/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140307.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 7, 2014, Vol. 18, No. 65 Headlines 710 LONG RIDGE: Court Says Plan Confirmable if D&O Releases Nixed ADT CORP: S&P Rates New $500MM Sr. Unsecured Notes 'BB-' ADVANCED PHOTONIX: Reaches Deal with SVB to Waive Covenant Breach AES CORP: Fitch to Rate $500MM Sr. Unsecured Notes 'BB' AFFIRMATIVE INSURANCE: Board OKs Revised Stock Award Agreement ALBERTSON'S LLC: S&P Revises Outlook to Stable & Affirms 'B' CCR AMERICAN APPAREL: Receives NYSE MKT Listing Noncompliance Notice AMERLINK LTD: Ch.7 Trustee May Waive Attorney-Client Privilege AT EMERALD: Gem Owner Files for Chapter 11 in Reno AT EMERALD: Section 341(a) Meeting Scheduled for March 31 ATLANTIC LTD: Indonesian Billionaire, Bondholders in Rescue Talks AUTOMATED BUSINESS: Former Principal Wants PNC, Others Examined AUTOMATED BUSINESS: PNC Bank Balks at Plan Exclusivity Extension AUTOMATED BUSINESS: PNC Objects to Bid to Review Cash Use Order BERNARD L. MADOFF: Lawyers Call Gov't Witness a 'Con Man' BIRMINGHAM-SOUTHERN COLLEGE: Moody's Ups Rev. Bonds Rating to B3 CAESARS ENTERTAINMENT: S&P Puts 'CCC+' Rating on CreditWatch Neg. CB3 ACQUISITIONS: Motion to Transfer Venue to Connecticut Filed CHATHAM PARKWAY: Debtor, Bank Directed to Execute Loan Documents CHICAGO H&S: Oaktree Wins Favorable Judgment in Pension Fund Rift COLFAX CORP: S&P Revises Outlook to Positive & Affirms 'BB' CCR CONSECO LIFE: A.M. Best Places FSR of 'B-' Under Review COSO GEOTHERMAL: Fitch Affirms 'CC' Rating on $629MM Certificates COUNTRY VILLA: Calif. Nursing Home Operator Files for Bankruptcy CUBIC ENERGY: Delays Form 10-Q for Dec. 31 Quarter DAVID MOLNER: Obtains Favorable Ruling in Bankruptcy Cases DENALI FAMILY: Marletto Family LP Allowed $648K in Claims DETROIT, MI: Defaults on Financial Obligation Payments to PFRS DETROIT LOCAL DEVELOPMENT: S&P Revises Rating Outlook to Negative DETROIT DOWNTOWN: S&P Lowers Revenue Bonds Rating to 'BB' DEWEY & LEBOEUF: Top Former Executives Said to Face Charges DOTS LLC: Argued with Committee Over Fast Sale Schedule DUMA ENERGY: Now Trading Under New Symbol 'HECC' E.H. MITCHELL: Court Okays Hiring of Richard Martinez as Counsel EASTCOAL INC: Period to Make BIA Proposal to Creditors Extended ELBIT IMAGING: Tel Aviv Stock Exchange OKs Restructuring ELMS DUPLEXES: Voluntary Chapter 11 Case Summary ELEPHANT TALK: Amends 2012 Form 10-K to Correct Auditor's Report EMPRESAS INTEREX: United Surety Files Objection to Settlement EMPRESAS INTEREX: Minor Correction in Reorganization Plan Approved ESSENTIAL POWER: Moody's Lowers 1st Lien Debt Rating to B1 EVENT RENTALS: March 14 Hearing on Kurtzman Carson as Admin Agent EVENT RENTALS: Taps Andrew Hinkleman of FTI Consulting as CRO EVENT RENTALS: Wants to Employ White & Case as Bankruptcy Counsel FLETCHER INT'L: United Community Banks Enters Into Settlement FLEXCOIN INC: Bitcoin Bank Closes After Being Robbed by "Hackers" FRIENDSHIP DAIRIES: Judge Denies AgStar's Bid to Dismiss Case FRIENDSHIP DAIRIES: AgStar Asks Court to Reconsider Stay Order GELT PROPERTIES: Eckert Withdraws as Committee's Counsel GENERAL MOTORS: U.S. Increases Pressure Over Delay in Auto Recall GOLDKING HOLDINGS: Panel Hires Brinkman Portillo as Counsel GOODYEAR TIRE: S&P Revises Outlook to Positive & Affirms 'BB-' CCR GREAT HEARTS: Fitch Affirms 'BB' Rating on $16.4MM Revenue Bonds GREEN FIELD ENERGY: Examiner Hires Hogan Firm as Counsel GREEN FIELD ENERGY: Wants to Access Shell's Cash Collateral GULF COLORADO: Court Declares Asset Sold to HOTTR Free of Liens HARI RAM: Barred From Using Magnolia Portfolio's Cash Collateral HIGHWAY TECHNOLOGIES: Court OKs McCarter & English as Counsel HOSPITALITY STAFFING: Can Change Case Caption After Sale HOSPITALITY STAFFING: Wants to File Chapter 11 Plan Until April 28 IN PLAY: Plan & Disclosure Statement Amendments Due Today INFINIA CORP: Court Approves Liquidating Plan Disclosures INFINIA CORP: Gets Court Approval to Purchase Run-Off Coverage INFINIA CORP: Seeks to Employ Deloitte as Special Counsel INTELLIPHARMACEUTICS INT 'L: Incurs US$11.5MM Net Loss in 2013 ISC8 INC: Incurs $513,000 Net Loss in Dec. 31 Quarter JAMESPORT DEVELOPMENT: Court Okays LaMonica Herbst as Counsel JAMES E. COFIELD: Cadles of Grassy Meadows' Suit Goes to Trial JEH COMPANY: May Sell Equipment Pledged to Wells Fargo JEH COMPANY: Frost Bank Balks at Adequacy of Plan Outline KAHN FAMILY: Hearing on Access to Cash Continued to March 28 KAHN FAMILY: Plan Outline Hearing Continued Until March 28 KASPER LAND: Proposes Kinkead as Bankruptcy Counsel KEMPER CORP: A.M. Best Assigns 'bb+' Rating on $150MM Debentures KEYWELL LLC: Court Approves Rust Omni as Claims & Noticing Agent KEYWELL LLC: Gets Court Approval to Name to "SGK Ventures" LAKESIDE CASINO: Manager Liable for Improper Wage Withholding LANDS' END: Moody's Assigns B1 CFR & B1 Rating on $515MM Debt LG-TR-CI: Case Summary & 20 Largest Unsecured Creditors LL MURPHREY: Dispute Over Guaranty Remanded to State Court LOFINO PROPERTIES: U.S. Trustee, Creditor Balk at Counsel Hiring LONG BEACH MEDICAL: Proposes Garfunkel Wild as Counsel LONG BEACH MEDICAL: Final Hearing on $4.5MM Loan on March 10 LONG BEACH MEDICAL: Monday Hearing on Sale of Most Assets LONGVIEW POWER: Plan Confirmation Hearing on Monday LOS GATOS HOTEL: Must Hire Broker to Market Hotel LUCAS ENERGY: Receives NYSE MKT Listing Noncompliance Notice M/I HOMES: Fitch Puts 'B+/RR3' Rating to $200MM Credit Facility MARTIFER SOLAR: US Trustee Forms Five-Member Creditor's Panel MATTAMY GROUP: Moody's Assigns B1 Rating on $100MM Add-on Notes MERRILL COMMUNICATIONS: Moody's Alters Outlook to Positive MF GLOBAL: Customers to Be Paid in Full After Corzine Loses MGM RESORTS: Incurs $38.3 Million Net Loss in Fourth Quarter MILAGRO OIL: S&P Withdraws 'D' Corporate Credit Rating MINI MASTER: Hires Pietrantoni Mendez as Special Counsel MINI MASTER: Seeks Court Approval to Hire Jesus Nieves as Auditor MINI MASTER: Hires Jose Andino as Debt Collection Counsel MONARCH COMMUNITY: Banc Fund Stake at 9.8% as of Dec. 31 MOSS FAMILY: Wants to Hire Beachwalk Realty as Broker MT. GOX: Mizuho Pushed to End Dealings with Bitcoin Exchange MT. GOX: Plaintiffs in Class Suit Seek to Freeze U.S. Assets MT. LAUREL LODGING: Wins Court OK to Hire Pinnacle as Appraiser NAVISTAR INTERNATIONAL: Reports $248MM First Quarter Loss NEW CENTURY TRS: Cromwell's $2 Million Claim Untimely NEW PLAN LEARNING: Fitch Affirms 'BB-' Rating on $33MM Rev. Bonds NPS PHARMACEUTICALS: Incurs $13.5 Million Net Loss In 2013 ORCKIT COMMUNICATIONS: Holders Seek Stay of Proceedings OVERSEAS SHIPHOLDING: Court Approves Deloitte FAS as Accountant OXYSURE SYSTEMS: Sinacola Stake at 7.9% as of Feb. 14 PHI INC: Moody's Rates New $500MM Senior Unsecured Notes 'B2' PHI INC: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable PLAZA HEALTHCARE: 17 Affiliates File Chapter 11 Petitions PONCE DE LEON: Amending Cash Collateral Budget PRESIDIO INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable QUANTUM FOODS: Hires BMC Group as Administrative Advisor QUANTUM FOODS: Has Interim OK to Pay Up to $3MM for Vendor Claims RADIOSHACK CORP: Offers Bonuses to Retain Execs During Turnaround REEVES DEVELOPMENT: Court Denies IberiaBank's Case Conversion Bid REEVES DEVELOPMENT: Court Approved Amended Disclosure Statement RESIDENTIAL CAPITAL: U.S. Attorney Gets Transcripts From Examiner RITE AID: Expands Distribution Agreement with McKesson RIVER VALLEY DAIRY: Case Summary & 20 Largest Unsecured Creditors ROAD INFRASTRUCTURE: Moody's Cuts CFR to B1 & Rates New Debt B1 RUTH JONES: Inaction Prompts Judge to Dismiss Appeal Over Sale SBARRO LLC: Preparing to File for Bankruptcy Protection SCHOOL SPECIALTY: Posts Net Loss of $30.1MM in Q3 Fiscal 2014 SEDONA DEVELOPMENT: Seeks Entry of Final Decree Closing Cases SENTINEL MANAGEMENT: Says BNY Mellon Ignored Appeals Court SEVEN ARTS: Delays Form 10-Q for Dec. 31 Quarter SFX ENTERTAINMENT: S&P Assigns 'B-' CCR; Outlook Negative SOLOMONS ONE: Assignment of Contract Rights Not Valid SPRINGLEAF HOLDINGS: S&P Revises Outlook to Pos. & Affirms B- ICR SPIRIT AEROSYSTEMS: Moody's Rates $540MM Secured Term Loan 'Ba1' STAFFORD MANAGEMENT: Case Summary & 11 Unsecured Creditors STEAK N SHAKE: Moody's Assigns 'B2' Corp. Family Rating STELERA WIRELESS: Taps HSPG & Associates as Tax Provider STERLING BLUFF: Court Approves Hiring of Stone & Baxter as Counsel SWA BASELINE: Court Approves Engelman Berger as Counsel SWJ HOLDINGS: Management Unit Files for Chapter 11 in Delaware SWJ HOLDINGS: Bankruptcy Filing Improper, Owners Allege TENET HEALTHCARE: Moody's Rates $400MM Sr. Secured Notes 'B3' TENET HEALTHCARE: S&P Assigns 'CCC+' Rating to $600MM Notes TENNESSEE METAL WORKS: Case Summary & 20 Top Unsecured Creditors TRANS ENERGY: Presented at The Oil & Services Conference TRANS ENERGY: Mark Woodburn Holds 7.2% Equity Stake TRANS ENERGY: Clarence Smith Stake at 9.2% as of Dec. 31 TRAVELPORT LLC: Moody's Affirms 'Caa1' Corp. Family Rating TRAVELPORT HOLDINGS: S&P Lowers CCR to 'SD' on Debt-To-Equity Swap TRONOX LTD: Names Richard Muglia as General Counsel UNIFIED 2020: Chapter 11 Trustee Can Hire Litzler as Accountant UNIFIED 2020: Chapter 11 Trustee Taps CBRE as Real Estate Broker UNIFIED 2020: Taps Terracon to Conduct Property Assessment USEC INC: Uranium Supplier Files for Bankruptcy USEC INC: Case Summary & 20 Largest Unsecured Creditors VERTIS HOLDINGS: Can Sell Medina Property for $200K to Smith Road VERTIS HOLDINGS: ACG Can Sell Stevensville, Ontario Property VERTIS HOLDINGS: Atlanta Property to Be Auctioned Off Monday ZALE CORP: To be Acquired by Signet in a $1.4 Billion Deal ZBB ENERGY: Obtains NYSE MKT Listing Compliance Period Extension * Lawyer Disqualification Waived by Three-Year Wait * Bankruptcies Down 13% in 2014 From Previous Year * Junk-Bond Covenant Quality Improves on Lower Volume in January * Milwaukee's Pamela Pepper Nominated for District Court * Lifland Eulogized as Iconic for Decades on Bench * BOOK REVIEW: PANIC ON WALL STREET: A History Of America's Financial Disasters ********* 710 LONG RIDGE: Court Says Plan Confirmable if D&O Releases Nixed ----------------------------------------------------------------- Bankruptcy Judge Donald H. Steckroth in New Jersey said Wednesday he will confirm the First Amended Joint Plan of Reorganization filed by 710 Long Ridge Road Operating Company II LLC and its affiliated debtors if the Plan is modified to eliminate proposed third party releases to certain of their managers, directors, officers, and employees. The judge said the Plan meets and satisfies the requirements for confirmation mandated by Section 1129 of the Bankruptcy Code except for the third-party non-Debtor releases and injunctions accorded to managers, directors, or employees of any of the Debtors, Care One, Care Realty, HealthBridge, and the Affiliated Landlords, including but not limited to Victor Matthew Marcos, A. Albert Lugo, and Daniel E. Straus. "The record is devoid of proof the individuals seeking to be released have made a necessary contribution toward funding the Plan and, even under the extreme circumstances of this case, without such demonstration, the proposed releases to managers, director, officers, or employees is not warranted and cannot be approved. The Plan as currently filed cannot be confirmed if nonconsensual third-party releases are given to the defined individuals. The Plan must be modified to eliminate the individuals from the entities being released if Debtors wish to have their Plan confirmed by the Court," Judge Steckroth said. A copy of the Court's March 5, 2014 Opinion is available at http://is.gd/H7L9Stfrom Leagle.com. Company Statement Five Connecticut health care centers (Centers) managed by HealthBridge Management LLC on March 5 disclosed that the U.S. Bankruptcy Court for the District of New Jersey in Newark has agreed to confirm, with limited modifications, the Centers' Chapter 11 Plan of Reorganization. "The Plan proposes a reasonable opportunity to reorganize Debtors' finances, pay creditors a meaningful distribution and, importantly, in my view, continued employment for 1,100 workers who care for the elderly and will receive $175 million in wages and benefits over the four years of the Plan." This culminates a year-long process for the Centers to restructure their labor costs and other obligations and ensure that the Centers could obtain a competitive cost structure that would allow them to continue to provide quality long-term nursing care for the elderly in Connecticut. The Plan provides for the combination of concessions and a cash infusion of approximately $67 million from affiliated entities, and was accepted by the overwhelming majority of the Centers' creditors. In agreeing to confirm the modified Plan, the Court overruled the objection of The New England Health Care Employees Union, District 1199 (SEIU, District 1199) and the National Labor Relations Board, and paved the way for the Centers to emerge from bankruptcy in the coming days. In finding that the Plan was reasonable the Court noted, "the Plan proposes a reasonable opportunity to reorganize Debtors' finances, pay creditors a meaningful distribution and, importantly, in my view, continued employment for 1,100 workers who care for the elderly and will receive $175 million in wages and benefits over the four years of the Plan." "We are pleased that the Court has agreed to confirm our Chapter 11 Plan with limited modifications clearing the way for us to officially exit bankruptcy, hopefully by the end of this week," said HealthBridge spokesman Ed Remillard. "We will exit bankruptcy having gained relief from unsustainable and restrictive SEIU labor agreements that have hamstrung the Centers' flexibility and competitiveness. Under the Plan, the Centers will have a competitive and durable cost structure and the Centers will be well-positioned to serve the needs of our patients, maintain our 1,100 employees and compete successfully in Connecticut." Under the Plan, the Centers' creditors are entitled to a recovery of up to 75 percent on their claims and there will be no disruption in operations or services. "Throughout this process, we have made the continued high quality care of our residents our top priority, and we are pleased that the Chapter 11 proceedings have had no adverse effect on our patient care, relations with physicians or any other of the Centers' normal operations," said Mr. Remillard. "The financial commitments and undertakings that the Centers and their affiliates have made under the Plan demonstrate that the continued excellent care and safety of the Centers' residents remains paramount," he said. The bankruptcy plan pertains only to the five unionized Connecticut Centers and does not apply to the other health care centers managed by HealthBridge Management, LLC. Each of the five centers is a sub-acute and long-term nursing care facility for the elderly in Connecticut. The facilities are: Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. The Chapter 11 filing was made in U.S. Bankruptcy Court for the District of New Jersey. About the Centers The five Centers provide long-term care and short-term rehabilitation services. For long term care residents who have medical needs, the Centers provide 24-hour-a-day nursing care, nutritional monitoring and planning, medication management and personal care. For individuals in need of nursing and/or rehabilitation services following a recent hospitalization for orthopedic surgery, stroke, oncology care, cardiac care, general surgery and other diagnoses, the Centers offer medical and physical rehabilitation including physical, occupational and speech therapy, rehabilitative nursing and physician directed rehabilitation plans, IV therapy, wound care and other services. About 710 Long Ridge Road Operating Company II 710 Long Ridge Road Operating Company II, LLC and four affiliates own sub-acute and long-term nursing care facilities for the elderly in Connecticut. The facilities, which are managed by HealthBridge Management LLC, are Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center, and Danbury Health Care Center. 710 Long Ridge Road Operating Company II and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Case Nos. 13-13653 to 13- 13657) on Feb. 24, 2013, to modify their collective bargaining agreements with the New England Health Care Employees Union, District 1199, SEIU. The Debtors owe $18.9 million to M&T Bank and $7.99 million on loans from the U.S. Department of Housing and Urban Development Federal Housing Administration. Michael D. Sirota, Esq., Gerald Gline, Esq., David Bass, Esq., and Ryan T. Jareck, Esq., serve as counsel to the Debtors. Logan & Company, Inc. is the claims and notice agent. Alvarez & Marsal Healthcare Industry Group, LLC, is the financial advisor. Porzio, Bromberg & Newman, P.C.'s Robert M. Schechter, Esq., and Rachel Segall, Esq., represents the Official Committee of Unsecured Creditors. The Committee retained EisnerAmper LLP as accountant. Levy Ratner's Suzanne Hepner, Esq., and Ryan J. Barbur, Esq., represent the New England Health Care Workers, District 1199 SEIU. Abby Propis Simms, Esq., Julie L. Kaufman, Esq., Nancy E. Kessler Platt, Esq., Dawn L. Goldstein, Esq., Paul Thomas, Esq., and John McGrath, Esq., at the National Labor Relations Board Special Litigation Branch in Washington, D.C., argue for the National Labor Relations Board. ADT CORP: S&P Rates New $500MM Sr. Unsecured Notes 'BB-' -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating to Boca Raton, Fla.-based ADT Corp.'s new $500 million senior unsecured notes, with a recovery rating of '3', indicating its expectation of meaningful (50%-70%) recovery in the event of a payment default. Proceeds from the notes will be used primarily to repay the outstanding amount under ADT's revolving credit facility, repurchase outstanding shares of its common stock, and for general corporate purposes. The use of proceeds is consistent with the company's financial policy announced in July 2013, which over time will result in leverage of 3.0x (corresponding to Standard & Poor's adjusted leverage around the mid-5x area). The 'BB-' corporate credit rating on ADT is indicative of its "satisfactory" business risk profile and "highly leveraged" financial risk profile. Pro forma for the proposed issue, Standard & Poor's adjusted leverage as of Dec. 31, 2013 will be around 5x. RATINGS LIST The ADT Corp. Corporate Credit Rating BB-/Stable/-- New Rating The ADT Corp. $500 million notes Senior Unsecured BB- Recovery Rating 3 ADVANCED PHOTONIX: Reaches Deal with SVB to Waive Covenant Breach ----------------------------------------------------------------- Advanced Photonix, Inc. on March 6 disclosed that it has reached an agreement with each of Silicon Valley Bank and Partners for Growth III, L.P. to waive past covenant violations under the Company's respective loan and security agreements with SVB and PFG and, subject to certain terms and conditions, provide for an extension of the line of credit under the SVB Loan Agreement through May 31, 2014. The Company plans to continue discussions with SVB to extend the line of credit beyond May 31, 2014 based on the Company's future business conditions. The Amendments provide for: Richard Kurtz, President and CEO commented, "We are pleased to have come to agreement with both Silicon Valley Bank and Partners for Growth, both of which have a rich history of working with growing high technology businesses like API. We would like to thank Silicon Valley bank and Partners for Growth, both for their deep understanding of the high technology market and for their commitment to API in particular." About Advanced Photonix, Inc. Based in Ann Arbor, Mich., Advanced Photonix Inc. .(R) (nyse mkt:API) -- http://www.advancedphotonix.com-- engages in the development and manufacture of optoelectronic devices and value-added sub-systems and systems. AES CORP: Fitch to Rate $500MM Sr. Unsecured Notes 'BB' ------------------------------------------------------- Fitch Ratings expects to assign a 'BB' rating to The AES Corporation's (AES; Issuer Default Rating 'BB-', Outlook Stable) $500 million of senior unsecured notes due in 2024. These notes will rank pari passu with other senior unsecured debt of AES. Proceeds from the debt issuance, along with cash on hand, will be used to fund concurrent tender offers on AES' outstanding senior notes, including those due in 2017. The Rating Outlook for AES is Stable. The Stable Outlook for AES reflects diversity and quality of cash flows from its regulated and long-term contracted electricity generation businesses. The company also benefits from a sufficient liquidity position, manageable debt maturities through 2017, and its ability to support and manage a rising capital expenditure at its key subsidiaries in the U.S. and Chile. Fitch's main credit concerns include geopolitical risks adversely affecting its cash flow profile, structural subordination of recourse only debt, and high parent-level leverage. AES' cash flows are subordinated to substantial levels of project debt and other covenants and restrictions typical in project level financing. Key Rating Drivers: Deleveraging Critical to Maintain Credit Ratings: Fitch expects AES to continue to deleverage in absolute terms and this is a key rating driver for the assigned IDR. Fitch expects proceeds from the future sale of non-core assets will be used to proportionally reduce the parent-level recourse debt as the future expected cash flow from new projects will lag and remain low due to the expected low power price environment. Continuous Exit from Non-Core Markets: In affirming the IDR, Fitch assumed that the company will continue to divest its non-core businesses and exit non-core regions. The company sold a number of non-core projects for over $1.4 billion in proceeds since 2011 and Fitch expects AES to continue to improve its credit and business risk profile by exiting non-core markets and narrowing its investment focus in terms of geographical diversity. Reduced Cash Flow: Large capital expenditures will be required in select portfolio investments including Indianapolis Power & Light (IPL) and internationally, in Chile and Asian subsidiaries. AES will likely downstream equity as well as face reduced upstream distributions through 2015. The stress on credit metrics during construction period is manageable. Sovereign Credit Risks: AES has a broad exposure to international markets including sub-investment grade countries, exposing cash flows to various risk factors. These risks are common in emerging economies where state finances and the property rights are weak and currency conversions and capital flows can be restricted. A large portfolio of investments across many markets reduces this exposure risk. Moderate Financial Profile: Fitch analyzes AES as a holding company on a deconsolidated basis with respect to its cash flows and the recourse debt levels. Fitch uses adjusted parent operating cash flows (APOCF), a non-GAAP measure, with its emphasis on dividends received and return on capital, to analyze AES' credit metrics. This approach, similar to the method used by AES' lenders in financial covenants, recognizes that the subsidiaries are encumbered by debt that is structurally superior to the debt of the corporate parent. The residual subsidiary cash flow available for upstream dividends and distributions has greater volatility than the direct cash flow of the operating subsidiaries, and may be subject to payment restrictions under subsidiary debt covenants, corporate by-laws, or national laws. Fitch expects AES' APOCF-to-recourse debt to be between 16%-18% over next two years and is moderately below Fitch's guideline metrics of 18% for its current IDR of 'BB-'. Rating Sensitivities Positive: An upgrade of AES is considered unlikely over the 2014- 2016 time horizons given the heavy investment cycle at several of its key subsidiaries. Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- An aggressive leveraged growth strategy. -- A sustainable material reduction in dividends received from subsidiaries. -- Material decline in the quality of its cash flow due to increased geopolitical risks in the countries AES has significant exposure. -- An aggressive shareholder distribution policy increasing leverage and constraining interest coverage on a sustainable basis. AFFIRMATIVE INSURANCE: Board OKs Revised Stock Award Agreement -------------------------------------------------------------- The Compensation Committee of the Board of Directors of Affirmative Insurance Holdings, Inc., approved a revised form of restricted stock award agreement to be used in connection with certain restricted stock grants to be issued under the Company's 2004 Amended and Restated Stock Incentive Plan. Under the form of Restricted Stock Award Agreement, provided the Grantee continues to provide Continuous Service to the Registrant or any affiliate, one hundred percent of the restricted stock award will vest on Feb. 12, 2017. Notwithstanding the foregoing, the restricted stock award will immediately vest and become free of all restrictions in the event the Company terminates the grantee's employment other than for cause or the grantee terminates employment for good reason. Additionally, if the grantee's employment agreement is not renewed at expiration, the restricted stock award will vest to the extent and only to the extent provided in Section 2(b) of the grantee's employment agreement. Each grantee under a Restricted Stock Award Agreement will be eligible to exercise voting rights with respect to shares of restricted stock issued thereunder. Grantees of restricted stock under a Restricted Stock Award Agreement will not be eligible to receive cash dividends paid on the restricted stock unless and until those shares of restricted stock fully vest. On Feb. 12, 2014, the Compensation Committee of the Company's Board of Directors approved the following restricted stock award grants to Michael J. McClure, the Company's principal executive officer, Earl R. Fonville, the Company's principal financial officer, and Joseph G. Fisher, the Company's other named executive officer: Number of Restricted Name and Position Shares Issued ----------------- -------------------- Michael J. McClure, CEO 250,000 Joseph G. Fisher, President and COO 147,000 Earl R. Fonville, EVP & CFO 75,000 All of the foregoing shares of restricted stock were issued in accordance with the terms and conditions of the Plan and were evidenced by the Company and each of Messrs. McClure, Fonville and Fisher in separate Restricted Stock Award Agreements. About Affirmative Insurance Addison, Tex.-based Affirmative Insurance Holdings, Inc., is a distributor and producer of non-standard personal automobile insurance policies for individual consumers in targeted geographic markets. Non-standard personal automobile insurance policies provide coverage to drivers who find it difficult to obtain insurance from standard automobile insurance companies due to their lack of prior insurance, age, driving record, limited financial resources or other factors. Non-standard personal automobile insurance policies generally require higher premiums than standard automobile insurance policies for comparable coverage. The Company's balance sheet at Sept. 30, 2013, showed $386.03 million in total assets, $476.73 million in total liabilities and a $90.70 million total stockholders' deficit. "At December 31, 2012, the Company's history of recurring losses from operations, its failure to comply with the Financial Covenants in its senior secured credit facility, its failure to comply with the Illinois Department of Insurance reserve requirement, and substantial liquidity needs the Company would face when the senior secured credit facility was set to expire in January 2014 raised substantial doubt about the Company's ability to continue as a going concern," the Company said in the quarterly report for the period ended Sept. 30, 2013. ALBERTSON'S LLC: S&P Revises Outlook to Stable & Affirms 'B' CCR ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on the Boise, Idaho-based Albertson's LLC to stable from negative. At the same time, S&P affirmed all the ratings, including the 'B' corporate credit rating and 'BB-' senior secured issue-level rating. The senior secured recovery rating remains '1', which indicates S&P's expectations of a very high (90%-100%) recovery of principal in the event of payment default. "The outlook revision comes as the company's sales and profit trajectory improved materially in the third quarter of fiscal 2013 (ended November 2013), and we expect a similar trend in the fourth quarter (ended February 2014) and into fiscal 2014 (ending February 2015). In the first half of last year, the company's strategy was to improve the quality of perishable offerings and make price investments at the supermarkets previously acquired from SUPERVALU Inc. in March 2013," said credit analyst Charles Pinson-Rose. "This strategy has mostly been effective as same- stores sales increased in the mid-single-digit range in the third quarter, and we expect a comparable increase when the company reports fourth quarter results." The stable rating outlook incorporates S&P's view that the company's improved sales growth should continue over the next year, given the recent change in the performance trajectory. Moreover, gross margins and EBITDA should also improve as the company does not have to incur various costs associated with its turnaround plan in 2014 and can manage cost more effectively going forward. Nonetheless, S&P expects credit ratios to be indicative of highly leveraged financial risk profile, with adequate liquidity. Upside scenario S&P do not expect to consider a higher rating over the near term, as its baseline performance expectations already factor in meaningful profit growth over the next year. S&P could consider a higher rating if it expected the company to improve leverage to below 5x and consistently generate excess cash flow. Forecasted EBTIDA for 2014 would need to be at least 15% higher than S&P currently forecasts for the company to reach this threshold. In addition, S&P would need to believe the company's financial policies, as dictated by its financial sponsor, would sustain any improved credit ratios. Downside scenario S&P would consider a lower rating if the company maintained leverage in the high-6x area. S&P expects this could occur if the company's EBITDA only grew in the single-digit area over the next year and did not reduce debt materially. AMERICAN APPAREL: Receives NYSE MKT Listing Noncompliance Notice ---------------------------------------------------------------- On February 28, 2014, American Apparel, Inc. received a letter from the NYSE MKT LLC stating that the Company is not in compliance with the continued listing standards of the Exchange set forth in Section 1003(a)(iv) (financial impairment) of the NYSE MKT LLC Company Guide. In order to maintain its listing, the Company must submit a plan of compliance by March 21, 2014 addressing how it intends to regain compliance with Section 1003(a)(iv) of the Company Guide by April 15, 2014. If the plan is accepted, the Company may be able to continue its listing but will be subject to periodic review by the Exchange. If the plan is not accepted but the Company is not in compliance with the continued listing standards by April 15, 2014, or if the Company does not make progress consistent with the plan, the Exchange will initiate delisting procedures as appropriate. The Exchange's notice has no immediate effect on the listing of the Company's common stock on the Exchange. The Company's management is pursuing options to address the Company's financial requirements and intends to submit such a plan on or before the deadline set by the Exchange. Preliminary 2013 Financial Results American Apparel on March 6 provided information with respect to the following: Preliminary 2013 Financial Results (Unaudited) 2014 Sales and EBITDA Guidance Preliminary Sales Results for February 2014 Receipt of Noncompliance Notice from NYSE MKT Preliminary 2013 Financial Results Preliminary unaudited financial results for 2013 are as follows: Sales: Net sales of $634 million, an increase of 3%. Comparable store sales including online sales, an increase of 3%. Wholesale net sales of $180.7 million, an increase of 4%. Adjusted EBITDA: The Company estimates for the year ended December 31, 2013 adjusted EBITDA will be between $7 million to $9 million as compared to $36.6 million for the year ended December 31, 2012. 2014 Sales and EBITDA Guidance For 2014, the Company is projecting net sales between $634 million and $658 million based upon a flat to 4% overall increase in net sales. Adjusted EBITDA is estimated in the range of $40 million to $50 million. Capital expenditures are estimated at $12 million with a marginal number of new store openings. Raw material costs are estimated at current prices and foreign currency exchange rates are estimated to remain at current levels. According to Dov Charney, Chairman and CEO of American Apparel, Inc., "The challenged implementation of our new distribution center had a material negative impact on the Company in terms of actual costs as shown in the above table (estimated at $14.9 million). Naturally, the disrupted flow of merchandise to our stores, wholesale clients, and online customers had an immediate negative impact on sales. These disruptions impaired our ability to react to demand trends and properly plan production flows and resulted in production cost overruns and excessive overtime charges. However, the La Mirada Center has been operating as designed since mid-November. Our distribution costs have dramatically declined and in January they were substantially less than what we incurred last year. Although we expect to make further cost improvements, the vast majority of the needed cost reductions have already been implemented. We expect that 2014 sales and costs will be enhanced by the operation of the La Mirada facility. Although this was a painful and costly endeavor it was necessary in order for us to achieve the future productivity and growth potential associated with the American Apparel brand. "Additionally in late 2013 and into January 2014, we implemented an aggressive program to reduce overhead costs. To date we have eliminated in excess of $9 million in such annual operating expenses. We expect that almost the entire amount of the overhead savings will be realized in 2014. These cost reductions primarily impact the Company?s manufacturing and administrative functions. We also closed another warehouse facility in December bringing the total warehouse closures in 2013 to three. Although 2013 results were burdened with the costs of the closures we will receive a meaningful financial benefit from these closures in 2014 and beyond. We continue to work to further reduce overhead costs. "We invested substantially in our infrastructure in 2012 and 2013 and almost all of these projects have been implemented. We expect 2014 to be a year where we return our full focus to exploiting the strength of our brand and delivering exceptional service to our retail and wholesale customers. We are committed to delivering a return on the investments we have made in our business." February Sales Results On a preliminary basis, for the month of February 2014, total net sales were $42.1 million, a decrease of 1% from last February. Comparable sales decreased 5%, including a 7% decrease in comparable store sales in the retail store channel and a 3% increase in net sales in the online channel. Wholesale net sales increased 9% over the prior year. The Company believes that the February sales results were significantly impacted by the extraordinarily severe winter weather in regions where we have a concentration of stores. 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. * * * As reported by the Troubled Company Reporter on Feb. 26, 2014, Standard & Poor's Ratings Services lowered its corporate credit rating to 'CCC' from 'B-' on Los Angeles-based American Apparel Inc. The outlook is developing. 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. AMERLINK LTD: Ch.7 Trustee May Waive Attorney-Client Privilege -------------------------------------------------------------- Bankruptcy Judge Randy D. Doub affirmed the Chapter 7 Trustee's broad authority to waive AmerLink, Ltd.'s prepetition and postpetition attorney-client privilege, both as debtor and as debtor in possession, as to any subject matter and any form of communication, written or spoken, between the Debtor and any of its officers and directors, including, but not limited to, any communications or information held, preserved or recorded on the computer equipment in the possession or control of Richard B. Spoor, CEO, Treasurer and Board Chairman of AmerLink, Ltd., or received or delivered during in-person meetings or telephone conversations. The Chapter 7 Trustee, the Court said, may execute a waiver of the attorney-client privilege of Amerlink, Ltd. John M. Barth, Sr., filed with the Court the Motion to Authorize Trustee to Waive Debtor and Debtor in Possession's Attorney-Client Privilege. Mr. Spoor and 23 customer creditors of Amerlink, Ltd., filed a Memorandum in Opposition to Mr. Barth's request. The Court conducted a hearing on Feb. 26, 2014, in Greenville, North Carolina, to consider these matters. AmerLink, Ltd., was in the business of log home manufacturing, e.g., processing logs into home kits and contracting for installation of homes. AmerLink filed for Chapter 11 bankruptcy on Feb. 11, 2009. Stephen L. Beaman was appointed as Chapter 11 trustee. The case was converted to Chapter 7 (Bankr. E.D.N.C. Case No. 09-01055) on Nov. 23, 2009, and Mr. Beaman remained as trustee in the Chapter 7 proceeding. The Chapter 7 Trustee filed a number of adversary proceedings, including Adv. Proc. No. 10-00164-8-JRL, which named, among others, Mr. Spoor; John M. Barth, Jr., President and board member of AmerLink, Ltd.; and Barth Sr.. The Adversary Proceeding was settled with the Court's approval on July 27, 2012. On October 11, 2011, Mr. Spoor filed a complaint in the Superior Court of Wake County, North Carolina naming Barth Jr. and "John Doe, Sr." as defendants. On February 14, 2012, he amended his complaint and named Barth Jr., Barth Sr., John Does 1-5, and JR International Holdings, LLC as defendants. That suit is being defended by Barth Sr. and Barth Jr. The parties are presently conducting discovery. JR Holdings International, LLC has not filed a responsive pleading in the Wake County Suit, nor has an attorney filed an appearance on its behalf. Mr. Spoor's theories of recovery in the Wake County Suit are based on his allegations regarding a scheme by Barth Jr. and Barth Sr. to take over the Debtor in connection with allegedly proposed investments in or financing to the Debtor or a limited liability company into which Mr. Spoor alleges he contributed his stock in the Debtor. During the discovery process in the Wake County Suit, a dispute arose between Mr. Spoor and the Defendants as to the scope of the waiver of the Debtor's attorney-client privilege. The dispute initially arose with regard to Barth Sr.'s request to Mr. Spoor for production of documents from, and inspection and copying of, files on a server and two computers -- Computer Equipment -- that had been property of the Debtor's estate but that remain in Mr. Spoor's possession and control. The Trustee consented to waive the attorney-client privilege of the Debtor and the debtor in possession at the request of Barth Sr. When Mr. Spoor objected, the Trustee requested that Barth Sr. file a motion with the Court to request affirmation of the Trustee's authority to waive the Debtor and debtor in possession's attorney-client privilege. The customer creditors are: John Newton, Harry Schatmeyer, Cheryl Schatmeyer, Juan Velazquez, Robert Thompson, Kristi Thompson, Dale F. Camara, A. J. Rice, Violane Rice, Randall Slayton, Marie Paladino, Marcar Enterprises, Inc., Maynard Sikes, Nancy Sikes, Billy Bacon, Beverly Bacon, Sabina Houle, Kenneth Cournoyer, Lawanna Cournoyer, Gary Gross, Elke Gross, Jack Donnelly, and Joseph Kintz. A copy of the Court's March 3, 2014 Order is available at http://is.gd/5D3Kyofrom Leagle.com. AT EMERALD: Gem Owner Files for Chapter 11 in Reno -------------------------------------------------- AT Emerald LLC filed a Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 14-50331) on March 4, 2014, in Reno, Nevada. The Washoe, Nevada-based company disclosed $200 million in assets and less than $541,000 in liabilities. The company has no real property. Its lone major asset is one emerald valued at $200 million, which is categorized under furs and jewelry. According to the docket, the 11 U.S.C. 341(a) meeting of creditors is slated for March 31, 2014. The deadline to file proofs of claims is on June 30, 2014. Bankruptcy Judge Bruce T. Beesley is assigned to the case. The Debtor is represented by Alan R Smith in Reno. Anthony Thomas, the managing member, owns 100% of the stock. AT EMERALD: Section 341(a) Meeting Scheduled for March 31 --------------------------------------------------------- A meeting of creditors in the bankruptcy case of At Emerald, LLC, will be held on March 31, 2014 at 2:00 p.m. at Young Bldg,Rm 3087. The last day to file proofs of claim will be on June 30, 2014. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. At Emerald, LLC, filed a Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 14-50331) on March 4, 2014. Anthony Thomas signed the petition as managing member. The Debtor disclosed total assets of $200 million and total liabilities of $541,200. Alan R Smith, Esq., at The Law Offices of Alan R. Smith, serves as the Debtor's counsel. The Hon. Bruce T. Beesley oversees the case. ATLANTIC LTD: Indonesian Billionaire, Bondholders in Rescue Talks ----------------------------------------------------------------- Daniel Stacey, writing for The Wall Street Journal, reported that Indonesian billionaire Anthoni Salim and a group of mainly U.S. bondholders are in advanced talks on a rescue deal for Atlantic Ltd. to stave off bankruptcy and maintain development of one of the world's biggest vanadium mines, three people familiar with the situation said. According to the report, deal talks include Mr. Salim's Droxford International Ltd. investment vehicle offering a 33 million Australian dollar (US$30 million) financial lifeline to Atlantic, whose shares have been suspended since early last month following a plant fire at its Windimurra Vanadium Project in Western Australia state, the people said. Any deal is contingent on an overhaul of the company's management, they added. A one-time darling of the Australian stock market, Atlantic's market value has slumped from a peak of A$367 million in 2011 to A$27 million amid a slump in prices for vanadium -- an industrial metal used to strengthen steel in end-products ranging from wrenches to fighter jets, the report related. The fire followed a number of plant breakdowns last year that saw the company consistently miss productions targets, restricting cash flow and hurting sentiment in the stock, the report further related. As a result, Atlantic's management has relied more heavily on loans to maintain a project it had forecast could meet as much as 7% of the world's demand for vanadium. Investors in Atlantic are collectively owed A$483.5 million, with Mr. Salim's Droxford the largest single creditor, the report added. Droxford has plowed A$22.6 million in equity and a further A$148.5 million in unsecured loans and convertible bonds into the business since 2010. AUTOMATED BUSINESS: Former Principal Wants PNC, Others Examined --------------------------------------------------------------- Eyal Halevy, founder and former principal of Automated Business Power, Inc., et al., asks the U.S. Bankruptcy Court for the District of Maryland for authority to examine PNC Bank, National Association, pursuant to Fed.R.Bankr.P. 2004. Mr. Halevy is also a creditor of ABP's bankruptcy estate. Mr. Halevy alleges that PNC and its syndicated lender group -- Sovereign Bank, Citizens Bank of Pennsylvania, National Penn Bank and Tristate Bank -- wrongfully engaged in a "scorched earth campaign" to destroy the Debtor. "What is unknown, however, and requires an appropriate investigation to uncover, is the full extent and nature of PNC's conduct, and what potential claims, causes of action or legal and equitable bankruptcy remedies may exist for the Debtor, its estate and creditors, including Mr. Halevy, against PNC, the Lender Group and their agents," Mr. Halevy says. Mr. Halevy requests that the Court: -- order the corporate designee for PNC to attend an examination to be conducted by counsel for Mr. Halevy at the law offices of Whiteford, Taylor & Preston LLP, 7 Saint Paul Street, Baltimore, Maryland at a time mutually agreeable to counsel for Mr. Halevy and PNC, but, in any event, within 30 days following the entry of an order granting the motion; and -- direct PNC to produce documents requested by Mr. Halevy no later than 10 days before the examination requested herein. About Automated Business Power Military supplier Automated Business Power, Inc., and Automated Business Power Holding Co. filed their Chapter 11 petitions (Bankr. D. Md. Case Nos. 13-27123 and 13-27125) on Oct. 8, 2013. Automated Business Power has been engaged in the design and production of advanced filed deployable uninterruptible power supplies, AC-to-DC power supplier, DC-to-DC converters, uninterruptible power systems, Power/Voice/Data cases, speakers, speaker/voice systems and ancillary equipment tactical transceivers, power amplifiers, SATCOM, and other communications equipment. The petitions were signed by Daniel Akman as president. The Debtors estimated assets of at least $50 million and liabilities of at least $10 million. The Debtor is represented by Nelson C. Cohen, Esq., at Zuckerman Spaeder LLP, in Washington, D.C. PNC Bank is represented by James M. Smith, Esq., and Lisa Bittle Tancredi, Esq., at Gebhardt & Smith LLP. The Debtor proposed to hire Dickinson Wright and Michael R. Holzman as Special ESOP Plan Counsel. AUTOMATED BUSINESS: PNC Bank Balks at Plan Exclusivity Extension ---------------------------------------------------------------- PNC Bank, National Association, as agent and lender, asks the U.S. Bankruptcy Court for the District of Maryland to deny Automated Business Power, Inc., and Automated Business Power Holding Co.'s motion to extend their exclusive periods to file and solicit acceptances for the chapter 11 plans. According to PNC, after bringing litigation upon themselves by failing to make disclosures related to Eyal Halevy, founder and former principal of Automated Business Power, Inc., the Debtors now argue that "litigation" is "cause" to extend the exclusive period. During the first four months of the cases, most of the litigation unrelated to cash collateral was the direct result of the Debtors' failure to disclose that Mr. Halevy was the source of their professionals' retainers and that they had attempted to release him. PNC asserts that permitting the exclusive period to expire would place the parties on equal footing and encourage negotiations. It would also provide a needed counter balance -- the prospect of a competing plan would make a party think twice before proposing a plan wholly unacceptable to the other. As reported in the Troubled Company Reporter on Feb. 17, 2014, the Debtors asked that the Court extend their exclusive periods to: a) file a Chapter 11 plan until May 6, 2014, and b) solicit acceptances of that plan through and until July 6, 2014. The Debtors' current plan proposal period was scheduled to expire Feb. 5, 2014, and the solicitation period is scheduled to expire April 6, 2014, absent an extension. The Debtors tell the Court that there has not been sufficient time to formulate a plan of reorganization. The Debtors say they have been compelled to engage in time-consuming litigation with their secured creditor, PNC Bank, concerning cash collateral, post- petition financing and other less controversial subjects, including employment of the Debtors' professionals. Now that a number of the controversies have been resolved, the Debtors will be able to devote the necessary time to formulate and negotiate plans of reorganization, the Debtor noted. About Automated Business Power Military supplier Automated Business Power, Inc., and Automated Business Power Holding Co. filed their Chapter 11 petitions (Bankr. D. Md. Case Nos. 13-27123 and 13-27125) on Oct. 8, 2013. Automated Business Power has been engaged in the design and production of advanced filed deployable uninterruptible power supplies, AC-to-DC power supplier, DC-to-DC converters, uninterruptible power systems, Power/Voice/Data cases, speakers, speaker/voice systems and ancillary equipment tactical transceivers, power amplifiers, SATCOM, and other communications equipment. The petitions were signed by Daniel Akman as president. The Debtors estimated assets of at least $50 million and liabilities of at least $10 million. The Debtor is represented by Nelson C. Cohen, Esq., at Zuckerman Spaeder LLP, in Washington, D.C. PNC Bank is represented by James M. Smith, Esq., and Lisa Bittle Tancredi, Esq., at Gebhardt & Smith LLP. The Debtor proposed to hire Dickinson Wright and Michael R. Holzman as Special ESOP Plan Counsel. AUTOMATED BUSINESS: PNC Objects to Bid to Review Cash Use Order --------------------------------------------------------------- PNC Bank, National Association, as agent and lender, supplemented its objection to the motion to reconsider the final order approving Automated Business Power, Inc., et al.'s use of cash collateral. The Bank asks the Court to schedule a hearing soon as possible on the motion and all responses thereto. The Debtors, in a separate filing, responded to their founder and former principal Eyal Halevy's motion to reconsider the final cash collateral order. On Jan. 8, 2014, the Court entered a final order approving the Debtor's use of cash collateral. Among other provisions, the final cash collateral order contained a release of any and all claims that the Debtor may have against the secured lenders, including PNC Bank. On Jan. 21, 2014, Eyal Halevy filed his motion for reconsideration, asserting that contrary to Federal Rule of Bankruptcy Procedure 4001(d), no motion attaching the cash collateral agreement was filed and served on parties-in-interest. Mr. Halevy asserted that the absence of a motion that described the release of the Debtor's claims against the secured lenders requires reconsideration of the final cash collateral order. The Debtors said that they exercised its business judgment and concluded that an agreement with the secured lenders, including the release, was the appropriate decision and in the best interest of the Debtor and its creditors. About Automated Business Power Military supplier Automated Business Power, Inc., and Automated Business Power Holding Co. filed their Chapter 11 petitions (Bankr. D. Md. Case Nos. 13-27123 and 13-27125) on Oct. 8, 2013. Automated Business Power has been engaged in the design and production of advanced filed deployable uninterruptible power supplies, AC-to-DC power supplier, DC-to-DC converters, uninterruptible power systems, Power/Voice/Data cases, speakers, speaker/voice systems and ancillary equipment tactical transceivers, power amplifiers, SATCOM, and other communications equipment. The petitions were signed by Daniel Akman as president. The Debtors estimated assets of at least $50 million and liabilities of at least $10 million. The Debtor is represented by Nelson C. Cohen, Esq., at Zuckerman Spaeder LLP, in Washington, D.C. PNC Bank is represented by James M. Smith, Esq., and Lisa Bittle Tancredi, Esq., at Gebhardt & Smith LLP. The Debtor proposed to hire Dickinson Wright and Michael R. Holzman as Special ESOP Plan Counsel. BERNARD L. MADOFF: Lawyers Call Gov't Witness a 'Con Man' --------------------------------------------------------- James Sterngold, writing for The Wall Street Journal, reported that the defense lawyers for five former employees of Bernard L. Madoff's securities firm began their closing arguments by aggressively attacking the credibility of the government's star witness in the fraud trial. According to the report, the lawyers suggested that the employees were victims of the scheme's masterminds, not perpetrators. The focus of the denunciations was Frank DiPascali, a top executive at the firm who earlier pleaded guilty to aiding in the largest Ponzi scheme in history and who testified for several weeks in the five-month-long trial in federal district court in Manhattan, the report said. He was "the con man's con man," and he "used, abused and manipulated" one of the computer programmers at the Madoff firm who had devised software that generated bogus financial records, the Journal said, citing Larry Krantz, the attorney for George Perez, the computer expert. Neither he nor another defense lawyer disputed that the work of their clients helped perpetuate the scheme, the report related. But they said their clients didn't know the firm was a front for the fraud because they trusted in Mr. Madoff's honesty and the stories they were told by him and Mr. DiPascali. 