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/raid1/www/Hosts/bankrupt/TCR_Public/131016.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, October 16, 2013, Vol. 17, No. 287 Headlines ACXIOM CORP: S&P Withdraws 'BB' Corporate Credit Rating ADAYANA INC: Case Summary & 18 Largest Unsecured Creditors ART AND ARCHITECTURE: Judge Explains Order on Lease Assumption AIRTRONIC USA: SEC Completes Review of GDSI Registration Statement ALCATEL LUCENT: Job Cuts Pose Test for France ALITALIA SPA: Vote Reflects Troubles for National Airlines ALITALIA SPA: Board Approves Measures to Secure EUR500 Million ALLY FINANCIAL: Declares Dividends on Preferred Stock ALVARION LTD: Obtains NASDAQ Listing Extension AS SEEN ON TV: Unit Closes Sale of Meal Delivery Business ASCENT AVIATION: Victory Park Capital Completes Sale to LongueVue BALL FOUR: Court Confirms Bankruptcy-Exit Plan BELLWEST HOLDINGS: Court Dismisses Chapter 11 Case BOOMERANG SYSTEMS: Director Stephen C. Rockefeller Quits BROWNSVILLE MD: Can Employ Husch Blackwell as Bankruptcy Counsel BROWNSVILLE MD: Files Schedules of Assets and Liabilities CALDERA PHARMACEUTICALS: Timothy Tyson Joins Board CAMCO FINANCIAL: Inks Merger Agreement with Huntington CAPITOL BANCORP: Inks Agreement to Sell Remaining Affiliates CASCADE AG: Cairncross & Hempelmann Seeks to Withdraw as Counsel CASCADE AG: Hearing on Bid to Dismiss Case Continued to Nov. 22 CENGAGE LEARNING: Wants to Avoid Liens on Disputed Copyrights CHECKERS DRIVE-IN: S&P Affirms B- CCR & B- Rating on $160MM Notes CHINA PRECISION: Widens Net Loss to $68.9 Million in Fiscal 2013 CITIZENS DEVELOPMENT: Use of LSM Lender's Cash Collateral Approved CITIZENS DEVELOPMENT: May Incur $100,000 Loan to Pay Pac West COLOREP INC: Hilco IP Okayed as Marketing Agent COLOREP INC: May Sell Assets to Prepetition Lender for $20MM COMARCO INC: Chief Operating Officer McKeefery Quits CONCHO RESOURCES: Rowe Price held 10% Equity Stake at Sept. 30 CRESTWOOD MIDSTREAM: S&P Affirms Then Withdraws 'BB' CCR CYCLONE POWER: Secures Agreement to Manufacture Engines DETROIT, MI: Reaches Deal to Borrow $350MM From Barclays DETROIT, MI: US Blasts Retirees' Attempt to Thwart Bankruptcy DETROIT, MI: Gets Up to $350M Post-Petition Financing Commitment DETROIT, MI: Bankruptcy Court Continues Operating Amid Shutdown EASTMAN KODAK: S&P Assigns 'B-' CCR & Rates $420MM Loan 'B-' ELBIT IMAGING: To Hold Meeting to Approve Plan of Arrangement ENERGY CONVERSION: Trina Solar Says Suit is 'Baseless' ENNIS COMMERCIAL: Administrator Can Employ Katten Muchin EXCELITAS TECHNOLOGIES: S&P Lowers Corporate Credit Rating to 'B' FINJAN HOLDINGS: Adopts Codes of Ethics for Officers & Employees FIRST DATA: Fitch Affirms 'B' Issuer Default Rating FRIENDFINDER NETWORKS: Gets OK for $500MM Restructuring Deal FURNITURE BRANDS: Gets Nod For $140MM DIP, Employee Bonuses GENIUS BRANDS: Obtains OK to Effect Reverse Split GUIDED THERAPEUTICS: Secures Additional Distribution for LuViva HIGHWAY TECHNOLOGIES: Estridge Appeal Abated Til Further Order IBIO INC: NYSE MKT Grants Listing Compliance Extension ICTS INTERNATIONAL: Holds 22.9% Equity Stake in InkSure INTERMETRO COMMUNICATIONS: Sells 257,897 Preferred Shares INTERNATIONAL TEXTILE: Unit Inks Transfer Agreements JEFFERSON COUNTY, AL: Seeks to Change Debt Pact LAFAYETTE YARD: Trustee Wants Auctioneer Tossed LAFAYETTE YARD: FTI Consulting Approved as Financial Advisor LAFAYETTE YARD: Wong Fleming Approved as Bankruptcy Counsel LDB MEDIA: Gravitas Leasing Has No Valid Interests in News Trucks LIGHTSQUARED INC: Court Temporarily Puts Harbinger Suit on Hold MICHIGAN PUBLIC: S&P Lowers Rating on 2010 Revenue Bonds to 'BB+' MONTREAL MAINE: Ch.11 Trustee May Use Cash Thru January 2014 MOON VALLEY: MVAZ Appeal From Confirmation Order Dismissed NATIONAL ENVELOPE: Wants Plan Filing Deadline Extended to Jan. 6 NMP-GROUP: Oct. 22 Hearing on Adequacy of Plan Outline OMNITRACS INC: S&P Assigns Preliminary 'B' CCR; Outlook Stable POINT CENTER: Administratively Insolvent; Case Conversion Sought POINT CENTER: Nov. 12 Hearing on Bank's Bid to Foreclose REGIONAL EMPLOYERS: Involuntary Chapter 11 Case Summary RYDER MEMORIAL: S&P Revises Outlook and Affirms 'BB-' Rating SAVIENT PHARMACEUTICALS: Case Summary & 20 Top Unsecured Creditors SR REAL ESTATE: Case Dismissal Hearing Set for Nov. 4 * Fitch Says Canadian CMBS Market Stable, Losses Rare * Fitch Says US Bank Regulators' Asset Review Flags Possible Risks * Fitch Says Weakened BDC Dividend Coverage a Ratings Negative * Upcoming Meetings, Conferences and Seminars ********* ACXIOM CORP: S&P Withdraws 'BB' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its ratings on Acxiom Corp., including the 'BB' corporate credit rating, at the company's request. ADAYANA INC: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Adayana, Inc. c/o Michael P. O'Neil Taft Stettinius & Hollister LLP One Indiana Square, Suite 3500 Case No.: 13-10919 Chapter 11 Petition Date: October 14, 2013 Court: United States Bankruptcy Court Southern District of Indiana (Indianapolis) Debtor's Counsel: Michael P. O'Neil, Esq. TAFT STETTINIUS & HOLLISTER LLP 1 Indiana Square, Suite 3500 Indianapolis, IN 46204 Tel: 317-713-3500 Email: moneil@taftlaw.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million List of Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ComVest Capital II, L.P. Blanket Lien $13,250,000 525 Okeechobee Blvd. Suite 1050 West Palm Beach Fl 33401 Vora, Geeta Sunderial Promissory Note $361,209 62 E Golden Lake Rd Circle Pines, MN 550104 Parrell, Jeffrey Promissory Note $260,972 5504 Halifax Ln Edina, MN 55424 Mehta, Ramesh Promissory Note $208,611 Shamblot, Steve Promissory Note $108,235 SHI International Corp Trade Debt $105,000 Peterson, Daniel Promissory Note $104,306 SSI Financial Promissory Note $104,167 Heenan, Lucille & George Promissory Note $52,486 Buelt, Dave Promissory Note $52,486 CP Pyramid Associates L.P. Rent $43,174 Sivertson, Wayne Promissory Note $40,560 McGladrey LLP Accountant Fees $10,000 Furber Timmer Zahn, PLLP Legal Fees $6,525 Ethos IT IT Services $4,200 Main Street Partners, LLP Rent $2,024 Ernst & Young LLP Accountant Fees $1,756 BMO Harris Bank Guaranty of debt Unknown ART AND ARCHITECTURE: Judge Explains Order on Lease Assumption -------------------------------------------------------------- Bankruptcy Judge Robert Kwan issued a Separate Statement of Decision on Art and Architecture Books of the 21st Century's Motion to Assume Master Lease on Premises at 5500 Wilshire Boulevard, Los Angeles, California -- where the judge provided additional explanation of its reasoning for its decision on the motion. Ultimately, Judge Kwan held that the Debtor may assume the lease and the Motion to Assume is granted. According to Judge Kwan, while there may be some "lingering doubts" of future performance, the debtor would be wise to continue its good postpetition performance under the Master Lease and fully comply with the terms of the lease to avoid any defaults with a capital "D", but not engage in risky or dubious financial behavior, such as issuing checks on bank accounts without sufficient funds or issuing stop payment orders on checks without notifying the payee, particularly if the payee is the landlord. A copy of Judge Kwan's Sept. 12, 2013 Separate Statement of Decision is available at http://is.gd/DNPwl5from Leagle.com. Art and Architecture Books of the 21st Century, dba Ace Gallery, filed for a voluntary Chapter 11 petition on Feb. 19, 2013, in the U.S. Bankruptcy Court for the Central District of California, Case No. 13-14135. The petition was signed by Douglas Chrismas, president. Judge Robert Kwan presides over the case. Joseph A. Eisenberg, Esq., at Jeffer Mangels Butler & Mitchell LLP, serves as counsel. The Debtor reported $1 million to $10 million in assets and $10 million to $50 million in debts. AIRTRONIC USA: SEC Completes Review of GDSI Registration Statement ------------------------------------------------------------------ Global Digital Solutions, Inc., a company that 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, on Oct. 11 disclosed that the Securities and Exchange Commission has advised the Company that the SEC has completed its review of the Company's Registration Statement on Form 10, filed on August 10, 2013, as amended. The Company is now a reporting Company under the Securities Exchange Act of 1934 and expects to file its quarterly report for the quarter ended September 30, 2013 on Form 10-Q within the prescribed time frame. "This is another important step in the evolution of GDSI," said GDSI's President and CEO Richard J. Sullivan. "This news is especially welcome coming so soon after two other important developments: our October 8, 2013 announcement that Airtronic has become the exclusive OEM supplier for a major international client with a first stage value of approximately $95 million and the October 2nd court confirmation of Airtronic's reorganization plan. All of these recent developments build enormous momentum for GDSI." About Global Digital Solutions 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 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'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 a Chapter 11 reorganization. The company had filed for chapter 7 bankruptcy on March 13, 2012. ALCATEL LUCENT: Job Cuts Pose Test for France --------------------------------------------- Grainne McCarthy, writing for The Wall Street Journal, reported that in France, old habits die hard, as exemplified by the pas de deux between Alcatel-Lucent SA and the French government. The report related that the ailing ailing Paris-based telecom- equipment maker said last week that it had to slash some 10,000 jobs world-wide, including 900 in France, closing offices in cities like Toulouse and Rennes. Within hours, several members of Fran�ois Hollande's government, including the president himself, suggested that the French cuts were too deep. The next morning, Mr. Hollande's prime minister threw down the gauntlet: He was prepared to use a new labor law to block the layoffs if Alcatel didn't reach a compromise with its unions. According to the WSJ report, the threat was remarkable because the law, which took effect just three months ago, had been touted as a boon for business, allowing companies to be more nimble in restructuring, partly by making it easier for them to cut pay and working hours in difficult times. Instead, the government was using it to prod Alcatel to dial back job cuts. The episode lays bare a deeper dilemma facing France's year-and-a- half-old Socialist government: how to be more pro-business without alienating left-wing factions of its party and the electorate, WSJ pointed out. Mr. Hollande, like his peers across Europe, is struggling with economic growth that is too weak to overcome such ailments as rising debt and mass unemployment, the report said. Headquartered in Paris, France, Alcatel-Lucent is a leading developer and manufacturer of telecommunications equipment, with sales of approximately EUR15.3 billion for fiscal year 2011. ALITALIA SPA: Vote Reflects Troubles for National Airlines ---------------------------------------------------------- Daniel Michaels in Brussels, Gilles Castonguay and Deborah Ball in Milan, writing for The Wall Street Journal, reported that Alitalia's shareholders meet on Oct. 14 to vote on raising EUR500 million (US$677 million) in a plan that could bring the Italian government back as an owner of the airline, five years after privatization of the carrier cost taxpayers billions of euros. According to the report, Alitalia's latest tribulations illustrate the problems faced by Europe's former national airlines in deregulated markets and with limits to the subsidies on which they long relied. Despite Alitalia's 2008 restructuring, it has lost roughly a third of its home market and almost 20% of its market share internationally, according to Innovata, an aviation consulting firm. Alitalia's board on Oct. 11 unanimously approved a plan to raise EUR300 million in a capital increase and taking on EUR200 million in new debt, the report related. The airline, which hasn't turned a profit in more than a decade, could be grounded by creditors and Italian aviation regulators if the new funds aren't obtained. Alitalia's shareholders -- a group of Italian companies and Air France-KLM SA, which owns 25% -- are considering the plan after Prime Minister Enrico Letta's government late on Oct. 10 arranged for the state postal system to contribute a possible EUR75 million, the report said. Under the deal, the government is demanding an overhaul of Alitalia, the report noted. Whether the plan will win approval remains unclear. About Alitalia Alitalia-Compagnia Aerea Italiana has navigated its way through a successful restructuring. After filing for bankruptcy protection in 2008, Alitalia found additional investors, acquired rival airline Air One, and re-emerged as Italy's leading airline in early 2009. Operating a fleet of about 150 aircraft, the airline now serves more than 75 national and international destinations from hubs in Fiumicino (Rome), Milan, Turin, Venice, Naples, and Catania. Alitalia extends its network as a member of the SkyTeam code-sharing and marketing alliance, which also includes Air France, Delta Air Lines, and KLM. An Italian investor group owns a majority of the company, while Air France- KLM owns 25%. ALITALIA SPA: Board Approves Measures to Secure EUR500 Million -------------------------------------------------------------- Gilles Castonguay, writing for Daily Bankruptcy Review, reported that Alitalia's board on Oct. 11 approved measures to secure 500 million euros (US$675.8 million) in new funding that are desperately needed by the struggling Italian airline to avoid bankruptcy during the weekend. According to the report, the board met in Rome to vote on the measures a day after Alitalia got help from the government to convince shareholders and creditors to put up more money for an airline that has failed to make a profit since coming out of bankruptcy five years ago. The government's support, which came in the form of a EUR75 million pledge from Poste Italiane, the state-owned postal services operator, was crucial in getting Air France-KLM to agree to the new funding, the report said. With a 25% stake, the French-Dutch airline is both a shareholder and a board member of Alitalia, and it had shown reluctance to accept a previous proposal to raise money. The government's support and subsequent board vote came as a major fuel supplier threatened to stop doing business with the airline if it didn't come up with a convincing plan to stay solvent, the report related. Even the civil aviation authority warned Alitalia that it might to have to ground the airline, the report added. About Alitalia Alitalia-Compagnia Aerea Italiana has navigated its way through a successful restructuring. After filing for bankruptcy protection in 2008, Alitalia found additional investors, acquired rival airline Air One, and re-emerged as Italy's leading airline in early 2009. Operating a fleet of about 150 aircraft, the airline now serves more than 75 national and international destinations from hubs in Fiumicino (Rome), Milan, Turin, Venice, Naples, and Catania. Alitalia extends its network as a member of the SkyTeam code-sharing and marketing alliance, which also includes Air France, Delta Air Lines, and KLM. An Italian investor group owns a majority of the company, while Air France- KLM owns 25%. ALLY FINANCIAL: Declares Dividends on Preferred Stock ----------------------------------------------------- The Ally Financial Inc. board of directors has declared quarterly dividend payments for certain outstanding preferred stock. Each of these dividends were declared by the board of directors on Oct. 1, 2013, and are payable on Nov. 15, 2013. A quarterly dividend payment was declared on Ally's Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series F-2, of approximately $134 million, or $1.125 per share, and is payable to the U.S. Department of the Treasury. A quarterly dividend payment was also declared on Ally's Fixed Rate Cumulative Perpetual Preferred Stock, Series G, of approximately $45 million, or $17.50 per share, and is payable to shareholders of record as of Nov. 1, 2013. Additionally, a dividend payment was declared on Ally's Fixed Rate/Floating Rate Perpetual Preferred Stock, Series A, of approximately $22 million, or $0.53 per share, and is payable to shareholders of record as of Nov. 1, 2013. Including the aforementioned dividend payments on the Series F-2 Preferred Stock, Ally will have paid a total of approximately $6.3 billion to the U.S. Treasury since February 2009. This amount includes preferred stock dividends, interest payments and proceeds received by the U.S. Treasury in its sale of Ally trust preferred securities. 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: Obtains NASDAQ Listing Extension ---------------------------------------------- Alvarion Ltd. (in receivership) on Oct. 14 disclosed that on October 10, 2013, the Company received notice from The NASDAQ Stock Market LLC indicating that the NASDAQ Listing Qualifications Panel has granted the Company's request for continued listing on NASDAQ through January 13, 2014. In order to comply with the terms of this exception, on or before January 13, 2014, the Company must emerge from bankruptcy proceedings in Israel and demonstrate compliance with all applicable requirements for initial listing on NASDAQ. In the event the Company does not satisfy the terms of the Panel's decision by January 13, 2014, the Panel will issue a final determination to delist the Company's shares from NASDAQ. Headquartered in Tel Aviv-Yafo, Israel, Alvarion Ltd. -- 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. AS SEEN ON TV: Unit Closes Sale of Meal Delivery Business --------------------------------------------------------- eDiets.com, Inc., a wholly owned subsidiary of As Seen On TV, Inc., completed the previously announced sale to Chefs Diet National Co., LLC, a subsidiary of Chef's Diet Corp., of certain assets relating to the eDiets meal delivery business. The disposed assets consist primarily of a customer database of active and inactive eDiets customers. In addition, eDiets granted Chef's Diet a perpetual royalty-free license to content and certain other intellectual property used in connection with the eDiets meal delivery business. The base purchase price of $1.1 million consists of an initial cash payment of $200,000, plus deferred cash payments totaling $900,000 payable as follows: (i) eight quarterly payments beginning Jan. 1, 2014, in an amount equal to the greater of $56,250 or seven percent of adjusted gross revenue for the immediately preceding period; and (ii) eight quarterly payments beginning Jan. 1, 2016, in an amount equal to the greater of $56,250 or five percent of adjusted gross revenue for the immediately preceding period. In addition, Chef's Diet will make up to four quarterly bonus payments of up to $50,000 each if it meets certain customer acquisition and retention targets. About As Seen on TV Clearwater, Fla.-based As Seen On TV, Inc., is a direct response marketing company. It identifies, develops, and markets consumer products. As reported by the TCR on Nov. 6, 2012, As Seen On TV entered into an Agreement and Plan of Merger with eDiets Acquisition Company ("Merger Sub"), eDiets.com, Inc., and certain other individuals. Pursuant to the Merger Agreement, Merger Sub will merge with and into eDiets.com, and eDiets.com will continue as the surviving corporation and a wholly-owned subsidiary of the Company. As Seen On TV disclosed net income of $3.69 million on $10.10 million of revenues for the year ended March 31, 2013, as compared with a net loss of $8.07 million on $8.16 million of revenues during the prior year. The Company's balance sheet at June 30, 2013, showed $23.81 million in total assets, $13.05 million in total liabilities and $10.75 million in total stockholders' equity. EisnerAmper LLP, in Edison, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the year ended March 31, 2013. The independent auditors noted that the Company's recurring losses from operations and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. ASCENT AVIATION: Victory Park Capital Completes Sale to LongueVue ----------------------------------------------------------------- Victory Park Capital, an asset-management firm focused on debt and equity investments in the lower middle market, on Oct. 11 announced the sale of its portfolio company, Ascent Aviation Services Corp, to LongueVue Capital Partners II, LP, a New Orleans-based private equity firm. The terms of the transaction were not disclosed. VPC has held a stake in Ascent since December 2007, when it made a senior secured loan to its predecessor company. When the predecessor company filed for bankruptcy protection in January 2009, VPC provided a debtor-in-possession loan to finance the bankruptcy process, and subsequently purchased the assets in November 2009. VPC rebranded and repositioned the business, leading to a successful operational turnaround. The firm implemented significant critical changes, including the following: -- Overhauled the management team with industry-leading executives; -- Enhanced systems and operational controls, establishing best-in-class practices; -- Shifted the business and customer mix, building a more attractive revenue base; -- Implemented numerous planning tools and quality metrics to drive increased customer satisfaction and margins; and -- Expanded into several new aircraft platforms, including the B757, CRJ 100/200 and A320 aircraft. "We are truly appreciative of the relationship established with the Ascent team over the last several years," said Matthew Ray, partner and co-founder of VPC. "Together, we managed a repositioning that drove strong organic growth; made substantial operational improvements that enhanced the margin profile; and executed strategic initiatives to secure future prospects at the Tucson airport. As a result of this collective effort, we are confident that Ascent is well positioned for future success." "The VPC team added tremendous value in all aspects of our business since re-emerging as Ascent in 2009," said Michael Melvin, President of Ascent. "Their experience in building businesses and the support they provided through a hands- on investment approach helped guide us as we solidified our market presence." About Victory Park Capital Victory Park Capital -- http://www.victoryparkcapital.com/--is a privately held, registered investment advisor dedicated to alternative investing. As specialists in less efficient markets, VPC focuses on niche credit and private equity opportunities in both distressed and improving U.S.