/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140225.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 25, 2014, Vol. 18, No. 55 Headlines 21ST CENTURY FINANCIAL: 8th Circ. Won't Revive US Adversary Suit ADVANZEON SOLUTIONS: Lloyd Miller Stake at 7.6% as of Dec. 31 AFA INVESTMENT: Court Okays Protocol for Settling Avoidance Claims AGFEED INDUSTRIES: Files Amended Schedules of Assets & Liabilities AGFEED INDUSTRIES: Court Extends Removal Period to April 10 AGFEED INDUSTRIES: Plante & Moran Okayed to Provide Tax Services AMERICAN APPAREL: Taps Skadden for Restructuring Advice API TECHNOLOGIES: Incurs $7.2 Million Net Loss in Fiscal 2013 ARCHETYPE INC: Converting After Sale to Founder Carlino ASPIRE PUBLIC: Fitch Affirms 'BB' Rating on $93.3MM Revenue Bonds AT HOME CORP: Google AdSense Targeted in Patent Suit ATHLACTION HOLDINGS: S&P Assigns 'B' CCR & Outlook Negative ATLANTIC COAST: Basswood Capital Reports 8.8% Equity Stake ATLANTIC COAST: Basswood Stake at 8.8% as of Dec. 31 ATLANTIC INC: Blows Interest Payment, Lands Financing B-SQUARED INC: Court Rules on Summary Judgment Bid BANKUNITED FINANCIAL: Tax Sharing Deals Not Yet High Court-Ready BERNARD L. MADOFF: Defendants Ask to Consolidate on Common Issues BERNARD L. MADOFF: "Corporate Psychopath" Defense Challenged BIOLIFE SOLUTIONS: Incurs $1.1 Million Net Loss in 2013 BIOMODA INC: Going Private With $750,000 Under Chapter 11 Plan BIONOL CLEARFIELD: TD, WestLB Dodge Oppenheimer's Credit Deal Suit BLITZ USA: Deadline to Remove Pending Actions Extended to July 25 BON-TON STORES: J. Berylson Held 4.6% Equity Stake at Dec . 31 BROOKSTONE CO: Grace Period on Missed Payments Was Feb. 15 BROWN MEDICAL: Lease Decision Period Extended Through May 13 BROWN MEDICAL: Claro Group Approved as Ch.11 Trustee Fin'l Advisor BROWN MEDICAL: Crown Files Suit to Determine Validity of Liens BROWN MEDICAL: Sale of Arizona, Austin and Dallas Assets Closed BROWN PUBLISHING: E.D.N.Y. Court Rules on KLG Gates Appeal C.H.I. OVERHEAD: S&P Affirms 'B' CCR; Outlook Stable CASA GRANDE HOSPITAL: Hires Brownstein Hyatt as Bankr. Counsel CASA GRANDE HOSPITAL: Claims Bar Date Set for April 15 CASA GRANDE HOSPITAL: Files Schedules of Assets and Liabilities CENGAGE LEARNING: Photographers Sue to Preserve Copyright Claims CEREPLAST INC: Files Chapter 11 Bankruptcy Petition CHEMTURA CORP: Notice Satisfies Constitutional Requirements CHEMTURA CORP: Reports Financial Results for Fourth Quarter CHINA NATURAL: Hires Ernst & Young China as Restructuring Advisor CMS ENERGY: Fitch Raises LT IDR & Sr. Unsec. Debt Rating From BB+ CONSTAR INTERNATIONAL: Sells Maryland Property to Smucker for $3MM CONSTAR INTERNATIONAL: U.K. Unit Commences Administration COVANTA HOLDING: Fitch Expects to Withdraw Ratings on March 21 DETROIT, MI: Retirees, Banks Fight for Assets DETROIT, MI: Bankruptcy Blueprint Due Out This Week DETROIT, MI: Bankruptcy Judge to Hear Crucial Bond Dispute DIAMONDBACK ENERGY: S&P Raises CCR to 'B' on Acreage Acquisition DONALD VAN HOUTEN TOTTEN: Hawaii Judge Denies Chapter 7 Discharge DOTS LLC: Has Court Authority to Conduct Feb. 26 Auction DUNE ENERGY: Whitebox Advisors Holds 5.2% Equity Stake DYNASIL CORP: Posts $1.4 Million Net Income in Dec. 31 Quarter EDDIE BAUER: Activist Hedge Fund Criticizes Jos. A. Bank for Deal EDISON MISSION: Settles with Noteholders, Amends Ch. 11 Plan ELBIT IMAGING: Regains Compliance with NASDAQ Listing Rule ELCOM HOTELS: One Bal Harbor Resort Implements Chapter 11 Plan ELEPHANT TALK: Has Until April 30 to Regain NYSE Compliance ELEPHANT TALK: Vanguard Stake at 1.03% as of Dec. 31 ENERGY FUTURE: Prepares for a Breakup, Lining up Loans ENERGY FUTURE: Said to Meet DIP Loan Bankers ENERGY FUTURE: Bankruptcy to Bring More Fees ESTATE FINANCIAL: 9th Circ. Urged to Revive Bryan Cave Suits EXIDE TECHNOLOGIES: Parties Oppose Panel's Bid to Hire Consultant EXIDE TECHNOLOGIES: Probing for Damages From Lead Price-Fixing EXPERT SOUTH TULSA: Kansas Judge Rules on LTF Lawsuit EVENT RENTALS: Proposes to Pay Bonuses to Employees EVENT RENTALS: Has Authority to Employ Kurtzman as Claims Agent FILENE'S BASEMENT: DSW on Hook for Lease, Landlord Tells NY Court FINJAN HOLDINGS: Appoints VP Legal Operations FIRST INDUSTRIAL: S&P Raises Corp. Credit Rating to 'BB+' FIRST MARINER: Bidding Approval Sought FISHER ISLAND: Bankruptcy Judge Approves Plan FREESEAS INC: Broadbill No Longer a Shareholder GGW BRANDS: 'Girls Gone Wild' Being Sold for $1.83 Million GREGORY CANYON: Consents to Chapter 11 Case GULFCO HOLDING: PE Firm Balks at Probe Request in Chapter 11 HALLWOOD GROUP: Merger Consideration Hiked to $13.00 Per Share HARRIS AGENCY: Nevada Court Rules on Archway Insurance Suit HAWKER BEECHCRAFT: Whistleblowers Contest Discharge Of Claims HDOS ENTERPRISES: Taps Friedman Law Group as Attorney HDOS ENTERPRISES: Wants to Hire A&G as Real Estate Consultant HORIZON LINES: Beach Point Holds 12.8% Equity Stake HOUSTON REGIONAL: Astros Have Duties to Bankrupt Network INDUSTRIAL SERVICES: Finalizes Credit Facility Amendment Terms INFUSYSTEM HOLDINGS: Annual Meeting of Stockholders on May 8 INFUSYSTEM HOLDINGS: Austin Marxe Stake at 5.3% as of Dec. 31 INTEGRATED BIOPHARMA: Posts $397,000 Net Income in Dec. 31 Qtr. INTERLEUKIN GENETICS: Extends Clematis Lease Until 2017 INVESTORS CAPITAL: Case Dismissal Hearing Continued to March 25 IRISH BANK: Urges Bankruptcy Approval of $5.8-Mil. Tampa Deal J. CREW: Moody's Assigns B1 Rating on Proposed $1.57BB Term Loan J. CREW: S&P Rates $1.6 Billion Term Loan 'B' JACKSONVILLE BANCORP: Sandler O'Neill Holds 7.6% Equity Stake JAMES RIVER: Mulls Possible Sale, Amends Credit Facility JAMES RIVER: Silverback Asset Stake at 8.7% as of Dec. 31 KARYL PAXTON DESIGN: Sheriff Directed to Turn Over Seized Assets KEMPER CORP: S&P Assigns 'BB' Rating to 40-Yr. Subordinated Debt LANDAUER HEALTHCARE: Completes Sale, Changes Name to LMI Legacy LEHMAN BROTHERS: Judge Peck to Join Morrison & Foerster LIGHTSQUARED INC: Asks Court to Approve Outline of Latest Plan LIGHTSQUARED INC: Seeks Court Approval to Obtain $1.65-Bil. Loan LIGHTSQUARED INC: Expands Scope of Ernst & Young's Services LIGHTSQUARED INC: Inks Agreement With AnyDATA to Settle Claim LIGHTSQUARED INC: Disclosure Statement for $2.6B Plan Approved LLS AMERICA: Recommendations on Suit v. Armstrong Adopted LLS AMERICA: Recommendations on Suit v. Foerstner Adopted LONG BEACH MEDICAL: Hospital Files for Bankruptcy MCGRAW-HILL GLOBAL: Fitch Affirms 'B+' Issuer Default Rating MED-DEPOT INC: Set to Emerge After Chapter 11 Plan Confirmed MELANIE MILASINOVICH: Fannie Mae May Commence Eviction MERCURY COS: Denver Court Requires Listing for Suits to Survive MF GLOBAL: Lawsuits Against Corzine to Proceed MF GLOBAL: Claims Over Collapse Trimmed in Class Action MOBIVITY HOLDINGS: ACT Capital Held 9.9% Stake at Dec. 31 MONTREAL MAINE: Has Divergent Plans in U.S. and Canada MONTREAL MAINE: Court Approves Paul Hasting as Panel's Counsel MORNINGSTAR MARKETPLACE: Has Until March 5 to File Schedules NATIONAL AIRLINES: Former CFO Loses 9th Cir. Appeal Against IRS NAVISTAR INTERNATIONAL: To Close Alabama Engine Plant NPS PHARMACEUTICALS: Vanguard Stake at 5.5% as of Dec. 31 ORCKIT COMMUNICATIONS: Noteholders OK Proposed Arrangement OVERSEAS SHIPHOLDING: Notice Shortened PILGRIM'S PRIDE: Profit Jumps on Lower Costs PHH CORP: In Talks To Sell Fleet Management Business PRICHARD, ALA: Files Chapter 9 Debt-Adjustment Plan PLEXTRONICS INC: Sale to Solvay America Is Set for March 6 QUANTUM CORP: Vanguard Group Holds 5.3% Equity Stake RAY K. SHAHANI: Court Narrows Suit v. Wells Fargo, BofA et al RENT-A-CENTER INC: S&P Affirms 'BB' CCR & Revises Outlook to Neg. RESIDENTIAL CAPITAL: Haffey's $10-Mil. in Claims Expunged RESON LEE WOODS: 10th Cir. Takes Up "Family Farmers" Issue REVSTONE INDUSTRIES: Reaches Deal Over $95M in PBGC Claims RG STEEL: Court Issues Revised Order Approving APS Employment RITE AID: Drug Channel Aligns Further on McKesson Deal, Fitch Says SBARRO LLC: To Close 155 Restaurants in North America SELECT TREE: Court Converts Case to Chapter 7 SEQUENOM INC: Sectoral Asset Mgt. Ceases to Own Shares SOUND SHORE: Can Hire Garbarini as Medical Malpractice Counsel SOUTH COAST: Bankrupt Oil Co. Wrongly Split Assets, 9th Circ. Told SPIN HOLDCO: S&P Affirms 'B' Rating to $1.4BB 1st Lien Term Loan ST. FRANCIS' HOSPITAL: Gets OK of Health Quest Deal Termination ST. FRANCIS' HOSPITAL: Ombudsman Seeks Gibbons as Counsel ST. JOSEPH HEALTH: Moody's Lowers Rating on $17.2MM Debt to Caa3 STACY'S INC: Wants Hearing on Cash Collateral Moved to March 12 TAYLOR BEAN: Unsecured Creditors Have First Payment STELERA WIRELESS: Told to Produce Draft Plan by April TOWN SPORTS: S&P Revises Outlook to Negative & Affirms 'B+' CCR TRONOX INC: Wants Kerr-McGee to Pay $20.8 Billion in Damages TUSCANY INTERNATIONAL: Taps Prime Clerk as Administrative Advisor TUSCANY INTERNATIONAL: Hires Latham & Watkins as Co-Counsel TUSCANY INTERNATIONAL: Taps McCarthy Tetrault as Canadian Counsel TUSCANY INTERNATIONAL: Hires Young Conaway as Attorneys UM FINANCIAL: Missing Financier Charged With $4.3MM Mortgage Fraud USA COMMERCIAL: 9th Cir. Issues Ruling in Suit v. Deloitte VERITEQ CORP: Louis Haller No Longer a Shareholder VIJAY K. TANEJA: 4th Cir. Split on Avoidance Action Suit WEIGHT WATCHERS: Moody's Lowers CFR to B1; Outlook Negative WEIGHT WATCHERS: S&P Lowers CCR to 'B+', Placed on Watch Negative WESTMORELAND COAL: Closes Offering of $425 Million Senior Notes XTREME POWER: U.S. Trustee Appoints 3-Member Creditors Panel XTREME POWER: Panel Retains Hohmann Taube as Bankr. Counsel XTREME POWER: Inc Files Schedules of Assets and Liabilities XTREME POWER: Grove Files Schedules of Assets and Liabilities XTREME POWER: Systems Files Schedules of Assets and Liabilities YRC WORLDWIDE: Deutsche Bank Stake at 5.2% as of Dec. 31 YSC INC: March 7 Hearing on Whidbey Bid to Foreclose on Ramada Inn ZALE CORP: Golden Gate Capital Scores Again on Buyout ZOGENIX INC: Federated Stake at 24.8% as of Dec. 31 * Out-Of-Court Municipal Restructuring Will Rise, Experts Say * American Express Merchant Fee Accord Wins Court Approval * Bill to Force Refunds of Overpaid Foreclosure Costs in Colorado * Fed Approves Tough U.S. and Foreign Bank Liquidity Rule * Fifth Third Bank Mistakenly Reports Customers as "Bankrupt" * JPMorgan's $13 Billion Accord Seen Needing Court Review * Hope for NYC Hospitals Rises With $8-Bil. Medicaid Waiver Deal * Panel Seeks Greater Disclosures on Pension Health * Senate Votes to Restore Military Pensions * CFTC Is Set to Ease Rules on Trading Swaps Overseas * Ex-BofA Executive Pleads Guilty in Muni Bond Rigging Case * Fla. Supreme Court Untangles Self-Insured Retentions * Massachusetts Attorney General Seeks Ban on Liens by Casinos * Hungry for Cash, Casual Dining Cos. May Flock to Ch. 11 * Regulator Halts Ocwen-Wells Fargo Mortgage-Servicing Deal * Large Companies With Insolvent Balance Sheets ********* 21ST CENTURY FINANCIAL: 8th Circ. Won't Revive US Adversary Suit ---------------------------------------------------------------- Law360 reported that an Eighth Circuit panel upheld a Nebraska bankruptcy court's dismissal of an adversary suit brought by a former financial adviser convicted of securities fraud that disputed a $6.8 million restitution order, saying bankruptcy court is the wrong forum to challenge his criminal conviction. According to the report, the U.S. Bankruptcy Appellate Panel for the Eighth Circuit said the suit brought by former 21st Century Financial Group Inc. owner Bryan Behrens was properly tossed. The case is Bryan Behrens v. USA, Case No. 13-6052 (8th Cir.). ADVANZEON SOLUTIONS: Lloyd Miller Stake at 7.6% as of Dec. 31 ------------------------------------------------------------- Lloyd I. Miller, III, disclosed in an amended Schedule 13G filed with the U.S. Securities and Exchange Commission that as of Dec. 31, 2013, he beneficially owned 5,184,190 shares of common stock of Advanzeon Solutions, Inc., representing 7.6 percent of the shares outstanding. Mr. Miller previously reported beneficial ownership of 5,723,100 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/FDE5RU About Advanzeon Solutions Tampa, Fla.-based Comprehensive Care Corporation, (n/k/a Advanzeon Solutions) provides managed care services in the behavioral health, substance abuse, and psychotropic pharmacy management fields. Mayer Hoffman McCann P.C., in Clearwater, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations and has not generated sufficient cash flows from operations to fund its working capital requirements. This raises substantial doubt about the Company's ability to continue as a going concern. Comprehensive Care incurred a net loss attributable to common stockholders of $6.99 million for the year ended Dec. 31, 2012, as compared with a net loss attributable to common stockholders of $14.08 million for the year ended Dec. 31, 2011. As of June 30, 2013, Comprehensive Care had $3.07 million in total assets, $28.30 million in total liabilities and a $25.23 million stockholders' deficiency. AFA INVESTMENT: Court Okays Protocol for Settling Avoidance Claims ------------------------------------------------------------------ The U.S, Bankruptcy Court for the District of Delaware has authorized AFA Investment Inc., et al., to settle classes of preference claim controversies pursuant to Fed.R.Bankr.P. Rule 9019(b). The Court said the Debtors, through their avoidance counsel, may settle avoidance actions without further notice or Court approval. The Avoidance Action Counsel has identified roughly 300 potential avoidance claims. Because of the number of defendants and the need to promptly and efficiently resolve the adversary proceedings, the Debtors sought blanket authority to settle adversary proceedings seeking the recovery of preferences within the settlement ranges and guidelines. A copy of the guidelines is available for free at: http://bankrupt.com/misc/AFAINvestment_claims_guidelines.pdf Pursuant to the Court's order approving a Revised Global Settlement filed July 2, 2013, Scott J. Leonhardt. Esq., at the The Rosner Law Group LLC; Joseph L. Steinfeld, Jr., Esq., and Edward E. Neiger, Esq., were appointed as avoidance action counsel charged with bringing certain actions arising under Chapter 5 of the Bankruptcy Code on behalf of the Debtors. The Debtors, through their Avoidance Action Counsel, may prosecute, collect and settle avoidance actions relating to the bankruptcy of AFA Investment Inc., et al. Pursuant to the Order, the Avoidance Action Committee was put in place to manage the prosecution of avoidance actions and has reviewed and approved the motion. The Debtors anticipate that the net benefit to the Debtors' estates will be maximized by compromising certain claims rather than incurring the expense and uncertainty of litigation. The Debtors said possible considerations for compromise include but are not limited to: A. Errors and omissions in the Debtors' books and records; B. New value as made applicable pursuant to Section 547(c)(4) of the Bankruptcy Code documented by defendants; C. Ordinary course of business defense as made applicable pursuant to Section 547(c)(2); D. Risk of not prevailing in litigation; E. Cost of litigating claims to judgment; and F. The desirability of concluding contested matters by compromise and settlement. About AFA Foods King of Prussia, Pennsylvania-based AFA Foods Inc. was one of the largest processors of ground beef products in the United States. AFA had seven facilities capable of producing 800 million pound of ground beef annually. Revenue in 2011 was $958 million. Yucaipa Cos. acquired the business in 2008 and currently owns 92% of the common stock and all of the preferred stock. AFA Foods, AFA Investment Inc. and other affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-11127) on April 2, 2012, after recent changes in the market for its ground beef products and the impact of negative media coverage related to boneless lean beef trimmings (BLBT) affected sales. Judge Mary Walrath presides over the case. Laura Davis Jones, Esq., Timothy P. Cairns, Esq., and Peter J. Keane, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware; Tobias S. Keller, Esq., at Jones Day, in San Francisco; and Jeffrey B. Ellman, Esq., and Brett J. Berlin, Esq., at Jones Day, in Atlanta, Georgia, represent the Debtors. FTI Consulting Inc. serves as the Debtors' financial advisors and Imperial Capital LLC serves as marketing consultants. Kurtzman Carson Consultants LLC serves as noticing and claims agent. As of Feb. 29, 2012, the Debtors' books and records on a consolidated basis, reflected approximately $219 million in assets and $197 million in liabilities. AFA Foods, Inc., disclosed $615,859,574 in assets and $544,499,689 in liabilities as of the Petition Date. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven members to the official committee of unsecured creditors in the Debtors' cases. The Committee has obtained approval to hire McDonald Hopkins LLC as lead counsel and Potter Anderson & Corroon LLP serves as co-counsel. The Committee also obtained approval to retain J.H. Cohn LLP as its financial advisor. AFA, in its Chapter 11 case, sold plants and paid off the first- lien lenders and the loan financing the Chapter 11 effort. Remaining assets are $14 million cash and the right to file lawsuits. General Electric Capital Corp. and Bank of America Corp. provided about $60 million in DIP financing. The loan was paid off in July 2012. In October 2012, the Bankruptcy Court denied a settlement that would have released Yucaipa Cos., the owner and junior lender to AFA Foods, from claims and lawsuits the creditors might otherwise bring, in exchange for cash to pay unsecured creditors' claims under a liquidating Chapter 11 plan. Under the deal, Yucaipa would receive $11.2 million from the $14 million, with the remainder earmarked for unsecured creditors. Asset recoveries above $14 million would be split with Yucaipa receiving 90% and creditors 10%. Proceeds from lawsuits would be divided roughly 50-50. AGFEED INDUSTRIES: Files Amended Schedules of Assets & Liabilities ------------------------------------------------------------------ AgFeed USA LLC filed with the U.S. Bankruptcy Court for the District of Delaware amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property N/A B. Personal Property N/A C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority $5,239,756 Claims UNKNOWN ----------- ----------- TOTAL $0 $5,239,756 PLUS UNKNOWN About AgFeed Industries AgFeed Industries, Inc., has 21 farms and five feed mills in China producing more than 250,000 hogs annually. In the U.S., the business included 10 sow farms in three states and two feed mills producing more than one million hogs a year. AgFeed's revenue in 2012 was $244 million. AgFeed and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 13-11761) on July 15, 2013, with a deal to sell most of its subsidiaries to The Maschhoffs, LLC, for cash proceeds of $79 million, absent higher and better offers. The Debtors estimated assets of at least $100 million and debts of at least $50 million. Keith A. Maib signed the petition as chief restructuring officer. Hon. Brendan Linehan Shannon presides over the case. Donald J. Bowman, Jr., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' counsel. BDA Advisors Inc. acts as the Debtors' financial advisor. The Debtors' claims and noticing agent is BMC Group, Inc. The U.S. Trustee has appointed a five-member official committee of unsecured creditors to the Chapter 11 cases. The Creditors' Committee tapped Lowenstein Sandler as lead bankruptcy counsel and Greenberg Traurig, LLP, as co-counsel. CohnReznick LLP serves as the Creditors' Committee's financial advisor. An official committee of equity security holders was also appointed to the Chapter 11 cases. The Equity Committee tapped Sugar Felsenthal Grais & Hammer LLP and Elliott Greenleaf as co-counsel. AGFEED INDUSTRIES: Court Extends Removal Period to April 10 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the period within which AgFeed Industries, Inc., may remove actions that were pending in various state and federal courts by 90 days, through and including April 10, 2014, with respect to the actions on Jan. 10, 2014. As reported in the Troubled Company Reporter on Feb. 11, 2014, AgFeed said that since the petition date, the debtors have focused primarily on (i) conducting the AgFeed USA Sale, and the AgFeed Industries Sale in an effort to maximize the value of the Debtor's estates for the benefit of their stakeholders, (ii) winding down the Debtor's business operations, and (iii) working with the Committees in formulating and filing the plan and Disclosure Statement. In addition, the Debtors have devoted a substantial amount of time and their resources addressing critical case management issues, including but not limited to (i) securing the use of cash collateral, (ii) stabilizing the business, (iii) preparing the schedules of assets and liabilities and statement of financial affairs, (iv) producing monthly operating reports and other reports, (v) retaining professionals, and (vi) beginning the claims and reconciliation process. About AgFeed Industries AgFeed Industries, Inc., has 21 farms and five feed mills in China producing more than 250,000 hogs annually. In the U.S., the business included 10 sow farms in three states and two feed mills producing more than one million hogs a year. AgFeed's revenue in 2012 was $244 million. AgFeed and its affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Case No. 13-11761) on July 15, 2013, with a deal to sell most of its subsidiaries to The Maschhoffs, LLC, for cash proceeds of $79 million, absent higher and better offers. The Debtors estimated assets of at least $100 million and debts of at least $50 million. Keith A. Maib signed the petition as chief restructuring officer. Hon. Brendan Linehan Shannon presides over the case. Donald J. Bowman, Jr., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' counsel. BDA Advisors Inc. acts as the Debtors' financial advisor. The Debtors' claims and noticing agent is BMC Group, Inc. The U.S. Trustee has appointed a five-member official committee of unsecured creditors to the Chapter 11 cases. The Creditors' Committee tapped Lowenstein Sandler as lead bankruptcy counsel and Greenberg Traurig, LLP, as co-counsel. CohnReznick LLP serves as the Creditors' Committee's financial advisor. An official committee of equity security holders was also appointed to the Chapter 11 cases. The Equity Committee tapped Sugar Felsenthal Grais & Hammer LLP and Elliott Greenleaf as co-counsel. AGFEED INDUSTRIES: Plante & Moran Okayed to Provide Tax Services ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized AgFeed USA, LLC and its debtor-affiliates to employ Plante & Moran, PLLC as tax services provider, nunc pro tunc to Sept. 10, 2013. As reported in the Troubled Company Reporter on Feb. 11, 2014, the Debtors engaged Plante & Moran to render tax compliance services to the Debtors for the fiscal year ending Dec. 31, 2013 (the "Supplemental Tax Services"). The Supplemental Tax Services include the preparation of: -- U.S. Corporate Income Tax Return; -- Information Return of U.S. Persons with Respect to Certain Foreign Corporations; -- Information Return of U.S. Persons with Respect to Foreign Disregard Entities; -- Return of U.S. Persons with Respect to Certain Foreign Partnerships; -- Colorado, Florida, Iowa, Massachusetts, North Carolina, and Oklahoma Corporate Income Tax Returns; -- Oklahoma Annual Business Activity Tax Return; and -- Tennessee Franchise/Excise Tax Return. Plante & Moran will provide additional services, including amending prior year tax returns, accounting, consulting, or tax assistance at the request of the Debtors. The Debtors and Plante & Moran have agreed that any additional services will be billed at the hourly rates specified in the Supplemental Engagement Letter. Plante & Moran will be paid at these hourly rates: Partner $250-$400 Manager $130-$250 In-charge $90-$130 Staff $60-$90 Plante & Moran will also be reimbursed for reasonable out-of- pocket expenses incurred. Based on past year-end audits performed by Plante & Moran of similarly sized corporations, Plante & Moran estimates that its fee for the Supplemental Tax Services will be approximately $70,000, plus all reasonable and necessary travel and out-of- pocket expenses incurred. Annette Tenerelli-Lemke, partner of Plante & Moran PLLC, 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. Plante & Moran can be reached at: Annette Tenerelli-Lemke PLANTE & MORAN, PLLC Suite 400, 1000 Oakbrook Drive Ann Arbor, MI 48104 Tel: (734) 665-9494 Fax: (734) 665-0664 About AgFeed Industries AgFeed Industries, Inc., has 21 farms and five feed mills in China producing more than 250,000 hogs annually. In the U.S., the business included 10 sow farms in three states and two feed mills producing more than one million hogs a year. AgFeed's revenue in 2012 was $244 million. AgFeed and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 13-11761) on July 15, 2013, with a deal to sell most of its subsidiaries to The Maschhoffs, LLC, for cash proceeds of $79 million, absent higher and better offers. The Debtors estimated assets of at least $100 million and debts of at least $50 million. Keith A. Maib signed the petition as chief restructuring officer. Hon. Brendan Linehan Shannon presides over the case. Donald J. Bowman, Jr., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' counsel. BDA Advisors Inc. acts as the Debtors' financial advisor. The Debtors' claims and noticing agent is BMC Group, Inc. The U.S. Trustee has appointed a five-member official committee of unsecured creditors to the Chapter 11 cases. The Creditors' Committee tapped Lowenstein Sandler as lead bankruptcy counsel and Greenberg Traurig, LLP, as co-counsel. CohnReznick LLP serves as the Creditors' Committee's financial advisor. An official committee of equity security holders was also appointed to the Chapter 11 cases. The Equity Committee tapped Sugar Felsenthal Grais & Hammer LLP and Elliott Greenleaf as co-counsel. AMERICAN APPAREL: Taps Skadden for Restructuring Advice ------------------------------------------------------- Emily Glazer, writing for The Wall Street Journal, reported that retailer and clothing manufacturer American Apparel Inc. tapped restructuring advisers as it battles weakening sales and a hefty debt load, people familiar with the matter said. According to the report, Los Angeles-based American Apparel, known for casual clothing in a spectrum of colors, recently enlisted lawyers at Skadden, Arps, Slate, Meagher & Flom LLP to work on restructuring options, though it is unclear exactly what the strategy will be, these people said. Skadden also has served as the company's outside corporate counsel. Some of the company's bondholders are starting to organize and are reaching out to restructuring advisers, these people said, the report related. The company, which has roughly $240 million in debt, has struggled over the years, the report related. In recent quarters it has come close to breaching loan covenants, debt terms designed to protect its lenders, some of these people said. The company in late January said it refinanced the majority of its debt. About American Apparel Los Angeles, Calif.-based American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel. As of September 2010, American Apparel employed over 10,000 people and operated 278 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea and China. Amid liquidity problems and declining sales, American Apparel in early 2011 reportedly tapped law firm Skadden, Arps, Slate, Meagher & Flom and investment bank Rothschild Inc. for advice on a restructuring. In April 2011, American Apparel said it raised $14.9 million in rescue financing from a group of investors led by Canadian financier Michael Serruya and private equity firm Delavaco Capital Corp., allowing the casual clothing retailer to meet obligations to its lenders for the time being. Under the deal, the investors were buying 15.8 million shares of common stock at 90 cents apiece. The deal allows the investors to purchase additional 27.4 million shares at the same price. The Company incurred a net loss of $37.27 million in 2012, as compared with a net loss of $39.31 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $332.93 million in total assets, $389.12 million in total liabilities and a $56.19 million total stockholders' deficit. * * * The Troubled Company Reporter, on Nov. 21, 2013, reported that American Apparel Inc. had its corporate family rating cut one level to Caa2 by Moody's Investors Service. The clothing retailer's probability of default was also lowered one level and the outlook is negative. API TECHNOLOGIES: Incurs $7.2 Million Net Loss in Fiscal 2013 ------------------------------------------------------------- API Technologies Corp. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $7.22 million on $244.30 million of net revenue for the year ended Nov. 30, 2013, as compared with a net loss of $148.70 million on $242.38 million of net revenue for the year ended Nov. 30, 2012. As of Nov. 30, 2013, the Company had $304.57 million in total assets, $147.14 million in total liabilities, $26.32 million in redeemable preferred stock, and $131.10 million in shareholders' equity. At Nov. 30, 2013, the Company held cash and cash equivalents of approximately $6.4 million compared to $20.5 million at Nov. 30, 2012. A copy of the Form 10-K is available for free at: http://is.gd/2RaYyT About API Technologies API Technologies designs, develops and manufactures electronic systems, subsystems, RF and secure solutions for technically demanding defense, aerospace and commercial applications. API Technologies' customers include many leading Fortune 500 companies. API Technologies trades on the NASDAQ under the symbol ATNY. For further information, please visit the Company Web site at www.apitech.com. * * * As reported by the TCR on Feb. 14, 2013, Moody's Investors Service has withdrawn all ratings of API Technologies Corp., including its Caa1 Corporate Family Rating and negative outlook due to the repayment of all rated debt. On Feb. 6, 2013, API Technologies Corp. completed a refinancing of its previously outstanding rated bank debt. All ratings of API have been withdrawn since the company has no rated debt outstanding. In the Feb. 22, 2013, edition of the TCR, Standard & Poor's Ratings Services said that it lowered its corporate credit rating on API Technologies Corp. to 'B-' from 'B'. "The downgrade reflects weaker-than-expected credit metrics resulting from less-than-expected improvements in operating performance and higher debt, including a modest increase from the recent refinancing," said Standard & Poor's credit analyst Chris Mooney. ARCHETYPE INC: Converting After Sale to Founder Carlino ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Archetype, Inc., now known as AI Liquidation Co., scheduled a Feb. 28 hearing to dismiss or convert the Chapter 11 case to liquidation under Chapter 7. According to the report, the company was sold to founder Cristina Carlino in exchange for $7.33 million in secured notes. She also provided $1.25 million in financing for the Chapter 11 effort, which began Nov. 1. The sale didn't throw off enough cash to complete even a liquidating Chapter 11 plan, although expenses of the Chapter 11 case are being paid, according to a court filing, the report related. A trustee in Chapter 7 will have $25,000 to wind up the case. The company said in court filings that it generated no income and couldn't get more capital, the report added. About Archetype Inc. Archetype Inc., now known as AI Liquidation Co., the creator of a Web site that delivers personalized content to users derived from their individual "personas" based on Carl Jung's philosophy of archetypes, sought bankruptcy protection (Bankr. D. Del. Case No. 13-bk-12874) on Nov. 1, 2013, after a fundraising effort failed. The New York-based company estimated debt of as much as $50 million and assets of as much as $10 million. Archetype was forced to enter bankruptcy after a liquidity crisis left it unable to and pay debt and fund operations. Archetype, which was listed as one of Time Inc.'s 10 New York startups to watch in 2013, attempted to generate $20 million through an equity offering earlier this year. Cristina Carlino, the founder of Philosophy Inc., the maker of the eponymous cosmetic products line, owns most of Archetype's equity and debt. Carlino is also the company's executive chairman. The Debtor is represented by Robert W. Mallard, Esq., at Dorsey & Whitney (Delaware) LLP, in Wilmington, Delaware. ASPIRE PUBLIC: Fitch Affirms 'BB' Rating on $93.3MM Revenue Bonds ----------------------------------------------------------------- Fitch Ratings has affirmed the 'BB' rating on $93.3 million California Statewide Communities Development Authority school facility revenue bonds, series 2010, issued on behalf of Aspire Public Schools (the bonds). The Rating Outlook is Stable. SECURITY The bonds are secured by rental payments made by Aspire Public Schools (Aspire) equal to debt service on the bonds from gross revenues of the 10 schools which received bond proceeds (the bond schools); a debt service reserve fund; deeds of trust on five of the 10 financed facilities; and partial credit enhancement through a $17 million letter of credit (LOC). The rating does not incorporate the partial credit enhancement from the LOC. KEY RATING DRIVERS STRONG OPERATIONAL/FINANCIAL MANAGEMENT: Fitch views Aspire's operational and financial management practices as strong. Academic performance for most of the bond schools is at or above state expectations, and in fiscal 2013 each school generated a modest operating surplus on a full accrual basis. LIMITED OPERATING HISTORY: Four of the 10 bond schools have been in operation less than five years, and one has not gone through its first charter renewal process. Under Fitch's charter school rating criteria, this precludes those schools from being included in debt service coverage calculations. FINANCIAL METRICS REMAIN SPECULATIVE: Despite effective leadership and policies, balance sheet metrics for the 10 bond schools and the consolidated Aspire organization remain very limited. Transaction maximum annual debt service coverage (TMADS), as adjusted per Fitch's criteria, was positive. RATING SENSITIVITIES WEAK BALANCE SHEET AND LIMITED DIVERSITY: Weak balance sheet strength for the bond schools - which largely comes from consolidated Aspire operations, could create rating pressures. There is some philanthropic support which adds revenue diversity, although this is mostly at the consolidated Aspire level. OPERATING PERFORMANCE: Weakened TMADS coverage from the bond schools due to enrollment declines or state per pupil funding reductions could create rating pressures. STANDARD CHARTER RENEWAL RISK: A limited financial cushion; substantial reliance on enrollment-driven, per-pupil funding; and charter renewal risk are credit concerns common in all charter school transactions which, if pressured, could negatively impact the rating over time. CREDIT PROFILE Aspire is a non-profit public-benefit corporation that operates 37 charter schools, mainly in California. Of these, the 10 bond schools serve a mix of K-12 grades, and are located in various California communities. Series 2010 bond proceeds were used to finance or refinance charter school facilities. Gross revenues of 10 of those schools, all in California, support debt service on the series 2010 educational school facility revenue bonds. In response to a 2012 decision by the Alameda County Superior Court regarding its statewide benefit charters, Aspire obtained local school district charters for the six schools formerly authorized as state-wide benefit charters. Those local charters are in place as of the 2013/2014 academic year. Fitch considers the prior litigation risk resolved. POSITIVE ENROLLMENT AND DEMAND TRENDS As of fall 2013, Aspire enrolled approximately 4,073 students at the 10 bond schools, an annual increase of about 2%. As in the past several years, this pace exceeds Aspire's base-case forecast for the bond schools. Demand for an Aspire education remains robust, as evidenced by waitlists at the bond schools exceeding 3,300 in fall 2013 (fiscal 2014). Positive academic results also drive student demand. In academic year 2012/2013, four schools failed to meet the state API growth target (Aspire Golden State, Aspire Langston Hughes, Aspire Twilight Secondary and Aspire Pacific Prep Academy), and were below the state-wide average. The other six bond schools reported API results well in excess of the state average and the state proficiency target. As a whole, Aspire's California schools' API average was well above state targets and averages. Fitch is not concerned about the mixed academic performance at this time, as the various charter authorizers reported satisfactory management focus on achievement as well as incremental progress. Aspire allocates additional resources to schools with lower API scores. IMPROVING FINANCIAL PERFORMANCE State funding, tied primarily to enrollment, remains the bond schools' primary revenue stream. For fiscal 2013, Fitch calculated a positive 9.2% operating margin for the bond schools based on unaudited consolidated financials provided by Aspire. This compares to 3.6% in fiscal 2012. Management attributes the stronger operating performance to increased state per-pupil funding, conservative budgeting, and stable to growing enrollment. Under Fitch's charter school criteria, Fitch adjusts the debt service coverage calculation to exclude any charter school that has an operating history of less than five years. Such schools are deemed speculative grade under this criteria. Four of the 10 bond schools (Aspire Alexander Twilight Prep, Aspire Alexander Twilight Secondary, Aspire Pacific, and Aspire Titan) currently meet that definition. When related net revenues from these four schools are excluded from Fitch's assessment of TMADS coverage for the bond schools, adjusted fiscal 2013 coverage was still 1.6x (it was 1.8x with all 10 bond schools). HIGH DEBT BURDEN On a consolidated basis, TMADS burden remains high. In fiscal 2013, TMADS of $6.6 million was 16.9% of bond school revenues, which is a speculative-grade attribute based on Fitch's rating criteria. The series 2010 bonds are the only outstanding debt for the bond schools, and Aspire management reports no plans for additional debt related to those schools. SLIM BALANCE SHEET Aspire's balance sheet cushion (defined as available funds [AF], or unrestricted cash and investments) at the end of fiscal 2013, on both a bond school and Aspire consolidated basis, remains very light. There was essentially no AF recorded at the charter school level, and $19.7 million at the Aspire consolidated level. Fitch adjusted consolidated cash and investments for restricted funds, with a resulting available funds amount of $8.9 million (up from an adjusted $3.2 million in 2012). For consolidated Aspire, adjusted available funds remain at extremely modest levels of 7.7% of expenses and 5.7% of debt (including the series 2010 bonds). Proposition 30 revenues led to per-pupil funding improvement in fiscal 2013. While this supported stronger TMADs coverage levels, Fitch expects increases in reserves to be relatively modest. Liquidity risk remains a credit concern, as is the case for nearly all Fitch-rated charter schools. STANDARD CHARTER SCHOOL RISK FACTORS Effective for the 2013/2014 academic year, the bond schools now operate under charters with five different local school district authorizers. Fitch communicated with all five authorizers, who reported that the bond schools and Aspire were cooperative in their oversight process and in compliance with charter requirements. These authorizers reported no outstanding issues threatening the charters at this time. AT HOME CORP: Google AdSense Targeted in Patent Suit ---------------------------------------------------- Law360 reported that the trustee for now-defunct At Home Corp. launched a patent infringement suit against Google Inc., claiming the search giant is infringing on two of its patents covering information storage and delivery through Google's third-party advertising program. According to the report, the suit is asserting infringement of U.S. Patent No. 6,014,698, entitled "System Using First Banner Request that can not be Blocked from Reaching a Server for Accurately Counting Displays of Banners on Network Terminals," and No. 6,286,045. The case is Williamson v. Google Inc., Case No. 1:14-cv-00177 (D.Del.). Headquartered in Redwood City, California, At Home Corporation, dba Excite@Home, provided broadband access services. Excite@Home had interests in one joint venture outside of North America delivering high-speed Internet services and three joint ventures outside of North America operating localized versions of the Excite portal. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. N.D. Calif. Case Nos. 01-32495 through 01- 32525) on Sept. 28, 2001. The Court confirmed the Debtors' Joint Plan of Liquidation dated as of May 1, 2002, on Aug. 15, 2002. The Plan took effect on Sept. 30, 2002. The trusteeship was created in 2002. ATHLACTION HOLDINGS: S&P Assigns 'B' CCR & Outlook Negative ----------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B' corporate credit rating to San Diego-based Athlaction Holdings LLC. The outlook is negative. S&P also assigned its 'B+' issue-level rating to the company's $342.5 million first-lien term loan maturing 2020 and $45 million revolving credit facility maturing 2018. The '2' recovery rating indicates S&P's expectations for substantial (70%-90%) recovery in the event of payment default. S&P also assigned its 'CCC+' issue- level rating to the $192.5 million second-lien term loan maturing 2021. The '6' recovery rating indicates S&P's expectations for negligible (0%-10%) recovery in the event of payment default. "The ratings on Athlaction Holdings reflect the company's 'weak' business risk profile (as defined by our criteria), incorporating the company's narrow product focus and fragmented market, partly favorably offset by high customer retention rates, and a 'highly leveraged' financial risk profile," said Standard & Poor's credit analyst Martha Toll-Reed. The outlook is negative, reflecting currently weak profitability and high leverage. Sustained revenue growth, realization of substantial cost reductions, and adjusted leverage of about 8x in fiscal 2014 could lead us to revise the outlook to stable. Persistently high costs, lack of revenue growth, or material deterioration in customer retention rates, leading to sustained leverage over 10x, could lead to a downgrade. ATLANTIC COAST: Basswood Capital Reports 8.8% Equity Stake ---------------------------------------------------------- Basswood Capital Management, L.L.C., and its affiliates disclosed in a Schedule 13G filed with the U.s. Securities and Exchange Commission that as of Dec. 31, 2013, they beneficially owned 1,376,129 shares of common stock of Atlantic Coast Financial Corporation representing 8.87 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/13yiaO About Atlantic Coast Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. The Company incurred a net loss of $11.40 million in 2013, a net loss of $6.66 million in 2012 and a net loss of $10.28 million in 2011. The Company's balance sheet at Dec. 31, 2013, showed $733.63 million in total assets, $668.10 million in total liabilities and $65.52 million in total stockholders' equity. McGladrey LLP, in Jacksonville, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations that have adversely impacted capital at Atlantic Coast Bank. The failure to comply with the regulatory consent order may result in Atlantic Coast Bank being deemed undercapitalized for purposes of the consent order and additional corrective actions being imposed that could adversely impact the Company's operations. This raises substantial doubt about the Company's ability to continue as a going concern. ATLANTIC COAST: Basswood Stake at 8.8% as of Dec. 31 ---------------------------------------------------- Basswood Capital Management, L.L.C., and its affiliates disclosed in a Schedule 13G filed with the U.s. Securities and Exchange Commission that as of Dec. 31, 2013, they beneficially owned 1,376,129 shares of common stock of Atlantic Coast Financial Corporation representing 8.87 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/13yiaO About Atlantic Coast Jacksonville, Florida-based Atlantic Coast Financial Corporation is the holding company for Atlantic Coast Bank, a federally chartered and insured stock savings bank. It is a community- oriented financial institution serving northeastern Florida and southeastern Georgia markets through 12 locations, with a focus on the Jacksonville metropolitan area. The Company incurred a net loss of $11.40 million in 2013, a net loss of $6.66 million in 2012 and a net loss of $10.28 million in 2011. The Company's balance sheet at Dec. 31, 2013, showed $733.63 million in total assets, $668.10 million in total liabilities and $65.52 million in total stockholders' equity. McGladrey LLP, in Jacksonville, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations that have adversely impacted capital at Atlantic Coast Bank. The failure to comply with the regulatory consent order may result in Atlantic Coast Bank being deemed undercapitalized for purposes of the consent order and additional corrective actions being imposed that could adversely impact the Company's operations. This raises substantial doubt about the Company's ability to continue as a going concern. ATLANTIC INC: Blows Interest Payment, Lands Financing ----------------------------------------------------- Jamie Mason, writing for The Deal, reported that Atlantic Ltd., the parent of Australian mining company Midwest Vanadium Pty Ltd., has received A$32.6 million (US$29.46 million) in new funding after failing to make an interest payment on its $335 million in senior secured notes. According to the report, Perth, Australia-based Atlantic, which produces ferrovanadium, an alloy that is used to strengthen steel, announced on Feb. 19 that its largest shareholder, Droxford International Ltd., had provided it with A$32.6 million in senior secured debt. Terms of the new financing weren't disclosed, but the lender will provide Atlantic with some A$3.6 million immediately, the report related. Just one day earlier, Atlantic announced that it didn't make the $19 million interest payment due on Feb. 15 on its 11.5% senior secured notes that mature on Feb. 15, 2018, the report further related. The company has a 30-day grace period to make up the missed payment. Meanwhile, Atlantic's noteholders have hired Houlihan Lokey Inc. to advise them on a restructuring of the company's debt, sources said, the report added. B-SQUARED INC: Court Rules on Summary Judgment Bid -------------------------------------------------- Bankruptcy Judge Geraldine Mund granted, in part, and denied, in part, B-Squared Inc.'s motion for summary judgment in the lawsuit, B-Squared Inc. Plaintiff(s), v. Great American Assurance Company, Gevork Tashchyan, Aida Tashchyan, Andranik Tashchyan, Defendant(s), Adv. Proc. No 1:09-ap-01192-GM (Bankr. C.D. Cal.). BSI asserts a right to recover insurance policy proceeds as part of the two separate loans it arranged in 2002, each for $765,000, to Gevork Tashchyan, Aida Tashchyan and Andranik Tashchyan for the construction of two single family homes at 322 and 326 Bell Canyon Blvd. A copy of the Court's Feb. 19 Memorandum of Opinion is available at http://is.gd/HqtZMKfrom Leagle.com. B-Squared Inc., dba All California Funding and ACF Reconveyance, based in Sherman Oaks, California, filed for Chapter 11 bankruptcy (Bankr. C.D. Cal. Case No. 09-12590) on March 10, 2009. B-Squared was a licensed mortgage broker and its business primarily consisted of arranging and administering mortgage loans funded by individual investors. Upon arranging a loan, BSI would enter into a Loan Servicing Agreement with the lender(s), pursuant to which BSI would administer the loans on behalf of these lenders in exchange for various fees. Judge Geraldine Mund oversees the case. Simon Aron, Esq., at Wolf, Rifkin, Shapiro & Schulman LLP -- saron@wrslawyers.com -- serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. A full-text copy of the Debtor's petition, including a list of its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-12590.pdf The petition was signed by William Schumer, president and CEO of the Company. BANKUNITED FINANCIAL: Tax Sharing Deals Not Yet High Court-Ready ---------------------------------------------------------------- Law360 reported that the U.S. Supreme Court will likely reject BankUnited Financial Corp.'s recent bid for certiorari review of the interpretation of its tax sharing agreement, but tax experts expect a future high court decision on the issue because of the billions of dollars potentially at stake and the strong possibility of a circuit split. According to Law360, the Eleventh Circuit muddied the waters of bank tax refunds in August when it ordered BankUnited to forward refunds from a consolidated tax return to the Federal Deposit Insurance Corp. BankUnited claims the Eleventh Circuit created an illegal $500 million tax controversy when it ordered the company to forward refunds from a consolidated tax return to the Federal Deposit Insurance Corp. as receiver for distribution to its subsidiaries. BankUnited is hoping the high court will review the August decision by the Eleventh Circuit, which reversed a Florida bankruptcy court's decision to allow BankUnited to keep the refunds as assets for its bankruptcy estate. About BankUnited Financial BankUnited Financial Corp. (OTC Ticker Symbol: BKUNQ) -- http://www.bankunited.com/-- was the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed by regulators and the Federal Deposit Insurance Corporation facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors that include W.L. Ross & Co., Blackstone Group, Carlyle and Centerbridge. The new owners installed Mr. Kanas as CEO and he sought to revamp BankUnited as a commercial lender in south Florida. BankUnited Financial and its affiliates filed for Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 09-19940) on May 22, 2009. Stephen P. Drobny, Esq., and Peter Levitt, Esq., at Shutts & Bowen LLP; Mark D. Bloom, Esq., and Scott M. Grossman, Esq., at Greenberg Traurig, LLP; and Michael C. Sontag, at Camner, Lipsitz, P.A., represent the Debtors as counsel. Corali Lopez-Castro, Esq., David Samole, Esq., at Kozyak Tropin & Throckmorton, P.A.; and Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, serve as counsel to the official committee of unsecured creditors. The banking unit had assets of $12.8 billion and deposits of $8.6 billion as of May 2, 2009. The holding company, in its bankruptcy petition, disclosed $37,729,520 in assets against $559,740,185 in debts. Aside from those assets, BankUnited said a "valuable" asset is its $3.6 billion net operating loss carryforward. Wilmington Trust Co., U.S. Bank, N.A., and the Bank of New York were listed among the company's largest unsecured creditors in their roles as trustees for security issues. BankUnited estimated the Bank of New York claim tied to convertible securities at $184 million. U.S. Bank and Wilmington Trust are owed $120 million and $118.171 million on account of senior notes. The Fourth Amended Joint Plan of Liquidation proposed by the Official Committee of Unsecured Creditors of BankUnited Financial became effective on March 9, 2012. BERNARD L. MADOFF: Defendants Ask to Consolidate on Common Issues ----------------------------------------------------------------- Law360 reported that a New York bankruptcy judge heard bids to consolidate arguments and briefing from defendants the Bernard L. Madoff Investment Securities LLC liquidating trustee has accused of improperly receiving funds through Madoff's Ponzi scheme, but appeared reluctant to grant the request. According to the report, though trustee Irving Picard has targeted thousands of beneficiaries of the scheme in individual avoidance actions, U.S. Bankruptcy Judge Stuart M. Bernstein discussed at a court hearing the consolidation of the briefing for so many cases. 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 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: "Corporate Psychopath" Defense Challenged ------------------------------------------------------------ Erik Larson, writing for Bloomberg News, reported that a former Bernard Madoff executive on trial for aiding his $17 billion Ponzi scheme should be barred from calling a witness on "corporate psychopaths" to claim he was relentlessly manipulated, prosecutors said. According to the report, Paul Babiak, described by a defense lawyer as "one of the world's leading experts on corporate psychopaths," shouldn't be allowed to testify for Daniel Bonventre, the ex-operations chief of Madoff's broker-dealer unit, because he's never met Madoff or diagnosed him, Assistant U.S. Attorney Matthew Schwartz said in a filing in Manhattan federal court. Babiak, an author and licensed psychologist, can't "reliably diagnose Mr. Madoff as a psychopath and testify about his skills in manipulating those around him on the basis of news reports and YouTube videos," Schwartz wrote, the report cited. The trial of Bonventre and four of his former colleagues is the first stemming from the swindle, which collapsed after Madoff's arrest in December 2008, the report related. Madoff, 75, is serving a 150-year sentence in a federal prison in North Carolina after pleading guilty in 2009 to the unprecedented fraud. Prosecutors began presenting testimony by industry experts, Madoff's accomplices and his former clerical staff in October, the report said. 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 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. BIOLIFE SOLUTIONS: Incurs $1.1 Million Net Loss in 2013 ------------------------------------------------------- BioLife Solutions, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $1.08 million on $8.94 million of total revenue for teh year ended Dec. 31, 2013, as compared with a net loss of $1.65 million on $5.66 million of total revenue during the prior year. As of Dec. 31, 2013, the Company had $3.35 million in total assets, $16.62 million in total liabilities and a $13.27 million total shareholders' deficit. At Dec. 31, 2013, the Company had cash and cash equivalents of $156,273 compared to cash and cash equivalents of $196,478 at Dec. 31, 2012. Mike Rice, BioLife's president & CEO, commented on the Company's performance by stating, "2013 was another strong year for BioLife. Our team delivered on every meaningful metric including shareholder value, revenue growth, reducing operating losses and increased product adoption in the high growth regenerative medicine market. We also filed an application to uplist to the NASDAQ Capital Market." A copy of the Form 10-K is available for free at: http://is.gd/whWyRS Note Conversion Agreements As previously disclosed, on Dec. 16, 2013, BioLife Solutions entered into note conversion agreements with each of Thomas Girschweiler and Walter Villiger. Mr. Girschweiler is a director of the Company and holds approximately 20 percent of the Company's issued and outstanding common stock as of Feb. 12, 2014. Mr. Villiger holds approximately 27 percent of the Company's issued and outstanding common stock as of Feb. 12, 2014. On Feb. 11, 2014, Mr. Girschweiler transferred to Taurus4757 GmbH (an entity wholly-owned by Mr. Girschweiler) and Mr. Villiger transferred to WAVI Holding AG (an entity wholly-owned by Mr. Villiger), pursuant to an assignment and amendment agreement between the Company and each respective Investor and transferee, all of their rights and obligations under the Investor's respective Note, the Facility Agreement and respective Note Conversion Agreement. The Investors have advised the Company that the transfers were effected for tax structuring purposes. The Amendments did not change the Investors' beneficial ownership of the Notes and the other Note Documents, nor did they affect the terms of conversion set forth in the Note Conversion Agreements. On Jan. 11, 2008, the Company issued to each of the Investors a promissory note in the original principal amount of $2,500,000, which was subsequently amended Oct. 20, 2008, Dec. 16, 2009, Nov. 16, 2010, Aug. 10, 2011, and May 30, 2012, in connection with that certain Secured Multi-Draw Term Loan Facility Agreement dated as of Jan. 11, 2008, by and among the Company and the Investors, which was subsequently amended. As of Feb. 12, 2014, the aggregate outstanding principal balance on the Notes was approximately $10,600,000. The Notes are due and payable, together with accrued interest, on the earlier of (i) Jan. 11, 2016, or (ii) an Event of Default. Pursuant to the Note Conversion Agreements, the conversion of the Notes will be effected on substantially similar terms and in connection with the Company's next offer and sale of its equity for cash. The entire outstanding indebtedness of the Notes, including all accrued and unpaid interest through the date of conversion, will convert into substantially identical securities of the Company issued in the Qualified Financing, at a conversion price equal to the per security offering price in the Qualified Financing in consideration for the cancellation by the Investors of the entire principal amount of indebtedness and accrued interest thereon, and the release of all related security interests. About BioLife Solutions Bothell, Washington-based BioLife Solutions, Inc., develops and markets patented hypothermic storage and cryo-preservation solutions for cells, tissues, and organs, and provides contracted research and development and consulting services related to optimization of biopreservation processes and protocols. BIOMODA INC: Going Private With $750,000 Under Chapter 11 Plan -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Biomoda Inc., the developer of a non-invasive method to detect lung cancer, landed a $750,000 equity investment to fund a Chapter 11 plan. According to the report, the U.S. Bankruptcy Court in Albuquerque, New Mexico, approved disclosure materials on Feb. 10 and scheduled a March 6 confirmation hearing for approval the plan. Secured lenders owed $1.5 million will receive some of the new stock in exchange for their claims, the report said. Unsecured creditors are to get 10 percent of their $1.9 million in claims in cash. Twenty percent of the new stock is carved out for an employee incentive program. When the plan goes into effect, Biomoda will become a private company, the Bloomberg report added. Biomoda Inc., the developer of a non-invasive method to detect lung cancer, filed a petition for Chapter 11 reorganization (Bankr. D. N.M. Case No. 13-bk-13768) on Nov. 20, 2013, in its hometown of Albuquerque, New Mexico. Biomoda's product, called CyPath, is still in the testing stage and the company has yet to generate income. The petition listed assets of $653,000 and debt totaling $3.3 million, including a $1.5 million secured claim with liens on the assets and patents. Biomoda has an agreement for the lenders to assume ownership in exchange for debt. BIONOL CLEARFIELD: TD, WestLB Dodge Oppenheimer's Credit Deal Suit ------------------------------------------------------------------ Law360 reported that TD Bank NA and German bank WestLB AG escaped OppenheimerFunds Inc.'s suit claiming it stands to lose $65 million after the banks altered a credit agreement related to an investment in a failed ethanol plant, with a New York judge ruling the investment manager lacked standing. According to the report, at issue is an agreement in which OppenheimerFunds stipulated it would purchase $65 million worth of bonds issued by Bionol Clearfield LLC, an ethanol plant that was being built in Clearfield, Pa. Bionol Clearfield filed for Chapter 7 liquidation (Bankr. D. Del. Case No. 11-12301) in July 2011. The Company estimated assets between $50 million and $100 million and liabilities between $100 million and $500 million. The Company owned a plant that produces bio-based chemicals and fuels from renewable feedstock. BLITZ USA: Deadline to Remove Pending Actions Extended to July 25 ----------------------------------------------------------------- At the behest of Blitz U.S.A. Inc., the U.S. Bankruptcy Court extended the Debtors' time to file notices of removal of civil actions to which the Debtors are or may become parties through and including July 25, 2014. The extension is without prejudice to the Debtor's rights to file one or more motions seeking a further extension of their time to file notices of removal. About Blitz U.S.A. Blitz U.S.A. Inc., is a Miami, Oklahoma-based manufacturer of plastic gasoline cans. The company, controlled by Kinderhook Capital Fund II LP, filed for bankruptcy protection to stanch a hemorrhage resulting from 36 product-liability lawsuits. Parent Blitz Acquisition Holdings, Inc., and its affiliates filed for Chapter 11 protection (Bankr. D. Del. Case Nos. 11-13602 thru 11-13607) on Nov. 9, 2011. The Hon. Peter J. Walsh presides over the case. Blitz USA disclosed $36,194,434 in assets and $41,428,577 in liabilities in its schedules. