/raid1/www/Hosts/bankrupt/TCR_Public/131028.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 28, 2013, Vol. 17, No. 299
Headlines
277-283 W. DELAVAN: Voluntary Chapter 11 Case Summary
710 LONG RIDGE: Hires Logan & Company as Administrative Advisor
AEROVISION HOLDINGS: Has Deal With i3 et al. Over Dismissal Bid
ALION SCIENCE: Scott Fry to Retire as Sector Manager
ALPHA NATURAL: Bank Debt Trades At 5% Off
AMERICAN AIRLINES: Mayors Urge DOJ to Allow Merger
ANCHOR BANCORP: Capital Z Partners Owns 9.7% of Common Stock
ANCHOR BANCORP: Castle Creek Capital Owns 9.7% of Common Stock
ANTERO RESOURCES: Moody's Rates New $500MM Unsecured Notes 'B1'
ANTERO RESOURCES: S&P Assigns 'BB-' Rating to $500MM Senior Notes
ARCHDIOCESE OF MILWAUKEE: Favored by Bankruptcy Judge's Ruling
AURA SYSTEMS: Reports $3.35-Mil. Net Loss in Q2 Ended Aug. 31
AUSTIN BURNET: Case Summary & 2 Largest Unsecured Creditors
AUTOMATED BUSINESS: Oct. 30 Deadline to File Complete Schedules
BANCORPSOUTH INC: Moody's Withdraws C Rating on Credit Assessment
BELLE FOODS: Has Until Jan. 27 to Assume or Reject Unexpired Lease
BELLE FOODS: Court OKs Certain Non-Material Amendments to APA
BERNARD L. MADOFF: Picard Waits as JPMorgan in Settlement Talks
BERNARD L. MADOFF: Ex-Aide Said to Have Written Own Bonus Checks
BROWARD COUNTY HFA: Moody's Puts Ba3 & Ca Bonds Rating on Review
CAESARS ENTERTAINMENT: Bank Debt Trades at 7% Off
CENGAGE LEARNING: First Lien Lenders Sue Debtor to Uphold Liens
CENTENNIAL BEVERAGE: Montgomery Coscia May Audit 401(k) Plan
CERTENEJAS INCORPORADO: Confirmation Trial Continued Until Nov. 18
CHICAGO, IL: Pension Alert Is Issued in Budget Talk
CIT GROUP: DBRS Assigns 'BB' Issuer and Sr. Unsecured Debt Ratings
CLEAR CHANNEL: Bank Debt Trades at 5% Off
CMNJT LLC: Case Summary & 8 Largest Unsecured Creditors
COACH AMERICA: PE Firm Ducks Bus Driver's Employment Suit
COMMUNITY HOME: Balks at Dismissal, Conversion Bid
CORD BLOOD: Tonaquint Cancels Planned Auction
COUNTRYWIDE FINANCIAL: Found Liable for Defrauding Fannie Mae
COVENTRY FIRE DISTRICT: Likely to Face Liquidation
CREW ENERGY: DBRS Assigns 'B' Final Issuer Rating
DALLAS ROADSTER: TCB Wants Corrected Amended Plan Denied
DETROIT, MI: Bankruptcy Eligibility Trial Continues
DEWEY & LEBOEUF: Baker, DLA et al. Ask Judge Not to Okay Probes
DIMENSIONS HEALTH: Moody's Withdraws 'B3' Rating on 1994 Bonds
E*TRADE FINANCIAL: DBRS Retains Ratings After 3Q 2013 Results
E.H. MITCHELL: Can Employ Robert L. Marrero as Bankruptcy Counsel
EDISON MISSION: Court Clears NRG to Kick Off Auction
ENBRIDGE ENERGY: DBRS Confirms BB Rating on Jr. Subordinate Notes
ENCORE CAPITAL: Voluntary Chapter 11 Case Summary
ENDEAVOUR INTERNATIONAL: Completes Organizational Changes
ENDICOTT INTERCONNECT: UST Objects to Davidson Fox Employment
FANNIE MAE: Amy E. Alving Joins Board
FIBERTOWER CORP: Revised Disclosure Statement Filed
FIBERTOWER NETWORK: Files New 13-Week Cash Collateral Budget
FLORIDA GAMING: Mulls Asset Sale; In Talks With Silvermark
FLORIDA GAMING: Committee Retains Development Specialists
FOREST CITY: Moody's Raises Senior Unsecured Rating to 'B2'
FREESEAS INC: May Obtain $10 Million Additional Investment
FRESH & EASY: Auction Scheduled for Nov. 19
FURNITURE BRANDS: Panel Taps Houlihan Lokey as Investment Banker
GASCO ENERGY: Obtains Financing From Markham and Orogen Energy
GATEHOUSE MEDIA: Has Final Cash Use Until Prepack Confirmation
GLOBAL DIGITAL: Reports $2.35-Mil. Net Loss in Q3 Ended Sept. 30
GMX RESOURCES: Files Plan; Disclosure Statement Hearing on Dec. 3
HARRISBURG, PA: Controller Can't Stop City's Restructuring Plan
HAWAII OUTDOOR: Ch.11 Trustee Seeks to Sell Hotel to America Asia
HEALTHWAREHOUSE.COM INC: Incurs $268,987 Loss in June 30 Quarter
HERCULES OFFSHORE: Files Fleet Status Report as of Oct. 22
HERITAGE PARTNERS: Stroock Faces Malpractice Suit Over Loan Deal
HILLTOP FARMS: Asks Court to Enter Final Decree Closing Case
HOSPITALITY STAFFING: Files for Bankruptcy to Facilitate Sale
HOSPITALITY STAFFING: Case Summary & 20 Top Unsecured Creditors
HOUSTON REGIONAL: Astros Say They, Rockets Have Different Needs
IPC INTERNATIONAL: Purchased by Universe Protection
J.C. PENNEY: Fitch Says Stress Could Pressure Malls But Not CMBS
JACK COOPER: Moody's Assigns B2 Rating to $150MM Add-on Sec. Notes
JACK COOPER: S&P Assigns 'B-' Rating to Proposed $150MM Sr. Notes
KAR AUCTION: Moody's Affirms B1 CFR & $1.8BB Loan Rating at Ba3
KIK CUSTOM: S&P Assigns 'B-' Rating to Proposed US$225MM Sr. Loan
LEHMAN BROTHERS: Loses Bid to Set Off $2BB Citigroup Claim
LEHMAN BROTHERS: Elliott, King Street Purchase of Claim Approved
LEWISTON HOSPITAL: Moody's Places 'Ba1' LT Rating Under Review
LILY GROUP: U.S. Trustee Appoints 4-Member Creditors Panel
LILY GROUP: Hires Tucker Hester as Attorneys
LIN MEDIA: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
LINKS GOLF CLUB: Voluntary Chapter 11 Case Summary
MEDLAB OHIO: Case Summary & 30 Largest Unsecured Creditors
METALDYNE CORP: Owner Held Liable for Underfunded Pension Plan
MI PUEBLO: Committee Balks at Rejection of Vince Alvarado Deal
MI PUEBLO: May Use Wells Fargo Cash Collateral Through Nov. 10
MI PUEBLO: Nov. 8 Hearing on Bid to Extend Plan Exclusivity
MICROSEMI CORP: Symmetricom Deal No Effect on Moody's Debt Ratings
MILLER BROTHERS: Security Interest Remains Effective After Lapsing
NEW YORK CITY OPERA: NYC Ballet Appointed to Creditor Committee
NEXT 1 INTERACTIVE: Has $5.38-Mil. Net Loss in Q2 Ended Aug. 31
NGPL PIPECO: Bank Debt Trades at 7% Off
NIRVANIX INC: Has Green Light for Twin Chapter 11 Sales
NNN PARKWAY: Lender's Dismissal Bid to Include New Debtor
NORCRAFT COS: S&P Puts 'B' CCR on CreditWatch Positive
OAK RIDGE LODGING: Case Summary & 15 Largest Unsecured Creditors
OGX PETROLEO: Said to File for Bankruptcy in the "Coming Days"
ORLANDO, FL: Moody's Affirms Ba2 Rating on $33.4MM 2nd Lien Bonds
PACIFIC ARCHITECTS: Moody's Gives B2 CFR & Rates $400MM Debt B2
PACIFIC ARCHITECTS: S&P Assigns 'B+' CCR & Rates $400MM Loan 'B+'
PETTERS COMPANY: Chapter 11 Trustee May Use Cash Collateral
PETTERS COMPANY: Tom Petters Seeks Shorter Sentence
PLASTIC TECHNOLOGIES: Files Chapter 11 in Rutland, Vermont
PROSEP INC: Files CCAA to Implement Sale of All Assets to PWA
QUANTUM FUEL: Timothy A. McGaw Joins Board
RADIAN GROUP: To Unveil 3rd Quarter Results, Hold Call on Nov. 7
RADIOSHACK CORP: Incurs $112 Million Net Loss in Third Quarter
REGIONALCARE HOSPITAL: Moody's Cuts Corp. Family Rating to Caa1
RESIDENTIAL CAPITAL: FHFA Joins Opposition to Ch. 11 Plan
RG STEEL: Elliot Co. Opposes Bid to Abandon Equipment
RHYTHM & HUES: Gets Court Nod for $1 Million Worker Deal
ROSEVILLE SENIOR: Wins Interim Use of CapitalSource Cash
RR DONNELLEY: S&P Affirms 'BB' CCR Over Consolidated Graphics Deal
RVOS FARM: A.M. Best Lowers Fin. Strength Rating to 'B'
S. D. WALKER: Case Summary & Largest Unsecured Creditor
SALLY HOLDINGS: Moody's Rates $200MM Sr. Unsecured Notes at Ba2
SALLY HOLDINGS: S&P Assigns 'BB+' Rating to $200MM Senior Notes
SAN BERNARDINO, CA: Trustee Forms 9-Member Retired Employees Panel
SAN BERNARDINO, CA: CalPers Appeals Ch.9 Eligibility Ruling
SANDERSON PLUMBING: Voluntary Chapter 11 Case Summary
SHELBOURNE NORTH WATER: Developer Wants Ch. 11 Moved to Chicago
SHILO INN: Hearing on Plan Outline & Stay Relief Bid Continued
SHILO INN: California Bank Wants to Foreclose on 5 Locations
SMILEY DENTAL: Voluntary Chapter 11 Case Summary
SPENDSMART PAYMENTS: Incurs $4 Million Net Loss in 3rd Quarter
ST. PAUL CROATIAN: Holy Love Ministry Suit vs NCUA Dismissed
STOCKTON, CA: Moody's Rates Water Revenue Bonds Offering '(P)Ba1'
STRATEGIC REALTY: Defaulted on $29MM Loan in Jan.; Sued Over IPO
THE PAGE: To Hold Liquidation Auction This Month
TITAN ENERGY: Reports Net Income of $303,451 in Sept. 30 Quarter
TOYS R US: Bank Debt Trades at 6% Off
TRUE BEGINNINGS: Canadian Buyer Drops Bid Amid Privacy Concerns
WALTER ENERGY: Bank Debt Trades at 3% Off
WATERFRONT OFFICE: Feb. 25 Hearing on Confirmation of Plan
WATERSTONE AT PANAMA: Court Denies Lenox Mortgage's Dismissal Bid
WATERSTONE AT PANAMA: Has Until Dec. 5 to File Plan
WELLS HOLDING: Voluntary Chapter 11 Case Summary
WEST AIRPORT PALMS: Foreclosure Sale Set for Nov. 6
WR GRACE: Reports $69.4-Mil. Net Income in Third Quarter 2013
XZERES CORP: Incurs $1.95-Mil. Net Loss in Q2 Ended Aug. 31
* Current Texas Drought Pressures Public Water Utilities' Finances
* Delinquencies Up Slightly in September, LPS Report Shows
* Fed Set to Open Proposed Bank Liquidity Demand to Public Comment
* HSBC's Household Case Goes On After $2.46 Billion Verdict
* SEC Releases "Crowdfunding" Rule
* Both Spouses Must File Ch.13 to Strip Off Subordinate Lien
* BOND PRICING -- For Week From Oct. 21 to 25, 2013
*********
277-283 W. DELAVAN: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: 277-283 W. Delavan LLC
5306 New Utrecht Ave
Brooklyn, NY 11219
Case No.: 13-46409
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
Eastern District of New York (Brooklyn)
Judge: Hon. Elizabeth S. Stong
Debtor's Counsel: Pro Se
Estimated Assets: not indicated
Estimated Liabilities: $500,000 to $1 million
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
710 LONG RIDGE: Hires Logan & Company as Administrative Advisor
---------------------------------------------------------------
710 Long Ridge Road Operating Company II, LLC and its debtor-
affiliates seek permission from the Hon. Donald H. Steckroth of
the U.S. Bankruptcy Court for the District of New Jersey to employ
Logan & Company, Inc. as administrative advisor, nunc pro tunc to
Feb. 24, 2013.
Logan & Company, Inc. currently serves as the Debtors' noticing
and claims agent in the Debtors' Chapter 11 cases.
As administrative advisor, the Debtors require Logan & Company to:
(a) assist the Debtors in managing the claims reconciliations
and objection process, noting for review by the Debtors
those proofs of claim subject to possible procedural
objections, those that are inconsistent with the Schedules,
and those that supersede scheduled liabilities, entering
the Debtors' objection determination in the claims
database, and preparing exhibits for the Debtors' omnibus
claims objections;
(b) provide balloting and solicitation services to the Debtors
for any plan of reorganization and liquidation filed by the
Debtors, which may include the following services:
- assist in the production of solicitation materials and
ballots;
- receive, date-stamping, numbering, and inspecting ballots
for conformity to voting procedures in accordance with
Logan & Company's usual practice, tabulating ballots, and
providing computerized balloting database services;
- prepare voting reports by plan class, creditor or
shareholder, and amount for review by the Debtors and
their counsel; and
- generate and filing an official ballot certification
and testifying, if necessary, in support of the
balloting, solicitation, and tabulation results;
(c) manage any distributions pursuant to a confirmed plan;
(d) provide the Debtors with consulting and computer software
support regarding the reporting and information management
requirements of the bankruptcy administration process as it
relates to its Section 327 Services;
(e) educate and train the Debtors in the use of support
software and providing Logan & Company's standard reports
as well as consulting and programming support for Debtors-
requested reports, program modifications, database
modification, and other features in accordance with the
Logan Agreement; and
(f) perform other administrative services as may be requested
by the Debtors that are not otherwise allowed under the
Section 156(c) Retention Order.
Logan & Company will also be reimbursed for reasonable out-of-
pocket expenses incurred.
Kathleen M. Logan, president of Logan & Company, assured the Court
that the firm is a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code and does not represent
any interest adverse to the Debtors and their estates.
Logan & Company can be reached at:
Kathleen M. Logan
LOGAN & COMPANY, INC.
546 Valley Road, Second Floor
Upper Montclair, NJ 07043
Tel: (973) 509-3190
Fax: (973) 509-3191
E-mail: klogan@loganandco.com
About 710 Long Ridge Road Operating Company II
710 Long Ridge Road Operating Company II, LLC and four affiliates
own sub-acute and long-term nursing care facilities for the
elderly in Connecticut. The facilities, which are managed by
HealthBridge Management LLC, are Long Ridge of Stamford, Newington
Health Care Center, Westport Health Care Center, West River Health
Care Center, and Danbury Health Care Center.
710 Long Ridge Road Operating Company II and its affiliates sought
Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13-
13657) on Feb. 24, 2013, to modify their collective bargaining
agreements with the New England Health Care Employees Union,
District 1199, SEIU.
The Debtors owe $18.9 million to M&T Bank and $7.99 million on
loans from the U.S. Department of Housing and Urban Development
Federal Housing Administration.
Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, serve as counsel to the Debtors. Logan & Company, Inc.
is the claims and notice agent. Alvarez & Marsal Healthcare
Industry Group, LLC, is the financial advisor.
Porzio, Bromberg & Newman, P.C., represents the Official Committee
of Unsecured Creditors. The Committee tapped to retain
EisnerAmper LLP as accountant.
AEROVISION HOLDINGS: Has Deal With i3 et al. Over Dismissal Bid
---------------------------------------------------------------
Aerovision Holdings 1 Corp., filed an amended response to the
motion to dismiss, or in the alternative, relief from the
automatic stay, filed by Tiger Aircraft Corp., Logix Global Inc.,
and Aerovision LLC. The Debtor said it has entered into a
settlement agreement with i3 Aircraft Holdings One, LLC and
Integration Innovation, Inc. In this relation, the motion to
dismiss will be withdrawn as part of the agreement.
According to the Debtor, Tiger et al. sought dismissal of the case
the Chapter 11 case as a bad faith filing. There is also a
request for stay relief, but no arguments or cause have been set
forth in support.
As reported in the Troubled Company Reporter on Oct. 7, 2013, the
Debtor argued that the bankruptcy case was filed for the purpose
of reorganizing its business affairs. The Debtor said it will
agree to maintain the status quo regarding the aircraft until the
issue of ownership has been determined. A good faith effort will
be made by the Debtor to resolve the concerns of the Official
Committee of Unsecured Creditors. Prior to the hearing on the
motion, the Debtor and Tiger et al. will attend mediation
scheduled by the Debtor with Robert Furr, Esq., as the mediator.
As reported in the TCR on Sept. 27, 2013, the Court approved an
agreed order continuing until Nov. 13, at 9:30 a.m., the hearing
on the motion to dismiss, or in the alternative, for relief of
stay in the Debtor's case. The agreed order was entered among the
Debtor and creditors Integration Innovation, Inc., and i3 Aircraft
Holdings 1, LLC.
Tiger, et al., said the relief requested will permit a pending
action on the fraudulent possession of the subject property in
this petition to continue in the Florida Circuit Court and will
prevent further fraud on the judicial process. The relief
requested will also put a stop on the Debtor's intent to abuse the
purposes of the reorganization provisions by using such provisions
to delay the enforcement of the Circuit Court's order to return
the subject property and to further delay the Circuit Court from
proceeding with an evidentiary hearing regarding the fraudulent
actions of Mark Daniels and Steven Selz.
About Aerovision Holdings 1 Corp.
Aerovision Holdings 1 Corp. filed a Chapter 11 petition (Bankr.
S.D. Fla. Case No. 13-24624) on June 21, 2013, in its home-town in
West Palm Beach, Florida. Mark Daniels signed the petition as
president. The Debtor estimated assets in excess of $10 million
and liabilities of $1 million to $10 million. Craig I. Kelley,
Esq., at Kelley & Fulton, PL, serves as the Debtor's counsel.
ALION SCIENCE: Scott Fry to Retire as Sector Manager
----------------------------------------------------
Scott Fry provided notice to Alion Science and Technology
Corporation of his decision to retire from his position as sector
senior vice president and sector manager, Engineering and
Integration Solutions Sector of Alion. Mr. Fry will step-down
from his position as sector senior vice president and sector
manager, EISS effective as of Nov. 1, 2013. Mr. Fry's last day of
employment will be Nov. 15, 2013.
Mr. Fry has served Alion since 2004, and expects to continue to
serve Alion as a consultant after his retirement takes effect.
Mr. Fry is a named executive officer of Alion.
Alion has appointed Mr. Rod Riddick as Alion's sector manager,
EISS, effective Nov. 1, 2013. Mr. Riddick has been Alion's Deputy
Sector Manager, EISS, since 2008. He has supported the U.S. Navy
in various capacities for over 40 years, and he has served Alion
since Alion acquired John J. McMullen Associates, Inc., in 2005.
About Alion Science
Alion Science and Technology Corporation, based in McLean,
Virginia, is an employee-owned company that provides scientific
research, development, and engineering services related to
national defense, homeland security, and energy and environmental
analysis. Particular areas of expertise include communications,
wireless technology, netcentric warfare, modeling and simulation,
chemical and biological warfare, program management.
Alion Science incurred a net loss of $41.44 million for the year
ended Sept. 30, 2012, a net loss of $44.38 million for the year
ended Sept. 30, 2011, and a net loss of $15.23 million for the
year ended Sept. 30, 2010. As of June 30, 2013, the Company had
$632.86 million in total assets, $799.58 million in total
liabilities, $111.01 million in redeemable common stock, $20.78
million in common stock warrants, $149,000 in accumulated other
comprehensive loss and a $298.37 million accumulated deficit.
Bankruptcy Warning
The Company said in its annual report for the fiscal year ended
Sept. 30, 2012, "Our credit arrangements, including our unsecured
and secured note indentures and our revolving credit facility
include a number of covenants. We expect to be able to comply
with our indenture covenants and our credit facility financial
covenants for at least the next twenty-one months. If we were
unable to meet financial covenants in our revolving credit
facility in the future, we might need to amend the revolving
credit facility on less favourable terms. If we were to default
under any of the revolving credit facility covenants, we could
pursue an amendment or waiver with our existing lenders, but there
can be no assurance that lenders would grant an amendment or
waiver. In light of current credit market conditions, any such
amendment or waiver might be on terms, including additional fees,
increased interest rates and other more stringent terms and
conditions materially disadvantageous to us. If we were unable to
meet these financial covenants in the future and unable to obtain
future covenant relief or an appropriate waiver, we could be in
default under the revolving credit facility. This could cause all
amounts borrowed under it and all underlying letters of credit to
become immediately due and payable, expose our assets to seizure,
cause a potential cross-default under our indentures and possibly
require us to invoke insolvency proceedings including, but not
limited to, a voluntary case under the U.S. Bankruptcy Code."
ALPHA NATURAL: Bank Debt Trades At 5% Off
-----------------------------------------
Participations in a syndicated loan under which Alpha Natural
Resources, Inc. is a borrower traded in the secondary market at
94.79 cents-on-the-dollar during the week ended Friday, October
25, 2013, according to data compiled by LSTA/Thomson Reuters MTM
Pricing and reported in The Wall Street Journal. This represents
an increase of 0.34 of percentage points from the previous week,
The Journal relates. Alpha Natural pays 275 basis points above
LIBOR to borrow under the facility. The bank loan matures on
May 31, 2020. The bank debt carries Moody's Ba1 rating and S&P's
BB rating. The loan is one of the biggest gainers and losers
among 254 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended Friday.
* * *
As reported in the Troubled Company Reporter Oct. 9, 2013, Moody's
Investors Service downgraded the ratings of Alpha Natural
Resources, Inc., including the company's Corporate Family Rating
(CFR) to B2 from B1, Probability of Default Rating (PDR) to B2-PD
from B1-PD, the rating on senior secured term loan to Ba2 from
Ba1, and the ratings on senior unsecured debt to B3 from B2.
AMERICAN AIRLINES: Mayors Urge DOJ to Allow Merger
--------------------------------------------------
Law360 reported that mayors of seven cities that serve as hubs for
American Airlines Inc. and US Airways Group Inc. on Oct. 23 urged
Attorney General Eric H. Holder Jr. to allow the carriers'
proposed merger to proceed for the sake of boosting their local
economies.
According to the report, in a letter, the mayors of Charlotte,
N.C.; Chicago; Dallas; Fort Worth, Texas; Philadelphia; Phoenix;
and Miami-Dade County all urged Holder to drop the U.S. Department
of Justice's antitrust suit seeking to block the deal, which would
create the largest airline in the world.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements. AMR, previously the world's largest airline prior to
mergers by other airlines, is the last of the so-called U.S.
legacy airlines to seek court protection from creditors.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
The Retiree Committee is represented by Jenner & Block LLP's
Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B.
Hankin, Esq.
AMR and US Airways Group, Inc., on Feb. 14, 2013, announced a
definitive merger agreement under which the companies will combine
to create a premier global carrier, which will have an implied
combined equity value of approximately $11 billion.
The bankruptcy judge on Sept. 12, 2013, confirmed AMR Corp.'s plan
to exit bankruptcy through a merger with US Airways. By
distributing stock in the merged airlines, the plan is designed to
pay all creditors in full, with interest.
Judge Sean Lane confirmed the Plan despite the lawsuit filed by
the U.S. Department of Justice and several states' attorney
general complaining that the merger violates antitrust laws. The
plan confirmation order means that if AMR and US Airways win the
Justice Department lawsuit or settle with the government, the
merger plan can go into effect.
The antitrust suit is U.S. v. US Airways Group Inc., 13-cv-1236,
U.S. District Court, District of Columbia (Washington).
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ANCHOR BANCORP: Capital Z Partners Owns 9.7% of Common Stock
------------------------------------------------------------
Capital Z Partners III, L.P., in a Schedule 13D filing dated Oct.
22, 2013, reports that as of Sept. 27, 2013, it beneficially owns
877,800 shares, representing 9.7% of the Common Stock, par value
$0.01 per share, of Anchor Bancorp Wisconsin, Inc.
Cap Z III is a Cayman Islands limited partnership formed to invest
in securities of insurance, financial services and healthcare
service companies and other related businesses.
A copy of the Form SC 13D is available at http://is.gd/b8hSO0
About Anchor Bancorp
Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. sought
protection under Chapter 11 of the Bankruptcy Code on Aug. 12,
2013 (Case No. 13-14003, Bankr. W.D. Wis.) to implement a
"pre-packaged" plan of reorganization in order to facilitate the
restructuring of the Company and the recapitalization of
AnchorBank, fsb, a wholly-owned subsidiary of the Company.
As of March 31, 2013, the Debtor listed total assets of
$2,367,583,000 and total liabilities of $2,427,447,000. Chief
Judge Robert D. Martin oversees the Chapter 11 case. The Debtor
is represented by Kerkman Dunn Sweet DeMarb as lead bankruptcy
counsel and Skadden, Arps, Slate, Meagher & Flom LLP, as special
counsel. CohnReznick LLP serves as the Debtor's financial
advisor.
Anchor BanCorp is a registered savings and loan holding company
incorporated under the laws of the State of Wisconsin. The
Company is engaged in the savings and loan business through its
wholly owned banking subsidiary, AnchorBank, fsb.
Anchor BanCorp and its wholly-owned subsidiaries, AnchorBank FSB,
each consented to the issuance of an Order to Cease and Desist by
the Office of Thrift Supervision. The Corporation and the Bank
continue to diligently work with their financial and professional
advisors in seeking qualified sources of outside capital, and in
achieving compliance with the requirements of the Orders.
In connection with the Plan, the Company has entered into
definitive stock purchase agreements with institutional and other
private investors as part of a $175 million recapitalization of
the institution. No new investor will own in excess of 9.9
percent of the common equity of the recapitalized Holding Company.
The reorganization filing includes only Anchor BanCorp, the
holding company for the Bank, allowing the Bank to remain outside
of bankruptcy and to continue normal operations. The Bank
operates 55 offices throughout Wisconsin. Operations at the Bank
will continue as usual throughout the reorganization process.
Anchor BanCorp Wisconsin Inc. on Aug. 30 disclosed that the
Holding Company has received court approval of its recently
announced plan of reorganization. U.S. Bankruptcy Court Judge
Robert Martin approved the plan at a hearing on Aug. 30.
ANCHOR BANCORP: Castle Creek Capital Owns 9.7% of Common Stock
--------------------------------------------------------------
Castle Creek Capital Partners V, LP, in a Schedule 13D filing
dated Oct. 22, 2013, reports that as of Sept. 27, 2013, it
beneficially owns 877,800 shares, representing 9.7% of the Common
Stock, par value $0.01 per share, of Anchor Bancorp Wisconsin,
Inc.
Castle Creek Capital Partners V, LP, is a Delaware limited
partnership and a private equity fund focused on investing in
community banks throughout the United States of America.
A copy of the Form SC 13D is available at http://is.gd/AUcCwt
About Anchor Bancorp
Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. sought
protection under Chapter 11 of the Bankruptcy Code on Aug. 12,
2013 (Case No. 13-14003, Bankr. W.D. Wis.) to implement a
"pre-packaged" plan of reorganization in order to facilitate the
restructuring of the Company and the recapitalization of
AnchorBank, fsb, a wholly-owned subsidiary of the Company.
As of March 31, 2013, the Debtor listed total assets of
$2,367,583,000 and total liabilities of $2,427,447,000. Chief
Judge Robert D. Martin oversees the Chapter 11 case. The Debtor
is represented by Kerkman Dunn Sweet DeMarb as lead bankruptcy
counsel and Skadden, Arps, Slate, Meagher & Flom LLP, as special
counsel. CohnReznick LLP serves as the Debtor's financial
advisor.
Anchor BanCorp is a registered savings and loan holding company
incorporated under the laws of the State of Wisconsin. The
Company is engaged in the savings and loan business through its
wholly owned banking subsidiary, AnchorBank, fsb.
Anchor BanCorp and its wholly-owned subsidiaries, AnchorBank FSB,
each consented to the issuance of an Order to Cease and Desist by
the Office of Thrift Supervision. The Corporation and the Bank
continue to diligently work with their financial and professional
advisors in seeking qualified sources of outside capital, and in
achieving compliance with the requirements of the Orders.
In connection with the Plan, the Company has entered into
definitive stock purchase agreements with institutional and other
private investors as part of a $175 million recapitalization of
the institution. No new investor will own in excess of 9.9
percent of the common equity of the recapitalized Holding Company.
The reorganization filing includes only Anchor BanCorp, the
holding company for the Bank, allowing the Bank to remain outside
of bankruptcy and to continue normal operations. The Bank
operates 55 offices throughout Wisconsin. Operations at the Bank
will continue as usual throughout the reorganization process.
Anchor BanCorp Wisconsin Inc. on Aug. 30 disclosed that the
Holding Company has received court approval of its recently
announced plan of reorganization. U.S. Bankruptcy Court Judge
Robert Martin approved the plan at a hearing on Aug. 30.
ANTERO RESOURCES: Moody's Rates New $500MM Unsecured Notes 'B1'
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Antero Resources
Finance Corporation's proposed $500 million senior unsecured notes
due 2021. Proceeds from the offering will be used to finance a
portion of the redemption of the company's outstanding 9.375%
senior notes due December 2017. The proposed notes will be fully
and unconditionally guaranteed on a senior unsecured basis by
Antero Resources Corporation (Antero) and all of its subsidiaries.
The rating outlook is stable.
"Moody's views this proposed transaction as a straight refinancing
of more expensive debt, while extending the company's debt
maturity profile," stated Michael Somogyi, Moody's Vice President
-- Senior Analyst. "To the extent necessary, Moody's expects
Antero to borrow under its bank credit facility to finance the
remainder of the redemption of its $525 million notes due December
2017."
Ratings Rationale:
The B1 rating on Antero's senior notes reflects both Antero's
overall probability of default, to which Moody's assigns a PDR of
Ba3-PD, and a loss given default of LGD 5(77%). Pro forma for the
proposed offering, Antero has $400 million of senior notes due
2019, $525 million of senior notes due 2020 and $500 million
senior notes due 2021. The senior notes are unsecured and are
subordinated to the $1.5 billion senior secured credit facility's
potential priority claim to the company's assets. The size of the
potential senior secured claims relative to the unsecured notes
outstanding results in the senior notes being notched one rating
below the Ba3 CFR under Moody's Loss Given Default Methodology.
Antero's Ba3 CFR reflects its lower leverage profile and enhanced
near-term liquidity position following the company's successful
initial public offering. Antero's realized production growth,
increased size of the company's proved reserve base, and low cost
structure driving improved capital efficiency and cash flows
further support the Ba3 CFR. The rating is restrained by Antero's
small ratio of proved developed to total proved reserve base,
concentrated reserve base, natural gas weighted production profile
and continued reliance on external funding sources to finance its
development program and midstream infrastructure investments.
Despite Antero's rising production growth profile and increasing
reserve base, the company's elevated leverage metrics and narrowed
liquidity position resulting from significant outspending of
internally generated cash flows to develop natural gas assets were
key areas of concern. With net IPO proceeds of approximately $1.6
billion applied to repaying borrowings under its credit facility,
Antero's has significantly reduced its leverage profile and
enhanced its near-term liquidity position.
The stable outlook is reflective of Antero's lower leverage
profile and enhanced near-term liquidity position. It also
reflects Moody's expectation that while debt may increase through
2014, reserve additions and production increases will keep pace
with the increase in borrowings, keeping the ratios of debt to
proved developed reserves and debt to production relatively
constant. An upgrade could be considered if debt / average daily
production is sustained below $20,000 per boe and debt / proved-
developed reserves is sustained below $8.00 per boe. An upgrade
would also be contingent on Antero maintaining unleveraged cash
margins greater than $25.00 per boe and retained cash flow to debt
over 40% as it builds out infrastructure needs to support
production growth. A downgrade is possible if debt to average
daily production exceeds $27,000 per boe and debt to proved
developed reserves exceeds $10.50 per boe on a sustained basis.
ANTERO RESOURCES: S&P Assigns 'BB-' Rating to $500MM Senior Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'BB-'
issue-level rating (the same as the corporate credit rating) and
'3' recovery rating to Antero Resources Finance Corp.'s
$500 million senior unsecured notes due in 2021. S&P bases the
ratings on the rating on oil and gas exploration and production
company Antero Resources Corp. (BB-/Stable/--), which guarantees
the proposed notes on a senior unsecured basis. The '3' recovery
rating indicates S&P's expectation of a meaningful (50% to 70%)
recovery in the event of default. The company will use the
proceeds from the notes to redeem its outstanding 2017 notes.
The ratings on Denver-based Antero Resources Corp. reflect S&P's
assessment of the company's "fair" business risk and "aggressive"
financial risk. The ratings incorporate the company's
participation in the competitive and highly cyclical oil and gas
industry, its high percentage of proved undeveloped reserves, the
significant total costs associated with the development of its
proved reserve base, and its high concentration of low-priced
natural gas in its reserves and production. The ratings on Antero
also incorporate its low cash operating costs and finding and
development costs; strong reserve replacement performance; solid
production growth; and the expectation that Antero will continue
to expand its reserve base, which totaled 6.3 trillion cubic feet
equivalent as of midyear 2013.
Ratings List
Antero Resources Corp.
Corporate Credit Rating BB-/Stable/--
New Rating
Antero Resources Finance Corp.
$500 mil. sr. unsecd nts due 2021 BB-
Recovery Rating 3
ARCHDIOCESE OF MILWAUKEE: Favored by Bankruptcy Judge's Ruling
--------------------------------------------------------------
Annysa Johnson, writing for the Milwaukee-Wisconsin Journal
Sentinel, reported that in a major victory for the Archdiocese of
Milwaukee, a federal judge has ruled that a sex abuse victim, who
was paid $80,000 in an earlier settlement, cannot seek additional
compensation in the church's bankruptcy.
According to the report, U.S. District Judge Rudolph T. Randa on
Oct. 22 dismissed the claim of the victim, a deaf man molested by
the late Father Lawrence Murphy, who alleged the archdiocese lied
to him in meditation to get him to sign the settlement. If it
stands, Judge Randa's ruling could force the dismissal of nearly
100 of the 570-plus claims filed in the bankruptcy.
Milwaukee Archbishop Jerome Listecki was not available for
comment, but Jerry Topczewski, his chief of staff, welcomed the
ruling as "fair," the report related.
This is "another step forward . . . toward a plan of
reorganization that will allow the Archdiocese of Milwaukee to
emerge from bankruptcy," Topczewski said in an email, the report
further related.
Michael Finnegan, whose firm represents most of the victims in the
bankruptcy, including this man, called the ruling a disappointment
and said they are contemplating filing an appeal, the report said.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
AURA SYSTEMS: Reports $3.35-Mil. Net Loss in Q2 Ended Aug. 31
-------------------------------------------------------------
Aura Systems, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q, reporting a net loss
of $3,731,071 on $615,389 of revenues for the three months ended
Aug. 31, 2013, compared to a net loss of $3,347,900 on $303,904 of
revenues for the same period last year.
The Company's balance sheet at Aug. 31, 2013, showed $3,049,311 in
total assets, $27,308,070 in total liabilities, and stockholders'
deficit of $24,258,759.
A copy of the Form 10-Q is available at:
http://is.gd/FAhreb
About Aura Systems
El Segundo, Calif.-based Aura Systems, Inc., designs, assembles
and sells the AuraGen(R), its patented mobile power generator that
uses a prime mover such as the engine of a vehicle to generate
power.
The Company's balance sheet at May 31, 2013, showed $2.9 million
in total assets, $25.2 million in total liabilities, and a
stockholders' deficit of $22.3 million.
The Company said that as a result of its losses from operations,
there is substantial doubt about the Company' ability to continue
as a going concern.
As reported in the TCR on June 18, 2013, Kabani & Company, Inc.,
in Los Angeles, California, issued a "going concern" qualification
on the consolidated financial statements for the year ended Feb.
28, 2013. The independent auditors noted that the Company has
historically incurred substantial losses from operations, and the
Company may not have sufficient working capital or outside
financing available to meet its planned operating activities over
the next 12 months. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
AUSTIN BURNET: Case Summary & 2 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Austin Burnet Professional, LLC
2719 Wilshire Boulevard, Suite 250
Santa Monica, CA 90403
Case No.: 13-35896
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
Central District Of California (Los Angeles)
Judge: Hon. Sheri Bluebond
Debtor's Counsel: Peter T Steinberg, Esq.
STEINBERG NUTTER AND BRENT
23801 Calabasas Rd Ste 2031
Calabasas, CA 91302
Tel: 818-876-8535
Fax: 818-876-8536
Email: mr.aloha@sbcglobal.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Scott Chaplan, partner.
A list of the Debtor's two largest unsecured creditors is
available for free at http://bankrupt.com/misc/cacb13-35896.pdf
AUTOMATED BUSINESS: Oct. 30 Deadline to File Complete Schedules
---------------------------------------------------------------
At the behest of Automated Business Power, Inc., et al., the U.S.
Bankruptcy Court extended the Debtors' deadline to file their
statements of financial affairs and schedules of assets and
liabilities not later than Oct. 30, 2013.
Automated Business Power, Inc., and Automated Business Power
Holding Co filed their Chapter 11 petitions (Bankr. D. Md. Case
Nos. 13-27123 and 13-27125) on Oct. 8, 2013. The petitions were
signed by Daniel Akman as president. The Debtors estimated assets
of at least $50 million and liabilities of at least $10 million.
The Debtors are represented by Nelson C. Cohen, Esq., at Zuckerman
Spaeder LLP, in Washington, D.C. The Agent is represented by
James M. Smith, Esq. -- jsmit@gebsmith.com -- and Lisa Bittle
Tancredi, Esq. -- ltancredi@gebmith.com -- at Gebhardt & Smith
LLP, in Baltimore, Maryland.
BANCORPSOUTH INC: Moody's Withdraws C Rating on Credit Assessment
-----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of
BancorpSouth, Inc. (long-term issuer Baa2) and its bank
subsidiary, BancorpSouth Bank (Baa1 and Prime-2 for long-term and
short-term deposits, respectively; Baa1 and Prime-2 for long-term
and short-term other senior obligations, respectively; Baa1 for
long-term issuer rating; and C-/baa1 for standalone bank financial
strength rating/baseline credit assessment). Prior to withdrawal,
all ratings had a negative outlook.
Ratings Rationale:
Moody's has withdrawn the rating for its own business reasons.
BELLE FOODS: Has Until Jan. 27 to Assume or Reject Unexpired Lease
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Alabama
extended until Jan. 27, 2014, the deadline by which Belle Foods
LLC must assume or reject all unexpired leases of nonresidential
real property.
Belle Foods, LLC, bought 57 stores from Southern Family Markets
LLC in 2012, and put the business into Chapter 11 reorganization
(Bankr. N.D. Ala. Case No. 13-81963) on July 1, 2013, in Decatur,
Alabama.
The chain is owned by a father and son who purchased the operation
with a $4 million secured term loan and $24 million revolving
credit from the seller. The stores are in Florida, Georgia,
Alabama and Mississippi.
Belle Foods disclosed $64,408,112 in assets and $18,836,157 plus
an unknown amount in liabilities as of the Chapter 11 filing.
D. Christopher Carson, Esq., Brent W. Dorner, Esq., and Marc P.
Solomon, Esq., at Burr & Forman, LLP, represent the Debtor as
counsel.
Attorneys at Haskell Slaughter Young & Rediker, LLC, in
Birmingham, Alabama, and Otterbourg Steindler Houston & Rosen,
P.C., in New York, serve as co-counsel to the Official Committee
of Unsecured Creditors.
BELLE FOODS: Court OKs Certain Non-Material Amendments to APA
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Alabama
entered a supplemental order amending (1) the asset purchase
agreement between Belle Foods, LLC and Associated Wholesale
Grocers, Inc.; and (2) the sale order dated Sept. 27, 2013.
The Debtor and AWG or buyer, in an abundance of caution, moved the
Court for entry of an order authorizing and approving certain non-
material amendments or modifications to the Asset Purchase
Agreement and supplementing the Order (A) approving APA between
Belle Foods, LLC and Associated Wholesale Grocers, Inc.,
(B) authorizing (I) sale of certain of the Debtor's assets; and
(II) assumption and assignment of leases and (III) buyer's
lease designation rights.
The Debtor and AWG, in their motion, stated that in order to
accommodate for the federal government shut-down and furlough, the
Debtor and AWG agree to modify the Permit Use Requirements under
Section 2.4 of the APA and Paragraph 38 of sale order such that
submission of a permit application by AWG or Ultimate Purchaser,
if applicable, within 10 days of the date on which federal
agencies begin to again accept such applications will be deemed to
be an application submitted within seven days of closing and will
authorize AWG or Ultimate Purchaser, if applicable, to continue to
use Debtor's Permits subject to the remaining Permit Use
Requirements.
As reported in the Troubled Company Reporter on Oct. 3, 2013,
the Court on Sept. 27 entered an order approving the APA between
the Debtor, and buyer relating to certain stores, and authorizing
the Debtor to assume and assign certain contracts. According to
papers filed with the Court on Sept. 27, the buyer submitted the
highest or otherwise best offer received for the Assets at the
Auction on Sept. 24.
Belle Foods sold 43 of its locations to Associated Wholesale for
$16,128,250. A listing of the 43 stores can be found at:
http://bankrupt.com/misc/bellefoods.doc605-5.pdf
About Belle Foods
Belle Foods, LLC, bought 57 stores from Southern Family Markets
LLC in 2012, and put the business into Chapter 11 reorganization
(Bankr. N.D. Ala. Case No. 13-81963) on July 1, 2013, in Decatur,
Alabama.
The chain is owned by a father and son who purchased the operation
with a $4 million secured term loan and $24 million revolving
credit from the seller. The stores are in Florida, Georgia,
Alabama and Mississippi.
Belle Foods disclosed $64,408,112 in assets and liabilities of
$18,836,157 plus an unknown amount.
D. Christopher Carson, Esq., Brent W. Dorner, Esq., and Marc P.
Solomon, Esq., at Burr & Forman, LLP, represent the Debtor as
counsel.
Attorneys at Haskell Slaughter Young & Rediker, LLC, in
Birmingham, Alabama, and Otterbourg Steindler Houston & Rosen,
P.C., in New York, serve as co-counsel to the Official Committee
of Unsecured Creditors.
BERNARD L. MADOFF: Picard Waits as JPMorgan in Settlement Talks
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that while JPMorgan Chase & Co. is in talks with the U.S.
to resolve allegations that it helped enable Bernard Madoff's
Ponzi scheme, the trustee unraveling the Madoff firm has been
barred from suing the bank.
A probe by the Manhattan U.S. attorney, tied to how the bank
handled Madoff's funds and whether it turned a blind eye to his
multibillion-dollar fraud, may end in a deferred prosecution
agreement, Bloomberg's Patricia Hurtado and Dawn Kopecki reported,
citing a person familiar with the matter.
It's one of several options being discussed by prosecutors and the
bank, including resolving the matter with just a fine, said the
person, who requested anonymity because the talks are private, the
Bloomberg report related.
The New York Times reported earlier that a deferred prosecution
deal was possible.
Meanwhile, Irving Picard, the Madoff trustee, has been shut out in
his attempts to sue New York-based JPMorgan, the largest U.S.
bank, and other financial institutions. His latest defeat came in
June, when the U.S. Court of Appeals in New York agreed with two
district judges and upheld dismissal of Picard's lawsuits, ruling
that the law views the bankruptcy trustee as tainted by the fraud
Madoff committed.
Picard's last hope for resurrecting $30.6 billion in lawsuits
against the banks rests with the U.S. Supreme Court, which he
petitioned this month for the right to appeal. In his Oct. 9
request, Picard argued that the New York appeals court's
application of the law puts it in conflict with other federal
circuits.