-based lower middle market companies. Whether as a lender or a control investor, VPC looks to identify situations on behalf of its LP's where it believes the potential for reward outweighs the risks entailed. Founded in 2007, VPC is headquartered in Chicago with additional resources in New York, Boston and San Francisco. About LongueVue Capital Partners LongueVue Capital -- http://www.lvcpartners.com-- is a private equity company focused on making value-oriented equity and debt investments in lower middle market companies (up to $100 million of revenue) to support buy-outs, recapitalizations, acquisitions, and growth. Since its formation in 2001, LVC has made successful investments in a wide variety of industries, including manufacturing, business services, energy services, and third party logistics. LVC is based in New Orleans with additional offices in New York and Salt Lake City. About Ascent Aviation Services Headquartered in Tucson, Arizona, Ascent -- http://www.ascentmro.com/-- is a premier commercial aircraft maintenance, repair and overhaul service provider with a specialization in narrow body aircraft. Ascent performs heavy and line maintenance services, aircraft modification, transition and refurbishment work, aircraft storage and reclamation services, and consigned part sales. BALL FOUR: Court Confirms Bankruptcy-Exit Plan ---------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado in late September confirmed Ball Four, Inc.'s Second Amended Plan of Reorganization. Pursuant to the Plan, holders of allowed unsecured claims will be paid the allowed amount of their claims in full plus interest at the current Federal Judgment Interest Rate calculated from the Effective Date until the date that the allowed unsecured claims are paid in full. To pay allowed unsecured claims, the Debtor will make sufficient semi-annual payments of $50,000 each which will be distributed to the holders of allowed unsecured claims on a Pro Rata basis with the first semi-annual payment of $50,000 due on the Effective Date and continuing thereafter with additional semi-annual payments of $50,000 each until Class 4 claims are paid in full. Additionally, the unsecured priority claim of the U.S. Internal Revenue Service will be paid in full with interest at 5% per annum amortized over 48 months with the first payment of principal and interest due on the Effective Date and continuing monthly thereafter until the claim is paid in full. A full-text copy of the disclosure statement explaining the terms of the Plan is available for free at: http://bankrupt.com/misc/BALLFOUR_amended_DS.pdf Early in September, Denver Bankruptcy Judge Michael E. Romero signaled he would approve the Amended Plan of Reorganization proposed by Larry Ralph Gentry and Susan Ellen Gentry, the 100% officers, directors and shareholders of Ball Four. The bankruptcy judge overruled objections filed by creditor 2011-SIP-1 CRE/CADC Venture LLC. No other objections remain to confirmation of the Gentrys' Amended Plan, which is dated June 11, 2012. The Gentrys were granted leave to file a Motion for Entry of Order with a proposed confirmation order and an Affidavit in support of confirmation of the Amended Plan, as modified by the Erratum, no later than 14 days from the date of the Court's Order. In a Sept. 12, 2013 Order available at http://is.gd/sygJAffrom Leagle.com, Judge Romero directed the Gentrys to file an objection to SIP's claim against the Gentrys, if any, within 60 days from the Effective Date of the Amended Plan. In late 2005, Ball Four borrowed approximately $1.9 million from FirsTier Bank to pay off a previous loan and fund the construction of two buildings to expand the business. The FirsTier loan was secured by certain Ball Four assets, and the Gentrys personally guaranteed this indebtedness pursuant to the terms of two commercial guaranties dated Sept. 22, 2005. According to the Gentrys, the construction project was underfunded and completed one year late, and certain construction defects remained. The economy declined soon after the project was completed in June 2007. Over the next two years, Ball Four struggled in the weakened economy, and by November 2009, it was unable to make the interest payment due on the note to FirsTier. In the midst of structuring a deal with FirsTier to cure the arrears, FirsTier called the note and initiated a foreclosure proceeding against Ball Four. Ball Four filed for relief under Chapter 11 of the Bankruptcy Code on Sept. 21, 2010 (Case No. 10-33952 EEB), and the case was adjudicated before another division of the Colorado Bankruptcy Court. Ball Four indicated FirsTier's foreclosure action was the primary cause for seeking bankruptcy protection. FirsTier filed a proof of claim in the amount of $3,572,158.12 in Ball Four's case. Almost two months later, FirsTier was closed by the Colorado Division of Banking, and the FDIC was appointed as receiver and assumed all rights and operations of FirsTier. On August 4, 2011, the FDIC conveyed all rights under the original promissory note to SIP. It is undisputed SIP is the successor in interest to FirsTier's claim. In summary, Ball Four's plan provides SIP's claim will be paid in full, in whatever amount deemed allowed. Notably, FirsTier, the FDIC and SIP did not object to the treatment in Class 3 in Ball Four's plan, nor did they object to the feasibility of the same. On August 29, 2011, Judge Brown confirmed Ball Four's Second Amended Plan of Reorganization. Under the confirmed plan, Ball Four's payments to SIP on the Class 3 claim are to commence on the later of the effective date or thirty days after the Ball Four Court enters a final order allowing the claim. Although the effective date has passed, a final determination of SIP's claim has not been made. Based on the clear language of Ball Four's confirmed plan, and until a final order determining the allowance of SIP's claim enters, Ball Four is not obligated to make any payments to SIP (a point SIP conceded at oral argument before this Court). Ball Four filed its Chapter 11 Final Report and Motion for Final Decree, indicating the Second Amended Plan of Reorganization became final and the Ball Four estate was fully administered pursuant to FED. R. BANKR. P. 3022. The Court granted Ball Four's Motion for Final Decree over SIP's objection, and Ball Four's bankruptcy case was closed on March 13, 2013. After acquiring the original promissory note, SIP commenced litigation against the Gentrys in Jefferson County seeking collection under the Personal Guaranties. On November 29, 2011, the Gentrys filed their own Chapter 11 case (Bankr. D. Colo. Case No. 11-37658), and the state court litigation was automatically stayed. SIP's collection action was the primary cause of the Gentrys' individual bankruptcy filing. As in the Ball Four case, the Gentrys hired Allen & Vellone as special counsel to object to SIP's claim, which objection has not yet been filed. According to their Amended Disclosure Statement, the Gentrys each receive a monthly gross salary of $7,000 from Ball Four. The Gentrys anticipate their monthly gross salary will increase to $10,000 each, and the they will fund their Amended Plan and ongoing living expenses with this income. The Gentrys' Amended Plan proposes 100% payment of all "allowed" secured and unsecured claims. As to SIP's claim, the Amended Plan provides the following treatment: "The disputed unsecured claim of the Class 6 creditor is evidenced by a personal guaranty signed by the Debtors guarantying [sic] the secured claim of the Class 6 creditor which is owed to the Class 6 creditor by Ball Four. When the Class 6 creditor's disputed claim is determined to be an allowed claim by entry of a Final Order, the allowed unsecured claim will be paid in full by Ball Four pursuant to the terms of the confirmed Chapter 11 Plan of Reorganization of Ball Four. The Class 6 creditor's allowed unsecured claim will be paid by Ball Four as provided for in Ball Four's confirmed Plan of Reorganization." On December 5, 2012, the Court approved the Gentrys' Amended Disclosure Statement and set a hearing on confirmation of the Amended Plan. The deadline for ballots and objections to confirmation of the Amended Plan was January 23, 2013. According to the Ballot Summary, the general unsecured creditor class (Class 8) voted to accept the Amended Plan, thereby satisfying the requirements of 11 U.S.C. Sec. 1126(c).12 SIP submitted the only ballot rejecting the Amended Plan. Class 7, the only other impaired class entitled to a vote, did not submit a ballot, and is deemed to have accepted the Amended Plan. The Office of the United States Trustee filed a Limited Objection to Confirmation, which was resolved by the Gentrys' Erratum to the Amended Plan and the objection was withdrawn. SIP filed the only other objection to confirmation of the Amended Plan. About Ball Four Ball Four, Inc., has a 16.93-acre property located at 2101 W. 64th Ave. in Adams County, Arvada, Colorado. The site has a slow pitch softball facility and an indoor-soccer facility. Simulcast wagering on dog and horse racing from tracks in the United States is also operated at the site pursuant to a license obtained from Mile High Racing in Commerce City. Ball Four first sought Chapter 11 protection after it was discovered in 1989 that a small portion of Ball Four's property was contaminated. Ball Four later sought confirmation of a Chapter 11 plan, and an investigation found Ball Four's property to be free of contaminants. Ball Four completed its indoor soccer facility and another building at its property in 2007 following a $1.9 million loan from FirsTier Bank. In November 2009, Ball Four was unable to make the interest payment due on the note to FirsTier. FirsTier commenced a foreclosure proceeding which led to the Debtor filing for Chapter 11 protection in 2010. Ball Four, Inc., filed a Chapter 11 petition (Bankr. D. Colo. Case No. 10-33952) on Sept. 21, 2010. William A. Richey, Esq., at Weinman & Associates, P.C., serves as the Debtor's bankruptcy counsel. The Debtor disclosed $16,220,990 in assets and $3,483,420 in liabilities as of the Chapter 11 filing. BELLWEST HOLDINGS: Court Dismisses Chapter 11 Case -------------------------------------------------- The U.S. Bankruptcy Court approved a motion filed by Bellwest Holdings, LLC, to dismiss its Chapter 11 case, citing that: 1. The Debtor has reached an agreement with secured creditor MLCFC 2007-9 Surprise Retail, LLC, which will allow the debtor to dismiss its Chapter 11 proceeding. 2. As part of the settlement agreement with secured creditor, the Debtor must have substantially completed the terms of the agreement which includes the dismissal of the Chapter 11 proceeding. 3. The Debtor believes it no longer needs the Court's assistance to complete its reorganization efforts. The Court ruled that the Debtor is prohibited from filing another bankruptcy petition within 180 days of the entry of the Dismissal Order. Attorney for the Debtor can be reached at: Eric Slocum Sparks, Esq. LAW OFFICES OF ERIC SLOCUM SPARKS, P.C. 110 South Church Avenue, #2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 E-mail: eric@ericslocumsparkspc.com About Bellwest Holdings LLC Bellwest Holdings LLC, owner of a property in Surprise, Arizona, filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 12-20126) on Sept. 10, 2012, in Tucson. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101 (51B), estimated assets and debts of $10 million to $50 million in the petition. Bankruptcy Judge Eileen W. Hollowell presides over the case. Eric Slocum Sparks, Esq., at Eric Slocum Sparks PC, in Tucson, Ariz., serves as counsel. BOOMERANG SYSTEMS: Director Stephen C. Rockefeller Quits -------------------------------------------------------- Stephen C. Rockefeller, Jr., resigned from Boomerang Systems, Inc.'s Board of Directors on Oct. 10, 2013. Mr. Rockefeller served as a member of the Company's Compensation Committee and Audit Committee. His resignation was not the result of any disagreement on any matter, practice or policy. About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang Utah, is engaged in the design, development, and marketing of automated racking and retrieval systems for automobile parking and automated racking and retrieval of containerized self-storage units. Boomerang incurred a net loss of $17.42 million for the fiscal year ended Sept. 30, 2012, compared with a net loss of $19.10 million during the prior year. The Company's balance sheet at March 31, 2013, showed $4.46 million in total assets, $23.19 million in total liabilities and a $18.73 million total stockholders' deficit. Bankruptcy Warning "Our operations may not generate sufficient cash to enable us to service our debt. If we were to fail to make any required payment under the notes and agreements governing our indebtedness or fail to comply with the covenants contained in the notes and agreements, we would be in default. Our debt holders would have the ability to require that we immediately pay all outstanding indebtedness. If the debt holders were to require immediate payment, we might not have sufficient assets to satisfy our obligations under the notes or our other indebtedness. In such event, we could be forced to seek protection under bankruptcy laws, which could have a material adverse effect on our existing contracts and our ability to procure new contracts as well as our ability to recruit and/or retain employees. Accordingly, a default could have a significant adverse effect on the market value and marketability of our common stock," the Company said in its annual report for the year ended Sept. 30, 2012. BROWNSVILLE MD: Can Employ Husch Blackwell as Bankruptcy Counsel ---------------------------------------------------------------- Brownsville MD Ventures, LLC, sought and obtained approval from the U.S. Bankruptcy Court to employ Husch Blackwell LLP of Austin, Texas, as its bankruptcy counsel. Kell C. Mercer will serve as attorney in charge. Prior to the Petition Date, the firm received an initial retainer of $25,000. Shortly before the filing of the case, the retainer was replenished by $4,503.16 to $25,000. The Debtor assures the Court that Husch Blackwell does not represent any interest adverse to the Debtor, or the Estate, and is a "disinterested party" pursuant to Section 327 of the Bankruptcy Code. Brownsville MD Ventures, LLC, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-10341) on Aug. 26, 2013, in Brownsville, Texas. Chester Gonzalez signed the petition as chairman of the board of managers. The Debtor estimated assets and debts of at least $10 million. Kell Corrigan Mercer, Esq. kell.mercer@huschblackwell.com -- at Husch Blackwell, LLP, in Austin, Texas, serves as the Debtor's counsel. Judge Richard S. Schmidt presides over the case. BROWNSVILLE MD: Files Schedules of Assets and Liabilities --------------------------------------------------------- Brownsville MD Ventures, LLC filed with the Bankruptcy Court for the Southern District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $21,228,754 B. Personal Property $2,755,461 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $14,365,505 E. Creditors Holding Unsecured Priority Claims $297,787 F. Creditors Holding Unsecured Non-priority Claims $0 ----------- ----------- TOTAL $23,984,215 $14,663,292 Brownsville MD Ventures, LLC, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-10341) on Aug. 26, 2013, in Brownsville, Texas. Chester Gonzalez signed the petition as chairman of the board of managers. The Debtor estimated assets and debts of at least $10 million. Kell Corrigan Mercer, Esq., at Husch Blackwell, LLP, in Austin, Texas, serves as the Debtor's counsel. Judge Richard S. Schmidt presides over the case. CALDERA PHARMACEUTICALS: Timothy Tyson Joins Board -------------------------------------------------- The Board of Directors of Caldera Pharmaceuticals, Inc., voted to increase the size of the Board of Directors to seven and appointed Timothy Tyson as a director of the Board. For his service as director of the Company, Mr. Tyson will receive the Company's standard compensation applicable to non-employee directors. Mr. Tyson brings over 30 years of experience, and is an internationally recognized leader in the pharmaceutical industry. He is currently the Chairman of Aptuit, a contract research organization providing services to the pharmaceutical industry. His previous leadership positions include his tenure as CEO of Aptuit, and CEO of Valeant Pharmaceuticals. In addition Mr. Tyson has held senior executive positions at GlaxoSmithKline and at Bristol-Myers. Gary Altman, president and CEO of Caldera Pharmaceuticals, Inc., and XRpro, stated, "We are honored to have Tim join our Board. His leadership, his business experience, and his wealth of knowledge of the pharmaceutical industry, add a great deal to our team. I look forward to working with him, and gaining his counsel." Mr. Tyson is a graduate of the United States Military Academy, and holds a Masters of Public Administration and an MBA from Jacksonville State University. About Caldera Based in Cambridge, Massachusetts, Caldera Pharmaceuticals, Inc., is a drug discovery and pharmaceutical services company that is based on a proprietary x-ray fluorescence technology, called XRpro(R). The Company's balance sheet at June 30, 2013, showed $2.9 million in total assets, $3.4 million in total liabilities, $133,350 of Series A Cumulative Convertible Redeemable Preferred Stock, and a stockholders' deficit of $635,724. The Company said in its quarterly report for the period ended June 30, 2013: "We have generated losses to date and have limited working capital. We incurred a net loss of for the six months ended June 30, 2013, of $(1,810,498). At June 30, 2013, we had an accumulated deficit of $(10,654,430) and a working capital deficiency of $(1,107,739). We have generated losses to date and have limited working capital. At Dec. 31, 2012, we had an accumulated deficit of $(6,967,435) and a working capital deficiency of $(742,499). We incurred a net loss of for the year ended Dec. 31, 2012, of $(792,061) and for the year ended Dec. 31, 2011, of $(2,152,923). These factors raise substantial doubt about our ability to continue as a going concern." CAMCO FINANCIAL: Inks Merger Agreement with Huntington ------------------------------------------------------ Huntington Bancshares Incorporated and Camco Financial Corporation signed a definitive agreement under which Huntington will acquire Camco Financial, the parent company of Cambridge Ohio-based Advantage Bank, in a cash and stock transaction. As of June 30, 2013, Camco operated 22 banking offices throughout eastern and southern Ohio with $0.8 billion in total assets and $0.6 billion in total deposits. "This is a great opportunity to enhance our presence in several areas within our existing footprint and to expand into several new attractive geographies," said Steve Steinour, chairman, president and CEO of Huntington Bank. "We are pleased to welcome the more than 55,000 customers of Advantage Bank to Huntington. Our new customers will now have access to some of the highest rated customer service in the industry and to some of the most innovative banking products and services, which have helped to grow our customer base by more than 30 percent in the past three years. The acquisition will also give our current customers the convenience of more branches." "Huntington has a well-known legacy of investing in its customers and communities," said Jim Huston, chairman, president and CEO of Camco Financial and Advantage Bank. "We believe our customers will enjoy excellent service along with Huntington's broader suite of products." Under the terms of the agreement, which was unanimously approved by the boards of both companies, shareholders of Camco Financial may elect to receive 0.7264 shares of Huntington common stock, or $6.00 in cash, for each share of Camco Financial common stock, subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of total consideration of 80 percent common stock and 20 percent cash. Based upon the Wednesday, Oct. 9, 2013, closing price of $8.12 per share of Huntington common stock, the transaction is valued at approximately $97 million, including outstanding options and warrants. The transaction is expected to be completed in the first half of 2014, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of Camco Financial. Given the size and structure, the transaction has a de minimis impact to tangible book value. With over 45 percent geographic overlap(1), Huntington expects the acquisition to be accretive to earnings per share in the first full year. In completing diligence, Huntington reviewed over 75 percent of the loan portfolio. (1) 45 percent geographic overlap defined as branches within 1.5 miles of a Huntington branch. A copy of the Agreement and Plan of Merger is available at: http://is.gd/vg2Xoj About Camco Financial Cambridge, Ohio-based Camco Financial Corporation is a bank holding company that was organized under Delaware law in 1970. Camco is engaged in the financial services business in Ohio, Kentucky and West Virginia, through its wholly-owned subsidiary, Advantage Bank, an Ohio bank. On March 31, 2011, Camco divested activities related to Camco Title Agency and decertified as a financial holding company. Camco remains a bank holding company and continues to be regulated by the Federal Reserve Board. Plante & Moran PLLC, in Auburn Hills, Michigan, noted that the Corporation's bank subsidiary is not in compliance with revised minimum regulatory capital requirements under a formal regulatory agreement with the banking regulators, and that failure to comply with the regulatory agreement may result in additional regulatory enforcement actions. As discussed in Note K, Camco's wholly-owned subsidiary Advantage Bank's Tier 1 capital does not meet the requirements set forth in the 2012 Consent Order. As a result, the Corporation will need to increase capital levels. The Corporation reported net earnings of $4.2 million on net interest income (before provision for loan losses) of $23.9 million in 2012, compared with net earnings of $214,000 on net interest income of $214,000 on net interest income (before provision for loan losses) of $25.9 million in 2011. As of June 30, 2013, the Company's balance sheet showed $756.77 million in total assets, $690.84 million in total liabilities and $65.93 million in total stockholders' equity. CAPITOL BANCORP: Inks Agreement to Sell Remaining Affiliates ------------------------------------------------------------ Capitol Bancorp Limited on Oct. 14 disclosed that it has entered into a stock purchase agreement to sell the common stock of its remaining consolidated entities, Bank of Las Vegas, Indiana Community Bank, Michigan Commerce Bank and Sunrise Bank of Albuquerque, to Talmer Bancorp, Inc., a bank holding company located in Troy, Michigan. Capitol's Chairman and CEO Joseph D. Reid said, "We are pleased to provide the banks with a strategic partner that has the resources and capital to support the banks' long-term success. This transaction presents significant opportunities for the banks, and their employees and customers. The Talmer organization is community oriented and committed to continuing to build upon the banks' existing operations and refocus on growth in their respective markets. I am confident that the banks will continue their strong tradition of high standards of performance, service and commitment to the communities that they serve for many years to come." Capitol officials stress that the pending transaction will not have any impact on the operations of the banks, and their employees and customers. Customer deposits remain insured by the Federal Deposit Insurance Corporation. The sale is expected to close under Section 363 of the U.S. Bankruptcy Code, and is subject to regulatory approval, and the terms and conditions contained in the stock purchase agreement. 