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, represents the Debtors in their restructuring efforts. Young Conaway Stargatt & Taylor LLP represents Debtors LAM 2011 Holdings, LLC and Blitz Holdings, Inc. The Debtors tapped Zolfo Cooper, LLC, as restructuring advisor; and Kurtzman Carson Consultants LLC serves as notice and claims agent. SSG Capital Advisors LLC serves as investment banker. Elliott Greenleaf is Delaware's special litigation and conflicts counsel. Lowenstein Sandler PC from Roseland, New Jersey, as well as Womble Carlyle Sandridge & Rice, LLP, of Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. The Chapter 11 case is financed with a $5 million secured loan from Bank of Oklahoma. Bank of Oklahoma, as DIP agent, is represented by Samuel S. Ory, Esq., at Frederic Dorwart Lawyers in Tulsa. In April 2012, Hopkins Manufacturing Corp. acquired the assets of Blitz USA's unit, F3 Brands LLC, a major manufacturer of oil drains, drain pans, lifting aids and automotive ramps. Blitz USA said in court documents the sale netted the Debtors $14.6 million, which was applied against secured debt. Blitz announced in June 2012 it would abandon its efforts to reorganize and instead to shut down operations by the end of July. In September that year, the Troubled Company Reporter, citing Sheila Stogsdill at Tulsa World, reported that the Bankruptcy Court approved a $9.5 million offer from Toronto, Canada-based Scepter Corporation to purchase Blitz USA, according to Philip Monckton, Scepter's vice president of sales and marketing. Scepter bought land, equipment and other assets. Scepter supplies about 20% of the USA market with gas cans. The report said the sale was to become final on Sept. 28, 2012. The Bankruptcy Court on Jan. 30, 2014, entered Findings of Fact, Conclusions of Law and Order Confirming Debtors' and Official Committee of Unsecured Creditors' First Amended Joint Plan of Liquidation. The Plan contemplates the separate substantive consolidation of the USA Debtors and the BAH Debtors. The USA Debtors are comprised of: (1) Blitz Acquisition, LLC; (2) Blitz U.S.A., Inc.; (3) MiamiOK, LLC (f/k/a F3 Brands, LLC); and (4) Blitz RE Holdings, LLC. The BAH Debtors are comprised of: (1) Blitz Acquisition Holdings, Inc.; and (2) LAM 2011 Holdings, LLC. The Plan establishes two trusts pursuant to section 105 of the Bankruptcy Code: (i) a Blitz Personal Injury Trust that is responsible for administration and payment of Blitz Personal Injury Trust Claims; and (ii) a Blitz Liquidating Trust for the benefit of Administrative Claims and General Unsecured Claims of the USA Debtors. As for the BAH Debtors, the Plan contemplates the appointment of the BAH Plan Administrator who will have the responsibility of liquidating all assets of the BAH Debtors and making distributions to holders of Allowed Claims against the BAH Debtors (other than the holders of Blitz Personal Injury Trust Claims). The Blitz Personal Injury Trust will be funded with roughly $162 million in funds contributed by Wal-Mart and the Participating Insurers, along with certain assigned insurance policies. Specifically, Wal-Mart will contribute roughly $23.8 million (plus waiving its rights to payment under the Participating Insurer Policies and Assigned Blitz Insurance Policies) and the Participating Insurers will contribute roughly $137.5 million. The Blitz Liquidating Trust will liquidate and make distributions for administrative claims and general unsecured claims. The Liquidating Trust is funded through (i) payment of $6.25 million by the BAH Released Parties, and (ii) Wal-Mart's release of account payables in the amount of $1.54 million that are secured by Wal-Mart's right of setoff. The Plan further provides for the contribution of the Assigned Insurance Policies to the Blitz Liquidating Trust as a source of recovery for Pre-2007 Blitz Personal Injury Claims. BON-TON STORES: J. Berylson Held 4.6% Equity Stake at Dec . 31 -------------------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Berylson Master Fund, LP, Berylson Capital Partners, LLC, and James Berylson disclosed that as of Dec. 31, 2013, they beneficially owned 805,577 common shares of The Bon-Ton Stores, Inc., representing 4.6 percent of the shares outstanding. The reporting persons previously disclosed beneficial ownership of 933,163 shares as of Sept. 6, 2013. A copy of the regulatory filing is available for free at http://is.gd/jKDHiv About Bon-Ton Stores The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 273 department stores, which includes 10 furniture galleries, in 25 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate. For the 39 weeks ended Nov. 2, 2013, the Company reported a net loss of $64.89 million. The Company incurred a net loss of $21.55 million for the year ended Feb. 2, 2013, following a net loss of $12.12 million for the year ended Jan. 28, 2012. The Company's balance sheet at Nov. 2, 2013, showed $1.80 billion in total assets, $1.75 billion in total liabilities and $48.87 million in total shareholders' equity. * * * As reported by the TCR on May 15, 2013, Moody's Investors Service upgraded The Bon-Ton Stores, Inc.'s Corporate Family Rating to B3 from Caa1 and its Probability of Default Rating to B3-PD from Caa1-PD. "The upgrade of Bon-Ton's Corporate Family Rating considers the company's ability to drive modest same store sales growth as well as operating margin expansion beginning in the second half of 2012 and that these positive trends have continued, with the company reporting that its same store were positive, and EBITDA margins expanded, in the first fiscal quarter of 2013," said Moody's Vice President Scott Tuhy. As reported by the TCR on May 17, 2013, Standard & Poor's Ratings Services affirmed the 'B-' corporate credit rating on The Bon-Ton Stores Inc. BROOKSTONE CO: Grace Period on Missed Payments Was Feb. 15 ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Brookstone Co., a 265-store specialty retailer, missed an interest payment that was due Jan. 15 on $125.6 million in 13 percent second-lien notes. The grace period expired on Feb. 15. Brookstone was acquired in 2005 by a Singapore-led group including Osim International Ltd. and state-owned Temasek Holdings Pte, the report said. BROWN MEDICAL: Lease Decision Period Extended Through May 13 ------------------------------------------------------------ Elizabeth M. Guffy, the chapter 11 trustee of Brown Medical Center, Inc., sought and obtained an extension of the time period to assume or reject unexpired nonresidential real property leases to the earlier of (i) May 13, 2014; or (ii) the date of the entry of an order confirming a plan in these cases. The Chapter 11 Trustee said sufficient cause exists for the requested extension because she is moving in an "expeditious fashion" toward confirming a plan of liquidation. With respect to the remaining real property leases, the Trustee said she is either paying post-petition rent or in the process of negotiating an agreed lease rejection. The Trustee expects to reject all unnecessary real property leases prior to the end of the 120-day period or shortly thereafter. The Trustee believes no party will be prejudiced by the requested extension. Counsel to Elizabeth M. Guffy can be reached at: Joshua W. Wolfshohl, Esq. Aaron J. Power, Esq. PORTER HEDGES LLP 1000 Main Street, 36th Floor Houston, TX 77002 Tel: (713) 226-6000 Fax: (713) 228-1331 About Brown Medical Houston, Texas-based Brown Medical Center, Inc., is a management company that historically served as the epicenter of the operating business enterprise directly or indirectly owned or controlled by Michael Glyn Brown, including six surgery centers and related facilities. The Company sought protection under Chapter 11 of the Bankruptcy Code on Oct. 15, 2013 (Case No. 13-36405, Bankr. S.D.Tex.). The case is assigned to Judge Marvin Isgur. Brown Medical Center is represented by Spencer D. Solomon, Esq., at Nathan Sommers Jacobs, P.C., in Houston, Texas. In November 2013, the Bankruptcy Court approved the appointment of Elizabeth M. Guffy as Chapter 11 trustee. The trustee hired Porter Hedges LLP, led by Joshua W. Wolfshohl, Esq., John F. Higgins, Esq., and James Matthew Vaughn, Esq., Nick D. Nicholas, Esq., J. Patrick LaRue, Esq., and Craig M. Bergez, as counsel. The trustee tapped The Claro Group, LLC, as financial advisor and consultant. In its schedules, Brown Medical listed $13,807,746 in assets and $27,716,168 in liabilities. Brown Medical owes Crown Financial Funding LP, the primary secured creditor, pursuant to a pre- bankruptcy promissory note in the original principal amount of $2 million, which indebtedness is secured by a security agreement from Allied Center for Special Surgery, Scottsdale, LLC covering accounts and accounts receivable which the Debtor has the right to collect. BROWN MEDICAL: Claro Group Approved as Ch.11 Trustee Fin'l Advisor ------------------------------------------------------------------ The Hon. Jeff Bohm of the U.S. Bankruptcy Court for the Southern District of Texas authorized Elizabeth M. Guffy, the Chapter 11 trustee of Brown Medical Center, Inc., to employ The Claro Group, LLC, as financial advisor and consultant to the Trustee. As reported in the Troubled Company Reporter on Nov. 22, 2013, the Trustee requires Claro Group to: (a) analyze the cash position and cash needs of the Debtor and all related entities and businesses; (b) analyze claims against assets held by the Debtor and all related entities and businesses; (c) provide technical and analytical support with regard to the abandonment, return or liquidation of the Debtor's assets; (d) provide technical and analytical support in connection with the reconciliation and collection of pre and post petition Accounts Receivable; (e) provide technical and analytical support in connection with the preparation or amendment of the Debtor's Schedules and Statement of Financial Affairs and for any related entities or businesses, if necessary; (f) prepare operating reports and financial statements; (g) provide forensic accounting and litigation support services to the Trustee and, if requested, the Trustee's counsel; (h) provide forensic data preservation and data analytics; (i) provide a cash management system to control cash deposits; (j) provide assistance to the Trustee and counsel in reviewing and evaluating the collectability of medical insurance and Medicare and Medicaid accounts receivable; (k) provide advice, assistance and analytical support for the Trustee's process for the sale of the assets of the estate, including, but not limited to, the clinics, labs, surgical centers, equipment, real property, furniture and fixtures, contracts and licenses; (l) analyze employee payroll information; and (m) provide such other services as may be required by the Trustee. Claro Group will also be reimbursed for reasonable out-of-pocket expenses incurred. Douglas J. Brickley, managing director of Claro Group, 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. Claro Group can be reached at: Douglas J. Brickley THE CLARO GROUP, LLC 1221 McKinney Street, Ste 2850 Houston, TX 77010 Tel: (713) 454-7741 E-mail: dbrickley@theclarogroup.com About Brown Medical Houston, Texas-based Brown Medical Center, Inc., is a management company that historically served as the epicenter of the operating business enterprise directly or indirectly owned or controlled by Michael Glyn Brown, including six surgery centers and related facilities. The Company sought protection under Chapter 11 of the Bankruptcy Code on Oct. 15, 2013 (Case No. 13-36405, Bankr. S.D.Tex.). The case is assigned to Judge Marvin Isgur. Brown Medical Center is represented by Spencer D. Solomon, Esq., at Nathan Sommers Jacobs, P.C., in Houston, Texas. In November 2013, the Bankruptcy Court approved the appointment of Elizabeth M. Guffy as Chapter 11 trustee. The trustee hired Porter Hedges LLP, led by Joshua W. Wolfshohl, Esq., John F. Higgins, Esq., and James Matthew Vaughn, Esq., Nick D. Nicholas, Esq., J. Patrick LaRue, Esq., and Craig M. Bergez, as counsel. The trustee tapped The Claro Group, LLC, as financial advisor and consultant. In its schedules, Brown Medical listed $13,807,746 in assets and $27,716,168 in liabilities. Brown Medical owes Crown Financial Funding LP, the primary secured creditor, pursuant to a pre- bankruptcy promissory note in the original principal amount of $2 million, which indebtedness is secured by a security agreement from Allied Center for Special Surgery, Scottsdale, LLC covering accounts and accounts receivable which the Debtor has the right to collect. BROWN MEDICAL: Crown Files Suit to Determine Validity of Liens -------------------------------------------------------------- Crown Financial Funding, LP, has filed with the U.S. Bankruptcy Court for the Southern District of Texas an adversary proceeding to determine the validity, amount and priority of liens and to request for declaratory judgment against Elizabeth Guffy, the Chapter 11 trustee for Brown Medical Center, Inc., et al., and Northstar Acquisitions, LLC. In the complaint filed Jan. 24, Crown argues it holds a valid and perfected lien against the assets of the Debtors, which lien attaches to the proceeds from any sale of assets secured by Crown's lien including, but not limited to the future sale of any equipment of BMC located at 3726 Dacoma Houston, Texas, which lien fully secures the principal amount of BMC's indebtedness to Crown, interest thereon and reasonable attorneys' fees. Crown requested that the Court issue an order that any San Antonio Equipment alleged to be owned by Northstar Acquisitions, LLC, is not owned by Northstar and is subject to Crown's claim. About Brown Medical Houston, Texas-based Brown Medical Center, Inc., is a management company that historically served as the epicenter of the operating business enterprise directly or indirectly owned or controlled by Michael Glyn Brown, including six surgery centers and related facilities. The Company sought protection under Chapter 11 of the Bankruptcy Code on Oct. 15, 2013 (Case No. 13-36405, Bankr. S.D.Tex.). The case is assigned to Judge Marvin Isgur. Brown Medical Center is represented by Spencer D. Solomon, Esq., at Nathan Sommers Jacobs, P.C., in Houston, Texas. In November 2013, the Bankruptcy Court approved the appointment of Elizabeth M. Guffy as Chapter 11 trustee. The trustee hired Porter Hedges LLP, led by Joshua W. Wolfshohl, Esq., John F. Higgins, Esq., and James Matthew Vaughn, Esq., Nick D. Nicholas, Esq., J. Patrick LaRue, Esq., and Craig M. Bergez, as counsel. The trustee tapped The Claro Group, LLC, as financial advisor and consultant. In its schedules, Brown Medical listed $13,807,746 in assets and $27,716,168 in liabilities. Brown Medical owes Crown Financial Funding LP, the primary secured creditor, pursuant to a pre- bankruptcy promissory note in the original principal amount of $2 million, which indebtedness is secured by a security agreement from Allied Center for Special Surgery, Scottsdale, LLC covering accounts and accounts receivable which the Debtor has the right to collect. BROWN MEDICAL: Sale of Arizona, Austin and Dallas Assets Closed --------------------------------------------------------------- Elizabeth Guffy, the Chapter 11 trustee for Brown Medical Center, Inc., et al., filed papers with the Bankruptcy Court to disclose that the sale of: -- the Debtor's equipment located at its Scottsdale, Arizona surgical center to Northstar Acquisitions closed Dec. 23, 2013; -- all of the equipment owned by the Debtor located at the Debtor's surgical center located at Austin Texas, and any rights the Debtor has in licenses related to the operation of the Austin Surgical Center closed on Dec. 20, 2013; and -- the Debtor's interest in a real property lease and owned and lead equipment located in Bedford, Texas, closed on Dec. 31, 2013. Sale of Arizona Assets On Dec. 18, 2013, the Bankruptcy Court authorized the Chapter 11 trustee to sell the Arizona Assets. The trustee said it has made all cure, buy out and other payments required by the sale orders. Northstar and Central Palm Beach Physicians & Urgent Care, Inc., participated in the auction. Northstar's final bid was in the amount of $460,000. Central Palm's final bid was in the amount of $455,000. The Chapter 11 trustee considered both bids well as the fact that, if not selected as the highest and best offer, Northstar would be entitled to a break-up fee of up to $12,500. The trustee concluded that Northstar's bid of $460,000 is the highest and best bid and that Central Palm's bid of $455,000 is the back-up bid. The Chapter 11 trustee also informed the Court that secured parties' interests are being adequately protected because their liens, claims, interests, and encumbrances will attach to the sale proceeds. The Chapter 11 Trustee said that at closing she will pay OneSource Financial Corporation the amount of $7,500 to purchase all equipment currently leased under the Master Lease Agreement, ML- 0701, dated June 15, 2007, as modified. The assets purchased from OneSource Financial will be part of the Arizona Assets sold to the purchaser pursuant to the order and the asset purchase agreement. Once OneSource Financial receives $7,500 at closing, it will have no further claims against the Debtor's estate. Sale of Austin Assets On Dec. 18, 2013, the Court entered authorized the Chapter 11 trustee to sell the Austin Assets to Crown Financial, L.L.C. The trustee has made all cure, buy out and other payments required by the sale orders. As consideration for the Austin Assets, Crown Financial will (i) assume any and all obligations of the Debtor to First National Bank of Eagle Lake and take the Austin Assets subject to any related liens; (ii) make payment to Farnam Street Financial, Inc.; (iii) assume any and all obligations of the Debtor concerning the Austin Surgical Center location' and (iv) pay $50,000 to the estate. Crown will pay $43,992 to purchase all equipment located at the Austin Surgical Center and leased by the Debtor from Farnam Street Financial Inc. The Farnam Austin Equipment will be part of the Austin assets sold to Crown. The assets will remain subject to any and all rights held by secured creditors, lessors and governmental entities, including existing liens, claims and encumbrances filed of record with the Texas Secretary of State. Eastbourne MoPac LLC, the landlord of the Debtor's former location in Austin, Texas, objected to the Austin sale, saying it must be made clear that the Chapter 11 trustee has no leasehold rights that can be purchased by Renova Hand Centers, LLC, the stalking horse bidder with respect to the Debtor's former location in Austin pursuant to a letter of intent dated Nov. 21, 2013, or any other party. Eastbourne said the only property the Chapter 11 trustee has a right to sell with respect to the premises is the furniture, fixture and equipment. Pursuant to a stipulation between Eastbourne and the Chapter 11 trustee on Nov. 18, 2013, lease was terminated prior to the petition date. Sale of Dallas Assets On Dec. 18, 2013, the Court approved the sale of Dallas Assets to Elite Ambulatory Surgery Centers, LLC, for $1,550,000. The trustee has made all cure, buy out and other payments required by the sale orders. The Claro Group, LLC, as financial advisor and consultant marketed the asset. On Dec. 12, 2013, the Chapter 11 trustee conducted an auction before the Court for the Debtor's interests in a real property lease and owned and leased equipment located in Bedford, Texas. Northstar Acquisitions, LLC, Central Palm Beach Physicians & Urgent Care, Inc., and Elite participated in the auction. Elite's final bid was in the amount of $1,550,000. Northstar's final bid was in the amount of $1,525,000. The trustee considered both bids as well as the fact that if not selected as the highest and best offer, Northstar would be entitled to a break-up fee of up to $12,500. The trustee concluded that Elite's bid of $1,550,000 is the highest and best bid and that Northstar's bid of $1,525,000 is the back-up bid. At closing, the Chapter 11 trustee will pay Farnam Street Financial, Inc., the amount of $14,561 to purchase from Farnam all equipment located at 1605 Airport Freeway, Bedford, Texas and leased under that certain Lease Agreement, BR052410-0001, dated May 28, 2010, as modified. The Farnam Equipment will be part of the Dallas Assets sold to the purchaser pursuant to the order and the asset purchase agreement. SS Realty, LLC, as successor by assignment to 1605 Airport Freeway, LLC, landlord of the real property located at 1605 Airport Freeway, in Bedford, filed a limited objection to the Chapter 11 trustee's expedited motion to approve the sale. SS Realty argued that the asset purchase agreement provides that the Dallas Lease will be assigned from BMC to Elite. However, the APA specifically excludes liability or obligation to SS Realty to cure any and all defaults under the Dallas Lease that are required to be cured under the Bankruptcy Code. It said the cure amount for the Dallas Lease is $322,011 Surgeo's Management, now known as Brown Medical Center., Inc., entered into a real restate lease agreement with SS Realty regarding the real property located at 1605 Airport Freeway. About Brown Medical Houston, Texas-based Brown Medical Center, Inc., is a management company that historically served as the epicenter of the operating business enterprise directly or indirectly owned or controlled by Michael Glyn Brown, including six surgery centers and related facilities. The Company sought protection under Chapter 11 of the Bankruptcy Code on Oct. 15, 2013 (Case No. 13-36405, Bankr. S.D.Tex.). The case is assigned to Judge Marvin Isgur. Brown Medical Center is represented by Spencer D. Solomon, Esq., at Nathan Sommers Jacobs, P.C., in Houston, Texas. In November 2013, the Bankruptcy Court approved the appointment of Elizabeth M. Guffy as Chapter 11 trustee. The trustee hired Porter Hedges LLP, led by Joshua W. Wolfshohl, Esq., John F. Higgins, Esq., and James Matthew Vaughn, Esq., Nick D. Nicholas, Esq., J. Patrick LaRue, Esq., and Craig M. Bergez, as counsel. The trustee tapped The Claro Group, LLC, as financial advisor and consultant. In its schedules, Brown Medical listed $13,807,746 in assets and $27,716,168 in liabilities. Brown Medical owes Crown Financial Funding LP, the primary secured creditor, pursuant to a pre- bankruptcy promissory note in the original principal amount of $2 million, which indebtedness is secured by a security agreement from Allied Center for Special Surgery, Scottsdale, LLC covering accounts and accounts receivable which the Debtor has the right to collect. BROWN PUBLISHING: E.D.N.Y. Court Rules on KLG Gates Appeal ---------------------------------------------------------- KLG Gates LLP took an appeal from the orders of the United States Bankruptcy Court, Eastern District of New York (Eisenberg, J.), entered on April 29, 2013 and July 8, 2013, that disqualified KLG as counsel to (1) the Brown Publishing Company and Brown Media Holdings Company; and (2) the Brown Publishing Company Liquidating Trust; and that ordered KLG to disgorge $100,000 of previously approved and paid fees. The Bankruptcy Court disqualified KLG based on its conclusions that (1) an implied pre-petition attorney-client relationship existed between KLG and certain of the Debtors' managers and (2) KLG's 2010 Statement pursuant to Federal Rule of Bankruptcy Procedure failed to adequately inform the Court of its relationship with those managers, certain creditors of the Debtors, and other parties in interest. In a Feb. 18, 2014 Memorandum of Decision and Order available at http://is.gd/ZzojLkfrom Leagle.com, District Judge Arthur D. Spatt held that the appeal is granted, in part, and denied, in part. "[T]he Court finds that Brown's delay in bringing the Disqualification Motion constituted a waiver of his right to contest the alleged conflict of interest between KLG and the Brown Insiders. The Court further finds that the Bankruptcy Court (1) properly found that KLG failed to provide sufficient detail in its Rule 2014 Statement with respect to Fox's prior relationships with PNC and Wilmington and (2) improperly considered Fox's prior relationships with Levy and Carlson," Judge Spatt said. "At this juncture of the litigation, the Court declines to uphold the disqualification of KLG in the first instance on the basis of its failure to sufficiently disclose Fox's prior relationships with PNC and Wilmington. . . . "On remand, the Bankruptcy Court should consider in the first instance whether disqualification remains appropriate on the basis of KLG's failure to disclose Fox's relationship with PNC and Wilmington. "[I]t is hereby ORDERED, that Brown's appeal is granted in part, denied in part, and remanded to the Bankruptcy Court for further findings consistent with this Order, namely whether disqualification remains appropriate on the basis of KLG's failure to disclose Fox's relationship with PNC and Wilmington. The Clerk of the Court is directed to close this case." The appellate case is, KLG GATES LLP, Appellant, v. ROY E. BROWN, Appellee, No. 13-cv-4972 (ADS) (E.D.N.Y.). Anthony C. Acampora, Esq., at Silverman, Acampora LLP, in Jericho, NY, represents the Appellant. Daniel L. Abrams, Esq., at the Law Office of Daniel L. Abrams, PLLC, in New York, NY, represents the Appellee. About Brown Publishing The Brown Publishing Company, Brown Media Holdings Company and their subsidiaries filed for Chapter 11 bankruptcy (Bankr. E.D.N.Y. Lead Case No. 10-73295) on April 30, 2010 and May 1, 2010. BPC estimated $10 million to $50 million in assets and debts in its Chapter 11 petition. Edward M. Fox, Esq., and Eric T. Moser, Esq., at K&L Gates LLP, served as counsel for the Debtors. BPC is a privately held community news and information corporation, organized under the laws of the State of Ohio that, prior to the sale of its assets, had been one of the largest newspaper publishers in Ohio, and also operated publications in Illinois, South Carolina, Texas and Utah. Roy E. Brown, former CEO, shareholder, and director of each of the debtors, and other insiders of the Debtors formed Brown Media Corporation to acquire the assets and serve as stalking horse bidder. BMC offered a stalking horse bid of $15.3 million cash plus additional consideration. The auction commenced July 19, 2010 and lasted into the early morning hours of July 20. With the exception of certain assets of the Debtors located in Van Wert, Ada and Putnam, Ohio that were sold to Delphos Herald, Inc., BMC was the successful bidder with respect to substantially all of the Debtors's remaining assets after making the highest and best offer for $22.4 million cash plus additional consideration. PNC Bank, N.A., a secured creditor of the Debtors, was the next successful bidder after BMC. BMC, however, lost financing and failed to close on the sale. The insiders had obtained a commitment from Guggenheim Corporate Funding, LLC and/or one of its affiliates for financing. Subsequently, the Court approved the asset purchase agreements for the sale of the Debtors' assets to PNC's assignee, Ohio Community Media LLC, and to ISIS Ventures Partners LLC pursuant to orders dated Sept. 3, 2010. ISIS formed Dan's Papers Holdings LLC to purchase the assets of one of the Debtors, Dan's Papers, for $1,750,000. PNC agreed to pay $21,750,000 for substantially all of the Debtors remaining assets. The total purchase price tendered for the Debtors' assets, including cash and debt forgiveness, was about $27.09 million. On June 16, 2011, the Court entered an order confirming the Debtors' chapter 11 plan which provided that any remaining assets of the Debtors' bankruptcy estate that were not sold pursuant to the Auction Sale, including all claims and causes of action, would vest in a trust. C.H.I. OVERHEAD: S&P Affirms 'B' CCR; Outlook Stable ---------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B' corporate credit rating on C.H.I. Overhead Doors Inc. The outlook is stable. At the same time, S&P affirmed its 'B' issue-level rating on C.H.I.'s senior secured first-lien credit facilities. S&P's recovery rating on the senior secured first-lien credit facilities remains '4', indicating its expectation for average (30% to 50%) recovery under our default scenario. "The stable rating outlook reflects our expectation that C.H.I.'s 2014 operating results will modestly improve from 2013 given gradual increases in repair and remodeling spending. As a result, we expect C.H.I. to continue to generate positive free cash flow, with leverage of about 5x-5.5x by the end of 2014, a level we consider in line with the current rating," said Standard & Poor's credit analyst Tobias Crabtree. S&P's operating assumptions include modest sales growth and stable EBITDA margins. The outlook also incorporates S&P's view that the company's liquidity, primarily from FFO and availability on its revolving credit facility, will remain adequate and that its covenant cushion will be at least 20% over the next 12 to 18 months. S&P might downgrade the company if weaker-than-expected operating performance resulted in reduced free cash flow generation, minimal debt repayment, and covenant cushion falling below 10%. EBITDA would have to decline more than 15% from our forecast, which would likely result in leverage of about 6x. At this time, an upgrade seems less likely given the influence of the company's financial sponsor owner on financial policy. S&P anticipates that forecast surplus cash balances would likely be paid out as dividends rather than for permanent debt repayment. CASA GRANDE HOSPITAL: Hires Brownstein Hyatt as Bankr. Counsel -------------------------------------------------------------- Regional Care Services Corp. et al ask the U.S. Bankruptcy Court for permission to employ Brownstein Hyatt Farber Schreck LLP as counsel. Michael J. Pankow attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm, will among other things, provide these services: a. assist in the production of the Debtors' schedules and statement of financial affairs and other pleadings necessary to file its Chapter 11 case; b. assist in the preparation of motions and documents related to the sale of assets under Sec. 363 of the Bankruptcy Code, if necessary; and c. assist in the preparation of the Debtors' plan of reorganization and disclosure statement. The firm's rates are: Professional Rates ------------ ----- Michael J. Pankow $575.00 Joshua M. Hantman $380.00 Michael W. King $515.00 Darryl T. Landahl $515.00 Michael T. Chatwin $365.00 Kinny Bagga $260.00 The firm can be reached at: Michael J. Pankow, Esq. Joshua M. Hantman, Esq. BROWNSTEIN HYATT FARBER SCHRECK, LLP 410 Seventeenth Street, Suite 2200 Denver, CO 80202-4432 Tel: (303) 223-1100 Fax: (303) 223-1111 E-mail: mpankow@bhfs.com jhantman@bhfs.com About Casa Grande Community Hospital Regional Care Services Corp., Casa Grande Community Hospital d/b/a Casa Grande Regional Medical Center, Regional Care Physician's Group, Inc., and Casa Grande Regional Retirement Community sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 14-01383) in Tucson, Arizona, on Feb. 4, 2014. The Debtors, one of the largest employers in Pinal County, operate an award winning, full service non-profit community hospital serving more than 65,000 patients each year from the largely rural communities of Casa Grande, Sacaton, Eloy, Florence and surrounding communities. CGRMC is a 177-licensed bed, general acute care hospital located in Casa Grande, Arizona. RCSC is the sole member and sponsor of CGRMC, RCPG and CGRRC. As of the Petition Date, CGRRC's management consists of Rona Curphy as President, Cherie McGlynn as Chairman, David Fitzgibbons as Vice Chairman, and John Robert McEvoy as Secretary/Treasurer. Michael McGrath, Esq., and Kasey C. Nye, Esq., at Mesch, Clark & Rothschild, P.C., in Tucson, Arizona; and Michael J. Pankow, Esq., and Joshua M. Hantman, Esq., at Brownstein Hyatt Farber Schreck, LLP, in Denver, Colorado, serve as counsel to the Debtor. Casa Grande Hospital estimated $50 million to $100 million in assets and liabilities. CASA GRANDE HOSPITAL: Claims Bar Date Set for April 15 ------------------------------------------------------ Creditors of Regional Care Services Corp. et al. must file their proofs of claim not later than April 15, 2014. Regional Care Services Corp., Casa Grande Community Hospital d/b/a Casa Grande Regional Medical Center, Regional Care Physician's Group, Inc., and Casa Grande Regional Retirement Community sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 14-01383) in Tucson, Arizona, on Feb. 4, 2014. The Debtors, one of the largest employers in Pinal County, operate an award winning, full service non-profit community hospital serving more than 65,000 patients each year from the largely rural communities of Casa Grande, Sacaton, Eloy, Florence and surrounding communities. CGRMC is a 177-licensed bed, general acute care hospital located in Casa Grande, Arizona. RCSC is the sole member and sponsor of CGRMC, RCPG and CGRRC. As of the Petition Date, CGRRC's management consists of Rona Curphy as President, Cherie McGlynn as Chairman, David Fitzgibbons as Vice Chairman, and John Robert McEvoy as Secretary/Treasurer. Michael McGrath, Esq., and Kasey C. Nye, Esq., at Mesch, Clark & Rothschild, P.C., in Tucson, Arizona; and Michael J. Pankow, Esq., and Joshua M. Hantman, Esq., at Brownstein Hyatt Farber Schreck, LLP, in Denver, Colorado, serve as counsel to the Debtor. Casa Grande Hospital estimated $50 million to $100 million in assets and liabilities. CASA GRANDE HOSPITAL: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Regional Care Services Corp. at al filed with the Bankruptcy Court for the District of Arizona its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $480,981 B. Personal Property Undetermined C. Property Claimed as Exempt D. Creditors Holding Secured Claims $699,611 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $318,925 ----------- ----------- TOTAL $480,981 + $1,018,536 Undetermined Regional Care Services Corp., Casa Grande Community Hospital d/b/a Casa Grande Regional Medical Center, Regional Care Physician's Group, Inc., and Casa Grande Regional Retirement Community sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 14-01383) in Tucson, Arizona, on Feb. 4, 2014. The Debtors, one of the largest employers in Pinal County, operate an award winning, full service non-profit community hospital serving more than 65,000 patients each year from the largely rural communities of Casa Grande, Sacaton, Eloy, Florence and surrounding communities. CGRMC is a 177-licensed bed, general acute care hospital located in Casa Grande, Arizona. RCSC is the sole member and sponsor of CGRMC, RCPG and CGRRC. As of the Petition Date, CGRRC's management consists of Rona Curphy as President, Cherie McGlynn as Chairman, David Fitzgibbons as Vice Chairman, and John Robert McEvoy as Secretary/Treasurer. Michael McGrath, Esq., and Kasey C. Nye, Esq., at Mesch, Clark & Rothschild, P.C., in Tucson, Arizona; and Michael J. Pankow, Esq., and Joshua M. Hantman, Esq., at Brownstein Hyatt Farber Schreck, LLP, in Denver, Colorado, serve as counsel to the Debtor. Casa Grande Hospital estimated $50 million to $100 million in assets and liabilities. CENGAGE LEARNING: Photographers Sue to Preserve Copyright Claims ---------------------------------------------------------------- A group of professional photographers filed an adversary complaint against Cengage Learning, Inc., and its debtor affiliates to object to the discharge of their potential copyright infringement claims and to seek a declaration that their potential copyright infringement claims are exempt from discharge in the bankruptcy proceeding. According to the Plaintiffs' counsel, Danial A. Nelson, Esq. -- dnelson@nelsonmcculloch.com -- at Nelson & McCulloch LLP, in New York, the Plaintiffs are the owners of copyrights to hundreds of photographs that were licensed to Cengage both directly and, much more often, indirectly. In obtaining the photographs for uses in their publication, Cengage represented to the Plaintiffs or their agents that it would not make any subsequent uses of the Plaintiffs' photographs without obtaining prior permission and paying agreed-upon license fees. Mr. Nelson says Cengage violated the terms of its licences to use the photos and also re-used the photos in different books and subsequent editions of books without authorization. Cengage's answer to the complaint is due March 17. A Pre-Trial Conference is set for April 3, at 11:00 AM. The Plaintiffs -- Brandon Cole, David Young-Wolff, Laura Dwight, Mark Gibson, Michael Grecco, The Estate of Michael Newman, Greg Probst, Louis Psihoyos, Carl Schneider, Ellen Senisi, William Warren, and Norbert Wu -- are also represented by Kevin P. McCulloch, Esq. -- kmcculloch@nelsonmcculloch.com -- at Nelson & McCulloch LLP, in New York. The adversary case is BRANDON COLE; DAVID YOUNG-WOLFF; LAURA DWIGHT; MARK GIBSON; MICHAEL GRECCO; THE ESTATE OF MICHAEL NEWMAN; GREG PROBST; LOUIS PSIHOYOS; CARL SCHNEIDER; ELLEN SENISI; WILLIAM WARREN; and NORBERT WU, Plaintiffs, v. CENGAGE LEARNING, INC., CENGAGE LEARNING ACQUISITIONS, INC., CENGAGE LEARNING HOLDINGS II, L.P., and CENGAGE LEARNING HOLDCO, INC., Defendants, Adv. Proc. No. 14-01020 (In re Cengage Learning, Inc., et al., Case No. 13- 44105)(Bankr. E.D.N.Y.). 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's Jonathan S. Henes, Esq., Christopher J. Marcus, Esq., and Christopher T. Greco, Esq., and Ross M. Kwasteniet, Esq. -- christopher.greco@kirkland.com and ross.kwasteniet@kirkland.com -- as bankruptcy 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. Arent Fox's Andrew I. Silfen, Esq. -- andrew.silfen@arentfox.com -- represents the statutory committee of unsecured creditors. Milbank, Tweed, Hadley & McCloy LLP's Gregory Bray, Esq., and Lauren Cohen, Esq. -- gbray@milbank.com and ldoyle@milbank.com -- represent the ad hoc group of holders of certain first lien claims. Davis Polk & Wardwell LLP's Damian S. Sohaible, Esq., and Darren S. Klein, Esq. -- damian.schaible@davispolk.com and darren.klein@davispolk.com -- represent the agent under the First Lien Credit Agreement. Katten Muchin Rosenman LLP's Karen Dine, Esq., and David Crichlow, Esq. -- karen.dine@kattenlaw.com and david.crichlow@kattenlaw.com -- represent the Indenture Trustee for the First Lien Noteholders. Akin Gump Strauss Hauer Feld LLP's Ira Dizengoff, Esq., and Ropes & Gray LLP's Mark R. Somerstein, Esq. -- Mark.Somerstein@ropesgray.com -- argue for CSC Trust Company of Delaware as Second Lien Trustee. Loeb & Loeb LLP's Walter H. Curchack, Esq. -- wcurchack@loeb.com -- represents the Indenture Trustee for the Senior PIK Notes. Kilpatrick Townsend's Todd Meyers, Esq. -- Tmeyers@kilpatricktownsend.com -- represents the Indenture Trustee for the Senior Unsecured Notes. Jones Day's Lisa Laukitis, Esq. -- llaukitis@jonesday.com -- is counsel to Centerbridge Partners LP. Simpson Thacher & Bartlett LLP's Peter Pantaleo, Esq. -- ppantaleo@stblaw.com -- represents Apax Partners LP. CEREPLAST INC: Files Chapter 11 Bankruptcy Petition --------------------------------------------------- Cereplast, Inc., filed a voluntary petition in the United States Bankruptcy Court for the Southern District Of Indiana seeking relief under Chapter 11 of Title 11 of the United States Code. The Debtor intends to continue to operate its businesses as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In connection with the Chapter 11 case, the Debtor intends to file a motion seeking Bankruptcy Court approval of debtor-in-possession financing. Cereplast, Inc., filed a Chapter 11 bankruptcy petition (Bankr. S.D. Ind. Case No. 14-90200) on Feb. 10, 2014. Frederic Scheer signed the petition as chief executive officer. The Debtor estimated assets and debts of at least $10 million. Tamara Marie Leetham, Esq., at Austin Legal Group, serves as the Debtor's counsel. The Hon. Basil H. Lorch III oversees the case. El Segundo, Calif.-based Cereplast, Inc., has developed and is commercializing proprietary bio-based resins through two complementary product families: Cereplast Compostables(R) resins which are compostable, renewable, ecologically sound substitutes for petroleum-based plastics, and Cereplast Sustainables(TM) resins (including the Cereplast Hybrid Resins product line), which replaces up to 90% of the petroleum-based content of traditional plastics with materials from renewable resources. CHEMTURA CORP: Notice Satisfies Constitutional Requirements ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that notice published in a newspaper was sufficient to notify potential creditors they might have claims, according to an opinion on Feb. 10 by U.S. District Judge Jesse M. Furman in New York. According to the report, the appeal involved Chemtura Corp., a specialty chemical maker that emerged from bankruptcy reorganization in November 2010. Afterward, nine individuals sued Chemtura, claiming they contracted lung disease from exposure to a chemical while working in a company plant in New Jersey. The bankruptcy judge barred the claims on the authority of the Chapter 11 plan, the report related. Judge Furman upheld the ruling. The workers contended their claims weren't barred because they didn't receive constitutionally adequate notice since their illnesses didn't arise until after bankruptcy was completed, he report further related. Judge Furman pointed out that Chemtura published notice in a local newspaper near the plant, saying that employees might have claims for exposure to chemicals, the report said. The case is Gabauer v. Chemtura Corp. (In re Chemtura Corp.), 13- cv-02023, U.S. District Court, Southern District of New York (Manhattan). About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 (Bankr. S.D.N.Y. Case No. 09-11233) on March 18, 2009. The Debtors disclosed total assets of $3.06 billion and total debts of $1.02 billion as of the Chapter 11 filing. M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, served as bankruptcy counsel for the Debtors. Wolfblock LLP was the Debtors' special counsel. The Debtors' auditors and accountant were KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors were Joele Frank, Wilkinson Brimmer Katcher; their business advisors were Alvarez & Marsal LLC and Ray Dombrowski served as their chief restructuring officer; and their claims and noticing agent was Kurtzman Carson Consultants LLC. The Official Committee of Equity Security Holders tapped Jay Goffman, Esq., and David Turetsky, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York, as counsel. the Official Committee of Unsecured Creditors retained Daniel H. Golden, Esq., Philip C. Dublin, Esq., and Meredith A. Lahaie, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Chemtura completed its financial restructuring and emerged from protection under Chapter 11 in November 2010. In connection with the emergence, reorganized Chemtura is now listed on the New York Stock Exchange under the ticker "CHMT". CHEMTURA CORP: Reports Financial Results for Fourth Quarter ----------------------------------------------------------- Chemtura Corporation on Feb. 24 reported financial results for the fourth quarter ended December 31, 2013. The Company also filed with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2013. For the fourth quarter of 2013, Chemtura reported net sales of $544 million and net earnings from continuing operations attributable to Chemtura on a GAAP basis of $13 million, or $0.13 per diluted share. Net earnings from continuing operations attributable to Chemtura on a managed basis were $16 million, or $0.16 per diluted share. CEO Remarks "We were encouraged to complete what has been a challenging year with a fourth quarter performance that exceeded our performance in the fourth quarter of 2012," commented Craig A. Rogerson, Chairman, President and CEO of Chemtura. "Were it not for the $5 million of expenses incurred in the quarter related to our exploration of a sale of Chemtura AgroSolutions, we would have delivered $70 million of Adjusted EBITDA, 11% higher than the $63 million we delivered in the fourth quarter of 2012. Further, we completed the second major divestiture of the year, closing the sale of our Consumer Products business on December 31, 2013." "The year-on-year improvement was again led by Chemtura AgroSolutions, delivering an $8 million or 57% increase in Adjusted EBITDA -- even better than I had anticipated," continued Mr. Rogerson. "Industrial Performance Products delivered $5 million or 18% year-over-year improvement in Adjusted EBITDA. After the changes in demand and price mainly around insulation foam applications during 2013, the fourth quarter challenge for Industrial Engineered Products was to show sequential improvement over the third quarter of 2013. The segment delivered $31 million of Adjusted EBITDA in the fourth quarter of 2013 compared to $11 million in the third quarter of 2013, but still short of the $40 million in the fourth quarter of 2012. As anticipated, the biggest component of the improvement was the actions taken in the third quarter to reduce manufacturing costs. We have actions in place to drive revenue, price and cost improvements in 2014 but the segment still is exposed to several challenging application markets. Excluding the Chemtura AgroSolutions transaction expenses in the fourth quarter of 2013, Corporate on an EBITDA basis was $3 million lower than last year, reflecting the benefit of our stranded cost eliminations." "In 2013, we made significant progress in shaping our portfolio and giving visibility to the strategic direction of our remaining businesses," commented Mr. Rogerson. "We successfully completed the divestitures of our Antioxidant and Consumer Products businesses. We have repaid debt to maintain our stated leverage goals and started the process of returning a significant portion of proceeds from our divestitures to our shareholders through stock repurchases. Our Chemtura AgroSolutions segment built on the improvements made in 2012, launching 110 new products and registrations in 2013, increasing revenues by 10% and Adjusted EBITDA by 28%. In 2013, Industrial Performance Products increased revenues by 10% and Adjusted EBITDA by 9%, having absorbed the impact of the start-up of its new plants in The Netherlands and China. Industrial Engineered Products took a step back due to difficult market conditions, but have actions in place to recover and grow." Outlook "As described at our Investor Day in December, for 2014 we target revenue growth in the order of 8-10% and growth in consolidated Adjusted EBITDA in the range of 20-30% as compared to 2013," continued Mr. Rogerson. "This requires that we deliver year-over- year improvement in most quarters in 2014 (excluding project expenses incurred in the process to explore the sale of Chemtura AgroSolutions), but the first quarter will be our greatest challenge. Our Industrial Engineered Products segment delivered $31 million of Adjusted EBITDA in the first quarter of 2013 which is the same as they earned in the fourth quarter of 2013. However, they have headwinds from the timing of production and related manufacturing variances. Our other segments should deliver improvement to offset some but not all of this impact, so it looks like the first quarter will be our weakest quarter of the year." "We anticipate being able to report to you on the outcome of our exploration of the sale of Chemtura AgroSolutions at some point in the first half of 2014," concluded Mr. Rogerson. "Our process is proceeding as planned. We will report to investors as soon as it reaches a conclusion." A copy of Chemtura's earnings release for the fourth quarter and year ended December 31, 2013 is available for free at: http://is.gd/fI2qle About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 (Bankr. S.D.N.Y. Case No. 09-11233) on March 18, 2009. The Debtors disclosed total assets of $3.06 billion and total debts of $1.02 billion as of the Chapter 11 filing. M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, served as bankruptcy counsel for the Debtors. Wolfblock LLP was the Debtors' special counsel. The Debtors' auditors and accountant were KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors were Joele Frank, Wilkinson Brimmer Katcher; their business advisors were Alvarez & Marsal LLC and Ray Dombrowski served as their chief restructuring officer; and their claims and noticing agent was Kurtzman Carson Consultants LLC. The Official Committee of Equity Security Holders tapped Jay Goffman, Esq., and David Turetsky, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York, as counsel. the Official Committee of Unsecured Creditors retained Daniel H. Golden, Esq., Philip C. Dublin, Esq., and Meredith A. Lahaie, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Chemtura completed its financial restructuring and emerged from protection under Chapter 11 in November 2010. In connection with the emergence, reorganized Chemtura is now listed on the New York Stock Exchange under the ticker "CHMT". CHINA NATURAL: Hires Ernst & Young China as Restructuring Advisor ----------------------------------------------------------------- China Natural Gas, Inc. asks for permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Ernst & Young (China) Advisory Limited ("EY China") as restructuring advisor, nunc pro tunc to Jan. 17, 2014. EY China will generally provide assistance to the Debtor with respect to the proposed sale or other disposition of the Debtor's business and supporting negotiations among the Debtor, its advisors, and its creditors with respect to identifying and entering into transactions with potential new investors. Specifically, EY China will provide, without limitation, these services: (a) assist in the coordination and management of a proposed sale of the Debtor's business in the People's Republic of China from commencement through to completion; (b) assist in the preparation of marketing materials in relation to such proposed sale; (c) provide indicative pricing analyses, as required, for the purposes of the proposed sale and negotiations; (d) coach and prepare the Debtor for presentations to potential new investors; (e) act as a sounding board throughout the course of the sale process in order to ensure smooth completion of the sale; (f) review and comment on the Debtor's business, operations and financial records and projections; (g) assist in the determination of a range of estimated values for the Debtor's business; (h) set up a data room consisting of documentation necessary for interested parties to evaluate the proposed sale and liaising with interested parties as the primary contact for due diligence inquiries; (i) liaise with interested parties regarding visits to the Debtor's facility and organizing and arranging such site visits with the Debtor's management and employees; (j) participate in regular status updates with the Debtor and Petitioners and involving Petitioners in the sale process as reasonably requested by Petitioners; (k) identify, advice regarding, interact with, and coordinate meetings with potential new investors; and (l) manage the negotiation process and assist the Debtor to attempt to secure the best possible terms for the proposed sale. EY China will seek from the Debtor a success fee to be calculated as 0.75% of the total cash actually received by the Debtor from any new investors in a sale of the Debtor's business in the People's Republic of China pursuant to a definitive agreement procured by or facilitated by EY China. EY China will also be reimbursed for reasonable out-of-pocket expenses incurred. Upon execution of the Engagement Letter, the Debtor will remit a retainer to EY China in the amount of $50,000. Andrew Koo, partner of EY China, 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. EY China can be reached at: Andrew Koo ERNST & YOUNG (CHINA) ADVISORY LIMITED 50/F, Shanghai World Financial Center 100 Century Avenue, Pudong New Area Shanghai, China 200120 Tel: +86 (212) 228-2964 Tel: +852 6118 4302 About China Natural Headquartered in Xi'an, Shaanxi Province, P.R.C., China Natural Gas, Inc., was incorporated in the State of Delaware on March 31, 1999. The Company through its wholly owned subsidiaries and variable interest entity, Xi'an Xilan Natural Gas Co., Ltd., and subsidiaries of its VIE, which are located in Hong Kong, Shaanxi Province, Henan Province and Hubei Province in the People's Republic of China ("PRC"), engages in sales and distribution of natural gas and gasoline to commercial, industrial and residential customers through fueling stations and pipelines, construction of pipeline networks, installation of natural gas fittings and parts for end-users, and conversions of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles at 0ptmobile conversion sites. On Feb. 8, 2013, an involuntary petition for bankruptcy was filed against the Company by three of the Company's creditors, Abax Lotus Ltd., Abax Nai Xin A Ltd., and Lake Street Fund LP (Bankr. S.D.N.Y. Case No. 13-10419). The Petitioners claimed that they have debts totaling $42,218,956.88 as a result of the Company's failure to make payments on the 5% Guaranteed Senior Notes issued in 2008. Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in Washington, D.C., represents the Petitioners as counsel. China Natural Gas, Inc., sought dismissal of the involuntary petition but in July 2013, it consented to the entry of an order for relief under Chapter 11 of the U.S. Code. The last regulatory filing listed assets as of June 30 of $29.5 million and liabilities totaling $82.5 million. CMS ENERGY: Fitch Raises LT IDR & Sr. Unsec. Debt Rating From BB+ ----------------------------------------------------------------- Fitch Ratings has upgraded the long-term Issuer Default Rating (IDR) and senior unsecured debt rating for CMS Energy Corp. (CMS) to 'BBB-'from 'BB+'. Concurrently, Fitch affirmed the senior secured debt rating for the bank credit facility at 'BBB-' and assigned a 'F3' short-term IDR. The Rating Outlook for CMS is revised to Stable from Positive. Fitch has affirmed the long-term IDR, debt ratings and short-term IDR for Consumers Energy Co. (Consumers). The Rating Outlook for Consumers remains Stable. CMS Upgrade and Stable Outlook: The company's improved credit profile is sustainable, in Fitch's opinion. Key financial drivers include strong utility earnings, a lower cost of debt, and effective cost control. Low-risk utility operations contribute over 95% of consolidated earnings and Consumers distributes 80% of its net income to the parent to support parent-level funding obligations and the common dividend. The utility's financial profile is solid, in Fitch's opinion, and benefits from supportive rate treatment in Michigan. The 2008 Energy Law in Michigan provides the legislative framework for balanced rate treatment, including minimizing regulatory lag and mitigating exposure to commodity risk. Key Rating Drivers: -- CMS' ownership of Consumers; -- Consumers' low-risk credit profile and supportive rate treatment in Michigan; -- Large utility-centric capital plan which will increase Consumers' funding needs; -- Highly levered consolidated capital structure, including a high level of parent debt; -- Improving service territory demographics. CMS Financial Metrics: Fitch expects CMS' coverage metrics to remain at or near current levels and forecasts EBITDA-to-interest to range between 4.0 times (x) and 4.4x over the next five years. Leverage metrics reflect the high level of debt at CMS relative to peers, with debt-to- EBITDA forecast at or below 4x toward the end of the five-year forecast. Fitch considers effective cost control as key to maintaining a stable financial profile, as well as balanced rate treatment to mitigate regulatory lag at the utility during this capital intensive period. CMS Leverage: Consolidated debt-to-capitalization, as calculated by Fitch, is high relative to peers at 69%, at fiscal year end (FYE) Dec. 31, 2013. Approximately $2.4 billion or 30% of the company's consolidated long-term debt of $7.7 billion is parent corporate debt, and structurally subordinated to that of the subsidiaries. The high level of parent level debt remains a constraint in the company's credit profile, and Fitch sees limited opportunities to de-lever the parent over the next five-years due to utility funding capital funding requirements, and a target 62% dividend payout ratio. Consolidated Debt Maturities: The consolidated debt maturity schedule is manageable, in Fitch's opinion, with $425 million due in 2015, $530 million due in 2016, and $600 million due in 2017. The company has actively re-financed its current maturities in this lower interest rate environment, and has effectively reduced its cost of debt. Fitch's assessment assumes CMS' and Consumers' access to debt capital market financing remains unrestricted. Consolidated Liquidity: Total liquidity at FYE Dec. 31, 2013 was $1.3 billion, including $134 million in cash-on-hand. Neither CMS nor Consumers are relying on bank credit for short-term funding, and bank credit capacity is fully available. Total bank credit is $1.2 billion and includes a $550 million facility at CMS and a $650 million facility at Consumers. All bank credit facilities expire in 2018, and both companies have extended facility maturities to maintain five-year bank credit. Consumers' Stable Outlook: The utility's Stable Outlook reflects a solid stand-alone financial profile, and supportive rate treatment in Michigan. Fitch's outlook on Consumers assumes solid financial metrics are sustainable over the next five-years, and views the likelihood of a material change in Michigan's 2008 Energy Law (which provides the legislative framework for rate treatment) as unlikely in the near term. Supportive Rate Treatment: The inclusion of rate design components designed to mitigate recovery lag, including forward test years, support a stable utility credit profile. General rate cases (GRCs) are determined within 12-months of filing with the Michigan Public Service Commission (MPSC), and authorized interim rates can be implemented by the utility within six months of the filing date (with the permanent rate increase subject to true-up or refund). Additionally, an automatic power supply cost recovery mechanism and a gas cost recovery mechanism facilitate timely recovery of commodity costs. Neither the electric nor natural gas utility rate plans include a revenue decoupling mechanism; however, in Fitch's opinion, existing rate features are fair. Recent Regulatory Developments: A rate settlement was adopted in Consumers' electric GRC in May 2013 and the natural gas GRC was suspended, and later withdrawn in 2013. The small size of the natural gas rate increase request, coupled with the ability of the utility to manage costs were, in Fitch's opinion, the primary drivers for the GRC withdrawal. Electric rates were increased by $89 million and based on a 10.3% return on equity (ROE). The natural gas authorized ROE is also 10.3%, which is modestly higher than what Fitch views as the sector average. The utility currently has neither an electric nor natural gas GRC pending with the MPSC, with no new rate filings anticipated by Fitch earlier than mid-2014. Fitch expects that capital cost recoveries will be the primary component of future rate filings. Utility Financial Metrics: Consumers' financial metrics are forecast to remain solid relative to Fitch guidelines for the rating and risk profile. Fitch forecasts EBITDA-to-interest above 6.0x over the near term; however, higher interest costs could pressure coverage metrics in the longer term. Effective cost control is key to maintaining solid financial metrics absent new rates in 2014, in Fitch's opinion. Funds from operations (FFO) interest coverage, as calculated by Fitch at FYE Dec. 31, 2013 was 6.6x, and the rating forecast range is at the higher-end of 4.0x by 2018. FFO metrics are expected to weaken as the positive tax benefits associated with bonus depreciation are no longer a variable. Capital Plan: The five-year nearly $7 billion utility-centric capex budget includes new generation and system reliability projects. Fitch forecasts annual capex in the range of $1 billion-$1.6 billion over the next few years, with two-thirds of spending on electric projects, and a third on natural gas. On Jan. 30, 2014, CMS announced its intention to purchase for $155 million a 540 MW natural gas plant located in Jackson, MI. Simultaneously, the company put on hold plans to construct the nearly $750 million 700 MW combined-cycle Thetford plant, including the Certificate of Need pending with the MPSC. The new gas plant will partially mitigate capacity shortfalls resulting from the planned closure of seven small coal units in 2016. Fitch would expect the asset purchase to be complete prior to the coal unit closures. Fitch looks to timely recovery of capital costs as key to maintaining credit quality during this capital intensive period, and considers the use of forward test years as well as final rate determinations within 12-months of filing as facilitators of timely recovery. Fitch's forecast includes incremental new debt as a source of capital funding over the next few years, and expects the utility capital structure will remain balanced with some equity support from the parent. Access to the debt capital markets is viewed as unrestricted by Fitch. Rating Sensitivities: CMS and Consumers: No positive rating actions are currently under consideration. CMS: Consolidated debt-to-EBTIDA higher than 4.5x on a sustainable basis would lead to negative rating action. Consumers: An adverse regulatory order that negatively impacts the utility's financial position could place not only lead to negative rating action at the utility, but also at the parent. Fitch has upgraded the following ratings of CMS Energy Corp.: -- Long-term IDR to 'BBB-' from 'BB+'; -- Senior unsecured debt to 'BBB-' from 'BB+'. Fitch has assigned the following rating at CMS Energy Corp.: -- Short-term IDR at 'F3'. Fitch has affirmed the following rating at CMS Energy Corp.: -- Senior secured debt (bank credit facility) at 'BBB-'. The Rating Outlook for CMS has been revised to Stable from Positive. Fitch has affirmed the following ratings at Consumers Energy Co.: -- Long-term IDR at 'BBB'; -- Senior unsecured debt at 'BBB+'; -- Senior secured debt at 'A-'; -- Preferred Stock at 'BBB-'; -- Short-term IDR at 'F3'. The Rating Outlook for Consumers remains Stable. CONSTAR INTERNATIONAL: Sells Maryland Property to Smucker for $3MM ------------------------------------------------------------------ Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware authorized Constar International Holdings LLC, et al., to sell a facility in Havre de Grace, Maryland, to Smucker Natural Foods, Inc., for $3 million. According to Bill Rochelle, the bankruptcy columnist for Bloomberg News, Smucker met no competition at an auction to buy the Maryland facility. About Constar International Privately held Constar International Holdings and nine affiliated debtors filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-13281) on Dec. 19, 2013. This is Constar International's third bankruptcy. Constar, which manufactures plastic containers, first filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13432) in December 2008, with a pre-negotiated Chapter 11 Plan and emerged from bankruptcy in May 2009. Constar and its affiliates returned to Chapter 11 protection (Bankr. D. Del. Case No. 11-10109) on Jan. 11, 2011, with a pre-negotiated Chapter 11 plan and emerged from bankruptcy in June 2011. The 2013 petition listed assets worth less than $100 million against $123 million on three layers of secured debt. Judge Christopher S. Sontchi oversees the 2013 case. Constar is represented by Michael J. Sage, Esq., Brian E. Greer, Esq., Stephen M. Wolpert, Esq., and Janet Bollinger Doherty, Esq., at Dechert LLP; and Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young Conaway Stargatt & Taylor, LLP. Prime Clerk LLC serves as the Debtors' claims and noticing agent, and administrative advisor. Lincoln Partners Advisors LLC serves as the Debtors' financial advisor. Attorneys at Brown Rudnick LLP represent the official committee of unsecured creditors. Counsel to Wells Fargo Capital Finance, LLC, the revolving loan agent, is Andrew M. Kramer, Esq., at Otterbourg P.C. Constar has sold substantially all of its U.S. assets to Plastipak Holdings Inc. for $102.5 million, its U.K. assets to Sherburn Acquisition Limited, an affiliate of Greybull Capital LLP, for $11.1 million, and its Maryland facility to Smucker Natural Foods, Inc., for $3 million. Constar U.K commenced administration proceedings following the sale of its assets. The U.K. Administrator is Deloitte LLP. CONSTAR INTERNATIONAL: U.K. Unit Commences Administration --------------------------------------------------------- Constar International Holdings LLC, et al., notified the U.S. Bankruptcy Court for the District of Delaware that the sole director of debtor Constar International U.K. Limited appointed Daniel Francis Butters and Nicolas Guy Edwards of Deloitte LLP as administrators. The U.K. Administration Proceeding follows the closing of the sale of the U.K. assets to Sherburn Acquisition Limited. U.S. Bankruptcy Judge Christopher Sontchi authorized the U.S. Debtors to sell the U.K. Assets to Sherburn for GBP3,512,727, (or US$7,046,000), less the deposit in the sum of US$1,250,000. The U.S. Debtors are represented by Robert S. Brady, Esq., Sean T. Greecher, Esq., and Maris J. Kandestin, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware; and Michael J. Sage, Esq., Brian E. Greer, Esq., and Stephen M. Wolpert, Esq., at DECHERT LLP, in New York. The Buyer is represented by: Craig Thompson, Esq. FORSTER LLP 31 Hill Street London W1J 5LS Email: craig.thompson@forsters.co.uk About Constar International Privately held Constar International Holdings and nine affiliated debtors filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-13281) on Dec. 19, 2013. This is Constar International's third bankruptcy. Constar, which manufactures plastic containers, first filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13432) in December 2008, with a pre-negotiated Chapter 11 Plan and emerged from bankruptcy in May 2009. Constar and its affiliates returned to Chapter 11 protection (Bankr. D. Del. Case No. 11-10109) on Jan. 11, 2011, with a pre-negotiated Chapter 11 plan and emerged from bankruptcy in June 2011. The 2013 petition listed assets worth less than $100 million against $123 million on three layers of secured debt. Judge Christopher S. Sontchi oversees the 2013 case. Constar is represented by Michael J. Sage, Esq., Brian E. Greer, Esq., Stephen M. Wolpert, Esq., and Janet Bollinger Doherty, Esq., at Dechert LLP; and Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young Conaway Stargatt & Taylor, LLP. Prime Clerk LLC serves as the Debtors' claims and noticing agent, and administrative advisor. Lincoln Partners Advisors LLC serves as the Debtors' financial advisor. Attorneys at Brown Rudnick LLP represent the official committee of unsecured creditors. Counsel to Wells Fargo Capital Finance, LLC, the revolving loan agent, is Andrew M. Kramer, Esq., at Otterbourg P.C. Constar has sold substantially all of its U.S. assets to Plastipak Holdings Inc. for $102.5 million, its U.K. assets to Sherburn Acquisition Limited, an affiliate of Greybull Capital LLP, for $11.1 million, and its Maryland facility to Smucker Natural Foods, Inc., for $3 million. Constar U.K commenced administration proceedings following the sale of its assets. The U.K. Administrator is Deloitte LLP. COVANTA HOLDING: Fitch Expects to Withdraw Ratings on March 21 -------------------------------------------------------------- Fitch Ratings expects to withdraw its ratings of Covanta Holding Corporation (CVA) and Covanta Energy Corporation (CEC) at the end of a 30 day period beginning Feb. 21, 2014. Fitch will continue to maintain the coverage of CVA and CEC prior to withdrawal. This advance notice is provided for the benefit of users in managing their use of Fitch's ratings. The ratings of CVA and CEC are being withdrawn as the ratings are no longer considered by Fitch to be relevant to the agency's coverage. Fitch currently rates CVA and CEC as follows: Covanta Holding Corporation (CVA) -- Long-term Issuer Default Rating (IDR) 'BB'; -- Unsecured tax-exempt bonds 'BB+'; -- Senior unsecured debt 'BB'; Covanta Energy Corporation (CEC) -- Long-term IDR 'BB'; -- Senior secured debt 'BBB-'. The Rating Outlook is Negative. Fitch's last rating action occurred on Oct. 30, 2013. Fitch affirmed the long-term IDRs of CVA and CEC at 'BB' and revised the Ratings Outlook to Negative from Stable. The revision to the Outlook reflects the company's higher than expected maintenance costs for its aging equipment, low margins on electricity and metal sales, aggressive distribution policy, and weakening credit protection measures over the rating horizon (2014-2016). Fitch expects funds flow from operations (FFO) based leverage and FFO/interest coverage ratios to decline to 12% and 3x, respectively, by 2016, which are below Fitch's guidelines for a 'BB' rated issuer. DETROIT, MI: Retirees, Banks Fight for Assets --------------------------------------------- Chad Livengood, writing for The Detroit News, reported that Detroit's historic bankruptcy has evolved into a populist fight between retirees and banks, as the city prepares to unveil a critical plan next week to shed some of its $18 billion in debts. According to the report, each side is fighting for its share of Detroit's limited resources, be it tax revenue or city assets. Gov. Rick Snyder and Detroit Emergency Manager Kevyn Orr recently have made moves that fueled the fight, as the governor signaled a desire to treat pensioners better than investors of city bond debt, the report related. He has pledged $350 million in state assistance for pensioners, while telling Wall Street it will not be getting special treatment. When Orr took the city into bankruptcy in July, he forged a pact to let two big banks cut in line ahead of pensioners and other creditors, the report further related. But he abandoned that plan after U.S. Bankruptcy Judge Steven Rhodes twice rejected the settlement as too generous for the banks and a repeat of the city's bad financial decisions. In recent weeks, Orr has taken a more aggressive stand against Wall Street financial institutions, including filing suit to invalidate a disastrous 2005 debt deal blamed for plunging Detroit into bankruptcy, the report said. The result: an emerging "us versus them" narrative that has rankled the nation's municipal finance industry. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's financial advisor. Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013, appointed five creditors to serve on the Official Committee of Unsecured Creditors. DETROIT, MI: Bankruptcy Blueprint Due Out This Week --------------------------------------------------- Matt Helms and Nathan Bomey, writing for Detroit Free Press, reported that Detroit's fight for survival will enter a critical stage this week when the insolvent city unveils an early blueprint of how it plans to exit bankruptcy, with a restructuring plan that would shed massive amounts of debt and allow the city to improve some of the basic public services it has struggled for years to provide. According to the report, as early as Feb. 19, the city is expected to release its bankruptcy plan of adjustment -- the legal term for the restructuring proposal that spells out how the city would treat creditors and assets in the nation's largest municipal bankruptcy. The document is expected to be released in conjunction with a detailed report about how city government would be restructured, affecting the day-to-day services Detroiters rely on, from levels of policing and fire protection to how often buses run and how many blighted homes and businesses are torn down, the report said. Release of the restructuring plan amounts to a first draft of how Detroit's bankruptcy team -- led by state-appointed emergency manager Kevyn Orr -- envisions operating a city with far less debt, the report added. But that first draft is subject to the same negotiations and potentially long legal challenges from creditors who stand to lose out. It's certain to face objections from creditors fighting for every last dime they can get. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's financial advisor. Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013, appointed five creditors to serve on the Official Committee of Unsecured Creditors. DETROIT, MI: Bankruptcy Judge to Hear Crucial Bond Dispute ---------------------------------------------------------- Karen Pierog, writing for Reuters, reported that for Detroit, the long and winding road out of the largest-ever U.S. municipal bankruptcy may get a bit straighter. First, U.S. Bankruptcy Judge Steven Rhodes will consider litigation over whether Detroit's pledge of tax revenue to pay off voter-approved bonds is a binding obligation or merely a promise that the broke city cannot keep, according to the report. And while in court for the hearing, the city's state-appointed emergency manager may file a blueprint on how the city plans to treat its $18 billion debt burden and exit bankruptcy, the report said. Bill Nowling, a spokesman for emergency manager Kevyn Orr, said the plan of adjustment could come "anytime after" Feb. 18, the report added. Both the result of the case and the plan for the future will be watched closely by participants in the $3.7 trillion U.S. municipal bond market, the report said. About City of Detroit, Michigan The City of Detroit, Michigan, weighed down by more than $18 billion in accrued obligations, sought municipal bankruptcy protection on July 18, 2013, by filing a voluntary Chapter 9 petition (Bankr. E.D. Mich. Case No. 13-53846). Detroit listed more than $1 billion in both assets and debts. Kevyn Orr, who was appointed in March 2013 as Detroit's emergency manager, signed the petition. Detroit is represented by lawyers at Jones Day and Miller Canfield Paddock and Stone PLC. Michigan Governor Rick Snyder authorized the bankruptcy filing. The filing makes Detroit the largest American city to seek bankruptcy, in terms of population and the size of the debts and liabilities involved. The City's $18 billion in debt includes $5.85 billion in special revenue obligations, $6.4 billion in post-employment benefits, $3.5 billion for underfunded pensions, $1.13 billion on secured and unsecured general obligations, and $1.43 billion on pension- related debt, according to a court filing. Debt service consumes 42.5 percent of revenue. The city has 100,000 creditors and 20,000 retirees. The Hon. Steven Rhodes oversees the bankruptcy case. 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. Lazard Freres & Co. LLC serves as the Retiree Committee's financial advisor. Daniel M. McDermott, U.S. Trustee for Region 9, on Dec. 23, 2013, appointed five creditors to serve on the Official Committee of Unsecured Creditors. DIAMONDBACK ENERGY: S&P Raises CCR to 'B' on Acreage Acquisition ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on Midland, Texas-based oil and gas E&P company Diamondback Energy Inc. to 'B' from 'B-'. The outlook is stable. S&P also raised the rating on the company's unsecured notes to 'B-' from 'CCC+'. The recovery rating on this debt is '5', reflecting S&P's expectation for modest (10% to 30%) recovery in the event of a payment default. The company is acquiring leasehold interests in Martin County, Texas, in the Permian Basin. The acquisition represents a 43.8% working interest for a total purchase price of $174 million. However, under the terms of the operating agreement, the company has made offers to owners for the remaining 56.2% working interest as well, which could take the purchase price up to a total of approximately $397 million. S&P expects that the company will use equity to finance this transaction. The rating action reflects Diamondback Energy Inc.'s progress developing its asset base in the Permian Basin, which S&P expects will continue. S&P views the Permian favorably since it is weighted to profitable crude oil. Moreover, S&P expects that Diamondback's production this year, including its acquisition of acreage in Martin County, will average at least 17,000 barrels of oil equivalent per day (boe/d). S&P considers this level of production to be appropriate for the 'B' rating category. "The stable outlook reflects our expectation that the company will continue to develop its asset base in the Permian while maintaining adequate liquidity and FFO to debt in excess of 45% over the next 12 months," said Standard & Poor's credit analyst Marc Bromberg. S&P could lower the rating if Diamondback's horizontal drilling program does not proceed as it expects, with well production below or costs above its current expectations, which could lead to run rate FFO to debt below 30%. In addition, S&P could lower ratings if it expects that the company will be unable to maintain adequate liquidity. S&P could raise the rating if the company is able to increase its reserve and production profile to a level commensurate with its 'B+' peers, which typically have production in excess of 20,000 barrels of oil equivalent per day. DONALD VAN HOUTEN TOTTEN: Hawaii Judge Denies Chapter 7 Discharge ----------------------------------------------------------------- Bankruptcy Judge Robert J. Faris in Honolulu, Hawaii, granted the request of the U.S. Trustee for summary judgment denying discharge to Chapter 7 debtor, Donald Van Houten Totten, Jr. Among others, Judge Faris held that Van Houten Totten: -- concealed four financial accounts in his own name which were open a year prior to filing with the intent to hinder, delay or defraud the Chapter 7 Trustee, and creditors. -- concealed an active Pay Pal in the name of a third party prior to the filing of his bankruptcy case in which it is estimated that between $40,000 and $60,000 in deposits from the Debtor's vacation rentals had been deposited within the year prior to and up to the time of filing bankruptcy with the intent to hinder, delay or defraud the Chapter 7 Trustee and creditors. The third party Pay Pal account was under the control and/or influence of the Debtor whereby deposits and withdrawals were made as directed by the Debtor. -- the Debtor transferred $17,000 prior to the filing of his bankruptcy to his spouse who resides in the Philippines with the intent to hinder, delay or defraud the Chapter 7 Trustee, and creditors. The Debtor described this transfer on Amended SOFA Question No. 2 as a "wedding gift" from a "friend" which was a false and misleading statement. -- the Debtor concealed real property located on the Big Island of Hawaii from his bankruptcy schedules with the intent to hinder, delay or defraud the Chapter 7 Trustee and creditors. -- the Debtor concealed a security interest in real property located in Australia from his bankruptcy schedules with the intent to hinder, delay or defraud the Chapter 7 Trustee and creditors. A copy of Judge Faris' Findings of Fact and Conclusions of Law is available at http://is.gd/OSOJWsfrom Leagle.com, which was lodged in the U.S. Trustee's complaint captioned, The UNITED STATES TRUSTEE, Plaintiff, v. DONALD VAN HOUTEN TOTTEN, JR. Defendant, Adv. Pro. No. 13-90044 (Bankr. D. Hawaii). Donald Van Houten Totten, Jr., filed a voluntary chapter 11 petition (Bankr. D. Hawaii Case No. 12-00332) on Feb. 16, 2012. He filed an amended voluntary chapter 11 petition on April 11, 2012. On June 15, 2012, the chapter 11 case was converted to chapter 7, and Dane Field was named the Chapter 7 Trustee. The First Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) was held on March 27, 2012. It was continued eight times and finally concluded on March 13, 2013. DOTS LLC: Has Court Authority to Conduct Feb. 26 Auction -------------------------------------------------------- Judge Donald H. Steckroth of the U.S. Bankruptcy Court for the District of New Jersey approved the auction procedures governing the proposed sale of Dots, LLC, et al.'s roughly 370 stores Competing bids may be submitted through and including Feb. 25, 2014, so that if the Debtors receive two or more qualified bids, an auction will be conducted on Feb. 26, commencing at 9:00 a.m. (Eastern) at the offices of Lowenstein Sandler LLP, in Roseland, New Jersey. No lead bidder has been named yet for the auction. The Debtors said in court papers that they have entered into non-disclosure agreements enabling approximately 30 prospective bidders to access the Debtors' due diligence data room. The Debtors anticipate that the auction will result in robust bidding. As previously reported by The Troubled Company Reporter, the ailing chain said there is no committed opening bid yet, and hence no guarantee that it won' fall into the hands of liquidators. A hearing to consider approval of the sale will be held on Feb. 27. The proposed sale and auction procedures have the support of Salus Capital Partners, LLC, as administrative and collateral agent to the DIP Credit Agreement and the Prepetition Senior Credit Agreement. Objections, if any, to the sale may be made at the sale hearing. About DOTS LLC Dots is a retailer of fashionable clothing, accessories, and footwear for price-conscious women. Dots provides missy and plus size choices to fashion savvy 25 to 35 year old women at approximately 400 retail stores throughout the Midwest, East, and South United States. Dots' workforce includes 3,500 individuals in their stores, distribution center, and corporate headquarters. Dots, LLC, and its affiliates sought bankruptcy protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 14-11016) on Jan. 20, 2014, to sell some or all of their assets. Lowenstein Sandler LLP serves as counsel to the Debtors. PricewaterhouseCoopers LLP is financial advisor and investment banker. Donlin, Recano & Company, Inc., is the claims and notice agent. As of the Petition Date, the Debtors have outstanding secured debt owed to senior lender Salus Capital Partners, LLC, of which $14.5 million remains outstanding under a revolving facility and $16.1 million is owed under a term facility. The Debtors also have not less than $17 million outstanding under subordinated term loan agreements with Irving Place Capital Partners III L.P. ("IPC") and related entities. Moreover, the Debtors have aggregate unsecured debts of $47.0 million. Salus, the prepetition senior lender and the DIP lender, is represented by Morgan, Lewis & Bockius, LLP. The prepetition subordinated lenders are represented by Okin Hollander & DeLuca, LLP. The Company has arranged to borrow $36 million to keep operating as it reorganizes under court protection. DUNE ENERGY: Whitebox Advisors Holds 5.2% Equity Stake ------------------------------------------------------ In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Whitebox Advisors, LLC, and its affiliates disclosed that as of Dec. 31, 2013, they beneficially owned 3,745,393 shares of common stock of Dune Energy Inc. representing 5.2 percent of the shares outstanding. Whitebox Advisors previously reported beneficial ownership of 3,267,243 shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/K4nRGV About Dune Energy Dune Energy, Inc. (NYSE AMEX: DNE) -- http://www.duneenergy.com/ -- is an independent energy company based in Houston, Texas. Since May 2004, the Company has been engaged in the exploration, development, acquisition and exploitation of natural gas and crude oil properties, with interests along the Louisiana/Texas Gulf Coast. The Company's properties cover over 90,000 gross acres across 27 producing oil and natural gas fields. The Company's balance sheet at Sept. 30, 2013, showed $252.02 million in total assets, $117.49 million in total liabilities and $134.52 million in total stockholders' equity. Dune Energy incurred a net loss of $7.85 million in 2012, a net loss of $60.41 million in 2011 and a net loss of $75.53 million in 2010. DYNASIL CORP: Posts $1.4 Million Net Income in Dec. 31 Quarter -------------------------------------------------------------- Dynasil Corporation of America filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $1.44 million on $10.71 million of net revenue for the three months ended Dec. 31, 2013, as compared with a net loss of $379,342 on $10.55 million of net revenue for the same period during the prior year. The Company's balance sheet at Dec. 31, 2013, showed $24.15 million in total assets, $11.90 million in total liabilities and $12.25 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/ledhpD About Dynasil Dynasil Corporation of America -- http://www.dynasil.com-- develops and manufactures optical detection and analysis technology and components for the homeland security, medical and industrial markets. Combining world-class expertise in research and materials science with extensive experience in manufacturing and product development, Dynasil is commercializing products including dual-mode radiation detection solutions for Homeland Security and commercial applications and sensors for non- destructive testing. Dynasil has an impressive and growing portfolio of issued and pending U.S. patents. The Company is based in Watertown, Massachusetts, with additional operations in Mass., Minn., NY, NJ and the United Kingdom. Dynasil Corporation reported a net loss of $8.72 million on $42.75 million of net revenue for the year ended Sept. 30, 2013, as compared with a net loss of $4.30 million on $47.88 million of net revenue during the prior year. McGladrey LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Sept. 30, 2013. The independent auditors noted that the Company is in default with the financial covenants set forth in the terms of its outstanding loan agreements (and may enter into a forbearance arrangement with its lenders) and has sustained substantial losses from operations for the years ended Sept. 30, 2013, and 2012. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. EDDIE BAUER: Activist Hedge Fund Criticizes Jos. A. Bank for Deal ----------------------------------------------------------------- Maureen Farrell, writing for The Wall Street Journal, reported that the hedge fund Eminence Capital was one of the parties with the most to lose when a possible deal between the suit retailers Jos. A. Bank and Men's Wearhouse fell apart. According to the report, Eminence Capital, which owns nearly 10% of Men's Wearhouse and 4.9% of Jos. A. Bank, started fighting back, criticizing Jos. A. Bank's board for its $825 million acquisition of Eddie Bauer announced on Feb. 14. The letter attacked the board's motivations for doing the deal, claiming "willing[ness] to engage in desperate tactics in an effort to protect their jobs and paychecks in blatant disregard for the best interests of shareholders," the report said. Eminence said it will fight the merger during the company's annual shareholder meeting through its proxy vote and will continue to fight it in court, the report related. The hedge fund has filed a lawsuit in the Delaware Chancery Court accusing Jos. A. Bank's board of breaching its fiduciary duties. Jos. A. Bank's acquisition of Eddie Bauer has made the likelihood of a deal with Men's Wearhouse -- which has been trying to acquire Jos. A. Bank (after Jos. A Bank originally tried to acquire Men's Wearhouse last fall) -- not necessarily impossible, but more unlikely, the report further related. EDISON MISSION: Settles with Noteholders, Amends Ch. 11 Plan ------------------------------------------------------------ Edison Mission Energy, et al., filed with the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, a third amended joint Chapter 11 plan of reorganization, which incorporates a settlement between the Debtors and certain holders of senior unsecured notes. As a result of the settlement, holders of EME Interests are unimpaired and are not entitled to vote as they are deemed to have accepted the Plan. Under the EIX Settlement, in full and final satisfaction of each Claim by EME and its subsidiaries against Edison Mission International (EIX) and its subsidiaries, EIX will pay to the Reorganization Trust an amount equal to the sum of (x) the Effective Date Cash Amount plus (y) the Adjustment Amount plus (z) interest on the Adjustment Amount as set forth in the calculation of the 2015 Note Amount and the 2016 Note Amount, and will assume certain liabilities. On the Effective Date, the Tax Sharing Agreements, among Mission Energy Holding Company, EME, and Capistrano Wind Holdings, Inc., will be deemed to have terminated pursuant to their terms on December 31, 2013, with respect to EME, and will not be assumed by EME or assigned to the Purchaser Parties. The Debtors also filed supplements to their Plan, including the following exhibits: * Members of the Board of Directors of Post-Reorganization EME and the Reorganization Trust Oversight Board and Section 1129(a)(5) of the Bankruptcy Code Disclosures * EME Retained Causes of Action * Purchaser Retained Causes of Action * Amount of Disputed Claims Reserve * Summary of Wind Down Budget * Information to be Requested of Recipients of New Interests * Reconciliation of Certain Tax Attributes Between Disclosure Statement and EIX Settlement Agreement The United States Securities and Exchange Commission, objected to the confirmation of the Debtors' Plan, on the grounds that the Plan improperly provides a discharge to the liquidating Debtors in violation of Section 1141(d)(3) of the Bankruptcy Code. The SEC pointed out that the Plan provides that the reorganized EME will have no business operations and its only remaining assets will be litigation claims, tax attributes, and the assets of three related subsidiaries that are in wind-down. Nevertheless, the Plan seeks to effect a discharge of debts of EME and its subsidiaries. That discharge would violate Section 1141(d)(3), which prohibits the discharge of corporate debtors that have no ongoing business operations, the SEC complained. A full-text copy of the Third Amended Plan, dated Feb. 20, 2014, is available at http://bankrupt.com/misc/EDISONplan0220.pdf The Court has scheduled a hearing to consider confirmation of the Third Amended Plan on March 11, 2014, at 10:30 a.m. (Central Time). Deadline for eligible holders to change their vote on the Plan is March 6. Deadline to respond to objections to the EIX settlement, including objections to the amended terms of the Plan, is March. 10. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that EME's $1.2 billion in 7 percent senior unsecured notes maturing in 2017 traded at 12:42 p.m. on Feb. 11 for 78.76 cents on the dollar, 50 percent more than immediately before bankruptcy, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The Debtors, other than Camino Energy Company, are represented by James H.M. Sprayregen, P.C., Esq., David R. Seligman, P.C., Esq., and Sarah Hiltz Seewer, Esq., at KIRKLAND & ELLIS LLP, in Chicago, Illinois; and Joshua A. Sussberg, Esq., at KIRKLAND & ELLIS LLP, in New York. Camino Energy is represented by David A. Agay, Esq., and Joshua Gadharf, Esq., at MCDONALD HOPKINS LLC, in Chicago, Illinois. The SEC is represented by Sonia Chae, Esq., Senior Attorney for Bankruptcy, in Chicago, Illinois. 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 also represented by James H.M. Sprayregen, P.C., Sarah Hiltz Seewer, Esq., and Seth A. Gastwirth, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois; and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in New York. Debtor Camino Energy Company is represented by David A. Agay, Esq., and Joshua Gadharf, Esq., at McDonald Hopkins LLC, in Chicago, Illinois. 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's Joint Plan of Reorganization provides for the sale of all or substantially all of Debtors MWG, EME, and Midwest Generation EME, LLC, will be sold to NRG Energy, Inc. ELBIT IMAGING: Regains Compliance with NASDAQ Listing Rule ---------------------------------------------------------- Elbit Imaging Ltd. on Feb. 24 disclosed that as a result of the closing of the plan of arrangement among the Company and its unsecured financial creditors on February 20, 2014, the Company will recognize gain in the first quarter of 2014 in the total amount of approximately NIS1.6 billion (approximately US$457 million). Furthermore, as a result of the Debt Restructuring, the Company's shareholders' equity will increase in the total amount of approximately NIS1.9 billion (approximately US$ 544 million). Compliance with NASDAQ Listing Rules Further to the Company's announcement on December 5, 2013 that it has received notice from the Listing Qualifications Department of The NASDAQ Stock Market LLC that the Company has ceased to comply with Nasdaq Listing Rule 5450(b)(1)(A) requiring companies listed on the Nasdaq Global Select Market to maintain a minimum of US$10,000,000 in shareholders' equity, the Company on Feb. 24 disclosed that it has regained compliance with the Listing Rule, as a result of the closing of the Debt Restructuring and the Shareholders Equity Increase. Nasdaq will continue to monitor the Company's ongoing compliance with the shareholders' equity requirement and, if at the time of its next periodic report the Company does not evidence compliance, then in such event, it may be subject to delisting. About Elbit Imaging Ltd. Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF) hold investments in real estate and medical companies. The Company, through its subsidiaries, also develops shopping and entertainment centers in Central Europe and invests in and manages hotels. Elbit Imaging disclosed a loss of NIS455.50 million on NIS671.08 million of total revenues for the year ended Dec. 31, 2012, as compared with a loss of NIS247.02 million on NIS586.90 million of total revenues for the year ended Dec. 31, 2011. Brightman Almagor Zohar & Co., in Tel-Aviv, Israel, expressed substantial doubt about Elbit Imaging's ability to continue as a going concern following the financial results for the year ended Dec. 31, 2012. The Certified Public Accountants noted that in the period commencing Feb. 1, 2013, through Feb. 1, 2014, the Company is to repay its debenture holders NIS 599 million (principal and interest). "Said amount includes NIS 82 million originally payable on Feb. 21, 2013, that its repayment was suspended following a resolution of the Company's Board of Directors. The Company's Board also resolved to suspend any interest payments relating to all the Company's debentures. In addition, as of Dec. 31, 2012, the Company failed to comply with certain financial covenants relating to bank loans in the total amount as of such date of NIS 290 million. The Company's balance sheet at Sept. 30, 2013, showed NIS4.83 billion in total assets, NIS4.96 billion in total liabilities and a NIS122.24 million shareholders' deficiency. Since February 2013, Elbit has intensively endeavored to come to an arrangement with its creditors. Elbit has said it has been hanging by a thread for more than five months. It has encountered cash flow difficulties and this burdens its day to day activities, and it certainly cannot make the necessary investments to improve its assets. In light of the arrangement proceedings, and according to the demands of most of the bondholders, as well as an agreement that was signed on March 19, 2013, between Elbit and the Trustees of six out of eight series of bonds, Elbit is prohibited, inter alia, from paying off its debts to the financial creditors - - and as a result a petition to liquidate Elbit was filed, and Bank Hapoalim has declared its debts immediately payable, threatening to realize pledges that were given to the Bank on material assets of the Company -- and Elbit undertook not to sell material assets of the Company and not to perform any transaction that is not during its ordinary course of business without giving an advance notice to the trustees. Accountant Rony Elroy has been appointed as expert for examining the debt arrangement in the Company. In July 2013, Elbit Imaging's controlling shareholders, Europe- Israel MMS Ltd. and Mr. Mordechay Zisser, notified the Company that the Tel Aviv District Court has appointed Adv. Giroa Erdinast as a receiver with regards to the ordinary shares of the Company held by Europe Israel securing Europe Israel's obligations under its loan agreement with Bank Hapoalim B.M. The judgment stated that the Receiver is not authorized to sell the Company's shares at this stage. Following a request of Europe-Israel, the Court also delayed any action to be taken with regards to the sale of those shares for a period of 60 days. Europe Israel and Mr. Zisser have also notified the Company that they utterly reject the Bank's claims and intend to appeal the Court's ruling. ELCOM HOTELS: One Bal Harbor Resort Implements Chapter 11 Plan -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the reorganization of One Bal Harbor Resort & Spa in Bal Harbor, Florida, was completed on Feb. 10 by implementation of the Chapter 11 plan approved when the bankruptcy judge in Miami signed a confirmation order on Jan. 24. According to the report, the residential homeowners' association bought the assets, with a bid of $13.4 million. The plan included a 50 percent recovery for trade suppliers with claims of as much as $1 million, the report related. General unsecured creditors, with claims totaling as much as $79 million, are to recover up to 18 percent, according to the court-approved disclosure statement. About Elcom Hotel Elcom Hotel & Spa LLC and Elcom Condominium LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 13-10029 and 13-10031) on Jan. 2, 2013, with plans to sell their hotel and condominium property. Elcom Condominium owns nine of the hotel condominium units at the One Bal Harbor Resort & Spa. The resort is located on five acres of land in Bal Harbor, Florida. The building and improvements consist of 185 luxury residential condominium units and 124 hotel condominium units. Elcom Hotel owns the hotel lot. Elcom Hotel disclosed $10,378,304 in assets and $20,010,226 in liabilities as of the Chapter 11 filing. The Debtor owes OBH Funding, LLC, $1.8 million on a mortgage and F9 Properties, LLC, formerly known as ANO, LLC, $9 million on a mezzanine loan secured by a lien on the ownership interests in the project's owner. OBH Funding and ANO are owned by Thomas D. Sullivan, the manager of the Debtors. Corali Lopexz-Castro, Esq., of Kozyak Tropin & Throckmorton, P.A., represent the Debtors as bankruptcy counsel. Duane Morris LLP is the special litigation, real estate, and hospitality counsel. Algon Capital, LLC, d/b/a Algon Group's Troy Taylor is the Debtors' chief restructuring officer. Barry E. Mukamal and Marcum, LLP, serve as accountants and financial advisors. The Barthet Firm is the special litigation collections counsel. Barry E. Somerstein and Greenspoon Marder Law serve as special real estate counsel. Elcom Hotel & Spa and Elcom Condominium have submitted a revised disclosure statement filed in conjunction with the proposed liquidating plan. The revised disclosure statement indicates that unsecured creditors are still divided into two classes under the Plan. The Plan contemplates that holders of general unsecured claims (expected to total $14 million to $79.1 million) will have a recovery of 0% to 18%, which will be funded from the pro rata distribution of "net free cash" and proceeds of causes of action and remaining assets. Holders of general unsecured vendor claims (estimated at $500,000 to $971,000) -- those vendors who have unsecured claims who agree to continue do business with the Debtors -- will have a recovery of 50%, which will be funded from the 50% distribution from "net free cash." In December 2013, the Florida bankruptcy judge signed off on a $13.4 million sale of the building's common areas to the homeowners' association. U.S. Bankruptcy Judge Robert A. Mark approved the result of the auction in which the One Bal Harbour residential association beat out an entity owned by Thomas Sullivan, who is the largest shareholder of Elcom Hotel, and stalking horse bidder Stoneleigh Capital LLC. Judge Robert A. Mark of the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, confirmed on Jan. 24, 2014, the Revised First Amended Joint Plan of Liquidation of Elcom Hotel & Spa, LLC, and Elcom Condominium, LLC, after determining that the Plan satisfies the confirmation requirements laid out in the Bankruptcy Code. ELEPHANT TALK: Has Until April 30 to Regain NYSE Compliance ----------------------------------------------------------- Elephant Talk Communications Corp. announced that the NYSE MKT LLC has notified the Company that it has extended the review period for which the Company can work to regain compliance with the Exchange's listing standards until April 30, 2014. Based on a review of information provided by Elephant Talk through Feb. 5, 2014, the Exchange has determined that while the Company has not yet regained full compliance with Section 1003(a)(iv) of the Exchange's Company Guide, the Company has made a reasonable demonstration of its ability to regain compliance by the end of the extended plan period. The Company is devoted to regaining compliance with the Exchange's listing standards. The Company will continue to remain subject to periodic review by the Exchange during the extended plan period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extended plan period could result in the Company being delisted from the Exchange. In addition, the Company continues to be subject to the compliance deadline of Sections 802(b) and 803(B)(6)(b) of the Company Guide for its non-compliance with Sections 802(a) and 803(B)(2)(a) in connection with the resignation of Charles Levine from the Company's Board of Directors on Dec. 18, 2013, and the non- reelection of Phil Hickman to the Board at the Company's Annual Meeting of Stockholders on Dec. 18, 2013. Consequently, a majority of the directors on the Company's Board are not independent and its audit committee is comprised of one independent director rather than the requisite three independent directors. The Company will have until the earlier of its next annual meeting of stockholders or Dec. 18, 2014, to regain compliance. While not expected, if the Company were to hold its 2014 annual meeting of stockholders early (on or before June 16, 2014), then the Compliance Date would instead be June 16, 2014. "Our goal is to regain compliance, and we are focused on our mobile platforms deployed with Vodafone and Iusacell, combined with the continued roll-out of ValidSoft's technology with customers including FICO," said Steven van der Velden, CEO of Elephant Talk. "We also continue to evaluate candidates with relevant industry knowledge who satisfy the independence requirements under the Exchange's Company Guide," continued Mr. van der Velden. About Elephant Talk Lutz, Fla.-based Elephant Talk Communications, Inc. (OTC BB: ETAK) -- http://www.elephanttalk.com/-- is an international provider of business software and services to the telecommunications and financial services industry. Elephant Talk disclosed a net loss attributable to the Company of $23.13 million in 2012, a net loss attributable to the Company of $25.31 million in 2011 and a net loss attributable to the Company of $92.48 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $46.45 million in total assets, $22.53 million in total liabilities and $23.91 million in total stockholders' equity. BDO USA, LLP, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations has an accumulated deficit of $203.3 million and continues to generate negative cash flows that raise substantial doubt about its ability to continue as a going concern. ELEPHANT TALK: Vanguard Stake at 1.03% as of Dec. 31 ---------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, The Vanguard Group disclosed that as of Dec. 31, 2013, it beneficially owned 1,451,054 shares of common stock of Elephant Talk Communications Corp representing 1.03 percent of the shares outstanding. Vanguard Group previously reported beneficial ownership of 6,308,021 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/xqzxYA About Elephant Talk Lutz, Fla.-based Elephant Talk Communications, Inc. (OTC BB: ETAK) -- http://www.elephanttalk.com/-- is an international provider of business software and services to the telecommunications and financial services industry. Elephant Talk disclosed a net loss attributable to the Company of $23.13 million in 2012, a net loss attributable to the Company of $25.31 million in 2011 and a net loss attributable to the Company of $92.48 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $46.45 million in total assets, $22.53 million in total liabilities and $23.91 million in total stockholders' equity. BDO USA, LLP, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has suffered recurring losses from operations has an accumulated deficit of $203.3 million and continues to generate negative cash flows that raise substantial doubt about its ability to continue as a going concern. ENERGY FUTURE: Prepares for a Breakup, Lining up Loans ------------------------------------------------------ Emily Glazer and Mike Spector, writing for The Wall Street Journal, reported that one of the biggest leveraged buyouts of an American company is preparing to file for bankruptcy protection, brought to its knees by heavy debt and a misguided bet on the direction of natural gas prices. According to the report, Energy Future Holdings Corp., previously called TXU Corp., is lining up loans to keep two subsidiaries operating during bankruptcy proceedings after months of talks have failed to produce an agreement with creditors on reworking its $40 billion-plus in debt, according to people familiar with the matter. The two sides may yet reach a last-minute agreement, but prospects for a streamlined bankruptcy where creditors agree in advance on a restructuring plan have dimmed, the people said, the report related. The filing would likely result in a split of Energy Future's two large operating subsidiaries, they said. A bankruptcy would be the 10th largest by assets in U.S. history. The acquisition was part of the frenzied leveraged buyout boom where private-equity firms used massive amounts of debt to back a series of corporate takeovers including TXU, hotelier Hilton Worldwide Inc., office-building owner Equity Office Properties Trust and hospital operator HCA Holdings Inc., the report related. Many of these large deals struggled with heavy debts amid the 2008-2009 recession, though private-equity firms for the most part were able to keep their purchases afloat and in many cases have eked out profits, the report said. About Energy Future Holdings, fka TXU Corp. Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80 percent-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Restructuring Talks With Creditors In April 2013, Energy Future and its affiliates confirmed in a regulatory filing that they are in restructuring talks with certain unaffiliated holders of first lien senior secured claims concerning the Companies' capital structure. Energy Future has retained Kirkland & Ellis LLP and Evercore Partners to advise the Companies with respect to the potential changes to the Companies' capital structure and to assist in the evaluation and implementation of other potential restructuring options. The Creditors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co., L.P. to advise the Creditors and to assist in the Creditors' evaluation of potential restructuring options involving the Companies. According to a Wall Street Journal report, people familiar with the matter said Apollo Global Management LLC, Oaktree Capital Management, Centerbridge Partners and GSO Capital Partners, the credit arm of buyout firm Blackstone Group LP, all hold large chunks of Energy Future's senior debt. Many of these firms belong to a group being advised by Jim Millstein, a restructuring expert who helped the U.S. government revamp American International Group Inc. The Journal said Apollo enlisted investment bank Moelis & Co. for additional advice to ensure it gets as much attention as possible on the case given its large debt holdings. Bloomberg News reported on Feb. 11, 2014, that Energy Future was meeting with lenders in New York to discuss loans that would fund it through bankruptcy as the latest chapter of the power generator's restructuring begins to unfold. Banks began presenting proposals to the former TXU Corp. on Feb. 10 to provide debtor-in-possession financing, the Bloomberg report said, citing two people with knowledge of the deliberations who asked not to be identified because the talks are private. ENERGY FUTURE: Said to Meet DIP Loan Bankers -------------------------------------------- Mary Childs, writing for Bloomberg News, reported on Feb. 11 that Energy Future Holdings Corp. was meeting with lenders in New York to discuss loans that would fund it through bankruptcy as the latest chapter of the power generator's restructuring begins to unfold. Banks began presenting proposals to the former TXU Corp. on Feb. 10 to provide debtor-in-possession financing, the Bloomberg report said, citing two people with knowledge of the deliberations who asked not to be identified because the talks are private. Energy Future, purchased in the largest leveraged buyout in history six years ago, is resuming efforts to line up the funding less than two months before auditors may raise doubts about its ability to remain a going concern, the report noted. The Dallas- based company is seeking to restructure $45.6 billion of debt after a plunge in natural gas prices, which set the price of electricity in the state, triggered 10 straight quarterly losses. Attempts to agree on a reorganization plan with creditors in October failed. "It's smart to at least line up a DIP so you know what is available and to crystallize the options for you," Marc Gross, a New York-based money manager at RS Investments, said in an e-mail to Bloomberg. "It could also help focus all the interested parties into negotiations. With the pressure on and an actual DIP lined up and the clock ticking down to the coupon payment, the negotiating parties might focus more." ENERGY FUTURE: Bankruptcy to Bring More Fees -------------------------------------------- Maureen Farrell, writing for The Wall Street Journal, reported that Citigroup Inc. and Morgan Stanley were there at the start for Energy Future Holdings Corp., part of a group that earned about $735 million in fees for arranging financing for the $45 billion takeover of the Texas utility in 2007. Nearly seven years later, these two banks are among the lenders expected to again provide financing to the company -- this time to help it operate through a possible bankruptcy, according to the report. The banks, along with Bank of America, could earn up to $200 million in fees. "In this case, it looks like these banks are taking a piece of flesh at every turn," said David Skeel, a professor of corporate law at the University of Pennsylvania Law School, told the Journal. "It also shows that the same set of banks are doing everything rather than being concentrated in certain parts of the life cycle of a firm." The purchase of TXU, as the company was then known, by KKR & Co., TPG and the private-equity arm of Goldman Sachs Group Inc., among several other funds, was the largest leveraged buyout in history, the report related. In leveraged buyouts, private-equity firms fund part of the purchase price by raising debt. A consortium of banks, including Citigroup, Morgan Stanley, J.P. Morgan Chase & Co. and Lehman Brothers Holdings Inc., helped the buyers take TXU private for $32 billion plus about $13 billion in assumed debt, the report further related. About Energy Future Holdings, fka TXU Corp. Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80 percent-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. Restructuring Talks With Creditors In April 2013, Energy Future and its affiliates confirmed in a regulatory filing that they are in restructuring talks with certain unaffiliated holders of first lien senior secured claims concerning the Companies' capital structure. Energy Future has retained Kirkland & Ellis LLP and Evercore Partners to advise the Companies with respect to the potential changes to the Companies' capital structure and to assist in the evaluation and implementation of other potential restructuring options. The Creditors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co., L.P. to advise the Creditors and to assist in the Creditors' evaluation of potential restructuring options involving the Companies. According to a Wall Street Journal report, people familiar with the matter said Apollo Global Management LLC, Oaktree Capital Management, Centerbridge Partners and GSO Capital Partners, the credit arm of buyout firm Blackstone Group LP, all hold large chunks of Energy Future's senior debt. Many of these firms belong to a group being advised by Jim Millstein, a restructuring expert who helped the U.S. government revamp American International Group Inc. The Journal said Apollo enlisted investment bank Moelis & Co. for additional advice to ensure it gets as much attention as possible on the case given its large debt holdings. ESTATE FINANCIAL: 9th Circ. Urged to Revive Bryan Cave Suits ------------------------------------------------------------ Law360 reported that trustees for a bankrupt real estate investment firm urged the Ninth Circuit to revive their legal malpractice suits seeking more than $100 million from Bryan Cave LLP, saying Bryan Cave attorneys knew the investment firm was engaging in fraud when it represented the company but failed to stop it. According to the report, the two linked appeals, filed by Bradley D. Sharp and Thomas P. Jeremiassen, bankruptcy trustees of Estate Financial Inc. and its independent investment vehicle Estate Financial Mortgage Fund LLC, seek the revival of their malpractice lawsuits against Bryan Cave. About Estate Financial Estate Financial, Inc. -- http://www.estatefinancial.com/-- was a license real estate brokerage firm since the later 1980's. EFI solicited funding for, and arranged and made, loans secured by various real property. EFI also was the sole manager of Estate Financial Mortgage Fund LLC, which was organized for the purpose of investing in and funding loans originated by EFI which were secured by first deeds of trust encumbering commercial and real estate located primarily in California and has been funding such mortgage loans since 2002. Five creditors of EFI filed an involuntary Chapter 11 petition against the real estate broker on June 25, 2008 (Bankr. C.D. Calif. Case No. 08-11457). EFI consented to the bankruptcy petition on July 16, 2008. Robert B. Orgel, Esq., at Pachulski Stang Ziehl & Jones LLP, and William C. Beall, Esq., at Beall and Burkhardt, represented the Debtor as counsel. A Chapter 11 trustee, Thomas P. Jeremiassen, was appointed by the Court on July 23, 2008. Robyn B. Sokol, Esq., and Steven T. Gubner, Esq., at Ezra Brutzkus & Gubner, represent the official committee of unsecured creditors as counsel. In its schedules, Estate Financial disclosed total assets of $27,428,550, and total debts of $7,316,755. EXIDE TECHNOLOGIES: Parties Oppose Panel's Bid to Hire Consultant ----------------------------------------------------------------- Exide Technologies, Wells Fargo Bank, National Association, and the Unofficial Noteholder Committee ask the U.S. Bankruptcy Court for the District of Delaware to deny the application of the Official Committee of Unsecured Creditors to retain an economic consultant. Exide asserts that the Application should be denied because the Committee "insists on controlling any investigation to the exclusion of the Debtor and other stakeholders. Simply put, the Committee does not have such unfettered authority." Exide argues that the Committee's envisioned exclusive arrangement would not only be unwieldy and likely to jeopardize the Debtor's ability to control privileged information in anticipation of potential future litigation, it is beyond the bounds of the Committee's authority. The Unofficial Noteholder Committee supports the Debtor?s employment of a qualified professional to investigate potential price fixing and/or stabilization in the lead market, and to evaluate any potential related causes of action; but strongly objects to the Creditors Committee?s retention of a professional. The Debtor, the Unofficial Noteholder Committee argues, is properly charged in the first instance with investigating whether it has any antitrust or similar claims to bring against third parties. Wells Fargo complains that the Committee has not adequately explained or justified why it now needs and should be allowed to retain for its exclusive use and at open-ended cost to the Debtor's estate yet another -- a fourth -- financial/"economic" advisor. Pushing the envelope further, the Committee does not identify the proposed new "secret" economic consultant nor explain why its existing coterie of financial advisors is inadequate, Wells Fargo adds. Wells Fargo asserts that should the Court decide to accommodate the Application in any way, the Court should (i) impose strict limits on the scope and initial cost of the retention and (ii) require the Committee to share any information, conclusions and/or reports generated by the economic consultant with the Debtor, the lenders under the Debtor?s postpetition financing facility, the unofficial committee of certain holders of the Senior Secured Notes, and the Indenture Trustee. In response to the objections, the Committee argues that the Bankruptcy Code is clear that the Committee has both the power and the fiduciary duty to investigate potential avenues for asset valuation and monetization, including potential claims. Given its right and duty to conduct investigations central to the Chapter 11 proceedings and retain professionals, consultants and other agents to assist in carrying out its duties, the Committee asserts that its application to retain the economic consultant should be granted. The Debtor is represented by Laura Davis Jones, Esq., and James E. O?Neill, Esq., at PACHULSKI STANG ZIEHL & JONES LLP, in Wilmington, Delaware. Wells Fargo is indenture trustee and collateral trustee under the Indenture dated as of January 25, 2011, pursuant to which the Debtor issued its $675 million in face amount of 8-5/8% Senior Secured Notes due 2018. Wells Fargo is represented by Richard A. Robinson, Esq., at REED SMITH LLP, in Wilmington, Delaware; and Harold L. Kaplan, Esq., and Mark F. Hebbeln, Esq., at FOLEY & LARDNER LLP, in Chicago, Illinois. The Unofficial Noteholder Committee is represented by Pauline K. Morgan, Esq., and Andrew L. Magaziner, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware; and Alan W. Kornberg, Esq., Alice Belisle Eaton, Esq., and Claudia R. Tobler, Esq., at PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, in New York. The Committee is represented by Robert J. Dehney, Esq., Eric D. Schwartz, Esq., and Erin R. Fay, Esq., at MORRIS, NICHOLS, ARSHT & TUNNELL LLP, in Wilmington, Delaware; Kenneth A. Rosen, Esq., Sharon L. Levine, Esq., and Paul Kizel, Esq., at LOWENSTEIN SANDLER LLP, in Roseland, New Jersey; and Gerald C. Bender, Esq., and Jeffrey Blumenfeld, Esq., at LOWENSTEIN SANDLER LLP, in New York. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. Exide first sought Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002 and exited bankruptcy two years after. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. Exide returned to Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-11482) on June 10, 2013. Exide disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide's international operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. For the new case, Exide has tapped Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial advisor; Sitrick and Company Inc. as public relations consultant and GCG as claims agent. Schnader Harrison Segal & Lewis LLP was tapped as special counsel. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co-counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. Geosyntec Consultants was tapped as environmental consultants to the Committee. Robert J. Keach of the law firm Bernstein Shur as fee examiner has been appointed as fee examiner. The fee examiner has hired his own firm to represent him in Exide's bankruptcy cases. EXIDE TECHNOLOGIES: Probing for Damages From Lead Price-Fixing -------------------------------------------------------------- Peg Brickley, writing for The Wall Street Journal, reported that Exide Technologies Inc. and its creditors are vying for the right to launch a probe into suspected metal price-fixing, with an eye toward collecting damages if it turns out the battery-maker was victimized. According to the report, suspicions that warehouse owners and the London Metal Exchange conspired to inflate metals prices (and warehouse rents) by stockpiling the commodities in "shadow warehouses" surfaced last year, triggering questions from the Commodity Futures Trading Commission and Department of Justice as well as a wave of lawsuits. If proven, the claims of anticompetitive behavior could mean money for Exide, a lead-acid battery maker that filed for Chapter 11 bankruptcy in June 2013. The Chapter 11 case is Exide's second in less than a dozen years, and the company is under pressure to produce a restructuring plan that will win the approval of its creditors and the court, the report related. The chance to collect damages due to alleged anticompetitive behavior would be a valuable asset to put on the table in plan negotiations, according to court papers filed by Exide's official committee of unsecured creditors. The committee says it's been looking at the issue for months, tracking reports of suspected price-fixing that surfaced last year. The committee says lead, too, may have been improperly hidden to inflate prices. If that's the case, the committee contends that Exide, a major user of lead, should be assessing the damage, the report further related. The battery maker reckons lead accounts for 45.5% of its costs. Recycling provides most of the metal for U.S. battery-making operations, but Exide's operations in Europe use lead bought on the continent, where the warehouse stockpiling scheme reportedly operated. But while all the major forces operating in Exide's Chapter 11 case agree there needs to be a probe of lead price-fixing, there's a fight over who should run the investigation, the report said. That's a dispute U.S. Bankruptcy Judge Kevin Carey could decide, when the committee will face off with Exide and a group of its lenders over the committee's plans bring in an outside firm to evaluate "whether the market prices paid by Exide and other lead purchasers were supracompetitive?that is, higher than what the market prices would have been absent the allegedly unlawful conduct," court papers say. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. Exide first sought Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002 and exited bankruptcy two years after. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. Exide returned to Chapter 11 bankruptcy (Bankr. D. Del. Case No. 13-11482) on June 10, 2013. Exide disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide's international operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. For the new case, Exide has tapped Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, and Pachulski Stang Ziehl & Jones LLP as counsel; Alvarez & Marsal as financial advisor; Sitrick and Company Inc. as public relations consultant and GCG as claims agent. Schnader Harrison Segal & Lewis LLP was tapped as special counsel. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler LLP and Morris, Nichols, Arsht & Tunnell LLP as co counsel. Zolfo Cooper, LLC serves as its bankruptcy consultants and financial advisors. Geosyntec Consultants was tapped as environmental consultants to the Committee. Robert J. Keach of the law firm Bernstein Shur as fee examiner has been appointed as fee examiner. The fee examiner has hired his own firm to represent him in Exide's bankruptcy cases. EXPERT SOUTH TULSA: Kansas Judge Rules on LTF Lawsuit ----------------------------------------------------- Bankruptcy Judge Robert D. Berger granted the motion of LTF Real Estate Company, Inc., to dismiss the Amended Counterclaim filed by Expert South Tulsa, LLC, in the lawsuit, LTF REAL ESTATE COMPANY, INC., Plaintiff, v. EXPERT SOUTH TULSA, LLC, Debtor/Defendant, Adv. Proc. No. 11-06011 (Bankr. D. Kan., January 10, 2011). The Court abstained from deciding on LTF's request for a determination on the ownership of an escrow fund, and dismissed First American Title Insurance Company as a party in the lawsuit. The dispute stems from the sale of a real estate development known as Memorial Commons located in Tulsa, Oklahoma. In 2008, LTF purchased 11 acres of Memorial Commons for the purpose of building and operating a health club. The attendant Purchase Agreement required the Debtor to construct certain improvements after the sale. To facilitate the construction, LTF and the Debtor entered into an Escrow and Post-Closing Construction Agreement. The Debtor placed $1,226,400 of the $3,000,000 purchase price into escrow with First American. These funds equaled 120% of LTF's and the Debtor's engineers' reasonable estimate of the cost of the work and was set aside to pay for the construction. Under the terms of the Escrow Agreement, the Debtor was entitled to the return of the Escrow Fund at certain stages of completion of the improvements. In the event the Debtor failed to complete the improvements, LTF had the option to complete the improvements and obtain reimbursement from the Escrow Fund. The Escrow Agreement is somewhat unusual because the performing party (Debtor) received all of the purchase price before the escrow was created, and the Debtor then forwarded $1,226,000 of the purchase price to First American as the Escrow Fund. Before April 2009, the Debtor contracted with Key Construction Oklahoma, LLC to perform the construction pursuant to the Purchase Agreement. On March 30, 2010, Team Viva, LLC, another creditor in the main bankruptcy case, filed an involuntary petition against the Debtor under Chapter 7 of the United States Bankruptcy Code. After filing, the Debtor converted this case to a Chapter 11 (Bankr. D. Kan. Case No. 10-20982). The Debtor never completed the improvements and no money has been disbursed from the Escrow Fund. LTF filed the Complaint to determine the rights of the parties to the Escrow Fund and to direct First American to comply with the Court's decision. On March 11, 2011, the Debtor asserted a counterclaim against LTF and a cross-claim against First American. The Debtor asserted that the Escrow Fund was property of the bankruptcy estate. On August 29, 2011, the Court issued its Memorandum Opinion and Order Granting Plaintiff's Motion for Summary Judgment, In Part. In the decision, the Court held: (a) the Debtor only has a contingent interest in the Escrow Agreement; (b) the Escrow Fund is not property of the estate; (c) neither the Debtor nor LTF are entitled to an immediate disbursement of the Escrow Fund; and, finally, (d) LTF has the right to exercise the remedy of self-help under the terms of the Escrow Agreement. The decision did not determine either the claims against First American or the Debtor's counterclaim against LTF. On Sept. 15, 2011, the Debtor filed its Amended Answer and Amended Counterclaim in which it asserted two additional claims against LTF under 11 U.S.C. Sections 544(b) and 548. Of the three counts raised in the Amended Counterclaim, Count I reiterates the Debtor's argument that the Escrow Fund belongs to the estate because the Escrow Fund came from the Debtor and the "purposes of the agreement between the parties have not been implemented and will no longer be implemented." Count II asserts that the sale of the Property was fraudulent under Sec. 548 because the Debtor allegedly did not receive reasonably equivalent value for the Property. Count III alleges that the sale was fraudulent under Sec. 544(b) and Oklahoma law. The Debtor filed its Motion for Summary Judgment on Counts II and III on Dec. 15, 2011, and LTF filed its Objection on Jan. 5, 2012. On Jan. 27, 2012, the Bankruptcy Court issued its Order Denying Defendant's Motion for Summary Judgment because the Amended Answer and Amended Counterclaim were untimely filed. On Feb. 28, 2012, the Debtor appealed. On May 29, 2012, the Bankruptcy Appellate Panel of the Tenth Circuit denied the appeal as interlocutory and directed the parties to seek a final order from the Bankruptcy Court on the issues. The Bankruptcy Appellate Panel also noted that the Amended Counterclaim should have been allowed since it was filed within the time provided for by the Bankruptcy Court. After the Bankruptcy Appellate Panel's decision, LTF filed the Motion to Dismiss and requested a final order incorporating the Bankruptcy Court's previous determinations. Judge Berger said LTF's Motion for Summary Judgment Dismissing Debtor's Amended Counterclaim,4 Debtor/Defendant's Motion for Summary Judgment - Counts II and III; the Debtor/Defendant's Motion to Stay Scheduling Order Deadlines; and the Debtor/ Defendant's Motion to Suspend Proceedings on LTF's Motion for Summary Judgment are denied as moot by separate order. A copy of the Bankruptcy Court's Feb. 18, 2014 Memorandum Opinion and Order is available at http://is.gd/2LJqTRfrom Leagle.com. EVENT RENTALS: Proposes to Pay Bonuses to Employees --------------------------------------------------- Event Rentals, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to approve a key employee incentive plan and a key employee retention plan. Through the KEIP, the Debtors seek to motivate and incentivize 14 employees, who are both insiders and non-insiders, whose efforts and expertise are integral to preserving the Debtors' businesses, a meaningful continuation of the Debtors' marketing process, and the Debtors' efforts towards a competitive auction. The terms of the KEIP provide for potential performance bonuses that have served, and will continue to serve, as an important incentive for the KEIP Participants to go beyond their ordinary duties and obligations, and take those important extra steps that will preserve the value of the Debtors' businesses and maximize the price obtained for the Debtors' assets. Upon the closing of the Sale, the Debtors will make KEIP Payments to 12 employees included in the KEIP (called "Group A") in the collective aggregate amount of: (i) $281,250, contingent upon the Debtors achieving the cumulative cash receipts forecast in the Approved Budget; plus (ii) $281,250, contingent upon the Debtors achieving a DIP Financing balance at the closing of the Sale at or below the balance forecast in the Approved Budget; provided, however, that to the extent the Debtors are in arrears on postpetition payables at the closing of the Sale, the amount of the arrearages will be deemed added to the DIP Financing balance for purposes of this calculation; plus (iii) $187,500, contingent upon the aggregate amount of cash and credit bid consideration (excluding assumed liabilities) received in the Sale equaling or exceeding $124 million; plus (iv) 1% of the aggregate amount of cash and credit bid consideration (excluding assumed liabilities) received in the Sale in excess of $124 million but less than or equal to $134 million; plus (v) 2% of the aggregate amount of cash and credit bid consideration (excluding assumed liabilities) received in the Sale in excess of $134 million. Upon the closing of the Sale, the Debtors will make KEIP Payments to two employees in the KEIP Participants (called "Group B") in the collective aggregate amount of $60,000. Through the KERP, the Debtors seek to retain and motivate the key field management and sales professionals essential to the preservation of the Debtors' business operations and the Debtors' obligations as debtors in possession as the Debtors endeavor to maximize the value of their estates through a successful sale process. The KERP participants will include approximately 13 employees, none of which are insiders. The KERP utilizes a retention pool of approximately $260,000, funded by the Debtors' postpetition lenders, and provides for each KERP Participant to receive a retention bonus equal to between 7% and 22% of that KERP Participant's annual base pay. The Debtors are represented by Jeffrey M. Schlerf, Esq., John H. Strock, Esq., and L. John Bird, Esq., at FOX ROTHSCHILD LLP, in Wilmington, Delaware; John K. Cunningham, Esq., at WHITE & CASE LLP, in Miami, Florida; Craig H. Averch, Esq., at WHITE & CASE LLP, in Los Angeles, California. About Event Rentals Event Rentals Inc., the largest event-rental provider in the U.S., filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 14-bk-10282) on Feb. 13, 2014, seeking a new owner to take over its business. Event Rentals, which sought bankruptcy protection with affiliates, including Classic Midwest, Inc., has 39 locations across 22 markets. The company has the largest offering of event equipment, value-added event services, and temporary structure assets, and provide services for over 145,000 events for approximately 55,000 customers annually. The company taps 2,500 employees throughout the year and has total annual revenues of $235 million. Assets were listed for $148 million, with debt of $246 million. The Debtors owe $175 million in outstanding principal under a senior secured credit agreement; $36 million in outstanding principal under certain unsecured and subordinated liquidity notes; $5.5 million in outstanding principal under certain unsecured and subordinated seller financing relating to business acquisitions; and trade debt, as of Dec. 26, 2013, totaling $16.6 million. The Debtors have tapped Fox Rothschild LLP as local counsel; White & Case LLP as bankruptcy counsel; Jefferies LLC as financial advisor; and Kurtzman Carson Consultants LLC as claims and noticing agent. EVENT RENTALS: Has Authority to Employ Kurtzman as Claims Agent --------------------------------------------------------------- Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized Event Rentals, Inc., et al., to employ Kurtzman Carson Consultants LLC as claims and noticing agent in order to assume full responsibility for the distribution of notices and the maintenance, processing, and docketing of proofs of claim filed in the Chapter 11 cases. As previously reported by The Troubled Company Reporter, the Debtors said they compared engagement proposals of three court- approved claims and noticing agents before engaging KCC. The fee structure agreed upon by the parties was not attached to the copy of the services agreement filed with the bankruptcy court. Before the Petition Date, the Debtors paid a retainer to KCC in the amount of $15,000. About Event Rentals Event Rentals Inc., the largest event-rental provider in the U.S., filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 14-bk-10282) on Feb. 13, 2014, seeking a new owner to take over its business. Event Rentals, which sought bankruptcy protection with affiliates, including Classic Midwest, Inc., has 39 locations across 22 markets. The company has the largest offering of event equipment, value-added event services, and temporary structure assets, and provide services for over 145,000 events for approximately 55,000 customers annually. The company taps 2,500 employees throughout the year and has total annual revenues of $235 million. Assets were listed for $148 million, with debt of $246 million. The Debtors owe $175 million in outstanding principal under a senior secured credit agreement; $36 million in outstanding principal under certain unsecured and subordinated liquidity notes; $5.5 million in outstanding principal under certain unsecured and subordinated seller financing relating to business acquisitions; and trade debt, as of Dec. 26, 2013, totaling $16.6 million. The Debtors have tapped Fox Rothschild LLP as local counsel; White & Case LLP as bankruptcy counsel; Jefferies LLC as financial advisor; and Kurtzman Carson Consultants LLC as claims and noticing agent. FILENE'S BASEMENT: DSW on Hook for Lease, Landlord Tells NY Court ----------------------------------------------------------------- Law360 reported that the landlord of a Manhattan retail complex urged a New York appeals court to hold shoe company DSW MS LLC liable for a $100 million commercial lease that belonged to Filene's Basement before its bankruptcy, saying DSW's guarantee of the lease is absolute and unconditional. According to the report, in oral arguments before a panel of New York Supreme Court's Appellate Division, First Department, an attorney for 4 USS LLC, Robert J. Giuffra Jr. of Sullivan & Cromwell LLP, called DSW a highly sophisticated entity. About Filene's Basement Massachusetts-based Filene's Basement, also called The Basement, is the oldest off-price retailer in the United States. The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. Filene's Basement first filed for Chapter 11 bankruptcy protection in August 1999. Filene's Basement was bought by a predecessor of Retail Ventures, Inc., the following year. Retail Ventures in April 2009 transferred the unit to Buxbaum. Filene's Basement, Inc. and its affiliates filed for Chapter 22 (Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy Solutions serves as claims and notice agent. The Debtors disclosed assets of $236 million, including real estate of $97.7 million, and liabilities of $94 million, including $31.1 million owing on a revolving credit with Bank of America NA as agent. In addition, there were $11.1 million in letters of credit outstanding on the revolver. The 2009 Debtor was formally renamed FB Liquidating Estate, following the sale of all of its assets to Syms Corp. in June 2009. Pursuant to the Liquidating Plan confirmed in January 2010, secured creditors in the Chapter 11 case have been paid in full, and holders of priority, administrative and convenience class claims have received 100% of their allowed claims. As reported by the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen, Chairman of Abacus Advisors LLC and Chief Restructuring Officer for FB Liquidating Estate disclosed that a second distribution of dividend checks to Filene's unsecured creditors amounting to 12.5% of approved claims has been made, bringing the cumulative distributions on unsecured claims to 62.5%. On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-13511 to 11-13514) after a failed bid to sell the business. The two units are Syms Clothing Inc. and Syms Advertising Inc. Judge Kevin J. Carey presides over the case. Lawyers at Skadden Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The Debtors tapped Rothschild Inc. as investment banker and Cushman and Wakefield Securities, Inc., as real estate financial advisors. Syms shuttered its namesake and Filene's Basement outlets upon the bankruptcy filing and tapped a joint venture of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC to run the going-out-of-business sales. The sale may continue until Jan. 31, 2012. Filene's Basement estimated $1 million to $10 million in assets and $50 million to $100 million in debts. The petitions were signed by Gary Binkoski, authorized representative of Filene's Basement. The official committee of unsecured creditors appointed in the 2011 case has retained Hahn & Hessen LLP as legal counsel. Holders of equity in Syms Corp. pushed for an official shareholders' committee and separation of the Syms and Filene's Basement bankruptcy estates. Gordon Brothers and Hilco are represented by Goulston & Storrs, P.C. and Ashby & Geddes, P.A. FINJAN HOLDINGS: Appoints VP Legal Operations --------------------------------------------- Finjan Holdings, Inc., appointed Julie Mar-Spinola as vice president, legal operations. In this newly created role, Ms. Mar- Spinola will join the Company's senior management team and have a dual business and legal role, including building up Finjan's Intellectual Property (IP) assets, heading up legal operations, and overseeing the Company's patent enforcement program to protect its proprietary technologies and IP. She will report to Finjan's President, Phil Hartstein. Ms. Mar-Spinola has over 26 years of experience in the technology sector. Prior to joining Finjan, she was interim general counsel for core system BIOS firm, Phoenix Technologies, Ltd., where she successfully helped close the acquisition of system optimization software company, iolo technologies. Prior to Phoenix, she was vice president, legal for thin film solar start-up, Alta Devices, Inc., where she architected and launched Alta's worldwide patent strategy, growing its U.S. patent portfolio over 200 percent during an 18-month period. Before Alta Devices, she was the vice president, Global Affairs for worldwide semiconductor manufacturer Atmel Corporation, where she transformed the IP, Litigation and Licensing department into a profit center for the company by, among other achievements, successfully leading to victory several major litigation matters and collecting over $100 million in jury awards. Ms. Mar-Spinola joined Atmel from international law firm Heller Ehrman, where, being the firm's first patent attorney, she played a key role in the formation of Heller Ehrman's highly successful IP litigation group. "Julie is a seasoned corporate executive whose expertise in intellectual property and technology will make her an integral member of our senior management team," said Finjan's president, Phil Hartstein. "Her extensive track record in IP asset management, patent litigation and dispute resolution strengthens our ability to protect our proprietary inventions resulting from decades-long R&D efforts and invested dollars while meeting Finjan's commitment to the advancement of innovations in the cyber security space." "I am excited and enthused about joining Finjan and the core management team here," added Ms. Mar-Spinola. "In today's environment, cybersecurity is at the forefront of international and commercial interests and concerns. It is quite energizing to be part of an organization who was the first to invent technologies able to detect and deflect software intrusions and malicious code delivery and who is committed to investing in new cybersecurity innovations to address such interests. Importantly, Finjan's core values and best practices fit well with my own. This position presents a unique opportunity not only to help advance the Company's growth objectives, but also to advance a culture of thoughtful, composed, and sound decision-making processes for the benefit of its shareholders, employees, and the community as a whole." Ms. Mar-Spinola is a certified mediator for the U.S. District Court for the Northern District of California, specializing in patent disputes. She is also the Co-Founder and Chairman of the Board of ChIPs Network, Inc. (ChIPs), a non-profit organization that supports, educates, and promotes the advancement of women in IP law, and a board member of Women's Audio Mission (WAM), a non- profit group dedicated to the education and advancement of women and girls in music production in the recording arts. She is a registered patent attorney and admitted to the California State Bar. With this key appointment, Finjan continues to round out its senior management team in support of the Company's planned growth strategy. Recognized internationally as a pioneer and leader in web and network security, Finjan's decades-long investment in innovation is captured in its patent portfolio, centered around software and hardware technologies capable of proactively detecting previously unknown and emerging threats on a real-time, behavior-based basis. Finjan has proudly licensed its patents and technology to several major software and technology companies around the world. About Finjan Finjan, formerly known as Converted Organics, is a leading online security and technology company which owns a portfolio of patents, related to software that proactively detects malicious code and thereby protects end-users from identity and data theft, spyware, malware, phishing, trojans and other online threats. Founded in 1997, Finjan is one of the first companies to develop and patent technology and software that is capable of detecting previously unknown and emerging threats on a real-time, behavior-based basis, in contrast to signature-based methods of intercepting only known threats to computers, which were previously standard in the online security industry. Converted Organics disclosed a net loss of $8.42 million in 2012, as compared with a net loss of $17.98 million in 2011. Finjan Holdings's balance sheet at Sept. 30, 2013, showed $30.35 million in total assets, $927,000 in total liabilities and $29.42 million in total stockholders' equity. Moody, Famiglietti & Andronico, LLP, in Tewksbury, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses and negative cash flows from operations and an accumulated deficit that raises substantial doubt about the Company's ability to continue as a going concern. FIRST INDUSTRIAL: S&P Raises Corp. Credit Rating to 'BB+' --------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on First Industrial Realty Trust Inc. and First Industrial L.P. (collectively, First Industrial) to 'BB+' from 'BB'. The outlook is stable. At the same time, S&P raised by one notch its issue-level rating on the company's unsecured debt to 'BBB-' from 'BB+'; the recovery rating for the unsecured debt remains '2'. In addition, S&P raised its rating on the company's preferred stock to 'B+' from 'B'. "The upgrade acknowledges First Industrial's improved debt coverage measures and lower leverage, due in part to the pay down and redemption of higher-cost debt and preferred stock as well as the improvements in the company's portfolio quality and operating performance," said Standard & Poor's credit analyst Elizabeth Campbell. "We have revised our view of First Industrial's financial risk profile to "intermediate" from "significant". First Industrial's very manageable near-term debt maturity schedule, low dividend payout ratio, and access to a recently expanded revolver support "adequate" liquidity. We have also considered the growth in portfolio occupancy, benefiting from a recovery in industrial markets nationally. First Industrial continues to increase its concentration in higher-barrier markets, primarily through development. We view First Industrial's business risk profile as "fair," which acknowledges its sizable industrial portfolio's good geographic and tenant diversity but also its uneven asset quality relative to peers and the risks associated with its development pursuits; while moderate in scale, its current projects are largely speculative". The outlook is stable based on S&P's expectation that First Industrial will sustain its recent improvements in key credit metrics, portfolio occupancy, and NOI. Favorable macroeconomic and real estate trends and the contribution to cash flow as development stabilizes should support modest EBITDA growth over the next two years. S&P considers an upgrade unlikely over the next one to two years, though it could raise the rating if the company's portfolio performance and growth prospects strengthen such that S&P's view of First Industrial's business risk profile improves to "satisfactory". This could occur if the company continues to reposition its portfolio and its same-store NOI growth accelerates from further improvements to rent and occupancy, while successfully managing its development pursuits. S&P do not think a negative rating action is likely in the near term, based on its expectation that real estate fundamentals will continue to improve in 2014 and management will sustain its balance sheet and liquidity improvements. However, S&P would lower the rating if First Industrial's financial risk profile deteriorated such that it was more in line with a "significant" assessment (such as sustained fixed-charge coverage below 2.1x and debt to EBITDA that exceeded 7.5x). S&P would also consider lowering the rating if the company pursues debt-financed speculative development or faces material operating and leasing difficulties. FIRST MARINER: Bidding Approval Sought -------------------------------------- BankruptcyData reported that First Mariner Bancorp filed with the U.S. Bankruptcy Court a motion for (i) an order (a) approving bidding and auction procedures with respect to the sale of certain assets, (b) approving bidding protections for the stalking horse bidder, (c) approving procedures related to the assumption and assignment of certain executory contracts and unexpired leases, (d) approving the form and manner of notices related to the auction and sale and (e) scheduling the sale hearing and (ii) an order (a) approving such sale free and clear of liens, claims, encumbrances and other interests and (b) granting related relief. According to BankruptcyData, the motion explains, "After months of extensive negotiations, on February 7, 2014, FMAR, the Bank and RKJS entered into that certain Merger and Acquisition Agreement (the 'M&A Agreement') to consummate the M&A Transaction. The M&A Transaction is functionally a transfer of the Debtor's shares in the Bank (as well as certain Bank-related assets) to the 'Investors' (as defined in the M&A Agreement) for consideration of $4.775 million (the 'Purchase Price')....As part of the M&A Transaction, the Investors have also agreed to recapitalize the Bank in an amount between $85 million and $100 million, less the Purchase Price (such amount, the 'Recapitalization Amount'). RKJS has agreed to set the 'floor' price for Competing Bidders to outbid by serving as a 'stalking horse' bidder in the bankruptcy auction process. In consideration for serving as the stalking horse bidder, if a Competing Bid is ultimately selected as the winning bid at the auction, or upon termination of the M&A Agreement (provided that RKJS is not in material breach thereof), RKJS will be entitled to (i) a breakup fee in the amount of $1 million, consisting of $250,000 due from FMAR and $750,000 due from the Bank, and (ii) reimbursement of the actual fees and expenses incurred by RKJS and the Investors in connection with the M&A Transaction, up to an amount of $1.75 million ((i) and (ii) referred to herein as the 'Stalking Horse Bidder Fee')." The minimum overbid must be at least $250,000 more than the aggregate sum of the purchase price and the stalking horse bidder fee. About First Mariner Bancorp First Mariner Bancorp, the holding company for Maryland community bank 1st Mariner, filed for Chapter 11 bankruptcy on Feb. 10, 2014, in order to sell its bank subsidiary, 1st Mariner Bank, to a new bank formed by investors. The case is In re First Mariner Bancorp, Case No. 14-11952 (D. Md.) before Judge David E. Rice. The Debtor's bankruptcy counsel if KRAMER LEVIN NAFTALIS & FRANKEL LLP. The Debtor's local counsel is Lawrence Joseph Yumkas, Esq., at YUMKAS, VIDMAR & SWEENEY, LLC, in Annapolis, Maryland. The Debtor's regulatory and corporate counsel if KILPATRICK TOWNSEND & STOCKTON LLP. The Debtor's investment banker and financial adviser is SANDLER O'NEILL + PARTNERS, L.P. The Debtor has total assets of $5.45 million and total debts of $60.52 million. FISHER ISLAND: Bankruptcy Judge Approves Plan --------------------------------------------- Brian Bandell, writing for South Florida Business Journal, reported that U.S. Bankruptcy Judge A. Jay Cristol approved a plan by a company in Chapter 11 to pursue a residential project on wealthy Fisher Island. According to the report, the order by the judge on Feb. 11 allows Fisher Island Investments to fully pursue development of the Palazzo del Sol and Palazzo del Luna projects despite the ongoing bankruptcy case and a foreclosure lawsuit in county court. Fisher Island Investments was thrown into bankruptcy court by an involuntary Chapter 11 filing by several alleged creditors in 2011, the report related. The case has been delayed by ownership disputes but those issues have apparently been resolved and the court declared that the officers and directors of Fisher Island Investments are Roberto Sosa, Mark Hauf and Yves Baumann. They will seek to line up development of the residential project on the north side of the island off Miami Beach and to refinance the $139.7 million mortgage that fell into foreclosure, the report further related. The foreclosure sale date is still scheduled for March 12 but it could be moved or canceled if development talks progress, the report added. About Fisher Island Investments Solby+Westbrae Partners; 19 SHC Corp.; Ajna Brands Inc.; 601/1700 NBC LLC; Axafina Inc.; and Oxana Adler, LLM, filed an involuntary Chapter 11 petition against Miami Beach, Florida-based Fisher Island Investments, Inc. (Bankr. S.D. Fla. Case No. 11-17047) on March 17, 2011. On the same date, involuntary Chapter 11 petitions were also filed against the Company's affiliates, Mutual Benefits Offshore Fund, LTD (Bankr. S.D. Fla. Case No. 11-17051) and Little Rest Twelve, Inc. (Bankr. S.D. Fla. Case No. 11-17061). Judge A. Jay Cristol presides over the case. The case was previously assigned to Judge Laurel M. Isicoff. Petitioning creditors are represented by Craig A. Pugatch, Esq., and George L. Zinkler, Esq., at Rice Pugatch Robinson & Schiller, P.A., 101 NE 3 Ave. Suite 1800, Fort Lauderdale FL 33301. John F. O'Sullivan, Esq., at Hogan Lovells US LLP, Patricia A. Redmond, Esq., at Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.,, and Terrance A. Dee, Esq., at DiBello, Lopez & Castillo, P.A., represent Alleged Debtor Fisher Island Investments, Inc., as counsel. Donald F. Walton, the U.S. Trustee for Region 21, appointed James S. Feltman as an examiner in the involuntary cases. Greenberg Traurig, P.A., serves as counsel for the examiner while Leshaw Law, P.A., is the co-counsel. FREESEAS INC: Broadbill No Longer a Shareholder ----------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Broadbill Investment Partners, LLC, and Broadbill Partners GP, LLC, disclosed that as of Dec. 31, 2013, they have ceased to be the beneficial owner of more than 5 percent of the common shares of FreeSeas Inc. Broadbill previously reported beneficial ownership of 648,232 shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/uwZdmZ 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. As of Sept. 30, 2013, the Company had $107.35 million in total assets, $106.63 million in total liabilities, all current, and $711,000 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. GGW BRANDS: 'Girls Gone Wild' Being Sold for $1.83 Million ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the "Girls Gone Wild" video franchise and its assets will be sold for $1.83 million unless a better offer surfaces at an auction on April 11. According to the report, the company's trustee R. Todd Neilson filed papers to set up a hearing on Feb. 20 in U.S. Bankruptcy Court in Los Angeles for approval of auction and sale procedures. If the judge goes along, competing bids will be due April 8. The hearing to approve the sale will occur on April 23. The buyer isn't affiliated with founder Joe Francis, the report said. About GGW Brands Santa Monica, California-based GGW Brands, LLC, the company behind the "Gils Gone Wild" video, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-15130) on Feb. 27, 2013. Judge Sandra R. Klein oversees the case. The company is represented by the Law Offices of Robert M. Yaspan. The company disclosed $0 to $50,000 in estimated assets and $10 million to $50 million in estimated liabilities in its petition. Affiliates GGW Events LLC, GGW Direct LLC and GGW Magazine LLC also sought Chapter 11 protection. In April 2013, R. Todd Neilson, an ex-FBI agent, was appointed as Chapter 11 Trustee to take over the companies. Mr. Neilson has investigated failed solar-power company Solyndra and was involved in the Mike Tyson and Death Row Records bankruptcy cases. GGW Marketing, LLC, GGW Brands' affiliate, filed a voluntary Chapter 11 petition on May 22, 2013, before the United States Bankruptcy Court Central District Of California (Los Angeles). The case is assigned Case No.: 13-23452. Martin R. Barash, Esq., and Matthew Heyn, Esq., at Klee, Tuchin, Bogdanoff and Stern, LLP, in Los Angeles, California, represent GGW Marketing. GREGORY CANYON: Consents to Chapter 11 Case ------------------------------------------- James Simmons, in his capacity as sole manager of Gregory Canyon Ltd., notifies the U.S. Bankruptcy Court for the Southern District of California, that GCL consents to the entry of an order for relief commencing a case under Chapter 11 of the Bankruptcy Code. Richard Marcus Profit Sharing Plan, Irwin Heller and Capital Foresight Limited Partnership filed an involuntary Chapter 11 petition against GCL on Feb. 12, 2014. Each of the Petitioning Credit is a holder of a promissory note evidencing a claim against GCL. The claims of the Petitioning Creditors aggregate more than $10,000 in excess of the value of any collateral securing those claims. Mr. Simmons agreed that GCL is generally not paying its debts as they become due. The petitioning creditors are allegedly owed: Capital Foresight ($428,000), Irwin Heller ($1.55 million) and Richard Marcus Profit Sharing Plan (owed $453,000). The petitioning creditors are represented by attorneys at DSR & Associates, P.C., in San Diego. The involuntary petition (Bankr. S.D. Cal. Case No. 14-00983) was filed Feb. 12, 2014. Chief Judge Laura S. Taylor is assigned to the case. GULFCO HOLDING: PE Firm Balks at Probe Request in Chapter 11 ------------------------------------------------------------ Law360 reported that Prospect Capital Corp., a major creditor in oil drilling equipment holding company Gulfco Holding Corp.'s bankruptcy, decried the debtor's request for an investigation of the lender, arguing the probe is just a fishing expedition for information to support "baseless allegations." According to the report, in an objection before the Delaware bankruptcy court, Prospect contends that Gulfco's request for an examination under rule 2004 of the Bankruptcy Code is just a way to gather data for the adversary action it lodged in late January. As previously reported by The Troubled Company Reporter, Gulfco lodged an adversary action in its case, claiming its Chapter 11 filing stems from secured creditor Prospect's "scheme to steal" its nondebtor operating affiliate Gulf Coast Machine & Supply Co. In the complaint filed in the Delaware bankruptcy court, Gulfco said it had borrowed about $42 million from Prospect in order to buy Texas-based Gulf Coast for $72 million at a blind auction in 2012. Prospect Capital has pushed for the Chapter 11 case to be thrown out, five days after the debtor accused it of plotting "to steal" a nondebtor operating affiliate. Prospect alleges that Gulfco filed its case in bad faith because the situation is really just a two-party dispute that's been improperly cloaked as a Chapter 11 case. About Gulfco Holding Headquartered in Wilton, Connecticut, Gulfco Holding Corp. filed a bare-bones Chapter 11 petition (Bankr. D. Del. Case No. 13-13113) on Nov. 27, 2013. The Hon. Brendan Linehan Shannon presides over the case. Michael Jason Barrie, Esq., at Benesch Friedlander Coplan & Aronoff LLP represents the Debtor in its restructuring effort. The Debtor estimated $10 million to $50 million in assets and debts. According to the list of top unsecured creditors, PNC Bank, National Association is owed $5.4 million and Prospect Capital Corp. has a disputed claim of $40.95 million on account of its shares of stock in Gulf Coast Machine & Supply Company. Altus Capital Partners II, L.P. and its affiliates, Franklin Park Co-Investment Fund, L.P., David LeBlanc, and Steven Tidwell own shares in the company. Elizabeth A. Burgess, as president and CEO, signed the Chapter 11 petition. HALLWOOD GROUP: Merger Consideration Hiked to $13.00 Per Share -------------------------------------------------------------- Plaintiff Gary L. Sample, defendants The Hallwood Group Incorporated, Anthony J Gumbiner, Charles A. Crocco, Jr., Amy H. Feldman, Michael R. Powers, Hallwood Financial Limited, and HFL Merger Corporation, who are the parties to the derivative action, entered into a stipulation of settlement, subject to the approval of the Court of Chancery of the State of Delaware. As reported by the TCR on June 10, 2013, Hallwood Group, Hallwood Financial Limited ("Parent"), and HFL Merger Corporation, a wholly owned subsidiary of the Parent ("Merger Sub"), entered into an Agreement and Plan of Merger on June 4, 2013. The Merger Agreement provides that Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. On Aug. 23, 2013, Mr. Sample filed a purported class and derivative action in the Court of Chancery of the State of Delaware against the parties to the Merger Agreement and certain directors and officers of the Company, asserting, among other things, that the Merger Consideration was unfair and did not reflect the true value of the Company and all of its assets. On Feb. 7, 2014, Plaintiff and the Defendants entered into a Stipulation of Settlement whereby the Parties agreed that, in order to resolve the Litigation, the parties to the Merger Agreement would amend the Merger Agreement to increase the Merger Consideration by $3.00 per share, from $10.00 per Share to $13.00 per Share, less any incentive payment that may be awarded by the Court to the Plaintiff and less any attorneys fees that may be awarded by the Court to Plaintiff's counsel in accordance with the Stipulation. The Defendants specifically deny that they have engaged in any wrongdoing, deny that they committed any violation of law, deny that they breached any fiduciary duties, and deny liability of any kind to Plaintiff, the Company, or its stockholders. The increased Merger Consideration will be paid if the settlement set forth in the Stipulation is approved by the Court and the Merger is consummated pursuant to the terms of the Merger Agreement as amended by the Second Amendment to the Merger Agreement, which was entered into by the Company, Parent, and Merger Sub as of Feb. 7, 2014. Hallwood Trust and Anthony Joseph Gumbiner disclosed that as of Feb. 7, 2014, they beneficially owned 1,001,575 shares of common stock of The Hallwood Group Incorporated representing 65.7 percent of the shares outstanding. A copy of the regulatory filing is available for free at: http://is.gd/yKRHwL About Hallwood Group Dallas, Texas-based The Hallwood Group Incorporated (NYSE MKT: HWG) operates as a holding company. The Company operates its principal business in the textile products industry through its wholly owned subsidiary, Brookwood Companies Incorporated. Brookwood is an integrated textile firm that develops and produces innovative fabrics and related products through specialized finishing, treating and coating processes. Prior to October 2009, The Hallwood Group Incorporated held an investment in Hallwood Energy, L.P. ("Hallwood Energy"). Hallwood Energy was a privately held independent oil and gas limited partnership and operated as an upstream energy company engaged in the acquisition, development, exploration, production, and sale of hydrocarbons, with a primary focus on natural gas assets. The Company accounted for the investment in Hallwood Energy using the equity method of accounting. Hallwood Energy filed for bankruptcy in March 2009. In connection with the confirmation of Hallwood Energy's bankruptcy in October 2009, the Company's ownership interest in Hallwood Energy was extinguished and the Company no longer accounts for the investment in Hallwood Energy using the equity method of accounting. Hallwood Group incurred a net loss of $17.94 million in 2012, as compared with a net loss of $6.33 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $65.88 million in total assets, $25.75 million in total liabilities, and stockholders' equity of $40.13 million. Deloitte & Touche LLP, in Dallas, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company is dependent on its subsidiary to receive the cash necessary to fund its ongoing operations and obligations. It is uncertain whether the subsidiary will be able to make payment of dividends to its fund ongoing operations. These conditions raise substantial doubt about its ability to continue as a going concern. HARRIS AGENCY: Nevada Court Rules on Archway Insurance Suit ----------------------------------------------------------- ARCHWAY INSURANCE SERVICES, LLC, et al., Plaintiff(s) v. JAMES HARRIS, et al., Defendant(s), No. 2:11-CV-1173 JCM (CWH) (D. Nev.), arises out of the financing and purchase of The Harris Agency -- THA -- an insurance business, and was originally filed in the Eastern District of Pennsylvania. Defendants James Harris and Greg Harris are father and son, respectively. Both James Harris and Greg Harris are insurance producers. THA was the employer of James and Greg Harris for several years through 2010. THA was owned by plaintiff Nevada Investment Partners, which was formed for the purpose of owning THA and was owned by the same group of persons who are the principals of the plaintiff-entities in this case. The other plaintiffs in the lawsuit are Archway Insurance Services; Union One Insurance Group; and Trinity Capital Management Group. Prior to his employment with THA, James Harris worked for an insurance agency called Brown & Brown Insurance of Nevada, Inc. In July 2007, James Harris discussed with Brown & Brown the possibility of joining his son, Greg, at THA. James Harris later left Brown & Brown. In response, Brown & Brown filed suit against defendants James and Greg Harris in Nevada state court for diverting its book of business in violation of its non-compete agreements with Brown & Brown. Thereafter, the parties agreed to engage in mediation to discuss THA's possible purchase of the Brown & Brown book of business James Harris had been handling. The book of business focused on commercial accounts largely in the construction industry in Las Vegas, Nevada. While in discussions about the purchase of the book of business from Brown & Brown, James Harris requested that a loan be made to Dianne Curry, a current or proposed employee of the Harris Agency, for her use in purchasing a house. The Plaintiffs allege James Harris stated he would repay the $25,000. The Plaintiffs claim Harris represented he was unable to loan the money directly because he was on the board of the bank, and was thus not able to make personal loans for real estate transactions. In response to the request, plaintiff Union One sent $25,000 to THA to be used to pay Ms. Curry. During negotiations over the book of business at Brown & Brown, a production report dated June 22, 2007 was created for the book. The production report showed an annual revenue of $3.2 million. On Oct. 18, 2007, the defendants and Brown & Brown signed a settlement agreement that was filed with the Eighth Judicial District Court of Clark County, Nevada. In the settlement, THA agreed to purchase Brown & Brown's book of business for $5.25 million. THA, by funding obtained through lenders, was to pay Brown & Brown in three installments: 50% (or $2,625,000) to be paid after execution; and two payments of 25% ($1,312,500) each due to be made later. By October 2008, the end of the first year of operations after the purchase, the revenue from the book of business of James Harris was approximately $1,400,000 less than the $3,200,000 that had been represented. The amount of revenue generated from the book of business was insufficient to repay the loans. As a result, THA filed a Chapter 11 petition on Jan. 20, 2009, in the bankruptcy court in the Eastern District of Pennsylvania. As the bankruptcy was pending, Greg Harris filed a motion to appoint a Chapter 11 trustee to manage THA. On June 10, 2010, that court entered an order granting the motion to appoint a Chapter 11 trustee to manage THA. After the trustee was appointed, he made attempts to sell the THA book of business to various parties. Greg Harris reached an agreement with the trustee for the purchase and sale of the THA book of business to Greg Harris. On Oct. 28, 2010, the bankruptcy court held an evidentiary hearing and granted the trustee's motion to approve the sale of THA's assets to Greg Harris. THA's book of business included the Brown & Brown book of business that THA had purchased at the conclusion of the 2007 lawsuit filed by Brown & Brown. The next day, the plaintiffs filed the present lawsuit against defendants in the Eastern District of Pennsylvania. Upon motion of all of the defendants, the portion of the case relating to defendants James Harris, Harris Consulting Services, Inc. and Gregory Harris, was transferred to the Nevada court, and the portion relating to various bank defendants was transferred to the United States District Court for the District of Kansas. Only counts one and two of the complaint for fraud and breach of contract are being litigated in this district. Presently before the court are the Plaintiffs' motion to voluntarily dismiss a portion of count II of the complaint; the second motion for summary judgment filed by Defendants James Harris, Harris Consulting Services, and Gregory Harris; and the plaintiffs' motion to dismiss the defendants' counterclaims. The Defendants assert that the complaint is a violation of the bankruptcy court's order enjoining claims by THA against defendants. The Defendants seek injunctive relief that enjoins plaintiffs from engaging in "further interferences with the bankruptcy court order, the sale, and the injunction entered by the bankruptcy court." In a Feb. 18 Order available at http://is.gd/MmJXP5from Leagle.com, District Judge James C. Mahan held that the Court is without subject matter jurisdiction to hear this claim. The court cannot enforce an alleged violation of the Bankruptcy Court's injunction. The defendants are not seeking to determine the res judicata effect of the bankruptcy court's order, but rather are seeking relief to enforce that order. However, this is not the proper forum to seek such relief, the Court said. Hence, the Defendants' third counterclaim is dismissed. Judge Mahan ruled that: -- the plaintiffs' motion for voluntary dismissal of the portion of their second cause of action for breach of contract is granted; -- the defendants' motion for summary judgment is granted; -- the plaintiffs' motion to dismiss defendants' counterclaims is granted. About Harris Agency The Harris Agency, LLC, is an insurance agency which services predominantly commercial business insurance needs. In 2005, Nevada Investment Partners, LLC formed to acquire Harris' business from its then owner, Brown & Brown Insurance of Nevada, Inc. The membership interests in NIP were held by Randall Siko, Eric K. Bossard, Debra Agnew, and Fred Milbert. The members, or most of them, also have formed these entities, which are thus related to the Debtor: Alliance Insurance Services, LLC, Archway Insurance Services, LLC, and Union One Insurance Group, LLC. Harris Agency filed for Chapter 11 (Bankr. E.D. Pa. Case No. 09-10384) on Jan. 20, 2009, listing under $500,000 in assets and $1 million to $10 million in debts. The Debtor filed a proposed Plan of Reorganization and Disclosure Statement on Sept. 8, 2009. The Plan and Disclosure Statement were withdrawn on Nov. 4, 2009. Pursuant to the Plan, Archway was to contribute $110,000 in new equity in exchange for receiving 50% of the equity interest in the reorganized debtor, without waiving its right to payment on its unsecured claim. Trinity Capital Management Group, LLC., a separate company owned by James Agnew, was to have its $109,500 secured claim for a post-petition loan satisfied in consideration for receiving the other 50% equity interest in the reorganized debtor. Upon completion of the Plan, Randall Siko, Eric Bossard and James Agnew were to act as officers and directors of the Debtor. The Plan calls for the secured debt of a consortium of banks to be paid in full. The Plan did not contemplate any payment of a $2,924,125 loan from Brooke Credit Corporation from any of the Debtor's co-obligors. HAWKER BEECHCRAFT: Whistleblowers Contest Discharge Of Claims ------------------------------------------------------------- Law360 reported that former employees of a Hawker Beechcraft Corp. subcontractor urged a New York federal judge to revive their complaint over whether their $2.3 billion in whistleblower claims were discharged by Hawker's Chapter 11 plan, contending a bankruptcy court erred in dismissing the complaint as untimely. According to the report, Donald Minge and David Kiehl, relators in a seven-year-old False Claims Act suit alleging Hawker sold the U.S. military shoddy airplanes, are appealing U.S. Bankruptcy Judge Stuart M. Bernstein's July 2013 ruling that those claims were discharged in the turnaround plan. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. On June 30, 2012, Hawker filed its Plan, which proposed to eliminate $2.5 billion in debt and $125 million of annual cash interest expense. The plan would give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. In July 2012, Hawker disclosed it was in exclusive talks with China's Superior Aviation Beijing Co. for the purchase of Hawker's corporate jet and propeller plane operations out of bankruptcy for $1.79 billion. In October 2012, Hawker unveiled that those talks have collapsed amid concerns a deal with Superior wouldn't pass muster with a U.S. government panel and other cross-cultural complications. Sources told The Wall Street Journal that Superior encountered difficulties separating Hawker's defense business from those units in a way that would make both sides comfortable the deal would get U.S. government clearance. The sources told WSJ the defense operations were integrated in various ways with Hawker's civilian businesses, especially the propeller plane unit, in ways that proved difficult to untangle. Thereafter, Hawker said it intends to emerge from bankruptcy as an independent company. On Oct. 29, 2012, Hawker filed a modified reorganization plan and disclosure materials. Hawker said the plan was supported by the official creditors' committee and by a "substantial majority" of holders of the senior credit and a majority of holders of senior notes. Hawker said it will either sell or close the jet-manufacturing business. The revised plan still offers 81.9% of the new stock in return for $921 million of the $1.83 billion owing on the senior credit. Unsecured creditors are to receive the remaining 18.9% of the new stock. Holders of the senior credit will receive 86% of the new stock. The senior credit holders are projected to have a 43.1% recovery from the plan. General unsecured creditors' recovery is a projected 5.7% to 6.3%. The recovery by holders of $510 million in senior notes is predicted to be 9.2% to 10%. Beechcraft Corp., formerly Hawker Beechcraft, on Feb. 19, 2013, disclosed that it has formally emerged from the Chapter 11 process as a new company well-positioned to compete vigorously in the worldwide business aviation, special mission, trainer and light attack markets. The company's Joint Plan of Reorganization was approved by the Bankruptcy Court on Feb. 1, and became effective on Feb. 15. HDOS ENTERPRISES: Taps Friedman Law Group as Attorney ----------------------------------------------------- HDOS Enterprises asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Friedman Law Group P.C. as its attorney. The Debtor tells the Court that it requires the advice and assistance of the firm in connection with the case and administration of its Chapter 11 estate. Among other things, the firm is expected to: a) advise the Debtor concerning its rights and remedies in connection with the estate's assets and the claims of creditors; b) assist and advise the Debtor in the preparation of its schedules, statements, list and other disclosure documents; c) examine witnesses, claimants or adverse parties as the case may require; d) prepare and assist in the preparation of reports, accounts, applications, motions and orders; and e) assist the Debtor in the formulation, preparation and execution of a program to maximize the value of the assets of the estate. The Debtor says it paid the firm a retainer fee of $150,000, of which $31,000 was applied to the petition date to defray fees and costs and fees incurred before the case was commenced. The Debtor assures the Court that the firm is a "disinterested person" within the meaning of the Bankruptcy Code. About Hot Dog On A Stick Established in 1946 in Southern California, Hot Dog On A Stick -- http://www.hotdogonastick.com-- is known for its fair-inspired menu of corn dogs, lemonades, and a sampling of other menu items such as cheese on a stick, hot dog in a bun, fries, and funnel cake sticks. HDOS is owned by its employees. HDOS Enterprises sought protection under Chapter 11 of the Bankruptcy Code on Feb. 3, 2014 (Case No. 14-12028, Bankr. C.D. Cal.). The case is assigned to Judge Neil W. Bason. The Debtor's counsel is represented by Jerome Bennett Friedman, Esq., Stephen F. Biegenzahn, Esq. -- sbiegenzahn@jbflawfirm.com -- and Michael D. Sobkowiak, Esq. -- msobkowiak@jbflawfirm.com -- at FRIEDMAN LAW GROUP, P.C., in Los Angeles, California. The Debtor said assets range from $10 million to $50 million, and debts from $1 million to $10 million. The petition was signed by Dan Smith, president and CEO. HDOS ENTERPRISES: Wants to Hire A&G as Real Estate Consultant ------------------------------------------------------------- HDOS Enterprises asks the U.S. Bankruptcy Court for the Central District of California for permission to employ A&G Realty Partner LLC as its real estate consultant. The firm is expected to represent the Debtor in connection with the analysis of the remaining unexpired commercial leases to which the Debtor was a party at the time the case was commenced. The firm will negotiate with certain of the Debtor's landlords regarding the terms of the assumption of certain of the leases. The Debtor tells the Court that, for each successful renegotiation of the monetary terms of any leases, it agrees to pay the firm a consultant's fee of $1,000 plus 7.5% of occupancy cost savings for the remainder of the current term of the leases and any term extension and option term exercised as part of the lease renegotiation. The Debtor assures the Court that the firm is a "disinterested person" within the meaning of the Bankruptcy Code. About Hot Dog On A Stick Established in 1946 in Southern California, Hot Dog On A Stick -- http://www.hotdogonastick.com-- is known for its fair-inspired menu of corn dogs, lemonades, and a sampling of other menu items such as cheese on a stick, hot dog in a bun, fries, and funnel cake sticks. HDOS is owned by its employees. HDOS Enterprises sought protection under Chapter 11 of the Bankruptcy Code on Feb. 3, 2014 (Case No. 14-12028, Bankr. C.D. Cal.). The case is assigned to Judge Neil W. Bason. The Debtor's counsel is represented by Jerome Bennett Friedman, Esq., Stephen F. Biegenzahn, Esq., and Michael D. Sobkowiak, Esq., at Friedman Law Group, P.C., in Los Angeles, California. The Debtor said assets range from $10 million to $50 million and debts from $1 million to $10 million. The petition was signed by Dan Smith, president and CEO. HORIZON LINES: Beach Point Holds 12.8% Equity Stake --------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Beach Point Capital Management LP and Beach Point GP LLC disclosed that as of Dec. 31, 2013, they beneficially owned 5,005,397 shares of common stock of Horizon Lines, Inc., representing 12.87 percent of the shares outstanding. Beach Point previously reported beneficial ownership of 3,954,309 shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/E0Cxy7 About Horizon Lines Charlotte, N.C.-based Horizon Lines, Inc. (NYSE: HRZ) is the nation's leading domestic ocean shipping and integrated logistics company. The Company owns or leases a fleet of 20 U.S.-flag containerships and operates five port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. The Company provides express trans-Pacific service between the U.S. West Coast and the ports of Ningbo and Shanghai in China, manages a domestic and overseas service partner network and provides integrated, reliable and cost competitive logistics solutions. Horizon Lines reported a net loss of $94.69 million for the fiscal year ended Dec. 23, 2012, a net loss of $229.41 million for the year ended Dec. 25, 2011, and a net loss of $57.96 million for the year ended Dec. 26, 2010. The Company's balance sheet at Sept. 22, 2013, showed $642.85 million in total assets, $675.01 million in total liabilities and a $32.16 million total stockholders' deficiency. * * * In June 2012, Moody's Investors Service affirmed Horizon Lines, Inc.'s Corporate Family Rating (CFR) and Probability of Default Rating ("PDR") at Caa2 and removed the LD ("Limited Default") designation from the rating in recognition of the conversion to equity of the $228 million of Series A and Series B Convertible Senior Secured notes due in October 2017 ("Notes"). Moody's said the affirmation of the Corporate Family and Probability of Default ratings considers that total debt has been reduced by the conversion of the Notes, but also recognizes the significant operating challenges that the company continues to face. HOUSTON REGIONAL: Astros Have Duties to Bankrupt Network -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Major League Baseball's Astros, one of three owners of the Houston Regional Sports Network LP, can't render the network's reorganization futile by violating fiduciary duties to it, U.S. Bankruptcy Judge Marvin Isgur said on Feb. 12. According to the report, Judge Isgur's 24-page opinion explained his decision the day before granting an involuntary Chapter 11 petition filed against the network by its other two owners, Comcast Corp. and the Houston Rockets of the National Basketball Association. Unable to oppose the involuntary petition directly, the Astros argued that a successful reorganization would be futile because the ball club would use its veto power to reject any plan. Judge Isgur rebutted the argument on several grounds, the report said. First, he said that Jim Crane, the Astros' owner, testified he would support a viable plan and one could be constructed, the report related. On that basis, bankruptcy isn't futile, Judge Isgur said. The Astros argued that state law and the partnership agreement absolved them of fiduciary duties to the network, thus allowing them to veto a plan even though it may be in the best interest of the network, the report further related. Judge Isgur met that argument head on, saying no case law allows those who control a bankrupt company to violate fiduciary duties to it, whatever state law may say. 