Picard asked the Supreme Court to rule that he has the right to
"bring claims that are common to all customers" defrauded by
Madoff. The New York appeals court ruled squarely to the contrary,
saying "federal bankruptcy law does not empower a trustee to
collect money owed to creditors."
The New York court's opinion ended with an apology of sorts. Chief
Judge Dennis Jacobs said there would "no doubt" be advantages if
Picard could sue on behalf of all customers. Nonetheless, Chief
Judge Jacobs said, "equity has its limits; it may fill gaps in a
statute, but it should not be used to enlarge substantive rights
and powers."
Unless the Supreme Court intervenes, Picard is unlikely to succeed
in paying off the $17.3 billion in claims resulting from Madoff's
fraud. So far, he has paid customers slightly more than half,
calculated as the difference between what they invested and what
they withdrew.
Banks that successfully got Picard's cases dismissed also include
HSBC Holdings Plc, UBS AG and UniCredit SpA. Picard seeks
reinstatement of those suits as well.
Defrauded customers can't expect to recover any of the profit
shown on their account statements absent a victory against the
banks.
The case in the Supreme Court is Picard v. JPMorgan Chase & Co.,
13-448, U.S. Supreme Court (Washington). The criminal case is
U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern
District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has paid about 58 percent of customer claims totaling
$17.3 billion. The most recent distribution was in March 2013.
Mr. Picard has collected about $9.35 billion, not including an
additional $2.2 billion that was forfeit to the government and
likewise will go to customers. Picard is holding almost
$4.4 billion he can't distribute on account of outstanding
appeals and disputes. The largest holdback, almost $2.8 billion,
results from disputed claims.
BERNARD L. MADOFF: Ex-Aide Said to Have Written Own Bonus Checks
----------------------------------------------------------------
Erik Larson, writing for Bloomberg News, reported that a former
employee of Bernard Madoff on trial for allegedly aiding the con
man's $17 billion fraud said he wrote corporate checks to himself
for tens of thousands of dollars as a secret "bonus" from his
boss, a jury was told.
According to the report, Daniel Bonventre, who oversaw Madoff's
broker-dealer and proprietary trading units, told investigators
after Madoff's arrest on Dec. 11, 2008, that Madoff permitted him
to write such "vendor" checks to himself to hide his total annual
compensation from other employees, Meaghan Schmidt, a consultant
who helped unravel the fraud after its discovery, told jurors on
Oct. 24 in Manhattan federal court.
Starting in 1998, Bonventre signed similar checks to himself about
once a year, ranging from about $45,000 to $60,000, said Schmidt,
a director at the consulting firm AlixPartners LLP, whose
employees took over Madoff's offices in Midtown Manhattan to
secure documents and ascertain where the business stood, the
report related. One of the last such payments was a $50,000 check
written the previous month, Schmidt said.
Bonventre said Madoff approved the payments "because his salary
was already so high he didn't want his bonus to be scrutinized by
other employees," Schmidt said under questioning from U.S.
prosecutors, the report further related.
Assistant U.S. Attorney Matthew Schwartz said in court on Oct. 24
that Bonventre's annual salary was more than $1 million and his
last annual bonus was about $200,000, citing payroll records that
were displayed for the jury, the report added.
The case is U.S. v. O'Hara, 10-cr-00228, U.S. District Court,
Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has paid about 58 percent of customer claims totaling
$17.3 billion. The most recent distribution was in March 2013.
Mr. Picard has collected about $9.35 billion, not including an
additional $2.2 billion that was forfeit to the government and
likewise will go to customers. Picard is holding almost
$4.4 billion he can't distribute on account of outstanding
appeals and disputes. The largest holdback, almost $2.8 billion,
results from disputed claims.
BROWARD COUNTY HFA: Moody's Puts Ba3 & Ca Bonds Rating on Review
----------------------------------------------------------------
Moody's has placed the Ba3 and Ca of Broward County, FL Housing
Finance Authority Single Family Mortgage Revenue Bonds Senior
Series 2006A and 2006B, respectively, under review for downgrade.
The rating action affects $2.46 million of senior debt and
$275,000 of subordinate debt.
Rating Rationale:
The ratings were placed under review reflecting Moody's
expectation that cash flow projection results will be weaker than
they were in the past. During the review period Moody's will
review cash flow projections and the legal framework in order to
analyze expected losses and probability of default.
Strengths:
-- High credit quality of mortgage backed securities (MBS)
-- Float and reserve funds are invested in a guaranteed
investment contract, which provides a fixed rate of return
Challenges:
-- Potential cash flow insufficiencies caused by structural
weaknesses
-- Second loan portfolio is not credit enhanced, and historical
performance is weak
-- Performance relies on proper administration and adherence to
mandatory provisions of the trust indenture and financing
agreement by all parties
-- Little to no additional security is available from outside the
trust estate
CAESARS ENTERTAINMENT: Bank Debt Trades at 7% Off
-------------------------------------------------
Participations in a syndicated loan under which Caesars
Entertainment Inc. is a borrower traded in the secondary market at
93.48 cents-on-the-dollar during the week ended Friday, October
25, 2013, according to data compiled by LSTA/Thomson Reuters MTM
Pricing and reported in The Wall Street Journal. This represents
an increase of 0.98 percentage points from the previous week, The
Journal relates. Caesars Entertainment Inc pays 525 basis points
above LIBOR to borrow under the facility. The bank loan matures on
Jan. 1, '18, and carries Moody's B3 rating and Standard & Poor's
B- rating. The loan is one of the biggest gainers and losers among
205 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended Friday.
About Caesars Entertainment
Caesars Entertainment Corp., formerly Harrah's Entertainment Inc.
-- http://www.caesars.com/-- is one of the world's largest casino
companies, with annual revenue of $4.2 billion, 20 properties on
three continents, more than 25,000 hotel rooms, two million square
feet of casino space and 50,000 employees. Caesars casino resorts
operate under the Caesars, Bally's, Flamingo, Grand Casinos,
Hilton and Paris brand names. The Company has its corporate
headquarters in Las Vegas.
Harrah's announced its re-branding to Caesar's on mid-November
2010.
The Company incurred a net loss of $1.49 billion on $8.58 billion
of net revenues for the year ended Dec. 31, 2012, as compared with
a net loss of $666.70 million on $8.57 billion of net revenues
during the prior year. As of June 30, 2013, the Company had
$26.84 billion in total assets, $27.58 billion in total
liabilities and a $738.1 million total deficit.
* * *
Caesars Entertainment carries a 'CCC' long-term issuer default
rating, with negative outlook, from Fitch and a 'Caa1' corporate
family rating with negative outlook from Moody's Investors
Service.
As reported in the TCR on Feb. 5, 2013, Moody's Investors Service
lowered the Speculative Grade Liquidity rating of Caesars
Entertainment Corporation to SGL-3 from SGL-2, reflecting
declining revolver availability and Moody's concerns that Caesars'
earnings and cash flow will remain under pressure causing the
company's negative cash flow to worsen.
In the May 7, 2013, edition of the TCR, Standard & Poor's Ratings
Services said that it lowered its corporate credit ratings on Las
Vegas-based Caesars Entertainment Corp. (CEC) and wholly owned
subsidiary Caesars Entertainment Operating Co. (CEOC) to 'CCC+'
from 'B-'.
"The downgrade reflects weaker-than-expected operating performance
in the first quarter, and our view that Caesars' capital structure
may be unsustainable over the next two years based on our EBITDA
forecast for the company," said Standard & Poor's credit analyst
Melissa Long.
CENGAGE LEARNING: First Lien Lenders Sue Debtor to Uphold Liens
---------------------------------------------------------------
Cengage Learning's first lien group comprised of senior secured
claim holders -- comprised of BlackRock Financial Management,
Deutsche Bank Trust Company Americas, Franklin Mutual Advisers,
Kohlberg Kravis Roberts & Co., Oak Hill Advisors, Oaktree Capital
Management and Searchlight Capital Partners -- filed with the U.S.
Bankruptcy Court a complaint against Cengage Learning.
According to BankruptcyData, the complaint explains, "Prior to the
Petition Date, the Defendants orchestrated a scheme to mislead
those lenders with revolving loan commitments under the credit
agreement into funding a $430 million draw down of the First Lien
Credit Facility Agreement so that the funds could be wrongly set
aside for the benefit of Defendants and their unsecured creditors.
Defendants improperly obtained the Disputed Cash in violation of
fiduciary duties owed to Plaintiff and have been unjustly enriched
by retaining possession of the Disputed Cash. Plaintiff commences
this adversary proceeding to seek the imposition of a constructive
trust over the Disputed Cash and such further equitable relief as
the Court deems just and proper. . . . In fact, Defendants admit
that they never intended to use the draw proceeds for a proper
purpose, and have acknowledged that the entire purpose of the draw
on the revolver was to use these funds solely to create value for
the Defendants' unsecured creditors instead of using them for
working capital or other general corporate purposes. . . .
Defendants made false representations and knowingly breached
representations and warranties made in the First Lien Credit
Facility Agreement in order to wrongfully obtain the $430 million
draw down. . . . WHEREFORE, Plaintiff respectfully requests that
the Court grant judgment in favor of Plaintiff and against
Defendants, and enter an order granting the following relief: (a)
The imposition of a constructive trust over the Disputed Cash; (b)
Costs; (c) Attorney's fees; and (d) Such other and further
equitable relief as the Court deems just and proper."
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports the complaint is a counterattack against Cengage, which
sued the lenders alleging that they don't have a valid security
interest in $273.9 million held in a money-market account.
According to the Bloomberg report, how Cengage's unsecured
creditors come out depends in large part on the outcome of the new
complaint and the suit the company filed against the lenders in
September claiming that the $273.9 million is an unencumbered
asset.
Bloomberg notes that in March, Cengage drew down the last $430
million available on the first-lien revolving credit and deposited
the proceeds in a money-market account, the report recalled. The
loan agreement with JPMorgan Chase Bank NA, as agent for the
lenders, says the secured creditors won't have liens on any shares
of a company that didn't guarantee the debt. The money-market
investment represents shares in a fund that didn't guarantee the
debt. Consequently, Cengage says the money-market account is
excluded from the lenders' liens.
According to Bloomberg, a group of the lenders are asking the
bankruptcy court to rule that Cengage was insolvent when it drew
down the remainder of the credit and thereby violated fiduciary
duties to creditors. The lenders say the judge should impose a
trust on the $273.9 million remaining in the money market account.
The lenders also contend that Cengage made false representations
and breached warranties.
Cengage filed a separate lawsuit this month against the lenders
contending liens on 15,500 copyrights can be voided under the
company's powers in bankruptcy.
Rather than allow the reorganization to become a litigation
meltdown, the bankruptcy judge in Brooklyn, New York, already
appointed another bankruptcy judge to serve as mediator.
Investors who filed the complaint include BlackRock Financial
Management Inc., Deutsche Bank Trust Co., Franklin Mutual Advisers
LLC, KKR & Co., Oak Hill Advisors LP, Searchlight Capital Partners
and Oaktree Capital Management LP.
Cengage filed a reorganization plan in August and amended it this
month. Cengage filed under Chapter 11 after negotiating an
agreement with holders of $2 billion in first-lien debt to
eliminate more than $4 billion of $5.8 billion in debt. Second-
lien creditors and holders of unsecured notes weren't part of the
agreement.
Cengage's debt includes $3.87 billion on five first-lien term
loans and revolving credits plus $725 million outstanding on
first-lien notes and $710 million on second-lien notes. Cengage
owes about $490 million on three issues of unsecured senior and
subordinated notes.
Financial statements for the second quarter ended March 31 showed
assets of $4.68 billion against liabilities totaling $6.47
billion, following a $2.76 billion goodwill-impairment charge.
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 providing them
with appropriate time to conduct diligence, and discuss their
conclusions on, among other things, the value of those sources of
potential recoveries.
CENTENNIAL BEVERAGE: Montgomery Coscia May Audit 401(k) Plan
------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas, in a
corrected order, granted Centennial Beverage Group, LLC's
supplemental application to expand the scope of employment of
Montgomery Coscia Greilich LLP as auditor.
As reported in the Troubled Company Reporter on Aug. 14, 2013,
MCG will serve as the auditor and issue the applicable reports for
the 401(k) Plan for the year ended Dec. 31, 2012, in connection
with the annual reporting obligations under the Employee
Retirement Income Security Act of 1974. MCG was expected to
complete the audit and issue the report prior to the Oct. 15, 2013
filing deadline.
The Debtor believes MCG is a "disinterested person," as defined in
11 U.S.C. Sec. 101(14) and as required by Sec. 327(a).
MCG will receive $12,600 for conducting the audit for the year
ended Dec. 31, 2012. MCG will also charge the Debtor for all
reasonable out-of-pocket expenses, such as postage and computer
processing charges, incurred by MCG in connection with the
auditing services.
On May 14, 2013, the Court authorized the Debtor to employ MCG as
tax advisors to the Debtor. The Court authorized MCG to prepare
the Debtor's federal tax returns for the year ended Dec. 31, 2012,
and preparation of the combined Texas franchise tax return for the
Debtor and related entities for the year ended Dec. 31, 2012.
About Centennial Beverage
Centennial Beverage Group LLC, a chain of 23 liquor stores in
Texas, filed a petition for Chapter 11 reorganization (Bankr.
N.D. Tex. Case No. 12-37901) amid lower sales brought by
competition from big-box retailers. The 75-year-old-company once
had 70 stores throughout Texas. They are now concentrated in the
Dallas-Fort Worth area. Sales for the year ended in November 2012
were $158 million. Year-over-year, revenue was down 50%,
according to a court filing. In its schedules, the Debtor
disclosed $24,053,049 in assets and $48,451,881 in liabilities as
of the Petition Date.
Robert Dew Albergotti, Esq., and Ian T. Peck, Esq., at Haynes and
Boone, LLP, in Dallas, serve as counsel to the Debtor. M. Jack
Martin, III, Esq., at Jack Martin & Associates, in Austin, Tex.,
serves as special counsel. RGS LLC serves as the Debtor's
financial advisor. BYGH Tax Consulting is property tax consultant
to the Debtor.
The Official Committee of Unsecured Creditors has retained Munsch
Hardt Kopf & Harr, P.C. as its attorneys, and Lain, Faulkner &
Co., P.C. as financial advisors.
CERTENEJAS INCORPORADO: Confirmation Trial Continued Until Nov. 18
------------------------------------------------------------------
The Bankruptcy Court continued until the Nov. 18, 2013, at 10:30
a.m., the hearing to consider the confirmation of Certenejas
Incorporado's Plan of Reorganization.
As reported in the Trouble Company Reporter on June 5, 2013,
pursuant to the Plan dated Sept. 28, 2012, Banco Popular de Puerto
Rico, holder of a $40.4 million claim secured by substantially all
assets of the Debtor, will recover 100 percent. On the effective
date, the Debtor will surrender, as payment in kind to BPPR or
will consent to the foreclosure of the Motel Molino Azul (valued
at $6.95 million), Motel Molino Rojo ($5.60 million), Motel Las
Palmas ($8.50 million), Motel El Rio ($6.67 million), and Motel El
Eden ($3.25 million), and a parcel of land in Rio Grand, Puerto
Rico ($1.45 million). The Debtor will retain the real property
known as Motel Flor Del Valle (valued at $4.5 million). The
balance of BPPR's secured claim for $4.5 million will be paid
through monthly payments with a balloon payment of $4.32 million
on Dec. 31, 2014.
Holders of general unsecured claims aggregating $4.65 million will
recover 1 percent under the plan.
As reported in the TCR on Jan. 11, 2013, the Court has approved
the disclosure statement describing the plan.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/Certenejas_Inco_Plan_Outline.pdf
About Certenejas Incorporado
Certenejas Incorporado -- aka Hotel Flor Del Valle, Motel El
Eden, Motel Molino Azul, Motel Molino Rojo, Motel Las Palmas, and
Motel El Rio -- owns motels or short-term guest houses in Puerto
Rico. It filed a Chapter 11 petition (Bankr. D.P.R. Case No.
12-02806) in Old San Juan, Puerto Rico, on April 11, 2012. The
Debtor disclosed US$27.68 million in assets and US$45.29 million
in debts as of the Chapter 11 filing. Charles Alfred Cuprill,
Esq., serves as the Debtor's counsel. The petition was signed by
Luis J. Meaux Vazquez, president.
Certenejas Incorporado and three of its affiliates previously
sought Chapter 11 bankruptcy protection (Bankr. D.P.R. Case Nos.
09-08470 to 09-08473) on Oct. 2, 2009. The affiliates are
Rojoazul Hotel, Inc., Jonathan Corporation, and Silvernugget
Development Corporation. According to the schedules filed in the
2009 case, Certenejas Incorporado had total assets of
US$13,800,000, and total debts of US$41,596,637. The petition was
signed by Luis J. Meaux Vazquez, the Company's president.
CHICAGO, IL: Pension Alert Is Issued in Budget Talk
---------------------------------------------------
Monica Davey, writing for The New York Times, reported that Mayor
Rahm Emanuel on Oct. 23 proposed a spending plan for his city next
year that is full of nips and tucks: a 75-cent per pack increase
in the cigarette tax, higher zoning permit fees for big
developments, an end to some retirees' health insurance subsidies
and a rolling hiring freeze. Left alone, for now, were more
controversial taxes, on property, sales and gasoline.
But looming beyond Mr. Emanuel's somewhat unsurprising $6.97
billion budget for 2014 are circumstances far more ominous: a
pension system that is short by $19.5 billion and to which,
starting in 2015, the city will be required to make far larger
contributions, threatening to leave Chicago hundreds of millions
of dollars in the red, the report said.
"There's simply no way that we can cut or tax our way out of this
crisis and still leave Chicago a good place to work and live," Mr.
Emanuel warned City Council members in his annual budget address,
calling on state lawmakers to settle, at last, on an overhaul to
the Illinois pension system, which is among the most underfinanced
of state systems, as well as to Chicago's, according to the
report. "Without balanced reform, meeting our current pension
obligations would require us to nearly double the city's property
tax -- a move that would send residents and businesses streaming
out of Chicago."
As the nation's cities have shown signs of making a modest
recovery from the recession of 2008, some have also wrestled with
the growing risks of pension liabilities, which threaten to pit
promises made to city retirees against cutting municipal services
or raising taxes, the report said. The four pension plans that
affect the city of Chicago's retirees were about 36 percent
financed as of 2012, city documents show.
Chicago's pension troubles have been years in the making, the
result of city contributions under a state-authorized formula that
failed to gather enough money, economic downturns and a
Democratic-led state legislature that has so far been unable to
agree on how to cut costs to the state's own system, the report
related. The state also controls the benefit and financing levels
for Chicago's pension system, and those advocating for changes to
the state's pension system say they presume such changes would
ultimately be replicated at the city level.
CIT GROUP: DBRS Assigns 'BB' Issuer and Sr. Unsecured Debt Ratings
------------------------------------------------------------------
DBRS Inc. has commented on the 3Q13 financial results of CIT Group
Inc. DBRS rates CIT's Issuer and Senior Unsecured Debt at BB with
a Positive trend. For the quarter, the Company reported net
income of $199.6 million compared to net income of $183.6 million
in the prior quarter and a net loss of $299.2 million in 3Q12.
CIT's financial results benefited from the absence of significant
debt redemption charges which impacted the prior year results.
Moreover, results reflect continued solid growth in commercial
assets despite the tepid economic recovery, strong credit metrics
and a well-managed balance sheet. Further, the results reflect
the impact of CIT's ongoing rationalization of its Vendor Finance
business and the partial sale of the Dell Europe portfolio in the
quarter, which impacted both revenues and operating expenses.
Despite asset sales as well as small and middle market companies
remaining cautious during the quarter, CIT's commercial financing
and leasing assets grew 1% sequentially to $32.1 billion,
representing the eighth consecutive quarter of sequential growth.
Growth in commercial assets was primarily driven by the Corporate
Finance segment. For the quarter, new funded volumes totaled $2.6
billion, a 19% improvement YoY. Factoring volumes, which tend to
be seasonal, were $6.6 billion for the quarter compared to $6.4
billion a year ago. Within the Transportation segment,
utilization rates in both the Commercial Air and Commercial Rail
businesses remain strong.
Total net revenues were marginally higher sequentially at $462.3
million, but significantly improved from a deficit of $42.5
million a year ago. DBRS notes that 3Q12 net revenues were
impacted by $454 million of charges related to the redemption of
high cost debt. While earnings assets grew marginally, lower
adjusted net finance margins (primarily due to the partial sale of
the high-yielding Dell Europe portfolio) along with lower interest
recoveries and a reduced benefit from suspended depreciation were
among the key contributors to the 6% QoQ reduction in net finance
revenue to $357.5 million. Adjusted net finance margin, which
excludes debt redemption charges, and accelerated OID, was 4.22%;
40 bps lower QoQ, but 20 bps higher than in 3Q12 reflecting the
progress made in expanding the deposit base as a proportion of
overall funding and the repaying of high cost debt. Core non-
spread revenue, which includes factoring commissions, fee income
and gains on sale of leasing equipment, as a percentage of average
earning assets improved but was 3 bps lower QoQ at 1.04%.
Overall, non-interest revenue expanded 32% sequentially to $104.8
million. The improvement was driven by a $21 million gain on the
Dell Europe portfolio sale, a $13 million gain on a workout in
commercial aerospace, a modest increase in factoring commissions
and solid fees from Corporate Finance activities all of which more
than offset the impairment on assets transferred to held for sale
related to the Company's international rationalization strategy.
Operating expenses totaled $232.2 million, including $3.2 million
of restructuring costs. Excluding these costs, operating expenses
were $229 million, a 4% increase QoQ. As a result, CIT's
operating expenses as a percentage of average earning assets were
2.74% in 3Q13 above the Company's target of 2.00% to 2.50%. DBRS
notes that the Company's expectation is that operating expenses
will be above the target range for the next couple of quarters as
it exits certain subscale platforms internationally and incurs
costs related to those exits.
Credit metrics remain strong and near cyclical lows. For 3Q13,
NCOs were $27.1 million, or 0.59% of average commercial finance
receivables compared to $18.0 million, or 0.44% a year ago. In
the quarter, NCOs included approximately $5 million of Corporate
Finance and $7 million of Vendor Finance charge-offs related to
the transfer of loans to held-for-sale, while the prior quarter
included approximately $20 million of similar charge-offs in the
Corporate Finance segment. Non-accrual loans decreased 7% QoQ to
$258.3 million, or 1.41% of commercial finance receivables.
Provision for credit losses was $16.4 million in the quarter
compared to $14.6 million in the prior quarter primarily related
to loan growth. Allowance coverage remains sound at 1.94% of the
commercial portfolio and 138% of non-accruals.
Funding and liquidity remain solid and well-managed. Deposits
grew 6% on a sequential basis and in line with asset growth. At
September 30, 2013, deposits totaled $11.8 billion constituting
35% of total funding. On a linked quarter basis, the weighted
average coupon rate was stable at 3.09%, but 16 bps lower YoY
reflecting the expanding presence of low-cost deposits in the
funding mix. Liquidity, which is comprised of cash and short-term
investment securities totaling $7.4 billion, as well as $1.9
billion of unused and committed capacity under the Company's $2.0
billion revolving credit facility, is more than sufficient to meet
the $2.8 billion of term debt maturities over the next two years.
With regards to regulatory capital, CIT's preliminary Basel I Tier
1 ratio stood at 16.7% and Total Capital ratio was 17.4% both up
40 bps from the prior quarter. The solid quarterly earnings and a
slight decline in risk-weighted assets more than offset $39
million in share repurchases. Further, CIT announced the
reinstatement of a quarterly dividend on its common stock with an
initial dividend of $0.10 a share to be paid in 4Q13. DBRS views
the modest capital distribution, which is approximately 29% of
3Q13 net income, acceptable given the Company's current regulatory
capital levels, credit performance and organic capital generation
ability.
CLEAR CHANNEL: Bank Debt Trades at 5% Off
-----------------------------------------
Participations in a syndicated loan under which Clear Channel
Communications is a borrower traded in the secondary market at
95.23 cents-on-the-dollar during the week ended Friday, October
25, 2013, according to data compiled by LSTA/Thomson Reuters MTM
Pricing and reported in The Wall Street Journal. This represents
an increase of 0.81 percentage points from the previous week, The
Journal relates. Clear Channel Communications pays 365 basis
points above LIBOR to borrow under the facility. The bank loan
matures on Jan. 30, '16, and carries Moody's Caa1 rating and
Standard & Poor's CCC+ rating. The loan is one of the biggest
gainers and losers among 205 widely quoted syndicated loans with
five or more bids in secondary trading for the week ended Friday.
About Clear Channel Communications
San Antonio, Texas-based Clear Channel Communications, Inc., an
indirect subsidiary of CC Media Holdings, Inc. (OTCBB: CCMO), is
one of the leading global media and entertainment companies
specializing in radio, digital, outdoor, mobile, live events, and
on-demand entertainment and information services for local
communities and providing premier opportunities for advertisers.
CC Media Holdings Inc. -- http://www.ccmediaholdings.com/-- is a
global media and entertainment company. Its businesses include
radio and outdoor displays.
As of June 30, 2013, the Company had $15.29 billion in total
assets, $23.58 billion in total liabilities and a $8.28 billion
total shareholders' deficit.
* * *
In May 2013, Moody's Investors Service said that Clear Channel's
upsize of the term loan D to $4 billion from $1.5 billion will not
impact the Caa1 facility rating assigned. Clear Channel's
Corporate Family Rating is unchanged at Caa2. The outlook remains
stable.
In May, Standard & Poor's Ratings Services also announced that its
issue-level rating on San Antonio, Texas-based Clear Channel's
senior secured term loan remains unchanged at 'CCC+' following the
company's upsize of the loan to $4 billion from $1.5 billion. The
rating on parent company CC Media Holdings remains at 'CCC+' with
a negative outlook, which reflects the risks surrounding the long-
term viability of the company's capital structure.
CMNJT LLC: Case Summary & 8 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: CMNJT, L.L.C.
1900 Galaxy DR.
Newport Beach, CA 92660
Case No.: 13-19016
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Hon. Laurel E. Davis
Debtor's Counsel: Talitha Gray Kozlowski, Esq.
GORDON & SILVER, LTD.
3960 Howard Hughes Pkwy., 9th Floor
Las Vegas, NV 89169
Tel: 702-796-5555
Email: tgray@gordonsilver.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Talbott, managing member.
A list of the Debtor's eight largest unsecured creditors is
available for free at http://bankrupt.com/misc/nvb13-19016.pdf
COACH AMERICA: PE Firm Ducks Bus Driver's Employment Suit
---------------------------------------------------------
Law360 reported that a Delaware bankruptcy judge on Oct. 23 tossed
a putative class action against Fenway Partners LLC, finding
claims brought on behalf of bus drivers once employed by bankrupt
Coach America Inc. had no plausible connection to the private
equity firm.
According to the report, U.S. Bankruptcy Judge Kevin Gross
dismissed the suit, which was filed as an adversary proceeding in
Coach America's Chapter 11 case, finding its claims of alleged
employment law violations lacked any viable connection to Fenway
Partners.
About Coach America
Coach America -- http://www.coachamerica.com/-- was the largest
tour and charter bus operator and the second largest motorcoach
service provider in the U.S. Coach America operated the second
largest fleet in the U.S. with over 3,000 vehicles, including over
1,600 motorcoaches, primarily under the Coach America, American
Coach Lines and Gray Line brands.
Coach America Holdings Inc. and its U.S.-based subsidiaries filed
to reorganize under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
D. Del. Lead Case No. 12-10010) on Jan. 3, 2012. Judge Kevin
Gross presides over the case. Coach America's investment banker
is Rothschild Inc., legal counsel are Lowenstein Sandler PC and
Polsinelli Shughart, and its financial advisor is Alvarez & Marsal
North America LLC. BMC Group Inc. serves as the Debtors' notice,
claims and balloting agent.
Coach America disclosed $274 million in assets and $402 million in
liabilities as of Nov. 30, 2011. Liabilities include $318.7
million owing on first-lien debt with JPMorgan Chase Bank NA as
agent. Second-lien debt, with Bank of New York Mellon Corp. as
agent, is $30.5 million.
Attorneys for JPMorgan, as Prepetition First Lien Agent and DIP
Agent, are Brian M. Resnick, Esq., at Davis Polk & Wardwell LLP;
and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.
In February 2012, Coach America named Laura Hendricks, the
company's vice president for business development, as its new
chief executive.
In June 2013, Judge Gross entered an order dismissing the Chapter
11 cases of Coach Am Group Holdings Corp. and its debtor
affiliates.
COMMUNITY HOME: Balks at Dismissal, Conversion Bid
--------------------------------------------------
Community Home Financial Services, Inc., responded to Edwards
Family Partnership, LP, and Beher Holdings Trust's motion to
dismiss or, in the alternative, for conversion of case to one
under Chapter 7. According to the Debtor, EFP/BHT sought
dismissal or conversion to avoid pending adversary proceedings and
objections to claims filed by the Debtor. Community Home contends
EFP/BHT do not have allowed claims due to their own conduct.
Therefore, grounds do not exist for the dismissal or conversion of
the case.
As reported in the Troubled Company Reporter on Oct. 14, 2013, the
U.S. Bankruptcy Court for the Southern District of Mississippi
will convene a hearing on Oct. 29, 2013, at 1:30 p.m., to consider
the motion to dismiss or convert the Chapter 11 case.
About Community Home
Community Home Financial Services, Inc., filed a Chapter 11
petition (Bankr. S.D. Miss. Case No. 12-01703) on May 23, 2012.
Community Home Financial is a specialty finance company located in
Jackson, Mississippi, providing contractors with financing for
their customers. CHFS operates from one central location
providing financing through its dealer network throughout 25
states, Alabama, Delaware, and Tennessee. The Debtor scheduled
$44,890,581 in total assets and $30,270,271 in total liabilities.
Judge Edward Ellington presides over the case.
Derek A. Henderson, Esq., Jonathan Bisette, Esq., and Roy Liddell,
Esq., of Wells, Marble & Hurst, PLLC, serve as counsel to the
Debtor.
On Aug. 8, 2013, the Court approved the Disclosure Statement
explaining the Debtor's Plan of Reorganization dated Jan. 29,
2013.
CORD BLOOD: Tonaquint Cancels Planned Auction
---------------------------------------------
Cord Blood America, Inc., previously received a notice received
from Tonaquint, Inc., regarding disposition of collateral advising
of Tonaquint's intent to sell all assets of the Company at a
public auction on Nov. 4, 2013.
On Oct. 18, 2013, the Company received from Tonaquint a
Notification of Cancellation, which provided notice that the
auction to sell the Company's assets is cancelled.
About Cord Blood America
Based in Las Vegas, Nevada, Cord Blood America, Inc., is primarily
a holding company whose subsidiaries include Cord Partners, Inc.,
CorCell Co. Inc., CorCell Ltd.; CBA Professional Services, Inc.
D/B/A BodyCells, Inc.; CBA Properties, Inc.; and Career Channel
Inc, D/B/A Rainmakers International. Cord specializes in
providing private cord blood stem cell preservation services to
families. BodyCells is a developmental stage company and intends
to be in the business of collecting, processing and preserving
peripheral blood and adipose tissue stem cells allowing
individuals to privately preserve their stem cells for potential
future use in stem cell therapy. Properties was formed to hold
the corporate trademarks and other intellectual property of CBAI.
Rain specializes in creating direct response television and radio
advertising campaigns, including media placement and commercial
production.
Cord Blood disclosed a net loss of $3.49 million on $5.99 million
of revenue for the year ended Dec. 31, 2012, as compared with a
net loss of $6.51 million on $5.07 million of revenue during the
prior year. The Company's balance sheet at March 31, 2013, showed
$6.37 million in total assets, $5.76 million in total liabilities
and $606,561 in total stockholders' equity.
Rose, Snyder & Jacobs, LLP, in Encino, California, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Company has sustained recurring operating losses and has
an accumulated deficit at Dec. 31, 2012. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
COUNTRYWIDE FINANCIAL: Found Liable for Defrauding Fannie Mae
-------------------------------------------------------------
Patricia Hurtado, writing for Bloomberg News, reported that Bank
of America Corp.'s Countrywide unit was found liable by a jury for
selling Fannie Mae and Freddie Mac thousands of defective loans in
the first mortgage-fraud case brought by the U.S. government to go
to trial.
According to the report, a federal jury in Manhattan on Oct. 24
also found former Countrywide Financial Corp. executive Rebecca
Mairone liable for defrauding the U.S. Mairone was the only
individual named as a defendant in the government's lawsuit.
U.S. District Judge Jed Rakoff, who presided over the trial, told
lawyers he'll determine the amount of any civil penalty at a later
date, the report related. Assistant U.S. Attorney Pierre Armand
asked the judge to impose a penalty of as much as $848 million,
representing the gross losses to Fannie Mae and Freddie Mac.
Armand said alternatively, Judge Rakoff could fine Countrywide
about $131 million, the estimated net losses to the two entities.
Judge Rakoff set a Dec. 5 hearing for further arguments involving
the penalty and said he would be ready to rule on those matters by
Dec. 31, the report said. He said if he determines an evidentiary
hearing is needed, lawyers should be prepared to proceed with
expert witnesses during the first week in January.
Countrywide, based in Calabasas, California, was once the biggest
U.S. residential home lender, originating or purchasing about $1.4
trillion in mortgages from 2005 to 2007, the report recalled. The
bulk of them were sold to investors as mortgage-backed securities.
Bank of America acquired Countrywide in 2008.
The case is U.S. v. Countrywide Financial Corp., 12-cv-01422, U.S.
District Court, Southern District of New York (Manhattan).
About Countrywide Financial
Based in Calabasas, California, Countrywide Financial Corporation
(NYSE: CFC) -- http://www.countrywide.com/-- originated,
purchased, securitized, sold, and serviced residential and
commercial loans.
In mid-2008, Bank of America completed its purchase of Countrywide
for $2.5 billion. The mortgage lender was originally priced at $4
billion, but the purchase price eventually was whittled down to
$2.5 billion based on BofA's stock prices that fell over 40% since
the time it agreed to buy the ailing lender.
COVENTRY FIRE DISTRICT: Likely to Face Liquidation
--------------------------------------------------
Jim Hummel at WPRO reports that voters in the Central Coventry
Fire District overwhelmingly approved a budget on October 21 that
will likely lead to the liquidation of the department, barring
last-minute concessions by the union or intervention by a judge.
According to the report, the $5.6 million budget, approved by more
than 80 percent of the voters, will not provide enough money to
operate the district for the coming year. It is the third -- and
probably final -- time voters have rejected increased spending
over the past year and a half.
"The people are sick of having the tail wag the dog," said
Fred Gralinski, chairman of the District Board, which has rejected
union concessions, saying they did not go far enough, before
recommending the district be liquidated, WPRO says.
WPRO says nearly 900 packed the Coventry High School Auditorium
for a brief presentation before heading to the voting machines set
up out in the hallway. It was the third time over the past year
that voters have told the district it is spending too much, while
simultaneously approving a budget. The financially-trouble
district has been in receivership for a year.
Despite the vote, Union President Dave Gorman told The Hummel
Report it's not over yet, WPRO discloses. "I think we'll still
survive, I think tomorrow we'll be here, I think moving forward
we'll be here. I'm not too confident the judge will bang the gavel
and say it's all over."
Superior Court Judge Brian Stern said he would make a decision on
Nov. 1 about the fate of the department, following the past week's
vote, the report adds.
Coventry, Rhode Island's central fire department district filed
for receivership in October 2012, after taxpayers voted down the
department's proposed budget in a meeting. WPRI.com disclosed
that district's treasurer's report revealed that the fire
department is $1.6 million in the red. Financial issues include
not keeping up on payments for health insurance to Blue Cross and
Blue Shield of Rhode Island, the report related.
The department has 52 firefighters to cover 26 square miles of
Coventry.
CREW ENERGY: DBRS Assigns 'B' Final Issuer Rating
-------------------------------------------------
DBRS Inc. has finalized its provisional rating of B on Crew Energy
Inc.'s $150 million of 8.375% Senior Unsecured Notes due October
21, 2020 (the Notes, with a recovery rating of RR4), as well as
the Company's provisional Issuer Rating of B, both with Stable
trends. DBRS originally assigned the provisional ratings on
October 9, 2013.
The Notes will be direct senior unsecured obligations of Crew
Energy and will rank equal in right of payment to all of Crew
Energy's existing and future senior indebtedness and senior in
right of payment to any future subordinated indebtedness of the
Company. DBRS understands that proceeds from the sale of the
above-noted securities will be used for general corporate
purposes, including non-permanent repayment of secured credit
facility indebtedness.
DALLAS ROADSTER: TCB Wants Corrected Amended Plan Denied
--------------------------------------------------------
Texas Capital Bank, N.A., asks the U.S. Bankruptcy Court for the
Eastern District of Texas to deny confirmation of Dallas Roadster,
Limited, et al's Corrected Third Amended Plan of Reorganization.
According to TCB, it agreed with the Debtors to the primary terms
of an agreed treatment for the secured claim of TCB subject to
approval of a comprehensive full modification to the current
Corrected Third Amended Plan of Reorganization and approval of
related plan documents.
TCB asserts that the pending Corrected Third Amended Plan cannot
be confirmed for a number of reasons, including, but not limited
to:
a. The Plan violates the "fair and equitable" requirement
for confirmation mandated by 11 U.S.C. Section 1129(b)(1)
with regard to the proposed treatment of the secured claim
of TCB.
b. The Plan is not feasible because it is speculative and
shifts the risk of the reorganization to the creditors.
c. The Plan provides discriminatory treatment as to TCB.
Kenneth Stohner, Jr., Esq., at Jackson Walker L.L.P. represents
TCB.
As reported in the Troubled Company Reporter on Sept. 11, 2013,
according to the Amended Disclosure Statement, as Dallas
Roadster's general partner, IEDA Enterprise is liable for all
debts of Dallas Roadster.
The Plan is based on Dallas Roadster continuing its operations as
it has in the past. Payment of all claims against Dallas Roadster
is made from revenue generated by the Debtor's operations. The
Plan proposes full payment of all Allowed Claims.
The Plan also contemplates that onerous operating restrictions
imposed by Texas Capital Bank will be removed, thus providing
Dallas Roadster with a greater opportunity to return to its
previous profitability than has been available to it while this
Bankruptcy Case has been pending.
On Sept. 10, the Court approved the corrected Disclosure Statement
dated Sept. 9, 2013, as containing adequate information.
A copy of the Disclosure Statement is available for free at
http://bankrupt.com/misc/DALLAS_ROADSTER_4ds.pdf
About Dallas Roadster and IEDA Enterprises
Dallas Roadster, Limited, owns and operates an auto dealership
with locations in both Richardson and Plano, Texas. IEDA
Enterprises, Inc., is the general partner of Roadster.
Dallas Roadster and IEDA Enterprises filed for Chapter 11
bankruptcy (Bankr. E.D. Tex. Case Nos. 11-43725 and 11-43726) on
Dec. 12, 2011. Chief Judge Brenda T. Rhoades oversees both cases.
J. Bennett White, P.C., replaced DeMarco Mitchell, PLLC, as the
Debtors' bankruptcy counsel. Dallas Roadster disclosed $9,407,469
in assets and $4,554,517 in liabilities as of the Chapter 11
filing.
The Debtors' assets were placed under the care of a receiver on
Nov. 16, 2011, pursuant to a state court action by Texas Capital
Bank, National Association.
No trustee has been appointed in the Chapter 11 cases.
DETROIT, MI: Bankruptcy Eligibility Trial Continues
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a financial analyst testified for Detroit at the
second day of trial that he couldn't remember any significant
savings the city managed to realize on its own before the
emergency manager was appointed.
According to the report, another consultant testified that the
city needs to spend $1.25 billion in the next 10 years to
restructure operations, improve decayed infrastructure and remove
blight.
The trial in bankruptcy court, to continue until Oct. 29, will
determine whether Detroit is eligible for Chapter 9 municipal
bankruptcy, the report related. Hoping to ward off reductions in
retiree benefits, city workers contend the city didn't file
bankruptcy in good faith and should be barred from bankruptcy
court.
The trial deals with eligibility issues grounded on disputed
facts. The bankruptcy judge already completed hearings on purely
legal objections where facts weren't disputed.
Detroit Operating on 'Razor's Edge' Before Ch. 9
Joseph Lichterman, writing for Reuters, reported that Detroit was
operating on a "razor's edge" and had no options to avoid running
out of cash and filing bankruptcy, the city's top adviser
testified on Oct. 24 in a trial to determine whether the city is
eligible to file the largest municipal bankruptcy in U.S. history.
According to the report, Kenneth Buckfire, the city's top outside
financial adviser, said the city tried to avoid filing bankruptcy
in July by cutting expenses and looking at city assets that might
be sold to raise cash.
The case is being closely watched for the precedents it could set
for other U.S. cities facing huge healthcare and pension
obligations amid declining revenue, the report related.
Unions, pension funds and others who would face large financial
losses if Detroit is granted bankruptcy protection are arguing
that the city does not qualify and is rushing into bankruptcy as
an effort to avoid meeting its financial obligations, the report
said.
Mr. Buckfire, an investment banker hired by the city in January to
advise on its financial restructuring, described in his testimony
the city's search for cash in the weeks before the state-appointed
emergency manager, Kevyn Orr, determined a bankruptcy filing was
Detroit's best option, the report further related.
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.
DEWEY & LEBOEUF: Baker, DLA et al. Ask Judge Not to Okay Probes
---------------------------------------------------------------
Law360 reported that Baker & McKenzie LLP, DLA Piper and more than
two dozen other major law firms on Oct. 23 filed a joint objection
in New York bankruptcy court to the Dewey & LeBoeuf LLP
liquidation trust's bid for an order authorizing discovery for
unfinished-business inquiries, saying the request is premature and
inappropriate.
According to the report, the firms blasted the trust's request in
an objection brief, saying the July 26 application seeks "invasive
discovery of financial and proprietary information" to pursue
unfinished-business claims against ex-Dewey attorneys and their
current firms.
About Dewey & LeBoeuf
Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 12-12321) to complete the wind-down of its operations.
The firm had struggled with high debt and partner defections.
Dewey disclosed debt of $245 million and assets of $193 million in
its chapter 11 filing late evening on May 29, 2012.
Dewey & LeBoeuf LLP operated as a prestigious, New York City-
based, law firm that traced its roots to the 2007 merger of Dewey
Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird
-- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in
1929. In recent years, more than 1,400 lawyers worked at the firm
in numerous domestic and foreign offices.
At its peak, Dewey employed about 2,000 people with 1,300 lawyers
in 25 offices across the globe. When it filed for bankruptcy,
only 150 employees were left to complete the wind-down of the
business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for
$6 million. The Pension Benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel. The Former Partners hired
Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt &
Winters, LLP, as counsel.
FTI Consulting, Inc. was appointed secured lender trustee for the
Secured Lender Trust. Alan Jacobs of AMJ Advisors LLC, was named
Dewey's liquidation trustee. Scott E. Ratner, Esq., Frank A.
Oswald, Esq., David A. Paul, Esq., Steven S. Flores, Esq., at
Togut, Segal & Segal LLP, serve as counsel to the Liquidation
Trustee.
Dewey's liquidating Chapter 11 plan was approved by the bankruptcy
court in February 2013 and implemented in March. The plan created
a trust to collect and distribute remaining assets. The firm
estimated that midpoint recoveries for secured and unsecured
creditors under the plan would be 58.4 percent and 9.1 percent,
respectively.
DIMENSIONS HEALTH: Moody's Withdraws 'B3' Rating on 1994 Bonds
--------------------------------------------------------------
Moody's Investors Services has withdrawn the B3 rating assigned to
Dimensions Health Corporation's Series 1994 bonds. On October 22,
2013, Prince George's County and Dimensions deposited sufficient
moneys, together with the Debt Service Reserve Fund, to pay the
redemption price of the Bonds on November 21, 2013. Dimensions no
longer has any Moody's rated debt outstanding.