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. CASCADE AG: Cairncross & Hempelmann Seeks to Withdraw as Counsel ---------------------------------------------------------------- The hearing on a motion filed by Cairncross & Hempelmann to withdraw as counsel for Cascade AG Services, Inc., dba Pleasant Valley Farms, fdba Mountain View Produce, Inc., fdba Staffanson Harvesting LLC, fdba Sterling Investment Group, L.L.C. is set for October 25, 2013 at 9:30 a.m. at 700 Stewart Street Courtroom 7206 Seattle, WA 98101. The hearing will be presided by Judge Karen A. Overstreet. On September 9, 2013, the Court entered an order that, among other things, approved the sale of substantially all of the Debtor's assets. The Sale Order appointed Pivotal Solutions, Inc. as liquidating agent to assume sole custody and control over the Debtor and all of its assets. The Sale Order further stripped the Debtor's principals, Craig Staffanson, Jocelyn Staffanson, and Ben Lee, of any right to access or control the Debtor's business or assets. Since the Sale Order's entry, Cairncross's client contacts have had no authority to act on behalf of Cairncross's client, whose business and assets are controlled by the Liquidating Agent, who is represented by separate counsel. On September 26, 2013, Cairncross received an email from Jocelyn Staffanson, stating that the Debtor's principals, Ben Lee, Craig Staffanson, and Jocelyn Staffanson, had resigned as corporate officers and directors. Accordingly, Cairncross now has no client contacts at all. As the Court is well aware, the Debtor is no longer an operating company, and the duty to protect and preserve the estate's assets now rests with the Liquidating Agent. Consequently, it is highly unlikely that any issues will arise that do not fall within the scope of the Liquidating Agent's duties under the Sale Order. Even if such an issue were to arise, Cairncross would not have any authority to act on behalf of the Debtor in light of the withdrawal of the Debtor's principals. Finally, Cairncross will remain subject to this Court's jurisdiction in Cairncross's capacity as an administrative claimant; and Cairncross voluntarily submits to this Court's jurisdiction with respect to any other matters related to Cairncross's representation of the Debtor. About Cascade AG Cascade AG Services, Inc., dba Pleasant Valley Farms, fdba Mountain View Produce, Inc., fdba Staffanson Harvesting LLC, fdba Sterling Investment Group, L.L.C., is a vegetable processing company that processes Washington-grown cucumbers and cabbage into pickles and sauerkraut. Cascade AG filed for Chapter 11 bankruptcy (Bankr. W.D. Wash. Case No. 12-18366) on Aug. 13, 2012. In amended schedules, the Debtor disclosed $25,522,648 in assets and $21,354,742 in liabilities as of the Chapter 11 filing. Lawyers at Cairncross & Hempelmann PS, in Seattle, serve as the Debtor's counsel. Clyde A. Hamstreet & Associates, LLC, is the Debtor's chief restructuring officer and financial advisor. The petition was signed by Craig Staffanson, president. The U.S. Trustee appointed seven creditors to the Official Unsecured Creditors' Committee. Lawrence R. Ream, Esq., at Schwabe, Williamson & Wyatt PC, Seattle, represents the Committee as counsel. DIP lender One PacificCoast Bank, FSB, is represented by Brad T. Summers, Esq., and David W. Criswell, Esq. The Plan filed in the Debtor's case contemplates a $3.0 million capital infusion. Money contributed to fund the Plan will be used to satisfy Administrative Expense Claims to the extent that those Claims must be satisfied for Confirmation, unless there is agreement with Holders of Administrative Expense Claims to defer payment. CASCADE AG: Hearing on Bid to Dismiss Case Continued to Nov. 22 --------------------------------------------------------------- A continued hearing on the motion filed by the United States Trustee seeking dismissal of the chapter 11 case of Cascade AG Services, Inc., is continued to November 22, 2013. The Court reviewed the Motion and the responses and objections of Columbia State Bank, One Pacific Coast Bank, Washington Federal and debtor Cascade Ag Services, Inc., dba Pleasant Valley Farms, fdba Mo0untain View Produce, Inc., fdba Staffanson Harvesting LLC, and fdba Sterling Investment Group, L.L.C., considered the terms of the Order (A) Authorizing and Approving the Sale of Assets Free and Clear of all Liens, Claims, Encumbrances and Other Interests, (B) Appointing Liquidating Agent and (C) Granting Related Relief and heard the arguments of counsel. The Liquidating Agent shall file a written report with the Court no later than Nov. 18, 2013, regarding the status of the matters under the Liquidating Agent's charge pursuant to the Order. About Cascade AG Cascade AG Services, Inc., dba Pleasant Valley Farms, fdba Mountain View Produce, Inc., fdba Staffanson Harvesting LLC, fdba Sterling Investment Group, L.L.C., is a vegetable processing company that processes Washington-grown cucumbers and cabbage into pickles and sauerkraut. Cascade AG filed for Chapter 11 bankruptcy (Bankr. W.D. Wash. Case No. 12-18366) on Aug. 13, 2012. In amended schedules, the Debtor disclosed $25,522,648 in assets and $21,354,742 in liabilities as of the Chapter 11 filing. Lawyers at Cairncross & Hempelmann PS, in Seattle, serve as the Debtor's counsel. Clyde A. Hamstreet & Associates, LLC, is the Debtor's chief restructuring officer and financial advisor. The petition was signed by Craig Staffanson, president. The U.S. Trustee appointed seven creditors to the Official Unsecured Creditors' Committee. Lawrence R. Ream, Esq., at Schwabe, Williamson & Wyatt PC, Seattle, represents the Committee as counsel. DIP lender One PacificCoast Bank, FSB, is represented by Brad T. Summers, Esq., and David W. Criswell, Esq. The Plan filed in the Debtor's case contemplates a $3.0 million capital infusion. Money contributed to fund the Plan will be used to satisfy Administrative Expense Claims to the extent that those Claims must be satisfied for Confirmation, unless there is agreement with Holders of Administrative Expense Claims to defer payment. CENGAGE LEARNING: Wants to Avoid Liens on Disputed Copyrights ------------------------------------------------------------- Cengage Learning, Inc., et al., filed with the U.S. Bankruptcy Court for the Eastern District of New York an adversary proceeding against: 1. JPMorgan Chase Bank, N.A., solely in its capacity as successor administrative agent and collateral agent under that certain credit agreement dated July 5, 2007, and as amended; 2. The Bank of New York Mellon, solely in its capacity as trustee and collateral agent under that certain indenture dated April 10, 2012; and 3. CSC Trust Company of Delaware, solely in its capacity as successor trustee and collateral agent under that certain indenture dated as of July 5, 2012. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, on behalf of the Debtors, asks: i) the Court to enter an order avoiding the liens on and security interests in the Disputed Copyrights and the Security Agreement Collateral pertaining to the Disputed Copyrights and preserving them for the benefit of the Debtors' estates; ii) the Court to issue an order declaring that any interest in Disputed Copyrights and Security Agreement Collateral avoided, and preserved for the benefit of the Debtors' estates pursuant to Section 551 of the Bankruptcy Code is superior in priority to any other interests that the Defendants have in such Disputed Copyrights and Security Agreement Collateral; iii) the Court to issue an order declaring that the Debtors' estates have no rights or obligations, and are not otherwise bound by, any intercreditor agreement or other agreement to which the Defendants were a party with respect to any recovery received on account of the liens in any Disputed Copyrights or Security Agreement Collateral pertaining to such Disputed Copyrights avoided. As of June 30, 2013, shortly before the Petition Date, the Debtors had outstanding funded debt obligations in the aggregate principal amount of approximately $5.8 billion. 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. The Debtors filed a Joint Plan of Reorganization and Disclosure Statement dated Oct. 3, 2013, which provides that the Debtors took extreme care to advance and protect the interest of unsecured creditors -- including seeking to protect four primary sources of potential recoveries for unsecured creditors and providint them with appropriate time to conduct diligence, and discuss their conclusions on, among other things, the value of those sources of potential recoveries. CHECKERS DRIVE-IN: S&P Affirms B- CCR & B- Rating on $160MM Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Tampa, Fl.-based restaurant chain Checkers Drive In Restaurants Inc. The outlook is stable. At the same time, S&P affirmed its 'B-' issue-level rating on the company's $160 million senior secured notes. S&P's '4' recovery rating on this facility indicates its expectation for average recovery (30% to 50%) in the event of a payment default. S&P do not rate the company's $20 million revolver. The company's new $25 million HoldCo senior PIK toggle notes will not be rated. "We believe credit measures will remain close to current levels over the next year," said Standard & Poor's credit analyst Nalini Saxena. "We believe a slight increase to EBITDA generation will offset the additional burden of the incremental debt." Standard & Poor's could consider a downgrade if increasing competition in the QSR segment impairs Checkers' sales growth and margins. S&P could consider a higher rating if Checkers successfully increases its franchise income and overall profitability. CHINA PRECISION: Widens Net Loss to $68.9 Million in Fiscal 2013 ---------------------------------------------------------------- China Precision Steel, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $68.93 million on $36.52 million of sales revenues for the year ended June 30, 2013, as compared with a net loss of $16.94 million on $142.97 million of sales revenues during the prior fiscal year. The increase in net loss is attributable to, among other things, a substantial decrease in sales revenues, a negative gross profit margin, and a substantial allowance for bad and doubtful debts. As of June 30, 2013, the Company had $119.92 million in total assets, $67.01 million in total liabilities, all current, and $52.91 million in total stockholders' equity. As of June 30, 2013, the Company had cash and cash equivalents of approximately $0.1 million. Moore Stephens, Certified Public Accountants, in Hong Kong, 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 a very significant loss in the year ended June 30, 2013, and defaulted on interest and principal repayments of bank borrowings 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/FhzkyS About China Precision China Precision Steel Inc. is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel's high precision, ultra-thin, high strength (7.5 mm to 0.05 mm) cold- rolled steel products are mainly used in the production of automotive components, food packaging materials, saw blades and textile needles. The Company primarily sells to manufacturers in the People's Republic of China as well as overseas markets such as Nigeria, Thailand, Indonesia and the Philippines. China Precision Steel was incorporated in 2002 and is headquartered in Sheung Wan, Hong Kong. CITIZENS DEVELOPMENT: Use of LSM Lender's Cash Collateral Approved ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of California approved a stipulation between Citizens Development Corp. and LSM Lender LLC: -- authorizing the Debtor's use of cash collateral; -- authorizing adequate protection payments of $20,562 to LSM Lender LLC; and -- prohibiting foreclosure of the Debtor's property through and including Dec. 31, 2013. About Citizens Development San Marcos, California-based Citizens Development Corp., owns and operates the Lake San Marcos Resort and Country Club located in San Diego County. The Company filed a voluntary petition for relief under Chapter 11 (Bankr. S.D. Calif. Case No. 10-15142) on August 26, 2010. Ron Bender, Esq., and Krikor Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill LLP, represent the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million. Chapter 11 petitions were also filed by affiliates LSM Executive Course, LLC (Bankr. S.D. Calif. Case No. 10-07480), and LSM Hotel, LLC (Bankr. S.D. Calif. Case No. 10-13024). A bankruptcy-exit plan filed in the case provides that funding for the Plan will initially come from a new value contribution in the amount of up to $375,000 to be made to the Reorganized Debtor by LDG Golf Marketing, LLC, Telesis' cash collateral in the amount of $50,000 allocated to the payment of allowed administrative expenses pursuant to the Telesis Settlement, and the Debtor's additional cash on hand which is estimated to be $50,000, which collectively equates to up to $475,000. Tiffany L. Carroll, Acting U.S. Trustee for Region 15, was unable to appoint an official committee of unsecured creditors in the Chapter 11 case of Citizens Development Corp. As reported by the TCR on July 16, 2013, the funding for the Plan of Reorganization dated May 24, 2013, filed by the Debtor will come from: (1) the additional financing; (2) new value contribution in the amount of $400,000 to be made to the Reorganized Debtor by Atlantica, the new investor; (3) the Debtor's cash on hand which is estimated to be approximately $25,000 as of the Effective Date -- which collectively equates to $2,925,000 -- and (4) the revenue generated from continued business operations. CITIZENS DEVELOPMENT: May Incur $100,000 Loan to Pay Pac West ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California authorized Citizens Development Corp., to obtain $100,000 postpetition financing from LSM Lender, LLC. In a separate order, the Court approved the Debtor's settlement agreement with Pac West TD Fund II, L.P. As reported in the Troubled Company Reporter on Sept. 3, 2013, the Debtor explained that the loan will enable the Debtor to meet the payment requirements to Pac West TD Fund II, L.P. The Debtor also asked the Court to approve its Settlement Agreement with LSM and Pac West. Pursuant to the Settlement, Pac West has agreed to a payment from the Debtor of $100,000 in full settlement and satisfaction of its claims against the Debtor, which claims are asserted to be comprised of a $875,000 secured claim against the Debtor. Pursuant to the Settlement, the Debtor's avoidance action commenced against Pac West will be resolved favorably for the Debtor, at minimal cost to the Debtor. "Indeed, the Settlement Loan amount is likely the minimal amount that the Debtor would have to spend litigating with Pac West, with no certainty that the Debtor's litigation will prove fruitful," says Krikor J. Meshefejian, Esq., at Krikor J. Meshefejian Levene, Neale, Bender, Yoo & Brill L.L.P., counsel to the Debtor. "The Settlement and the Settlement Loan are clearly in the best interests of the estate and should be approved," he adds. The Settlement Loan will be secured by: (1) a first priority Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing encumbering the property; and (2) all of the Debtor's assets. The Settlement Loan will be due four years from its inception. The Debtor will be required to make interest only payments on the Settlement Loan at a rate of 7 percent per annum. About Citizens Development San Marcos, California-based Citizens Development Corp., owns and operates the Lake San Marcos Resort and Country Club located in San Diego County. The Company filed a voluntary petition for relief under Chapter 11 (Bankr. S.D. Calif. Case No. 10-15142) on August 26, 2010. Ron Bender, Esq., and Krikor Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill LLP, represent the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million. Chapter 11 petitions were also filed by affiliates LSM Executive Course, LLC (Bankr. S.D. Calif. Case No. 10-07480), and LSM Hotel, LLC (Bankr. S.D. Calif. Case No. 10-13024). A bankruptcy-exit plan filed in the case provides that funding for the Plan will initially come from a new value contribution in the amount of up to $375,000 to be made to the Reorganized Debtor by LDG Golf Marketing, LLC, Telesis' cash collateral in the amount of $50,000 allocated to the payment of allowed administrative expenses pursuant to the Telesis Settlement, and the Debtor's additional cash on hand which is estimated to be $50,000, which collectively equates to up to $475,000. Tiffany L. Carroll, Acting U.S. Trustee for Region 15, was unable to appoint an official committee of unsecured creditors in the Chapter 11 case of Citizens Development Corp. As reported by the TCR on July 16, 2013, the funding for the Plan of Reorganization dated May 24, 2013, filed by the Debtor will come from: (1) the additional financing; (2) new value contribution in the amount of $400,000 to be made to the Reorganized Debtor by Atlantica, the new investor; (3) the Debtor's cash on hand which is estimated to be approximately $25,000 as of the Effective Date -- which collectively equates to $2,925,000 -- and (4) the revenue generated from continued business operations. COLOREP INC: Hilco IP Okayed as Marketing Agent ----------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Colorep, Inc. and Transprint USA, Inc., to employ Hilco IP Services LLC as exclusive agent for the purposes of marketing their assets for sale, nunc pro tunc to Aug. 14, 2013. As reported in the Troubled Company Reporter on Sept. 9, 2013, the Debtors propose to pay Hilco a fee of $60,000, which will be paid in two installments: (i) $30,000 payable upon entry of an order by the Court approving Hilco's retention; and (ii) $30,000 payable upon closing on the sale of the assets. Hilco will also be paid a commission from the Gross Proceeds of the sale: (i) 3% of the first $20 million of the aggregate gross proceeds of the sale; and (ii) 10% for any aggregate gross proceeds in excess of $20 million. Hilco will also be reimbursed from the Gross Proceeds of the sale for all reasonable and customary expenses in connection with the performance of its services. The firm's Ian S. Fredericks assures the Court that neither Hilco nor the employees comprising it hold or represent an interest adverse to the estates with respect to the matters on which they are to be employed. About Colorep Inc. Colorep Inc., an industrial printer from Harrisonburg, Virginia, filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 13-27689) on July 10 in Los Angeles, owing $17 million to secured lender Meserole LLC. The company licenses a fabric-dyeing process known as AirDye. Colorep's subsidiary Transprint USA Inc. also filed in Chapter 11. Transprint produces transfer-printing paper. Gary E. Klausner, Esq., at Stutman, Treister & Glatt, P.C. represents Colorep as reorganization counsel while Stubbs, Alderton & Markiles LLP serves as it special corporate counsel. Meserole, LLC, is represented by Frank T. Pepler, Esq., and Stuart M. Brown, Esq., at DLA Piper LLP (US). COLOREP INC: May Sell Assets to Prepetition Lender for $20MM ------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California has authorized Colorep, Inc. to sell substantially all of its assets, and other interests to the purchaser, pursuant to the terms of that certain asset purchase agreement between the Debtors and Beta Color, LLC as sellers, and the purchaser, as purchaser, dated as of Oct. 4, 2013. An asset purchase agreement was submitted jointly by Meserole, LLC, as Prepetition lender and Fuller Smith Capital Management LLC, the DIP Agent wherein they made a credit bid in the aggregate amount of $20 million dollars consisting of the DIP Agent and Saviva FS 1. L.P., the DIP Lender credit bidding the amount outstanding under the DIP Financing and Meserole, credit bidding that portion of its prepetition claim equal to the sum of $20 million minus the DIP credit bid amount. The bid also provided for the payment of $25,000 cash to the estates and the assumption by the purchaser of the assumed liabilities. The purchaser intends to assign the credit bids to AirDye Solutions, LLC, which will be the purchaser upon the assignment at or before closing of the transactions contemplated by the final APA. "Purchaser" refers to Meserole and DIP Agent, or AirDye as their interests may appear and as applicable The Final APA as subsequently negotiated and agreed to between the parties provides for the following consideration: a) a credit bid in the amount of $20 million consisting of (i) a credit bid by the DIP Agent of $250,000 of the amount outstanding under the DIP Financing; and (ii) a credit bid by Meserole of the outstanding amount owing under the Prepetition Loan in the amount equal to $20 million less the DIP Financing Credit Bid, which amount is $19,750,000; b) the purchaser's payment of all cure amounts for all assigned contracts and the assumption of the assumed liabilities, as that term is defined in the Final APA; and c) the payment of $25,000. At the closing, the debt constituting the Credit Bid to the extent of $250,000 of the DIP Financing and $19,750,000 of the Pre- Petition Loan will be deemed satisfied and extinguished and Debtors and their estates will have no further obligations with respect thereto. Any liens or security interests of the Prepetition lender, DIP Agent or DIP Lender against the assets of the Debtors owned or acquired after the Closing of the Sale will be deemed released and extinguished without the need for any further action by any party. At the closing, purchaser will assume the assumed liabilities. The purchaser will pay the assumed liabilities as liabilities and obligations become due and payable unless otherwise expressly provided with regards to terms and condition of payment in the final APA or any agreement between purchaser and a holder of the any assumed liability. The Troubled Company Reporter, citing a Bloomberg News report, said on Oct. 2, 2013, that an auction set for September was cancelled after no offers were received by the Sept. 18 deadline. According to the Bloomberg report, Colorep said in a court filing that it was in talks Fuller Smith and Meserole, which was owed $17 million in secured debt. Colorep in August received court approval to finance the bankruptcy. At the end of August, Meserole gave Fuller Smith the role of agent on the bankruptcy financing and transferred its interest in the loan itself to an affiliate of Fuller Smith. The Bloomberg report notes that Meserole retained a limited partnership interest in the loan, according to a court filing. About Colorep Inc. Colorep Inc., an industrial printer from Harrisonburg, Virginia, filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 13-27689) on July 10, 2013, in Los Angeles, owing $17 million to secured lender Meserole LLC. The company licenses a fabric-dyeing process known as AirDye. Colorep's subsidiary Transprint USA Inc. also filed in Chapter 11. Transprint produces transfer-printing paper. Stutman, Treister & Glatt, P.C. represents Colorep as reorganization counsel while Stubbs, Alderton & Markiles LLP serves as special corporate counsel. Meserole, LLC, is represented by Frank T. Pepler, Esq., and Stuart M. Brown, Esq., at DLA Piper LLP (US). COMARCO INC: Chief Operating Officer McKeefery Quits ---------------------------------------------------- Donald L. McKeefery submitted to Comarco Inc. his resignation as chief operating officer effective Oct. 4, 2013. About Comarco Inc. Based in Lake Forest, California, Comarco, Inc. (OTC: CMRO) -- http://www.comarco.com/-- is a provider of innovative, patented mobile power solutions that can be used to power and charge notebook computers, mobile phones, and many other rechargeable mobile devices with a single device. Comarco disclosed a net loss of $5.59 million on $6.33 million of revenue for the year ended Jan. 31, 2013, as compared with a net loss of $5.31 million on $8.06 million of revenue for the year ended Jan. 31, 2012. Comarco's balance sheet at July 31, 2013, showed $2.93 million in total assets, $10.89 million in total liabilities and a $7.95 million total shareholders' deficit. Squar, Milner, Peterson, Miranda & Williamson, LLP, 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 and negative cashflow from operations, has negative working capital and uncertainties surrounding the Company's ability to raise additional funds. These factors, among others, raise substantial doubt about its ability to continue as a going concern. CONCHO RESOURCES: Rowe Price held 10% Equity Stake at Sept. 30 -------------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, T. Rowe Price Associates, Inc., disclosed that as of Sept. 30, 2013, it beneficially owned 10,567,620 shares of common stock of Concho Resources Inc. representing 10 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/eo23dt About Concho Resources Inc. Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company's operations are focused in the Permian Basin of Southeast New Mexico and West Texas. For more information, visit Concho?s website at www.concho.com. The Company's balance sheet at June 30, 2013, showed $9.24 billion in total assets, $5.64 billion in total liabilities and $3.59 billion in total stockholders' equity. * * * As reported by the TCR on May 22, 2013, Moody's Investors Service upgraded Concho Resources Inc.'s Corporate Family Rating to Ba2 from Ba3. "The upgrade to Ba2 reflects Concho Resources' strong cash margins, relatively high proportion of oil in the production mix, and continued growth in production and reserves," said Arvinder Saluja, Moody's Assistant Vice President-Analyst. Concho Resources Inc. carries a BB+ corporate credit rating from Standard & Poor's. CRESTWOOD MIDSTREAM: S&P Affirms Then Withdraws 'BB' CCR -------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions as a result of the completion of the Inergy/Crestwood merger: -- S&P affirmed its 'BB' corporate credit rating on Inergy; -- S&P subsequently withdrew the rating because the combined entity has been renamed Crestwood Midstream Partners L.P. -- S&P's recovery expectations on Crestwood's (formerly Inergy's) $500 million senior unsecured debt remains unchanged at '4'. -- S&P raised its corporate credit rating on Crestwood to 'BB' from 'B' and raised the senior unsecured debt rating to 'BB' from 'B-'. S&P also removed the ratings from CreditWatch, where it placed them with positive implications on May 6, 2013. The outlook is stable. S&P raised the ratings as a result of the completion of the announced merger with an Inergy subsidiary. -- S&P revised its recovery rating to '4' from a '6' on Crestwood's $350 million senior unsecured notes, indicating its expectations for average (30% to 50%) recovery from modest (10% to 30%) recovery if a payment default occurs. Ratings reflect the "fair" business risk profile and "significant" financial risk profile. Total debt at Crestwood was $779 million as of June 30, 2013. "The rating actions on Crestwood follow the completion of its merger with an Inergy subsidiary. We believe the merger is positive for Crestwood's credit risk profile," said Standard & Poor's credit Analyst Michael Llanos. S&P's ratings reflect the consolidated credit profile of the combined entity. The transaction expands Crestwood's asset and geographic diversity while increasing its scale and overall cash flow diversity. However, S&P views there to be increased credit risk from cash flow volatility associated with the gathering and processing sector. This is muted somewhat because more than 80% of its 2013 total gross margin is under fixed-fee contracts, of which more than 50% is under firm, take-or pay contracts. S&P expects crude oil and natural gas liquids to contribute to about 70% of the pro forma entity's cash flows. S&P's stable outlook reflects its expectation Crestwood will successfully integrate the merger with Inergy and the consolidated entity will generate debt/EBITDA in the low 4x range in 2014. S&P could lower the ratings if management is unsuccessful with the integration or if gathering volumes cause cash flows to drop such that debt to EBITDA of 5x or higher is expected for 2014. S&P do not expect to raise the ratings in the near term because the Arrow acquisition is expected to increase leverage to about 5x at year- end 2013. S&P could consider raising the ratings if it expects debt to EBITDA below 3.5x on a sustained basis and if the company improves its business risk profile by further expanding fee-based cash flow and the crude oil logistics business. CYCLONE POWER: Secures Agreement to Manufacture Engines ------------------------------------------------------- Cyclone Power Technologies Inc. has signed a revised and restated License Agreement with Phoenix Power Group LLC. Under this agreement, Cyclone and its waste-to-power operating subsidiary, Cyclone-WHE LLC, will manufacture and supply Phoenix with a minimum of 6,500 engines over the next five years. Phoenix is Cyclone's exclusive, worldwide licensee with rights to utilize Cyclone engines to produce power from the clean combustion of used motor oil, as well as other waste fuels and engine lubricants. Phoenix's distributors currently control 70 percent of the used motor oil furnace market, with more than 150,000 such heat-producing units beings sold over the last several decades. Under the terms of this new agreement, Phoenix will purchase engines for a period of at least five years from Cyclone-WHE at prices to be determined at a future date. In order to maintain its exclusivity under the ten-year license, Phoenix must purchase at least 6,500 engines during the initial five-year period after delivery of the first running prototypes. The 10hp Waste Heat Engine (WHE) model will be the first engine to be provided; however, all Cyclone engines are covered under the license. Upon completing certain engine development milestones, the agreement will be transferred to Cyclone-WHE to execute the production phase of this program. "This is an important agreement for Cyclone and its shareholders, as it provides Cyclone-WHE with its first committed customer to purchase engines over an extended period of time for a solid and proven sales pipeline. We expect this will generate substantial product sales revenue, as opposed to license royalties, and a firm base to ramp up our manufacturing operations. We're thrilled to be working with the capable and well supported team at Phoenix on the launch of our engines," stated Christopher Nelson, president of Cyclone and managing director of Cyclone-WHE. Thomas Thillen, president of Phoenix, stated: "We have seen great progress at Cyclone over the last few months with their focus on commercialization of the WHE. The addition of the engineering team at Ohio State University and the manufacturing capacity with Precision CNC has provided us confidence that we will see Cyclone engines in Phoenix used oil cogeneration systems in the near future. We are supportive of their development path, and look forward to a long, mutually profitable business relationship." A copy of the Amended License Agreement is available for free at: http://is.gd/Us9xgm About Cyclone Power Pompano Beach, Fla.-based Cyclone Power Technologies, Inc. (Pink Sheets: CYPW) is a clean-tech engineering company, whose business is to develop, commercialize and license its patented Rankine cycle engine technology for applications ranging from renewable power generation to transportation. The Company is the successor entity to the business of Cyclone Technologies LLLP, a limited liability limited partnership formed in Florida in June 2004. Cyclone Technologies LLLP was the original developer and intellectual property holder of the Cyclone engine technology. Cyclone Power disclosed a net loss of $3 million on $1.13 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $23.70 million on $250,000 of revenue in 2011. The Company's balance sheet at June 30, 2013, showed $1.36 million in total assets, $4.26 million in total liabilities and a $2.89 million total stockholders' deficit. Mallah Furman, in Mallah Furman, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company's dependence on outside financing, lack of sufficient working capital, and recurring losses raises substantial doubt about its ability to continue as a going concern. DETROIT, MI: Reaches Deal to Borrow $350MM From Barclays -------------------------------------------------------- Katy Stech and Matthew Dolan, writing for Daily Bankruptcy Review, reported that Detroit officials announced plans on Oct. 11 to take out a $350 million bankruptcy loan from Barclays PLC in a deal that would make it the first major U.S. city to borrow money while in Chapter 9. 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: US Blasts Retirees' Attempt to Thwart Bankruptcy ------------------------------------------------------------- Law360 reported that Detroit's bid for Chapter 9 bankruptcy protection doesn't conflict with the U.S. Constitution, the federal government told a U.S. bankruptcy judge on Oct. 11 in response to objections by two of the unions representing some of the city's public-sector retirees. According to the report, contrary to the assertions of The Michigan Council 25 of the American Federation of State, County & Municipal Employees, AFL-CIO and Sub-Chapter 98, City of Detroit, a Chapter 9 bankruptcy filing does not violate the 10th Amendment of the Constitution, the government said in a brief. 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: Gets Up to $350M Post-Petition Financing Commitment ---------------------------------------------------------------- Kevyn Orr, the Emergency Manager for the City of Detroit, on Oct. 11 disclosed that the City has received a commitment for senior secured post-petition financing of up to $350 million from Barclays. The proceeds of the financing will benefit the ongoing restructuring of Detroit in several ways: -- Allow the City to capture a large discount -- estimated to be more than $60 million -- on the settlement of certain pension debt interest rate swap obligations; -- Save the City tens of millions of dollars of annual debt service; -- Afford the City additional resources to fund its revitalization and improve the future recoveries of its creditors, including retirees, as part of its restructuring process; -- Provide additional cash for investment in Detroit's delivery of municipal services to its businesses and 700,000 residents, including blight removal, public safety initiatives and technology infrastructure improvements. "[Fri]day is another important step in the continued revitalization of Detroit," Mr. Orr said. "We said at the outset of this process that we are committed to improving the financial condition of Detroit and the lives of its 700,000 citizens, and our team worked tirelessly to bring this significant post-petition financing to bear. We are very encouraged by the level of interest we received from the financial community, its implicit support of the work we are doing and their desire to participate in the ongoing recovery of one of America's great and vibrant cities." Approximately $230 million of the post-petition financing will be used to exercise termination rights on certain pension debt interest rate swap obligations. The balance of the financing -- approximately $120 million -- will be used to advance certain key investment initiatives of the City aimed at improving basic services to Detroit's residents and businesses and the technology infrastructure of the City's government. The City, in conjunction with its investment banker, Miller Buckfire & Co., and legal counsel, Jones Day, conducted a highly competitive financing process over the past month, contacting more than 50 institutions with experience in municipal or special credit situations. Detroit received 16 high-level financing proposals from leading financial institutions such as local and national commercial banks, investment banks and hedge funds, among which were many of the City's financial creditors. After extensive review and negotiation between the City and prospective lenders, the Emergency Manager, in consultation with the City's advisors, chose the Barclays proposal as the most advantageous based on structure and pricing. Terms of the Financing The financing commitment from Barclays in the amount of up to $350 million carries an interest rate of London Interbank Offered Rate (LIBOR) + 2.5% (with a 1% LIBOR floor), subject to market flex. The outside maturity date for the financing is two years and six months from the closing date, with a commitment fee in connection with the financing due from the City. The financing is secured by a pledge of income tax revenues, wagering tax revenues and net cash proceeds from any potential monetization of City assets that exceeds $10 million. Asset monetizations are not required. Barclays will be given a claim on the borrowing that has priority over all administrative expense claims, all other post-petition claims, and prepetition unsecured claims. Approval Process and Closing Conditions The financing will be issued as Financial Recovery Bonds under Section 36a of the Home Rule City Act. As required under Michigan Public Act 436 of 2012, the proposed financing has been submitted to the Detroit City Council, which has 10 days to approve or disapprove the financing. The City also will seek the approval of the emergency financial assistance loan board. Finally, the financing will be subject to the approval of the United States Bankruptcy Court for the Eastern District of Michigan. The City intends to file a motion with the Court in late October for a hearing in November. The closing of the financing commitment is subject to, among other conditions, the entry of an order of relief in the bankruptcy case, exercise of termination rights under Forbearance Agreement, and bankruptcy court approval of the financing transaction. 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: Bankruptcy Court Continues Operating Amid Shutdown --------------------------------------------------------------- Law360 reported that the federal bankruptcy court in Michigan handling the biggest municipal insolvency case in U.S. history has joined others around the country in continuing to work through the government shutdown, now nearly two weeks old. According to the report, following the Oct. 10 announcement from D.C. federal court administrators that they had enough money to fund the system two more days than expected, the U.S. Bankruptcy Court in the Eastern District of Michigan posted a notice that normal operations "will continue as usual." 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. EASTMAN KODAK: S&P Assigns 'B-' CCR & Rates $420MM Loan 'B-' ------------------------------------------------------------ Standard & Poor's Ratings Services said it assigned a 'B-' corporate credit rating to Rochester, N.Y.-based Eastman Kodak Co. The outlook is stable. In addition, S&P assigned a 'B-' issue rating to the $420 million first-lien term loan, with a '3' recovery rating (indicating S&P's expectation of meaningful (50% to 70%) recovery of principal in the event of a payment default), and a 'CCC' issue rating to the $275 million second-lien term loan, with a '6' recovery rating (indicating S&P's expectation of negligible (0% to 10%) recovery of principal in the event of a payment default). "The ratings reflect our assessment of the company's 'vulnerable' business risk profile and 'highly leveraged' financial risk profile," said Standard & Poor's credit analyst Molly Toll-Reed. In S&P's view, Kodak's vulnerable business risk profile reflects its small share of a large, mature global market in commercial printing, facing secular decline in demand and significantly larger competitors with greater resources. S&P's base-case forecast assumptions include: -- Mid-single-digit revenue decreases, as declining end-of-life segments outweigh new product growth in the near term. -- Cost reductions and restructurings will enable Kodak to sustain adjusted annual EBITDA of about $160 million in the near term. -- Preservation of adequate liquidity, including substantial offshore cash balances. The stable outlook incorporates S&P's expectation that Kodak will be challenged to stabilize revenues and grow operating earnings, given expected declines in the commercial film and consumer inkjet segments. However, important rating support is provided by cash balances in excess of $800 million, which provide a significant cushion in the event of earnings and cash flow volatility. The potential for a higher rating is constrained by Kodak's highly leveraged financial profile and lack of predictability of operating performance. Although the potential for lower ratings over the coming year is currently limited by sizeable cash balances, ratings could be lowered if a substantial deterioration in operations leads us to view Kodak's liquidity as less than adequate. ELBIT IMAGING: To Hold Meeting to Approve Plan of Arrangement ------------------------------------------------------------- Elbit Imaging Ltd. disclosed that the Tel Aviv District Court found no reason why noteholders will not approve the adjusted plan of arrangement submitted by the Company on Sept. 18, 2013. A Noteholders' meetings that will be convened within 7 days. About Elbit Imaging Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF) hold investments in real estate and medical companies. The Company, through its subsidiaries, also develops shopping and entertainment centers in Central Europe and invests in and manages hotels. Elbit Imaging disclosed a loss of NIS455.50 million on NIS671.08 million of total revenues for the year ended Dec. 31, 2012, as compared with a loss of NIS247.02 million on NIS586.90 million of total revenues for the year ended Dec. 31, 2011. Brightman Almagor Zohar & Co., in Tel-Aviv, Israel, expressed substantial doubt about Elbit Imaging's ability to continue as a going concern following the financial results for the year ended Dec. 31, 2012. The Certified Public Accountants noted that in the period commencing Feb. 1, 2013, through Feb. 1, 2014, the Company is to repay its debenture holders NIS 599 million (principal and interest). "Said amount includes NIS 82 million originally payable on Feb. 21, 2013, that its repayment was suspended following a resolution of the Company's Board of Directors. The Company's Board also resolved to suspend any interest payments relating to all the Company's debentures. In addition, as of Dec. 31, 2012, the Company failed to comply with certain financial covenants relating to bank loans in the total amount as of such date of NIS 290 million. As of June 30, 2013, the Company had NIS5.80 billion in total assets, NIS5.19 billion in total liabilities and NIS613.57 million in shareholders' equity. ENERGY CONVERSION: Trina Solar Says Suit is 'Baseless' ------------------------------------------------------ Nathalie Tadena, writing for DBR Small Cap, reported that Trina Solar Ltd. said a lawsuit recently filed by failed solar-panel manufacturer Energy Conversion Devices over an alleged scheme to dump low-cost solar panels in the U.S. is "without merit" and the company will defend itself against the complaint's "baseless" allegations. According to the report, the Chinese solar-products maker said on Oct. 11 it isn't in a position to evaluate the potential impact of the lawsuit on its business at this time. A bankruptcy trustee for Energy Conversion is suing Trina and two other Chinese companies for $950 million over allegations of price fixing and the dumping of cheap solar panels that drove the U.S. company out of business, the report related. The lawsuit was filed in the U.S. District Court for the Eastern District of Michigan. John Madden, who heads a trust created to recover money for Energy Conversion's creditors, said the three companies--Trina, Yingli Green Energy Holding Co. and Suntech Power Holdings Co. --engaged in a far-ranging scheme to flood the market with low-cost solar panels in an illegal bid to take over the U.S. market, the report further related. Mr. Madden said the three Chinese companies imported solar panels at "dramatically reduced prices" in a sustained effort to "destroy and injure competitors, and over time, all competition." The U.S. moved last year to impose tariffs on Chinese-made solar cells, after the Commerce Department determined that Chinese manufacturers had dumped their goods in the U.S., the report said. In July, China imposed antidumping tariffs on U.S. and South Korean raw-material producers. The U.S. actions, however, came too late for Energy Conversion and nearly a dozen other American solar manufacturers--including Solyndra LLC, Abound Solar and Evergreen Solar Inc.--which have sought bankruptcy protection in recent years, the report pointed out. The case is Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd., 13-cv-14241, U.S. District Court, Eastern District of Michigan (Detroit). About Energy Conversion Energy Conversion Devices -- http://energyconversiondevices.com/ -- has a renowned 51 year history since its formation in Detroit, Michigan and has been a pioneer in materials science and renewable energy technology development. The company has been awarded over 500 U.S. patents and international counterparts for its achievements. ECD's United Solar wholly owned subsidiary has been a global leader in building-integrated and rooftop photovoltaics for over 25 years. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology. ECD filed for Chapter 11 protection (Bankr. E.D. Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel. The Debtor estimated assets and debts of between $100 million and $500 million as of the petition date. The petition was signed by William Christopher Andrews, chief financial officer and executive vice president. Affiliate United Solar Ovonic LLC filed a separate Chapter 11 petition on the same day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar Integrated Technologies, Inc., filed a petition for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-43169). An official committee of unsecured creditors has been appointed in the case. Foley and Lardner, LLP represents the Committee. Scouler & Company, LLC, serves as financial advisor. The company had estimated in court papers that it was worth $986 million, based on nearly $800 million of investment in the manufacturing unit. The Debtors canceled an auction to sell USO as a going concern and discontinued the court-approved sale process after failing to receive an acceptable qualified bid by the bid deadline. Quarton Partners served as the companies' investment banker. The Debtors also hired auction services provider Hilco Industrial to prepare for an orderly sale of the companies' assets. In August 2012, the Debtors won confirmation of their Second Amended Chapter 11 Plan of Liquidation. The Plan was declared effective in September 2012. Under the Plan, unsecured creditors owed up to $337 million in claims were to expect a recovery between 50.1% and 59.3%. The Plan creates a trust to sell remaining assets and distribute proceeds in the order of priority laid out in bankruptcy law. ENNIS COMMERCIAL: Administrator Can Employ Katten Muchin -------------------------------------------------------- David P. Stapleton of the Stapleton Group, solely in his capacity as plan administrator for Ben Ennis, sought and obtained authority from the U.S. Bankruptcy Court for the Eastern District of California to employ Katten Muchin Rosenman LLP as special real estate and corporate counsel, nunc pro tunc to July 13, 2013. Katten's attorneys have been working with the Plan Administrator and his team since July 13, 2013, to review the Debtor's assets and perform due diligence in preparation for the role of Plan Administrator. The primary attorneys who will be working on this matter, and who will be paid based on their hourly rates are: Professional Position Rate ------------ -------- ---- William B. Freeman Partner $700 Douglas W. Pyle Associate $455 Jennifer K. Brooks Associate $410 The firm will also be reimbursed for its out-of-pocket expenses. Mr. Freeman assures the Court that Katten does not hold or represent any interest materially adverse to the interests of the estate or any class of creditors or equity security holders. About Ennis Commercial Porterville, California-based Ennis Commercial Properties, LLC's business consists of acquiring raw land and building commercial developments. The Company then either operates or sells the commercial buildings comprising the commercial development. ECP is owned by Ben Ennis, Brian Ennis and Pamela Ennis, in equal shares. On Sept. 20, 2010, Pam Ennis and Brian Ennis transferred all of their ownership interests in ECP to Ben Ennis. ECP filed for Chapter 11 bankruptcy protection (Bankr. E.D. Calif. Case No. 10-12709) on March 16, 2010. Peter L. Fear, Esq., and Gabriel J. Waddell, Esq., at the Law Offices of Peter L. Fear, in Fresno, Calif., represent ECP as counsel. No creditors committee has been formed in the case. In its schedules, the Debtor disclosed $40,878,319 in assets and $43,922,485 in liabilities. Ben Ennis filed a voluntary petition under Chapter 11 (Bankr. E.D. Calif. Case No. 10-62315) on Oct. 25, 2010. On May 25, 2011, Terence Long was appointed as Chapter 11 Trustee in the Benn Ennis bankruptcy. Consequently, the Chapter 11 Trustee stands in the shoes of Ben Ennis, and holds all of the membership interests in ECP and controls it accordingly. Justin D. Harris, Esq., at Motschiedler, Michaelides, Wishon, Brewer & Ryan, LLP, in Fresno, represents the Chapter 11 Trustee as counsel. EXCELITAS TECHNOLOGIES: S&P Lowers Corporate Credit Rating to 'B' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Excelitas Technologies Corp., including the corporate credit rating to 'B' from 'B+'. The outlook is stable. At the same time, S&P assigned its 'B' issue-level and '3' recovery ratings to the company's proposed $660 million senior secured credit facilities. The '3' recovery rating indicates S&P's expectation for meaningful (50%-70%) recovery in a default scenario. The credit facilities will consist of a $40 million revolver, a $580 million term loan, and a $40 million delayed-draw term loan. "The downgrade reflects our view that Excelitas' credit measures continue to be subpar and will remain weaker than our expectations for the former 'B+' rating," said credit analyst Carol Hom. Following the company's recent announcement to acquire Qioptiq S.a.r.l. (Qioptiq), the proposed funding to finance the transaction -- in the form of the proposed credit facilities -- will result in higher leverage due to an increase in debt. This is only partially mitigated by the business benefits of the purchase. With the acquisition, the company could also face integration challenges from combining its businesses. The ratings also reflect the company's "weak" business risk profile and "highly leveraged" financial risk profile. S&P's business risk profile assessment reflects Excelitas' position in a small niche industry and modest cash flow. S&P believes the company should benefit from moderate profitability. S&P expects its detection and defense segments to remain somewhat stable, but its lighting segment could continue to see some softness over the next few quarters. The company is owned by private equity firm Veritas Capital. Consequently, S&P views the company's management and governance profile as "fair." Upon the transaction's closing, S&P expects to withdraw the existing issue-level and recovery ratings. "We believe Excelitas will continue to hold the no. 1 or 2 position in most of the niche markets it serves. The company sells custom-designed lighting and sensor components, subsystems, and integrated solutions to global original equipment manufacturers. We believe Excelitas' acquisition of Qioptiq will increase its scale and scope by enhancing its breadth of product offerings. Excelitas' products are used in various health, environmental, industrial, safety, and defense markets. The company operates in three product groups: lighting, detection, and advanced electronic systems. Post-acquisition, we believe Excelitas will continue to maintain its relatively good customer and geographic diversity (almost half of its revenues come from outside the U.S.). The company's products require a high degree of customization and technological specialty. Its long-term relationships with customers and the "designed-in" nature of its products -- whereby Excelitas' engineers are closely involved in customers' product design cycles -- should continue to create barriers to entry and high switching costs," S&P said. With its broader product base, S&P believes Excelitas could benefit from increased demand. S&P's base-case forecast assumes the following: -- Low-single-digit organic revenue growth; -- EBITDA margins in the low-20% range; -- Capital expenditures of 3% of revenues in 2013 and 2014; and -- Modest free cash flow generation. S&P views the company's financial risk profile as "highly leveraged." Pro forma for the proposed transaction, total debt to EBITDA (adjusted to include operating leases) was more than 6x as of June 30, 2013. Although this is weaker than S&P's expectation for the rating (S&P expects total debt to EBITDA of 5x-6x for the rating), S&P believes that the company's credit measures will improve over the next 12-18 months, with total debt to EBITDA (adjusted to include operating leases) approaching 6x. Excelitas could complete small bolt-on acquisitions in the future, but S&P's rating does not incorporate the possibility of a significant acquisition or meaningful shareholder initiatives after this acquisition, which the company expects to close in 2013. The rating outlook is stable. Pro forma for the proposed transaction, S&P expects Excelitas' credit metrics to be weaker than its expectations for the rating. However, S&P believes that its credit metrics will gradually improve over the next 12-18 months through a combination of modest debt reduction and EBITDA improvement, although leverage will likely remain higher than 6x debt to EBITDA during that period. S&P could lower the ratings if Excelitas experiences a worse-than- expected market downturn or a significant loss of customers as a result of integration issues, causing the company's revenues and margins to contract by more than 5% and 100 basis points, respectively. S&P could also lower the ratings if additional debt hurts the company's liquidity or meaningfully weakens its credit measures. This could occur if debt to EBITDA does not improve from its pro forma leverage at the transaction's closing. Although less likely, S&P could raise the ratings one notch if stronger-than-expected growth in the company's end markets and a more conservative financial policy improve leverage to 5x or less for an extended period. Excelitas does not release its financial results publicly. FINJAN HOLDINGS: Adopts Codes of Ethics for Officers & Employees ---------------------------------------------------------------- The Board of Directors of Finjan Holdings, Inc., adopted a Code of Business Conduct and Ethics applicable to the Board and the Company's officers and employees. The Board also adopted a supplemental Code of Ethics for Principal and Senior Financial Officers. The Code and the Supplement replaced any codes of ethics previously applicable to the Company. The Code and the Supplement clarify, among other things, the Company's policies and expectations regarding honest and ethical conduct in connection with the Company?s business, including with respect to conflicts of interest, financial records and reporting, compliance with applicable laws, rules and regulations, reporting of non-compliance and disciplinary action. The Code, and the Supplement in particular, emphasize the role of senior management in promoting the honest and ethical conduct that the Code and Supplement are intended to encourage, as well as in the other areas covered by the Code. Copies of the Codes are available for free at: http://is.gd/Cb4hv0 http://is.gd/2I0jKi About Finjan Finjan, formerly known as Converted Organics, is a leading online security and technology company which owns a portfolio of patents, related to software that proactively detects malicious code and thereby protects end-users from identity and data theft, spyware, malware, phishing, trojans and other online threats. Founded in 1997, Finjan is one of the first companies to develop and patent technology and software that is capable of detecting previously unknown and emerging threats on a real-time, behavior-based basis, in contrast to signature-based methods of intercepting only known threats to computers, which were previously standard in the online security industry. Converted Organics disclosed a net loss of $8.42 million in 2012, as compared with a net loss of $17.98 million in 2011. The Company's balance sheet at June 30, 2013, showed $31.84 million in total assets, $1.16 million in total liabilities and $30.67 million total stockholders' equity. Moody, Famiglietti & Andronico, LLP, in Tewksbury, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses and negative cash flows from operations and an accumulated deficit that raises substantial doubt about the Company's ability to continue as a going concern. FIRST DATA: Fitch Affirms 'B' Issuer Default Rating --------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating (IDR) for First Data Corp. (FDC) at 'B' with a Stable Rating Outlook. FDC has announced a refinancing of its parent company debt, approximately $2 billion in senior unsecured PIK notes maturing 2016 issued by First Data Holdings Inc. (HoldCo) which is the direct parent company of FDC and a subsidiary of New Omaha Holdings L.P. These notes and the subsequent refinancing debt are not obligations of FDC. Fitch did, however, view the maturity of the HoldCo notes as a potential issue in any attempt to further extend the capital structure beyond 2016. In addition, this maturity could have affected efforts to refinance the still outstanding $1.75 billion in subordinated notes due 2016 at FDC. The HoldCo debt will be refinanced in part by an exchange for roughly $1.4 billion in new 14.5% senior unsecured PIK notes due 2019 issued by HoldCo which will not be an obligation of FDC. The 2016 noteholders will also be paid approximately $300 million in cash. The cash payment will be financed by the issuance of an equal amount of 14.5% convertible preferred stock in the HoldCo to existing equity owners. The preferred stock will also not be an obligation of FDC. Fitch believes this refinancing is a modest positive for the credit by opening up a path to further extend the company's capital structure. The nearest significant maturity for the company is the aforementioned $1.75 billion in subordinated notes due 2016. In 2017 and 2018 the company has various portions of its secured term loans set to mature, which Fitch views as being easier to refinance given their position in the capital structure. The end result is essentially a viable five-year-plus runway for the company to grow out of its currently highly levered capital structure. FDC has had other modestly positive events in 2013 relative to the credit. In April, the company named Frank Bisignano as its new CEO, having left his prior role as co-COO of JP Morgan. Fitch believes that management has since taken on a more intense focus on driving efficiencies, most notably in the Financial Services (FS) segment, and enhancing its product offerings, particularly in the Retail and Alliance Services (RAS) business. These efforts had already begun to materialize in the June quarter results with EBITDA margins for both the RAS and FS segments near record highs. Ratings Drivers From an operational perspective, Fitch believes core credit strengths include: -- Stable end-market demand with below-average susceptibility to economic cyclicality; -- A highly diversified, global and stable customer base consisting principally of millions of merchants and large financial institutions; -- A significant advantage in scale of operations and technological leadership which positively impact the company's ability to maintain its leading market share and act as barriers to entry to potential future competitors. In addition, FDC's FS business benefits from long-term customer contracts and generally high switching costs; -- Low working capital requirements typically enable a high conversion of EBITDA less cash interest expense into cash from operations. Fitch believes operational credit concerns include: -- Mix shift in the RAS segment, including a shift in consumer spending patterns favoring large discount retailers, has negatively affected profitability and revenue growth and could lead to greater than anticipated volatility in results; -- High fixed cost structure with significant operating leverage would typically drive volatility in profitability during business and economic cycles; -- Consolidation in the financial services industry and changes in regulations could continue to negatively impact results in the company's FS segment; -- Potential for new competitive threats to emerge over the long term including new payment technology in the RAS segment, the potential for a competitor to consolidate market share in the RAS segment, and the potential for historically niche competitors in the FS segment to move upstream and challenge FDC's relative dominance in card processing for large financial institutions. From a financial perspective, Fitch believes core credit strengths include expectations that the company will use the majority of excess free cash flow (FCF) for debt reduction. Credit concerns include a highly levered balance sheet that results in minimal financial flexibility and reduces the company's ability to act strategically in a business that has historically benefited from consolidation opportunities. Fitch estimates EBITDA for the LTM period at $2.3 billion, roughly flat with the prior year period. Over the next 12 months, Fitch would expect modest revenue growth with the potential for relatively strong EBITDA growth as EBITDA margin enhancements provide greater operating leverage. Fitch estimates leverage (total debt/total EBITDA) at 9.8x as of June 2013. Fitch believes leverage will likely remain high over the next several years but could drop to roughly 8x by 2015. Fitch estimates FCF for the LTM period at $75 million. Fitch's estimate of FCF adjusts for payments made by FDC to its minority interest partners in several consolidated joint ventures including Bank of America Merchant Services (BAMS). These payments are not recorded in FDC's cash flow from operations but rather cash flows from financing. Cash flow generation is down over the prior year reflecting recent weakness in the business. Going forward, Fitch expects FCF to average above $200 million annually. This estimate is aided in part by management's recent decision to significantly increase equity compensation across a broad portion of the employee base which is expected to save approximately $60 million in cash the first year. Liquidity as of June 30, 2013 was solid with cash of $363 million ($110 million of which was available to the company in the U.S.). FDC has an undrawn revolving credit facility which, pro forma for approximately $500 million of which expired in September 2013, provides an additional $1 billion in liquidity and expires September 2016. Fitch estimates that FDC generated approximately $75 million in FCF over the LTM period which further adds to liquidity. Total debt as of June 30, 2013 was $22.7 billion, which includes approximately $15.6 billion in secured debt, $4.6 billion in unsecured debt and $2.5 billion in subordinated debt (all figures approximate). Fitch has affirmed the ratings for FDC as follows: -- Long-term IDR at 'B'; -- $1 billion senior secured revolving credit facility expiring September 2016 at 'BB-/RR2'; -- $2.7 billion senior secured term loan B due 2017 at 'BB-/RR2'; -- $4.7 billion senior secured term loan B due 2018 at 'BB-/RR2'; -- $1 billion senior secured term loan B due 2018 at 'BB-/RR2'; -- $1.6 billion 7.375% senior secured notes due 2019 at 'BB-/RR2'; -- $510 million 8.875% senior secured notes due 2020 at 'BB-/RR2'; -- $2.2 billion 6.75% senior secured notes due 2020 at 'BB-/RR2'; -- $2 billion 8.25% junior secured notes due 2021 at 'CCC+/RR6'; -- $1 billion 8.75%/10.0% PIK Toggle junior secured notes due 2022 at 'CCC+/RR6'; -- $815 million 10.625% senior unsecured notes due 2021 at 'CCC+/RR6'; -- $785 million 11.25% senior unsecured notes due 2021 at 'CCC+/RR6'; -- $3 billion 12.625% senior unsecured notes due 2021 at 'CCC+/RR6'; -- $1.75 billion 11.25% senior subordinated notes due 2016 at 'CCC/RR6'; -- $750 million 11.75% senior subordinated notes due 2021 at 'CCC/RR6'. The Rating Outlook is Stable. The Recovery Ratings (RRs) for FDC reflect Fitch's recovery expectations under a distressed scenario, as well as Fitch's expectation that the enterprise value of FDC, and hence recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation scenario. In deriving a distressed enterprise value, Fitch applies a 15% discount to FDC's estimated operating EBITDA (adjusted for equity earnings in affiliates) of approximately $2.4 billion for the LTM ended Sept. 31, 2012 which is equivalent to Fitch's estimate of FDC's total interest expense and maintenance capital spending. Fitch then applies a 6x distressed EBITDA multiple, which considers FDC's prior public trading multiple and that a stress event would likely lead to multiple contraction. As is standard with Fitch's recovery analysis, the revolver is fully drawn and cash balances fully depleted to reflect a stress event. The 'RR2' for FDC's secured bank facility and senior secured notes reflects Fitch's belief that 71%-90% recovery is realistic. The 'RR6' for FDC's second lien, senior and subordinated notes reflects Fitch's belief that 0%-10% recovery is realistic. The 'CCC/RR6' rating for the subordinated notes reflects the minimal recovery prospects and inherent subordination in a recovery scenario. Ratings Sensitivities Future developments that may, individually or collectively, lead to positive rating action include: -- Greater visibility and confidence in the potential for the company to access the public equity markets. Future developments that may, individually or collectively, lead to negative rating action include: -- If FDC were to experience sustained market share declines or if typical price compression accelerates; -- If the U.S. economy were to experience a sustained recession. FRIENDFINDER NETWORKS: Gets OK for $500MM Restructuring Deal ------------------------------------------------------------ Law360 reported that a Delaware bankruptcy judge gave the nod on Oct. 11 to a transaction support agreement between the publisher of Penthouse magazine and the vast majority of its senior debt holders, allowing the company to restructure its more than $500 million in debt. According to the report, U.S. Bankruptcy Judge Christopher S. Sontchi approved FriendFinder Networks Inc.'s request after hearing from the company's attorneys that support for the recapitalization measure remained at 80 percent of senior debt holders. "I am prepared to sign the order," the judge said from the bench, the report related. As reported in the TCR on Sept 27, 2013, FriendFinder Networks Inc., the operator of adult social networking Web sites, filed a plan on Sept. 21 containing details on a reorganization worked out with about 80 percent of first and second-lien lenders before the Sept. 17 Chapter 11 filing. Pursuant to the plan, holders of the $234.3 million in 14 percent first-lien notes will receive accrued interest plus an equal amount in new 14 percent first-lien notes to mature in five years. Excess cash will be used in part to pay down principal on the notes before maturity. Holders of $330.8 million in two issues of second-lien notes are to receive all the new equity. Unsecured creditors are to be paid in full. About FriendFinder Networks FriendFinder Networks (formerly Penthouse Media Group) owns and operates a variety of social networking Web sites, including FriendFinder.com, AdultFriendFinder.com, Amigos.com, and AsiaFriendFinder.com. In total, its Web sites are offered in 12 languages to users in some 170 countries. The company also publishes the venerable adult magazine PENTHOUSE, and produces adult video content and related images. The Company is based in Boca Raton, Florida. FriendFinder Networks reported a net loss of $49.44 million in 2012, a net loss of $31.14 million in 2011, and a net loss of $43.15 million in 2010. FriendFinder Networks and affiliates, including lead debtor PMGI Holdings Inc., sought bankruptcy protection (Bankr. D. Del. Lead Case No. 13-12404) on Sept. 17, 2013, estimating assets of $465.3 million and debt totaling $662 million. The Debtors are represented by Nancy A. Mitchell. Esq., Matthew L. Hinker, Esq., and Paul T. Martin, Esq., at Greenberg Traurig, LLP, in New York, as lead bankruptcy counsel; and Dennis A. Meloro, Esq., in Wilmington, Delaware, as local Delaware counsel. Akerman Senterfitt serves as the Debtors' special and conflicts counsel. The Debtors' financial advisor is SSG Capital Advisors LLC. BMC Group, Inc., is the Debtors' claims and noticing agent. On Sept. 21, 2013, the Debtors filed a plan of reorganization containing details on a reorganization worked out with about 80 percent of first and second-lien lenders before the Sept. 17 Chapter 11 filing. Under the Plan, holders of the $234.3 million in 14 percent first-lien notes will receive accrued interest plus an equal amount in new 14 percent first-lien notes to mature in five years. Excess cash will be used in part to pay down principal on the notes before maturity. Holders of $330.8 million in two issues of second-lien notes are to receive all the new equity. FURNITURE BRANDS: Gets Nod For $140MM DIP, Employee Bonuses ----------------------------------------------------------- Law360 reported that a Delaware bankruptcy judge gave final approval for Furniture Brands International Inc.'s $140 million post-petition loan on Oct. 11 from KPS Capital Partners LP and allowed the debtor to dole out millions of dollars in executive and employee bonuses, despite the objections of the U.S. Trustee. According to the report, U.S. Bankruptcy Judge Christopher S. Sontchi said he was initially concerned about the key employee incentive plan, but gave it the green light after hearing that the unsecured creditors committee had reluctantly decided to support it. About Furniture Brands Furniture Brands International (NYSE:FBN) -- http://www.furniturebrands.com-- engages in the designing, manufacturing, sourcing and retailing home furnishings. Furniture Brands markets products through a wide range of channels, including company owned Thomasville retail stores and through interior designers, multi-line/ independent retailers and mass merchant stores. Furniture Brands serves its customers through some of the best known and most respected brands in the furniture industry, including Thomasville, Broyhill, Lane, Drexel Heritage, Henredon, Pearson, Hickory Chair, Lane Venture, Maitland-Smith and LaBarge. On Sept. 9, 2013, Furniture Brands International, Inc. and 18 affiliated companies sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12329). Attorneys at Paul Hastings LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez and Marsal North America, LLC, is the restructuring advisors. Miller Buckfire & Co., LLC is the investment Banker. Epiq Systems Inc. dba Epiq Bankruptcy Solutions is the claims and notice agent. Furniture Brands' balance sheet at June 29, 2013, showed $546.73 million in total assets against $550.13 million in total liabilities. The company has an official creditor's committee with seven members. The creditors' panel includes the Pension Benefit Guaranty Corp., Milberg Factors Inc. and five suppliers. GENIUS BRANDS: Obtains OK to Effect Reverse Split ------------------------------------------------- Genius Brands International, Inc., terminated its consent solicitation to approve: (1) an amendment to the Company's Articles of Incorporation in order to increase the number of shares of common stock, $0.001 par value per share, authorized to 700,000,000 shares from 250,000,000 shares; and (ii) an amendment to the Company's Articles of Incorporation to effect a reverse stock split of its issued and outstanding common stock by a ratio of not less than one-for-ten and not more than one-for-one hundred at any time prior to Sept. 30, 2014, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors in its sole discretion. Approximately 52.59 percent of the Company's voting capital approved the Authorized Capital Increase and approximately 52.52 percent of the Company's voting capital approved the Reverse Stock Split. San Diego, Calif.