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. Counsel for the petitioning creditors are Howard M. Shapiro, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP; Vincent P. Slusher, Esq., at DLA Piper; and Arthur J. Burke, Esq., at Davis Polk & Wardwell LLP. Judge Marvin Isgur presides over the case. The Network was officially placed into Chapter 11 bankruptcy pursuant to a Feb. 7 Order for Relief. Harry Perrin, Esq., represents Astros owner Jim Crane. Comcast is represented by Craig Goldblatt, Esq. Alan Gover, Esq., represents the Rockets. INDUSTRIAL SERVICES: Finalizes Credit Facility Amendment Terms -------------------------------------------------------------- Industrial Services of America, Inc., a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets and offers programs and equipment to help businesses manage waste, on Feb. 24 disclosed that it has finalized the terms of an amendment to its credit facility with Fifth Third Bank. With this amendment, ISA will reclassify $13,668,900 of current debt to long-term debt, improving the company's liquidity ratios and freeing up more cash to operate the business. The amendment features other important improvements, including: All of these changes provide ISA with enhanced near-term liquidity. The amendment is part of a more comprehensive refinancing which ISA expects to complete soon, and which the company anticipates will bring it current with all of its suppliers. Fifth Third has waived the company's previous defaults under the credit agreement. In addition to amending its primary credit facility, following the filing of ISA's Form 10-Q for the third quarter of 2013 on January 10, 2014, NASDAQ issued a letter to ISA affirming that ISA regained compliance with the NASDAQ periodic filing requirement. Sean Garber, ISA's President, commented, "We are pleased to have regained compliance with both Fifth Third and NASDAQ. This is the first step in a larger restructuring process that will establish a sound financial foundation and lean operating profile for ISA. We are proceeding quickly but methodically toward our goal of complete operational turnaround. Our team has pulled together and is working hard. With this collective effort, ISA will soon be properly positioned to take advantage of the numerous growth opportunities we see ahead of us." About ISA Headquartered in Louisville, Kentucky, Industrial Services of America, Inc. -- http://www.isa-inc.com-- is a publicly traded company whose core business is buying, processing and marketing scrap metals and recyclable materials for domestic users and export markets. Additionally, ISA offers commercial, industrial and business customers a variety of programs and equipment to manage waste. INFUSYSTEM HOLDINGS: Annual Meeting of Stockholders on May 8 ------------------------------------------------------------ InfuSystem Holdings, Inc., will hold its 2014 annual meeting of stockholders on May 8, 2014, at 10:00 a.m. Eastern Time at the Company's offices at 31700 Research Park Drive, Madison Heights, Michigan 48071. Shareholders of record of InfuSystem common stock at the close of business on March 14, 2014, are entitled to notice of, and to vote at, the meeting. The Company expects the notice of the Annual Meeting and Definitive Proxy Statement will be mailed to stockholders on or about April 8, 2014. In addition, the Definitive Proxy Statement and 2013 Annual Report will also be available online at www.infusystem.com on the Investors page under the IR Calendar on or after April 8, 2014. Because the expected date of the 2014 Annual Meeting represents a change of more than 30 days from the anniversary of the Company's 2013 annual stockholders' meeting, the Company has set a new deadline for the receipt of stockholder proposals submitted pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, for inclusion in the Company's proxy materials for the 2014 Annual Meeting. In order to be considered for inclusion, those proposals must be received in writing by the Company before the close of business on March 7, 2014. Proposals must also comply with the applicable requirements of Rule 14a-8 of the Exchange Act regarding the inclusion of stockholder proposals in Company-sponsored proxy materials and other applicable laws. The March 7, 2014, deadline will also apply in determining whether notice of a stockholder proposal is timely for purposes of exercising discretionary voting authority with respect to proxies under Rule 14a-4(c)(1) of the Exchange Act. Additionally, in order for a stockholder to bring business before the 2014 Annual Meeting outside of Rule 14a-8 of the Exchange Act or to nominate a director, it must provide timely notice within the applicable time period set forth in the advance notice provisions of the Company's Bylaws. The Bylaws provide that the Secretary of the Company must receive written notice at the principal executive offices of the Company no earlier than 90 days (Feb. 7, 2014) and no later than 60 days (March 9, 2014) prior to the date of the 2014 Annual Meeting, and the stockholder must otherwise comply with the requirements set forth in the Bylaws. Because March 9, 2014, is a Sunday, the Secretary of the Company must receive written notice before 5:00 p.m. Eastern Time on March 7, 2014. Any stockholder proposal for inclusion in the Company's proxy materials, notice of proposed business to be brought before the 2014 Annual Meeting, or director nomination should be sent to the Company's Secretary at the Company's principal executive offices located at 31700 Research Park Drive, Madison Heights, Michigan 48071. About InfuSystem Holdings InfuSystem Holdings, Inc., operates through operating subsidiaries, including InfuSystem, Inc., and First Biomedical, Inc. InfuSystem provides infusion pumps and related services. InfuSystem provides services to hospitals, oncology practices and facilities and other alternate site healthcare providers. Headquartered in Madison Heights, Michigan, InfuSystem delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada. Infusystem Holdings disclosed a net loss of $1.48 million in 2012, a net loss of $45.44 million in 2011 and a net loss of $1.85 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $76.39 million in total assets, $34.77 million in total liabilities and $41.62 million in total stockholders' equity. INFUSYSTEM HOLDINGS: Austin Marxe Stake at 5.3% as of Dec. 31 ------------------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Austin W. Marxe, David M. Greenhouse and Adam C. Stettner disclosed that as of Dec. 31, 2013, they beneficially owned 1,170,602 shares of common stock of Infusystem Holdings Inc. representing 5.3 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/pQs6cX About InfuSystem Holdings InfuSystem Holdings, Inc., operates through operating subsidiaries, including InfuSystem, Inc., and First Biomedical, Inc. InfuSystem provides infusion pumps and related services. InfuSystem provides services to hospitals, oncology practices and facilities and other alternate site healthcare providers. Headquartered in Madison Heights, Michigan, InfuSystem delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada. Infusystem Holdings disclosed a net loss of $1.48 million in 2012, a net loss of $45.44 million in 2011 and a net loss of $1.85 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $76.39 million in total assets, $34.77 million in total liabilities and $41.62 million in total stockholders' equity. INTEGRATED BIOPHARMA: Posts $397,000 Net Income in Dec. 31 Qtr. --------------------------------------------------------------- Integrated Biopharma, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $397,000 on $8.78 million of net sales for the three months ended Dec. 31, 2013, as compared with net income of $817,000 on $7.39 million of net sales for the same period during the prior year. For the six months ended Dec. 31, 2013, the Company reported net income of $695,000 on $17.97 million of net sales as compared with a net loss of $155,000 on $15.87 million of net sales for the same period a year ago. As of Dec. 31, 2013, the Company had $11.76 million in total assets, $21.36 million in total liabilities and a $9.59 million total stockholders' deficiency. A copy of the Form 10-Q is available for free at: http://is.gd/uJtvcE About Integrated BioPharma Based in Hillside, N.J., Integrated BioPharma, Inc. (INBP.OB) -- -- http://www.healthproductscorp.us/-- is engaged primarily in manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company's customers are located primarily in the United States. The Company was previously known as Integrated Health Technologies, Inc., and, prior to that, as Chem International, Inc. The Company was reincorporated in its current form in Delaware in 1995. The Company continues to do business as Chem International, Inc., with certain of its customers and certain vendors. "At June 30, 2013, we had cash of approximately $55,000 and a working capital deficit of approximately $2.5 million. Our working capital deficit includes (i) $4.5 million outstanding under our revolving line of credit which is not due until July 2017, but is classified as current due to a subjective acceleration clause that could cause the advances to become currently due and (ii) $0.3 million in long term debt which is also classified as current due to a prepayment provision in connection with our term loan with PNC Bank, National Association. These factors have raised substantial doubt as to our ability to continue as a going concern in previous years and we may continue to generate net losses for the foreseeable future. Although we were able to achieve profitability, we did not do so until the fourth quarter of our fiscal year ended June 30, 2013. We cannot assure that we will remain profitable, although we have taken several actions to correct the continued losses, including reducing our selling and administrative expenses by approximately $3.7 million or 46% and refinancing our debt to, among other things, provide for a maturity of 5 years, with approximately 4 years remaining as of June 30, 2013," the Company said in its annual report for the year ended June 30, 2013. INTERLEUKIN GENETICS: Extends Clematis Lease Until 2017 ------------------------------------------------------- Interleukin Genetics, Inc., entered into the Second Amendment to Commercial Lease with Clematis, LLC, which amends that certain Commercial Lease, dated as of Feb. 13, 2004, by and between the Company and the Lessor, as amended on Nov. 18, 2008. The Second Amendment, among other things, extends the term of the lease from March 31, 2014, to March 31, 2017, and reduces the amount of space under the lease by approximately 6,011 square feet, which was the space that the Company had sublet to a third party since April 2010. A copy of the Second Amendment is available for free at: http://is.gd/PifNik About Interleukin Waltham, Mass.-based Interleukin Genetics, Inc., is a personalized health company that develops unique genetic tests to provide information to better manage health and specific health risks. Interleukin Genetics disclosed a net loss of $5.12 million in 2012, as compared with a net loss of $5.02 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $10.12 million in total assets, $3.09 million in total liabilities and $7.03 million in total stockholders' equity. Grant Thornton LLP, in Boston, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company incurred a net loss of $5,120,084 during the year ended December 31, 2012, and as of that date, the Company's total liabilities exceeded its total assets by $13,623,800. These conditions, among other factors, raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning "We have retained a financial advisor and are actively seeking additional funding, however, based on current economic conditions, additional financing may not be available, or, if available, it may not be available on favorable terms. In addition, the terms of any financing may adversely affect the holdings or the rights of our existing shareholders. For example, if we raise additional funds by issuing equity securities, further dilution to our then- existing shareholders will result. Debt financing, if available, may involve restrictive covenants that could limit our flexibility in conducting future business activities. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies, tests or products in development. Our common stock was delisted from the NYSE Amex in 2010 and is currently trading on the OTCQBTM. As a result, our access to capital through the public markets may be more limited. If we cannot obtain additional funding on acceptable terms, we may have to discontinue operations and seek protection under U.S. bankruptcy laws," the Company said in its quarterly report for the ended March 31, 2013. INVESTORS CAPITAL: Case Dismissal Hearing Continued to March 25 --------------------------------------------------------------- U.S. Bankruptcy Judge Joan Lloyd will continue on March 25 the hearing to consider PBI Bank, Inc.'s motion to dismiss the Chapter 11 case of Investors Capital Partners II LP, or to convert the case to Chapter 7 liquidation. In proposing for the dismissal of the case, PBI Bank, a creditor of Investors Capital, cited the company's significant financial losses as well as its inability to propose a confirmable plan. The bank also alleged the bankruptcy case was filed in bad faith. Judge Lloyd on Feb. 4 denied the Chapter 11 plan proposed by Investors Capital, and terminated as moot its motion regarding certain plan modifications and clarifications. About Investors Capital II Brentwood, Tennessee-based Investors Capital Partners II, LP and two affiliates sought Chapter 11 protection (Bankr. W.D. Ky. Case Nos. 12-11575 to 11677) in Bowling Green, Kentucky, on Dec. 19, 2012. ICP II estimated assets of at least $10 million and liabilities of less than $10 million. It owns a 35-acre commercial development near Glasgow, Kentucky. The ICP II property is home to a Marquee Cinema, Dollar Tree, and Aaron's Rents and also consists of seven parcels of undeveloped land. Debtor-affiliate Investors Capital Partners I, LP owns multiple parcels of undeveloped land near Nolensville, Tennessee. Investors Land Partners II, LP owns partially developed land, consisting of six adjoining parcels of real property, near Nashville, Tennessee. Laura Day DelCotto, Esq., and Amelia Martin Adams, Esq., at DelCotto Law Group, PLLC, represent the Debtor as counsel. In court filings, the Debtors said their lenders have attempted to foreclose against the Debtors' assets, and the Debtors have been unable to reach agreements with their lenders that would allow the Debtors to reorganize their debts in an orderly manner; thus, the Debtors have little option except for the development of a joint plan to reorganize operations and restructure debts for the benefit of all creditors and parties in interest. IRISH BANK: Urges Bankruptcy Approval of $5.8-Mil. Tampa Deal ------------------------------------------------------------- Law360 reported that Irish Bank Resolution Corp. urged a Delaware bankruptcy judge to bless a $5.75 million deal with the Tampa Port Authority that would wind up its involvement in Channelside Bay Plaza in Tampa, Fla., while a real estate developer argued the court should instead consider its own higher offer. According to the report, IBRC holds the loan its predecessor Anglo Irish Bank issued to the plaza's leaseholder, and the agreement with the TPA represents the best deal for that asset, attorney Van C. Durrer II said at a hearing. As previously reported by The Troubled Company Reporter, the settlement agreement provides for the assignment of (i) IBRC's interest in March 23, 2006 note in the amount of $27,000,000, (ii) the mortgage securing the note, and (ii) the assignment of leases given by Channelside Bay Mall, LLC, as the lessee of the Channelside Bay Plaza, located at 615 Channelside Drive, in Tampa, Florida, given to Anglo Irish Bank Corporation Limited, the predecessor of IBRC. The settlement also provides mutual releases of both parties from all claims held by either party against the other. As consideration and payment for assignment of the Note, the Mortgage and the Assignment of Leases, the Port agrees to pay $5,750,000 to IBRC. About Irish Bank Resolution Irish Bank Resolution Corp., the liquidation vehicle for what was once one of Ireland's largest banks, filed a Chapter 15 petition (Bankr. D. Del. Case No. 13-12159) on Aug. 26, 2013, to protect U.S. assets of the former Anglo Irish Bank Corp. from being seized by creditors. Irish Bank Resolution sought assistance from the U.S. court in liquidating Anglo Irish Bank Corp. and Irish Nationwide Building Society. The two banks failed and were merged into IBRC in July 2011. IBRC is tasked with winding them down and liquidating their assets. In February, when Irish lawmakers adopted the Irish Bank Resolution Corp., IBRC was placed into a special liquidation in the Irish High Court to complete liquidation and distribution of the two banks' assets. IBRC's principal asset as of June 2012 was a loan portfolio valued at some EUR25 billion (US$33.5 billion). About 70 percent of the loans were to Irish borrowers. Some 5 percent of the portfolio was under U.S. law, according to a court filing. Total liabilities in June 2012 were about EUR50 billion, according to a court filing. Most assets in the U.S. have been sold already. IBRC is involved in lawsuits in the U.S. IBRC was granted protection under Chapter 15 of the U.S. Bankruptcy Code in December 2013. J. CREW: Moody's Assigns B1 Rating on Proposed $1.57BB Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to J. Crew Group, Inc.'s ("J. Crew") proposed $1.57 billion secured term loan due 2021. Moody's also affirmed Chinos Intermediate Holdings A, Inc.'s (the indirect parent company of J. Crew) Corporate Family Rating at B2. The rating outlook remains negative. The rating assigned is subject to receipt and review of final documentation. Proceeds from the new term loan will be used to refinance J. Crew's existing $1.17 billion secured term loan due 2018 and to fund the redemption of its outstanding $400 million senior unsecured notes due 2019. Moody's anticipates it will withdraw the Ba3 rating assigned to the existing $1.17 billion secured term loan due 2018 and the B3 rating assigned to the $400 million senior unsecured notes due 2019 upon successful conclusion of the proposed financing. The transaction is considered a credit positive for J. Crew. While the transaction is leverage neutral, conclusion of the proposed transaction will lengthen the company's debt maturity profile, and is also expected to reduce ongoing cash interest costs for the company. The affirmation of the company's B2 Corporate Family Rating reflects the company's still high leverage with rent-adjusted debt/EBITDA expected to be around 6.4 times as of the end of the company's recently concluded fiscal year end. The company's earnings have shown improvement in the second half which Moody's consider a good accomplishment considering the highly promotional environment. However leverage remains high following the company's approximate $500 million debt financed dividend paid in late 2013. The following ratings were affirmed: Chinos Intermediate Holdings A, Inc. Corporate Family Rating at B2 Probability of Default Rating at B2-PD $500 million Senior PIK toggle notes due 2019 at Caa1 (LGD 6, 92%) Speculative Grade Liquidity Rating at SGL-1 J. Crew Group, Inc. The following rating was assigned: $1.57 billion term loan B due 2021 at B1 (LGD 3, 39%) The following ratings were affirmed and expected to be withdrawn upon conclusion of the refinancing: $1.17 billion term loan B due 2018 at Ba3 (LGD 3,31%) $400 million senior unsecured notes due 2019 at B3 (LGD 5, 73%) Ratings Rationale J.Crew's B2 Corporate Family Rating reflects its high debt burden from its 2011 LBO by investment funds affiliated with TPG Capital, L.P. ("TPG") and Leonard Green & Partners, L.P. ("Leonard Green") along with certain members of the executive management team and the company's aggressive financial policies evidenced by its recent $500 million debt-financed distribution. Moody's adjusted leverage is around 6.4 times and interest coverage is around 1.6 times. The rating is also constrained by J.Crew's relatively small scale and high business risk as a specialty apparel retailer, which exposes the company to potential performance volatility as a result of fashion risk or changes in consumer spending. The rating is supported by J.Crew's solid merchandising skills as reflected by its consistent track record of sales and earnings growth, credible market position in the highly fragmented specialty apparel retailing segment, very well recognized lifestyle brand, and its strong margins relative to peers. The company's very good liquidity profile partly mitigates its high leverage. The negative outlook reflects the company's more constrained financial flexibility following the recent debt financed distribution. There is limited ability for the company to see continued negative trends in EBITDA, as was evident in the first half of 2013. Moody's note the company achieved a recovery in EBITDA in the second half of fiscal 2013 despite a very promotional season, and this will need to be sustained in the face of a challenging consumer environment. Ratings could be lowered if the positive trends seen in the second half of 2014 were to reverse, such that it was unlikely the company would be able to restore debt/EBITDA below 6 times over the next 12-18 months. In view of the elevated leverage there is no capacity for any erosion to the company's very good liquidity profile or for any more aggressive financial policies, such as utilizing the company's liquidity for further shareholder distributions. Specific metrics include Debt/EBITDA sustained above 6.0 times or interest coverage being sustained below 1.5 times. In view of the aggressive financial policies under its current owners, ratings are unlikely to be upgraded in the near to intermediate term. Over time ratings could be upgraded if J. Crew continues to realize good returns on growth investments with consistent positive annual free cash flow, while demonstrating the ability and willingness to achieve and maintain debt/EBITDA below 5.0 times and interest coverage above 2.0 times. The rating outlook could be revised to stable if debt/EBITDA moves below 6 times and interest coverage exceeded 1.75 times while maintaining a very good liquidity profile. Moody's estimate that debt/EBITDA would be around 6x if EBITDA (as calculated by the company) was around $420 million, holding debt balances constant at year-end fiscal 2013 levels. The principal methodology used in this rating was the Global Retail Industry published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. J.Crew Group, Inc. is a multi-channel retailer of women's, men's and children's apparel, shoes and accessories. As of February 1, 2014, the Company operates 330 retail stores (including 257 J.Crew retail stores, eight crewcuts stores and 65 Madewell stores), jcrew.com, jcrewfactory.com, the J.Crew catalog, madewell.com, the Madewell catalog, and 121 factory stores. J. CREW: S&P Rates $1.6 Billion Term Loan 'B' --------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' issue-level rating to J. Crew's new $1.6 billion term loan B with a recovery rating of '4', indicating S&P's expectation of average (30%-50%) recovery in the event of default. At the same time, S&P affirmed all other ratings including the 'B' corporate credit rating. The outlook is negative. According to the company, it will use proceeds from the new term loan to repay the existing $1.2 billion term loan and $400 million senior unsecured notes. "The ratings on J. Crew reflect our assessment of its "fair" business risk and "highly leveraged" financial risk profiles. The business risk profile incorporates our view of its good position in the highly competitive and volatile specialty retail apparel segment, good performance trends, and a solid management team," said credit analyst David Kuntz. "However, the company, like many other specialty apparel retailers, has been subject to periodic merchandise missteps." "The negative outlook reflects our view that credit measures will remain very weak over the next few quarters as a result of the debt financed sponsor dividend in October 2013. Additionally, we believe weak consumer spending and elevated promotional activity will characterize the apparel retail environment during the next few quarters. We forecast that J. Crew's revenues will be positive, but driven by new store growth as we expect comparable company sales may be flat. As a result, we believe there will be only modest improvement in the company's credit protection measures over the next 12 months," S&P said. Downside scenario S&P could lower the rating if performance erodes because of meaningfully lower consumer spending or merchandise issues. A decrease in sales, margins, or some combination of the two that results in leverage moderately above 6.0x and interest coverage in the low-2.0x area, could lead to a downgrade. Additionally, any further meaningful dividend activity above $300 million, which would erode credit protection measures to this level, could have a negative effect on the rating. Upside scenario S&P could revise the outlook to stable if the company is able to demonstrate stable and consistent performance gains over the next few quarters while reducing leverage by a moderate amount. Under this scenario, revenue growth would be in the low-double digits supported by new store growth and direct sales and EBITDA margins would be about 100 basis points above S&P's forecast. As a result, leverage would be in the mid-5.0x area and interest coverage would be approaching 3.0x. The outcome of the recently completed holiday season will be an important benchmark. JACKSONVILLE BANCORP: Sandler O'Neill Holds 7.6% Equity Stake ------------------------------------------------------------- Sandler O'Neill Asset Management, LLC, and Terry Maltese reported that as of Dec. 31, 2013, they beneficially owned 243,407 shares of common stock of Jacksonville Bancorp, Inc., representing 7.66 percent of the shares outstanding. They previously owned 333,333 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/JXGAd7 About Jacksonville Bancorp Jacksonville Bancorp, Inc., a bank holding company, is the parent of The Jacksonville Bank, a Florida state-chartered bank focusing on the Northeast Florida market with eight full-service branches in Jacksonville, Duval County, Florida, as well as the Company's virtual branch. The Jacksonville Bank opened for business on May 28, 1999, and provides a variety of community banking services to businesses and individuals in Jacksonville, Florida. Jacksonville Bancorp disclosed a net loss of $43.04 million in 2012, a net loss of $24.05 million in 2011 and a $11.44 million net loss in 2010. As of Sept. 30, 2013, the Company had $514.54 million in total assets, $481.82 million in total liabilities and $32.72 million in total shareholders' equity. "Both Bancorp and the Bank must meet regulatory capital requirements and maintain sufficient capital and liquidity and our regulators may modify and adjust such requirements in the future. The Bank's Board of Directors has agreed to a Memorandum of Understanding (the "2012 MoU") with the FDIC and the OFR for the Bank to maintain a total risk-based capital ratio of 12.00% and a Tier 1 leverage ratio of 8.00%. As of December 31, 2012, the Bank was well capitalized for regulatory purposes and met the capital requirements of the 2012 MoU. If noncompliance or other events cause the Bank to become subject to formal enforcement action, the FDIC could determine that the Bank is no longer "adequately capitalized" for regulatory purposes. Failure to remain adequately capitalized for regulatory purposes could affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to make distributions on our trust preferred securities, and our business, results of operation, liquidity and financial condition, generally," according to the Company's annual report for the year ended Dec. 31, 2012. JAMES RIVER: Mulls Possible Sale, Amends Credit Facility -------------------------------------------------------- James River Coal Company said it is exploring and evaluating potential strategic alternatives for the Company, which may include a capital investment through debt and/or equity securities or a sale of all or one or more portions of the Company. In connection with launching this process, the Company has entered into an amendment to its Revolving Credit Agreement, which will provide the Company with continued access to its revolving credit facility during the strategic review process. A complete description of the material terms of the Amendment is available for free at http://is.gd/u3Muxb To assist in the process of identifying, evaluating and pursuing potential strategic alternatives, the Company has engaged Perella Weinberg Partners LP as restructuring advisor, Deutsche Bank Securities Inc. as M&A advisor and Davis Polk & Wardwell LLP as legal advisor. The Company has not made a decision to pursue any specific transaction or other strategic alternative, and there can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction. The Company does not intend to comment further regarding this process until such time as its Board of Directors has determined the outcome of the process or otherwise determined that disclosure is required or appropriate. A full-text copy of the Second Amendment to Second Amended and Restated Revolving Credit Agreement, dated Feb. 6, 2014, is available for free at http://is.gd/lneQyS About James River Headquartered in Richmond, Virginia, James River Coal Company (NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines, processes and sells bituminous steam and industrial-grade coal primarily to electric utility companies and industrial customers. The company's mining operations are managed through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $14.99 million. James River reported a net loss of $138.90 million in 2012, as compared with a net loss of $39.08 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $1.06 billion in total assets, $818.69 million in total liabilities and $247.34 million in total shareholders' equity. * * * In the May 24, 2013, edition of the TCR, Moody's Investors Service downgraded James River Coal Company's Corporate Family Rating to Caa2 from Caa1. "While the company continues to take actions to reposition operations and shore up its balance sheet, we expect external factors will preclude James River from maintaining credit measures and liquidity consistent with the Caa1 rating level," said Ben Nelson, Moody's lead analyst for James River Coal Company. As reported by the TCR on Nov. 19, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Richmond, Va.-based James River Coal Co. to 'CCC' from 'SD' (selective default). "We raised our rating on James River Coal because we understand that the company has stopped repurchasing its debt at deep discounts, for the time being," said credit analyst Megan Johnston. JAMES RIVER: Silverback Asset Stake at 8.7% as of Dec. 31 --------------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Silverback Asset Management, LLC, and its affiliates disclosed that as of Dec. 31, 2013, they beneficially owned 3,444,400 shares of common stock of James River Coal Company representing 8.7 percent of the shares outstanding. Silverback Asset previously reported beneficial ownership of 3,455,400 common shares as of May 17, 2013. A copy of the regulatory filing is available for free at http://is.gd/BWt4aX About James River Headquartered in Richmond, Virginia, James River Coal Company (NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines, processes and sells bituminous steam and industrial-grade coal primarily to electric utility companies and industrial customers. The company's mining operations are managed through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $14.99 million. James River reported a net loss of $138.90 million in 2012, as compared with a net loss of $39.08 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $1.06 billion in total assets, $818.69 million in total liabilities and $247.34 million in total shareholders' equity. * * * In the May 24, 2013, edition of the TCR, Moody's Investors Service downgraded James River Coal Company's Corporate Family Rating to Caa2 from Caa1. "While the company continues to take actions to reposition operations and shore up its balance sheet, we expect external factors will preclude James River from maintaining credit measures and liquidity consistent with the Caa1 rating level," said Ben Nelson, Moody's lead analyst for James River Coal Company. As reported by the TCR on Nov. 19, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Richmond, Va.-based James River Coal Co. to 'CCC' from 'SD' (selective default). "We raised our rating on James River Coal because we understand that the company has stopped repurchasing its debt at deep discounts, for the time being," said credit analyst Megan Johnston. KARYL PAXTON DESIGN: Sheriff Directed to Turn Over Seized Assets ---------------------------------------------------------------- Bankruptcy Judge Elizabeth W. Magner granted the request of Karyl Paxton Design, Inc., for turnover of property and funds seized by Marlin N. Gusman, Sheriff of Orleans Parish. On April 16, 2011, Christopher J. Sacco obtained a money judgment against KPD, Karyl Paxton, and Karyl Paxton Design Studio, L.L.C. in Orleans Parish Civil District Court in the principal amount of $1,153,673. The ruling was affirmed on appeal by the Louisiana Fourth Circuit Court of Appeal. On Sept. 16, 2013, Sacco filed a Petition for Garnishment, Interrogatories and Order against Karyl Paxton, Karyl Paxton Design Studio, L.L.C., and KPD in Civil District Court for the Parish of Orleans, case no. 2004-0466. Also on Sept. 16, 2013, the Sheriff signed a Notice of Seizure addressed to Savoy. According to Judge Magner, the Motion for Turnover is granted, and Sacco must turn over to KPD all KPD property that is in its possession. The Court will also direct the Sheriff of Orleans Parish to turn over all of KPD's property in his possession. However, because Sacco's Garnishment occurred on Sept. 18, 2013, and was more than 90 days prior to KPD's filing for bankruptcy relief on Dec. 20, 2013, Sacco has a lien on the funds or royalties due to KPD on Sept. 18, 2013, and is entitled to adequate protection. A copy of Judge Magner's Feb. 19, 2014 Reasons for Decision is available at http://is.gd/gpN7JCfrom Leagle.com. New Orleans-based Karyl Paxton Design, Inc., filed for Chapter 11 bankruptcy (Bankr. E.D. La. Case No. 13-13478) on Dec. 20, 2013. Judge Jerry A. Brown was assigned to the case. Wade Iverstine, Esq., and William E. Steffes, Esq., at Steffes, Vingiello & Mckenzie, LLC, serve as counsel to KPD. In its petition, KPD estimated $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. The petition was signed by Karyl Pierce Paxton, president. On Dec. 27, 2013, Karyl Paxton, as principal of KPD, filed a personal Chapter 11 bankruptcy petition. KEMPER CORP: S&P Assigns 'BB' Rating to 40-Yr. Subordinated Debt ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB' subordinated debt rating to Kemper Corp.'s (NYSE: KMPR) new offering of 40-year subordinated notes maturing in 2054. This rating reflects the notes' hybrid equity-like features such as a long maturity date and deep subordination to Kemper's senior unsecured debt. S&P treats the subordinated debt as intermediate equity content. At the same time, S&P assigned its preliminary 'BBB-' senior debt, 'BB+' subordinated debt, and 'BB' preferred stock ratings to Kemper's unlimited universal shelf. S&P expects Kemper to use the net proceeds from the notes for working capital and general corporate purposes, and probably to support partial repayment of Kemper's 2015 or 2017 debt maturities. Although this issue temporarily increases debt, S&P expects the company to maintain debt levels consistent with year- end 2013 in the longer term. Following this transaction, S&P expects the company's financial leverage to increase temporarily, but to remain consistent with our expectations at less than 35% with generally accepted accounting principles fixed-charge coverage in the 4x-6x range. S&P expects Kemper's financial leverage to increase to 31% as of Dec. 31, 2014, from 27% as of Dec. 31, 2013. RATINGS LIST Kemper Corp. Counterparty Credit Rating BBB-/Stable/-- New Rating Kemper Corp. Subordinated notes due 2054 BB Senior debt BBB-(prelim) Subordinated debt BB+(prelim) Preferred stock BB(prelim) LANDAUER HEALTHCARE: Completes Sale, Changes Name to LMI Legacy --------------------------------------------------------------- Landauer Healthcare Holdings, Inc., notified the U.S. Bankruptcy Court for the District of Delaware that it has changed its name to LMI Legacy Holdings Inc. following the completion of the sale of substantially all of its assets to an affiliate created by Quadrant Management Inc. Quadrant, through LMI DME Holdings LLC, obtained in early January the Court's approval to purchase the Debtors' assets for $22 million. A full-text copy of the Asset Purchase Agreement is available for free at http://bankrupt.com/misc/LANDAUERapa0106.pdf To resolve the objection raised by the U.S. Government, the Sale Order provides that the Debtors are not, and will not, assume and assign or otherwise transfer their provider transaction access numbers or Centers for Medicare and Medicaid Services enrollment agreements to the Purchaser. Moreover, solely to the extent provided by applicable law, (i) Passaic Healthcare Services, LLC, (ii) Louis Rocco, and (iii) Saverio Burdi will retain the right to assert valid and enforceable defenses including without limitation, recoupment and setoff rights, if any. Furthermore, the Purchased Assets will not include any property owned by Airgas USA, LLC, and the Debtors will make arrangements with Airgas for the return and removal of any Airgas property. About Landauer Healthcare Home medical equipment provider Landauer Healthcare Holdings, Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12098) on Aug. 16, 2013, with a deal to sell all assets to Quadrant Management Inc. for $22 million, absent higher and better offers. The Company has 32 operating locations, with 50% of inventory concentrated in Mount Vernon, New York; Great Neck, New York; Warwick, Rhode Island; and Philadelphia, Pennsylvania. Landauer, which derives revenues by reimbursement from insurers, Medicare and Medicaid, reported net revenues of $128.5 million in fiscal year ended March 31, 2013. Landauer disclosed $2,978,495 in assets and $53,636,751 in liabilities as of the Chapter 11 filing. The Debtors are represented by Justin H. Rucki, Esq., Michael R. Nestor, Esq., and Matthew B. Lunn, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware; John A. Bicks, Esq., at K&L Gates LLP, in New York; and Charles A. Dale III, Esq., and Mackenzie L. Shea, Esq., in Boston, Massachusetts. Carl Marks Advisory Group serves as the Debtor's financial advisors, and Epiq Systems as claims and notice agent. Maillie LLP serves as the Debtors' tax accountants. The Debtor filed a Chapter 11 restructuring plan that would transfer ownership of the home medical supply company to Quadrant Management Inc., whose $22 million bid for the company went unchallenged. Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed five members to the official committee of unsecured creditors in the Chapter 11 cases. The Committee retained Landis Rath & Cobb LLP as counsel. Deloitte Financial Advisory Services LLP serves as its financial advisor. LEHMAN BROTHERS: Judge Peck to Join Morrison & Foerster ------------------------------------------------------- Morrison & Foerster announced on Feb. 19, 2014, that Hon. James M. Peck will join the firm as co-chair of its global Business Restructuring & Insolvency Group, effective March 3, 2014. During his tenure as U.S. Bankruptcy Judge for the Southern District of New York, Judge Peck presided over the chapter 11 and SIPA cases of Lehman Brothers and its affiliates, which collectively held approximately $600 billion assets at the time of filing, constituting the largest bankruptcy filing in U.S. history. Other notable matters over which Judge Peck presided include the chapter 11 cases of Iridium, Quebecor, Charter Communications, Extended Stay Hotels and ION Media and the chapter 15 case of Japan Airlines. Judge Peck also brokered settlements in several high profile cases including American Airlines, Syms/Filenes, MF Global, General Motors Nova Scotia noteholders, Residential Capital and Excel Maritime. As well as enhancing Morrison & Foerster's current restructuring practice, Judge Peck also brings expertise in the area of complex mediation in both domestic and international insolvencies. "As a result of the increasing multinational nature of businesses and globalization of capital, in the last six years we have seen the most complex cross-border and domestic bankruptcy and insolvency matters in history. Judge Peck's experiences presiding over some of these matters, including the Lehman Brothers chapter 11 case, in addition to his experience acting as a mediator in others, such as Residential Capital and MF Global, will add a wealth of expertise to our practice. We are delighted that Judge Peck will be joining Morrison & Foerster," said Larren M. Nashelsky, chair of Morrison & Foerster. "Bringing on a practitioner of Judge Peck's stature strengthens our already robust practice in complex domestic and cross-border restructuring," added Gary S. Lee, chair of Morrison & Foerster's Business Restructuring & Insolvency Group. "Judge Peck will offer expertise in a myriad of areas where he has helped advance bankruptcy law. This is especially true of his landmark rulings relating to derivatives and the bankruptcy safe harbors. We are excited to offer his insights to our clients and colleagues." Judge Peck said: "I look forward to continuing to do in private practice what I did on the bench ? working on world class domestic and cross-border cases and engaging in complex mediation matters ? at Morrison & Foerster. MoFo's global platform and practice strength in restructuring and insolvency make this a most exciting opportunity." Judge Peck joins at a time of meteoric trajectory for the practice. The firm has recently advised on a number of high- profile cases, including representing Residential Capital, LLC, one of the largest real estate finance companies in the world, as the debtor in the largest chapter 11 case of 2012. In addition, the group represented the chapter 11 trustee for MF Global in the largest chapter 11 case of 2011. Morrison & Foerster played a significant role in Iceland's bank restructurings through its representation of the Resolution Committee and Winding-up Board of Landsbanki Islands hf. The group also represents official creditors' committees in some of the highest profile cases, including in the recent cases of the Los Angeles Dodgers and Ambac Financial Group. Indeed, the firm was named "Bankruptcy Firm of the Year" for 2013 by Chambers USA. Judge Peck also joins on the heels of leading insolvency practitioner Howard Morris, who joined the firm's London office, bringing a wealth of expertise on cross-border and pan-European insolvency, and Jorg Meissner and Thomas Keul, highly regarded restructuring lawyers in Morrison & Foerster's Berlin office. Judge Peck was appointed to the United States Bankruptcy Court for the Southern District of New York in January 2006. Prior to his appointment, he was a partner in the business reorganization department at Schulte Roth & Zabel and previously a partner in the reorganization and finance practice of Duane Morris. He earned his J.D. from New York University School of Law and his B.A. from Dartmouth College. Judge Peck is a fellow of the American College of Bankruptcy, a member of the International Insolvency Institute and is co-chair of the ABI's Advisory Committee on Financial Contracts, Derivatives and Safe Harbors. He is an adjunct professor of finance at NYU's Stern School of Business and is a frequent speaker and moderator at global industry conferences and universities. LIGHTSQUARED INC: Asks Court to Approve Outline of Latest Plan -------------------------------------------------------------- LightSquared Inc. asked U.S. Bankruptcy Judge Shelley Chapman to approve the outline of its latest plan to exit Chapter 11 protection. Matthew Barr, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York, said the plan outline or the so-called disclosure statement contains sufficient information for creditors to decide on whether to support the new plan. Mr. Barr said the disclosure statement meets the requirements of section 1125 of the Bankruptcy Code, a provision which requires that a plan outline contain adequate information to permit voting creditors to make an informed decision on a bankruptcy plan. The company also seeks court approval of a streamlined re- solicitation of the plan. According to Mr. Barr, implementing the new plan doesn't require a complete re-solicitation of votes since it provides for the full payment of all classes of claims and equity interests. "LightSquared is cognizant, however, that some level of additional disclosure and resolicitation may be required in connection with the LightSquared plan," he said. LightSquared proposes a March 3 deadline for voting on the new plan, and a March 7 deadline for submission of the voting report. Judge Chapman will hold a hearing on Feb. 24 to consider approval of the disclosure statement, and another hearing on March 17 to consider confirmation of the plan. Objections to the plan are due by March 10. New Bankruptcy Plan LightSquared on Feb. 14 filed a new plan, which contemplates the provision of a new $1.65 billion loan, of which about $115 million will be converted into equity. The new plan, which is backed by Fortress Investment Group, also contemplates the payment in full of all claims and equity interests with cash and other consideration; the issuance of new debt and equity instruments; and the preservation of the company's litigation claims. Under the plan, LightSquared's bankruptcy exit is no longer conditioned on the Federal Communications Commission's approval related to terrestrial spectrum rights. It doesn't also include participation from Dish Network Corp. or its chairman. Full-text copies of the new plan and the disclosure statement are available for free at: http://bankrupt.com/misc/LightSquared_3rdAmendedPlan.pdf http://bankrupt.com/misc/LightSquared_3rdAmendedDS.pdf About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Seeks Court Approval to Obtain $1.65-Bil. Loan ---------------------------------------------------------------- LightSquared Inc. asked U.S. Bankruptcy Judge Shelley Chapman for approval to obtain $1.65 billion loan in connection with the confirmation of its proposed plan to exit Chapter 11 protection. The new financing consists of $1.35 billion original aggregate principal amount of new money loans, and $300 million original aggregate principal amount, which may consist of new money loans or of loans deemed made to LightSquared and two other borrowers in exchange for a like amount of obligations outstanding under a credit agreement dated Oct. 1, 2010. LightSquared will use the new loan to pay in full the existing obligations under a $46.4 million credit agreement, and a $33 million loan extended by a group of lenders that includes Fortress Credit Corp. and Capital Research and Management Co. The new loan will also be used to finance capital expenditures and pay operating expenses as well as restructuring costs. Aside from the $1.65 billion loan, LightSquared is also seeking court approval to use the cash collateral of lenders under the 2010 credit agreement. The $1.65 billion loan is part of the new plan filed by LightSquared on Feb. 14 to exit bankruptcy. The plan, which is backed by Fortress Investment Group, doesn't hinge on the Federal Communications Commission modifying LightSquared's licenses. It doesn't also include participation from Dish Network Corp. or its chairman Charlie Ergen. The new plan, scaled down from a $4 billion Fortress-led reorganization that LightSquared abandoned earlier, calls for a $1.65 billion loan while the company is in bankruptcy proceedings and then a fresh $1 billion loan to finance the company once it exits bankruptcy. The new plan requires less funding because LightSquared would emerge from bankruptcy proceedings much sooner than under the previous proposal. Phil Falcone's Harbinger Capital Partners, which currently controls LightSquared, would participate in the new financing and retain an equity stake. Judge Chapman will hold a hearing on March 17 to consider approval of the proposed financing. Objections are due by March 10. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Expands Scope of Ernst & Young's Services ----------------------------------------------------------- LightSquared Inc. said it entered into a new statement of work for the company's tax compliance for the year ended Dec. 31, 2013, which expanded the scope of Ernst & Young LLP's services. The new SOW can be accessed for free at http://is.gd/KxH62u The company also entered into a new statement of work for LightSquared LP's tax compliance for the year ended Dec. 31, 2013. The SOW can be accessed for free at http://is.gd/Au46IZ About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Inks Agreement With AnyDATA to Settle Claim ------------------------------------------------------------- LightSquared Inc. entered into an agreement to settle the claims of AnyDATA Corp. against the company and its affiliated debtors. Under the deal, AnyDATA can assert a general unsecured claim of $690,000 against LightSquared LP and its estate. The claims asserted by AnyDATA against the other LightSquared units will be deemed withdrawn and disallowed. A full-text copy of the agreement is available at http://is.gd/olhKE3 The claims stemmed from contracts entered into by the companies, including a 2011 deal between AnyDATA and LightSquared LP. LightSquared previously objected to all claims other than the claim filed by AnyDATA against LightSquared LP on grounds that its books and records did not reflect the liabilities asserted in those claims. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Disclosure Statement for $2.6B Plan Approved -------------------------------------------------------------- Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York approved on Feb. 24 the disclosure statement explaining the Third Amended Joint Plan of Reorganization for Lightsquared Inc. and its debtor affiliates. The amended dates and deadlines with respect to the LightSquared Plan are as follows: March 3, 2014 Plan Voting Deadline March 11, 2014 Plan Objection Deadline March 7, 2014 Deadline to submit Voting Report March 14, 2014 Deadline to submit Plan objections March 17, 2014 Confirmation Hearing As previously reported by The Troubled Company Reporter, Lightsquared proposed a $2.65 billion restructuring backed by Fortress Investment Group that unlike a previous Fortress-backed plan, doesn't hinge on the Federal Communications Commission modifying LightSquared's licenses. In addition, unlike the previous plans, the new Plan doesn't include participation from Dish Network Corp. or its chairman Charlie Ergen. The new plan, scaled down from a $4 billion Fortress-led reorganization that LightSquared abandoned earlier, calls for a $1.65 billion loan while the company is in bankruptcy proceedings and then a fresh $1 billion loan to finance the company once it exits Chapter 11. The new plan requires less funding because LightSquared would emerge from bankruptcy proceedings much sooner than under the previous proposal. Phil Falcone's Harbinger Capital Partners, which currently controls LightSquared, would participate in the new financing and retain an equity stake. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LLS AMERICA: Recommendations on Suit v. Armstrong Adopted --------------------------------------------------------- In the case, BRUCE P. KRIEGMAN, solely in his capacity as court- appointed Chapter 11 Trustee for LLS America, LLC, Plaintiff, v. DAVID ARMSTRONG and Shelly Armstrong, Defendants, Adv. Proc. No. 11-80119-PCW11 (E.D. Wash.), Chief District Judge Rosanna Malouf Peterson issued an order dated Feb. 18 adopting a "REPORT AND RECOMMENDATION RE PARTIAL SUMMARY JUDGMENT AGAINST DEFENDANTS DAVID AND SHELLY ARMSTRONG". A copy of the Order is available at http://is.gd/xLPvCJfrom Leagle.com. About Little Loan Shoppe LLS America LLC, doing business as Little Loan Shoppe, operated an online payday loan business. Affiliate Team Spirit America provided the manpower, management and equipment for Little Loan Shoppe. The companies are among a multitude of Canadian and American business entities owned and operated by Doris E. Nelson, a/k/a Dee Nelson, a/k/a Dee Foster. Investors claimed Ms. Nelson operated a Ponzi scheme. Ms. Nelson allegedly told investors they could earn as much as 60% on money her companies used to make payday loans to consumers. American and Canadian investors bought notes worth US$29 million and another C$26,000,000. However, the investors received no payments after March 2009. One investor group placed a related company, LLS-A LLC, into bankruptcy in July 10, 2009. LLS America LLC filed for bankruptcy (Bankr. D. Nev. Case No. 09-23021) on July 21, 2009, before Judge Linda B. Riegle. Gregory E. Garman, Esq., at Gordon Silver, served as the Debtor's counsel. In its petition, the Debtor disclosed $2,661,584 in assets and $24,013,837 in debts. The petition was signed by Ralph Gamble, CEO of the Company. The case was subsequently moved to Washington state (Bankr. E.D. Wash. Case No. 09-06194). Charles Hall was appointed as examiner in the case. LLS AMERICA: Recommendations on Suit v. Foerstner Adopted --------------------------------------------------------- In the case, BRUCE P. KRIEGMAN, solely in his capacity as court- appointed Chapter 11 Trustee for LLS America, LLC, Plaintiff, v. TYLER FOERSTNER, Defendant, Adv. Proc. No. 11-80110-PCW11 (E.D. Wash.), Chief District Judge Rosanna Malouf Peterson issued an order dated Feb. 18 adopting a "REPORT AND RECOMMENDATION RE PARTIAL SUMMARY JUDGMENT AGAINST DEFENDANT TYLER FOERSTNER." A copy of the Order is available at http://is.gd/FCZfNOfrom Leagle.com. About Little Loan Shoppe LLS America LLC, doing business as Little Loan Shoppe, operated an online payday loan business. Affiliate Team Spirit America provided the manpower, management and equipment for Little Loan Shoppe. The companies are among a multitude of Canadian and American business entities owned and operated by Doris E. Nelson, a/k/a Dee Nelson, a/k/a Dee Foster. Investors claimed Ms. Nelson operated a Ponzi scheme. Ms. Nelson allegedly told investors they could earn as much as 60% on money her companies used to make payday loans to consumers. American and Canadian investors bought notes worth US$29 million and another C$26,000,000. However, the investors received no payments after March 2009. One investor group placed a related company, LLS-A LLC, into bankruptcy in July 10, 2009. LLS America LLC filed for bankruptcy (Bankr. D. Nev. Case No. 09-23021) on July 21, 2009, before Judge Linda B. Riegle. Gregory E. Garman, Esq., at Gordon Silver, served as the Debtor's counsel. In its petition, the Debtor disclosed $2,661,584 in assets and $24,013,837 in debts. The petition was signed by Ralph Gamble, CEO of the Company. The case was subsequently moved to Washington state (Bankr. E.D. Wash. Case No. 09-06194). Charles Hall was appointed as examiner in the case. LONG BEACH MEDICAL: Hospital Files for Bankruptcy ------------------------------------------------- Stephanie Gleason, writing for The Wall Street Journal, reported that Long Island, N.Y.'s, shut Long Beach Medical Center filed for Chapter 11 bankruptcy on Feb. 19 to sell what remains of its assets after Hurricane Sandy devastated the hospital a little more than a year ago. According to the report, South Nassau Communities Hospital has offered $21 million for the assets, a bid that will be tested at auction. The funding for the purchase came from a $22 million grant that the state of New York provided to execute the sale and build an urgent-care facility on the hospital grounds. The Dormitory Authority of the State of New York is providing an additional $6 million grant to South Nassau Communities, the report said. South Nassau Communities is lending that money to Long Beach Medical to fund the Chapter 11 case and help it continue operating. Long Beach Medical received $1.5 million of the funding before the bankruptcy filing and is requesting $4.5 million in the form of bankruptcy financing, which will require bankruptcy-court approval. Nationwide, cuts to state and federal reimbursement rates have hit hospitals and health-care centers, causing many to search for strategic partners and some to file for Chapter 11 bankruptcy, the report related. Long Beach Medical wasn't immune to these troubles, but the hospital hired premier doctors and upgraded its technology to try to combat steep losses. According to documents filed with the U.S. Bankruptcy Court in Central Islip, N.Y., those efforts were beginning to show results until October 2012, when Hurricane Sandy wiped out its boilers, electric system, fire alarms, communications and food services, the report further related. More than a year later, the 162-bed acute care facility is still unable to reopen. MCGRAW-HILL GLOBAL: Fitch Affirms 'B+' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has affirmed the 'B+' Issuer Default Rating (IDR) of McGraw-Hill Global Education Holding LLC (MHGE) and McGraw-Hill Global Education Finance, Inc. (MHGE Finance; co-issuer of the secured debt). Fitch has also affirmed the senior secured debt ratings of 'BB/RR2'. The Rating Outlook is Stable. Key Rating Drivers The ratings reflect MHGE's business profile: 63% of revenues from higher education publishing/solutions, 10% of revenues from professional education content and services, and 27% from international sales of higher education, professional and primary education materials. The higher education publishing market is dominated by Pearson, Cengage and MHGE. Fitch believes that collectively these three publishers make up approximately 75% market share. This scale provides meaningful advantages to these three publishers and creates barriers to entry for new publishers. Fitch believes that there could be some near-term enrollment pressures due to continued enrollment pressures at for-profit universities and the potential for federal student aid cuts. Long term, Fitch believes enrollment will continue to grow in the low single digits, as higher education degrees continue to be a necessity for many employers. MHGE and its peers have continued to demonstrate pricing power over their products. Fitch believes this will continue, albeit at lower levels than historically. Textbook pricing increases are expected to be in the low single digits. Revenue growth will primarily come from the continued growth in the volume of digital solution products sold and pricing increases associated with these digital products as they gain traction with professors. The transition from printed education materials to digital products has been advancing at a faster pace relative to K-12 education level. Fitch believes that the transition will lead to a net benefit for the publishers over time. Publishers will have the opportunity to disintermediate used/rental text book sellers, recapturing market share from these segments. Fitch expects print/digital margins to remain roughly the same, as both the discount of the digital textbook (relative to the print textbook) and the investments made in the interactive user experience offset the elimination of the cost associated with manufacturing, warehousing, and shipping printed textbooks. Fitch recognizes the risk of digital piracy, given the age demographic of higher education, the current data speeds available on the internet and the relative ease of finding a pirated text book. A mitigant to piracy risk is the development and selling of digital education solutions. The digital solutions incorporate homework and other supplemental materials that require a user's authentication. The company's strategy is to 'sell' these products to the professors, who then adopt this as required material for the course. Students then purchase the digital solution. This strategy has also been adopted by MHGE's peers. It will be vital for the industry to steer professors towards these digital solutions rather than a stand-alone eBook in order to defend against piracy. Fitch believes that this strategy is sound and can be successful. Fitch notes that adoption will be slow due to the slow to change nature of many professors. Fitch expects traditional print revenues to continue to decline due to growth in eBooks, near-term cyclical pressures in enrollment, and delays by professors in adopting new editions. In 2013, these print declines were offset by growth in digital solutions, custom publishing and eBooks. Fitch does not expect a material acceleration in print declines and believes that the digital solutions, custom publishing and eBooks will continue to provide an offset for these print declines. The ratings reflect cost savings identified by MHGE, approximately $80 million through 2015. Cost reductions include corporate and IT costs driven by headcount reductions and outsourcing. Fitch believes this is achievable given the historical ownership of MHGE within a conglomerate. MHGE did not provide audited financial statements. Audited combined financial statements for McGraw-Hill Education LLC (MHE) were provided, which combined MHGE and McGraw-Hill's School Education Group (MHSE). Unaudited break out of these two divisions were provided by management and used by Fitch to assign ratings. Upon the acquisition of MHE by Apollo, MHSE and MHGE were separated into two sister non-recourse subsidiaries of MHE. LIQUIDITY, FCF AND LEVERAGE Based on MHGE's reported September 2013 last 12 months (LTM) results, Fitch calculates post plate EBITDA of $291 million, resulting in gross leverage of 5.2x. Fitch post plate EBITDA does not add back certain adjustments made by the company, including adjusting for deferred revenue and expected cost savings. Based on Fitch's base case model, with revenues flat to down in the low single digits, Fitch expects leverage to remain near 4.5x - 5.0x in 2013 and decline in 2014 driven mandatory debt repayment and EBITDA growth. The ratings reflect the strong FCF metrics of MHGE. Fitch estimates September 2013 LTM free cash flow (FCF) of approximately $346 million. In 2013, FCF materially benefited from the improved working capital efficiencies. Fitch expects FCF to decline, however, remain healthy in the $50 million-$100 million range in 2014. As of September 2013 LTM, FCF to debt is estimated at 23%; Fitch projects 5%-10% in 2014. EBITDA to FCF conversion metrics are elevated in 2013 due to the working capital efficiencies and cost reduction initiatives, but absent these initiatives Fitch would expect FCF conversion to be around 35% or better. The ratings reflect Fitch's expectation that FCF will be dedicated towards acquisitions and debt reduction. Fitch believes most acquisitions will be small tuck in acquisitions. While management has not stated a leverage target, Fitch believes that the private equity ownership is incentivized to reduce leverage in order to improve the prospects of an exit from its investment. Fitch does not expect additional leveraging transactions in the near to mid- term. As of September 2013, liquidity was supported by $240 million revolver due 2018 and cash balance of $181 million. The credit facility and the notes are pari passu with one another and benefit from a first priority lien on all material assets, including a pledge of the equity of domestic guarantor subsidiaries and 65% of the voting equity interest of first-tier foreign subsidiaries, subject to certain exceptions. The credit facility is further secured by a pledge of the equity interest of MHGE held by its parent McGraw-Hill Global Education Intermediate Holding LLC (Holdings). While the secured notes do not benefit from the pledge of MHGE's equity by Holdings, Fitch's believes the value of the security comes from the assets of MHGE and its subsidiaries (including the equity pledge of MHGE's subsidiaries). Both the bank facility and the notes are guaranteed by existing and future wholly owned domestic subsidiaries of MHGE (subject to certain exceptions). RECOVERY RATINGS ANALYSIS MHGE's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company and, thus, recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern) rather than a liquidation. Fitch estimates a distressed enterprise valuation of $1.5 billion, using a 6x multiple and a post restructuring EBITDA of approximately $250 million. After deducting Fitch's standard 10% administrative claim, Fitch estimates