E*TRADE FINANCIAL: DBRS Retains Ratings After 3Q 2013 Results
-------------------------------------------------------------
DBRS Inc. has commented that its ratings of E*TRADE Financial
Corporation remain unchanged following the release of the
Company's 3Q13 results. DBRS rates E*TRADE's Issuer & Senior Debt
at B (high) and E*TRADE Bank's (the Bank) Deposits & Senior Debt
at BB. All ratings have a Stable trend. For the quarter, E*TRADE
reported net income of $47 million on net revenues of $417
million.
Highlights of the quarter include sustained momentum in E*TRADE's
core brokerage franchise, which caters to broad-based retail
clients and corporate services clients, and continued success with
strategic actions such as deleveraging and capital planning.
Importantly, E*TRADE was granted approval by its bank regulator to
upstream capital from the Bank to the Parent, given that the Bank
has substantial excess risk-based capital. DBRS views this
favorably from a ratings perspective, provided that capitalization
at the Bank remains appropriately strong. Following a dividend
distribution of $100 million from the Bank to the Parent, which
boosted corporate cash to $373 million at 3Q13, the Bank continues
to maintain substantial excess risk-based capital of an estimated
$2.2 billion. Increased corporate cash enhances E*TRADE's ability
to not only make payments on but also pay down some of its
corporate debt and reduce its interest costs, subject to
regulatory approvals.
Also positive from a ratings perspective, E*TRADE is consistently
generating sufficient operating income before provisions and taxes
(IBPT) to absorb provisioning. With operating IBPT of $146
million, the Company easily absorbed provisioning of $37 million
in 3Q13, which is at its lowest level since early 2007. With
special mention delinquencies, total at-risk delinquencies, net
charge offs, and provision for loan losses all maintaining their
downward trajectory, the drag on earnings from E*TRADE's legacy
portfolio continues to become less burdensome. The remaining
sizable drag on earnings is corporate interest expense. Despite
being approximately halved from peak levels, corporate interest
expense of $29 million remains elevated and adds pressure to
overall profitability.
E*TRADE's funding and liquidity position remains sound.
Benefiting from its brokerage client franchise, deposits at the
bank fund a sizable portion of the balance sheet; comprising 64%
of total liabilities. Corporate cash has now reached $373
million, sufficient to cover approximately three years' worth of
debt servicing requirements.
Regulatory capital ratios continue to improve at both the holding
company and bank level. On a consolidated basis, E*TRADE reported
a Tier 1 common ratio of 12.9% at 3Q13, up from 12.2% at the prior
quarter. At the Bank level, E*TRADE reported a Tier 1 common
ratio of 22.2% at 3Q13, up from 21.7% at 2Q13. The Company's Tier
1 leverage ratio remains solid at 6.6% at the consolidated level
and 9.5% at the Bank level.
E.H. MITCHELL: Can Employ Robert L. Marrero as Bankruptcy Counsel
-----------------------------------------------------------------
E.H. Mitchell & Company, L.L.C., sought and obtained authority
from the U.S. Bankruptcy Court for the Eastern District of
Louisiana to employ Robert L. Marrero as bankruptcy counsel. Mr.
Marrero's firm will be paid the following hourly rates:
Partners $300
Associates $100 to $200
Para-professionals $75
The Marrero firm assures the Court that it is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code and does not represent any interest adverse to the
Debtors and their estates.
E. H. Mitchell & Company, L.L.C., sought protection under Chapter
11 of the Bankruptcy Code on Oct. 8, 2013, (Case No. 13-12786,
Bankr. E.D. La.). The case is assigned to Judge Jerry A. Brown.
The Debtor is represented by Robert L. Marrero, Esq., at Robert
Marrero, LLC, in New Orleans, Louisiana.
The Debtor estimated its assets to range from $100 million to $500
million and liabilities to range to $1 million to $10 million.
The petition was signed by Michael Furr, secretary/member.
EDISON MISSION: Court Clears NRG to Kick Off Auction
----------------------------------------------------
Jacqueline Palank, writing for Daily Bankruptcy Review, reported
that a bankruptcy judge on Oct. 24 approved bidder protections,
including a $65 million breakup fee, to NRG Energy Inc. as it
works to close a $2.6 billion offer to take Edison Mission Energy
out of Chapter 11 protection next year.
As reported by The Troubled Company Reporter, NRG Energy on Oct.
18 disclosed it has entered into a plan sponsor agreement with
EME, certain of EME's subsidiaries, the unsecured creditors
committee, certain of EME's unsecured noteholders, and the parties
to the Powerton and Joliet sale leaseback transaction to acquire
substantially all of the assets of EME, including its equity
interests in certain of its subsidiaries, for an aggregate
purchase price of $2,635 million (or $1,572 million net of $1,063
million retained cash within EME).
The aggregate purchase price, which is subject to certain post-
closing adjustments, will consist of approximately 12.7 million
shares of NRG common stock (valued at $350 million based upon the
volume-weighted average trading price of the 20 trading days prior
to October 18, 2013) with the balance to be paid in cash on hand.
In connection with the transaction, NRG will also assume non-
recourse debt of approximately $1,545 million, of which $273
million is associated with assets designated as Non-Core Assets
pursuant to the asset purchase agreement.
EME and NRG have entered into an asset purchase agreement, dated
October 18, 2013. The acquisition and transactions contemplated
in the purchase agreement will be consummated as part of an EME
Chapter 11 plan of reorganization to be sponsored by NRG. Each of
EME's major stakeholders has agreed to support and pursue a
Chapter 11 plan sponsored by NRG.
The assets to be acquired include:
-- EME's generation portfolio, which consists of nearly
8,000 net MW of generation capacity located throughout
the US
-- 1,700 MW of wind capacity
-- 1,600 MW of gas-fired capacity
-- 4,300 MW of coal-fired capacity
-- 400 MW of oil and waste coal-fired capacity
-- Edison Mission Marketing and Trading, a proprietary trading
and asset management platform
The proposed plan sponsor transaction provides an outline for a
chapter 11 plan supported by all of the Debtors' major
stakeholders -- including NRG, the official committee of unsecured
creditors, a group of holders of over 45 percent of the amount of
EME's senior unsecured notes (the "Supporting Noteholders"), and a
group of stakeholders with interests in the Powerton-Joliet
leveraged leases and related agreements ("PoJo Parties").
The Plan Sponsor Agreement also contemplates that Supporting
Noteholders holding at least 66-2/3% of the aggregate face amount
of the Notes will execute the Plan Sponsor Agreement on or after
Nov. 6, 2013.
The Debtors intend to file the plan (together with a disclosure
statement and other related pleadings) on or before Nov. 15, 2013.
If the Debtors do not consummate the sale with NRG, they will be
required to pay a breakup fee of $65 million plus NRG's reasonable
and documented out-of-pocket expenses.
EME will also retain and control claims and causes of action
against Edison International and other related parties.
About Edison Mission
Santa Ana, California-based Edison Mission Energy is a holding
company whose subsidiaries and affiliates are engaged in the
business of developing, acquiring, owning or leasing, operating
and selling energy and capacity from independent power production
facilities. EME also engages in hedging and energy trading
activities in power markets through its subsidiary Edison Mission
Marketing & Trading, Inc.
EME was formed in 1986 and is an indirect subsidiary of Edison
International. Edison International also owns Southern California
Edison Company, one of the largest electric utilities in the
United States.
EME and its affiliates sought Chapter 11 protection (Bankr. N.D.
Ill. Lead Case No. 12-49219) on Dec. 17, 2012.
EME has reached an agreement with the holders of a majority of
EME's $3.7 billion of outstanding public indebtedness and its
parent company, Edison International EIX, that, pursuant to a plan
of reorganization and pending court approval, would transition
Edison International's equity interest to EME's creditors, retire
existing public debt and enhance EME's access to liquidity.
The Company's balance sheet at Sept. 30, 2012, showed
$8.17 billion in total assets, $6.68 billion in total liabilities
and $1.48 billion in total equity.
In its schedules, Edison Mission Energy disclosed total assets of
assets of $5,721,559,170 and total liabilities of $6,202,215,094
as of the Petition Date.
The Debtors other than Camino Energy Company are represented by
David R. Seligman, Esq., at Kirkland & Ellis LLP; and James H.M.
Sprayragen, Esq., at Kirkland & Ellis LLP. Counsel to Debtor
Camino Energy Company is David A. Agay, Esq., at McDonald Hopkins
LLC.
Perella Weinberg Partners is acting as the Debtors' financial
advisor and McKinsey & Company Recovery and Transformation
Services is acting as restructuring advisor. GCG, Inc., is the
claims and notice agent.
An official committee of unsecured creditors has been appointed in
the case and is represented by Ira S. Dizengoff, Esq., Stephen M.
Baldini, Esq., Arik Preis, Esq., and Robert J. Boller, Esq., at
Akin Gump Strauss Hauer & Feld LLP in New York; James Savin, Esq.,
and Kevin M. Eide, Esq., at Akin Gump Strauss Hauer & Feld LLP in
Washington, DC; and David M. Neff, Esq., and Brian Audette, Esq.,
at Perkins Coie LLP. The Committee also has tapped Blackstone
Advisory Partners as investment banker and FTI Consulting as
financial advisor.
EME said it doesn't plan to emerge from Chapter 11 until
December 2014 to receive benefits from a tax-sharing agreement
with parent Edison International Inc.
ENBRIDGE ENERGY: DBRS Confirms BB Rating on Jr. Subordinate Notes
-----------------------------------------------------------------
DBRS Inc. has confirmed the Issuer Rating of Enbridge Energy
Partners, L.P. (EEP or the Partnership) at BBB and the ratings on
the Partnership's Senior Unsecured Notes, Junior Subordinated
Notes and Commercial Paper (CP) at BBB, BB (high) and R-2
(middle), respectively, all with Stable trends. The ratings
incorporate DBRS's expectation that EEP's credit ratios, which are
under pressure due to its large growth capex program, will recover
from recent levels, while also recognizing expected continued
improvement in its business risk profile following completion of
its major liquids pipeline projects in 2013 and 2014. DBRS
expects EEP to maintain sufficient liquidity to fully support its
needs in the event of difficult capital market conditions.
Finally, EEP's ratings are also supported by the strong
sponsorship of Enbridge Inc. (ENB, rated A (low)).
DBRS expects EEP's credit metrics to remain under pressure as a
result of its large growth capex program and high distribution
payout. As a master limited partnership (MLP), EEP pays out most
of its cash flow to unitholders, with growth capex and
acquisitions requiring external funding (debt and/or units). DBRS
expects EEP's debt-to-capital ratio to remain near 50% and its
cash flow-to-debt and interest coverage metrics to remain
relatively weak in the near term, prior to recovering over the
medium term.
EEP's business risk profile is expected to continue improving
following completion of many of its major low-risk (due to strong
regulatory and contractual arrangements) liquids pipeline projects
in 2013 and 2014. As a result, EEP's exposure to its higher-risk
(due to volume and commodity price risks) Natural Gas segment (the
subject of an initial public offering (IPO)) is expected to
continue to decline. DBRS expects the Liquids segment to account
for approximately 80% of segment EBITDA over the medium term
compared with 74% in the last 12 months (LTM) ending June 30,
2013.
Finally, EEP's ratings are also supported by the strong
sponsorship of ENB, which, through its wholly owned subsidiary,
Enbridge Energy Company, Inc. (EECI, EEP's general partner (GP)),
concluded a joint funding agreement under which ENB will
effectively fund three-quarters of the $2.5 billion Eastern Access
and the $2.4 billion U.S. Mainline Expansion crude oil pipeline
projects, with the remaining one-quarter funded by EEP. During Q2
2013, EEP issued $1.2 billion of preferred units to EECI and used
the proceeds to reduce CP.
ENCORE CAPITAL: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Encore Capital Corporation
PO BOX 2870
Valley Center, CA 92082
Case No.: 13-10433
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
Southern District of California (San Diego)
Judge: Hon. Margaret M. Mann
Debtor's Counsel: Pro Se
Total Assets: $2.50 million
Total Liabilities: $700,000
The petition was signed by Alan Carrington, secretary.
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
ENDEAVOUR INTERNATIONAL: Completes Organizational Changes
---------------------------------------------------------
Endeavour International Corporation's Board of Directors has
concluded the strategic review process started in February 2013.
The Board of Directors has determined that it is the best
interests of shareholders to retain and exploit its existing asset
base, with the organizational changes and cost savings
initiatives.
"Since the start of the strategic review, Endeavour has achieved
several objectives that have improved the long-term value of its
business, including completion of Bacchus, progression of Rochelle
and continued process improvements at the Alba field. The
decision is the right choice for our shareholders and employees,"
said William L. Transier, chairman, chief executive officer and
president. "A relentless and enthusiastic focus on reducing debt,
being cost efficient and exploiting the underlying value of assets
in our core areas is the best way to create value for our
stakeholders."
Coinciding with the completion of the strategic review process,
Endeavour is closing its London office and consolidating its
technical teams in Aberdeen, Scotland. Derek Neilson has been
promoted to Managing Director of U.K. Operations reporting to Mr.
Transier. Mr. Neilson joined Endeavour in 2008 and has over 28
years of experience in the oil and gas industry. Carl D. Grenz,
executive vice president of International Operations, is no longer
with the Company.
"Consolidating our U.K. operations in Aberdeen will improve
productivity, communications and generate substantial cost
savings. Aberdeen is unquestionably the hub of the U.K. North Sea
oil and gas industry today," said Mr. Transier. "Mr. Neilson's
expertise in the North Sea and understanding of our fields makes
him the right individual to lead our efforts in the next phase of
the Company's growth. He is a highly respected professional in
the energy industry."
At Rochelle, the West development well was completed and tested in
July 2013 and the subsea infrastructure finished earlier in the
year. The Scott platform modifications are completed and first
production from Rochelle is expected imminently.
For the third quarter, the Company is providing revised production
guidance of 7,500 to 8,000 barrels of oil equivalent per day.
Production volumes are lower than originally anticipated primarily
due to the delay in start-up of production at Rochelle and
downtime for annual maintenance work.
Additional information regarding the terms of Mr. Grenz's
separation with the Company is available for free at:
http://is.gd/drHkAu
About Endeavour International
Houston-based Endeavour International Corporation (NYSE: END)
(LSE: ENDV) is an oil and gas exploration and production company
focused on the acquisition, exploration and development of energy
reserves in the North Sea and the United States.
For the year ended Dec. 31, 2012, the Company incurred a net loss
of $126.22 million, as compared with a net loss of $130.99 million
during the prior year. As of June 30, 2013, the Company had $1.54
billion in total assets, $1.41 billion in total liabilities,
$43.70 million in series C convertible preferred stock and $85.12
million in stockholders' equity.
* * *
As reported by the TCR on March 5, 2013, Moody's Investors Service
downgraded Endeavour International Corporation's Corporate Family
Rating to Caa3 from Caa1. Endeavour's Caa3 CFR reflects its weak
liquidity, small production and proved reserve scale, geographic
concentration and the uncertainties regarding its future
performance given the inherent execution risks related to its
offshore North Sea operations for a company of its size.
In the Feb. 22, 2013, edition of the TCR, Standard & Poor's
Ratings Services lowered its corporate credit rating on Houston,
Texas-based Endeavour International Corp. (Endeavour) to 'CCC+'
from 'B-'. The rating action reflects S&P's expectation that
Endeavour could have insufficient liquidity to meet its needs due
to the delay in production from its Rochelle development.
ENDICOTT INTERCONNECT: UST Objects to Davidson Fox Employment
-------------------------------------------------------------
Tracy Hope Davis, United States Trustee for Region 2, seeks to
block the request of Endicott Interconnect Technologies, Inc. and
EI Transportation Company, LLC, for nunc pro tunc appointment of
Davidson Fox & Company, as accountants.
The Debtor filed for Chapter 11 on July 10, 2013. On Oct. 11,
2013, the Court entered an Order reducing the time for notice of
hearing to consider the firm's engagement and scheduled a hearing
for Oct. 24.
The Debtors seek approval of the appointment of Davidson Fox, nunc
pro tunc to the bankruptcy petition date. The Debtors need the
firm to prepare their 2012 federal and state tax returns, and
assist with an ongoing Internal Revenue Service examination.
The Debtors request that the appointment be granted nunc pro tunc
so Davidson Fox can be compensated for the time and expenses
incurred in connection with the preparation of the Debtors' 2012
tax returns that were required to be filed on Sept. 16, 2013.
According to the Debtors, Davidson Fox began the relevant work in
early July 2013. Davison Fox has now completed the preparation of
the Debtor's 2012 tax return.
In addition, the Debtors propose payment of post-petition
retainers under the terms of an Engagement Agreement executed on
Sept. 9, 2013 in the amount of $37,750.00 for tax preparation
services, and $20,000 for audit services.
According to the U.S. Trustee, it is undisputed that the Debtors
knew in advance that the work would be required to be completed
prior to Sept. 16, 2013, yet failed to seek timely appointment of
their accountant or offer any explanation for the delay. The
Debtors seek payment of post-petition retainers for work that has
already been completed. The U.S. Trustee opposes payment of the
post-petition retainer because it is no longer necessary.
Moreover, the U.S. Trustee submits that the Debtors' proposed
Engagement Agreement and the terms thereunder, do not meet the
standard required in the Second Circuit to allow such a nunc pro
tunc appointment. The Debtors make no showing of excusable delay
or unavoidable hardship in seeking retention of Davidson Fox and
the payment of post-petition retainers. Indeed, the Debtors offer
no explanation at all.
Consequently, the U.S. Trustee submits that Debtors' request for
nunc pro tunc appointment of Davidson Fox and for the payment of
post-petition retainer fails to meet the standards established in
the Second Circuit and should therefore be denied.
The Trial Attorney can be reached at:
Erin P. Champion, Esq.
10 Broad Street, Suite 105
Utica, NY 13501
Tel: (315) 793-8191
Fax: (315) 793-8133
About Endicott Interconnect
Endicott Interconnect Technologies, Inc., and its affiliates filed
a Chapter 11 petition (Bankr. N.D.N.Y. Case No. 13-61156) in
Utica, New York, on July 10, 2013, to sell the business before
cash runs out by the end of September. David W. Van Rossum is the
Debtors' sole officer. Bond, Schoeneck & King, PLLC, is counsel
to the Debtor.
Based in Endicott, New York, and formed in 2002, EIT is the
successor to the microelectronics division of IBM Corp. The
products are used in aerospace, defense and medication
applications, among others.
The company sought Chapter 11 bankruptcy protection after
suffering $100 million in operating losses in the last four years.
In addition to $16 million in secured claims, trade suppliers are
owed $34 million. There is another $32 million owing for loans
made by shareholders. The company said the book value of property
is $36 million.
An official committee of unsecured creditors has been appointed in
the case with Avnet Electronics Marketing, Arrow Electronics,
Inc., Acbel Polytech, Inc., Cadence Design Systems, Inc.,
Orbotech, Inc., Tyco Electronics, and High Performance Copper
Foil, Inc. as members. The committee is represented by Arent Fox
LLP.
The official creditors' committee said there could be
$20.8 million in claims to bring against insiders. In August, the
judge authorized the committee to conduct an investigation of the
insiders.
FANNIE MAE: Amy E. Alving Joins Board
-------------------------------------
The Board of Directors of Fannie Mae (formally, the Federal
National Mortgage Association) elected Amy E. Alving to join the
Board. As of Oct. 18, 2013, the Board committees on which Dr.
Alving will serve have not been determined.
Dr. Alving, age 50, served as the chief technology officer and a
senior vice president at Science Applications International
Corporation, an engineering and technology applications company,
from December 2007 to September 2013. Prior positions include
director of the Special Projects Office at the Defense Advanced
Research Projects Agency, White House Fellow, and a tenured
faculty member at the University of Minnesota. Dr. Alving is
currently a member of the Board of Directors of Pall Corporation,
where she serves as a member of the Nominating/Governance
Committee. In addition, she is a member of the Defense Science
Board and the Council on Foreign Relations.
In accordance with Fannie Mae's non-management director
compensation practices, Dr. Alving will be paid a cash retainer at
a rate of $160,000 per year for serving as a Board member. In
accordance with its customary practice, Fannie Mae is entering
into an indemnification agreement with Dr. Alving.
About Fannie Mae
Federal National Mortgage Association, aka Fannie Mae, is a
government-sponsored enterprise that was chartered by U.S.
Congress in 1938 to support liquidity, stability and affordability
in the secondary mortgage market, where existing mortgage-related
assets are purchased and sold.
The U.S. Department of the Treasury owns Fannie Mae's senior
preferred stock and a warrant to purchase 79.9 percent of its
common stock, and Treasury has made a commitment under a senior
preferred stock purchase agreement to provide Fannie with funds
under specified conditions to maintain a positive net worth.
As of June 30, 2013, Fannie Mae had $3.28 trillion in total
assets, $3.26 trillion in total liabilities and $13.24 billion in
total equity.
Conservatorship
Fannie Mae has operated under the conservatorship of the Federal
Housing Finance Agency since Sept. 6, 2008. Fannie Mae has not
received funds from Treasury since the first quarter of 2012. The
funding the company has received under the senior preferred stock
purchase agreement with the U.S. Treasury has provided the company
with the capital and liquidity needed to maintain its ability to
fulfill its mission of providing liquidity and support to the
nation's housing finance markets and to avoid a trigger of
mandatory receivership under the Federal Housing Finance
Regulatory Reform Act of 2008. For periods through March 31,
2013, Fannie Mae has requested cumulative draws totaling $116.1
billion. Under the senior preferred stock purchase agreement, the
payment of dividends cannot be used to offset prior Treasury
draws. Accordingly, while Fannie Mae has paid $35.6 billion in
dividends to Treasury through March 31, 2013, Treasury still
maintains a liquidation preference of $117.1 billion on the
company's senior preferred stock.
In August 2012, the terms governing the company's dividend
obligations on the senior preferred stock were amended. The
amended senior preferred stock purchase agreement does not allow
the company to build a capital reserve. Beginning in 2013, the
required senior preferred stock dividends each quarter equal the
amount, if any, by which the company's net worth as of the end of
the preceding quarter exceeds an applicable capital reserve
amount. The applicable capital reserve amount is $3.0 billion for
each quarter of 2013 and will be reduced by $600 million annually
until it reaches zero in 2018.
The amount of remaining funding available to Fannie Mae under the
senior preferred stock purchase agreement with Treasury is
currently $117.6 billion. Fannie Mae is not permitted to redeem
the senior preferred stock prior to the termination of Treasury's
funding commitment under the senior preferred stock purchase
agreement.
FIBERTOWER CORP: Revised Disclosure Statement Filed
---------------------------------------------------
BankruptcyData reported that FiberTower filed with the U.S.
Bankruptcy Court a Revised Disclosure Statement for its First
Amended Joint Chapter 11 Plan dated September 27, 2013.
According to documents filed with the Court, "In summary, the
principal terms of the Plan . . . are as follows: (i) the holders
of the 2016 Notes . . . will receive one hundred percent (100%) of
the common equity in Reorganized FiberTower, in the form of shares
of New FiberTower Common Stock; and (ii) Reorganized FiberTower
shall receive one hundred percent (100%) of the New FiberTower
Subsidiary Equity Interests in Reorganized FiberTower Network
Services and Reorganized FiberTower Licensing, and Reorganized
FiberTower Licensing shall receive one hundred percent (100%) of
the New FiberTower Subsidiary Equity Interests in Reorganized
FiberTower Spectrum, such that the Debtors' corporate structure
shall effectively remain in place following the Effective Date."
The Disclosure Statement revisions relate primarily to the Federal
Communication Commission's approval of the spectrum portfolio
transfer.
The Court is scheduled to consider the Disclosure Statement on
October 29, 2013.
About FiberTower Corp.
FiberTower Corporation, FiberTower Network Services Corp.,
FiberTower Licensing Corp., and FiberTower Spectrum Holdings
LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos.
12-44027 to 12-44031) on July 17, 2012, together with a plan
support agreement struck with prepetition secured noteholders.
FiberTower is an alternative provider of facilities-based backhaul
services, principally to wireless carriers, and a national
provider of millimeter-band spectrum services. Backhaul is the
transport of voice, video and data traffic from a wireless
carrier's mobile base station, or cell site, to its mobile
switching center or other exchange point. FiberTower provides
spectrum leasing services directly to other carriers and
enterprise clients, and also offer their spectrum services through
spectrum brokerage arrangements and through fixed wireless
equipment partners.
FiberTower's significant asset is the ownership of a national
spectrum portfolio of 24 GHz and 39 GHz wide-area spectrum
licenses, including over 740 MHz in the top 20 U.S. metropolitan
areas and, in the aggregate, roughly 1.72 billion channel pops
(calculated as the number of channels in a given area multiplied
by the population, as measured in the 2010 census, covered by
these channels). FiberTower believes the Spectrum Portfolio
represents one of the largest and most comprehensive collections
of millimeter wave spectrum in the U.S., covering areas with a
total population of over 300 million.
As of the Petition Date, FiberTower provides service to roughly
5,390 customer locations at 3,188 deployed sites in 13 markets
throughout the U.S. The fixed wireless portion of these hybrid
services is predominantly through common carrier spectrum in the
11, 18 and 23 GHz bands. FiberTower's biggest service markets are
Dallas/Fort Worth and Washington, D.C./Baltimore, with additional
markets in Atlanta, Boston, Chicago, Cleveland, Denver, Detroit,
Houston, New York/New Jersey, Pittsburgh, San Antonio/Austin/Waco
and Tampa.
As of June 30, 2012, FiberTower's books and records reflected
total combined assets, at book value, of roughly $188 million and
total combined liabilities of roughly $211 million. As of the
Petition Date, FiberTower had unrestricted cash of roughly $23
million. For the six months ending June 30, 2012, FiberTower had
total revenue of roughly $33 million. With the help of FTI
Consulting Inc., FiberTower's preliminary valuation work shows
that the Company's enterprise value is materially less than $132
million -- i.e., the approximate principal amount of the 9.00%
Senior Secured Notes due 2016 outstanding as of the Petition Date.
The preliminary valuation work is based upon the assumption that
FiberTower's spectrum licenses will not be terminated. Fibertower
Spectrum disclosed $106,630,000 in assets and $175,501,975 in
liabilities as of the Chapter 11 filing.
Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at
Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at
Hogan Lovells and Willkie Farr and Gallagher LLP serve as special
FCC counsel. FTI Consulting serve as financial advisor. BMC
Group Inc. serve as claims and noticing agent. The petitions were
signed by Kurt J. Van Wagenen, president.
Wells Fargo Bank, National Association -- as indenture trustee and
collateral agent to the holders of 9.00% Senior Secured Notes due
2016 owed roughly $132 million as of the Petition Date -- is
represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad
Hoc Committee of Holders of the 9% Secured Notes Due 2016 is
represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya,
Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad
Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark
Elmore, Esq., at Haynes and Boone, LLP, as local counsel.
U.S. Bank, National Association -- in its capacity as successor
indenture trustee and collateral agent to holders of the 9.00%
Convertible Senior Secured Notes due 2012, owed $37 million as of
the Petition Date -- is represented by Michael B. Fisco, Esq., at
Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq.,
at McGuire Craddock & Strother PC as local counsel.
William T. Neary, the U.S. Trustee for Region 6 appointed five
members to the Official Committee of Unsecured Creditors in the
Debtors' cases. The Committee is represented by Otterbourg,
Steindler, Houston & Rosen, P.C., and Cole, Schotz, Meisel, Forman
& Leonard, P.A. Goldin Associates, LLC serves as its financial
advisors.
On March 15, 2013, the Court entered an order authorizing the
Debtors to sell assets that are primarily utilized by the Debtors
to provide wireless backhaul services in the State of Ohio to
Cellco Partnership (dba Verizon Wireless) free and clear for $1.5
million.
In May 2013, FiberTower sought and obtained Court authority to
sell their telecommunications equipment and employ American
Communications, LLC, as telecommunications equipment reseller.
According to the Debtors, the telecommunications equipment, which
was a part of their backhaul business, is no longer necessary in
the conduct of their business. They, however, believe that the
equipment may have resale value that would benefit their estates.
FIBERTOWER NETWORK: Files New 13-Week Cash Collateral Budget
------------------------------------------------------------
Fibertower Network Services Corp., et al., filed with the U.S.
Bankruptcy Court for the Northern District of Texas a 13-week cash
flow forecast pursuant to the terms of a final order authorizing
use of cash collateral which the secured parties assert an
interest. A copy of the new budget is available for free at:
http://bankrupt.com/misc/FIBERTOWERNETWORK_cashcoll_budget.pdf
About FiberTower Corp.
FiberTower Corporation, FiberTower Network Services Corp.,
FiberTower Licensing Corp., and FiberTower Spectrum Holdings
LLC filed for Chapter 11 protection (Bankr. N.D. Tex. Case Nos.
12-44027 to 12-44031) on July 17, 2012, together with a plan
support agreement struck with prepetition secured noteholders.
FiberTower is an alternative provider of facilities-based backhaul
services, principally to wireless carriers, and a national
provider of millimeter-band spectrum services. Backhaul is the
transport of voice, video and data traffic from a wireless
carrier's mobile base station, or cell site, to its mobile
switching center or other exchange point. FiberTower provides
spectrum leasing services directly to other carriers and
enterprise clients, and also offer their spectrum services through
spectrum brokerage arrangements and through fixed wireless
equipment partners.
As of June 30, 2012, FiberTower's books and records reflected
total combined assets, at book value, of roughly $188 million and
total combined liabilities of roughly $211 million.
With the help of FTI Consulting Inc., FiberTower's preliminary
valuation work shows that the Company's enterprise value is
materially less than $132 million -- i.e., the approximate
principal amount of the 9.00% Senior Secured Notes due 2016
outstanding as of the Petition Date. The preliminary valuation
work is based upon the assumption that FiberTower's spectrum
licenses will not be terminated. Fibertower Spectrum disclosed
$106,630,000 in assets and $175,501,975 in liabilities as of the
Chapter 11 filing.
Judge D. Michael Lynn oversees the Chapter 11 case. Lawyers at
Andrews Kurth LLP serve as the Debtors' lead counsel. Lawyers at
Hogan Lovells and Willkie Farr and Gallagher LLP serve as special
FCC counsel. FTI Consulting serve as financial advisor. BMC
Group Inc. serve as claims and noticing agent. The petitions were
signed by Kurt J. Van Wagenen, president.
Wells Fargo Bank, National Association -- as indenture trustee and
collateral agent to the holders of 9.00% Senior Secured Notes due
2016 owed roughly $132 million as of the Petition Date -- is
represented by Eric A. Schaffer, Esq., at Reed Smith LLP. An Ad
Hoc Committee of Holders of the 9% Secured Notes Due 2016 is
represented by Kris M. Hansen, Esq., and Sayan Bhattacharyya,
Esq., at Stroock & Stroock & Lavan LLP. Wells Fargo and the Ad
Hoc Committee also have hired Stephen M. Pezanosky, Esq., and Mark
Elmore, Esq., at Haynes and Boone, LLP, as local counsel.
U.S. Bank, National Association -- in its capacity as successor
indenture trustee and collateral agent to holders of the 9.00%
Convertible Senior Secured Notes due 2012, owed $37 million as of
the Petition Date -- is represented by Michael B. Fisco, Esq., at
Faegre Baker Daniels LLP, as counsel and J. Mark Chevallier, Esq.,
at McGuire Craddock & Strother PC as local counsel.
William T. Neary, the U.S. Trustee for Region 6 appointed five
members to the Official Committee of Unsecured Creditors in the
Debtors' cases. The Committee is represented by Otterbourg,
Steindler, Houston & Rosen, P.C., and Cole, Schotz, Meisel, Forman
& Leonard, P.A. Goldin Associates, LLC serves as its financial
advisors.
On March 15, 2013, the Court entered an order authorizing the
Debtors to sell assets that are primarily utilized by the Debtors
to provide wireless backhaul services in the State of Ohio to
Cellco Partnership (dba Verizon Wireless) free and clear for $1.5
million.
In May 2013, FiberTower sought and obtained Court authority to
sell their telecommunications equipment and employ American
Communications, LLC, as telecommunications equipment reseller.
According to the Debtors, the telecommunications equipment, which
was a part of their backhaul business, is no longer necessary in
the conduct of their business. They, however, believe that the
equipment may have resale value that would benefit their estates.
As reported in the Troubled Company Reporter on Oct. 3, 2013,
FiberTower filed a First Amended Joint Chapter 11 Plan of
Reorganization and related Disclosure Statement. The principal
terms of the Plan are: (i) the holders of the 2016 Notes will
receive 100% of the common equity in Reorganized FiberTower, in
the form of shares of New FiberTower Common Stock; and (ii)
Reorganized FiberTower shall receive 100% of the New FiberTower
Subsidiary Equity Interests in Reorganized FiberTower Network
Services and Reorganized FiberTower Licensing, and Reorganized
FiberTower Licensing will receive 100% of the New FiberTower
Subsidiary Equity Interests in Reorganized FiberTower Spectrum,
such that the Debtors' corporate structure shall effectively
remain in place following the Effective Date.
FLORIDA GAMING: Mulls Asset Sale; In Talks With Silvermark
----------------------------------------------------------
Law360 reported that Florida Gaming Centers Inc., the bankrupt
owner of Casino Miami Jai Alai, has abandoned the prospect of
reorganization and is instead planning an asset sale in late
March, the company told a Florida bankruptcy court on Oct. 22.
According to the report, in a hearing before U.S. Bankruptcy Judge
Robert A. Mark, FGC told the court that it is planning a sale and
is hoping to work out a deal for a stalking horse bid from casino
operator Silvermark LLC, with which FGC had a $129 million stock
purchase agreement.
About Florida Gaming
Florida Gaming Centers Inc. filed for Chapter 11 bankruptcy
(Bankr. S.D. Fla. Case No. 13-29597) in Miami on Aug. 19, 2013.
Florida Gaming Centers operates a casino and jai-alai frontons in
Miami. The Company disclosed debt of $138.3 million and assets of
$180 million in its petition.
Its parent, Florida Gaming Corp. (FGMG:US), and two other
affiliates also sought court protection.
Florida Gaming previously negotiated a sale of virtually all its
assets to casino operator Silvermark LLC for $115 million in cash
and $14 million in assumed liabilities. A provision in the
financing agreement required Florida Gaming to make an additional
payment to the lender -- ABC Funding -- if the assets are sold to
third party. Jefferies LLC was hired to determine that amount,
about $26.8 million, and valued the company at more than $180
million.
Luis Salazar, Esq., Esq., at Salazar Jackson in Miami, represents
Florida Gaming.
ABC Funding, LLC, as Administrative Agent for a consortium of
prepetition lenders, and the prepetition lenders are represented
by Dennis Twomey, Esq., and Andrew F. O'Neill, Esq., at SIDLEY
AUSTIN LLP, in Chicago, Illinois; and Drew M. Dillworth, Esq., and
Marissa D. Kelley, Esq., at STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A., in Miami, Florida. The Prepetition
Lenders are Summit Partners Subordinated Debt Fund IV-A, L.P.,
Summit Partners Subordinated Debt Fund IV-B, L.P., JPMorgan Chase
Bank, N.A., Locust Street Funding LLC, Canyon Value Realization
Fund, L.P., Canyon Value Realization Master Fund, L.P., Canyon
Distressed Opportunity Master Fund, L.P., and Canyon-GRF Master
Fund II, L.P.
FLORIDA GAMING: Committee Retains Development Specialists
---------------------------------------------------------
BankruptcyData reported that the U.S. Bankruptcy Court approved
Florida Gaming's official committee of unsecured creditors'
request to retain Development Specialists as financial advisor at
the following hourly rates: senior consultant at $455 to 660,
consultant at 265 to 450 and junior consultant at 155 to 260.
According to papers filed in Court, "DSI has substantial
experience and expertise in chapter 11 cases in Florida and
throughout the United States, and is qualified to act as Financial
Advisor for the Committee herein. DSI and its professionals and
employees have a wealth of experience in providing crisis
management services to financially-troubled organizations."
About Florida Gaming
Florida Gaming Centers Inc. filed for Chapter 11 bankruptcy
(Bankr. S.D. Fla. Case No. 13-29597) in Miami on Aug. 19, 2013.
Florida Gaming Centers operates a casino and jai-alai frontons in
Miami. The Company disclosed debt of $138.3 million and assets of
$180 million in its petition.
Its parent, Florida Gaming Corp. (FGMG:US), and two other
affiliates also sought court protection.
Florida Gaming previously negotiated a sale of virtually all its
assets to casino operator Silvermark LLC for $115 million in cash
and $14 million in assumed liabilities. A provision in the
financing agreement required Florida Gaming to make an additional
payment to the lender -- ABC Funding -- if the assets are sold to
third party. Jefferies LLC was hired to determine that amount,
about $26.8 million, and valued the company at more than $180
million.
Luis Salazar, Esq., Esq., at Salazar Jackson in Miami, represents
Florida Gaming.
ABC Funding, LLC, as Administrative Agent for a consortium of
prepetition lenders, and the prepetition lenders are represented
by Dennis Twomey, Esq., and Andrew F. O'Neill, Esq., at Sidley
Austin LLP, in Chicago, Illinois; and Drew M. Dillworth, Esq., and
Marissa D. Kelley, Esq., at Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A., in Miami, Florida. The Prepetition
Lenders are Summit Partners Subordinated Debt Fund IV-A, L.P.,
Summit Partners Subordinated Debt Fund IV-B, L.P., JPMorgan Chase
Bank, N.A., Locust Street Funding LLC, Canyon Value Realization
Fund, L.P., Canyon Value Realization Master Fund, L.P., Canyon
Distressed Opportunity Master Fund, L.P., and Canyon-GRF Master
Fund II, L.P.
FOREST CITY: Moody's Raises Senior Unsecured Rating to 'B2'
-----------------------------------------------------------
Moody's Investors Service raised Forest City's senior unsecured
rating to B2 from B3 and revised the rating outlook to stable from
positive.
The following ratings were upgraded with a stable outlook:
Forest City Enterprises, Inc. -- senior unsecured rating at B2
Ratings Rationale:
This rating action reflects Forest City's de-leveraging efforts
including the redemption of its senior notes due 2017 and 2034,
the joint venture with QIC, as well as other asset sales. In the
second half of 2013, Forest City is expected to reduce its debt
further by utilizing cash on hand, asset sale and joint venture
proceeds, as well as taking into account bond redemptions. As a
result of these transactions, Forest City's net debt to EBITDA is
projected to decline to 11.1x at YE2013 from 13.4x at July 31,
2013. Concurrently, the company's fixed charge coverage is
anticipated to increase to 1.5x for the full year, from 1.25x for
the first half of 2013, inclusive of the debt reduction.
Forest City's rating continues to incorporate its profitable
nationwide portfolio diversified in major real estate sectors
(office, retail and multifamily). Moody's acknowledges the
company's efforts to focus its operations and successful divesting
of non-core assets. Moody's also notes Forest City's deep
development expertise as well as its strong franchise in large-
scale, mixed-use, urban projects. Also positively, Forest City
benefits from ample liquidity.
These credit strengths are offset by continued material leverage
and weak fixed charge (although both are on a positive
trajectory). In addition, its significant development exposure has
historically been a credit concern; positively, Forest City has
meaningfully reduced its development pipeline after the recession.
The firm's portfolio remains substantially encumbered, and large
joint ventures continue to be a key part of its strategy; both are
credit negatives.
The stable rating outlook reflects Moody's expectation that Forest
City will at a minimum maintain its current credit profile and
continue its de-leveraging efforts while focusing its portfolio
holdings around its three key property sectors.
Positive rating movement would depend on Forest City successfully
reducing its leverage, net debt/EBITDA , closer to 10.0x and
increasing its fixed charge coverage closer to 1.6x. Positive same
store NOI growth and adequate liquidity, as well as a manageable
development pipeline, would also be needed for an upgrade.
Negative rating pressure would occur from any increases in
leverage, net debt/EBITDA, above 12.0x or reduction in fixed
charge coverage below 1.4x, both on a sustained basis. A large
increase in development exposure or any liquidity challenges would
also be viewed negatively.
Moody's last rating action with respect to Forest City was on
February 1, 2013, when Moody's affirmed the ratings of Forest City
Enterprises, Inc. (senior unsecured debt at B3) and maintained its
positive rating outlook.
FREESEAS INC: May Obtain $10 Million Additional Investment
----------------------------------------------------------
FreeSeas Inc. has entered into a non-binding term sheet with an
institutional investor for an investment of US$10 million into the
Company through the issuance of zero-dividend convertible
preferred stock and warrants, subject to certain terms and
conditions.
Mr. Ion G. Varouxakis, chairman, president and CEO, commented: "We
are particularly pleased to announce that after our recent
extinguishment of bank debt amounting to USD 30 million we are now
in the process of securing additional funds to be added on our
balance sheet as fresh working capital and growth capital. We
look forward to using such capital for the repositioning of the
Company and towards executing on our plans for balance sheet turn
around, and income and revenue growth."
Upon signing the transaction documents, the Company will sell to
the Investor $1.5 million of units, each unit consisting of (i)
one share of Preferred Stock and (ii) a warrant to purchase one
share of stock for every share that the Preferred Stock is
convertible into. The preferred stock issued in the Initial
Closing will be convertible into common stock at the lower of (a)
the closing bid price of the common stock on the day before the
Initial Closing or (b) the price of the common stock on the day
after the registration statement is declared effective by the
Securities and Exchange Commission.
On the date after effectiveness of the registration statement, the
Company will sell to the Investor $8.5 million of Preferred Stock
and warrants. The preferred stock issued in the Second Closing
will be convertible into common stock at the closing bid price of
the common stock on the day of the Second Closing.
The warrants included in the units to be sold at the Initial
Closing and the Second Closing will allow the Investor, for five
years from the date of issuance, to purchase one share of common
stock for every share it could acquire upon exercise of the
securities received at such closing, exercisable at a price equal
to a 30 percent premium to the consolidated closing bid price on
the day prior to the Initial Closing and the Second Closing, as
applicable. Investor may exercise those warrants by paying for
the shares in cash, or on a cashless basis by exchanging such
warrants for common stock using the Black-Scholes value, which is
assumed to have a volatility of 135 percent. In the event that
the Company's common stock trades at a price 25 percent or more
about the exercise price of the warrants for a period of 20
consecutive days (with average daily dollar volume at least equal
to $1 million), the Company may call the warrants for cash.
In addition, the Investor will also receive a second five-year
warrant, exercisable for a period of 90 days, allowing it to
purchase one share of common stock for every two shares it could
acquire upon exercise of the securities received at that closing,
under the same terms as the warrant listed. All warrants issued
to the Investor will not be exercisable by the Investor if it
results in the Investor owning more than 9.9 percent of the
Company's common stock. The warrants will contain customary anti-
dilution protection.
The Company will be required to file a registration statement with
the SEC within 20 days of the Initial Closing, registering the
common stock underlying the (i) Preferred Stock to be issued in
the Initial Closing and Second Closing and (ii) the warrants to be
issued to the Investor. The Company will pay a penalty of 2
percent per month for each month that the registration statement
is not declared effective after 90 days, but those penalties such
cease after six months, assuming the Investor is eligible to sell
shares under Rule 144.
The closing of the investment with the Investor is subject to
several conditions, including the successful negotiation of
transaction documents between the Company and the Investor, the
Company being fully-reporting with the SEC, the Company's common
stock being listed on The NASDAQ Stock Market and the Company
being in compliance with all listing requirements, the absence of
events of default under any financial agreement other than those
identified to the Investor; and other customary conditions for
this type of transaction. In addition, the Second Closing is
conditioned upon the Company having the Registration Statement
effective with the SEC.
The Company will pay the Investor an expense reimbursement fee of
5 percent from the gross proceeds received at each closing. In
addition, the Company is responsible for paying a non-refundable
fee of $75,000 to the Investor's legal counsel for the preparation
of the investment documents. As well, the Investor shall have the
right to participate on the same terms as other investors, up to
25 percent of the amount of any subsequent financing the Company
enters into, for a period of one year from the Second Closing.
Further, the Company will be prohibited from issuing additional
common stock or securities convertible into common stock for a
period of 150 days from the later of the Initial Closing or the
Second Closing, except for issuances pursuant to acquisitions,
joint ventures, license arrangements, leasing arrangements,
employee compensation and the like.
About FreeSeas Inc.
