/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130920.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, September 20, 2013, Vol. 17, No. 261 Headlines 1031 ADVANCE: Silicon Valley Law Group Off Hook for Malpractice 1617 WESTCLIFF: Wells Fargo Objects to Approval of Disclosures 261 EAST: Can Access MB Financial Cash Collateral Until Dec. 31 261 EAST: Court Appoints Melanie Cyganowski as Mediator 22ND CENTURY: To Acquire NASCO Products for $1 Million AERCO LIMITED: Fitch Affirms 'D' Rating on Two Note Classes AFFIRMATIVE INSURANCE: To Sell Retail Agency Business for $120MM AIR CANADA: Fitch Rates New $300MM Term Loan at 'BB' AIR CANADA: New $400MM First Lien Notes Get Moody's 'B2' Rating AIRTRONIC USA: Creditor Ballots Available; Plan Hearing Nears ALLEN FEINGOLD: Disbarred Atty's Debt Not Dischargeable ALLIED SYSTEMS: Jack Cooper Approved to Buy Auto Hauler ALLY FINANCIAL: Files Copy of Dodd-Frank Act Stress Test Results ALVARION LTD: Provides Update on Status of Receivership AMERICAN AIRLINES: Grant Thornton Okayed to Provide Add'l Services ANDERSON UNIVERSITY: Fitch Affirms 'BB+' Rating on Revenue Bonds ARCAPITA BANK: Court Nod Not Necessary for EuroLog Assets Sale ATLS ACQUISITION: Whistleblowers Want Stay Lifted In FCA Suit AUXILIUM PHARMACEUTICALS: S&P Alters 'B-' Rating Outlook to Stable BERNARD L. MADOFF: District Judge Rakoff Sitting as Appeals Judge BERNARD L. MADOFF: Collecting $97.8 Million Settlement BERNARD L. MADOFF: Other Executives Could Face Charges BERRY PLASTICS: CEO Issues Remarks on Near-Term Outlook BIONOL CLEARFIELD: Lenders Decry Bondholders' Distribution Hopes BROOKLYN CENTER: Moody's Affirms Ba3 Rating on $31MM GO Debt CAESARS ENTERTAINMENT: Fitch to Rate $1.35 Billion Notes at 'CCC' CAPITOL BANCORP: Motion to Unseal Filed CASA CASUARINA: Miami Beach's Versace Mansion Sold to Jordache CENGAGE LEARNING: Committee Can Retain Arent Fox as Counsel CENGAGE LEARNING: Court Sets Oct. 31 Bar Date for Proofs of Claim CENGAGE LEARNING: Can Retain Donlin Recano as Admin. Agent CLUB AT SHENANDOAH: Can Access GECC Cash Collateral Until Oct. 29 COMPETITIVE TECHNOLOGIES: To Issue 1.6-Mil. Shares to ASC Recap CONFIE SEGUROS: Moody's Keeps B3 CFR Following Asset Purchase CONFIE SEGUROS: S&P Affirms 'B-' Counterparty Credit Rating CORNERSTONE HOMES: Plan Approval Hearing Adjourned Sine Die CRYOPORT INC: Elects Edward Zecchini to Board of Directors DESIGNLINE CORP: Can Borrow Up to $500,000 From Cyprus in Interim DETROIT, MI: Fitch Says GOs Likely to Default on October 1 DETROIT, MI: Defends Ch. 9 Bid Against Retirees' Objections DETROIT, MI: Says Kirkland Attorney Can't Testify in Syncora Row DETROIT, MI: Fitch Says GOs Likely to Default on October 1 DEVONSHIRE PGA: Owners of Senior Care Facilities Seek Chapter 11 EARL GAUDIO: Committee Taps Rubin & Levin as Counsel EARL GAUDIO: Obtains Final Authority to Use Cash Collateral EASTMAN KODAK: Gets Extension to File Post-Confirmation Timetable EASTMAN KODAK: Wins Court Approval to Settle Dispute With GOT EASTMAN KODAK: Signs Deal With Calif. Tax Board to Settle Claims EASTMAN KODAK: Signs Deal With Rochester to Assume 7 Contracts EDISON MISSION: Bankruptcy Judge Sides With Co. in Chevron Row EMPRESAS INTEREX: PRAPI Seeks to Block Use of Cash Collateral ENDICOTT INTERCONNECT: Committee Opposes Credit Bidding ENDICOTT INTERCONNECT: Creditors Challenge $16MM in Secured Debt EXIDE TECHNOLOGIES: Incentive Plan Approved EXIDE TECHNOLOGIES: Bonuses, BMW Agreement Get Court Approval FAIRMONT GENERAL: Sec. 341 Creditors' Meeting Set for Oct. 31 FAIRMONT GENERAL: Wins Interim OK to Hire Gleason & Associate FAIRMONT GENERAL: Gets Interim Approval to Hire Spilman Thomas FAIRWEST ENERGY: Defaults Under Debtor-In-Possession Financing FIBERTOWER CORP: Files Plan to Give Noteholders Ownership FIRSTPLUS FINANCIAL: Purported Mafia Wife Cops Plea in Takeover FOTOLIA HOLDINGS: Moody's Assigns B2 CFR & Sr. Term Loan Rating FOTOLIA HOLDINGS: S&P Raises Prelim. CCR to 'B+'; Outlook Stable GLOBE ENERGY: S&P Withdraws 'B' Corporate Credit Rating GRAND CENTREVILLE: Seeks to Employ Walther as Special Counsel GRAND CENTREVILLE: Hires Mendelson & Mendelson as Accountant GRAND CENTREVILLE: Files Schedules of Assets and Liabilities GREAT PLATTE: Wins Approval of Chapter 11 Plan HD SUPPLY: Files Copy of Presentation Materials With SEC HERON LAKE: Posts $2.6 Million Net Income in July 31 Quarter HUNTSMAN CORP: Moody's Changes Outlook to Stable & Keeps Ba3 CFR IBAHN CORP: Has Interim Authority to Obtain $1.5MM in DIP Loans IBAHN CORP: Can Use Cash Collateral Until Oct. 7 IBAHN CORP: Seeks to Employ Pachulski as Bankruptcy Counsel IBAHN CORP: Employs Epiq as Claims and Noticing Agent IBAHN CORP: Wants Agreement with Former CEO Rejected INSPIREMD INC: Incurs $29.3 Million Net Loss in Fiscal 2013 INTRAOP MEDICAL: Sale Approved With Creditors Getting 15% Recovery J & J DEVELOPMENTS: Court Converts Case into Chapter 7 Proceeding KIDSPEACE CORP: Lease Decision Period Extended Until Sept. 26 LIQUIDMETAL TECHNOLOGIES: Inks Change of Control Agreements MAINEGENERAL MEDICAL: Moody's Lowers Ratings on 2011 Bonds to Ba1 MDU COMMUNICATIONS: CEO Sheldon Nelson Resigns From Posts MF GLOBAL: Lawsuit Expanded Against Jon Corzine, Others MOBILESMITH INC: Sells $260,000 Convertible Note MSR RESORT: Moves to Keep Control of Bankruptcy MTS GOLF: Bid to Continue Confirmation Hearing to Oct. 24 Okayed MUD KING: Opposes National Oilwell's Lift Stay Bid NET ELEMENT: Board Approves CEO's Compensation NNN 3500: Has Until Oct. 1 to File Schedules and Statements NNN 3500: U.S. Bank Wants Reinstatement of Stay Denied NUVILEX INC: Incurs $4.6 Million Net Loss in July 31 Quarter ORCKIT COMMUNICATIONS: Stock Moved to TASE Maintenance List OUTERWALL INC: Moody's Ratings Unchanged Over Lower 3Q Guidance PACIFIC GOLD: Stockholders Elect Two Directors PACIFIC THOMAS: Disclosure Statement Hearing Continued to Oct. 10 PATRIOT COAL: Disclosure Statement Hearing Scheduled for Nov. 6 PENSACOLA BEACH: Explores Refinancing Options with Ladder Capital PENSON WORLDWIDE: Seeks Dismissal of GHP1 Inc.'s Chapter 11 Case PLUG POWER: Closes Offering of 21.4 Million Common Shares POSITIVEID CORP: Ironridge to Resell 6 Million Common Shares PRIMCOGENT SOLUTIONS: US Trustee Wants Case Converted to Chapter 7 PURADYN FILTER: To Provide Bypass Filtration Technology in China RAMS ASSOCIATES: Gets 2nd Interim Order for Cash Collateral Use RED OAK: Moody's Hikes Rating on $284MM Senior Bonds to 'B1' RESIDENTIAL CAPITAL: Deal on 151 RMBS Servicing Claims Okayed RGR WATKINS: Section 341(a) Meeting Set on October 21 RHINOCEROS VISUAL: Gravity Files Chapter 11 to Avoid Eviction RURAL/METRO: Sec. 341 Creditors' Meeting Set for Oct. 1 RURAL/METRO: Panel Hires GLC & Ex-Goldman Director as Advisors SCOTTSDALE VENETIAN: Has Until Nov. 18 to Solicit Plan Votes SEARS HOLDINGS: Fitch Rates $1BB Senior Secured Term Loan at B' SEARS HOLDINGS: S&P Assigns 'B' Rating to $3.275BB Facility SEGA BIOFUELS: Section 341(a) Meeting Set on October 18 SHOTWELL LANDFILL: Plan Confirmation Hearing Continued to Dec. 17 SOUTHERN FILM: Can Hire Ivey McClellan as Counsel SOUTHERN FILM: Can Hire Hendren & Malone as Counsel SPIG INDUSTRY: Section 341(a) Meeting Scheduled for Oct. 11 SPRINGLEAF FINANCE: Plans to Offer $250 Million Notes SPRINGLEAF FINANCE: S&P Rates $650MM Senior Unsecured Notes 'CCC+' STELERA WIRELESS: Committee Taps Gablegotwals as Co-Counsel STELERA WIRELESS: Committee Taps Gavin/Solmonese as Fin'l Advisor STONE ROSE: Hearing on Trustee Appointment Continued to Oct. 2 STONE ROSE: U.S. Trustee Wants Case Conversion or Dismissal STRIKE MINERALS: Obtains Temporary Management Cease Trade Order SUNSHINE HOTELS: Wins Approval of Revised Plan SUNTECH POWER: Zhou Weiping Is Interim CEO; CFO Search On SYNCREON HOLDINGS: S&P Puts 'B+' CCR on CreditWatch Negative TECHPRECISION CORP: Incurs $1.4 Million Net Loss in 1st Quarter TECHPRECISION CORP: Incurs $1.4 Million Net Loss in June 30 Qtr. TRANS-LUX CORP: Gabelli Funds Lowers Equity Stake to 38.9% TRINITY COAL: Files Disclosures for 2nd Revised Plan TRINITY COAL: Nears Consensual Plan With Committee & Essar TRINITY COAL: Wants Exclusive Right to File Plan Until Nov. 14 TRINITY COAL: Wants Until Dec. 27 to Decide on Unexpired Leases TRUSTWORTHY RADIO: Future Questioned After Host Quits UNIFIED 2020: Court Approves Motion to Use Cash Collateral UPH HOLDINGS: Hines REIT One Wilshire's Cure Claim Settled VAIL LAKE: Has Final Authorization to Use Cash Collateral VAIL LAKE: Oct. 3 Hearing on Request to Dismiss Chapter 11 Case VIGGLE INC: Incurs $91.4 Million Net Loss in Fiscal 2013 VISUALANT INC: Amends 162.1 Million Shares Resale Prospectus VISUALANT INC: Gets Approval to Restate Articles of Incorporation VULPES LLC: Fox & Obel Food Market Files Chapter 11 in Chicago WHEELER RENTAL: Counsel Wants Case Dismissed * Banks Face Fines for Benchmark Safeguard Breaches in EU Plan * DRW Investments Sues to Forestall CFTC Enforcement Action * Ex-JPMorgan Employees Indicted over $6.2 Billion Loss * 4 Massachusetts: Schools Facing Receivership * SEC to Unveil Pay-Ratio Proposal Mandated by Dodd-Frank * UBS Wins Ruling Upholding Dismissal of Securities Suit * Fitch Says Appetite for Risk Growing in U.S. Auto Loan Market * Fines on Lawyers Are Non-Dischargeable * BOOK REVIEW: A Legal History of Money in the United States, 1774-1970 ********* 1031 ADVANCE: Silicon Valley Law Group Off Hook for Malpractice --------------------------------------------------------------- Law360 reported that a California federal jury unanimously found on Sept. 17 that Silicon Valley Law Group didn't commit malpractice when it helped a real estate investment firm negotiate its sale to Edward Okun, whose involvement in a $126 million Ponzi scheme later bankrupted the firm and earned Okun 100 years in jail. According to the report, the verdict meant a loss for 1031 Advance liquidation trustee Gerard McHale, who accused the Silicon Valley Law Group of failing to advise Janet Dashiell and Steven Allred, the investment firm's founders, that Okun had fishy borrowing habits. The case is McHale v. Silicon Valley Law Group, Case No. 3:10-cv- 04864 (N.D. Calif.) before Judge Joseph C. Spero. 1617 WESTCLIFF: Wells Fargo Objects to Approval of Disclosures -------------------------------------------------------------- Secured creditor Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004-C3, objects to the disclosure statement for debtor 1617 Westcliff, LLC's First Amended Chapter 11 Plan of Reorganization dated July 1, 2013. According to Wells Fargo, the Disclosure Statement does not adequately describe: * Why it is necessary to prohibit Secured Creditor from pursuing non-debtor guarantors on the subject loan following Plan confirmation; * Why it is necessary to replace the current property manager post-confirmation; or * Why the Debtor should be able to pay its professionals and settle claims post-confirmation with absolutely no oversight by the Court or input from creditors and interested parties. According to papers filed with the Court on Sept. 3, 2013, given that secured creditor is the sole significant creditor in the case, it is critical that the Debtor clarify these issues so that secured creditor can make an informed decision about the Plan. Attorneys for Wells Fargo Bank, N.A., can be reached at: Aron M. Oliner, Esq. Geoffrey A. Heaton, Esq. DUANE MORRIS LLP One Market Plaza Spear Street Tower, Suite 2200 San Francisco, CA 94105-1127 Tel: (415) 957-3000 Fax: (415) 957-3001 E-mail: roliner@duanemorris.com The Plan As reported in the Troubled Company Reporter on July 10, 2013, the Debtor, through the liquidating plan, seeks to accomplish payment of creditors in full by reorganizing its personal assets and liabilities through the sale of its only substantial asset, a commercial real property commonly known as 1617 Westcliff Drive, in Newport Beach, California. The property, according to court documents, is a mixed use, Class B building mostly occupied by medical office space. It comprises 32,000 square feet of rentable space in a single two-story building situated on approximately 1.56 acres of land in an up-scale commercial district of Newport Beach. The Debtor filed the plan of liquidation and disclosure statement on July 1, 2013. The Debtor is negotiating a settlement agreement with a former tenant, which may result in payments to the Estate on account of past-due rent: however, as long as Debtor owns the Property, those payments will be the cash collateral of Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004- C3, acting by and through its special servicer, which holds a first-in-priority deed of trust secured by the Property, and are unlikely to become available for distribution to creditors. The Plan proposes two means of paying all creditors in full: (1) The Debtor will sell the Property, and the sale will close on or before the effective date of the Plan, allowing Debtor to pay all allowed claims in full on the Effective Date. If able to close the sale on or before the Effective Date, the Debtor intends to cure on the Effective Date all defaults with respect to the Bank's note, thereby eliminating default interest on that claim. The Debtor will pay any pre-payment fee on the Bank's claim which is triggered by the sale. Under the Plan scenario, no claims will be impaired. (2) The Debtor will sell the Property, and the sale will close after, but within 18 months of, the Effective Date, allowing the Debtor to pay all allowed claims in full within 18 months of the Effective Date. If the Debtor is unable to close the sale on or before the Effective Date, then on the Effective Date the Receiver will remain in possession of the Property: however, the Receiver will be required to replace the current Property Manager with a new professional property management entity. As the Debtor will be unable to pay all allowed claims on the Effective Date in this case, all claims will technically be impaired. However, all claims will still receive payment in full, including interest. Furthermore, because the Debtor will be unable to cure on the Effective Date all defaults with respect to the Bank's note, the Bank will be entitled to interest at the default rate on that claim. The Bank will only be entitled to any pre-payment fee on the Bank's claim if the sale closes on or before Sept. 1, 2014, which is the maturity date of the loan. D. Edward Hays, Esq. -- ehays@marshackhays.com -- and Sarah C. Boone, Esq. -- sboone@marshackhays.com -- at MARSHACK HAYS LLP, in Irvine, California, filed the Plan and Disclosure Statement on behalf of the Debtor. A full-text copy of the Disclosure Statement dated July 1, 2013, is available at http://bankrupt.com/misc/1617WESTCLIFFds0701.pdf About 1617 Westcliff 1617 Westcliff, LLC, filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-19326) on Aug. 2, 2012, in Santa Ana, California. The Debtor estimated assets of $10 million to $50 million and liabilities of $1 million to $10 million. Bankruptcy Judge Mark S. Wallace oversees the case. Sarah C. Boone, Esq., and D. Edward Hays, Esq., at Marshack Hays LLP, serve as the Debtor's counsel. 261 EAST: Can Access MB Financial Cash Collateral Until Dec. 31 --------------------------------------------------------------- The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved a fifth stipulation authorizing 261 East 78 Realty Corporation to continue using MB Financial Bank, N.A.'s cash collateral until Dec. 31, 2013, unless earlier terminated through the occurrence of an event of default that is not cured within any time period permitted in this Order. The Debtor will be entitled to use cash collateral solely in accordance with a budget. As partial adequate protection, MB Financial is granted replacement liens. In the event the Court determines that the replacement liens are insufficient, such diminution in value will be afforded status as a super-priority administrative expense under Section 507(b) of the Bankruptcy Code. About 261 East 261 East 78 Realty Corp. owns real property located at 261 East 78th Street, in New York. The premises consist of seven commercial units, three of which are currently occupied. 261 East 78 Realty filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 11-15624) on Dec. 6, 2011. The case was assigned to Judge Robert E. Gerber. The Chapter 11 filing was precipitated by the commencement of foreclosure proceedings on the premises. The Debtor scheduled $20.2 million in assets and $18.8 million in liabilities. The petition was signed by Lee Moncho, president. Jonathan S. Pasternak, Esq., at DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, in White Plains, N.Y., represents the Debtor as counsel. Matthew W. Olsen, Esq., at Katten Muchin Rosenman LLP, in New York, N.Y., represents MB Financial Bank, N.A., as counsel. 261 EAST: Court Appoints Melanie Cyganowski as Mediator ------------------------------------------------------- Acting on 261 East 78 Realty Corporation's letter dated July 9, 2013, requesting mediation of all matters involving Secured Creditor MB Financial Bank, N.A., and the Debtor and MB having agreed upon Melanie C. Cyganowski, Esq., as the mediator, on Sept. 3, 3013, the U.S. Bankruptcy Court for the Southern District of New York directed the Debtor and MB to participate in the Court's Mediation Program pursuant to and in compliance with General Order M-390. Melanie Cyganowski is appointed to serve as the mediator for the Mediation Parties. The mediator will mediate the disputes existing between the Mediation Parties in the Chapter 11 case and the adversary proceeding styled 261 East 78 Realty Corp. v. MB Financial Bank, N.A., Adv. Pro. No. 13-01000-reg. The mediator will be compensated for the actual recorded time and disbursements incurred by the Mediator and any attorney or paraprofessional of the Otterbourg, Steindler, Houston & Rosen, P.C. firm who assists her. The mediation fees will be paid equally by MB and the Debtor, on a several but not joint basis, provided, however, that (x) the Debtor is authorized to pay mediation fees up to an aggregate amount of $17,500 without the need for further approval or notice and (y) the Debtor's payment of any mediation fees in excess of an aggregate amount of $17,500, will be subject to prior Court review and approval pursuant to Paragraph 4.0 of General Order M-390, which approval (if required) the Debtor's counsel will promptly seek upon completion of the mediation. The parties are to attend mediation at a mutually convenient date, but in no event later than Aug. 31, 2013, unless otherwise agreed by the mediator and the mediation parties. About 261 East 261 East 78 Realty Corp. owns real property located at 261 East 78th Street, in New York. The premises consist of seven commercial units, three of which are currently occupied. 261 East 78 Realty filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 11-15624) on Dec. 6, 2011. The case was assigned to Judge Robert E. Gerber. The Chapter 11 filing was precipitated by the commencement of foreclosure proceedings on the premises. The Debtor scheduled $20.2 million in assets and $18.8 million in liabilities. The petition was signed by Lee Moncho, president. Jonathan S. Pasternak, Esq., at DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, in White Plains, N.Y., represents the Debtor as counsel. Matthew W. Olsen, Esq., at Katten Muchin Rosenman LLP, in New York, N.Y., represents MB Financial Bank, N.A., as counsel. 22ND CENTURY: To Acquire NASCO Products for $1 Million ------------------------------------------------------ 22nd Century Group, Inc., and NASCO Products, LLC, entered into a definitive and binding agreement for 22nd Century Group to purchase NASCO Products. NASCO Products, a federally licensed tobacco product manufacturer, is also a participating member of the Tobacco Master Settlement Agreement known as the MSA, an agreement among 46 U.S. states and the tobacco industry administered by the National Association of Attorneys General (NAAG). The purchase price for the NASCO acquisition is $1 million payable in a combination of cash and equity. The purchase agreement also contemplates that 22nd Century will enter into a management agreement and a sales agreement at closing with an affiliate of NASCO Products. In addition, 22nd Century will purchase cigarette manufacturing machinery for approximately $2 million. Upon closing, which will take place immediately following NAAG's consent of the acquisition, NASCO Products, LLC, will become a wholly-owned manufacturing subsidiary of 22nd Century Group. Current president of NASCO Products, Ralph Angiuoli, will be part of the management team of the new 22nd Century Group subsidiary. Mr. Angiuoli, former president and CEO of RJ Reynolds Tobacco Company, is a 30-year veteran of the industry. Barry Saintsing and Ralph Angiuoli Jr., owners of an affiliate of NASCO Products, will also join the 22nd Century management team. Mr. Saintsing was formerly with RJ Reynolds Tobacco Company for 34 years and retired as Master Product Developer. Mr. Angiuoli, Jr., was also formerly with RJ Reynolds as a sales and marketing representative. Joseph Pandolfino, CEO of 22nd Century Group, explained, "Having the NASCO Products team aboard will be of tremendous benefit to 22nd Century Group by facilitating the production and distribution of our products in the United States." Goodrich Tobacco Company, the distribution arm of 22nd Century Group, has thus far utilized contract manufacturers that are not members of the MSA to produce the company's cigarette brands. Henry Sicignano, President of Goodrich Tobacco, explained, "We intentionally have delayed expansion of the marketing and distribution of our brands in the United States since the more product we sold, the more difficult and expensive it would be to become a participating manufacturer of the MSA. 22nd Century Group owning NASCO Products resolves this issue." Upon NAAG's consent of the acquisition, 22nd Century will move forward with widespread distribution and sales of the company's brands throughout the United States. Mr. Sicignano added, "We look forward to obtaining consent of NAAG for the NASCO Products acquisition so that our super-premium brands, RED SUN and MAGIC can be sold under the MSA." A copy of the Purchase Agreement is available for free at: http://is.gd/AKH3YW About 22nd Century Clarence, New York-based 22nd Century Group, Inc., through its wholly-owned subsidiary, 22nd Century Ltd, is a plant biotechnology company using technology that allows for the level of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in tobacco plants to be decreased or increased through genetic engineering and plant breeding. 22nd Century incurred a net loss of $6.73 million in 2012, as compared with a net loss of $1.34 million in 2011. As of June 30, 2013, the Company had $3.16 million in total assets, $10.37 million in total liabilities and a $7.21 million total shareholders' deficit. Freed Maxick CPAs, P.C., in Buffalo, New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that 22nd Century has suffered recurring losses from operations and as of Dec. 31, 2012, has negative working capital of $3.3 million and a shareholders' deficit of $6.1 million. Additional capital will be required during 2013 in order to satisfy existing current obligations and finance working capital needs as well as additional losses from operations that are expected in 2013. AERCO LIMITED: Fitch Affirms 'D' Rating on Two Note Classes ----------------------------------------------------------- Fitch Ratings has taken the following rating actions on AerCo Limited: -- Class A-3 notes downgraded to 'Csf'/RE 50% from 'CCsf' and withdrawn; -- Class B-1 and B-2 affirmed at 'Csf'/RE 0% and withdrawn; -- Class C-1 and C-2 affirmed at 'Dsf'/ RE 0%; and withdrawn; -- Class D-2 affirmed at 'Dsf'/RE 0% and withdrawn; Key Rating Drivers The downgrade of the class A-3 notes to 'Csf' reflects Fitch's view that default is considered inevitable. The outstanding class A-3 note balance significantly exceeds the value of trust collateral. Furthermore, the few remaining aircraft consist predominately of older illiquid aircraft which Fitch believes will be unable to generate sufficient cash flow to repay the notes in full. The recovery estimate of 50% reflects Fitch's expectation of principal payments relative to the current class A-3 note balance. The affirmation of class B-1 and B-2 notes at 'Csf' as well as class C-1, C-2, and D-2 notes at 'Dsf' reflect Fitch's expectation of inevitable default. The recovery estimate is 0% on each of these classes as no principal is expected to be paid as interest shortfalls continue to grow for the subordinate notes and any collections will only be applied to class A-3 interest and principal. Fitch has withdrawn its ratings on the transaction as its coverage is no longer considered relevant given Fitch's expectation that default of the notes is considered inevitable. AFFIRMATIVE INSURANCE: To Sell Retail Agency Business for $120MM ---------------------------------------------------------------- Affirmative Insurance Holdings, Inc., has entered into a definitive agreement to sell its retail agency distribution business to Confie Seguros, a leading California-based national insurance distribution company, for $100 million in cash with the potential to receive an additional $20 million of cash proceeds. Affirmative's retail agency business consists of 195 retail locations in Louisiana, Alabama, Texas, Illinois, Indiana, Missouri, Kansas, South Carolina and Wisconsin and two premium finance companies. The retail agency business employs approximately 500 employees. The initial $100 million of cash proceeds will include $20 million to be placed in an escrow account that will, dependent upon the risk-based capital status of Affirmative Insurance Company (AIC), be utilized to either infuse capital into AIC or pay down debt. The risk-based capital measurement will be made quarterly as of Sept. 30, 2013, through June 30, 2014. The Company expects to pay down about $72 million of its current $119 million senior debt obligation with the net proceeds available after the $20 million is placed into escrow and transaction expenses. In addition, the Company may receive up to an additional $20 million of proceeds that could be used to pay down debt or infuse capital into AIC. The additional proceeds are contingent on AIC meeting certain risk-based capital thresholds. The measurement begins as of June 30, 2014, and can be achieved quarterly through Dec. 31, 2015. In the best case scenario, the Company would receive an additional $10 million of proceeds based on the risk- based capital measurement as of June 30, 2014, and an additional $10 million of proceeds based on the measurement as of Sept. 30, 2014. The Company has also entered into a commitment letter for a $31 million senior secured term loan facility with a maturity date of Nov. 30, 2014, and a $16 million subordinated secured term loan facility with a maturity date of June 30, 2015. Fortress Credit Corp. will participate in both facilities, and JCF AFFM Debt Holdings L.P., an affiliate of J.C. Flowers & Co. LLC and New Affirmative LLC, the Company's 51 percent majority shareholder, will participate in the subordinated secured term loan facility. The new financing is intended to completely replace the Company's existing senior secured loan facility and is expected to close when the retail sale closes. Mike McClure, acting chief executive officer, stated, "Although the retail business has been a valuable part of Affirmative, this transaction will allow us to address our senior debt maturity issue as our senior debt was set to mature in January 2014. The transaction will also allow us to focus on our insurance production business, which has significantly improved from both a revenue and profitability perspective. Lastly, we will also be entering into a distribution agreement with Confie Seguros and are hopeful that this is the beginning of a long-term partnership with a great distribution company in the non-standard automobile insurance marketplace." Affirmative will continue to own and operate the retail business until the closing date of the sale. The sale of the retail business and new financing are expected to be completed within 30 days. A copy of the Asset Purchase Agreement is available for free at: http://is.gd/1cCuyi Contact: Earl R. Fonville Executive Vice President and Chief Financial Officer (972) 728-6458 earl.fonville@affirmativeinsurance.com About Affirmative Insurance Addison, Tex.-based Affirmative Insurance Holdings, Inc., is a distributor and producer of non-standard personal automobile insurance policies for individual consumers in targeted geographic markets. Non-standard personal automobile insurance policies provide coverage to drivers who find it difficult to obtain insurance from standard automobile insurance companies due to their lack of prior insurance, age, driving record, limited financial resources or other factors. Non-standard personal automobile insurance policies generally require higher premiums than standard automobile insurance policies for comparable coverage. For the six months ended June 30, 2013, the Company reported a net loss of $4.76 million on $136.59 million of total revenues, as compared with a net loss of $14.17 million on $103.21 million of total revenues for the same period during the prior year. AIR CANADA: Fitch Rates New $300MM Term Loan at 'BB' ---------------------------------------------------- Fitch Ratings expects to rate Air Canada's (AC) proposed $300 million 1st lien senior secured term loan B, $100 million 1st lien senior secured revolving credit facility, $400 million 1st lien senior secured notes, and C$300 million 1st lien senior secured notes 'BB/RR1'. This action represents an update to the press release published on Sept. 9, 2013. Whereas Air Canada initially proposed to raise $700 million through the issuance of a 1st lien term loan B, AC now expects to issue the same amount of debt through the combination of a $300 million 1st lien term loan B and $400 million in 1st lien secured notes. The expected ratings for AC's proposed $300 million 2d lien senior secured notes remain 'BB-/RR2' The new debt will be secured by a priority lien on accounts receivable, certain real estate, spare engines, ground equipment, AC's Pacific route authorities, and slots at LaGuardia, Heathrow, and Washington-Reagan. This represents the same collateral pool that secures AC's existing secured notes, supplemented by 10 additional spare engines. For more information please refer to the press release titled 'Fitch Rates Air Canada's Prop'd Sr Secured Credit Facils & Notes 'BB/RR1'; 2d Lien Notes 'BB-/RR2', available at www.fitchratings.com. Fitch expects to assign the following ratings: Air Canada -- Senior secured term loan B due 2019 'BB'/'RR1'; -- Senior secured revolving credit facility 'BB'/'RR1'; -- First lien senior secured notes due 2019 'BB'/'RR1'; -- CDN$ first lien senior secured notes due 2019 'BB/RR1'; -- Second lien senior secured notes due 2020 'BB-/RR2'. Fitch currently rates Air Canada as follows: -- Long-term Issuer Default Rating 'B'; -- Senior secured 1st -lien debt 'BB/RR1'; -- Senior secured 2d-lien debt 'BB-/RR2'. AIR CANADA: New $400MM First Lien Notes Get Moody's 'B2' Rating --------------------------------------------------------------- Moody's Investors Service assigned a B2 senior secured rating to Air Canada's $400 million 1st lien notes issue. Air Canada's Caa1 corporate family, Caa1-PD probability of default, existing B2 1st lien senior secured, Caa2 2nd lien senior secured and SGL-3 speculative grade liquidity ratings remain unchanged. The ratings outlook remains positive. Ratings Rationale: The new notes issue reflects a change in Air Canada's previously announced refinancing plans, which consisted of the proposed issuance of a $700 million 1st lien senior secured term loan B, C$300 million 1st lien senior secured notes, $100 million 1st lien senior secured revolver and $300 million 2nd lien senior secured notes issue. Air Canada now intends to reduce the amount of its proposed 1st lien senior secured term loan B to $300 million and issue $400 million of 1st lien senior secured notes. The other proposed instruments remain unchanged. Given there is no change in the total proposed debt or amounts in each debt class there is no rating impact to the existing ratings. Issuer: Air Canada Assignments: $400M 1st Lien Senior Secured Notes, Assigned B2, LGD2, 24% The principal methodology used in this rating was the Global Passenger Airlines Methodology published in May 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 Saint-Laurent, Quebec, Air Canada is the largest provider of scheduled passenger services in Canada. Revenues for 2012 were approximately $12 billion. AIRTRONIC USA: Creditor Ballots Available; Plan Hearing Nears ------------------------------------------------------------- Global Digital Solutions, Inc. on Sept. 19 informed shareholders and other interested parties that they can acquire publicly available information about creditor ballots regarding Airtronic USA's chapter 11 bankruptcy reorganization plan via the Public Access To Court Electronic Records -- www.Pacer.gov -- website. As previously announced, Airtronic, GDSI's planned merger partner, filed the Plan on August 21, 2013, with the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. The court set October 2, 2013, as the date for the confirmation hearing for Airtronic's Plan. If confirmed by the court, as expected, GDSI will be able to move forward to complete its acquisition of Airtronic and Airtronic will emerge from chapter 11 with adequate working capital to compete effectively as an innovative leader in small arms manufacturing. "The October 2nd confirmation hearing will be a major milestone in the evolution of GDSI and Airtronic," said GDSI's President and CEO Richard J. Sullivan. "We wanted to make sure all shareholders and other interested parties are aware that information regarding creditor ballots is available via www.Pacer.gov and we encourage all those interested to become informed by accessing this publicly available information." On or about August 13, 2012, GDSI and Airtronic announced that they had signed a letter of intent to enter into good faith discussions involving a potential strategic combination in which Airtronic would be acquired by GDSI. Having completed those good faith discussions, the companies signed a merger agreement on or about October 22, 2012. The companies have been working together on the Plan that was filed on August 21, 2013. About PACER Public Access to Court Electronic Records (PACER) is an electronic public access service that allows users to obtain case and docket information from federal appellate, district and bankruptcy courts, and the PACER Case Locator via the Internet. PACER is provided by the federal Judiciary in keeping with its commitment to providing public access to court information via a centralized service. About Global Digital Solutions, Inc. Global Digital Solutions -- http://www.gdsi.co-- is positioning itself as a leader in providing small arms manufacturing, complementary security and technology solutions and knowledge- based, cyber-related, culturally attuned social consulting in unsettled areas. About Airtronic USA, Inc. Airtronic -- http://www.Airtronic.net-- is an electro-mechanical engineering design and manufacturing company. It provides small arms and small arms spare parts to the U.S. Department of Defense, foreign militaries, and the law enforcement market. The company also manufactures medical, avionics, and telecommunications original equipment. The company's products include grenade launchers, rocket propelled grenade launchers, grenade launcher guns, flex machine guns, grenade machine guns, rifles, and magazines. Founded in 1990, the company is based in Elk Grove Village, Illinois. On May 16, 2012, the voluntary petition of Airtronic, Inc. for liquidation under Chapter 7 was converted to chapter 11 reorganization. The company had filed for chapter 7 bankruptcy on March 13, 2012. ALLEN FEINGOLD: Disbarred Atty's Debt Not Dischargeable ------------------------------------------------------- Law360 reported that the Eleventh Circuit on Sept. 17 ruled that a disbarred Pennsylvania attorney who once choked a judge couldn't discharge the cost of the proceedings against him in his Chapter 7 bankruptcy because the $45,000 debt is considered a fine under state law. According to the report, the appellate court upheld a Florida federal judge's ruling that the debt was non-dischargeable, saying nearly every other court that has considered similar issues has decided that cost assessments in attorney disciplinary proceedings are viewed as penalties. Allen Feingold, who represented himself before the appeals court, asked the Eleventh Circuit on Sept. 11 to determine that the money requested by the Disciplinary Board of the Supreme Court of Pennsylvania to cover the cost of the proceedings against him is debt that is dischargeable in his Chapter 7 bankruptcy. Mr. Feingold said that the $45,000 requested by the disciplinary board should not be considered sanctions, which are not dischargeable under the bankruptcy code. The case is The Disciplinary Board of the v. Allen Feingold, 12- 13817 (11th Cir.). ALLIED SYSTEMS: Jack Cooper Approved to Buy Auto Hauler ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jack Cooper Holding Corp., the largest truck-based auto hauler in the U.S., will become even larger now that the Delaware bankruptcy court has approved its purchase of auto hauler Allied Systems Holdings Inc. for $135 million. According to the report, the Kansas City, Missouri-based buyer will pay $125 million in cash and a $10 million senior secured note with interest at 9.25 percent. The buyer has the right to pay off the note at any time with accrued interest. Jack Cooper wasn't the winning bidder at the first auction in August. Thanks to objections it filed along with others, Jack Cooper is purchasing substantially all of the assets except for some real property the lenders are taking over. The report notes that at the first auction, Allied declared the lenders to be the winning bidder with an offer of $105 million, consisting of $40.5 million cash and a credit bid of $64.5 million to be paid with secured debt rather than cash. After multiple objections were filed by creditors and others, the bankruptcy judge reopened the auction this month, and Jack Cooper won. The report relates that the sale-approval order contains provisions addressing the portion of the sale price claimed by majority shareholder Yucaipa Cos., which also holds a majority of the first- and second-lien debt. From the portion of the sale price attributable to the first-lien debt, Yucaipa's portion, 55.2 percent, will be held in an escrow account until objections to Yucaipa's claims are resolved. Some of the sale price will also be held aside to wind up the Chapter 11 case. 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. first 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 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 2013, 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 allowed Black Diamond to participate in the lawsuit against Yucaipa and Allied directors. ALLY FINANCIAL: Files Copy of Dodd-Frank Act Stress Test Results ---------------------------------------------------------------- Ally Financial Inc. furnished with the U.S. Securities and Exchange Commission a copy of "Dodd-Frank Act Stress Test - Mid- Cycle Estimates in the Severely Adverse Scenario". As required under the rules published by the Federal Reserve to address the Dodd-Frank Act Stress Test requirements, Ally Financial Inc. provided a summary of mid-cycle stress test results under the Severely Adverse scenario. The stress test results were submitted to the Federal Reserve on July 5, 2013, and cover a 9-quarter forecast horizon beginning in the second quarter of 2013, and continuing through the second quarter of 2015. The DFAST Severe scenario and the related forecasts of macroeconomic variables were developed internally by Ally and devised to capture all of the Company's primary risks. The Severe scenario considers a recession that has a level of severity comparable to the most severe post-war U.S. recessions and also includes a shock to oil prices that directly impacts the automotive industry and Ally's core automotive finance operations. A copy of the Results Summary is available at http://is.gd/eQQMc0 About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The Company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3 percent stake. Private equity firm Cerberus Capital Management LP keeps 14.9 percent, while General Motors Co. owns 6.7 percent. Ally Financial Inc. reported net income of $1.19 billion for the year ended Dec. 31, 2012, as compared with a net loss of $157 million during the prior year. As of June 30, 2013, the Company had $150.62 billion in total assets, $131.46 billion in total liabilities and $19.16 billion in total equity. ALVARION LTD: Provides Update on Status of Receivership ------------------------------------------------------- Alvarion Ltd., in Receivership, disclosed that Valley Telecom Ltd. has made the first payment of NIS 12.5 million in accordance with the court-approved sale of the Company's assets to Valley Telecom. Following this payment, Valley Telecom has assumed the management and financing of the Company's operations and the court-mandated operating plan had ended. As previously disclosed, on Sept. 4, 2013, the District Court of Tel Aviv -- Yaffo approved the sale of Alvarion's (in receivership) assets to Valley Telecom for no less than NIS 38 million. Subsequent payments shall be made no later than the end of 2014. In addition, a creditors plan and settlement will be submitted to the Court by October 2, 2013. Creditors' meetings will be held no earlier than 14 days thereafter. Valley Telecom has acted on behalf of Alvallytech Ltd. in this transaction. About Alvarion Ltd. Tel Aviv, Israel-based Alvarion Ltd. (Nasdaq: ALVR) -- http://www.alvarion.com/-- provides optimized wireless broadband solutions addressing the connectivity, coverage and capacity challenges of telecom operators, smart cities, security, and enterprise customers. The Company was sent to receivership and Mr. Yoav Kfir, CPA, was named Receiver. The District Court of Tel Aviv -- Yaffo approved on July 21, 2013, of an operating plan to allow the normal business operation of the company. The Company reported a net loss of $55.9 million on $49.9 million of revenue in 2012, compared with a net loss of $33.8 million on $69.5 million of revenue in 2011. The Company's balance sheet at Dec. 31, 2012, showed $96.1 million in total assets, $60.6 million in total liabilities, and stockholders' equity of $35.5 million. AMERICAN AIRLINES: Grant Thornton Okayed to Provide Add'l Services ------------------------------------------------------------------ The U.S. Bankruptcy Court in Manhattan authorized Grant Thornton LLP to provide additional services to AMR Corp. and its affiliated debtors. The new services involve a preparation of Grant Thornton's estimate of the value of marketing activities related to the AAdvantage(R) program. The firm's valuation analysis includes marketing activities like physical placement at American Airlines locations in airports; placement on the carrier's website; access to the AAdvantage(R) member's database; and use of the American Airlines brand name. 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). ANDERSON UNIVERSITY: Fitch Affirms 'BB+' Rating on Revenue Bonds ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BB+' rating on approximately $42.4 million of the City of Anderson, Indiana economic development revenue refunding and improvement bonds issued on behalf of Anderson University (AU). The Rating Outlook is Stable. Security The bonds are an unsecured general obligation of the university. As additional security, there is a cash-funded $3.7 million debt service reserve fund. Key Rating Drivers Rating Affirmation: The 'BB+' continues to reflect a track-record of uneven, though generally break-even to positive GAAP-based operating performance, which regularly contributes to annual debt service coverage of around 1 times (x); relatively limited financial and operational flexibility; and a high pro forma maximum annual debt service (MADS) burden. Uneven Operating History: GAAP-based operating performance has been uneven in recent years, which is not unexpected for a private non-profit postsecondary institution in the 'BB' rating category. Unaudited financial results indicate a narrower, though still positive, GAAP-based operating margin in fiscal 2013. Enrollment-Related Challenges: Preliminary fall 2013 data indicates that the university is experiencing a moderate, unexpected decline in its traditional undergraduate population. Actions taken by management to address revenue shortfalls and stem further enrollment declines underpin the Stable Outlook. Narrow Financial Flexibility: AU's financial flexibility remains constrained, as evidenced by its high tuition discounting rate, weak financial cushion, and limited ability to institute significant rate increases due to a competitive environment. A material, adverse movement in one or more of these areas could have negative credit implications. Unchanged Leverage Position: The university has no additional short- or long-term borrowing plans over the next few years, which should allow the level of outstanding debt to moderate over time. Rating Sensitivities Consistently Negative Gaap Operations: An inability to effectively offset continued pressures in growing net tuition and fee revenue through growth in other revenue areas and/or structural expense adjustments would negatively impact the university's ability to service its debt from operations and place downward rating pressure. Smaller Enrollment Base: A trend of continuing declines in traditional undergraduate and graduate enrollment would make the university's operations more susceptible to enrollment fluctuations, leading to negative rating pressure. Additional Debt: Though not anticipated in present time, the incurrence of additional debt without a commensurate growth in financial resources or net operating income sufficient to service the debt could negatively affect the rating. Credit Profile Founded in 1917, Anderson University is a Christian university located in Anderson, Indiana (35 miles northeast of Indianapolis). AU was founded and is supported by the Church of God (COG) and is the only college affiliated with COG in the Midwest. The university offers around 60 undergraduate majors as well as graduate programs in business, music, nursing, and theology. The university also maintains a Department of Adult Studies that offers bachelor and associates degrees and non-credit programs for adult students. Headcount enrollment totaled 2,516 in fall 2012, primarily consisting of traditional undergraduate students (about 70%), graduate enrollment (about 19%), and adult students in traditional and non-traditional programs (about 11%). The university's regional accreditation (Higher Learning Commission of North Central Association) was most recently reaffirmed in 2008 for a 10-year term. Uneven Operating History and Enrollment-Related Challenges Not unexpected for a higher education institution in the 'BB' rating category, GAAP-based operating performance has been uneven in recent years ranging from a high of 5.7% in fiscal 2007 to low -5.2% in fiscal 2011 (4% in fiscal 2012). Uneven financial results reflect, in part, continued challenges in consistently growing revenues derived from net tuition and fees, which regularly constitutes the bulk of annual operating revenues (79.9% of fiscal 2012 Fitch-adjusted unrestricted operating revenues). While management was able to resume growing revenues derived from net tuition and fees in fiscal 2012, a modest dip in fall 2012 traditional undergraduate and graduate enrollment led to a modest decrease in the amount of revenues derived from net tuition and fees in fiscal 2013 based on unaudited financials. Fitch notes that revenue growth in other areas, namely auxiliary enterprises and unrestricted gifts, along with active expense management helped the university achieve a modestly positive GAAP-based operating margin in fiscal 2013 based on unaudited financials. Preliminary enrollment figures for fall 2013 indicate that the number of traditional undergraduate students is expected to dip by around 7%. Management reported that an IT-related problem negatively affected the retrieval of submitted applications which may have diminished the possible matriculant yield for the fall semester. Fitch notes that the issue has since been resolved and is not expected to reoccur. Fall 2013 undergraduate enrollment trends may have also been negatively affected by management's focus on constraining further growth in freshmen tuition discounting, which partially reflects the university's difficulty in competing with lower-priced public institutions. A dip in graduate enrollment was principally driven by planned eliminations of two education-related programs and a headcount decline within the School of Theology. Management is implementing various budgetary adjustments to offset fall 2013 enrollment-related revenue shortfall that is expected to support budgetary balance in fiscal 2014. Some examples of cost- savings initiatives undertaken for fiscal 2014 include cutting discretionary expenses and maintaining position vacancies. Fitch notes that management does not budget fully for its annual depreciation expense, which suggests that negative GAAP-based operations in fiscal 2014 is possible; however, it remains too early in the fiscal year (May 31) to gauge the extent to which operating performance may be pressured. Management has voluntarily engaged the services of two consulting firms to enhance marketing and recruiting efforts to support future enrollment trends. Furthermore, management is in the process of conceptualizing a number of programmatic and curricular changes to better align institutional resources with market demand. Fitch views management's responsiveness favorably and will analyze the relative success of its initiatives in future credit reviews. Narrow Financial Flexibility A significant portion of student tuition is discounted annually (39.4% in fiscal 2012) as a result of a competitive environment and AU's high cost of attendance relative to its peer group. Management continues to take steps to curb increases in student charges and tuition discounting. Nevertheless, Fitch believes AU's already high discounting rate, which is not atypical for similarly rated credits by Fitch, and limited pricing flexibility constrain the university's ability to materially raise student-generated revenues without expanding the overall enrollment level. The university's financial flexibility is further restricted by its thin level of balance sheet resources. As of May 31, 2012, available funds, defined by Fitch as cash and investments not permanently restricted, totaled $7.3 million. This covered fiscal 2012 operating expenses ($51.1 million) and pro forma long-term debt ($54. million, inclusive of outstanding bonds, notes, and capital leases) by a weak 14.4% and 13.5%, respectively. Unaudited fiscal 2013 financial statements indicate that a modest operating surplus and favorable investment performance drove a healthy increase in fiscal 2013 available funds. Unchanged Leverage Position The university's debt burden remains high, with pro forma MADS of around $6.2 million (inclusive of a bullet maturity on an outstanding note) due in fiscal 2018 consumed 11.8% of fiscal 2012 unrestricted operating revenues. Partly offsetting the magnitude of this burden is AU's ability to normally generate adequate MADS coverage from operations (1.3x in fiscal 2012). Fitch expects AU's debt burden to moderate over time, as outstanding obligations are repaid and near-term capital needs are funded through operations and fundraising. ARCAPITA BANK: Court Nod Not Necessary for EuroLog Assets Sale -------------------------------------------------------------- Arcapita Bank B.S.C.