recovery for the senior secured instruments of 77%, which maps within 71%-90% 'RR2' range. Issuance of additional secured debt could result in a one notch downgrade of the issue ratings. RATING SENSITIVITIES Continued growth in digital revenues coupled with leverage of 4x or less (on Fitch-calculated basis) would likely lead to positive rating actions. Mid to high-single digit revenue declines, which may be driven by declines or no growth in digital products (caused by a lack of execution or adoption by professors) would pressure ratings. Fitch has affirmed the following ratings: MHGE -- Long-term IDR at 'B+'; -- Senior secured credit facility (term loan and revolver) at 'BB/RR2'; -- Senior secured notes at 'BB/RR2'. MHGE Finance (co-issuer to MHGE's secured term loan, revolver and notes listed above) -- Long-term IDR at 'B+'. The Rating Outlook is Stable. MED-DEPOT INC: Set to Emerge After Chapter 11 Plan Confirmed ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Med-Depot Inc., a provider of respiratory therapy and home medical devices for hospice providers and their patients, is set to emerge from a Chapter 11 reorganization begun in July. According to the report, facing opposition from the unsecured creditors' committee, the company raised the distribution to the panel's constituents to $500,000 over three years, rather than $200,000 as in the first iteration of the plan. The bankruptcy judge in Sherman, Texas signed a confirmation order on Feb. 11 approving the plan. About Med-Depot Inc. Med-Depot, Inc., filed a Chapter 11 petition (Bankr. E.D. Tex. Case No. 13-41815) on July 26, 2013, in Sherman, Texas. Attorneys at Powell Goldstein, LLP and Bryan Cave, LLP, serve as counsel to the Debtor. The Debtor estimated assets of $1,000,001 to $10,000,000 and debt of $10,000,001 to $50,000,000. Parent Med-Depot Holdings, Inc., also sought bankruptcy protection. Based in Plano, Texas, 64 miles (103 kilometers) north of Dallas, Med-Depot entered bankruptcy after working out a plan to restructure the first-lien debt and give stock in return for the second-lien loan. Med-Depot entered bankruptcy after working out a plan to restructure the first-lien debt while giving stock in return for the second-lien loan. The plan offers a pot of $200,000 in cash to unsecured creditors. The company has $18 million in consolidated debt. The company projected a $1.8 million net loss in the fiscal year on revenue of $14.5 million. By fiscal 2015, Med-Depot was forecasting revenue of $20.8 million and $1.6 million in net income. MELANIE MILASINOVICH: Fannie Mae May Commence Eviction ------------------------------------------------------ Bankruptcy Judge David T. Thuma granted the request of the Federal National Mortgage Association for relief from the bankruptcy stay to evict debtor Melanie Milasinovich from her house at 422 Mission Road, Santa Fe, New Mexico. "The facts before the Court indicate that the Debtor filed this Chapter 11 case solely to further delay eviction from the House, where she has lived and worked for about five years without paying anything to the mortgagor and/or owner. During that time the House has generated substantial income for the Debtor. The Debtor has not filed a plan of reorganization, even though the case has been pending more than seven months. Debtor's income (apart from that generated by the House) is insufficient to pay Debtor's expenses, let alone fund a plan of reorganization. The Debtor's apparent misuse of the bankruptcy system should be stopped." Ms. Milasinovich filed a Chapter 7 bankruptcy (Bankr. D.N.M. Case No. 7-10-12868-SS) on June 7, 2010. A discharge was entered and the case was closed Sept. 21, 2010. Ms. Milasinovich filed for Chapter 11 (Bankr. D.N.M. Case No. 11-13-12294 TA) on July 9, 2013. In June 2012 a New Mexico state district court entered an in rem judgment against Ms. Milasinovich, foreclosing her interest in a Santa Fe house. The House was sold at public auction by the appointed special master, who conveyed it to the foreclosing plaintiff. Federal National Mortgage Association, the subsequent owner of the House, was substituted as the plaintiff in the foreclosure action and obtained a writ of assistance to remove the Debtor from the House. The Debtor filed this Chapter 11 case before the eviction could occur. A copy of Judge Thuma's Feb. 19, 2014 Memorandum Opinion is available at http://is.gd/QK1UQBfrom Leagle.com. MERCURY COS: Denver Court Requires Listing for Suits to Survive --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a federal district judge in Colorado dismissed a lawsuit because it wasn't specifically and unequivocally listed in either a company's Chapter 11 plan or disclosure statement. According to the report, after emerging from reorganization, the company sued its pre-bankruptcy lender, alleging a lack of good faith and fair dealing in seizing bank accounts. U.S. District Judge Richard P. Matsch in Denver threw out the suit. Judge Matsch said that the U.S. Court of Appeals in Denver, like the federal appeals court in New Orleans, requires that a company emerging from Chapter 11 specifically and unequivocally notify creditors about suits it intends bring after bankruptcy, the report related. In this case, a claim against the bank was listed in the formal schedules and statement of affairs, the report noted. When the plan and disclosure statement were published two years later, there was no mention of the claim. That left an "inference" that the claim was abandoned, Judge Matsch said. The plan said the company would preserve and prosecute "any and all claims" after bankruptcy, the report further related. Judge Matsch said those words were too general to preserve the claim. The case is Mercury Cos. Inc. v. Comerica Bank, 13-cv-01921, U.S. District Court, District of Colorado (Denver). About Mercury Companies Inc. Denver, Colorado-based Mercury Companies Inc. was a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. Mercury Cos. filed for Chapter 11 protection on Aug. 28, 2008. Two months later, six subsidiaries, namely Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions. The units' cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Lawywers at Brownstein Hyatt Farber Schreck, LLP, led by Daniel J. Garfield, Esq., served as the Debtors' bankruptcy counsel. Lars H. Fuller, Esq., at Baker Hostetler, served as the official committee of unsecured creditors' counsel. Mercury Companies disclosed $21.8 million in assets and $63.6 million in liabilities as of the Petition Date. The Bankruptcy Court confirmed the Debtors' liquidating Chapter 11 Plan, as amended, on Dec. 13, 2010, after objections by the Texas Comptroller of Public Accounts and the former employee creditors were withdrawn. Under the Plan, Mercury would set $25 million cash aside in a fund for distribution to general unsecured creditors. Mercury estimated that at the conclusion of the claims resolution process the total allowed general unsecured claims would be $35 million. The initial $25 million must be sufficient to pay unsecured creditors roughly 70% of their claims (although it will not be paid all at once because of the need to reserve for disputed claims). Mercury's remaining activities would generate more cash so that eventually creditors must receive greater distributions. MF GLOBAL: Lawsuits Against Corzine to Proceed ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jon Corzine, a former U.S. senator and onetime co- chairman of Goldman Sachs Group Inc., was mostly unsuccessful in persuading a federal district judge to dismiss class lawsuits brought against him and other officers and directors by customers and the trustee liquidating defunct commodity broker MF Global Inc. According to the report, twice before, Corzine failed in persuading a district judge to throw out class suits centering around MF Global's failure properly to segregate $1.6 billion in customer funds. In his 79-page opinion on Feb. 11, Judge Marrero was dealing with lawsuits brought by customers and the MF Global brokerage trustee, the report related. The judge said the litigation is "wasteful and rancorous" because parties' lawyers fail to concede anything despite "clear and controlling case law." "It is reasonable to infer that someone, somewhere, at some time did something wrong," Judge Marrero said, given that $1.6 billion was missing at the outset of bankruptcy, the report cited. He also said the plaintiffs gave "an account of the event that is compelling." Writing in favor of Corzine and other company managers, Judge Marrero said the plaintiffs "brought claims that fly in the face of clear precedent." Still, the judge said the "entire senior management went missing," just like the $1.6 billion in customer property, the report further related. The suit in Judge Marrero's court is In re MF Global Holdings Ltd. Securities Litigation, 11-cv-07866, U.S. District Court, Southern District New York. About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058), after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MF GLOBAL: Claims Over Collapse Trimmed in Class Action ------------------------------------------------------- Law360 reported that a New York federal judge dismissed some claims from a customer class action alleging Jon Corzine, the former CEO of now bankrupt MF Global Inc. and others lied about a $1.6 billion shortfall in customer funds, finding that a private plaintiff can't sue a financial institution employee for Commodity Exchange Act violations. According to the report, U.S. District Judge Victor Marrero dismissed six counts against Corzine and several other of the former MF Global top brass. The case is Deangelis v. Corzine et al., Case No. 1:11-cv-07866 (S.D.N.Y.). About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058), after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MOBIVITY HOLDINGS: ACT Capital Held 9.9% Stake at Dec. 31 --------------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, ACT Capital Management, LLLP, and its affiliates disclosed that as of Dec. 31, 2013, they beneficially owned 1,677,416 shares of common stock of Mobivity Holdings Corp. representing 9.9 percent of the shares outstanding. ACT Capital previously reported beneficial ownership of 10,064,576 common shares as of June 17, 2013. A copy of the regulatory filing is available for free at http://is.gd/j9gGG5 About Mobivity Holdings Mobivity Holdings Corp. was incorporated as Ares Ventures Corporation in Nevada in 2008. On Nov. 2, 2010, the Company acquired CommerceTel, Inc., which was wholly-owned by CommerceTel Canada Corporation, in a reverse merger. Pursuant to the Merger, all of the issued and outstanding shares of CommerceTel, Inc., common stock were converted, at an exchange ratio of 0.7268-for-1, into an aggregate of 10,000,000 shares of the Company's common stock, and CommerceTel, Inc., became a wholly owned subsidiary of the Company. In connection with the Merger, the Company changed its corporate name to CommerceTel Corporation on Oct. 5, 2010. In connection with the Company's acquisition of assets from Mobivity, LLC, the Company changed its corporate name to Mobivity Holdings Corp. and its operating company to Mobivity, Inc, on Aug. 23, 2012. Mobivity Holdings disclosed a net loss of $7.33 million in 2012, as compared with a net loss of $16.31 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $9.96 million in total assets, $1.51 million in total liabilities and $8.45 million in total stockholders' equity. M&K CPAS, PLLC, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring operating losses and negative cash flows from operations and dependence on additional financing to fund operations which raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning "[A]ll of our assets are currently subject to a first priority lien in favor of the holders of our outstanding convertible notes payable in the current aggregate principal amount of $4,521,378. The notes are due on October 15, 2013, if we are unable to repay or refinance our obligations under those notes by October 15, 2013, the holders of the notes will have the right to foreclose on their security interests and seize our assets. To avoid such an event, we may be forced to seek bankruptcy protection, however a bankruptcy filing would, in all likelihood, materially adversely affect our ability to continue our current level of operations. In the event we are not able to refinance or repay the notes, but negotiate for a further extension of the maturity date of the notes, we may be required to pay significant extension fees in cash or shares of our equity securities or otherwise make other forms of concessions that may adversely impact the interests of our common stockholders," the Company said in its annual report for the year ended Dec. 31, 2012. MONTREAL MAINE: Has Divergent Plans in U.S. and Canada ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Montreal Maine & Atlantic Railway Ltd. has diametrically conflicting proposals in parallel bankruptcies in Canada and the U.S. for compensating victims of the July derailment and explosion that killed 47 people and destroyed much of the town of Lac-Megantic, Quebec. According to the report, the principal asset so far for victims is $25 million in insurance recoveries. In Canada, lawyers for a class of 1,500 damage victims wrote to the judge proposing what they called a "made in Lac-Megantic solution." They advocate a distribution under Canadian law giving the entire $25 million to victims, and nothing to lawyers, the report said. The proposal also calls for distributing the $14.3 million realized from selling the railroad to claimants under Canadian law. By contrast, lawyers representing families of the 47 people who were killed filed a Chapter 11 plan in the U.S. court in Maine proposing that 75 percent of the $25 million be distributed under U.S. law to those who died, the report related. The remaining 25 percent would be for people whose property was damaged or destroyed. Robert J. Keach, the trustee in the U.S. bankruptcy, has said the 47 victims' proposal is "not a serious plan," the report added. Similarly, Luc Despins of Paul Hastings LLP in New York, a lawyer for the official victims' committee, called the proposal "just a publicity stunt." About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson, P.A., has been named as chapter 11 trustee. His firm serves as his chapter 11 bankruptcy counsel, led by Michael A. Fagone, Esq. Development Specialists, Inc., serves as the Chapter 11 trustee's financial advisor. Gordian Group, LLC, serves as the Chapter 11 Trustee's investment banker. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana served as counsel to MM&A. It now serves as counsel to the Chapter 11 Trustee. Justice Martin Castonguay oversees the case in Canada. The Canadian Transportation Agency suspended the carrier's operating certificate after the accident, due to insufficient liability coverage. The town of Lac-Megantic, Quebec, has sought financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent a derailment. In the Canadian case, Andrew Adessky at Richter Consulting has been appointed CCAA monitor. The CCAA Monitor is represented by Sylvain Vauclair at Woods LLP. MM&A Canada is represented by Patrice Benoit, Esq., at Gowling LaFleur Henderson LLP. The U.S. Trustee appointed a four-member official committee of derailment victims. The Official Committee is represented by: Richard P. Olson, Esq., at Perkins Olson; and Luc A. Despins, Esq., at Paul Hastings LLP. There's also an unofficial committee of wrongful death claimants consisting of representatives of the estates of the 46 victims. This group is represented by George W. Kurr, Jr., Esq., at Gross, Minsky & Mogul, P.A.; Daniel C. Cohn, Esq., at Murtha Cullina LLP; Peter J. Flowers, Esq., at Meyers & Flowers, LLC; Jason C. Webster, Esq., at The Webster Law Firm; and Mitchell A. Toups, Esq., at Weller, Green Toups & Terrell LLP. After the U.S. Trustee formed the Official Committee, the ad hoc committee filed papers asking the U.S. Court to have the official committee disbanded. The ad hoc group said it represents 46 victims of the disaster. On Jan. 23, 2014, the Debtors won authorization to sell substantially all of their assets to Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group, for $15.7 million. The Bankruptcy Courts in the U.S. and Canada approved the sale. The Fortress unit is represented by Terence M. Hynes, Esq., and Jeffrey C. Steen, Esq., at Sidley Austin LLP. On Jan. 29, 2014, an ad hoc group of wrongful-death claimants submitted a plan, which would give 75 percent of the $25 million in available insurance to the families of those who died after an unattended train derailed in Lac-Megantic, Quebec, in July. The other 25 percent would be earmarked for claimants seeking compensation for property that was damaged when much of the town burned. Former U.S. Senator George Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995 and who is now chairman emeritus of law firm DLA Piper LLP, would administer the plan and lead the effort to wrap up MM&A's Chapter 11 bankruptcy. MONTREAL MAINE: Court Approves Paul Hasting as Panel's Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maine authorized the Official Committee of Victims of Montreal Maine & Atlantic Railway, Ltd. to retain Paul Hastings LLP as its counsel, effective Dec. 10, 2013. As reported in the Troubled Company Reporter on Jan. 28, 2014, the Committee requires Paul Hastings to: (a) consult with the Committee, the Trustee, the Debtor, the U.S. Trustee and the Monitor concerning the administration of this chapter 11 case and the CCAA Proceeding; (b) review, analyze, and respond to pleadings filed with the Court and the CCAA Court and to participate at hearings on such pleadings; (c) take all necessary action to protect the rights and interests of the Committee, including, but not limited to, negotiations and preparation of documents relating to any plan and disclosure statement; (d) represent the Committee in connection with the exercise of its powers and duties under the Bankruptcy Code; and (e) perform all other necessary legal services in connection with the Chapter 11 case. Paul Hastings will be paid at these hourly rates: Luc A. Despins, Partner $550 Christopher Fong, Associate $660 Paul Hastings will also be reimbursed for reasonable out-of-pocket expenses incurred. Consistent with the approach adopted by the Quebec Government, and as a courtesy to the victims of the derailment, Paul Hastings will not seek to have its fees paid out of the $25 million liability proceeds of a liability insurance policy that the Debtor maintains with XL Insurance Company Ltd. Prior to the being retained by the Committee, Paul Hastings was retained, as of Aug. 22, 2013, to represent the Informal Committee of Quebec Claimants in this chapter 11 case. However, that representation terminated on Dec. 9, 2013 and Paul Hastings did not receive any compensation or promise of compensation in connection therewith, except that on 3 occasions the Quebec Government offered to pay the sum of C$10,000 per day for Mr. Despins' attendance at meetings in (i) Quebec, Canada, with victims of the derailment or representatives of such victims, and (ii) Portland, Maine with the Trustee. Paul Hastings had not sought payment of these sums and will not do so if the Court believes that such payment would be inappropriate given the Firm's proposed engagement by the Committee. Paul Hastings will not represent the Informal Committee of Quebec Claimants or any of their members in their individual capacity in the Debtor's chapter 11 case. Luc A. Despins, partner of Paul Hastings, 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. Paul Hastings can be reached at: Luc A. Despins, Esq. PAUL HASTINGS LLP 75 East 55th Street New York, NY 10022 Tel: (212) 318-6001 Fax: (212) 230-7771 E-mail: lucdespins@paulhastings.com About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson, P.A., has been named as chapter 11 trustee. His firm serves as his chapter 11 bankruptcy counsel, led by Michael A. Fagone, Esq. Development Specialists, Inc., serves as the Chapter 11 trustee's financial advisor. Gordian Group, LLC, serves as the Chapter 11 Trustee's investment banker. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana served as counsel to MM&A. It now serves as counsel to the Chapter 11 Trustee. Justice Martin Castonguay oversees the case in Canada. The Canadian Transportation Agency suspended the carrier's operating certificate after the accident, due to insufficient liability coverage. The town of Lac-Megantic, Quebec, has sought financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent a derailment. In the Canadian case, Andrew Adessky at Richter Consulting has been appointed CCAA monitor. The CCAA Monitor is represented by Sylvain Vauclair at Woods LLP. MM&A Canada is represented by Patrice Benoit, Esq., at Gowling LaFleur Henderson LLP. The U.S. Trustee appointed a four-member official committee of derailment victims. The Official Committee is represented by: Richard P. Olson, Esq., at Perkins Olson; and Luc A. Despins, Esq., at Paul Hastings LLP. There's also an unofficial committee of wrongful death claimants consisting of representatives of the estates of the 46 victims. This group is represented by George W. Kurr, Jr., Esq., at Gross, Minsky & Mogul, P.A.; Daniel C. Cohn, Esq., at Murtha Cullina LLP; Peter J. Flowers, Esq., at Meyers & Flowers, LLC; Jason C. Webster, Esq., at The Webster Law Firm; and Mitchell A. Toups, Esq., at Weller, Green Toups & Terrell LLP. After the U.S. Trustee formed the Official Committee, the ad hoc committee filed papers asking the U.S. Court to have the official committee disbanded. The ad hoc group said it represents 46 victims of the disaster. On Jan. 23, 2014, the Debtors won authorization to sell substantially all of their assets to Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group, for $15.7 million. The Bankruptcy Courts in the U.S. and Canada approved the sale. The Fortress unit is represented by Terence M. Hynes, Esq., and Jeffrey C. Steen, Esq., at Sidley Austin LLP. On Jan. 29, 2014, an ad hoc group of wrongful-death claimants submitted a plan, which would give 75 percent of the $25 million in available insurance to the families of those who died after an unattended train derailed in Lac-Megantic, Quebec, in July. The other 25 percent would be earmarked for claimants seeking compensation for property that was damaged when much of the town burned. Former U.S. Senator George Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995 and who is now chairman emeritus of law firm DLA Piper LLP, would administer the plan and lead the effort to wrap up MM&A's Chapter 11 bankruptcy. MORNINGSTAR MARKETPLACE: Has Until March 5 to File Schedules ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Pennsylvania extended the deadline for Morningstar Marketplace LTD to file its Chapter 11 schedules of assets and liabilities, statement of financial affairs and other documents. As reported in the Troubled Company Reporter on Feb. 11, 2014, the Debtor sought an extension of the Feb. 17 deadline because, among other things, it was unable to readily obtain complete and accurate records and additional time is necessary to review and sign the final paperwork. About Morningstar Marketplace Morningstar Marketplace, LTD, operator of a flea market business in St. Thomas, Pennsylvania, filed a Chapter 11 bankruptcy petition (Bankr. M.D. Pa. Case No. 14-00451) in Harrisburg on Feb. 3, 2014. Judge Mary. D France presides over the case. Attorneys at Smigel, Anderson & Sacks, LLP serve as counsel to the Debtor. The Debtor estimated $100 million to $500 million in assets and liabilities. NATIONAL AIRLINES: Former CFO Loses 9th Cir. Appeal Against IRS --------------------------------------------------------------- Raymond T. Nakano, Senior Vice President and Chief Financial Officer of, Inc., sued the U.S. government in district court for recovery of taxes paid and an abatement of the Raymond T. Nakano, Senior Vice President and Chief Financial Officer of National Airlines, Inc., sued the U.S. government in district court for recovery of taxes paid and an abatement of the amounts owing. The government counterclaimed for the amount owing and followed with a motion for summary judgment. Mr. Nakano moved to dismiss the government's counterclaim. The district court denied his motion, granted the government's motion, and entered judgment for the government in the amount of $11,553,586, which represents the full amount due from all three quarters plus statutory interest through Nov. 30, 2011. Mr. Nakano served as SVP and CFO from National's founding in 1995 until it filed for Chapter 7 bankruptcy in May 2003. The Internal Revenue Service had assessed unpaid excise taxes against Mr. Nakano personally, pursuant to 26 U.S.C. Sec. 6672. He brought the civil action against the government pursuant to 26 U.S.C. Sec. 7422, for a refund of the taxes he claimed were erroneously assessed. Mr. Nakano elevated the matter to the U.S. Court of Appeals for the Ninth Circuit in San Francisco, California. In considering the appeal, the Ninth Circuit addressed two questions: (1) whether the district court erred in holding that Plaintiff's failure to pay the excise taxes was "willful" within the meaning of 26 U.S.C. Sec. 6672(a) despite the airline's bankruptcy; and (2) whether Sec. 6672 liability applies to excise tax payments deferred under the Air Transportation Safety and System Stabilization Act, Pub. L. No. 107-42, Sec. 301(a)(1) (2001). Reviewing those legal questions de novo, Ilko v. Cal. State Bd. of Equalization (In re Ilko), 651 F.3d 1049, 1052 (9th Cir. 2011) (order), the Ninth Circuit affirmed in a Feb. 18 opinion available at http://is.gd/X4vGAofrom Leagle.com. Circuit Judges Diarmuid F. O'Scannlain, Susan P. Graber, and Jacqueline H. Nguyen held that: (1) assets are "encumbered" for purposes of Sec. 6672 only if "the taxpayer is legally obligated to use the funds for a purpose other than satisfying the preexisting employment tax liability and if that legal obligation is superior to the interest of the IRS in the funds," Honey v. United States, 963 F.2d 1083, 1090 (8th Cir. 1992), a test that is not met in this case; and (2) the Stabilization Act does not "allow the airlines to use the excise taxes as working capital" and does not defeat trust status for unpaid excise taxes for purposes of personal liability under Sec. 6672, Conway v. United States, 647 F.3d 228, 236 (5th Cir. 2011). The appellate case is, RAYMOND T. NAKANO, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee, No. 11-18013 (9th Cir.). Richard D. Salgado, Esq., and Laura L. Gavioli, Esq. -- richard.salgado@dentons.com and laura.gavioli@dentons.com -- at Dentons, in Dallas, Texas, represent Mr. Nakano. Jennifer M. Rubin, Esq., and Robert W. Metzler, Esq., Attorneys, and Kathryn Keneally, Esq., Assistant Attorney General, Tax Division, United States Department of Justice, Washington, D.C., argue for the IRS. About National Airlines National Airlines halted operations and dismissed most of its 1,500 employees in early November 2002. The Las Vegas-based carrier couldn't close on a multi-million dollar financing package necessary to emerge from chapter 11 as a reorganized company and was unable to rustle-up an outside equity investment. In mid- 2002, the Air Transportation Stabilization Board declined to provide National with any form of loan guarantee. National, 48% owned by Harrah's Entertainment Corp., served Chicago Midway, Chicago O'Hare, Dallas/Ft. Worth, Los Angeles, Miami, Newark, New York JFK, Philadelphia and San Francisco with nonstop flights to and from its Las Vegas hub. When the Company filed for chapter 11 protection (Bankr. Nev. Case No. 00-19258) on Dec. 6, 2000, it disclosed $103,464,700 in assets and debts totaling $119,506,900. National later ceased operations and, on May 7, 2003, the airline converted its bankruptcy to Chapter 7. NAVISTAR INTERNATIONAL: To Close Alabama Engine Plant ----------------------------------------------------- Bob Tita, writing for The Wall Street Journal, reported that commercial truck maker Navistar International Corp. will close an engine plant in Alabama this summer as it moves to eliminate excess production capacity and consolidate its engine lineup for medium-size trucks. According to the report, the closure of the plant in Huntsville will result in the loss of about 280 jobs and generate savings of about $22 million a year. Production at that plant will be shifted to an engine plant near Chicago, which will add about 75 workers. Navistar will continue to produce large diesel engines for heavy- duty trucks at a second plant in Huntsville. The move reflects an increasing reliance on engines made by Cummins Inc., the report said. Navistar recently began offering Cummins's engines in its medium-size trucks and had earlier decided to buy 15-liter engines from Cummins for heavy-duty trucks. With the addition of Cummins's popular midrange engine, Navistar Chief Executive Troy Clarke said the company is reviewing its own engine line for medium-size trucks and is likely to discontinue some low-volume models, the report related. The Huntsville plant slated for closure produces a variety of diesel engines ranging in size from 6 liters to 9.3 liters. "We're not going to go out of the engine business," Mr. Clarke said during an interview with The Wall Street Journal. "We just have too much manufacturing capacity at this point." About Navistar International Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The Company also provides truck and diesel engine parts and service. Another affiliate offers financing services. Navistar International reported a net loss attributable to the Company of $898 million for the year ended Oct. 31, 2013, a net loss attributable to the Company of $3.01 billion for the year ended Oct. 31, 2012. The Company's balance sheet at Oct. 31, 2013, showed $8.31 billion in total assets, $11.91 billion in total liabilities and a $3.60 billion total stockholders' deficit. * * * In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service lowered Navistar International Corporation's Corporate Family Rating (CFR), Probability of Default Rating (PDR), and senior note rating to B2 from B1. The downgrade of Navistar's ratings reflects the significant challenges the company will face during the next eighteen months in re-establishing the profitability and competitiveness of its US and Canadian truck operations in light of the failure to achieve EPA certification of its EGR emissions technology, the significant reductions in military revenues and substantially higher engine warranty reserves. As reported by the TCR on Oct. 9, 2013, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Illinois-based truckmaker Navistar International Corp. (NAV) to 'CCC+' from 'B-'. "The rating downgrades reflect our increased skepticism regarding NAV's prospects for achieving the market shares it needs for a successful business turnaround," said credit analyst Sol Samson. The TCR, on the same day, also reported that Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) for Navistar International, Navistar, Inc. and Navistar Financial Corporation (NFC) at 'CCC'. In addition, Fitch assigns a rating of 'CC'/'RR6' to NAV's planned $200 million of senior subordinated convertible notes due 2018. Proceeds from the new notes will be available for general corporate purposes and to repay a portion of 3% senior subordinated notes scheduled to mature October 2014. NPS PHARMACEUTICALS: Vanguard Stake at 5.5% as of Dec. 31 --------------------------------------------------------- The Vanguard Group disclosed in an amended Schedule 13G filed with the U.S. Securities and Exchange Commission that as of Dec. 31, 2013, it beneficially owned 5,598,146 shares of common stock of NPS Pharmaceuticals Inc representing 5.48 percent of the shares outstanding. Vanguard Group previously reported beneficial ownership of 5,032,804 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/KVRs96 About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing new treatment options for patients with rare gastrointestinal and endocrine disorders. NPS has been in the red since 2009. It posted a net loss of $18.73 million in 2012, a net loss of $36.26 million in 2011, a net loss of $31.44 million in 2010, and a net loss of $17.86 million in 2009. For the nine months ended Sept. 30, 2013, the Company reported a net loss of $21.27 million. The Company's balance sheet at Sept. 30, 2013, showed $277.01 million in total assets, $185.18 million in total liabilities and $91.83 million in total stockholders' equity. ORCKIT COMMUNICATIONS: Noteholders OK Proposed Arrangement ---------------------------------------------------------- The holders of Orckit Communications Ltd.'s Series A notes and Series B notes approved the proposed arrangement under Section 350 of the Israeli Companies Law, 1999, among the Company and the Noteholders presented by a joint committee of the representatives of the Noteholders on Jan. 30, 2014, without any changes proposed by the Company in its response to the Proposed Arrangement published on Feb. 4, 2014. In addition, the Noteholders approved a proposal submitted by Neocorp, a member of the VAR Group, to provide management and operational services to the Company, including the services of Mr. Yoav Kfir as the active Chairman of the Board of the Company. The Noteholders also authorized the trustees of the Noteholders to take actions and proceedings (including legal proceedings) to implement the foregoing decisions. The decisions are not binding on the Company. The Board of Directors of the Company will convene to consider this development. About Orckit Tel-Aviv, Israel-based Orckit Communications Ltd. (TASE: ORCT) engages in the design, development, manufacture and marketing of advanced telecom equipment to telecommunication service providers in metropolitan areas. The Company's products are transport telecommunication equipment targeting high capacity packetized metropolitan networks. Orckit disclosed a net loss of $6.46 million on $11.19 million of revenues for the year ended Dec. 31, 2012, as compared with a net loss of $17.38 million on $15.58 million of revenues for the year ended Dec. 31, 2011. The Company's balance sheet at Sept. 30, 2013, showed $12.44 million in total assets, $24.03 million in total liabilities and a $11.59 million total capital deficiency. Kesselman & Kesselman, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a capital deficiency, recurring losses, negative cash flows from operating activities and has significant future commitments to repay its convertible subordinated notes. These facts raise substantial doubt as to the Company's ability to continue as a going concern. OVERSEAS SHIPHOLDING: Notice Shortened -------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved Overseas Shipholding Group's motion, pursuant to Sections 102(1) and 105(a) of the Bankruptcy Code, shortening notice for orders (i)(a) authorizing the Debtor sellers entry into a purchase agreement, (b) authorizing and approving bidding procedures and bid protections, (c) approving notice procedures, (d) setting a date for a sale hearing and (ii) authorizing and approving the sale of certain of the Debtors' vessels free and clear of encumbrances. According to BankruptcyData, the court document stated, "Following extensive negotiations, the Debtors determined that they would be unable to consensually restructure the terms of the CEXIM Facility in a way that was acceptable to the Debtors and their creditors so as to retain the CEXIM Vessels in their fleet....Subject to the results of the sale process and Auction, the Purchase Agreement reached with the Stalking Horse Bidder following comprehensive arm's-length negotiations serves these goals....[T]he Stalking Horse Bidder has not only established the standard against which future bids will be evaluated, but has ensured that the Debtors can effectively liquidate the entire CEXIM Vessel fleet in a process that has been vetted with CEXIM and the Debtors' major creditor constituents." About Overseas Shipholding Overseas Shipholding Group, Inc. (OTC: OSGIQ), headquartered in New York, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. OSG owns or operates 111 vessels that transport oil and petroleum products throughout the world. Overseas Shipholding Group and 180 affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 12-20000) on Nov. 14, 2012, disclosing $4.15 billion in assets and $2.67 billion in liabilities. Greylock Partners LLC Chief Executive John Ray serves as chief reorganization officer. James L. Bromley, Esq., and Luke A. Barefoot, Esq., at Cleary Gottlieb Steen & Hamilton LLP serve as OSG's Chapter 11 counsel. Derek C. Abbott, Esq., Daniel B. Butz, Esq., and William M. Alleman, Jr., at Morris, Nichols, Arsht & Tunnell LLP, serve as local counsel. Chilmark Partners LLC serves as financial adviser. Kurtzman Carson Consultants LLC is the claims and notice agent. The Export-Import Bank of China, owed $312 million used for the construction of five tankers, is represented by Louis R. Strubeck, Jr., Esq., and Kristian W. Gluck, Esq., at Fulbright & Jaworski LLP in Dallas; David L. Barrack, Esq., and Beret Flom, Esq., at Fulbright & Jaworski in New York; and John Knight, Esq., and Christopher Samis, Esq., at Richards Layton & Finger PA. Chilmark Partners, LLC serves as financial and restructuring advisor. Akin Gump Strauss Hauer & Feld LLP, and Pepper Hamilton LLP, serve as co-counsel to the official committee of unsecured creditors. FTI Consulting, Inc., is the financial advisor and Houlihan Lokey Capital, Inc., is the investment banker. PILGRIM'S PRIDE: Profit Jumps on Lower Costs -------------------------------------------- Anna Prior, writing for The Wall Street Journal, reported that Pilgrim's Pride Corp.'s fourth-quarter profit surged as the chicken producer continued to rein in costs. According to the report, Pilgrim's Pride has kept production- related expenses in check while raising prices on chicken in recent quarters, driving an improvement in its operating performance that prompted investors to more than double the company's share price last year. In November, the company unveiled plans to further streamline its operations, looking to save $200 million this year, the report related. As part of the plan, the company said its Boaz, Ala., poultry processing operations would be shut. For the most recent quarter, the company reported a profit of $143.4 million, or 55 cents a share, up from a year-earlier profit of $22.8 million, or nine cents a share, the report further related. Sales fell 6.5% to $2.05 billion, though the prior year included an extra week. * * * The Troubled Company Reporter on Sep. 2, 2013, reported that Standard & Poor's Ratings Services raised its ratings on Greeley, Colo.-based Pilgrim's Pride including the corporate credit rating, to 'BB-' from 'B'. The outlook is stable. Concurrently, S&P raised the issue-level ratings on the company's outstanding $500 million senior unsecured notes due 2018 to 'BB-' from 'B'. The recovery rating remains '4', indicating S&P's expectations for average (30% to 50%) recovery in the event of a payment default. PHH CORP: In Talks To Sell Fleet Management Business ---------------------------------------------------- Tatjana Kulkarni, writing for The Deal, reported that mortgage services provider PHH Corp. is in talks with leasing finance firm Element Financial Corp. regarding the sale of its PHH Arval fleet management business, according to a source close to the matter. According to the report, it was only a week ago, on Feb. 11, that Mount Laurel, N.J.-based PHH said it was exploring options of selling the company as a whole or in parts by separating its fleet management and mortgage services divisions. PHH officials didn't respond to multiple calls, the report noted. Element declined to comment on the PHH situation, but its senior vice president, John Sadler, said that, "generally speaking," the Toronto company is on the prowl for acquisitions in the fleet management space. "The company has solid dry powder," Sadler said by phone, referring to cash it has set aside to pursue acquisitions, the report cited. "Obviously, we exercise discipline in these matters, but fleet-management acquisitions is highly aspirational for Element." Element, which provides financing for industrial, aerospace and automotive equipment leasing, established its fleet business in 2012, when it acquired fleet leasing company TLSI Holdings Inc. from Scotiabank for about C$146.7 million ($146.4 million), plus debt on May 15, the report related. More recently, Element acquired the Canadian fleet portfolio of GE Capital Corp. for C$570 million ($551 million) on May 31. * * * The Troubled Company Reporter, on Feb. 14, 2014, reported that Fitch Ratings has placed the 'BB' Long-Term Issuer Default Ratings (IDR) of PHH Corporation (PHH) on Rating Watch Evolving following the company's announcement that it is exploring ways to maximize shareholder value through the separation or sale of its fleet business, mortgage business, or both. The company has retained advisors to assist in this process. PHH indicated that they expect to reach conclusions on this announcement prior to the end of the second quarter of 2014. The TCR, on the same day, also reported that Standard & Poor's Ratings Services said it revised its outlook on PHH Corp. to negative from stable. At the same time, S&P affirmed its 'BB-' long-term issuer credit and senior unsecured ratings on the company. S&P also affirmed its preliminary 'B' subordinated debt rating, preliminary 'B-' preferred stock rating, and 'B' short- term issuer credit rating on PHH. PRICHARD, ALA: Files Chapter 9 Debt-Adjustment Plan --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Prichard, Alabama, a suburb of Mobile, has a hearing on April 12 for approval of a municipal debt-adjustment plan in a bankruptcy case that went up to the state's high court. According to the report, the Chapter 9 proceeding, which began in October 2009, took more than four years because the bankruptcy court dismissed the case, saying the city didn't have outstanding bonds required by state law. On appeal, a federal district judge asked the Alabama Supreme Court to decide whether the city had the right type of debt to be eligible under Chapter 9 of the U.S. Bankruptcy Code. The state high court ruled in April 2012 that the city's debt qualified for Chapter 9. Prichard, a community of 25,000 people, laid the foundation for the newly filed plan by working out a settlement with city workers regarding their pensions, the report said. That settlement is incorporated into the plan. About Prichard, Alabama The city of Prichard, Alabama, a suburb of Mobile, filed for municipal reorganization on Oct. 27, 2009, its second time in eight years. The Chapter 9 petition in Mobile says that assets and debt both exceed $10 million. In September 2010, the Bankruptcy Court dismissed Prichard's petition after finding that the city lacked the capacity, under Alabama law, to file the petition. The city filed for bankruptcy after retirees stopped receiving pension checks. Prichard said it was having a "substantial under- funded pension obligation." Prichard has a population of 25,000. PLEXTRONICS INC: Sale to Solvay America Is Set for March 6 ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Plextronics Inc., a maker of conductive polymers and inks used in printed organic electronics, will sell its business to Solvay America Inc. for $32.6 million, assuming no one submits a better offer at a March 5 auction. According to the report, Plextronics filed a Chapter 11 petition on Jan. 16, with the sale to Solvay already arranged. A bankruptcy judge in Delaware approved auction and sale procedures on Feb. 12. Any competing bids are due Feb. 28. A hearing for sale approval will take place March 6. Solvay, the company's largest shareholder and primary lender, will pay for the business with $8.5 million in cash and $24.1 million in secured debt, the report related. About Plextronics Inc. Headquartered in Pittsburgh, Pennsylvania, Plextronics, Inc. -- http://www.plextronics.com-- specializes in conductive polymers and printable formulations that enable advanced electronic devices. The company's develops customized inks to enhance the performance of organic light emitting diodes (OLEDs) for next generation displays and lighting applications, lithium ion batteries, polymer metal capacitors, and emerging organic electronic devices. The privately held company was founded in 2002 as a spinout from Carnegie Mellon University based upon conductive polymer technology developed by Dr. Richard McCullough. Plextronics, Inc. on Jan. 16, 2014, filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 14-10080) with plans to sell its assets to Solvay America, Inc., absent higher and better offers. The Debtor estimated assets and debt of $10 million to $50 million as of the bankruptcy filing. Campbell & Levine, LLC in Pittsburgh is serving as the Plextronics' legal advisors. New York-based Cowen and Company, LLC is serving as its investment banker. QUANTUM CORP: Vanguard Group Holds 5.3% Equity Stake ---------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, The Vanguard Group disclosed that as of Dec. 31, 2013, it beneficially owned 13,218,124 shares of common stock of Quantum Corp representing 5.32 percent of the shares outstanding. Vanguard Group previously reported beneficial ownership of 13,636,121 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/12qMWX About Quantum Corp. Based in San Jose, California, Quantum Corp. (NYSE:QTM) -- http://www.quantum.com/-- is a storage company specializing in backup, recovery and archive. Quantum provides a comprehensive, integrated range of disk, tape, and software solutions supported by a world-class sales and service organization. For the 12 months ended March 31, 2013, the Company incurred a net loss of $52.41 million on $587.57 million of total revenue, as compared with a net loss of $8.81 million on $652.37 million of total revenue for the same period a year ago. The Company's balance sheet at Dec. 31, 2013, showed $360.27 million in total assets, $439.90 million in total liabilities and a $79.62 million stockholders' deficit. RAY K. SHAHANI: Court Narrows Suit v. Wells Fargo, BofA et al ------------------------------------------------------------- Rockridge Trust and its trustee Ray K. Shahani sued Wells Fargo, N.A., Bank of America, N.A., First American Trustee Servicing Solutions LLC, and First American Loanstar Trustee Services LLC, alleging numerous causes of action arising out of a series of loan modification negotiations followed by foreclosure. On June 24, 2013, the Court, addressing only those claims over which it had federal question jurisdiction, granted the Defendants' motions to dismiss, and dismissed the original complaint without prejudice. Subsequently, Plaintiffs filed a First Amended Complaint. On Sept. 25, 2013, the Court granted the Defendants' motions to dismiss that complaint except for these claims: (1) violation of the Fair Debt Collection Practices Act as to Wells Fargo; (2) wrongful foreclosure based in violations of the Homeowner's Bill of Rights provisions regarding excessive fees as to Wells Fargo; (3) violation of the Rosenthal Act as to Wells Fargo and Bank of America; and (4) violation of California's Unfair Competition Law as to Wells Fargo. The Plaintiffs have filed a Second Amended Complaint. Presently before the Court are motions to dismiss the SAC by Wells Fargo and Bank of America, and First American Trustee. In a Feb. 19, 2014 Order available at http://is.gd/RH8WHffrom Leagle.com, Magistrate Judge Joseph C. Spero granted, in part, and denied, in part, the Wells Fargo Motion and granted the First American Motion. Specifically, Judge Spero ruled that the SAC is dismissed with prejudice as to all claims except: (1) violation of the FDCPA as to Wells Fargo; (2) breach of oral contract based on a contract arising from Shahani's Feb. 28, 2013 conversation with Keri Peck resulting in a promise by Wells Fargo to postpone the trustee's sale of the subject property scheduled for March 4, 2013; (3) breach of the implied covenant of good faith and fair dealing based on contracts arising from (a) Shahani's Sept. 15, 2011 conversation with Jaycee Bell resulting in Wells Fargo's promises to not foreclose and to accept regular monthly mortgage payments, and (b) Shahani's Feb. 28, 2013 conversation with Peck resulting in a promise by Wells Fargo to postpone the trustee's sale; (4) promissory estoppel based on Peck's Feb. 28, 2013 promise to postpone the trustee's sale; (5) fraud based on misrepresentations made by Peck on Feb. 28, 2013; (6) violation of the Rosenthal Act as to Wells Fargo and Bank of America; and (7) violation of the UCL as to Wells Fargo and Bank of America. The case is, ROCKRIDGE TRUST, et al., Plaintiffs, v. WELLS FARGO NA, et al., Defendants, Case No. 13-cv-01457-JCS (N.D. Cal.). Ray K. Shahani filed Chapter 11 (Bankr. N.D. Cal. Case No. 09-33549) on Nov. 11, 2009. RENT-A-CENTER INC: S&P Affirms 'BB' CCR & Revises Outlook to Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on Plano, Texas-based Rent-A-Center Inc. and revised the outlook to negative from stable. At the same time, S&P assigned a 'BB+' issue-level rating and a '2' recovery rating to the proposed $350 million senior secured term loan B. The '2' recovery rating indicates S&P's expectation for substantial (70% to 90%) recovery of principal in the event of a payment default. S&P also lowered the issue-level rating on the company's existing senior notes to 'B+' from 'BB-', with a '6' recovery rating, indicating our expectation for negligible (0% to 10%) recovery. "The outlook revision reflects the potential for a downgrade from weakening credit metrics, especially cash flow measures, and our expectation that the company's operating performance will continue to be soft for the next 12-24 months, as weakened customer demand and increasingly promotional environment continue to pressure margins," said credit analyst Diya Iyer. The outlook is negative, reflecting S&P's expectation that operating performance will continue to be soft for the next 12-24 months, primarily because of on-going weak customer demand and intensified promotional environment. Downside scenario S&P could lower the ratings if the company's credit ratios, especially its cash flow measures, further deteriorate. For example, S&P could lower the ratings if margins further decline by 200 bps with flat same-store sales, causing FFO to total debt to approach 12% or below. In addition, S&P would also likely reassess the company's business risk profile as weak to reflect its weakened profitability and competitive position, if the company's EBITDA and margins continue to decline. Upside scenario S&P could revise the outlook back to stable if it can grow EBITDA through international expansion and domestic Acceptance Now services, with a 10% sales increase and 100 bps in gross margin expansion. At that time, leverage would decline below 3.0x and FFO to total debt will be above mid-20%. RESIDENTIAL CAPITAL: Haffey's $10-Mil. in Claims Expunged --------------------------------------------------------- At the behest of Residential Capital, LLC, Bankruptcy Judge Martin Glenn expunges the proofs of claim filed by Shane M. Haffey (Claim Nos. 2582 and 4402), each in the amount of $5 million. Counsel to Shane M. Haffey is: Heather Boone McKeever, Esq. MCKEEVER LAW OFFICES PLLC P.O. Box 1181 Isle of Palms, SC 29451 A copy of the Court's Feb. 19, 2014 Memorandum Opinion and Order is available http://is.gd/jRo9Evfrom Leagle.com. 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. Judge Martin Glenn in December 2013 confirmed the Joint Chapter 11 Plan co-proposed by Residential Capital and the Official Committee of Unsecured Creditors. RESON LEE WOODS: 10th Cir. Takes Up "Family Farmers" Issue ---------------------------------------------------------- FIRST NATIONAL BANK OF DURANGO, Appellant, v. RESON LEE WOODS; SHAUN K. WOODS, Appellees, No. 12-1111 (10th Cir.), is an appeal from the Bankruptcy Appellate Panel's decision affirming the bankruptcy court's confirmation of the Chapter 12 bankruptcy plan of Reson and Shaun Woods. Although First National Bank raises several issues on appeal, the Tenth Circuit only reached the first: whether Debtors are permitted to seek relief under Chapter 12 as "family farmers." In deciding this issue, the the Tenth Circuit is presented with a question of first impression -- namely, when does a debt "for" a principal residence "arise[] out of a farming operation"? See 11 U.S.C. Sec. 101(18)(A). In a Feb. 19 decision available at http://is.gd/AyW4fMfrom Leagle.com, the Tenth Circuit concluded that a debt so arises if it is directly and substantially connected to any of the activities constituting a "farming operation" within the meaning of 11 U.S.C. Sec. 101(21). More specifically, when the debt at issue is loan debt, the Tenth Circuit concluded that an objective "direct-use" test serves as the optimal vehicle for discerning when the direct-and-substantial-connection standard is satisfied. That is, if the loan proceeds were used directly for or in a farming operation, the debt "arises out of" that farming operation. The Tenth Circuit said this was not the test applied by the bankruptcy court (or the BAP). "Because we conclude that the bankruptcy court did not apply the proper legal standard and test in its analysis of Debtors' eligibility for Chapter 12 relief, we deem it appropriate and prudent to remand for that court to apply the correct law to the facts of this case. Thus, we vacate the bankruptcy court's judgment and remand the case to the bankruptcy court for further proceedings," the Tenth Circuit said. Garry R. Appel, Esq., at Appel & Lucas, P.C., in Denver, Colorado, represents the Appellant. Cheryl A. Thompson, Esq., at Thompson Brownlee, in Vail, Colorado; and Daniel J. Lowenberg, Esq., at Mountain Law Group, L.L.C., Montrose, Colorado, argue for the Appellees. The Debtors are a husband and wife who, in 2007, purchased farmland in southwestern Colorado on which to run their hay- farming operation. Until they filed for bankruptcy in November 2010, the Debtors accumulated various debts, some of which were related to their farming operation and others of which were not. One such debt is a $480,000 loan they obtained from First National Bank. Approximately $284,000 of this loan was used to pay off a loan from another bank that was obtained to purchase Debtors' farmland. The Debtors do business as Bar LS Farms, and formerly did business as Bar LS Properties Inc. REVSTONE INDUSTRIES: Reaches Deal Over $95M in PBGC Claims ---------------------------------------------------------- Law360 reported that bankrupt auto parts conglomerate Revstone Industries LLC announced that it had struck a deal with the largest creditor in its case, the Pension Benefit Guaranty Corp., to resolve more than $95 million in pension-related claims against the debtor and affiliates, marking "a critical turning point" in the 14 month-long Chapter 11. According to the report, in a motion before the Delaware bankruptcy court, Revstone said that PBGC would accept a projected recovery of $82 million -- with a guarantee it would get at least $80 million. About Revstone Industries et al. Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP represents Revstone. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. Metavation, also known as Hillsdale Automotive, LLC, joined parent Revstone in Chapter 11 on July 22, 2013 (Bankr. D. Del. Case No. 13-11831) to sell the bulk of its assets to industry rival Dayco for $25 million, absent higher and better offers. Metavation has tapped Pachulski as its counsel. Pachulski also serves as counsel to Revstone and Spara. Metavation also has tapped McDonald Hopkins PLC as special counsel, and Rust Consulting/Omni Bankruptcy as claims agent and to provide administrative services. Stuart Maue is fee examiner. Mark L. Desgrosseilliers, Esq., at Womble Carlyle Sandridge & Rice, LLP, represents the Official Committee of Unsecured Creditors in Revstone's case. RG STEEL: Court Issues Revised Order Approving APS Employment ------------------------------------------------------------- U.S. Bankruptcy Judge Kevin Carey issued a revised order authorizing RG Steel Sparrows Point, LLC to hire APS International as its agent in connection with the lawsuits it lodged against Union Electric Steel Corp. and The Davy Roll Company, Ltd. Pursuant to the revised order, the time limitations for APS to serve complaint and summons are not applicable to the lawsuits, and that none of the lawsuits may be dismissed for failure to timely serve the defendants with the complaint and summons. The summons filed in each of the cases will be valid for one year. Electric Steel and Davy Roll have 90 days within service of the complaint and summons to file an answer. If the defendants do not timely file an answer to the complaint, RG Steel will be entitled to seek an order granting a default judgment against the defendants. 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. RG Steel Sparrows Point LLC has received the green light to sell some of its assets to Siemens Industry, Inc., which include equipment and related spare parts, for $400,000. RITE AID: Drug Channel Aligns Further on McKesson Deal, Fitch Says ------------------------------------------------------------------ Rite Aid Corp.'s decision this week to expand its distribution agreement with McKesson Corp. to include generic pharmaceuticals in addition to branded drugs is in line with prevailing trends in the global drug channel and in healthcare more broadly, according to Fitch Ratings. The industry trend is toward partnerships, alignment and amassing scale to cut costs in an increasingly constrained reimbursement environment. McKesson could become the biggest beneficiary of increased generic purchasing power among global drug channel participants, Fitch believes. The drug distributor's deal with Rite Aid strengthens its position in the increasingly important area of drug purchasing scale, particularly for generics. After overcoming a few hurdles, McKesson closed its purchase of approximately 75% of Celesio AG earlier this month. Increased scale from that deal will allow McKesson to drive cost savings, particularly related to generic drug sourcing, and future growth. The Rite Aid agreement will further enhance McKesson's drug purchasing scale and will allow Rite Aid to tap into the resulting cost savings. Notably, unlike other drug channel participants that have largely become parties to purchasing joint ventures (JVs), McKesson will not be forced to share these cost savings with partners. Fitch estimates that McKesson's generic drug purchasing power, including Celesio and Rite Aid, will rival that of the JV among Walgreen Co., Alliance Boots GmbH and AmerisourceBergen Corp. (ABC) in the next couple of years. The forms and progress of business combinations and alignments in the global drug channel have been diverse. But the search for cost savings from increased purchasing scales is at the core of each relationship. Joint ventures to date have included CVS Caremark Corp. and Cardinal Health as well as Walgreen's and Alliance Boots, which teamed up in 2012 and added ABC last year. Walgreens and ABC also entered into a 10-year comprehensive distribution agreement and agreed on provisions which could allow for up to 30% equity ownership of ABC by Walgreens. These developments raise questions for other drug channel participants. CVS Caremark may need to adjust its strategy now that its two largest competitors employ a distributor for virtually all drug volumes. (CVS stores are served by Cardinal; but its Caremark business is served by McKesson.) Also, with distributors increasingly able to garner better drug pricing, the purchasing JV among Express Scripts, Kroger and Supervalu (Econdisc) comes into focus. These developments could lead to other large pharmacy operators (i.e. Walmart, Target, Safeway) deciding to join distributors' generic programs. Walmart and Target are currently served by MCK, and Safeway by CAH. It is still too early in the business combination cycle to draw a definitive conclusion. In Fitch's view, comprehensive distribution agreements make the most sense for retail drugstores, then for grocers/mass merchants, then for mail-order pharmacies. Still, each sector could benefit from tapping into better generic pricing derived from greater scale. At the other end of the channel, generic drugmakers will likely feel increasing pricing pressures from these growing drug purchasers. Smaller and mid-sized generic firms will likely be most affected, possibly leading to additional consolidation over the medium term. Though the largest global generic drugmakers will be less affected, drug channel consolidation is probably contributing to the firms' focus on bolstering their presence in specialty and other branded drug development, such Actavis plc's announcement this week to acquire specialty drugmaker Forest Laboratories, Inc. As previously reported by The Troubled Company Reporter, Fitch Ratings assigned a 'B-' Issuer Default Rating to Rite Aid Corporation, and 'BB-/RR1' to the company's secured revolving credit facility and term loans. SBARRO LLC: To Close 155 Restaurants in North America ----------------------------------------------------- Julie Jargon, writing for The Wall Street Journal, reported that Sbarro LLC said it will close 155 of the 400 restaurants it owns in North America, the latest move by the troubled pizza chain to cut costs in response to weaker demand. According to the report, the move, which takes effect on Feb. 20, "represents an important step towards improving the financial performance of the company and is designed to facilitate continued growth and investment in the brand," a Sbarro spokesman said. The move doesn't affect franchise-owned locations, he said. The Melville, N.Y., restaurant chain initially found success targeting shoppers in malls but was hurt during the U.S. economic downturn as mall traffic fell, the report said. The Wall Street Journal reported in January that the company, which emerged from bankruptcy protection more than a year ago, had hired restructuring advisers. Sbarro also struggled after taking on debt as part of a 2007 buyout by investment firm MidOcean Partners, the report added. It closed more than 150 restaurants in the two years before its April 2011 bankruptcy filing. MidOcean didn't retain ownership following Sbarro's bankruptcy exit in 2012. Sbarro has been trying to open more stand-alone restaurants and revamp its recipes to use fresher ingredients, the report said. About Sbarro Inc. The Sbarro family started its business after moving to Brooklyn, New York, from Naples, Italy, in 1956. Today Sbarro is a leading, global Italian quick service restaurant concept with approximately 5,170 employees, 1,045 restaurants throughout 42 countries, and annual revenues in excess of $300 million. Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr. S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million in debt. The Debtor disclosed $51,537,899 in assets and $460,975,646 in liabilities as of the Chapter 11 filing. Sbarro said it has reached an agreement with all of its second- lien secured lenders and approximately 70% of its senior noteholders on the terms of a reorganization plan that will eliminate more than half of the Company's total indebtedness. Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' general bankruptcy counsel. Rothschild, Inc., is the Debtors' investment banker and financial advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors' special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co is the Debtors' communications advisor. In November 2011, Sbarro, Inc., along with its domestic subsidiaries, disclosed that its Plan of Reorganization has become effective and the Company has successfully emerged from Chapter 11 with significantly reduced debt and a new $35 million capital infusion. * * * The Troubled Company Reporter reported on Jan. 21, 2014, that Standard & Poor's Ratings Services said it lowered its corporate credit rating on Melville, N.Y.- based Sbarro LLC to 'CCC-' from 'CCC+'. The outlook is negative. The Wall Street Journal also reported on the same day that the fast-food pizza chain has enlisted restructuring lawyers at Kirkland & Ellis LLP and bankers at Moelis & Co. SELECT TREE: Court Converts Case to Chapter 7 --------------------------------------------- The U.S. Bankruptcy Court on Feb. 10 approved Select Tree Farms, Inc.'s request to convert its chapter 11 case to a liquidation under Chapter 7 of the Bankruptcy Code. On March 7, 2012, the individual debtors, George A. Schichtel and Debra G. Schichtel, and the corporate debtor, Select Tree Farms, Inc., filed their voluntary Chapter 11 petitions and cases have been procedurally consolidated. George A. Schichtel is the President of STF and was the husband of Debra G. Schichtel who passed away on Nov. 14, 2012. STF has agreed to take all steps necessary to effectuate the conversion, including (a) the turnover of all records and property of the estate under its custody and control to the Chapter 7 Trustee as required by Fed.R.Bankr.P. Rule 1019(4); (b) the filing of a schedule of unpaid debts incurred after the filing of the petition and before conversion pursuant to FRBP 1019(5)(A)(i); and (c) the filing of a final report and account and transmitting that report to the Office of the United States Trustee consistent with the Court's order and in accordance with FRBP 101 9(5)(ii). Attorneys for the Debtor can be reached at: William F. Savino, Esq. Beth Ann Bivona, Esq. DAMON & MOREY LLP The Avant Building, Suite 1200 200 Delaware Avenue Buffalo, NY 14202 Tel: (716) 856-5500 About Select Tree Farms Select Tree Farms, Inc., filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 12-10669) on March 7, 2012. Select Tree Farms scheduled $11,450,989 in assets and $5,959,983 in liabilities. The petition was signed by George A. Schichtel, president. The Debtor's owner, George A. Schichtel and Debra G. Schichtel, filed for Chapter 11 bankruptcy on the same day (Bankr. W.D.N.Y. Case No. 12-10670). Ms. Schichtel suffered a stroke around October 2012 and became comatose and was intubated. She passed away Nov. 14, 2012. Judge Carl L. Bucki presides over the case. William F. Savino, Esq., and Beth Ann Bivona, Esq., at Damon Morey LLP, serve as the Debtors' counsel. NextPoint LLC serves as the Debtors' financial advisor. Garry M. Graber, Esq., and Steven W. Wells, Esq., at Hodgson Russ LLP, represent Evans Bank, N.A., the primary secured creditor. Rita Pope and Realty USA.Com is the company's exclusive brokers. Brown Chiari LLP serves as special counsel to the individual debtors. SEQUENOM INC: Sectoral Asset Mgt. Ceases to Own Shares ------------------------------------------------------ In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Sectoral Asset Management Inc. and its affiliates disclosed that as of Dec. 31, 2013, they have ceased to be the beneficial owners of more than five percent of Sequenom Inc.'s common stock. Sectoral Asset previously reported beneficial ownership of 9,215,967 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at: http://is.gd/YS29kx About Sequenom Sequenom, Inc. (NASDAQ: SQNM) -- http://www.sequenom.com/-- is a life sciences company committed to improving healthcare through revolutionary genetic analysis solutions. Sequenom develops innovative technology, products and diagnostic tests that target and serve discovery and clinical research, and molecular diagnostics markets. The company was founded in 1994 and is headquartered in San Diego, California. Sequenom disclosed a net loss of $117.02 million in 2012, a net loss of $74.13 million in 2011 and a net loss of $120.84 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $164.82 million in total assets, $195.85 million in total liabilities and a $31.02 million total stockholders' deficit. SOUND SHORE: Can Hire Garbarini as Medical Malpractice Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Sound Shore Medical Center of Westchester and its debtor-affiliates to employ Garbarini & Scher, P.C. as medical malpractice counsel. As reported in the Troubled Company Reporter on Feb. 3, 2014, the Debtors sought to employ Garbarini & Scher as their special medical malpractice counsel to assist with the implementation of their Claim Resolution Process. In connection therewith, the Debtors anticipate that Garbarini & Scher will be performing a number of tasks related to the Claims Resolution Process and the resolution of the Medical Malpractice Claims. Subject to the control and further order of this court, Garbarini & Scher will be expected to render the following services, among others, on behalf of the Debtors: (a) represent the Debtors in the mediation and litigation of the Medical Malpractice Claims; (b) advise the Debtors in connection with the implementation and progress of the Claims Resolution Process; (c) gives estimation liability of such claims; (d) advise the Debtors in connection with designing the provisions of a plan of liquidation regarding treatment of Medical Malpractice Claims; and (e) other services may be necessary and requested by the Debtors with respect to the Claims Resolution Process (collectively, the "Medical Malpractice Matters"). In rendering the foregoing services, Garbarini & Scher will also prepare, on behalf of the Debtors, any necessary motions, complaints, answers, declaration, orders, counterclaims, affidavits, reports and other legal papers relating to the Medical Malpractice Matters. When necessary, Garbarini & Scher will also appear before the Court in connection with any filings to ensure the Debtors' interests are adequately protected. Garbarini & Scher will be paid at these hourly rates: Partners $200 Associates $165 Paraprofessionals $95 The Debtors have been advised that the professionals expected to work on this case are: Kurt Lee Weinmann, Partner; Yuval D. Bar-Kokhba, Partner; Pamela D. Field, Associate; and Arlene Murphy, Paralegal Garbarini & Scher will also be reimbursed for reasonable out-of- pocket expenses incurred. Yuval D. Bar-Kokhba, partner of Garbarini & Scher, 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. Garbarini & Scher can be reached at: Yuval D. Bar-Kokhba, Esq. GARBARINI & SCHER, P.C. 432 Park Avenue, 9th Floor New York, NY 10016-8013 Tel: (212) 689-1113 Fax: (212) 725-9630 About Sound Shore Medical Center Sound Shore Medical Center of Westchester, Mount Vernon Hospital Inc., Howe Avenue Nursing Home and related entities sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 13-22840) on May 29, 2013, in White Plains, New York. The Debtors were the largest "safety net" providers for Southern Westchester County in New York. Affiliated with New York Medical College, Sound Shore is a not-for-profit 242-bed, community based- teaching hospital located in New Rochelle, New York. Mountain Vernon Hospital is a voluntary, not-for-profit 176-bed hospital located in Mount Vernon, New York. Howe Avenue Nursing Home is a 150-bed, comprehensive facility. The Debtors tapped Burton S. Weston, Esq., at Garfunkel Wild, P.C. as counsel; Alvarez & Marsal Healthcare Industry Group, LLC, as financial advisors; and GCG Inc., as claims agent. Alston & Bird LLP represents the Official Committee of Unsecured Creditors. Deloitte Financial Advisory Services LLP serves as the Committee's as financial advisor. Sound Shore disclosed assets of $159.6 million and liabilities totaling $200 million. Liabilities include a $16.2 million revolving credit and a $5.8 million term loan with Midcap Financial LLC. There is $9 million in mortgages with Sun Life Assurance Co. of Canada (US) and $11.5 million owing to the New York State Dormitory Authority. Neubert, Pepe & Monteith, P.C., represents Daniel T. McMurray, the patient care ombudsman for Sound Shore. The Debtors filed for bankruptcy to sell their assets, including their hospital and nursing home operations, to the Montefiore health system. On Aug. 8, 2013, the Bankruptcy Court entered an order, as affirmed and ratified by a Supplemental Sale Order entered on Oct. 15, 2013, approving the sale to Montefiore New Rochelle Hospital, Inc., Schaffer Extended Care Center, Inc., Montefiore Mount Vernon Hospital, Inc. and certain related affiliates. In June 2013, Montefiore added $4.75 million to its purchase offer to speed up the sale. Montefiore raised its bid to $58.75 million plus furniture and equipment as part of a request for a private sale of the hospitals. On Nov. 6, 2013 at 12:01 a.m. the closing of the Sale occurred and the sale was effective. Montefiore is represented by Togut, Segal & Segal LLP. SOUTH COAST: Bankrupt Oil Co. Wrongly Split Assets, 9th Circ. Told ------------------------------------------------------------------ Law360 reported that shareholders of the bankrupt South Coast Oil Co. urged the Ninth Circuit to reverse a bankruptcy trustee's settlement of litigation over the company's assets, saying a bankruptcy judge improperly approved a deal that decreased the company's value by $10 million. According to the report, during oral arguments in Pasadena, Calif., Douglas L. Mahaffey of Mahaffey & Associates, representing Palladino, told a three-judge panel that the bankruptcy judge never had the authority to approve bankruptcy trustee James J. Joseph's use of South Coast's voting shares in subsidiary Angus Petroleum. The case is In re: Joseph Palladino, et al v. South Coast Oil Corp, et al., Case No. 12-56014 (9th Cir.). An involuntary petition for Chapter 11 was filed against South Coast Oil Corporation on Sept. 19, 2007 (Bankr. C.D. Cal. Case No. 07-12994). The involuntary Chapter 11 case was assigned to Judge Theodor Albert. The Petitioners were Donald W. White (owed $831,000), Joseph Palladino (owed $25,000), and B.G. Operations, L.L.C. (owed $15,784). They were represented by Leonard M. Shulman, Esq., at Shulman, Hodges & Bastian, L.L.P., in Foothill Ranch, California. SPIN HOLDCO: S&P Affirms 'B' Rating to $1.4BB 1st Lien Term Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it is affirming its 'B' issue rating on Plainview, N.Y.-based Spin Holdco Inc.'s (doing business as CSC ServiceWorks) $1.4 billion first-lien term loan following the announced refinancing of the company's $325 million second-lien debt with $125 million incremental first-lien debt due November 2019 and $210 million of new second-lien debt due 2021. S&P expects the transaction to lower annual interest expense by about $13 million. S&P's '3' recovery rating on the first-lien debt remains unchanged, indicating its expectation of meaningful (50% to 70%) recovery for first-lien lenders in the event of a payment default. All other ratings, including the 'B' corporate credit rating remain unchanged. S&P views the refinancing as nearly neutral to credit metrics given the minimal increase in outstanding debt ($10 million), and modest improvement to interest coverage. S&P estimates the company will have about $1.7 billion in balance sheet debt outstanding following the transaction. The ratings on Spin Holdco reflect S&P's assessment that the company's business risk profile will remain "weak" and its financial risk profile will remain "highly leveraged" over the next year. S&P's business risk assessment primarily reflects the company's participation in the mature outsourced laundry equipment services business and an end-user customer base that S&P believes is susceptible to high inflation and unemployment. Primary factors in S&P's financial risk assessment include weak credit ratios, private equity ownership, and an "adequate" liquidity profile. During 2014, S&P forecasts the ratio of total debt to EBITDA to be in the mid-6x area and EBITDA interest coverage will remain in the low-3x area. Ratings List Spin Holdco Inc. d/b/a CSC ServiceWorks Corporate credit rating B/Stable/-- Issue Rating Affirmed; Recovery Rating Unchanged Spin Holdco Inc. d/b/a CSC ServiceWorks Senior secured $1.4 bil. first-lien term loan B Recovery Rating 3 ST. FRANCIS' HOSPITAL: Gets OK of Health Quest Deal Termination --------------------------------------------------------------- Judge Cecelia G. Morris formally approved a stipulation among St. Francis' Poughkeepsie, New York and its affiliated debtors with Health Quest Systems Inc. for the cancellation of an auction for the sale of the Debtors' assets. The Debtors notified of their intention to cancel the auction to accept a higher and better bid from Westchester County Health Care Corporation. Health Quest is willing to abide by the Debtors' decision to cancel auction. Accordingly, under the stipulation, Health Quest exercises its right to terminate its asset purchase agreement, dated Dec. 17, 2013, with the Debtors. About St. Francis' Hospital St. Francis' Hospital, Poughkeepsie, New York, and four affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 13-37725) on Dec. 17, 2013. The case is assigned to Judge Cecelia G. Morris. The Debtors are represented by Christopher M. Desiderio, Esq., Daniel W. Sklar, Esq., and Lee Harrington, Esq., at Nixon Peabody LLP, in New York. Their financial adviser is CohnReznick Advisory Group; and the investment banker is Deloitte Corporate Finance LLC. BMC Group is the claims and notice agent. The U.S. Trustee has appointed a five-member official committee of unsecured creditors. The Creditors' Committee tapped Alston & Bird LLP as counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC, as financial advisor. On Jan. 30, 2014, Barry Bliss of Gibbons, P.C., was named as patient care ombudsman in the Debtors' cases. St. Francis filed for bankruptcy to sell its 333-bed acute-care facility, which was founded in 1914, for $24.2 million to Health Quest Systems Inc., absent higher and better offers. An auction was slated for Feb. 13, 2014, if a rival offer is submitted. St. Francis, however, canceled the auction and decided to accept a higher and better bid from Westchester County Health Care Corporation. Under the deal with Westchester, the buyer will assume certain liabilities, plus pay $3,500,000 in cash at closing to cover the break-up fee of $1,000,000 and administrative costs of $2,500,000. The Westchester deal provides for the exchange of bonds in the amount of $27,352,000 at 5.00%. Westchester also will loan or arrange for the loan of funds to retire the Debtors' DIP facility up to a limit of $17,600,000, secured by the Accounts Receivable. Any DIP obligation in excess of $17,600,000 will be paid by the estate. Westchester also will provide a loan in the amount of $250,000 as a "Final Payment" on Bonds to be used to initially capitalize the liquidating trust of the Estate. James P. Lagios, Esq., at Iseman, Cunningham, Riester & Hyde, LLP, represents Health Quest Systems, Inc. ST. FRANCIS' HOSPITAL: Ombudsman Seeks Gibbons as Counsel --------------------------------------------------------- Barry Bliss, the patient care ombudsman appointed in the bankruptcy cases of St. Francis' Poughkeepsie, New York and its affiliated debtors, is seeking Bankruptcy Court permission to retain Gibbons P.C. as its counsel nunc pro tunc to the date of the Ombudsman's appointment on Jan. 30, 2014. Mr. Bliss is a director in the Corporate Department of Gibbons P.C. The Ombudsman expects Gibbons to, among other things: (a) represent him in any proceeding or hearing in the Bankruptcy Court, and in any action in other courts where the rights of the patients may be litigated or affected as a result of the bankruptcy case; (b) advise him on the requirements of the Bankruptcy Code and the requirements of the Office of the U.S. Trustee relating to the discharge of his duties; (c) advise and represent him concerning any potential reorganization or sale of the Debtors' assets. The Ombudsman seeks that Gibbons be compensated on an hourly basis for its legal services in accordance with its ordinary and customary hourly rates, and reimbursed for its actual and necessary out-of-pocket expenses incurred. Gibbons has advised the Ombudsman that the current hourly rates applicable to the principal attorneys and paralegal proposed to represent the Ombudsman are: Professional Rate Per Hour ------------ ------------- David N. Crapo, Esq. $495 Brett S. Theisen, Esq. $345 Ellen Rosen, Sr. Paralegal $245 Diane M. Dorgan, Paralegal $170 In an accompanying affidavit, David N. Crapo, Esq., disclosed that to the best of his knowledge and information after due inquiry, Gibbons does not represent or hold any interest adverse to the Debtors and their estates, and is a disinterested person within the meaning of Sec. 101(14) of the Bankruptcy Code. About St. Francis' Hospital St. Francis' Hospital, Poughkeepsie, New York, and four affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 13-37725) on Dec. 17, 2013. The case is assigned to Judge Cecelia G. Morris. The Debtors are represented by Christopher M. Desiderio, Esq., Daniel W. Sklar, Esq., and Lee Harrington, Esq., at Nixon Peabody LLP, in New York. Their financial adviser is CohnReznick Advisory Group; and the investment banker is Deloitte Corporate Finance LLC. BMC Group is the claims and notice agent. The U.S. Trustee has appointed a five-member official committee of unsecured creditors. The Creditors' Committee tapped Alston & Bird LLP as counsel, and CBIZ Accounting, Tax & Advisory of New York, LLC, as financial advisor. On Jan. 30, 2014, Barry Bliss of Gibbons, P.C., was named as patient care ombudsman in the Debtors' cases. St. Francis filed for bankruptcy to sell its 333-bed acute-care facility, which was founded in 1914, for $24.2 million to Health Quest Systems Inc., absent higher and better offers. An auction was slated for Feb. 13, 2014, if a rival offer is submitted. St. Francis, however, canceled the auction and decided to accept a higher and better bid from Westchester County Health Care Corporation. Under the deal with Westchester, the buyer will assume certain liabilities, plus pay $3,500,000 in cash at closing to cover the break-up fee of $1,000,000 and administrative costs of $2,500,000. The Westchester deal provides for the exchange of bonds in the amount of $27,352,000 at 5.00%. Westchester also will loan or arrange for the loan of funds to retire the Debtors' DIP facility up to a limit of $17,600,000, secured by the Accounts Receivable. Any DIP obligation in excess of $17,600,000 will be paid by the estate. Westchester also will provide a loan in the amount of $250,000 as a "Final Payment" on Bonds to be used to initially capitalize the liquidating trust of the Estate. James P. Lagios, Esq., at Iseman, Cunningham, Riester & Hyde, LLP, represents Health Quest Systems, Inc. ST. JOSEPH HEALTH: Moody's Lowers Rating on $17.2MM Debt to Caa3 ---------------------------------------------------------------- Moody's Investors Service has downgraded the bond rating to Caa3 from Caa2 on St. Joseph Health Services of Rhode Island's (St. Joseph) $17.2 million of outstanding debt issued through the Rhode Island Health and Educational Building Corporation. The outlook remains negative. The rating downgrade reflects the material downturn in performance in fiscal year (FY) 2014 increasing the possibility of default given the trajectory in performance and weak unrestricted cash position. Summary Rating Rationale The downgrade to Caa3 is attributable to the material decline in operating performance in the first quarter of FY 2014 which was caused by material volume declines. Absent operational improvement the already weak unrestricted cash position will decline limiting St. Joseph's ability to make debt service payments. The negative outlook reflects our opinion that should the hospital default the projected level of recovery could lower the rating. Challenges -- St. Joseph's material downturn in operating performance in the first quarter of FY 2014 is draining cash (operating cash flow margin of -8.8% and operating margin of -13.7%). Management is endeavoring to improve performance and continues to focus on lowering the length of stay and improving clinical documentation as well as multiple cost reduction initiatives. -- St. Joseph has a very weak cash position as of December 31, 2013 with 15 days cash on hand and 35% cash-to-debt. The hospital achieved its days cash on hand covenant of 12 days in fiscal year (FY) 2013, however in FY 2014 the covenant increases to 17 days which is measured bi-annually on March 31 and September 30. If not achieved, St. Joseph has six months to cure, if missed two consecutively times, consultant call in is required. -- St. Joseph's unfunded pension liability is more than three times the bonded debt at $73 million as of September 30, 2013. The plan, however, is not subject to ERISA funding guidelines given its status as a church plan. Cash to total comprehensive debt (including the pension) is very weak at 7% and unrestricted net assets is a negative $50 million resulting in over 100% debt to capitalization. Moody's note an agreement has been reached to partially fund the pension and maintain it as a separate entity once Prospect's acquisition of St. Joseph is complete. -- St. Joseph is in the competitive Providence healthcare market with multiple struggling small providers being acquired by not- for-profit and for-profit providers. -- Providence (Baa1/stable GO rating) and the state Rhode Island (Aa2/negative GO rating), where St. Joseph is located, have endured prolonged high unemployment rates of 9.2% in Providence and 9.1% in the state in 2013, both above the national rate but improved over 2012. Strengths -- As part of the forbearance agreement and a supplemental indenture, St. Joseph is required to make monthly payments to the Trustee to fund semi-annual debt service and interest payments. St. Joseph's March 2014 debt service payment is fully funded as is its debt service reserve fund. -- The hospital achieved rate covenants in fiscal years 2012 and 2013 and management practices good disclosure practices with monthly financial statements provided to Moody's. -- St. Joseph's debt is all in a fixed rate mode with no derivatives and a conservative investment allocation of all cash and US treasuries. Outlook The negative outlook considers the risk of a possible payment default if operations continue to deteriorate and St. Joseph continues to consume cash. If St. Joseph should default the rating could be lowered. What Could Make The Rating Go UP Given the current level of performance and the negative outlook, an upgrade is unlikely in the near-term however, over the longer term an upgrade would be considered if St. Joseph is able to sustain materially improved operating performance and materially grow balance sheet measures. What Could Make The Rating Go DOWN A downgrade would be considered if St. Joseph defaults and recovery values are projected to be below what is appropriate for the Caa3 rating level. Principal Methodology Used The principal methodology used in this rating was Not-for-Profit Healthcare Rating Methodology published in March 2012. STACY'S INC: Wants Hearing on Cash Collateral Moved to March 12 --------------------------------------------------------------- Stacy's Inc., according to its case docket, has asked the Bankruptcy Court to continue the hearing to consider its motion for authorization to use cash collateral from March 7, 2014, until March 12 at 9:30 a.m. According to the Debtor, the witness is unavailable on the date first set. The affected parties had consented to the continuance of hearing. The Official Committee of Unsecured Creditors has responded to the Debtor's motion for the use of cash collateral, stating that the Debtor is seeking to use operating funds to pay a tax liability well as other postpetition operating expenses of the Debtor. In its objection, Bank of the West contended that it holds a valid lien on the operating funds, that the operating funds constitute BOTW's cash collateral, and that therefore the Debtor may not use the operating funds absent either (a) BOTW's permission or (b) a finding by the Court that BOTW can be adequately protected. The Committee said it supports the Debtor's motion and submits that either a surcharge on BOTW's collateral or an authorization to use the operating funds as requested is equitable. As reported by the Troubled Company Reporter on Dec. 17, 2013, BOTW objected to the Debtor's motion to use cash collateral. BOTW said that, in connection with the negotiation of a consent sale order regarding the sale of substantially all of the Debtor's assets, BOTW agreed to a carve out of $1,400,000 from the sale proceeds, with $950,000 to be reserved for the payment of allowed administrative expense claims and $450,000 to be reserved for payment of allowed general unsecured claims. BOTW said that the Court must require that all administrative expenses in excess of the Sept. 5, 2013 budget be paid from the Admin Carve-Out, and that the remaining balance of the cash collateral operating account and the $600,000 "cushion" held in the trust account of the Debtor's counsel be paid to BOTW immediately. In a filing dated Dec. 19, 2013, the Debtor said it has been able to obtain further information about the specific cash collateral needed and the use of the cash collateral. According to the Debtor, the sale order does not alter the treatment of cash collateral or even comment on the subject but provides for an allocation of the sales proceeds. In separate docket entries, the Debtor also requested that the hearing set for March 7, be continued until March 12, on (i) the motion to approve the adequacy of information in the Disclosure Statement, as amended, filed by the Debtor; and (ii) the motion for order enforcing the Court's prior sale order entered in August. About Stacy's Inc. Stacy's Inc., a commercial greenhouse in York, South Carolina, filed a Chapter 11 petition on June 21 (Bankr. D. S.C. Case No. 13-03600) in Spartanburg, South Carolina, with a deal to sell the business for $17 million to Metrolina Greenhouses, absent higher and better offers. Stacy's -- http://www.stacysgreenhouses.com/-- had 16 acres of greenhouses on three farms aggregating 260 acres in York, South Carolina. The Debtor scheduled $26.4 million in total assets and $31.4 million in liabilities as of the bankruptcy filing. The secured lender is Bank of the West, owed $22.1 million secured by liens on the assets. Stacy's in August 2013 sold the business to Metrolina Greenhouses for $15.2 million after no competing bids were entered at a bankruptcy auction. The Debtor has tapped Barbara George Barton, Esq., at Barton Law Firm, P.A, as bankruptcy counsel; Ouzts, Ouzts & Varn, P.A., as its financial advisor; SSG Advisors, LLC, as its investment banker; and Faulkner and Thompson, P.A., to provide limited accounting services. The Official Committee of Unsecured Creditors has retained Reid E. Dyer, Esq., at Moore & Van Allen, PLLC. TAYLOR BEAN: Unsecured Creditors Have First Payment --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trust for Taylor Bean & Whitaker Mortgage Corp. will make an initial 35 percent distribution to unsecured creditors under the Chapter 11 plan that was approved in July 2011. According to the report, the trustee had been unable to make a distribution until now on account of disputed claims. The first distribution will be made to holders of $12.2 million in approved claims. The trust is creating a reserve for $2.7 million in claims still unresolved. The bankruptcy judge in Jacksonville, Florida will hold a hearing on March 12 to consider approving the distribution, the report related. About Taylor Bean Taylor, Bean & Whitaker Mortgage Corp. grew from a small Ocala- based mortgage broker to become one of the largest mortgage bankers in the United States. In 2009, Taylor Bean was the country's third largest direct-endorsement lender of FHA-insured loans of the largest wholesale mortgage lenders and issuer of mortgage backed securities. It also managed a combined mortgage servicing portfolio of approximately $80 billion. The company employed more that 2,000 people in offices located throughout the United States. Taylor Bean sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009. Taylor Bean filed the Chapter 11 petition three weeks after federal investigators searched its offices. The day following the search, the Federal Housing Administration, Ginnie Mae and Freddie Mac prohibited the company from issuing new mortgages and terminated servicing rights. Taylor Bean estimated more than $1 billion in both assets and liabilities in its bankruptcy petition. Lee Farkas, the former chairman, was sentenced in June to 30 years in federal prison after being convicted on 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets. Jeffrey W. Kelly, Esq., and J. David Dantzler, Jr., Esq., at Troutman Sanders LLP, in Atlanta, Ga., and Russel M. Blain, Esq., and Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, in Tampa, Fla., represent the Debtors. Paul Steven Singerman, Esq., and Arthur J. Spector, Esq., at Berger Singerman PA, in Miami, Fla., represent the Committee. BMC Group, Inc., serves as the claims and noticing agent. Unsecured creditors were expected to receive 3.3% to 4.4% under a Chapter 11 plan approved in July 2011. STELERA WIRELESS: Told to Produce Draft Plan by April ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although Stelera Wireless LLC said it's "entirely possible" creditors will be paid in full, the official creditors' committee is keeping the company's feet to the fire by attaching conditions to an extension of the exclusive right to propose a Chapter 11 plan. According to the report, in return for an enlargement of so-called exclusivity until May 1, Stelera, a provider of wireless Internet service for rural communities agreed to give the committee a draft plan no later than April 1. If the company circulates a draft to anyone else before then, the committee must also have a copy. The new exclusivity deadline is about two weeks shorter than what the company sought, the report said. A bankruptcy court in Oklahoma City, where Stelera is based, approved two sales of frequency licenses that the company said could generate $37.4 million, the report related. The buyers, affiliates of Verizon Communications Inc. and AT&T Inc., are awaiting regulatory approval to complete the acquisitions. Stelera said it couldn't file a reorganization plan until the sales are completed, the report further related. Its largest creditor is the U.S. Agriculture Department's Rural Utilities Service. Stelera said filed claims total $30 million, including the government's claim. About Stelera Wireless, LLC Stelera Wireless, LLC, filed a Chapter 11 petition (Bankr. W.D. Okla. Case No. 13-13267) on July 18, 2013. Tim Duffy signed the petition as chief technology officer/manager. Judge Niles L. Jackson presides over the case. The Debtor disclosed $18,005,000 in assets and $30,809,314 in liabilities as of the Chapter 11 filing. Christensen Law Group, PLLC, serves as the Debtor's primary counsel. Mulinix Ogden Hall & Ludlam, PLLC, serves as additional bankruptcy counsel. Wilkinson Barker Knauer, LLP, serves as the Debtor's special counsel. American Legal Claims Services, LLC serves as official noticing agent. Falkenberg Capital Corporation serves as the Debtor's broker. The official committee of unsecured creditors is represented by attorneys at Gablegotwals. The Troubled Company Reporter reported on Dec. 10, 2013, the Hon. Niles Jackson of the U.S. Bankruptcy Court for the Western District of Oklahoma authorized Stelera Wireless to sell its Federal Communications Commission licenses to: AT&T Mobility Spectrum LLC, as purchaser; and Atlantic Tele-Network, Inc., as backup purchaser. In an auction held Nov. 20, 2013, AT&T's bid was the highest and best offer for the FCC licenses, while Atlantic's, the stalking horse purchaser, was the second highest. Pursuant to the APA, the aggregate purchase price to be paid by AT&T will be $6,020,000. TOWN SPORTS: S&P Revises Outlook to Negative & Affirms 'B+' CCR --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on New York-based fitness club operator, Town Sports International Holdings Inc. (TSI) to negative from stable. At the same time, S&P affirmed all ratings on the company, including its 'B+' corporate credit rating. "The negative outlook revision reflects our expectation for 2014 credit measures to weaken due to increased competitive pressures combined with incremental operating expenses for new club and studio openings," said Standard & Poor's credit analyst Ariel Silverberg. S&P expects 2014 adjusted leverage (adjusted for operating leases) will increase to more than 5x (compared with about 4.6x on Dec. 31, 2013), and that operating cash flow generation will be insufficient to fully fund capital expenditures (including expected growth-related expenditures). While leverage in excess of 5x is weak for an aggressive financial risk profile, S&P believes EBITDA coverage of interest will remain greater than 3x (which is strong for the financial risk profile assessment) for the next two years, and that leverage will gradually improve over the next few years. Additionally, S&P believes TSI will continue to maintain a strong liquidity profile based on its expectation the company will retain excess cash on hand and availability under its $45 million revolver and S&P's belief that it has some flexibility to reduce capital expenditures if operating performance deteriorates more than it currently expects. "We currently expect 2014 EBITDA to decline in the mid-20% range. We believe additional competition, particularly from boutique studios, will continue to pressure new member sign ups and revenue generation at TSI's existing clubs, which we believe will be only partially offset by incremental revenue from new clubs and studios. We believe limited revenue growth, in conjunction with our expectation for a significant increase in expenses from expected new club and studio openings, will fuel the decline in EBITDA," S&P said. S&P's 'B+' corporate credit rating on Town Sports reflects its assessment of the company's business risk profile as "weak" and its financial risk profile as "aggressive". The negative outlook reflects S&P's expectation that operating performance will deteriorate in 2014, resulting in leverage (adjusted for operating leases) increasing to more than 5x, and for operating cash flow generation to be insufficient to fully fund capital expenditures (including expected growth related expenditures) through 2014. S&P could lower the rating by at least one notch if the decline in 2014 EBITDA is modestly weaker than it is currently forecasting such that S&P expects adjusted leverage will remain greater than 5x for an extended period. This would likely lead S&P to revise downward its financial risk assessment to "highly leveraged" from "aggressive." A negative rating action could also result from an impairment to TSI's liquidity profile. S&P would consider revising the outlook to stable once EBITDA generation returns to a growth trajectory, and S&P believes adjusted leverage will be sustained below 5x and capital expenditures will be fully funded through internally generated cash. TRONOX INC: Wants Kerr-McGee to Pay $20.8 Billion in Damages ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Tronox Inc. calculates that Kerr-McGee Corp. should pay $20.8 billion in damages as a result of a ruling in December by U.S. Bankruptcy Judge Allan L. Gropper finding that the spinoff of Tronox in March 2006 included fraudulent transfer with actual intent to hinder and delay creditors. According to the report, Judge Gropper said in his opinion that Kerr-McGee is liable because it took away valuable assets, leaving Tronox with unsupportable debt from decades of legacy liabilities and environmental costs. Judge Gropper told Kerr-McGee to submit papers calculating the amount of damages. The report related that Kerr-McGee's filed papers in January explaining why the liability should be $850 million. On Feb. 13, Tronox creditors filed papers explaining why the liability should be at or above the range of $5.2 billion to $14.2 billion that Judge Gropper discussed in his opinion. The dispute over the amount of damages revolves around Section 502(h) of the Bankruptcy Code, which gives Kerr-McGee an unsecured claim for what it pays back, to be treated on the same basis as all other unsecured claims, the report further related. That's how Kerr-McGee calculated its net liability should be only $850 million. The Feb. 13 filing lays out the creditors' theories on why the liability should be $20.8 billion. The U.S. government, a major creditor to benefit from whatever Kerr-McGee pays, concurs that the damages are $20.8 billion. About Tronox Inc. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-10156) on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represented the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants served as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders were appointed in the cases. The Creditors Committee retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until Sept. 30, 2008, Tronox was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors' First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox reorganized around its existing operating businesses, including its facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi; Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia. TUSCANY INTERNATIONAL: Taps Prime Clerk as Administrative Advisor ----------------------------------------------------------------- Tuscany International Holdings (U.S.A.) Ltd. and its debtor- affiliates seek authorization from the U.S. Bankruptcy Court for the District of Delaware to employ Prime Clerk LLC as administrative advisor, nunc pro tunc to the Feb. 2, 2014 petition date. The Debtors require Prime Clerk to: (a) assist with, among other things, solicitation, balloting and tabulation of votes, and prepare any related reports, as required in support of confirmation of a Chapter 11 plan, and in connection with such services, process requests for documents from parties in interest, including, if applicable, brokerage firms, bank back-offices and institutional holders; (b) prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; (c) assist with the preparation of the Debtors' schedules of assets and liabilities and statement of financial affairs (the "Schedules") and gather data in conjunction therewith; (d) provide confidential data room, if requested; (e) manage and coordinate any distributions pursuant to a Chapter 11 plan; and (f) provide other processing, solicitation, balloting and other administrative services described in the Engagement Agreement but not included in the Section 156(c) Application, as may be requested from time to time by the Debtors, the Court of the Office of the Clerk of the Bankruptcy Court (the "Clerk"). Prime Clerk will be paid at these hourly rates: Case Manager $45 Technology Consultant $130 Consultant $140 Senior Consultant $170 Director $195 Solicitation Analyst $210 Director of Solicitation $235 Prime Clerk will also be reimbursed for reasonable out-of-pocket expenses incurred. Prior to the petition date, the Debtors provided Prime Clerk a retainer in the amount of $25,000. Michael J. Frishberg, co-president and CEO of Prime Clerk, 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 application on March 3, 2014, at 1:00 p.m. Objections, if any, were due Feb. 24, 2014, at 4:00 p.m. Prime Clerk can be reached at: Shai Waisman PRIME CLERK LLC 830 Third Avenue, 19th Floor New York, NY 10022 Tel: (212) 257-5450 About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany USA also intends to commence ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Latham & Watkins LLP's Mitchell A. Seider, Esq., Keith A. Simon, Esq., David A. Hammerman, Esq., and Annemarie V. Reilly, Esq.; and Young Conaway Stargatt & Taylor, LLP's Michael R. Nestor, Esq., and Kara Hammond Coyle, Esq., serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent, and administrative agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP provides tax services. TUSCANY INTERNATIONAL: Hires Latham & Watkins as Co-Counsel ----------------------------------------------------------- Tuscany International Holdings (U.S.A.) Ltd. and its debtor- affiliates ask for permission from the U.S. Bankruptcy Court for the District of Delaware to employ Latham & Watkins LLP as bankruptcy co-counsel, nunc pro tunc to the Feb. 2, 2014 petition date. The Debtors require Latham & Watkins to: (a) advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their businesses and properties; (b) attend meetings and negotiating with representatives of creditors, interest holders, and other parties in interest; (c) analyze proofs of claim filed against the Debtors and potential objections to such claims; (d) analyze executory contracts and unexpired leases and potential assumptions, assignments, or rejections of such contracts and leases; (e) take all necessary action to protect and preserve the Debtors' estates, including prosecutiong actions on the Debtors' behalf, defending any action commenced against the Debtors, and representing the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the estates; (f) prepare motion, applications, answers, orders, reports, and papers necessary to the administration of the Debtors' estates; (g) take necessary action on behalf of the Debtors to negotiate, prepare, and obtain approval of a disclosure statement and confirmation of a plan of reorganization; (h) advise the Debtors in connection with any potential sale of assets or stock and taking necessary action to guide the Debtors through such potential sale; (i) appear before this Court or any Appellate Courts and protecting the interests of the Debtors' estates before those Courts and the U.S. Trustee; (j) advise on corporate, litigation, environmental, finance, tax, employee benefits, and other legal matters; and (k) perform all other necessary legal services for the Debtors in connection with the Chapter 11 cases. Latham & Watkins will be paid at these hourly rates: Associates $395-$855 Counsel $850-$1,295 Partners $875-$1,275 Paraprofessionals $175-$810 Latham & Watkins also will be reimbursed for reasonable out-of- pocket expenses incurred. As of the petition date, the Debtors did not owe Latham & Watkins any amounts for legal services rendered before the petition date. During the one-year prior to the petition date, Latham & Watkins received $1,114,382.33 in total compensation from the Debtors for fees and expenses. In the 90 days prior to the petition date, Latham & Watkins received the same amount, $1,114,382.33, in total compensation from the Debtors for fees and expenses. Mitchell A. Seider, partner of Latham & Watkins, 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 application on March 3, 2014, at 1:00 p.m. Objections, if any, were due Feb. 24, 2014, at 4:00 p.m. Latham & Watkins can be reached at: Mitchell A. Seider, Esq. LATHAM & WATKINS LLP 885 Third Avenue New York, NY 10022-4834 Tel: (212) 906-1200 Fax: (212) 751-4864 E-mail: mitchell.seider@lw.com About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany USA also intends to commence ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Latham & Watkins LLP's Mitchell A. Seider, Esq., Keith A. Simon, Esq., David A. Hammerman, Esq., and Annemarie V. Reilly, Esq.; and Young Conaway Stargatt & Taylor, LLP's Michael R. Nestor, Esq., and Kara Hammond Coyle, Esq., serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent, and administrative agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP provides tax services. TUSCANY INTERNATIONAL: Taps McCarthy Tetrault as Canadian Counsel ----------------------------------------------------------------- Tuscany International Holdings (U.S.A.) Ltd. and its debtor- affiliates ask for permission from the U.S. Bankruptcy Court for the District of Delaware to employ McCarthy Tetrault LLP as their Canadian counsel, nunc pro tunc to the Feb. 2, 2014 petition date, to provide these professional services: (a) provide legal services in connection with seeking recognition under and pursuant to section 46 of the Companies' Creditors Arrangement Act by the Court of the Queen's Bench of Alberta, Judicial District of Alberta of the Chapter 11 proceedings commenced by the Debtors in the U.S. Bankruptcy Court for the District of Delaware; and (b) provide legal services which are reasonably necessary and appropriate to carry out the seeking of recognition, including, without limitation, advice and representation as it pertains to matters of Canadian law affecting the Debtors in connection with the Chapter 11 proceedings. McCarthy Tetrault will be paid at these hourly rates: Partners C$500 - C$1,070 Associates C$375 - C$520 McCarthy Tetrault will also be reimbursed for reasonable out-of- pocket expenses incurred. Sean Collins, partner of McCarthy Tetrault, 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. As set forth in the Collins Declaration, during the 90 days prior to the Petition Date, McCarthy Tetrault received payment from the Debtors for professional services rendered in the ordinary course of business in the aggregate amount of C$1,115,070.50 in fees and C$52,411.90 in expenses, for a total of C$1,225,849.35 including applicable taxes. The Court for the District of Delaware will hold a hearing on the application on March 3, 2014, at 1:00 p.m. Objections, if any, were due Feb. 24, 2014, at 4:00 p.m. McCarthy Tetrault can be reached at: Sean Collins, Esq. McCARTHY TETRAULT LLP Suite 3300, 421 7th Avenue SW Calgary AB T2P 4K9 Tel: (403) 260-3500 Fax: (403) 260-3501 About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany USA also intends to commence ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Latham & Watkins LLP's Mitchell A. Seider, Esq., Keith A. Simon, Esq., David A. Hammerman, Esq., and Annemarie V. Reilly, Esq.; and Young Conaway Stargatt & Taylor, LLP's Michael R. Nestor, Esq., and Kara Hammond Coyle, Esq., serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent, and administrative agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP provides tax services. TUSCANY INTERNATIONAL: Hires Young Conaway as Attorneys ------------------------------------------------------- Tuscany International Holdings (U.S.A.) Ltd. and its debtor- affiliates seek authorization from the U.S. Bankruptcy Court for the District of Delaware to employ Young Conaway Stargatt & Taylor, LLP as attorneys, nunc pro tunc to the Feb. 2, 2014 petition date. The Debtors require Young Conaway to: (a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their properties, and sale of their assets; (b) prepare and pursue confirmation of a plan and disclosure statement; (c) prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports, and other legal papers; (d) appear in Court and to protect the interests of the Debtors before the Court; and (e) perform all other legal services for the Debtors which may be necessary and proper in these proceedings. Young Conaway will be paid at these hourly rates: Michael R. Nestor, Partner $695 Kara Hammond Coyle, Partner $460 Ashley E. Markow, Associate $300 Laurel D. Roglen, Associate $300 Troy Bollman, Paralegal $170 Young Conaway will also be reimbursed for reasonable out-of-pocket expenses incurred. Young Conaway was retained to represent the Debtors in connection with these cases pursuant to an engagement agreement dated Dec. 30, 2013. On Jan. 28, 2014, Young Conaway received a retainer in the amount of $100,000, as well as $2,975 for payment of filing fees. On Feb. 5, 2014, Young Conaway applied $86,413.80 of the retainer to outstanding balances existing as of the petition date. The remainder will constitute as an evergreen retainer as security for post-petition services and expenses. Michael R. Nestor, partner of Young Conaway, 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 application on March 3, 2014, at 1:00 p.m. Objections, if any, were due Feb. 24, 2014, at 4:00 p.m. Young Conaway can be reached at: Michael R. Nestor, Esq. YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square 1000 North King Street Wilmington, DE 19801 Tel: (302) 571-6600 Fax: (302) 571-1253 E-mail: mnestor@ycst.com About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany USA also intends to commence ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Latham & Watkins LLP's Mitchell A. Seider, Esq., Keith A. Simon, Esq., David A. Hammerman, Esq., and Annemarie V. Reilly, Esq.; and Young Conaway Stargatt & Taylor, LLP's Michael R. Nestor, Esq., and Kara Hammond Coyle, Esq., serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent, and administrative agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP provides tax services. UM FINANCIAL: Missing Financier Charged With $4.3MM Mortgage Fraud ------------------------------------------------------------------ Tu Thanh Ha, writing for The Globe and Mail, reported that the RCMP has filed fraud charges against a Toronto Islamic financier who went missing after he allegedly pocketed $4.3-million in mortgage payments from Muslim homeowners and used the money to buy himself gold bars, silver coins and electronics. According to the report, Omar Kalair portrayed himself as a trailblazing entrepreneur who, as a middleman, could offer mortgage arrangements to devout Muslims who believed that they were forbidden under Islamic law from making interest payments. Mr. Kalair's two federally registered firms, UM Financial Inc. and UM Capital Inc., collapsed two years ago, leaving more than 170 homeowners in the lurch, the report said. The RCMP's Greater Toronto Area Financial Crime Unit announced on Feb. 19 that the 38-year-old Mr. Kalair is facing criminal charges of theft over $5,000, fraud over $5,000 and laundering proceeds of crime, the report related. The investigation, which was conducted with the Office of the Superintendent of Bankruptcy, also resulted in three charges under the Bankruptcy and Insolvency Act of fraudulent disposition of bankruptcy property, failure to comply and failure to answer truthfully, the report further related. USA COMMERCIAL: 9th Cir. Issues Ruling in Suit v. Deloitte ---------------------------------------------------------- A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit in San Francisco, California, held that the mandate issued on May 15, 2013, in the case, USACM LIQUIDATING TRUST, Plaintiff- Appellant, and USA CAPITAL DIVERSIFIED DEED FUND, LLC, Plaintiff, v. DELOITTE & TOUCHE, Defendant-Appellee, No. 11-15626 (9th Cir.), is recalled; Appellee Deloitte & Touche's request for publication is granted, and the Memorandum Disposition filed on April 22, 2013, is withdrawn. The withdrawn memorandum disposition is replaced and superseded by an opinion dated Feb. 18. The panel said no petitions for rehearing and/or rehearing en banc will be entertained. In the Order and Opinion dated Feb. 18 available at http://is.gd/Mbvrqufrom Leagle.com, Circuit Judges J. Clifford Wallace and Sandra S. Ikuta, and Hon. Marvin J. Garbis, Senior District Judge for the U.S. District Court for the District of Maryland, sitting by designation, upheld an order by the district court that granted summary judgment in favor of Deloitte & Touche LLP in the case. The USACM Liquidating Trust, which was established pursuant to the confirmed Chapter 11 plan of USA Commercial Mortgage Company, sued on April 11, 2008, USACM's former outside auditor, Deloitte & Touche, alleging that Deloitte wrongfully issued unqualified audit opinions for fiscal years 2000 and 2001, concealing the misappropriations of USACM's funds through two allegedly fraudulent schemes perpetrated by Thomas Hantges and Joseph Milanowski (the owners and controllers of USACM). The charged misappropriations caused USACM to sustain millions of dollars in losses and required its bankruptcy filing. The Trust took an appeal from the district court's summary judgment in Deloitte's favor. The Ninth Circuit, however, held that the district court properly granted summary judgment to Deloitte on the ground that the misconduct of Messrs. Hantges and Milanowski must be imputed to USACM under Nevada's "sole actor" rule. Under Nevada law, the sole actor rule imputes an agent's actions to the principal corporation "even if the agent totally abandons the corporation's interest" when "the corporation and its agent are indistinguishable from each other." The Ninth Circuit said the record before the district court demonstrated that Messrs. Hantges and Milanowski utterly controlled and dominated USACM: they were the majority shareholders, owning collectively at least 83% of the stock at any given time prior to bankruptcy; held top management positions including CEO and President, respectively; were the only two directors until 2001 when they appointed a nominal third director, who admittedly had no active involvement in the company; and were perceived by other actors within USACM as the relevant decision-makers whose actions could not be overridden. Allan B. Diamond, Esq., and J. Maxwell Beatty, Esq. -- mbeatty@diamondmccarthy.com -- at Diamond McCarthy LLP, in Houston, Texas, argue for the Trust. Steve Morris, Esq., and Rosa Solis-Rainey, Esq. -- sm@morrislawgroup.com and rsr@morrislawgroup.com -- at Morris Peterson, in Las Vegas, Nevada; and Miles N. Ruthberg, Esq., Robert W. Perrin, Esq., and Melanie M. Blunschi, Esq. -- miles.ruthberg@lw.com robert.perrin@lw.com and melanie.blunschi@lw.com -- at Latham & Watkins LLP, in Los Angeles, California, argue for Deloitte. About USA Commercial Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provided more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, and Annette W. Jarvis, Esq., at Ray Quinney & Nebeker, P.C., represented the Debtors in their restructuring efforts. Thomas J. Allison, a senior managing director at Mesirow Financial Interim Management LLC, served as Chief Restructuring Officer for the Debtors. Susan M. Freeman, Esq., and Rob Charles, Esq., at Lewis and Roca LLP represented the Official Committee of Unsecured Creditors of USA Commercial Mortgage Company. Edward M. Burr at Sierra Consulting Group, LLC, provided financial advice to the Creditors Committee of USA Mortgage. Marc A. Levinson, Esq., and Jeffery D. Hermann, Esq., at Orrick, Herrington & Sutcliffe LLP, and Bob L. Olson, Esq., and Anne M. Loraditch, Esq., at Beckley Singleton, Chartered, represented the Official Committee of Equity Security Holders of USA Capital Diversified Trust Deed Fund, LLC. FTI Consulting, Inc., provided financial advice to the Equity Committee of USA Diversified. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., and Jeffrey H. Davidson, Esq., Frank A. Merola, Esq., and Eve H. Karasik, Esq., at Stutman, Treister & Glatt, PC, represented the Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC. Matthew A. Kvarda, at Alvarez & Marsal, LLC, provided financial advise to the Equity Committee of USA First. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. The Debtor's Chapter 11 plan of reorganization was confirmed on Jan. 8, 2007. USACM Liquidating Trust was created pursuant to the Debtors' Third Amended Joint Chapter 11 Plan of Reorganization, which became effective March 12, 2007. Under the Joint Plan, the Trust obtained the right to enforce USACM's causes of action. VERITEQ CORP: Louis Haller No Longer a Shareholder -------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Louis Michael Haller III disclosed that as of July 3, 2013, he ceased to own any chares of VeriTeQ Corporation's common stock. Following the execution of an employment agreement with VeriTeQ effective Aug. 23, 2012, Mr. Haller was granted a stock option to purchase an aggregate total of 333,333 shares of the Issuer's Common Stock. The option as to 66,667 shares immediately vested upon grant and the other shares were to vest in four additional tranches, each tranche as to 66,667 shares, upon meeting certain conditions. As a result, Mr. Haller was deemed to beneficially own 66,667 shares of Common Stock, and all those shares of Common Stock represented beneficial ownership of approximately 6.5 percent of the Common Stock, based on 1,029,156 shares of Common Stock issued and outstanding on Aug. 27, 2012. On May 3, 2013, Mr. Haller's employment with the Company was terminated in accordance with an amendment to employment agreement dated April 10, 2013. As a result, Mr. Haller had until July 3, 2013, to exercise the vested option to acquire 66,667 shares of Common Stock. Mr. Haller did not exercise the option and, therefore, on July 3, 2013, the option was forfeited. A copy of the regulatory filing is available for free at: http://is.gd/XUpert About VeriteQ VeriTeQ, formerly known as Digital Angel Corporation, is a developer and marketer of innovative RFID technologies for implantable medical device identification and radiation dosimeters for use in cancer treatment. The Company's balance sheet at Sept. 30, 2013, showed $7.72 million in total assets, $13 million in total liabilities and a $5.27 million total stockholders' deficit. "We are in the development stage, have incurred operating losses since our inception and we have a working capital deficit of approximately $2.7 million as of September 30, 2013. These factors raise substantial doubt about our ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2013. VIJAY K. TANEJA: 4th Cir. Split on Avoidance Action Suit -------------------------------------------------------- The trustee for the bankruptcy estates of Vijay K. Taneja and Financial Mortgage, Inc., filed an action to avoid and recover certain payments made by FMI to First Tennessee Bank, National Association. The trustee alleged that the payments were "fraudulent transfers" under 11 U.S.C. Sec. 548, and were part of a fraudulent scheme carried out by FMI and Taneja. Specifically, H. Jason Gold, the trustee, seeks to avoid and recover funds that FMI transmitted to the bank in 12 payments, which totaled nearly $4 million, on the ground that the funds were conveyed fraudulently. After a trial, the bankruptcy court determined that the bank proved the affirmative defense of good faith in accordance with Section 548(c) and dismissed the trustee's action. The district court affirmed that decision, and the trustee elevated the matter to the United States Court of Appeals, Fourth Circuit. The primary question presented is whether the bank proved its good-faith defense based on the testimony of two bank employees. A divided three-judge panel of U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia, affirmed. Circuit Judge Barbara Milano Keenan, who wrote the majority's opinion, held that "Upon our review, we conclude that the bankruptcy court and the district court correctly applied the objective good-faith standard in determining that the bank employees' testimony provided competent objective evidence that satisfied the bank's burden of proving its affirmative defense under Section 548(c). We further conclude that the bankruptcy court did not clearly err in holding that the bank accepted the payments from FMI in good faith. Accordingly, we affirm the district court's judgment." Circuit Judge Stephanie Thacker concurred. The third judge, Circuit Judge James A. Wynn, Jr., dissented, holding that "To succeed with its good faith defense, First Tennessee Bank had to prove both aspects of good faith. But . . . it failed to proffer any evidence to support a finding that it received transfers from FMI with objective good faith in the face of several alleged red flags. Because it was clear error for the district court to make the unsupported finding that First Tennessee Bank received transfers from FMI with objective good faith, I must respectively dissent from the contrary view of my colleagues in the majority." A copy of the Fourth Circuit's Feb. 21 decision is available at http://is.gd/Z51t5bfrom Leagle.com. The case is, H. JASON GOLD, Chapter 11, Liquidating Trustee, Plaintiff-Appellant, v. FIRST TENNESSEE BANK NATIONAL ASSOCIATION, Defendant-Appellee, No. 13-1058 (4th Cir.). The Chapter 11 Trustee is represented by: Kenneth Oestreicher, Esq. Todd M. Brooks, Esq. WHITEFORD, TAYLOR & PRESTON, LLP Seven Saint Paul Street Baltimore, MD 21202-1636 Tel: 410-347-9401 Fax: 410-223-4301 E-mail: koestreicher@wtplaw.com tbrooks@wtplaw.com - and - Christopher A. Jones, Esq. WHITEFORD, TAYLOR & PRESTON, LLP 3190 Fairview Park Drive, Suite 300 Falls Church, VA 22042-4510 Tel: 703-280-9263 Fax: 703-280-8942 E-mail: cajones@wtplaw.com First Tennessee Bank is represented by: Clarence A. Wilbon, Esq. Annie T. Christoff, Esq. BASS, BERRY & SIMS PLC The Tower at Peabody Place 100 Peabody Place Memphis, TN 38103 Tel: (901) 543-5927 E-mail: cwilbon@bassberry.com achristoff@bassberry.com - and - Sheila DeLa Cruz, Esq. HIRSCHLER FLEISCHER, PC Edgeworth Building 2100 East Cary Street Richmond, VA 23223 Tel: (804) 771-9530 Fax: (804) 644-0957 E-mail: sdelacruz@hf-law.com About Taneja and FMI Vijay K. Taneja and four companies controlled by him, including a mortgage loan originator known as Financial Mortgage, Inc., filed voluntary Chapter 11 petitions (Bankr. E.D. Va. Lead Case No. 08-13293) on June 9, 2008. H. Jason Gold was appointed the Chapter 11 trustee in all five cases. James P. Campbell, Esq., at Campbell Flannery, P.C. in Leesburg, VA, advised the Trustee. The Official Committee of Unsecured Creditors was represented by Lawrence E. Rifken, Esq., at Greenberg Traurig, LLP, in McLean, Virginia. WEIGHT WATCHERS: Moody's Lowers CFR to B1; Outlook Negative ----------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Weight Watchers' International, Inc., including the Corporate Family and senior secured ratings to B1 from Ba2, and the Probability of Default rating to B2-PD from Ba3-PD. The Speculative Grade Liquidity Rating was lowered to SGL-3 from SGL-2. The ratings outlook remains negative. Ratings Rationale "Unexpectedly poor operating results in early 2014 -- in particular, accelerating declines in meeting recruitment, paid weeks and attendance -- will result in sharply reduced profits and cash flow this year, and raise financial leverage considerably", said Edmond DeForest, Moody's Senior Analyst. Importantly, a first-ever quarterly decline in internet revenues indicate the company has yet to introduce products that can at least retain those dieters now abandoning traditional approaches to try desktop/mobile applications or activity monitors. "Consumer demand for weight management is likely to be high and Weight Watchers is still the market leader, yet the company's strategy for regaining market share lost to new alternatives is uncertain", added Moody's DeForest. Heightened business risk along with expectation of weak financial performance lead to the revised Corporate family Rating ("CFR") at B1. Moody's expects a sharp drop in 2014 revenue and EBITDA to about $1.4 billion and $325 million, respectively, even with management plans to initiate cost reduction programs. As a result, debt to EBITDA (after Moody's standard adjustments) may increase to above 7 times, which is high for the B1 CFR. Moody's anticipates Weight Watchers will remain profitable but down considerably from earlier expectations and generate at least $100 million of free cash flow. Lowered free cash flow and in Moody's view financial covenant constraints will limit Weight Watchers access to about $50 million of its revolver, so the Speculative Grade Liquidity rating was revised to SGL-3. Liquidity is considered adequate. The negative ratings outlook reflects Moody's concern that evidence of business stabilization may not appear in 2014, which could imply further deterioration of financial leverage and cash flow. The ratings outlook could be stabilized if new products or marketing campaigns lead Moody's to expect meeting attendance, paid weeks and internet revenues to bottom during 2014, leading to overall revenue and profit stability, resulting in debt to EBITDA of less than 6 times and free cash flow to debt of about 8%. A further downgrade to ratings is possible if Moody's expects meeting attendance, paid weeks and internet revenues to continue to decline, or if there are further declines in overall revenues and profits, or if Moody's anticipates any departure from the company's deleveraging commitment, or if liquidity becomes less than adequate. Downgrades: Corporate Family Rating, Downgraded to B1 from Ba2 Probability of Default Rating, Downgraded to B2-PD from Ba3-PD Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Senior Secured Revolving Credit Facility due Apr 2, 2018, Downgraded to B1 (LGD3, 33%) from Ba2 (LGD3, 33%) Senior Secured Term Loan due Apr 2, 2016, Downgraded to B1 (LGD3, 33%) from Ba2 (LGD3, 33%) Senior Secured Term Loan due Apr 2, 2020, Downgraded to B1 (LGD3, 33%) from Ba2 (LGD3, 33%) The principal methodology used in this rating was Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Weight Watchers is a global provider of weight management services. WEIGHT WATCHERS: S&P Lowers CCR to 'B+', Placed on Watch Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on New York City-based Weight Watchers International Inc. to 'B+' from 'BB-. At the same time, S&P lowered its issue-level ratings on Weight Watchers' senior secured revolving credit and term facilities to 'BB-' (one notch higher than our corporate credit rating on the company) from 'BB'. S&P's recovery rating on these facilities is '2', indicating its expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. Additionally, S&P placed all of its ratings on the company on CreditWatch with negative implications. "The downgrade reflects our revised forecast for Weight Watchers, which continues to struggle with declining enrollment and revenues," said Standard & Poor's credit analyst Linda Phelps. "We now forecast the ratio of debt to EBITDA could approach 6x in 2014. We estimate this ratio was in the high-4x area in 2013." "The CreditWatch listing with negative implications reflects our view that we could lower the ratings if we believe leverage will be sustained above 6x, or if we reassess Weight Watchers business risk profile unfavorably because of the evolving competitive landscape. Alternatively, we could affirm the ratings if we believe the company can effectively respond to competitive threats, which could enable it to reverse declining enrollment and profit trends, and maintain credit ratios consistent with our revised forecast, including leverage below 6x. We will resolve the CreditWatch listing for Weight Watchers following our review of the company's business strategies, including revenue generation and cost reduction initiatives, and financial policy, including any debt reduction strategies," S&P noted. WESTMORELAND COAL: Closes Offering of $425 Million Senior Notes --------------------------------------------------------------- Westmoreland Coal Company closed its previously announced private offering of $425 million in aggregate principal amount of 10.75 percent Senior Secured Notes. The proceeds from the offering will be used primarily to pay the purchase price and related expenses for Westmoreland's acquisition of Sherritt International Corporation's coal mining operations, to prepay the outstanding senior secured notes issued by a subsidiary, and for working capital. The proceeds will be held in escrow pending the completion of the Sherritt acquisition, which is expected to occur by the end of the first quarter of 2014. The notes were offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and to buyers outside the United States pursuant to Regulation S under the Securities Act. The notes have not been registered under the Securities Act, and until so registered, the notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes. In addition, Westmoreland successfully completed its previously announced solicitation of consents from holders of its outstanding 10.75 percent Senior Secured Notes, allowing it to increase borrowing availability under its revolving credit agreement. Westmoreland received consent from holders of approximately 83.5 percent of the principal amount of existing notes, exceeding the consent required under the Indenture to approve the amendments. The amendments will be implemented through the adoption of a second supplemental indenture, which will become operative only upon the completion of the Sherritt acquisition and disbursement of the previously announced cash payment of $1.25 per $1,000 in principal amount of existing notes to holders of existing notes that consented to the amendments. Additional information is available for free at: http://is.gd/B0d4ie About Westmoreland Coal Colorado Springs, Colo.-based Westmoreland Coal Company (NYSE AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The Company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. Westmoreland Coal incurred a net loss of $13.66 million in 2012, a net loss of $36.87 million in 2011, and a net loss of $3.17 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed $939.83 million in total assets, $1.22 billion in total liabilities and a $280.31 million total deficit. * * * As reported by the TCR on Nov. 6, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Englewood, Co.-based Westmoreland Coal Co. (WLB). to 'B-' from 'CCC+'. "The upgrade reflects our view that WLB is less vulnerable to default after successfully negotiating less restrictive covenant requirements for an unrated $110 million term loan due 2018," said credit analyst Gayle Bowerman. "Our assessment of WLB's business risk profile as 'vulnerable' and financial risk profile as 'highly leveraged' are unchanged. We also revised our liquidity score to 'adequate' based on the covenant relief and additional liquidity provided under the company's new $20 million asset-based loan (ABL) facility from 'less than adequate'." Westmoreland Coal carries a Caa1 corporate family rating from Moody's Investors Service. XTREME POWER: U.S. Trustee Appoints 3-Member Creditors Panel ------------------------------------------------------------ Judy A. Robbins, the U.S. Trustee for Region, on Feb. 6 appointed three members to the official committee of unsecured creditors in the Chapter 11 case of Xtreme Power. The Creditors Committee members are: 1. Margaret M. McKay Toshiba International Corporation 13131 West Little York Road Houston, TX 77041 E-mail: Margaret.mckay@tic.toshiba.com Tel: 713-466-0277 ext 3810 Fax: 713-896-5251 2. Robert J. Bruckmann Dynapower Company LLC 85 Meadowland Dr. So. Burlington, VT 05401 E-mail: bbruckmann@dynapower.com Tel: 802-652-1333 Fax: 801 652-1377 3. Michelle Romonek Control Panels USA, Inc. 16310 Bratton Ln Bld 1, Ste. 100 Austin, TX 78728 E-mail: mromonek@controlpanelsusa.net Tel: 512-863-3224 Fax: 512-866-5446 About Xtreme Power Xtreme Power focuses on the design, engineering, installation, and monitoring of integrated energy storage systems for power generators, grid operators and commercial and industrial end users, among others. Xtreme Power claims to be one of the world's leading grid-scale power control technology provider capable of integrating the full spectrum of energy generation sources and battery technologies. Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin, Texas, on Jan. 22, 2014. Judge Christopher H. Mott presides over the case. The Debtors have tapped Shelby A. Jordan, Esq., Harlin C. Womble, Jr., Esq., Nathaniel Peter Holzer, Esq., Brennon Gamblin, Esq., Susan M. Womble, Esq., and Antonio Ortiz, Esq., at Jordan Hyden Womble & Culbreth & Holzer, P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special counsel, Gordian Group, LLC, as investment banker and financial advisor. Xtreme Power Inc. estimated assets of at least $10 million and liabilities of at least $50 million. Xtreme Power on Feb. 7 won bankruptcy court approval to eliminate a February deadline for bids and instituted a straight auction process in March. Horizon Technology Finance Corporation will provide debtor-in-possession financing and serve as the stalking horse at the auction with a bid of $10 million and a pledge not to compete with firms bidding higher. XTREME POWER: Panel Retains Hohmann Taube as Bankr. Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors for Xtreme Power Inc. et al filed papers with the U.S. Bankruptcy Court seeking to retain Hohmann, Taube & Summers, L.L.P. as counsel. The firm will, among other things, provide these services: (a) advise the Committee and its members as to rights and responsibilities and as to matters and issues arising in this proceeding and any related proceeding; (b) negotiate with the Debtor and other parties in interest with respect to the direction of this case including, but not limited to, any chapter 11 plan for the Debtors or any sale by the Debtors; and (c) prepare on behalf of the Committee all necessary applications, motions, and other pleadings and papers in connection with this case. The panel attests that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The Firm has not received a retainer. The hourly rates of attorneys range from $225.00 to $550.00 per hour. The primary counsel will be Eric J. Taube, Esq., whose rate is $550.00 per hour. About Xtreme Power Xtreme Power focuses on the design, engineering, installation, and monitoring of integrated energy storage systems for power generators, grid operators and commercial and industrial end users, among others. Xtreme Power claims to be one of the world's leading grid-scale power control technology provider capable of integrating the full spectrum of energy generation sources and battery technologies. Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin, Texas, on Jan. 22, 2014. Judge Christopher H. Mott presides over the case. The Debtors have tapped Shelby A. Jordan, Esq., Harlin C. Womble, Jr., Esq., Nathaniel Peter Holzer, Esq., Brennon Gamblin, Esq., Susan M. Womble, Esq., and Antonio Ortiz, Esq., at Jordan Hyden Womble & Culbreth & Holzer, P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special counsel, Gordian Group, LLC, as investment banker and financial advisor. Xtreme Power Inc. estimated assets of at least $10 million and liabilities of at least $50 million. Xtreme Power on Feb. 7 won bankruptcy court approval to eliminate a February deadline for bids and instituted a straight auction process in March. Horizon Technology Finance Corporation will provide debtor-in-possession financing and serve as the stalking horse at the auction with a bid of $10 million and a pledge not to compete with firms bidding higher. XTREME POWER: Inc Files Schedules of Assets and Liabilities ----------------------------------*------------------------ Xtreme Power Inc. filed with the Bankruptcy Court for the Western District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $7,004,915 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $49,996,995 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $5,746,287 ----------- ----------- TOTAL $7,004,915 $65,743,283 Xtreme Power focuses on the design, engineering, installation, and monitoring of integrated energy storage systems for power generators, grid operators and commercial and industrial end users, among others. Xtreme Power claims to be one of the world's leading grid-scale power control technology provider capable of integrating the full spectrum of energy generation sources and battery technologies. Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin, Texas, on Jan. 22, 2014. Judge Christopher H. Mott presides over the case. The Debtors have tapped Shelby A. Jordan, Esq., Harlin C. Womble, Jr., Esq., Nathaniel Peter Holzer, Esq., Brennon Gamblin, Esq., Susan M. Womble, Esq., and Antonio Ortiz, Esq., at Jordan Hyden Womble & Culbreth & Holzer, P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special counsel, Gordian Group, LLC, as investment banker and financial advisor. Xtreme Power Inc. estimated assets of at least $10 million and liabilities of at least $50 million. Xtreme Power on Feb. 7 won bankruptcy court approval to eliminate a February deadline for bids and instituted a straight auction process in March. Horizon Technology Finance Corporation will provide debtor-in-possession financing and serve as the stalking horse at the auction with a bid of $10 million and a pledge not to compete with firms bidding higher. XTREME POWER: Grove Files Schedules of Assets and Liabilities ------------------------------------------------------------- Xtreme Power Grove LLC filed with the Bankruptcy Court for the Western District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $5,179,692 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $7,342,792 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $24,539,485 ----------- ----------- TOTAL $5,179,692 $31,882,277 About Xtreme Power Xtreme Power focuses on the design, engineering, installation, and monitoring of integrated energy storage systems for power generators, grid operators and commercial and industrial end users, among others. Xtreme Power claims to be one of the world's leading grid-scale power control technology provider capable of integrating the full spectrum of energy generation sources and battery technologies. Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin, Texas, on Jan. 22, 2014. Judge Christopher H. Mott presides over the case. The Debtors have tapped Shelby A. Jordan, Esq., Harlin C. Womble, Jr., Esq., Nathaniel Peter Holzer, Esq., Brennon Gamblin, Esq., Susan M. Womble, Esq., and Antonio Ortiz, Esq., at Jordan Hyden Womble & Culbreth & Holzer, P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special counsel, Gordian Group, LLC, as investment banker and financial advisor. Xtreme Power Inc. estimated assets of at least $10 million and liabilities of at least $50 million. Xtreme Power on Feb. 7 won bankruptcy court approval to eliminate a February deadline for bids and instituted a straight auction process in March. Horizon Technology Finance Corporation will provide debtor-in-possession financing and serve as the stalking horse at the auction with a bid of $10 million and a pledge not to compete with firms bidding higher. XTREME POWER: Systems Files Schedules of Assets and Liabilities --------------------------------------------------------------- Xtreme Power Systems, LLC, filed with the Bankruptcy Court for the Western District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $743,210 B. Personal Property $3,560,711 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $8,165,538 E. Creditors Holding Unsecured Priority Claims $580,485 F. Creditors Holding Unsecured Non-priority Claims $78,920,849 ----------- ----------- TOTAL $4,303,921 $87,666,873 Xtreme Power focuses on the design, engineering, installation, and monitoring of integrated energy storage systems for power generators, grid operators and commercial and industrial end users, among others. Xtreme Power claims to be one of the world's leading grid-scale power control technology provider capable of integrating the full spectrum of energy generation sources and battery technologies. Xtreme Power Inc. and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. W.D. Tex. Lead Case No. 14-10096) in Austin, Texas, on Jan. 22, 2014. Judge Christopher H. Mott presides over the case. The Debtors have tapped Shelby A. Jordan, Esq., Harlin C. Womble, Jr., Esq., Nathaniel Peter Holzer, Esq., Brennon Gamblin, Esq., Susan M. Womble, Esq., and Antonio Ortiz, Esq., at Jordan Hyden Womble & Culbreth & Holzer, P.C., as bankruptcy attorneys, Baker Botts L.L.P. as special counsel, Gordian Group, LLC, as investment banker and financial advisor. Xtreme Power Inc. estimated assets of at least $10 million and liabilities of at least $50 million. Xtreme Power on Feb. 7 won bankruptcy court approval to eliminate a February deadline for bids and instituted a straight auction process in March. Horizon Technology Finance Corporation will provide debtor-in-possession financing and serve as the stalking horse at the auction with a bid of $10 million and a pledge not to compete with firms bidding higher. YRC WORLDWIDE: Deutsche Bank Stake at 5.2% as of Dec. 31 -------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Deutsche Bank AG and Deutsche Bank Securities Inc. disclosed that as of Dec. 31, 2013, they beneficially owned 810,725 shares of common stock of YRC Worldwide, Inc., representing 7.21 percent of the shares outstanding. Deutsche Bank previously reported beneficial ownership of 208,678 common shares as of Jan. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/TpLodN About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. For the year ended Dec. 31, 2012, the Company incurred a net loss of $136.5 million on $4.85 billion of operating revenue, as compared with a net loss of $354.4 million on $4.86 billion of operating revenue during the prior year. As of Sept. 30, 2013, the Company had $2.13 billion in total assets, $2.79 billion in total liabilities and a $665.8 million total shareholders' deficit. * * * As reported by the TCR on Aug. 2, 2013, Moody's Investors Service affirmed the rating of YRC Worldwide, Inc., corporate family rating at Caa3. The ratings outlook is has been changed to positive from stable. "The positive ratings outlook recognizes the important progress that YRCW has made in restoring positive operating margins through implementation of yield management initiatives, during a period of stabilizing demand in the less than truckload ('LTL') segment," the report stated. As reported by the TCR on Jan. 31, 2014, Standard & Poor's Ratings Services said that it raised its ratings on Overland Park, Kansas- based less-than-truckload (LTL) trucker YRC Worldwide Inc. (YRCW), including the corporate credit rating to 'CCC+' from 'CCC'. "The upgrades reflect YRCW's improved liquidity position and minimal debt maturities as a result of its proposed refinancing," said Standard & Poor's credit analyst Anita Ogbara. YSC INC: March 7 Hearing on Whidbey Bid to Foreclose on Ramada Inn ------------------------------------------------------------------ YSC Inc., owner of the Comfort Inn in Federal Way, Washington, and the Ramada Inn in Olympia, Washington, is moving closer to exiting bankruptcy protection with the filing of a plan of reorganization on Jan. 31. YSC intends to sell the Comfort Inn and the Ramada Inn, but will continue to operate the hotels until they are sold. YSC owns the hotels but not the real estate, which is owned personally by the Debtor's principals, the Yims. YSC, however, has to deal with a request by a lender to foreclose on the Ramada Inn. Whidbey Island Bank, which holds a third deed of trust on the Comfort Inn and a first deed of trust on the Ramada Inn, has asked the Bankruptcy Court for relief from the automatic stay to foreclose its deed of trust on the real property of Sang Kil Yim and Chan Sook Yim commonly known as Ramada Hotel. Like the Comfort Inn, the Yims own the real estate but the Debtor operates the Ramada Inn and owns the personal property therein. Whidbey also holds a deed of trust on the Yims' residence. Per its proof of claim, the amount owed to Whidbey as of Dec. 16, 2013, was $13,261,564. Per Whidbey's appraisal, the Ramada Inn is valued at $12,800,000 for the real estate and personal property. The current contract interest is 6.25%, and the current contract payment is $96,309. In papers filed with the Bankruptcy Court on Dec. 27, YSC said Whidbey is adequately protected and fully secured. The Debtor added that Whidbey's loan is secured on personal property of the Ramada Inn, well as the Ramada Inn real estate. YSC said Whidbey is the only deed of trust holder on the Ramada Inn, therefore, it will be protected by an equity cushion at the time of plan confirmation. The Debtor also said it intends to continue monthly payments to Whidbey. By the date of the hearing on the relief from stay, the Debtor said it will file a plan which proposes to make ongoing monthly payments to Whidbey for five years, at which point the Debtor will refinance (or sell) the Ramada Inn. A hearing on Whidbey's request for stay relief is scheduled for March 7, 2014, at 9:30 a.m. Scott Hutchison, Esq., counsel for Whidbey Island Bank, in response to the Debtor's filings, said the Court must grant Whidbey's request. As reported in the Troubled Company Reporter on Jan. 13, 2014, Whidbey said relief from stay will allow it to proceed with the foreclosure of its deed of trust on the real property of Sang Kil Yim and Chan Sook, and the personal property located thereon including but not limited to furniture, fixtures, equipment and inventory. Additionally, the relief will permit Whidbey to file its petition for the appointment of a custodial receiver of the real and personal property in the Thurston County Superior Court. Whidbey also requested that the Debtor be ordered to turn over to the funds held in Anchor Bank account or such other account established for the rental proceeds of the Ramada Inn. According to the Debtor's Plan, the Comfort Inn is subject to a purchase and sale agreement for $7,500,000. The Debtor said it may receive additional offer(s) from other potential buyer(s). The Debtor has filed a separate motion to approve sale of its personal property wherein the court may approve the highest and best purchase and sale agreement. In the interim, the Debtor will continue to operate the Comfort Inn and make payments from the revenue therefrom until the sale closes. The Debtor will also continue to operate the Ramada Inn throughout the period of the plan, and will fund the plan from the revenue therefrom until the Ramada Inn is sold or refinanced. A copy of the disclosure statement is available for free at: http://bankrupt.com/misc/YSC72ds.pdf A copy of the reorganization plan is available for free at: http://bankrupt.com/misc/YSC73plan.pdf About YSC Inc. YSC Inc., owner of a Comfort Inn in Federal Way, Washington, and a Ramada Inn in Olympia, Washington, filed a petition for Chapter 11 protection (Bankr. W.D. Wash. Case No. 13-17946) on Aug. 30, 2013, in Seattle. The owner listed the hotels as worth $17.9 million. Total debt is $18.5 million, including $18 million in secured debt. Among mortgage holders, Whidbey Island Bank is owed $13.3 million. Bankruptcy Judge Marc L. Barreca presides over the case. Wells and Jarvis, P.S., serves as YSC's counsel. ZALE CORP: Golden Gate Capital Scores Again on Buyout ----------------------------------------------------- Maureen Farrell, writing for The Wall Street Journal, reported that private-equity firm Golden Gate Capital will clean up on Signet Jewelers Ltd.'s $690 million deal to buy its rival Zale Corp. for $21 per share. That's because Golden Gate is Zale's top shareholder, holding 11 million in warrants that it had the option to exercise at at $2 per share. On just its Zale warrants, Golden Gate generated profits of more than $200 million, the report said. Shares of Zale jumped more than 40% on Feb. 19, the report related. Investors also rewarded Signet Jewelers, pushing the acquirer's stock up 17% on the same day. Signet estimates that the deal could generate synergies of $100 million within three years. Golden Gate came to Zale's rescue in 2010 giving the retailer, which was nearing bankruptcy, a lifeline in the form of a $150 million secured loan, the report further related. With this loan, Golden Gate acquired its warrants for Zale. Since then, Zale's management team has been successfully executing on a multi-year turnaround plan, the report said. In January, the jewelry retailer impressed investors with its 2013 holiday sales figures during a year when many retailers fell flat. About Zale Corporation Based in Dallas, Texas, Zale Corporation (NYSE: ZLC) -- http://www.zalecorp.com/-- is a specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,695 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at http://www.zales.com/, http://www.zalesoutlet.com/, http://www.gordonsjewelers.com/and http://www.pagoda.com/ Zale Corporation disclosed net earnings of $10.01 million on $1.88 billion of revenues for the year ended July 31, 2013, as compared with a net loss of $27.31 million on $1.86 billion of revenues for the year ended July 31, 2012. As of Oct. 31, 2013, Zale Corporation had $1.31 billion in total assets, $1.16 billion in total liabilities and $152.95 million in total stockholders' investment. ZOGENIX INC: Federated Stake at 24.8% as of Dec. 31 --------------------------------------------------- In an amended Schedule 13G filed with the U.S. Securities and Exchange Commission, Federated Investors, Inc., and its affiliates disclosed that as of Dec. 31, 2013, they beneficially owned 35,782,213 shares of common stock of Zogenix Inc. representing 24.87 percent of the shares outstanding. Federated Investors previously reported beneficial ownership of 31,032,213 common shares as of Dec. 31, 2012. A copy of the regulatory filing is available for free at http://is.gd/oPISEj About Zogenix Inc. Zogenix, Inc. (NASDAQ: ZGNX), with offices in San Diego and Emeryville, California, is a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain. Ernst & Young LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses from operations and lack of sufficient working capital which raise substantial doubt about the Company's ability to continue as a going concern. Zogenix incurred a net loss of $47.38 million in 2012, as compared with a net loss of $83.90 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $54.63 million in total assets, $68.52 million in total liabilities and a $13.88 million total stockholders' deficit. * Out-Of-Court Municipal Restructuring Will Rise, Experts Say ------------------------------------------------------------- Law360 reported that while Detroit's bankruptcy has caught the attention of financially strapped municipalities nationwide, experts said that it's more likely that out-of-court restructurings are going to balloon, not Chapter 9 petitions, especially since there is so little case law on hot-button issues such as pension liabilities. According to the report, bankruptcy and restructuring experts sitting on a panel to discuss Chapter 9 trends at the TMA Distressed Investing Conference in Las Vegas noted that a bankruptcy judge's rulings in Detroit's case have been generally friendly toward the city. * American Express Merchant Fee Accord Wins Court Approval ---------------------------------------------------------- Christie Smythe, writing for Bloomberg News, reported that American Express Co. won preliminary court approval of a settlement with U.S. merchants over transaction fees that the retailers say complements a multibillion-dollar accord with Visa Inc. and MasterCard Inc. According to the report, U.S. District Judge Nicholas Garaufis in Brooklyn, New York, made the ruling on Feb. 7 and scheduled a Sept. 17 hearing on final approval. The deal allows shops to encourage customers to use debit cards, which cost retailers less to process than credit-card purchases. The accord "unlocks the value" of the settlement with Visa and MasterCard, lawyers for businesses that accept American Express cards said in a Dec. 20 court filing, the report related. Under that settlement, Visa and MasterCard offered businesses some ability to add surcharges to credit-card transactions as a way to steer customers away from them, the report further related. Such surcharges could only be used if New York-based American Express permitted the practice as well. The Visa and MasterCard deal also involved a payment of $5.7 billion in damages to the class of retailers, the report said. Damages aren't part of the American Express settlement. * Bill to Force Refunds of Overpaid Foreclosure Costs in Colorado ----------------------------------------------------------------- David Migoya, writing for The Denver Post, reported that lawyers who pass on to homeowners the court costs of filing a foreclosure lawsuit against them would have to prove they incurred the expenses, under a legislative bill -- but only if someone asks. Additionally, foreclosure lawyers would be required under the bill proposed by Rep. Beth McCann, D-Denver, to keep receipts and other proof that the expenses they say a homeowner must pay to end the foreclosure process are real, the report said. The legislation, HB-1130, unanimously passed a House subcommittee and will be heard by the entire assembly, the report related. If it passes the House, it will move to the Senate for hearings. "It's really a common-sense bill," said McCann, who has failed several times to bring legislative changes to the state's foreclosure process, the report further related. This time, though, she received outright support from the Colorado Public Trustees Association, which specifically backs a provision requiring refunds of cure overpayments to be given to homeowners and not foreclosing banks, as had been the practice in some counties, the report added. * Fed Approves Tough U.S. and Foreign Bank Liquidity Rule --------------------------------------------------------- Ronald Orol, writing for The Deal, reported that the Federal Reserve on Feb. 18 approved a tough package of rules for the biggest banks operating in the U.S., a move that central bankers believe could help avoid a repeat of the crisis that shook global markets in 2008. However, the central bank also punted or substantially delayed some of the more stringent provisions that many critics of the large financial institutions had been seeking. According to the report, the Fed, under newly approved chair Janet Yellen in her first public meeting as head of the central bank, voted unanimously to require the largest U.S. institutions with $50 billion or more in assets hold more short-term "highly liquid" assets that they believe would help a bank stabilize itself in a crisis. Banks will also need to set up a risk committee of individuals responsible for making sure executives are advised on when to cut back on investments that could pose a risk to the institutions and to the financial markets if their value suddenly dropped. The rule would apply to the largest 24 U.S.-based banks and about 100 foreign institutions operating here, with more restrictions on the largest firms that make up this group. "The traditional framework for supervising and regulating major financial institutions and assessing risks contained material weaknesses," Yellen said, the report cited. "The final rule would help address these sources of vulnerability." However, the final rule did not set up new capital and liquidity requirements for so called non-bank systemically important financial institutions, even though a Dec. 2011 proposal suggested the Fed would issue requirements for them too, the report said. So far, regulators have designated three non-bank firms as systemically risky, including American International Group Inc., whose collapse was instrumental in the 2008 panic. A Fed official suggested the central bank will take more time to consider capital restrictions on non-bank firms designated as a potential threat to the financial system, in particular on insurance firms, which the central bank is not an expert at regulating. In addition to AIG, regulators have designated Prudential Financial Inc. and GE Capital, a unit of General Electric Co., as systemically important firms. * Fifth Third Bank Mistakenly Reports Customers as "Bankrupt" ------------------------------------------------------------- Dan Horn, writing for Cincinnati Enquirer, reported that Fifth Third Bank mistakenly told credit agencies last fall that some of its customers were bankrupt. According to the report, bank officials won't say how many customers were affected, other than that it was "a limited number." The error occurred late last fall and was caught soon after, said Fifth Third spokeswoman Stephanie Honan, the report related. She said the bank moved quickly to notify credit agencies about the mistake so the notification would not affect customers' credit scores. "They should have no impact on their reports," Honan said of customers' scores, the report cited. Credit scores matter because they are crucial when lenders determine whether to approve loans, the report pointed out. A bad score makes it difficult to secure loans for homes, cars and other major purchases. * JPMorgan's $13 Billion Accord Seen Needing Court Review --------------------------------------------------------- Andrew Zajac and Cheyenne Hopkins, writing for Bloomberg News, reported that JPMorgan Chase & Co.'s $13 billion fraud settlement with the U.S. government should be blocked until a court is able to review it, a Wall Street watchdog group founded by an Atlanta hedge fund manager said. According to the report, Better Markets Inc. is seeking judicial scrutiny of the accord because it's the largest settlement "with a single entity in the 237-year history of the U.S.," according to a complaint filed today in Washington federal court. "No one has any ability to determine if the $13 billion agreement is fair" or "if it is a sweetheart deal," the group said in the filing. The accord, announced in November, settled allegations that the biggest U.S. lender by assets misled investors and the public when it sold bonds backed by faulty residential mortgages, the report related. U.S. and state officials blamed JPMorgan's actions for helping to cause the credit crisis, and said the agreement didn't shield JPMorgan or its employees from possible charges. The Justice Department "acted as investigator, prosecutor, judge, juror, sentencer and collector," Dennis Kelleher, chief executive officer of Better Markets, said at a press conference in Washington, the report cited. The agreement was "mostly designed to conceal, not reveal." The case is Better Markets Inc. v. U.S. Department of Justice, 14- cv-00190, U.S. District Court, District of Columbia (Washington). * Hope for NYC Hospitals Rises With $8-Bil. Medicaid Waiver Deal ---------------------------------------------------------------- Law360 reported that New York state reached a deal with the federal government to push $8 billion in Medicaid savings into reforming its health care delivery system, potentially keeping several bankrupt or insolvent hospitals operating, with New York City Mayor Bill de Blasio hailing the accord as "long-overdue good news." According to the report, the breakthrough between the state and the Obama administration came some 18 months after Gov. Andrew Cuomo first announced the state's application for the so-called Medicaid 1115 waiver on Aug. 6, 2012. * Panel Seeks Greater Disclosures on Pension Health --------------------------------------------------- Mary Williams Walsh, writing for The New York Times' DealBook, reported that a panel of risk experts sees a teachable moment in Detroit's bankruptcy and pension woes. According to the report, a blue-ribbon panel of the Society of Actuaries -- the entity responsible for education, testing and licensing in the profession -- says that more precise, meaningful information about the health of all public pension funds would give citizens the facts they need to make informed decisions. The DealBook said the panel will recommend that pension actuaries provide plan boards of trustees and, ultimately, the public with the fair value of pension obligations and estimates of the annual cash outlays needed to cover them. That means pension officials would disclose something they have long resisted discussing: the total cost, in today's dollars, of the workers' pensions, assuming no credit for expected investment gains over the years. ?We think it would be a useful benchmark for plans to have,? said Robert W. Stein, the panel's chairman, who is both an actuary and a certified public accountant, the report cited. ?We're optimistic that the information would enable them to better appreciate the future and what it might bring.? Economists refer to this elusive number as the plan's total liability, discounted at a risk-free rate, the report said. They have called for its disclosure for years, saying it would help pension trustees make better decisions. Economists have calculated rough approximations in recent years for various states and cities, but only the plan actuaries have the data needed for precise calculations. * Senate Votes to Restore Military Pensions ------------------------------------------- Jennifer Liberto, writing for CNN.com, reported that the Senate overwhelmingly passed a bill to restore military pension increases, which is good news for 750,000 military retirees who had tens of thousands of dollars at stake. According to the report, the Senate voted 95-to-3 in favor of the bill, which the House passed. The measure reinstates cost-of- living hikes in the pensions for all current retirees and anyone who enlisted before Jan. 1. In December, a deal to fund the federal government led Congress to trim a full percentage point from cost-of-living raises for military retirees starting in 2015, yielding $6.3 billion in savings, the report related. The move sparked outrage among veterans and retiree groups, who accused Congress of "betraying" promises made to those who risked their lives in wars overseas, the report further related. The cuts would decrease the pensions of 750,000 military personnel, the report said. Over the course of their lifetime, those cuts would trim, on average, around $69,000 from enlisted members' pensions and $87,000 from officers' pensions, according to a Congressional Research Service report this month. * CFTC Is Set to Ease Rules on Trading Swaps Overseas ----------------------------------------------------- Andrew Ackerman and Katy Burne, writing for The Wall Street Journal, reported that regulators in Washington and Brussels agreed to ease rules on overseas swaps trading, exempting European trades and electronic platforms from U.S. regulations. According to the report, the deal between the Commodity Futures Trading Commission and the European Union's executive arm will allow U.S. firms to trade swaps on European platforms as long as those systems are governed by rules closely mirroring those ushered in as part of the 2010 Dodd-Frank financial overhaul law. Right now, the United Kingdom currently has such standards in place, CFTC officials said. The pact reflects efforts by global policy makers to impose a coordinated set of international rules that will give more insight into the trading of derivatives, which were at the heart of the 2008 financial crisis. U.S. policy makers, including Treasury Secretary Jacob Lew, have warned against a "race to the bottom" and encouraged global regulators to impose tough international restrictions that will impose transparency on swaps trading, the report said. But progress has been slow, particularly in Europe. While the U.S. trading rules are set to go into effect on February 15, Europe isn't expected to have rules in place across the continent until the end of 2016. Michel Barnier, the EU commissioner responsible for financial- market regulation, said the pact "is an important further step in implementing a joined up, consistent global approach to ensure that financial markets work for the benefit of the real economy," the report cited. Acting CFTC Chairman Mark Wetjen said, "The two commissions have provided confirmation this week that a global race- to-the-top in derivatives regulation is possible," the report further cited. * Ex-BofA Executive Pleads Guilty in Muni Bond Rigging Case ----------------------------------------------------------- Melba Newsome and Jef Feeley, writing for Bloomberg News, reported that former Bank of America Corp. executive Phillip D. Murphy pleaded guilty to conspiring to defraud bond investors and the U.S. government through a bid-rigging scheme, prosecutors said. According to the report, Murphy, former head of the bank's municipal derivatives desk, admitted in federal court in Charlotte, North Carolina, to manipulating the bidding process for investment agreements covering municipal-bond proceeds, Steven Tugander, a U.S. Justice Department lawyer, said on Feb. 11 in an interview. Murphy's guilty plea resulted from the government's multiyear probe of bid-rigging of investment contracts involving monies generated by municipal bonds, the report related. Bank of America, JPMorgan Chase & Co., UBS AG, Wells Fargo & Co. and General Electric Co. have acknowledged that former employees engaged in illegal activity in connection with the scheme, and the companies paid a total of $743 million in restitution and penalties. "By manipulating what was intended to be a competitive bidding process, the conspirators defrauded municipalities, public entities and taxpayers across the country," Brent Snyder, a Justice Department prosecutor who specializes in antitrust cases, said in an e-mailed statement, the report related. The case is U.S. v. Murphy, 12-cr-00235, U.S. District Court, Western District of North Carolina (Charlotte). * Fla. Supreme Court Untangles Self-Insured Retentions ------------------------------------------------------ Law360 reported that the Florida Supreme Court let a contractor use third-party payments to satisfy the self-insured retention in a liability policy, reassuring a wide swath of policyholders that they can count on additional insured coverage and providing guidance to bankruptcy courts that are puzzled about how insurance policies should be triggered. According to the report, the ruling answered a pair of questions sent by the Eleventh Circuit in an insurance dispute stemming from a $1.6 million settlement of injury claims against Intervest Construction of Jax Inc. and ICI Homes Inc. * Massachusetts Attorney General Seeks Ban on Liens by Casinos -------------------------------------------------------------- Mark Arsenault, writing for The Boston Globe, reported that State Attorney General Martha Coakley urged Massachusetts regulators to prohibit casinos from placing liens on the homes of patrons with unpaid gambling debts, calling the practice "deeply concerning" in a letter to the state gambling commission. "Protecting against predatory lending and overly aggressive debt collection in the gaming industry is critical, because the odds are stacked against the patron being able to earn back the value of the loan," wrote Coakley, who is also a candidate for governor, the report cited. "This practice by the gaming industry in which customers' homes are put at risk should not be allowed." Coakley cited an article in the Globe that detailed the longstanding practice by the two large Connecticut tribal casinos, Mohegan Sun and Foxwoods, of placing liens on homes of residents who owe the casinos money advanced for gambling, the report said. Casino industry specialists have said it is unusual for a gambling business to employ property liens as a collection tactic, the report related. "This story highlights the need for a robust set of consumer protection regulations before these establishments begin operations," Coakley wrote, the report further cited. * Hungry for Cash, Casual Dining Cos. May Flock to Ch. 11 --------------------------------------------------------- Law360 reported that distressed investors have been jumping on opportunities to buy casual dining restaurants' debt in recent months, and while some struggling chains are managing to restructure themselves out of court, experts say low revenues could lead to a boost in Chapter 11 filings. The report pointed out that recent bankruptcy filings in the sector include Furr's Cafeteria parent Buffet Partners LP earlier this month, and F&H Acquisition Corp., parent of the Fox & Hound and Champps chains, in December. * Regulator Halts Ocwen-Wells Fargo Mortgage-Servicing Deal ----------------------------------------------------------- Shayndi Raice, writing for The Wall Street Journal, reported that the red-hot market to buy mortgage-servicing rights got a splash of cold water as a New York regulator stopped a $2.7 billion deal. According to the report, Ocwen Financial Corp., one of the nation's largest mortgage servicers, said the state's Department of Financial Services "halted indefinitely" its agreement to buy the rights to service $39 billion of loans from Wells Fargo & Co. The office of Benjamin Lawsky, superintendent of the New York regulator, has been investigating Ocwen since December 2012 over alleged abusive behavior toward homeowners, said a person familiar with the matter, the report related. The regulator scuttled the Wells Fargo deal because it was concerned about Ocwen's ability to handle more loans given the alleged abuses, added the person. Mortgage servicers collect payments from homeowners and distribute the payments to investors who own the loans through mortgage securities, the report further related. "Ocwen will continue to work closely with the NY DFS to resolve its concerns about Ocwen's servicing portfolio," the company said, the report cited. A Wells Fargo spokesman declined to comment. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- ABSOLUTE SOFTWRE OU1 GR 142.1 (11.2) (6.3) ABSOLUTE SOFTWRE ABT CN 142.1 (11.2) (6.3) ABSOLUTE SOFTWRE ALSWF US 142.1 (11.2) (6.3) ADAMIS PHARMACEU CY3B GR 3.5 (4.9) (4.9) ADVANCED EMISSIO ADES US 106.4 (46.1) (15.3) ADVANCED EMISSIO OXQ1 GR 106.4 (46.1) (15.3) ADVENT SOFTWARE AXQ GR 456.3 (111.8) (106.0) ADVENT SOFTWARE ADVS US 456.3 (111.8) (106.0) AERIE PHARMACEUT AERI US 7.2 (22.4) (11.0) AERIE PHARMACEUT 0P0 GR 7.2 (22.4) (11.0) AGENUS INC AGEN US 37.7 (2.9) 21.2 AIR CANADA-CL A AC/A CN 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A ADH GR 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A AIDIF US 9,481.0 (3,056.0) 105.0 AIR CANADA-CL A ADH TH 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B ADH1 GR 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B ADH1 TH 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B AIDEF US 9,481.0 (3,056.0) 105.0 AIR CANADA-CL B AC/B CN 9,481.0 (3,056.0) 105.0 ALLIANCE HEALTHC AIQ US 515.6 (131.4) 61.3 AMC NETWORKS-A AMCX US 2,524.8 (611.9) 790.3 AMC NETWORKS-A 9AC GR 2,524.8 (611.9) 790.3 AMER RESTAUR-LP ICTPU US 33.5 (4.0) (6.2) AMERICAN AIRLINE A1G GR 26,780.0 (7,922.0) 143.0 AMERICAN AIRLINE AAL US 26,780.0 (7,922.0) 143.0 AMERICAN AIRLINE A1G TH 26,780.0 (7,922.0) 143.0 AMERICAN AIRLINE AAL* MM 26,780.0 (7,922.0) 143.0 AMR CORP ACP GR 26,780.0 (7,922.0) 143.0 AMYLIN PHARMACEU AMLN US 1,998.7 (42.4) 263.0 ANACOR PHARMACEU 44A TH 44.9 (7.3) 17.0 ANACOR PHARMACEU 44A GR 44.9 (7.3) 17.0 ANACOR PHARMACEU ANAC US 44.9 (7.3) 17.0 ANGIE'S LIST INC 8AL GR 105.6 (18.5) (21.7) ANGIE'S LIST INC 8AL TH 105.6 (18.5) (21.7) ANGIE'S LIST INC ANGI US 105.6 (18.5) (21.7) ARRAY BIOPHARMA ARRY US 146.3 (5.4) 90.2 ARRAY BIOPHARMA AR2 TH 146.3 (5.4) 90.2 ARRAY BIOPHARMA AR2 GR 146.3 (5.4) 90.2 ATLATSA RESOURCE ATL SJ 768.5 (14.1) 30.2 AUTOZONE INC AZ5 GR 7,023.4 (1,721.2) (962.6) AUTOZONE INC AZ5 TH 7,023.4 (1,721.2) (962.6) AUTOZONE INC AZO US 7,023.4 (1,721.2) (962.6) BARRACUDA NETWOR CUDA US 236.2 (90.1) (66.5) BARRACUDA NETWOR 7BM GR 236.2 (90.1) (66.5) BERRY PLASTICS G BERY US 5,264.0 (183.0) 681.0 BERRY PLASTICS G BP0 GR 5,264.0 (183.0) 681.0 BRP INC/CA-SUB V DOO CN 1,875.1 (63.7) 116.5 BRP INC/CA-SUB V B15A GR 1,875.1 (63.7) 116.5 BRP INC/CA-SUB V BRPIF US 1,875.1 (63.7) 116.5 BURLINGTON STORE BURL US 2,980.9 (215.8) 145.9 BURLINGTON STORE BUI GR 2,980.9 (215.8) 145.9 CABLEVISION SY-A CVC US 6,482.1 (5,284.1) 342.2 CABLEVISION SY-A CVY GR 6,482.1 (5,284.1) 342.2 CAESARS ENTERTAI CZR US 26,096.4 (1,496.8) 626.7 CAESARS ENTERTAI C08 GR 26,096.4 (1,496.8) 626.7 CANNAVEST CORP CANV US 10.7 (0.2) (1.3) CAPMARK FINANCIA CPMK US 20,085.1 (933.1) - CC MEDIA-A CCMO US 15,231.2 (8,370.8) 786.9 CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1) CENVEO INC CVO US 1,238.5 (473.0) 143.1 CHOICE HOTELS CZH GR 539.9 (464.2) 84.3 CHOICE HOTELS CHH US 539.9 (464.2) 84.3 CIENA CORP CIE1 TH 1,802.8 (82.7) 780.7 CIENA CORP CIE1 GR 1,802.8 (82.7) 780.7 CIENA CORP CIEN TE 1,802.8 (82.7) 780.7 CIENA CORP CIEN US 1,802.8 (82.7) 780.7 CINCINNATI BELL CBB US 2,551.7 (687.2) (147.2) CYTORI THERAPEUT CYTX US 35.2 (3.2) 5.4 DIRECTV DTV CI 21,905.0 (6,169.0) (577.0) DIRECTV DIG1 GR 21,905.0 (6,169.0) (577.0) DIRECTV DTV US 21,905.0 (6,169.0) (577.0) DOMINO'S PIZZA EZV TH 468.5 (1,322.2) 76.9 DOMINO'S PIZZA EZV GR 468.5 (1,322.2) 76.9 DOMINO'S PIZZA DPZ US 468.5 (1,322.2) 76.9 DUN & BRADSTREET DB5 GR 1,849.9 (1,206.3) (128.9) DUN & BRADSTREET DB5 TH 1,849.9 (1,206.3) (128.9) DUN & BRADSTREET DNB US 1,849.9 (1,206.3) (128.9) DYAX CORP DY8 GR 70.6 (38.8) 41.0 DYAX CORP DYAX US 70.6 (38.8) 41.0 EASTMAN KODAK CO KODN GR 3,815.0 (3,153.0) (785.0) EASTMAN KODAK CO KODK US 3,815.0 (3,153.0) (785.0) EDGEN GROUP INC EDG US 883.8 (0.8) 409.2 EGALET CORP EGLT US 14.4 (1.5) (3.1) ELEVEN BIOTHERAP EBIO US 5.1 (6.1) (2.9) EMPIRE STATE -ES ESBA US 1,122.2 (31.6) (925.9) EMPIRE STATE-S60 OGCP US 1,122.2 (31.6) (925.9) ENDURANCE INTERN EI0 GR 1,519.2 (20.5) (180.2) ENDURANCE INTERN EIGI US 1,519.2 (20.5) (180.2) ENTRAVISION CO-A EV9 GR 455.7 (5.6) 78.1 ENTRAVISION CO-A EVC US 455.7 (5.6) 78.1 EVERYWARE GLOBAL EVRY US 356.6 (53.9) 142.5 FAIRPOINT COMMUN FRP US 1,592.6 (406.7) 30.0 FERRELLGAS-LP FEG GR 1,441.3 (134.9) (55.6) FERRELLGAS-LP FGP US 1,441.3 (134.9) (55.6) FIFTH & PACIFIC FNP US 957.0 (220.7) (66.9) FIFTH & PACIFIC LIZ GR 957.0 (220.7) (66.9) FOREST OIL CORP FST US 1,909.3 (63.1) (148.3) FREESCALE SEMICO 1FS GR 3,047.0 (4,594.0) 1,133.0 FREESCALE SEMICO FSL US 3,047.0 (4,594.0) 1,133.0 FREESCALE SEMICO 1FS TH 3,047.0 (4,594.0) 1,133.0 FRESH HEALTHY VE VEND US 2.3 (1.8) (2.0) GAWK INC GAWK US 0.0 (0.0) (0.0) GLG PARTNERS INC GLG US 400.0 (285.6) 156.9 GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9 GLOBAL BRASS & C 6GB GR 592.5 (8.9) 307.1 GLOBAL BRASS & C BRSS US 592.5 (8.9) 307.1 GRAHAM PACKAGING GRM US 2,947.5 (520.8) 298.5 HALOZYME THERAPE HALOZ GR 110.1 (3.5) 63.2 HALOZYME THERAPE HALO US 110.1 (3.5) 63.2 HCA HOLDINGS INC 2BH GR 28,831.0 (6,928.0) 2,342.0 HCA HOLDINGS INC HCA US 28,831.0 (6,928.0) 2,342.0 HCA HOLDINGS INC 2BH TH 28,831.0 (6,928.0) 2,342.0 HD SUPPLY HOLDIN HDS US 6,518.0 (698.0) 1,346.0 HD SUPPLY HOLDIN 5HD GR 6,518.0 (698.0) 1,346.0 HOVNANIAN ENT-A HOV US 1,759.1 (432.8) 956.3 HOVNANIAN ENT-A HO3 GR 1,759.1 (432.8) 956.3 HOVNANIAN ENT-B HOVVB US 1,759.1 (432.8) 956.3 HOVNANIAN-A-WI HOV-W US 1,759.1 (432.8) 956.3 HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8) HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8) INCYTE CORP ICY TH 629.6 (193.1) 447.8 INCYTE CORP INCY US 629.6 (193.1) 447.8 INCYTE CORP ICY GR 629.6 (193.1) 447.8 INFOR US INC LWSN US 6,515.2 (555.7) (303.6) IPCS INC IPCS US 559.2 (33.0) 72.1 ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2 JUST ENERGY GROU JE CN 1,533.5 (359.8) (281.4) JUST ENERGY GROU JE US 1,533.5 (359.8) (281.4) JUST ENERGY GROU 1JE GR 1,533.5 (359.8) (281.4) L BRANDS INC LB US 6,636.0 (820.0) 846.0 L BRANDS INC LTD TH 6,636.0 (820.0) 846.0 L BRANDS INC LTD GR 6,636.0 (820.0) 846.0 LDR HOLDING CORP LDRH US 77.7 (7.2) 10.3 LEE ENTERPRISES LE7 GR 820.2 (157.4) 9.9 LEE ENTERPRISES LEE US 820.2 (157.4) 9.9 LORILLARD INC LLV TH 3,536.0 (2,064.0) 1,085.0 LORILLARD INC LO US 3,536.0 (2,064.0) 1,085.0 LORILLARD INC LLV GR 3,536.0 (2,064.0) 1,085.0 MACROGENICS INC MGNX US 42.0 (4.0) 11.7 MACROGENICS INC M55 GR 42.0 (4.0) 11.7 MALIBU BOATS-A MBUU US 57.2 (32.5) (2.0) MALIBU BOATS-A M05 GR 57.2 (32.5) (2.0) MANNKIND CORP NNF1 TH 258.6 (30.7) (51.5) MANNKIND CORP NNF1 GR 258.6 (30.7) (51.5) MANNKIND CORP MNKD US 258.6 (30.7) (51.5) MARRIOTT INTL-A MAQ GR 6,794.0 (1,415.0) (772.0) MARRIOTT INTL-A MAQ TH 6,794.0 (1,415.0) (772.0) MARRIOTT INTL-A MAR US 6,794.0 (1,415.0) (772.0) MDC PARTNERS-A MDCA US 1,365.7 (40.1) (211.1) MDC PARTNERS-A MDZ/A CN 1,365.7 (40.1) (211.1) MDC PARTNERS-A MD7A GR 1,365.7 (40.1) (211.1) MEDIA GENERAL MEG US 749.9 (217.2) 36.8 MERITOR INC AID1 GR 2,497.0 (808.0) 337.0 MERITOR INC MTOR US 2,497.0 (808.0) 337.0 MERRIMACK PHARMA MACK US 224.2 (16.6) 139.4 MERRIMACK PHARMA MP6 GR 224.2 (16.6) 139.4 MIRATI THERAPEUT MRTX US 18.5 (24.3) (25.3) MIRATI THERAPEUT 26M GR 18.5 (24.3) (25.3) MONEYGRAM INTERN MGI US 4,786.9 (77.0) 85.2 MORGANS HOTEL GR MHGC US 572.8 (172.9) 6.5 MORGANS HOTEL GR M1U GR 572.8 (172.9) 6.5 MPG OFFICE TRUST MPG US 1,280.0 (437.3) - NATIONAL CINEMED NCMI US 982.5 (217.5) 139.1 NATIONAL CINEMED XWM GR 982.5 (217.5) 139.1 NAVISTAR INTL IHR TH 8,315.0 (3,601.0) 1,198.0 NAVISTAR INTL NAV US 8,315.0 (3,601.0) 1,198.0 NAVISTAR INTL IHR GR 8,315.0 (3,601.0) 1,198.0 NEKTAR THERAPEUT ITH GR 383.0 (50.3) 127.0 NEKTAR THERAPEUT NKTR US 383.0 (50.3) 127.0 NEW MEDIA INVEST NEWM US 427.0 (902.4) 35.0 NORCRAFT COS INC 6NC GR 265.0 (6.1) 47.7 NORCRAFT COS INC NCFT US 265.0 (6.1) 47.7 NORTHWEST BIO NWBO US 7.6 (14.3) (9.7) NORTHWEST BIO NBYA GR 7.6 (14.3) (9.7) NYMOX PHARMACEUT NYMX US 1.1 (5.9) (2.3) OCI PARTNERS LP OP0 GR 460.3 (98.7) 79.8 OCI PARTNERS LP OCIP US 460.3 (98.7) 79.8 OMEROS CORP 3O8 GR 12.0 (23.9) (1.6) OMEROS CORP OMER US 12.0 (23.9) (1.6) OMTHERA PHARMACE OMTH US 18.3 (8.5) (12.0) PALM INC PALM US 1,007.2 (6.2) 141.7 PHILIP MORRIS IN 4I1 TH 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PM FP 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PM US 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PM1 TE 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN 4I1 GR 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PM1CHF EU 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PM1EUR EU 38,168.0 (6,274.0) (214.0) PHILIP MORRIS IN PMI SW 38,168.0 (6,274.0) (214.0) PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9) PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9) PLY GEM HOLDINGS PG6 GR 1,088.3 (37.7) 212.1 PLY GEM HOLDINGS PGEM US 1,088.3 (37.7) 212.1 PROTALEX INC PRTX US 1.2 (8.6) 0.6 PROTECTION ONE PONE US 562.9 (61.8) (7.6) QUALITY DISTRIBU QLTY US 465.1 (38.1) 92.3 QUICKSILVER RES KWK US 1,331.6 (964.5) 234.3 QUINTILES TRANSN Q US 3,066.8 (667.5) 463.4 QUINTILES TRANSN QTS GR 3,066.8 (667.5) 463.4 RE/MAX HOLDINGS RMAX US 252.0 (22.5) 39.1 RE/MAX HOLDINGS 2RM GR 252.0 (22.5) 39.1 REGAL ENTERTAI-A RGC US 2,508.3 (658.5) 54.0 REGAL ENTERTAI-A RETA GR 2,508.3 (658.5) 54.0 RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4) RENTPATH INC PRM US 208.0 (91.7) 3.6 RETROPHIN INC RTRX US 21.4 (5.8) (10.3) REVANCE THERAPEU RVNC US 18.9 (23.7) (28.6) REVANCE THERAPEU RTI GR 18.9 (23.7) (28.6) REVLON INC-A REV US 1,259.4 (619.8) 192.4 REVLON INC-A RVL1 GR 1,259.4 (619.8) 192.4 RITE AID CORP RTA GR 7,138.2 (2,228.8) 1,881.2 RITE AID CORP RAD US 7,138.2 (2,228.8) 1,881.2 RURAL/METRO CORP RURL US 303.7 (92.1) 72.4 SALLY BEAUTY HOL S7V GR 2,060.1 (291.2) 689.5 SALLY BEAUTY HOL SBH US 2,060.1 (291.2) 689.5 SILVER SPRING NE SSNI US 516.4 (78.1) 95.5 SILVER SPRING NE 9SI TH 516.4 (78.1) 95.5 SILVER SPRING NE 9SI GR 516.4 (78.1) 95.5 SMART TECHNOL-A SMA CN 374.2 (29.4) 71.6 SMART TECHNOL-A SMT US 374.2 (29.4) 71.6 SUNESIS PHARMAC SNSS US 46.6 (5.8) 11.2 SUNESIS PHARMAC RYIN TH 46.6 (5.8) 11.2 SUNESIS PHARMAC RYIN GR 46.6 (5.8) 11.2 SUNGAME CORP SGMZ US 0.1 (2.2) (2.3) SUPERVALU INC SVU* MM 4,711.0 (983.0) 272.0 SUPERVALU INC SVU US 4,711.0 (983.0) 272.0 SUPERVALU INC SJ1 GR 4,711.0 (983.0) 272.0 SUPERVALU INC SJ1 TH 4,711.0 (983.0) 272.0 TANDEM DIABETES TD5 GR 48.6 (2.8) 13.8 TANDEM DIABETES TNDM US 48.6 (2.8) 13.8 TAUBMAN CENTERS TU8 GR 3,506.2 (215.7) - TAUBMAN CENTERS TCO US 3,506.2 (215.7) - THRESHOLD PHARMA THLD US 101.0 (17.5) 74.4 THRESHOLD PHARMA NZW1 GR 101.0 (17.5) 74.4 TOWN SPORTS INTE T3D GR 408.9 (40.4) (3.9) TOWN SPORTS INTE CLUB US 408.9 (40.4) (3.9) TRANSDIGM GROUP T7D GR 6,292.5 (234.2) 882.4 TRANSDIGM GROUP TDG US 6,292.5 (234.2) 882.4 ULTRA PETROLEUM UPL US 2,069.0 (376.8) (243.9) ULTRA PETROLEUM UPM GR 2,069.0 (376.8) (243.9) UNISYS CORP UISEUR EU 2,510.0 (663.9) 516.0 UNISYS CORP USY1 GR 2,510.0 (663.9) 516.0 UNISYS CORP UISCHF EU 2,510.0 (663.9) 516.0 UNISYS CORP UIS1 SW 2,510.0 (663.9) 516.0 UNISYS CORP USY1 TH 2,510.0 (663.9) 516.0 UNISYS CORP UIS US 2,510.0 (663.9) 516.0 VECTOR GROUP LTD VGR US 1,121.0 (192.6) 316.7 VECTOR GROUP LTD VGR GR 1,121.0 (192.6) 316.7 VENOCO INC VQ US 695.2 (258.7) (39.2) VERISIGN INC VRS TH 2,660.8 (423.6) (226.0) VERISIGN INC VRSN US 2,660.8 (423.6) (226.0) VERISIGN INC VRS GR 2,660.8 (423.6) (226.0) VINCE HOLDING CO VNCE US 470.3 (181.2) (158.1) VINCE HOLDING CO VNC GR 470.3 (181.2) (158.1) VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3) VISKASE COS I VKSC US 346.7 (16.3) 106.1 WEIGHT WATCHERS WW6 TH 1,408.9 (1,474.6) (30.1) WEIGHT WATCHERS WTW US 1,408.9 (1,474.6) (30.1) WEIGHT WATCHERS WW6 GR 1,408.9 (1,474.6) (30.1) WEST CORP WT2 GR 3,486.3 (740.2) 363.9 WEST CORP WSTC US 3,486.3 (740.2) 363.9 WESTMORELAND COA WME GR 939.8 (280.3) 4.1 WESTMORELAND COA WLB US 939.8 (280.3) 4.1 WIRELESS ATTACHM WRSS US 0.0 (0.0) 0.0 XERIUM TECHNOLOG XRM US 626.9 (25.4) 128.4 XERIUM TECHNOLOG TXRN GR 626.9 (25.4) 128.4 XOMA CORP XOMA US 91.0 (13.5) 58.8 XOMA CORP XOMA GR 91.0 (13.5) 58.8 XOMA CORP XOMA TH 91.0 (13.5) 58.8 YRC WORLDWIDE IN YEL1 GR 2,133.9 (665.8) (151.6) YRC WORLDWIDE IN YRCW US 2,133.9 (665.8) (151.6) YRC WORLDWIDE IN YEL1 TH 2,133.9 (665.8) (151.6) ZOGENIX INC Z08 TH 54.6 (13.9) 3.1 ZOGENIX INC Z08 GR 54.6 (13.9) 3.1 ZOGENIX INC ZGNX US 54.6 (13.9) 3.1 ********* 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 by e-mail. 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 the nation's bankruptcy courts. The list includes links to freely downloadable of these small-dollar petitions in Acrobat PDF documents. 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. ********* 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, 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 2014. All rights reserved. ISSN: 1520-9474. 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