Headquartered in Athens, Greece, FreeSeas Inc., formerly known as
Adventure Holdings S.A., was incorporated in the Marshall Islands
on April 23, 2004, for the purpose of being the ultimate holding
company of ship-owning companies. The management of FreeSeas'
vessels is performed by Free Bulkers S.A., a Marshall Islands
company that is controlled by Ion G. Varouxakis, the Company's
Chairman, President and CEO, and one of the Company's principal
shareholders.
The Company's fleet consists of six Handysize vessels and one
Handymax vessel that carry a variety of drybulk commodities,
including iron ore, grain and coal, which are referred to as
"major bulks," as well as bauxite, phosphate, fertilizers, steel
products, cement, sugar and rice, or "minor bulks." As of
Oct. 12, 2012, the aggregate dwt of the Company's operational
fleet is approximately 197,200 dwt and the average age of its
fleet is 15 years.
Freeseas disclosed a net loss of US$30.88 million in 2012, a net
loss of US$88.19 million in 2011, and a net loss of US$21.82
million in 2010. The Company's balance sheet at Dec. 31, 2012,
showed US$114.35 million in total assets, $106.55 million in
total liabilities and US$7.80 million in total shareholders'
equity.
RBSM LLP, in New York, issued a "going concern" qualification on
the consolidated financial statements for the year ended Dec. 31,
2012. The independent auditors noted that the Company has
incurred recurring operating losses and has a working capital
deficiency. In addition, the Company has failed to meet
scheduled payment obligations under its loan facilities and has
not complied with certain covenants included in its loan
agreements. It has also failed to make required payments to
Deutsche Bank Nederland as agreed to in its Sept. 7, 2012,
amended and restated facility agreement and received notices of
default from First Business Bank. Furthermore, the vast majority
of the Company's assets are considered to be highly illiquid and
if the Company were forced to liquidate, the amount realized by
the Company could be substantially lower that the carrying value
of these assets. These conditions, among others, raise
substantial doubt about the Company's ability to continue as a
going concern.
FRESH & EASY: Auction Scheduled for Nov. 19
-------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Tesco Plc's Fresh & Easy Neighborhood Market Inc.
will go up for auction on Nov. 19 under procedures approved on
Oct. 24 by the bankruptcy court in New York.
According to the report, the first bid will be made by Ron
Burkle's Yucaipa Cos. Competing offers are due Nov. 15. A
hearing to approve the sale will take place Nov. 21. The sale
will be six days later than the company wanted.
Assuming there is no competitive bidding, a Tesco affiliate will
lend Yucaipa $120 million and receive warrants to buy as much as
10 percent of the equity in the reorganized supermarket chain, the
report related. Tesco also will retain 22.5 percent of the equity
in the reorganized chain.
The company said the Yucaipa offer was the only proposal that
would avoid liquidation.
Yucaipa will take on about 150 markets along with a production
facility in Riverside, California. Fresh & Easy came into
bankruptcy operating 167 stores in the western U.S. The company
also owns 61 non-operating locations and leases 36.
Peg Brickley, writing for Daily Bankruptcy Review, reported that
the official committee of unsecured creditors decided not to
oppose the rushed bankruptcy auction plan, but may oppose the
sale, said Pachulski Stang Ziehl & Jones's Jeffrey Pomerantz,
attorney for the panel, the report further related. According to
Mr. Pomerantz, Yucaipa is negotiating to amend the terms of its
offer, and creditors are not happy.
"We don't support any changes to the deal," he said, the report
added. Talks are going on that may result in a joint Chapter 11
plan backed by the creditors and the company, he said, but when it
comes to the sale, creditors are determined to hold Yucaipa to the
terms spelled out in the "stalking horse," or opening bid,
agreement.
About Fresh & Easy Neighborhood Market Inc.
Fresh & Easy Neighborhood Market Inc., and its affiliate filed
Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-12569 and
13-12570) on Sept. 30, 2013. The petitions were signed by James
Dibbo, chief financial officer. Judge Kevin J. Carey presides
over the case.
Fresh & Easy owes $738 million to Cheshunt, England-based Tesco,
the U.K.'s biggest retailer. Fresh & Easy never made a profit and
lost an average of $22 million a month in the 12 months ended in
February, according to court papers.
Jones Day serves as lead bankruptcy counsel. Richards, Layton &
Finger, P.A., serves as local Delaware counsel. Alvarez & Marsal
North America, LLC, serves as financial advisors, and Alvarez &
Marsal Securities, LLC, serves as investment banker. Prime Clerk
LLC acts as the Debtors' claims and noticing agent. The Debtors
estimated assets of at least $100 million and liabilities of at
least $500 million.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five
creditors to serve in the Official Committee of Unsecured
Creditors in the Chapter 11 cases of Fresh & Easy Neighborhood
Market Inc., et al.
FURNITURE BRANDS: Panel Taps Houlihan Lokey as Investment Banker
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Furniture Brands
International, Inc. and its debtor-affiliates seeks authorization
from the U.S. Bankruptcy Court for the District of Delaware to
retain Houlihan Lokey Capital, Inc., investment banker, nunc pro
tunc to Sept. 24, 2013.
The Committee requires Houlihan Lokey to:
(a) analyze business plans and forecasts of the Debtors;
(b) evaluate the assets and liabilities of the Debtors;
(c) assess the financial issues and options concerning:
- the sale of the Debtors, either in whole or in part, and
- the Debtors' plans of reorganization or liquidation or
any other plans;
(d) analyze and review the financial and operating statements
of the Debtors;
(e) provide such financial analyses as the Committee may
require in connection with the cases;
(f) assist in the determination of an appropriate capital
structure for the Debtors;
(g) assist with a review of the Debtors' employee benefit
programs, including key employee retention, incentive,
pension and other post-retirement benefit plans;
(h) analyze strategic alternatives available to the Debtors;
(i) evaluate the Debtors' debt capacity in light of its
projected cash flows;
(j) assist in the review of claims and with the reconciliation,
estimation, settlement, and litigation with respect
thereto;
(k) assist the Committee in identifying potential alternative
sources of liquidity in connection with any debtor-in-
possession financing, any Chapter 11 plans or otherwise;
(l) represent the Committee in negotiations with the Debtors
and third parties with respect to any of the foregoing;
(m) provide testimony in court on behalf of the Committee with
respect to any of the foregoing, if necessary; and
(n) provide such other investment banking services as may be
Required by additional issues and developments not
anticipated on the effective date, as described in Section
5 of the Engagement Letter.
Houlihan Lokey will be paid in advance a non-refundable monthly
cash fee of $50,000. The first payment shall be made upon the
approval of this Agreement by the Bankruptcy Court and shall be in
respect of the first month after the Sept. 24, 2013 effective
date. Each subsequent monthly fee shall accrue on the 24th of
each month commencing on Oct. 24, 2013 and shall be payable on the
later of Oct. 24, 2013 and the date of the approval of this
agreement by the Bankruptcy Court and continuing during the term
of the agreement. Each monthly fee shall be earned upon Houlihan
Lokey's receipt thereof in consideration of Houlihan Lokey
accepting this engagement and performing services as described
herein. Fifty percent of all monthly fees after the second
monthly fee received by Houlihan Lokey and approved by the final
order of the Bankruptcy Court shall be credited against the
Deferred Fee to which Houlihan Lokey becomes entitled, except
that, in no event, shall such Deferred Fee be reduced below zero;
and
In addition to the other fees provided, the Debtors shall pay
Houlihan Lokey a fee "Deferred Fee" equal to the greater of
$500,000 and 2.0% of the difference between
(a) the Aggregate Consideration provided for in the stalking
horse bid proposed by KPS Capital Partners, LP on
Sept. 23, 2013, the economic terms of which are summarized
on Exhibit "A" hereto (the "Baseline Bid") and
(b) the sum of the Aggregate Consideration provided for in the
successful bid plus the value of any additional excluded
assets not included as Excluded Assets in the baseline bid.
Further, for the avoidance of doubt, Aggregate
Consideration for purposes of calculating a Deferred Fee
may include consideration from multiple transactions which
together or separately may comprise a Successful Bid and
which could be executed under the Bid Procedures Order or
through an alternative methodology, including pursuant to
Sec. 1129 of the Bankruptcy Code. Notwithstanding, in no
event will the Deferred Fee payable to Houlihan Lokey
exceed 1.0% of the Aggregate Consideration. The Deferred
Fee shall be paid in cash.
Houlihan Lokey will also be reimbursed for reasonable out-of-
pocket expenses incurred.
Andrew Turnbull, managing director of Houlihan Lokey, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
The Court for the District of Delaware will hold a hearing on the
motion on Nov. 22, 2013, at 2:00 p.m. Objections, if any, are due
Nov. 1, 2013, at 4:00 p.m.
Blank Rome can be reached at:
Andrew Turnbull
Houlihan Lokey Capital, Inc.
123 North Wacker Drive, 4th Floor
Chicago, IL 60606
Tel: (312) 456-4719
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.
GASCO ENERGY: Obtains Financing From Markham and Orogen Energy
--------------------------------------------------------------
Markham LLC, Orogen Energy, Inc., as Purchasers, and certain
noteholders of Gasco Energy, Inc., entered into Purchase and Sale
Agreements pursuant to which, among other things, the Purchasers
acquired:
(i) $45,168,000 in aggregate outstanding principal amount of
the Company's 5.5 percent Convertible Senior Notes due
2015, representing 100 percent of the issued and
outstanding Notes;
(ii) 182,065 shares of the Company's Series C Convertible
Preferred Stock, par value $0.001 per share, representing
100 percent of the issued and outstanding Series C
Convertible Preferred Stock; and
(iii) 2,743,818 shares of common stock, par value $0.0001 per
share.
Those securities represented beneficial ownership of less than ten
percent of the issued and outstanding Common Stock pursuant to the
limitations set forth in the indenture governing the Notes and the
certificate of designation governing the Series C Shares.
Credit Agreement
On Oct. 18, 2013, in exchange for the issuance of 250,000 shares
of Common Stock by the Company to the Purchasers, the Company and
the Purchasers entered into a Credit Agreement, pursuant to which,
among other things, the Purchasers extended credit to the Company
in the maximum principal amount of $5,000,000 in the form of a
revolving credit facility to fund working capital and capital
expenditure requirements of the Company. The Revolving Credit
Facility bears interest at a fixed annual rate of 8 percent and
becomes due on Feb. 18, 2014.
On Oct. 18, 2013, the Company borrowed $2,500,000 under the
Revolving Credit Facility, which was used for general corporate
purposes, leaving the Company with $2,500,000 of credit
availability under the Revolving Credit Facility.
A copy of the Credit Agreement is available for free at:
http://is.gd/4CauxF
Securities Purchase Agreement
Following the consummation of the transactions contemplated by the
Credit Agreement, the Company and the Purchasers entered into a
Securities Purchase Agreement, pursuant to which, in exchange for
the Purchasers transferring the Notes and the Series C Shares to
the Company, the Company issued to the Purchasers an aggregate of
(i) 393,550,372 shares of Common Stock, and (ii) 50,000 shares of
Series D Convertible Preferred Stock, par value $0.001 per share,
of the Company which Series D Preferred Stock was created pursuant
to the Certificate of Designation filed by the Company on Oct. 15,
2013, with the Secretary of State of the State of Nevada. The
Notes and the Series C Shares were cancelled following their
acquisition by the Company.
On Oct. 18, 2013, the Company sold a total of 393,800,372 shares
of Common Stock and 50,000 shares of Series D Preferred Stock to
the Purchasers.
Change in Control
Following the closings under the Agreements and completion of the
transactions, on Oct. 18, 2013, a change in control of the Company
occurred. As of Oct. 18, 2013, the Purchasers beneficially own
396,544,190 shares of Common Stock and 50,000 shares of Series D
Preferred Stock, which are convertible into 7,295,744,128 shares
of Common Stock. Those shares of Common Stock and Series D
Preferred Stock together represent beneficial ownership of
approximately 97.9 percent of the Company's issued and outstanding
Common Stock.
Board Composition
On Oct. 18, 2013, immediately following the closing of the
Securities Purchase Agreement, the Company (a) set the size of the
Board of Directors to three members effective immediately, (b)
accepted the resignations of Richard J. Burgess, Charles B.
Crowell, Steven D. Furbush and John A. Schmit from the Board
effective immediately, (c) appointed G. Wade Stubblefield to serve
as a member of the Board effective immediately, and (d) appointed
L. Edward Parker to serve as a member of the Board effective
immediately following the Company's compliance with the
requirements of Section 14(f) of the Securities Exchange Act of
1934, as amended. As a result, immediately after the closing of
the Securities Purchase Agreement, Messrs. Langdon and
Stubblefield constituted the entire Board, and, upon the Company's
compliance with Section 14(f) of the Exchange Act, Mr. Parker will
join the Board.
As to the resigning directors, Mr. Crowell served on the Executive
Committee and was Chairman of the Board; Mr. Burgess served on the
Audit Committee, the Compensation Committee and the Nominating
Committee; Mr. Furbush served on the Audit Committee, the
Compensation Committee and the Nominating Committee; and Mr.
Schmit served on the Audit Committee and the Executive Committee
and was the Chairman of the Compensation Committee and the
Nominating Committee.
Certificate of Designation
The Company filed the Certificate of Designation with the
Secretary of State of the State of Nevada thereby designating the
Series D Preferred Stock. The Certificate of Designation was
approved by the Board as constituted at that time on Oct. 15,
2013, and did not require a stockholder vote.
Certificate of Withdrawal
On Oct. 18, 2013, the Company filed a Certificate of Withdrawal of
Certificate of Designation with the Secretary of State of the
State of Nevada, thereby withdrawing the certificates of
designation establishing the Company's Series B Convertible
Preferred Stock, $0.001 par value per share and the Series C
Shares.
Bylaw Amendment
On Oct. 15, 2013, the Board, as constituted at that time, approved
an amendment to the bylaws of the Company. Pursuant to the Bylaw
Amendment, the stockholders of the Company holding majority voting
power may now act by written consent without a meeting and the
number of directors was amended to be not less than one and no
more than three.
About Gasco Energy
Denver-based Gasco Energy, Inc. -- http://www.gascoenergy.com--
is a natural gas and petroleum exploitation, development and
production company engaged in locating and developing hydrocarbon
resources, primarily in the Rocky Mountain region and in
California's San Joaquin Basin. Gasco's principal business is the
acquisition of leasehold interests in petroleum and natural gas
rights, either directly or indirectly, and the exploitation and
development of properties subject to these leases. Gasco focuses
its drilling efforts in the Riverbend Project located in the Uinta
Basin of northeastern Utah, targeting the oil-bearing Green River
Formation and the natural gas-prone Wasatch, Mesaverde, Blackhawk,
Mancos, Dakota and Morrison formations.
In its auditors' report on the consolidated financial statements
for the year ended Dec. 31, 2012, KPMG LLP, in Denver, Colorado,
expressed substantial doubt about Gasco Energy's ability to
continue as a going concern. The independent auditors noted that
the Company has suffered recurring losses and negative cash flows
from operations.
The Company reported a net loss of $22.2 million on $8.9 million
of revenues in 2012, compared with a net loss of $7.3 million on
$18.3 million of revenues in 2011.
As of June 30, 2013, the Company had $53.16 million in total
assets, $40.05 million in total liabilities and $13.10 million in
total stockholders' equity.
Bankruptcy Warning
To continue as a going concern, the Company said it must generate
sufficient operating cash flows, secure additional capital or
otherwise pursue a strategic restructuring, refinancing or other
transaction to provide it with additional liquidity. The
Company's ability to do so will depend on numerous factors, some
of which are beyond its control. For example, the urgency of the
Company's liquidity situation may require it to pursue such a
transaction at an inopportune time when the Company has little or
no negotiating leverage.
"The Company has engaged Stephens, Inc., a financial advisor, to
assist it in evaluating potential strategic alternatives,
including a sale of the Company or all of its assets. It is
possible these strategic alternatives will require the Company to
make a pre-packaged, pre-arranged or other type of filing for
protection under Chapter 11 of the U.S. Bankruptcy Code. If the
Company is unable to generate sufficient operating cash flows,
secure additional capital or otherwise restructure or refinance
the business before September 30, 2013, it will not have adequate
liquidity to fund its operations and meet its obligations
(including its debt payment obligations), the Company will not be
able to continue as a going concern, and could potentially be
forced to seek relief through a filing under Chapter 11 of the
U.S. Bankruptcy Code. In addition, the Company is in default on
its outstanding 2015 Notes under the Indenture, which could result
in the filing of an involuntary petition for bankruptcy against
the Company," the Company said in the quarterly report for the
period ended June 30, 2013.
GATEHOUSE MEDIA: Has Final Cash Use Until Prepack Confirmation
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that newspaper publisher GateHouse Media Inc., which plans
on being in bankruptcy reorganization about six weeks, received
final court approval on Oct. 23 to use cash representing
collateral for secured lenders' claims.
According to the report, there were no objections to use of cash
collateral, so the bankruptcy judge in Delaware dispensed with a
hearing.
The judge will hold a confirmation hearing on Nov. 6 to consider
approval of the plan worked out before the Chapter 11 filing on
Sept. 27, the report related. At the November hearing, the judge
must first determine that disclosure materials used before
bankruptcy to solicit votes contained adequate information.
GateHouse's publications include 78 daily and 235 weekly
newspapers, plus 343 associated websites. Last year, revenue of
$491 million resulted in a $29.8 million net loss. During the
first six months of 2013, revenue of $230.2 million produced a
$31.6 million net loss.
The GateHouse bankruptcy is part of a program by Fortress
Investment Group LLC for cobbling together a chain of more than
430 daily, weekly and community newspapers. Alongside the
GateHouse transaction, Newcastle Investment Corp. paid $87
million to buy Dow Jones Local Media Group Inc. from News Corp.
The acquired company has eight daily and 15 weekly newspapers in 7
states. Local Media will manage GateHouse.
The GateHouse reorganization plan gives holders of $1.2 billion in
secured debt the option of taking 40 percent in cash or a share in
ownership. Fortress owns 52 percent, or $626 million of the
secured debt. Fortress also has 39.6 percent of GateHouse's
equity, according to data compiled by Bloomberg.
New York-based Fortress will convert its debt to equity in
Fairport, New York-based GateHouse. Disclosure materials given to
creditors showed the stock option as representing a recovery of 36
percent to 48.5 percent, based on the estimated range for the
reorganized company's enterprise value.
General unsecured creditors owed $15 million will be paid in full.
The petition listed assets of $433.7 million and liabilities
totaling $1.28 billion.
About GateHouse Media
GateHouse Media, Inc. -- http://www.gatehousemedia.com/--
headquartered in Fairport, New York, is one of the largest
publishers of locally based print and online media in the United
States as measured by its 97 daily publications. GateHouse Media
currently serves local audiences of more than 10 million per week
across 21 states through hundreds of community publications and
local Web sites.
As of June 30, 2013, the Company had $433.70 million in total
assets, $1.28 billion in total liabilities and a $848.85 million
total stockholders' deficit.
GateHouse Media and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Case No. 13-12503, Bankr. D.Del.) on
Sept. 27, 2013. The case is assigned to Judge Mary F. Walrath.
The Debtors are represented by Patrick A. Jackson, Esq., and
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware. Their financial advisor is Houlihan
Lokey Capital, Inc. Epiq Bankruptcy Solutions, LLC, serves as
their claims and noticing agent.
GLOBAL DIGITAL: Reports $2.35-Mil. Net Loss in Q3 Ended Sept. 30
----------------------------------------------------------------
Global Digital Solutions, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, reporting a
net loss of $2,348,888 for the three months ended Sept. 30, 2013,
compared to a net loss of $165,885 for the same period last year.
The Company's balance sheet at Sept. 30, 2013, showed $2,360,796
in total assets, $726,882 in total liabilities, and stockholders'
equity of $1,633,914.
A copy of the Form 10-Q is available at:
http://is.gd/sNpn2C
About Global Digital Solutions
Global Digital Solutions, Inc., does not have significant
operations. The company focuses on small arms manufacturing.
Previously, it was engaged in providing telecom and data
engineering services.
Global Digital Solutions, Inc.'s independent registered accounting
firm has expressed, at December 31, 2012, substantial doubt about
its ability to continue as a going concern as a result of its
history of net loss. The ability to achieve and maintain
profitability and positive cash flow is dependent upon its ability
to successfully execute the plans to pursue the acquisition of
Airtronic.
GMX RESOURCES: Files Plan; Disclosure Statement Hearing on Dec. 3
-----------------------------------------------------------------
GMX Resources filed with the U.S. Bankruptcy Court a Chapter 11
Plan of Reorganization and related Disclosure Statement.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the plan based on a settlement between senior lenders
and unsecured creditors.
BankruptcyData reports that the Disclosure Statement provides
that, "The Restructuring will reduce the amount of the Debtors'
outstanding indebtedness by approximately $505,000,000 under the
Indentures as follows: (i) satisfaction of $338,000,000 of the
Senior Secured Notes through conversion of the Senior Secured
Noteholders Secured Claim into all of the issued and outstanding
shares of Reorganized GMXR Common Stock and [63.7586]% of the New
GMXR Interests; (ii) waiver of an approximately $64,000,000
deficiency claim by the Holders of Senior Secured Notes if Class 4
votes to accept the Plan, or discharge of such deficiency claim
with such claim being treated as a General Unsecured Claim if
Class 4 votes to reject the Plan; (iii) discharge of the Second-
Priority Notes in the approximate amount of $51,500,000, with such
claims being treated as General Unsecured Claims under Class 4;
(iv) discharge of the Convertible Notes in the approximate amount
of $48,296,000, with such claims being treated as General
Unsecured Claims under Class 4; and (v) discharge of the Old
Senior Notes in the approximate amount of $1,970,000, with such
claims being treated as General Unsecured Claims under Class 4."
According to Bloomberg, the bankruptcy court in Oklahoma City
scheduled a hearing on Dec. 3 for approval of disclosure materials
explaining how senior secured noteholders in substance will assume
ownership in exchange for $338 million of the $402.4 million
they're owed. The disclosure statement pegs their recovery at 83
percent, the report related. The senior noteholders will waive
their $64 million deficiency claim if unsecured creditors vote in
favor of the plan.
Second-lien notes totaling $51.5 million and $42.3 million in
convertible notes will be treated as unsecured debt. Similarly,
$2 million in old senior notes will be in the class of unsecured
creditors.
Unsecured creditors will share $1.5 million in cash, for a
recovery estimated at 1 percent or an unknown larger amount.
Bloomberg notes that before the plan arrived, the unsecured
creditors' committee objected to selling the assets to lenders in
exchange for debt. The lenders had won an auction to buy the
assets in exchange for $338 million in secured debt. The committee
said the sale would have left nothing for unsecured creditors.
The settlement scrapped the sale in favor of giving ownership to
senior noteholders through the plan.
In total, the plan reduces debt by $505 million, according to the
disclosure statement.
Bloomberg says the bankruptcy judge put unsecured creditors' backs
to the wall when she ruled in August that the lenders were owed
$402.4 million because a so-called make-whole premium was owing
even though it became due as a consequence of the Chapter 11
filing.
The bankruptcy is financed with a $50 million loan provided by
senior noteholders including Chatham Asset Management LLC, GSO
Capital Partners, Omega Advisors Inc. and Whitebox Advisors
LLC.
The $294.3 million in 11 percent first-lien notes due in 2017 last
traded on Aug. 29 for 86.15 cents on the dollar, according to
Trace, the bond-price reporting system of the Financial Industry
Regulatory Authority. The second-lien notes last traded for less
than 1 cent, Trace reported. The $48.3 million in senior unsecured
notes due in 2015 traded on Oct. 22 for 1.1 cents on the dollar,
according to Trace.
For the nine months ended Sept. 30, GMX reported sales of $48.3
million and a net loss of $206.7 million, including $166.2 million
in asset-impairment charges.
About GMX Resources
GMX Resources Inc. -- http://www.gmxresources.com/-- is an
independent natural gas production company headquartered in
Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas &
Louisiana, 24 proved developed non-producing reservoirs, 48 proved
undeveloped locations and several hundred other development
locations. GMXR has 9,000 net acres on the Sabine Uplift of East
Texas. GMXR has 7 producing wells in New Mexico.
GMX filed a Chapter 11 petition in its hometown (Bankr. W.D. Okla.
Case No. 13-11456) on April 1, 2013, so secured lenders can buy
the business in exchange for $324.3 million in first-lien notes.
GMX listed assets for $281.1 million and liabilities totaling
$458.5 million.
GMX missed a payment due in March 2013 on $51.5 million in second-
lien notes. Other principal liabilities include $48.3 million in
unsecured convertible senior notes.
The DIP financing provided by senior noteholders requires court
approval of a sale within 75 days following approval of sale
procedures. The lenders and principal senior noteholders include
Chatham Asset Management LLC, GSO Capital Partners, Omega Advisors
Inc. and Whitebox Advisors LLC.
David A. Zdunkewicz, Esq., at Andrews Kurth LLP, represents the
Debtors as counsel.
Looper Reed is substituted as counsel for the Official Committee
of Unsecured Creditors in place of Winston & Strawn LLP, effective
as of April 25, 2013. The Committee tapped Conway MacKenzie,
Inc., as financial advisor.
HARRISBURG, PA: Controller Can't Stop City's Restructuring Plan
---------------------------------------------------------------
Law360 reported that a Pennsylvania appeals court said on Oct. 23
that Harrisburg's city controller could not block the cash-
strapped state capital's plan to restructure more than $350
million in debt from a bungled incinerator project, finding his
objections were filed too late and that he lacked standing.
According to the report, Commonwealth Court Judge Bonnie Brigance
Leadbetter rejected City Controller Daniel Miller's objections to
a plan for settling the debt stemming from a trash-to-energy
incinerator project, noting that further delays would put the
city's fiscal recovery at risk.
About Harrisburg, Pennsylvania
The city of Harrisburg, in Pennsylvania, is coping with debt
related to a failed revamp of an incinerator. The city is
$65 million in default on $242 million owing on bonds sold to
finance an incinerator that converts trash to energy.
The Harrisburg city council voted 4-3 on Oct. 11, 2011, to
authorize the filing of a Chapter 9 municipal bankruptcy (Bankr.
M.D. Pa. Case No. 11-06938). The city claims to be insolvent,
unable to pay its debt and in imminent danger of having
tax revenue seized by holders of defaulted bonds.
Judge Mary D. France presided over the Chapter 9 case. Mark D.
Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's
counsel. The petition estimated $100 million to $500 million in
assets and debts. Susan Wilson, the city's chairperson on Budget
and Finance, signed the petition.
Harrisburg said in court papers it is in imminent jeopardy through
six pending legal actions by creditors with respect to a number of
outstanding bond issues relating to the Harrisburg Materials,
Energy, Recycling and Recovery Facilities, which processes waste
into steam and electrical energy. The owner and operator of the
incinerator is The Harrisburg Authority, which is unable to pay
the bond issues. The city is the primary guarantor under each
bond issue. The lawsuits were filed by Dauphin County, where
Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and
Covanta Harrisburg Inc.
The Commonwealth of Pennsylvania, the County of Dauphin, and
Harrisburg city mayor Linda D. Thompson and other creditors and
interested parties objected to the Chapter 9 petition. The state
later adopted a new law allowing the governor to appoint a
receiver.
Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss
Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg,
P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to
the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey
G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor.
In November 2011, the Bankruptcy Judge dismissed the Chapter 9
case because (1) the City Council did not have the authority under
the Optional Third Class City Charter Law and the Third Class City
Code to commence a bankruptcy case on behalf of Harrisburg and (2)
the City was not specifically authorized under state law to be a
debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2).
Dismissal of the Chapter 9 petition was upheld in a U.S. District
Court.
That same month, the state governor appointed David Unkovic as
receiver for Harrisburg. Mr. Unkovic is represented by the
Municipal Recovery & Restructuring group of McKenna Long &
Aldridge LLP, led by Keith Mason, Esq., co-chair of the group.
Mr. Unkovic resigned as receiver March 30, 2012. Mr. Unkovic was
replaced by William Lynch as receiver.
HAWAII OUTDOOR: Ch.11 Trustee Seeks to Sell Hotel to America Asia
-----------------------------------------------------------------
David C. Farmer, Chapter 11 trustee of Hawaii Outdoor Tours, Inc.,
asks the U.S. Bankruptcy Court for the District of Hawaii to
approve the sale of substantially all of the Debtor's assets
comprising the "Naniloa Volcanoes Resort and Naniloa Volcanoes
Golf Club," pursuant to a purchase and sale agreement dated
Oct. 21, 2013, between the trustee, as Seller, and America Asia
Travel Center Inc., a California corporation, Ramesh Manchanda,
and Nirmal Kumar, together, as purchaser.
The Chapter 11 trustee also seeks authority to distribute a
portion of the sales proceeds to (a) pay all usual and customary
closing costs paid by the Seller as provided in the PSA; and (b)
fund a reserve, subject to mutual agreement with First-Citizens
Bank in an amount that the trustee believes is appropriate for
allowed administrative expense claims.
A copy of the terms of sale is available for free at
http://bankrupt.com/misc/HAWAIIOUTDOOR_sale.pdf
Timothy J. Hogan, Esq., represents the Chapter 11 trustee.
About Hawaii Outdoor Tours
Hawaii Outdoor Tours, Inc., operator of the Naniloa Volcanoes
Resort in Hilo, Hawaii, filed a Chapter 11 petition (Bankr. D.
Haw. Case No. 12-02279) in Honolulu on Nov. 20, 2012. Naniloa
Volcanoes is a 382-room hotel with a nine-hole golf course. The
64-acre property is subject to a 65-year lease, commencing Feb. 1,
2006, and provides for a total ground rent for the first 10 years
of $500,000 annually. The Debtor used a $10 million loan from
First Regional Bank and $10 million of its own cash to invest in
the property.
First-Citizens Bank & Trust Company, which acquired the First
Regional note from the Federal Deposit Insurance Corp., commenced
foreclosure proceedings in August. First-Citizens Bank asserts a
claim of $9.95 million. The Debtor believes that the value of the
hotel property exceeds the amount of the First-Citizens Bank note.
Just the bricks and mortar alone was valued in excess of
$35 million by First Regional's appraiser and the insurance
company.
Bankruptcy Judge Robert J. Faris oversees the case. Ramon J.
Ferrer, Esq., represents the Debtor as counsel.
In its schedules, the Debtor disclosed $52,492,891 in assets and
$11,756,697 in liabilities. The petition was signed by CEO
Kenneth Fujiyama.
Ted N. Petitt, Esq., represents secured creditor First-Citizens
Bank as counsel. Cynthia M. Johiro, Esq., represents the State of
Hawaii Department of Taxation as counsel.
Timothy J. Hogan, Esq., represents David C. Farmer, the Chapter 11
Trustee, as counsel.
Christopher J. Muzzi, Esq., at Tsugawa Biehl Lau & Muzzi, LLLC,
represents the Official Committee of Unsecured Creditors as
counsel.
HEALTHWAREHOUSE.COM INC: Incurs $268,987 Loss in June 30 Quarter
----------------------------------------------------------------
HealthWarehouse.com, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, reporting a
net loss of $268,987 on $2,674,761 of net sales for the three
months ended June 30, 2013, compared to a net loss of $1,602,670
on $2,997,326 of net sales for the same period last year.
The Company's balance sheet at June 30, 2013, showed $1,448,537 in
total assets, $5,053,856 in total liabilities, and stockholders'
deficit of $3,605,319.
A copy of the Form 10-Q is available at:
http://is.gd/2FmKkc
$4.08-Mil. Loss 2Q Ended March 31
HealthWarehouse.com, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, reporting a
net loss of $4,078,366 on $2,409,916 of net sales for the three
months ended March 31, 2013, compared to a net loss of $1,550,312
on $3,153,607 of net sales for the same period last year.
The Company's balance sheet at March 31, 2013, showed $1,838,135
in total assets, $5,327,325 in total liabilities, and
stockholders' deficit of $3,489,190.
A copy of the Form 10-Q is available at:
http://is.gd/MrfZGs
About HealthWarehouse.com
HealthWarehouse.com, Inc., headquartered in Florence, Kentucky,
is a U.S. licensed virtual retail pharmacy ("VRP") and healthcare
e-commerce company that sells brand name and generic prescription
drugs as well as over-the-counter ("OTC") medical products.
The Company reported a net loss of $5.57 million on $11.08
million of net sales for the year ended Dec. 31, 2012, as
compared with a net loss of $5.71 million on $10.36 million of
net sales during the prior year. As of Dec. 31, 2012, the
Company had $2.15 million in total assets, $9.94 million in total
liabilities and a $7.79 million total stockholders' deficiency.
Marcum LLP, in New York, issued a "going concern" qualification on
the consolidated financial statements for the year ended
Dec. 31, 2012, citing significant losses and the need to raise
additional funds to meet the Company's obligations and sustain
its operations.
Bankruptcy Warning
"The Company recognizes it will need to raise additional capital
in order to fund operations, meet its payment obligations and
execute its business plan. There is no assurance that additional
financing will be available when needed or that management will
be able to obtain financing on terms acceptable to the Company
and whether the Company will become profitable and generate
positive operating cash flow. If the Company is unable to raise
sufficient additional funds, it will have to develop and
implement a plan to further extend payables, attempt to extend
note repayments, attempt to negotiate the preferred stock
redemption and reduce overhead until sufficient additional
capital is raised to support further operations. There can be no
assurance that such a plan will be successful. If the Company is
unable to obtain financing on a timely basis, the Company could
be forced to sell its assets, discontinue its operation and /or
seek reorganization under the U.S. bankruptcy code," the Company
said in its annual report for the year ended Dec. 31, 2012.
HERCULES OFFSHORE: Files Fleet Status Report as of Oct. 22
----------------------------------------------------------
Hercules Offshore, Inc., filed a report entitled "Hercules
Offshore Fleet Status Report". The Fleet Status Report includes
the Hercules Offshore Rig Fleet Status (as of Oct. 22, 2013),
which contains information for each of the Company's drilling
rigs, including contract dayrate and duration. The Fleet Status
Report also includes the Hercules Offshore Liftboat Fleet Status
Report, which contains information by liftboat class for September
2013, including revenue per day and operating days. The Fleet
Status Report can be found under the Investor Relations portion of
the Company's website, a copy of which is available for free at:
http://is.gd/RrLHVf
About Hercules Offshore
Hercules Offshore Inc. (NASDAQ: HERO) --
http://www.herculesoffshore.com/-- provides shallow-water
drilling and marine services to the oil and natural gas
exploration and production industry in the United States, Gulf of
Mexico and internationally. The Company provides these services
to integrated energy companies, independent oil and natural gas
operators and national oil companies. The Company operates in six
business segments: Domestic Offshore, International Offshore,
Inland, Domestic Liftboats, International Liftboats and Delta
Towing.
Hercules incurred a net loss of $127 million in 2012, a net loss
of $76.12 million in 2011, and a net loss of $134.59 million in
2010. As of June 30, 2013, the Company had $2.15 billion in total
assets, $1.23 billion in total liabilities and $917.27 million in
total equity.
* * *
The Troubled Company Reporter said on April 11, 2013, that
Moody's Investors Service upgraded Hercules Offshore, Inc.'s
Corporate Family Rating to B2 from B3. Hercules' B2 CFR is
supported by its improved cash flow and lower leverage on the back
of increased drilling activity and higher day-rates in the Gulf of
Mexico (GOM)
As reported by the TCR on Nov. 6, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Houston-based
Hercules Offshore Inc. to 'B' from 'B-'. "The upgrade reflects
the improving market conditions in the Gulf of Mexico and our
expectations that Hercules' fleet will continue to benefit," said
Standard & Poor's credit analyst Stephen Scovotti.
HERITAGE PARTNERS: Stroock Faces Malpractice Suit Over Loan Deal
----------------------------------------------------------------
Law360 reported that Heritage Partners LLC, a New York condo
developer, filed an $80 million malpractice suit on Oct. 22
against Stroock & Stroock & Lavan LLP, the law firm that was
advising it when it defaulted on a loan for a multifamily project
that had gone stagnant in 2009's dampened real estate market.
According to the report, Heritage Partners filed suit in New York
Supreme Court alleging Stroock had assigned an inexperienced
associate to handle its affairs as it slid toward default on a
second mezzanine loan taken out on Tribeca Summit.
HILLTOP FARMS: Asks Court to Enter Final Decree Closing Case
------------------------------------------------------------
Hilltop Farms, LLC, asks the U.S. Bankruptcy Court for the
District of South Dakota to enter a final hearing closing its
Chapter 11 case. According to the Debtor:
1. the Court entered its post-confirmation order on
Aug. 21, 2013;
2. consummation of the Plan is complete.
3. there are no holders of claims or interests which have
not been surrendered or released in accordance with
the provisions of the Plan; and
4. it does not waive any of its rights afforded by
Section 1127 of the Bankruptcy Code.
As reported in the Troubled Company Reporter, Judge Charles L.
Nail, Jr. issued a final order on Aug. 21, 2013, confirming
Hilltop Farms's Modified Plan of Reorganization, with
clarifications entered on the record and incorporated in the
Plan. The modifications noted include the incorporation of
settlement agreements with First Bank & Trust and CNH Capital
America, LLC.
The Confirmed Plan provides that the Debtor will pay $98.11 per
month to the priority creditor; $47,243 per month to impaired
secured creditors under Claim Classes 1 through 3; and an
estimated $835 per month to unsecured creditors under Claim
Class 8 for the first year of the Plan, for a total of
approximately $48,177 per month. This plan version notes an
increase in monthly payments to impaired secured creditors of
about $6,400. The previous plan version only provides $40,827
per month to impaired secured creditors.
Moreover, the Confirmed Plan specifies that the parties
acknowledge that the indebtedness due to CNH Capital America is
oversecured. CNH will be paid attorney's fees and costs totaling
$1,500. In addition to the attorney's costs, the creditor will be
paid $2,220 per month.
The Confirmed Plan also provides that the Debtor will pay $43,241
per month starting Oct. 1, 2013 to First Bank & Trust and Hilltop
Dairy, LLP, will pay $33, 466 per month starting Sept. 17, 2013.
A full-text copy of the Plan dated Aug. 9, 2013, as confirmed, is
available for free at:
http://bankrupt.com/misc/HILLTOPFARMS_PlanConfrmed.PDF
About Hilltop Farms
Elkton, South Dakota-based Hilltop Farms, LLC, owns properties in
Brookings County, South Dakota. It filed a Chapter 11 petition
(Bankr. D.S.D. Case No. 12-40768) on Nov. 2, 2012, in Sioux Falls,
South Dakota. It disclosed assets of $13.1 million and
$13.5 million in liabilities as of Nov. 2, 2012. Laura L. Kulm
Ask, Esq., at Gerry & Kulm Ask, Prof LLC, serves as counsel to the
Debtor. Judge Charles L. Nail, Jr., presides over the case.
Daniel M. McDermott, U.S. Trustee for Region 12, was unable to
form an official committee of unsecured creditors in the Debtor's
case.
HOSPITALITY STAFFING: Files for Bankruptcy to Facilitate Sale
-------------------------------------------------------------
Hospitality Staffing Solutions, LLC, a provider of outsourced
staffing solutions for the hospitality industry, on Oct. 24
disclosed that it has reached agreement to enter into an asset
purchase agreement with HS Solutions Corporation, an entity formed
by LJC Investments I, LLC and a group of investors including
Littlejohn Opportunities Master Fund, L.P., Caymus Equity Partners
and Management, under which HSS proposes to sell its assets as a
going concern through a court-supervised process.
To facilitate the sale, HSS has filed a voluntary petition (Bankr.
D. Del. Case No. 13-12740) for relief with the U.S. Bankruptcy
Court for the District of Delaware under Chapter 11 of the U.S.
Bankruptcy Code. To ensure that the Company can continue
providing ongoing access to staffing solutions to its customers,
and to protect the value of the Company's assets, HSS will seek to
sell its assets under Section 363 of the U.S. Bankruptcy Code,
subject to higher and better bids.
The transaction, which is expected to close by the end of the
fourth quarter of 2013, is subject to a competitive bidding
process and Court approval. This transition will allow HSS to
substantially reduce its outstanding indebtedness, shed certain
legacy obligations and emerge with the strong financial backing of
a new owner.
The bankruptcy filing comes three years after HSS's founders sold
the company to Chicago firm Frontenac Co. for more than $80
million.
HSS will continue uninterrupted service to its customers through
the sale process. In addition, HSS does not expect to make any
meaningful reductions to its workforce through the sale process.
HSS team members will continue to work their usual schedules and
be paid in the normal course, pending customary Court approval.
Rick Holliday, president and CEO, said, "This transaction will
allow us to clean up our balance sheet and emerge as a stronger
company with new owners. Importantly, the process will enable HSS
to continue to provide its customers with the same high-quality,
industry-leading staffing solutions they've come to expect."
HSS also announced that, subject to Court approval, it has secured
commitments for debtor-in-possession (DIP) financing from an
affiliate of HS Solutions Corporation that will ensure sufficient
working capital and enable it to continue operating business as
usual throughout the sale process.
* * *
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the investor group acquired $22.9 million of the
Company's secured bank debt on Oct. 11.
According to the Bloomberg report, the Atlanta-based company,
which has more than 6,700 employees, blamed financial problems on
"employee verification and compliance issues" discovered after the
acquisition, the report related. In addition, there were
"operational issues" and a $2.5 million claim by the workers'
compensation insurer, according to a court filing.
In addition to the bank debt in default, $22.9 million is owing on
unsecured subordinated notes held by Norwest Mezzanine Partners
III LP. There is another $8.7 million owing on an unsecured note
to the former owners and $3.8 million on an unsecured convertible
note that is subordinated to the subordinated notes.
The company estimates trade suppliers are owed $2 million.
SG Distressed Debt Fund LP, LittleJohn Opportunities Master Fund
LP and LJC Investment I LLC acquired the bank debt this month,
according to a court filing.
The lenders are providing a $7 million secured credit to finance
the bankruptcy. Before final approval, $3.5 million is to be
available on an interim basis.
The loan will bear 13 percent interest. In addition, the loan
calls for a 1 percent commitment fee and a 4 percent fee due when
the loan receives interim court approval.
The loan requires selling the business by Dec. 5.
The petition lists the company as valued at less than $50
million while debt is more than $50 million.
About Hospitality Staffing Solutions, LLC
Hospitality Staffing Solutions, LLC (HSS) --
http://www.hssstaffing.com-- is a hospitality staffing company.
Established in 1990, the company's team of hotel industry experts
works with 4 and 5 star properties in 35 states and 62 markets
across the country.
HOSPITALITY STAFFING: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor entities filing separate Chapter 11 cases:
Debtor Case No.
------ --------
HSS Holding, LLC 13-12740
100 Glenridge Point Parkway, Suite 400
Atlanta, GA 30342
Hospitality Staffing Solutions Group, LLC 13-12741
Hospitality Staffing Solutions, LLC 13-12742
IHS Staffing Services, LLC 13-12743
IHS Hospitality Services, LLC 13-12744
Hospitality Staffing Solutions
of Louisiana, L.L.C. 13-12745
Hospitality Staffing Solutions of Iowa, LLC 13-12746
Hospitality Staffing Solutions of
Connecticut, LLC 13-12747
Hospitality Staffing Solutions of Indiana, LLC 13-12748
Hospitality Staffing Solutions of Illinois, LLC 13-12749
Type of Business: Hotel Staffing Company
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Hon. Brendan Linehan Shannon
Debtor's Counsel: Mark Minuti, Esq.
SAUL EWING LLP
222 Delaware Ave, Suite 1200
P.O. Box 1266
Wilmington, DE 19899
Tel: 302 421-6840
Fax: 302 421-5873
Email: mminuti@saul.com
Debtors'
Financial Conway Mackenzie, Inc.
Advisor:
Debtors'
Investment Duff & Phelps Corp.
Banker:
Debtors'
Claims and Epiq Systems, Inc.
Noticing Agent:
HSS Holding's
Estimated Assets: $0 to $50,000
HSS Holding's
Estimated Debts: $10 million to $50 million
Hospitality Staffing's
Estimated Assets: $10 million to $50 million
Hospitality Staffing's
Estimated Debts: $50 million to $100 million
The petitions were signed by Jeffrey A. Zappone, chief
restructuring officer.