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. BIRMINGHAM-SOUTHERN COLLEGE: Moody's Ups Rev. Bonds Rating to B3 ---------------------------------------------------------------- Moody's Investors Service has upgraded its rating on Birmingham- Southern College's revenue bonds to B3 from Caa1. The outlook is stable. Summary Rating Rationale The upgrade to B3 reflects ongoing traction in Birmingham-Southern College's recovery plan. Operating performance in FY2013 was strong with a 17.7% operating cash flow margin, in part supported by $8.7 million in unrestricted gifts. This enabled the college to begin to rebuild some flexible reserves, although liquidity remains low. During fiscal 2013 the college was also taken off warning by SACS and extended its largest credit agreement with Regions Bank. Despite this momentum, serious challenges remain including stagnant net tuition revenue expected to continue through fiscal 2014, high operating leverage, thin flexible reserves and reliance on donor support. As the college strives to stabilize, it has also reduced capital investment that, if continued, will create lasting challenges as deferred maintenance builds and the campus become less attractive and competitive. The B3 rating and stable outlook incorporate ongoing enhancement of governance and management at the college. With a recently streamlined board and under new leadership, the college has demonstrated improved financial discipline and enhanced student marketing. Management reports increased student demand for the fall 2014 entering class. Over the medium term the college seeks to rebuild to 1,600 students from under 1,200 in fall 2013 and is putting systems and processes in place to maintain operating equilibrium, reduce debt and build endowment as it grows. Challenges -- Birmingham-Southern remains small with operating revenue of $47 million, providing limited economies of scale and contributing to a relatively high cost model. -- With enrollment declines and weak pricing power (net tuition per student of under $13,000) due to fierce competition, BSC has not been able to increase tuition revenue. -- The college's $38 million loan with Regions Bank exposes the college to acceleration and renewal risk. Monthly liquidity covers just 25% of this demand debt. The college granted Regions Bank a secured interest in its physical property and other assets, effectively subordinating the tuition revenue bonds. -- High reliance on gift revenue (28% of operating revenue in fiscal 2013) points to ongoing need to generate donor support to achieve operating stability. -- The college has twice the operating leverage of its typical peers. Fiscal 2013 debt to operating revenue of 1.39 times compares to the median of 0.72 times for private colleges. -- The current recovery plan leaves little room for capital investment. As the age of plant approaches 27 years, ongoing underinvestment could yield competitive challenges. Strengths -- Birmingham-Southern benefits from a history of substantial donor support with average gifts per student of $9,835 in fiscal years 2011 through 2013. Its future credit quality remains dependent on guarding against donor fatigue and maintaining the perception of positive momentum through a recovery plan. -- The streamlined board and management team remain committed to control expenses and generate healthy cash flow performance in support debt service. The team also aims to reduce financial leverage over time as it executes a plan to rebuild enrollment. -- The college's student market identity as small liberal arts college within United Methodist tradition benefits from recent expansion of internship program that leverages network of alumni and other supporters. -- With total cash and investments of $64.1 million, the college's endowment contributes to some revenue diversity via planned endowment spending. The college aims to increase this endowment and over time this could reduce the reliance on current use gifts. Outlook The stable outlook reflects expectation that the college's recovery plan will continue to grain traction. It incorporates expectations that enrollment will gradually recover and support growth of net tuition revenue. The stable outlook is also predicated on continued healthy cash flow in support of debt service, maintenance or improvement in flexible reserves, ongoing reduction of debt and continued donor support. What Could Make The Rating Go UP The rating could be upgraded through multiple years of demonstrated student revenue growth, maintenance of healthy operating performance, and reduced operating reliance on current use gift revenue. Other supporting factors could be permanent reduction in financial leverage and a demonstrated to ability to fund capital reinvestment through a combination of gifts and operating cash flow. What Could Make The Rating Go DOWN Downward pressure could result from the inability to increase net tuition revenue, decline in donor support, bank agreement covenant violations or reduction in flexible reserves. Methodology The principal methodology used in this rating was U.S. Not-for- Profit Private and Public Higher Education published in August 2011. CAESARS ENTERTAINMENT: S&P Puts 'CCC+' Rating on CreditWatch Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services placed all ratings on the Caesars Entertainment Corp. (CEC) family of companies, including the 'CCC+' corporate credit ratings, on CreditWatch with negative implications. The CreditWatch listing follows Caesars' announcement that it has reached a definitive agreement to sell three Las Vegas-based casino assets (Bally's Las Vegas, The Cromwell, and the Quad) and one regional casino asset (Harrah's New Orleans) to Caesars Growth Partners (CGP; of which CEC owns a 58% economic interest) for a total purchase price of $2.2 billion. The sale of assets will result in an estimated $1.8 billion cash inflow (net of $185 million in assumed debt and $223 million in committed capital expenditures on the properties) to Caesars Entertainment Operating Co. (CEOC), bolstering CEOC's near-term liquidity position and its ability to fund interest expense and capital expenditures. Caesars has also indicated it will likely use a portion of the estimated $1.8 billion of net proceeds to reduce bank debt. However, S&P believes the transaction is a leveraging event for CEOC because it is selling these assets at a lower aggregate multiple than its current total debt leverage. Furthermore, S&P believes this sale is one of a series of steps Caesars is likely to undertake in 2014 to address CEOC's unsustainable capital structure. S&P also believes it is increasingly likely that Caesars may move forward with a restructuring plan that would result in CEOC debtholders being offered an exchange in some form that would be less than what S&P deems as a full and timely payment under its ratings criteria. S&P's ratings on the Caesars family of companies currently reflect a consolidated view of the Caesars portfolio of properties, including CEOC, Caesars Entertainment Resort Properties (CERP), Chester Downs and Marina, and Corner Investment, despite the fact that different assets secure different pieces of the capital structure. The CreditWatch listing on these entities reflects significant uncertainties in future periods regarding the Caesars structure in the event CEOC moves forward with a restructuring plan, given common ownership and other linkages across these companies. S&P believes that CEC views all the properties at these various entities as integral to its current identity and strategy, and manages the properties as a single portfolio. Additionally, CEC's properties all benefit from being included in its Total Rewards player loyalty program. S&P's consolidated view also factors in lease payments that CEOC makes to Corner Investment and CERP, management agreements, and shared services agreements between various Caesars entities. Given S&P's perception of the strategic relationships that exist between these entities and common management, it expects management to make decisions regarding operating and financial strategies with a view toward the collective group of companies. Additionally, the asset sales will result in the transfer of almost all of the remaining Las Vegas-based assets in the CEOC portfolio to CGP. S&P expects the Las Vegas market to be a better performing market for Caesars in 2014, particularly given ongoing investments in its portfolio of properties in the market. The CreditWatch listing also reflects S&P's view that the debt paydown (the amount of which is undetermined) might not be enough to offset the reduction in enterprise value available to CEOC debtholders following the sale of the assets. Recovery prospects for CEOC's first-lien creditors are currently at the low end of the 70% to 90% range for a '2' recovery rating. The transaction may result in a revision of S&P's recovery rating on the first- lien debt to '3' (50% to 70% recovery expectation) from '2', and a downgrade of S&P's issue-level ratings in accordance with out notching criteria. In resolving the CreditWatch listing, S&P will meet with management to discuss the company's use of proceeds and plans for addressing CEOC's unsustainable capital structure. S&P will also update its performance expectations for Caesars with particular emphasis on the company's liquidity profile. Lastly, S&P will update its recovery analysis incorporating the planned use of proceeds once determined and expected reduction of enterprise value available to CEOC debtholders. CB3 ACQUISITIONS: Motion to Transfer Venue to Connecticut Filed --------------------------------------------------------------- Richard M. Coan, Chapter 7 trustee of First Connecticut Consulting Group, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to transfer venue of the Chapter 11 case of CB3 Acquisitions, LLC, to the U.S. Bankruptcy Court for the District of Connecticut. Kevin J. Mangan, Esq., at Womble Carlyle Sandridge & Rice, LLP, in Wilmington, Delaware, on behalf of the Chapter 7 Trustee, alleges that CB3's bankruptcy filing is a blatant attempt at forum shopping and an effort to "game" the judicial system. Mr. Mangan argues that the CB3 bankruptcy case is inextricably intertwined with two bankruptcy cases in the Connecticut Bankruptcy Court -- In re First Connecticut Consulting Group, Inc., Bankruptcy Case No. 02-50852, and In re James J. Licata, Bankruptcy Case No. 02- 51167. He points out that CB3's sole assets and claims are claims to assets owned by the Connecticut bankruptcy estates. Mr. Mangan adds that there is a pending trial in the Superior Court of New Jersy in the Mocco, et al., v. Licata, et al., Case No. ESX-C-397-99, and a motion to compromise, which is tentatively scheduled for March 11, 2014. The New Jersey litigation is an ownership dispute that has been pending for 15 years. Bruce J. Duke, Esq., in Mount Laurel, New Jersey, on behalf of CB3, asks the Delaware Bankruptcy Court to deny the Chapter 7 Trustee's Motion to Transfer Venue, arguing that the judge presiding over the state court litigation has advised that the trial in the Mocco case will not be moving forward on the March 11 date, and that the motion to compromise before the Connecticut Bankruptcy Court violates the automatic stay as to CB3, and it too will have to be adjourned as well. The Chapter 7 Trustee is also represented by Timothy D. Miltenberger, Esq., Coan, Lewendon, Gulliver & Miltenberger, LLC, in New Haven, Connecticut. CB3 Acquisition, LLC, sought protection under Chapter 11 of the Bankruptcy Code on Feb. 27, 2014 (Case No. 14-10416, Bankr. D.Del.). The Debtor is represented by Bruce Duke, Esq., in Mount Laurel, New Jersey. The Debtor has estimated assets ranging from $10 million to $50 million and estimated debts ranging from $1 million to $10 million. The petition was signed by Michael Staisil, member. CHATHAM PARKWAY: Debtor, Bank Directed to Execute Loan Documents ---------------------------------------------------------------- Chatham Parkway Self Storage, LLC's Second Amended Plan of Reorganization, which was confirmed by the Court on July 22, 2013, provides that no later than the effective date of the Plan, the Debtor agrees to execute new loan documents in favor of Ameris Bank, successor in interest to Darby Bank & Trust Co., which govern the terms of its repayment of Ameris' secured claim as set forth in the Plan, as well as the security for the debt. Pursuant to the terms of the Plan, the effective date of the Plan, and therefore the deadline for executing the Secured Loan Documents, was Sept. 6, 2013. The Court extended the deadline for Debtor to execute the Loan Documents from the effective date to Sept. 13, 2013, due to Ameris providing the Loan Documents for review. Sometime after reviewing the Loan Documents provided by Ameris, the Debtor submitted its own version of the Loan Documents to the Bank for execution. Because the parties could not agree on all the specific terms included in the Loan Documents, the Debtor on Nov. 1, 2013, asked the Court to compel Ameris to execute the Loan Documents as drafted by Debtor, or in the alternative, direct further mediation with Judge John S. Dalis, or in the alternative, hold a hearing and determine the appropriate terms to be included in the Loan Documents. In a March 3, 2014 Opinion and Order available at http://is.gd/c91qN1from Leagle.com, Bankruptcy Judge Lamar W. Davis, Jr., directed Ameris to amend a commercial promissory note to incorporate the changes as set forth. Once the Note is amended, the Debtor and Ameris must execute the Note within a reasonable period of time, not to exceed 14 days from the date the amended Note is presented to the Debtor. According to Judge Davis, "the Plan is silent on the disputed terms and conditions that are the subject of this Motion. A court order supplying these missing terms and conditions would in no way alter a material term or provision of the confirmed Plan. . . . What is clear from this contract between Debtor and Ameris is that the parties desired and expected to execute Loan Documents, which at a minimum, contain the specific material terms outlined in the Plan. Moreover, because the extended deadline for executing the Loan Documents has passed, the parties are arguably in default of the Plan/contract. Therefore, I find that in order to protect the confirmation order and aid in the Plan's execution, the Court has the authority to supply commercially reasonable terms and conditions to the Loan Documents where the Plan is silent and which do not alter any provision of the Plan." Chatham Parkway Self Storage, LLC, filed for Chapter 11 (Bankr. S.D. Ga. Case No. 12-42153) on Nov. 2, 2012. The Debtor is a Georgia limited liability company owned by Ben and Julie Farmer. A consent order confirming the Debtor's status as a single asset real estate debtor was entered on Jan. 24, 2013. The Debtor owns a 4.92 acre tract of land in Chatham County, Georgia, upon which the Debtor operates a self-storage facility. The Debtor's principal source of revenue consists of receipts from the rental of self-storage units. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. A list of the Company's eight largest unsecured creditors filed with the petition is available for free at http://bankrupt.com/misc/gasb12-42153.pdf The petition was signed by Ben G. Farmer, manager. The Debtor is represented in the case by: Jesse C. Stone, Esq. MERRILL & STONE, LLC P.O. Box 129 Swainsboro, GA 30401 Tel: (478) 237-7029 Fax: (478) 237-9211 E-mail: bkymail@merrillstonehamilton.com - and - Jon A. Levis, Esq. MERRILL & STONE, LLC P.O. Box 129 Swainsboro, GA 30401 Tel: (478) 237-7029 Fax: (478) 237-9211 E-mail: bkymail@merrillstonehamilton.com CHICAGO H&S: Oaktree Wins Favorable Judgment in Pension Fund Rift ----------------------------------------------------------------- HOTEL 71 MEZZ LENDER LLC and OAKTREE CAPITAL MANAGEMENT, L.P., Plaintiffs, v. THE NATIONAL RETIREMENT FUND, Defendant; THE NATIONAL RETIREMENT FUND and THE TRUSTEES OF THE NATIONAL RETIREMENT FUND, Counter Plaintiffs, v. HOTEL 71 MEZZ LENDER LLC, OAKTREE CAPITAL MANAGEMENT, L.P, and JOHN DOES 1-10, Counter Defendants, No. 13 C 03306 (N.D. Ill.), arises from a dispute over whether an Order entered by the U.S. Bankruptcy Court for the Northern District of Illinois releases Oaktree Capital Management, L.P. and Hotel 71 Mezz Lender LLC from withdrawal liability incurred under the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1001 et seq. and owed to The National Retirement Fund and its Board of Trustees. The Plaintiffs seek a declaration pursuant to the Declaratory Judgment Act, 28 U.S.C. Sec. 2201, that the Order, which enforced the Second Amended Liquidating Plan of Reorganization resolving the dissolution of Chicago H&S Hotel Property, L.L.C., releases Plaintiffs from any withdrawal liability and enjoins the NRF from asserting any claim against Plaintiffs. The NRF and Trustees bring a counterclaim against Plaintiffs and all other trades and businesses under common control with Chicago H&S seeking to collect withdrawal liability, interest, liquidated damages, and attorneys' fees and costs pursuant to ERISA. In a March 3, 2014 Memorandum Opinion and Order available at http://is.gd/hqJpJXfrom Leagle.com, District Judge Ruben Castillo denied the NRF's and Trustees' motion for summary judgment, and granted the Plaintiffs' motion for summary judgment with respect to the withdrawal liability issue. The Clerk of the Court is directed to enter a declaratory judgment in favor of Plaintiffs only to the extent stated in the opinion. Chicago H&S in 2005 purchased Hotel 71, a 40-story, 437-guestroom, full service hotel located at 71 East Wacker Drive in Chicago, Illinois. Chicago H&S borrowed heavily to finance this acquisition, including $100 million as a senior mortgage loan as well as a $27.3 million mezzanine loan. Oaktree, through Hotel 71 Lender, provided financing for the Mezz loan. Based in Chicago, Illinois, Chicago H&S Hotel Property, LLC, dba Hotel 71, owns and operates a 40-story, 437 guestroom full service hotel. The Company filed for Chapter 11 protection on Oct. 29, 2007 (Bankr. N.D. Ill. Case No. 07-20088). Charles R. Gibbs, Esq. at Akin Gump Strauus Hauer & Feld LLP, and Daniel A. Zazove, Esq., and Jason D. Horwitz, Esq., at Perkins Coie LLP, represented the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors in the Debtor's case chose Polsinelli Shalton Flanigan Suelthaus P.C. as its counsel. The Debtor's schedules reflect total assets of $133,553,529, and total liabilities of $106,862,713. COLFAX CORP: S&P Revises Outlook to Positive & Affirms 'BB' CCR --------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its rating outlook on Fulton, Md.