-based Genius Brands International, Inc., creates and distributes music-based products which it believes are entertaining, educational and beneficial to the well-being of infants and young children under its brands, including Baby Genius and Little Genius. The Company's balance sheet at June 30, 2013, showed $1.88 million in total assets, $3.26 million in total liabilities, and a stockholders' deficit of $1.38 million. GUIDED THERAPEUTICS: Secures Additional Distribution for LuViva --------------------------------------------------------------- Guided Therapeutics, Inc., signed an additional distributors for the LuViva(R) Advanced Cervical Scan in territories that include France, Qatar, Malaysia, Indonesia and Bangladesh. Combined, these territories include approximately 86 million women aged 25 to 64 years. "We continue to see high levels of interest for LuViva across the globe as governments and other institutions work to reduce the financial burden of managing cervical cancer," said Mark L. Faupel, president and CEO of Guided Therapeutics. "The regulatory environment in international markets has been particularly receptive to new technology. Developed countries are beginning to adopt human papillomavirus (HPV) testing to screen for cervical cancer which is creating a high number of false positive results leading to women receiving unnecessary, invasive testing. LuViva is uniquely suited to effectively help manage this population. As a result, the international market remains a potentially lucrative opportunity for building shareholder value over the near term." With the additions of France, Qatar, Malaysia, Indonesia and Bangladesh, Guided Therapeutics currently has 21 countries covered by definitive distribution agreements. About Guided Therapeutics Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP) -- http://www.guidedinc.com/-- is developing a rapid and painless test for the early detection of disease that leads to cervical cancer. The technology is designed to provide an objective result at the point of care, thereby improving the management of cervical disease. Unlike Pap and HPV tests, the device does not require a painful tissue sample and results are known immediately. GT has also entered into a partnership with Konica Minolta Opto to develop a non-invasive test for Barrett's Esophagus using the LightTouch technology platform. Guided Therapeutics disclosed a net loss of $4.35 million on $3.33 million of contract and grant revenue for the year ended Dec. 31, 2012, as compared with a net loss of $6.64 million on $3.59 million of contract and grant revenue in 2011. The Company's selected balance sheet data at June 30, 2013, showed $4.39 million in total assets and $1.74 million in stockholders' equity. UHY LLP, in Sterling Heights, Michigan, issued a "going concern" qualification on the Company's consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses from operations and accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Bankruptcy Warning "The Company's capital-raising efforts are ongoing. If sufficient capital cannot be raised during the second quarter of 2013, the Company has plans to curtail operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support, such as under the Konica Minolta license agreement and additional NCI, NHI or other grant funding. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection," the Company said in its annual report for the year ended Dec. 31, 2012. HIGHWAY TECHNOLOGIES: Estridge Appeal Abated Til Further Order -------------------------------------------------------------- The Court of Appeals of Texas, Fourteenth District, Houston, entered an order abating the appeal David Estridge, Individually and As Next Friend of His Minor Son, Caden ESTRIDGE, Appellant, v. BRUCE McCOLLISTER, TRI-CITY SWEEPING, INC., AND HIGHWAY TECHNOLOGIES, INC., Appellees, Case No. 14-13-00775-CV, for administrative purposes only. The abatement was in line with appellee Highway Technologies's notice that it filed for a voluntary Chapter 11 petition. Pursuant to the Abatement Order, the appeals case is treated as a closed case until further order of the court. A copy of the Appeals Court's Sept. 12, 2013 Order is available at http://is.gd/wf0wZnfrom Leagle.com. About Highway Technologies Highway Technologies Inc. and affiliate HTS Acquisition Inc. sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11325 to 13-11326) on May 22, 2013, to conduct an orderly liquidation. Richard M. Pachuiski, Esq., Debra I. Grassgreen, Esq., Bruce Grohsgal, Esq., Maria A. Bove, Esq., and John W. Lucas, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The prepetition lenders are represented by David M. Hilllman, Esq., at Schulte Roth & Zabel, in New York. The Company's balance sheet as of March 31, 2013, showed $55 million in total assets and $102 million in liabilities. In its amended schedules, Highway Technologies disclosed $41,350,616 in assets and $91,780,181 in liabilities. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A. represents the Official Unsecured Creditors' Committee as counsel. Gavin/Solmonese LLC serves as its financial advisor. The Debtors have asked the Court to convert their cases into Chapter 7 proceedings. An Oct. 16 hearing has been set for the matter. IBIO INC: NYSE MKT Grants Listing Compliance Extension ------------------------------------------------------ iBio, Inc. on Oct. 14 disclosed that on October 11, 2013, the NYSE MKT notified the Company that it accepted the Company's updated Plan of Compliance and granted the Company an extension until December 2, 2013 to regain compliance with the continued listing standards set forth in Sections1003(a)(ii), 1003(a)(iii), and 1003(a)(iv) of the NYSE MKT Company Guide. During the extension period, the Company will be subject to periodic review by the Staff of the Exchange. The failure by the Company to make progress consistent with the accepted plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from the Exchange. Although the Company's general policy is not to respond to market rumors and to let its press releases and SEC filings speak for themselves, it is making an exception to correct egregiously misleading statements contained in an article about the Company published during market trading on Friday, October 11, 2013. The article stated that iBio "insider selling has been ferocious" even though the table within the article purporting to support that claim shows that during the trailing 19 month period, net insider holdings of the Company's stock increased by more than 5.3 million shares. The article also falsely claimed that the Company was out of cash even though the audited financial statements of the Company and the narrative discussion of the Annual Report, both contained in the Company's 10-K filed on September 30, 2013, and the Company's October 7, 2013 release discussing the 10-K and subsequent events, all prove otherwise. The Company cautions shareholders and interested investors to refer to iBio's SEC filings for accurate information on the Company and its financial condition and reiterates its longstanding commitment to full and accurate disclosure of material information. About iBio, Inc. iBio -- http://www.ibioinc.com-- develops and offers product applications of its iBioLaunch(TM) and iBioModulator(TM) platforms, providing collaborators full support for turn-key implementation of its technology for both proprietary and biosimilar products. The iBioLaunch platform is a proprietary, transformative technology for development and production of biologics using transient gene expression in unmodified green plants. The iBioModulator platform is complementary to the iBioLaunch platform and is designed to significantly improve vaccine products by increasing potency and lengthening duration of effect. The iBioModulator platform can be used with any recombinant expression technology for vaccine development and production. ICTS INTERNATIONAL: Holds 22.9% Equity Stake in InkSure ------------------------------------------------------- In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, ICTS International, N.V., and its affiliates disclosed that as of Oct. 1, 2013, they beneficially owned 9,915,555 shares of common stock of InkSure Technologies Inc. representing 22.97 percent of the shares outstanding. A copy of the regulatory filing is available at http://is.gd/yDnfZH About ICTS International ICTS International N.V. is a public limited liability company organized under the laws of The Netherlands in 1992. ICTS specializes in the provision of aviation security and other aviation services. Following the taking of its aviation security business in the United States by the TSA in 2002, ICTS, through its subsidiary Huntleigh U.S.A. Corporation, engages primarily in non-security related activities in the USA. ICTS, through I-SEC International Security B.V., supplies aviation security services at airports in Europe and the Far East. In addition, I-SEC Technologies B.V. including its subsidiaries develops technological systems and solutions for aviation and non? aviation security. ICTS International incurred a net loss of US$9.01 million in 2012, a net loss of US$2.14 million in 2011 and a net loss of US$8.12 million in 2010. The Company's balance sheet at Dec. 31, 2012, showed US$22.55 million in total assets, US$59.24 million in total liabilities and a US$36.68 million total shareholders' deficit. Mayer Hoffman McCann CPAs, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a history of recurring losses from continuing operations, negative cash flows from operations, working capital deficit, and is in default on its line of credit arrangement in the United States as a result of the violation of certain financial and non-financial covenants. Collectively, these conditions raise substantial doubt about the Company's ability to continue as a going concern. INTERMETRO COMMUNICATIONS: Sells 257,897 Preferred Shares --------------------------------------------------------- InterMetro Communications, Inc., and its subsidiaries sold the remaining 257,897 shares of Series A2 Preferred Stock together with warrants to purchase 257,897 shares of common stock at an exercise price of $0.20 per share in exchange for a total purchase price of $257,897. The securities were sold to accredited investors in a private placement exempt from registration under Regulation D of the Securities Act of 1933, as amended. The Series A2 Preferred stock may be converted into shares of common stock at a conversion rate of 6.66 shares of common stock for each share of Series A2 Preferred. About InterMetro Simi Valley, Calif.-based InterMetro Communications, Inc., -- http://www.intermetro.net/-- is a Nevada corporation which through its wholly owned subsidiary, InterMetro Communications, Inc. (Delaware), is engaged in the business of providing voice over Internet Protocol ("VoIP") communications services. InterMetro Communications disclosed net income of $699,000 on $20.06 million of net revenues for the year ended Dec. 31, 2012, as compared with net income of $3.61 million on $21.31 million of net revenue in 2011. The Company's balance sheet at March 31, 2013, showed $2.74 million in total assets, $13.97 million in total liabilities and a $11.23 million total stockholders' deficit. Gumbiner Savett Inc., in Santa Monica, 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 incurred net losses in previous years, and as of Dec. 31, 2012, the Company had a working capital deficit of approximately $7,460,000 and a total stockholders' deficit of approximately $10,692,000. The Company anticipates that it will not have sufficient cash flow to fund its operations in the near term and through fiscal 2013 without the completion of additional financing. INTERNATIONAL TEXTILE: Unit Inks Transfer Agreements ---------------------------------------------------- Cone Denim de Nicaragua, S.A., a wholly?owned subsidiary of International Textile Group, Inc., entered into various third party agreements whereby Inter-American Investment Corporation and certain other banks that had previously provided debt financing to CDN, and the Corporacion De Zonas Francas De Nicaragua pursuant to which, among other things and as of Oct. 7, 2013: (i) CZF paid, on behalf of CDN, certain amounts to the CDN Lenders in full satisfaction of CDN's term loan debt and related interest and fee obligations to the CDN Lenders; (ii) IIC assigned all of its rights in and to the CDN Loans to CZF in full satisfaction of CDN's obligations thereunder; and (iii) CZF was granted ownership of certain assets of CDN, including all of CDN's land, buildings, machinery and equipment. In addition, the Transfer Agreements provided for the cancellation of all of the Company's guarantees, bonds and pledges related to the CDN Loans, including the Project Funds and Subordination Agreement as well as a lease obligation that CDN had to CZF. ITG did not pay or receive any cash consideration in connection with the entry into, or completion of the transactions contemplated by, the Transfer Agreements. The Company preliminarily expects that it will record a net non- cash gain on the derecognition of the Obligations and the Security Assets in the amount of approximately $27.7 million in the fourth quarter of 2013, which will be included in discontinued operations. The Company is in the process of finalizing the preparation of its consolidated financial results as of and for the period ended Sept. 30, 2013. Based on estimates to date, the Company currently expects that its consolidated balance sheet as of Sept. 30, 2013, will include the following: $38 million outstanding under the CDN term loan, approximately $12.7 million of accrued interest outstanding related to the CDN Loans, and approximately $1.9 million outstanding under the CZF lease obligation. The principal amount outstanding under the CDN Loans is included in the line "callable long-term debt classified as current", accrued interest is included in the line "sundry payables and accrued liabilities", and the CZF lease obligation is included in the line "accounts payable", in each case in the Company's historical consolidated balance sheets. The Company also preliminarily expects that the Security Assets will have a total net book value of approximately $24.8 million as of Sept. 30, 2013. As a result of the execution and effectiveness of the Transfer Agreements, the Obligations have been fully extinguished and the Company does not have, and will not regain, control of the Security Assets as of the date of execution of those agreements. Consequently, ITG has derecognized the Obligations and Security Assets as of Oct. 7, 2013, in its consolidated balance sheet. Because the Obligations and Security Assets comprised the entire business operations of CDN, the results of operations of CDN will be presented as discontinued operations in all periods presented in the Company's historical consolidated statements of operations, beginning with the presentation of such statements in the Company's quarterly report on Form 10-Q for the quarter ended Sept. 30, 2013. As previously disclosed by the Company, CDN has been idled since 2009, and it has not had any trade sales revenues since that date. The Company preliminarily expects to report that CDN incurred net losses of approximately $5.8 million in the nine months ended September 30, 2013 and $7.7 million in the full year 2012 (including non-cash depreciation charges recorded in cost of goods sold of $1.9 million and $2.6 million, and interest expense of $3.1 million and $4.2 million, respectively, as well as other miscellaneous idled facility costs in each period). About International Textile International Textile Group, Inc., is a global, diversified textile manufacturer headquartered in Greensboro, North Carolina, with current operations principally in the United States, China, Mexico, and Vietnam. ITG's long-term focus includes the realization of the benefits of its global expansion, including reaching full production at ITG facilities in China and Vietnam, and continuing to seek other strategic growth opportunities. International Textile disclosed a net loss of $67.33 million in 2012, as compared with a net loss of $69.64 million in 2011. The Company's balance sheet at March 31, 2013, showed $363.38 million in total assets, $482.75 million in total liabilities and a $119.36 million total stockholders' deficit. JEFFERSON COUNTY, AL: Seeks to Change Debt Pact ----------------------------------------------- Katy Stech, writing for Daily Bankruptcy Review, reported that Jefferson County, Ala., leaders met last week with J.P. Morgan Chase & Co. and others to try to redraw the terms of their proposed $1.9 billion debt settlement, in another sign that the county's plan to get out of bankruptcy by the end of the year is in jeopardy. According to the report, county leaders have warned that their bankruptcy-exit plan may not work without improvements in the municipal-bond market, which has been rattled by Detroit's bankruptcy filing and Puerto Rico's financial woes. The leaders sat down with bank officials and other sewer-debt holders to try to renegotiate the settlement terms in order to save the deal. Jefferson County Commission President David Carrington called the meetings "productive," but didn't say whether the proposed changes would be enough for the county to move forward with the refinancing of some of the $3.1 billion it borrowed to fix its aging sewer system, the report related. Mr. Carrington said he was "disappointed" that several hedge-fund investors -- that hold about $900 million of the county's sewer debt and were invited to the talks -- didn't attend, the report further related. An attorney who has represented the hedge funds didn't respond to requests for comment on Oct. 11. Without more concessions from major creditors including J.P. Morgan, Jefferson County officials have said the bond market needs to improve by November and December, when it is expected to sell new bonds to refinance its debt under the terms of the deal, the report added. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. Jefferson County filed a bankruptcy petition under Chapter 9 (Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart. John S. Young Jr. LLC was appointed as receiver by Alabama Circuit Court Judge Albert Johnson in September 2010. Jefferson County's bankruptcy represents the largest municipal debt adjustment of all time. The county said that long-term debt is $4.23 billion, including about $3.1 billion in defaulted sewer bonds where the debt holders can look only to the sewer system for payment. The county said it would use the bankruptcy court to put a value on the sewer system, in the process fixing the amount bondholders should be paid through Chapter 9. Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers at Bradley ArantBoult Cummings LLP and Klee, Tuchin, Bogdanoff& Stern LLP, led by Kenneth Klee, represent the Debtor as counsel. Kurtzman Carson Consultants LLC serves as claims and noticing agent. Jefferson estimated more than $1 billion in assets. The petition was signed by David Carrington, president. The bankruptcy judge in January 2012 ruled that the state court- appointed receiver for the sewer system largely lost control as a result of the bankruptcy. Before deciding whether Jefferson County is eligible for Chapter 9, the bankruptcy judge will allow the Alabama Supreme Court to decide whether sewer warrants are the equivalent of "funding or refunding bonds" required under state law before a municipality can be in bankruptcy. U.S. District Judge Thomas B. Bennett ruled in March 2012 that Jefferson County is eligible under state law to pursue a debt restructuring under Chapter 9. Holders of more than $3 billion in defaulted sewer debt had challenged the county's right to be in Chapter 9. In June 2013, the county reached settlement with holders of 78 percent of the $3.1 billion in sewer debt at the core of the county's financial problems. The bondholders will be paid $1.84 billion through a refinancing, according to a term sheet. The settlement calls for JPMorgan Chase & Co., the owner of $1.22 billion in bonds, to make the largest concessions so other bondholder will recover more. On June 30, 2013, Jefferson County filed a Chapter 9 plan of debt adjustment. Pursuant to the Plan, sewer bondholders will receive 65 percent in cash. If they elect to waive claims against JPMorgan and bond insurers, they receive 80 percent in cash. Bondholders supporting the plan already agreed to waive claims and receive the larger recovery. Existing sewer bonds will be canceled in exchange for payments under the plan. The county will fund plan distributions by selling new sewer bonds calculated to generate $1.96 billion to cover the $1.84 billion earmarked for existing sewer bondholders. JPMorgan has agreed to waive $842 million of the sewer debt and a $657 million swap debt, resulting in an 88 percent overall write off by JPMorgan. To finance the new sewer bonds, there will be 7.4 percent in rate increases for sewer customers in each of the first four years. In later years, rate increases will be 3.5 percent. LAFAYETTE YARD: Trustee Wants Auctioneer Tossed ----------------------------------------------- Law360 reported that U.S. trustee overseeing Lafayette Yard Community Development Corp.'s Ch. 11 bankruptcy told a New Jersey federal judge that the proposed auctioneer who would run the non- profit hotel owner's sale process has a conflict of interest with Lafayette's debtor-in-possession lender. According to the report, U.S. Trustee Tracy Hope Davis urged U.S. Bankruptcy Judge Michael B. Kaplan to reject Lafayette Yard's application to retain auctioneer Sheldon Good & Co., a/k/a Racebrook Marketing Concepts, LLC, saying DIP lender and investment firm Racebrook Capital Advisors LLC has the same owner, therefore creating an "adverse interest." As previously reported by The Troubled Company Reporter, Sheldon is an affiliate of Racebrook Capital. Racebrook Capital and Racebrook Marketing share common ownership. Racebrook Marketing is the sole owner and member of Sheldon Good. Furthermore, Racebrook Capital and Sheldon Good share only one Director, the chairman of the board of all Racebrook entities, and share only one Officer, their general counsel. Further, management of Sheldon Good is independent of other Racebrook entities. Lafayette Yard Community Development Corporation, owner of the Lafayette Yard Hotel & Conference Center, previously called the Trenton Marriott, sought protection under Chapter 11 of the Bankruptcy Code on Sept. 23, 2013 (Case No. 13-30752, Bankr. D.N.J.). The Debtor is represented by Gregory G. Johnson, Esq., at Wong Fleming, Attorneys At Law, in Princeton, New Jersey; and Robert L. Rattet, Esq., Dawn Kirby, Esq., and Julie Cvek Curley, Esq., at Delbello Donnellan Weingarten Wise & Wiederkehr, LLP, in White Plains, New York. LAFAYETTE YARD: FTI Consulting Approved as Financial Advisor ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey authorized Lafayette Yard Community Development Corporation to employ FTI Consulting, Inc. as financial advisor FTI Consulting is expected to provide advice during the DIP financing process and sale process, including: 1. Financial Advisory Services: -- reviewing and analyzing the Debtor's business operations. -- assisting in developing and executing a sale of the Hotel (a landmark hotel located at 1 West Lafayette Street, Trenton, New Jersey) including determining a range of estimated values for the property, communicating directly with potential purchasers, and accessing FTI's network of potential purchasers. -- developing and formatting a 13 week cash forecast to assist in DIP financing and cash collateral issues. 2. General Accounting Services: -- assisting in the development of monthly financial reports required by the court, including hotel operating reports, sources and uses schedules, statement of accounts, pre- petition payments and the financial condition of the Debtor. -- assisting the Debtor with claims analysis. -- all accounting services that are normally and reasonably associated with the chapter 11 process. Alan Tantleff, senior managing director of corporate finance for FTI Consulting, tells the Court that FTI's compensation structure provides: a. an initial retainer in the amount of $25,000, which was received prepetition and may be applied to any unpaid prepetition billing. b. a blended hourly rate for all FTI professionals in the amount of $575. c. one percent of the total committed DIP financing. d. a consummation fee of $180,000 if the Debtor succeeds in obtaining (i) a consensual restructuring of a substantial amount of its existing indebtedness, or (ii) a final judicial order approving a plan of reorganization or a sale of substantially all of the Debtor's assets under Section 363 of the Bankruptcy Code. To the best of Debtor's knowledge, FTI is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Lafayette Yard Community Development Corporation Lafayette Yard Community Development Corporation, owner of the Lafayette Yard Hotel & Conference Center, previously called the Trenton Marriott, sought protection under Chapter 11 of the Bankruptcy Code on Sept. 23, 2013 (Case No. 13-30752, Bankr. D.N.J.). The Debtor is represented by Gregory G. Johnson, Esq., at Wong Fleming, Attorneys At Law, in Princeton, New Jersey; and Robert L. Rattet, Esq., Dawn Kirby, Esq., and Julie Cvek Curley, Esq., at Delbello Donnellan Weingarten Wise & Wiederkehr, LLP, in White Plains, New York. LAFAYETTE YARD: Wong Fleming Approved as Bankruptcy Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized Lafayette Yard Community Development Corporation to employ Wong Fleming as bankruptcy counsel. Gregory G. Johnson, a shareholder of Wong Fleming, tells the Court that on Sept. 17, 2013, before commencement of the Chapter 11 cases, the Debtor paid Wong Fleming $20,740 in satisfaction of a prepetition invoice for contemporaneous services rendered and charges incurred within the 30 days before the filing date. According to Mr. Johnson, Wong Fleming will be rendering services on an hourly basis. The current rates of Wong Fleming partners, associates and paralegals are: Partners $350 - $450 Special Counsel $350 - $450 Associates $250 - $275 Paralegals $100 - $125 To the best of the Debtor's knowledge, Wong Fleming is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Lafayette Yard Community Development Corporation Lafayette Yard Community Development Corporation, owner of the Lafayette Yard Hotel & Conference Center, previously called the Trenton Marriott, sought protection under Chapter 11 of the Bankruptcy Code on Sept. 23, 2013 (Case No. 13-30752, Bankr. D.N.J.). The Debtor is represented by Gregory G. Johnson, Esq., at Wong Fleming, Attorneys At Law, in Princeton, New Jersey; and Robert L. Rattet, Esq., Dawn Kirby, Esq., and Julie Cvek Curley, Esq., at Delbello Donnellan Weingarten Wise & Wiederkehr, LLP, in White Plains, New York. LDB MEDIA: Gravitas Leasing Has No Valid Interests in News Trucks ----------------------------------------------------------------- Bankruptcy Judge Michael G. Williamson entered a memorandum opinion on the validity of security interests in the complaint LDB MEDIA, LLC, Plaintiff, v. GRAVITAS LEASING, LLC, Defendant, Adv. No. 8:12-AP-00715-MGW (Bankr. M.D. Fla.). Gravitas Leasing claims to have a security interest in satellite news trucks and other vehicles that the Debtor LDB Media uses to operate its cable news channel, as well as the equipment located in the news trucks. On review, the Bankruptcy Court held that it undisputed that Gravitas did not perfect its interest in the vehicles until sometime during the "preference period" -- or the 90-day period before the Debtor filed its Chapter 11 case -- and that perfection of the security interest was a transfer of an interest in the Debtor's property on account of an antecedent debt. So there is no question the liens on the vehicles are avoidable as a preferential transfer, the Court held. "To the extent the equipment on the news trucks is deemed a fixture (referred to as an accession), the lien on the equipment is avoidable for the same reason. To the extent the equipment is not a fixture (or accession), however, then Gravitas does not have a security interest in it because the parties' security agreement (or, for that matter, Gravitas' financing statement) does not reasonably identify the equipment as collateral". Against this backdrop, Judge Williamson concludes that Gravitas does not have a valid security interest in the news trucks or the equipment located in them. Accordingly, the Court will enter final judgment in favor of the Debtor on Counts I and II of its complaint. A copy of Judge William's Sept. 12, 2013 Memorandum Opinion is available at http://is.gd/MypQCsfrom Leagle.com. On February 24, 2012, LDB Media, LLC, dba SNN Local News 6, filed for bankruptcy (Bankr. M.D. Fla., Case No. 12-02560). Bernard J. Morse, Esq. -- chipmorse@morsegomez.com -- of Morse & Gomez PA, serves as counsel to the Debtor. The Debtor lists $1 million to $10 million in assets and liabilities. The petition was signed by Douglas C. Barker, managing member. LIGHTSQUARED INC: Court Temporarily Puts Harbinger Suit on Hold --------------------------------------------------------------- The U.S. Bankruptcy for the Southern District of New York temporarily put on hold the lawsuit filed by Harbinger Capital Partner, LLC against Deere & Co. and two other manufacturing companies. The bankruptcy court ordered that the Harbinger case is stayed for 60 days or until a time earlier than 60 days if the court grants a motion to lift the stay, which can be filed by any interested party. Harbinger on August 9 sued Deere & Co., Garmin International Inc., Trimble Navigation Limited and two trade associations they control. The defendants are companies engaged in the design and manufacturing of products using Global Positioning System technology. Harbinger alleges claims for fraud and negligent misrepresentation as well as violations of securities law. The company, which invested about $1.9 billion in LightSquared, specifically alleges that the defendants fraudulently failed to disclose that they had designed their GPS devices to use some portions of LightSquared's spectrum, which ultimately delayed approval for its network and led to its bankruptcy filing. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. MICHIGAN PUBLIC: S&P Lowers Rating on 2010 Revenue Bonds to 'BB+' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term rating to 'BB+' from 'BBB-' on Michigan Public Educational Facilities Authority's series 2010 limited-obligation revenue bonds, issued for New Branches School. The outlook is stable. "Despite stable enrollment trends, good academic results, and two years of positive operations, the rating reflects our view of New Branches' trend of weak liquidity metrics that are more consistent with the 'BB' rating category," said Standard & Poor's credit analyst Chris Littlewood. Partially due to a volatile state funding environment, New Branches achieved consecutive years of thin margins in fiscal 2012 and fiscal 2013 that resulted in minimal surpluses for the school. Given the limited revenue diversity and size of the school, S&P believes such levels will continue for the next few years, thus making it difficult to build a deep unrestricted reserve position. In addition, based on Standard & Poor's internal maximum annual debt service calculations, the school was below 1x for the year. Despite the school's weak liquidity and coverage metrics for fiscal 2013 per S&P's internal calculations, management reports they are in compliance with all bond covenants. MONTREAL MAINE: Ch.11 Trustee May Use Cash Thru January 2014 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Maine, in a sixth interim order, authorized Robert J. Keach, Chapter 11 trustee of Montreal Maine & Atlantic Railway, Ltd., to use cash collateral for ordinary course operations. Pursuant to an agreement reached between the trustee and Wheeling & Lake Erie Railway Company, the trustee is authorized to use cash collateral, including cash, through the close of business on Jan. 31, 2014, provided, however, that if closing on the loan facility with Camden National Bank will not have occurred on or prior to Oct. 25, 2013, authority to use cash collateral pursuant to the order will extend only through Oct. 25, 2013. In the event that the closing occurs on or before Oct. 18, Wheeling will be granted a $50,000 floating, first priority lien and security interest on accounts receivable created by the Debtor after the date of the closing in order to adequately protect Wheeling against any diminution in the value of its cash collateral as of the Petition Date. In the event that the closing occurs after Oct. 18, and on or before Oct. 25, Wheeling will be granted a $100,000 floating, first priority lien and security interest on Post-Closing A/R in order to adequately protect Wheeling against any diminution in the value of the cash collateral as of the Petition Date. As adequate protection from diminution in value of the lenders' collateral, the trustee will grant replacement liens in all accounts, inventory, and proceeds of accounts acquired by the Debtor on or after the Petition Date to the same extent that Wheeling had prior to the Petition Date. In the event that the trustee and Wheeling agree to extend the use of cash collateral past the expiration date, a further hearing will be held at a time as the parties will agree and the Court will be available to conduct the hearing. About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson, P.A., has been named as chapter 11 trustee. His firm serves as his chapter 11 bankruptcy counsel. Development Specialists, Inc., serves as his financial advisor. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana serves as counsel to MM&A. Justice Martin Castonguay oversees the case in Canada. The Canadian Transportation Agency suspended the carrier's operating certificate after the accident, due to insufficient liability coverage. The town of Lac-Megantic, Quebec, is seeking financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent a derailment. The Hermon, Maine-based carrier is still working to create a formal claims process for the families of the victims and other claims holders. The carrier will present a formal process to the court for approval by Nov. 30, according to the filings, Bloomberg News reported. MOON VALLEY: MVAZ Appeal From Confirmation Order Dismissed ---------------------------------------------------------- In the appellate case captioned, MV AZ, LLC, Appellant, v. Moon Valley Country Club, Appellee, Case No. CV13-00196-PHX-DGC (D. Ariz.), District Judge David G. Campbell granted the appellee's motion to dismiss the appeal. Appellant MV AZ, LLC, controlled by land developer Jerry Tokph, purchased the Debtor's defaulted loan from National Bank of Arizona for about $3 million in December 2011. The bankruptcy court order challenged in the Appeal is the confirmation of the First Amended and Restated Plan of Reorganization of Moon Valley Country Club based on the grounds of mootness. The Amended Plan called for the Debtor to restructure from a non- profit to a for-profit corporate entity with new equity interests in the Reorganized Debtor being issued to Moon Valley Acquisition LLC (MVA). In return for this equity interest, MVA provided a $2 million capital contribution to the Debtor. The Plan included more than $1.6 million in voluntary contributions from the Debtor's members and neighbors, for which the contributing parties received no equity interest or other services. The total $3.6 million capital infusion is to be used to pay back certain classified creditors and to allow for MVCC's restructuring. The Plan valued MVAZ's note at $6 million and provided that a $2.5 million principal payment would be made to MVAZ on the Plan's effective date. MVAZ's note would bear interest at five percent per annum and that the remaining $3.5 million balance would be paid off in monthly installments over ten years. For the first two years, MVAZ would receive interest-only payments, and for the following eight years, MVAZ would receive principal and interest payments calculated on a 20-year amortization of the remaining $3.5 million balance, with a final balloon payment due at the end of that eight-year period. MVAZ objected to the Plan on various grounds, including an assertion of its right to credit bid on the sale of the Debtor's assets to MVA. As to MVAZ's assertion of a right to credit bit, the bankruptcy court found that regardless of whether the equity transfer to MVA constituted a sale, MVAZ had no statutory credit bid right because the Plan allowed it to retain its lien on the secured property until paid, and MVAZ failed to make a 11 U.S.C. Sec. 1111(b) election. The bankruptcy court confirmed the Plan over MVAZ's objection on May 1, 2013. The bankruptcy court and the District Court denied MVAZ's motions for a stay pending appeal and the Plan went into effect on May 24, 2013. A copy of the District Court's Sept. 10, 2013 Order is available at http://is.gd/MF9qygfrom Leagle.com. Debtor Moon Valley Country Club, appellee, is represented by John Anthony Harris, Esq. -- john.harris@quarles.com -- Robert Patrick Harris, Esq. -- robert.harris@quarles.com -- and Walter Joseph Ashbrook, Esq. -- walter.ashbrook@quarles.com -- of Quarles & Brady LLP. MV AZ LLC, appellant, is represented by Richard Lorenzen, Esq. -- RLorenzen@perkinscoie.com -- of Perkins Coie LLP. United States Trustee, appellee, is represented by Elizabeth C Amorosi, Esq. -- elizabeth.c.amorosi@usdoj.gov -- and Renee Sandler Shamblin, Esq. -- renee.s.shamblin@usdoj.gov -- of the U.S. Trustee's Office. Moon Valley Neighborhood Association, Interested Party, Appellee, is represented by Patrick A Clisham, Esq. -- pac@eblawyers.com -- of Engelman Berger PC. MV Acquisition, Appellee, is represented by John J Fries, Esq. -- jfries@rcalaw.com -- of Ryley Carlock & Applewhite PA. Maricopa County Treasurer, Appellee, is represented by Lori Ann Lewis, of the Maricopa County Attorneys Office-Civil Services Division at 301 West Jefferson Street, Suite 800 Phoenix, AZ 85003. APS, Appellee, is represented by James P Kneller Esq., of Law Office of James Kneller PC, at 6750 E Camelback Road #101, in Scottsdale, Arizona 85251. TCF Equipment Finance Incorporated, Appellee, is represented by Alan R Costello, Esq. -- acostello@costello-law.com -- of Costello Law Firm. Troon Golf LLC, Appellee, represented by John Harvey Anderson, Esq. -- janderson@carsonlawfirm.com -- and Matthew Hemler Mason, Esq. -- mmason@carsonlawfirm.com -- of Carson Messinger PLLC. National PEO Incorporated, Appellee, is represented by Jonathan B Frutkin, Esq. -- jfrutkin@frutkinlaw.com -- of Frutkin Law Firm. Christopher Baker, Appellee, is represented by Robert John Miller, Esq. -- rjmiller@bryancave.com -- of Bryan Cave LLP in Phoenix, AZ. About Moon Valley Country Club Phoenix, Arizona-based Moon Valley Country Club is a 50-year old private country club with approximately 900 members. It owns 183- acres of land that includes a 46,178 square-foot clubhouse, a 43,192 sq. ft. fitness facility, an Olympic-size swimming pool, eight lighted tennis courts, an 18-hole golf course, an executive 18-hole par-three golf course, a 5,946 sq.ft. maintenance facility, and a 558-vehicle parking lot. In 2008, the Debtor borrowed about $6 million from National Bank of Arizona secured by liens on the Debtor's real property and assets. On July 25, 2012, Moon Valley Country Club filed for Chapter 11 bankruptcy (Bankr. D. Ariz. Case No. 12-16548) to avoid foreclosure on its defaulted loan. Bankruptcy Judge James M. Marlar oversees the case. Robert P. Harris, Esq., at Quarles & Brady LLP, serves as the Debtor's counsel. In its petition, the Debtor estimated under $10 million in both assets and debts. The petition was signed by William Doyle, president. NATIONAL ENVELOPE: Wants Plan Filing Deadline Extended to Jan. 6 ---------------------------------------------------------------- NE Opco, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to extending the Debtors' exclusive periods to file a chapter 11 plan until Jan. 6, 2014, and solicit acceptances for that plan until March 7. The Court will convene a hearing on Nov. 8, at 11 a.m., to consider the Debtors' motion for exclusivity extension. Objections, if any, are due Oct. 25, at 4 p.m. The Debtors filed their request for an extension before the exclusive periods was set to expire on Oct. 8. According to the Debtors, the closing of the sale of substantially all assets required additional time to analyze the path toward winding down the Debtors' estates. Moreover, if the Debtors pursue a Chapter 11 plan, they will seek to do so with the support of the major constituencies in the Chapter 11 cases, and establishing the framework for a consensual time will require further time and negotiations among the parties. The filing of a Chapter 11 plan at this juncture would be premature and disruptive of the wind-down process. About NE OPCO, Inc. National Envelope is the largest privately-held manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. The Official Committee of Unsecured Creditors is represented by Pachulski Stang Ziehl & Jones LLP's Laura Davis Jones, Esq., Bradford J. Sandier, Esq., Robert J. Feinstein, Esq., and Peter J. Keane, Esq. Guggenheim Securities, LLC, serves as its investment banker and financial advisor. As reported in the TCR on July 25, National Envelope won court approval on July 19 for a global settlement permitting a sale of the company without objection from the official unsecured creditors' committee. The settlement ensures some recovery for unsecured creditors. The Company also won final approval for $67.5 million in bankruptcy financing being supplied by Salus Capital Partners LLC. The settlement will create a trust for unsecured creditors funded with $250,000 over 10 weeks. If a sale pays off the $67.5 million of bankruptcy financing, the creditors' trust will receive another $500,000. From the first $4 million surplus after repaying bankruptcy financing, secured lenders will receive 75 percent, with the other 25 percent for unsecured creditors. Secured lenders will give 3 percent of additional sale proceeds to unsecured creditors, all in return for the committee's agreement to withhold objection to a sale. The settlement creates a separate $790,000 fund to be used in winding down the Chapter 11 case. As reported in the TCR on August 26, NE Opco Inc., which does business as National Envelope, struck a $65 million sales trifecta Wednesday as the bankrupt envelope maker announced a series of deals to parcel out its assets among three separate buyers. The proposed transactions would see Connecticut-based printer Cenveo Inc. acquire National Envelope's operating assets for $25 million, Hilco Receivables LLC pick up accounts receivable for $25 million and Southern Paper LLC take on its inventory for $15 million, according to a sale motion filed in Delaware bankruptcy court. NMP-GROUP: Oct. 22 Hearing on Adequacy of Plan Outline ------------------------------------------------------ The Bankruptcy Court will convene a combined hearing on Oct. 22, 2013, at 9:45 a.m., to consider the adequacy of information in the Disclosure Statement and confirmation of NMP-Group, LLC's Plan of Orderly Liquidation. As reported in the Troubled Company Reporter on Sept. 9, 2013, Tracy Hope Davis, U.S. Trustee for Region 2, objected to the motion for an order scheduling a combined hearing on the adequacy of the disclosure statement and confirmation of the Debtor's liquidation plan, stating that: -- the relief requested is inconsistent with Section 1125 of the Bankruptcy Code because this is not a small business or prepackaged case; and -- the relief sought is premature because the Debtor has failed, in substance, to appear at the Section 341(a) meeting. As reported in the TCR on Aug. 29, 2013, the Debtor filed with the Court a Plan of Liquidation and Disclosure Statement on Aug. 22. The Plan designates six classes of claims and interests -- Class 1 Real Estate Tax and Other In rem Governmental Lien Claims, Class 2 Mortgagee Claims estimated to total $51.64 million, Class 3 Subordinate Lien Claims, Class 4 Other Priority Claims, Class 5 General Unsecured Claims and Class 6 Equity Interests. All the claim classes are unimpaired and claimholders are expected to have 100% recovery on their claims. The Plan embodies a sale of the Debtor's property to Madison 33 Owner LLC for $51,878,784, subject to adjustments. The sale proceeds will be used to satisfy the Class 1 and 2 Claims. The Purchaser has agreed to assume the payment of (i) any Allowed General Unsecured Claim that is not paid by the Debtor because the Purchase Price is otherwise insufficient to pay in full all of the Claims secured by the Property, all of the Allowed Administrative Claims, and all such Allowed General Unsecured Claims, and (ii) administrative claims for attorneys' fees that are approved by the Bankruptcy Court, that exceed $100,000 in amount (but not to exceed $2,000,000 in the aggregate), and that cannot be paid from the Purchase Price. The Plan was signed by NMP-Group manager, Luiza Dubrovsky. A full-text copy of the Disclosure Statement dated Aug. 22, 2013 is available for free at: http://bankrupt.com/misc/NMPGROUP_DSAug22.PDF About NMP-Group NMP-Group LLC, the owner of 21 East 33rd Street in Manhattan, filed a petition for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 13-bk-12269) on July 10, 2013, in New York to prevent a foreclosure sale. Ilana Volkov, Esq. -- ivolkov@coleschotz.com -- and Felice R. Yudkin, Esq. -- fyudkin@coleschotz.com -- at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtor. The U.S. Trustee has not formed a creditors' committee due to lack of interest of creditors to serve in a committee. OMNITRACS INC: S&P Assigns Preliminary 'B' CCR; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned a preliminary 'B' corporate credit rating to San Diego, Calif.