Consolidated List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Pennsylvania Manufacturers' Insurance Debt $1,998,607
Association Insurance Company
380 Sentry Parkway
Blue Bell, PA 19422
Chartis (AIG) Insurance Debt $656,200
175 Sample St.
New York City, NY 10038
Fax: 973-331-8588
Baker & McKenzie, LLP Services $227,741
Grant Thornton, LLP Services $168,476
The PrivateBank & Trust Contract $150,000
Company Liability
Jackson Lewis, LLP Services $133,247
Katten, Muchin Rosenman LLP Services $119,636
Bluewave Computing LLC Trade Debt $79,412
Lockton Companies Trade Debt $78,364
Irvine Company-Pelican Trade Debt $68,951
Hill Resort
Flex HR, Inc. Trade Debt $22,736
Kinetix, LLC Trade Debt $21,300
Sprint Trade Debt $20,802
Smith Howard CPAs Services $15,000
RemX Specialty Staffing Trade Debt $8,790
Avionte Trade Debt $7,808
OfficeMax Trade Debt $6,853
Taylor and English LLP Services $3,021
Cosgrave Enterprises, Inc. Trade Debt $2,986
ADP Trade Debt $2,938
HOUSTON REGIONAL: Astros Say They, Rockets Have Different Needs
---------------------------------------------------------------
David Barron, writing for The Houston Chronicle, reported that
while reserving most of their rhetorical ire for Comcast, the
Astros' legal team on Oct. 24 outlined differences with the
Rockets -- their partner in Comcast SportsNet Houston -- in a
statement filed in advance of this week's hearing on whether the
network should stay in Chapter 11 bankruptcy.
According to the report, the Astros expanded on previous filings
by accusing Comcast Corp., parent company of the NBC Sports Group
that includes CSN Houston, of being the ultimate force behind the
motion by Comcast subsidiaries to force CSN Houston into
bankruptcy.
"Comcast . . . orchestrated the bankruptcy to circumvent the
Astros' bargained-for contractual rights for its own purposes,"
Astros attorneys said, the report related. "Such behavior 'falls
squarely within the parameters which classically define a bad
faith filing.'"
U.S. Bankruptcy Judge Marvin Isgur on Oct. 28 will hear the
Astros' motion to dismiss the involuntary Chapter 11 case filed by
four Comcast affiliates and Comcast's motion to name an interim
trustee for the network, the report added. The Rockets said they
favor keeping Houston Regional Sports Network, the Astros-Rockets-
Comcast partnership that owns CSN Houston, under Chapter 11 but
oppose an interim trustee.
The Astros also note that Comcast, the Rockets and Astros have
different economic interests at stake, the report added.
About Houston Regional Sports Network
An involuntary Chapter 11 bankruptcy petition was filed against
Houston Regional Sports Network, L.P. d/b/a Comcast SportsNet
Houston (Bankr. S.D. Tex. Case No. 13-35998) on Sept. 27, 2013.
The involuntary filing was launched by three units of Comcast/NBC
Universal and a television-related company. The petitioners are:
Houston SportsNet Finance LLC, Comcast Sports Management Services
LLC, National Digital Television Center LLC, and Comcast SportsNet
California, LLC.
The petitioning creditors have filed papers asking the Bankruptcy
Judge to appoint an independent Chapter 11 trustee "to conduct a
fair and open auction process for the Network's business assets on
a going concern basis."
Houston Regional Sports Network is a joint enterprise among
affiliates of the Houston Astros baseball team, the Houston
Rockets basketball team, and Houston SportsNet Holdings, LLC --
"Comcast Owner" -- an affiliate of Comcast Corporation. The
Network has three limited partners -- Comcast Owner, Rockets
Partner, L.P., and Astros HRSN LP Holdings LLC. The primary
purpose of Houston Regional Sports Network is to create and
operate a regional sports programming service that produces,
exhibits, and distributes sports programming on a full-time basis,
including live Astros and Rockets games within the league-
permitted local territories.
The Network also has one general partner -- Houston Regional
Sports Network, LLC -- "General Partner" -- which, subject to
certain limitations, exercises exclusive management, supervision,
and control over the Network's properties and business. The
General Partner's sole purpose is to serve as the Network's
general partner; it has no authority or power to act outside of
that role. The General Partner has three members -- Comcast
Owner, JTA Sports, Inc. -- "Rockets Owner" -- and Astros HRSN GP
Holdings LLC -- "Astros Owner".
Counsel for the petitioning creditors are Howard M. Shapiro, Esq.,
Craig Goldblatt, Esq., and Jonathan Paikin, Esq., at Wilmer Cutler
Pickering Hale and Dorr LLP in Washington, D.C.; George W.
Shuster, Jr., Esq., at Wilmer Cutler in New York; Vincent P.
Slusher, Esq., and Andrew Zollinger, Esq., at DLA Piper; and
Arthur J. Burke, Esq., Timothy Graulich, Esq., and Dana M.
Seshens, Esq., at Davis Polk & Wardwell LLP.
IPC INTERNATIONAL: Purchased by Universe Protection
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that IPC International Corp., a provider of security
services for 350 shopping malls, won authorization from the
bankruptcy court to sell the business for $25.4 million to
Universal Protection Services LLC.
According to the report, Allied Security Holdings LLC, a competing
bidder, forced Universal to raise the offer at an auction early in
October. Universal was already under contract for $21.3 million.
IPC had said the original price should pay secured creditors in
full plus expenses of the bankruptcy, with something left for
unsecured creditors, the report related.
IPC's liabilities include $6.9 million on a revolving credit and
$10.4 million on term loans owing to PrivateBank & Trust Co. IPC's
official lists show assets with a value of $22 million and debt
totaling $32 million, including $20.2 million in secured debt.
PrivateBank is providing a $12 million revolving credit to finance
the Chapter 11 reorganization begun Aug. 9.
About IPC International
IPC International Corp., a provider of security services for
350 shopping malls, filed a petition for Chapter 11 protection
(Bankr. D. Del. Case No. 13-12050) on Aug. 9, 2013, in Delaware
after signing a contract for Universal Protection Services LLC to
buy the business for $21.3 million plus assumption of specified
liabilities.
Scott M. Strong signed the petition as chief financial officer.
The Debtor estimated assets and debts of at least $10 million.
Jeremy William Ryan, Esq., and Etta R. Mayers, Esq., at Potter
Anderson & Corroon, LLP, serves as local counsel. Paul V.
Possinger, Esq., and Brandon W. Levitan, Esq., at Proskauer Rose,
LLP, serve as the Debtor's general bankruptcy counsel. Silverman
Consulting, LLC, acts as the Debtor's financial advisor and
Livingstone Partners, LLP, serves as the Debtor's investment
banker. KCC is the Debtor's noticing, claims and balloting agent.
Judge Mary F. Walrath presides over the case.
The petition shows assets and liabilities both exceeding
$10 million. Liabilities include $6.9 million on a revolving
credit and $10.4 million on term loans owing to PrivateBank &
Trust Co., as agent.
Bankruptcy was the result of losses on a U.K. affiliate that was
sold, as well as competition and the cost of liability insurance.
A three-member panel has been appointed as the official unsecured
creditors committee in the case. The panel consists of Weinberg,
Wheeler, Hudgins, Gunn & Dial, LLC; Mary Carmona-Rousse; and Drew
Eckl & Farnham, LLP.
IPC, based in Bannockburn, Illinois, is asking the bankruptcy
judge to approve auction procedures under which competing bids
would be due on Sept. 16, followed by an auction on Sept. 18 and a
hearing on Sept. 25 to approve sale. Even without a higher bid at
auction, the price will be sufficient to pay secured creditors in
full along with expenses of the bankruptcy. Unsecured creditors
should receive some recovery from the sale.
The bankruptcy is being financed with a $12 million loan from
existing lender PrivateBank & Trust Co. as agent. There will be a
final hearing Sept. 9 for approval of the entire loan package.
The loan requires quick sale.
J.C. PENNEY: Fitch Says Stress Could Pressure Malls But Not CMBS
----------------------------------------------------------------
If J.C. Penney's financial challenges result in the closure of a
portion of its stores, some malls would likely struggle to replace
the retailer, Fitch Ratings says. "We do not expect the potential
closure of the company's stores to impact rated CMBS deals because
they represent relatively small amounts of those transactions,"
Fitch says.
One mall that could struggle if its J.C. Penney anchor were to
close is Riverbirch Corner Shopping Center in Sanford NC. The
mall's other anchor tenants are Belk and Goody's. Riverbirch could
have difficulty finding find another retailer to take over the
large space currently held by J.C. Penney. Riverbirch is
approximately 20 miles from Raleigh, NC and 30 miles from
Fayetteville and Fort Bragg. The loan on that shopping center is
just $12 million, 0.3% of CGCMT 2007-C6.
Other malls would have less difficulty in replacing a J.C. Penney
store. Fitch believes for example, that Aventura Mall in Miami,
Florida could manage a closure of its J.C. Penney anchor promptly.
The mall has several stronger anchor tenants including Nordstrom
and Bloomingdales and a favorable location in the northern Miami
suburb. Should the J.C. Penney store in that mall close, we
believe it would be possible for the mall to find another tenant.
The loan on that mall is in LBUBS 2007-C7.
Loans on many properties with J.C. Penney stores are in conduit
deals with vintages back to 2001. Two large single borrower mall
transactions also contain JC Penney as an anchor, the QCMT 2013-QC
at $600 million and JPMCC 2011-PLSD. Both of these malls are
located in strong locations at or above 95% occupancy.
J.C. Penney's real estate portfolio has been appraised at over $4
billion and includes properties it owns and leases. According to
the company's most recent corporate filings, it owns 306 stores,
operates 123 ground leased stores, and leases 675 stores. It also
owns nine distribution centers and leases another six. Earlier
this month, Fitch downgraded J.C. Penney's Issuer Default Rating
to 'CCC' from 'B-'.
JACK COOPER: Moody's Assigns B2 Rating to $150MM Add-on Sec. Notes
------------------------------------------------------------------
Moody's Investors Service has affirmed all of its ratings assigned
to Jack Cooper Holdings Corp. ("JCH"): Corporate Family Rating
(CFR) of B2; Probability of Default Rating (PDR) of B2-PD and
senior secured rating assigned to the previously issued $225
million senior secured notes due 1 June 2020 of B2. Moody's also
assigned a B2 rating to the $150 million senior secured notes,
also due 1 June 2020 that the company plans to issue as an add-on
to its existing rated notes. The proceeds of the add-on offering
will fund the company's previously-announced plan to purchase
certain assets of Allied Systems Holdings, Inc. (Debtor-in-
Possession) ("Allied") and related transaction costs. The ratings
outlook is stable.
Ratings Rationale:
The B2 CFR reflects JCH's leading position in the North American
car carrier market. The purchase of Allied's assets will
strengthen the company's business profile, expanding its
geographic footprint in the U.S. and Canada, reduce customer
concentration, provide economies of scale, particularly in G&A,
and a more efficient network with enhanced opportunities for
backhauls. Backhauls in truck transportation typically facilitate
margin expansion. The purchase multiple implied by Allied's
existing run rate EBITDA prior to any synergies results in no
meaningful pressure on JCH's credit metrics from the increase in
funded debt. However, the addition of a large number of unionized
employees will lead to a larger debt adjustment for multi-employer
pension plans pursuant to Moody's standard adjustments. Revenues
and earnings will remain exposed to the cyclical North American
automobile industry, which can pressure cash flow generation
during cyclical troughs. However, a large portion of the cost
structure is variable, providing significant flexibility to
mitigate the effects of weak demand from automobile OEMs. Adequate
liquidity supports the B2 CFR.
Adjusted debt, including Moody's adjustment for multiemployer
pension plans, will increase to over $800 million upon the
completion of the add-on note issuance, somewhat higher than
annual revenue pro forma for the Allied transaction. Moody's
anticipates Debt to EBITDA of about 6.8 times and EBIT to Interest
of about 1.5 times at 31 December 2013 pro forma for the
acquisition and after an estimated $20 million use of working
capital. The leverage metric is somewhat weak for the B2 rating
category. However, the MEPP adjustment is a significant
contributor to total adjusted debt. The ratings also anticipate
some de-leveraging in 2014 from positive free cash flow derived
from the benefits of the transaction and steady to slightly higher
production by North American automobile OEMs.
The stable outlook anticipates supportive demand from the customer
base and the realization of the benefits the company expects from
the acquisition, such that credit metrics can strengthen within
the B2 rating category. Acquiring a large number of idle car
carrier rigs should also help reduce future growth capital
expenditures, which is an important factor supporting the
expectation of future free cash flow generation.
A negative rating action could follow if the company is not able
to generate at least $20 million of positive free cash flow
generation in each of 2014 and 2015. The rating anticipates
improved credit metrics from de-levering with free cash flow.
JCH's business case for the Allied transaction contemplates free
cash flow in excess of this level, driven by a favorable level of
demand for its services, economies of scale and the other
transaction-related benefits. Another debt-funded acquisition
before restoring credit metrics from the Allied purchase could
also lead to a ratings downgrade as could an EBIT margin that
remains below 10%; Debt to EBITDA that is sustained above 6.5
times; EBIT to Interest of less than 1.2 times or Funds from
Operations to Debt of less than 5%. Moody's foresees little
upwards rating pressure over the medium term. The company would
need to demonstrate the ability to generate free cash flow even
during troughs in the cycle to warrant an upgrade. Additionally,
it has limited flexibility to reduce the balance of the notes
prior to maturity, unlike in a bank financing. Debt to EBITDA of
less than 5.0 times, EBIT to Interest above 2.0 times, and RCF to
Net Debt in excess of 14% could lead to a positive rating action.
JACK COOPER: S&P Assigns 'B-' Rating to Proposed $150MM Sr. Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit rating on Kansas City, Mo.-based Jack Cooper Holdings Corp.
(Jack Cooper). The outlook is stable. S&P also assigned a 'B-'
rating to the company's proposed $150 million senior secured notes
due 2020, as well as a '4' recovery rating.
At the close of the acquisition, Jack Cooper Finance Co. will
merge into Jack Cooper Holdings Corp., at which time Jack Cooper
Holdings Corp. will assume the obligations of Jack Cooper Finance
Co. The $150 million senior secured notes will be added on to
Jack Cooper Holdings Corp.'s existing $225 million senior secured
notes due 2020.
"The ratings on Jack Cooper reflect the truckload carrier's highly
leveraged financial profile, as well as its limited customer
diversity and participation in the capital-intensive and cyclical
trucking sector, which is subject to pricing pressure and intense
competition," said credit analyst Anita Ogbara. The company's
market position as the largest car hauler in the U.S. only partly
offsets these weaknesses. S&P characterizes the company's
business risk as "weak," its financial risk as "highly leveraged,"
and its liquidity as "adequate," according to its criteria.
For 2013, S&P's base case anticipates funds from operations (FFO)
to total debt (including contingent liabilities under
multiemployer pension plans [MEPPs] totaling $478 million) of
around 1% and debt to EBITDA of about 15x. Pro forma for the
proposed transaction, credit metrics improve in 2014, with FFO to
debt rising to the mid- to high-single-digit percentage area and
debt to EBITDA in the 9x-10x range.
While the company maintains a significant market position in car
hauling, Jack Cooper has very limited customer diversity. The
company's key customers include several large U.S. original
equipment manufacturers, and the largest customer (General Motors
Co.) represents almost 50% of total revenues prior to the
acquisition of Allied assets. The company's cost structure is
constrained due to its mostly unionized workforce. EBITDA margins
are in the high-single-digit percent area (based on gross
revenues, including fuel surcharges), which is below its peer
trucking companies such as Swift Corp., US Xpress Enterprises
Inc., and J.B. Hunt Transport Services Inc.
Standard & Poor's expects Jack Cooper to use the proceeds from the
proposed debt issue to purchase substantially all of Allied
Systems Holdings' assets. This year, planned capital expenditures
are about $20 million, which is comparable with 2012 levels. S&P
expects capital spending to be stable over the next few years,
given management's plans to update the fleet and manage the
fleet's age.
Because of its acquisition history, private ownership structure,
and MEPP exposure, Jack Cooper is highly leveraged, with limited
financing sources. S&P expects little improvement in the
company's financial profile over the next few years, given its
nonamortizing capital structure. (As a private company, Jack
Cooper does not publicly disclose its financial information. Jack
Cooper has the option to register the notes with the SEC by June
18, 2014, or pay additional interest on the notes.)
The rating outlook is stable, reflecting S&P's belief that Jack
Cooper's operating profitability and financial profile will
improve gradually over the next few years, due primarily to
earnings growth from increased volumes in the auto industry.
S&P could lower the ratings if the auto industry experiences a
slowdown or operational challenges which cause Jack Cooper's
earnings to weaken and EBITDA margin to decline to the mid-single-
digit percent area on a sustained basis, or if liquidity becomes
constrained such that S&P revises its liquidity assessment to
"less than adequate" or "weak."
Although less likely, S&P could raise the ratings if earnings
growth and debt reduction result in an EBITDA margin in the mid-
teens percent area and FFO to debt rising above 10% on a sustained
basis (which would be about 25% not including adjustments for
MEPPs). S&P considers MEPPs as a debt-like liability, but its
rating-change threshold also considers credit measures that don't
include this MEPP adjustment.
KAR AUCTION: Moody's Affirms B1 CFR & $1.8BB Loan Rating at Ba3
---------------------------------------------------------------
Moody's Investors Service raised the liquidity rating of KAR
Auction Services, Inc. ("KAR") to SGL-1 from SGL-2. All other
ratings were affirmed including the B1 Corporate Family Rating
("CFR"). The ratings outlook is stable.
Rating raised:
Speculative Grade Liquidity Rating, to SGL-1 from SGL-2
Ratings affirmed (and Loss Given Default assessments):
Corporate Family Rating, B1
Probability of Default Rating, B1-PD
$250 million senior secured revolver due May 2016, Ba3 (LGD3, to
40% from 39%)
$1.8 billion senior secured term loan due May 2017, Ba3 (LGD3,
to 40% from 39%)
Ratings Rationale:
The change in KAR's liquidity rating to SGL-1 from SGL-2 reflects
greater financial flexibility after refinancing the 2014 senior
notes and extending the maturity on AFC Funding's securitization
facilities to 2016 from 2014. Moody's expects KAR to continue to
generate strong free cash flow of more than $200 million annually,
of which Moody's estimates at least $100 million will be allocated
towards dividends. KAR's liquidity profile is further enhanced by
a sizable cash balance and an undrawn $250 million revolver.
The B1 CFR reflects KAR's large revenue size and leading market
positions which produce relatively high profitability margins.
Off-lease vehicles are once again entering the auction pipeline in
meaningful numbers after an industry-wide dearth of lease
originations during the credit crisis. Meanwhile, strong demand
for new cars is creating higher volumes of dealer trade-ins which
further boosts the supply of used cars at Adesa's auctions.
Moody's expects the IAA business to grow more modestly in 2014
after strong volumes in 2013, aided by Superstorm Sandy and other
unusual weather patterns. Due to rising supply, average used car
prices may pull back from current levels, modestly dampening
revenue growth. Nonetheless, demand remains strong for both whole
cars and salvaged after-market parts and Moody's expects KAR's
consolidated revenues to grow by at least 6% annually over the
next 12-18 months. The ratings remain constrained by high
financial leverage, expected to fall below 5x (including the
receivables securitization) in 2014.
The stable outlook reflects Moody's expectation that KAR will
continue to reduce financial leverage through revenue and earnings
growth. The ratings could be raised if additional debt is retired
and financial leverage (total debt including the securitization /
EBITDA) is sustained under 4.5 times. The ratings could be lowered
if KAR loses market share, margins erode materially, or the
company makes sizable debt-funded acquisitions or shareholder
returns of capital such that financial leverage (total debt
including the securitization / EBITDA) and interest coverage
(EBITDA - capex / interest expense) are sustained above 5.5 times
and below 2 times, respectively.
Headquartered in Indiana, KAR is a leading provider of vehicle
auction services in North America. The company provides whole car
auction services (dba ADESA), salvage auction services (dba
Insurance Auto Auctions, or IAA), and floorplan financing (dba
Automotive Finance Corporation, or AFC). Moody's expects revenues
to approach $2.3 billion in 2014.
KIK CUSTOM: S&P Assigns 'B-' Rating to Proposed US$225MM Sr. Loan
-----------------------------------------------------------------
Standard & Poor's Ratings Services said affirmed its 'B-' long-
term corporate credit rating on Concord, Ont.-based consumer
products manufacturer KIK Custom Products Inc. The outlook is
stable.
At the same time, Standard & Poor's assigned its 'B-' issue-level
rating (the same as the corporate credit rating on KIK) to the
company's proposed US$225 million first-lien senior secured term
loan due 2019. Standard & Poor's also assigned its '3' recovery
rating to the debt, indicating an expectation of meaningful (50%-
70%) recovery in the event of default.
In addition, Standard & Poor's assigned its 'CCC' issue-level
rating (two notches below the corporate credit rating) and '6'
recovery rating to the company's proposed US$50 million second-
lien senior secured term loan due 2019. A '6' recovery rating
indicates S&P's expectation of negligible (0%-10%) recovery in the
event of default.
KIK has entered into a stock purchase agreement to acquire the
BioLab consumer products business from U.S.-based Chemtura Corp.
for US$315 million. The company plans to use the net proceeds of
the new term loans, along with a US$75 million equity
contribution, to finance the BioLab transaction and for general
corporate purposes. Closing is expected by year end upon
regulatory approval.
The ratings on KIK reflect Standard & Poor's view of the company's
"vulnerable" business risk profile and "highly leveraged"
financial risk profile (as S&P's criteria define the terms).
"We base our business risk assessment on the company's weak market
position, customer concentration, and participation in the mature
and highly competitive North American household products and
personal care industries, as well pool additives," said Standard &
Poor's credit analyst Lori Harris.
S&P bases its financial risk assessment on an aggressive financial
policy, including a highly leveraged capital structure.
The proposed BioLab acquisition will significantly expand KIK's
scale and market position in the North American pool additive
business, while allowing the company to immediately enter the
European pool additive business. The completion of the
transaction will make KIK a leader in the pool additive business,
while adding to the company's household cleaning product line and
providing for cost-saving opportunities. Still, there is
integration risk related to the acquisition because the addition
of BioLab's consumer business results in a substantial increase to
KIK's revenue base.
KIK is the largest contract manufacturer of consumer products and
the second-largest manufacturer of bleach in North America after
Clorox Co. In 2011, KIK entered the U.S pool additives industry
upon acquiring privately held Chem Lab Products Inc., a
California-based manufacturer of pool and spa care products. The
company operates under two divisions: Classic--manufacturer of
private label household products and pool additives; and Custom--
contract manufacturer of national brand personal care and
household products.
The stable outlook reflects Standard & Poor's belief that KIK's
performance will meet its expectations this year, including
maintaining its market position and generating positive free cash
flow. Downward pressure on the ratings could result from
deterioration in the company's operations or negative free cash
flow or less than a 10% cushion within the fixed charge covenant
should it apply. Given the company's very high leverage, Standard
& Poor's is not contemplating raising the ratings in the next
year. S&P could, however, upgrade KIK if the company demonstrates
sustainable strengthening in its operating performance, which
results in significantly improved credit measures, including
maintaining adjusted debt to EBITDA below 5x.
KIK is a private company and does not release financial
information publicly.
LEHMAN BROTHERS: Loses Bid to Set Off $2BB Citigroup Claim
----------------------------------------------------------
Law360 reported that the judge overseeing Lehman Brothers Holdings
Inc.'s liquidation on Oct. 23 rejected its bid to force Citigroup
Inc. to accept a setoff of its $2 billion claim against the failed
investment bank's estate, saying the matter was not ripe for
consideration.
According to the report, Lehman sought to exercise a provisional
setoff of Citgroup's claims -- against a $2 billion deposit Lehman
had made at Citigroup prior to its collapse -- and to cut off
Citigroup's right to potentially hundreds of millions of dollars
in interest on its claims.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012, a second payment of $10.2 billion on Oct. 1, 2012,
and a third distribution of $14.2 billion on April 4, 2013. The
brokerage is yet to make a first distribution to non-customers,
although customers are being paid in full.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates.
LEHMAN BROTHERS: Elliott, King Street Purchase of Claim Approved
----------------------------------------------------------------
Patrick Fitzgerald, writing for The Wall Street Journal, reported
that a U.S. judge on Oct. 24 cleared the way for Paul Singer's
hedge fund Elliott Management and King Street Capital Management
L.P. to buy a multibillion-dollar bankruptcy claim owed to a
Lehman Brothers U.K. subsidiary at a discount.
According to the report, Judge James Peck of the U.S. Bankruptcy
Court in New York rejected a bid by a rival group of hedge funds
to take a closer look at the deal, the details of which they
argued were unfairly kept secret. Those funds, including such
major distressed-debt investors such as John Paulson's Paulson &
Co. and Seth Klarman's Baupost Group, had argued rival bidders had
been shut out of the sale process.
"I have no factual basis to that there is anything about this
transaction that is truly suspect," Judge Peck told the assembled
lawyers and onlookers in a Manhattan courtroom, the report
related. "No facts have been presented, only suspicions."
Elliott and King Street have agreed to buy a bankruptcy claim
against Lehman Brothers' U.K. business that's valued, with
interest, at 1.8 billion British pounds [$3 billion] in return for
an initial payment of 650 million British pounds plus the right to
"future contingent sums," the report further related.
The secrecy surrounding the deal had prompted concern from other
funds with big investments in Lehman debt. One fund, CarVal
Investors LLC, the hedge-fund subsidiary of agribusiness company
Cargill Inc., said it would pay 900 million British pounds for the
bankruptcy claim, 250 million British pounds more than Elliott and
King Street, the report added.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 08-13555) on Sept. 15, 2008. Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012, a second payment of $10.2 billion on Oct. 1, 2012,
and a third distribution of $14.2 billion on April 4, 2013. The
brokerage is yet to make a first distribution to non-customers,
although customers are being paid in full.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates.
LEWISTON HOSPITAL: Moody's Places 'Ba1' LT Rating Under Review
--------------------------------------------------------------
Moody's Investors Service has placed the Ba1 long-term rating
assigned to Lewistown Hospital (Lewistown) under review with
direction uncertain. The action comes following significant
movement by Aa2-rated Geisinger Health System to acquire Lewistown
under a timeline that is still pending.
Moody's direction uncertain designation contemplates two potential
scenarios that could unfold in coming months. In the first, the
potential merger could be fully executed. Should any assistance
provided by Geisinger to some extent neutralize the material
operating losses driven by poor reimbursement and market share
decline, Moody's could confirm or upgrade the Ba1 rating. Also,
should Lewistown's bondholders receive a change in security and be
brought to parity with Geisinger's existing debt, Moody's would
then raise Lewistown's rating to Geisinger's rating level.
Should the merger deal terminate or timeline for execution be
severely protracted, Moody's could downgrade Lewistown's rating in
light of the time and money spent on the transaction, in addition
to the negative trends mentioned above, as well as uncertainties
surrounding the hospital's strategic direction and capacity for
future capital spending.
LILY GROUP: U.S. Trustee Appoints 4-Member Creditors Panel
----------------------------------------------------------
U.S. Trustee Nancy J. Gargula appointed four members to the
official committee of unsecured creditors in the Chapter 11 cases
of Lily Group Inc.
The Creditors Committee members are:
1. Gene Ray Byrum,
Hendrix Electric Inc.
T&D Solutions, LLC
P.O. Box 297
Clay, KY 42404
Tel: (270) 664-2349
E-mail: Gene.byrum@tdsolutions.com
2. Timothy D. Glazar
Heartland Pump Rental and Sales, Inc.
84 Floodgate Rd.
Bridgeport, NJ 08014
Tel: (856) 467-3636
E-mail: Timothy.Glazar@xyleminc.com
3. Fred L. Grabner
Grabner Blasting and Consulting
42444 W. Meadowvale Drive
Bloomington, IN 47404
Tel: (812) 322-3886
E-mail: Grabnerblasting@msn.com
4. James W. Lee
Ceres Solutions LLP
P.O. Box 432
Crawfordsville, IN 47933
Tel: (812) 362-6700
E-mail: jlee@ceresllp.com
The Trial Attorney can be reached at:
Charles R. Wharton, Esq.
Office of the United States Trustee
101 W. Ohio Street, Suite 1000
Indianapolis, IN 46204
Tel: (317) 226-6101
Fax: (317) 226-6356
E-mail: Charles.R.Wharton@usdoj.gov
Lily Group Inc., the developer of an open-pit coal mine in Green
County, Indiana, filed a petition for Chapter 11 reorganization
(Bankr. S.D. Ind. Case No. 13-81073) on Sept. 23 in Terre Haute,
listing assets and debt both exceeding $10 million. The Debtor is
represented by Courtney Elaine Chilcote, Esq., and David R. Krebs,
Esq., at Tucker, Hester, Baker & Krebs, LLC, in Indianapolis,
Indiana.
LILY GROUP: Hires Tucker Hester as Attorneys
--------------------------------------------
Lily Group, Inc. seeks authorization from the U.S. Bankruptcy
Court for the Southern District of Indiana to employ Tucker Hester
Baker & Krebs, LLC, as attorneys.
The Debtor requires Tucker Hester to:
(a) give legal advice to the Debtor with respect to its powers
and duties as debtor-in-possession and management of its
property;
(b) take necessary action to avoid the attachment of any lien
against the Debtor's property threatened by secured
creditors holding liens;
(c) prepare on behalf of the Debtor as debtor-in-possession
necessary petitions, answers, orders, reports, and other
legal papers; and
(d) perform all other legal services for the Debtor as debtor-
in-possession which may be necessary, inclusive of
the preparation of petitions and orders respecting the sale
or release of equipment not found to be necessary in the
management of its property, to file petitions and orders
for the borrowing of funds; and it is necessary for the
Debtor to employ counsel for such professional services.
Tucker Hester professionals will be paid at these hourly rates:
Attorneys
---------
William J. Tucker $425
Joseph W. Hammes $400
John K. McDavid $350
Christopher E. Baker $350
Jeffrey M. Hester $325
Niccole R. Sadowski $300
Courtney E. Chilcote $250
Bradley J. Buchheit $250
Daniel A. Tucker $250
Paralegals
----------
Kathy Shamblin $125
Tracy Wilkerson $125
Christine Ball $125
Michelle Murray $125
Rachel Bell $125
Tricia Hignight $125
Donna Adams $125
Selena Watson $125
Tammy Hudelson $125
Becca Taylor $125
Marsha Hetser $125
John J. Allman $250
Tucker Hester will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Tucker Hester will receive an initial retainer in the sum of
$50,000 out of cash collateral and the DIP financing post-filing.
David R. Krebs, member of Tucker Hester, assured the Court that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Tucker Hester can be reached at:
David R. Krebs, Esq.
TUCKER HESTER BAKER & KREBS, LLC
One Indiana Square, Suite 1600
Indianapolis, IN 46204
Tel: (317) 608-1133
Fax: (317) 833-3031
E-mail: dkrebs@thbklaw.com
Lily Group Inc., the developer of an open-pit coal mine in Green
County, Indiana, filed a petition for Chapter 11 reorganization
(Bankr. S.D. Ind. Case No. 13-81073) on Sept. 23 in Terre Haute,
listing assets and debt both exceeding $10 million.
The Debtor is represented by Courtney Elaine Chilcote, Esq., and
David R. Krebs, Esq., at Tucker, Hester, Baker & Krebs, LLC, in
Indianapolis, Indiana.
LIN MEDIA: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Providence, R.I.-based TV broadcaster LIN Media LLC, including the
corporate credit rating to 'BB-' from 'B+'. The outlook is
stable.
At the same time, S&P raised its issue-level ratings on LIN
Television Corp.'s (its wholly owned subsidiary) senior secured
debt to 'BB+' from 'BB', in accordance with the upgrade. The
recovery rating on this debt remains '1', indicating S&P's
expectation for very high (90%-100%) recovery in the event of a
payment default.
In addition, S&P raised its issue-level rating on LIN Television
Corp.'s senior unsecured debt to 'B+' from 'B'. The recovery
rating on this debt remains '5' (10%-30% recovery expectation).
The rating upgrade reflects S&P's expectations that LIN's debt to
average-eight-quarter EBITDA will decline to under 5x within the
next few quarters. Leverage, as of the June 30, 2013 quarter, was
5.8x, though this measure includes only six quarters of the New
Vision acquisition (which closed on Oct. 15, 2012).
"Our rating on LIN reflects our assessment of the company's
business risk profile as "fair" and its financial risk profile as
"aggressive," based on our criteria. We view LIN's business risk
profile as fair based on its portfolio of quality TV stations in
midsize markets, its favorable mix of network affiliations, and
its EBITDA margin, which is solid but modestly below its larger
industry peers. We assess LIN's financial risk profile as
aggressive. We expect debt to average-eight-quarter EBITDA to
decline to the low-5x area by the end of 2013, and to be below 5x
in 2014. We estimate current debt to average-eight-quarter EBITDA
to be about 5.8x as of June 30, 2013," S&P said.
LIN, a midsize TV broadcaster, operates or services 50 broadcast
network affiliate stations in 23 markets, reaching 10.6% of U.S.
TV households. LIN's station affiliations are diversified across
the four major U.S. broadcast networks, shielding it from the risk
of individual network underperformance. Most of the company's
stations are ranked first or second in local news -- an important
competitive edge for building loyal local viewing and attractive
political advertising. Additionally, its duopoly positions in a
number of its markets provide cost savings, enhancing cash flow.
LIN's EBITDA margin of about 30% is average among its broadcasting
peers and modestly lags its larger, more efficient competitors,
whose EBITDA margins are in the high-30% area. S&P believes this
may be at least in part because the company has been less
aggressive than some peers in pursuing retransmission fees with
cable, satellite, and telecom video service providers.
LINKS GOLF CLUB: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Links Golf Club at Kings Grant, LLC
100 Majestic Way
Marlton, NJ 08053
Case No.: 13-33274
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
District of New Jersey (Camden)
Judge: Hon. Judith H. Wizmur
Debtor's Counsel: Jeffrey B. Saper, Esq.
LAW OFFICES OF JEFFREY B. SAPER, PC
414 Stokes Road, Suite 104
Medford, NJ 08055
Tel: (856) 985-9770
Email: jbsaperlaw@comcast.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Edward D. Quinn, III, managing member
and president.
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
MEDLAB OHIO: Case Summary & 30 Largest Unsecured Creditors
----------------------------------------------------------
Debtor entities filing separate Chapter 11 cases:
Debtor Case No.
------ --------
MedLab Ohio, Inc. 13-12772
aka MEDLAB
aka Clinical Health Laboratory
aka Medi-Lab
671 Ohio Pike, Suite K
Cincinnati, OH 45245
Kilbourne Medical Laboratories, Inc. 13-12771
671 Ohio Pike, Suite K
Cincinnati, OH 45245
Laboratory Partners, Inc. 13-12769
671 Ohio Pike, Suite K
Cincinnati, OH 45245
Suburban Medical Laboratory, Inc. 13-12773
Biological Technology Laboratory, Inc. 13-12774
Terre Haute Medical Laboratory, Inc. 13-12775
Pathology Associates of Terre Haute, Inc. 13-12776
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Debtors' Counsel: Robert J. Dehney, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL
1201 N. Market Street
P O. Box 1347
Wilmington, DE 19899-1347
Tel: (302) 658-9200
Fax: (302) 658-3989
Email: rdehney@mnat.com
- and -
Erin R Fay, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL, LLP
1201 North Market Street
PO Box 1347
Wilmington, DE 19801
Tel: 302-351-9668
Fax: 302-225-2561
Email: efay@mnat.com
- and -
Pillsbury Winthrop Shaw Pittman LLP
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by William A. Brandt, Jr., chief executive
officer.
A consolidated list of the Debtors' 30 largest unsecured creditors
is available for free at http://bankrupt.com/misc/deb13-12772.pdf
METALDYNE CORP: Owner Held Liable for Underfunded Pension Plan
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Asahi Tec Corp. failed to persuade a federal court in
Washington that it shouldn't be liable for the underfunded pension
plan of Metaldyne Corp., a manufacturer of parts for automobile
transmissions, engines and chassis.
According to the report, based in Kikugawa, Japan, Ashai acquired
100 percent of Metaldyne in 2006. Less than three years later,
Metaldyne filed under Chapter 11. The business was sold, and the
underfunded pension plan was terminated.
The Pension Benefit Guaranty Corp. sued, alleging that Asahi was
liable for the pension shortfall because it directly or indirectly
owned more than 80 percent of Metaldyne, the report related.
Asahi didn't dispute its status as a control person.
Instead, Asahi latched onto numerous ambiguities in applicable
provisions in the Employee Retirement Income Security Act of 1974.
On a motion for partial summary judgment, U.S. District Judge Amy
Berman Jackson ruled on Oct. 4 in favor of the PBGC, holding that
Asahi is liable. She will later decide the amount of liability.
Judge Jackson said that the governing statute was ambiguous on the
question of whether a control person like Asahi is liable for
underfunding. Using the so-called Chevron test laid down by the
Supreme Court for statutory interpretation, she concluded that the
PBGC's interpretation was reasonable.
A group including Carlyle Group purchased the business out of
bankruptcy for $39.5 million in cash, about $32 million in assumed
obligations and $425 million in secured debt mostly owned by the
purchasing group. Under the liquidating Chapter 11 plan confirmed
in February 2010, unsecured creditors with as much as $370 million
in claims were predicted to recover from 0.4 percent to 2.1
percent.
The PBGC case is Pension Benefit Guaranty Corp. v. Asahi Tech
Corp., 10-cv-1936, U.S. District Court, District of Columbia
(Washington).
About Metaldyne
Metaldyne LLC -- http://www.metaldyne.com/-- is a leading global
manufacturer of engineered metal-based components for engine,
transmission, and driveline applications in the automotive and
light truck markets. Products include powder metal engine
connecting rods, engine bearing caps, engine cylinder oil jets,
transmission sub assemblies, forged differential gears and
pinions, differential assemblies, engine balance shaft modules,
transmission shafts, and engine crankshaft dampers. Metaldyne has
over $1 billion in annual revenue, with 25 locations in 13
countries.
Metaldyne Corp. and its affiliates filed for Chapter 11 protection
on May 27, 2009 (Bankr. S.D.N.Y. Case No. 09-13412). The filing
did not include the company's non-U.S. entities or operations. As
of March 29, 2009, the Company, utilizing book values, listed
assets of US$977 million and liabilities of $927 million.
Richard H. Engman, Esq., at Jones Day, represented the Debtors in
their restructuring. Judy A. O'Neill, Esq., at Foley & Lardner
LLP served as conflicts counsel; Lazard Freres & Co. LLC and
AlixPartners LLP as financial advisors; and BMC Group Inc. as
claims agent. A committee of Metaldyne creditors was represented
by Mark D. Silverschotz, Esq., and Kurt F. Gwynne, Esq., at Reed
Smith LLP, and the committee tapped Huron Consulting Services,
LLC, as its financial advisor.
Judge Martin Glenn approved the sale of substantially all assets
to Carlyle Group in November 2009 for roughly $496.5 million, and
confirmed the Debtors' liquidating chapter 11 plan on Feb. 23,
2010. Under the terms of the confirmed liquidation plan, Oldco M
Distribution Trust is the post-confirmation entity charged with
prosecuting all claim objections and distributing all plan assets
pursuant to the terms of the plan. The Trust is represented by
Kimberly E.C. Lawson, Esq., at Reed Smith LLP, in Wilmington, Del.
MI PUEBLO: Committee Balks at Rejection of Vince Alvarado Deal
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
case of Mi Pueblo San Jose, Inc., asks the U.S. Bankruptcy Court
for the Northern District of California to deny the Debtor's
motion to reject the executive continuity and consulting agreement
of Vince Alvarado.
According to the Committee, under the terms of the agreement,
Mr. Alvarado is obligated to provide certain consulting services
to the Debtor that will be phased out over time, ending on
Dec. 31, 2015. In return for these services, the Debtor agreed to
pay substantial amounts and to provide certain benefits to
Mr. Alvarado. In addition, the Debtor agreed to pay Mr. Alvarado
a bonus in the amount of $200,000 at the end of January 2014.
The Committee notes that the motion provides no information
regarding the effect that rejection of the agreement may have on
the Debtor's estate. In particular, the motion makes no reference
to the effect that rejection of the agreement may have on any
claim that Mr. Alvarado may assert against the estate.
Additionally, the Committee said that the motion contains
inadequate information to determine whether rejection is in the
interest of creditors.
About Mi Pueblo San Jose
Mi Pueblo San Jose, Inc., filed a Chapter 11 petition (Bankr. N.D.
Calif. Case No. 13-53893) in San Jose, California, on July 22,
2013. An affiliate, Cha Cha Enterprises, LLC, sought Chapter 11
protection (Case No. 13-53894) on the same day. The cases are not
jointly administered.
In its amended schedules, Mi Pueblo disclosed $61,577,296 in
assets and $68,735,285 in liabilities as of the Petition Date.
Heinz Binder, Esq., at Binder & Malter, LLP, is the Debtor's
general reorganization counsel. The Law Offices of Wm. Thomas
Lewis, sometimes doing business as Robertson & Lewis, is the
Debtor's special counsel. Avant Advisory Partners, LLC serves as
its financial advisors. Bustamante & Gagliasso, P.C. serves as its
special counsel.
The U.S. Trustee appointed seven members to the Official Committee
of Unsecured Creditors. Protiviti Inc. serves as financial
advisor. Stutman, Treister & Glatt P.C. serves as counsel to the
Committee.
MI PUEBLO: May Use Wells Fargo Cash Collateral Through Nov. 10
--------------------------------------------------------------
Bankruptcy Judge Arthur S. Weissbrodt signed off on a "Sixth
Further Interim Order" permitting Mi Pueblo San Jose, Inc., to use
cash collateral in which Wells Fargo Bank N.A., through Nov. 10.
The Debtor and the Bank advised the Court at Friday's hearing they
agreed on the form of the Interim Order, and will utilize the cash
collateral budget prepared for the weeks of Nov. 3 and 10.
As further adequate protection for the Debtor's use of Cash
Collateral, the Debtor shall pay to the Bank the following
adequate protection payment: on Nov. 4, 2013, the amount equal to
the sum of (i) the monthly payment of principal and interest at
the non-default rate that will be due and owing by the Debtor to
the Bank pursuant to a Term Note on that payment date; plus (ii)
the monthly payment of interest at the non-default rate that will
be due and owing by the Debtor to the Bank pursuant a Revolving
Reducing Note on that payment date; plus (iii) the monthly payment
required to be paid by the Debtor to the Bank pursuant to certain
swap documents.
The line item in the Current Interim Budget in the amount of
$300,000 for "Professional Restructuring Fees" is deemed to be the
amount of the Carve Out for the period from Oct. 7, 2013, through
Nov. 10, 2013; and the Retained Professionals having the benefit
of the Carve Out for the Current Interim Period are:
(A) the Debtor's counsel, Binder & Malter LLP;
(B) the Debtor's special counsel, Robertson & Lewis;
(C) the Debtor's financial advisor, Avant Advisory Group,
LLC;
(D) the Debtor's accountants, BDO USA LLP;
(E) the Committee's counsel, Stutman, Treister & Glatt PC;
and
(F) the Committee's financial advisor, Protiviti, Inc.
Previously, the Court on Oct. 11 signed off on a Fifth Further
Interim Order allowing the Debtor's continued use of cash
collateral until Oct. 27, 2013.
A copy of the budget is available for free at
http://bankrupt.com/misc/MIPUEBLO_cashcoll_order.pdf
About Mi Pueblo San Jose
Mi Pueblo San Jose, Inc., filed a Chapter 11 petition (Bankr. N.D.
Calif. Case No. 13-53893) in San Jose, California, on July 22,
2013. An affiliate, Cha Cha Enterprises, LLC, sought Chapter 11
protection (Case No. 13-53894) on the same day. The cases are not
jointly administered.
In its amended schedules, Mi Pueblo disclosed $61,577,296 in
assets and $68,735,285 in liabilities as of the Petition Date.
Heinz Binder, Esq., at Binder & Malter, LLP, is the Debtor's
general reorganization counsel. The Law Offices of Wm. Thomas
Lewis, sometimes doing business as Robertson & Lewis, is the
Debtor's special counsel. Avant Advisory Partners, LLC serves as
its financial advisors. Bustamante & Gagliasso, P.C. serves as its
special counsel.