(c), et al., have withdrawn their motion to take actions in connection with the sale by non-debtor subsidiaries of EuroLog Assets, which was scheduled to be heard on Sept. 23, 2013 at 11:30 a.m. According to papers filed with the Court on Sept. 18, 2013, due to the occurrence of the effective date of the Debtors' Plan, the approval of the Court is not required to consummate the Sale. As reported in the TCR on Sept. 9, 2013, Arcapita, et al., ask the U.S. Bankruptcy Court for the Southern District of New York to authorize the Debtors to take actions, incur obligations, and provide the consents necessary or appropriate to authorize, approve, and facilitate the sale by certain indirect non-Debtor subsidiaries identified as the EuroLog Affiliates of their interests in a group of companies that own and operate a variety of warehousing assets located throughout Europe pursuant to a Share Purchase Agreement dated as of Sept. 4, 2013. A summary of the essential terms of the Sale is available at: http://bankrupt.com/misc/arcapita.doc1481.pdf 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 The effective date of the Debtors' Second Amended Joint Plan of Reorganization, dated as of June 11, 2013, occurred on Sept. 17, 2013, according to papers filed with the U.S. Bankruptcy Court for the Southern District of New York on Sept. 17, 2013. ATLS ACQUISITION: Whistleblowers Want Stay Lifted In FCA Suit ------------------------------------------------------------- Law360 reported that whistleblowers who filed a $69 million False Claims Act suit against bankrupt Liberty Medical Supply Inc. over alleged Medicare and Medicaid overpayments urged a federal bankruptcy judge on Sept. 16 to lift the automatic stay on the case, saying recent procedural moves have made the stay moot. According to the report, the case, brought by Lucas Matheny and Deborah Loveland, both former employees of Liberty, was automatically stayed when the company filed for bankruptcy in February. A federal bankruptcy judge in Delaware then extended the stay in May, the report related. About Liberty Medical Entities that own diabetics supply provider Liberty Medical led by ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than three months after a management buy-out and amid a notice by the lender who financed the transaction that it's exercising an option to acquire the business. Liberty has been in business for 22 years serving the needs of both type 1 and type 2 diabetic patients. Liberty is a mail order provider of diabetes testing supplies. In addition to diabetes testing supplies, the Debtors also sell insulin pumps and insulin pump supplies, ostomy, catheter and CPAP supplies and operate a large mail order pharmacy. Liberty operates in seven different locations and has 1,684 employees. The Debtors have tapped Greenberg Traurig, LLP, as counsel; Ernst & Young LLP to provide investment banking advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent for the Clerk of the Bankruptcy Court. An official committee of unsecured creditors has been appointed in the case and consists of LifeScan, Inc., Abbott Laboratories, and Teva Pharmaceuticals USA, Inc. They are represented by Joseph H. Huston Jr., Esq., Maria Aprile Sawczuk, Esq., and Camille C. Bent, Esq. of Stevens & Lee P.C. as well as Bruce Buechler, Esq., S. Jason Teele, Esq., and Nicole Stefanelli, Esq. of Lowenstein Sandler LLP. The Committee has tapped Mesirow Financial Consulting, LLC, as financial advisors. AUXILIUM PHARMACEUTICALS: S&P Alters 'B-' Rating Outlook to Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services said it affirmed its 'B-' corporate credit rating on Chesterbrook, Pa.-based Auxilium Pharmaceuticals Inc. and revised the outlook to stable from positive. S&P also affirmed the 'B' issue-level rating on the company's term loan facility, which includes a $50 million add-on. The recovery rating remains '2', indicating expectations for substantial (70%-90%) recovery of principal in the event of a payment default. "The ratings on Auxilium Pharmaceuticals Inc. continue to reflect its "vulnerable" business risk profile and "highly leveraged" financial risk profile. Key credit factors considered in our business risk assessment include its reliance on Testim for a sizeable portion of revenues, limited growth potential, and heavy dependence on the testosterone replacement therapy (TRT) market, which is facing increased competition from major pharmaceutical companies," said credit analyst John Babcock. "The company's limited product pipeline and low profitability compared with its peers further support our view. Auxilium's financial risk profile predominantly reflects its highly leveraged capital structure." S&P's stable outlook reflects its belief that slower-than- anticipated revenue expansion will result in a debt-to-EBITDA ratio above 5x for the foreseeable future. This incorporates S&P's expectation for 20% revenue growth in 2013, driven primarily by the acquisition of Actient, and a relatively flat adjusted EBITDA margin. S&P could raise the corporate credit rating to 'B' if the company's debt-to-EBITDA ratio declines below 5x and its funds from operations-to-debt ratio climbs sustainably above 12%. S&P estimates this would occur if the company generates about $130 million in EBITDA. This would require a combination of strong double-digit revenue growth and significant margin expansion, which we believe would be difficult to achieve with its current product mix. While unlikely, S&P could lower our rating on Auxilium if the company's financial performance deteriorates significantly, thereby raising the risk of a default within the next 12 months. S&P estimates this would require a steep decline in earnings that would drive increasing cash flow deficits and impair its liquidity, consequently questioning its ability to service its debt obligations. BERNARD L. MADOFF: District Judge Rakoff Sitting as Appeals Judge ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Jed Rakoff found himself in the position of writing an appeals court opinion in a case over Bernard Madoff's fraud that in substance tells him how to rule in another Madoff case he's hearing as a district judge. Both cases involve the liquidation of Bernard L. Madoff Investment Securities Inc., the biggest U.S. Ponzi scheme. "Why did he ever get himself in this situation?" asked Stephen Lubben, a professor at Seton Hall University School of Law in Newark, New Jersey. According to the report, Judge Rakoff was selected by the U.S. Court of Appeals in Manhattan to sit by designation on a three- judge panel to review a federal district judge's dismissal of a lawsuit against JPMorgan Chase & Co. and Bank of New York Mellon Corp. The suit was filed by investors in feeder funds that in turn invested with Madoff. The report notes that the investors sued the two banks, contending they were aware of Madoff's fraud and should be liable because they continued providing banking services. The district court dismissed the suits, citing the 1998 Securities Litigation Uniform Standards Act, or SLUSA. The report relates that meanwhile, Judge Rakoff had taken over several lawsuits from bankruptcy court where Irving Picard, the Madoff trustee, is suing feeder funds and their managers. In Judge Rakoff's court, the defendants sought dismissal under SLUSA. Judge Rakoff, who heard arguments on Oct. 15, hasn't issued a decision. Sitting on the appeals court, Judge Rakoff said in his Sept. 16 opinion that SLUSA is in a succession of federal laws adopted to "combat abusive and extortionate securities class actions." The report relays that upholding dismissal, he said it didn't matter that feeder fund customers made no claim to having securities fraud claims. Nor did it matter that Madoff never actually purchased any securities, Judge Rakoff said. Opposing dismissal, Mr. Picard made much same arguments in district court that Judge Rakoff rejected in this week's appeal. Amanda Remus, the spokeswoman for Mr. Picard, declined to comment on the cases. According to the report, sitting as a district judge and an appeals court judge in cases involving such similar issues is "technically OK," according to Nancy B. Rapoport, a professor at the University of Nevada Las Vegas William S. Boyd School of Law. Still, hearing the issue in two courts is a bad idea because it "makes the system look rigged," said Ms. Rapoport, an expert on bankruptcy ethics. It's a "strange situation," Mr. Lubben said in a phone interview, according to Bloomberg. "Why would you set up this situation when there are all of these other district judges you could have had on the circuit court?" The report notes that Mr. Lubben said U.S. Supreme Court Chief Justice John Roberts recused himself from a case because he had been one of the judges when it was in the court of appeals. At least one person familiar with the Madoff litigation, who asked not to be identified by name while the matters are pending, said the two cases are totally different. By writing the opinion in the circuit court, Judge Rakoff might be seen as controlling how he will rule in Mr. Picard's case because appeals court decisions are binding on district courts, assuming the cases aren't different. The report relates that if Mr. Picard loses and appeals, another three-judge panel on the circuit court can't deviate from Judge Rakoff's opinion this week. Consequently, Mr. Picard's only hope for success on the SLUSA question may lie in having the issue considered by all of the active judges on the appeals court, who together have power to set aside a decision by a three-judge panel. The appeal in the circuit court is Trezziova v. Kohn (In re Herald, Primeo, and Thema), 12-156, U.S. Court of Appeals for the Second Circuit (New York). The issue before Judge Rakoff in the Madoff case is In re Bernard L. Madoff Investment Securities LLC, 12-mc-00115, U.S. District Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has paid about 58 percent of customer claims totaling $17.3 billion. The most recent distribution was in March 2013. Mr. Picard has collected about $9.35 billion, not including an additional $2.2 billion that was forfeit to the government and likewise will go to customers. He is holding almost $4.4 billion he can't distribute on account of outstanding appeals and disputes. The largest holdback, almost $2.8 billion, results from disputed claims. BERNARD L. MADOFF: Collecting $97.8 Million Settlement ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating Bernard L. Madoff Investment Securities Inc. will recover almost $100 million for defrauded customers as the result of a settlement approved by the U.S. Bankruptcy Court in New York. According to the report, Madoff trustee Irving Picard sued Sandra Manzke, family members and her Maxam Capital Management LLC for $97.8 million they received from Madoff within two years of bankruptcy. In the settlement, Mr. Picard gave up nothing. Ms. Manzke and Maxam filed a claim for $215.3 million, representing cash they invested with Madoff, less what they managed to take out before bankruptcy. Mr. Picard contended that the only purpose of the Maxam funds was to invest with Madoff. The report notes that Manzke and Maxam had the lawsuit moved to federal district court, where they attempted unsuccessfully to have the case dismissed, contending they hadn't shown "willful blindness" to Madoff's fraud. After the district judge laid down the ground rules for the suit, he returned it to bankruptcy court. The Manzke defendants agreed to pay back the $97.8 million in full by using distributions they would have received on their customer claim. In return Mr. Picard approved their customer claim for the $215.3 million. The report relates that on repaying the $97.8 million, the Manzke defendants could have claimed that amount as an addition to the customer claim. Instead, the settlement gives them a total customer claim of $276.7 million, which is less than they might have received. The approved claim will be paid like all other customer claims. The one objection to the settlement was withdrawn. The Madoff firm began liquidating in December 2008 with appointment of Mr. Picard as trustee under the Securities Investor Protection Act. From recoveries in lawsuits coupled with money advanced by the Securities Investor Protection Corp., Mr. Picard has paid 53 percent of customers' claims totaling $17.3 billion. The lawsuit being settled is Picard v. Maxam Absolute Return Fund LP (In re Bernard L. Madoff Investment Securities LLC), 10-05342, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has paid about 58 percent of customer claims totaling $17.3 billion. The most recent distribution was in March 2013. Mr. Picard has collected about $9.35 billion, not including an additional $2.2 billion that was forfeit to the government and likewise will go to customers. He is holding almost $4.4 billion he can't distribute on account of outstanding appeals and disputes. The largest holdback, almost $2.8 billion, results from disputed claims. BERNARD L. MADOFF: Other Executives Could Face Charges ------------------------------------------------------ Peter Lattman, writing for The New York Times' DealBook, reported that with federal prosecutors in Manhattan facing a December deadline to bring additional charges connected to Bernard L. Madoff's multibillion-dollar Ponzi scheme, they are weighing criminal charges against several people connected to the case, said people briefed on the investigation. Among those still under scrutiny are Shana Madoff Swanson, a senior executive at the firm, and Paul J. Konigsberg, a longtime accountant in Mr. Madoff's inner circle. According to the report, investigators have examined several dozen people related to the case. Including Mr. Madoff, who is serving a 150-year prison sentence, nine have pleaded guilty. When Mr. Madoff confessed in December 2008, that started the clock ticking on a five-year statute of limitations to bring securities fraud charges. Any new charges would come just weeks before the first criminal trial related to the Madoff case, the report related. On Oct. 7, five former employees of Bernard L. Madoff Investment Securities are scheduled to stand trial in Federal District Court in Manhattan on charges they aided the fraud. Each of the five employees -- Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O'Hara and George Perez -- worked at the firm for more than 15 years. The trial is likely to last several months, and the defendants are expected to argue that they had no idea their boss was a crook, the report further related. "My client was manipulated and deceived by Mr. Madoff and has lost every penny she ever earned at Bernard L. Madoff Investment Securities, and as a result is as much a victim as anyone else in this case," said Roland G. Riopelle, a lawyer for Ms. Bongiorno, a longtime secretary for Mr. Madoff, the report added. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has paid about 58 percent of customer claims totaling $17.3 billion. The most recent distribution was in March 2013. Mr. Picard has collected about $9.35 billion, not including an additional $2.2 billion that was forfeit to the government and likewise will go to customers. Picard is holding almost $4.4 billion he can't distribute on account of outstanding appeals and disputes. The largest holdback, almost $2.8 billion, results from disputed claims. BERRY PLASTICS: CEO Issues Remarks on Near-Term Outlook ------------------------------------------------------- Berry Plastics Group, Inc.'s senior management provided an update on the Company's strategic initiatives, near-term outlook, financial performance and new product innovations. "Despite a soft demand environment, Berry's financial performance since 2010 has improved significantly as a result of our focused execution on a number of important initiatives," said Jonathan D. Rich, chief executive officer of Berry Plastics. "From 2010 until the end of 2011 we withdrew from certain chronically low profitable segments, while taking pricing action to appropriately reflect the value that our products were adding to our customers. These steps reduced our top line but allowed us to increase margins by about 5%. Since 2010, we also significantly increased our productivity, redesigned our products for material efficiency, and undertook a number of value creating acquisitions that had substantial synergies, all of which allowed us to continue to grow our margins and bottom line despite ongoing weakness in consumer spending." "As we close out 2013 and look forward to 2014, we will take the appropriate steps to further strengthen what we believe is our already industry leading cost position and maximize cash flow generation. While taking these steps we will also continue to make the investments required to succeed in our strategic objectives, including investments in R&D and marketing for new products, expansion in our targeted overseas growth projects and continuing to identify and execute on accretive acquisitions that will increase shareholder value." A copy of the Company's CEO's remarks is available for free at: http://is.gd/pPLuUV About Berry Plastics Berry Plastics Corporation manufactures and markets plastic packaging products, plastic film products, specialty adhesives and coated products. At Jan. 2, 2010, the Company had more than 80 production and manufacturing facilities, primarily located in the United States. Berry is a wholly-owned subsidiary of Berry Plastics Group, Inc. Berry Group is primarily owned by affiliates of Apollo Management, L.P., and Graham Partners. Berry, through its wholly owned subsidiaries operates five reporting segments: Rigid Open Top, Rigid Closed Top, Flexible Films, Tapes/Coatings and Specialty Films. The Company's customers are located principally throughout the United States, without significant concentration in any one region or with any one customer. On Dec. 3, 2009, Berry Plastics obtained control of 100 percent of the capital stock of Pliant upon Pliant's emergence from reorganization pursuant to a proceeding under Chapter 11 for a purchase price of $602.7 million. Pliant is a leading manufacturer of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. The acquired business is primarily operated in Berry's Specialty Films reporting segment. As of June 29, 2013, the Company had $5.04 billion in total assets, $5.29 billion in total liabilities and a $251 million total stockholders' deficit. * * * As reported by the TCR on Feb. 1, 2013, Moody's Investors Service upgraded the corporate family rating of Berry Plastics to B2 from B3 and the probability of default rating to B2-PD from B3-PD. The upgrade of the corporate family rating to B2 from B3 reflects the improvement in pro-forma credit metrics and management's publicly stated goal to pursue a less aggressive, more balanced financial profile. In November 2011, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on Berry and its holding company parent, Berry Plastics Group Inc. "The ratings on Berry reflect the risks associated with the company's highly leveraged financial profile and acquisition- driven growth strategy as well as its fair business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. In November 2011, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on Berry and its holding company parent, Berry Plastics Group Inc. "The ratings on Berry reflect the risks associated with the company's highly leveraged financial profile and acquisition- driven growth strategy as well as its fair business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. BIONOL CLEARFIELD: Lenders Decry Bondholders' Distribution Hopes ---------------------------------------------------------------- Law360 reported that OppenheimerFunds Inc., which bought bonds in a now-bankrupt Pennsylvania ethanol plant, can't sue the project's lenders over debt repayment priority on a $200 million financing arrangement just because it didn't do its own homework, the lenders' attorneys told a New York state judge on Sept. 17. According to the report, OppenheimerFunds bought $65 million in bonds on the project, while a group of six lenders provided the rest of money in more-senior financing. Bionol Clearfield filed for Chapter 7 liquidation (Bankr. D. Del. Case No. 11-12301) in July 2011. The Company estimated assets between $50 million and $100 million and liabilities between $100 million and $500 million. The Company owned a plant that produces bio-based chemicals and fuels from renewable feedstock. BROOKLYN CENTER: Moody's Affirms Ba3 Rating on $31MM GO Debt ------------------------------------------------------------ Moody's Investors Service has affirmed the Ba3 rating on Brooklyn Center Independent School District (ISD) 286's (MN) outstanding general obligation (GO) debt. The outlook remains negative. The district has $31.1 million of outstanding GO debt. The district's GO bonds are secured by its unlimited tax pledge. Ratings Rationale: The Ba3 rating reflects the district's long-term trend of operating shortfalls and deficit General Fund position as well as its heavy reliance on cash flow borrowing to finance operations. The Ba3 rating further incorporates the district's modest tax base that has experienced significant valuation declines, below average demographic profile, and elevated debt burden. The negative outlook reflects the prolonged nature of the district's deficit position and its history of poor budget management practices, both of which suggest that the district's financial position is unlikely to improve significantly in the near term. Strengths - Favorable location in Twin Cities metropolitan area - Expenditure reductions contributing to positive fiscal 2012 operating results - Recent improvement in timeliness of state aid disbursements to Minnesota school districts - The State of Minnesota (Aa1/stable outlook) provides some oversight to school districts in Statutory Operating Debt (SOD), including Brooklyn Center ISD 286 - Growing enrollment that factors favorably into the state aid formula Challenges - Long-term trend of operating shortfalls resulting in a prolonged deficit General Fund balance position - Lack of voter support for excess operating levies - Heavy reliance on cash flow borrowing for operations - Declining tax base valuations - High debt burden Outlook The negative outlook reflects the prolonged nature of the district's deficit position and its history of poor budget management practices, both of which suggest that the district's financial position is unlikely to improve significantly in the near term. What Could Move the Rating Up (Removal of negative outlook) - Ongoing operating surpluses that leads to material improvement in the district's General Fund position - Significant growth in the district's tax base coupled with strengthening of the district's socio-economic indices - Material reduction in the district's debt burden What Could Move the Rating Down - Continuation of operating deficits resulting in further financial deterioration - Emergence of enrollment declines placing pressure on district revenues - Further declines in tax base valuation - Growth in the district's debt burden The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. CAESARS ENTERTAINMENT: Fitch to Rate $1.35 Billion Notes at 'CCC' ----------------------------------------------------------------- Fitch Ratings expects to assign a 'B+/RR2' rating to Caesars Entertainment Resort Properties, LLC's (CERP) proposed $3.27 billion senior secured first-lien credit facility and $500 million first-lien notes and a 'CCC/RR6' rating to CERP's proposed $1.35 billion in second-lien notes. Fitch has assigned an initial 'B-' Issuer Default Rating (IDR) to CERP. Fitch has also affirmed the IDRs of Caesars Entertainment Corp. (CEC; Caesars, the parent) and Caesars Entertainment Operating Company (CEOC) at 'CCC' and affirms all other related ratings. CERP's credit facility will consist of a $3 billion term loan and a $269.5 million revolver. The facility, the first-lien notes and the second-lien notes will be guaranteed and secured by Rio, Flamingo, Paris and Harrah's casino resorts in Las Vegas, Harrah's in Laughlin, NV, and Harrah's in Atlantic City, NJ as well as the Octavius Tower and Project Linq assets (together Linq/Octavius). Linq/Octavius will be transferred from CEOC by Caesars. The Octavius Tower includes 602 rooms, 60 suites and six luxury villas and is part of the Caesars Palace complex, which is part of CEOC. Project Linq includes a 550-foot observation wheel (High Roller), over 260,000 square feet of retail space (some will be leased by other CERP entities) and a redeveloped O'Sheas casino. CEOC will lease Octavius Tower and the O'Sheas casino from CERP for $35 million and $15 million, respectively. Octavius Tower opened in January 2012 and Project Linq will open in phases from late 2013 to early 2014. CERP will use the proceeds from the proposed financing to repurchase approximately $4.4 billion in outstanding debt at the PropCo and refinance the $450 million term loan used to fund Linq/Octavius. Caesars will pay 99% of par for $3.67 billion in outstanding PropCo mortgage notes and 90% of par for $719 million in outstanding mezzanine notes. The repurchases are conditioned upon the acceptance by lenders holding at least 65% of the outstanding aggregate principal amount of the mortgage loans (63% accepted as of Sept. 17, 2013) and 85% of the outstanding aggregate principal amount of the mezzanine loans (84% accepted). CERP Rating Drivers CERP's 'B-' IDR reflects Fitch's expectation that pro forma for the transactions and the opening of the Linq components CERP will have sustainable leverage and FCF profiles. The IDR also factors in CERP's relationship with CEC and CEOC. CERP's positive FCF will allow for modest deleveraging over the near-to-medium term. Liquidity will be solid with a $269.5 million undrawn revolver and no maturities until 2020, when the first-lien debt matures. The second-lien notes will mature 2021. In its base case, Fitch projects CERP's leverage at year-end 2014 and FCF for 2014 at 8.9 times (x) and approximately $75 million, respectively. Fitch's forecasted property EBITDA for 2014 of $627 million includes the following projections: -- $440 million of EBITDA generated by the existing PropCo Las Vegas casinos (70% of EBITDA); -- $76 million generated by Harrah's Atlantic City (12% of EBITDA); -- $42 million generated by Harrah's Laughlin (7% of EBITDA); and -- $69 million generated by Linq/Octavius, which includes $50 million in lease payments from CEOC and $19 million capturing three-quarters of the High Roller and retail operations (together 11% of EBITDA). Fitch's FCF forecast for 2014 takes into account approximately $90 million of corporate expenses, $365 million of interest expense and $100 million in capital expenditures. The corporate expense assumption takes into account a management fee structure similar to the one that is in place at the PropCo; however, terms of the management fee, if there will be one, are not yet determined. The capital expenditures include the final costs associated with Linq and should moderate to around $60 million in the outer years. Leverage and FCF under Fitch's base case forecast improves in 2016 to 8.3x and $160 million, respectively. The improvements reflect annual EBITDA growth of about 2% (Las Vegas growth and ramp-up of Linq offset by Atlantic City weakness), decline in annual capital expenditures and a modest reduction in interest expense. CERP'S Relationship With CEC And CEOC CERP's 'B-' IDR is supported by Fitch's expectations that the restricted payment covenants in CERP's credit agreement will be restrictive and would guard CERP creditors against attempts by CEC to extract value out of CERP and against a potential default at CEOC. Fitch may revisit the ratings if the restricted payment covenants are looser than Fitch's current expectations. Regardless of the restrictive payment covenants in place, CERP's ownership by CEC, which guarantees the debt at the highly leveraged and FCF-negative CEOC, is a key credit risk and will pressure CERP's IDR. Positive rating pressure on CERP will be constrained by CEC's ownership and an upgrade is unlikely while there is a heightened probability of default at CEOC. There is also uncertainty with respect to the Linq/Octavius lease payments (about 8% of CERP's EBITDA) from CEOC to CERP if CEOC defaults. Fitch believes that in an event CEOC defaults the leases would be affirmed given their strategic importance to CEOC, but there is good likelihood that the lease terms will be renegotiated at lesser terms. However, if the leases were rejected, CERP could either monetize the assets or operate the assets itself, albeit possibly at less profit relative to the existing lease terms. CERP Recovery Considerations The 'B+/RR2' rating assigned to the credit facility reflects Fitch's recovery expectation in an event of default in 71%-90% range and the 'CCC/RR6' on the second-lien notes reflects Fitch's expectation of minimal recovery. The recovery analysis takes into account Fitch's stressed enterprise value estimate of $3.1 billion, and standard assumptions including a 10% of EV assumption for administrative claims equal to 10% of EV, and an assumption that the $269.5 million revolver is fully drawn at the time of default. The EV calculation assigns multiples in the range of 6.0x for Harrah's Laughlin to 7.5x for Paris and assumes EBITDA stresses of 15%-20% on LTM EBITDAs. Fitch estimates a stressed EV value of roughly $360 million for Linq/Octavius. CERP Rating Sensitivities As mentioned above positive rating action is largely precluded with respect to CERP's IDR as long as CEOC's credit profile remains weak. A debt restructuring at CEOC that leaves CEOC financially healthier or not part of the CEC consolidated group could allow for CERP's IDR to move higher within the 'B' category to the extent CERP's stand-alone financial profile improves. CERP's gross leverage migrating towards 7x could a catalyst for an upgrade to 'B' IDR assuming the CEOC overhang is addressed. However, Fitch expects leverage to remain above 8x through its projection horizon (2016). Fitch would consider downgrading CERP or revising its Outlook to Negative if Fitch has reason to believe that CEC has ample flexibility to extract value out of CERP beyond what would be reasonably expected under standard restrictive payment covenant terms. Also leverage remaining above 9x for an extended period, especially closer to CERP's maturities, and/or FCF declining close to zero could precipitate negative rating action. CEOC Rating Drivers The CERP transactions are viewed neutrally from CEOC's credit point of view. On the positive side, the PropCo refinancing leaves CEC's interest in the interactive business untouched. Fitch previously alluded to the risk that CEC may contribute a share of the interactive assets to the PropCo as part of a refinancing or a restructuring at the PropCo. This could have diluted CEOC's recovery prospects since CEC guarantees CEOC debt and could possibly be required to contribute to CEOC creditors a potion or CEC's entire stake in the interactive business in an event of a default at CEOC. Negatively, the PropCo debt refinancing is likely to leave CEC with less flexibility in terms of extracting cash out of the PropCo assets, which in turn reduces the amount of ongoing support CEC may lend to CEOC. However, previously CEC used PropCo cash flows and management fees to repurchase CMBS debt at the PropCo and Fitch was not heavily factoring the support from the PropCo in the CEOC credit analysis. CEOC's 'CCC' IDR with a Negative Outlook reflects CEOC's negative FCF and the associated heightened risk of a default. Fitch projects $1.2 billion in negative FCF at CEOC for 2013 and negative $800 million for 2014. Fitch's estimate for 2013 FCF includes $1.35 billion in EBITDA, $1.9 billion in interest expense and $650 million in capital expenditures not being funded with debt. In 2014, FCF improvement largely reflects reduction in capital expenditures, which Fitch estimates at $250 million, and modest same-store EBITDA growth. The lower capital spending is offset by the loss of Plant Hollywood Las Vegas, which is being sold to Caesars Growth Properties (CGP) along with other CEOC assets for $360 million. Pro forma for the sale of Planet Hollywood and the Macau land, which is expected to generate additional $420 million in proceeds, Fitch estimates CEOC's excess cash at $1.8 billion as of June 30, 2013. This is net of cage cash, which Fitch estimates at $350 million. Fitch does not count CEOC's revolver in the liquidity calculation since the extended portions is just adequate to support CEOC's outstanding letters of credit. Taking into account the cash burn discussed above and $1 billion in maturities coming due in 2015 (includes $427 million related to notes held by Harrah's BC, Inc.), Fitch projects CEOC's liquidity running out sometime in 2015. In 2016, outside of first lien debt, CEOC has $1.05 billion in unsecured debt coming due ($324 million held by Harrah's BC, Inc.). CEOC will have to rely on its remaining first lien capacity (credit facility has a $1.15 billion accordion), intercompany cash infusions from CEC, or possibly additional asset sales to meet these maturities. CGP Takeaway The CGP transaction reduces the potential willingness and/or ability of CEC and the sponsors to provide support CEOC, if executed as contemplated. Additionally, the transaction weakens the long-term standalone credit profile of CEOC, thereby increasing CEOC's reliance on such support to maintain solvency. The primary considerations that lead Fitch to this view include: -- The transaction could effectively insulate 23% - 43% of the value of the CGP entity against a potential default at CEOC. CEC guarantees CEOC's debt and if the guarantee were called on by CEOC creditors, Fitch believes that CEC would be required to use all of its available assets to perform under the guarantee. With the transaction finalized, CEC and the sponsors may have less incentive to support CEOC if they view CEOC as insolvent knowing that they will retain at least a 23% economic stake in CGP assets. -- Caesars Acquisition Corp. (CAC), the holding company that will facilitate sponsors' and participating stockholders' investment in CGP, will have 100% voting rights in CGP. CAC will likely opt to maintain cash at CGP versus paying dividends as indicated in CAC's S-1 filing. -- CGP liquidation provisions benefit CAC over CEC. CAC may elect to liquidate CGP after five years of the transaction being finalized. Upon liquidation, CAC would be entitled to receive its contributed share plus a 10.5% annual rate of return on assets contributed ($500 million - $1.2 billion) before CEC receives anything. -- Positively, the transaction will inject $500 million - $1.2 billion into the overall enterprise. However, the capital infusion comes at the expense of diluting CEC's ownership in CGP's assets and the investment return hurdle rate of 10.5% is very high. Therefore, CGP needs to reflect superior growth in order to materially benefit CEC directly and CEOC indirectly. CEOC Recovery Considerations Fitch's 'RR3' Recovery Rating on first lien debt implies an expected recovery at the high end range of the 51%-70% range for 'RR3'. This is based on admittedly cautious assumptions: zero value for CEOC's 'other' segment and CEC guarantee, 7.0x blended EBITDA multiple, 10% of EV for administrative claims, and 0% EBITDA growth. But with CEOC being roughly 9x leveraged through the first lien (excluding non-guarantor subsidiary debt and EBITDA), strong recovery is far from certain, especially taking into account CEOC's aging facilities and exposure to competitive regional markets. CEOC Rating Sensitivities Fitch may downgrade CEOC's IDR to 'CC' or lower if a default of some kind seems more imminent. Potential triggers may include near depletion of liquidity, a maturity becoming current on CEOC's financial statements, CEOC soliciting a debt exchange program, or CEC engaging financial advisors regarding its financial position. CEOC violating its 4.75x senior secured net leverage maintenance covenant could also be a downgrade driver. As of June 30, 2013 CEOC's financial covenant was at 4.33x, providing a 9% cushion. An upgrade is unlikely in the near to medium term, as Fitch sees no clear path to a sustainable FCF profile outside of the top-line growth trends tracking well above Fitch's base case scenario. Federal legalization of online poker would be viewed positively, though the immediate effect on cash flow is unclear. Also, Caesars' online gaming subsidiary (Caesars Interactive) is outside of CEOC and online gaming is progressing at the state rather than federal level. Chester Downs Rating Drivers The Negative Outlook on Chester Down and Marina, LLC's (Chester Downs, dba Harrah's Philadelphia) 'B-' IDR reflects continued negative gaming revenue trends in the Philadelphia market and Fitch's expectation of increased competition in the area once a second a casino opens within the city of Philadelphia. The IDR and the Negative Outlook also reflect Chester Downs' 99.5% ownership by CEOC, which has capacity to extract cash out of Chester Downs. Chester Down's restricted payment covenant is somewhat relaxed with the restricted payment basket based on EBITDA minus 1.4x interest expense. Despite market wide gaming revenue declines, Chester Downs managed to stabilize its EBITDA through cost containment measures. Leverage and LTM FCF as of June 30, 2013 are commensurate with 'B- ' IDR and provide some cushion against additional market weakness and potential future competition. Chester Downs also has grown its cash balance, which can potentially be used to redeem notes in anticipation of a competing facility opening around 2016/2017 timeframe. However, Fitch believes it is likely that CEOC will pull all or most of the cash out that is permitted under the covenants given CEOC's liquidity needs and the relaxed restricted payment covenants discussed above. Chester Downs Recovery Consideration The 'BB-/RR1' rating on Chester Downs' $330 million in senior secured notes reflects Fitch's expectation of better than 90% recovery in an event of default. Chester Downs Rating Sensitivities Fitch could potentially revise Chester Down's Outlook to Stable if Chester Down's revenues stabilize and/or Chester Downs uses cash on hand to redeem notes outstanding. Alternatively, Fitch may downgrade Chester Downs' IDR to 'CCC' if top line continues to get pressured and/or financial cushion deteriorates to a point that Fitch's base case projections after incorporating the new casino in Philadelphia would point to negative FCF. Pennsylvania's gaming regulator is currently reviewing six gaming applications for Philadelphia's second gaming license. Applicants include companies associated with or owned by Wynn Resorts, Mohegan Tribal Gaming Authority, Isle of Capri and Penn National. Fitch expects SugarHouse to be most affected when a second Philadelphia license opens; however, Fitch believes that Harrah's Philadelphia, located about 20 miles south from downtown will also be affected, but to a lesser degree. Factors Fitch is weighting with respect to potential rating action related to the license include the timing of license being awarded, the scale and location of the development and Chester Down's financial profile at the time the license is awarded. The longer than expected duration of bidding process for the Philadelphia license is a positive credit factor for Chester Downs. The process is being extended by a lawsuit filed by the owners of SugarHouse casino. Fitch assigns the following ratings: Caesars Entertainment Resort Properties, LLC -- IDR 'B-'; Outlook Stable; -- Senior secured first-lien credit facility 'B+/RR2'; -- First-lien notes 'B+/RR2'; -- Second-lien notes 'CCC/RR6'; Fitch affirms the following ratings: Caesars Entertainment Corp. -- Long-term IDR at 'CCC'; Outlook Negative. Caesars Entertainment Operating Co. -- Long-term IDR at 'CCC'; Outlook Negative; -- Senior secured first-lien revolving credit facility and term loans at 'CCC+/RR3'; -- Senior secured first-lien notes at 'CCC+/RR3'; -- Senior secured second-lien notes at 'CC/RR6'; -- Senior unsecured notes with subsidiary guarantees at 'CC/RR6'; -- Senior unsecured notes without subsidiary guarantees at 'C/RR6'. Chester Downs and Marina LLC (and Chester Downs Finance Corp as co-issuer) -- Long-term IDR at 'B-'; Outlook Negative; -- Senior secured notes at 'BB-/RR1'. Caesars Linq, LLC & Caesars Octavius, LLC -- Long-term IDR at 'CCC'; Outlook Negative; -- Senior secured credit facility at 'CCC+/RR3'; Corner Investment PropCo, LLC -- Long-term IDR at 'CCC'; -- Senior secured credit facility at 'B-/RR2'. CAPITOL BANCORP: Motion to Unseal Filed --------------------------------------- BankruptcyData reported that G3 Properties, filed with the U.S. Bankruptcy Court a motion to unseal Capitol Bancorp's official committee of unsecured creditors' previously-filed motion for an order: (1) appointing a chief restructuring officer to manage the Debtors, pursuant to 11 U.S.C. Sections 105(a) and 1107(a), or, (2) in the alternative, appointing a Chapter 11 trustee, pursuant to 11 U.S.C. Section 1104(a). The motion explains, "The Investors are significant creditors of CBC, as they hold direct claims in the aggregate amount of approximately $2.9 million. The Investors are concerned with the Debtors' proposed plan, which the Investors view as un-confirmable for various reasons. It would be premature to raise legal objections to the Debtors' proposed plan in this Motion. However, the Debtors' proposed plan does not provide for any meaningful distribution to the Investors, who are concerned that the Debtors are not proposing to maximize their estates for the benefit of creditors. The Investors thus seek access to the CRO Motion to better understand what claims, and potential resulting proceeds, are available to the estates to ensure that the Investors receive a maximum distribution. The Investors have already agreed to, and continued to be bound by, the Protective Order. The Investors represent to this Court that in the event that the relief requested herein is granted, they will continue to adhere to, and abide by, the Protective Order as if such order was entered by this Court, or would be willing to enter into a separate confidentiality agreement with reasonable terms." 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. CASA CASUARINA: Miami Beach's Versace Mansion Sold to Jordache -------------------------------------------------------------- The former Versace Mansion on Ocean Drive in Miami Beach, Florida, was sold at a bankruptcy auction Sept. 17 for $41.5 million to a group including the owners of Jordache Enterprises Inc. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Jordache group bested the $41 million offer from real estate developer Donald Trump. The winning bidder, VM South Beach LLC, owns a $34.5 million secured claim and is thus entitled to pay part of the purchase price by surrendering the mortgage debt. VM includes the Nakash family, which owns the Hotel Victor next door. VM acquired the mortgage from the prior lender. According to Law360, VM South Beach LLC beat out two bidders, including Donald Trump, for the famed villa on Ocean Drive, which had been listed at $75 million before its owner filed for Chapter 11 bankruptcy. About Casa Casuarina Casa Casuarina, LLC, owner of Gianni Versace's former South Beach mansion on Ocean Drive in Miami Beach, Florida, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 13-25645) in Miami on July 1, 2013. Peter Loftin signed the petition as manager. Judge Laurel M. Isicoff presides over the case. The Debtor estimated assets of at least $50 million and debts of at lease $10 million. Joe M. Grant, Esq., at Marshall Socarras Grant, P.L., serves as the Debtor's counsel. Until his Ponzi scheme fell apart in 2009, Scott Rothstein had controlled the company that owned the property. Herbert Stettin is the Chapter 11 trustee for Rothstein's law firm Rothstein Rosenfeldt Adler PA, which has been in Chapter 11 liquidation since November 2009. Before Casa Casuarina filed bankruptcy, Mr. Stettin had reached agreement to settle his claim to partial ownership. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA -- http://www.rra-law.com/-- was suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed Nov. 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non- existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on Jan. 