-based gas- and fluid-handling and fabrication technology products manufacturer Colfax Corp. to positive from stable. At the same time, S&P affirmed its 'BB' corporate credit rating on the company. S&P also raised its issue-level rating on Colfax's senior secured bank facilities to 'BBB-' from 'BB+' and revised the recovery rating on the debt to '1' from '2' due to S&P's expectation that the company's proposed acquisition of Victor Technologies Group Inc. would result in an increase in emergence enterprise value under a simulated default scenario. The '1' recovery rating reflects S&P's expectation for very high (90%-100%) recovery prospects in the event of a payment default. "The outlook revision reflects Colfax's improved credit measures, which have resulted in our reassessment of the company's financial risk profile to 'significant' from 'aggressive'," said Standard & Poor's credit analyst Svetlana Olsha. "We expect Colfax's credit metrics to improve further partly due to the conversion of preferred equity to common equity." The 'BB' corporate credit rating on Colfax reflects S&P's assessment of the company's "satisfactory" business risk profile and "significant" financial risk profile. The positive outlook reflects S&P's expectation that Colfax's operating performance and credit measures will modestly improve during the next 12 months. S&P could raise the rating on Colfax if it expects that funds from operations to debt will exceed 20% and debt leverage will remain below 3.5x over the next 12 months and if S&P believes the company's financial policy remains consistent with maintaining these levels. S&P would also need to believe that the company could sustain an improvement in its competitive position as a result of the recent acquisition, which would allow S&P to assess the company's credit characteristics as consistent with a 'BB+' corporate credit rating. S&P could revise the outlook to stable if the company fails to close the acquisition as proposed, experiences greater-than- expected integration challenges, or margin erosion, or if the competitive conditions become significantly more challenging. These issues would make it difficult for Colfax to sustain credit measures commensurate with a higher rating, in S&P's view. S&P could also revise the outlook to stable if management pursues debt-funded acquisitions or shareholder initiatives that increase leverage. CONSECO LIFE: A.M. Best Places FSR of 'B-' Under Review ------------------------------------------------------- A.M. Best Places Ratings of Conseco Life Insurance Company Under Review With Positive Implications MARCH 3, 2014 A.M. Best has placed under review with positive implications the financial strength rating (FSR) of B- (Fair) and issuer credit rating (ICR) of "bb-" of Conseco Life Insurance Company (CLIC). CLIC is a life/health subsidiary of CNO Financial Group, Inc. (CNO Financial)[NYSE: CNO]. Both companies are headquartered in Carmel, IN. The rating actions follow the recently announced definitive agreement by CNO Financial to sell all of CLIC's common shares to Wilton Reassurance Company (Wilton Re) (Minneapolis, MN) for approximately $237 million in cash. The transaction, which includes CLIC's run-off blocks of traditional life, interest sensitive life and annuity lines of business, is expected to close by mid-year 2014. CNO Financial has been actively de-risking its legacy blocks of business within its other CNO business segment in recent months. With this transaction, CNO Financial will significantly reduce its exposure to life and annuity closed blocks of business within other CNO business so that the organization can concentrate more on its core lines of business. The under review status reflects A.M. Best's view that CLIC will benefit from being a part of the Wilton Re organization that focuses on the life and annuity market segments. The ratings will remain under review pending the completion of the transaction, during which time A.M. Best will discuss with Wilton Re's management CLIC's strategic fit within the organization. The FSR, ICRs and debt ratings of CNO Financial and its subsidiaries are unchanged. However, A.M. Best views the recent long-term care reinsurance agreement with Beechwood Re and this current transaction, pending its closing, as a credit positive for CNO Financial. COSO GEOTHERMAL: Fitch Affirms 'CC' Rating on $629MM Certificates ----------------------------------------------------------------- Fitch Ratings has affirmed the rating on Coso Geothermal Power Holdings LLC's (CGP) $629 million ($462 million outstanding) pass through certificates due 2026 at 'CC'. The ratings affirmation reflects the continued expectation that default is probable, as Fitch expects that operating cash flows and reserve funds will be insufficient to meet long-term financial obligations. Key Rating Drivers Geothermal Resource Depletion: Underperformance of the geothermal resource has lowered net operating capacity at the Coso geothermal project's (Coso) three interlinked geothermal power plants. With the decline in the geothermal resource, energy revenues have fallen to levels that are not sufficient to meet debt obligations. (Supply Risk: Weaker) Expected Payment Shortfalls: Fitch's projections indicate that cash available for debt service will result in shortfalls for future payment obligations on the fully amortizing certificates. These obligations are supported by the letter of credit (LC)- funded senior rent reserve. (Debt Structure: Midrange) Finite Financial Support: Approximately $27.6 million in liquidity remains under the LC-funded senior debt service reserve, which Fitch expects to be exhausted between 2015 and 2017. Absent further dedicated liquidity to meet Coso's debt obligations, the certificates are likely to default. Limited Price Risk: Variable pricing on energy sales is limited to one-fifth of total revenues between July 2014 and March 2019. Coso executed an amendment with off-taker Southern California Edison (SCE, rated 'A-' with a Stable Outlook by Fitch) to fix the energy price earned at the BLM plant through June 30, 2014. (Revenue Risk: Midrange) Lack of Dedicated Operating Reserves: The project has no dedicated operations and maintenance or major maintenance reserve, leaving little cushion to protect against increased operational costs. (Operation Risk: Weaker) Rating Sensitivities -- Accelerated resource depletion may further erode credit quality. -- Insufficient liquidity to meet upcoming payment obligations would result in a downgrade. -- Potential expiration of Coso's LC on Nov. 30, 2014 might lead to negative rating action. Security Each tranche of the certificates represents an undivided interest in a related pass-through trust, which holds the lessor notes (notes) issued by the owner lessors. The notes are the sole collateral and source of repayment of the certificates. Credit Update The 'CC' rating is based upon the strong likelihood that Coso will default on its debt service obligations. Coso has been unable to reverse a steady decline in geothermal resource output, and reduced cash flow was insufficient to meet the debt portion of the lease rent payment that was due in January 2014 ($40.9 million). Coso's LC facility includes a $40 million senior rent reserve. Coso drew $5.7 million from the reserve to make its January 2014 payment, marking the second time the reserve has been tapped to meet lease rent obligations. As a result, the remaining balance in the senior rent reserve is $27.6 million. Absent a significant improvement in net capacity levels, operating cash flow will continue to fall short of required payments. Reserve funds will eventually be exhausted, leading to default on the certificates. On Feb. 14, 2014, LC provider CoBank issued an event of default letter due to insufficient repayment of drawn principal from the rent reserve. Coso's lease indenture contains specific provisions that indicate that this type of default cannot cause a cross- default of the lease or lease indenture, and has no impact on the availability of undrawn LC funds. Coso's LC is set to expire on Nov. 30, 2014. In the event that the LC is not extended or replaced, it may be drawn down in the full remaining amount. Fitch concludes that default on the pass- through certificates could accelerate under this scenario. In developing a base case for long-term expected performance, Fitch utilized recent performance as an assumption for Coso's net capacity and applied minimal additional stress. This scenario indicates a financial profile in which default is probable. Fitch expects Coso to operate below breakeven levels for the remainder of the debt tenor, with a DSCR average of 0.77x. Based on this profile, and the availability of liquidity in the reserve, Fitch expects default to occur between 2015 and 2017. CGP is a special-purpose company formed to lease and operate the Coso project, which consists of three interlinked geothermal power plants located in Inyo County, CA. Coso provides royalty payments to the U.S. Navy and the Bureau of Land Management for use of the geothermal resource. Under a series of power purchase agreements, Coso's entire output will be sold to SCE through January 2030. Cash flows from both Coso and Beowawe, an affiliated geothermal project in Nevada, are available to service CGP's rent payments under the CGP lease. Rent payments are the sole source of cash available to pay debt service on the pass-through trust certificates. COUNTRY VILLA: Calif. Nursing Home Operator Files for Bankruptcy ---------------------------------------------------------------- Patrick Fitzgerald, writing for The Wall Street Journal, reported that California nursing home operator Country Villa Health Services, the target of a number of pending class-action lawsuits, has filed for Chapter 11 bankruptcy. According to the report, the company, which operates 19 nursing homes and assisted living centers in Southern California, sought Chapter 11 protection along with more than a dozen of its health care affiliates in U.S. Bankruptcy Court in Orange County, Calif. Chief Executive Stephen Reissman said that while the business has been facing cash flow pressures in recent months, its legal issues were the primary cause of the Chapter 11 filing, the report related. "The dagger in the heart is that we have been overwhelmed by a wave of class-action lawsuits," the report cited Mr. Reissman as saying. The company is facing seven class action lawsuits: four related to wage and hour claims, two alleging improper patient care and one related to medications, the report said, citing papers filed in the bankruptcy case. CUBIC ENERGY: Delays Form 10-Q for Dec. 31 Quarter -------------------------------------------------- Due to Cubic Energy Inc. 's efforts to integrate the transactions consummated on Oct. 2, 2013, and certain accounting issues related thereto, the Company has been unable to complete, within the prescribed time period, its quarterly report on Form 10-Q for its fiscal quarter ended Dec. 31, 2013. The Company was unable to eliminate this reason without unreasonable effort or expense. On Oct. 2, 2013, the Company acquired oil and gas properties in three transactions. The operations with respect to those properties are included in the Company's results of operations for the quarter ended Dec. 31, 2013. The Company's results of operations for the quarter ended Dec. 31, 2013, also reflect the Company's increased level of indebtedness, as well as the other transactions. The significant changes in results of operations to be reflected in the quarterly earnings statements to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended Dec. 31, 2013, are as follows: Revenues increased to $5,047,665 during the quarter ended Dec. 31, 2013, from $1,039,376 for the quarter ended Dec. 31, 2012. Operating loss increased to $1,678,247 during the quarter ended Dec. 31, 2013, from $736,541 during the quarter ended Dec. 31, 2012. About Cubic Energy Cubic Energy, Inc., headquartered in Dallas, Texas, is an independent upstream energy company engaged in the development and production of, and exploration for, crude oil and natural gas. Its oil and gas assets and activities are concentrated in Louisiana. Cubic Energy incurred a net loss of $5.93 million for the year ended June 30, 2013, as compared with a net loss of $12.49 million during the prior fiscal year. The Company's balance sheet at Sept. 30, 2013, showed $19.51 million in total assets, $35.27 million in total liabilities and a $15.76 million total stockholders' deficit. DAVID MOLNER: Obtains Favorable Ruling in Bankruptcy Cases ---------------------------------------------------------- On March 6, 2014, Federal Judge Barry Russell granted David Bergstein a pivotal motion disallowing all of remaining claims filed by David Molner's entities (Aramid, Screen Capital, etc.) in the R2D2 and related involuntary bankruptcy cases initiated by Aramid former executive David Molner. In addition to the dismissal of claims brought against Mr. Bergstein, Judge Russell's rulings disallow the administrative claims (legal fees) for approximately $3 million brought by Screen Capital's attorneys -- Levene Neale and Stroock, Stroock and Lavan. The ruling confirms that the David Molner parties in fact never had any legitimate claims against Mr. Bergstein and no basis to have filed the involuntary proceedings in the first instance. Judge Russell further agreed that the initial claim which Screen Capital utilized for the involuntary filings now 4 years ago, was a claim that in fact was purchased from a third party (The Salter Group) for the express purpose of wrongfully attempting to put certain of Bergstein's companies into involuntary bankruptcy -- a violation of Federal Law . This ruling suggests allegations that the filings were made in bad faith and that they were a fraud perpetrated on the court, the Bergstein parties and the creditors. David Bergstein adds, "These rulings along with the victories we have had in the majority of the astonishing nearly 100 cases which Molner filed against me and my affiliates expose the fraud and other illegal conduct orchestrated by David Molner as part of his elaborate scheme to defraud the investors in the Aramid Fund. We expect future proceedings in Bankruptcy and other courts to further detail the surreptitious behavior and abuse of the system which Molner and his associates engaged in." The result of this ruling is that David Molner (and its affiliates, such as Aramid) are now completely out of the bankruptcy cases. In a related prior case, Mr. Bergstein was awarded a $50 Million judgment against attorney Susan Tregub for her role in Mr. Molner's campaign against Mr. Bergstein. The March 4 decision by Judge Russell triggers significant liability for costs and damages (asserted in various filings to be well over $100 Million) for David Molner, the Aramid Entertainment Fund, and the primary attorneys involved in the filings -- David Neale of the Levene Neale firm and Dan Rozansky of Stroock, Stroock and Lavan. DENALI FAMILY: Marletto Family LP Allowed $648K in Claims --------------------------------------------------------- Denali Family Services objects to Proof of Claim No. 20 filed by the Marletto Family Limited Partnership as exceeding the statutory limits imposed by 11 U.S.C. Sec. 502(b)(6). Marletto's claim arises from its prepetition lease of real property to the debtor. Its amended claim, filed on DFS's rejection of the lease, was for total damages of $1,514,744.18. DFS would limit the claim to $480,500, representing past due rent as of the petition date, future monthly rent for 15 months, and the 2014 real property taxes. In response to DFS's objection, Marletto contends it is entitled to recover these amounts, as well as the balance owed for tenant improvements, a future real estate commission, costs to remodel the premises, attorney fees, and utilities. Mareletto now claims total damages of $1,741,688.60. In a March 3, 2014 Memorandum Decision available at http://is.gd/51emsvfrom Leagle.com, Bankruptcy Judge Gary Spraker ruled that Claim No. 20 should be allowed in the sum of $647,758.85. This sum does not include Marletto's claim for attorney's fees, which is reserved pending supplementation of the record and further Court order. Denali Family Services, based in Anchorage, Alaska, filed for Chapter 11 bankruptcy (Bankr. D. Alaska Case No. 13-00114) on March 3, 2013. David H. Bundy, P.C., serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. A list of the Company's 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/akb13-00114.pdf The petition was signed by Allen Blair, interim chief executive officer. DETROIT, MI: Defaults on Financial Obligation Payments to PFRS -------------------------------------------------------------- The Police and Fire Retirement System of the City of Detroit on March 6 disclosed that it has outperformed 89% of the public pension plans with assets of more than $1 billion in the United States for calendar year 2013, earning 18.5 percent on its portfolio investments. "You got everything out of 2013 that you could have expected to get out of your investments," said Bill Bensur, Managing Director of Wilshire Associates, in delivering its annual report to the PFRS Board of Trustees on March 6. "It's important to take note of this impressive performance because we always tend to focus on the bad years." The PFRS, which has assets of $3.3 billion as of December 31, 2013, generated an 18.5% return on its investments for the calendar year 2013, according to Wilshire Associates, the national investment advisor to the Police and Fire Retirement System. Wilshire, a nationally recognized investment advisor, reported to the Board that the PFRS earned $564 million in investment gains for calendar 2013, with investment gains of $181 million achieved in the fourth quarter. The 2013 gross rate of return of 19.4 percent ranked in the 11th percentile in comparing the Police and Fire Retirement System with a universe of other public pension plans with assets of $1 billion or more. The PFRS' annual net rate of return for 2013 was 18.5%. "This was a good return for the year, a pretty solid absolute return," said Nick Sefchok, a Wilshire analyst told the board. The City of Detroit, which entered into bankruptcy in December 2013, has not made any of its financial obligation payments to the PFRS in more than a year. Wilshire Associates was hired by the Board in 2012 to serve as its General Investment Consultant after a lengthy Request For Proposal process of national financial consultant firms. "We think the results of performance for 2013 speaks to the management systems in place and to the quality of our own internal investment advisors and the national experts we have hired to advise the pension fund," said Cynthia Thomas, Executive Director of the Retirement Systems. "We continue to work on best practices and performance improvement of the system at all levels to maximize long term performance for our members and beneficiaries," she added. Wilshire Associates was founded in 1972 and employs some 300 people world wide. The Pittsburgh-based firm has more than 120 clients and assets under advisement in excess of $700 billion. Approximately 45 of the firm's clients have single assets over $1 billion and they service numerous public pension plans. The Police and Fire Retirement System of the City of Detroit -- http://www.PFRSDetroit.org-- was founded under City Charter and is the fiduciary for the pensions of all police and fire personnel. As of 2012 there are some 4,000 active members and more than 8,000 retirees in the system. The PFRS has assets of approximately $3.3 billion and is 96.1% funded for pension benefits. The PFRS is a separate entity from the city's General Retirement System. 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 LOCAL DEVELOPMENT: S&P Revises Rating Outlook to Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised the outlook to negative from stable on the Detroit City Local Development Finance Authority, Mich.'s series 1997A and 1997B tax- increment bonds and series 1997C and 1998A bonds. Standard & Poor's also affirmed its 'B' rating on the series 1997A and 1997B bonds and its 'B-' rating on the 1997C and 1998A bonds. "The negative outlook reflects our uncertainty on the level of revenue decline from the repeal of personal property taxes in the state," said Standard & Poor's credit analyst Oladunni Ososami, "which we believe is likely to put additional pressure on the vulnerable revenue." "The speculative-grade ratings reflect our assessment of recent continued assessed value declines in the project area, which have further depressed coverage," she added. The ratings also reflect: -- The concentration of the property tax base in one taxpayer, with more than 95% of the taxable value of the project area in one auto assembly plant, now owned by Fiat; -- Inadequate debt service coverage (DSC) in fiscal 2013 for all debt at 0.60x; and -- The original projected low all-in coverage of just 1.2x over the life of the bonds. Offsetting factors include S&P's view of: -- The demonstrated importance of the facility given it is the only North American assembly plant building the Jeep Grand Cherokee sport utility vehicle; and -- Adequate DSC of senior debt in fiscal 2013, which was 1.4x. The series 1997A and 1997B bonds have a senior pledge of revenues in the tax-increment area. The series 1997C and 1998A bonds are junior to the series 1997A and 1997B bonds. Additional senior bonds may be issued if available revenues provide at least 1.5x coverage of annual senior bond debt service. Additional junior- lien bonds may be issued with at least 1.2x coverage of combined annual debt service. "The negative outlook reflects our views of the vulnerability of DSC due to potential further revenue declines," said Ms. Ososami, "either from falling valuations or from the effects of the repeal of the personal property tax." Should revenues fall to levels that would likely not be sufficient to provide close to 1x coverage of annual debt service on the senior bonds, S&P could lower the rating further. If future legislation exempts the bonds from declines in revenue associated with the repeal of the personal property tax, S&P could revise the outlook to stable. S&P do not expect to raise the rating over the two-year horizon of the outlook. DETROIT DOWNTOWN: S&P Lowers Revenue Bonds Rating to 'BB' --------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its underlying rating (SPUR) on the Detroit Downtown Development Authority, Mich.'s senior-lien tax-increment revenue bonds to 'BB' from 'A-'. "The downgrade reflects the recent declines in the project area's tax base and the recent repeal of personal property tax in the state," said Standard & Poor's credit analyst Oladunni Ososami, "which, we believe, absent any further legislation exempting revenue declines for existing tax-increment bonds, will significantly reduce the district's tax base and put significant additional pressure on the vulnerable revenue." Standard & Poor's also lowered its SPUR on the authority's junior- lien bonds to 'BB-' from 'BBB'. S&P rates the subordinate bonds one notch below the senior-lien bonds, reflecting the subordinated pledge of tax-increment revenue. The outlook on all bonds is negative, reflecting Standard & Poor's view of likely further declines in the project area's tax base and uncertainty on the level of revenue decline from the repeal of personal property in the state. "The 'BB' rating also reflects our assessment of the vulnerability of the authority's future revenues to the final outcome of the state's repeal of certain personal property taxes," said Ms. Ososami, "and the high volatility ratio and recent declines in the tax base which have affected tax-increment revenue, significantly reducing coverage." Other factors include: -- A highly concentrated tax base with the 10 leading tax payers accounting for 92.8% of incremental assessed values; and -- The senior-lien pledge of tax-increment revenue generated in Development Area No. 1. Offsetting factors include: -- The size and depth of the project area, which includes the downtown commercial core of the city; and -- Bond provisions S&P considers adequate with an additional bonds test requiring 1.25x coverage on senior bonds and 1.15x coverage on combined junior and senior bonds. Development Area No. 1 encompasses 615 acres and includes much of Detroit's most valuable real estate and significant developments. The leading taxpayers include a number of mixed-use commercial and office complexes, including the Renaissance Center (GM headquarters), One Detroit Center, several other large office buildings, and the Greektown Casino. As a result, the tax base is concentrated, with the 10 leading taxpayers representing 92.8% of total taxable value within the project area. Much of the concentration is due to the combination of the Renaissance Center and other GM property, which together make up 41.5% of incremental value. "The negative outlook reflects our views of the vulnerability of DSC due to potential further revenue declines," said Ms. Ososami, "either from falling valuations or from the effects of the repeal of the personal property tax." Should revenues fall to levels that would likely not be sufficient to provide close to 1x coverage of annual debt service, S&P could lower the rating further. If future legislation exempts the bonds from declines in revenue associated with the repeal of the personal property tax, S&P could revise the outlook to stable. S&P do not expect to raise the rating over the two-year horizon of the outlook. DEWEY & LEBOEUF: Top Former Executives Said to Face Charges ----------------------------------------------------------- Matthew Goldstein and Ben Protess, writing for The New York Times' DealBook, reported that three former top executives of Dewey & LeBoeuf, the giant law firm that filed for bankruptcy protection in 2012, are expected to be charged with misleading other lawyers and lenders about the financial health of the firm. According to the report, the Manhattan district attorney, Cyrus Vance Jr., is expected to announce the filing of criminal charges against the three, Steven H. Davis, the firm's former chairman; Stephen DiCarmine, the former chief executive; and Joel Sanders, the former chief financial officer, two people briefed on the matter said. The details of the charges are still unclear, the report said. However, one of those people, who spoke on the condition of anonymity because the charges have not been made public yet, said that Mr. Vance would possibly accuse the lawyers of grand larceny. The filing of charges against the three lawyers would be the most significant event yet in the collapse of a once mighty firm that was created by the 2007 merger of Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, two of New York City's most prestigious law firms, the report related. The collapse of the firm, which once had 26 offices around the globe and employed 1,300 people, was closely followed in the New York legal community as large groups of lawyers at the firm left to join other practices. New York prosecutors have been investigating accusations that Dewey's leadership committee misled other lawyers about the firm's financial health, along with investors in a private sale of debt to raise financing for the firm, the report further related. A grand jury has been reviewing evidence in the investigation since the fall. About Dewey & LeBoeuf Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf LLP operated as a prestigious, New York City- based, law firm that traced its roots to the 2007 merger of Dewey Ballantine LLP -- originally founded in 1909 as Root, Clark & Bird -- and LeBoeuf, Lamb, Green & MacCrae LLP -- originally founded in 1929. In recent years, more than 1,400 lawyers worked at the firm in numerous domestic and foreign offices. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension Benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. FTI Consulting, Inc. was appointed secured lender trustee for the Secured Lender Trust. Alan Jacobs of AMJ Advisors LLC, was named Dewey's liquidation trustee. Scott E. Ratner, Esq., Frank A. Oswald, Esq., David A. Paul, Esq., Steven S. Flores, Esq., at Togut, Segal & Segal LLP, serve as counsel to the Liquidation Trustee. Dewey's liquidating Chapter 11 plan was approved by the bankruptcy court in February 2013 and implemented in March. The plan created a trust to collect and distribute remaining assets. The firm estimated that midpoint recoveries for secured and unsecured creditors under the plan would be 58.4 percent and 9.1 percent, respectively. DOTS LLC: Argued with Committee Over Fast Sale Schedule ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Dots LLC argued in court with the official creditors' committee on the question of how quickly the 400-store women's- wear retailer should be sold. Saying that's insufficient time to market a retailer with $339 million in annual revenue, the newly formed creditors' committee argues that such a quick sale will amount to a "fire sale," according to the report. Pre-bankruptcy lender Salus Capital Partners LLC, the provider of $36 million in bankruptcy financing, characterized the committee's objection as a "classic out-of-the-money creditor strategy," the report said. Salus wants the bankruptcy judge to give final financing approval and sanction bid procedures as within Dots's permissible business judgment. 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. DUMA ENERGY: Now Trading Under New Symbol 'HECC' ------------------------------------------------ Duma Energy 's new stock trading symbol will be HECC effective Feb. 18, 2014. This coincides with its new corporate name HYDROCARB ENERGY CORPORATION also effective Feb. 18, 2014. The Company was advised of the new stock trading symbol on Feb. 14, 2014, by FINRA. The Company 's name change is pursuant to a previously filed amendment to its articles if incorporation with an effective date of Feb. 18, 2014. About Duma Energy Corpus Christi, Tex.-based Duma Energy Corp. -- http://www.duma.com/-- formerly Strategic American Oil Corporation, is a growth stage oil and natural gas exploration and production company with operations in Texas, Louisiana, and Illinois. The Company's team of geologists, engineers, and executives leverage 3D seismic data and other proven exploration and production technologies to locate and produce oil and natural gas in new and underexplored areas. Duma Energy incurred a net loss of $40.47 million for the year ended July 31, 2013, a net loss of $4.57 million for the year ended July 31, 2012, and a net loss of $10.28 million for the year ended July 31, 2011. As of July 31, 2013, the Company had $26.27 million in total assets, $16.91 million in total liabilities and $9.36 million in total stockholders' equity. E.H. MITCHELL: Court Okays Hiring of Richard Martinez as Counsel ---------------------------------------------------------------- E.H. Mitchell & Company, LLC sought and obtained permission from the Hon. Jerry A. Brown of the U.S. Bankruptcy Court for the Eastern District of Louisiana to employ Richard W. Martinez as special counsel. As reported in the Troubled Company Reporter, Mr. Martinez will represent the Debtor in Adversary Proceeding No. 13-01106, either in the bankruptcy court or the state court venue, and in the formulation of the Debtor's plan and its confirmation as well as other matters which might arise out of or be related to the areas of his retention. The Debtor will pay Mr. Martinez $350 per hour, plus reimbursement of expenses, for legal services, subject to application and approval of the Court prior to payment. Mr. Martinez 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. Mr. Martinez can be reached at: Richard W. Martinez, Esq. 650 Poydras Street, Suite 1430 New Orleans, LA 70130 Tel: (504) 586-1996 E. H. Mitchell & Company LLC sought protection under Chapter 11 of the Bankruptcy Code on Oct. 8, 2013, (Case No. 13-12786, Bankr. E.D. La.). The case is assigned to Judge Jerry A. Brown. The Debtor is represented by Robert L. Marrero, Esq., at Robert Marrero, LLC, in New Orleans, Louisiana. The petition was signed by Michael Furr, secretary/member. EASTCOAL INC: Period to Make BIA Proposal to Creditors Extended --------------------------------------------------------------- EastCoal Inc. disclosed that on March 3, 2014 the Supreme Court of British Columbia granted it a 45-day extension to make a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada). The extension has the effect of allowing the Company until April 17, 2014 in which to make a proposal to creditors. EastCoal Inc. -- http://www.eastcoal.ca/-- is focused on coal in Ukraine. The Company is engaged in the acquisition and development of mineral properties. The Company is focused on the Verticalnaya Mine, which is an advanced coal project in the construction phase located in the Donbass Region of Ukraine. The Company's mineral properties include the Verticalnaya Coal Mine, Ukraine. The surface mine site in the Verticalnaya Coal Mine covers approximately 10.4 hectares, including three hectares of approach roads. The Company's operations also include the dewatering of the Main Mine at Verticalnaya. ELBIT IMAGING: Tel Aviv Stock Exchange OKs Restructuring -------------------------------------------------------- The Tel Aviv Stock Exchange approved the restructuring plan between Elbit Imaging Ltd. and the Company's unsecured financial creditors and the listing of 509,713,459 ordinary shares of the Company with no par value and the Company's NIS 448,000,000 par value Series H Notes as well as the Company's NIS 218,000,000 par value Series I Notes, that approval representing fulfilment of the conditions precedent as set in Section 7 to the Restructuring plan. The Restructuring was previously approved by the District Court of Tel Aviv-Jaffa. The timetable for performance of the Restructuring is as follows: 1. The Closing of the Restructuring will be Feb. 20, 2014. 2. The record date for the Restructuring will be Feb. 20, 2014. 3. The last trade date for the Company's Series A to G and 1 Notes will be Feb. 17, 2014. Certain material terms of the Restructuring follow: Cancellation of the existing notes In the framework of the Restructuring, all of the Company's Series A to G and 1 Notes as well as the notes representing the unpaid portion of the principal in the Series A and Series B Notes (numbered "Elbthad A HS 2/13" and "Elbthad B HS 2/13", respectively), will be cancelled and delisted including the interest payments in respect of A Notes and B Notes which had not been paid as of Feb. 20, 2013, interest payment in respect of C Notes which had not been paid as of March 1, 2013, and including interest payment in respect of F Notes which had not been paid on April 1, 2013. Allotment of the issued shares and the new notes On the Closing Date, the Company will allot and deposit with the TASE Clearing House the Issued Shares and the New Notes to the Company's unsecured financial creditors (whomever will be holding the Existing Notes on the Restructuring Record Date as well as Bank Leumi Le-Israel Ltd.). The Issued Shares and New Notes are expected to be distributed to those unsecured financial creditors on Feb. 21, 2014. It is clarified that the notes held by the Company's subsidiary will be cancelled with no consideration given. First payment of interest in respect of the Series H Notes The record date for the first payment of interest in respect of the Series H Notes will be Feb. 23, 2014. The date of the aforesaid first payment of interest will be March 9, 2014. Share issuance to Bank Hapoalim Ltd. In accordance with the Court Ruling, on the Closing Date the Company will allot Bank Hapoalim Ltd. and deposit with the TASE Clearing House 16,594,036 ordinary shares of the Company with no par value, pursuant to an agreement between the Company and Bank Hapoalim as detailed in the Company's announcement on Nov. 14, 2013. 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. ELMS DUPLEXES: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: The Elms Duplexes, LLC 109-A Shady Lane Belton, MO 64012 Case No.: 14-40653 Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court Western District of Missouri (Kansas City) Judge: Hon. Arthur B. Federman Debtor's Counsel: Michelle M. Masoner, Esq. BRYAN CAVE LLP 1200 Main St., Suite 3500 Kansas City, MO 64105 Tel: 816-374-3200 Fax: 816-374-3300 Email: michelle.masoner@bryancave.com - and - Purvi M. Shah, Esq. BRYAN CAVE LLP 1200 Main St., Ste. 3500 Kansas City, MO 64105 Tel: 816-374-3348 Fax: 816-374-3300 Email: purvi.shah@bryancave.com - and - Mark G. Stingley, Esq. BRYAN CAVE LLP 1200 Main St., Ste. 3500 Kansas City, MO 64105-2152 Tel: 816-374-3200 Fax: 816-374-3300 Email: mgstingley@bryancave.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Matthew B. Runte, managing member. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. ELEPHANT TALK: Amends 2012 Form 10-K to Correct Auditor's Report --------------------------------------------------------------- Elephant Talk Communications Corp. amended its annual report on Form 10-K for the fiscal year ended Dec. 31, 2012, which was originally filed on April 2, 2013, to include the corrected reports of its registered public accounting firm, BDO USA, LLP. This Amendment No. 3 does not affect any other parts of, or exhibits to, the Original Filing. In their report on the consolidated financial statements for the year ended Dec. 31, 2012, BDO USA, LLP, in Los Angeles, CA, issued a going concern qualification stating that the Company has suffered recurring losses from operations, has an accumulated deficit of $203.3 million and continues to generate negative cash flows. These factors, among others things, raise substantial doubt about its ability to continue as a going concern A copy of the Form 10-K/A is available for free at: http://is.gd/pQIAsR 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. EMPRESAS INTEREX: United Surety Files Objection to Settlement ------------------------------------------------------------- United Surety Company filed an objection to the settlement agreement between Empresas Interex Inc. and creditor Municipal Revenue Collection Center, known in Spanish as Centro de Recaudacion de Ingresos Municipales (CRIM). The creditor earlier filed a settlement agreement relative to CRIM's proof of claim no. 13. According to the settlement, the Parties agreed to settle the proof of claim in full through a payment of $44,654.63. The amount is to be satisfied from the $62,238.99 deposited in an account and the remaining $17,584.36 would be transferred to the Debtor. The Debtor and Ryam Construction Corp. had entered into an agreement for the construction of a residential project known as Ubanizacion Ciudad Atlantis. In relation to the Project, at Ryam's request, USIC issued the payment and performance bond number 06107429. As a result of Ryam's default to pay for labor and materials, and in compliance with its obligation under the bond, USIC made payments totaling $79,234.40. Ryam still owes USIC the entire $79,234.40, plus accrued interests. USIC, as surety of the Project, claims that it has a preferential treatment interest in such funds. In addition, USIC is entitled to subrogate to Ryam's rights in contract retainages and progress payments against Debtor in the Project. USIC argues that the Debtor intends to distribute funds that do not belong to the estate. Debtor Replies to Objection The Debtor had filed an objection to Ryam's POC, which was granted by the Bankruptcy Court, to the effect that Ryam had failed to complete its work at the Project, as agreed to with Debtor. Thus, Debtor was forced to assume the remaining tasks to be performed by Ryam at the Project and incurred in $1,215,677.91, surpassing the agreed and approved budget with Ryam by $334,491.41, which amount is owed to the Debtor by Ryam. As of the date of the signing of the Settlement, the Debtor said it is clear that Ryam has no enforceable claim as to the Debtor's estate, since its claim has been decided. The Debtor argues that any right of the workmen or suppliers to collect from the owner of the project is limited to the amount owed by the owner to the contractor. Considering that Ryam's POC was denied and Ryam did not make a claim in relation to funds in the Account, the Debtor contends that Ryam has no existing rights in contract retainages and progress payments against Debtor under which USIC could subrogate itself and be entitled to payment. About Empresas Interex Inc. San Juan, Puerto Rico-based Empresas Interex Inc. is engaged in the development, construction, and lease of real estate. One of the Debtor's construction project is known as Ciudad Atlantis at Hato Bajo Ward, Arecibo, Puerto Rico. Empresas Interex filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-10475) on Dec. 7, 2011. Bankruptcy Judge Mildred Caban Flores presides over the case. The company disclosed $11,412,500 in assets and $9,335,561 in liabilities. The Debtor is represented by Charles A. Cuprill P.S.C. Law Offices. EMPRESAS INTEREX: Minor Correction in Reorganization Plan Approved ------------------------------------------------------------------ Judge Mildred Caban Flores has approved an "urgent" motion filed by Empresas Interex Inc. to correct the Debtor's First Amended Plan of Reorganization. The Plan is corrected to reflect the correct property number to be transferred to DF Services, LLC. The Plan lists the real property to be transferred to DF Services as property number 30,300, when its correct number is 30,400. Interex is in the process of transferring the property to DF pursuant to the Plan, through a public deed. For its recording with the Registry of the Property of Puerto Rico needs for its number to be corrected. Interex needs for the number of the property to be corrected to be able to transfer the same and consummate the Plan. About Empresas Interex Inc. San Juan, Puerto Rico-based Empresas Interex Inc. is engaged in the development, construction, and lease of real estate. One of the Debtor's construction project is known as Ciudad Atlantis at Hato Bajo Ward, Arecibo, Puerto Rico. Empresas Interex filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-10475) on Dec. 7, 2011. Bankruptcy Judge Mildred Caban Flores presides over the case. The company disclosed $11,412,500 in assets and $9,335,561 in liabilities. The Debtor is represented by Charles A. Cuprill P.S.C. Law Offices. ESSENTIAL POWER: Moody's Lowers 1st Lien Debt Rating to B1 ---------------------------------------------------------- Moody's Investors Service downgraded Essential Power LLC's 1st Lien Senior Secured Facilities to B1 from Ba3 while also downgrading the 2nd Lien Secured Notes to B2 from B1. This rating action concludes the review for possible downgrade that had been initiated on December 17, 2013. Essential's rating outlook is stable. Ratings Rationale The rating action reflects Moody's expectation that Essential Power's credit agreement will be amended in a manner consistent with our understanding of the amendment terms, including the substantial financial support contemplated from Essential's sponsor IFM Investors ("IFM" or "the Sponsor") at amendment close. These positive attributes are balanced against Essential's primarily merchant exposure over the next several years, which creates cash flow volatility particularly given the weakened financial metrics anticipated over the time frame. While the elimination of Newington's Heat Rate Call Option (HRCO) risk, the Sponsor's contribution towards Newington Energy gross margin floor support, and the redemption of the 2nd lien secured facility are all positive credit considerations, the expiration of the Lakewood PPA, the most reliable source of cash flow in the portfolio, coupled with the weakened and potentially volatile energy margins across the portfolio are characteristics reflective of the B rating category. The B1 1st Lien rating benefits from good visibility into the PJM and NE ISO Capacity markets, a capable operating performance and especially, the meaningful commitment from the Sponsor. In that vein, our rating action incorporates a view that the Sponsor will continue to support the Borrower in subsequent periods if covenant pressure were to surface under Essential's credit facilities owing to even weaker than expected financial results. The B1 rating acknowledges Newington plant's dual-fuel capability which allows Essential to benefit from NE ISO's Winter Reliability Program (WRP) capacity revenues and economic dispatch under fuel oil during periods of gas price spikes. However, the volatility in realized gas prices for assets in PJM and NE ISO introduces a fair degree of uncertainty in Essential's merchant energy revenues. That said, known capacity revenues contribute to 37% of Essential's total revenues in the Moody's case over the next few years, and Moody's expect that the Essential plants will continue to be recipients of capacity revenues over the foreseeable future in subsequent auctions. From a financial metrics perspective, based on various sensitivity cases examined, Moody's expect Essential to produce financial metrics in line with the lower end of the B rating category. For example, Moody's calculate that under the management case, the 3 year average ratio of Funds from Operations to Debt (FFO/Debt) is expected to approximate around 4.5% and the 3 year average ratio for debt service coverage is about 1.4x. While these financial metrics could merit consideration of a lower rating within the B rating category, the B1 rating primarily factors in the meaningful financial support provided by the Sponsor along with a relatively strong capital structure at Essential. Moody's also lowered the rating on the 2nd lien debt by one notch to B2 from B1. Moody's understand, however, that as part of the amendment, the 2nd lien debt is expected to be redeemed by the end of Q2 2014. Moody's view the redemption of the very high coupon 2nd lien debt as a credit positive to 1st lien creditors. Should that redemption occur in its entirety, Moody's will withdraw rating for the 2nd lien notes. The current one notch rating differential between the two tranches of debt considers the terms of the credit documents that provide for 2nd lien interest to be paid after the 1st lien interest and 1st lien mandatory principal amortization, but before the 1st lien cash flow sweep as well as the existence of cross default provision between the 1st and 2nd lien debt facilities. The stable outlook incorporates Moody's view that the credit agreement will be amended as anticipated which should stabilize credit quality over the intermediate term. The stable outlook recognizes the meaningful degree of financial support coming from the Sponsor including plans to implement gross margin floor support at Newington. The stable outlook acknowledges the good visibility that exists for capacity revenues into the 2017/18 time frame, and factors in the expectation that the Essential assets will continue to be beneficiaries of these capacity revenues in subsequent auctions. The outlook further expects the assets to continue to operate consistent with their design capability, and that the project meets financial projections over the next several years. In light of the rating action and Moody's expectation that financial metrics will remain within the B-rating category, the rating is unlikely to be upgraded in the intermediate-term. The rating could face upward momentum should the project repay the term loan faster than expected, secure more robust and more predictable cash flows from subsequent capacity auctions or from the execution of reliable hedges, which together help to achieve sustained financial metrics commensurate with Ba rating category. The rating could face downward pressure if the anticipated energy margins are not realized, or if there are any events such as extended outages or fuel supply disruptions that might prevent Essential Power from producing anticipated energy margins. Additionally, Essential's inability to execute the amendment to the credit agreement, as well as the failure to redeem the 2nd lien notes could also negatively affect the rating. The current ratings are based upon Moody's understanding of the proposed terms and conditions of the Second Amendment and are subject to Moody's receipt and review of final documentation being consistent with the proposed terms. The principal methodology used in this rating was Power Generation Projects published in December 2012. The last rating action was on December 17, 2013, when Essential's 1st lien facilities' rating was downgraded to Ba3 from Ba2 and the ratings were placed under review for possible further downgrade. Essential Power, LLC is a wholesale power generation and marketing company. It is a special purpose entity formed by a fund managed by IFM to acquire and hold a portfolio of five power generation assets totaling 1,721 MW located in the ISO-New England and PJM power markets. The portfolio was acquired from Consolidated Edison Development, Inc in 2008. IFM is an investment management company based in Australia specializing in the management of private investment products across infrastructure, listed equities, private equity and debt. It is ultimately owned by 30 major Australian pension funds. IFM has approximately US$45 billion under management across a range of investment products, including US$17 billion of global infrastructure investments under management. EVENT RENTALS: March 14 Hearing on Kurtzman Carson as Admin Agent ----------------------------------------------------------------- The Bankruptcy Court will convene a hearing on March 14, 2014, at 10:00 a.m., to consider Event Rentals Inc., et al.'s request to employ Kurtzman Carson Consultants LLC as administrative agent. Objections, if any, are due March 7, at 4:00 p.m. The Debtors related they have also filed an application to employ KCC as claims and noticing agent. KCC as administrative agent will, among other things: -- assist with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs; and -- tabulate votes and perform subscription services as may be requested or required in connection with any and all plans of reorganization filed by the Debtors and provide ballot reports and related balloting and tabulation services. Evan Gershbein, senior vice president of corporate restructuring services for KCC, assured the Court that KCC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 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. A seven-member official committee of unsecured creditors has been appointed in the case. The Debtors sought bankruptcy protection as they seek a new owner to take over the business. Existing lenders led by Ableco Finance LLC, as administrative agent, have agreed to finance the bankruptcy with a DIP financing facility of up to $20 million. The DIP facility requires the Debtors to: -- hold an auction, if necessary, on or prior to 67 calendar days after the Petition Date at 10:00 a.m.; -- obtain approval of the sale to the winning bidder on or prior to 75 calendar days after the Petition Date; and -- close a deal with the winning bidder within 105 calendar days after the Petition Date. EVENT RENTALS: Taps Andrew Hinkleman of FTI Consulting as CRO ------------------------------------------------------------- Event Rentals Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ FTI Consulting, Inc., and approve the designation of Andrew Hinkleman, senior managing director of FTI, as chief restructuring officer. FTI will provide financial related services, including, among other things: 1. certain liquidity forecasting services, including evaluating the Debtors' current liquidity position and expected future cash flows, assisting the management and control of cash disbursements, advising the Debtors on cash conservation measures and assisting with implementation of cash forecasting and reporting tool as requested, assisting with the preparation and negotiation of the Debtors' postpetition financing budgets and related documents, and managing liquidity during the Chapter 11 cases; and 2. certain restructuring and other advisory services, including assessing potential earning based on location and product line, analyzing long term capital needs, assisting with working capital management, participating in the development in developing strategies related