The U.S. Trustee appointed seven members to the Official Committee
of Unsecured Creditors. Protiviti Inc. serves as financial
advisor. Stutman, Treister & Glatt P.C. serves as counsel to the
Committee.
MI PUEBLO: Nov. 8 Hearing on Bid to Extend Plan Exclusivity
-----------------------------------------------------------
The Bankruptcy Court will convene a hearing on Nov. 8, 2013, to
consider Mi Pueblo San Jose, Inc.'s motion to extend its
exclusivity periods.
On Oct. 8, the Debtor requested that the Court extend its
exclusive period to file and solicit acceptances for the Chapter
11 Plan until Feb. 17, 2014; and solicit acceptances for that Plan
until April 18. According to the Debtor, the time requested is
just sufficient to allow Mi Pueblo to obtain a better picture of
its reorganization options and feasibility.
About Mi Pueblo San Jose
Mi Pueblo San Jose, Inc., filed a Chapter 11 petition (Bankr. N.D.
Calif. Case No. 13-53893) in San Jose, California, on July 22,
2013. An affiliate, Cha Cha Enterprises, LLC, sought Chapter 11
protection (Case No. 13-53894) on the same day. The cases are not
jointly administered.
In its amended schedules, Mi Pueblo disclosed $61,577,296 in
assets and $68,735,285 in liabilities as of the Petition Date.
Heinz Binder, Esq., at Binder & Malter, LLP, is the Debtor's
general reorganization counsel. The Law Offices of Wm. Thomas
Lewis, sometimes doing business as Robertson & Lewis, is the
Debtor's special counsel. Avant Advisory Partners, LLC serves as
its financial advisors. Bustamante & Gagliasso, P.C. serves as its
special counsel.
The U.S. Trustee appointed seven members to the Official Committee
of Unsecured Creditors. Protiviti Inc. serves as financial
advisor. Stutman, Treister & Glatt P.C. serves as counsel to the
Committee.
MICROSEMI CORP: Symmetricom Deal No Effect on Moody's Debt Ratings
------------------------------------------------------------------
Moody's Investors Service said Microsemi Corp.'s debt ratings --
Ba2 Corporate Family ("CFR") and Senior Secured ratings -- are not
affected by the planned $310 million acquisition of Symmetricom,
Inc., a maker of atomic clock applications that can be used with
Microsemi's chips. The added debt (about $200 million) and reduced
cash (down about $110 million) have negative credit implications,
however, as pro forma debt to EBITDA will increase by over half a
turn to about 4x (after Moody's adjustments).
Microsemi, based in Aliso Viejo, California, is a global supplier
of high-performance analog (HPA) and mixed signal integrated
circuits as well as high reliability discrete semiconductors
targeted to the defense & security, aerospace, enterprise &
communication, and industrial & alternative energy end markets.
MILLER BROTHERS: Security Interest Remains Effective After Lapsing
------------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a secured lender that fails to file a continuation
statement after the borrower's bankruptcy nonetheless retains a
valid security interest, according to an Oct. 23 opinion by U.S.
District Judge William L. Osteen Jr. in Greenboro, North Carolina.
According to the Bloomberg report, the lender had an admittedly
valid security interest for $45,000 when the borrower filed for
Chapter 11. By the time a dispute over adequate protection arose
a few weeks later, the security interest lapsed because the lender
didn't file a timely continuation statement.
The bankruptcy judge ruled against the lender, adopting the
debtor's argument that the hypothetical judicial lien knocked out
the then-unperfected security interest, the report related.
Judge Osteen reversed, relying on Section 9-515(c) of the Uniform
Commercial Code in North Carolina. The section provides that the
lapse of security interest is as though there never had been
perfection "as against a purchaser for value."
The judge said the section "does not specifically address, in any
fashion, the possible change in priority as to the lapsed
perfection of a security interest relative to any junior lien
interests," such as the hypothetical judicial lien. Judge Osteen
pointed to two bankruptcy courts reaching the same conclusion.
Judge Osteen acknowledged that 11 U.S.C. Section 362(b)(3) was
modified so a secured creditor can file a continuation statement
without violating the automatic stay. He also said that Section
9-515 no longer tolls the time for filing a continuation statement
during a borrower's bankruptcy.
The case is American Bank FSB v. Miller Brothers Lumber Co. (in re
Miller Brothers Lumber Co.), 12-cv-00720, U.S. District Court,
Middle District of North Carolina (Greensboro).
About Miller Brothers Lumber
Elkin, North Carolina-based Miller Brothers Lumber Co., Inc.,
sought protection under Chapter 11 of the Bankruptcy Code on
Sept. 9, 2011 (Case No. 11-51405, Bankr. M.D.N.C.). The
bankruptcy case is assigned to Judge Thomas W. Waldrep Jr.
The Debtor's counsel is Charles M. Ivey, III, Esq., at Ivey,
McClellan, Gatton, & Talcott, LLP, in Greensboro, North Carolina.
The Debtor disclosed estimated assets ranging from $1 million to
$10 million and estimated debts ranging from $1 million to $10
million.
The petition was signed by Mike Miller, president.
NEW YORK CITY OPERA: NYC Ballet Appointed to Creditor Committee
---------------------------------------------------------------
Law360 reported that U.S. Trustee Tracy Hope Davis on Oct. 23
appointed an official unsecured creditors committee to New York
City Opera Inc.'s bankruptcy case made up so far of just three
members, including New York City Ballet Inc.
According to the report, the appointment came shortly after the
opera said it has $6.7 million in assets and is $3.6 million in
debt in an overview of its financial condition filed with the
bankruptcy court. The ballet company has submitted a $1.6 million
claim against the estate, according to the document.
New York City Opera, Inc., sought Chapter 11 bankruptcy protection
on Oct. 3 (Bankr. S.D.N.Y. Case No. 13-13240), listing between
$1 million and $10 million in both assets and debts.
The petition was signed by George Steel, general manager and
artistic director. Kenneth A. Rosen, Esq., at Lowenstein Sandler
LLP, serves as the opera's counsel. Ewenstein Young & Roth LLP
serves as special counsel.
NEXT 1 INTERACTIVE: Has $5.38-Mil. Net Loss in Q2 Ended Aug. 31
---------------------------------------------------------------
Next 1 Interactive, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, reporting a
net loss of $5,379,338 on $383,851 of total revenues for the three
months ended Aug. 31, 2013, compared to a net loss of $211,704 on
$140,860 of total revenues for the same period last year.
The Company's balance sheet at Aug. 31, 2013, showed $4,218,292 in
total assets, $17,299,426 in total liabilities, and stockholders'
deficit of $13,081,134.
A copy of the Form 10-Q is available at:
http://is.gd/Tf0YuK
About Next 1 Interactive
Weston, Fla.-based Next 1 Interactive, Inc., is the parent company
of RRTV Network (formerly Resort & Residence TV), Next Trip -- its
travel division, and Next One Realty -- its real estate division.
The Company is positioning itself to emerge as a multi revenue
stream "Next Generation" media-company, representing the
convergence of TV, mobile devices and the Internet by providing
multiple platform dynamics for interactivity on TV, Video On
Demand (VOD) and web solutions. The Company has worked with
multiple distributors beta testing its platforms as part of its
roll out of TV programming and VOD Networks. The list of multi-
system operators the Company has worked with includes Comcast,
Cox, Time Warner and Direct TV. At present the Company operates
the Home Tour Network through its minority owned/joint venture
real estate partner -- RealBiz Media. As of July 17, 2012, the
Home Tour Network features over 4,300 home listings in four cities
on the Cox Communications network.
Next 1 Interactive disclosed a net loss attributable to the
Company of $4.19 million on $987,115 of total revenues for the
year ended Feb. 28, 2013, as compared with a net loss attributable
to the Company of $13.65 million on $1.29 million of total
revenues for the year ended Feb. 29, 2012.
D'Arelli Pruzansky, P.A., in Boca Raton, Florida, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Feb. 28, 2013. The independent auditors noted
that the Company has incurred losses of $4,233,102 for the year
ended Feb. 28, 2013, and the Company had an accumulated deficit of
$71,193,862 and a working capital deficit of $13,371,094 at
Feb. 28, 2013. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
Bankruptcy Warning
"If we continue to experience liquidity issues and are unable to
generate revenue, we may be unable to repay our outstanding debt
when due and may be forced to seek protection under the federal
bankruptcy laws," according to the Company's annual report for the
year ended Feb. 28, 2013.
NGPL PIPECO: Bank Debt Trades at 7% Off
---------------------------------------
Participations in a syndicated loan under which NGPL PipeCo LLC is
a borrower traded in the secondary market at 93.50 cents-on-the-
dollar during the week ended Friday, October 25, 2013, according
to data compiled by LSTA/Thomson Reuters MTM Pricing and reported
in The Wall Street Journal. This represents an increase of 1.06
percentage points from the previous week, The Journal relates.
NGPL PipeCo LLC pays 550 basis points above LIBOR to borrow under
the facility. The bank loan matures on May 4, 2017. The bank
debt carries Moody's B2 and Standard & Poor's B rating. The loan
is one of the biggest gainers and losers among 204 widely quoted
syndicated loans with five or more bids in secondary trading for
the week ended Friday.
NIRVANIX INC: Has Green Light for Twin Chapter 11 Sales
-------------------------------------------------------
Law360 reported that a Delaware bankruptcy judge on Oct. 23
approved bidding procedures for Nirvanix Inc. that will divvy up
the cloud computing company's assets into two parcels in
anticipation of a Chapter 11 auction next month.
According to the report, San Diego-based Nirvanix sought court
protection Oct. 1 after failing to find a buyer for the entire
company and is now pursuing separates sales of its intellectual
property and other assets, attorney Keith A. McDaniels told the
court. The company has a stalking horse bidder in place for the
first lot, Nirvanix's IP asserts, the report noted.
Cloud storage company Nirvanix, Inc., based in San Diego,
California, sought protection under Chapter 11 of the Bankruptcy
Code on Oct. 1, 2013 (Case No. 13-12595, Bankr. D.Del.). The case
is assigned to Judge Brendan Linehan Shannon.
The Debtor is represented by Norman L. Pernick, Esq., Marion M.
Quirk, Esq., and Patrick J. Reilley, Esq., at COLE, SCHOTZ,
MEISEL, FORMAN & LEONARD, PA. Cooley LLP serves as the Debtor's
special corporate counsel. Arch & Beam Global LLC serves as the
Debtor's financial advisor. Epiq Systems Inc. is the Debtor's
claims and noticing agent.
The Debtor disclosed estimated assets of $10 million to $50
million and estimated debts of $10 million to $50 million.
The petition was signed by Debra Chrapaty, CEO.
NNN PARKWAY: Lender's Dismissal Bid to Include New Debtor
---------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
approved a stipulation and agreed order relating to the motions
for relief from stay and to dismiss the case of NNN Parkway 400
26, LLC.
Lender WBCMT 2007-C31 Amberpark Office Limited Partnership is
seeking stay relief or, in the alternative, dismissal of the
Parkway 400 26 case. The lender originally filed its motion on
June 20, 2013.
The Parkway 400 26 case has been jointly administered together
with other bankrupt Parkway entities by court order entered on
Aug. 9, 2013. The Debtors continue to operate and manage their
businesses as debtors-in-possession under Sections 1107(a) and
1108 of the Bankruptcy Code. In addition, debtor NNN Parkway 400
14, LLC commenced its bankruptcy case on Oct. 4, 2013.
The Parkway Debtors own undivided tenant-in-common interests in
real and personal commercial property commonly known as Parkway
400 located at 11720 and 11800 Amber Park Drive, Alpharetta,
Fulton County, Georgia.
Pursuant to the stipulation entered between lender and the Parkway
Debtors:
1. the relief pleadings, the opposition pleadings and the
reply pleadings, and the relief or opposition to relief
contained therein, will apply to all of the Parkway Debtors;
and
2. any order of the Court with respect to the Relief Pleadings,
the Opposition Pleadings and the Reply Pleadings will apply
to all of the Parkway Debtors.
The terms of the stipulation will inure to any additional tenant
in common owners of the property who subsequently file for
bankruptcy protection.
About NNN Parkway 400
NNN Parkway 400 26, LLC, filed a bare-bones Chapter 11 petition
(Bankr. C.D. Calif. Case No. 12-24593) in Santa Ana, California,
on Dec. 31, 2012. Dana Point, California-based NNN Parkway
estimated assets and debts of $10 million to $50 million. The Law
Office of Christine E. Baur, and David A. Lee, Esq., at Weiland,
Golden, Smiley, Wang Ekvall & Strok, LLP, represent the Debtor.
Pre-petition, the Debtors retained HighPoint Management Solutions,
LLC, a bankruptcy consulting company, as a manager of the Debtors,
and HighPoint's President, Mr. Mubeen Aliniazee, as the Debtors'
Restructuring Officer, to assist the Debtors in their compliance
with the Chapter 11 bankruptcy process.
The Debtors' primary asset is a commercial real property commonly
known as Parkway 400, which is a two-building office campus
totaling approximately 193,281 square feet located at 11720 Amber
Park Drive and 11800 Amber Park Drive, Alpharetta, Georgia. The
Debtors hold a concurrent ownership interest in the Property with
other tenant-in-common investors and the sponsor, NNN Parkway 400,
LLC.
NORCRAFT COS: S&P Puts 'B' CCR on CreditWatch Positive
------------------------------------------------------
Standard & Poor's Ratings Services said it placed its ratings on
Eagan, Minn.-based Norcraft Cos. L.P., including the 'B' corporate
credit rating and 'B' issue-level rating on the second-lien notes,
on CreditWatch with positive implications. At the same time, S&P
assigned its 'BB-' issue-level rating to its proposed $150 million
senior secured term loan B. The recovery rating is '2',
indicating S&P's expectation of substantial (70% to 90%) recovery
in the event of default.
The CreditWatch listing follows Norcraft's announcement that
concurrent with the planned IPO, the company intends to issue a
new $25 million five-year senior secured asset-backed loan (ABL)
revolving credit facility and a $150 million seven-year senior
secured term loan B facility that, together with the proceeds of
the equity offering, will refinance the company's existing
$240 million senior secured second-lien notes and pay related fees
and expenses. The ABL will not be rated.
Based on S&P's initial analysis, it has determined that if the
transaction is completed as currently proposed, it would raise the
corporate credit rating to 'B+' from 'B' with a stable outlook
following the closing of the transaction. The higher rating would
reflect S&P's expectations that the company would reduce its
existing debt by at least $80 million and extend its current
maturities no earlier than 2018, when its ABL revolver matures.
In addition, S&P is projecting that the company will maintain debt
to EBITDA (including adjustments for operating leases) below 5x in
the intermediate term and total liquidity (including cash on hand
and revolving credit facility availability) of no less than
$30 million, which S&P would consider to be commensurate with an
"aggressive" financial risk profile.
"In resolving the CreditWatch listing, we will monitor Norcraft
Cos. L.P.'s progress in completing the proposed transaction. If
the company successfully completes its IPO and refinances its
debt, we would likely raise the corporate credit rating to 'B+'
from 'B' with a stable outlook. At the same time we would expect
to withdraw the ratings on the $240 million second-lien notes,"
said Standard & Poor's credit analyst Maurice Austin.
OAK RIDGE LODGING: Case Summary & 15 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Oak Ridge Lodging, LLC
aka Westgate Lodging
1601 NW 13th Street
Boca Raton, FL 33486
Case No.: 13-35668
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
Southern District of Florida (West Palm Beach)
Judge: Hon. Paul G Hyman Jr.
Debtor's Counsel: Aaron A Wernick, Esq.
2255 Glades Rd # 337W
Boca Raton, FL 33431
Tel: (561) 395-0500
Fax: (561) 338-7532
Email: awernick@furrcohen.com
Total Assets: $2.56 million
Total Liabilities: $3.28 million
The petition was signed by Fred DeFalco, managing member.
A list of the Debtor's 15 largest unsecured creditors is available
for free at http://bankrupt.com/misc/flsb13-35668.pdf
OGX PETROLEO: Said to File for Bankruptcy in the "Coming Days"
--------------------------------------------------------------
Emily Glazer, Luciana Magalhaes and John Lyons, writing for The
Wall Street Journal, reported on Oct. 25 that Petroleo e Gas
Participacoes SA is set to file for bankruptcy protection in
Brazil in the coming days, people familiar with the matter said.
According to the WSJ report, the company is expected to be
reorganized but the next steps are unclear.
Meanwhile, David Kashi, writing for International Business Times,
reported Friday that the Brazilian tycoon Eike Batista's main
company has reportedly filed for bankruptcy after Mr. Batista
couldn't salvage a deal to merge the firm or raise outside
capital. IBTimes, citing a Wall Street Journal report on Friday,
said Mr. Batista, 56, was unable to find further financial backing
or partners. Mr. Batista reported lost about $33 billion in the
last year.
WSJ said a bankruptcy would be the biggest ever in Latin America,
and an ignominious milestone in the former powerboat racer's rise-
and-fall. WSJ also said the decision is a jarring reversal from
just last year, when the entrepreneur was listed among the world's
richest on the Forbes list with estimated wealth over $30 billion,
the WSJ report related. But his wealth has plunged since OGX
admitted it could find little oil. That sent shares falling across
his commodities companies. Mr. Batista later fell of the Forbes
list.
OGX has been trying to strike a settlement with the company's bond
holders, who collectively hold about $3.6 billion in company
paper, the WSJ report said. The holders include some of the
world's largest, such as BlackRock Inc. and bond giant Pacific
Investment Management Co., who backed a company that had no oil
production or profits. Bankruptcy loomed since OGX missed a bond
payment this month.
The company and creditors convened in Rio de Janeiro to strike a
restructuring deal, but those talks fell through, people familiar
with the talks said, the WSJ report further related. OGX is also
running out of cash. One difficulty in the discussions has been
Mr. Batista's snap decision-making, say people involved. He has
recently switched bankers and lawyers, and fired management with
little notice.
Luciana Magalhaes, writing for Daily Bankruptcy Review, had
reported that advisers for OGX and for some of the oil firm's
bondholders could wrap up the current round of talks on overdue
bond payments as early as Oct. 24 or 25, said a person familiar
with the situation.
About OGX Petroleo
Based in Rio de Janeiro, Brazil, OGX Petroleo e Gas Participaaoes
S.A. is an independent exploration and production company with
operations in Latin America.
* * *
As reported in the Troubled Company Reporter-Latin America on
July 17, 2013, Moody's Investors Service downgraded OGX Petroleo e
Gas Participaaoes S.A.'s Corporate Family Rating to Ca from Caa2
and OGX Austria GmbH's senior unsecured notes ratings to Ca from
Caa2. The rating outlook remains negative.
ORLANDO, FL: Moody's Affirms Ba2 Rating on $33.4MM 2nd Lien Bonds
-----------------------------------------------------------------
Moody's Investors Service has affirmed the City of Orlando's (FL)
Baa2 rating on $181.7 million Senior Tourist Development Tax
Revenue Bonds (6th Cent Contract Payments), Series 2008A, and Ba2
rating on $33.4 million Second Lien Subordinate Tourist
Development Tax Revenue Bonds (6th Cent Contract Payments), Series
2008B; the outlooks are stable. There is also a Subordinate Third
Lien TDT bond issue ($87.3 million outstanding) not rated by
Moody's.
The bonds are secured by a senior lien (Series 2008A) and a second
(subordinate) lien (Series 2008B) pledge on "Contract" 6th cent
tourist development tax (TDT) revenues that compose one-half of a
countywide 6th cent TDT, plus an additional incremental portion
("Installment Amount" - see below) available through November
2018.
The bond structures initially included separate cash-funded, debt
service (50%) and liquidity reserves (50%) for each series, which
together equal to 100% of MADS (Series A&B) and 10% of par (Series
C). The bonds were originally issued, along with other funds, to
construct an Event Center in the city's downtown area.
Summary Rating Rationale:
The Baa2 and Ba2 ratings for the senior and second lien
subordinate bonds, respectively, are based on the near-term
likelihood of depletion of both the liquidity and debt service
reserves to help make debt service payments for the Series C third
lien subordinate bonds (not rated) which would, in turn, trigger
cross-default provisions affecting both the Series A and Series B
bondholders. The current ratings reflect Moody's expectations for
high levels of recovery for the Series A and B bondholders, as the
post-default flow of funds provides protection through its lien
status payment basis.
The ratings also factor in the narrow senior and second lien debt
service coverage from the recovering TDT proceeds. The
differential between the senior and second lien subordinate bond
ratings reflects the more marginal coverage currently for the
second lien bonds, and their dependence on mild to tepid growth
for continued repayment. The bonds (Series A, B and C) are insured
for payment of principal and interest by Assured Guaranty Corp.
(A3/STA).
The Tourist Development Tax (TDT) is a passive tax collected by
the county and based on temporary lodging and tourism activity,
and bears no relationship to the city's overall financial
performance or credit position (Aa1 Issuer Rating). The Orlando
MSA has a well-established and sizable tourist-oriented component
that retains favorable long-term growth prospects.
Strengths:
-- The TDT is levied on a sizable base with an established
tourism identity as well as favorable convention activity
-- Historic TDT collections show strong results with periodic
declines recouped within two years
Challenges:
-- Insufficiency of contract 6th cent TDT receipts to adequately
cover debt service requirements on all TDT debt
-- City's inability to adjust the TDT
-- The fragile global and national economic recovery that could
negatively affect discretionary travel
Outlook:
The stable outlooks, while recognizing the strong likelihood of
Series C bonds triggering cross default provisions under the
indenture, also consider the favorable long-term TDT collection
history and the likelihood that, under a priority lien payment
status, both rated bonds, and senior lien bonds especiall,y should
continue to be fully paid in the intermediate term.
What Could Make the Rating Go Up:
-- Significant improvement in contract TDT receipts,
significantly improving coverage
What Could Make the Rating Go Down:
-- Additional declines in contract TDT receipts either further
narrowing coverage or being insufficient to cover debt
requirements for Series A and/ or Series B bonds
-- Economic events nationally that could reduce discretionary
travel to the Orlando area
PACIFIC ARCHITECTS: Moody's Gives B2 CFR & Rates $400MM Debt B2
---------------------------------------------------------------
Moody's Investors Service has assigned initial ratings to Pacific
Architects and Engineers Incorporated ("PAE"), including a B2
Corporate Family Rating. Concurrently, B2 ratings have been
assigned to debts of the company's planned $400 million first lien
bank credit facility. Proceeds of the planned facility will
refinance PAE's existing debts and fund a $170 million dividend.
Ratings assigned:
Corporate Family, B2
Probability of Default, B2-PD
$80 million first lien revolver due 2018, B2, LGD3, 47%
$320 million first lien term loan due 2019, B2, LGD3, 47%
Rating Outlook, Stable
Ratings Rationale:
The B2 Corporate Family Rating reflects good scale, but also
considers modest operating margin and a difficult business
environment for defense services contractors that will likely keep
credit metrics on par with the rating level. Moody's estimates,
pro forma for the contemplated financing, debt to EBITDA at the 5x
level (Moody's adjusted basis). Low asset intensity of the
services business model should support free cash flow generation
at this leverage level but the company's recently negative
performance trend -- Moody's thinks to be a reflection of a
generally difficult federal contracting backdrop at hand -- may
continue and would limit the degree. Further, PAE's funded backlog
to annual revenue ratio of only about 60% is a commonly reported
one by services contractors but still constrains visibility. In
July, PAE acquired Computer Science Corporation's Applied
Technology Division ("ATD"), a substantial acquisition in terms of
revenue, and associated integration risks also affect the rating.
Impact on operations from procurement reforms, sequestration, lack
of a long-term U.S. defense budget and debt ceiling considerations
are negative, but PAE's long heritage as an international mission
support provider positions the company well for U.S. Department of
State and foreign government bidding opportunities. These markets,
where PAE is well known, should be less vulnerable to U.S.
military spending reductions and further, the company's lean cost
structure should contribute competitive overhead rates that at
least minimally sustain market share.
The stable rating outlook considers increased diversity across the
revenue base from acquisitions over the past few years which
should help PAE maintain a broad bid pipeline and good economies
of scale over fixed costs. Some of the company's acquisitions have
also been of businesses, such as aviation services, where
potential for higher margin exists. While adequate, the liquidity
profile represents a tempering consideration with cash plus
expected revolver availability low against a revenue base that
heavily depends on U.S. government work -- especially problematic
if a government shutdown drives working capital growth.
Upward rating momentum would depend on achievement and expectation
of sustained debt to EBITDA at 4x or less, with free cash flow to
debt of 10% or higher, and a good liquidity profile. With
transaction costs and only partial year earnings contribution from
ATD in 2013, evidence of performance gains that could support a
higher rating may not surface until after 2014.
Downward rating pressure would develop with debt to EBITDA
approaching 6x, free cash flow to debt of 5% or less, and/or a
weak liquidity profile.
Pacific Architects and Engineers Incorporated provides contract
support services to U.S. government agencies, international
organizations, and foreign governments. Annual revenues pro forma
for the full year results of in-period acquisitions are about $1.7
billion. The company is majority-owned by entities of Lindsay
Goldberg LLC.
PACIFIC ARCHITECTS: S&P Assigns 'B+' CCR & Rates $400MM Loan 'B+'
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Pacific Architects & Engineers Inc. (PAE). The
outlook is stable. At the same time, S&P assigned its 'B+' issue-
level rating to the company's proposed $400 million secured credit
facility (which consists of a $320 million term loan B due 2019
and an $80 million revolver due 2018). The recovery rating on the
facility is '3', indicating S&P's expectation of meaningful
recovery (50%-70%) in a payment default scenario.
The ratings on PAE reflect S&P's belief that the company's credit
metrics will remain appropriate for the rating over the next year,
including debt to EBITDA of 4x-4.5x. PAE plans to issue about
$330 million of new debt to pay a $170 million dividend to its
owner, private-equity firm Lindsay Goldberg (LG), and refinance
existing debt. This comes on the heels of completing a large
acquisition in July 2013, funded partly with an equity
contribution from LG. "We believe future acquisitions are
possible, but we do not expect debt to EBITDA to rise to more than
5x and we believe another debt-financed dividend is unlikely in
the near-term given the challenging operating environment PAE
faces," said credit analyst Chris Mooney.
S&P assess PAE's financial risk profile as "aggressive" due to its
relatively high debt following the proposed dividend. Although
S&P believes revenues and earnings will likely decline due to U.S.
defense budget pressures, the company should still generate decent
free cash flow, which, if used mostly for debt reduction, should
offset the impact of lower earnings on the company's credit
ratios. While S&P expects funds from operations to debt to be at
the weaker end of the range for an "aggressive" financial risk
profile--at around 12% in 2014--it projects EBITDA interest
coverage to be more appropriate, at about 4x.
"We assess PAE's business risk profile as "weak" due to its
relatively modest size compared with other competitors, U.S.
defense budget reductions, increased price competition, relatively
low margins, and the risks associated with the recent acquisition
of Applied Technology Division. These factors are partially
offset by decent contract diversity for the company's size," S&P
said.
PAE is a service-focused company with capabilities in aviation and
ground maintenance, training and judicial support to foreign
nations, base operations support, and military test and training
range support. The vast majority of its sales are from branches
of the U.S. government, including the Navy (about 30%), Air Force
(20%), State Department (20%), and Homeland Security (5%-10%),
among others. More than half of PAE's work is performed in the
U.S., but it also has a presence in Africa, Afghanistan, Guam,
Antigua, and other regions.
PAE's limited exposure to the Army is a positive because S&P
believes the Navy and Air Force will see less cuts due to the
military's strategic shift to Asia, where air and sea power is
more important than ground forces. However, sequestration has
reduced training and flying hours and we believe the government
will continue to defer noncritical aviation maintenance, which
could hurt demand for PAE's services. Although PAE does not have
significant exposure to declining war funding, S&P believes
funding for diplomacy missions in Afghanistan (10% of total sales)
will likely decline as the U.S. reduces its presence in the
region. Furthermore, S&P believes continued budget uncertainty
could delay orders for many of PAE's services in the coming
months, particularly because service contracts are easier to
quickly scale back on than large procurement contracts.
Therefore, there will likely be some volatility around S&P's base
forecast, which assumes a mid-single-digit decline in pro forma
sales in 2014.
PAE's profits depend largely on its ability to price and structure
its contracts effectively, as most of its costs are flexible and
labor-related. PAE has increased its scale and range of service
offerings significantly in recent years, which could help the
company bid more effectively in a competitive environment. Still,
the U.S. government is increasingly focusing on the price of
contracts, which could limit margin improvement going forward or
result in deterioration. Our base-case forecast assumes EBITDA
margins of slightly higher than 5%.
The rating outlook is stable. S&P expects debt reduction to
largely offset the impact of lower earnings in 2014, with debt to
EBITDA of 4x-4.5x. S&P could lower the rating if a debt-financed
acquisition or dividend, or greater-than-expected operating
challenges, increase debt to EBITDA to more than 5x for a
sustained period. The company's ownership by a private-equity
firm and the potential for a debt-financed dividend or other
transaction that could significantly increase leverage eliminates
the possibility of an upgrade under the current ownership
structure.
PETTERS COMPANY: Chapter 11 Trustee May Use Cash Collateral
-----------------------------------------------------------
The Hon. Gregory F. Kishel of the U.S. Bankruptcy Court for the
District of Minnesota authorized Douglas A. Kelley, the duly
appointed Chapter 11 trustee for Petters Company, Inc., et al., to
use not more than $1,500,000 of cash collateral currently in the
possession of Petters Group Worldwide, LLC, to pay Petters
Worldwide's approved and allowed professional fees and expenses,
ongoing litigation costs and other administrative expenses.
The trustee and the Official Committee of Unsecured Creditors
moved the Court for authorization to use cash collateral to pay
allowed and unpaid professional fees and expenses of Petters
Worldwide.
On the Petition Date, Petters Worldwide had virtually no available
cash funds, and has since generated funds mostly from the
disposition of various assets and recover on claims in related
bankruptcy proceedings.
As adequate protection from any diminution in value of the
lender's collateral, the trustee will grant replacement liens in
all postpetition assets of Petters Worldwide, including avoidance
actions and other rights to payment arising under Chapter 5 of the
Bankruptcy Code.
On Sept. 17, Randall L. Seaver, the Trustee for the Bankruptcy
estate of Petters Capital, LLC, objected to the Chapter 11
trustee's motion to use cash collateral, stating that the cash
collateral will be used only for the payment set forth in the
trustee's motion, and provided the Court approves the replacement
lien in favor of Petters Capital.
About Petters Company, Inc.
Based in Minnetonka, Minn., Petters Group Worldwide LLC is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut (consumer
products via its catalog and Web site), SoniqCast (maker of
portable, WiFi MP3 devices), leading instant film and camera
company Polaroid (purchased for $426 million in 2005), Sun Country
Airlines (acquired in 2006), and Enable Holdings (online
marketplace and auction for consumers and manufacturers' overstock
inventory). Founder and chairman Tom Petters formed the company
in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide.
Thomas Petters, the founder and former CEO of Petters Group, has
been indicted and a criminal proceeding against him is proceeding
in the U.S. District Court for the District of Minnesota.
Petters Company, Petters Group Worldwide and eight other
affiliates filed separate petitions for Chapter 11 protection
(Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its
petition, Petters Company estimated its debts at $500 million and
$1 billion. Parent Petters Group Worldwide estimated its debts at
not more than $50,000.
Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly
appointed Chapter 11 Trustee of Petters Company, Inc., et al. The
trustee tapped Haynes and Boone, LLP as special counsel, and
Martin J. McKinley as his financial advisor.
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed separate petitions for Chapter 11 bankruptcy
protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and
08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun
Country's parent company.
The U.S. Trustee for Region 12 appointed a three-member official
committee of unsecured creditors.
PETTERS COMPANY: Tom Petters Seeks Shorter Sentence
---------------------------------------------------
Jacqueline Palank, writing for The Wall Street Journal, reported
that Tom Petters maintained his innocence following his 2009
conviction for running Minnesota's biggest Ponzi scheme, even
trying to take his battle to the Supreme Court. But in court on
Oct. 23 to seek a shorter prison sentence, he has finally conceded
his guilt.
"This is my only chance to clear my conscience and soul," Mr.
Petters said, according to Minnesota Public Radio, the report
added. "I made a horrible mess of things."
News reports say Mr. Petters cried as he apologized to U.S.
District Judge Richard Kyle for lying in his courtroom when he
denied his guilt for his role in the Ponzi scheme.
"Maybe I thought the world revolved around me. But I lost my way
big time. I am sorry I lied in your courtroom. It's a horrible
excuse, but I lied. And I am begging for forgiveness today," Mr.
Petters said, according to the Star Tribune.
About Petters Company, Inc.
Based in Minnetonka, Minn., Petters Group Worldwide LLC is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut (consumer
products via its catalog and Web site), SoniqCast (maker of
portable, WiFi MP3 devices), leading instant film and camera
company Polaroid (purchased for $426 million in 2005), Sun Country
Airlines (acquired in 2006), and Enable Holdings (online
marketplace and auction for consumers and manufacturers' overstock
inventory). Founder and chairman Tom Petters formed the company
in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide.
Thomas Petters, the founder and former CEO of Petters Group, has
been indicted and a criminal proceeding against him is proceeding
in the U.S. District Court for the District of Minnesota.
Petters Company, Petters Group Worldwide and eight other
affiliates filed separate petitions for Chapter 11 protection
(Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its
petition, Petters Company estimated its debts at $500 million and
$1 billion. Parent Petters Group Worldwide estimated its debts at
not more than $50,000.
Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly
appointed Chapter 11 Trustee of Petters Company, Inc., et al. The
trustee tapped Haynes and Boone, LLP as special counsel, and
Martin J. McKinley as his financial advisor.
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed separate petitions for Chapter 11 bankruptcy
protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and
08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun
Country's parent company.
PLASTIC TECHNOLOGIES: Files Chapter 11 in Rutland, Vermont
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Plastic Technologies of Vermont Inc. filed a petition
for Chapter 11 protection in Rutland, Vermont, on Oct. 20 after a
"series of poor business decision" caused the company to "exhaust
its available credit line," according to court papers.
According to the report, the South Burlington, Vermont-based
company owes $3.6 million to secured lender Centrix Bank & Trust,
not counting about $1 million on a federal tax lien. Trade
suppliers and landlords have claims for $3 million.
There are four plants in Vermont, New Hampshire, Maryland and New
York making plastic beverage containers, the report related.
The company said it's "contemplating" a sale of fixed assets and
inventory, other than assets covered by a purchase agreement with
Continental Container Corp. The company posted a loss of $2.4
million last year.
The case is In re Plastic Technologies of Vermont Inc., 13-
bk-10729, U.S. Bankruptcy Court, District of Vermont (Rutland).
PROSEP INC: Files CCAA to Implement Sale of All Assets to PWA
-------------------------------------------------------------
ProSep Inc. and Produced Water Absorbents, Inc. on Oct. 24
disclosed that they have entered into an Asset Purchase Agreement,
pursuant to which PWA will acquire substantially all of the assets
of ProSep, including all of the outstanding shares of the
Company's subsidiaries, for an aggregate consideration of
$9,200,000.
The Sale Transaction is expected to be implemented through a
Court-supervised process. To that end, ProSep intends to apply
for an Order from the Superior Court of the Province of Quebec
(Commercial Division) to initiate proceedings under the Companies'
Creditors Arrangement Act (Canada). The completion of the Sale
Transaction will be subject to obtaining approval of the sale and
a vesting order from the Court. The Sale Transaction is expected
to close within 10 business days following the receipt of the
approval and vesting order from the Court.
This process will not affect the Company's day-to-day operations.
ProSep's subsidiaries will not be subject to the CCAA proceedings.
ProSep's subsidiaries have access to the funding necessary to
maintain operations and the business will continue without
disruption during this period. ProSep's subsidiaries will
continue to fulfill their obligations to their customers and
suppliers.
Stikeman Elliott LLP is legal counsel to ProSep. McCarthy
Tetrault LLP is acting as legal counsel for PWA.
About ProSep
ProSep -- http://www.prosep.com-- is a technology-focused process
solutions provider to the upstream oil and gas industry. ProSep
designs, develops, manufactures and commercializes technologies to
separate oil, water and gas generated by oil and gas production.
About PWA
Produced Water Absorbents, Inc. (PWA) -- http://www.pwasystems.com
-- is a technology company which provides waste treatment
solutions and services to the oil and gas industry. It was
founded in 2011 when venture capital funding was secured from
Energy Ventures of Norway and Harris and Harris Group, Inc. from
the USA. The foundation of the offering is a patented, regenerable
and game-changing technology called Osorb(R) Media. Osorb absorbs
free, dispersed and soluble hydrocarbons from produced water and
other waste water streams to meet or exceed environmental
discharge requirements. Osorb also removes C4 and heavier
hydrocarbons from gas streams to improve the value of sales gas
(hydrocarbon dew point reduction), improve burner efficiency
(including flares), and to control other environmental gaseous
emissions.
QUANTUM FUEL: Timothy A. McGaw Joins Board
------------------------------------------
Quantum Fuel Systems Technologies Worldwide, Inc.'s Board of
Directors increased the size of the Company's board from six to
seven members and appointed Timothy A. McGaw to fill the newly
created vacancy effective Oct. 24, 2013.
In connection with the Company's Sept. 18, 2013, convertible note
financing between the Company and certain accredited investors,
Kevin Douglas, the lead investor, was given the right to appoint
one member to the Company's Board as long as his beneficial
ownership is at least 5 percent. The appointment of Mr. McGaw to
the Company's Board was at the request of Mr. Douglas.
Since 1991, Mr. McGaw has served in various capacities for Douglas
Telecommunications, a private management company located in
Larkspur, California. Prior to joining Douglas Telecommunications,
Mr. McGaw served as the chief financial officer for a privately
held company. Mr. McGaw has a degree in Taxation from Golden Gate
University, as well as an undergraduate degree from Humboldt State
University. Mr. McGaw also serves on the board of directors for
SilverWillow Energy Corporation, a publicly traded company located
in Calgary, Canada.
"We welcome Mr. McGaw to the board. His extensive business and
financial background make him a valuable addition to the Company
at a time of significant growth and opportunity," stated Jonathan
Lundy, Chairman of the Board.
Additional information is available for free at:
http://is.gd/ZBxEqb
About Quantum Fuel
Lake Forest, Cal.-based Quantum Fuel Systems Technologies
Worldwide, Inc. (Nasdaq: QTWW) develops and produces advanced
vehicle propulsion systems, fuel storage technologies, and
alternative fuel vehicles. Quantum's portfolio of technologies
includes electronic and software controls, hybrid electric drive
systems, natural gas and hydrogen storage and metering systems and
other alternative fuel technologies and solutions that enable fuel
efficient, low emission, natural gas, hybrid, plug-in hybrid
electric and fuel cell vehicles.
Quantum Fuel disclosed a net loss attributable to stockholders of
$30.91 million in 2012 and a net loss attributable to common
stockholders of $38.49 million in 2011. The Company's balance
sheet at March 31, 2013, showed $58.40 million in total assets,
$49.77 million in total liabilities and $8.62 million in total
stockholders' equity.
Haskell & White LLP, in Irvine, 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 does not have sufficient existing sources of
liquidity to operate its business and service its debt obligations
for a period of at least twelve months. These conditions, along
with the Company's working capital deficit and recurring operating
losses, raise substantial doubt about the Company's ability to
continue as a going concern.
RADIAN GROUP: To Unveil 3rd Quarter Results, Hold Call on Nov. 7
----------------------------------------------------------------
Radian Group Inc. on Oct. 24 disclosed that it will hold a
conference call on Thursday, November 7, 2013, at 10:00 a.m.
Eastern time to discuss the company's third quarter results, which
will be announced prior to the market open on the same day.
The conference call will be broadcast live over the Internet at
http://www.radian.biz/page?name=Webcastsor at
http://www.radian.biz
The call may also be accessed by dialing 877-531-2988 inside the
U.S., or 612-332-1020 for international callers, using passcode
304797 or by referencing Radian.
A replay of the webcast will be available on the Radian website
approximately two hours after the live broadcast ends for a period
of one year. A replay of the conference call will be available
approximately two and a half hours after the call ends for a
period of two weeks, using the following dial-in numbers and
passcode: 800-475-6701 inside the U.S., or 320-365-3844 for
international callers, passcode 304797.
In addition to the information provided in the company's earnings
news release, other statistical and financial information, which
is expected to be referred to during the conference call, will be
available on Radian's website under Investors >Quarterly Results,
or by clicking on http://www.radian.biz/page?name=QuarterlyResults
About Radian Group
Headquartered in Philadelphia, Radian Group Inc. --
http://www.radian.biz-- provides private mortgage insurance and
related risk mitigation products and services to mortgage lenders
nationwide through its principal operating subsidiary, Radian
Guaranty Inc. These services help promote and preserve
homeownership opportunities for homebuyers, while protecting
lenders from default-related losses on residential first mortgages
and facilitating the sale of low-downpayment mortgages in the
secondary market.
* * *
As reported by the Troubled Company Reporter on March 4, 2013,
Standard & Poor's Ratings Services said that it has affirmed all
of its ratings on Radian Group Inc. At the same time, S&P revised
the outlook to stable from negative. S&P also assigned its 'CCC+'
senior unsecured debt rating to the company's proposed
$350 million convertible senior notes.
As reported by the Troubled Company Reporter on Oct. 17, 2012,
Standard & Poor's Rating Services raised its long-term issuer
credit ratings on Radian Group Inc. (RDN) to 'CCC+' from 'CCC-'
and MGIC Investment Corp. (MTG) to 'CCC+' from 'CCC'. The
financial strength ratings for both RDN's and MTG's respective
operating companies are unchanged. The outlook on both companies
is negative.
"The outlook for each company is negative, reflecting the
continuing risk of significant adverse reserve development; the
current trajectory of operating performance; and the expected
impact ongoing losses will have on their capital positions," S&P
said in October 2012. "We expect operating performance to
deteriorate for the rest of the year for both companies,
reflecting the affect of normal adverse seasonality on new notices
of delinquency and cure rates, and the lack of greater improvement
in the job markets."
RADIOSHACK CORP: Incurs $112 Million Net Loss in Third Quarter
--------------------------------------------------------------
Radioshack Corporation filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $112.4 million on $805.4 million of net sales and operating
revenues for the three months ended Sept. 30, 2013, as compared
with a net loss of $47.1 million on $898 million of net sales and
operating revenues for the same period during the prior year.
For the nine months ended Sept. 30, 2013, the Company reported a
net loss of $208.8 million on $2.49 billion of net sales and
operating revenues as compared with a net loss of $76.1 million on
$2.65 billion of net sales and operating revenues for the same
period a year ago.
The Company's balance sheet at Sept. 30, 2013, showed $1.60
billion in total assets, $1.21 billion in total liabilities and
$394 million in total stockholders' equity.
Joseph C. Magnacca, chief executive officer, said, "We are moving
forward quickly and as planned with our turnaround efforts. As we
have said, we expect our work to take several quarters and during
that time our results will vary quarter to quarter as we make
strategic changes to improve our long-term financial performance.
This quarter reflects our strategic decision to accelerate the
improvements to the product assortment in our stores by removing
duplicate and unproductive inventory. The lower inventory
valuations for these products and projected disposal costs
resulted in an expected increase to our cost of products sold this
quarter."
Mr. Magnacca continued: "We have an aggressive plan to
reinvigorate our store experience this fall in nearly all of our
stores. This plan builds upon the sales improvement we've seen in
three concept stores and two brand statement stores. By the end
of the year, we will have over 100 concept and brand statement
stores open. In addition, we are currently contemporizing our
stores by significantly re-merchandising inventory in a more
logical manner and improving presentation. Our entire store base
of nearly 4,300 stores will see improvements from these changes
which are being implemented in the early part of the fourth
quarter."
The Company ended the third quarter with total liquidity of $613
million, including cash and cash equivalents of $316.4 million and
$296.2 million of available credit under the asset-based revolving
credit facility that expires in January 2016.