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. The official committee of unsecured creditors appointed in the case is represented by Michael Goldberg, Esq., at Akerman Senterfitt. RRA won approval of an amended liquidating Chapter 11 plan pursuant to the Court's July 17, 2013 confirmation order. The revised plan, filed in May, is centered around a $72.4 million settlement payment from TD Bank NA. CENGAGE LEARNING: Committee Can Retain Arent Fox as Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York has granted the Official Committee of Unsecured Creditors of Cengage Learning, Inc., et al., authorization to retain Arent Fox LLP as the Committee's bankruptcy counsel, nunc pro tunc to July 10, 2013. As reported in the TCR on Aug. 13, 2013, Arent Fox will be paid at these hourly rates: Partners $550 - $940 Of Counsel $540 - $850 Associates $305 - $585 Paraprofessionals $165 - $300 The firm will also be reimbursed for any necessary out-of-pocket expenses. About Cengage Learning Stamford, Connecticut-based Cengage Learning -- http://www.cengage.com/-- provides innovative teaching, learning and research solutions for the academic, professional and library markets worldwide. Cengage Learning's brands include Brooks/Cole, Course Technology, Delmar, Gale, Heinle, South Western and Wadsworth, among others. Apax Partners LLP bought Cengage in 2007 from Thomson Reuters Corp. in a $7.75 billion transaction. The acquisition was funded in part with $5.6 billion in new debt financing. Cengage Learning Inc. filed a petition for Chapter 11 reorganization (Bankr. E.D.N.Y. Case No. 13-bk-44106) on July 2, 2013, in Brooklyn, New York, after signing an agreement where holders of $2 billion in first-lien debt agree to support a reorganization plan. The plan will eliminate more than $4 billion of $5.8 billion in debt. First-lien lenders who signed the so-called plan-support agreement include funds affiliated with BlackRock Inc., Franklin Mutual Adviser LLC, KKR & Co. and Oaktree Capital Management LP. Second- lien creditors and holders of unsecured notes aren't part of the agreement. The Debtors have tapped Kirkland & Ellis LLP as counsel, Lazard Freres & CO. LLC as financial advisor, Alvarez & Marsal North America, LLC, as restructuring advisor, and Donlin, Recano & Company, Inc., as claims and notice agent. A nine-member official committee of unsecured creditors has been appointed in the Debtors' Chapter 11 cases. Arent Fox LLP is the proposed counsel for the Committee. FTI Consulting, Inc., serves as financial advisor to the Committee. Moelis & Company LLC serves as investment banker to the Committee. CENGAGE LEARNING: Court Sets Oct. 31 Bar Date for Proofs of Claim ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York has established Oct. 31, 2013, at 5:00 p.m. as the Bar Date for the filing of proofs of claim against Cengage Learning, Inc., et al., which arose prior to the filing of the Debtors' Chapter 11 petitions on July 2, 2013. Proofs of claim filed by governmental units must be filed by not later than 5:00 p.m. on Dec. 30, 2013. About Cengage Learning Stamford, Connecticut-based Cengage Learning -- http://www.cengage.com/-- provides innovative teaching, learning and research solutions for the academic, professional and library markets worldwide. Cengage Learning's brands include Brooks/Cole, Course Technology, Delmar, Gale, Heinle, South Western and Wadsworth, among others. Apax Partners LLP bought Cengage in 2007 from Thomson Reuters Corp. in a $7.75 billion transaction. The acquisition was funded in part with $5.6 billion in new debt financing. Cengage Learning Inc. filed a petition for Chapter 11 reorganization (Bankr. E.D.N.Y. Case No. 13-bk-44106) on July 2, 2013, in Brooklyn, New York, after signing an agreement where holders of $2 billion in first-lien debt agree to support a reorganization plan. The plan will eliminate more than $4 billion of $5.8 billion in debt. First-lien lenders who signed the so-called plan-support agreement include funds affiliated with BlackRock Inc., Franklin Mutual Adviser LLC, KKR & Co. and Oaktree Capital Management LP. Second- lien creditors and holders of unsecured notes aren't part of the agreement. The Debtors have tapped Kirkland & Ellis LLP as counsel, Lazard Freres & CO. LLC as financial advisor, Alvarez & Marsal North America, LLC, as restructuring advisor, and Donlin, Recano & Company, Inc., as claims and notice agent. CENGAGE LEARNING: Can Retain Donlin Recano as Admin. Agent ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York has authorized Cengage Learning, Inc., et al., to employ Donlin, Recano & Company as administrative agent in the Debtors' Chapter 11 cases, nunc pro tunc to Aug. 6, 2013. The Debtors are authorized to retain Donlin Recano to provide, among other things, the following bankruptcy administrative services, if and to the extent requested: a. Assist with, among other things, solicitation, balloting, and tabulation and calculation of votes, as well as preparing any appropriate reports, as required in furtherance of confirmation of plan(s) of reorganization(collectively, the "Balloting Services"); b. Generate an official ballot certification and testify, if necessary, in support of the ballot tabulation results; c. In connection with the Balloting Services, handle requests for documents from parties in interest, including, if applicable, brokerage firms and bank back-offices and institutional holders; d. Gather data in conjunction with the preparation, and assist with the preparation, of the Debtors' schedules of assets and liabilities and statements of financial affairs; e. Provide a confidential data room, if requested; f. Manage and coordinate any distributions pursuant to a confirmed plan of reorganization or otherwise; and g. Perform such other administrative services as may be requested by the Debtors that are not otherwise allowed under the Section 156(c) Order. This order will not apply to any services Donlin Recano was authorized to render pursuant to the Section 156(c) order approved by the Court. With respect to services to be provided as administrative agent for the Debtors, Donlin Recano will apply to the Court for allowances of compensation and reimbursement of reasonable and necessary out-of-pocket expenses incurred in these cases in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the E.D.N.Y. Local Bankruptcy Rules, the guidelines established by the U.S. Trustee, and any orders entered in these cases governing professional compensation and reimbursement for services rendered and charges and disbursements incurred. About Cengage Learning Stamford, Connecticut-based Cengage Learning -- http://www.cengage.com/-- provides innovative teaching, learning and research solutions for the academic, professional and library markets worldwide. Cengage Learning's brands include Brooks/Cole, Course Technology, Delmar, Gale, Heinle, South Western and Wadsworth, among others. Apax Partners LLP bought Cengage in 2007 from Thomson Reuters Corp. in a $7.75 billion transaction. The acquisition was funded in part with $5.6 billion in new debt financing. Cengage Learning Inc. filed a petition for Chapter 11 reorganization (Bankr. E.D.N.Y. Case No. 13-bk-44106) on July 2, 2013, in Brooklyn, New York, after signing an agreement where holders of $2 billion in first-lien debt agree to support a reorganization plan. The plan will eliminate more than $4 billion of $5.8 billion in debt. First-lien lenders who signed the so-called plan-support agreement include funds affiliated with BlackRock Inc., Franklin Mutual Adviser LLC, KKR & Co. and Oaktree Capital Management LP. Second- lien creditors and holders of unsecured notes aren't part of the agreement. The Debtors have tapped Kirkland & Ellis LLP as counsel, Lazard Freres & CO. LLC as financial advisor, Alvarez & Marsal North America, LLC, as restructuring advisor, and Donlin, Recano & Company, Inc., as claims and notice agent. CLUB AT SHENANDOAH: Can Access GECC Cash Collateral Until Oct. 29 ---------------------------------------------------------------- On Sept. 10, 2013, the U.S. Bankruptcy Court entered its order further continuing to Oct. 29, 2013, at 2:00 p.m., the final hearing on The Club at Shenandoah Springs Village, Inc.'s Emergency Motion for Interim and Final Orders Authorizing Use of Cash Collateral in which General Electric Capital Corporation asserts an interest. Any supplemental brief in support of the Cash Collateral Motion will be filed by the Debtor no later than Oct. 15, 2013. Any supplemental opposition to the Cash Collateral Motion will be filed no later than Oct. 22, 2013. General Electric consents to the Debtor's continued use of cash collateral for an additional period up through and including the continued Final Hearing on the Cash Collateral Motion pursuant to the terms set forth in the Cash Collateral Order entered Jan. 3, 2013, and the amended budget for September through October 2013. About The Club At Shenandoah Springs Village The Club At Shenandoah Springs Village, Inc., owns The Club At Shenandoah Springs Village, a golf and leisure resort in Thousand Palms, a desert region of central California. It filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 12-36723) on Dec. 3, 2012. The Debtor estimated both assets and liabilities of between $10 million and $50 million. Judge Mark D. Houle presides over the case. Daniel A. Lev, Esq., and Steven Worth, Esq., at SulmeyerKupetz, in Los Angeles, Calif., represent the Debtor as counsel. COMPETITIVE TECHNOLOGIES: To Issue 1.6-Mil. Shares to ASC Recap --------------------------------------------------------------- Competitive Technologies, Inc., agreed to issue approximately 1,618,235 shares of common stock, subject to adjustment, to ASC Recap LLC, in connection with the settlement of up to $2,123,605 in accounts payable of the Company, plus attorney fees and costs. In order to resolve the full Claim Amount, the Company would be required to issue additional shares to ASC from time to time. The ASC Shares were issued pursuant to an Order Approving Stipulation for Settlement of Claims between the Company and ASC entered by the Superior Court of the State of Connecticut, Judicial District of Fairfield on Aug. 22, 2013, in settlement of accounts payable of the Company purchased by ASC from creditors of the Company in the aggregate amount equal to the Claim Amount, plus fees and costs. Pursuant to the agreed Order, ASC is entitled to 200,000 shares, plus that number of shares of Common Stock that is equal to the Claim Amount and reasonable attorney fees divided by 75 percent of the volume weighted average price as reported by Bloomberg over a period of time beginning on the date on which ASC receives the ASC Shares and ending on the date on which the aggregate trading volume of the Company's common stock is equal to three times the purchase price of the shares. At no time may ASC and its affiliates collectively own more than 9.99 percent of the total number of shares of Common Stock outstanding. About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. Competitive Technologies incurred a net loss of $3 million on $546,139 of gross profit from product sales in 2012, as compared with a net loss of $3.59 million on $1.86 million of gross profit from product sales in 2011. As of June 30, 2013, the Company had $4.47 million in total assets, $9.78 million in total liabilities and a $5.31 million total shareholders' deficit. Mayer Hoffman McCann CPAs (The New York Practice of Mayer Hoffman McCann P.C.), 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 at Dec. 31, 2012, the Company has incurred operating losses since fiscal year 2006. These conditions raise substantial doubt about the Company's ability to continue as a going concern. CONFIE SEGUROS: Moody's Keeps B3 CFR Following Asset Purchase ------------------------------------------------------------- Moody's Investors Service has affirmed the B3 corporate family rating and B3-PD probability of default rating of Confie Seguros Holding II Co. following the announcement that it plans to acquire Affirmative Retail, the wholly owned distribution arm of Affirmative Insurance Holdings, Inc. (NYSE: AFFM), a nonstandard automobile insurer. Total consideration for the acquisition will be $120 million, including $100 million of cash at closing and $20 million of contingent consideration. The transaction is expected to close within the next 30 days. The rating outlook for Confie Seguros is stable. Ratings Rationale: Moody's said the ratings of Confie Seguros reflect its position as a leading broker of nonstandard auto insurance to the US Hispanic community, along with its steady growth in revenues and healthy EBITDA margins. Confie Seguros currently has over 320 stores located primarily in the West, along with some in the South and Northeast, allowing the broker to negotiate favorable contracts with various insurance carriers on behalf of its customers. These strengths are tempered by the company's high financial leverage and modest interest coverage since its leveraged buyout in November 2012. Additionally, Moody's expects that Confie Seguros will continue to pursue a combination of organic growth and acquisitions, the latter giving rise to integration and contingent risks. "The acquisition of Affirmative Retail strengthens Confie Seguros' position as a leading distributor of nonstandard auto insurance through the addition of 195 stores," said Bruce Ballentine, Moody's lead analyst for the broker. "It also adds geographic diversification, since the acquired stores are mainly in the Midwest and South," said Ballentine. Offsetting these benefits are the challenges of integrating Affirmative Retail, and the company's continued concentration in a single product line. Confie Seguros will fund the Affirmative Retail purchase through incremental borrowings under the accordion features of its existing credit facilities, adding $82.5 million to the first-lien term loan and $37.5 million to the second-lien term loan. Giving effect to these borrowings, the company's financing arrangement includes a $75 million first-lien revolving credit facility maturing in November 2017 (rated B2, undrawn at June 30, 2013), a $331 million first-lien term loan due in November 2018 (rated B2) and a $146 million second-lien term loan due in May 2019 (rated Caa2). The credit facilities are guaranteed by Confie Seguros' parent company and by substantially all of its subsidiaries. The facilities are also secured by most assets of Confie Seguros and the guarantors. Based on Moody's estimates, Confie Seguros' debt-to-EBITDA ratio will be in the range of 6.5x-7.0x immediately following the acquisitions. Such leverage is aggressive for the firm's rating category, but Moody's expects it to decline over the next 12-18 months. Factors that could lead to an upgrade of Confie Seguros' ratings include: (i) debt-to-EBITDA ratio below 5.5x, (ii) (EBITDA - capex) coverage of interest exceeding 2x, and (iii) free-cash- flow-to-debt ratio exceeding 5%. Factors that could lead to a rating downgrade include: (i) debt- to-EBITDA ratio above 8x, (ii) (EBITDA - capex) coverage of interest below 1.2x, or (ii) free-cash-flow-to-debt ratio below 2%. Moody's has affirmed the following ratings (and loss given default (LGD) assessments) with a stable outlook: Corporate family rating B3; Probability of default rating B3-PD; $75 million first-lien revolving credit facility B2 (LGD3, 34%); $331 million first-lien term loan B2 (LGD3, 34%); $146 million second-lien term loan Caa2 (LGD5, 86%) (LGD point estimate changed to 86% from 85%). The principal methodology used in this rating was Moody's Global Rating Methodology for Insurance Brokers and Service Companies published in February 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. Based in Huntington Beach, California, Confie Seguros is a leading US personal lines insurance broker primarily serving the Hispanic population. Giving effect to the Affirmative Retail acquisition, the company expects to generate yearly revenues exceeding $280 million. CONFIE SEGUROS: S&P Affirms 'B-' Counterparty Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that it has affirmed its 'B-' long-term counterparty credit rating on Confie Seguros Holding II Co. (Confie Seguros). The outlook is stable. S&P also affirmed its 'B-' rating on the company's incremental first-lien Term Loan B facility maturing November 2018, and its 'CCC' rating on the incremental senior secured second-lien term loan facility maturing May 2019. S&P is maintaining a recovery rating of '3' (meaningful recovery) on the loan, representing recovery expectations of 50% to 70% to the $330.6 million first- lien secured term loan credit facility. Concurrently, S&P is also maintaining a recovery rating of '6' to the $146.4 million second- lien secured term loan facility that provides potential debt holders a negligible recovery of between 0% and 10% upon default. The corporate credit rating on Confie Seguros reflects its highly leveraged and weak financial flexibility in respect to its adjusted fixed-charge coverage requirements and weak business risk profile," said Standard & Poor's credit analyst Marc Cohen. "The company's BRP specifically reflects our view of Confie Seguros's weak competitive position relative to larger broker peers. This is offset partly by its operating in a niche insurance line that maintains a distinct customer base benefiting from brand loyalty and agency affinity, its ranking as a top-four personal-lines agency by premiums written, its expanding geographic penetration, and its number of retail store locations, which are essential for offering nonstandard policies." The BRP concern is offset partly by the company's operating performance, specifically its sustained profitability and operating margins relative to peers', same-store/organic policy growth rates, revenue diversification/composition, and its potential robust cash-flow generation capabilities from EBITDA. The company has diversified its commission-based revenues in recent years, but S&P still views the high revenue concentration by a limited number of insurance carriers as a weakness, despite the current relationship with 50 carriers who maintain nonstandard auto insurance risk portfolios. Confie Seguros will be acquiring the retail nonstandard auto insurance distribution arm (Affirmative Retail) of Affirmative Insurance Holdings Inc. (Affirmative) for a total of $120 million ($100 million in cash and $20 million in contingent consideration). The purchase of Affirmative Retail will increase Confie Seguros's retail footprint by approximately 200 locations and diversify the company's geographic locations into the Midwest and Southeast of the U.S. The proposed platform acquisition will establish Confie Seguros as the leading nonstandard automobile independent agent with more than 521 retail agent locations. It will will further diversify its geographic locations (beyond the historic concentration in California), give it a greater presence in Texas, and establish a fundamental footprint in the Midwest and Southeast U.S. The outlook is stable. S&P expects Confie Seguros to continue its growth strategy and opportunistically implant store locations (via acquisitions or self-build agency stores) in strategic locations. S&P views the continued geographic expansion as a competitive advantage for the company. "We could lower the ratings during the next 12 months if the company does not meet our expectations, is not disciplined or successful in its acquisition strategy, or incurs additional debt that is not supported by prospective operating earnings," Mr. Cohen continued. "Conversely, if the company's operating performance significantly exceeds our expectations, resulting in lower leverage and higher financial flexibility, we would consider raising the rating within the next 12 months. This would be demonstrated by total adjusted leverage (including the perpetual preferred units) of 6.0x or less and adjusted EBITDA fixed-charge coverage of 2.0x or more." CORNERSTONE HOMES: Plan Approval Hearing Adjourned Sine Die ----------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York adjourned to an undetermined date the combined hearing to consider adequacy of information in the Disclosure Statement and the confirmation of Cornerstone Homes, Inc.'s Chapter 11 Plan. The hearing scheduled for Sept. 6, 2013, was not held. As reported in the Troubled Company Reporter on Aug 21, 2013, Tracy Hope Davis, the U.S. Trustee for Region 2, objected to the approval of the prepetition solicitation procedures, disclosure statement and pre-packaged plan of reorganization filed by Cornerstone Homes. The U.S. Trustee argues that: 1. To date, the Debtor has not met its burden to demonstrate that its pre-petition solicitation procedures complied with applicable nonbankruptcy law, rules or regulations. 2. The Disclosure Statement is deficient and fails to meet the standards of containing "adequate information" set forth in 11 U.S.C. Section 1125(a). The TCR reported on July 31, 2013, the Plan, negotiated prior to the bankruptcy filing, has been accepted by holders of 96 percent of unsecured creditors' claims. The company owns 728 properties and has 398 under contract. Four secured lenders with $21.8 million in claims are to be paid in full and didn't vote on the plan. Unsecured creditors are chiefly noteholders with $14.5 million in claims. For a 7 percent recovery, they will get a note for $1 million, bearing 2 percent interest and maturing in 10 years. The note will be paid from sale proceeds. The Court also has extended until Nov. 27, the deadline for any individual or entity to file proofs of claim against the Debtor. Jan. 14, 2014, is set as the last day for filing proofs of claim by governmental unit creditors. About Cornerstone Homes Cornerstone Homes Inc., a homebuilder from Corning, New York, filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 13-21103) on July 15, 2013, in Rochester alongside a reorganization plan already accepted by 96 percent of unsecured creditors' claims. The Debtor disclosed assets of $18,561,028 and liabilities of $36,248,526. Judge Paul R. Warren presides over the case. Curtiss Alan Johnson, Esq., and David L. Rasmussen, Esq., at Davidson Fink, LLP, in Rochester, N.Y., serve as the Debtor's counsel. CRYOPORT INC: Elects Edward Zecchini to Board of Directors ---------------------------------------------------------- Cryoport, Inc., has elected Edward J. Zecchini to its Board of Directors. Mr. Zecchini is an established technology leader with over 30 years of experience in the healthcare and information technology industries. With this appointment, the Cryoport Board now has four members, of which three are independent directors, including Mr. Zecchini. "Ed's track record of translating business problems into profitable software products and effective customer solutions will be very valuable to Cryoport as we further expand and enhance our technology-based software solutions," said Jerrell Shelton, Cryoport's chief executive officer. "Ed's in-depth understanding of technologies, software, data warehousing, information management and his experience in working in transformative entrepreneurial environments are at the top of Ed's qualifications. We look forward to his contributions and his verve for excellence." Mr. Zecchini currently serves as executive vice president and chief technology officer at Sandata Technologies, LLC, a leading nationwide provider of information technology solutions to the home healthcare industry. Previously he held executive and senior level positions with IT Analytics LLC, Touchstone Health Partnership, HealthMarkets, Inc., Thomson Healthcare and SportsTicker, Inc. "I am pleased to be joining the Board and work with this excellent team," said Mr. Zecchini. "Cryoport's technology platform and solutions are very impressive and have broad potential to solve real problems in the cold chain logistics market. I look forward to bringing my technical and strategic perspective at the board level to contribute to the future direction and growth of the company." Richard Rathmann, chairman of the Board, commented, "I have known Ed for over twenty-five years. His keen intellect and clarity of analysis would be helpful serving on any board. His software expertise and technical know-how make him perfect for Cryoport as we develop strategies to maximize assets and accelerate growth." Mr. Zecchini holds a Bachelor of Arts degree from the State University of New York. He is a current director of Insur I.Q. LLC. As non-employee director, Mr. Zecchini will participate in the Company's director compensation plan governed by the Compensation Committee and has received an initial grant to purchase 100,000 shares of the Company's common stock pursuant to the Company's 2011 Stock Incentive Plan, upon joining the Board. In addition, Mr. Zecchini will receive cash compensation as non-employee director in the amount of $40,000 annually and $8,000 annually for his Nominating and Governance Committee Chairmanship. About Cryoport Lake Forest, Calif.-based CryoPort, Inc. (OTC BB: CYRX) provides comprehensive solutions for frozen cold chain logistics, primarily in the life science industries. Its solutions afford new and reliable alternatives to currently existing products and services utilized for bio-pharmaceuticals and biologics, including in-vitro fertilization, cell lines, vaccines, tissue and other commodities requiring a reliable frozen solution. KMJ Corbin & Company LLP, in Costa Mesa, California, issued a "going concern" qualification on the consolidated financial statements for the year ended March 31, 2013. The independent auditors noted that the Company has incurred recurring operating losses and has had negative cash flows from operations since inception. Although the Company has cash and cash equivalents of $563,104 at March 31, 2013, management has estimated that cash on hand, which include proceeds from convertible bridge notes received in the fourth quarter of fiscal 2013, will only be sufficient to allow the Company to continue its operations into the second quarter of fiscal 2014. These matters raise substantial doubt about the Company's ability to continue as a going concern. Cryoport incurred a net loss of $6.38 million for the year ended March 31, 2013, as compared with a net loss of $7.83 million for the year ended March 31, 2012. The Company's balance sheet at June 30, 2013, showed $1.66 million in total assets, $4.68 million in total liabilities and a $3.02 million total stockholders' deficit. DESIGNLINE CORP: Can Borrow Up to $500,000 From Cyprus in Interim ----------------------------------------------------------------- Judge J. Craig Whitley entered an interim order granting DesignLine Corp., et al., permission to borrow up to %500,000 from Cyrus Opportunities Master Fund Ltd., et al. The Debtors are permitted to use the interim loan amount solely for general corporate purposes and for costs of administering their bankruptcy cases. Specifically the Debtors will use the proceeds to continue to liquidate their business. The interim loan proceeds are to be used in accordance with a prepared budget, a copy of which is available for free at: http://bankrupt.com/misc/DESIGNLINE_DIPBudgettruOct2013.pdf In exchange for the Loan, the DIP lenders are granted liens on the Debtors' assets, claims and causes of action, subject to a carve- out for fees to be paid to the bankruptcy court clerk, the bankruptcy administrator and bankruptcy professionals of the Debtors and the unsecured creditors committee. The DIP Loan Obligations of the Debtors constitute allowed superpriority administrative expense claims pursuant to Sec. 364(c)(1) of the Bankruptcy Code. The Debtors originally asked court approval for a $3 million postpetition financing arranged with Cyprus. A final hearing on the DIP Loan Motion will be held on Oct. 1, 2013, at 9:00 a.m. prevailing Eastern Time. Counsel for the Cyprus Entities are: PEPPER HAMILTON LLP David B. Stratton, Esq. Hercules Plaza, Suite 5100 1313 N. Market Street Wilmington, Delaware 19899 Tel No: (302)777-6566 E-mail: strattond@pepperlaw.com -- and -- PEPPER HAMILTON LLP Kay S. Kress, Esq. 4000 Town Center, Suite 1800 Southfield, MI 48075 Tel No: (248)359-7365 E-mail: kressk@pepperlaw.com -- and -- GRIER FURR & CRISP, PA Joseph W. Grier, III, Esq. 101 North Tyron Street, Suite 1240 Charlotte, NC 28246 E-mail: jgrier@grierlaw.com About DesignLine DesignLine Corporation is a manufacturer of coach, electric and range-extended electric (hybrid) buses founded in Ashburton, New Zealand in 1985. It was acquired by American interests in 2006, and DesignLine Corporations' headquarters was relocated to Charlotte, North Carolina. DesignLine Corporation is no longer affiliated with the DesignLine operations in New Zealand, which was placed in liquidation in 2011 DesignLine Corporation and DesignLine USA LLC originally sought Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware, with Lead Case Nos. 13-12089 and 13-12090, on Aug. 15, 2013. Katie Goodman signed the petitions as chief restructuring officer. The Debtors estimated assets and debts of at least $10 million. On Sept. 5, 2013, the case was transferred to the U.S. Bankruptcy Court for the Western District of North Carolina, under Case Nos. 13-31943 and 13-31944. Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Terri L. Gardner, Esq., at Nelson Mullins Riley & Scarborough, LLP, is the Debtors' general bankruptcy counsel. The Debtors' financial advisor is GGG Partners LLC. A five-member unsecured creditors panel has been appointed in the Debtors' cases. Moon Wright & Houston PLLC and Benesch, Friedlander, Coplan & Aronoff LLP are co-counsel to the Committee. DETROIT, MI: Fitch Says GOs Likely to Default on October 1 ---------------------------------------------------------- According to a new Fitch Ratings' report that encapsulates its position on Detroit's unlimited tax general obligation (ULTGO), limited tax general obligation (LTGO), certificates of participation (COPs) and utility debt, Detroit's landmark bankruptcy sets the stage to confirm or challenge basic premises underlying municipal debt credit ratings. 'Fitch began signaling concern about Detroit with its rating actions in 2005, and the bankruptcy was not unexpected. Detroit's economy has been on decline for decades, management has exhibited an unusual lack of cohesion and positive action, and fixed costs have been growing,' said Amy Laskey, Managing Director. Fitch downgraded the city's tax-supported debt and put the water and sewer utility debt on Rating Watch Negative on June 14, 2013. Three days later, after the city failed to make a debt service payment on its COPs, Fitch lowered that rating to 'D'. Fitch believes GO debt will not be paid as due on Oct. 1. If the Oct. 1st debt service payment is missed, Fitch will downgrade both the ULTGOs and LTGOs to 'D.' The emergency manager's (EM) decision to treat ULTGO and LTGO bonds and post-employment benefit payments as a single class of creditor is at odds with Fitch's prior expectations.' If pension benefits are not subject to adjustment in Chapter 9, then the GO debt is effectively subordinated, clarifying the priority of payments between GOs and pensions in a way that will cause considerable concern. 'If the Detroit case signals a shift towards lumping these obligations together and not levying taxes to support the apparently affordable ULTGO debt already approved by taxpayers, the outcome will lead Fitch to reconsider the impact on ratings,' said Laskey. However, Fitch believes there is substantial protection provided to water and sewer debt as special revenue bonds under a Chapter 9 bankruptcy proceeding. This is reflected in Fitch's investment grade ratings on that debt. Fitch's 'BB' implied ULTGO rating on Detroit's home county of Wayne reflects rapid deterioration in liquidity and budget flexibility. Wayne County has limited flexibility to address its structural deficits and faces short-term financing requirements in a Michigan bond market made more challenging by the Detroit bankruptcy. Michigan Act 436's strong oversight is offset by the weak support for Detroit bondholders. The city's bankruptcy filing demonstrates that state intervention mechanisms do not preclude credit deterioration or default. DETROIT, MI: Defends Ch. 9 Bid Against Retirees' Objections ----------------------------------------------------------- Law360 reported that Detroit's bid for Chapter 9 bankruptcy protection doesn't conflict with the Michigan Constitution's pensions clause, the city told a federal bankruptcy judge on Sept. 17 in response to objections by the committee representing the city's public-sector retirees. According to the report, in a brief, the city blasted the retiree committee's assertion that Michigan Gov. Rick Snyder's authorization for Detroit to file for Chapter 9 violated the pensions clause of the Michigan Constitution, saying no action had been taken against the retirees' pension rights. 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. Detroit 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. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. DETROIT, MI: Says Kirkland Attorney Can't Testify in Syncora Row ---------------------------------------------------------------- Law360 reported that a Kirkland & Ellis LLP attorney who represents bond insurer Syncora Guarantee Inc. in Detroit's historic bankruptcy proceedings should not be allowed to testify because she would abuse the attorney-client privilege, the city told a Michigan bankruptcy judge on Sept. 16. According to the report, undergoing the largest municipal bankruptcy in American history, Detroit said that Kirkland attorney Alexandra Schwarzman would be too selective about what she will discuss, using a "gross misapplication of the attorney- client privilege" to answer only questions beneficial to Syncora. 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. Detroit 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. Sharon Levine, Esq., at Lowenstein Sandler LLP, is representing the American Federation of State, County and Municipal Employees and the International Union. Babette Ceccotti, Esq., at Cohen, Weiss & Simon LLP, is representing the United Automobile, Aerospace and Agricultural Implement Workers of America. A nine-member official committee of retired workers was appointed in the case. The Retirees' Committee is represented by Dentons US LLP. DETROIT, MI: Fitch Says GOs Likely to Default on October 1 ---------------------------------------------------------- According to a new Fitch Ratings' report that encapsulates its position on Detroit's unlimited tax general obligation (ULTGO), limited tax general obligation (LTGO), certificates of participation (COPs) and utility debt, Detroit's landmark bankruptcy sets the stage to confirm or challenge basic premises underlying municipal debt credit ratings. 'Fitch began signaling concern about Detroit with its rating actions in 2005, and the bankruptcy was not unexpected. Detroit's economy has been on decline for decades, management has exhibited an unusual lack of cohesion and positive action, and fixed costs have been growing,' said Amy Laskey, Managing Director. Fitch downgraded the city's tax-supported debt and put the water and sewer utility debt on Rating Watch Negative on June 14, 2013. Three days later, after the city failed to make a debt service payment on its COPs, Fitch lowered that rating to 'D'. Fitch believes GO debt will not be paid as due on Oct. 1. If the Oct. 1st debt service payment is missed, Fitch will downgrade both the ULTGOs and LTGOs to 'D.' The emergency manager's (EM) decision to treat ULTGO and LTGO bonds and post-employment benefit payments as a single class of creditor is at odds with Fitch's prior expectations.' If pension benefits are not subject to adjustment in Chapter 9, then the GO debt is effectively subordinated, clarifying the priority of payments between GOs and pensions in a way that will cause considerable concern. 'If the Detroit case signals a shift towards lumping these obligations together and not levying taxes to support the apparently affordable ULTGO debt already approved by taxpayers, the outcome will lead Fitch to reconsider the impact on ratings,' said Laskey. However, Fitch believes there is substantial protection provided to water and sewer debt as special revenue bonds under a Chapter 9 bankruptcy proceeding. This is reflected in Fitch's investment grade ratings on that debt. Fitch's 'BB' implied ULTGO rating on Detroit's home county of Wayne reflects rapid deterioration in liquidity and budget flexibility. Wayne County has limited flexibility to address its structural deficits and faces short-term financing requirements in a Michigan bond market made more challenging by the Detroit bankruptcy. Michigan Act 436's strong oversight is offset by the weak support for Detroit bondholders. The city's bankruptcy filing demonstrates that state intervention mechanisms do not preclude credit deterioration or default. DEVONSHIRE PGA: Owners of Senior Care Facilities Seek Chapter 11 ---------------------------------------------------------------- Operators of assisted living facilities sought Chapter 11 bankruptcy in U.S. Bankruptcy Court in Wilmington, Delaware on Sept. 19, 2013. According to a Reuters report, Chatsworth PGA Properties LLC (Bankr. D. Del. Case No. 13-12457) estimated liabilities of between $100 million and $500 million, and assets of up to $10 million. Chatsworth PGA Properties provides assisted living services for the elderly. It also offers nursing and dementia care. Three affiliated entities also sought bankruptcy protection, according to Reuters. Michael Bathon, writing for Bloomberg News, reports that Devonshire PGA Holdings LLC (Case No. 13-12460), the owner of an assisted-living facility in Florida, and based in Palm Beach Gardens, estimated under $50,000 in assets and up to $50 million in debts. Another entity, Devonshire at PGA National LLC, estimated more than $100 million in both assets and debt. Bloomberg reports that the companies have filed a restructuring plan that gives ownership to the lenders in exchange for debt. Devonshire intends to implement a consensual restructuring and will seek an "expeditious exit from Chapter 11 protection," according to court documents. Residents and unsecured creditors won't be affected, the Bloomberg report says. According to Bloomberg, the company said in court papers that the value of the assets is "substantially less" than secured debt, so the reorganization plan "presents the best chance for any recovery for creditors." Bloomberg notes secured lender ELP West Palm LLC supports the plan and will get all of the reorganized company's equity. Mezzanine lender HJSI Devonshire II LLC will get a $3 million payment under the plan. Bloomberg, citing court documents, recounts Devonshire defaulted on its secured first-lien loan and owed ELP about $158.4 million in principal and interest as of Sept. 1. The company owed about $20.2 million on its defaulted mezzanine loan as of Sept. 11. HJSI acquired all of Devonshire's equity, which was pledged as collateral for the mezzanine loan, in a Sept. 12 foreclosure sale offering forgiveness of about $17.1 million of the debt, court papers show. EARL GAUDIO: Committee Taps Rubin & Levin as Counsel ---------------------------------------------------- The Official Unsecured Creditors' Committee of Earl Gaudio & Son, Inc., will appear before the Honorable Gerald D. Fines, of the U.S. Bankruptcy Court for the Central District of Illinois on Oct. 3, 2013, at 9:00 a.m., to seek authorization to employ Rubin & Levin, P.C., as counsel for the Committee. To the best of the Committee's knowledge, Rubin & Levin does not have any connection to the Debtor, the Debtor's estate, the Debtor's creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee concerning matters upon which the firm is being retained. Rubin & Levin currently charges at these hourly rates: Elliott D. Levin, Partner $450 James E. Rossow Jr., Partner $375 Edward R. Cardoza, Of Counsel $350 Christopher M. Trapp, Associate $325 Jonathan M. Dickey, Associate $300 Paraprofessionals $150 The firm will provide these professional services: 1. Giving the Committee legal advice with respect to its duties and powers in connection with the operation of the business and sale of the property of the Debtor; 2. Examining the conduct of the Debtor's affairs and the causes of its inability to pay its debts as they mature; 3. Conducting the examinations of officers and employees of the Debtor, and of other witnesses in order to determine facts as to the proposed sale of the Debtor's property; 4. Assisting the Committee in negotiating with the Debtor concerning the terms of any proposed Plan; 5. Performing all other legal services for the Committee which be necessary; and 6. Review and examination of secured creditor claims, including the amount, extent, validity, and priority of liens, claims, and encumberances. Earl Gaudio & Son, Inc., filed a Chapter 11 petition (Bankr. C.D. Ill. Case No. 13-90942) on July 19, 2013. The petition was signed by Angela E. Major Hart, as authorized signer of First Midwest Bank, custodian. Judge Gerald D. Fines presides over the case. The Debtor estimated assets of at least $10 million and debts of at least $1 million. John David Burke, Esq., and Ben T. Caughey, Esq., at Ice Miller, LLP, serve as the Debtor's counsel. Evans, Forehlich, Beth & Chamley is the proposed local counsel for the Official Committee of Unsecured Creditors of the Debtor. EARL GAUDIO: Obtains Final Authority to Use Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California entered on Sept. 5, 2013, a final order authorizing Earl Gaudio & Son, Inc., to use cash collateral wherever such cash collateral may be located, to among other things, pay operating expenses, including employee wages and salaries, satisfy other working capital needs and pay the costs and expenses of operating in the Chapter 11 case. As adequate protection, the secured creditors are granted replacement liens in the post-petition property of the Debtors of the same nature and to the same extent that the Secured Creditors had in the applicable prepetition collateral as of the Petition Date, including, but not limited to, postpetition inventory, equipment and receivables. The Bankruptcy Court also authorized Debtor, on a final basis, to obtain postpetition financing in the amount of $375,000 with interest being accrued on all amounts actually funded by the DIP Lender at the rate of 5% per annum. All indebtedness or obligations of the Debtor to the DIP Lender incurred on or after the Petition Date pursuant to this Court's authorization will be secured by a super priority lien on all post-petition assets of the Debtor, including but not limited to all accounts receivables of the Debtor billed for and paid (up to the DIP Financing amount) after the Petition Date and all of the Debtor's causes of action and any avoidance actions under Sections 544, 545, 547, 548, 549, 550 or 553 of the Bankruptcy Code. The Liens and Superpriority Claims granted to the DIP Lender pursuant to the Interim Order and Final Order will be subject and subordinate to a carve-out for: (i) amounts payable to the United States Trustee pursuant to 28 U.S.C. Section 1930(a); and (ii) the payment of unpaid professional fees of professionals employed by the estate in an amount equal to $150,000. According to the Order, the DIP Lender has no obligation extend additional funds. "To the extent that the Debtor seeks additional funds beyond those that have been advanced by the DIP Lender, the Debtor must obtain written consent from the Committee and provide notice and the opportunity to object to the Secured Creditors." Earl Gaudio & Son, Inc., filed a Chapter 11 petition (Bankr. C.D. Ill. Case No. 13-90942) on July 19, 2013. The petition was signed by Angela E. Major Hart, as authorized signer of First Midwest Bank, custodian. Judge Gerald D. Fines presides over the case. The Debtor estimated assets of at least $10 million and debts of at least $1 million. John David Burke, Esq., and Ben T. Caughey, Esq., at Ice Miller, LLP, serve as the Debtor's counsel. Evans, Forehlich, Beth & Chamley is the proposed local counsel for the Official Committee of Unsecured Creditors of the Debtor. EASTMAN KODAK: Gets Extension to File Post-Confirmation Timetable ----------------------------------------------------------------- U.S. Bankruptcy Judge Allan Gropper gave Eastman Kodak Co. until Sept. 30 to file its proposed order containing a post-confirmation timetable. The Company officially emerged from Chapter 11 protection on Sept. 3, 2013. Kodak had said it needs additional time to develop a timetable as required by Rule 3021-1(a) of the Local Bankruptcy Rules for the Southern District of New York given the complexity of its case. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Eastman Kodak emerged from bankruptcy after its First Amended Joint Chapter 11 Plan of Reorganization became effective on Sept. 3, 2013. Kodak reorganized the business by keeping its commercial printing business and selling various assets. Kodak completed the $527 million sale of digital-imaging technology in February 2013. Kodak also spun off its personalized imaging and document Imaging businesses to Kodak Pension Plan, a longstanding pension plan of Kodak's U.K. subsidiary. Kodak filed a proposed reorganization plan offering 85 percent of the stock to holders of the remaining $375 million in second-lien notes. The other 15 percent is for unsecured creditors with $2.7 billion in claims and retirees who have a $635 million claim from the loss of retirement benefits. EASTMAN KODAK: Wins Court Approval to Settle Dispute With GOT ------------------------------------------------------------- Eastman Kodak Co. won court approval of its agreement with Global OLED Technology LLC to settle their dispute over the transfer of Kodak patents. The transfer of patents was part of the purchase agreement made between Kodak and a group of tech firms led by LG Display Co., Ltd. in 2009. Global OLED was the assignee of the LG-led group under the 2009 deal. Under the deal, Kodak will keep 15 of the 18 patents that Global OLED claimed should have been also transferred to the tech firm. The three remaining patents will be transferred to Global OLED. The agreement requires Global OLED to dismiss its lawsuit for declaratory judgment against Kodak, which it filed last year to prove that it acquired the disputed patents. The tech firm also agreed to drop its claim against Kodak tied to the 2009 deal. In connection with the settlement, Kodak also received the green light from U.S. Bankruptcy Judge Allan Gropper to assume a 1995 licensing agreement with Pioneer Electronic Corp., and assign it to Global OLED. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Eastman Kodak emerged from bankruptcy after its First Amended Joint Chapter 11 Plan of Reorganization became effective on Sept. 3, 2013. Kodak reorganized the business by keeping its commercial printing business and selling various assets. Kodak completed the $527 million sale of digital-imaging technology in February 2013. Kodak also spun off its personalized imaging and document Imaging businesses to Kodak Pension Plan, a longstanding pension plan of Kodak's U.K. subsidiary. Kodak filed a proposed reorganization plan offering 85 percent of the stock to holders of the remaining $375 million in second-lien notes. The other 15 percent is for unsecured creditors with $2.7 billion in claims and retirees who have a $635 million claim from the loss of retirement benefits. EASTMAN KODAK: Signs Deal With Calif. Tax Board to Settle Claims ---------------------------------------------------------------- Eastman Kodak Co. signed an agreement to settle the claims of the State of California Franchise Tax Board against the company and its subsidiaries. Under the deal, CFTB can assert a priority claim in the amount of $4.13 million, and a general unsecured claim in the amount of $102,094 against Kodak. In exchange, CFTB agreed to drop its claims against FPC Inc., Kodak Imaging Network Inc., Laser-Pacific Media Corp., NPEC Inc. and Qualex Inc. In case the claim asserted by CFTB against Kodak is not timely paid in accordance with the company's Chapter 11 plan, its claims against the five other Kodak units will be reinstated and allowed in the total amount of $917,598. The agreement can be accessed for free at http://is.gd/H9ervx About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Eastman Kodak emerged from bankruptcy after its First Amended Joint Chapter 11 Plan of Reorganization became effective on Sept. 3, 2013. Kodak reorganized the business by keeping its commercial printing business and selling various assets. Kodak completed the $527 million sale of digital-imaging technology in February 2013. Kodak also spun off its personalized imaging and document Imaging businesses to Kodak Pension Plan, a longstanding pension plan of Kodak's U.K. subsidiary. Kodak filed a proposed reorganization plan offering 85 percent of the stock to holders of the remaining $375 million in second-lien notes. The other 15 percent is for unsecured creditors with $2.7 billion in claims and retirees who have a $635 million claim from the loss of retirement benefits. EASTMAN KODAK: Signs Deal With Rochester to Assume 7 Contracts -------------------------------------------------------------- Eastman Kodak Co. entered into a deal under which the company agreed to take over seven of its existing contracts with Rochester Silver Works LLC. Under the deal, Rochester agreed that Kodak has already cured all defaults under the contracts to be assumed, and that no amount is required to be paid by the company in connection with the assumption of those contracts. Rochester also agreed that Kodak has cured all defaults under their contracts dated Sept. 30, 2011, which have to be assigned to RED Rochester LLC, the company that bought Kodak's utility operations at Eastman Business Park. The deal is formalized in a stipulation dated Sept. 17, which can be accessed for free at http://is.gd/4CsfYp About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Eastman Kodak emerged from bankruptcy after its First Amended Joint Chapter 11 Plan of Reorganization became effective on Sept. 3, 2013. Kodak reorganized the business by keeping its commercial printing business and selling various assets. Kodak completed the $527 million sale of digital-imaging technology in February 2013. Kodak also spun off its personalized imaging and document Imaging businesses to Kodak Pension Plan, a longstanding pension plan of Kodak's U.K. subsidiary. Kodak filed a proposed reorganization plan offering 85 percent of the stock to holders of the remaining $375 million in second-lien notes. The other 15 percent is for unsecured creditors with $2.7 billion in claims and retirees who have a $635 million claim from the loss of retirement benefits. EDISON MISSION: Bankruptcy Judge Sides With Co. in Chevron Row -------------------------------------------------------------- Law360 reported that bankrupt Edison Mission Energy can keep its shares of a pair of energy joint ventures with affiliates of Chevron Corp., as an Illinois bankruptcy judge found on Sept. 16 that EME's Chapter 11 filing doesn't constitute an act of default under the partnership agreements. According to the report, Judge Jacqueline P. Cox granted a motion by EME's debtor affiliates Western Sierra Energy Co. and Southern Sierra Energy Co. to maintain partnership agreements with the Chevron affiliates for steam/electricity cogeneration projects in Bakersfield, Calif. Chevron had objected to EME's subsidiaries assuming the agreements, the report related. 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. The Debtors other than Camino Energy Company are represented by: David R. Seligman, P.C., Esq. James H.M. Sprayregen, P.C., Esq. Sarah Hiltz Seewer, Esq. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 - and - Joshua A. Sussberg, Esq. KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, NY 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Counsel to Debtor Camino Energy Company is: David A. Agay, Esq. Joshua Gadharf, Esq. MCDONALD HOPKINS LLC 300 North LaSalle, Suite 2100 Chicago, IL 60654 Telephone: (312) 280-0111 Facsimile: (312) 280-8232 Perella Weinberg Partners, LP is acting as the Debtors' 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 Ira S. Dizengoff, Esq., Stephen M. Baldini, Esq., Arik Preis, Esq., and Robert J. Boller, Esq., at AKIN GUMP STRAUSS HAUER & FELD LLP in New York; James Savin, Esq., and Kevin M. Eide, Esq., at AKIN GUMP STRAUSS HAUER & FELD LLP in Washington, DC; and David M. Neff, Esq., and Brian Audette, Esq., at PERKINS COIE LLP. 