-based Omnitracs, Inc. The outlook is stable. S&P also assigned its preliminary 'B+' issue-level rating and preliminary '2' recovery rating to the company's proposed $290 million first-lien term loan maturing 2020. The '2' recovery rating indicates S&P's expectations for substantial (70%-90%) recovery in the event of payment default. S&P also assigned its preliminary 'CCC+' issue-level rating and preliminary '6' recovery rating to the proposed $100 million second-lien term loan maturing 2021. The '6' recovery rating indicates our expectations for negligible (0%-10%) recovery in the event of payment default. The preliminary issue ratings and expected 'B' corporate credit rating are subject to S&P's review of final documentation. "The ratings on Omnitracs reflect the company's 'weak' business risk profile and 'highly leveraged' financial risk profile (as defined by our criteria), incorporating the company's narrow product base and lack of stand-alone operating history, and our view that the company's purchase by a private equity owner is likely to preclude sustained deleveraging over the longer term," said Standard & Poor's credit analyst Molly Toll-Reed. The outlook is stable, reflecting S&P's expectation that completion of the technology transition in Omnitracs' customer base will generate revenue stabilization, EBITDA growth, and modest FOCF. A decline in customer renewals or lack of new subscriptions to Omnitracs' software offerings, resulting in sustained EBITDA declines, could lead to a downgrade. Ratings upside is limited by Omnitracs highly leveraged financial profile, and S&P's view that the company's ownership structure is likely to preclude sustained deleveraging. POINT CENTER: Administratively Insolvent; Case Conversion Sought ---------------------------------------------------------------- Howard B. Grobstein, the Chapter 11 trustee for the bankruptcy estate of Point Center Financial, Inc., asks the U.S. Bankruptcy Court for the Central District of California to convert the case of the Debtor to one under Chapter 7 of the Bankruptcy Code. The Chapter 11 trustee relates that since learning of the trustee's impending appointment, the trustee has investigated and analyzed the Debtor's operations, assets, and related obligations; and commenced substantial litigation against the Debtor's principal, Dan J. Harkey, and companies with which Mr. Harkey is affiliated. Based on his investigation to date, the trustee has concluded that conversion of the Debtor's case to Chapter 7 is in the best interest of the Debtor's estate and its creditors for these reasons: 1) conversion is necessary to extricate the Debtor's estate from continuing to incur potential obligations and liabilities associated with the Debtor's status as the manager of a number of investment limited liability companies; 2) the estate is administrative insolvent by over a half million dollars, and conversion is necessary to prevent the estate from continuing to incur the significantly-increased administrative expenses associated with Chapter 11; and 3) conversion may be necessary to retain counsel and other related professionals capable of pursuing and maintaining the existing litigation against Mr. Harkey and his affiliated companies. About Point Center Point Center Financial, Inc., a hard money lender, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 13-11495) in Santa Ana, California, on Feb. 19, 2013. The Debtor disclosed $109,257,545 in assets and $54,566,116 in liabilities as of the Chapter 11 filing. The Company claims to have a long track record of success in originating and servicing loans from hundreds of investors. Unfortunately, due to the historic collapse of the economy beginning in about 2007, the Debtor, no different than many other similar enterprises in real estate, has fallen on hard times. From a high of about 130 performing loans with a total combined face value of over $450 million in 2006, only 8 loans are now performing. There were a total of only four foreclosed properties ("REOs") as of 2006. In comparison, between 2007 and 2012, there were 60 foreclosure sales. The result left the Debtor saddled with large secured liabilities to PMB, which has a blanket lien on all of the Debtor's assets in excess of $9 million, secured by the Debtor's primary asset of loan servicing and management fees received from secured loans and properties that have been taken back through foreclosure. The MA Creditors are represented by Mary L. Fickel, Esq., at Fickel & Davis. The Official Committee of Unsecured Creditors is represented by Marshack Hays LLP as counsel. Howard B. Grobstein has been appointed as Chapter 11 trustee of the Debtor's estate. John P. Reitman, Esq., and Roy Zur, Esq. -- jreitman@lgbfirm.com and rzur@lgbfirm.com -- at Landau Gottfried & Berger LLP, serve as general counsel for the Chapter 11 trustee. POINT CENTER: Nov. 12 Hearing on Bank's Bid to Foreclose -------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California will convene a hearing on Nov. 12, 2013, at 10:30 a.m., to consider creditor Pacific Mercantile Bank's motion for relief from stay in the property of Point Center Financial, Inc. Mark Bradshaw, Esq., at Shulman Hodges & Bastian LLP, on behalf of Pacific Mercantile Bank requested to relief from stay in the: 1. Equipment -- blanket security interest in all inventory, equipment, accounts, chattle paper, insturuments, letters of credit, documents, deposit accounts, etc. at 7 Argonaut, Aliso Viejo, California; and 2. Other Personal Property -- investment property, money, other rights to payment and performance, and general intangibles at 7 Argonaut, Aliso Viejo, California. Mr. Bradshaw related that cause exists to grant the bank relief from stay because, among other things: 1) the bank's interest in the property is not adequately protected; 2. the Debtor has no equity in the property; and 3. the property is not necessary for an effective reorganization. About Point Center Point Center Financial, Inc., a hard money lender, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 13-11495) in Santa Ana, California, on Feb. 19, 2013. The Debtor disclosed $109,257,545 in assets and $54,566,116 in liabilities as of the Chapter 11 filing. The Company claims to have a long track record of success in originating and servicing loans from hundreds of investors. Unfortunately, due to the historic collapse of the economy beginning in about 2007, the Debtor, no different than many other similar enterprises in real estate, has fallen on hard times. From a high of about 130 performing loans with a total combined face value of over $450 million in 2006, only 8 loans are now performing. There were a total of only four foreclosed properties ("REOs") as of 2006. In comparison, between 2007 and 2012, there were 60 foreclosure sales. The result left the Debtor saddled with large secured liabilities to PMB, which has a blanket lien on all of the Debtor's assets in excess of $9 million, secured by the Debtor's primary asset of loan servicing and management fees received from secured loans and properties that have been taken back through foreclosure. The MA Creditors are represented by Mary L. Fickel, Esq., at Fickel & Davis. The Official Committee of Unsecured Creditors is represented by Marshack Hays LLP as counsel. Howard B. Grobstein has been appointed as Chapter 11 trustee of the Debtor's estate. John P. Reitman, Esq., and Roy Zur, Esq., at Landau Gottfried & Berger LLP, serve as general counsel for the Chapter 11 trustee. REGIONAL EMPLOYERS: Involuntary Chapter 11 Case Summary ------------------------------------------------------- Alleged Debtor: Regional Employers Assurance Leagues Voluntary Employees' Beneficiary Association Trust dba REAL VEBA Trust 200 W 4th Street Bridgeport, PA 19405 Case Number: 13-05987 Involuntary Chapter 11 Petition Date: October 1, 2013 Court: United States Bankruptcy Court Middle District of Florida (Jacksonville) Judge: Hon. Jerry A. Funk Debtor's Counsel: Scott Alan Orth, Esq. LAW OFFICES OF SCOTT ALAN ORTH PA 3880 Sheridan Street Hollywood, FL 33021 Tel: (305) 757-3300 Fax: (305) 757-0071 Email: scott@orthlawoffice.com Petitioners' Counsel: Brett A Mearkle, Esq. LAW OFFICE OF BRETT A. MEARKLE 8777 San Jose Blvd., Suite 801 Jacksonville, FL 32217 Tel: 904-352-1342 Fax: 904-352-1814 Email: bmearkle@mtalawyers.com List of Debtor's petitioners: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Michael Graham Beneficiary, $210,000 Graham-Malone Inc. Welfare Reimbursement, Benefit Plan Contribution 721 Sandringham Drive Jacksonville, Fl 32225 John D Braddock Beneficiary, $350,000 8103 Inc. Welfare Reimbursement, Benefit Plan Contribution 121 32nd Avenue South Jacksonville Beach, FL 32250 Truman Gailey Beneficiary, $500,000 Carter Electric Mgmt Co. Reimbursement, Welfare Bene. Contribution 936 John Anderson Drive Ormond Beach, FL 32176 Jim Malone Beneficiary $130,000 Reimbursement, Contribution RYDER MEMORIAL: S&P Revises Outlook and Affirms 'BB-' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook to stable from negative and affirmed its 'BB-' rating on Puerto Rico Industrial, Medical & Higher Education & Environmental Pollution Control Facilities Financing Authority's $9.5 million series 1996 bonds, issued for Ryder Memorial Hospital (Ryder). "The outlook revision reflects our view of Ryder's strong enterprise profile, highlighted by its dominant 67% market share and its financial profile that we think has marginally improved over the past year," said Standard & Poor's credit analyst Jennifer Soule. Ryder reported an operating gain for fiscal 2012 and management expects to post similar results for fiscal 2013. Contributing credit factors that support the rating include Ryder's thin debt service coverage (DSC) of 1.5x through the first seven months of fiscal 2013; negative operating margin through fiscal 2013 interim period; weak, though improved, balance sheet metrics, characterized by 38 days' cash on hand; and uncertainty tied to the impact of healthcare reform, specifically reductions in Medicare revenue over the coming years. Offsetting these weaknesses are Ryder's operating gain reported for fiscal 2012, which is expected to continue in fiscal 2013 and successful recruitment of new physicians over the past year, which could help stem the declining admission trend. The stable outlook reflects Ryder's operating profit in fiscal 2012 and the expectation that this profit will continue in fiscal 2013. It also reflects Ryder's slightly improved balance sheet metrics as of July 31, 2013, although S&P views them as weak overall. S&P could assign a negative outlook or lower the rating within the two-year outlook if Ryder falls short of S&P's expectations for fiscal 2013 and/or if it reports net patient revenue decline leading to operating losses in that fiscal year. Any degradation of the hospital's balance sheet metrics, either through additional debt or use of cash, could be given negative consideration if absent a corresponding increase in net patient revenue. DSC below 1.25x would also be viewed negatively. A positive outlook during the outlook period is unlikely due to Ryder's weak balance sheet, but we could consider a positive rating action over a longer period if Ryder maintains its enterprise profile, sustains more than 60 days' cash on hand, and consistently reports a system profit from operations. Ryder's 165-staffed bed hospital in Humacao, P.R. secures the bonds. All of Ryder's debt is fixed rate, and the organization is not a party to any swap transactions. Standard & Poor's rating and analysis incorporates the consolidated results unless otherwise noted. SAVIENT PHARMACEUTICALS: Case Summary & 20 Top Unsecured Creditors ------------------------------------------------------------------ Debtor entities filing separate Chapter 11 cases: Debtor Case No. ------ -------- Savient Pharmaceuticals, Inc. 13-12680 400 Crossing Blvd., 3rd Floor Bridgewater, NJ 08807 Savient Pharma Holdings, Inc. 13-12681 400 Crossing Blvd., 3rd Floor Bridgewater, NJ 08807 Chapter 11 Petition Date: October 14, 2013 Court: United States Bankruptcy Court District of Delaware (Delaware) Debtor's Counsel: Anthony W. Clark, Esq. SKADDEN ARPS SLATE MEAGHER & FLOM One Rodney Square Wilmington, DE 19899, USA Tel: 302 651-3000 Fax: 302-651-3001 Total Assets: $73.75 million Total Liabilities: $260.37 million The petitions were signed by John P. Hamill, co-president and chief financial officer. List of Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank National Association Senior Secured Unknown As Collateral Agent Notes Global Corporate Trust Services 100 Wall Street, Suite 1600 New York, NY 10005 U.S. Bank National Association Conv. Notes Outstanding As Collateral Agent Principal Global Corporate Trust Services Amount: 100 Wall Street, Suite 1600 $122,441,000 New York, NY 10005 Wells Reit-Multi-State Owner LLC Lease $2,037,292 c/o Piedmont Office Realty Trust Inc. 11695 Johns Creek Parkway, Suite 350, Johns Creek GA 30097 Louis Ferrari Employee Debt $928,376 Stephen Davies Employee Debt $534,885 WIL Research Laboratories Trade $214,340 Consortium of Rheumatology Trade $183,083 Researchers of North America Inc. Bio-Technology General Trade $120,950 (Israel) Ltd. ICS Trade $111,282 State of California Dept. of Health Srvs. MS1101 Rebate Claim $109,250 Sparks Exhibits & Environmental Corp Trade $99,382 Cisco Systems Capital Corp. Equipment Lease $90,516 Fallon Medica LLC Trade $74,000 Faith Ottery Employee Debt $73,808 Display Works LLC Trade $71,420 Image Systems for Business, Inc. Equipment Lease $60,539 RxCrossroads Trade $49,048 Alan Glicklich Employee Debt $38,537 C1 Consulting, LLC Trade $33,900 Lester Szymanik Employee Debt $32,995 SR REAL ESTATE: Case Dismissal Hearing Set for Nov. 4 ----------------------------------------------------- The hearing on the motion to dismiss the chapter 11 case of SR Real Estate Holdings, LLC, is set for Nov. 4, 2013, at 2:30 p.m. at Courtroom 4, Room 328, Weinberger Courthouse. SR Real Estate Holdings, LLC, owner of 14 parcels of real property totaling 6,400 acres straddling Santa Cruz and Santa Clara counties, filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 13-54471) in San Jose, California, on Aug. 20, 2013. The Debtor estimated that its assets total at least $10 million and liabilities are at least $500 million. Victor A. Vilaplana, Esq., at Foley and Lardner, serves as counsel to the Debtor. This is the third bankruptcy filed with respect to the property. The prior owner, Sargent Ranch, LLC, filed Chapter 11 cases in January 2010 (Bankr. S.D. Cal. Case No. 10-00046-PB) and November 2011 (Bankr. S.D. Cal. Case No. 11-18853). The second bankruptcy case was dismissed in February 2012. * Fitch Says Canadian CMBS Market Stable, Losses Rare ----------------------------------------------------- Canadian CMBS will likely perform positively in the near term, Fitch Ratings says. "We expect retail and office properties to be positive but slightly lower than they have in recent years. Also, Canadian transactions have had extremely low default rates over the past 15 years. In 2Q13, we calculate a cumulative default rate of 1.9% of issuance by balance. The U.S. rate for the same period was 13.7%. In our view, more conservative lending, the commonality of recourse loans, and the relatively small amount of Canadian CMBS issuance and lending explain much of the difference," Fitch says. "Our view of the office market is rooted in our expectation that Canadian unemployment will remain stable through 2015 at approximately 7%. Nationwide the average vacancy rate in the second quarter was 8.7%. Rents have been growing in Montreal (4.2%) and Vancouver (3.0%) over the prior year. "Over the longer term, we observe some trends in multifamily housing that could slow its growth. The vacancy rate at the end of the second quarter was under 3%. But an oversupply of condominiums in Vancouver and Toronto may be forming. Those markets also have higher youth unemployment rates than the rest of Canada. "We expect the Canadian economy to grow 2% annually from 2013 to 2015. Much of the strongest growth has been in Alberta, Manitoba, and Saskatchewan and is partially attributable to the expansion of the oil and gas industry in those provinces." * Fitch Says US Bank Regulators' Asset Review Flags Possible Risks ------------------------------------------------------------------ An inter-agency review of complex loans commonly held by multiple U.S. and foreign financial institutions indicates that improvements in asset quality have stalled year-over-year and underwriting standards have diminished post-crisis, highlighting potential risks for both bank and nonbank lenders going forward. Fitch Ratings sees the review's results as further evidence that competition among lenders is heightening risks in and outside the banking system. Each year the Fed, the FDIC and the Office of the Comptroller of the Currency (OCC) take part in a review of the major U.S. banks' Shared National Credit (SNC) portfolios to assess risk and underwriting standards relating to large, complex loans shared across the banking system, which total around $3 trillion, or 20% of the U.S. GDP. Coming off of their 2013 review, the regulators reported on Oct. 10 that "criticized" or high-risk assets remain elevated at $302 billion, or 10% of total SNC commitments. This level was down just 60 bps from 2012 after a 2.1% decline between 2011 and 2012. Actual criticized loan volume increased 2.4% year over year and is about double precrisis levels, highlighting the degree of asset risk remaining in the system four years after the start of the recovery. "We believe the level of criticized assets remaining in SNC portfolios and the observed increase in riskier assets is a concern, given the current fragile state of the U.S. economy, which has a substantial impact on the credit quality of these large loans," Fitch says. "Furthermore, we remain focused on the potential impact on loan quality, particularly in commercial and industrial (C&I) portfolios, once short-term rates begin to rise along with debt payments. We believe that recent C&I loan loss rates, which are below long-term historical averages, are unsustainable and have also been deflated given somewhat higher growth rates in lending activity over recent periods. Fitch observes that the C&I loss rate at second-quarter 2013 for all FDIC insured banks stood at 33 bps compared with a 100 quarter average of 93 bps, thus supporting our view that there will be mean reversion going forward. "The SNC report confirms our view that underwriting, particularly in the C&I space, has weakened since the crisis given market liquidity and intense competition for loan growth." The report points out that 34% of recently originated leverage loans were cited for weak underwriting due to a combination of high leverage and absence of covenants. This will likely cause C&I loan loss rates to increase over coming quarters. One potential mitigant to risk in the insured banking system is that nonbank entities are among the primary buyers of these higher risk leveraged loans, and are the largest holders of criticized assets within the SNC portfolio (67%). Fitch will continue to monitor loan portfolio performance within its rating universe, particularly in the C&I space, and could take rating actions if observed loss rates increase outside of our expectations. * Fitch Says Weakened BDC Dividend Coverage a Ratings Negative -------------------------------------------------------------- In a report released on October 14, Fitch Ratings warns of potential dividend pressure for Business Development Companies (BDCs) given the increasingly competitive market environment. Asset yields are under pressure and portfolio growth may begin to wane, which could impact a BDC's ability to cover its dividend with net investment income (NII). Should these factors prove to be more than a temporary phenomenon, BDC managers will need to choose between cutting dividend payments and using principal to pay dividends, the latter of which will moderately reduce asset coverage to rated debtholders. Average NII coverage of dividends was 102.6% in 2Q'13 for BDCs in the report compared to 97.6% in 2Q'12, as portfolio growth offset a reduction in yields and larger equity bases. However, Fitch expects the pace of growth to moderate as market spreads continue to compress and underlying portfolio company leverage levels tick- up. BDCs have historically invested primarily in senior loans of portfolio companies. However, competitive market conditions may cause BDCs to increase their allocation to mezzanine positions in an attempt to increase or maintain yield. While a shift into higher yielding assets should generate additional interest income, it could increase PIK levels and relative risk, which would be viewed negatively by Fitch. For those BDCs that have reported outsized portfolio growth in the current environment, Fitch expects to closely monitor underlying portfolio metrics, including leverage and interest coverage, in addition to new origination yields and capital structure positioning, in order to assess the level of credit risk being taken. Fitch remains concerned about outsized portfolio growth in the current credit environment. Vintage concentrations in the portfolio could yield asset quality deterioration down the road, and thus, weaker dividend coverage in the future. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 20th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***