A copy of the Form 10-Q is available for free at:
http://is.gd/NPoHZy
About Radioshack Corporation
RadioShack (NYSE: RSH) -- -- http://www.radioshackcorporation.com
-- is a national retailer of innovative mobile technology products
and services, as well as products related to personal and home
technology and power supply needs. RadioShack's retail network
includes more than 4,300 company-operated stores in the United
States, 270 company-operated stores in Mexico, and approximately
1,000 dealer and other outlets worldwide.
Radioshack disclosed a net loss of $139.4 million in 2012, as
compared with net income of $72.2 million in 2011.
* * *
As reported by the TCR on Nov. 23, 2012, Standard & Poor's Ratings
Services lowered its corporate credit and senior unsecured debt
ratings on Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from
'B-'. "The downgrade of RadioShack reflects our view that it will
be very difficult for the company to improve its gross margin in
the fourth quarter of this year, given the highly promotional
nature of year-end holiday retailing in the wireless and consumer
electronic categories," said Standard & Poor's credit analyst
Jayne Ross.
In the July 27, 2012, edition of the TCR, Fitch Ratings has
downgraded its long-term Issuer Default Rating (IDR) for
RadioShack Corporation to 'CCC' from 'B-'. The downgrade reflects
the significant decline in RadioShack's profitability, which has
become progressively more pronounced over the past four quarters.
As reported by the TCR on March 6, 2013, Moody's Investors Service
downgraded RadioShack Corporation's corporate family rating to
Caa1 from B3 and probability of default rating to Caa1-PD from B3-
PD. RadioShack's Caa1 Corporate Family Rating reflects Moody's
opinion that the overall business strategy of the company to
reverse the decline in profitability has not gained any traction.
REGIONALCARE HOSPITAL: Moody's Cuts Corp. Family Rating to Caa1
---------------------------------------------------------------
Moody's Investors Service downgraded RegionalCare Hospital
Partners, Inc.'s (RCHP) Corporate Family Rating to Caa1 from B3
and Probability of Default Rating to Caa1-PD from B3-PD.
Concurrently, Moody's downgraded the rating on RCHP's first lien
senior secured debt to B3 (LGD 3, 39%) from B2 (LGD 3, 39%). The
outlook for the ratings is stable.
The downgrade reflects Moody's expectation that the company will
face difficulties reducing leverage due to lower than anticipated
operating results at two of the company's facilities that will
constrain growth in consolidated EBITDA and cash flow. Moody's
believes that the company will also continue to face challenges
that are impacting the sector as a whole, including weak volume
trends and reimbursement pressure, but its relatively small size
will make it more difficult to absorb negative developments. These
challenges are expected to result in modest cash flow and weak
interest coverage metrics over the near term. Lower EBITDA will
also diminish headroom in complying with the required financial
covenant levels in the company's credit facilities and could
constrain revolver availability within the next 12 to 18 months.
Following is a summary of Moody's rating actions.
Ratings Downgraded:
Senior secured revolving credit facility to B3 (LGD 3, 39%) from
B2 (LGD 3, 39%)
Senior secured term loan to B3 (LGD 3, 39%) from B2 (LGD 3, 39%)
Corporate Family Rating to Caa1 from B3
Probability of Default Rating to Caa1-PD from B3-PD
Ratings Rationale:
RCHP's Caa1 Corporate Family Rating reflects Moody's expectation
that the company will continue to operate with very high financial
leverage, modest cash flow and weak interest coverage. Moody's
believes the company will look to aggressively pursue acquisitions
to increase scale, since it remains relatively small compared to
other corporate issuers, and that these acquisitions will likely
add to the company's debt load. The rating also reflects risks
associated with the lack of scale, including the fact that
underperformance at only a few facilities can have a detrimental
effect on the company's operating results and credit metrics.
Supporting the rating is Moody's expectation that individual
hospital operations will gradually improve under the RCHP
management team, many of which have had a successful track record
in building a hospital operating company, and benefit from lower
bad debt expense as the expansion of insurance coverage under the
Affordable Care Act begins in 2014.
If improvements in operating results fail to materialize, either
because of operational issues in specific markets, challenges in
the broader healthcare sector, including the possibility of
additional reductions in Medicare reimbursement or disruption from
future growth initiatives, Moody's could downgrade the rating.
Moody's could also downgrade the rating if leverage increases for
a large acquisition or shareholder initiative. Additionally,
Moody's could downgrade the rating if the company's liquidity
position weakens or free cash flow was expected to be negative for
a sustained period.
Given the weak credit metrics resulting from the slower than
expected growth in EBITDA, Moody's does not expect an upgrade of
the ratings in the near term. However, Moody's could upgrade the
rating if improvements in the operations of the currently owned
facilities are balanced with the acquisition of new facilities
such that lease adjusted leverage can be maintained below 6.0
times. Additionally, Moody's would have to see evidence of margin
improvement as operational improvements are implemented. Finally,
Moody's would have to see improvement in the company's liquidity
as evidenced by increased free cash flow and a greater degree of
headroom in compliance with covenants such that revolver
availability is restored.
RegionalCare Hospital Partners, Inc. operates eight hospital
facilities in seven states and recognized revenue, after the
provision for doubtful accounts, of approximately $583 million for
the twelve months ended June 30, 2013.
RESIDENTIAL CAPITAL: FHFA Joins Opposition to Ch. 11 Plan
---------------------------------------------------------
Law360 reported that the Federal Housing Finance Agency objected
on Oct. 22 to Residential Capital LLC's Chapter 11 plan, arguing
that it fails to provide the agency its claim of first priority to
payment and unfairly gives it a smaller distribution percentage
than the general unsecured creditors will receive.
According to the report, the plan, originally filed in July,
incorporated a $2.1 billion settlement with creditors and ResCap's
former parent Ally Financial Inc., but FHFA argues that it does
little to settle ResCap's debts to Fannie Mae and Freddie Mac.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities at March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
ResCap sold most of the businesses for a combined $4.5 billion.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RG STEEL: Elliot Co. Opposes Bid to Abandon Equipment
-----------------------------------------------------
Elliot Co. asked U.S. Bankruptcy Judge Kevin Carey to deny the
request of RG Steel LLC to abandon certain assets, saying they are
"beneficial to the estate."
RG Steel earlier proposed to abandon certain equipment, including
an AYR turbine assembly and a DYR turbine rotor that it sent to
Elliot's service shop for repair.
Elliot said the equipment is worth $45,000, which exceeds the
company's $38,151 claim against the steel maker.
"The equipment which debtors seek to abandon has value and is
beneficial to the estate. As such, debtors should not be
permitted to abandon such assets," the company said in an Oct. 23
filing.
Elliot Co. is represented by:
R. Stokes Nolte, Esq.
Reilly, Janiczek & McDevitt PC
Delle Donne Corporate Center
1013 Centre Road, Suite 210
Wilmington, DE 19805
Tel: (302) 777-1700
Fax: (302) 777-1705
Email: rnolte@rjm-law.com
About RG Steel
RG Steel LLC -- http://www.rg-steel.com/-- is the United States'
fourth-largest flat-rolled steel producer with annual steelmaking
capacity of 7.5 million tons. It was formed in March 2011
following the purchase of three steel facilities located in
Sparrows Point, Maryland; Wheeling, West Virginia and Warren,
Ohio, from entities related to Severstal US Holdings LLC. RG
Steel also owns finishing facilities in Yorkville and Martins
Ferry, Ohio. It also owned Wheeling Corrugating Company and has a
50% ownership in Mountain State Carbon and Ohio Coatings Company.
RG Steel along with affiliates, including WP Steel Venture LLC,
sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12-
11661) on May 31, 2012. Bankruptcy was precipitated by liquidity
shortfall and a dispute with Mountain State Carbon, LLC, and a
Severstal affiliate, that restricted the shipment of coke used in
the steel production process.
The Debtors estimated assets and debts in excess of $1 billion.
As of the bankruptcy filing, the Debtors owe (i) $440 million,
including $16.9 million in outstanding letters of credit, to
senior lenders led by Wells Fargo Capital Finance, LLC, as
administrative agent, (ii) $218.7 million to junior lenders, led
by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million
on account of a subordinated promissory note issued by majority
owner The Renco Group, Inc., and (iv) $100 million on a secured
promissory note issued by Severstal.
Judge Kevin J. Carey presides over the case.
The Debtors are represented in the case by Robert J. Dehney, Esq.,
and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP,
and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T.
Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the
Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial
advisor and The Seaport Group serves as lead investment banker.
Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman
Carson Consultants LLC is the claims and notice agent.
Wells Fargo Capital Finance LLC, as Administrative Agent, is
represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo,
Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura
Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang
Ziehi & Jones LLP.
Renco Group is represented by lawyers at Cadwalader, Wickersham &
Taft LLP.
Kramer Levin Naftalis & Frankel LLP represents the Official
Committee of Unsecured Creditors. Huron Consulting Services LLC
serves as the Committee's financial advisor.
The Debtor has sold off the principal plants. The sale of the
Wheeling Corrugating division to Nucor Corp. brought in $7
million. That plant in Sparrows Point, Maryland, fetched the
highest price, $72.5 million. CJ Betters Enterprises Inc. paid
$16 million for the Ohio plant.
RHYTHM & HUES: Gets Court Nod for $1 Million Worker Deal
--------------------------------------------------------
Law360 reported that a Los Angeles federal bankruptcy judge on
Oct. 23 approved a $1 million settlement for a class of workers
that claims the now-bankrupt visual effects studio behind "Life of
Pi" breached the Workers Adjustment and Retraining Notification
Act when it didn't pay them after the company shut down.
According to the report, the Oscar-winning Rhythm & Hues Inc.
agreed to pay at least $1 million to the workers out of its
bankruptcy estate, ending six months of adversary proceedings.
About Rhythm and Hues
Rhythm and Hues, Inc., aka Rhythm and Hues Studios Inc., filed its
Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-13775) in Los
Angeles on Feb. 13, 2013, estimating assets ranging from $10
million to $50 million and liabilities ranging from $50 million to
$100 million. Judge Neil W. Bason oversees the case. Brian L.
Davidoff, Esq., C. John M Melissinos, Esq., and Claire E. Shin,
Esq., at Greenberg Glusker, serve as the Debtor's counsel.
Houlihan Lokey Capital Inc., serves as investment banker.
The petition was signed by John Patrick Hughes, president and CFO.
R&H provided visual effects and animation for more than 150
feature films and has received Academy Awards for Babe and the
Golden Compass, an Academy Award nomination for The Chronicles of
Narnia and Life of Pi. R&H owned a 135,000 square-foot facility
in El Segundo, California, and had more than 460 employees.
Key clients Universal City Studios LLC and Twentieth Century Fox,
a division of Twentieth Century Fox Film Corporation, provided DIP
financing. They are represented by Jones Day's Richard L. Wynne,
Esq., and Lori Sinanyan, Esq.
The Official Committee of Unsecured Creditors tapped Stutman,
Treister & Glatt Professional Corporation as its counsel.
At the end of March 2013, the Debtor sold the business to 34x118
Holdings Inc., an affiliate of competitor Prana Studios Inc. The
buyer agreed to pay $1.2 million cash, take over payment of the
loan financing the Chapter 11 effort, pay defaults on contracts
going along with the sale, and assume liabilities to employees for
as much as $5 million. On May 24, 2013, the Debtor obtained Court
permission to change its corporate name to AWTR Liquidation, Inc.
ROSEVILLE SENIOR: Wins Interim Use of CapitalSource Cash
--------------------------------------------------------
Judge Donald H. Steckroth approved a stipulation between Roseville
Senior Living Properties, LLC and CapitalSource Finance LLC
approving the Debtor's interim use of cash collateral that secures
obligations owing to CapitalSource.
The Court allows the Debtor access to the cash collateral to be
used in accordance with a prepared budget.
In exchange for the use of the cash collateral, the Lender is
granted valid, binding, and properly perfected postpetition
security interest and replacement liens on all of the Collateral
to the extent the Lender has a valid existing interest and lien as
of the Petition Date. In addition, adequate protection payments
totaling $35,000 are granted. These "Adequate Protection
Obligations" have priority over all administrative expenses under
the Bankruptcy Code.
CapitalSource, before the Petition Date, extended a $7,000,000
secured loan to the Debtor. The Lender asserts that the Loan is
secured by, among other things, a senior living facility located
at 707 Sunrise Ave., Roseville, in Placer County, California.
The Bankruptcy Court will convene a hearing on Nov. 7, at 10:00
a.m. to consider entry of a final order on the cash collateral
bid.
CapitalSource is represented by:
KATTEN MUCHIN ROSENMAN LLP
Kenneth J. Ottaviano, Esq.
525 West Monroe Street
Chicago, IL 60661
- and -
KATTEN MUCHIN ROSENMAN LLP
Brian W. Hofmeister, Esq.
691 State Highway 33
Trenton, NJ 08619
Roseville Senior Living Properties, LLC, filed for Chapter 11
bankruptcy (Bankr. D.N.J. Case No. 13-31198) on Sept. 27, 2013, in
Newark. Judge Donald H. Steckroth presides over the case. Walter
J. Greenhalgh, at Duane Morris, LLP, represents Roseville Senior
Living Properties as counsel. It estimated $10 million to $50
million in assets, and $1 million to $10 million in liabilities.
The petition was signed by Michael Edrel, managing director,
Meecorp Capital Markets, Inc.
RR DONNELLEY: S&P Affirms 'BB' CCR Over Consolidated Graphics Deal
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Chicago-based print company RR Donnelley & Sons Co. This includes
the 'BB' corporate credit rating. The outlook is negative.
The ratings affirmation follows the announcement that Donnelley
has signed a definitive agreement to acquire Houston-based general
commercial printing company Consolidated Graphics Inc. for about
$620 million in stock and cash. Donnelley will also assume
Consolidated Graphics debt.
"We believe that this transaction, on a pro forma basis, will
result in minimally lower leverage at Donnelley," said credit
analyst Naveen Sarma.
In addition, the affirmation reflects S&P's expectation that
adjusted leverage will decline below 3.75x, its threshold for the
company at a 'BB' rating, by the end of 2013. S&P's leverage
calculation includes significantly lower pension and OPEB
adjustments. Leverage, which also includes adjustments for the
capitalization of operating leases, was 4.3x as of June 30, 2013.
The negative outlook reflects S&P's expectation that structural
pressures on revenue and EBITDA are likely to require the company
to continue to reduce debt to keep leverage below our 3.75x
threshold for Donnelley at a 'BB' rating.
S&P's rating on Donnelley reflects its "fair" business risk
profile of the company, which is supported by Donnelley's market
position as the largest company in the printing industry, amid
competitive and long-term structural pressures. S&P's rating also
reflects its "aggressive" financial risk profile of the company,
marked by high leverage that we expect will decline only
gradually. S&P assess the company's management and governance as
"fair."
S&P's business profile assessment reflects the company's scale and
competitive strengths in a fragmented industry, although pressured
by the industry's cyclicality, overcapacity, fragmentation,
intense service, and pricing competition. S&P believes that these
trends will cause Donnelley's organic revenue in its traditional
printing business to continue to decline at a low-single-digit
percent pace over time.
The printing industry has steadily lost ground to electronic
distribution of content and online advertising. As a result, it
has been afflicted by overcapacity, chronic pricing pressure, and
the need to continuously take out costs. Donnelley's size confers
important efficiencies, the capacity to provide one-stop service
to clients, the ability to invest in leading technology, and the
ability to cope with pricing pressure more successfully than many
of its competitors. Nevertheless, several of its important end
markets, notably the magazine, retail inserts, directory, and book
businesses, are subject to long-term adverse fundamentals as well
as general economic cyclicality. Industry volume shrinkage is
likely to continue to necessitate capacity downsizing and
restructuring charges. Donnelley has sought to counter these
trends by diversifying into services-related businesses that are
not under secular pressure. It remains unclear whether growth in
these businesses will offset the secular declines plaguing the
traditional printing business.
RVOS FARM: A.M. Best Lowers Fin. Strength Rating to 'B'
-------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to B
(Fair) from B+ (Good) and issuer credit ratings to "bb" from "bbb-
" of RVOS Farm Mutual Insurance Group's (RVOS Group) members, RVOS
Farm Mutual Insurance Company and Priority One Insurance Company.
The outlook for all ratings is negative. All companies are
domiciled in Temple, TX.
The rating downgrades primarily reflect RVOS Group's significant
decline in risk-adjusted capitalization and its volatile operating
performance due to continuation of unfavorable underwriting
performance. As a single-state property writer in Texas, RVOS
Group's underwriting performance has been susceptible to severe
and frequent weather-related events along with risk to fire-
related losses. This was evidenced over the last five years by
sizable underwriting losses and in 2013 by a series of severe
weather-related events along with the West Fertilizer Plant
explosion that occurred early in the year.
The ratings also reflect RVOS Group's elevated underwriting
measures primarily due to its historically volatile policyholder
surplus levels, while net premium written continues to increase.
RVOS Group's management has on-going initiatives to improve its
overall financial results and a return to profitability. The
underwriting corrective actions include aggressive rate increases,
stricter underwriting guidelines, frequent inspections, expense
reductions, reviews of geographic concentrations and new
technology initiatives with deeper pricing segmentation. In
addition, RVOS Group's other income and net investment income both
have been positive and continue to partially offset its
unfavorable underwriting performance. RVOS Group benefits from
its long-standing market presence and strong agency relationships.
A.M. Best has maintained the negative outlook on the ratings. The
ratings may be downgraded if RVOS Group has a continuation of
adverse operating results and declining risk-adjusted
capitalization. Removal of the negative outlook is contingent
upon RVOS Group's ability to reverse its adverse operating
performance and improve its overall risk-adjusted capitalization.
S. D. WALKER: Case Summary & Largest Unsecured Creditor
-------------------------------------------------------
Debtor: S. D. Walker, Inc.
c/o Steven D. Catalano
103 Bruce Road
Washington Crossing, PA 18977
Case No.: 13-33358
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
District of New Jersey (Trenton)
Judge: Hon. Kathryn C. Ferguson
Debtor's Counsel: Pro Se
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Steven D. Catalano, president.
The Debtor listed 537AA, LLC, as its largest unsecured creditor
holding $1,300,000 claim.
SALLY HOLDINGS: Moody's Rates $200MM Sr. Unsecured Notes at Ba2
---------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Sally Holdings
LLC's proposed $200 million senior unsecured notes due 2023.
Proceeds from the proposed notes will be used to repay the full
amount outstanding under the ABL revolver (approximately $91.5
million), with the remainder to be used for general corporate
purposes. All other ratings remain unchanged including the Ba2
Corporate Family Rating and the Ba2-PD Probability of Default
Rating. The ratings outlook is stable.
The following ratings have been assigned:
Sally Holdings LLC:
$200 million sr. unsecured notes due 2023 at Ba2 (LGD4, 58%)
The following ratings remain unchanged (LGD point estimates
revised):
Sally Holdings LLC:
Corporate Family Rating at Ba2
Probability of default rating at Ba2-PD
$850 million 5.75% sr. unsecured notes due 2022 at Ba2 (LGD4,
58%)
$750 million 6.875% sr. unsecured notes due 2019 at Ba2 (LGD4,
58%)
Senior unsecured shelf at (P)Ba2
SGL-1 Speculative Grade Liquidity Rating
Sally Beauty Holdings, Inc.:
Senior unsecured shelf at (P)Ba2
Sally Capital, Inc.:
Senior unsecured shelf at (P)Ba2
Ratings Rationale:
Sally's Ba2 Corporate Family Rating reflects its solid market
position in the professional beauty supply market, steady
performance through economic cycles, geographic diversity, and
strong merchandising focus which Moody's expects will continue to
benefit the company's margins. Sally's liquidity is very good,
supported by the expectation that operating cash flow and ample
revolver availability will be more than sufficient to cover
working capital and capital spending over the next twelve months.
The rating is constrained by the company's high debt load and
continued risk for a more aggressive financial policy due to
increased share repurchase activity. Pro forma for the proposed
$200 million note offering, lease-adjusted Debt/EBITDA for the
twelve months ended will modestly increase to 4.3 times from 4.1
times.
The stable outlook reflects the expectation for continued
profitable growth while maintaining a disciplined approach to
shareholder returns and acquisitions.
Ratings could be downgraded if operating performance were to
sustainably weaken, financial policies were to become more
aggressive, or the company were unable to maintain at least good
liquidity. Specific metrics include debt/EBITDA sustained near 5.0
times, interest coverage below 2.75 times and retained cash flow-
to-net debt below 12.5%.
An upgrade would require continued profitable growth and increased
global scale, as well as comfort on Moody's part that Sally will
demonstrate the willingness to achieve and maintain debt/EBITDA
below 3.5 times and retained cash flow-to-debt above 20%.
SALLY HOLDINGS: S&P Assigns 'BB+' Rating to $200MM Senior Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'BB+'
issue-level rating to Denton, Texas-based Sally Holdings LLC and
Sally Capital Inc.'s $200 million senior notes due 2023, with a
recovery rating of '3', indicating S&P's expectation for 50%-70%
recovery in the event of a default. The 'BB+' rating is the same
as the 'BB+' corporate credit rating on Sally Beauty Holdings
Inc., the parent company. The company will issue the notes under
its shelf registration. According to the company, it plans to use
net proceeds for general corporate purposes and to repay the
amount outstanding under its senior credit facility. S&P
forecasts that with the proposed issuance, Sally's debt leverage
will increase slightly to approximately 3.5x at fiscal-year end
2013, which remains in line with its expectations.
The ratings on Sally reflect S&P's assessment of its business risk
profile as "satisfactory," given its leading position in the
growing yet highly discretionary and fragmented beauty supply
industry, stable historical operating performance, and highly
concentrated supplier base. Sally competes with a wide range of
participants in the beauty products sector, including other
specialty beauty supply stores, salons, mass merchants, drug
stores, and supermarkets. S&P believes Sally's broad range of
merchandise, including its higher margin, exclusive-label
products, provides a unique value proposition to consumers, which
has aided the company's strong historical sales growth.
The company's "significant" financial risk profile reflects S&P's
belief that the company will continue to maintain a moderately
leveraged capital structure and generate significant and stable
cash flows. S&P also takes into consideration its view that the
company will manage its debt issuances and share repurchases to an
adjusted leverage ratio in the low- to mid-3x range.
RATING LIST
Sally Beauty Holdings Inc.
Sally Holdings LLC
Corporate credit rating BB+/Stable/--
New Rating
Sally Holdings LLC
Sally Capital Inc.
Senior unsecured
$200 million notes due 2023 BB+
Recovery rating 3
SAN BERNARDINO, CA: Trustee Forms 9-Member Retired Employees Panel
------------------------------------------------------------------
U.S. Trustee Peter C. Anderson on Oct. 11 appointed these parties
to serve on the Official Committee of Retired Employees in the
Chapter 11 case of San Bernardino, California.
The Committee consists of:
1. Michael Billdt
E-mail: mbilldt@verizon.net
2. Jeffrey L. Breiten
E-mail: breitenj@msn.com
3. Aaliyah K. Harkley
E-mail: roscoe111@verizon.net
4. Michael A. Hudson
E-mail: itzhud@yahoo.com
5. Steve M. Klettenberg
E-mail: smkberg@roadrunner.com
6. Dennis Moon
E-mail: dennismoon@verizon.net
7. Barbara S. Pachon
E-mail: pachrry@netscape.net
8. Robert L. Simmons
E-mail: rlsimmons@riversidelegalaid.org
9. Vickie Walker
E-mail: bettebit@msn.com
The U.S. Trustee reserves any and all rights to add additional or
replacement committee members at a later date.
About San Bernardino, Calif.
San Bernardino, California, filed an emergency petition for
municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code
(Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San
Bernardino, a city of about 210,000 residents roughly 65 miles
(104 km) east of Los Angeles, estimated assets and debts of more
than $1 billion in the bare-bones bankruptcy petition.
The city council voted on July 10, 2012, to file for bankruptcy.
The move lets San Bernardino bypass state-required mediation with
creditors and proceed directly to U.S. Bankruptcy Court.
The city is represented that Paul R. Glassman, Esq., at Stradling
Yocca Carlson & Rauth.
San Bernardino joined two other California cities in bankruptcy:
Stockton, an agricultural center of 292,000 east of San Francisco,
and Mammoth Lakes, a mountain resort town of 8,200 south of
Yosemite National Park.
The City was granted Chapter 9 protection on Aug. 28, 2013.
SAN BERNARDINO, CA: CalPers Appeals Ch.9 Eligibility Ruling
-----------------------------------------------------------
Tim Reid, writing for Reuters, reported that the largest U.S.
public employee pension fund filed an appeal on Oct. 23 against a
judge's ruling in August that the city of San Bernardino,
California, is eligible for bankruptcy protection.
According to the report, the California Public Employees'
Retirement System, which manages $277 billion of assets, said in
its filing: "Never has a bankruptcy court set such a low bar for a
municipal debtor to enter the doors of the bankruptcy court."
Calpers has fiercely opposed San Bernardino's quest for Chapter 9
bankruptcy protection, because the city suspended its $1.2 million
bimonthly payments to the fund for a year after it declared
bankruptcy in August 2012, the report related.
That move was unprecedented, the report said. No California city
has ever stopped paying Calpers, and the fund -- which administers
benefits for over 3,000 city, state and local employers -- is
worried that such behavior could encourage other cash-strapped
cities to follow suit, said Karol Denniston, a bankruptcy attorney
in San Francisco.
"Calpers does not want a bankruptcy court to weigh in and apply
the bankruptcy code to the non-payments, because that will be
precedent, and then other cities could ask bankruptcy courts to
restructure their Calpers contracts," Denniston said, the report
further related.
About San Bernardino, Calif.
San Bernardino, California, filed an emergency petition for
municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code
(Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San
Bernardino, a city of about 210,000 residents roughly 65 miles
(104 km) east of Los Angeles, estimated assets and debts of more
than $1 billion in the bare-bones bankruptcy petition.
The city council voted on July 10, 2012, to file for bankruptcy.
The move lets San Bernardino bypass state-required mediation with
creditors and proceed directly to U.S. Bankruptcy Court.
The city is represented that Paul R. Glassman, Esq., at Stradling
Yocca Carlson & Rauth.
San Bernardino joined two other California cities in bankruptcy:
Stockton, an agricultural center of 292,000 east of San Francisco,
and Mammoth Lakes, a mountain resort town of 8,200 south of
Yosemite National Park.
The City was granted Chapter 9 protection on Aug. 28, 2013.
SANDERSON PLUMBING: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Sanderson Plumbing Products, Inc.
P.O. Box 1367
Columbus, MS 39701
Case No.: 13-14506
Chapter 11 Petition Date: October 25, 2013
Court: United States Bankruptcy Court
Northern District of Mississippi (Aberdeen)
Debtor's Counsel: Craig M. Geno, Esq.
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Email: cmgeno@cmgenolaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Thomas Whitaker, president.
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
SHELBOURNE NORTH WATER: Developer Wants Ch. 11 Moved to Chicago
---------------------------------------------------------------
Law360 reported that the Chicago Spire developer, hit in Delaware
with an involuntary bankruptcy petition earlier this month, said
on Oct. 24 it wants the case moved to the Windy City, a community
it argues will be much more affected by the outcome and where all
of the major stakeholders are located.
According to the report, Shelbourne North Water Street LP -- which
is developing the ill-fated construction project that was meant to
be the tallest residential building in the world and the highest
structure in the Western Hemisphere -- asked that the involuntary
Chapter 11 case be transferred to Illinois.
A group of creditors filed an involuntary Chapter 11 petition
against Chicago, Illinois-based Shelbourne North Water Street L.P.
on Oct. 10, 2013 (Case Number 13-12652, Bankr. D.Del.). The case
is assigned to Judge Kevin J. Carey.
The Petitioners are represented by Zachary I Shapiro, Esq., and
Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A.,
in Wilmington, Delaware.
SHILO INN: Hearing on Plan Outline & Stay Relief Bid Continued
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
approved a stipulation between Shilo Inn, Twin Falls, LLC, et al.,
and California Bank & Trust to continue hearings and deadlines
with respect to (1) approval of the Debtors' Disclosure Statement
explaining their plan of reorganization; and (2) California Bank &
Trust's motion for relief from the automatic stay.
Pursuant to the stipulation, among other things:
1. the hearing to approve the Debtors' Disclosure Statement
is continued from Oct. 17, 2013, to Nov. 21, at 1:30 p.m.;
2. the hearing on CBT's motion for stay relief is continued
from Oct. 22, to Nov. 21, at 1:30 p.m.;
3. the briefing schedule and deadlines for filing oppositions,
objections, responses, and replies to the Disclosure
Statement motion, and stay relief motion are continued.
About Shilo Inn, Twin Falls
Shilo Inn, Twin Falls, LLC, and six affiliates filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 13-21601) on May 1, 2013.
Judge Richard M. Neiter presides over the case. Shilo Inn, Twin
Falls, estimated assets of at least $10 million and debts of at
least $1 million.
Shilo Inn, Twin Falls; Shilo Inn, Nampa Blvd, LLC; Shilo Inn,
Newberg, LLC; Shilo Inn, Seaside East, LLC, Shilo Inn, Moses Lake,
Inc.; and Shilo Inn, Rose Garden, LLC each operates and owns a
hotel. California Bank and Trust is the primary, senior secured
lender for each of the Debtors.
The Debtors sought Chapter 11 protection after CBT on May 1, 2013,
filed for receiverships in district court.
David B. Golubchick, Esq., Kurt Ramlo, Esq., and J.P. Fritz, Esq.,
at Levene, Neale, Bender, Yoo & Brill LLP, in Los Angeles,
represent the Debtors in their restructuring effort.
The Debtors' Joint Plan of Reorganization dated Aug. 29, 2013,
provides for payment of all claims in full, unless otherwise
agreed with the claimholder, with unsecured claims to be paid over
a three-month period from the Plan Effective Date.
SHILO INN: California Bank Wants to Foreclose on 5 Locations
------------------------------------------------------------
California Bank & Trust, assignee of holder of deed of trust, asks
the U.S. Bankruptcy Court for the Central District of California
for relief from the automatic stay as to these properties:
1. Shilo Inn, Rose Garden, LLC's real property located at
1506 NE 2nd Avenue, Portland, Oregon;
2. Shilo Inn, Moses Lake, Inc.'s real property located at
1819 E. Kittleson Road, Moses Lake, Washington;
3. Shilo Inn, Seaside East, LLC's real property located at
900 S. Holladay Drive, Seaside, Oregon;
4. Shilo Inn, Nampa Blvd, LLC's real property located at
617 Northside Boulevard, Nampa, Idaho; and
5. Shilo Inn, Boise Airport, LLC's real property located
at 4111 S. Broadway Avenue, at Boise, Idaho.
According to California Bank, cause exist to lift the stay because
the bank's interest in the collateral is not protected by an
adequate equity cushion, and the Debtor has no equity in the
property, and the property is not necessary to an effective
reorganization.
About Shilo Inn, Twin Falls
Shilo Inn, Twin Falls, LLC, and six affiliates filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 13-21601) on May 1, 2013.
Judge Richard M. Neiter presides over the case. Shilo Inn, Twin
Falls, estimated assets of at least $10 million and debts of at
least $1 million.
Shilo Inn, Twin Falls; Shilo Inn, Nampa Blvd, LLC; Shilo Inn,
Newberg, LLC; Shilo Inn, Seaside East, LLC, Shilo Inn, Moses Lake,
Inc.; and Shilo Inn, Rose Garden, LLC each operates and owns a
hotel. California Bank and Trust is the primary, senior secured
lender for each of the Debtors.
The Debtors sought Chapter 11 protection after CBT on May 1, 2013,
filed for receiverships in district court.
David B. Golubchick, Esq., Kurt Ramlo, Esq., and J.P. Fritz, Esq.,
at Levene, Neale, Bender, Yoo & Brill LLP, in Los Angeles,
represent the Debtors in their restructuring effort.
The Debtors' Joint Plan of Reorganization dated Aug. 29, 2013,
provides for payment of all claims in full, unless otherwise
agreed with the claimholder, with unsecured claims to be paid over
a three-month period from the Plan Effective Date.
SMILEY DENTAL: Voluntary Chapter 11 Case Summary
------------------------------------------------
21 debtor-entities filing separate Chapter 11 cases:
Debtor Case No.
------ --------
Smiley Dental Asset Management, Inc. 13-44810
10901 Garland Road
Dallas, TX 75218
Smiley Dental Arlington, PLLC 13-44805
Smiley Dental Camp Bowie, PLLC 13-44806
Smiley Dental Ft. Worth, PLLC 13-44807
Lynh Thy Pham DDS, PA 13-44808
J.T. Realty, Inc. 13-44809
Smiley Dental Beltline PLLC 13-44811
Smiley Dental Broadway, PLLC 13-44812
Smilely Dental Coit, PLLC 13-44813
Smilely Dental Forest Lane, PLLC 13-44814
Smiley Dental Garland PLLC 13-44815
Smiley Dental Gessner PLLC 13-44816
Smiley Dental Management Company, LLC 13-44817
Smiley Dental Mesquite, PLLC 13-44818
Smiley Dental Seminary PLLC 13-44819
Smiley Dental Shepherd PLLC 13-44820
Smiley Dental Skillman, PLLC 13-44821
Smiley Dental Walnut PLLC 13-44822
Smiley Dental Webb Chapel, PLLC 13-44823
Smiley Dental Irving PLLC 13-44824
Smiley Dental Buckner PLLC 13-44825
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
Northern District of Texas (Ft. Worth)
Judge for Smiley
Dental Asset Management,
Inc.'s. Case: Hon. Michael Lynn
Debtors' Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS, P.C.
12770 Coit Rd., Suite 1100
Dallas, TX 75251
Tel: (972) 991-5591
Email: eric@ealpc.com
Smiley Dental Asset
Management, Inc.'s
Estimated Assets: $0 to $50,000
Estimated Liabilities: $0 to $50,000
The petitions were signed by Lynh Thy Pham, president.
The Debtors did not file a list of their largest unsecured
creditors when they filed the petitions.
SPENDSMART PAYMENTS: Incurs $4 Million Net Loss in 3rd Quarter
--------------------------------------------------------------
The SpendSmart Payments Company filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss and comprehensive loss of $4.05 million on $244,011 of
revenues for the three months ended June 30, 2013, as compared
with a net loss and comprehensive loss of $2.75 million on
$259,290 of revenues for the same period during the prior year.
For the nine months ended June 30, 2013, the Company reported a
net loss and comprehensive loss of $9.05 million on $790,194 of
revenues as compared with a net loss and comprehensive loss of
$8.14 million on $776,805 of revenues for the same period a year
ago.
The Company's balance sheet at June 30, 2013, showed $1.37 million
in total assets, $1.91 million in total liabilities, all current,
and a $540,393 total stockholders' deficiency.
For the year ended Sept. 30, 2012, the Company's audited
consolidated financial statements included an opinion containing
an explanatory paragraph as to the uncertainty of our Company's
ability to continue as a going concern. Additionally, the Company
has incurred net losses through June 30, 2013, and has yet to
establish profitable operations.
"These factors among others create a substantial doubt about our
ability to continue as a going concern," the Company said in the
interim report.
A copy of the Form 10-Q is available for free at:
http://is.gd/Gge3HM
Amends Periodic Reports
The Company amended its quarterly reports for the periods ended
Dec. 31, 2012, and March 31, 2013.
On Aug. 19, 2013, after consulting with the Company's Audit
Committee, the management concluded it had incorrectly calculated
its historical volatility for the fiscal years ended Sept. 30,
2012, and 2011. The error also impacted the three and six months
ended March 31, 2013, and three months ended Dec. 31, 2012, and
2011 interim reports. The error specifically related to an excel
spreadsheet calculation whereby it was calculating a volatility
that was significantly higher than it should have been. The
historical volatility is a key assumption and driver in
determining the valuation of the company's stock based
compensation and derivative liabilities. The impact of the change
affects the derivative liabilities, changes in fair value of
derivative liabilities, and stock based compensation.
As restated, the Company incurred a net loss and comprehensive
loss of $414,298 on $247,497 of revenues for the three months
ended Dec. 31, 2012, as compared with a net loss and comprehensive
loss of $1.13 million on $247,497 of revenues as originally
reported.
The Company's restated balance sheet at Dec. 31, 2012, showed
$6.80 million in total assets, $12.42 million in total
liabilities, all current, $8.65 million in redeemable Series B
convertible preferred stock, $2.77 million in redeemable common
stock, and a $17.06 million total stockholders' deficiency.
The Company previously reported $6.80 million in total assets,
$18.13 million in total liabilities, all current, $8.36 million in
redeemable series B convertible preferred stock, $1.03 million in
redeemable common stock, and a $20.73 million total stockholders'
deficit for that period.
The Company reported a net loss and comprehensive loss of $4.58
million on $298,686 of revenues for the three months ended
March 31, 2013, as compared with a net loss and comprehensive loss
of $5.42 million on $298,686 of revenues as originally reported.
The Company's amended balance sheet at March 31, 2013, showed
$2.77 million in total assets, $1.70 million in total liabilities,
all current, and $1.06 million in total stockholders' equity. The
Company originally reported $2.77 million in total assets, $1.82
million in total liabilities, all current, and $947,763 in total
stockholders' equity.
Copies of the amended Quarterly Reports are available for free at:
http://is.gd/MbF4XC
http://is.gd/FoWAro
About SpendSmart
San Diego, Cal.-based The SpendSmart Payments Company is a
Colorado corporation. Through the Company's subsidiary
incorporated in the state of California, The SpendSmart Payments
Company, the Company issues and services prepaid cards marketed to
young people and their parents. The Company is a publicly traded
company trading on the OTC Bulletin Board under the symbol "SSPC."
ST. PAUL CROATIAN: Holy Love Ministry Suit vs NCUA Dismissed
------------------------------------------------------------
Peter Strozniak at Credit Union Times reports that a lawsuit filed
by a church against the National Credit Union Administration
(NCUA) in connection with the collapse of St. Paul Croatian
Federal Credit Union has been dismissed.
The report says U.S. District Court Judge Donald C. Nugent in
Cleveland has dismissed the suit filed by Holy Love Ministry in
North Ridgeville, Ohio, that claimed it was entitled to an
additional $250,000 deposit insurance payment on $1.7 million in
accounts it held with St. Paul Croatian FCU when the Eastlake,
Ohio, credit union collapsed in 2010 following the exposure of a
$70 million fraud scheme.
Although this lawsuit was dismissed Oct. 11, Holy Love Ministry
has filed a second lawsuit to recoup its $1.7 million under the
Federal Tort Claims Act. The church also is asking for $1.5
million in compensatory damages, according to court documents
cited by Credit Union Times.
The first lawsuit was brought by Holy Love Ministry in June 2011,
about 14 months following NCUA's liquidation process of SPCFCU,
the report discloses.
According to the report, more than 20 people have either been
indicted or imprisoned for their involvement in the St. Paul
Croatian FCU case, one of the largest fraud cases in credit union
history.
Credit Union Times recalls that Anthony Raguz, the former credit
union CEO, was sentenced last November to 14 years in federal
prison after he admitted to approving more than 1,000 fraudulent
loans totaling $70 million to about 300 account holders at the
credit union from 2000 to 2010. Several other account holders
also were convicted and are now serving prison terms, the report
notes.
STOCKTON, CA: Moody's Rates Water Revenue Bonds Offering '(P)Ba1'
-----------------------------------------------------------------
Moody's Investors Service has assigned a (P)Ba1 rating to the
Stockton Public Financing Authority Water Revenue Bonds, Series
2010A (Delta Water Supply Project). These bonds are being
converted to fixed rate mode and are ultimately secured by the
city's senior pledge of its water enterprise net revenues. The
outstanding 2010A water revenue bonds are in variable rate mode.
Moody's has also placed the Ba3 ratings on the city's fixed rate,
2005 Water Revenue Bonds Series A and Variable Rate Demand Water
Revenue Bonds Series 2010A on review for possible upgrade, largely
to reflect the reduction in risk that will result from the
enterprise's elimination of its variable rate exposure. The
provisional aspect of the rating assignment will be removed at
closing, when the bonds have been successfully converted to fixed
rate.
Rating Rationale:
The 2010A bonds represent the water enterprise's lone variable
rate obligation. The conversion to fixed rate will primarily
eliminate the substantial liquidity risk to the enterprise that
resulted from the city's filing for bankruptcy. The bonds are
currently held by their letter of credit bank, which, as a result
of the bankruptcy filing, has the right to demand immediate
payment in full for these bonds. Such a demand would have put
significant pressure on the enterprise's liquidity. In addition to
the benefits of the mode conversion, the rating assignment
reflects the enterprise's otherwise healthy operating metrics and
the strong likelihood that the special revenue security for these
bonds will remain unaffected by the city's progression through
bankruptcy.
The stable outlook on the (P)Ba1 rating is driven by Moody's
expectation that the enterprise's fundamental operations will
remain sound and full and timely debt service payments will
continue, notwithstanding the uncertainties resulting from the
city's bankruptcy.
The review for upgrade on the city's existing water revenue bond
ratings reflects the same fundamental credit considerations as the
(P)Ba1 rating assignment, but with the additional consideration
that the removal of the variable rate risk depends on the
successful completion of this 2010A mode conversion.
Strengths:
-- There have been no challenges in the course of the city's
bankruptcy from either the city or its creditors to the
continued payment of the water revenue bond debt service,
owing largely to their "special revenue" status
-- Senior lien debt service coverage is solid and likely to
remain so
-- The enterprise's debt profile will be significantly improved
with a successful conversion of the 2010As to fixed rate
-- The water enterprise operations have been solid, in large part
reflecting the city's continued willingness to raise water
rates
Challenges:
-- The City of Stockton remains in bankruptcy
-- The city's proposed plan of adjustment to exit bankruptcy
still needs court approval; it depends on a new sales tax
requiring local voter approval; and it may not be sustainable
long-term, since operating deficits are projected to return in
fiscal 2015
-- The local economy, though slowly recovering, remains pressured
What Could Change the Rating Up Existing Bonds:
-- Completion of the variable-to-fixed mode conversion
What Could Change the Rating Up:
-- City's emergence from bankruptcy
-- Improved operating performance resulting in strengthened
reserves and stronger total debt service coverage
What Could Change the Rating Down:
-- Material deterioration of senior and total debt service
coverage
-- Materially negative, unanticipated outcome from the city's
bankruptcy proceeding
STRATEGIC REALTY: Defaulted on $29MM Loan in Jan.; Sued Over IPO
----------------------------------------------------------------
Girard Gibbs LLP and Peiffer Rosca Abdullah & Carr LLC on Oct. 23
announced that a class action has been commenced in the United
States District Court for the Northern District of California on
behalf of persons and entities who purchased or otherwise acquired
Strategic Realty Trust, Inc.'s common stock in or traceable to the
Company's initial public offering ("IPO") between September 23,
2010 and February 7, 2013, pursuant to a registration statement
and prospectus filed with the U.S. Securities and Exchange
Commission. Prior to August 23, 2013, the Company was known as
TNP Strategic Retail Trust, Inc.
If you wish to serve as lead plaintiff, you must move the Court no
later than 60 days from October 23, 2013. If you wish to discuss
this action or have any questions concerning this notice or your
rights or interests, please contact Girard Gibbs attorney John
Kehoe at (866) 981-4800 or (415) 981-4800, or via e-mail at
jak@girardgibbs.com or Peiffer Rosca attorney Alan Rosca at (888)
998-0520, or via email at arosca@praclawfirm.com
The complaint alleges that the Company, its former affiliates
Thompson National Properties, LLC, TNP Strategic Retail Advisor,
LLC and TNP Securities, LLC, and certain of the Company's current
or former officers and directors violated Sections 11, 12(a)(2)
and/or 15 of the Securities Act of 1933. Among other things, the
complaint alleges that the offering materials provided to
investors during the IPO contained material misrepresentations and
omissions about the financial health of the Company and its
affiliates and about the performance of earlier real estate
programs sponsored by the Company's affiliates.
On January 16, 2013, the Company revealed that it had defaulted on
a $29 million loan that its CEO and Chairman had personally and
unconditionally guaranteed and on its $45 million revolving credit
facility. Then, on August 28, 2013, the Company issued a press
release disclosing that a board-level "Special Committee" had been
formed a year earlier "for the protection of shareholders" after
one of the Company's affiliates was found to be paying fees to
itself that had not been earned; and that its affiliates had
defaulted on certain corporate debt obligations and had sustained
significant corporate losses. In the wake of this disclosure, the
Company replaced its CEO and Chairman and severed its relationship
with its affiliates.