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. EMPRESAS INTEREX: PRAPI Seeks to Block Use of Cash Collateral ------------------------------------------------------------- PR ASSET PORTFOLIO 2013-1 INTERNATIONAL, LLC or PRAPI, a secured creditor of Empresas Interex Inc., submitted an urgent motion with the Bankruptcy Court seeking entry of an order prohibiting the Debtor from using PRAPI's cash collateral. PRAPI also wants the Debtor to provide adequate protection. The Debtor currently generates cash from five known leases of certain real property listed as property of the estate. The Debtor's obligations are secured by real property mortgages and a collateral assignment of rents that cover, among other interests, "rents due" from the subject realty. The rents from the Debtor's realty are the Debtor's principal source of cash. PRAPI contends the rent being collected by the Debtor on a monthly basis since the filing of the case constitute PRAPI's cash collateral. PRAPI does not consent to any use of its Cash Collateral and, accordingly, should not be forced to continue to bear the risk of its erosion. It said the Debtor has no right to use the Cash Collateral, and all such Cash Collateral should be forthwith turned over to PRAPI. PRAPI also asks the Court to grant it adequate protection on an emergency basis by: a. granting a first priority replacement lien on all of the Debtor's post-petition assets; b. requiring an accounting of all Cash Collateral received by or for the benefit of the Debtor since the Petition Date; c. requiring that any Cash Collateral or property of PRAPI that is in the possession, custody or control of the Debtor or any of the insiders of the Debtor (as such term is defined in 11 U.S.C. Sec. 101) including but not limited to the $90,375.30 in Debtor's bank account as of August 31, 2013, be turned over to PRAPI, whether now existing or hereafter created, within the later of: (i) five days from date hereof; or (ii) five days of receipt; and d. prohibiting the Debtor from using any Cash Collateral of PRAPI unless otherwise ordered by the Court. Attorneys for PR Asset Portfolio can be reached at: Ubaldo M. Fernandez, Esq. Barbara M. Sabat Lafontaine, Esq. O'NEILL & BORGES LLC American International Plaza 250 Munoz Rivera Ave., Ste. 800 San Juan, PR 00918-1813 Telephone: 787-764-8181 Fax: 787-753-8944 E-mail: Ubaldo.Fernandez@oneillborges.com Barbara.Sabat@oneillborges.com About Empresas Interex Inc. San Juan, Puerto Rico-based Empresas Interex Inc. is engaged in the development, construction, and lease of real estate. One of the Debtor's construction project is known as Ciudad Atlantis at Hato Bajo Ward, Arecibo, Puerto Rico. Empresas Interex filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-10475) on Dec. 7, 2011. Bankruptcy Judge Mildred Caban Flores presides over the case. The company disclosed $11,412,500 in assets and $9,335,561 in liabilities. The Debtor is represented by Charles A. Cuprill P.S.C. Law Offices. ENDICOTT INTERCONNECT: Committee Opposes Credit Bidding ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Endicott Interconnect Technologies Inc.'s official unsecured creditors' committee claims that the company can't be purchased by insiders using a credit bid. Endicott will be sold at auction on Sept. 24. According to the report, bids were due Sept. 19. The hearing to approve the sale is set for Sept. 26. The first bid of $250,000 is coming come from an insider group including a company owned by minority shareholder James T. Matthews. In addition to cash, he would assume a $6.1 million secured term loan which he already owns. About $10 million is owing on two other secured loans. The Matthews group intends to make a credit bid, paying for the business by using secured debt rather than cash. The report notes that the committee, in its Sept. 16 papers, said it performed an investigation and believes Matthews and the groups are liable for receipt of preferences and fraudulent transfers. The debt should be recharacterized as equity, the committee said. The committee's papers don't lay out facts supporting its conclusions. The panel's members promised to file a lawsuit by Sept. 23 giving details on the claims. The report relates that the bankruptcy judge scheduled an expedited hearing tomorrow to determine if the group can credit bid. The report relates that alternatively, the creditors want the group to put cash in escrow in case the court later decides a credit bid was improper. Previously, the committee said there could be $20.8 million in claims against insiders. About Endicott Interconnect Endicott Interconnect Technologies Inc. and its affiliates filed a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-61156) in Utica, New York, on July 10, 2013, to sell the business before cash runs out by the end of September. David Van Rossum is the Debtors' chief restructuring officer. Bond, Schoeneck & King, PLLC, is counsel to the Debtor. Based in Endicott, New York, and formed in 2002, EIT is the successor to the microelectronics division of IBM Corp. The products are used in aerospace, defense and medication applications, among others. The company sought Chapter 11 bankruptcy protection after suffering $100 million in operating losses in the last four years. In addition to $16 million in secured claims, trade suppliers are owed $34 million. There is another $32 million owing for loans made by shareholders. The company said the book value of property is $36 million. An official committee of unsecured creditors has been appointed in the case with Avnet Electronics Marketing, Arrow Electronics, Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc., Orbotech, Inc., Tyco Electronics, and High Performance Copper Foil, Inc. as members. The committee is represented by Arent Fox LLP. The business will be sold at auction on Sept. 24. Bids are due Sept. 19. The hearing to approve sale is set for Sept. 26. The first bid of $250,000 is coming come from an insider group. The purchase offer is from company owned by minority shareholder James T. Matthews. In addition to the cash, he would assume a $6.1 million secured term loan of which he is already the owner. There is about $10 million owing on two other secured loans. The official creditors' committee said there could be $20.8 million in claims to bring against insiders. In August, the judge authorized the committee to conduct an investigation of the insiders. ENDICOTT INTERCONNECT: Creditors Challenge $16MM in Secured Debt ---------------------------------------------------------------- Stephanie Gleason, writing for DBR Small Cap, reported that the committee representing Endicott Interconnect Technologies Inc.'s unsecured creditors has raised concerns about $ 16.1 million in secured debt, the holders of which are likely to try to exchange that debt to purchase the company at auction next week. According to the report, secured creditors and insiders James Matthews, who owns a company called Integrian Holdings LLC, William Maines and David Maines, used their "control and influence...to cause the Debtors to make preferential transfers" to them, breaching fiduciary duties, the committee said in documents filed on Sept. 16 with the U.S. Bankruptcy Court in Utica, N.Y. The claims could be "recharacterized, subordinated, or disallowed and expunged," the committee said, the report related. As a result, the parties shouldn't be allowed to use forgiveness of these claims to purchase Endicott Interconnect, which is set to hit the auction block on Sept. 24. This exchange is often referred to as a credit bid. The committee has requested that the court hear its motion as soon as possible and ahead of the auction, the report said. A hearing hasn't been scheduled yet. Endicott Interconnect, based in Endicott, N.Y., was spun off from International Business Machines Corp. in 2002, the report recalled. At that time, local businessmen -- James Matthews Sr. of MATCO Electronics Group (the father of Integrain owner James Matthews) and Messrs. Maines of Maines Paper and Food Service -- stepped in as backers for the new company, according to a Reuters report from 2002. William Maines was named president. About Endicott Interconnect Endicott Interconnect Technologies Inc. and its affiliates filed a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-bk-61156) in Utica, New York, on July 10, 2013, to sell the business before cash runs out by the end of September. David Van Rossum is the Debtors' chief restructuring officer. Bond, Schoeneck & King, PLLC, is counsel to the Debtor. Based in Endicott, New York, and formed in 2002, EIT is the successor to the microelectronics division of IBM Corp. The products are used in aerospace, defense and medication applications, among others. The company sought Chapter 11 bankruptcy protection after suffering $100 million in operating losses in the last four years. In addition to $16 million in secured claims, trade suppliers are owed $34 million. There is another $32 million owing for loans made by shareholders. The company said the book value of property is $36 million. An official committee of unsecured creditors has been appointed in the case with Avnet Electronics Marketing, Arrow Electronics, Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc., Orbotech, Inc., Tyco Electronics, and High Performance Copper Foil, Inc. as members. The committee is represented by Arent Fox LLP. The business will be sold at auction on Sept. 24. Bids are due Sept. 19. The hearing to approve sale is set for Sept. 26. The first bid of $250,000 is coming come from an insider group. The purchase offer is from company owned by minority shareholder James T. Matthews. In addition to the cash, he would assume a $6.1 million secured term loan of which he is already the owner. There is about $10 million owing on two other secured loans. The official creditors' committee said there could be $20.8 million in claims to bring against insiders. In August, the judge authorized the committee to conduct an investigation of the insiders. EXIDE TECHNOLOGIES: Incentive Plan Approved ------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved Exide Technologies' motion to implement its key employee incentive plan. As previously reported, "At this incipient stage of the restructuring process, it is critical to ensure that those employees who drive the economic success of the Debtor's enterprise are appropriately compensated and incentivized to deliver superlative results. In this regard, after substantial deliberation and consultation with compensation experts from Mercer (US), Inc. ('Mercer'), the Organization and Compensation Committee (the 'Compensation Committee') of the Debtor's board of directors (the 'Board') recommended, and the full Board approved, the three employee compensation plans (collectively, the 'Employee Compensation Plans') that are the subject of this Motion: the 2014 Annual Incentive Plan (the 'AIP'); the Key Employee Incentive Plan (the 'KEIP'); and the Non-Insider Key Employee Retention Plan (the 'KERP')." 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 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. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. EXIDE TECHNOLOGIES: Bonuses, BMW Agreement Get Court Approval ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Exide Technologies, a maker of lead-acid batteries, received court authorization for bonus programs covering higher and lower-level executives and managers. According to the report, the bankruptcy judge in Delaware also approved an agreement to terminate a supplier relationship with BMW of North America LLC dating to 2006. The annual incentive plan covers 725 employees. The key employee incentive plan is for 55. A key employee retention plan covers another 51 and would cost about $2 million. The report notes that the programs would cost $16.1 million in bonuses if target levels are reached for earnings before interest, taxes, depreciation and amortization, and free cash flow. BMW had given notice of termination of the supply contract, claiming the action was in accord with the parties' agreement. Milton, Georgia-based Exide took the position that BMW was compelled by the contract to buy branded inventory remaining on hand. The report relates that the settlement, approved by the judge on Sept. 17, has BMW paying $3 million for three months of inventory. The contract otherwise is terminated, and BMW will have no claim in the Exide bankruptcy. Exide is in bankruptcy for a second time. The new bankruptcy is a consequence of higher costs for lead and the loss of a large customer. The petition listed assets of $1.89 billion and debt totaling $1.14 billion. Liabilities for borrowed money are $886.9 million. Unsecured debt owing to trade suppliers and others is $103.5 million, according to a court filing. 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 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. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. FAIRMONT GENERAL: Sec. 341 Creditors' Meeting Set for Oct. 31 ------------------------------------------------------------- The Office of the U.S. Trustee will convene a meeting of creditors pursuant to 11 U.S.C. 341(a) in the Chapter 11 cases of Fairmont General Hospital Inc., et al., on Oct. 31, 2013, at 10:00 a.m. The meeting will be held at U.S. Bankruptcy Court- Division Office, Northern District of West Virginia, 324 West Main Street - Edel Building, Clarksburg WV 26301. About Fairmont General Fairmont General Hospital Inc. and Fairmont Physicians, Inc., which operate a 207-bed acute-care facility in Fairmont, West Virginia, sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 13-01054) on Sept. 3, 2013, listing between $10 million and $50 million in both assets and debts. The fourth-largest employer in Marion County, West Virginia, filed for bankruptcy as it looks to partner with another hospital or health system. The Debtors are represented by Rayford K. Adams, III, Esq., at Spilman Thomas & Battle, PLLC, in Winston-Salem, North Carolina; David R. Croft, Esq., at Spilman Thomas & Battle, PLLC, in Wheeling, West Virginia, and Michael S. Garrison, Esq., at Spilman Thomas & Battle, PLLC, in Morgantown, West Virginia. The Debtors' financial analyst is Gleason & Associates, P.C. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. FAIRMONT GENERAL: Wins Interim OK to Hire Gleason & Associate ------------------------------------------------------------- Fairmont General Hospital Inc. et al. sought and obtained interim approval from the U.S. Bankruptcy Court to employ Gleason & Associates P.C. as financial analyst. William G. Krieger attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Fairmont General Fairmont General Hospital Inc. and Fairmont Physicians, Inc., which operate a 207-bed acute-care facility in Fairmont, West Virginia, sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 13-01054) on Sept. 3, 2013, listing between $10 million and $50 million in both assets and debts. The fourth-largest employer in Marion County, West Virginia, filed for bankruptcy as it looks to partner with another hospital or health system. The Debtors are represented by Rayford K. Adams, III, Esq., at Spilman Thomas & Battle, PLLC, in Winston-Salem, North Carolina; David R. Croft, Esq., at Spilman Thomas & Battle, PLLC, in Wheeling, West Virginia, and Michael S. Garrison, Esq., at Spilman Thomas & Battle, PLLC, in Morgantown, West Virginia. The Debtors' financial analyst is Gleason & Associates, P.C. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. FAIRMONT GENERAL: Gets Interim Approval to Hire Spilman Thomas -------------------------------------------------------------- Fairmont General Hospital Inc. et al., sought and obtained interim approval from the U.S. Bankruptcy Court to employ Spilman Thomas & Battle, PLLC as attorneys. The Debtor attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Fairmont General Fairmont General Hospital Inc. and Fairmont Physicians, Inc., which operate a 207-bed acute-care facility in Fairmont, West Virginia, sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 13-01054) on Sept. 3, 2013, listing between $10 million and $50 million in both assets and debts. The fourth-largest employer in Marion County, West Virginia, filed for bankruptcy as it looks to partner with another hospital or health system. The Debtors are represented by Rayford K. Adams, III, Esq., at Spilman Thomas & Battle, PLLC, in Winston-Salem, North Carolina; David R. Croft, Esq., at Spilman Thomas & Battle, PLLC, in Wheeling, West Virginia, and Michael S. Garrison, Esq., at Spilman Thomas & Battle, PLLC, in Morgantown, West Virginia. The Debtors' financial analyst is Gleason & Associates, P.C. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. FAIRWEST ENERGY: Defaults Under Debtor-In-Possession Financing -------------------------------------------------------------- FairWest Energy Corporation disclosed that on September 17, 2013, Supreme Group Inc. served FairWest with a demand letter and Notice of Intention to Enforce Security pursuant to subsection 244(1) of the Bankruptcy and Insolvency Act in respect of amounts owing to SGI by FairWest under the debtor-in-possession financing provided by SGI to FairWest. SGI has provided DIP Financing to FairWest since FairWest commenced proceedings under the Companies' Creditors Arrangement Act on December 12, 2012. On July 16, 2013, the Court of Queen's Bench of Alberta approved certain amendments to the DIP Financing, including additional events of default which, if triggered, could result in SGI withdrawing its funding from FairWest. The DIP Financing provided that it was an event of default if, on or before September 1, 2013, (i) the Alberta Energy Regulator had not consented to the transfer of licenses for the licensed wells and facilities included in SGI's offer submitted pursuant to the Sale and Investment Solicitation Process approved by the Court on March 19, 2013 and (ii) no order had been made by the Court on notice to the AER approving the Offer. Consent was not obtained from the AER and no order was made by the Court by September 1, 2013. The Demand Letter requires FairWest to repay the amount of $1,836,510.98 plus all additional accrued and unpaid interest, fees and costs due under the DIP Financing. If payment or other arrangements satisfactory to SGI for payment cannot be made, SGI will take such further steps as it deems necessary to recover the amounts owing, which could include the appointment of a receiver over the property, assets and undertakings of FairWest. About FairWest Energy FairWest is a Calgary, Alberta based junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids in the provinces of Alberta and Saskatchewan. FairWest an Initial Order on Dec. 12, 2012 from the Court of Queen's Bench of Alberta granting relief to FairWest under the Companies' Creditors Arrangement Act ("CCAA") and appointing PricewaterhouseCoopers Inc. as the monitor. FIBERTOWER CORP: Files Plan to Give Noteholders Ownership --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that FiberTower Corp. filed a reorganization plan this week where holders of the remaining $98 million in first-lien notes due in 2016 would take ownership, other creditors receive nothing, and the company continues litigating with the aim of recovering frequency licenses the U.S. Federal Communications Commission terminated last year. According to the report, the holders of the notes, paid down almost $34 million, are projected to have a recovery ranging from 5.3 percent to 7.6 percent, according to the accompanying disclosure statement. If the $34 million paydown is included, the noteholders will have recovered 30.9 percent to 33.2 percent. The report notes that holders of $30 million in convertible notes due in 2012 are to receive nothing because their liens are subordinate to the 2016 notes. Similarly, unsecured creditors with claims ranging from $4.4 million to $12.2 million are to have no dividend from bankruptcy. FiberTower has 49 remaining licenses and is in litigation with the FCC to take back 691 licenses the commission terminated last year because the company hadn't developed them. Katy Stech, writing for DBR Small Cap, reported that under the Plan, bondholders are poised to take control of FiberTower, putting them in a spot to press federal regulators to reconsider their decision to cut the company's license to use wireless network spectrum in major U.S. cities. About FiberTower Corp. FiberTower Corporation, FiberTower Network Services Corp., FiberTower Licensing Corp., and FiberTower Spectrum Holdings LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos. 12-44027 to 12-44031) on July 17, 2012, together with a plan support agreement struck with prepetition secured noteholders. FiberTower is an alternative provider of facilities-based backhaul services, principally to wireless carriers, and a national provider of millimeter-band spectrum services. Backhaul is the transport of voice, video and data traffic from a wireless carrier's mobile base station, or cell site, to its mobile switching center or other exchange point. FiberTower provides spectrum leasing services directly to other carriers and enterprise clients, and also offer their spectrum services through spectrum brokerage arrangements and through fixed wireless equipment partners. FiberTower's significant asset is the ownership of a national spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum licenses, including over 740 MHz in the top 20 U.S. metropolitan areas and, in the aggregate, roughly 1.72 billion channel pops (calculated as the number of channels in a given area multiplied by the population, as measured in the 2010 census, covered by these channels). FiberTower believes the Spectrum Portfolio represents one of the largest and most comprehensive collections of millimeter wave spectrum in the U.S., covering areas with a total population of over 300 million. As of the Petition Date, FiberTower provides service to roughly 5,390 customer locations at 3,188 deployed sites in 13 markets throughout the U.S. The fixed wireless portion of these hybrid services is predominantly through common carrier spectrum in the 11, 18 and 23 GHz bands. FiberTower's biggest service markets are Dallas/Fort Worth and Washington, D.C./Baltimore, with additional markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit, Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco and Tampa. As of June 30, 2012, FiberTower's books and records reflected total combined assets, at book value, of roughly $188 million and total combined liabilities of roughly $211 million. As of the Petition Date, FiberTower had unrestricted cash of roughly $23 million. For the six months ending June 30, 2012, FiberTower had total revenue of roughly $33 million. With the help of FTI Consulting Inc., FiberTower's preliminary valuation work shows that the Company's enterprise value is materially less than $132 million -- i.e., the approximate principal amount of the 9.00% Senior Secured Notes due 2016 outstanding as of the Petition Date. The preliminary valuation work is based upon the assumption that FiberTower's spectrum licenses will not be terminated. Fibertower Spectrum disclosed $106,630,000 in assets and $175,501,975 in liabilities as of the Chapter 11 filing. Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at Hogan Lovells and Willkie Farr and Gallagher LLP serve as special FCC counsel. FTI Consulting serve as financial advisor. BMC Group Inc. serve as claims and noticing agent. The petitions were signed by Kurt J. Van Wagenen, president. Wells Fargo Bank, National Association -- as indenture trustee and collateral agent to the holders of 9.00% Senior Secured Notes due 2016 owed roughly $132 million as of the Petition Date -- is represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad Hoc Committee of Holders of the 9% Secured Notes Due 2016 is represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya, Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, as local counsel. U.S. Bank, National Association -- in its capacity as successor indenture trustee and collateral agent to holders of the 9.00% Convertible Senior Secured Notes due 2012, owed $37 million as of the Petition Date -- is represented by Michael B. Fisco, Esq., at Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq., at McGuire Craddock & Strother PC as local counsel. William T. Neary, the U.S. Trustee for Region 6 appointed five members to the Official Committee of Unsecured Creditors in the Debtors' cases. The Committee is represented by Otterbourg, Steindler, Houston & Rosen, P.C., and Cole, Schotz, Meisel, Forman & Leonard, P.A. Goldin Associates, LLC serves as its financial advisors. In May 2013, FiberTower sought and obtained Court authority to sell their telecommunications equipment and employ American Communications, LLC, as telecommunications equipment reseller. According to the Debtors, the telecommunications equipment, which was a part of their backhaul business, is no longer necessary in the conduct of their business. They, however, believe that the equipment may have resale value that would benefit their estates. In February 2013, FiberTower filed with the Court a motion to sell assets that are primarily utilized by the Debtors to provide wireless backhaul services in the State of Ohio to Cellco Partnership (dba Verizon Wireless) free and clear for $1.5 million. Verizon Wireless will also pay the pre-closing, monthly operating costs incurred by the Debtors in connection with operating the business in an amount not to exceed $258,000 per month and a monthly fee of $20,000 for certain transition services relating to the assets following the closing. FIRSTPLUS FINANCIAL: Purported Mafia Wife Cops Plea in Takeover --------------------------------------------------------------- Law360 reported that the wife of reputed mafia figure Nicodemo Scarfo pled guilty on Sept. 17 in New Jersey federal court to conspiring to fraudulently apply for a mortgage, settling allegations against her in the prosecution of a scheme in which Scarfo allegedly drained $12 million from a bankrupt mortgage company. According to New Jersey's U.S. Attorney, Lisa Marie Scarfo pled guilty to a superseding charge of conspiracy to make false statements for the purpose of influencing the actions of the bank on a mortgage application to secure a $715,000 home, the report related. The case is USA v. SCARFO et al., Case No. 1:11-cr-00740 (D.N.J.). About FirstPlus Financial Based in Beaumont, Texas, FirstPlus Financial Group, Inc. (Pink Sheets: FPFX) -- http://www.firstplusgroup.com/-- was a diversified company that provided commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company had three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., had three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly owned FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development had one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended reorganization plan was confirmed in that case in April 2000. FirstPLUS Financial Group filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 09-33918) on June 23, 2009. Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, served as counsel. The Debtor had total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FirstPLUS Financial Group disclosed $1,264,637 in assets and $10,347,448 in liabilities as of the Chapter 11 filing. Matthew D. Orwig was appointed as the Chapter 11 trustee in the Debtor's cases. He is represented by Peter A. Franklin, Esq., and Erin K. Lovall, Esq., at Franklin Skierski Lovall Hayward LLP. Franklin Skierski was elevated to lead counsel from local counsel in the stead of Jo Christine Reed and SNR Denton US LLP, due to the maternity leave of Ms. Reed. Kurtzman Carson Consultants served as notice and balloting agent. FOTOLIA HOLDINGS: Moody's Assigns B2 CFR & Sr. Term Loan Rating --------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating and a B3-PD Probability of Default Rating (PDR) to Fotolia Holdings, Inc. Moody's also assigned B2 to the company's proposed $210 million senior secured term loan. Proceeds from the new facility are expected to fund the refinancing of existing debt, a $73 million special dividend, and transaction related fees. The rating outlook is stable. Assignments: Issuer: Fotolia Holdings, Inc. Corporate Family Rating: Assigned B2 Probability of Default Rating: Assigned B3-PD New $210 million Senior Secured Term Loan: Assigned B2, LGD3 -- 34% Outlook Actions: Issuer: Fotolia Holdings, Inc. Outlook is Stable Ratings Rationale: Fotolia's B2 corporate family rating reflects high leverage with pro forma debt-to-EBITDA of 4.6x (including Moody's standard adjustments) estimated upon closing of the proposed dividend transaction. Based on Moody's forecast, debt-to-EBITDA could improve to roughly 4.0x over the next 12 to 18 months driven by low to mid-single digit percentage EBITDA growth and application of a portion of free cash flow to reduce term loan borrowings. Fotolia is a leading provider of microstock imagery in Germany and France, and has generated annual increases in revenues since its founding in 2005 supported by growing demand for imagery products used by small businesses, publishers, and freelancers. Moody's expects revenues to increase in the low to mid-single digit percentage range over the next 12 months, despite economic weakness in Europe (80% of FY2012 revenues). Expansion beyond existing markets will require modest capital investment which should be funded from excess cash. The company benefits from a highly variable cost structure as well as reported EBITDA margins in excess of 45%. Free cash flow conversion is strong reflecting favorable working capital dynamics combined with nominal capital spending. Moody's believes event risk is high based on the company's ownership by financial sponsors, track record of distributions, and strategy to expand in other countries. The company's ratings also consider the increasing supply of lower priced digital imagery, as well as potential threats from existing and new competitors or technologies. Moody's believes barriers to entry are low in the microstock segment, and there are risks related to increasing competition. Fotolia has minimal product diversification away from microstock photography, and revenues are concentrated in Europe. Accordingly, Moody's believes it is important for the company to improve leverage ratios and enhance financial flexibility for making necessary investments in its products and services to retain its leading positions in Europe, especially in a scenario of increasing competition. Liquidity is expected to be good with cash balances of a minimum $5 million to $10 million over the next 12 months plus at least low double digit percentage free cash flow-to-debt ratios. The stable rating outlook reflects Moody's expectation that Fotolia will maintain its leadership positions in Germany and France despite the potential for increased competition from existing and new imagery providers in the microstock segment. Moody's believes revenues will increase in the low to mid-single digit percentage range over the next 12 months tracking expectations for effectively flat GDP growth in Europe and low single-digit GDP growth in the U.S. The outlook assumes free cash flow will be applied to reduce term loan borrowings and incorporates Moody's view that debt-to-EBITDA will decrease below initial levels providing more flexibility to invest in expansion into new markets as well as some cushion for the next cyclical downturn. The outlook does not incorporate sizable debt financed distributions or acquisitions over the next 12 to 18 months. Ratings could be downgraded if debt-to-EBITDA is sustained above 5.75x due to heightened competition or weak demand in one or more key markets resulting in revenue declines or erosion in EBITDA margins. Another leveraging event, including sizable debt financed dividends or share repurchases resulting in debt-to-EBITDA ratios being sustained above 5.75x (including Moody's standard adjustments), could also lead to a downgrade. The company's track record for distributions or recapitalizations weighs on ratings; however, Moody's could consider an upgrade if the company adheres to operating and financial policies that are consistent with a higher rating. Debt-to-EBITDA leverage ratios would also need to be sustained below 4.0x with free cash flow-to-debt ratios of a minimum 12%. The principal methodology used in this rating was the Global Broadcast and Advertising Related Industries Methodology published in May 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 New York, NY, Fotolia Holdings, Inc. is a provider of microstock photography with lead rankings in Europe based on revenues. The company was founded in 2005 and provides stock images primarily through its web site Fotolia.com. In June 2012, KKR acquired a 47% stake (50% voting stake) in Fotolia from TA Associates (31% remaining ownership) and Oleg Tscheltzoff (Co- founder & CEO) in a transaction which valued the company at $455 million. Revenues totaled $90 million for the 12 months ending June 2013. FOTOLIA HOLDINGS: S&P Raises Prelim. CCR to 'B+'; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its preliminary corporate credit rating on New York-based online photography provider Fotolia Holdings Inc. to 'B+'. The outlook is stable. At the same time, S&P assigned the company's proposed $210 million senior secured term loan due 2020 its preliminary issue-level rating of 'B+' (at the same level as the corporate credit rating), with a preliminary recovery rating of '3', indicating S&P's expectation for meaningful (50% to 70%) recovery for secured lenders in the event of a payment default. S&P is withdrawing the preliminary issue-level ratings on the company's previously proposed credit facility, which included a $200 million first-lien term loan and a $100 million second-lien term loan. Previously, proposed financing was not completed. The company will use the proceeds to fund a dividend of approximately $73 million and refinance the existing credit facility. The 'B+' preliminary corporate credit rating reflects the company's narrow business focus, high profitability, and the financial risk inherent in a leveraged recapitalization. S&P views Fotolia's business risk profile as "weak," based on the company's small scale and narrow business focus in the lower-end online photography marketplace, and notwithstanding its high profitability. S&P views the company's financial risk profile as "aggressive," based on its lease-adjusted leverage of 4.8x, pro forma as of June 30, 2013. Pro forma lease-adjusted interest coverage is 3.3x. S&P views Fotolia's management and governance as "fair." Fotolia is the leading online provider of microstock imagery in Europe, where it generated 80% of 2012 revenue. The company is the European market leader but trails iStockPhoto (owned by Getty Images) and Shutterstock Inc. globally. Although Fotolia has grown rapidly, the company operates on a limited scale and has a narrow business focus. There is also the risk of a new competitor entering this still evolving industry segment. Fotolia has grown mainly through organic growth and international expansion. The company offers customers the option to buy images using credit or to buy a subscription product. The majority of revenue has come from credit purchases, but the subscription segment has been growing faster of late as the company introduced new subscription options in late 2012. About 200,000 contributors supply the images and are paid a commission each time their image is downloaded. Over the past couple years, the company has been able to meaningfully improve margins by increasing prices while containing operating expense growth. GLOBE ENERGY: S&P Withdraws 'B' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its 'B' corporate credit rating and 'B' issue-level rating on Snyder, Texas-based Globe Energy Services LLC at the request of the company. GRAND CENTREVILLE: Seeks to Employ Walther as Special Counsel ------------------------------------------------------------- Grand Centreville, LLC seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Lizabeth Lee Walther, Esq., as special counsel in its Chapter 11 case. The Debtor, through Black Creek Consulting, Ltd., a receiver appointed by the Court in an order dated June 3, 2013, is continuing in possession of its properties and is operating and managing its business, as a Debtor-in-Possession, pursuant to Sections 1107 and 1108 of the Bankruptcy Code. Since June 17, 2013, Ms. Walther has served as counsel to the Receiver assisting with general corporate, litigation and landlord-tenant matters. The Receiver anticipates Ms. Walther will continue to render legal services for the benefit of the Debtor as needed throughout the course of the Chapter 11 case similar to the services rendered before the Petition Date to the Receiver, as well as additional services related to Debtor's lender relationship. Ms. Walther will be paid based on her hourly rate and reimbursed for her actual and necessary out-of-pocket expenses. Her hourly rate as of the Petition Date is $320. The Debtor assures the Court that Ms. Walther is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) and/or Section 327(e) of the Bankruptcy Code. Proposed Counsel for the Debtor may be reached at: Lynn Lewis Tavenner, Esq. Paula S. Beran, Esq. TAVENNER & BERAN, PLC 20 North Eighth Street, Second Floor Richmond, VA 23219 Telephone: (804) 783-8300 Telecopy: (804) 783-0178 About Grand Centreville Grand Centreville, LLC, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-13590) on Aug. 2, 2013. The petition was signed by Michael L. Schuett, principal of Black Creek Consulting Ltd., the receiver. Judge Robert G. Mayer presides over the case. The Debtor estimated assets and debts of at least $10 million. GRAND CENTREVILLE: Hires Mendelson & Mendelson as Accountant ------------------------------------------------------------ Grand Centreville, LLC seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Mendelson & Mendelson, CPA's, P.C. as its accountant in its Chapter 11 case. The Debtor, through Black Creek Consulting, Ltd., a receiver appointed by the Court in an order dated June 3, 2013, is continuing in possession of its properties and is operating and managing its business, as a Debtor-in-Possession, pursuant to Sections 1107 and 1108 of the Bankruptcy Code. Mendelson has served as the Receiver's accountant since appointment. Mendelson's professionals will be paid for its services on an hourly basis in accordance with their ordinary and customary hourly rates. The name, position, and hourly rates of the Petition Date, of the professional currently expected to have primary responsibility for providing services to the Debtor is: Louis B. Ruebelmann $325.00 Certified Public Accountant Certified in Financial Forensics The firm will also be reimbursed for actual and necessary out-of- pocket expenses. Mr. Ruebelmann, a Principal of Mendelson, assures the Court that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) and/or Section 327 (e) of the Bankruptcy Code. About Grand Centreville Grand Centreville, LLC, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-13590) on Aug. 2, 2013. The petition was signed by Michael L. Schuett, principal of Black Creek Consulting Ltd., the receiver. Judge Robert G. Mayer presides over the case. The Debtor estimated assets and debts of at least $10 million. GRAND CENTREVILLE: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Grand Centreville, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of Virginia its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $39,000,000.00 B. Personal Property 1,550,045.74 C. Property Claimed as Exempt D. Creditors Holding Secured Claims 24,454,924.53 E. Creditors Holding Unsecured Priority Claims 0 F. Creditors Holding Unsecured Non-priority Claims 1,792,677.47 -------------- -------------- TOTAL $40,550,045.74 $26,247,602.00 A full-text copy of the Schedules of Assets and Debts may be accessed for free at http://is.gd/2yeDLN About Grand Centreville Grand Centreville, LLC, filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 13-13590) on Aug. 2, 2013. The petition was signed by Michael L. Schuett, principal of Black Creek Consulting Ltd., the receiver. Judge Robert G. Mayer presides over the case. The Debtor estimated assets and debts of at least $10 million. GREAT PLATTE: Wins Approval of Chapter 11 Plan ---------------------------------------------- The Great Platte River Road Archway Monument, a tourist attraction spanning Interstate 80 near Kearney, Nebraska, has won approval of its Chapter 11 plan on Sept. 18, 2013. Joe Duggan and Mike Konz, writing for the Omaha World-Herald, report that U.S. Bankruptcy Judge Thomas Saladino ordered the Archway Foundation to pay $100,000 to settle the claims of bond holders and unsecured creditors. The money to cover the payments will come mostly from pledges made by supporters of the transportation museum. "We have reduced over $20 million in debt down to $100,000," said Omaha attorney Randall Wright, Esq., who represented the foundation in the Chapter 11 bankruptcy proceedings. The report notes both bond holders and creditors voted overwhelmingly to accept the settlement offer. Had they rejected it, the bankruptcy would have collapsed and the museum, built at a cost of $60 million, would likely have closed. About Great Platte The Great Platte River Road Memorial Foundation owns the Platte River Road Archway, an eight-story tall museum that was built in 2000 with $60 million in industrial revenue bonds. The museum is 129 miles (208 kilometers) west of Lincoln, Nebraska, and 317 miles east of Cheyenne, Wyoming. Admission is $12 for adults and between $8 and $5 for children. The attraction never generated enough income to cover operating expenses and debt service. The first default occurred in 2002 when the outstanding amount on the bonds was reduced to $22 million. Great Platte River sought Chapter 11 protection (Bankr. D. Neb. Case No. 13-40411) on March 6, 2013. T. Randall Wright, Esq., at Baird Holm, LLP, in Omaha, Nebraska. The Debtor estimated assets of $100,001 to $500,000 and debts of $10 million to $50 million. HD SUPPLY: Files Copy of Presentation Materials With SEC -------------------------------------------------------- HD Supply Holdings, Inc., furnished with the U.S. Securities and Exchange Commission a copy of presentation materials for the Company's investors. The presentation focuses on, among other things, second quarter 2013 performance highlights, estimated market outlook framework, and monthly sales performance. A copy of the presentation is available for free at http://is.gd/3cYqy5 About HD Supply HD Supply, Inc., headquartered in Atlanta, Georgia, is one of the largest North American wholesale distributors supporting residential and non-residential construction and to a lesser extent electrical consumption and repair and remodeling. HDS also provides maintenance, repair and operations services. Its businesses are organized around three segments: Infrastructure and Energy; Maintenance, Repair & Improvement; and, Specialty Construction. HDS operates through approximately 800 locations throughout the U.S. and Canada serving contractors, government entities, maintenance professionals, home builders and professional businesses. For the 12 months ended Feb. 3, 2013, the Company incurred a net loss of $1.17 billion on $8.03 billion of net sales, as compared with a net loss of $543 million on $7.02 billion of net sales for the 12 months ended Jan. 29, 2012. As of Aug. 4, 2013, the consolidated balance sheet showed $6.58 billion in total assets, $7.34 billion in total liabilities and a $753 million total stockholders' deficit. * * * As reported by the TCR on Jan. 11, 2013, Moody's Investors Service upgraded HD Supply, Inc.'s ("HDS") corporate family rating to B3 from Caa1 and its probability of default rating to B3 from Caa1. This rating action results from our expectations that HDS will refinance a significant portion of its senior subordinated notes due 2015, effectively extending the remainder of its maturities by at least two years to 2017. HD Supply carries a 'B' corporate credit rating, with negative outlook, from Standard & Poor's Ratings Services. HERON LAKE: Posts $2.6 Million Net Income in July 31 Quarter ------------------------------------------------------------ Heron Lake Bioenergy, LLC, filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $2.64 million on $45.58 million of revenues for the three months ended July 31, 2013, as compared with net income of $557,887 on $41.90 million of revenues for the same period last year. For the nine months ended July 31, 2013, the Company reported net income of $890,797 on $125.20 million of revenues as compared with a net loss of $1.94 million on $121.95 million of revenues for the same period during the prior year. The Company's balance sheet at July 31, 2013, showed $60.75 million in total assets, $35.47 million in total liabilities and $25.27 million total members' equity. A copy of the Form 10-Q is available for free at: http://is.gd/8OP7CD About Heron Lake Heron Lake BioEnergy, LLC, operated a dry mill, coal fired ethanol plant in Heron Lake, Minnesota. After completing a conversion in November 2011, the Company is now a natural gas fired ethanol plant. Its subsidiary, HLBE Pipeline Company, LLC, owns 73 percent of Agrinatural Gas, LLC, the pipeline company formed to construct, own, and operate a natural gas pipeline that provides natural gas to the Company's ethanol production facility through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company in Cottonwood County, Minnesota. Its subsidiary, Lakefield Farmers Elevator, LLC, has grain facilities at Lakefield and Wilder, Minnesota. At nameplate, the Company's ethanol plant has the capacity to process approximately 18.0 million bushels of corn each year, producing approximately 50 million gallons per year of fuel-grade ethanol and approximately 160,000 tons of distillers' grains with soluble. In its report on the Company's financial statements for the fiscal year ended Oct. 31, 2012, Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minnesota, expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern. The independent auditors noted that the Company has incurred losses due to difficult market conditions and the impairment of long-lived assets. "The Company is out of compliance with its master loan agreement and is operating under a forbearance agreement whereby the Company agreed to sell substantially all of its assets." The Company reported a net loss of $32.35 million for the year ended Oct. 31, 2012, as compared with net income of $543,017 for the year ended Oct. 31, 2011. Bankruptcy Warning At Jan. 31, 2013, the Company's total indebtedness to AgStar was approximately $41.1 million. All of the Company's assets and real property are subject to security interests and mortgages in favor of AgStar as security for the obligations of the master loan agreement. The Company's failure to pay any required installment of principal or interest or any other amounts payable under the Company's Term Loan or Term Revolving Loan or the Company's failure to perform or observe any covenant under the Sixth Amended and Restated Master Loan Agreement would result in an event of default, entitling AgStar to accelerate and declare due all amounts outstanding under the Company's Term Loan and its Term Revolving Loan. "Upon the occurrence of any one or more Events of Default, as defined under the Sixth Amended and Restated Forbearance Agreement, including failure to observe any of the financial or affirmative covenants...AgStar may accelerate all of our indebtedness and may seize the assets that secure our indebtedness, causing us to lose control of our business. We may also be forced to sell our assets, restructure our indebtedness, submit to foreclosure proceedings, cease operations or seek bankruptcy or reorganization protection," according to the Company's quarterly report for the three months ended Jan. 31, 2013. HUNTSMAN CORP: Moody's Changes Outlook to Stable & Keeps Ba3 CFR ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings (Corporate Family Rating of Ba3) of Huntsman Corporation and its subsidiary Huntsman International LLC and changed the outlook to stable from positive following the proposed acquisition of Rockwood Specialties Group, Inc.'s Pigments and Performance Additives Business (excluding Clay-based Additives). Huntsman will acquire the assets for $1.325 billion ($1.1 billion in cash and assume $225 million of pension liability). The transaction is expected to close in the first half of 2014, subject to regulatory approvals. "Further consolidation in the TiO2 industry should benefit long term profitability of Huntsman's business," stated Moody's analyst John Rogers. "However, the recovery in margins is likely to be slow as we believe that fundamental demand growth appears to be weak and TiO2 users have been restocking inventories given the low prices in 2013." The following summarizes the outlook activity: Huntsman Corporation Outlook to Stable from Positive Huntsman International LLC Outlook to Stable from Positive The Ba3 Corporate Family Rating (CFR) at Huntsman and HI reflect its solid competitive position in urethanes, epoxies and TiO2, as well as an experienced management team. Additional support for the rating is based on management's desire to reduce net leverage to about 2.0 to 2.5 times on a normalized EBITDA basis (this ratio does not incorporate Moody's adjustments). However, the severe downturn in TiO2 profitability over the past year has materially weakened credit metrics and the proposed acquisition of Rockwood's business would further stress Huntsman's metrics for the Ba3 CFR (pro forma Debt/EBITDA as of June 30 , 2013 of roughly 5.0x). However, the TiO2 business appears to have bottomed in the first half of 2013 and should generate a material improvement in margins in the second half of 2013 and into 2014. Rockwood's TiO2 business has been slower to recover due to high priced ore inventories and low capacity utilization. The acquisition price represents an elevated multiple of LTM June 30, 2013 EBITDA for the business with the Performance Additives providing the vast majority of the earnings (roughly 85% of the estimated $100-105 million EBITDA). Moody's expects that EBITDA for these businesses to nearly double in 2014 from the LTM levels due to the recovery in TiO2 margins and some very modest synergies. Huntsman expects to achieve $130 million in synergies over the first three years of operation, which Moody's views as fairly aggressive. Huntsman has stated that it plans to do an initial public offering of the TiO2 business within two years to reduce leverage. Hence, Huntsman will like finance this transaction with debt that can be easily repaid. If Huntsman adds debt that is pari passu with its existing term loan, the rating on the revolver and loan would likely be lowered to Ba2 from Ba1, as it would represent a much greater proportion of the capital structure. The stable outlook reflects the expected improvement in Huntsman's financial metrics in 2014, from the pro forma levels cited above, given a recovery in the TiO2 margins and growth in Huntsman's other businesses. Debt/EBITDA (including Moody's standard adjustments) is expected to be 4.0-4.2x in 2014 and Retained Cash Flow/Debt is expected to be in the 12-15% range. If Debt/EBITDA remains above 4.5x in 2014 due to the failure of TiO2 margins to recover, Moody's could lower Huntsman's CFR by one notch. An upgrade is unlikely at the current time due to elevated financial metrics and uncertainty over the pace of improvement through the first half of 2014. However, if Huntsman is able to reduce its Debt/EBITDA towards 3.0x on a sustainable basis, Moody's could raise the CFR to Ba2. Huntsman's Speculative Grade Liquidity rating of SGL-2 is supported by an elevated cash balance and the expectation for over $300 million of free cash flow over the next four quarters. Huntsman's secondary liquidity is provided by a $400 million undrawn revolver due in 2017 and over $250 million of availability under its US and European accounts receivable programs due 2016. Huntsman plans to expand the revolver to $600 million as part of this acquisition to further improve its liquidity. The principal methodology used in this rating was the Global Chemical 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. Huntsman Corporation is a global manufacturer of differentiated and commodity chemical products. Huntsman's products are used in a wide variety of end markets, including aerospace, automotive, construction, consumer products, electronics, medical, packaging, coatings, refining and synthetic fibers. Huntsman has revenues of almost $11 billion. IBAHN CORP: Has Interim Authority to Obtain $1.5MM in DIP Loans --------------------------------------------------------------- Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave interim authority for iBahn Corporation, et al., to obtain not more than $1.5 million of postpetition superpriority secured financing from JPMorgan Chase Bank, N.A., as DIP lender. To secure the DIP Loan Obligations, the DIP Lender is granted valid, enforceable and fully perfected, first priority priming liens on and senior security interests in all of the property, assets or interests in property or assets of each Debtor, and all "property of the estate," subject only to permitted liens and a carve-out. The DIP Lender is also granted an allowed superpriority administrative expense claim for all DIP Loan Obligations, subject and subordinate in priority of payment only to payment of the Carve-Out. The Carve-Out are (i) fees payable to the U.S. Trustee or the Clerk of the Bankruptcy Court, (ii) unpaid professional fees and expenses payable to bankruptcy professionals that are incurred prior to the date of the DIP Lender's termination of the DIP Facility, and (iii) case administration fees and professional fees paid on or after the DIP Lender's termination of the DIP Facility in an aggregate amount not to exceed $100,000. The DIP Agreements provide for the Debtors' payment of a DIP Facility Fee equal to $50,000, which is fully earned on the date of the entry of the Interim Order. iBahn Corp. also agrees to pay to Chase a "success fee" equal to 2% of the current outstanding principal balance of its prepetition obligations upon the closing of a merger or consolidation with any other person, a sale, transfer, lease or other disposition of all or any substantial part of the its assets or all or substantially all of its stock. The interest rate on the DIP Facility will be: -- 8% per annum for the first 90 days -- 9% per annum for the second 60 days -- 10% per annum for the third 60 days -- 11% per annum for the fourth 60 days -- 12% per annum if paid thereafter The DIP Facility matures on Feb. 14, 2014. The Court will conduct a final hearing on the Debtors' request to obtain DIP Loans commencing Oct. 7, 2013, at 9:30 a.m. (Eastern). Objections are due Sept. 30. The Debtors are represented by Laura Davis Jones, Esq., and Bruce Grohsgal, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. The DIP Lender is represented by Louis R. Strubeck, Esq., and Ryan E. Manns, Esq., at Fulbright & Jaworski LLP, in Dallas, Texas, and John H. Knight, Esq., at Richards Layton & Finger, in Wilmington, Delaware. A full-text copy of the Interim DIP Order is available for free at http://bankrupt.com/misc/IBAHN_dipord0909.pdf Salt Lake City, Utah-based IBahn Corp., a provider of Internet services to hotels, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12285), citing a loss of contracts with largest customer Marriott International Inc. and patent litigation costs. IBahn Chief Financial Officer Ryan Jonson said the company had assets of $13.6 million and it listed liabilities of as much as $50 million in the Chapter 11 filing on Sept. 6, 2013. The petitions were signed by Ryan Jonson as chief financial officer. Judge Peter J. Walsh presides over the case. Pachulski Stang, Ziehl Young & Jones, LLP, serves as the Debtors' counsel. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. IBAHN CORP: Can Use Cash Collateral Until Oct. 7 ------------------------------------------------ Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave interim authority for iBahn Corporation, et al., to use cash collateral securing their prepetition indebtedness until Oct. 7, 2013, when the Court will commence a hearing to consider final approval of the Debtors' request to use the Cash Collateral. As adequate protection in respect of, and as consideration for, the use of Cash Collateral, the Prepetition Lender is granted replacement liens subordinate only to the DIP Liens, permitted liens and the carve-out. As further adequate protection, the Prepetition Lender is also granted a superpriority claim, which will have priority over all administrative expense claims and unsecured claims against the Debtors. The Carve-Out are (i) fees payable to the U.S. Trustee or the Clerk of the Bankruptcy Court, (ii) unpaid professional fees and expenses payable to bankruptcy professionals that are incurred prior to the date of the DIP Lender's termination of the DIP Facility, and (iii) case administration fees and professional fees paid on or after the DIP Lender's termination of the DIP Facility in an aggregate amount not to exceed $100,000. Objections to the final approval of the Debtors' request to use the Cash Collateral are due Sept. 30. The Debtors are represented by Laura Davis Jones, Esq., and Bruce Grohsgal, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. The DIP Lender is represented by Louis R. Strubeck, Esq., and Ryan E. Manns, Esq., at Fulbright & Jaworski LLP, in Dallas, Texas, and John H. Knight, Esq., at Richards Layton & Finger, in Wilmington, Delaware. A full-text copy of the Interim Cash Collateral Order is available for free at http://bankrupt.com/misc/IBAHN_dipord0909.pdf Salt Lake City, Utah-based IBahn Corp., a provider of Internet services to hotels, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12285), citing a loss of contracts with largest customer Marriott International Inc. and patent litigation costs. IBahn Chief Financial Officer Ryan Jonson said the company had assets of $13.6 million and it listed liabilities of as much as $50 million in the Chapter 11 filing on Sept. 6, 2013. The petitions were signed by Ryan Jonson as chief financial officer. Judge Peter J. Walsh presides over the case. Pachulski Stang, Ziehl Young & Jones, LLP, serves as the Debtors' counsel. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. IBAHN CORP: Seeks to Employ Pachulski as Bankruptcy Counsel ----------------------------------------------------------- iBahn Corporation, et al., seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Pachulski Stang Ziehl & Jones LLP, as counsel, nunc pro tunc to the Petition Date. The principal attorneys and paralegals presently designated to represent the Debtors and their current hourly rates are: Laura Davis Jones ljones@pszjlaw.com $975 Davis M. Bertenthal dbertenthal@pszjlaw.com $825 James E. O'Neill joneill@pszjlaw.com $695 Timothy P. Cairns tcairns@pszjlaw.com $575 Lynzy McGee, paralegal $295 The firm will also be reimbursed for any necessary out-of-pocket expenses. The firm assures the Court that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The firm discloses that it has received payments from the Debtors during the year prior to the Petition Date in the amount of $103,639. Salt Lake City, Utah-based IBahn Corp., a provider of Internet services to hotels, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12285), citing a loss of contracts with largest customer Marriott International Inc. and patent litigation costs. IBahn Chief Financial Officer Ryan Jonson said the company had assets of $13.6 million and it listed liabilities of as much as $50 million in the Chapter 11 filing on Sept. 6, 2013. The petitions were signed by Ryan Jonson as chief financial officer. Judge Peter J. Walsh presides over the case. Pachulski Stang, Ziehl Young & Jones, LLP, serves as the Debtors' counsel. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. IBAHN CORP: Employs Epiq as Claims and Noticing Agent ----------------------------------------------------- iBahn Corporation, et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Epiq Bankruptcy Solutions, LLC, as claims and noticing agent. The firm assured the Court that it is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Salt Lake City, Utah-based IBahn Corp., a provider of Internet services to hotels, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12285), citing a loss of contracts with largest customer Marriott International Inc. and patent litigation costs. IBahn Chief Financial Officer Ryan Jonson said the company had assets of $13.6 million and it listed liabilities of as much as $50 million in the Chapter 11 filing on Sept. 6, 2013. The petitions were signed by Ryan Jonson as chief financial officer. Judge Peter J. Walsh presides over the case. Pachulski Stang, Ziehl Young & Jones, LLP, serves as the Debtors' counsel. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. IBAHN CORP: Wants Agreement with Former CEO Rejected ---------------------------------------------------- iBahn Corporation, et al., seek authority from the U.S. Bankruptcy Court for the District of Delaware to reject, effective as of the Petition Date, a prepetition severance, separation and consulting agreement with David W. Garrison, the former chief executive officer and member of the Board of Directors. Pursuant to the consulting agreement, Mr. Garrison was engaged to provide services to iBahn as an independent contractor. However, Mr. Garrison no longer works for the Debtors or otherwise provides the Debtors with services. Consequently, the Debtors believe that the estates derive no benefit from maintaining the contract. Salt Lake City, Utah-based IBahn Corp., a provider of Internet services to hotels, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12285), citing a loss of contracts with largest customer Marriott International Inc. and patent litigation costs. IBahn Chief Financial Officer Ryan Jonson said the company had assets of $13.6 million and it listed liabilities of as much as $50 million in the Chapter 11 filing on Sept. 6, 2013. The petitions were signed by Ryan Jonson as chief financial officer. Judge Peter J. Walsh presides over the case. Pachulski Stang, Ziehl Young & Jones, LLP, serves as the Debtors' counsel. The Debtors' claims and noticing agent is Epiq Bankruptcy Solutions. INSPIREMD INC: Incurs $29.3 Million Net Loss in Fiscal 2013 ----------------------------------------------------------- InspireMD, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $29.25 million on $4.87 million of revenues for the year ended June 30, 2013, as compared with a net loss of $17.59 million on $5.34 million of revenues during the prior year. The Company's net loss increased by approximately $11.7 million, or 66.3 percent due to an increase of approximately $14.2 million in financial expenses, of which, approximately $13.5 million were non-recurring, non-cash, partially offset by a decrease of approximately $2.4 million in operating expenses and an increase of approximately $0.1 million in gross profit. For the three months ended June 30, 2013, the Company incurred a net loss of $14.94 million on $1.50 million of revenues as compared with a net loss of $3.94 million on $933,000 of revenues for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $20.74 million in total assets, $4.64 million in total liabilities and $16.10 million in total equity. Commenting on the Company's recent activity, Alan Milinazzo, president and chief executive officer of InspireMD, stated, "Since joining the Company earlier this year, I've looked to realign our efforts across multiple areas of the business in order to create a solid foundation for future growth. We've identified four key areas of focus moving forward: clinical studies, development of new products in our pipeline, strategic partnerships and our commercial strategy. I believe these concentrated efforts will allow us to build broader awareness for our new generation of stent technologies with sales in countries where we already have market clearance, while working towards FDA approval." A copy of the Form 10-K is available for free at: http://is.gd/EvwHo2 About InspireMD InspireMD, Inc., was organized in the State of Delaware on Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the acquisition, exploration and development of natural resource properties. On March 28, 2011, the Company changed its name from "Saguaro Resources, Inc." to "InspireMD, Inc." Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical device company focusing on the development and commercialization of its proprietary stent platform technology, Mguard. MGuard provides embolic protection in stenting procedures by placing a micron mesh sleeve over a stent. The Company's initial products are marketed for use mainly in patients with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass surgery). InspireMD reported a net loss of US$17.59 million on US$5.35 million of revenue for the year ended June 30, 2012, compared with a net loss of US$6.17 million on US$4.67 million of revenue during the prior year. For the nine months ended March 31, 2013, the Company incurred a net loss of $14.31 million on $3.37 million of revenues. The Company's balance sheet at March 31, 2013, showed $9.79 million in total assets, $13.20 million in total liabilities, and a $3.40 million total capital deficiency. Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2012. The independent auditors noted that the Company has had recurring losses, negative cash flows from operating activities and has significant future commitments that raise substantial doubt about its ability to continue as a going concern. The Company said the following statement in its quarterly report for the period ended Dec. 31, 2012: "The Company has had recurring losses and negative cash flows from operating activities and has significant future commitments. For the six months ended December 31, 2012, the Company had losses of approximately $9.4 million and negative cash flows from operating activities of approximately $5.8 million. The Company's management believes that its financial resources as of December 31, 2012 should enable it to continue funding the negative cash flows from operating activities through the three months ended September 30, 2013. Furthermore, commencing October 2013, the Company's senior secured convertible debentures (the "2012 Convertible Debentures") are subject to a non-contingent redemption option that could require the Company to make a payment of $13.3 million, including accrued interest. Since the Company expects to continue incurring negative cash flows from operations and in light of the cash requirement in connection with the 2012 Convertible Debentures, there is substantial doubt about the Company's ability to continue operating as a going concern. These financial statements include no adjustments of the values of assets and liabilities and the classification thereof, if any, that will apply if the Company is unable to continue operating as a going concern." INTRAOP MEDICAL: Sale Approved With Creditors Getting 15% Recovery ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that IntraOp Medical Corp., the maker of the Mobetron device for treating cancer with radiation, got tentative court approval to sell the business given a settlement under which the buyer agreed to fund a 15 percent distribution for unsecured creditors. According to the report, IntraOp, based in Sunnyvale, California, filed a petition for Chapter 11 protection on July 15 in San Jose after negotiating an agreement to sell the business to Firsthand Technology Value Fund Inc. largely in exchange for debt. The settlement, recited in court records, obviated opposition to the sale from the unsecured creditors' committee. The report notes that the buyer agreed to fund whatever is required for a 15 percent recovery by unsecured creditors, as long as the claims don't exceed $4 million. Firsthand and the company both agreed not to sue creditors for payments they received within 90 days of bankruptcy. About IntraOp Medical Headquartered in Sunnyvale, California, IntraOp Medical Corp. (OTC BB: IOPM) -- http://www.intraopmedical.com/-- develops, manufactures, markets, distributes and services Mobetron, a proprietary mobile electron-beam cancer treatment system designed for use in intraoperative electron-beam radiation therapy, or IOERT. IntraOp Medical Corp. filed a petition for Chapter 11 protection (Bankr. N.D. Cal. Case No. 13-bk-53791) on July 15 in San Jose, California. Revenue for the September 2012 fiscal year was $13.2 million. The IntraOp device delivers radiation during surgery to cancerous tissue while shielding healthy tissue. J & J DEVELOPMENTS: Court Converts Case into Chapter 7 Proceeding ----------------------------------------------------------------- Judge Robert E. Nugent ordered the conversion of J & J Developments Inc.'s Chapter 11 case into a Chapter 7 proceeding. Steven L. Speth is appointed as Chapter 7 Trustee. As reported on the Aug. 21, 2013 edition of The Troubled Company Reporter, Steven L. Speth, liquidating trustee of J & J Developments Inc., filed a motion to convert the Debtor's existing Chapter 11 case to one under Chapter 7 of the Bankruptcy Code. The Trustee reasoned that asserted that the estate is continuing to accrue Chapter 11 quarterly fees, which will not provide any benefit to the unsecured creditors in the event Chapter 5 recoveries are generated. The only remaining Chapter 11 assets, he noted, are potential Chapter 5 proceedings as all tangible assets have been liquidated. At the hearing on the Motion to Convert, Steven L. Speth appeared by and through his counsel, SPETH & KING, at 300 W. Douglas, Suite 230, Wichita, KS 67202. The U.S. Trustee was also represented at the hearing by its counsel, Joyce Owen, Esq., with business address 301 North Main, Suite 1150, Wichita, KS 67202. About J & J Developments J & J Developments Inc. is a real estate holding company holding title to real estate in more than 20 locations in Kansas. Many of those locations contain convenience stores. J & J Developments filed a Chapter 11 petition (Bankr. D. Kan. Case No. 12-11881) in Wichita, Kansas, on July 12, 2012. John E. Brown signed the petition as president and chief executive officer. The Debtor is represented by Edward J. Nazar, Esq., at Redmond & Nazar, LLP, in Wichita, Kansas. Judge Robert E. Nugent presides over the case. According to the petition, the Debtor has scheduled assets of $18.7 million and scheduled liabilities of $34,933. In April 2013, J & J Developments, Inc. won confirmation of its Chapter 11 Liquidation Plan dated Nov. 30, 2012. KIDSPEACE CORP: Lease Decision Period Extended Until Sept. 26 ------------------------------------------------------------- On Sept. 9, 2013, the U.S. Bankruptcy Court for the Eastern District of Pennsylvania entered a bridge order extending the time period within which KidsPeace Corporation, et al., may assume or reject non-residential real property leases, through and including one week after the date on the hearing on the motion. The hearing on the motion is scheduled for Sept. 19, 2013. As reported in the TCR on Sept. 5, 2013, the Debtors are asking the Bankruptcy Court to extend until Dec. 17, 2013, the period of time within which the Debtors may assume or reject non-residential real property leases. At the present time, although the Debtors have commenced a review and analysis of the leases to determine which of them are beneficial to the bankruptcy estates, there are 31 leases involving property at different locations throughout the county. The Debtors, according to Joseph R. Zapata, Jr., Esq., at NORRIS, McLAUGHLIN & MARCUS, PA, in Allentown, Pennsylvania, need additional time to review the needs of the Debtors at those locations and assess the benefit of the respective Leases. In addition, since the Petition Date, the Debtors have been actively engaged in discussions with the Pension Benefit Guaranty Corporation and the Official Committee of Unsecured Creditors. Pending a resolution with the PBGC and the Committee and the filing of plan of reorganization, the Debtors are unable to determine which Leases will be a necessary part of the reorganization and thus beneficial to the estate, Mr. Zapata tells the Court. The Debtors understand the need to continue to make the post- petition rental payments on the Leases, and expect to continue to do so unless and until any lease is formally rejected. 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 Fitzpatrick Lentz & Bubba, P.C., and Lowenstein Sandler LLP as counsel. FTI Consulting, Inc. serves as the panel's financial advisor. LIQUIDMETAL TECHNOLOGIES: Inks Change of Control Agreements ----------------------------------------------------------- Liquidmetal Technologies, Inc., entered into Change of Control Agreements with Ricardo A. Salas, the Company's Executive Vice President, Tony Chung, the Company's Chief Financial Officer, and certain other executive officers who are not "named executive officers" of the Company for SEC reporting purposes. The Change of Control Agreements provide that if the executive officer's employment with the Company is terminated without cause during the one-year period after a change of control of the Company, then the terminated officer will receive lump sum severance compensation in an amount equal to 12 months of his then-current base salary. "Change of control" is defined, with certain exceptions, as a merger of the Company with a third-party, the sale of all or substantially all of the Company's assets, or the acquisition by a single person or group of more than 50 percent of the combined voting power of the Company's outstanding securities. "Cause" is defined in the Change of Control Agreements to include fraud, embezzlement, dishonesty, material harm to the Company, or an uncured failure to adequately perform job duties, among other things. Under the agreements, the executive officers will each also be entitled to the severance compensation in the event he terminates his own employment within one year after a change of control because of a salary decrease or assignment to a lower-level position. About Liquidmetal Technologies Based in Rancho Santa Margarita, Cal., Liquidmetal Technologies, Inc., and its subsidiaries are in the business of developing, manufacturing, and marketing products made from amorphous alloys. Liquidmetal Technologies markets and sells Liquidmetal(R) alloy industrial coatings and also manufactures, markets and sells products and components from bulk Liquidmetal alloys that can be incorporated into the finished goods of its customers across a variety of industries. The Company also partners with third- party licensees and distributors to develop and commercialize Liquidmetal alloy products. Liquidmetal incurred a net loss of $14.02 in 2012, as compared with net income of $6.15 million in 2011. The Company's balance sheet at March 31, 2013, showed $7.31 million in total assets, $7.57 million in total liabilities and a $258,000 total shareholders' deficit. SingerLewak LLP, in Los Angeles, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has an accumulated deficit, which raises substantial doubt about the Company's ability to continue as a going concern. MAINEGENERAL MEDICAL: Moody's Lowers Ratings on 2011 Bonds to Ba1 ----------------------------------------------------------------- Moody's Investors Service has downgraded to Ba1 from Baa3 the rating assigned to MaineGeneral Medical Center's Series 2011 bonds. The outlook is revised to negative from stable. The downgrade affects $281 million of rated bonds. The downgrade is due to MGMC's downturn in financial performance in fiscal year (FY) 2013 and expectation that FY 2014 will show material further decline in operating and operating cash flow margins. Rating Rationale: The downgrade to Ba1 from Baa3 reflects the organization's downturn in financial performance in FY 2013 and the expectation that FY 2014 financial performance will be materially weaker than FY 2013 performance levels (based on a management-provided budget) and significantly lower than prior projections. FY 2013 financial performance was negatively impacted by lower than anticipated revenue growth associated with Medicare and Medicaid cuts, rising bad debt and charity care, and declining inpatient utilization. In addition, MGMC has a very high debt load that results in weak debt coverage measures, particularly pronounced given the downturn in financial performance in FY 2013. The negative outlook reflects the expectation that FY 2014 financial performance will be materially weaker than current performance, and will be the low period for the organization with improvements in financial performance projected for FY 2015. Favorable credit factors include MGMC's position as market leader in its service area, demonstrated financial support from a large foundation for the new hospital construction project, recent receipt of owed MaineCare (Medicaid) payments for prior years, and a conservative debt structure with all fixed rate debt and no interest rate swaps. Challenges - MGMC experienced weaker financial performance in FY 2013 with a 6.9% operating cash flow margin, compared to an 8.5% operating cash flow margin in FY 2012. The downturn in financial performance was largely related to low revenue growth (1.5%) due to Medicare and Medicaid cuts, rising bad debt and charity care, and lower inpatient volumes. Medicare, Medicaid, and self-pay make up nearly 70% of MGMC's gross patient revenues. - The hospital's financial performance in FY 2014 is budgeted to be materially weaker than current levels of performance, and significantly off budget from projections provided in 2011 when construction of the new hospital commenced. Management anticipates a $17.3 million operating loss (-3.9% operating margin) and operating cash flow of $24.2 million (5.5% operating cash flow margin) in FY 2014. One-time costs of transitioning to the new hospital are budgeted at $2.6 million, so most of the downturn is related to lower than anticipated revenue growth and an expense base that includes additional costs of opening the new hospital. Management states that expenses in FY 2014 will be higher than anticipated due to the accelerated opening of the new hospital, seven months ahead of originally scheduled. - The hospital has a very heavy debt burden, with weak Moody's- adjusted maximum annual debt service coverage of 1.46 times,76% debt-to-revenue, and 36% cash-to-debt based on unaudited FY 2013 financial statements. - Inpatient volume declines continued through FY 2013. Inpatient admissions declined by 0.6%, although observation stays grew by 36%. The organization has a history of variable patient volumes. - There is little to no population growth in MGMC's service area and the population is aging which will increase the system's exposure to Medicare. Strengths: - MGMC's construction of a new inpatient facility that consolidates hospital services on one location is nearly complete -- seven months ahead of schedule and on budget. - The organization recently received $48 million from the State of Maine related to prior year MaineCare payments, which will help prevent declines in liquidity as the hospital enters the final phase of its construction project and is required to make an equivalent $48 million in equity contributions. - MGMC maintains its position as the market leader in the Kennebec Valley region with dominant market share in the primary service area. - MGMC's debt structure is conservative, with all fixed rate debt and no interest rate derivatives. Outlook: The negative outlook reflects the expectation that financial performance, particularly operating cash flow, in FY 2014 and FY 2015 will be significantly weaker than current levels of performance. In addition, cash is expected to decline, despite the receipt of $48 million in Medicaid back-payments from the State of Maine. What Could Make the Rating Go Up A rating upgrade is unlikely in the near term given the weak credit metrics, the challenges of opening the new facility in FY 2014 and the resulting downturn in financial performance. Longer term a rating upgrade would be considered if the organization showed sustained improvement in operating and operating cash flow margins and balance sheet position. What Could Make the Rating Go Down A rating downgrade could occur should MGMC not meet its FY 2014 budget and demonstrate projected improvement in revenue growth and operating profitability in FY 2015. Further reductions in liquidity beyond the decline projected in FY 2014, or any violation of bond or term loan covenants resulting in an event of default could also result in a downgrade. The principal methodology used in this rating was Not-for-Profit Healthcare Rating Methodology published in March 2012. MDU COMMUNICATIONS: CEO Sheldon Nelson Resigns From Posts --------------------------------------------------------- Sheldon Nelson, president and chief executive officer of MDU Communications International, Inc., as well as president of the Company's wholly-owned subsidiary MDU Communications (USA) Inc., resigned, effective Sept. 13, 2013, as an officer and director of the Company as well as of the wholly-owned subsidiary. Mr. Nelson's departure is not the result of any disagreement with the Company or the Board of Directors on any matter relating to the Company's operations, policies or practices. J.E. "Ted" Boyle, 66, will serve as the Company's interim chief executive officer. Mr. Boyle currently serves on the Board of Directors of the Company, having been appointed in 2012. Mr. Boyle previously served as a Company director from 2000 through 2011 and served as Chairman of the Board from 2008 to 2011. Mr. Boyle has extensive experience in the telecommunications industry. Mr. Boyle and the Company have not entered into an employment agreement. There are no arrangements or understandings between Mr. Boyle and any other person pursuant to which he was appointed as an executive officer of the Company. About MDU Communications Totowa, New Jersey-based MDU Communications International, Inc., is a national provider of digital satellite television, high-speed Internet, digital phone and other information and communication services to residents living in the United States multi-dwelling unit market -- estimated to include 32 million residences. For the six months ended March 31, there was $152,000 in operating income and a net loss of $1.5 million on revenue of $12 million. The Company reported a net loss of $6.4 million on $27.3 million of revenue for fiscal year ended Sept. 30, 2012, compared with a net loss of $7.4 million on $27.9 million of revenue for 2011. The Company's balance sheet at March 31, 2013, showed $18.04 million in total assets, $32.14 million in total liabilities and a $14.09 million total stockholders' deficiency. CohnReznick LLP, in Roseland, New Jersey, expressed substantial doubt about MDU's ability to continue as a going concern following the financial results for the year ended Sept. 30, 2012. The independent auditors noted that the Company has incurred significant recurring losses, has a working capital deficit, and an accumulated deficit of $75 million at Sept. 30, 2012. They also noted that the Company's $30 million Credit Facility matures on June 30, 2013. MF GLOBAL: Lawsuit Expanded Against Jon Corzine, Others ------------------------------------------------------- Tiffany Kary, writing for Bloomberg News, reported that Jon Corzine, the former head of MF Global Holdings Ltd., masterminded a scheme to inflate earnings that led to the eighth-biggest bankruptcy in U.S. history, according to an updated lawsuit filed by a trustee for the failed futures broker. According to the report, Corzine, a former Democratic governor and senator from New Jersey and once a co-chairman of Goldman Sachs Group Inc., implemented the trading scheme to prop up profits and get "in the money" on his stock options, according to an amended complaint filed in Manhattan bankruptcy court on Sept. 17. The new complaint intensifies the lawsuit brought in April by former trustee Louis J. Freeh against Corzine and senior executives Bradley Abelow and Henri Steenkamp, the report related. Freeh had said only that the executives dramatically changed MF Global's business plan without addressing weaknesses. According to the new complaint, their actions rose to the level of a "scheme." "This is certainly throwing fuel on the fire," said Michael Weinstein, chairman of Cole, Schotz, Meisel, Forman & Leonard PA's white-collar practice in Hackensack, New Jersey, the report said. "You get into a whole new area," possibly putting MF Global on par with financial frauds such as Enron Corp. and Adelphia Communications Corp., the former Justice Department trial attorney said in a phone interview. The lawsuit is Freeh v. Corzine (In re MF Global Holdings Ltd.), 13-01333, U.S. Bankruptcy Court, Southern District 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. MOBILESMITH INC: Sells $260,000 Convertible Note ------------------------------------------------ MobileSmith, Inc., sold an additional convertible secured subordinated note due Nov. 14, 2016, in the principal amount of $260,000 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 instalments commencing Dec. 13, 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 Inc. MobileSmith, Inc. (formerly, Smart Online, Inc.) was incorporated in the State of Delaware in 1993. The Company changed its name to MobileSmith, Inc., effective July 1, 2013. The Company develops and markets software products and services tailored to users of mobile devices. The Company's flagship product is The MobileSmithTM Platform. The MobileSmithTM Platform is an innovative, patents pending mobile app development platform that enables organizations to rapidly create, deploy, and manage custom, native smartphone apps deliverable across iOS and Android mobile platforms. 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 June 30, 2013, showed $1.52 million in total assets, $31.12 million in total liabilities and a $29.59 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. MSR RESORT: Moves to Keep Control of Bankruptcy ----------------------------------------------- Law360 reported that MSR Hotels & Resort Inc. asked a New York bankruptcy judge on Sept. 17 for an extra 30 days to file a Chapter 11 plan without the threat of a rival proposal being submitted, saying it will use the time to work with stakeholders on the terms of a plan. If its motion is granted, MSR will have until Nov. 4 to file a plan to the court before the floor opens up and other parties can submit their own. 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. MTS GOLF: Bid to Continue Confirmation Hearing to Oct. 24 Okayed ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona has granted MTS Land, LLC's and MTS Golf, LLC's motion to continue the September 26 hearing on confirmation of the Debtors' Third Amended Joint Plan of Reorganization, as modified, to Oct. 24, 2013, at 2:30 p.m. About MTS Land MTS Land, LLC, and MTS Golf, LLC, own and operate the now dormant Mountain Shadows Golf Club. They filed separate Chapter 11 petitions (Bankr. D. Ariz. Case Nos. 12-16257 and 12-16257) in Phoenix on July 19, 2012. Mountain Shadows Golf Club -- http://www.mountainshadowsgolfclub.com/-- is an 18 hole, par 56 course located at Paradise Valley. Nestled in the foothills of Camelback Mountain, the 3,081-yard Executive course claims to be one of the most scenic golf courses in Arizona. MTS Land and MTS Golf are affiliates of Irvine, Cal.-based Crown Realty & Development Inc. MTS Land and MTS Golf each estimated assets and debts of $10 million to $50 million. Judge Charles G. Case II oversees the Debtors' cases. Gerald M. Gordon, Esq., Robert C. Warnicke, Esq., and Teresa M. Pilatowicz, Esq., at Gordon Silver, represent the Debtor. The petition was signed by Robert A. Flaxman, administrative agent. Lender U.S. Bank is represented by Steven D. Jerome, Esq., and Evans O'Brien, Esq., at Snell & Wilmer L.L.P. The Plan filed in the Debtors' cases provides that all creditors with allowed claims will be paid the amount of their allowed claims in full through the Plan. Holders of equity securities of Debtors will retain all of their legal interests. The U.S. Trustee for Region 14 advised the Court that an official committee of unsecured creditors has not been appointed because an insufficient number of persons holding unsecured claims against the Debtors have expressed interest in serving on a committee. The U.S. Trustee reserves the right to appoint a committee if interest develop among the creditors. MUD KING: Opposes National Oilwell's Lift Stay Bid -------------------------------------------------- Mud King Products, Inc., opposes National Oilwell Varco, LP's Motion For Relief from the Automatic Stay to Proceed with a State Court Action Against Debtor and Employee Defendants. According to the Debtor, the automatic stay should not be terminated to allow the NOV Litigation to proceed against the Debtor or its Employee Defendants. "No valid basis exists to warrant termination [of the automatic stay]. The Debtor cannot reorganize until NOV's claim, if any, is liquidated and a determination is made as to related employee indemnification claims." According to the Debtor, it cannot wait three years to liquidate NOV's claim. "The Debtor is a small company and does not have the unlimited "war chest" available to NOV to pay the tremendous attorneys fees and expenses required to fight this litigation." "This Court has scheduled a hearing for October 3 and 4 on Debtor's Motion to Estimate NOV's claim. Once the claim is estimated, the Debtor will be able to file a plan, which provides for payment of any claim that NOV may hold, and proceed with its reorganization. "Further, NOV has filed a Proof of Claim in this case and has therefore submitted to this Court's jurisdiction and its ability to estimate NOV's claim. Filing this motion is simply another litigation tactic by NOV to continue its pattern of vexatious litigation in order effectively kill the Debtor's business. Moreover, the Debtor's bylaws provide for indemnification of the Employee Defendants. Thus, any liability imposed against the Employee Defendants is likely to result in additional claims against the Debtor. To the extent these claims arise, they would also be paid pursuant to a plan of reorganization. Judge Atlas has found that if the indemnification is enforceable, there is an "actual" identity of interests between the indemnified [Employee] Defendant[s] and Debtor Mud King itself." Termination of the automatic stay as to the Employee Defendants would only increase indemnity claims against the Debtor and deplete the Debtor's estate. "Accordingly, the automatic stay should not be terminated. Terminating the automatic stay as to the Debtor or the Employee Defendants would result in a continuation of protracted litigation against the Debtor and its employees, payment of significant attorneys fees and expenses during this period, significantly impact Debtor's ability to reorganize and severely diminish any return to unsecured creditors in this case. "Finally, this Motion does not comply with Local Bankruptcy Rule 4001-1. NOV failed to conduct the required conference call with the Debtor prior to filing the motion. This is evidenced by the lack of a certificate of conference. Thus, the motion should be denied on this basis as well." A copy of the Debtor's Response and Objection is available at: http://bankrupt.com/misc/mudking.doc148.pdf As reported in the TCR on Sept. 2, 2013, National Oilwell is requesting for relief from the automatic stay to proceed with a state court action pending action in the District Court against Debtor and employee defendants -- Nigel Brassington, Freddy Rubiano, Sean Cougot, Martin Rodriguez, and former Mud King employee Gary Clayton. According to National Oilwell, Messrs. Brassington and Handoyo violated their Directors' duties of loyalty and care by amending Mud King's bylaws. Messrs. Brassington and Handoyo violated their duty of care when they authorized Mud King to incur indemnification obligations to the employee defendants on the eve of the Company's bankruptcy. The Court will consider the request at a Sept. 18, 2013, hearing at 9 a.m. About Mud King Products Mud King Products, Inc., filed a Chapter 11 petition (Bank. S.D. Tex. Case No. 13-32101) on April 5, 2013. The petition was signed by Erich Mundinger as vice president. The Debtor disclosed $18,959,158 in assets and $3,351,216 in liabilities as of the Chapter 11 filing. Annie E Catmull, Esq., Melissa Anne Haselden, Esq., Mazelle Sara Krasoff, Esq., and Edward L Rothberg, Esq., at Hoover Slovacek, LLP, represent the Debtor in its restructuring effort. Judge Karen K. Brown presides over the case. The U.S. Trustee was unable to appoint an official committee of unsecured creditor. NET ELEMENT: Board Approves CEO's Compensation ---------------------------------------------- The Board of Directors of Net Element International, Inc., approved the compensation of Oleg Firer, the Company's chief executive officer (since April 16, 2013). Mr. Firer's base salary is $300,000 per annum payable in equal installments in accordance with the Company's regular payroll cycle. Mr. Firer is paid an additional $300,000 per annum payable quarterly. The Company also reimburses Mr. Firer for motor vehicle and other expenses in the sum of $26,000 per annum, payable in equal monthly installments. In addition, Mr. Firer is eligible to earn an annual bonus of up to $300,000 subject to achieving performance or other benchmarks approved by the compensation committee, and additional discretionary bonus in amounts determined from time to time by the compensation committee. As of Sept. 16, 2013, the compensation committee has not yet approved the performance criteria or other benchmarks for purposes of determining the annual bonus. About Net Element Miami, Fla.-based Net Element, Inc. (formerly TOT Energy, Inc.) currently operates several online media Web sites in the film, auto racing and emerging music talent markets. Following the 2011 results, Daszkal Bolton LLP, in Fort Lauderdale, Florida, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced recurring losses and has an accumulated deficit and stockholders' deficiency at Dec. 31, 2011. The Company reported a net loss of $24.85 million in 2011, compared with a net loss of $3.10 million in 2010. The Company's balance sheet at June 30, 2012, showed $3.22 million in total assets, $7.69 million in total liabilities, and a $4.46 million total stockholders' deficit. NNN 3500: Has Until Oct. 1 to File Schedules and Statements ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas extended until Oct. 1, 2013, the deadline for NNN 3500 Maple 1 LLC to file schedules of assets and liabilities and statement of financial affairs. Jupiter, Florida-based NNN 3500 Maple 1, LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 13-34362) on Aug. 29, 2013. 26 of its affiliates simultaneously filed for Chapter 11 protection. Bankruptcy Judge Harlin DeWayne Hale presides over the case. Michelle V. Larson, Esq., at Andrews Kurth, LLP represents the Lead Debtor in its restructuring effort. The Lead Debtor estimated assets at $50 million to $100 million and debts at $50 million to $100 million. The petitions were signed by Mubeen Aliniazee, restructuring officer. NNN 3500: U.S. Bank Wants Reinstatement of Stay Denied ------------------------------------------------------ U.S. Bank National Association asks the U.S. Bankruptcy Court for the Northern District of Texas to (i) deny the request of NNN 3500 Maple 26 LLC to reinstate the automatic stay; (ii) direct parties to comply with Section 362 and other provisions of the Bankruptcy Code; and (iii) direct non-debtor parties to continue to perform under terms of contracts and leases; or, in the alternative (iv) granting stay of lift stay order pending appeal. U.S. Bank National Association, as trustee, successor-in-interest to Bank of America, N.A., as trustee for the Registered Holders of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass- Through Certificates, Series 2006-C23, by and through CWCapital Asset Management LLC, solely in its capacity as special servicer, explained that, among other things: 1. the Court has twice ruled that the Trust is entitled to relief from the automatic stay because Maple 26 has no equity in the property and Maple 26, a single tenant in common investor cannot confirm a plan of reorganization that modifies the rights and obligations of the Trust against all of the TIC Investors; 2. Maple 26 is not entitled to a stay pending appeal because Maple 26 cannot establish any of the elements required to obtain a stay pending appeal. U.S. Bank also pointed out that the Court has made clear in its prior stay relief order, that a bankruptcy plan cannot be confirmed unless all of the TIC owners of the property file for bankruptcy. Despite the clarity of the Court's ruling, some, but not all, of the Debtor's fellow TIC investors recently filed Chapter 11 cases to forestall a Sept. 3, 2013 foreclosure. The Debtor, along with the other 32 tenant in common owners hold bare legal title to an office building located at 3500 Maple Avenue in Dallas Texas. The property is encumbered by a first lien deed of trust held by the Trust which has been in payment default since October 2012. Gregory A. Cross, Esq., at Venable LLP, and Steven R. Smith, Esq., at Perkins Coie LLP, represent CWCapital. In a minute entry for the Sept. 4 hearing, Wesley Denton Ray, Esq. on behalf of the Debtor, informed the Court that the parties have agreed to let the stay relief motion ride the calendar with plan confirmation when set, and Scott Jenkins, counsel for secured creditor, agreed. About NNN 3500 Maple 1, LLC Jupiter, Florida-based NNN 3500 Maple 1, LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 13-34362) on Aug. 29, 2013. 26 of its affiliates simultaneously filed for Chapter 11 protection. Bankruptcy Judge Harlin DeWayne Hale presides over the case. Michelle V. Larson, Esq., at Andrews Kurth, LLP represents the Lead Debtor in its restructuring effort. The Lead Debtor estimated assets at $50 million to $100 million and debts at $50 million to $100 million. The petitions were signed by Mubeen Aliniazee, restructuring officer. NUVILEX INC: Incurs $4.6 Million Net Loss in July 31 Quarter ------------------------------------------------------------ Nuvilex, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $4.66 million on $0 of total revenue for the three months ended July 31, 2013, as compared with a net loss of $510,517 on $6,626 of total revenue for the same period last year. The Company's balance sheet at July 31, 2013, showed $3.39 million in total assets, $994,155 in total liabilities, $500,000 in preferred stock, and $1.90 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/miRW0T About Nuvilex Inc. Silver Spring, Md.-based Nuvilex, Inc.'s current strategy is to focus on developing and marketing products designed to improve the health and well-being of those who use them. Nuvilex incurred a net loss of $1.59 million on $12,160 of product sales for the 12 months ended April 30, 2013, as compared with a net loss of $1.89 million on $66,558 of total revenue during the prior year. Robison, Hill & Co., in Salt Lake City, Utah, issued a "going concern" qualification on the consolidated financial statements for the year ended April 30, 2013. The independent auditors noted that the Company has suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. ORCKIT COMMUNICATIONS: Stock Moved to TASE Maintenance List ----------------------------------------------------------- Orckit Communications Ltd.'s ordinary shares were transferred from the main list of the Tel Aviv Stock Exchange to the maintenance list of the TASE for failure to satisfy the minimum shareholders' equity condition for continued listing on the main list. As of June 30, 2013, the Company's capital deficiency was approximately $11.5 million. The TASE informed the Company that if the conditions for renewing trade on the TASE's main list will not be satsified within 24 months, the Company's shares will be delisted on Sept. 16, 2015. Trading of securities on the TASE's maintenance list is carried out once per day, in a limited format. This could have a negative impact on the trading price of Company's shares on the TASE. About Orckit Tel-Aviv, Israel-based Orckit Communications Ltd. (TASE: ORCT) engages in the design, development, manufacture and marketing of advanced telecom equipment to telecommunication service providers in metropolitan areas. The Company's products are transport telecommunication equipment targeting high capacity packetized metropolitan networks. ORCKIT Communications disclosed a net loss of $6.46 million on $11.19 million of revenues for the year ended Dec. 31, 2012, as compared with a net loss of $17.38 million on $15.58 million of revenues for the year ended Dec. 31, 2011. The Company's balance sheet at June 30, 2013, showed $13.52 million in total assets, $25.02 million in total liabilities and a $11.50 million total capital deficiency. Kesselman & Kesselman, 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 a capital deficiency, recurring losses, negative cash flows from operating activities and has significant future commitments to repay its convertible subordinated notes. These facts raise substantial doubt as to the Company's ability to continue as a going concern. OUTERWALL INC: Moody's Ratings Unchanged Over Lower 3Q Guidance --------------------------------------------------------------- Moody's Investors Service said that Outerwall Inc.'s (Ba2 CFR) announcement that it updated its guidance for the third quarter and the year 2013, including reducing its estimates for revenues, EBITDA and free cash flow, as well as increasing its share repurchases by $100 million, will not impact the company's credit ratings. Moody's believes that the new guidance is much lower than the previous public guidance but still consistent with or better than Moody's expectations back when the company's credit ratings were assigned earlier this year. In addition, Moody's believes that the issues that contributed to the shortfall will be swiftly remediated, capex will be reduced, and leverage is still expected to decline to a level comfortably under 2.0x within the next six to twelve months. This would leave the company with strong financial flexibility within its rating, particularly when the company turns around the promotion related issues that plagued the company's Redbox division in recent quarters. Moody's believes that the higher share repurchases will slow, but not halt the company's debt reduction capabilities, and the company's liquidity will remain solid. Outerwall Inc. (formerly named Coinstar, Inc.), with its headquarters in Bellevue, Washington, is a leading provider of automated retail solutions through its network of self-service kiosks. Its offerings include Redbox, the company's largest business, where consumers can rent movies and video games, its Coin business where consumers can convert their coins to cash or stored value cards, and its New Ventures business which identifies and develops new concepts in automated retail. PACIFIC GOLD: Stockholders Elect Two Directors ---------------------------------------------- The 2013 Annual Meeting of Stockholders of Pacific Gold Corp. was held on Sept. 11, 2013, at which the stockholders: (i) elected Robert Landau and Mitchell Geisler as directors to serve until the 2014 Annual Meeting of Stockholders and until their respective successors are elected and qualified, or until that director's earlier death, resignation or removal; (ii) approved an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of common stock from 3,000,000,000 to 10,000,000,000, subject to the Board of Directors' authority to abandon that amendment; (iii) approved an amendment to the Company's Articles of Incorporation to effect a reverse stock split of its Common Stock at a specific ratio within a range from 1-for-50 to 1-for-200 and authorized the Board of Directors to determine, at its discretion, the timing and the specific ratio of the reverse stock split, subject to the Board of Directors' authority to abandon that amendment; (iv) approved the Company's 2013 Equity Performance Plan; (v) approved the compensation of the Company's executive officers; (vi) selected "every 3 years" as the desired frequency of future advisory vote on executive compensation; and (vii) ratified the selection by the Company's Board of Directors of Silberstein Ungar, PLLC, as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2013. About Pacific Gold Las Vegas, Nev.