If you are a member of this class, you can view a copy of the
filed complaint or join this class action online at
http://www.girardgibbs.com/strategic-realty-trust-investor-
lawsuit/
Any member of the putative class may move the Court to serve as
lead plaintiff through counsel of their choice, or may choose to
do nothing and remain an absent class member.
Girard Gibbs LLP -- http://www.GirardGibbs.com-- is a law firm
that represents individual and institutional investors in
securities fraud class actions and litigation to correct abusive
corporate governance practices, breaches of fiduciary duty and
proxy violations.
Based in Louisiana with an office in Ohio, Peiffer Rosca --
http://www.praclawfirm.com/-- deals with complex and difficult
legal and business matters, and has developed expertise in a
variety of specialized areas of law to provide innovative
solutions to its clients' various needs.
THE PAGE: To Hold Liquidation Auction This Month
------------------------------------------------
Jason Claffey at Portsmouth Patch reports that The Page, the
controversial downtown bar that closed earlier this year after a
patron was beaten to death, will have a liquidation auction later
this month.
The auction will be held on Oct. 29 at 11:00 a.m. The former
bar's furnishings -- from convection ovens to signed Tom Brady
sports memorabilia -- will be put up for bid, according to the
report. Portsmouth Patch discloses that the building is currently
on the market for $3.5 million.
According to the report, The Page, located at 172 Hanover St.,
closed this summer after pressure from city officials. In April,
police said 24-year-old Joshua Krantz, of Dover, died after he was
attacked outside the bar.
The Page was charged in connection with the case, the report says.
TITAN ENERGY: Reports Net Income of $303,451 in Sept. 30 Quarter
----------------------------------------------------------------
Titan Energy Worldwide, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, reporting a
net income of $303,451 on net sales of $5,304,078 for the three
months ended Sept. 30, 2013, compared to a net loss of $470,649 on
net sales of $5,850,912 for the same period last year.
The Company's balance sheet at Sept. 30, 2013, showed $6,243,502
in total assets, $9,616,645 in total liabilities, and
stockholders' deficit of $3,373,143.
As of June 30, 2013, the Company had $5.76 million in total
assets, $9.48 million in total liabilities and a $3.71 million
total stockholders' deficit.
A copy of the Form 10-Q is available at:
http://is.gd/8l8bXS
About Titan Energy
New Hudson, Mich.-based Titan Energy Worldwide, Inc., is a
provider of onsite power generation, energy management and energy
efficiency products and services.
Going Concern
The Company believes it will be profitable for the year 2013 and
is in the process of restructuring its balance sheet. However the
Company said that until it is successful in completing certain
items, the accumulated deficit and the notes that are in default
raise substantial doubt as to the Company's ability to continue as
a going concern. According to the Company's quarterly report for
the period ended June 30, 2013, management has taken these steps
that it believes will be sufficient to provide the Company with
the ability to continue its operations:
"Management has entered into an agreement with Forefront
Capital to raise up to $5 million on a best efforts basis.
While there is no guarantee that these efforts will result in
any new capital for the Company, these potential funds would
have a significant impact on the Company's ability to
restructure its debt and improve its cash flow.
Management has been successful in having the majority of the
Convertible Notes extend their due date to July 1, 2014.
These extensions were achieved to allow the Company the time
to complete its restructuring of the balance sheets. These
note holders will convert their notes and accrued interest
into equity if the item above is successful.
Management will continue to take steps to expand and increase
its service sales and work order flow. Service sales account
for the highest margins of any business segment and the
quickest turnaround in terms of customer payments.
Management will seek to either restructure or replace its
existing factoring agreement with either an asset based or
bank line of credit before the end of the year 2013.
Management believes the company is eligible for a lower cost
lending facility and that this could save the Company up to
$300,000 a year in interest and fees."
TOYS R US: Bank Debt Trades at 6% Off
-------------------------------------
Participations in a syndicated loan under which Toys R Us is a
borrower traded in the secondary market at 93.79 cents-on-the-
dollar during the week ended Friday, October 25, 2013, according
to data compiled by LSTA/Thomson Reuters MTM Pricing and reported
in The Wall Street Journal. This represents a decrease of 1.56
percentage points from the previous week, The Journal relates.
Toys R Us pays 500 basis points above LIBOR to borrow under the
facility. The bank loan matures on Aug. 17, '16. The bank debt
carries Moody's B3 rating and Standard & Poor's B+ rating. The
loan is one of the biggest gainers and losers among 212 widely
quoted syndicated loans with five or more bids in secondary
trading for the week ended Friday.
Headquartered in Houston, Texas, NGPL PipeCo. LLC is a holding
company for Natural Gas Pipeline Company of America and other
interstate natural gas pipeline assets. NGPL is 80% owned by
Myria Acquisition LLC and 20% owned and operated by Kinder Morgan,
Inc.
* * *
As reported in the Troubled Company Reporter on June 6, 2013,
Moody's Investors Service downgraded NGPL PipeCo LLC's (NGPL)
senior unsecured debt rating, Corporate Family Rating, and
Probability of Default Rating to B2 from Ba3. NGPL's Speculative
Grade Liquidity Rating is changed to SGL-3 from SGL-2. The rating
outlook is now stable.
TRUE BEGINNINGS: Canadian Buyer Drops Bid Amid Privacy Concerns
---------------------------------------------------------------
Jacob Gershman, writing for DBR Small Cap, reported that a
Canadian-owned dating site called PlentyOfFish on Oct. 23 withdrew
its $700,000 offer to buy True.com, a Plano-based dating site that
still possesses a database of tens of millions of customers. The
decision came days after Texas Attorney General Greg Abbott's
office filed a petition to block True.com from selling its assets,
which included its membership database and all information
provided by True.com's customers. The attorney general said
True.com was violating its privacy policy by agreeing to transfer
all the personal data -- including criminal and divorce histories
-- without getting permission from its customers. Customers can
still opt out, but they would have to make that request on their
own, the report further related.
"At a time when privacy is an issue of grave concern to so many,
we are taking legal action to prevent an online dating service
from selling more than 2 million Texans' personal information
without their consent," Mr. Abbott said in a statement, the report
added.
Denton, Texas-based True Beginnings, LLC, doing business as
True.com, filed a bare-bones Chapter 11 petition (Bankr. S.D. Tex.
Case No. 12-42061) on Aug. 1, 2012, in Sherman, Texas. True
estimated under $50,000 in assets and liabilities in excess of
$50 million, owed to between 100 and 199 creditors.
Herb Vest is True's largest creditor, owed $61.5 million via
convertible notes plus interest, bankruptcy filings show. Mr.
owns 85% of the company. Mr. Vest filed a separate bankruptcy
petition. He listed assets of up to $50,000 and debts of $1
million to $10 million, owed to up to 49 creditors.
Founded by Mr. Vest, True.com provides site visitors "a safer,
smarter way" to find their soul mates. "Through a unique blend of
science, technology and personalized attention, we'll guide you
through the process of finding and keeping lasting love," the Web
site says.
WALTER ENERGY: Bank Debt Trades at 3% Off
-----------------------------------------
Participations in a syndicated loan under which Walter Energy Inc.
is a borrower traded in the secondary market at 96.70 cents-on-
the-dollar during the week ended Friday, October 25, 2013,
according to data compiled by LSTA/Thomson Reuters MTM Pricing and
reported in The Wall Street Journal. This represents an increase
of 0.41 percentage points from the previous week, The Journal
relates. Walter Energy Inc. pays 575 basis points above LIBOR to
borrow under the facility. The bank loan matures on March 14, '18,
and carries Moody's B3 rating and Standard & Poor's B rating. The
loan is one of the biggest gainers and losers among 205 widely
quoted syndicated loans with five or more bids in secondary
trading for the week ended Friday.
WATERFRONT OFFICE: Feb. 25 Hearing on Confirmation of Plan
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut will
convene a hearing on Feb. 25, 2014, at 2 p.m., to consider
confirmation of Waterfront Office Building LP and Summer Office
Building, LP's Plan of Reorganization dated Sept. 27, 2013.
Objections, if any, are due Nov. 22.
At the hearing, the Court will also consider confirmation of the
rival plan of reorganization, as amended, filed by Deutsche
Genossenschafts-Hypothekenbank AG for the Debtors.
The Court approved on Oct. 1, 2013, the Disclosure Statements
proposed by the Debtors and DG-Hyp as containing adequate
information.
The Court set Nov. 22 as the last day for returning written
ballots of acceptance or rejection of the two competing Plan.
The Debtors' Plan
As reported in the Troubled Company Reporter, the Debtors filed
with the Court on Sept. 27, 2013, a Second Amended Disclosure
Statement with respect to the Second Amended Plan of
Reorganization. Pursuant to the Debtors' Second Amended Plan, the
DG-Hyp Secured Claims in Class 2 will be allowed in an amount to
be determined by the Bankruptcy Court.
In full satisfaction, settlement, release and discharge of and in
exchange for the Allowed DG-Hyp Secured Claims and all Liens
securing such Claims, DG-Hyp will receive, on or as soon as
practicable after the later of the Effective Date or the Allowance
Date with respect to the DG-Hyp Secured Claims: (i) title to the
real property owned by Summer and any security deposits paid by
Summer's tenants not previously returned to any such tenants;
(ii) approximately $3,500,000 representing the Debtors' reserves
held under the Pre-Petition Date loan documents between DG-Hyp and
the Debtors and Cash Collateral Order (net of reserves funded for
post-Petition Date taxes and insurance) and (iii) the DG-Hyp
Promissory Note, which will be issued by the Reorganized Debtor in
the principal amount of any balance due on the Allowed DG-Hyp
Secured Claims. (Assuming that the Debtors' estimates of value of
the DG-Hyp Collateral are accurate and assuming further that any
disputes to the amount of the DG-Hyp Claim are decided in DG-Hyp's
favor, the principal amount of the DG-Hyp Promissory Note would be
approximately $20,000,000).
The Plan Supplement will identify the principal amount of the DG-
Hyp Promissory Note, and the Plan Supplement will include the form
of the DG-Hyp Promissory Note. To the extent that there is any
inconsistency or conflict between the DG-Hyp Promissory Note and
the Plan, the provisions of the Plan will control.
DG-Hyp General Unsecured Claims in Class 3, estimated to total
$16,500,000, will receive payments equal to 3% of any such Claim
from the Reorganized Debtor in four (4) equal quarterly Cash
payments commencing with the first full calendar quarter following
the Effective Date. Each quarterly Cash payment will be made no
later than 10 business days after the end of such calendar
quarter.
General Unsecured Claims in Class 4, estimated to total $350,000,
will receive a payment equal to 100% of its Allowed Claim on the
first anniversary of the Effective Date plus a payment of 5%
interest on its Allowed Claim accruing from the Effective Date
through the date of Distribution.
Easch holder of a Tenant Claim in Class 5, will be paid in full,
plus interest at the Case Interest Rate, the amount of a Tenant
Claim within twelve months that it would otherwise be due under
the Tenant's lease with Waterfront. Notwithstanding, the
Reorganized Debtor will have the right to pay the Holder of a
Tenant Claim in full any time after the Effective Date without
premium or penalty.
Holders of Interests in the Debtors in Class 6 will be permitted
to retain their Interests; provided, however, that they contribute
$5,000,000 in total to the Reorganized Debtor on the Effective
Date, pursuant to the conditions provided in Section C. Means of
Implementation of the Plan 1.a-d. The Class 6 Interests will be
extinguished in the event they are not the successful bidder in
any auction for the equity in the Reorganized Debtor provided in
Section C.
The sources of Cash necessary for the Reorganized Debtor to pay
Allowed Claims that are to be paid in Cash by the Reorganized
Debtor under the Plan will be: (a) the Cash of the Reorganized
Debtor on hand as of the Effective Date; (b) Cash arising from the
operation, ownership, maintenance, and/or sale of the Assets owned
and managed by or at the direction of the Debtors, including,
without limitation, the DG-Hyp Collateral; and (c) any Cash
generated or received by the Reorganized Debtor after the
Effective Date from any other source, including the $5,000,000 to
be contributed by the Holders of the Interest to be issued on the
Effective Date under the Plan.
On the Effective Date, Summer will merge into Waterfront. The
effect of the merger will include a substantive consolidation of
the Summer and Waterfront estates.
A copy of the Debtors' Second Amended Disclosure Statement is
available at http://bankrupt.com/misc/waterfrontoffice.dcc153.pdf
DG-Hyp Plan
As reported in the Troubled Company Reporter, DG-Hyp Plan filed
with the Court on Sept. 26, 2013, a Second amended Disclosure
Statement with respect to the Second Amended Plan of
Reorganization for the Debtors.
The DG-Hyp Plan proposes to pay all creditors in full on or around
the Effective Date.
According to the DG-Hyp, with accrued and unpaid interest, costs
and fees, and various outlays, the Debtors currently owe it in
excess of $55,672,000. DG Hyp has recently had the Properties
appraised as having a value of $41,200,000, leaving DG Hyp with a
large deficiency claim estimated at approximately $14,472,000.
Pursuant to DG-Hyp's Second Amended Plan, Class 5 Equity Interests
in the Debtors will be extinguished and the holders of Interests
will not receive an Distributions on account of their Interests.
Class 4 General Unsecured Claims will receive on the Effective
Date, or as soon as practicable after such Claim becomes an
Allowed Claim, payment from DG-Hyp, in Cash, in the full amount of
the Allowed Claim which will be paid from the $3,500,000 held in
the Debtors' Accounts to be turned over to DG Hyp. DG-Hyp agrees
to waive any distribution on account of the DG-Hyp's Deficiency
Claim only in the event the DG-Hyp Plan is confirmed by the
Bankruptcy Court.
The Class 3 Secured Claim of DG- Hyp will receive deeds to the
Properties, free and clear of any Liens, Claims or encumbrances on
the Effective Date and the turnover of any and all amounts held in
the Debtors' Accounts (approximately $3,500,000).
A copy of DG-Hyp's Second Amended Disclosure Statement is
available at http://bankrupt.com/misc/waterfrontoffice.doc150.pdf
About Waterfront Office Building &
Summer Office Building
Stamford, Conn.-based Waterfront Office Building, LP, filed a
voluntary Chapter 11 petition (Bankr. D. Conn. Case No. 12-52121)
in Bridgeport on Nov. 27, 2012, listing $50 million to $100
million in both assets and debts. The Debtor owns a 206,186
square foot multi-tenant office building on 8.1 waterfront acres
with two on site restaurants and an adjacent 71-slip marina.
Summer Office Building, LP, also filed for Chapter 11 (Bankr. D.
Conn. Case No. 12-52122), listing $10 million to $50 million in
assets and $50 million to $100 million in debts.
Judge Alan H.W. Shiff oversees the Chapter 11 cases. The
petitions were signed by Paul Kuehner, manager of managing member
of sole member of Debtor's GP.
Secured Creditor DG-Hyp is represented by John Carberry, Esq., at
Cumming & Lockwood LLC, in Stamford, Connecticut; and Deborah J.
Piazza, Esq., at Tarter Krinsky & Drogin LLP, in New York
WATERSTONE AT PANAMA: Court Denies Lenox Mortgage's Dismissal Bid
-----------------------------------------------------------------
Lenox Mortgage XVII LLC failed to convince a Nebraska bankruptcy
court to dismiss the Chapter 11 case of Waterstone at Panama City
Apartments, LLC, on the basis of a bad faith filing.
Lenox is a holder of a note and first lien on the apartment
development owned by the Debtor in Panama City.
Lenox based its Dismissal Motion on the various relationships
Edward Wilczewski, as interim president of Tapestry Group, has
with his companies, Tapestry and the Debtor. Tapestry Group owns
the Debtor. Lenox evidence purports to show that Mr. Wilczewski's
relationships and activities are nefarious and are a benefit only
to him and not to the Debtor.
In an Oct. 18 order, Judge Timothy J. Mahoney said he does not
find "cause" for a dismissal of case.
The judge noted that the non-holding of board of director meetings
by Tapestry is not illegal. He added that there is nothing, per
se, improper about the filing of a bankruptcy case to stop a
foreclosure action. He further noted that other than a problem
with the gate system, Lenox presented no evidence that there is
lack of maintenance of the Debtor's asset.
Lenox has asserted that the operation of the Debtor has been
unprofitable and the cash flow is insufficient to allow the Debtor
to be rehabilitated. The cash flow has fluctuated over the life
of the case, but the issue of cash flow adequacy and feasibility
should be left to a confirmation hearing, Judge Mahoney said.
Frederick Stehlick, Esq. -- fstehlik@grosswelch.com -- of Gross &
Welch, P.C., appeared at the hearing for the Debtor, Steve Turner,
Esq. -- sturner@bairdholm.com -- and Brandon Tomjack, Esq. --
btomjack@bairdholm.com -- of the Baird Holm Law Firm appeared for
Lenox.
About Waterstone
Omaha, Nebraska-based Waterstone at Panama City Apartments, LLC,
is a single-asset real estate entity located in Panama City,
Florida, and owned by a non-profit corporation called Tapestry
Group, Inc., which is the sole member of Waterstone at Panama City
Apartments, LLC.
Waterstone at Panama City Apartments filed for Chapter 11
protection (Bankr. D. Neb. Case No. 13-80751) on April 9, 2013.
Bankruptcy Judge Timothy J. Mahoney presides over the case.
William L. Biggs, Jr., Esq., at Gross & Welch, P.C., L.L.O.,
represents the Debtor in its restructuring efforts. The Debtor
disclosed $26,159,064 in assets and $26,120,989 in liabilities as
of the Chapter 11 filing.
The petition was signed by Edward E. Wilczewski, manager. Mr.
Wilczewski is presently the interim president of Tapestry.
WATERSTONE AT PANAMA: Has Until Dec. 5 to File Plan
---------------------------------------------------
At the behest of Waterstone at Panama City Apartments, LLC, Judge
Timothy Mahoney extended the Debtor's exclusive period to file a
Chapter 11 plan through and including Dec. 5, 2013. No further
extensions will be granted, the Court said.
About Waterstone
Omaha, Nebraska-based Waterstone at Panama City Apartments, LLC,
is a single-asset real estate entity located in Panama City,
Florida, and owned by a non-profit corporation called Tapestry
Group, Inc., which is the sole member of Waterstone at Panama City
Apartments, LLC.
Waterstone at Panama City Apartments filed for Chapter 11
protection (Bankr. D. Neb. Case No. 13-80751) on April 9, 2013.
Bankruptcy Judge Timothy J. Mahoney presides over the case.
William L. Biggs, Jr., Esq., at Gross & Welch, P.C., L.L.O.,
represents the Debtor in its restructuring efforts. The Debtor
disclosed $26,159,064 in assets and $26,120,989 in liabilities as
of the Chapter 11 filing.
The petition was signed by Edward E. Wilczewski, manager. Mr.
Wilczewski is presently the interim president of Tapestry.
WELLS HOLDING: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Wells Holding LLC
4343 Montgomery road
Norwood, OH 45212
Case No.: 13-14893
Chapter 11 Petition Date: October 24, 2013
Court: United States Bankruptcy Court
Southern District of Ohio (Cincinnati)
Judge: Hon. Jeffery P. Hopkins
Debtor's Counsel: Philomena S Ashdown, Esq.
The Federal Reserve Building
150 East Fourth Street, Fourth Floor
Cincinnati, OH 45202-4018
Tel: (513) 621-2120
Email: psashdown@strausstroy.com
Total Assets: not indicated
Total Debts: not indicated
The Debtor did not file a list of its largest unsecured creditors
when it filed the petition.
WEST AIRPORT PALMS: Foreclosure Sale Set for Nov. 6
---------------------------------------------------
The Hon. Robert A. Mark of the U.S. Bankruptcy Court for the
Southern District of Florida extended through Oct. 21 the deadline
for West Airport Palms Business Park LLC to file pleadings seeking
to enjoin a scheduled foreclosure sale, and disclosure statement
and plan and provisionally setting hearing.
Creditor First-Citizens Bank & Trust Company had objected to the
Debtor's request.
A state court foreclosure sale for the Debtor's primary asset is
scheduled for Nov. 6, 2013.
The Court extended the deadline for the Debtor to file a motion to
enjoin the foreclosure sale, but will only consider enjoining the
foreclosure sale if the conditions enumerated in the order are
met. Specifically, the Court ordered that:
1. the Debtor had until Oct. 21, to file a motion to enjoin
the Nov. 6, 2013 foreclosure sale;
2. the motion to enjoin must comply with the following
requirements:
a. the motion to enjoin must contemplate the sale of
all or of substantially all of the Debtor's assets at
a sufficient price to pay First citizen's claim in full.
b. the Debtor must attach to the motion to enjoin a
contract with no contingencies other than court approval
for such a sale and provide evidence of at least a
$400,000 non-refundable deposit.
3. if the Debtor files a motion to enjoin that complies
with the requirements of the order by Oct. 21, 2013, the
Court will hold a hearing on the motion to enjoin on Nov. 4,
at 10 a.m.
4. to prove cause sufficient to enjoin the state court
foreclosure sale, the Debtor will be required to establish a
prima facie case that the sale contemplated in the motion to
enjoin will close.
About West Airport Palms Business Park
Headquartered in Miami, Florida, West Airport Palms Business Park,
LLC, filed for Chapter 11 (Bankr. S.D. Fla. Case No. 13-25728) on
July 2, 2013. Judge Robert A. Mark presides over the case. James
Schwitalla, Esq., represents the Debtor as counsel. In its
petition, the Debtor scheduled assets of $14,440,419 and
liabilities of $9,284,422. The petition was signed by Alexander
Montero, managing member.
The U.S. Trustee said that an official committee has not been
appointed in the case. The U.S. Trustee reserves the right to
appoint such a committee if interest developed among the
creditors.
WR GRACE: Reports $69.4-Mil. Net Income in Third Quarter 2013
-------------------------------------------------------------
W. R. Grace & Co. on Oct. 23 announced third quarter net income of
$69.4 million. Net income for the prior-year quarter was $75.5
million.
"Our business segments demonstrated solid performance in the
quarter," said Fred Festa, Grace's Chairman and Chief Executive
Officer. "Materials Technologies and Construction Products
delivered strong quarters with double-digit increases in operating
income. Catalysts Technologies operating income was slightly
better than we expected. Our new catalyst technologies have been
well received by customers, and our investments in catalyst
technologies, including the UNIPOL(TM) polypropylene catalyst
acquisition, position us well for a stronger 2014."
Third Quarter Results
Third quarter net sales of $771.3 million decreased 0.7 percent
compared with the prior-year quarter. The decrease was due to
lower pricing (-1.2 percent) and unfavorable currency translation
(-0.4 percent), partially offset by higher sales volumes (+0.9
percent). Base pricing increased 0.7 percent compared with the
prior-year quarter, but was more than offset by lower rare earth
surcharges.
Gross profit of $284.7 million was unchanged compared with the
prior-year quarter as lower raw material and manufacturing costs
offset lower sales. Gross margin was 36.9 percent compared with
36.7 percent in the prior-year quarter.
Adjusted EBIT of $130.7 million increased 1.2 percent compared
with the prior-year quarter as higher earnings in Materials
Technologies and Construction Products more than offset lower
earnings in Catalysts Technologies. Adjusted EBIT margin of 16.9
percent increased 30 basis points compared with the prior-year
quarter.
Adjusted EBIT Return On Invested Capital was 33.8 percent on a
trailing four-quarter basis, a decrease of 80 basis points from
the prior-year quarter, reflecting lower earnings in Catalysts
Technologies for the trailing four-quarter period.
Nine Month Results
Sales for the nine months ended September 30, 2013, decreased 3.1
percent to $2.284 billion as lower pricing (-2.9 percent) and
unfavorable currency translation (-0.9 percent) partially were
offset by higher sales volumes (+0.7 percent). Base pricing
increased 0.6 percent compared with the prior-year period, but was
more than offset by lower rare earth surcharges.
Gross profit of $851.8 million decreased 1.6 percent compared with
the prior-year period primarily due to lower sales and unfavorable
currency translation partially offset by lower raw material and
manufacturing costs. Gross margin of 37.3 percent increased 60
basis points compared with the prior-year period.
Adjusted EBIT was $377.7 million compared with $384.0 million in
the prior-year period. The decline was due to lower gross profit,
partially offset by lower operating expenses and higher earnings
from the ART joint venture. Adjusted EBIT margin of 16.5 percent
increased 20 basis points compared with the prior-year period.
On October 11, 2013, Grace announced that it signed a definitive
agreement to acquire the assets of the UNIPOL(TM) polypropylene
licensing and catalysts business of The Dow Chemical Company for a
cash purchase price of $500 million. This acquisition is
complementary to Grace's specialty catalysts business and
significantly enhances the company's position as a leading
supplier of polyolefin catalyst technologies. The transaction is
expected to close by year end, pending regulatory approvals.
Other Expenses
Total corporate expenses were $20.9 million for the third quarter,
a decrease of approximately 4 percent compared with the prior year
quarter primarily due to cost control initiatives.
Defined benefit pension expense for the third quarter was $18.2
million compared with $17.6 million for the prior-year quarter.
Grace has elected to change its method of accounting for deferred
actuarial gains and losses relating to its global defined benefit
pension plans to a more preferable method under U.S. generally
accepted accounting principles. This accounting method, referred
to as mark-to-market accounting, will be adopted in the 2013
fourth quarter and will be retrospectively applied to the
company's financial results for all periods to be presented in its
annual report on Form 10-K for the year ended December 31, 2013.
Interest expense was $10.7 million for the third quarter compared
with $11.5 million for the prior-year quarter. The annualized
weighted average interest rate on pre-petition obligations for the
third quarter was 3.5 percent.
Income Taxes
Income taxes were recorded at a global effective tax rate of
approximately 33 percent before considering the effects of certain
non-deductible Chapter 11 expenses, changes in uncertain tax
positions and other discrete adjustments.
Grace generally has not had to pay U.S. Federal income taxes in
cash in recent years since available tax deductions and credits
have fully offset U.S. taxable income. Grace expects to generate
significant U.S. Federal net operating losses upon emergence from
bankruptcy. Grace generally does pay cash taxes in foreign
jurisdictions and in a limited number of U.S. states. Income
taxes paid in cash, net of refunds and excluding settlements of
$12.2 million, were $53.4 million during the first nine months of
2013, or approximately 17 percent of income before income taxes.
Cash Flow
Net cash provided by operating activities for the first nine
months of 2013 was $291.0 million compared with $292.4 million in
the prior-year period.
Adjusted Free Cash Flow was $238.7 million for the first nine
months of 2013 compared with $286.1 million in the prior-year
period. Adjusted Free Cash Flow benefited from a significant
improvement in working capital in 2012 due to lower rare earth
costs, which benefit did not recur to the same extent in 2013.
Grace expects Adjusted Free Cash Flow of approximately $400
million for the full year.
2013 Outlook
As of October 23, 2013, Grace affirmed its prior outlook for 2013
Adjusted EBIT in the range of $560 million to $570 million, and
Adjusted EBITDA in the range of $685 million to $695 million.
These respective ranges include lower pension expense of
approximately $45 million resulting from the company's 2013 fourth
quarter adoption of mark-to-market pension accounting, and exclude
the closing costs and any earnings effects of the pending UNIPOL
acquisition.
Chapter 11 Proceedings
On April 2, 2001, Grace and 61 of its United States subsidiaries
and affiliates, including its primary U.S. operating subsidiary,
W. R. Grace & Co.-Conn., filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware in order to resolve Grace's asbestos-related liabilities.
On January 31, 2011, the Bankruptcy Court issued an order
confirming Grace's Joint Plan of Reorganization. On January 31,
2012, the United States District Court issued an order affirming
the Joint Plan, which was reaffirmed on June 11, 2012, following a
motion for reconsideration. Eight parties appealed to U.S. Court
of Appeals for the Third Circuit, three of which subsequently
withdrew their appeals. On June 17, 2013, oral argument was heard
before a Third Circuit panel of judges on the five remaining
appeals. In rulings issued in July and September 2013, the Third
Circuit Court denied the four asbestos-related appeals. One
appeal remains pending.
The timing of Grace's emergence from Chapter 11 will depend on the
final resolution of all appeals by claimants and the satisfaction
or waiver of the remaining conditions set forth in the Joint Plan.
The Joint Plan sets forth how all pre-petition claims and demands
against Grace will be resolved.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA)
-- http://www.grace.com/-- supplies catalysts and silica
products, especially construction chemicals and building
materials, and container products globally. Grace employs
approximately 6,500 people in over 40 countries and had 2012 net
sales of $3.2 billion.
The company and its debtor-affiliates filed for chapter 11
protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139).
David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura
Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP,
represent the Debtors in their restructuring efforts. The Debtors
hired Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent
the Official Committee of Unsecured Creditors. The Creditors
Committee tapped Capstone Corporate Recovery LLC for financial
advice.
Roger Frankel serves as legal representative for victims of
asbestos exposure who may file claims against W.R. Grace. Mr.
Frankel, a partner at Orrick Herrington & Sutcliffe LLP, replaces
David Austern, who was appointed to that role in 2004. Mr.
Frankel has served as legal counsel for Mr. Austern who passed
away in May 2013. The FCR is represented by Orrick Herrington &
Sutcliffe LLP as counsel; Phillips Goldman & Spence, P.A., as
Delaware co-counsel; and Lincoln Partners Advisors LLC as
financial adviser.
Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA.
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla
R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official
Committee of Asbestos Personal Injury Claimants. The Asbestos
Committee of Property Damage Claimants tapped Scott Baena, Esq.,
and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod,
LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin
Naftalis & Frankel, LLP, represents the Official Committee of
Equity Security Holders.
W.R. Grace obtained confirmation of a plan co-proposed with the
Official Committee of Asbestos Personal Injury Claimants, the
Official Committee of Equity Security Holders, and the Asbestos
Future Claimants Representative. The Chapter 11 plan is built
around an April 2008 settlement for all present and future
asbestos personal injury claims, and a subsequent settlement for
asbestos property damage claims. Implementation of the Plan has
been held up by appeals in District Court from various parties,
including a group of prepetition bank lenders and the Official
Committee of Unsecured Creditors.
District Judge Ronald Buckwalter on Jan. 31, 2012, entered an
order affirming the bankruptcy court's confirmation of the Plan.
Bankruptcy Judge Judith Fitzgerald had approved the Plan on
Jan. 31, 2011.
The plan can't be implemented because pre-bankruptcy secured bank
lenders filed an appeal currently pending in the U.S. Court of
Appeals in Philadelphia.
Bankruptcy Creditors' Service, Inc., publishes W.R. Grace
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000).
XZERES CORP: Incurs $1.95-Mil. Net Loss in Q2 Ended Aug. 31
-----------------------------------------------------------
Xzeres Corp. filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q, reporting a net loss
of $1,950,210 on gross revenues of $1,012,403 for the three months
ended Aug. 31, 2013, compared to a net loss of $1,621,363 on gross
revenues of $1,186,101 for the same period last year.
The Company's balance sheet at Aug. 31, 2013, showed $6,948,955 in
total assets, $11,669,159 in total liabilities, and stockholders'
deficit of $4,720,204.
A copy of the Form 10-Q is available at:
http://is.gd/GCg18R
About XZERES Corp.
Headquartered in Wilsonville, Oregon, XZERES Corp. designs,
develops, and markets distributed generation, wind power systems
for the small wind (2.5kW-100kW) market as well as power
management solutions.
Xzeres incurred a net loss of $7.59 million on $4.51 million of
gross revenues for the year ended Feb. 28, 2013, as compared with
a net loss of $8.60 million on $3.96 million of gross revenues for
the year ended Feb. 28, 2012. As of May 31, 2013, the Company had
$4.88 million in total assets, $8.25 million in total liabilities
and a $3.37 million total stockholders' deficit.
Silberstein Ungar, PLLC, in Bingham Farms, Michigan, issued a
"going concern" qualification on the consolidated financial
statement for the year ended Feb. 28, 2013. The independent
auditors noted that the Company has incurred losses from
operations, has negative working capital, and is in need of
additional capital to grow its operations so that it can become
profitable. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
* Current Texas Drought Pressures Public Water Utilities' Finances
------------------------------------------------------------------
Texas' public water and sewer utilities continue to face
challenges presented by the current drought, according to a Fitch
Ratings report.
'With reservoir levels again dropping this year, we expect water
conservation efforts to date to result in reduced usage and
therefore sales revenue in this year's financial results,' says
Doug Scott, Managing Director.
'In addition, meteorological models predict the drought to persist
or worsen in many areas of Texas over the coming months.
Retailers' ability to offset declining revenues will be key to
maintaining financial flexibility.'
According to the report, with most utilities capturing 80% or more
of revenues from volume charges, one option, employed by the City
of Austin, is to increase base charges.
Since April 2013, Fitch downgraded the city of Fort Worth's water
and sewer bonds, the first directly correlated to the drought, and
placed two other systems on Negative Outlook, including water and
sewer revenue bonds issued by the city of Garland and the San
Patricio Municipal Water District.
While the Texas drought will continue to be an issue for public
water utilities, varying supply levels, precipitation and
financial cushion mean it will impact individual utilities and
their ratings differently.
Water and the drought was a major topic during the 2013 Texas
legislative session. In all, approximately 100 new water-related
bills were passed during the session. Fitch will continue to
monitor them, including the major water infrastructure funding
legislation on the November 2013 ballot.
* Delinquencies Up Slightly in September, LPS Report Shows
----------------------------------------------------------
Lender Processing Services, Inc., a provider of integrated
technology, data and analytics to the mortgage and real estate
industries, reports the following "first look" at September 2013
month-end mortgage performance statistics derived from its loan-
level database representing approximately 70 percent of the
overall market.
Total U.S. loan delinquency rate (loans 30 or more days past due,
but not in foreclosure): 6.46%
Month-over-month change in delinquency rate: 4.23%
Year-over-year change in delinquency rate: -12.63%
Total U.S. foreclosure pre-sale inventory rate: 2.63%
Month-over-month change in foreclosure pre-sale inventory rate:
-1.29%
Year-over-year change in foreclosure pre-sale inventory rate:
-32.18%
Number of properties that are 30 or more days past due, but not in
foreclosure: (A) 3,266,000
Number of properties that are 90 or more days delinquent, but not
in foreclosure: 1,331,000
Number of properties in foreclosure pre-sale inventory: (B)
1,328,000
Number of properties that are 30 or more days delinquent or in
foreclosure: (A+B) 4,593,000
States with highest percentage of non-current* loans:
FL, MS, NJ, NY, ME
States with the lowest percentage of non-current* loans:
WY, MT, AK, SD, ND
* Non-current totals combine foreclosures and delinquencies as a
percent of active loans in that state.
Notes:(1) Totals are extrapolated based on LPS Applied Analytics'
loan-level database of mortgage assets.(2) All whole numbers are
rounded to the nearest thousand.
The company will provide a more in-depth review of this data in
its monthly Mortgage Monitor report, which includes an analysis of
data supplemented by in-depth charts and graphs that reflect trend
and point-in-time observations.
* Fed Set to Open Proposed Bank Liquidity Demand to Public Comment
------------------------------------------------------------------
Jesse Hamilton and Jim Brunsden, writing for Bloomberg News,
reported that banks would have to hold enough easy-to-sell assets
to survive a 30-day credit drought under a rule to be proposed
today by the Federal Reserve that may have the greatest effect on
banks with big trading operations such as JPMorgan Chase & Co. and
Goldman Sachs Group Inc.
According to the report, the demand for 30 days of liquidity is
intended to satisfy global Basel III accords for strengthening the
financial system. Increasing the banks' liquid assets is meant to
make them less vulnerable in a crisis like the one that struck in
2008.
"It's always been viewed as something that had more relevance for
the trading banks," said former Fed lawyer William Sweet, adding
that it will hit them harder because of their more urgent need for
short-term funding, the report related. Banks' broker-dealer
units must raise money in the market because they can't rely on
deposits to finance their activities.
In January, the Basel Committee on Banking Supervision agreed on a
liquidity coverage ratio meant to ensure that banks can survive a
30-day credit squeeze, the report said. The standard to be fully
implemented by 2019 allows lenders to go beyond cash and low-risk
sovereign debt to an expanded range of assets including some
equities and securitized mortgage debt, according to the
agreement.
The rules to be advanced by the Fed on Oct. 24 must also be
proposed and opened to public comment by the Federal Deposit
Insurance Corp. and Office of the Comptroller of the Currency, the
report added.
* HSBC's Household Case Goes On After $2.46 Billion Verdict
-----------------------------------------------------------
Andrew Harris, writing for Bloomberg News, reported that HSBC
Holdings Plc, already facing a $2.46 billion judgment in an
11-year-old securities-fraud case, must keep litigating claims as
a U.S. judge ordered more exchanges of evidence for a potential
follow-up trial.
According to the report, a federal jury in Chicago ruled in 2009
that executives at Household International, now part of HSBC
Finance Corp., misled investors, violating U.S. securities laws.
After a four-year claims review process, U.S. District Judge
Ronald Guzman entered a $2.46 billion judgment on some claims.
On Oct. 24, the judge ordered the parties to produce a schedule
for developing evidence, a process known as discovery, to resolve
about 200 more claims, the report related.
Judge Guzman rejected a request by defense attorney Mark E.
Rakoczy to delay the discovery process until a federal appeals
court rules on the bank's challenge to the trial's outcome, the
report further related.
"Eleven years is a long time," the judge said, the report cited.
He also predicted that the appellate court would issue its ruling
before the remaining claims were ready to be tried. "Let's move
forward with discovery."
* SEC Releases "Crowdfunding" Rule
----------------------------------
Sarah N. Lynch, writing for Reuters, reported that entrepreneurs
and start-up companies looking for investors will be able to
solicit over the Internet from the general public under a new
proposal issued by U.S. regulators on Oct. 23.
According to the report, the "crowdfunding" proposal, if adopted
by the Securities and Exchange Commission, would be a major shift
in how small U.S. companies can raise money in the private
securities market.
Private companies are currently allowed to solicit only accredited
investors -- those with a net worth of at least $1 million,
excluding the value of their homes, or annual income of more than
$200,000, the report related.
The crowdfunding rule would let small businesses raise up to
$1 million a year by tapping unaccredited investors, the report
said.
It remains to be seen if the plan goes far enough in limiting
regulatory costs so that small businesses find crowdfunding
desirable, the report further related.
* Both Spouses Must File Ch.13 to Strip Off Subordinate Lien
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the U.S. Court of Appeals in Richmond, Virginia,
became the first circuit court to rule that an underwater
subordinate lien cannot be stripped from a home if only one spouse
files Chapter 13 bankruptcy.
According to the report, Circuit Judge Barbara Milano Keenan began
her 15-page opinion on Oct. 13 by saying that her court, the
Fourth Circuit, agrees with all other circuits by allowing a
Chapter 13 bankrupt to strip off a subordinate mortgage from a
home when the property is worth less than the first mortgage.
In the first case to reach a circuit court, she ruled that the
bankruptcy judge was correct in prohibiting strip-off if only one
spouse is in bankruptcy. Judge Keenan said that lower courts are
divided on the issue.
Judge Keenan supported her conclusion primarily by two concepts:
First, when property is owned as tenants by the entireties, not
the entire property becomes property of the bankrupt estate.
Second, the plan can't bind the lender because the plan only binds
the debtor's creditors. She said the result wasn't altered by
Section 363(h) of the Bankruptcy Code which allows selling a non-
bankrupt spouse's interest in property in "limited circumstances."
The case is Alvarez v. HSBC Bank USA (In re Alvarez), 12-1156,
U.S. Court of Appeals for the Fourth Circuit (Richmond, Virginia).
* BOND PRICING -- For Week From Oct. 21 to 25, 2013
---------------------------------------------------
Company Ticker Coupon Bid Price Maturity Date
------- ------ ------ --------- -------------
AES Eastern Energy LP AES 9 1.75 1/2/2017
AES Eastern Energy LP AES 9.67 4.125 1/2/2029
AGY Holding Corp AGYH 11 79.8 11/15/2014
Affinion Group
Holdings Inc AFFINI 11.625 58.98 11/15/2015
Alion Science &
Technology Corp ALISCI 10.25 69.2 2/1/2015
B456 Systems Inc AONE 3.75 24 4/15/2016
Buffalo Thunder
Development
Authority BUFLO 9.375 36.25 12/15/2014
Cengage Learning
Acquisitions Inc TLACQ 10.5 16.625 1/15/2015
Cengage Learning
Acquisitions Inc TLACQ 12 13.375 6/30/2019
Cengage Learning
Acquisitions Inc TLACQ 13.25 1.375 7/15/2015
Cengage Learning
Acquisitions Inc TLACQ 10.5 16.625 1/15/2015
Cengage Learning
Acquisitions Inc TLACQ 13.25 1.375 7/15/2015
Cengage Learning
Holdco Inc TLACQ 13.75 1.375 7/15/2015
Champion
Enterprises Inc CHB 2.75 0.375 11/1/2037
Energy Conversion
Devices Inc ENER 3 7.875 6/15/2013
Energy Future
Competitive
Holdings Co LLC TXU 8.175 15 1/30/2037
Energy Future
Holdings Corp TXU 5.55 41 11/15/2014
FiberTower Corp FTWR 9 0.625 1/1/2016
HSBC Finance Corp HSBC 3.69 99 11/10/2013
James River Coal Co JRCC 7.875 32.15 4/1/2019
James River Coal Co JRCC 4.5 26.465 12/1/2015
James River Coal Co JRCC 3.125 24.25 3/15/2018
LBI Media Inc LBIMED 8.5 30 8/1/2017
Lehman Brothers
Holdings Inc LEH 1 17.375 8/17/2014
Lehman Brothers
Holdings Inc LEH 1 17.375 8/17/2014
Lehman Brothers Inc LEH 7.5 17.01 8/1/2026
MF Global Holdings Ltd MF 6.25 45.5 8/8/2016
MF Global Holdings Ltd MF 1.875 42.7 2/1/2016
Mashantucket Western
Pequot Tribe MASHTU 6.5 13.25 7/1/2036
Odyssey Re
Holdings Corp FFHCN 7.65 97.57 11/1/2013
OnCure Holdings Inc ONCJ 11.75 49.625 5/15/2017
Overseas Shipholding
Group Inc OSG 8.75 89 12/1/2013
Patriot Coal Corp PCX 3.25 7 5/31/2013
Platinum Energy
Solutions Inc PLATEN 14.25 81.313 3/1/2015
Powerwave
Technologies Inc PWAV 1.875 0.75 11/15/2024
Powerwave
Technologies Inc PWAV 1.875 0.75 11/15/2024
Residential
Capital LLC RESCAP 6.875 35.875 6/30/2015
SLM Corp SLMA 4.261 99.625 11/1/2013
Savient
Pharmaceuticals Inc SVNT 4.75 1.75 2/1/2018
School Specialty
Inc/Old SCHS 3.75 38.625 11/30/2026
Sorenson
Communications Inc SRNCOM 10.5 71 2/1/2015
Sorenson
Communications Inc SRNCOM 10.5 71 2/1/2015
THQ Inc THQI 5 50.5 8/15/2014
TMST Inc THMR 8 16.125 5/15/2013
Terrestar Networks Inc TSTR 6.5 10 6/15/2014
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 10.25 1.875 11/1/2015
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 15 24.75 4/1/2021
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 10.25 1.875 11/1/2015
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 10.5 2.625 11/1/2016
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 15 35.2 4/1/2021
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 10.25 2.875 11/1/2015
Texas Competitive
Electric Holdings
Co LLC / TCEH
Finance Inc TXU 10.5 2 11/1/2016
Trico Marine
Services Inc/
United States TRMA 8.125 3.93 2/1/2013
USEC Inc USU 3 24.25 10/1/2014
Verso Paper
Holdings LLC /
Verso Paper Inc VRS 11.375 41.968 8/1/2016
Verso Paper
Holdings LLC /
Verso Paper Inc VRS 8.75 30.912 2/1/2019
WCI Communities
Inc/Old WCI 4 0.375 8/5/2023
Western Express Inc WSTEXP 12.5 59 4/15/2015
Western Express Inc WSTEXP 12.5 59 4/15/2015
*********
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
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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 ***