-based Pacific Gold Corp. is engaged in the identification, acquisition, and development of prospects believed to have gold mineralization. Pacific Gold through its subsidiaries currently owns claims, property and leases in Nevada and Colorado. Pacific Gold disclosed a net loss of $16.62 million in 2012, as compared with a net loss of $1.38 million in 2011. As of June 30, 2013, the Company had $1.39 million in total assets, $4.30 million in total liabilities and a $2.91 million total stockholders' deficit. Silberstein Ungar, PLLC, in Bingham Farms, Michigan, 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 losses from operations, has negative working capital and is in need of additional capital to grow its operations so that it can become profitable. These factors raise substantial doubt about the Company's ability to continue as a going concern. PACIFIC THOMAS: Disclosure Statement Hearing Continued to Oct. 10 ----------------------------------------------------------------- The hearing to consider the approval of the disclosure statement of Pacific Thomas Corporation's First Amended Plan of Reorganization has been continued to Oct. 10, 2013, at 10:30 a.m. As reported by The Troubled Company Reporter on July 25, 2013, Pacific Thomas amended the Disclosure Statement to address objections raised by two secured creditors -- Private Mortgage Fund LLC and Summit Bank. The Disclosure Statement dated July 11, 2013, reveals that the Plan proposes a restructuring plan with a refinance or sale within 60 months. The Debtor seeks to accomplish payments under the Plan by restructuring notes secured by real property of the estate held by Summit Bank, Bank of the West, Jacol, and Private Mortgage, by restructuring notes secured by personal property and real property of the estate, by restructuring liens levied by the real estate taxing authorities, and by a full payoff off all secured and general unsecured creditors within 60 months. The secured creditors as well as the general unsecured creditors of the estate will be paid the present value of their claim at a market interest rate over a 60-month period through net income generated from the Pacific Thomas Properties and/or through a refinance or sale of the Pacific Thomas Properties. A full-text copy of the Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/PACIFICTHOMASds0711.pdf About Pacific Thomas Corp. Walnut Creek, California, Pacific Thomas Corporation filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 12-46534) in Oakland on Aug. 6, 2012, estimating in excess of $10 million in assets and liabilities. The Debtor is related to Pacific Thomas Capital, which specializes in real estate services, focusing on the investment, ownership and development of commercial real estate properties, according to http://www.pacificthomas.com/ Real estate activities has spanned throughout the Hawaiian Islands as well as U.S. West Coast locations in California, Nevada, Arizona and Utah. Hawaii based activities are managed under the name Thomas Capital Investments. Bankruptcy Judge M. Elaine Hammond presides over the case. Anne- Leith Matlock, Esq., at Matlock Law Group, P.C., serves as general counsel. The petition was signed by Jill V. Worsley, COO, secretary. Kyle Everett was named Chapter 11 trustee of the Debtor. Craig C. Chiang, Esq., at Buchalter Nemer, P.C., in San Francisco, Calif., represents the Chapter 11 trustee as counsel. In its schedules, the Debtor disclosed $19,960,679 in assets and $16,482,475 in liabilities as of the petition date. PATRIOT COAL: Disclosure Statement Hearing Scheduled for Nov. 6 --------------------------------------------------------------- Patriot Coal filed a notice with the U.S. Bankruptcy Court setting forth the relevant dates for approval of its forthcoming Disclosure Statement. The Disclosure Statement is expected to be filed on or before Oct. 2, 2013, and the approval hearing is currently scheduled for Nov. 6, 2013. Patriot Coal disclosed that its Debtor-in-Possession financing has been extended to Dec. 31, 2013. To Idle Logan County Thermal Coal Complex Patriot Coal plans to idle its Logan County complex located near Man, West Virginia, reducing thermal coal production by approximately two million annual tons. Pursuant to the WARN Act, the Company gave 60-day notice to affected employees. The operations expected to be idled include the Guyan surface mine and the Fanco preparation plant and rail loadout - with a total of approximately 250 employees being impacted. Efforts are being made to place employees into open positions at other Patriot subsidiary operations, and the Company currently anticipates that about 50 employees will be offered jobs at those locations. "This is an unfortunate but necessary step to align Patriot's production with expected sales," said Patriot President and Chief Executive Officer Bennett K. Hatfield. "Despite the substantial progress being made in the Patriot reorganization, we still have to contend with the industry-wide challenge of coal prices that have fallen well below production costs at many Central Appalachian mines. Thermal coal markets are extremely weak due to low natural gas prices and costly regulatory changes that have reduced coal-fueled electricity generation capacity." About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP serves as lead restructuring counsel. Bryan Cave LLP serves as local counsel to the Debtors. Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. HoulihanLokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PENSACOLA BEACH: Explores Refinancing Options with Ladder Capital ----------------------------------------------------------------- Pensacola Beach, LLC, filed with the Bankruptcy Court a preliminary motion to request approval to explore refinancing. Counsel to the Debtor, Sherry F. Chancellor, Esq., relates that Ladder Capital Finance, LLC, has been in discussions for an initial $13 million loan to the Debtor to assist on refinancing and payment of loans to American Fidelity Life Insurance Company. The Debtor owns a property located at 24 Via Deluna, Pensacola Beach, Florida, known as Springhill Suite by Marriott, Pensacola Beach. The property is subject to a lien of a first mortgage in favor of American Fidelity Life Insurance Company. Balance owed on the mortgage is $15.71 million. In connection with the refinancing talks, Ladder Capital requires a Mezzanine Loan. The Mezzanine borrower will Pensacola Beach, Inc., who will pay the initial deposits required by the lender and will execute the lender term sheet. The Debtor will have no obligation during this preliminary phase, Mr. Chancellor relays. The funds from the Initial DIP loan will be supplemented by $2 million from the Mezzanine Loan. The Mezzanine Loan will be repaid through operations of the business. No payments will be made through the operating accounts of the business until American Fidelity has been paid in full and the State Court order that has previously controlled the finances of the Debtor has been rendered moot. Any balance over the $15 million will then be paid through alternate resources, including payments by affiliate entities of the Debtor and will not require the Debtor to incur additional debt. The loan will have a 25-year term and bear an interest of 6.1%, payable at the end of the loan term. Should the refinancing be approved, the Debtor will grant the Lender a first lien upon and a security interest in and to the Debtor's real property referred to as Springhill Suites by Marriott, Pensacola Beach, as well as other tangible and intangible property relating to the property. The Initial DIP Loan will pay in full the PrePetition loan and upon payment of same, the lien of the lender will have first priority. An evidentiary hearing is scheduled for Sept. 26, at 09:30 a.m., for the Debtor's requeset. About Pensacola Beach Gulf Breeze, Florida-based Pensacola Beach, LLC, aka Springhill Suites by Marriott Pns Beach, filed for Chapter 11 bankruptcy (Bankr. N.D. Fla. Case No. 13-30569) on May 2, 2013. Judge William S. Shulman oversees the case. Sherry F. Chancellor, Esq., at The Law Office of Sherry F. Chancellor, serves as the Debtor's counsel. The Debtor also tapped Mark J. Proctor and Travis P. Lepicier and the law firm of Levin, Papantonio, Thomas, Mitchell, Rafferty and Proctor, P.A., as attorneys in regard to the British Petroleum/Deep Water Horizon Oil Spill claims. In its petition, Pensacola Beach estimated $10 million to $50 million in both assets and debts. The petition was signed by David Brannen, managing member. In its schedules, the Debtor disclosed $22,523,252 in assets and $16,655,337 in liabilities. A plan of reorganization has been filed in the Debtor's case. The Plan proposes payments to American Fidelity Life Insurance Company. A Sept. 26 hearing has been set for considering adequacy of the Disclosure Statement explaining the Plan. PENSON WORLDWIDE: Seeks Dismissal of GHP1 Inc.'s Chapter 11 Case ---------------------------------------------------------------- Penson Technologies, LLC, as successor-in-interest to debtors other than GHP1, Inc., and GHP1 ask the Delaware bankruptcy court to (i) dismiss the Chapter 11 case of GHP1, Case No. 12-10070, and (ii) modify the caption of the jointly administered cases to remove GHP1 as a debtor in the cases. Counsel to the Debtors, Ryan M. Bartley, Esq., of Young Conaway Stargatt & Taylor LLP, relates that GHP1 has no liquid assets and its illiquid assets are not expected to yield any material value. On the other hand, he reveals, several claims have been asserted against GHP1, including a purported priority tax claim by the Wisconsin Department of Revenue for $137,000. Since GHP1 does not have any assets of any material value, it does not anticipate that it will be able to make distributions to satisfy claims of any of its creditors -- either under a chapter 11 plan or a chapter 7 liquidation. The Motion to Dismiss will be heard on Oct. 2, at 9:30 a.m. (ET) before Judge Peter Walsh. Pauline K. Morgan, Esq., Kenneth J. Enos, Esq., and Ashley E. Markow, Esq., of YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware; as well as Andrew N. Rosenberg, Esq., and Oksana Lashko, Esq., of PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, in New York, also represent the Debtors. 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. Penson Worldwide's Fifth Amended Joint Liquidation Plan became Effective and the Company emerged from Chapter 11 protection on Aug. 15, 2013. The Court confirmed the Plan on July 31, 2013. PLUG POWER: Closes Offering of 21.4 Million Common Shares --------------------------------------------------------- Plug Power Inc. completed its previously announced underwritten public offering of 18,600,000 shares of its common stock at $0.54 per share. Plug Power also announced that the underwriter exercised in full its option to purchase an additional 2,790,000 shares of its common stock at $0.54 per share to cover overallotments. The sale of the additional 2,790,000 shares was also completed on Sept. 16, 2013. Plug Power's common stock is traded on the NASDAQ Stock Market under the symbol "PLUG." Cowen and Company, LLC, acted as the sole underwriter for the offering. Net proceeds, after underwriting discounts and commissions and other estimated fees and expenses payable by Plug Power, will be approximately $10.5 million, which includes the net proceeds from the sale of the shares pursuant to the overallotment option. Plug Power intends to use the net proceeds of the offering for working capital and other general corporate purposes, including capital expenditures. About Plug Power Plug Power Inc. is a provider of alternative energy technology focused on the design, development, commercialization and manufacture of fuel cell systems for the industrial off-road (forklift or material handling) market. KPMG LLP, in Albany, New York, expressed substantial doubt about Plug Power's ability to continue as a going concern, following their audit of the Company's financial statements for the year ended Dec. 31, 2012, citing the Company's recurring losses from operations and substantial decline in working capital. As of June 30, 2013, the Company had $36.38 million in total assets, $26.96 million in total liabilities, $2.45 million in series C redeemable convertible preferred stock and $6.96 million in total stockholders' equity. Bankruptcy Warning "Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory to support both shipments of new units and servicing the installed base, and continued development and expansion of our products. Our ability to meet our future liquidity needs, capital requirements, and to achieve profitability will depend upon numerous factors, including the timing and quantity of product orders and shipments; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of building a sales base; the timing and costs of developing marketing and distribution channels; the timing and costs of product service requirements; the timing and costs of hiring and training product staff; the extent to which our products gain market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and any new research and development programs; and changes in our strategy or our planned activities. If we are unable to fund our operations without additional external financing and therefore cannot sustain future operations, we may be required to delay, reduce and/or cease our operations and/or seek bankruptcy protection," the Company said in the quarterly report for the period ended June 30, 2013. POSITIVEID CORP: Ironridge to Resell 6 Million Common Shares ------------------------------------------------------------ PositiveID Corporation registered filed with the U.S. Securities and Exchange Commission a registration statement on Form S-1 relating to the resale of 6,000,000 shares of common stock of the Company, par value $0.01 per share, by Ironridge Global IV, Ltd., a British Virgin Islands business company, upon conversion of up to 600 shares of Series F Preferred Stock held by Ironridge pursuant to a stock purchase agreement, dated Aug. 26, 2013, between Ironridge and the Company, or that the Company may choose to issue in lieu of cash as payment of the 7.65 percent dividends on the Series F. The Company will not receive any proceeds from the resale of these shares of common stock. The total amount of shares of common stock which may be sold pursuant to this Prospectus would constitute approximately 17.7 percent of the Company's issued and outstanding common stock as of Sept. 11, 2013, assuming that the selling stockholder will sell all of the shares offered for sale. The selling stockholder may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. The Company's common stock is quoted on the OTC Markets, under the ticker symbol "PSID." On Sept. 11, 2013, the closing price of the Company's common stock was $0.05 per share. A copy of the Form S-1 prospectus is available for free at: http://is.gd/iCMzz2 About PositiveID Delray Beach, Fla.-based PositiveID Corporation has historically developed, marketed and sold RFID systems used for the identification of people in the healthcare market. Beginning in early 2011, the Company has focused its strategy on the growth of its HealthID business, including the continued development of its GlucoChip, its Easy Check breath glucose detection device, its iglucose wireless communication system, and potential strategic acquisition opportunities of businesses that are complementary to its HealthID business. PositiveID incurred a net loss of $7.99 million on $0 of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $16.48 million on $0 of revenue for the year ended Dec. 31, 2011. The Company's balance sheet at June 30, 2013, showed $2.10 million in total assets, $7.18 million in total liabilities and a $5.08 million total stockholders' deficit. EisnerAmper 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 at Dec. 31, 2012, the Company has a working capital deficiency and an accumulated deficit. Additionally, the Company has incurred operating losses since its inception and expects operating losses to continue during 2013. These conditions raise substantial doubt about its ability to continue as a going concern. PRIMCOGENT SOLUTIONS: US Trustee Wants Case Converted to Chapter 7 ------------------------------------------------------------------ William T. Neary, the United States Trustee for Region 6 asks the U.S. Bankruptcy Court to convert Primcogent Solutions, LLC's Chapter 11 case to one under Chapter 7 of the Bankruptcy Code or, in the alternative, to dismiss the case under 11 U.S.C. Section 1112(b). The United States Trustee says the Debtor cannot propose a plan of reorganization under which it may reorganize, citing: 1. The automatic stay has lifted as to substantially all of the Debtor's assets, and those assets have been sold at foreclosure. 2. The Debtor's remaining significant assets are three causes of action, which may be prosecuted by a Chapter 7 trustee. Additionally, according to the U.S. Trustee, upon information and belief, the Debtor's management has not escrowed sufficient funds for Erchonia Corporation as required by the cash collateral order and has failed to turn over the assets foreclosed upon by ORIX Venture Finance LLC, further warranting conversion of this case. Alternatively, if the Court is disinclined to convert this case, the case should be dismissed. On Aug. 23, 2013, ORIX noticed a foreclosure sale of substantially all of the Debtor's assets to occur on Sept. 3, 2013, at 1:00 p.m. The foreclosure sale of the Foreclosed Assets occurred on the afternoon of Tuesday, Sept. 3, 2013. Upon information and belief, the Debtor has failed and refused to turn over some or all of the Foreclosed Assets to ORIX. 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 D. Michael Lynn presides over the case. Attorneys at Andrews Kurth, LLP, serve as counsel to the Debtor. 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. PURADYN FILTER: To Provide Bypass Filtration Technology in China ---------------------------------------------------------------- HongHua America LLC and Puradyn Filter Technologies Incorporated announced that HH-A, a subsidiary of HongHua Group Limited, have entered into a three-year agreement for the exclusive distribution of the puraDYN(R) Oil Filtration System in China, including mainland China, Hong Kong, Macau, and Taiwan. The agreement could possibly represent $5.75 million in sales of Puradyn product through 2015. HH-A, an American company located in Houston, Texas, is the exclusive agent and distributor in the Americas for the sale of HongHua Group Limited's drilling rig packages, triplex mud pumps and expendables, traveling equipment, wellhead equipment, handling tools, spare parts, and service. Mr. Frank Ao, president of HH-A said, "We strive to continually bring new value added products to our customers, and Puradyn's proprietary value-added technology offering cost-efficient measures achieves that goal. The solid research and development Puradyn has invested into our industry introduces a proven product that will change the way companies view maintenance practices in the future. The reduction in operating costs this product represents, along with the environmental benefits, is what our customers demand of us as a supplier. We fully expect our market to welcome this type of technology that reduces maintenance costs and provides longer life to the oil and engines." Kevin G. Kroger, president and chief operating officer, Puradyn, said, "Translation of all collateral material, engineering work to design the puraDYN System into their new rigs, and training, which was completed this past July in China, are the primary causes for the delay in this announcement being made until now. This partner agreement with HH-A, which was signed in April of this year, provides both companies a strong growth opportunity in a region thirsty for economic and environmental benefits. As for Puradyn, we look forward to the opportunity of opening up a new market in China, especially one with such unlimited growth potential, and being able to do it with such a prestigious business partner. HongHua- America, LLC is a true leader in its industry and we are pleased to offer its customers innovative solutions that they cannot get anywhere else." Mr. Ao concluded, "Puradyn's advanced filtration technology and its cost-saving efficiency has been proven by North American research labs and industry-leading companies with their products being used on thousands of applications in the past decade. Meanwhile, there was a void in the Chinese market for such innovated, oil saving cleaning solutions. After successful evaluation of the filtration system in its own drilling rigs, HongHua is proud to present Puradyn to Chinese customers. HongHua will do its best to promote Puradyn products through its network to create a win-win in our partnerships with Puradyn and China end-users as well as Chinese people who will be helped by the environmental benefits. About Puradyn Filter Boynton Beach, Fla.-based Puradyn Filter Technologies Incorporated (OTC BB: PFTI) designs, manufactures and markets the puraDYN's Oil Filtration System. Puradyn Filter reported a net loss of $2.22 million on $2.57 million of net sales for the year ended Dec. 31, 2012, as compared with a net loss of $1.61 million on $2.67 million of net sales during the prior year. Liggett, Vogt & Webb, P.A., in Boynton Beach, Florida, 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, its total liabilities exceed its total assets, and it has relied on cash inflows from an institutional investor and current stockholder. These conditions raise substantial doubt about the Company's ability to continue as a going concern. RAMS ASSOCIATES: Gets 2nd Interim Order for Cash Collateral Use --------------------------------------------------------------- The Hon. Christine M. Gravelle entered a second interim order authorizing Rams Associates, L.P., to use the cash collateral of its prepetition lenders through the next scheduled hearing on the request. The cash collateral is to be used in accordance with a prepared budget, a copy of which is available for free at: http://bankrupt.com/misc/RAMSAsso_BudgettruOct2013.pdf Athletic Community Team, LLC, as successor to The Bancorp Bank, is the Debtor's primary lender having a first priority security interest on all of the Debtor's assets. As of the Petition Date, the Debtor owe ACT about $11.5 million. In addition, John Sabo, Linda Sabo, Joseph Carballeira and Catherine Carballeira may assert security interests in all or certain assets of the Debtor. These parties are the Debtor's prepetition lenders. As adequate protection for the cash collateral use, the Debtor will pay ACT $36,000 monthly and the Lenders are granted replacement liens. A further hearing on the cash collateral use request is scheduled for Oct. 29, at 2:00 p.m., in Trenton. About Rams Associates Rams Associates LP, doing business as Jersey Shore Arena, filed a petition for Chapter 11 protection (Bankr. D.N.J. Case No. 13-25541) on July 16, 2013, in Trenton. The petition was signed by John Sabo as general partner. Judge Christine M. Gravelle presides over the case. Norris Mclaughlin & Marcus, P.A., serves as the Debtor's counsel. The Debtor estimated assets and debts of at least $10 million. RED OAK: Moody's Hikes Rating on $284MM Senior Bonds to 'B1' ------------------------------------------------------------ Moody's upgraded the rating of Red Oak, LLC's approximately $284 million senior secured bonds to B1 from B2 and revised the outlook to stable from positive. Ratings Rationale: The rating upgrade reflects Red Oak's solid operational performance since its April 2013 return to service following an extended outage to repair its steam turbine. Specifically since April, the project has been operating with average availability above 95% and an average capacity factor above 75% (July and August capacity factors were close to 90%). Although the outage will continue to impact Red Oak's financial results and liquidity profile in the short-run, the rating upgrade reflects the medium- to-longer term prospects for the project which include improved financial metrics owing to better operating performance and lower operating costs following an amendment to its long-term Term Warranty Agreement (TWA). Moody's understands the amended TWA incorporates the use of longer lived equipment which extends the time between outages and the term of the agreement and also results in a lower annual cost to the project. The rating upgrade factors in the existence of long-term contractual arrangements that continue through early 2022 which provide a consistent level of contracted cash flow and also considers the attractiveness of the asset as a competitive generating unit beginning in 2022 given its location in eastern New Jersey. The rating further acknowledges Carlyle Group LP's (Carlyle) announced agreement to acquire the project from a subsidiary of Energy Capital Partners Fund II (ECP) which Moody's views as being neutral to the B1 project rating. Moody's view incorporates an expectation that Red Oak will be managed by Carlyle's power affiliate, Cogentrix Energy Power Management, LLC, that the structure and terms of the financing, including its tolling agreement with TAQA Gen X LP, will generally remain unchanged, and that Carlyle will provide the project with operational and liquidity support that is at least comparable to the current arrangements with ECP. Moody's last rating action on Red Oak occurred in March 2012 when the then B2 rating was affirmed and the outlook revised to positive following the announcement that an ECP subsidiary had agreed to acquire the project from AES Corporation (Ba3 Stable). The positive outlook reflected improvements in the project's operational performance that were expected to allow Red Oak to remain current on subordinated payments to its counterparty. The positive outlook also reflected Moody's view that if needed, ECP would provide liquidity support in the form of management fee deferrals or subordinate cash contributions. Since its acquisition, ECP has contributed approximately $3 million of subordinate capital to the project. Notwithstanding the improved operating performance at Red Oak during 2012, in January 2013, as the plant was coming on line following repairs to the nearby Raritan substation that had been flooded by Hurricane Sandy, a bowing of its steam turbine rotor occurred causing the project to remain out of service until the beginning of April 2013. The total cost for repairs was about $3.6 million, of which $3.1 million is expected to be recovered from insurance in 2013/early 2014. There is also an estimated $7 million impact to revenues/earnings that will occur in 2013 and 2014 due to lower plant availability and associated penalties, of which approximately $5 million is expected to be recouped from business interruption insurance in 2014. Because of these events, Moody's expects cash flow coverage of senior debt service (as calculated by Moody's including the impact of insurance proceeds, but excluding cash balances) to approximate 1.04x and 1.30x in 2013 and 2014, respectively. Absent the impact of the outage, the ratios would have been expected to be around 1.18x and 1.23x, respectively. By comparison, in 2012, the project achieved a senior debt service coverage ratio of 1.27x and net total debt service coverage (after subordinated payments) was about 1.04x. As a result of 2013 outage, the project is currently deferring subordinate management fees and certain payments to its power off- taker which, under the terms of the power sales agreement, are permitted to be deferred (Fuel Conversion volume Rebate (FCVR) payments); Moody's anticipates deferral of a portion of these subordinated payments will continue into 2014. In addition, primarily owing to the delay in receipt of insurance proceeds, Moody's understands that Red Oak drew a total of about $6 million from its $18.6 million debt service reserve for payment of debt service during 2013. The reserve is expected to be fully replenished over the next few months. Beyond 2013, because of the seasonal nature of the project's capacity payments, Moody's understands that modest interim draws of the debt service reserve may be needed during certain shoulder periods and replenished in the following months. While Moody's recognizes that the use of debt service reserves for temporary liquidity is not an acceptable normal practice, in this particular instance the occasional draws on the debt service reserves is counterbalanced by the improving financial performance now that Red Oak is back-on line and performing well, and Moody's belief that this performance will be sustained. Failure to replenish the draws as expected would negatively influence Moody's views on the project. Red Oak's stable outlook reflects Moody's expectation of normal operating performance, a replenishment of the debt service reserve over the next few months and senior debt service coverage ratios beyond 2013 remaining above 1.20 times - with net total debt service coverage ratios (after subordinated payments) generally above 1.0 time. Although these metrics may arguably support some consideration of a higher rating, the B1 rating is constrained by the project's weak liquidity position and its unusual planned use of its debt service reserve beyond 2013 to address seasonal liquidity needs. With this upgrade, the rating is not expected to be upgraded in the short-term. Longer-term, consideration of a higher rating is not likely unless Red Oak addresses the seasonal liquidity issue with additional permanent liquidity. Downward rating pressure could develop if the project were to experience significant prolonged operational challenges or other unexpected cost increases such that senior debt service coverage ratios could be expected to remain around 1.0 times. Red Oak is an 830 megawatt (MW) gas-fired electric generating project located in Sayreville, New Jersey. The project, currently sells all of its capacity to TAQA Gen X LP, a joint venture between subsidiaries of Abu Dhabi Nation Energy Company and Morgan Stanley pursuant to a tolling agreement expiring in early 2022. The project interests are held by a subsidiary of ECP and managed by its operating affiliate EquiPower Resources Corp. The principal methodology used in this rating was Power Generation Projects published in December 2012. RESIDENTIAL CAPITAL: Deal on 151 RMBS Servicing Claims Okayed ------------------------------------------------------------- Judge Martin Glenn approved the stipulation under which debtor Residential Capital LLC and certain holders of certificates in certain of the Debtors' residential mortgage-backed securitizations agreed that if the Proposed Chapter 11 Plan is confirmed and if the effective date of the Proposed Chapter 11 Plan occurs, the RMBS trusts will have allowed as non-subordinated unsecured claims in the amount of $209.8 million against the GMACM Debtors and $7,091.2 million against the RFC Debtors. In exchange for these allowed claims, the RMBS Trusts will be deemed to provide a full and complete discharge of the Debtors from any and all RMBS Trust claims. A full-text copy of the Stipulation with accompanying schedule of the subject claims is available for free at: http://bankrupt.com/misc/RESCAP_rmbsstip0910.pdf 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). RGR WATKINS: Section 341(a) Meeting Set on October 21 ----------------------------------------------------- A meeting of creditors in the bankruptcy case of RGR Watkins, LLC, will be held on Oct. 21, 2013, at 9:30 a.m. at Tampa, FL, - Room 100-B, Timberlake Annex, 501 E. Polk Street. Creditors have until Nov. 26, 2013, to submit their proofs of claim. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. RGR Watkins, LLC, filed a petition for Chapter 11 protection (Bankr. M.D. Fla. Case No. 13-bk-12147) on Sept. 12, 2013, in Tampa, Florida. The petition was signed by Robert G. Roskamp as manager. The Debtor estimated assets and debts of at least $10 million. The Debtor is represented by Elena P. Ketchum, Esq. -- eketchum.ecf@srbp.com -- and Amy Denton Harris, Esq. -- aharris.ecf@srbp.com -- at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, FL, as counsel. RHINOCEROS VISUAL: Gravity Files Chapter 11 to Avoid Eviction ------------------------------------------------------------- Rhinoceros Visual Effects and Design LLC sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 13-_____) on Sept. 17, 2013. Rhinoceros Visual Effects, aka Gravity, is known for its computer animation and digital effects appear in Ford and Got Milk? ads. Gravity provides computer-generated animation and digital visual effects for commercials, movies, television shows and other productions. Zviah Eldar is Gravity's Chief Executive Officer. Jacqueline Palank, writing for Dow Jones Newswires, reports that Gravity sought bankruptcy protection to avoid eviction from its Madison Avenue office. It is facing demands to pay more than $465,000 in unpaid rent. The report says Gravity is hoping to continue normal operations in Chapter 11. Gravity has requested the use of cash securing its lenders' claims. A hearing on that request was slated for Thursday. RURAL/METRO: Sec. 341 Creditors' Meeting Set for Oct. 1 ------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors pursuant to 11 U.S.C. 341(a) in the Chapter 11 case of Rural/Metro Corporation, on Oct. 1, 2013, at 1:00 p.m. The meeting will be held at J. Caleb Boggs Federal Building, Room 5209, 844 King Street, in Wilmington, Delaware. About Rural/Metro Corporation Headquartered in Scottsdale, Arizona, Rural/Metro Corporation -- http://www.ruralmetro.com-- is a national provider of 911- emergency and non-emergency interfacility ambulance services and private fire protection services, operating in 21 states and nearly 700 communities. Rural/Metro Corp. and 59 affiliates sought Chapter 11 protection on Aug. 4, 2013, before the U.S. Bankruptcy Court for the District of Delaware. The Debtors' lead bankruptcy counsel are Matthew A. Feldman, Esq., Rachel C. Strickland, Esq., and Daniel Forman, Esq., at Willkie Farr & Gallagher LLP, in New York. Maris J. Kandestin, Esq., and Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, serve as the Debtors' local Delaware counsel. Alvarez & Marsal Healthcare Industry Group, LLC, and FTI Consulting, Inc., are the Debtors' financial advisors, while Lazard Freres & Co. L.L.C. is their investment banker. Donlin, Recano & Company, Inc., is the Debtors' claims and noticing agent. The U.S. Trustee has appointed a three-member official committee of unsecured creditors in the Chapter 11 case. The Debtors have arranged $75 million of DIP financing from a group of prepetition lenders led by Credit Suisse AG. An interim order has allowed the Debtors to access $40 million of the DIP facility. RURAL/METRO: Panel Hires GLC & Ex-Goldman Director as Advisors -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Rural/Metro Corporation asks the U.S. Bankruptcy Court for permission to employ GLC Advisors & Co., LLC as financial advisor to the Committee. Chetan Bhandari attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Prior to joining GLC in 2013, Mr. Bhandari was a Managing Director in the Investment Banking Division of Goldman, Sachs & Co. in New York. He was responsible for the US leveraged finance business in the consumer and retail sector. The firm will, among other things, provide these services: (a) familiarizing itself with the Debtors' financial condition and business; (b) advising and assisting the Committee in examining, analyzing, structuring, and negotiating the financial aspects of any potential or proposed strategy for a Transaction, including where appropriate, assisting counsel to the Committee in developing its own strategy for accomplishing a Transaction; (c) providing expert advice and testimony regarding financial matters related to any Transaction, if necessary. The Committee contemplates that GLC will be compensated as: (a) Monthly Advisory Fee: GLC shall be paid a monthly cash advisory fee of $125,000 (each, a "Monthly Advisory Fee"), payable in advance for the period commencing on the GLC Agreement Effective Date, with the first payment due upon Execution of the Engagement Letter and subsequent payments due on each monthly anniversary of the GLC Agreement Effective Date for each month of GLC's engagement thereunder, excluding dates during the Go Dark Period (as defined below). (b) Go Dark Monthly Advisory Fee: In the event that the effective date of the plan occurs beyond fourteen (14) days after the entry of an order of the Bankruptcy Court confirming the Plan (the "Confirmation Order") and at the Committee's request, including by counsel to the Committee, GLC shall be paid a monthly cash advisory fee of $62,500 for services performed for each month beginning the first day following entry of the Confirmation Order and ending on the effective date of the Plan. Such fee is referred to in the Engagement Letter as the "Go Dark Monthly Advisory Fee" and the applicable dates of such period are collectively referred to in the Engagement Letter as the "Go Dark Period." It is expected that the Committee will only request the Go Dark Monthly Advisory Fee if, in its sole judgment, the workload of GLC will be significantly reduced during the period after the entry of the Confirmation Order. For the avoidance of doubt, no Monthly Advisory Fee shall accrue during the Go Dark Period, and the Monthly Advisory Fee shall be effective during all other dates of GLC's engagement under the Engagement Letter. (c) Transaction Fee: GLC shall be paid a transaction fee equal to $500,000 (a "Transaction Fee") upon the consummation of any Transaction. For the avoidance of doubt, GLC shall be entitled to a single transaction fee, if any, under the Engagement Letter. (d) Credit: Up to the amount of the Transaction Fee payable, GLC shall credit on a onetime basis, solely against any Transaction Fee due to it under the Engagement Letter, an amount equal to 50% of the aggregate amount of Monthly Advisory Fees and Go Dark Monthly Advisory Fees that have been earned by and paid to GLC for services performed after the date that is one (1) month after the GLC Agreement Effective Date. (e) Expense Reimbursement: GLC shall be entitled to monthly reimbursement from the Debtors of reasonable out-of-pocket expenses incurred in connection with the services to be provided under the Engagement Letter (including up to an aggregate amount of $30,000 for GLC's reasonable out-of- pocket fees and expenses for outside legal counsel incurred in connection with the negotiation and performance of the Engagement Letter and the matters contemplated by the Engagement Letter), whether or not a Transaction occurs or any other transaction is consummated. The payment of these fees shall be subject to the applicable procedures of the Bankruptcy Code, Bankruptcy Rules, and applicable local rules, guidelines, and Bankruptcy Court orders. The firm may be reached at: Chetan Bhandari Managing Director GLC ADVISORS & CO., LLC 805 Third Avenue, 20th Floor New York, NY 10022 Tel: (212) 542-4549 Fax: (212) 542-4541 E-mail: chetan.bhandari@glca.com Headquartered in Scottsdale, Arizona, Rural/Metro Corporation -- http://www.ruralmetro.com-- is a national provider of 911- emergency and non-emergency interfacility ambulance services and private fire protection services, operating in 21 states and nearly 700 communities. Rural/Metro Corp. and 59 affiliates sought Chapter 11 protection on Aug. 4, 2013, before the U.S. Bankruptcy Court for the District of Delaware. The Debtors' lead bankruptcy counsel are Matthew A. Feldman, Esq., Rachel C. Strickland, Esq., and Daniel Forman, Esq., at Willkie Farr & Gallagher LLP, in New York. Maris J. Kandestin, Esq., and Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, serve as the Debtors' local Delaware counsel. Alvarez & Marsal Healthcare Industry Group, LLC, and FTI Consulting, Inc., are the Debtors' financial advisors, while Lazard Freres & Co. L.L.C. is their investment banker. Donlin, Recano & Company, Inc., is the Debtors' claims and noticing agent. The U.S. Trustee has appointed a three-member official committee of unsecured creditors in the Chapter 11 case. The Debtors have arranged $75 million of DIP financing from a group of prepetition lenders led by Credit Suisse AG. An interim order has allowed the Debtors to access $40 million of the DIP facility. SCOTTSDALE VENETIAN: Has Until Nov. 18 to Solicit Plan Votes ------------------------------------------------------------ The Hon. George B. Nielsen of the U.S. Bankruptcy Court for the District of Arizona extended until Nov. 18, 2013, Scottsdale Venetian Village, LLC's exclusive period to solicit votes for the Plan of Reorganization dated Aug. 9, 2013. As reported in the Troubled Company Reporter on Aug. 23, 2013, the Debtor argued in papers filed Aug. 16 that the extension is necessary to allow the Debtor to obtain approval of its First Amended Disclosure Statement, and thereafter to solicit ballots and otherwise proceed towards confirmation of the Debtor's pending First Amended Plan. According to papers filed with the Court, the Debtor intends to pay the full amount of First National Bank of Hutchinson (FNBH)'s Allowed Secured Claim, with interest, over a period of 12 years. Any amount by which FNBH's Allowed Claim exceeds the value of its collateral will be deemed to be an unsecured Claim, and treated as part of Class 3-B (All Unsecured Claims Not Otherwise Classified in the Plan). Under the Plan, the Days Inn Worldwide Note will be treated, and retired, in accordance with its terms, but for the date upon which payment is due in the event of acceleration. In the event of an acceleration, the Debtor will be permitted 90 days in which to pay the remaining balance of the Days Inn Note. Holders of Allowed Unsecured Claims in Class 3-B will be paid in full, with interest accruing at the Plan Rate, in equal quarterly installments commencing on the Effective Date and concluding on the eighth anniversary of the Effective Date. Any Insider that holds a Claim included in this class will ot be paid anything on account of such Claim until all other Claims against the Debtor are paid in full. Allowed Interests of Interest Holders in Class 4 will retain their equity interests, and constitute the New Interest Holders in the Reorganized Debtor. The Plan will be funded by the operations of the Hotel and Restaurant. A copy of the First Amended Disclosure Statement is available at: http://bankrupt.com/misc/scottsdalevenetian.doc124.pdf In a minute entry for the Sept. 4 hearing, the Hon. Redfield T. Baum reviewed the status of the disclosure statement approval, and stated that the only remaining objection is that by an Arizona county. Wesley Denton Ray, Esq., on behalf of the Debtor said that he intends to file an amended disclosure statement and asked that a confirmation hearing be set in 45 days. The Court directed the Debtor to submit a redlined version of the Disclosure Statement. About Scottsdale Venetian Scottsdale Venetian Village, LLC, operates the Days Hotel located at 5101 N. Scottsdale Road, in Scottsdale, Arizona. The Company also operates Papi Chulo's Mexican Grill & Cantina, located immediately adjacent to the hotel. The hotel consists of 211 guest rooms and, among other things, facilities for meetings and banquets. Scottsdale Venetian Village filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 13-02150) on Feb. 19, 2013, in Phoenix, estimating at least $10 million in assets and less than $10 million in liabilities. The Debtor is represented by John J. Hebert, Esq., and Wesley D. Ray at Polsinelli Shughart, P.C., in Phoenix. Charles B. Foley, CPA, PLLC serves as the Debtor's accountant. The Plan of Reorganization provides for the payment of outstanding obligations by the proceeds from the continued operation of Days Hotel located at 5101 N. Scottsdale Road, in Scottsdale, Arizona, and the adjacent Papi Chulo's Mexican Grill & Cantina. SEARS HOLDINGS: Fitch Rates $1BB Senior Secured Term Loan at B' --------------------------------------------------------------- Fitch Ratings has assigned a rating of 'B/RR1' to Sears Holdings Corporation's (Holdings) proposed $1 billion first lien senior secured term loan due June 2018. The new term loan is being issued under the company's existing Second Amended and Restated Credit Agreement, dated as of April 8, 2011, which currently provides for a $3.275 billion asset-based revolving credit facility due 2016. Post this transaction, Sears will have fully exhausted its ability to issue first-lien debt under this agreement but would still have the ability to issue $760 million in second lien debt - subject to obtaining lender commitments, as well as market and other conditions. The new term loan is expected to be secured by a first lien on the same collateral and guaranteed by the same subsidiaries of the company that guarantee the revolving facility. The company intends to use the net proceeds of the incremental term loan to reduce borrowings under the revolving facility over the near term, but Fitch views the increased liquidity as necessary to fund ongoing operations over the next 12 - 24 months given the significant deterioration in EBITDA. Fitch has downgraded the company's $1.24 billion 6.625% second- lien senior secured notes due October 2018 to 'B-/RR2' from 'B/RR1', given the additional first lien debt and the continued decline in the collateral that secures the first lien and second lien debt due to the shrinking business and asset sales, as well as the potential for additional second lien debt. Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDR) for Sears Holdings Corporation (Holdings) and its various subsidiary entities (collectively, Sears) at 'CCC'. The Rating Outlook is Negative. A full list of ratings follows at the end of this release. Key Rating Drivers 2013 EBITDA Could Turn Negative: The magnitude of the decline in profitability and lack of visibility to an operational turnaround remain a major concern. EBITDA for Sears Holdings Corporation is expected to remain depressed in 2013 and be lower than 2012 levels of $641 million. LTM EBITDA as of Aug. 3, 2013 stood at $225 million and EBITDA could potentially turn negative in 2013 given the dismal performance in the first half of the year. Fitch Ratings expects top-line contraction in the 7% - 8% range in 2013 and the 4% range in 2014, due to domestic comparable store sales (comps) in the negative 2.5% - negative 3% range, store closings, and spinoff of certain businesses. Inventory Reduction/Asset Sales Funding Operations: Fitch expects Sears' EBITDA to be in the negative $100 million to $200 million range in 2013, but estimates that Sears would need to generate a minimum EBITDA of $900 million - $1 billion in 2013 and 2014 to service cash interest expense, capex, and pension plan contributions. Given the significant shortfall in EBITDA, Sear's liquidity is being supported by a significant reduction in inventory, cost cuts, and asset sales/spinoffs. These actions injected about $2.0 billion in liquidity in 2012 and are expected to generate a further $1.0 billion in 2013. Given the $1 billion incremental term loan and above-mentioned liquidity injection from various initiatives, Fitch expects revolver borrowings at the end of January 2014 to be in the range of $500 million to $600 million, which would result in about $2.4 billion to $2.5 billion in borrowing capacity under its domestic revolver. Given Fitch's projections for FCF to be in the negative $1.2 billion to $1.4 billion range in 2014 -2015, Sears will need to fund operations with continued liquidity injection from further cuts in inventory buys, asset sales, and increased borrowings including the potential issuance of $760 million in second-lien debt. If Sears is unable to access the capital markets or find other sources of liquidity, and EBITDA remains at the current level or lower, there is a risk of restructuring over the next 24 months. Market Share Losses: Sears Domestic and Kmart stores have been underperforming their retail peers on top-line growth for many years. The combined domestic entity has lost $12 billion, or close to 25% of its 2006 domestic revenue base of $47 billion (excluding the extra 53rd week and Orchard Hardware) through 2012. Taking into account comps declines and asset sales/spinoffs, total revenue (including Canada) is expected to be in the $37 billion range in 2013, versus $40 billion in 2012. Market share declines reflect competitive pressures, inconsistent merchandising execution, and the lack of clarity regarding its long-term retail strategy. Fitch expects both Kmart and Sears will remain share donors. Sears' comps are expected to be in the negative 2% - negative 3% range in 2013 -2014, while Kmart's comps are expected to be in the negative 3% - negative 4% range. Sears Canada has also been very weak over the past four years, with comps in the negative mid-to-high single digits. The 2013 revenue estimates reflect the spinoff of Sears Hometown and Outlet businesses and certain hardware stores in October 2012. These assets represented approximately $2.3 billion - $2.6 billion in revenue and $70 million - $80 million in EBITDA in 2011. Sears will also not benefit from the extra (53rd) week in 2012, which added $500 million in revenue. Recovery Considerations for Issue-Specific Ratings: In accordance with Fitch's Recovery Rating (RR) methodology, Fitch has assigned RRs based on the company's 'CCC' IDR. Fitch's recovery analysis assumes a liquidation value under a distressed scenario of approximately $6.5 billion (low seasonal inventory) to $7.5 billion on (close to peak seasonal inventory) on domestic inventory, receivables, and property, plant and equipment. The $3.275 billion domestic asset-based senior secured revolving credit facility (ABL), under which Sears Roebuck Acceptance Corp. (SRAC) and Kmart Corporation (Corp.) are the borrowers, is rated 'B/RR1', indicating outstanding (91% - 100%) recovery prospects in a distressed scenario. Holdings provides a downstream guarantee to both SRAC and Kmart Corp. borrowings and there are cross- guarantees between SRAC and Kmart Corp. The facility is also guaranteed by direct and indirect wholly-owned domestic subsidiaries of Holdings which owns assets that collateralize the facility. The domestic ABL is secured primarily by domestic inventory which is expected to range from $6.2 billion (estimated in January 2014) to $8.0 billion around peak levels in November, and pharmacy and credit card receivables which are approximately $0.5 billion. The credit facility has an accordion feature that enables the company to increase the size of the credit facility or add a first-lien term loan tranche in an aggregate amount of up to $1 billion (which is currently being exercised) and issue $760 million in second-lien debt. The credit agreement imposes various requirements, including (but not limited to) the following: (1) if availability under the credit facility is beneath a certain threshold, the fixed-charge ratio as of the last day of any fiscal quarter be not less than 1.0 times (x); (2) a cash dominion requirement if excess availability on the revolver falls below designated levels, and (3) limitations on its ability to make restricted payments, including dividends and share repurchases. Fitch Ratings has assigned a 'B/RR1' rating to Sears Holdings Corporation's proposed issue of $1 billion first lien senior secured term loan due June 2018. The new term loan is expected to be secured by a first lien on the same collateral and guaranteed by the same subsidiaries of the company that guarantee the revolving facility. Fitch has downgraded the company's $1.24 billion 6.625% senior second-lien secured notes due October 2018 to 'B-/RR2' from 'B/RR1', indicating superior recovery prospects (71% - 90%), given the additional first lien debt and the continued decline in the collateral that secures the first lien and second lien debt due to the shrinking business and asset sales, as well as the potential for an additional $760 million in second lien debt. The notes have a second lien security on all domestic inventory and credit card receivables, essentially representing the same collateral package that backs the $3.275 billion credit facility on a first-lien basis. Domestic inventory declined to $8.5 billion at the end of October 2012 (around seasonal peak levels) from $9.9 billion in October 2011 and is expected to decline another $0.5 billion in October 2013. The notes contain provisions which require Holdings to maintain minimum asset coverage for total secured debt (failing which the company has to offer to buy notes sufficient to cure the deficiency at 101%) that could provide some downside protection. If the borrowing base is less than the principal amount of SHLD's consolidated debt that is secured by liens on the collateral that also secures the notes as of the last day of any two consecutive quarters (collateral coverage event), SHLD must offer to purchase an amount of notes sufficient to cure the collateral coverage shortfall at 101% of their principal amount, plus accrued and unpaid interest. Fitch also notes that the second lien notes have an unsecured claim on the company's unencumbered real estate assets, given that the notes are guaranteed by substantially all the domestic subsidiaries that guarantee the credit facility. The senior unsecured notes are rated 'CCC/RR4', indicating average recovery prospects (31% - 50%). The recovery on these notes are derived from the valuation on the company's unencumbered real estate assets held at Sears, Roebuck and Co, which provides a downstream guarantee of SRAC's senior notes and also agrees to maintain SRAC's fixed-charge coverage at a minimum of 1.1x. Factors considered in assigning the recovery rates include the potential sizable claims under operating lease obligations and the company's underfunded pension plan. Rating Sensitivities Negative Rating Action: A negative rating action could result from further deterioration in credit metrics or a significant decline in liquidity. Although Sears has levers to shore up liquidity, the magnitude of the decline in profitability and the lack of visibility to turn around operations remains a major concern. Positive Rating Action: A positive rating action could result from a sustained improvement in comps and EBITDA to a level where the company is covering its fixed obligations. This is not anticipated at this time. Fitch has taken the following rating actions: Sears Holdings Corporation (Holdings) -- Long-term IDR affirmed at 'CCC''; -- $3.275 billion secured bank facility affirmed at 'B/RR1'; -- $1.0 billion first lien term loan rated 'B/RR1' -- $1.24 billion second-lien secured notes downgraded to 'B-/RR2' from 'B/RR1'; Fitch has affirmed the ratings below as follows: Sears, Roebuck and Co. (Sears) -- Long-term IDR at 'CCC'. Sears Roebuck Acceptance Corp. (SRAC) -- Long-term IDR at 'CCC'; -- Short-term IDR at 'C'; -- Commercial paper at 'C'; -- $3.275 billion secured bank facility at 'B/RR1' (as co- borrower); -- Senior unsecured notes at 'CCC/RR4'. Kmart Holding Corporation (Kmart) -- Long-term IDR at 'CCC'. Kmart Corporation (Kmart Corp) -- Long-term IDR at 'CCC'; -- $3.275 billion secured bank facility at 'B/RR1' (as co-borrower); Sears DC Corp. (SDC) -- Long-term IDR at 'CCC'; The Rating Outlook is Negative. SEARS HOLDINGS: S&P Assigns 'B' Rating to $3.275BB Facility ----------------------------------------------------------- Standard & Poor's Ratings Services said it assigned a 'B' issue- level rating with a '1' recovery rating to Sears Roebuck Acceptance Corp. and Kmart Corp.'s $3.275 billion revolving credit facility due 2016 and $1.0 billion term loan due 2018. The '1' recovery rating indicates our expectations for very high (90% - 100%) recovery in the event of a payment default. The company will use the proceeds of the term loan to partly repay borrowings of about $1.5 billion currently outstanding under its revolving credit facility. Concurrently, S&P is lowering the issue-level rating on the $1.25 billion second-lien notes due 2018 to 'B-' from 'B' and revising the recovery rating to '2' from '1'. The '2' recovery rating indicates S&P's expectation of substantial (70% - 90%) recovery in the event of a payment default. The downgrade of the second-lien notes reflects the substantial increase of priority debt following the issuance of the term loan. At the same time, S&P affirmed the 'CCC+' corporate credit rating on Sears Holdings Corp. The outlook is stable. Standard & Poor's Ratings Services' rating on Sears Holdings Corp. reflects its "vulnerable" business risk profile and "highly leveraged" financial risk profile. "The vulnerable business risk profile assessment reflects the intense competition from a broad range of competitors, S&P's view that the company has underinvested in its store base compared with its peers, and its merchandising strategy that has not resonated with consumers," said credit analyst Ana Lai. "These factors have contributed to a steady decline in sales over a number of years and underperformance relative to almost all of its peers. Sears and Kmart have struggled with increasing competition from other broadline retailers, such as Kohl's, Target, and Wal-Mart, as well as Home Depot and Lowe's." The stable outlook reflects S&P's expectations that Sears will maintain adequate liquidity based on its access to its revolving credit facility and ongoing asset sales, despite what it estimates will be a continuing trend of sales erosion and cash operating losses. "We could lower the rating if we believe Sears' liquidity will become constrained because of cash burn in excess of $1.3 billion from further declines in operating performance leading to a greater-than-expected revolver usage along with lack of clearly defined asset sale plans. In that example, we could come to envision a specific default scenario over an upcoming 12 month period. This would also result in a revision of our liquidity descriptor to "less than adequate". Key aspects of our liquidity assessment include the availability under the revolving credit facility based on changes on the borrowing base, as well as asset sale targets. We could also lower the rating if we believed that Mr. Lampert's current operational and financial strategies for Sears appear to shift toward a financial restructuring," S&P said. Although unlikely in the next year, S&P could take a positive rating action (revise the outlook to positive or an upgrade) if the company can turn its operating performance around and achieve sustainable sales growth and reach sustainable profitability. S&P could take such action if, for example, sales grow 1% while gross margin improves 30 basis points in fiscal year ending January 2014, resulting in debt leverage approaching the 6.0x area. Free cash flow and adequate liquidity would also likely be key considerations in any positive rating actions. SEGA BIOFUELS: Section 341(a) Meeting Set on October 18 ------------------------------------------------------- A meeting of creditors in the bankruptcy case of SEGA Biofuels, LLC, will be held on Oct. 18, 2013, at 11:00 a.m. at Waycross Courthouse. Creditors have until Jan. 16, 2014, to submit their proofs of claim. Government proofs of claim are due by March 10, 2014. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Sega Biofuels LLC, the owner of a wood-pellet plant in Nahunta, Georgia, filed a petition for Chapter 11 protection (Bankr. S.D. Ga. 13-50694) on Sept. 11 in Waycross, Georgia. The Company listed assets worth $10.6 million and debt totaling $13.7 million. SHOTWELL LANDFILL: Plan Confirmation Hearing Continued to Dec. 17 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina continued until Dec. 17, 2013, at 2 p.m., the hearing to consider confirmation of Shotwell Landfill, Inc.'s Chapter 11 Plan dated Aug. 16, 2013, and final approval of the explanatory Disclosure Statement. Objections, if any, are due Dec. 9. As reported in the Troubled Company Reporter on Sept. 5, 2013, the Court conditionally approved the disclosure statement. As reported in the TCR on Aug. 22, 2013, Branch Bank & Trust has filed a proof of claim in the amount of $13.7 million. The claim amount is disputed. Pursuant to the Plan, the Allowed Secured Claim of BB&T in Class 3 will be placed in current, non-default status and re-amortized over 25 years with interest at the Secured Rate. The Debtor will make monthly payments according to such amortization. The Debtor anticipates that Branch Bank & Trust's Class 3 Claim will be $2,900,000. BB&T's Allowed Unsecured Claim in Class 6 will be amortized over 25 years at the Unsecured Rate, or such amortization and rate as the Court finds necessary for confirmation. The Debtor will make monthly payments according to such amortization. The Debtor anticipates that the Class 6 Claim will be less than $6,700,000. Allowed Unsecured Claims of less than $5,000 in Class 7 will be paid in full 90 days after the Effective Date. The Debtor anticipates that the Class 7 Claims will be less than $5,500. Allowed General Unsecured Claims in Class 8 will receive quarterly installments of $30,000 to be split pro rata among Allowed Claims in Class 8 until paid in full. The Debtor anticipates Class 8 Claims will be less than $360,000. Class 8 claimants have filed proofs of claim totaling $200,637.03. The existing Allowed Equity Interests in the Debtor in Class 9 will remain the same as prepetition. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/shotwelllandfill.doc99.pdf About Shotwell Landfill, Inc. Raleigh, North Carolina-based Shotwell Landfill, Inc., filed a Chapter 11 petition (Bankr. E.D.N.C. Case No. 13-02590) in Wilson on April 19, 2013. The Debtor disclosed $23,027,736 in assets and $10,039,308 in liabilities as of the Chapter 11 filing. Blake P. Barnard, Esq., William P. Janvier, Esq., and Samantha Y. Moore, Esq., at the Janvier Law Firm, PLLC, in Raleigh, N.C., represent the Debtor as counsel. William W. Pollock, Esq., at Ragsdale Liggett PLLC, in Raleigh, N.C., represents the Debtor as special counsel. The Bankruptcy Administrator was unable to appoint an official committee of unsecured creditors in the Debtor's case. SOUTHERN FILM: Can Hire Ivey McClellan as Counsel ------------------------------------------------- Southern Film Extruders, Inc., sought and obtained approval from the bankruptcy court to hire Charles M. Ivey, III, James K. Talcott and members of the law firm of Ivey, McClellan, Gatton & Talcott, LLLP, of Greensboro, North Carolina, to represent it in the administration of this estate. The firm will be compensated and reimbursed in the manner the approved by the bankruptcy court from revenues generated during the course of the Chapter 11 proceeding. The firm was paid a retainer of $90,000. Mr. Ivey avers that he and other members of his law firm have no connection with the Debtor, its creditors or any other party-in- interest. About Southern Film Southern Film Extruders, Inc., is the business of developing and manufacturing specialized film used in packaging various products. It has two plants in High Point, North Carolina. On July 25, 2013, an involuntary Chapter 7 petition was filed against Southern Film. In response thereto, Southern Film filed a Chapter 11 petition (Bankr. M.D.N.C. Case No. 13-11026) on Aug. 4, 2013. The Debtor experienced severe cash flow issues as a result of the loss of its largest customer prompted the bankruptcy filing. John L. Barnes, Jr., signed the Chapter 11 petition as vice president. The Debtor disclosed $16,276,001 in assets and $16,987,844 in liabilities as of the Chapter 11 filing. Charles M. Ivey, III, Esq., at Ivey, McClellan, Gatton, & Talcott, LLP, represents the Debtor as counsel. SOUTHERN FILM: Can Hire Hendren & Malone as Counsel --------------------------------------------------- The Official Committee of Unsecured Creditors of Southern Film Extruders, Inc. sought and obtained approval from the U.S. Bankruptcy Court to employ Jason L. Hendren, Esq., Rebecca F. Redwine, Esq., at Hendren & Malone, PLLC, as counsel for the Official Committee of Unsecured Creditors in the Chapter 11 case of Southern Film Extruders, Inc. The hourly rates of the firm's personnel are: Attorney Hourly Rate -------- ----------- Jason L. Hendren $350 Rebecca F. Redwine $265 Paralegal Hourly Rate --------- ----------- Jenny Gorman $105 Terri Womble $105 Brandy Baul $90 To the best of the Committee's knowledge, Hendren Malone is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. On Aug. 13, the U.S. Trustee appointed these creditors to the official committee of unsecured creditors in the Chapter 11 cases of Southern Film Extruders, Inc.: * Westlake Polymers, LLC * ExxonMobil Chemical Co. * Bradco Transporation About Southern Film Southern Film Extruders, Inc., is the business of developing and manufacturing specialized film used in packaging various products. It has two plants in High Point, North Carolina. On July 25, 2013, an involuntary Chapter 7 petition was filed against Southern Film. In response thereto, Southern Film filed a Chapter 11 petition (Bankr. M.D.N.C. Case No. 13-11026) on Aug. 4, 2013. The Debtor experienced severe cash flow issues as a result of the loss of its largest customer prompted the bankruptcy filing. John L. Barnes, Jr., signed the Chapter 11 petition as vice president. The Debtor disclosed $16,276,001 in assets and $16,987,844 in liabilities as of the Chapter 11 filing. Charles M. Ivey, III, Esq., at Ivey, McClellan, Gatton, & Talcott, LLP, represents the Debtor as counsel. SPIG INDUSTRY: Section 341(a) Meeting Scheduled for Oct. 11 ----------------------------------------------------------- A meeting of creditors in the bankruptcy case of SPIG Industry, LLC will be held on Oct. 11, 2013, at 12:00 p.m. at cr mtg, ABG, US Courthouse and Federal Building, 180 W. Main St., Abingdon. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. SPIG Industry, LLC, filed a Chapter 11 petition (Bankr. W.D. Va. Case No. 13-71469) on Sept. 11, 2013. SPRINGLEAF FINANCE: Plans to Offer $250 Million Notes ----------------------------------------------------- Springleaf Finance Corporation intends to offer, in a private placement, up to $150 million aggregate principal amount of notes due 2021 and up to $100 million aggregate principal amount of notes due 2023, subject to market and other conditions. In connection with this offering, the Company expects to simultaneously issue $500 million principal amount of 2021 notes and $200 million principal amount of 2023 notes in a privately negotiated exchange for $700 million aggregate principal amount of its outstanding 6.90 percent Medium Term Notes, Series J, due 2017. The closing of the offering of the notes is conditioned on the closing of the exchange transaction, and the closing of the exchange transaction is conditioned on the closing of the offering of the notes. The Company intends to use the net proceeds from the notes offering to pay fees and expenses related to the offering of the notes and the exchange transaction and for general corporate purposes, including the repayment or repurchase of a portion of its outstanding debt. There can be no assurance that the offering of the notes will be consummated. SFFC to Purchase $250MM Loan On Sept. 17, 2013, Springleaf Finance entered into an engagement letter with Merrill Lynch, Pierce, Fenner & Smith Incorporated to confirm the engagement of MLPFS to use its commercially reasonable efforts in connection with the proposed purchase by Springleaf Financial Funding Company of at least $250 million of the outstanding principal amount of loans under Springleaf Finance Corporation's senior secured term loan, under which SFFC is the borrower, and concurrent establishment of a new tranche of term loans under the SFFC Senior Secured Term Loan Facility in a principal amount equal to the principal amount of outstanding loans so purchased. SFFC would remain the borrower of the loans made under the New Loan Tranche. The New Loan Tranche would be guaranteed by the Company and by certain of the consumer finance operating subsidiaries of the Company, and the New Loan Tranche would be secured by the same collateral as, and on a pro rata basis with, the existing loans under the SFFC Senior Secured Term Loan Facility. Pursuant to the terms of the engagement letter, the remainder of the terms and provisions of the New Loan Tranche are proposed to be substantially the same as the terms and provisions of the SFFC Senior Secured Term Loan Facility, except, among other things, that the maturity date of the loans made under the New Loan Tranche would be six years after the date those loans are made and with respect to Eurodollar rate loans, the loans under the New Loan Tranche would have an interest rate margin over LIBOR of 3.50 percent, subject to a LIBOR floor of 1.25 percent, and with respect to base rate loans, the loans under the New Loan Tranche would have an interest rate margin over the base rate of 2.50 percent. Consummation of the New Loan Tranche and related concurrent purchase of existing loans under the SFFC Senior Secured Term Loan Facility is subject to the arrangement of a syndicate of lenders willing to participate in those transactions, and no assurance can be given that those transactions will be completed on the terms described above or at all. In addition, the Company expects to repay a substantial portion of the SFFC Senior Secured Term Loan Facility with cash on hand by the end of September 2013 and retire the remaining balance by the end of 2013. A copy of the Form 8-K is available for free at: http://is.gd/caAEEt About Springleaf Finance Springleaf was incorporated in Indiana in 1927 as successor to a business started in 1920. From Aug. 29, 2001, until the completion of its sale in November 2010, Springleaf was an indirect wholly owned subsidiary of AIG. The consumer finance products of Springleaf and its subsidiaries include non-conforming real estate mortgages, consumer loans, retail sales finance and credit-related insurance. The Company's balance sheet at Sept. 30, 2012, showed $15.05 billion in total assets, $13.74 billion in total liabilities and $1.31 billion in total shareholder's equity. * * * The Troubled Company Reporter said on Feb. 8, 2012, that Standard & Poor's Ratings Services lowered its issuer credit rating on Springleaf Finance Corp. and its issue credit rating on the company's senior unsecured debt to 'CCC' from 'B'. Standard & Poor's also said it lowered its issue credit ratings on Springfield's senior secured debt to 'CCC+' from 'B+' and on the company's preferred debt to 'CC' from 'CCC-'. The outlook on Springleaf's issuer credit rating is negative. "Springleaf's announcement that it will shut down about 60 branches and stop lending in 14 states highlights the operating, funding, and liquidity challenges that the firm faces as it works to pay down the $2 billion of debt coming due in 2012 and to establish a stable long-term funding strategy. The downgrade also reflects the company's poor earnings, exposure to weak residential markets and uncertainty about its ability to refinance debt or securitize assets over the coming year. We believe that should its funding or securitization options become unavailable, the company will not have enough liquidity to survive 2012, and in that case a distressed debt exchange would be likely. The company has retained financial advisors to assess its options," S&P said. As reported by the TCR on Sept. 11, 2012, Fitch Ratings has withdrawn the 'CCC' IDR assigned to Springleaf Finance, Inc., as the entity no longer exists. In the June 5, 2012, edition of the TCR, Moody's Investors Service downgraded Springleaf Finance Corporation's senior unsecured and corporate family ratings to Caa1 from B3. The downgrade reflects Springleaf's funding constraints and uncertain liquidity outlook, increased operational stresses, and record of operating losses since early 2008. SPRINGLEAF FINANCE: S&P Rates $650MM Senior Unsecured Notes 'CCC+' ------------------------------------------------------------------ Standard & Poor's Ratings Services said it assigned its 'CCC+' rating on Springleaf Finance Corp.'s $650 million senior unsecured notes due in 2021 and $300 million senior unsecured notes due in 2023. S&P also assigned a 'B' rating on Springleaf Financial Funding Co.'s $250 million senior secured term loan due in 2019. In addition, S&P affirmed its 'B' issue rating on the company's senior secured term loans. At the same time, S&P affirmed its 'B-' issuer credit rating on Springleaf. The outlook remains stable. The affirmation follows Springleaf's announcement that it will issue $650 million senior unsecured notes due in 2021 and $300 million senior unsecured notes due in 2023. The company will use the proposed issuance to retire its $700 million of senior unsecured notes due in 2017 and retain $250 million for general corporate purposes. Springleaf will also refinance $250 million to $500 million of its secured term loan due in 2017 with $250 million to $500 million of a new secured term loan due in 2019. "On balance, we view the new issuance and refinancing positively. In our opinion, this improves Springleaf's financial position because the transaction will pay down debt and extend the company's maturity profile," said Standard & Poor's credit analyst Stephen Lynch. "Most notably, the proposed transactions will significantly reduce Springleaf's 2017 debt maturities." The stable outlook balances the firm's existing cash holdings, recent access to the securitization market, and slowly improving earnings against the possibility of longer-term liquidity difficulties if securitizations or other funding options prove elusive as debt matures over the next four years. S&P believes that Springleaf's current sources of liquidity should be sufficient through 2014. S&P could lower the rating if Springleaf has trouble securitizing its consumer loan portfolio, if earnings metrics deteriorate, or if management considers a distressed debt exchange. S&P could raise the ratings on the firm if management obtains stable funding for its consumer lending business, if earnings show stable growth, or if debt to equity falls to less than 5x. STELERA WIRELESS: Committee Taps Gablegotwals as Co-Counsel ----------------------------------------------------------- The Official Unsecured Creditors' Committee appointed in the Chapter 11 case of Stelera Wireless, LLC, seeks permission from the U.S. Bankruptcy Court for the Western District of Oklahoma to retain GABLEGOTWALS as its Oklahoma co-counsel. Before its formal appointment by the Office of the United States Trustee, and while appointment of the Committee was delayed for various reasons, the Debtor sought expedited consideration by the Court of motions regarding bidding procedures for, and a sale of, a substantial portion of the assets of the its estate. Before their appointment, the members of the yet-to-be appointed Committee took certain actions as an ad hoc committee of unsecured creditors. The actions taken included, for the benefit of unsecured creditors of the Debtor generally, analysis of the Sale Proceedings, multiple communications with counsel for the Debtor and preparation and filing of an objection relating thereto. The Ad Hoc Committee requested Polsinelli and GABLEGOTWALS to represent its interests in such communications, to prepare and file its objection to the Sale Proceedings, to request and obtain an adjournment of the hearing in the Sale Proceedings, to appear on its behalf at the creditors' meeting. GABLEGOTWALS has not received any payment for services rendered prior to September 4, 2013. In order to allow GABLEGOTWALS to be compensated for work performed on and after the date of its retention on August 26, 2013, but prior to September 4, 2013, the Committee seeks to retain GABLEGOTWALS as counsel effective as of August 26, 2013. GABLEGOTWALS will be compensated and reimbursed for its expenses relating to the services performed before the Committee's appointment. G. Blaine Schwabe, III, will be the attorney primarily responsible for the engagement, with other GABLEGOTWALS attorneys and paralegals being involved as appropriate. Their current hourly rates are: G. Blaine Schwabe, III $385 John M. (Jake) Krattiger $235 Mr. Schwabe assures the Court GABLEGOTWALS is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Mr. Schwabe may be reached at: GABLEGOTWALS One Leadership Square - 15th Floor 211 North Robinson Oklahoma, City, OK 73102 Phone: (405) 235-5500 Fax: (405) 235-2875 E-mail: gschwabe@gablelaw.com About Stelera Wireless Stelera Wireless, LLC, specialized in providing broadband services to consumers and businesses in rural markets in the United States. The Company filed a Chapter 11 petition (Bankr. W.D. Okla. Case No. 13-13267) on July 18, 2013. Tim Duffy signed the petition as chief technology officer/manager. Judge Niles L. Jackson presides over the case. The Debtor disclosed $18,005,000 in assets and $30,809,314 in liabilities as of the Chapter 11 filing. J. Clay Christensen, Esq., at Christensen Law Group, PLLC, serves as the Debtor's primary counsel. Mulinix Ogden Hall & Ludlam, PLLC, serves as additional bankruptcy counsel. American Legal Claim Services, LLC serves as the official noticing agent. U.S. Trustee Richard A. Wieland appointed three members to the official committee of unsecured creditors. STELERA WIRELESS: Committee Taps Gavin/Solmonese as Fin'l Advisor ----------------------------------------------------------------- The Official Unsecured Creditors' Committee appointed in the Chapter 11 case of Stelera Wireless, LLC, seeks permission from the U.S. Bankruptcy Court for the Western District of Oklahoma to retain Gavin/Solmonese LLC as its financial advisor, nunc pro tunc to August 28, 2013. The firm's professionals will be paid based on their ordinary and customary hourly rates: Edward T. Gavin, CTP $600/hour Wayne P. Weitz $475/hour Ross B. Waetzman $375/hour The firm will also be reimbursed for out-of-pocket expenses. About Stelera Wireless Stelera Wireless, LLC, specialized in providing broadband services to consumers and businesses in rural markets in the United States. The Company filed a Chapter 11 petition (Bankr. W.D. Okla. Case No. 13-13267) on July 18, 2013. Tim Duffy signed the petition as chief technology officer/manager. Judge Niles L. Jackson presides over the case. The Debtor disclosed $18,005,000 in assets and $30,809,314 in liabilities as of the Chapter 11 filing. J. Clay Christensen, Esq., at Christensen Law Group, PLLC, serves as the Debtor's primary counsel. Mulinix Ogden Hall & Ludlam, PLLC, serves as additional bankruptcy counsel. American Legal Claim Services, LLC serves as the official noticing agent. U.S. Trustee Richard A. Wieland appointed three members to the official committee of unsecured creditors. STONE ROSE: Hearing on Trustee Appointment Continued to Oct. 2 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois continued to Oct. 2, 2013, at 10 a.m., the hearing to consider the request for appointment of a Chapter 11 trustee for Stone Rose, LP. As reported in the Troubled Company Reporter on Sept. 4, 2013, SFP Group, L.P., Ivy Grove, LLC, Daniel A. Sergi and Sergi Enterprises, creditors and holders of limited partnership interests in Stone Rose, asked the Court to appoint a Chapter 11 Trustee to wrest control of the Debtor and its assets from its current management to protect and preserve the estate's assets. The Debtor's original general partner was Driver1 Corp., a company owned by Matthew Stoen, Meritage Real Estate Investments, LLC, owned by Joel Burns and Tracy Burns and the Capital Development Fund, a company owned by Darren Niemann. Driver1 and Stoen resigned in 2010, and a new entity, Stone Rose Management, Inc., was formed to assume management responsibilities for the Debtor. The Sergi Investors relate that they made capital contributions and became limited partners in Stone Rose, investing the aggregate amount of $300,000. In 2010, the Sergi Investors filed a suit alleging that the Debtor is a sham real estate investment vehicle which Stoen used to fund his own personal whims and those of his wife Hayley Monson-Stoen, and his cronies, Niemann, Joel and Tracy. According to the Sergi Investors, the alleged misconduct of dissipating funds was material, involving millions of dollars. They add that the Debtor transferred millions of dollars to insiders and affiliates, while paying its investors nothing. "Thus far, the Debtor has failed and refused to pursue claims against the various wrongdoers and recipients of Debtor's funds," the Sergi Investors assert. "It is painfully obvious that the management of the Debtor has been, and remains, untrustworthy and unable to rehabilitate the Debtor," the Sergi Investors add. Section 1104 of the Bankruptcy Code provides "a trustee will be appointed, among other things, "for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause. . . . " About Stone Rose Aurora, Illinois-based Stone Rose, LP, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 13-16410) in Chicago, Illinois, on April 19, 2013. Joseph G. Dinges signed the petition as president of Stone Rose Mgmt., Inc., general partner. Judge Eugene R. Wedoff presides over the case. G. Alexander McTavish, Esq., at Foote, Mielke, Chavez & O'Neil, in Geneva, Ill., represents the Debtor as counsel. Stone Rose disclosed $16.5 million in total assets and $6.93 million in total liabilities in its schedule. The Debtor owns 82 acres of vacant land at 123rd St and Parallel Pky, in Kansas City, Missouri, which is valued at $4 million, and serves as collateral for a $2 million debt to Metcalf Bank. The Debtor also has a 75% interest as a member of Big House Investments, LLC, which owns 17 acres of vacant land at 110th St. and I-70 in Edwardsville, Kansas. The land is subject to a contract for sale for $6 million and is subject to a $4.0 million mortgage in favor of Metcalf Bank. STONE ROSE: U.S. Trustee Wants Case Conversion or Dismissal ----------------------------------------------------------- The U.S. Trustee for Region 11 asks the U.S. Bankruptcy Court for the Northern District of Illinois to dismiss or convert the Chapter 11 case of Stone Rose, LP to one under Chapter 7 of the Bankruptcy Code. According to the U.S. Trustee, conversion or dismissal of the Debtor's case is appropriate because the Debtor has proposed to sell its main asset (an 82 acres of vacant land in Kansas City, Missouri) in its Liquidation Plan; and has sold its 75% interest in Big House Investments in December 2012. In this relation, the U.S. Trustee believes that the Debtor has limited cash and no additional assets with which to operate its business and reorganize. Additionally, the so-called Sergi Investors have filed a motion to appoint Chapter 11 trustee alleging accountability issues concerning current and prior management of the Debtor. About Stone Rose Aurora, Illinois-based Stone Rose, LP, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 13-16410) in Chicago, Illinois, on April 19, 2013. Joseph G. Dinges signed the petition as president of Stone Rose Mgmt., Inc., general partner. Judge Eugene R. Wedoff presides over the case. G. Alexander McTavish, Esq., at Foote, Mielke, Chavez & O'Neil, in Geneva, Ill., represents the Debtor as counsel. Stone Rose disclosed $16.5 million in total assets and $6.93 million in total liabilities in its schedule. The Debtor owns 82 acres of vacant land at 123rd St. and Parallel Pky, in Kansas City, Missouri, which is valued at $4 million, and serves as collateral for a $2 million debt to Metcalf Bank. The Debtor also has a 75% interest as a member of Big House Investments, LLC, which owns 17 acres of vacant land at 110th St. and I-70 in Edwardsville, Kansas. The land is subject to a contract for sale for $6 million and is subject to a $4.0 million mortgage in favor of Metcalf Bank. STRIKE MINERALS: Obtains Temporary Management Cease Trade Order --------------------------------------------------------------- Strike Minerals Inc. on Sept. 19 disclosed that it has been granted a Temporary Management Cease Trade Order by its principal regulator, the Ontario Securities Commission. As previously announced, on August 30, 2013, a MCTO was made by the Company in respect of the late filing of the Company's its annual financial statements, accompanying Management's Discussion and Analysis and related CEO and CFO certifications of annual filings for the financial year ended April 30, 2013. The Temporary MCTO restricts all trading in securities of the Company, whether direct or indirect, by the Chief Executive Officer, the Chief Financial Officer and the directors of the Company, until such time as the Required Filings have been filed by the Company. All other parties are permitted to freely trade in the Company's securities. The OSC has given notice of a hearing to be held on October 1, 2013 for the purposes of making the Temporary MCTO permanent if the Company has not remedied the default in the filing the Required Filings. As previously announced, the Company was not in a position to timely file its Required Filings, primarily as a result of additional time required to secure financing, and subsequently for its auditors to complete the audit of the Company's annual financial statements. The Company's board of directors and its management confirm that they are working expeditiously with the Company's auditors to meet the Company's obligations relating to the filing of the Required Filings, and the Company continues to expect to file the Required Filings on or before October 28, 2013. The Company confirms that it will satisfy the provisions of the alternative information guidelines under Section 4.4 of National Policy Statement 12-203 respecting Cease Trade Orders for Continuous Disclosure Defaults, for so long as it remains in default, by issuing bi-weekly default status reports in the form of further news releases, which will also be filed on SEDAR. The Company confirms that there are no insolvency proceedings against it as of the date of this news release. The Company also confirms that there is no other material information concerning the affairs of the Company that has not been generally disclosed as of the date of this news release. About Strike Headquartered in Toronto, Ontario, Strike Minerals is a TSX-V listed company that is engaged in the exploration and development of precious metal properties in Canada. Its primary property is the former producing Edwards Gold Mine property in the Goudreau - Lochalsh Gold Camp near Wawa, Ontario. SUNSHINE HOTELS: Wins Approval of Revised Plan ---------------------------------------------- Sunshine Hotels, LLC, and Sunshine Hotels II, LLC confirmed their separate Plans of Reorganization Plan of Reorganization dated April 29, 2013, as amended. The Plans were amended in accordance with the limited objection filed by San Bernardino County on June 14, 2013, and consistent with the Non- Material Amendment filed June 19, 2013 and in agreement with creditor S2 Hospitality. The 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. As reported in the Troubled Company Reporter on Aug. 9, 2013, the U.S. Bankruptcy Court for the District of Arizona entered an order approving the First Amended Disclosure Statement of Sunshine Hotels, LLC, dated July 25, 2013. A copy of the Debtor's Amended Disclosure Statement is available at http://bankrupt.com/misc/sunshinehotels.doc89.pdf About Sunshine Hotels 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. SUNTECH POWER: Zhou Weiping Is Interim CEO; CFO Search On --------------------------------------------------------- Suntech Power Holdings Co., Ltd., announced a change in senior management, with Mr. David King stepping down as CEO and acting CFO and Mr. Zhou Weiping assuming the roles of interim CEO and interim CFO with immediate effect. The board of the Company will first commence a search for a new CFO. Mr. Zhou will retain his roles as president and director of the Company. Mr. Zhou, Suntech's CEO, said, "We would like to thank David for his service and I'm confident that I will be able to lead the company and, along with all our stakeholders, implement the restructuring plan over the coming months." About Suntech Wuxi, China-based Suntech Power Holdings Co., Ltd. (NYSE: STP) produces solar products for residential, commercial, industrial, and utility applications. With regional headquarters in China, Switzerland, and the United States, and gigawatt-scale manufacturing worldwide, Suntech has delivered more than 25,000,000 photovoltaic panels to over a thousand customers in more than 80 countries. As reported by the TCR on March 20, 2013, Suntech Power Holdings Co., Ltd., has received from the trustee of its 3 percent Convertible Notes a notice of default and acceleration relating to Suntech's non-payment of the principal amount of US$541 million that was due to holders of the Notes on March 15, 2013. That event of default has also triggered cross-defaults under Suntech's other outstanding debt, including its loans from International Finance Corporation and Chinese domestic lenders. SYNCREON HOLDINGS: S&P Puts 'B+' CCR on CreditWatch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services said that it has placed its 'B+' corporate credit rating on syncreon Holdings Ltd. and its 'B' issue-level rating on the company's $400 million senior unsecured notes on CreditWatch with negative implications. The CreditWatch placement follows syncreon's announcement that it has entered into an agreement with its existing shareholders to sell a substantial minority stake in its business to private equity firm Centerbridge Partners L.P. "Although the company's credit metrics commensurate with its 'aggressive' financial risk profile, we believe that the transaction could result in higher leverage due to a potential increase in debt," said Standard & Poor's credit analyst Carol Hom. "We expect to resolve the CreditWatch placement after reviewing the company's credit profile and financial policy." S&P expects to resolve the CreditWatch placement within 90 days. S&P is reviewing syncreon's financial objectives and policy with the addition of the new minority owner, and it will consider how these factors may affect its assessment of its financial risk profile. TECHPRECISION CORP: Incurs $1.4 Million Net Loss in 1st Quarter --------------------------------------------------------------- TechPrecision Corporation reported a net loss of $1.42 million on $7.09 million of net sales for the three months ended June 30, 2013, as compared with a net loss of $706,161 on $7.14 million of net sales for the same period last year. Loss from operations was $1.6 million in fiscal 2013 compared to an operating loss of $3.4 million in fiscal 2012. The Company's balance sheet at June 30, 2013, showed $19.05 million in total assets, $10.13 million in total liabilities and $8.91 million in total stockholders' equity. "We continue to focus our immediate efforts on reducing our expenses to align our current cost structure with current and expected revenue levels toward the goal of returning to profitability in fiscal 2014," commented Leonard Anthony, chairman of the Board of Directors and principal executive officer. "We are on track with our goal to reduce $2.0 million to $2.5 million in annualized expenses on a run-rate basis and are encouraged that our backlog continues to increase, expanding from $16.4 million at March 31 of 2013 to $19.4 million as of June 30, 2013. In addition, we continue to seek to replace or otherwise refinance our debt to align more closely with the business model that we are executing. I am confident that our near-term initiatives for stabilizing the business and the significant market opportunities we see going forward will yield the long-term results for growth and profitability that will create sustainable value for our shareholders." In their report on the consolidated financial statements for the year ended march 31, 2013, KPMG LLP, in Philadelphia, Pa., said that the Company was not in compliance with the fixed charges and interest coverage financial covenants under their credit facility, and the Bank has not agreed to waive the non-compliance with the covenants. "Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice. The Company has suffered recurring losses from operations, and the Company's liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months. These circumstances raise substantial doubt about the Company's ability to continue as a going concern." A copy of the press release is available for free at: http://is.gd/BreLZp TechPrecision Corporation (OTC BB: TPCSE), through its wholly owned subsidiaries, Ranor, Inc., and Wuxi Critical Mechanical Components Co., Ltd., globally manufactures large-scale, metal fabricated and machined precision components and equipment. TECHPRECISION CORP: Incurs $1.4 Million Net Loss in June 30 Qtr. ---------------------------------------------------------------- TechPrecision Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.42 million on $7.09 million of net sales for the three months ended June 30, 2013, as compared with a net loss of $706,161 on $7.14 million of net sales for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $19.05 million in total assets, $10.13 million in total liabilities and $8.91 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/Uxa0OK TechPrecision Corporation (OTC BB: TPCSE), through its wholly owned subsidiaries, Ranor, Inc., and Wuxi Critical Mechanical Components Co., Ltd., globally manufactures large-scale, metal fabricated and machined precision components and equipment. In their report on the consolidated financial statements for the year ended March 31, 2013, KPMG LLP, in Philadelphia, Pa., said that the Company was not in compliance with the fixed charges and interest coverage financial covenants under their credit facility, and the Bank has not agreed to waive the non-compliance with the covenants. "Since the Company is in default, the Bank has the right to accelerate payment of the debt in full upon 60 days written notice. The Company has suffered recurring losses from operations, and the Company's liquidity may not be sufficient to meet its debt service requirements as they come due over the next twelve months. These circumstances raise substantial doubt about the Company's ability to continue as a going concern." The Company reported a net loss of $2.4 million on $32.5 million of sales for the year ended March 31, 2013, compared with a net loss of $2.1 million on $33.3 million of sales in fiscal 2012. TRANS-LUX CORP: Gabelli Funds Lowers Equity Stake to 38.9% ---------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Gabelli Funds, LLC, and its affiliates disclosed that as of Sept. 13, 2013, they beneficially owned 10,087,100 shares common stock of Trans-Lux Corporation representing 38.92 percent of the shares outstanding. Gabelli Funds previously reported beneficial ownership of 14,107,500 common shares or 46.70 percent equity stake as of Dec. 31, 2012. A copy of the regulatory filing is available at: http://is.gd/LCeWvd About Trans-Lux Corporation Norwalk, Conn.-based Trans-Lux Corporation (NYSE Amex: TLX) is a designer and manufacturer of digital signage display solutions for the financial, sports and entertainment, gaming and leasing markets. For the year ended Dec. 31, 2012, the Company incurred a net loss of $1.36 million on $23.02 million of total revenues, as compared with a net loss of $1.41 million on $23.75 million of total revenues during the prior year. As of March 31, 2013, the Company had $20 million in total assets, $18.31 million in total liabilities and $1.69 million in total stockholders' equity. "Our independent registered public accounting firm has issued an opinion on our consolidated financial statements that states that the consolidated financial statements were prepared assuming we will continue as a going concern and further states that the continuing losses and uncertainty regarding the ability to make the required minimum funding contributions to the pension plan as well as the sinking fund payments on the Debentures and the principal and interest payments on the Notes and the Debentures raises substantial doubt about our ability to continue as a going concern. As a result, if the Company is unable to (i) obtain additional liquidity for working capital, (ii) make the required minimum funding contributions to the pension plan and (iii) make the required principal and interest payments on the Notes and Debentures, there would be a significant adverse impact on the financial position and the operating results of the Company," according to the Company's annual report for the year ended Dec. 31, 2012. TRINITY COAL: Files Disclosures for 2nd Revised Plan ---------------------------------------------------- Trinity Coal Corporation, et al., filed with the U.S. Bankruptcy Court for the Eastern District of Kentucky on Sept. 17, 2013, a Second Amended Disclosure Statement for the Second Amended Debtors' Joint Chapter 11 Plan of Reorganization, filed on Sept. 16, 2013, by the Debtors and a newly formed indirect wholly owned subsidiary of Essar Global Limited n/k/a Essar Global Fund Limited ("EGFL") as joint proponents. Pursuant to the Plan terms, all Senior Secured Credit Facility Secured Claims in Class 4 will be deemed to be Allowed Secured Claims in the aggregate principal amount of $60 million, solely for the purpose of this Plan. Holders of an Allowed Class 4 Claim will receive: (i) from EGFL under the EGFL Guarantee on the Effective Date $55 million, to be paid directly by EGFL to the Senior Secured Credit Facility Administrative Agent in Cash, for the ratable benefit of the Senior Secured Credit Facility Lenders and to be applied by the Senior Secured Credit Facility Administrative Agent in accordance with the terms of the Senior Secured Credit Facility Credit Agreement, which Cash, plus the sum of any unreimbursed draws under Letters of Credit paid by Essar on the Effective Date and the stated amount of the Replacement Letters of Credit up to but not exceeding the Guaranteed Note Obligations then due and payable, will be paid solely in satisfaction of the Guaranteed Note Obligations, and (ii) $1 million, to be funded to the Debtors by EGFL on the Effective Date then paid directly by the Debtors to the Senior Secured Credit Facility Administrative Agent in Cash, for the ratable benefit of the Senior Secured Credit Facility Lenders and to be applied by the Senior Secured Credit Facility Administrative Agent in accordance with the terms of the Senior Secured Credit Facility Credit Agreement, which Cash shall be paid solely in satisfaction of the Senior Secured Credit Facility Secured Claims. General Unsecured Claims in Class 6, including all Allowed Senior Secured Credit Facility Deficiency and all CAT Deficiency Claims, will receive a Pro Rata interest on the Trust Assets, provided that each Holder of an Allowed Senior Secured Credit Facility Deficiency Claim waives the entire amount of such Senior Secured Credit Facility Deficiency Claim on the Effective Date. Essar Unsecured Claims in Class 7 will not receive any distribution on account of such claims. Section 510(b) Claims in Class 9 will not receive any distribution on account of such Claims, and Section 510(b) Claims will be discharged, cancelled, released, and extinguished as of the Effective Date. Trinity Parent Corporation ("TPC) Interests in Class 11 will not receive any distribution on account of such TPC Interests, and TPC Interests will be discharged, cancelled, released, and extinguished as of the Effective Date, and will be of no further force or effect. A copy of the Second Amended Disclosure Statement for the Second Amended Debtors' Joint Chapter 11 Plan of Reorganization is available at http://bankrupt.com/misc/trinitycoal.doc725.pdf About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. Trinity is a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch filed an involuntary petition for relief under Chapter 11 against Trinity Coal Corporation and 15 affiliates (Bankr. E.D. Ky. Lead Case No. 13-50364). The three entities say they are owed a total of $104 million on account loans provided to Trinity. On Feb. 14, 2013, Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. On March 4, 2013, the Debtors filed their consolidated answer to involuntary petitions and consent to an order for relief and reservation of rights, thereby consenting to the entry of an order for relief in each of their respective Chapter 11 cases. An order for relief in each of the Debtors was entered by the Court on March 4, 2013, which converted the involuntary cases to voluntary Chapter 11 cases. Steven J. Reisman, Esq., L. P. Harrison 3rd, Esq., Jerrold L. Bregman, Esq., and Dienna Ching, Esq., at CURTIS, MALLET-PREVOST, COLT & MOSLE LLP, in New York, N.Y.; and John W. Ames, Esq., C.R. Bowles, Jr., Esq., and Bruce Cryder, Esq., at BINGHAM GREENEBAUM DOLL LLP, in Lexington, Ky., represent the Debtors as counsel. Attorneys at Foley & Lardner LLP, in Chicago, Ill., represent the Official Committee of Unsecured Creditors as counsel. Sturgill, Turner, Barker & Maloney, PLLC, in Lexington, Ky., represents the Official Committee of Unsecured Creditors as local counsel. TRINITY COAL: Nears Consensual Plan With Committee & Essar ---------------------------------------------------------- Geoffrey S. Goodman, Esq., at Foley & Lardner LLP, on behalf of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Trinity Coal Corporation, et al., said in Court papers it has worked with the Debtors and Essar Global Fund Limited on the terms of a consensual plan of reorganization in the cases. The parties have made substantial progress and are very close to a final deal. A few issues remain unresolved, however. While the Committee is optimistic that the issues can be addressed prior to the hearing on the Disclosure Statement explaining the Debtors' recently filed reorganization plan, the Committee submitted a limited objection to the Plan outline to protect its rights under the circumstances. The Committee says the Disclosure Statement pursuant to the Debtors' joint plan does not contain "adequate information" on certain aspects of the Plan. According to the First Amended Disclosure Statement, the First Amended Joint Plan dated Sept. 7, 2013, provides for the confirmation order to authorize, among other things, the restructuring transactions. All amounts and securities necessary for EGFL or the Debtors (on the Effective Date) or the Reorganized Debtors or the Liquidating Trustee to make payments from the Essar Equity Commitment Amount, the Essar DIP Commitment Amount, the Essar Unsecured Commitment Amount, the Essar Guaranty Commitment Amount, the Trust Assets, the Professional Fee Reserve Amount, Cash of the Debtors and the Exit Facility. Under the Plan, on the Effective Date, the Liquidating Trust will be formed to oversee the wind down, dissolution, and liquidation of the Trust Assets and the remaining Estates in accordance with the Plan after the Effective Date and will fund such wind down, dissolution, and liquidation using the Trust Assets. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/TRINITY_COAL_amendedds.pdf As reported in the Troubled Company Reporter on Sept. 4, 2013, the Court was slated to convene a hearing on Sept. 19, at 1:30 p.m., to consider the adequacy of the disclosure statement explaining the Joint Plan. The Plan is sponsored by Essar Met Coal Inc. Under the Plan, Essar's unsecured claims will be allowed in the aggregate amount of $133,446,780. In exchange for full and final satisfaction, settlement, release, and compromise of each and every Essar Unsecured Claim, together with the other payments and consideration to be provided by the holders of the Allowed Essar Unsecured Claims or their non-Debtor Affiliate designees, each Holder of Essar Unsecured Claims will receive its Pro Rata share of 100% of the New Common Stock of Reorganized TPC and 100% of the New Common Stock of the Reorganized Deep Water Entities on the Effective Date. General Unsecured Claims, excluding the Essar Unsecured Claims, are impaired. Each Holder of an Allowed General Unsecured Claim will receive a Pro Rata interest in the Trust Assets; provided that each Holder of an Allowed Senior Secured Credit Facility Deficiency Claim agrees to waive the entire amount of the Senior Secured Credit Facility Deficiency Claim on the Effective Date. The Debtors stated that if the Plan is not confirmed with respect to any of the Debtors, the Debtors may revert back to the auction for the sale of any or all of the Debtors' assets and/or risk foreclosure on collateral of various secured parties, including the DIP Lenders. About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. Trinity is a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch filed an involuntary petition for relief under Chapter 11 against Trinity Coal Corporation and 15 affiliates (Bankr. E.D. Ky. Lead Case No. 13-50364). The three entities say they are owed a total of $104 million on account loans provided to Trinity. On Feb. 14, 2013, Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. On March 4, 2013, the Debtors filed their consolidated answer to involuntary petitions and consent to an order for relief and reservation of rights, thereby consenting to the entry of an order for relief in each of their respective Chapter 11 cases. An order for relief in each of the Debtors was entered by the Court on March 4, 2013, which converted the involuntary cases to voluntary Chapter 11 cases. Sturgill, Turner, Barker & Moloney, PLLC serves as local counsel to the Official Committee of Unsecured Creditors. TRINITY COAL: Wants Exclusive Right to File Plan Until Nov. 14 -------------------------------------------------------------- Trinity Coal Corporation, et al., ask the U.S. Bankruptcy Court for the Eastern District of Kentucky to extend their exclusive periods to file a Chapter 11 Plan until Nov. 14, 2013; and solicit acceptances for that Plan until Jan. 13, 2014. The Debtors explain that the cases are large and complex with liabilities exceeding several hundred million dollars. The Debtors have hundreds of potential unsecured creditors, numerous executory contracts and unexpired leases and substantial secured debt. Moreover, the Debtors have already filed their Disclosure Statement, which is scheduled to be considered for approval by the Bankruptcy Court on Sept. 19. The Court will consider the Debtors' request at a Sept. 19 hearing. About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. Trinity is a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch filed an involuntary petition for relief under Chapter 11 against Trinity Coal Corporation and 15 affiliates (Bankr. E.D. Ky. Lead Case No. 13-50364). The three entities say they are owed a total of $104 million on account loans provided to Trinity. On Feb. 14, 2013, Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. On March 4, 2013, the Debtors filed their consolidated answer to involuntary petitions and consent to an order for relief and reservation of rights, thereby consenting to the entry of an order for relief in each of their respective Chapter 11 cases. An order for relief in each of the Debtors was entered by the Court on March 4, 2013, which converted the involuntary cases to voluntary Chapter 11 cases. Sturgill, Turner, Barker & Moloney, PLLC serves as local counsel to the Official Committee of Unsecured Creditors. TRINITY COAL: Wants Until Dec. 27 to Decide on Unexpired Leases --------------------------------------------------------------- Trinity Coal Corporation, et al., ask the U.S. Bankruptcy Court for the Eastern District of Kentucky to extend their time to assume or reject certain unexpired leases and royalty agreements with respect to nonresidential real property from Sept. 30, 2013, until Dec. 27, 2013. The Debtors relate that the counterparties to the leases and agreements assured that they will provide their written consent to the extension by the time of the hearing on the motion or such further date as stated on the record of the hearing on the Debtors' request. About Trinity Coal Trinity Coal Corp. is a coal mining company that owns coal deposits located in the Appalachian region of the eastern United States, specifically, in Breathitt, Floyd, Knott Magoffin, and Perry Counties in eastern Kentucky and in Boone, Fayette, Mingo, McDowell and Wyoming Counties in West Virginia. Trinity's coal mining operations are organized into six distinct coal mining complexes. Three complexes are located in Kentucky and are referred to as Prater Branch Resources, Little Elk Mining and Levisa Fork. The Kentucky Operations produced compliance and low sulfur steam coal. Three complexes are located in West Virginia and are referred to as Deep Water Resources, North Springs Resources and Falcon Resources. Trinity is a wholly owned subsidiary of privately held multinational conglomerate Essar Global Limited. Credit Agricole Corporate & Investment Bank, ING Capital LLC and Natixis, New York Branch filed an involuntary petition for relief under Chapter 11 against Trinity Coal Corporation and 15 affiliates (Bankr. E.D. Ky. Lead Case No. 13-50364). The three entities say they are owed a total of $104 million on account loans provided to Trinity. On Feb. 14, 2013, Austin Powder Company, Whayne Supply Company and Cecil I. Walker Machinery Co. filed an involuntary petition for relief under Chapter 11 (Bankr. E.D. Ky. Case No. 13-50335) against Frasure Creek Mining, LLC. On Feb. 19, 2013, Credit Agricole, ING Capital and Natixis joined as petitioning creditors. On March 4, 2013, the Debtors filed their consolidated answer to involuntary petitions and consent to an order for relief and reservation of rights, thereby consenting to the entry of an order for relief in each of their respective Chapter 11 cases. An order for relief in each of the Debtors was entered by the Court on March 4, 2013, which converted the involuntary cases to voluntary Chapter 11 cases. Sturgill, Turner, Barker & Moloney, PLLC serves as local counsel to the Official Committee of Unsecured Creditors. TRUSTWORTHY RADIO: Future Questioned After Host Quits ----------------------------------------------------- Samantha Madison, writing for The Carlisle Sentinel, reports that questions about the future of radio station Nice 960 WHYL AM hav surfaced following the departure of host Ben Barber. The station sought Chapter 11 bankruptcy protection on Aug. 13, 2013 under Trustworthy Radio LLC. A motion to convert the case to Chapter 7 bankruptcy was granted on July 18, 2013. Court documents say WHYL has claimed that it owes its creditors at least $82,880.22. According to the report, Wayne Gracey, Esq., represents the station as well as general manager Bruce Collier as counsel. He said the Chapter 7 trustee has allowed the station to stay open to better find a buyer. According to the report, Mr. Barber said WHYL owed rent, and as a result, WHYL was being foreclosed upon and was asked to leave the building by the close of the business day on Wednesday, Sept. 18. He said the information was the last he heard about the situation before leaving the station on Tuesday after his final show. The station began airing in 1948. UNIFIED 2020: Court Approves Motion to Use Cash Collateral ---------------------------------------------------------- Daniel J. Sherman, appointed Chapter 11 Trustee of Unified 2020 Realty Partners, LP, won Bankruptcy Court permission to use cash collateral. The Chapter 11 Trustee defeated a bid by United Central Bank, which sought to prohibit the use of cash collateral. The Bank alleged that the Debtor's assets are subject to the prepetition liens of the Bank including liens on real estate, equipment, furniture, and accounts receivables. The Chapter 11 Trustee may use cash collateral to continue the Debtor's ongoing operations, which involves the ownership and leasing of infrastructure critical to telecommunications companies and data center facilities. Without such funds, the Chapter 11 Trustee will not be able to pay the Debtor's operating expenses and obtain goods and services needed to carry on its business during this sensitive period in a manner that will avoid irreparable harm to the Debtor's estate. As adequate protection for the liens and interests of United Central Bank, and to the extent the Trustee is authorized to, the Trustee grants to the Bank, as adequate protection for any diminution in the value of the Collateral an additional and replacement lien, security interest and assignment, co-extensive with and of the same perfection and priority as the Bank's pre- petition lien, security interest and assignment in, all pre- petition and post-petition property of any and every kind and description of the Debtor, except Chapter 5 Bankruptcy Causes of Action. As additional interim adequate protection for the Bank's security interests in Cash Collateral, the Bank is afforded an administrative priority under 11 U.S.C. Sec. 507(b) and Sec. 503 (b), to the extent of its interest in the amount of such Cash Collateral received by Debtor for any diminution in the value of the Collateral. The Final Hearing on the motion to use cash collateral is set for Oct. 8, 2013, at 1:30 p.m. About Unified 2020 Realty Unified 2020 Realty Partners, LP, filed a bare-bones petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 13-32425) in its home-town in Dallas on May 6, 2013. The petition was signed by Edward Roush as president of general partner. The Debtor disclosed $44.7 million in total assets and $31.6 million in liabilities as of the Chapter 11 filing. The Debtor says it owns and leases infrastructure critical to telecommunications companies and data center facilities. Judge Stacey G. Jernigan presides over the Chapter 11 case. Arthur I. Ungerman, Esq., and Kerry S. Alleyne-Simmons, Esq., at the Law Office of Arthur Ungerman, in Dallas, Texas, represent the Debtor. Peter C. Lewis, Esq., and Jacob W. Sparks, Esq., at Scheef & Stone, LLP, in Dallas, Texas, represent United Central Bank. In its schedules, the Debtor disclosed $280,178,409 in assets and $46,378,972 in liabilities. UPH HOLDINGS: Hines REIT One Wilshire's Cure Claim Settled ---------------------------------------------------------- The Hon. Tony M. Davis of the U.S. Bankruptcy Court for the Western District of Texas signed off on an agreed order between Hines REIT One Wilshire LP, and UPH Holdings, Inc., regarding, among other things (i) assumption and assignment of lease of non- residential real property located at 624 S. Grand, One Wilshire Building, Los Angeles, California; and notice of cure amounts and deadline for objection to cure amounts. Pursuant to an agreed order: 1. the cure amount and compensation for Hines' actual pecuniary loss payable under the lease is $242,621 as of July 15, 2013; 2. upon the closing of the Debtor's sale of assets to TNCI Operating Company LLC, pursuant to the sale motion, the Debtors' assumption and assignment of the Lease to TNCI is approved and TNCI accepts such assignment, assumes all of the obligations under the lease, and agrees to be bound by and to perform all of the obligations of the tenant under the lease; 3. TNCI will deliver an additional security deposit in the sum of $41,589 to Hines or its successors in interest; and 4. the Debtors will remain fully liable for the payment and for performance of all of the other terms, covenants, conditions, liabilities and obligations under the Lease until the Effective Date. Jason S. Brookner, Esq., at Looper Reed & Mcgraw P.C., and A. Kenneth Hennesay, Jr., Esq. at Allen Matkins Leck Gamble Mallory & Natsis LLP, represent Hines. Patricia B. Tomasco, Esq., at Jackson Walker L.L.P., represents the Debtor. Steven Wilamowsky, Esq., at Bingham McCutchen LLP represents the buyer. As reported in the Troubled Company Reporter on Aug. 7, 2013, the Court authorized the Debtors to: 1. sell substantially all of its assets to TNCI pursuant to an asset purchase agreement dated July 3, 2013; and 2. pay the net proceeds of sale to Hercules Technology II, L.P. The Debtors, with the assistance of it sales agent, Q Advisors, LLC, having conducted a marketing process, in consultation with the Official Committee of Unsecured Creditors and Hercules, determined that TNCI submitted the highest and best bid for the Debtor's property. The Court on June 28, 2013, approved bid procedures with respect to the sale of substantially all of the Debtors' assets. Pursuant to the approved bid procedures, the auction was scheduled for July 9 until July 11, at the offices of Jackson Walker, L.L.P., in Austin, Texas. The Debtors' secured lender, Hercules Technology II. L.P., was authorized, in its discretion, to credit bid at the auction all or any portion of the Hercules Prepetition Indebtedness under Section 363(k) of the Bankruptcy Code. About UPH Holdings Inc. UPH Holdings Inc. and several affiliates filed Chapter 11 petitions (Bankr. W.D. Tex. Lead Case No. 13-bk-10570) on March 28, 2013. Judge Tony M. Davis oversees the case. Jennifer Francine Wertz, Esq., and Patricia Baron Tomasco, Esq., at Jackson Walker, L.L.P., serve as the Debtors' counsel. Q Advisors, LLC serves as financial advisors. UPH Holdings disclosed $26,917,341 in assets and $19,705,805 in liabilities as of the Chapter 11 filing. Other affiliates that sought Chapter 11 protection are: Pac-West Telecomm, Inc.; Tex-Link Communications, Inc.; Unipoint Holdings, Inc.; Unipoint Enhanced Services, Inc.; Unipoint Services, Inc.; Nwire LLC; and Peering Partners Communications LLC (Case Nos. 13-10571 to 13-10577). Judy A. Robbins, the United States Trustee for Region 7, has appointed a five-member Official Committee of Unsecured Creditors in the Chapter 11 cases of UPH Holdings, Inc., Pac-West Telecomm Inc., and their affiliated debtors. The Committee tapped Kelley Drye & Warren LLP as its counsel, and QSI Consulting, Inc. as its financial advisor. VAIL LAKE: Has Final Authorization to Use Cash Collateral --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California authorized Vail Lake Rancho California, LLC, et al.'s use of cash on a final basis. As reported in the Troubled Company Reporter on July 1, 2013, Bankruptcy Judge Louise DeCarl Adler entered an interim order granting the Debtors authority to use cash for business operations in accordance with a prepared budget. About Vail Lake Vail Lake Rancho California, LLC and its affiliates own the California campground Vail Lake Resort. Vail Lake is a large reservoir in western Riverside County, California, located on Temecula Creek in the Santa Margarita River watershed, approximately 15 miles east of Temecula, California. Properties cover approximately 9,000 acres and have an estimated water storage capacity of approximately 51,000 acre-feet. On Dec. 26, 2012, creditors of Vail Lake filed an involuntary Chapter 11 petition (Bankr. S.D. Cal. Case No. 12-16684) for Vail Lake. In a filing on June 6, 2013, the Debtor said it consents to the entry of an order for relief and does not contest the involuntary Chapter 11 petition. On June 5, 2013, the company sent 5 related entities -- Vail Lake USA, LLC ("VLU"), Vail Lake Village & Resort, LLC ("VLRC"), Vail Lake Groves, LLC, Agua Tibia Ranch, LLC, and Outdoor Recreational Management, LLC -- to Chapter 11 bankruptcy. The new debtors have sought and obtained an order for joint administration of their Chapter 11 cases with Vail Lake Rancho (Case No. 12-16684). The Debtors are represented by attorneys at Cooley LLP and Phillips, Haskett & Ingwalson, A.P.C. The Debtor also employed Thomas C. Hebrank and E3 Realty Advisors, Inc., with Mr. Hebrank serving as the Debtors' chief restructuring officer. The Debtors' consolidated assets, as of May 31, 2013, total approximately $291,016,000 and liabilities total $52,796,846. VAIL LAKE: Oct. 3 Hearing on Request to Dismiss Chapter 11 Case --------------------------------------------------------------- The Bankruptcy Court will convene a hearing on Oct. 3, 2013, at 2:30 p.m., to consider a motion to dismiss the Chapter 11 cases of Vail Lake Rancho California et al. The Motion to Dismiss was filed by Jeffry A. Davis, on behalf of Dynamic Finance Corporation and Angela Chen Sabella. Objections, if any, are due Sept. 27. The Court decided to consider the request on merits and rejected the Debtors' bid to throw out the request based on a technicality. Specifically, the Court denied approval of the Debtors' ex parte motion to strike the motion to dismiss for insufficient service. The Court said that it does not believe it is appropriate to strike the motion for defective service. As reported in the Troubled Company Reporter on Sept. 13, 2013, according to the Debtors, as evidenced on the face of the Certificate of Service filed in connection with the Notice and Motion to Dismiss, Dynamic and Chen failed to serve all creditors of these cases with their Notice and Motion to Dismiss. The Federal Rules of Bankruptcy Procedure, the Local Rules of the Bankruptcy Court, the Court's Limit Notice Order and fundamental precepts of due process require that all creditors entitled to notice be notified about the pendency of a case determinative motion like the Motion to Dismiss. Chen et al. received actual notice of the addition of over 330 creditors to VLRC's schedules more than one month before filing the Motion to Dismiss, but did not provide notice of the Motion to Dismiss to any of those entities. Moreover, Chen et al. failed to minimally comply with service requirements. That is, they failed to serve even the top 20 unsecured creditors of the Voluntary Debtors, as is required by the Limit Notice Order. By the Motion to Strike, the Debtors wanted the Court to direct Chen et al. to re-file and re-serve the Motion to Dismiss on all creditors required to be served under Bankruptcy Rule 2002. The ultimate effect of such an order, which would obviously not reach the merits of the Motion to Dismiss, would simply be to postpone the hearing and would therefore not substantively prejudice Chen et al. Rather than expend scarce estate resources on opposing a facially defective Motion to Dismiss at this time, the Debtors submit that it makes more sense for Chen et al. to re-notice and re-serve the Motion to Dismiss to allow all creditors entitled to notice the opportunity to participate and be heard with respect to the Motion to Dismiss. Due process requires no less, the Debtor said. About Vail Lake Vail Lake Rancho California, LLC and its affiliates own the California campground Vail Lake Resort. Vail Lake is a large reservoir in western Riverside County, California, located on Temecula Creek in the Santa Margarita River watershed, approximately 15 miles east of Temecula, California. Properties cover approximately 9,000 acres and have an estimated water storage capacity of approximately 51,000 acre-feet. On Dec. 26, 2012, creditors of Vail Lake filed an involuntary Chapter 11 petition (Bankr. S.D. Cal. Case No. 12-16684) for Vail Lake. In a filing on June 6, 2013, the Debtor said it consents to the entry of an order for relief and does not contest the involuntary Chapter 11 petition. On June 5, 2013, the company sent 5 related entities -- Vail Lake USA, LLC ("VLU"), Vail Lake Village & Resort, LLC ("VLRC"), Vail Lake Groves, LLC, Agua Tibia Ranch, LLC, and Outdoor Recreational Management, LLC -- to Chapter 11 bankruptcy. The new debtors have sought and obtained an order for joint administration of their Chapter 11 cases with Vail Lake Rancho (Case No. 12-16684). The Debtors are represented by attorneys at Cooley LLP and Phillips, Haskett & Ingwalson, A.P.C. The Debtor also employed Thomas C. Hebrank and E3 Realty Advisors, Inc., with Mr. Hebrank serving as the Debtors' chief restructuring officer. The Debtors' consolidated assets, as of May 31, 2013, total approximately $291,016,000 and liabilities total $52,796,846. VIGGLE INC: Incurs $91.4 Million Net Loss in Fiscal 2013 -------------------------------------------------------- Viggle Inc. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $91.40 million on $13.90 million of revenues for the year ended June 30, 2013, as compared with a net loss of $96.51 million on $1.73 million of revenues during the prior year. The Company's balance sheet at June 30, 2013, showed $16.77 million in total assets, $54.15 million in total liabilities and a $37.37 million total stockholders' deficit. "The last fiscal year was a time of incredible growth for Viggle on so many fronts - executive suite and human capital, technology platform, advertising partners and strategic business relationships," said Greg Consiglio, Viggle president and COO. "The transition from a start up to ongoing business is not always a smooth one but one that we've been able to make while driving tremendous growth in every key metric, including registered users, monthly active users and revenue, while also investing to build a global reward platform across multiple verticals." BDO USA, LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has suffered recurring losses from operations and at June 30, 2013, has deficiencies in working capital and equity that raise substantial doubt about its ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/5gxSVk About Viggle New York City-based Viggle Inc. is a loyalty marketing company. The Company has developed a loyalty program for television that gives people real rewards for checking into the television shows they are watching on most mobile operating system. Viggle users can redeem their points in the app's rewards catalog for items such as movie tickets, music, or gift cards. VISUALANT INC: Amends 162.1 Million Shares Resale Prospectus ------------------------------------------------------------ Visualant, Incorporated, has amended its registration statement relating to the the resale by Michael E. Donnelly, Steven M. Bathgate, William D. Moreland, et al., of up to 162,130,000 shares of the Company's common stock, $.001 par value per share, including: (i) 52,300,000 shares of common stock issued to Special Situations and forty other accredited investors pursuant to the Private Placement which closed June 14, 2013; (ii) 52,300,000 shares of common stock issuable upon the exercise of the five-year Series A Warrants at $0.15 per share, which were issued to the investors as part of the above-referenced Private Placement; (iii) 52,300,000 shares of common stock issuable upon the exercise of five year Series B Warrants at $0.20 per share, which were issued to the investors as part of the above- referenced Private Placement; and (iv) 5,230,000 shares of common stock issuable upon the exercise of five year Placement Agent Warrants at $0.10 per share, which were issued to GVC Capital LLC or affiliated parties pursuant to the above-referenced Private Placement. The Company will not receive any of the proceeds from the sale of the common stock by the selling security holders. The Company's common stock trades on the OTCQB under the symbol VSUL. On Sept. 12 , 2013, the last reported sale price for the Company's common stock as reported on OTCQB was $0.09 per share. A copy of the amended Form S-1 is available for free at: http://is.gd/oKH8ot About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on Oct. 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. Visualant incurred a net loss of $2.72 million for the year ended Sept. 30, 2012, compared with a net loss of $2.39 million for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $5.59 million in total assets, $7.32 million in total liabilities, $46,609 in noncontrolling interest and a $1.78 million total stockholders' deficit. PMB Helin Donovan, LLP, in Nov. 10, 2012, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. The independent auditors noted that the Company has sustained a net loss from operations and has an accumulated deficit since inception which raise substantial doubt about the Company's ability to continue as a going concern. VISUALANT INC: Gets Approval to Restate Articles of Incorporation ----------------------------------------------------------------- The stockholders of Visualant, Inc., on Aug. 9, 2013, approved an amendment to the Company's Articles of Incorporation increasing the number of authorized common shares from 200 million to 500 million shares. On Sept. 16, 2013, the Company filed and received approval from the State of Nevada for a Restatement of the Articles of Incorporation for Visualant, Inc., a Nevada Profit Corporation, related to the increase in the number of authorized common shares from 200 million to 500 million shares. A copy of the Restatement of the Articles of Incorporation is available for free at http://is.gd/qJeU3A About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on Oct. 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. Visualant incurred a net loss of $2.72 million for the year ended Sept. 30, 2012, compared with a net loss of $2.39 million for the same period during the prior year. The Company's balance sheet at June 30, 2013, showed $5.59 million in total assets, $7.32 million in total liabilities, $46,609 in noncontrolling interest and a $1.78 million total stockholders' deficit. PMB Helin Donovan, LLP, in Nov. 10, 2012, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2012. The independent auditors noted that the Company has sustained a net loss from operations and has an accumulated deficit since inception which raise substantial doubt about the Company's ability to continue as a going concern. VULPES LLC: Fox & Obel Food Market Files Chapter 11 in Chicago -------------------------------------------------------------- Chicago-based gourmet grocer Vulpes LLC, doing business as Fox & Obel Food Market, sought Chapter 11 bankruptcy protection (Bankr. N.D. Ill. Case No. 13-36961) on Sept. 18, 2013, in U.S. Bankruptcy Court for the Northern District of Illinois. Vulpes is represented by William J. Factor, Esq. -- wfactor@wfactorlaw.com -- in Northbrook, Illinois. Samantha Bomkamp, writing for The Chicago Tribune, reports that the filing was made after a half-dozen failed health inspections, missed rent payments and increasing competition in the highbrow food market. The Chicago Tribune reports that Fox & Obel was shut down for three days in July after failing its sixth health inspection in three years. During the inspection, a follow-up on a complaint of suspected food poisoning, more than 200 fruit flies and 30 cockroaches were found in food prep areas and behind walls. The report also notes the company has allegedly struggled to make rent payments in recent years and faced attempts at eviction, according to court documents. It's been sued twice before by food suppliers for nonpayment. Vulpes LLC listed between $500,000 to $1 million in assets and between $1 million and $10 million in debt. It is managed by William Bolton, a former executive vice president at former Jewel parent Supervalu. Mr. Bolton signed the petition. WHEELER RENTAL: Counsel Wants Case Dismissed -------------------------------------------- Ted Malave, News Channel 4 in Oklahoma City, reports that more than a dozen Oklahoma families have filed complaints against Wheeler Rental and Mobile Home Sales. In all, these customers paid about $150,000 for mobiles homes they never received and may never get. This week the case went back to court. However, instead of having clarity at court, the customers walked away more confused and now very angry, according to the report. The report recounts that last month more than a dozen other victims stood at the courthouse waiting for the scheduled bankruptcy hearing. The owner was quote "incapacitated" and didn't show up so the hearing was rescheduled. This week, at the second hearing families found out Wheeler's attorney had filed a motion for dismissal. The report relates that after complaints piled up from all over the state, Wheeler's owner lost her license. And because of that her attorney says she can't reorganize and in-turn cannot make a profit. So now the case goes to state court. "There's probably more opportunity for these people to try to find assets through state court than there would have been through the bankruptcy," says John Maile with the Used Motor Vehicle and Parts Commission. Mr. Maile works for the state. He says moving the case out of bankruptcy court might benefit these angry customers in the long run. Mr. Maile says, "They could make Mrs. Wheeler personally libel for what happened they could go against her personal assets which they could have done under the bankruptcy proceeding." But the victims want the owner arrested. * Banks Face Fines for Benchmark Safeguard Breaches in EU Plan -------------------------------------------------------------- Jim Brunsden, writing for Bloomberg News, reported that banks risk fines as high as 10 percent of their yearly sales for failing to set up adequate safeguards to combat benchmark rigging, under European Union anti-manipulation rules presented on Sept. 18. According to the report, Michel Barnier, the EU's financial services chief, is also seeking to empower regulators so that they can force banks to take part in some benchmark-setting panels, in proposals targeting scandals that began with the London interbank offered rate, or Libor, and spread across the financial system. The plans will toughen supervision of rate-setting, with "critical benchmarks" such as Libor to be overseen by colleges of national regulators. Benchmarks from oil to foreign exchange are being probed by global regulators as they seek to restore trust in rates undermined by evidence of endemic rigging, the report further related. Authorities have fined UBS AG, Barclays Plc and Royal Bank of Scotland Group Plc about $2.5 billion for distorting Libor and other interbank rates. Other firms are under investigation around the world. "Market confidence has been undermined by scandals and allegations of benchmark manipulation," Barnier said in an e-mailed statement, the report also related. "This cannot go on." The proposals from the Brussels-based European Commission "will ensure for the first time that all benchmark providers have to be authorized and supervised. They will enhance transparency and tackle conflicts of interest." * DRW Investments Sues to Forestall CFTC Enforcement Action ----------------------------------------------------------- Andrew Harris & Silla Brush, writing for Bloomberg News, reported that DRW Investments LLC, a Chicago-based investment firm, filed a pre-emptive lawsuit against the Commodity Futures Trading Commission seeking a court's finding that the company didn't breach derivatives trading regulations. According to the report, DRW Investments and its principal, Donald R. Wilson, sued the CFTC on Sept. 18 in federal court in Chicago, saying its case is a response to the agency's "stated intention to bring an enforcement action." "The CFTC's action would depend on an erroneous and legally untenable claim," that DRW violated anti-manipulation provisions of the Commodity Exchange Act by placing orders at prices differing from those of similar, though not identical, over-the- counter swaps, DRW said in a statement, the report related. At issue are interest-rate swap futures contracts traded on the Nasdaq OMX Futures Exchange and cleared through the International Derivatives Clearinghouse from August 2010 through September 2011, the report said. Wilson and the company, a unit of DRW Holdings LLC, alleged that when the trades were carried out, no regulation or rule made them illegal and an attempt by the agency to do so now would violate their constitutional right to fair notice of what activities would be considered market manipulation, the report further related. The case is DRW Investments LLC v. U.S. Commodity Futures Trading Commission, 13-cv-06630, U.S. District Court, Northern District of Illinois (Chicago). * Ex-JPMorgan Employees Indicted over $6.2 Billion Loss ------------------------------------------------------- Patricia Hurtado, writing for Bloomberg News, reported that two former JPMorgan Chase & Co. traders were indicted for engaging in a securities fraud to hide trading losses that eventually surpassed $6.2 billion on wrong-way derivatives bets last year. According to the report, Javier Martin-Artajo, who oversaw trading strategy for the synthetic portfolio at the bank's chief investment office in London, and Julien Grout, a trader who worked for him, were named in the indictment, unsealed on Sept. 18 in federal court in Manhattan. The U.S. announced preliminary charges against the men in August. Both were indicted by a grand jury on five counts, including securities fraud, conspiracy, filing false books and records, wire fraud and making false filings with the U.S. Securities and Exchange Commission, the report related. The pair, along with unidentified co-conspirators, are accused of engaging in a scheme to manipulate and inflate the value of position markings in the synthetic credit portfolio, or SCP. They face as long as 20 years in prison if convicted of securities fraud, the most serious charge. Martin-Artajo and Grout were named in criminal complaints filed Aug. 14 by prosecutors in the office of Manhattan U.S. Attorney Preet Bharara, the report added. They were accused of four separate counts of conspiracy, falsifying books and records, wire fraud, and false filings with the SEC. The indictment formalized those counts, adding the securities fraud charge. The case is U.S. v. Martin-Artajo, 13-cr-00707, U.S. District Court, Southern District of New York (Manhattan). The SEC case is Securities and Exchange Commission v. Martin-Artajo, 13-cv-05677, U.S. District Court, Southern District of New York (Manhattan). * 4 Massachusetts: Schools Facing Receivership ---------------------------------------------- Michael Norton at Sentinel & Enterprise reports that four turnaround schools in Massachusetts could fall into state receivership, state education officials announced. Four Level 4 schools are being considered for a "chronically underperforming" Level 5 designation that would trigger state receivership - the Dever Elementary School and Holland Elementary School in Boston, the Morgan K-8 School in Holyoke, and the Parker Elementary School in New Bedford, according to Sentinel & Enterprise. Under Level 5, the state education commissioner is responsible for creating a school turnaround plan for a school and potentially naming a "receiver" to implement the plan, the report relates. The report relates that Education Commissioner Mitchell Chester plans to hold meetings over the next month in Boston, Holyoke and New Bedford to hear from school community members before making a final determination about assigning Level 5 designations to the four schools under consideration for receivership. * SEC to Unveil Pay-Ratio Proposal Mandated by Dodd-Frank --------------------------------------------------------- Sarah N. Lynch, writing for Reuters, reported that U.S. corporations will need to disclose how their chief executive officers' paychecks compare with those of their workers under a proposal unveiled on Sept. 18 by the U.S. Securities and Exchange Commission. According to the report, the SEC's CEO pay ratio rule is championed by unions and labor advocates who say the disclosures would help investors identify whether a company's compensation model is too top-heavy. But companies and business organizations such as the U.S. Chamber of Commerce, as well as, the Center on Executive Compensation, which represents human resources executives, have vehemently opposed the measure, saying it is too costly to compile the data and would not be useful for investors. They have urged the SEC to scale it back, possibly by allowing companies with global offices to compile the median annual pay of their workers using compensation data from only their U.S.-based employees, the report related. The SEC's proposal aims to strike a balance between the two opposing viewpoints, the report said. The agency said it would still require companies to include compensation data for all of its workers, including those employed overseas or by its subsidiaries, the report further related. * UBS Wins Ruling Upholding Dismissal of Securities Suit -------------------------------------------------------- David Voreacos, writing for Bloomberg News, reported that UBS AG, the largest Swiss bank, won dismissal of a U.S. pension fund's lawsuit claiming it made misstatements and omissions in a $2.5 billion offering of mortgage-backed securities in 2007. According to the report, the Pension Trust Fund for Operating Engineers failed to sue Zurich-based UBS within the required one- year period after it should have begun investigating underwriting problems in home loans backing the securities, the U.S. Appeals Court in Philadelphia ruled on Sept. 18. The Operating Engineers first sued in federal court in New Jersey on Feb. 22, 2010, the report related. The pension fund should have investigated after a separate lawsuit was filed on Sept. 9, 2008, in California state court against UBS Securities LLC and Countrywide Financial Corp. alleging false and misleading statements in offerings, the appeals court said. "A reasonably diligent plaintiff who had purchased mortgage-backed securities from UBS Securities based on loans that were largely originated by Countrywide would have noticed that complaint," the Third Circuit court ruled, the report added. Countrywide originated 52 percent of the mortgages backing the certificates and IndyMac Bancorp Inc. originated 40 percent, according to the ruling, the report further related. IndyMac failed in mid-2008 and Countrywide was acquired by Bank of America Corp. in 2008. The case is Pension Trust Fund for Operating Engineers, 12-03454, U.S. Court of Appeals for the Third Circuit (Philadelphia). * Fitch Says Appetite for Risk Growing in U.S. Auto Loan Market --------------------------------------------------------------- Loosening underwriting standards and higher funding costs have led auto lenders to increasingly extend credit to subprime consumers, Fitch Ratings says. "However, we view the higher propensity to lend to weaker borrowers as a relative normalization in credit metrics, seen previously with the 2004-2006 vintages," Fitch says. Experian Information Solutions Inc. notes a gain of 10.6% year over year (YOY) in new financing of subprime auto loans and a 19.2% gain in so-called deep subprime. Banks have extended close to 36.0% of loans to nonprime borrowers in the second quarter (Q2), a 2.0% increase YOY, according to this same source. Lenders' auto loan portfolios continued to grow through Q2 2013, despite sustained deleveraging in household balance sheets. The number of newly originated auto loans returned to pre-crisis levels, amounting to $92 billion in Q2 (versus $82 billion in Q2 2012), as reported by the Federal Reserve Bank. "We expect new auto loan originations to persist through the subsequent quarter given greater vehicle financing options and heightened consumer demand for automobiles. However, with rapid growth in the number of new auto loans, the prospect of pronounced aggressive underwriting standards remains plausible," Fitch says. "Presently we observe marginally lower average credit scores YOY on most auto loan ABS securitized pools in the latter half of 2012 and 2013. We predict the 2012 and 2013 vintage performance will be slightly weaker relative to the strong 2009-2011 vintages, as the latter vintages contained the highest credit quality obligors, shorter loan terms and lower loan-to-value ratios." Fitch expects cumulative net loss proxies on auto loan ABS transactions to increase in the event that we observe materially weaker securitized pools, unless higher credit enhancement levels are present to offset risk attached to weaker collateral characteristics. * Fines on Lawyers Are Non-Dischargeable ---------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that fines imposed on a lawyer in a professional disciplinary proceeding aren't discharged if the lawyer files for bankruptcy. That was the ruling handed down on Sept. 17 by the U.S. Court of Appeals in Atlanta, taking sides with an appeals court in Boston that reached the same result in 2008. A lawyer was disbarred in Pennsylvania. According to the report, exercising discretion, the disciplinary board imposed a $45,000 fine to recover the cost of the proceedings. The lawyer filed for bankruptcy under Chapter 7 the day the decision was handed down. The disciplinary board failed to get a ruling from the bankruptcy judge that the $45,000 debt would survive bankruptcy. The report notes that the board won on appeal, where the district judge held that the fine was non-dischargeable under Section 523(a)(7) as a fine not in "compensation for actual pecuniary loss." Because the debt wasn't discharged, the district court ruled, the automatic stay should be modified on that basis alone, so the board could collect the judgment and enforce nonmonetary provisions in the judgment. The report relates that in an unsigned opinion on appeal, a three- judge appeals panel in Atlanta upheld the ruling on dischargeability. The court said "nearly every other court reached the same result." Among circuit courts finding non- dischargeability was the one in Boston. The bankrupt lawyer argued that the fine should be discharged because it was to compensate for monetary loss. The Atlanta circuit court disagreed, saying the penalty protected a public purpose and was therefore a bona-fide fine. The discretionary nature of the fine also showed it was meant to discourage bad acts by lawyers. "Even where a debt is intended to help defray the expense of government, it may not be dischargeable if its primary purpose is penal," the appeals court said. The report discloses that the appeals court differed with the district judge on the automatic stay. The higher court said the lower court should have considered other factors pertaining to stay modification and shouldn't have relied exclusively on the non-dischargeable nature of the debt. The case is Disciplinary Board v. Feingold (In re Feingold), 12-13817, U.S. Court of Appeals for the 11th Circuit (Atlanta). * BOOK REVIEW: A Legal History of Money in the United States, 1774-1970 ------------------------------------------------------------- Author: James Willard Hurst Publisher: Beard Books Paperback: US$34.95 Review by Gail Owens Hoelscher Order your personal copy today and one for a colleague at http://is.gd/x8Gesf This book chronicles the legal elements of the history of the system of money in the United States from 1774 to 1970. It originated as a series of lectures given by James Hurst at the University of Nebraska in 1973. Mr. Hurst is quick to say that he , as a historian of the law, took care in this book not to make his own judgments on matters outside the law. Rather, he conducted an exhaustive literature review of economics, economic history, and banking to recount the development of law over the operations of money. He attempted to "borrow the opinions of qualified specialists outside the law in order to provide a meaningful context in which to appraise what the law has done or failed to do." Mr. Hurst define money, for the purposes of this books, as "a distinct institutional instrument employed primarily in allocating scarce economic resources, mainly through government and market processes," and not shorthand for economic, social, or political power held through command of economic assets." From the beginning, public and legal policy in the U.S. centered on the definition of legitimate uses of both law affecting money, and allocation of power over money among official agencies, both federal and state. The foundations of monetary policy were laid between 1774 and 1788. Initially, individual state legislatures and the Continental Congress issued paper currency in the form of bills of credit. The Constitutional Convention later determined that ultimate control of the money supply should be at the federal level. Other issues were not clearly defined and were left to be determined by events. The author describes how law was used to create and maintain a system of money capable of servicing the flow of resource allocations in an economy of broadly dispersed public and private decision making. Law defined standard money units and made those units acceptable for use in conducting transactions. Over time, adjustment of the money supply was recognized as a legitimate concern of law. Private banks were delegated expansive monetary action powers throughout the 1900s and private markets for gold and silver were allowed to affect the money supply until 1933-34. Although the Federal Reserve Act was not aimed clearly at managing money for goals of major economic adjustment, it set precedents by devaluing the dollar and restricting the use of gold. Mr. Hurst devotes a large part of his book to key issues of monetary policy involving the distribution of power over money between the nation and the states, between legal and market processes, and among major agencies of the government. Until about 1860, all major branches of government shared in making monetary policy, with states playing a large role. Between 1908 and 1970, monetary policy became firmly centralized at the national level, and separation or powers questions arose between the Federal Reserve Board, the White House (The Council of Economic Advisors), and the Treasury. The book was an enormous undertaking and its research exhaustive. It includes 18 pages of sources cited and 90 pages of footnotes. Each era of American legal history is treated comprehensively. The book makes fascinating reading for those interested in the cause and effect relationship between legal processes and economic processes and t hose concerned with public administration and the separation of powers. James Willard Hurst (1910-1997) is widely regarded as the grandfather of American legal history. He graduated from Harvard Law School in 1935 and taught at the University of Wisconsin-Madison for 44 years. ********* 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 ***