to merchandise and other vendors, and assisting the Debtors and other advisors in developing strategy relating to existing and prospective capital provider. The Debtors add that FTI has been providing and will continue to provide strategic communication services. The Debtors will compensate FTI a monthly, non-refundable advisory fee of $185,000. The Debtors agreed to pay Mr. Hinkelman and other FTI employees their standard hourly rates. The Debtors also agreed to pay FTI an additional monthly fee of $15,000 in exchange for FTI's work on the strategic communication objectives, beginning Feb. 14, 2014, and continuing on the 14th day of each calendar month thereafter. To the best of the Debtors' knowledge, FTI is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 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. A seven-member official committee of unsecured creditors has been appointed in the case. The Debtors sought bankruptcy protection as they seek a new owner to take over the business. Existing lenders led by Ableco Finance LLC, as administrative agent, have agreed to finance the bankruptcy with a DIP financing facility of up to $20 million. The DIP facility requires the Debtors to: -- hold an auction, if necessary, on or prior to 67 calendar days after the Petition Date at 10:00 a.m.; -- obtain approval of the sale to the winning bidder on or prior to 75 calendar days after the Petition Date; and -- close a deal with the winning bidder within 105 calendar days after the Petition Date. EVENT RENTALS: Wants to Employ White & Case as Bankruptcy Counsel ----------------------------------------------------------------- Event Rentals Inc., et al., ask the Bankruptcy Court for permission to employ White & Case LLP as counsel. The Court will convene a hearing on March 14, 2014, at 10:00 a.m., to consider approval of the application. Objections, if any, are due March 7, at 4:00 p.m. W&C will represent the Debtors in coordination with Fox Rothschild. The Debtors relate that W&C and Fox Rothschild have discussed a division of responsibilities in connection with the representation and will make every effort to avoid or minimize duplication of services. John K. Cunningham, a partner at W&C, tells the Court he will lead the engagement, and his rate is $985. The hourly rate of other personnel working on the case: Partners $750 - $1,100 Counsel $530 - $850 Associates $405 - $765 Paraprofessionals $215 - $315 Mr. Cunningham adds that the firm received payments from the Debtors in the aggregate amount of $1,000,000 for professional services. As of the Petition Date, the Debtors owed W&C $643,111. Mr. Cunningham assures the Court that W&C is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 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. A seven-member official committee of unsecured creditors has been appointed in the case. The Debtors sought bankruptcy protection as they seek a new owner to take over the business. Existing lenders led by Ableco Finance LLC, as administrative agent, have agreed to finance the bankruptcy with a DIP financing facility of up to $20 million. The DIP facility requires the Debtors to: -- hold an auction, if necessary, on or prior to 67 calendar days after the Petition Date at 10:00 a.m.; -- obtain approval of the sale to the winning bidder on or prior to 75 calendar days after the Petition Date; and -- close a deal with the winning bidder within 105 calendar days after the Petition Date. FLETCHER INT'L: United Community Banks Enters Into Settlement ------------------------------------------------------------- United Community Banks, Inc. and its subsidiary United Community Bank on March 5 reported a settlement agreement with the Chapter 11 Trustee for Fletcher International, Ltd., pursuant to which United will purchase the outstanding warrant to purchase United's common stock previously issued to Fletcher and settle any and all claims that could be asserted by Fletcher. The settlement agreement is subject to bankruptcy court approval. As a result of the Trustee's efforts to liquidate the Fletcher bankruptcy estate's assets, United and Fletcher entered into the settlement agreement pursuant to which United has agreed to deliver 640,000 shares of its common stock and cash that, together with the common stock, will have a combined fair value of $12 million for the purchase of the Fletcher warrant and release of all claims by Fletcher. The value of United's common stock to be issued approximates the current fair value of the Fletcher warrant and therefore the transaction will be accounted for as an exchange of equity instruments with no impact on United's current earnings. United expects to fund the settlement 15 days following the court's approval, and the final cash payment due to Fletcher will be an amount equal to the difference between the value of United's common stock on such date and $12 million, which was previously reserved for at the time of the 2013 settlement with FILB Co-Investments LLC for potential claims that Fletcher might make against United, which are the subject of this settlement. Therefore, no current earnings impact is expected as a result of the settlement. "With this settlement, we have resolved all claims from the transactions between United and Fletcher for a small amount in excess of the current fair value of the Fletcher warrant," stated Jimmy Tallent, president and chief executive officer of United. "By purchasing the Fletcher warrant now, which has significant value due to the five years remaining before expiration, we minimize future dilution to shareholders that could result if the warrant remained outstanding. The additional cash to be transferred has been reserved for by United, and the impact of issuing additional shares will be minimal to United's future earnings and tangible book value per share." About United Community Banks United Community Banks, Inc. -- http://www.ucbi.com-- is the third-largest Georgia-based bank holding company. Based in Blairsville, the company has assets of $7.4 billion and operates 102 banking offices throughout north Georgia, the Atlanta region, coastal Georgia, western North Carolina, east Tennessee and western South Carolina. United specializes in personalized community banking services for individuals and small- to mid-size businesses, and also offers the convenience of 24-hour access through a network of ATMs, telephone and on-line banking. United's common stock is listed on the Nasdaq Global Select Market under the symbol UCBI. About Fletcher International Fletcher International, Ltd., filed a bare-bones Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-12796) on June 29, 2012, in Manhattan. The Bermuda exempted company estimated assets and debts of $10 million to $50 million. The bankruptcy documents were signed by its president and director, Floyd Saunders. David R. Hurst, Esq., at Young Conaway Stargatt & Taylor, LLP, in New York, serves as counsel and Appleby (Bermuda) Limited serves as special Bermuda counsel. The Debtor disclosed $52,163,709 in assets and $22,997,848 in liabilities as of the Chapter 11 filing. Fletcher International Ltd. is managed by the investment firm of Alphonse "Buddy" Fletcher Jr. Fletcher Asset Management was founded in 1991. During its initial four years, FAM operated as a broker dealer trading various debt and equity securities and making long-term equity investments. Then, in 1995, FAM began creating and managing a family of private investment funds. The Debtor is a master fund in the Fletcher Fund structure. As a master fund, it engages in proprietary trading of various financial instruments, including complex, long-term, illiquid investments. The Debtor is directly owned by Fletcher Income Arbitrage Fund and Fletcher International Inc., which own roughly 83% and 17% of the Debtor's common shares, respectively. Arbitrage's direct parent entities are Fletcher Fixed Income Alpha Fund and FIA Leveraged Fund, both of which are incorporated in the Cayman Islands and are subject to liquidation proceedings in that jurisdiction, and which own roughly 76% and 22% of Arbitrage's common stock, respectively. The Debtor currently has a single subsidiary, The Aesop Fund Ltd. After filing for Chapter 11 protection, Fletcher immediately started a lawsuit in bankruptcy court to stop the involuntary bankruptcy in Bermuda. Judge Gerber at least temporarily halted liquidators appointed in the Cayman Islands from moving ahead with proceedings in Bermuda. The lawsuit to halt the Bermuda liquidation is Fletcher International Ltd. v. Fletcher Income Arbitrage Fund, 12-01740, in the same court. Richard J. Davis, Chapter 11 trustee appointed in the case, has hired Michael Luskin, Esq., Lucia T. Chapman, Esq., and Stephanie E. Hornung, Esq., at Luskin, Stern & Eisler LLP as his counsel. The Chapter 11 trustee filed a proposed liquidating Plan in November 2013. The disclosure statement was approved on Jan. 17, 2014. FLEXCOIN INC: Bitcoin Bank Closes After Being Robbed by "Hackers" ----------------------------------------------------------------- Another online holder of the virtual currency known as bitcoins is shutting down, after hackers made off with the equivalent of about $670,000 from the Alberta company, Canada's Globe and Mail reported. According to Globe and Mail, Flexcoin Inc., which bills itself as the "first bitcoin bank," told users on its website on March 4 that it was winding up operations after the theft on Monday of 896 bitcoins, which, according to the Associated Press, translates into a loss of about $600,000, based on bitcoin's current trading value. The Associated Press said unlike banks dealing in government- backed currencies, Flexcoin's losses aren't covered by deposit insurance. The Alberta, Canada, bank says it can't recover from the setback. Flexcoin says bitcoins stored offline remain secure. The twin failures of Mt. Gox and Flexcoin will likely raise more doubts about bitcoin's ability to establish itself as an alternative currency, the Associated Press added. FRIENDSHIP DAIRIES: Judge Denies AgStar's Bid to Dismiss Case ------------------------------------------------------------- U.S. Bankruptcy Judge Robert Jones issued an order denying the request of AgStar Financial Services, FLCA to dismiss the Chapter 11 case of Friendship Dairies. In the same court order, Judge Jones also denied the request of the U.S. trustee to appoint a bankruptcy trustee for Friendship Dairies. AgStar had asked for dismissal of Friendship Dairies' case, saying its operation "has resulted in substantial and continuing loss to or diminution of the estate" and that there is "no reasonable likelihood of rehabilitation." Friendship Dairies' largest secured creditor also accused the company of mismanagement. About Friendship Dairies Friendship Dairies, a general partnership, filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-20405) in Amarillo, Texas, on Aug. 6, 2012. The Debtor operates a dairy near Hereford, Deaf Smith County, Texas. The dairy consists of 11,000 head of cattle, fixtures and equipment. The Debtor also farms 5,000 acres of land for production of various crops used in feeding for the cattle. The Debtor owes McFinney Agri-Finance, LLC, $16 million secured by the Debtor's property, which is appraised at more than $24 million. The Debtor disclosed $44,421,851 in assets and $45,554,951 in liabilities as of the Chapter 11 filing. Bankruptcy Judge Robert L. Jones oversees the case. J. Bennett White, P.C., serves as the Debtor's counsel. The petition was signed by Patrick Van Adrichem, partner. The U.S. Trustee appointed a six-member creditors committee in the Debtor's case. The Committee tapped Levenfeld Pearlstein as lead counsel, and Mullin, Hoard & Brown as local counsel. FRIENDSHIP DAIRIES: AgStar Asks Court to Reconsider Stay Order -------------------------------------------------------------- AgStar Financial Services, FLCA, asked a bankruptcy judge to reconsider his decision that put on hold temporarily his earlier ruling that allowed the company to foreclose on its collateral. U.S. Bankruptcy Judge Robert Jones on Feb. 10 temporarily suspended his Jan. 7 ruling until a higher court hears the appeal of Friendship Dairies to review his ruling that allowed AgStar to foreclose on a real property where the company's dairies and farmland are located. In his Feb. 10 decision, the bankruptcy judge said that the temporary suspension "best serves the interests of all parties." Judge Jones, however, required the company to make monthly payment of $85,000 to AgStar and provide proof of insurance on the collateral. In court papers filed last week, John O'Brien, Esq., at Snell & Wilmer LLP, in Denver, Colorado, urged the bankruptcy judge to take into consideration the "significant harm" that the temporary suspension would cause AgStar. Mr. O'Brien cited, among other things, the rapid decline in the equity in AgStar's collateral in light of recent downward trends on farm land values, and the fees the company will incur in defending the appeal. Mr. O'Brien asked the bankruptcy judge to require Friendship Dairies to provide the company with "adequate security" should he refuse to vacate his Feb. 10 order. The lawyer said the monthly payment should be increased to $144,000, and that Friendship Dairies should confirm that the collateral is insured. Friendship Diaries previously received hail insurance checks totaling $755,000 for damage to a portion of AgStar's collateral. That portion is uninsured because the insurer won't pay twice for the same loss, according to court papers. Judge Jones will hold a hearing on April 10 to consider approval of the request. AgStar's lawyers can be reached at: John O'Brien, Esq. Scott C. Sandberg, Esq. Brian P. Gaffney, Esq. LAW OFFICES OF SNELL & WILMER 1200 Seventeenth Street, Suite 1900 Denver, Colorado 80202-5854 Tel: (303) 634-2000 Fax: (303) 634-2020 E-mail: jobrien@swlaw.com ssandberg@swlaw.com bgaffney@swlaw.com About Friendship Dairies Friendship Dairies, a general partnership, filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-20405) in Amarillo, Texas, on Aug. 6, 2012. The Debtor operates a dairy near Hereford, Deaf Smith County, Texas. The dairy consists of 11,000 head of cattle, fixtures and equipment. The Debtor also farms 5,000 acres of land for production of various crops used in feeding for the cattle. The Debtor owes McFinney Agri-Finance, LLC, $16 million secured by the Debtor's property, which is appraised at more than $24 million. The Debtor disclosed $44,421,851 in assets and $45,554,951 in liabilities as of the Chapter 11 filing. Bankruptcy Judge Robert L. Jones oversees the case. J. Bennett White, P.C., serves as the Debtor's counsel. The petition was signed by Patrick Van Adrichem, partner. The U.S. Trustee appointed a six-member creditors committee in the Debtor's case. The Committee tapped Levenfeld Pearlstein as lead counsel, and Mullin, Hoard & Brown as local counsel. GELT PROPERTIES: Eckert Withdraws as Committee's Counsel -------------------------------------------------------- Eckert Seamans Cherin & Mellot LLC in January filed papers with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania seeking authority to withdraw as counsel to the Official of Unsecured Creditors of Gelt Financial Corporation and Gelt Properties LLC. Paul J. Schoff, Esq., attorney at the firm, tells the Court he believes that given the present posture of the case, and in particular, the approval of a settlement agreement with the Committee which has been incorporated into the plan or reorganization that is scheduled for confirmation, the Committee will not need legal representation going forward. Mr. Schoof says withdrawal of the firm will not adversely impact the interests of the Committee at this time. A hearing to consider the firm's withdrawal request was set for March 5, 2014, at 11:00 a.m., at nix5 - Courtroom #5. About Gelt Properties Based in Huntington Valley, Pennsylvania, Gelt Properties, LLC, and affiliate Gelt Financial Corporation borrow money from traditional lenders and make loans to commercial borrowers. They also acquire and manage real estate. Gelt Properties and Gelt Financial filed for (Bankr. E.D. Pa. Case Nos. 11-15826 and 11-15826) on July 25, 2011. Judge Magdeline D. Coleman presides over the cases. William John Baldini, Esq., Albert A. Ciardi, III, Esq., Jennifer E. Cranston, Esq., Daniel S. Siedman, Esq., and Jennifer C. McEntee at Ciardi Ciardi & Astin, in Philadelphia, Pa.; Thomas Daniel Bielli, Esq., at O'Kelly Ernst & Bielli, LLC, in Philadelphia, Pa.; Janet L. Gold, Esq., at Eisenberg, Gold & Cettei, P.C., in Cherry Hill, N.J.; David A. Huber, Esq., at Benjamin Legal Services, in Philadelphia, Pa.; Alan L. Nochumson, Esq., at Nochumson PC, in Philadelphia, Pa.; Axel A. Shield, II, Esq., of Huntington Valley, Pa., serve as counsel for Debtor Gelt Properties, LLC. Ciardi Ciardi & Astin also represents Debtor Gelt Financial Corporation as counsel. Gelt Properties disclosed $4.73 million in assets and $4.84 million in liabilities as of the Chapter 11 filing. Its affiliate, Gelt Financial has scheduled $20.3 million in assets and $17.05 million in liabilities as of the Chapter 11 filing. According to the Third Amended Disclosure Statement filed by the Debtors on Oct. 22, 2013, the Plan contemplates that all assets of the Debtors will be sold and liquidated, rented or leased, developed and maintained, in the ordinary course of the Debtors' business. The Debtors note that the Plan envisions the utilization of management talents, commitment and an existing infrastructure to restructure existing debt, liquidate unprofitable properties and meaningfully shift focus to its growing REO portfolio. Paul J. Schoff, Esq., and Francis X. Gorman, Esq., at Schoff McCabe, P.C., represent the Unsecured Creditors' Committee. Craig Howe, CPA, and Howe, Keller & Hunter, P.C., serve as the Committee's accountants. GENERAL MOTORS: U.S. Increases Pressure Over Delay in Auto Recall ----------------------------------------------------------------- Jeff Bennett, writing for The Wall Street Journal, reported that a federal probe into why General Motors Co. took nearly 10 years to recall cars with a potentially deadly defect heated up on Wednesday as safety regulators demanded the auto maker answer 107 questions on its handling of a faulty ignition switch. Separately, an outside law firm retained by GM has begun questioning employees as part of its internal investigation, according to the report, Chief Executive Mary Barra pledged in a letter to employees to get an "unvarnished report on what happened." The company didn't identify the law firm. The National Highway Traffic Safety Administration directed GM to answer a list of questions regarding its February recall of 1.6 million vehicles for faulty ignition switches, the report related. The safety agency told GM to respond by April 3 or face as much as $7,000 a day in penalties. "We are a data-driven organization, and we will take whatever action is appropriate based on where our findings lead us," NHTSA said in a statement, the report cited. The auto maker faces an up to $35 million fine if the agency determines it took too long to commence the recall after a defect was identified. Thirteen deaths have been linked to the problem switch, which was used in some Chevrolet Cobalt and HHR, Pontiac G5 and Solstice, Saturn Ion and Sky models, the report added. GM has said a jarring of the ignition key or too much weight on a key ring attached to the ignition key can cause the switch to turn off, disabling power to the air bags. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31. On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the Dissolution Date, pursuant to the Plan and the Motors Liquidation Company GUC Trust Agreement, dated March 30, 2011, between the parties thereto, the trust administrator and trustee -- GUC Trust Administrator -- of the Motors Liquidation Company GUC Trust, assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to the Dissolution Date. GOLDKING HOLDINGS: Panel Hires Brinkman Portillo as Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Goldking Holdings, LLC and its debtor-affiliates seeks authorization from the U.S. Bankruptcy Court for the Southern District of Texas to retain Brinkman Portillo Ronk, APC as counsel to the Committee, nunc pro tunc to Feb. 7, 2014. The Committee requires Brinkman Portillo to: (a) provide legal advice as necessary with respect to the Committee's powers and duties as an official committee appointed under 11 U.S.C. Section 1102; (b) assist the Committee in investigating the acts, conduct, assets, liabilities, and financial condition of the Debtor, the operation of the Debtor's business, potential claims, and any other matters relevant to the case, to the sale of assets or the formulation of a plan of reorganization (a "Plan"); (c) participate in the formulation of a Plan; (d) provide legal advice as necessary with respect to any disclosure statement and Plan filed in this case and with respect to the process for approving or disapproving disclosure statements and confirming or denying confirmation of a Plan; (e) prepare on behalf of the Committee, as necessary, applications, motions, complaints, answers, orders, agreements and other legal papers; (f) appear in Court to present necessary motions, applications, and pleadings, and otherwise protecting the interests of those represented by the Committee; (g) assist the Committee in requesting the appointment of a trustee or examiner, should such action be necessary; and (h) perform such other legal services as may be required and that are in the best interests of the Committee and creditors. Brinkman Portillo will be paid at these hourly rates: Daren R. Brinkman, Partner $575 Laura J. Portillo, Partner $495 David H. Oken, Of Counsel $485 Kevin C. Ronk, Partner $390 Associate Attorneys $330 Paralegals and Law Clerks $175 Brinkman Portillo will also be reimbursed for reasonable out-of- pocket expenses incurred. Daren R. Brinkman, shareholder of Brinkman Portillo, 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. Brinkman Portillo can be reached at: Daren R. Brinkman, Esq. BRINKMAN PORTILLO RONK, PC JP Morgan International Plaza III 14241 Dallas Parkway, Suite 650 Dallas, TX 75254 Tel: (214) 775-1762 Fax: (214) 932-1003 E-mail: firm@brinkmanlaw.com About Goldking Holdings Goldking Holdings LLC, an oil-and-gas exploration company based in Houston, sought bankruptcy protection (Bankr. D. Del. Case No. 13-12820) in Wilmington, Delaware, on Oct. 30, 2013, from creditors with plans to sell virtually all its assets. Goldking Onshore Operating, LLC, and Goldking Resources, LLC, also sought creditor protection. The cases were initially assigned to Delaware Judge Brendan Linehan Shannon. On Nov. 20, 2013, Judge Shannon granted the request of Goldking's former CEO Leonard C. Tallerine Jr. to move the Chapter 11 case to Houston, Texas (Bankr. S.D. Tex. Case No. 13-37200). Mr. Tallerine owns a nearly 6% stake in the company through an entity called Goldking LT Capital Corp. The Debtors are represented by Scott W. Everett, Esq., and Christopher L. Castillo, Esq., at Haynes And Boone, LLP. Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, serves as the Debtors' co-counsel. The Debtors' notice, claims, solicitation and balloting agent is Epiq Bankruptcy Solutions, LLC. Lantana Oil & Gas Partners was initially hired as the Debtors' financial advisors. In December 2013, the Debtors won Court approval to employ E-Spectrum Advisors LLC, led by its CEO Coy Gallatin, as asset sale advisor. Alvarez & Marsal Global Forensic and Dispute Services, LLC, has been engaged to provide computer forensics and related services. Goldking Holdings disclosed $16,170 in assets and $11,484,881 in liabilities as of the Chapter 11 filing. Judy A. Robbins, United States Trustee for the Southern District of Texas, appointed a three-member official committee of unsecured creditors. GOODYEAR TIRE: S&P Revises Outlook to Positive & Affirms 'BB-' CCR ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it revised its rating outlook on The Goodyear Tire & Rubber Co. (Goodyear) to positive from stable and affirmed its 'BB-' corporate credit rating on the company. At the same time, S&P affirmed its 'BB+' issue-level rating and '1' recovery rating on the company's EUR400 million European revolving credit facility due 2016. The '1' recovery rating indicates S&P's expectation that lenders will receive a very high recovery (90%-100%) in the event of a default. In addition S&P affirmed its 'BB' issue-level rating and '2' recovery rating (70%- 90% recovery expectation) on Goodyear's $1.2 billion term loan and Goodyear Dunlop Tires Europe B.V.'s (GDTE's) EUR250 million senior unsecured notes due 2019. S&P also affirmed its 'B+' issue-level rating and '5' recovery rating (10%-30% recovery expectation) on Goodyear's other senior unsecured debt. "The revised outlook reflects our expectation for an at least a one-in-three chance of an upgrade of Goodyear during the next 12 months," said Standard & Poor's credit analyst Lawrence Orlowski. Goodyear has fully funded its U.S. pension plans, and they will be frozen on April 30, 2014. The immediate effect is an improved number of debt-based financial metrics, including debt to EBITDA of 2.9x and free operating cash flow (FOCF) to debt of 7% for 2014. S&P still assess Goodyear's financial risk profile as "aggressive," given the potential volatility in the company's credit metrics and its still relatively weak free cash flow. However, S&P believes the company's credit measures could continue to improve and support a higher rating over the next 12 months. Specifically, S&P believes its level of free cash flow generation could improve above its base-case estimate and support a "significant" financial risk profile over the next year. The outlook is positive. S&P believes there is an at least a one- in-three chance of an upgrade of Goodyear during the next 12 months. An upgrade would most likely occur if S&P's assessment of the company's financial risk profile improves to "significant" from "aggressive." This could occur if S&P believes leverage will stay below 4.0x and free operating cash flow to debt will reach or exceed 10%. The company's strategy of supplying high-value-added tires to the premium and branded mid-tier segments of the market and its ongoing initiatives to improve its operational efficiency could improve free operating cash flow and result in a higher rating. S&P could revise the outlook to stable if global tire demand declines significantly or if raw material prices spike, thereby making it unlikely that the company could generate free operating cash flow to debt of more than 10% or if it pushes leverage to more than 4x. This could occur if Goodyear's revenue falls 5% or more in 2014 from 2013 and if its gross margins (excluding depreciation and research and development) drop below 24% and remain at that level. GREAT HEARTS: Fitch Affirms 'BB' Rating on $16.4MM Revenue Bonds ---------------------------------------------------------------- Fitch Ratings has affirmed its 'BB' rating on approximately $16.4 million of educational revenue bonds, series 2012 issued by the Industrial Development Authority of the City of Phoenix on behalf of Great Hearts Academies (Veritas Project). The Rating Outlook is Stable. Security The bonds are a joint and several obligation of two charter schools, Veritas Preparatory Academy (VPA) and Archway Classical Veritas (ACV) (together, the schools) and are payable from all legally available revenues. The bonds are further secured by a first mortgage lien over the facility in which the schools are co- located, and a cash-funded debt service reserve. Key Rating Drivers Stable Operations: The rating is supported by VPA's successful 11- year operating history; favorable demand trends evidenced by a track record of enrollment growth and robust waiting lists at both schools; and recent trend of positive operating results on a combined basis. Limited History Of Acv: ACV's limited two-year operating history currently hampers the rating. Per Fitch's charter school rating criteria, the calculation of debt service coverage therefore only includes VPA. Transaction maximum annual debt service (TMADS) coverage on the series 2012 bonds from VPA operations alone was just 0.4x in fiscal 2013. TMADS coverage rises to 1.2x on a combined basis. High Debt Burden: The schools' financial leverage remains high as measured by a TMADS burden of at or just under 15% on a combined basis over the two prior fiscal years (2012-2013) and high debt to net income available for debt service. Strong Management Oversight: The schools benefit from the strong programmatic leadership of Great Hearts Academies (GHA), whose reputation for academic excellence drives consistently strong student demand among its network of 19 charter schools located throughout the Phoenix metropolitan area. Rating Sensitivities Achievment Of Financial Metrics: VPA's achievement of certain financial metrics based on its own operations, principally TMADS coverage; or once ACV reaches five years of audited operating history in fiscal 2016, could yield upward rating momentum. Charter Related Concerns: A limited financial cushion; substantial reliance on enrollment-driven, per pupil funding; and charter renewal risk are credit concerns common among all charter school transactions that, if pressured, could negatively impact the rating. Credit Profile Demand Supported By Strong Academics The schools continue to benefit from favorable student demand trends, resulting from the strong academic performance among GHA's network of schools. VPA's 11-year operating history continues to be viewed as a credit positive, with growing enrollment and strong academic achievement. While only in its third academic year, ACV has also demonstrated enrollment growth and solid academic performance, underscoring the demand for GHA's program offerings and brand recognition throughout the Phoenix metropolitan area. The schools' academic quality is also evidenced by their high Arizona Department of Education rankings of A (or excelling); ACV was upgraded from B (or above-average) in 2013. All schools in the GHA network, including VPA and ACV, continue to outperform state averages on Arizona's standardized testing. The schools maintain a positive working relationship with their authorizer, the Arizona State Board of Charter Schools (ASBCS). While both schools are still operating under their initial charters, they are for terms of 15-years. ASBCS performs five- year reviews for charter schools with 15-year contracts, which VPA has successfully completed twice to date. Fitch views the schools' charter terms and their positive working relationship with ASBCS as a credit positive and partially mitigating charter renewal risk. VPA enrolled a total of 679 students in grades 6-12 as of October 2013, up from 629 as of October 2012 and about 2% over budget. Fitch views management's near-term goal to reach 700 students as achievable due to current demand and wait lists. Enrollment is capped at 750 students per its charter. Demand continues to be strong for ACV as well, with 527 students enrolled in grades K-5 as of October 2013, up from 510. ACV's charter caps enrollment at 600. Combined enrollment of 1,206 is up from 1,139 students as of October 2012 and remains just ahead of the initial projection provided to Fitch of 1,131 for fall 2013. The schools maintain robust and actively managed wait lists (171 for VPA and 1,219 for ACV). Fitch views the schools' nearly full enrollments and sizeable wait lists as reflective of the solid demand for GHA's programs, which center on a rigorous classical liberal arts curriculum. Adequate Margins Typical of most charter schools, revenue diversity is very limited. The schools are highly reliant on state per pupil funding (PPF), which represented 82% and 72% of VPA and ACV's fiscal 2013 operating revenues, respectively. Following relatively flat funding during fiscal years 2010-2012, PPF increased 1% in fiscal 2013, with a further, modest increase of about 1.8% for fiscal 2014. The schools' fiscal 2013 combined operating margin was 1%, down from 3.8% the prior fiscal year. VPA's margin has fluctuated, averaging 0.7%, or roughly breakeven over past five fiscal years (2009-2013); negative 1.8% in fiscal 2013. Despite only two years of audited operating history, ACV generated a solid 4.5% and 7.8% operating margin in fiscal years 2013 and 2012, respectively, boosting aggregated performance. For the six months ended Dec. 31, 2013 (unaudited), the schools were slightly ahead of budget with combined net operating income of $229,000 based on operating revenues of $4.56 million. For fiscal 2014, the schools' budgeted for a combined operating surplus of about $160,000, although management anticipates exceeding this based on enrollment growth during the 2013-2014 (fiscal 2014) academic year and improved PPF. Fitch views continued enrollment stability and breakeven to positive operations critical as the schools' balance sheet resources provide little financial flexibility. On a combined basis, available funds (cash and investments not restricted) totaled $925,000 as of June 30, 2013, up from $708,000 as of June 30, 2012. Available funds covered fiscal 2013 combined operating expenses ($9.09 million) and debt ($16.43 million) by a very low 10.2% and 5.6%, respectively. High Debt Burden The schools' financial leverage remains high as measured by pro forma TMADS coverage and burden. Debt service coverage, as calculated by Fitch, remains weak. Despite VPA's track record of enrollment growth, strong academic performance and generally breakeven to positive operating results, it cannot cover the carrying charges on the series 2012 bonds from current operations without the benefit of revenues derived from ACV. VPA's fiscal 2013 net income available for debt service totaled just $423,000, covering TMADS ($1.18 million) by only 0.4x. Under Fitch's charter school rating criteria, a school having less than five years of audited operating history is excluded from this calculation in pooled transactions. While ACV has experienced strong demand to date and benefits from its affiliation with VPA and the GHA network, it has only completed two full academic years (2011/2012-2012/2013). When incorporating ACV into the debt service calculation, TMADS coverage improved to an adequate 1.2x for fiscal 2013; up from 0.8x in fiscal 2012. The schools' debt burden remains high, although leverage metrics improved slightly from fiscal 2012 to fiscal 2013. TMADS consumed a high 12.9% of the schools' combined fiscal 2013 operating revenues of $9.18 million. Total debt outstanding of about $16.43 million also represented a high 13.8x of combined net income available for debt service of $1.19 million. High leverage ratios are characteristic of the charter school sector and Fitch views TMADS coverage of at or under 1x as a speculative grade credit attributes. While the broader GHA network will likely continue to grow and expand, VPA and ACV have no more material capital or borrowing needs following the acquisition and construction of their new campus in 2012. Moreover, based on the improved state funding environment, modest enrollment growth; and lack of capital plans, Fitch believes the school's debt burden should moderate over time. GREEN FIELD ENERGY: Examiner Hires Hogan Firm as Counsel -------------------------------------------------------- Steven A. Felsenthal, the court-appointed examiner of Green Field Energy Services, Inc. and its debtor-affiliates, seeks authorization from the U.S. Bankruptcy Court for the District of Delaware to employ The Hogan Firm as his counsel, nunc pro tunc to Jan. 17, 2014. The Examiner requires Hogan Firm to: (a) assist and advise the Examiner in investigating whether the Debtors' estates hold valuable claims or causes of action against any of the parties that would receive a release if the Chapter 11 Plan described in the RSA is confirmed and whether the value being contributed by the parties to the RSA justifies granting such releases; (b) represent the Examiner at any proceeding or hearing before the court; and (c) render such other necessary assistance or advice as the Examiner may require in preforming his duties under the Examiner Order. Hogan Firm will be paid at these hourly rates: Daniel K. Hogan, Shareholder $450 Karen E. Harvey, Paralegal $190 Gabrielle E. Durstein, Paralegal $190 Hogan Firm will also be reimbursed for reasonable out-of-pocket expenses incurred. Daniel K. Hogan, shareholder of Hogan Firm, 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 Mar. 25, 2014, at 10:00 a.m. Objections, if any, were due Mar. 6, 2014, at 4:00 p.m. Hogan Firm can be reached at: Daniel K. Hogan, Esq. THE HOGAN FIRM 1311 Delaware Avenue Wilmington, DE 19806 Tel: (302) 656-7540 Fax: (302) 656-7599 E-mail: dkhogan@dkhogan.com About Green Field Energy Green Field Energy Services, Inc., is an independent oilfield services company that provides a wide range of services to oil and natural gas drilling and production companies to help develop and enhance the production of hydrocarbons. The Company's services include hydraulic fracturing, cementing, coiled tubing, pressure pumping, acidizing and other pumping services. Green Field Energy and two affiliates filed Chapter 11 petitions in Delaware on Oct. 27, 2013, after defaulting on an $80 million credit provided by an affiliate of Royal Dutch Shell Plc (Bankr. D. Del. Case No. 13-bk-12783). The Debtors are represented by Michael R. Nestor, Esq., and Kara Hammon Coyle, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware; and Josef S. Athanas, Esq., Caroline A. Reckler, Esq., Sarah E. Barr, Esq., and Matthew L. Warren, Esq., at Latham & Watkins LLP, in Chicago, Illinois. The Debtors' investment banker is Carl Marks Advisory Group LLC. Thomas E. Hill, from Alvarez & Marsal North America, LLC, serves as the Debtors' chief restructuring officer. In its schedules, Green Field disclosed $306,960,039 in total assets and $447,199,869 in total liabilities. Roberta A. Deangelis, The U.S. Trustee for Region 3, appointed six members to the official committee of unsecured creditors in the Chapter 11 cases of Green Field Energy Services, Inc., et al. Green Field's bankruptcy is being financed with a $30 million loan from BG Credit Partners LLC and ICON Capital LLC. The Bankruptcy Court authorized the United States Trustee for Region 3 to appoint Steven A. Felsenthal, Esq., as examiner. GREEN FIELD ENERGY: Wants to Access Shell's Cash Collateral ----------------------------------------------------------- Green Field Energy Services Inc. and its debtor-affiliates ask the Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware for authority to use cash collateral of Shell Western Exploration and Production Inc. until April 26, 2014, pursuant to a proposed budget. A hearing is set for March 11, 2014 at 2:00 p.m. (ET), to consider approval of the Debtors' request. Objections were due March 4, 2014. According to the Debtors, Shell Western asserts that (a) the Debtors' obligation under a deal called contract high pressure fracturing services dated Sept. 2, 2011, are secured by liens on certain of their equipment and motor vehicles, (b) such liens are valid and perfected, and (c) the proceeds of those assets constitutes Shell's "cash collateral". The Debtors tell the Court the cash collateral will be used to pay expenses, which are related to their operations, administering their Chapter 11 case, successfully consummating the contemplated sale of certain of their assets, pursuing sale of their remaining assets, and seeking confirmation of their joint plan of liquidation. The Debtors say, without access to liquidity, their estates will suffer irreparable harm and they will not be able to maximize the value of their assets. The Debtors tells the Court that they have agreed to grant adequate protection to the indenture trustee, for the benefit of the noteholders, and ad hoc noteholder group, as applicable, to secure an amount equal to the aggregate postpetition diminution in value, if any. A full-text copy of the Debtors' proposed cash collateral budget is available for free at http://is.gd/r9lhxq About Green Field Energy Green Field Energy Services, Inc., is an independent oilfield services company that provides a wide range of services to oil and natural gas drilling and production companies to help develop and enhance the production of hydrocarbons. The Company's services include hydraulic fracturing, cementing, coiled tubing, pressure pumping, acidizing and other pumping services. Green Field Energy and two affiliates filed Chapter 11 petitions in Delaware on Oct. 27, 2013, after defaulting on an $80 million credit provided by an affiliate of Royal Dutch Shell Plc (Bankr. D. Del. Case No. 13-12783). The Debtors are represented by Josef S. Athanas, Esq., Caroline A. Reckler, Esq., Sarah E. Barr, Esq., and Matthew L. Warren, Esq., at Latham & Watkins LLP, in Chicago, Illinois; and Michael R. Nestor, Esq., and Kara Hammon Coyle, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware. The Debtors' investment banker is Carl Marks Advisory Group LLC. Thomas E. Hill, from Alvarez & Marsal North America, LLC, serves as the Debtors' chief restructuring officer. In its schedules, Green Field disclosed $306,960,039 in total assets and $447,199,869 in total liabilities. The official committee of unsecured creditors appointed in the case has retained Robert J. Stark, Esq., Howard L. Siegel, Esq., and Sunni P. Beville, Esq., at Brown Rudnick LLP as co-counsel; Steven K. Kortanek, Esq., Kevin J. Mangan, Esq., and Morgan Seward, Esq., at Womble Carlyle Sandridge & Rice, LLP as Delaware co-counsel; and Conway MacKenzie, Inc. as financial advisor. Green Field's bankruptcy is being financed with a $30 million loan from BG Credit Partners LLC and ICON Capital LLC. Steven A. Felsenthal, the court-appointed examiner tapped to employ Stutzman, Bromberg, Esserman & Plifka as his counsel. GULF COLORADO: Court Declares Asset Sold to HOTTR Free of Liens --------------------------------------------------------------- U.S. Bankruptcy Judge H. Christopher Mott granted Heart of Texas Railroad LP's motion in aid of execution of the order, which approved the sale of Gulf, Colorado & San Saba Railway Corp.'s property. HOTTR filed the motion to seek court determination that the property was conveyed to it free and clear of any interests or claim of Texas North Orient Corp., with any such interest or claim attaching to the proceeds of the sale. On Jan. 17, 2013, Judge Mott authorized Ronald Hornberger, the Chapter 11 trustee, to sell the company's assets to HOTRR for $1.55 million. An issue arose regarding the record title to the real property in connection with obtaining insurance for the property transferred under the sale order. According to title records, on May 7, 1993, the Atchison, Topeka and Santa Fe Railway Company conveyed its real property to San Saba Railway Partners. The joint venture partners in San Saba Railway were GCSR and Texas North Orient. About GCSR Gulf, Colorado & San Saba Railway Corporation operates the Gulf, Colorado and San Saba Railway, a former Atchison, Topeka and Santa Fe Railway "San Saba branch line." The Railway is a short-line freight railroad headquartered in Brady, Texas and operates from an interchange with the BNSF Railway at Lometa, Texas 67.5 miles west to Brady, Texas. The Railway is located within the counties of Lampasas, Mills, San Saba and McCulloch, Texas. The Company filed for Chapter 11 relief (Bankr. W.D. Tex. Case No. 12-11531) on July 3, 2012. Judge H. Christopher Mott presides over the case. Frances A. Smith, Esq., and Subvet D. West, Esq., at Shackelford Melton & McKinley, in Dallas, Texas, represented the Debtor as counsel. In its schedules, the Debtor disclosed $24,534,864 in total assets and $3,710,371 in total liabilities. The petition was signed by Richard C. McClure, president and CEO. Ronald Hornberger was named as Chapter 11 trustee to oversee the Debtor's operations through its employees. Cox Smith Matthews Incorporated represents the trustee. HARI RAM: Barred From Using Magnolia Portfolio's Cash Collateral ---------------------------------------------------------------- Chief Bankruptcy Judge Mary D. France denied the request of Hari Ram, Inc., to use cash collateral. The Debtor concedes that Magnolia Portfolio, LLC holds a mortgage and is perfected by an assignment of rents and a UCC financing statement. The Debtor asserts, however, that the hotel room revenues are property of the estate and that it has offered to provide adequate protection for Magnolia's interest in the Debtor's assets. Magnolia objects to the Debtor's use of its cash collateral because, either (1) the Debtor's interest in the hotel room revenues was terminated before the petition was filed or, alternatively, (2) the Debtor is unable to adequately protect Magnolia's security interest. In a March 5, 2014 Opinion available at http://is.gd/FwLZkffrom Leagle.com, Judge France held that even if the Debtor retains an interest in the cash collateral, it is unable to provide adequate protection to Magnolia's interests. Thus the motion to use cash collateral is denied. Hari Ram, Inc., is the owner and operator of a hotel located at 350 Bent Creek Boulevard, Mechanicsburg, Pennsylvania. Magnolia was not the original lender, but acquired its position through an assignment by Orrstown Bank. In 2001, the Debtor executed a promissory note in the principal amount of $2,669,000 secured by a mortgage and an assignment of rents to finance the construction of the Mechanicsburg Hotel. The Debtor also executed a Commercial Security Agreement granting Orrstown a security interest in various personal property including furniture, fixtures, equipment, accounts receivable, inventory, general intangibles, rents, and "payments." Hari Ram, Inc. filed for Chapter 11 bankruptcy (Bankr. M.D. Pa. Case No. 13-06524) on Dec. 24, 2013. Judge Mary D. France oversees the case. Henry W. Van Eck, Esq., at Mette, Evans, & Woodside, serves as the Debtor's counsel. In its petition, Hari Ram estimated $1 million to $10 million in both assets and debts. The petition was signed by Kanjibhai R. Patel, president. HIGHWAY TECHNOLOGIES: Court OKs McCarter & English as Counsel ------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware authorized Charles A. Stanziale, Jr., the Chapter 7 trustee of Highway Technologies, Inc. and HTS Acquisition, Inc. to employ McCarter & English, LLP as counsel to the Trustee, nunc pro tunc to Dec. 20, 2013. As reported in the Troubled Company Reporter, the professional services McCarter & English will provide include, but are not limited to: (a) providing legal advice with respect to the Chapter 7 Trustee's powers and duties under the Bankruptcy Code; (b) preparing on behalf of the Chapter 7 Trustee all motions, applications, orders, reports and papers in connection with the administration of the Debtors' estate; (c) assisting the Chapter 7 Trustee in investigating the financial affairs of the Debtors; (d) objecting to the allowance of any claim that the Chapter 7 Trustee deems improper; (e) appearing in Court and representing the interests of the Debtors' estate; (f) assisting the Chapter 7 Trustee in the liquidation of the Debtors' assets in accordance with the Bankruptcy Code, the Bankruptcy Rules and the Local Rules; (g) taking action to protect and preserve the Debtors' estate, including the prosecution of actions on the Chapter 7 Trustee's behalf, the commencement of actions commenced against the Debtors, the negotiation of disputes in which the Debtors and the Chapter 7 Trustee are involved; and (h) providing any other legal services and litigation services to the Chapter 7 Trustee that are appropriate, necessary and proper in these chapter 7 cases. McCarter & English will be paid at these hourly rates: Charles A. Stanziale, Jr. $625 William F. Taylor, Jr. $525 Jeffrey T. Testa $495 Scott H. Bernstein $395 Kate Roggio Buck $350 Paralegals $195-$205 McCarter & English will also be reimbursed for reasonable out-of- pocket expenses incurred. Charles A. Stanziale, Jr., partner of McCarter & English, 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. McCarter & English can be reached at: Charles A. Stanziale, Jr., Esq. MCCARTER & ENGLISH, LLP Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19801 Tel: (973) 639-7908 Fax: (973) 297-6231 E-mail: cstanziale@mccarter.com About Highway Technologies Highway Technologies Inc. and affiliate HTS Acquisition Inc. sought Chapter 11 protection (Bankr. D. Del. Case Nos. 13-11325 to 13-11326) on May 22, 2013, to conduct an orderly liquidation. Richard M. Pachuiski, Esq., Debra I. Grassgreen, Esq., Bruce Grohsgal, Esq., Maria A. Bove, Esq., and John W. Lucas, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The prepetition lenders are represented by David M. Hilllman, Esq., at Schulte Roth & Zabel, in New York. The Company's balance sheet as of March 31, 2013, showed $55 million in total assets and $102 million in liabilities. In its amended schedules, Highway Technologies disclosed $41,350,616 in assets and $91,780,181 in liabilities. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A. represents the Official Unsecured Creditors' Committee as counsel. Gavin/Solmonese LLC serves as the Committee's financial advisor. At the behest of the Debtors, the Court converted the Chapter 11 cases to liquidation under Chapter 7 of the Bankruptcy Code on Dec. 20, 2013. HOSPITALITY STAFFING: Can Change Case Caption After Sale -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized HSS Holding, LLC, et al., to revise the caption for their bankruptcy cases to reflect their new legal names. As reported in the Troubled Company Reporter on Feb. 11, 2014, the Debtors relate that the change is pursuant to the terms of the asset purchase agreement for the sale of substantially all of the Debtors' assets which closed on Jan. 24, 2014. The name changes are: Former Debtor Names New Debtor Names ------------------- ---------------- HSS Holdings, LLC Hospitality Liquidation I, LLC Hospitality Staffing Solutions Group, LLC Hospitality Liquidation II, LLC Hospitality Staffing Solutions, LLC Hospitality Liquidation III, LLC IHS Staffing Services, LLC Hospitality IV, LLC IHS Hospitality Services, LLC Hospitality Liquidation V, LLC Hospitality Staffing Solutions of Louisiana, L.L.C. Hospitality Liquidation VI, LLC Hospitality Staffing Solutions of Iowa, LLC Hospitality Liquidation VII, LLC Hospitality Staffing Solutions of Connecticut, LLC Hospitality Liquidation VIII, LLC Hospitality Staffing Solutions of Indiana, LLC Hospitality Liquidation IX, LLC Hospitality Staffing Solutions of Illinois, LLC Hospitality Liquidation X, LLC In addition, the Debtors intended to file a notice of legal name change in the cases to ensure that all creditors and parties-in- interest are aware of the Debtors' new names. About Hospitality Staffing Solutions Hospitality Staffing Solutions, LLC (HSS) -- http://www.hssstaffing.com-- is a hospitality staffing company. Established in 1990, the company's team of hotel industry experts works with 4 and 5 star properties in 35 states and 62 markets across the country. Hospitality Staffing Solutions and various affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 13-12740) on Oct. 24, 2013, before Judge Brendan Linehan Shannon. The Debtors are represented by Mark Minuti, Esq., at Saul Ewing LLP, in Wilmington, Delaware; and Jeffrey C. Hampton, Esq., Monique Bair DiSabatino, Esq., and Ryan B. White, Esq., at Saul Ewing LLP, in Philadelphia, Pennsylvania. The Debtors' financial advisor is Conway Mackenzie, Inc., and their investment banker is Duff & Phelps Corp. Epiq Systems, Inc., is the Debtors' claims and noticing agent. HSS Holding disclosed assets of undetermined amount and liabilities of $22,910,994. The investor group is providing DIP financing. They are represented by Scott K. Charles, Esq., and Neil M. Snyder, Esq., at Wachtell, Lipton, Rosen & Katz, in New York; and Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware. Roberta A. DeAngelis, U.S. Trustee for Region 3, has notified the Bankruptcy Court that she was unable to appoint a committee of unsecured creditors in the Debtors' cases as there was insufficient response to the U.S. Trustee communication/contact for service on the committee. The Debtors filed for bankruptcy to facilitate a sale of the business to HS Solutions Corporation, an entity formed by LJC Investments I, LLC and a group of investors including Littlejohn Opportunities Master Fund, L.P., Caymus Equity Partners and Management, and SG Distressed Debt Fund LP. The investor group acquired $22.9 million of the secured bank debt on Oct. 11, 2013. That debt is in default. The asset purchase agreement with HS Solutions was approved by the Court on Dec. 13, 2014. The sale closed on Jan. 24, 2014. HOSPITALITY STAFFING: Wants to File Chapter 11 Plan Until April 28 ------------------------------------------------------------------ HSS Holding LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to: a) file a Chapter 11 plan until April 28, 2014; and b) solicit acceptances of that plan through and until June 23, 2014. A hearing is set for March 26, 2014, at 11:30 a.m. (EST) to consider approval of the Debtors' extension request. Objections, if any, must be file no later than 4:00 p.m. (EST) on March 4, 2014. The Debtors tell the Court that their exclusive plan filing deadline expired on Feb. 21, 2014. To ensure that their Chapter 11 Cases continue to progress in an effective and efficient manner, they seek the requested extensions of the exclusive periods so that they can determine a course of action for these cases that best maximizes value for all parties in interest while also continuing to transition the Debtors' operations and address other pressing issues, the Debtors say. The Debtors say they need additional time to address various post- closing and asset disposition issues to develop a course of action that best serves their estates, creditors and parties in interest. Having sufficient time to develop a course of action that reflects the circumstances of these cases will in turn enable these cases to continue to progress in an efficient manner, the Debtor notes. About Hospitality Staffing Solutions Hospitality Staffing Solutions, LLC (HSS) -- http://www.hssstaffing.com-- is a hospitality staffing company. Established in 1990, the company's team of hotel industry experts works with 4 and 5 star properties in 35 states and 62 markets across the country. Hospitality Staffing Solutions and various affiliates filed voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 13-12740) on Oct. 24, 2013, before Judge Brendan Linehan Shannon. The Debtors are represented by Mark Minuti, Esq., at Saul Ewing LLP, in Wilmington, Delaware; and Jeffrey C. Hampton, Esq., Monique Bair DiSabatino, Esq., and Ryan B. White, Esq., at Saul Ewing LLP, in Philadelphia, Pennsylvania. The Debtors' financial advisor is Conway Mackenzie, Inc., and their investment banker is Duff & Phelps Corp. Epiq Systems, Inc., is the Debtors' claims and noticing agent. HSS Holding disclosed assets of undetermined amount and liabilities of $22,910,994. The investor group is providing DIP financing. They are represented by Scott K. Charles, Esq., and Neil M. Snyder, Esq., at Wachtell, Lipton, Rosen & Katz, in New York; and Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware. Roberta A. DeAngelis, U.S. Trustee for Region 3, has notified the Bankruptcy Court that she was unable to appoint a committee of unsecured creditors in the Debtors' cases as there was insufficient response to the U.S. Trustee communication/contact for service on the committee. The Debtors filed for bankruptcy to facilitate a sale of the business to HS Solutions Corporation, an entity formed by LJC Investments I, LLC and a group of investors including Littlejohn Opportunities Master Fund, L.P., Caymus Equity Partners and Management, and SG Distressed Debt Fund LP. The investor group acquired $22.9 million of the secured bank debt on Oct. 11, 2013. That debt is in default. The asset purchase agreement with HS Solutions was approved by the Court on Dec. 13, 2014. The sale closed on Jan. 24, 2014. IN PLAY: Plan & Disclosure Statement Amendments Due Today --------------------------------------------------------- The Bankruptcy Court, in a minute order, directed In Play Membership Golf, Inc., to file an amended Disclosure Statement and, if necessary, an amended plan, by March 7, 2014. The Court also said that upon filing of the amended documents, the Court will enter an order approving the Disclosure Statement and set a confirmation hearing for April 28, 2014 at 10:00 a.m., along with all attendant deadlines. The Chapter 11 Plan As reported by the Troubled Company Reporter, the Debtor's reorganization plan calls for the purchase of the Debtor's golf courses, and the golf course of Eagle Mountain Golf Course, LLC, located in Fort Worth, Texas, which are owned by Stacey Hart, the Debtor's principal, by Oread Capital & Development, LLC, for $14 million for the purpose of developing residential housing and the continued operation of Deer Creek Golf Course as a nine hole course by the Debtor after confirmation. The purchase is subject to court approval through a confirmed Plan which must pay all creditors in full. A full-text copy of the Second Amended Disclosure Statement, dated Sept. 18, 2013, is available for free at http://bankrupt.com/misc/INPLAYds0918.pdf The TCR reported on Dec. 26, 2013, that the Court extended, at the behest of the Debtor, the deadline to file the Debtor's Third Amended Plan of Reorganization and Third Amended Disclosure Statement to Jan. 7, 2014. About In Play Membership Golf In Play Membership Golf, Inc., doing business as Deer Creek Golf Club and Plum Creek Golf and Country Club, filed a Chapter 11 petition (Bankr. D. Col. Case No. 13-14422) in Denver on March 22, 2013. Jeffrey A. Weinman, Esq., at Weinman & Associates, P.C., and Patrick D. Vellone at Allen & Vellone, P.C., represent the Debtor in its restructuring effort. Allen & Vellone, P.C. serves as the Debtor's co-counsel. The Debtor estimated assets and liabilities of at least $10 million. INFINIA CORP: Court Approves Liquidating Plan Disclosures --------------------------------------------------------- Infinia Corp. is now a step closer to emerging from bankruptcy protection after a judge approved the outline of its Chapter 11 plan. Judge William Thurman of U.S. Bankruptcy Court for the District of Utah approved on Feb. 25 the so-called disclosure statement, which outlines the plan of liquidation proposed by Infinia and its subsidiary Powerplay Solar I LLC. Judge Thurman's decision means that creditors will soon begin voting on the proposed plan. Creditors will use the outline to inform their decision on whether to support the plan itself. The bankruptcy judge also approved the procedures for soliciting votes from creditors. Infinia needs to get a majority of votes accepting the plan and a court order confirming the plan to exit bankruptcy. In order for ballots to be counted, they must be received by the company on or before March 31, which is also the deadline for filing objections to confirmation of the plan. A court hearing to consider confirmation of the plan is scheduled for April 14. Liquidating Plan The proposed plan calls for the liquidation of the remaining assets of the bankruptcy estates of Infinia and its subsidiary, evaluation of claims, and distribution of the net funds of the estates to creditors. In November last year, the bankruptcy court approved the sale of substantially all of the assets of the companies to Ricor Generation Inc. The sale closed in early December. Infinia received and is holding the net proceeds from the sale in a bank account. As of January 10, the net funds held by the companies total approximately $4,371,292, according to the disclosure statement. In addition to the net proceeds from the sale and other cash of the companies, their remaining assets are primarily potential avoidance actions. Under the Plan, the estates and all of their remaining assets would be substantively consolidated into and become property of one liquidating trust, and a trustee would be appointed. The plan proposes that Gil Miller, a founding member and principal of Rocky Mountain Advisory LLC, a Salt Lake City based firm, would serve as the liquidating trustee. The claims of creditors are divided into six classes. Classes 1 and 2 consist of priority claims against Infinia and PowerPlay, respectively. Class 3 consists of secured claims against Infinia. Secured creditors will retain their liens on the collateral until, by no later than Sept. 30, the liquidating trustee sells the collateral and distributes the net proceeds to them in accordance with the priority of their liens; transfers the collateral to them; or pays such claims in full. Class 4 consists of general unsecured claims against Infinia. The trustee will pay unsecured creditors their pro rata share of at least 10% of the funds in a distribution account on the initial distribution date. Meanwhile, general unsecured claims against PowerPlay in Class 5 are treated the same as Class 4 claims under the plan. Class 6 consists of equity interests in the companies, including common and preferred shares of Infinia and the membership interest held by the company in PowerPlay. Equity interests will be cancelled under the plan. A full-text copy of the Disclosure Statement is available for free at http://is.gd/d6BgQx About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013, to sell the facility to their lender. The Debtors estimated assets and debts of at least $10 million. Infinia Corp. is represented by George Hoffman, Esq., Steven C. Strong, Esq. and Victor P. Copeland, Esq. -- gbh@pkhlaywers.com and scs@pkhlawyers.com -- of Parsons Kinghorn Harris. PowerPlay Solar I is represented by Troy J. Aramburu, Esq. and Jeff D. Tuttle, Esq. -- taramburu@swlaw.com and jtuttle@swlaw.com -- of Snell & Wilmer L.L.P. A four-member panel has been appointed in the case as the official unsecured creditors committee, composed of Petersen Incorporated, Intertek Testing Services, NA, Inc., ATL Technology, LLC, and LeanWerks. INFINIA CORP: Gets Court Approval to Purchase Run-Off Coverage -------------------------------------------------------------- Infinia Corp. received the green light from U.S. Bankruptcy Judge William Thurman to purchase run-off coverage for the D&O policy. The company was authorized to purchase run-off coverage for the policy for an extended reporting period of one year, at a cost of approximately $154,393, less any amount credited against the return premium for the policy. Prior to the Dec. 11, 2013 closing of the sale of substantially all of its assets to Ricor Generation, Inc., Infinia had maintained various insurance policies through the Marsh insurance brokerage firm. The policy period for Infinia's current D&O policy is May 15, 2013, through May 15, 2014. The limit of liability on the D&O policy is $5 million, and the retention/deductible is $25,000. The continuity/retroactive date on the D&O policy is May 15, 2012. The annual premium for the D&O policy was $154,393, which Infinia paid using premium financing from AFCO. After the closing, RGI elected to purchase new lines of insurance coverage that generally paralleled Infinia's existing insurance policies. In this relation, AIG has offered a substantial financial incentive for Infinia to give a buying decision to AIG within 30 days of Jan. 2, 2014. Infinia concluded that the one year run-off extension will provide the company a sufficient amount of time to report any claims under its D&O policy. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013, to sell the facility to their lender. The Debtors estimated assets and debts of at least $10 million. Infinia Corp. is represented by George Hoffman, Esq., Steven C. Strong, Esq. and Victor P. Copeland, Esq. -- gbh@pkhlaywers.com and scs@pkhlawyers.com -- of Parsons Kinghorn Harris. PowerPlay Solar I is represented by Troy J. Aramburu, Esq. and Jeff D. Tuttle, Esq. -- taramburu@swlaw.com and jtuttle@swlaw.com -- of Snell & Wilmer L.L.P. A four-member panel has been appointed in the case as the official unsecured creditors committee, composed of Petersen Incorporated, Intertek Testing Services, NA, Inc., ATL Technology, LLC, and LeanWerks. INFINIA CORP: Seeks to Employ Deloitte as Special Counsel --------------------------------------------------------- Infinia Corp. has filed an application to hire Deloitte Abogados and Deloitte Asesores Tributarios as its special counsel. Infinia tapped the firms to get legal advice on general corporate matters involving the laws of Spain, including management duties related to Infinia Solar's insolvency administration and Spanish liquidation liabilities. Deloitte will also advise the company with respect to labor law issues, tax compliance and tax form preparation. The firms will be paid on an hourly basis at these rates: Partner 576 Euro/hour (approx. $783) Manager 324 Euro/hour (approx. $440) Staff 165 Euro/hour (approx. $224) The firms do not represent or hold interest adverse to Infinia or its bankruptcy estate, according to a declaration by Santiago Hurtado, Esq., a partner at Deloitte Abogados. U.S. Bankruptcy Judge William Thurman will hold a hearing on March 31 to consider approval of the application. About Infinia Corp. Infinia Corp. and subsidiary Powerplay Solar I LLC, the owners of a solar generation project in Yuma, Arizona, filed Chapter 11 cases (Bankr. D. Utah Case No. 13-30688) on Sept. 17, 2013, to sell the facility to their lender. The Debtors estimated assets and debts of at least $10 million. Infinia Corp. is represented by George Hoffman, Esq., Steven C. Strong, Esq. and Victor P. Copeland, Esq. -- gbh@pkhlaywers.com and scs@pkhlawyers.com -- of Parsons Kinghorn Harris. PowerPlay Solar I is represented by Troy J. Aramburu, Esq. and Jeff D. Tuttle, Esq. -- taramburu@swlaw.com and jtuttle@swlaw.com -- of Snell & Wilmer L.L.P. A four-member panel has been appointed in the case as the official unsecured creditors committee, composed of Petersen Incorporated, Intertek Testing Services, NA, Inc., ATL Technology, LLC, and LeanWerks. INTELLIPHARMACEUTICS INT 'L: Incurs US$11.5MM Net Loss in 2013 ------------------------------------------------------------- Intellipharmaceutics International Inc. filed with the U.S. Securities and Exchange Commission its annual report on Form 20-F disclosing a net loss of US$11.49 million on US$1.52 million of revenues for the year ended Nov. 30, 2013, as compared with a net loss of US$6.13 million on US$107,091 of revenues for the year ended Nov. 30, 2012. The Company said the increased loss can be attributed to the loss in the fair value adjustment of derivative liabilities compared to a gain in the fair value adjustment of derivative liabilities in the prior year. For the year ended Nov. 30, 2011, the Company incurred a net loss of US$4.88 million. As of Nov. 30, 2013, the Company had US$4.37 million in total assets, US$10.33 million in total liabilities and a US$5.95 million shareholders ' deficiency. At Nov. 30, 2013, Intellipharmaceutics' cash and cash equivalents totaled $0.8 million, compared with $0.5 million at Nov. 30, 2012. The increase in cash and cash equivalents during the year ended Nov. 30, 2013, is mainly a result of the increase in financing activities, partially offset by a decrease in cash flows used in operating activities related to R&D activities, and the decrease in purchases of production, laboratory and computer equipment. Deloitte LLP, in Toronto, Canada, issued a ''going concern '' qualification on the consolidated financial statements for the year ended Nov. 30, 2013. The independent auditors noted that Company's recurring losses from operations and the accumulated deficit raise substantial doubt about its ability to continue as a going concern. A copy of the Form 20-F is available for free at: http://is.gd/IDHiXZ About Intellipharmaceutics Toronto, Canada-based Intellipharmaceutics International Inc. is incorporated under the laws of Canada. Intellipharmaceutics is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. Its patented Hypermatrix(TM) technology is a multidimensional controlled- release drug delivery platform that can be applied to the efficient development of a wide range of existing and new pharmaceuticals. Based on this technology, Intellipharmaceuticshas a pipeline of product candidates in various stages of development, including filings with the FDA in therapeutic areas that include neurology, cardiovascular, gastrointestinal tract, diabetes and pain. ISC8 INC: Incurs $513,000 Net Loss in Dec. 31 Quarter ----------------------------------------------------- ISC8 Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $513,000 on $93,000 of revenues for the quarter ended Dec. 31, 2013, as compared with a net loss of $2.16 million on $93,000 of revenues for the same quarter in 2012. As of Dec. 31, 2013, the Company had $3.81 million in total assets, $10.22 million in total liabilities and a $6.41 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/lHJ3mm On Feb. 7, 2014, ISC8 modified its Loan and Security Agreement with Partners for Growth to provide for, among other things, a revised repayment structure. In the event the Company consummates a Capital Transaction, as that term is defined in the Second Loan Modification, the Company will immediately pay to PFG 10 percent of the proceeds from the Capital Transaction in cash or cash equivalents, and an additional 15 percent of those proceeds will be added to the balance of the loan. The Unit Offering constitutes a Capital Transaction under the terms of the Second Loan Modification. On Feb. 13, 2014, the Company entered into Note Purchase Agreements with certain accredited investors, resulting in the issuance of units which consist of, among other securities, senior subordinated secured convertible promissory notes in the aggregate principal amount of $525,000. Each Note issued in connection with the Unit Offering currently accrues simple interest at a rate of 12 percent per annum, which interest rate increases to 20 percent in the event of default. Interest is payable through the addition of the amount of that interest to the then outstanding principal amount of the Notes. The Notes mature on July 31, 2014. Each Note is convertible, at the option of the holder thereof, into that number of shares of the Company's Series D Convertible Preferred Stock, and Common Stock purchase warrants as follows: the number of Series D Preferred issuable upon conversion of each Note will be equal to the product obtained by dividing (i) the total principal amount of the Note, together with accrued interest thereon (the "Conversion Amount"), by (ii) $10,000 ("Conversion Shares"). The number of shares of Common Stock issuable upon exercise of the Conversion Warrants shall be equal to the product obtained by diving (y) the Conversion Amount by (z) $0.168 ("Warrant Shares"). The Series D Preferred and Conversion Warrants are hereinafter referred to as the "Conversion Securities". The Notes shall automatically convert into Conversion Securities upon consummation of a qualified financing pursuant to which the Company sells equity securities (including without limitation shares of Series D Preferred) with an aggregate sales price of not less than $4.0 million, or upon the affirmative vote of a simple majority of holders of the Notes. To secure the Company's obligations to repay all amounts due under the terms of the Notes, the Company and Fundamental Master LP, the Holder Representative under the terms of the Notes, executed a Security Agreement, which Security Agreement grants a senior security interest in all assets of the Company, which security interest is only subordinated to the security interest granted to holders of senior debt issued by the Company prior to the date of the Security Agreement. The Company may in the future issue additional Notes, up to $3.5 million in the aggregate, of which $2.0 million will represent direct investment from new Investors, and up to $1.5 million will represent the exchange of certain currently issued promissory notes for new Notes ("Old Notes"), which Old Notes are currently due and payable. As additional consideration for the issuance of the Notes, the Company issued to each Investor (i) shares of the Company's Common Stock in an amount equal to the total principal amount of the Note purchased by such Investor divided by $0.168; and (ii) a Unit Warrant in an amount equal to the Purchase Price divided by $0.168, resulting in the issuance of an aggregate total of 59,524 shares of the Company's Common Stock and Unit Warrants exercisable for 59,524 Warrant Shares. The Unit Warrants are exercisable for $0.042 per share of Common Stock, and expire, if not otherwise exercised, two years from the date of issuance. On Jan. 30, 2014, the Company and a majority of the holders of the Company's Series D Preferred executed a consent, pursuant to which the Holders consented to the issuance of the Notes. Execution of the Consent by a majority of the Holders was required as a condition to the issuance of the Notes. A copy of the Form 8-K is available for free at: http://is.gd/hOJ9n4 About ISC8 Inc. Costa Mesa, California-based ISC8 Inc. is engaged in the design, development, manufacture and sale of a family of security products, consisting of cyber security solutions for commercial and U.S. government applications, secure memory products, some of which utilize technologies that the Company has pioneered for three-dimensional ("3-D") stacking of semiconductors, systems in a package ("Systems in a Package" or "SIP"), and anti-tamper systems. The Company reported a net loss of $28.02 million on $501,000 of revenues in fiscal year ended Sept. 30, 2013, compared with a net loss of $19.7 million in fiscal year ended Sept 30, 2012. Squar, Milner, Peterson, Miranda & Williamson, LLP, in their audit report on the consolidated financial statements for the year ended Sept. 30, 2013, expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has negative working capital of $29.7 million and a stockholders' deficit of $55.5 million. JAMESPORT DEVELOPMENT: Court Okays LaMonica Herbst as Counsel ------------------------------------------------------------- Jamesport Development LLC sought and obtained permission from the Hon. Robert E. Grossman of the U.S. Bankruptcy Court for the Eastern District of New York to employ LaMonica Herbst & Maniscalco, LLP as counsel, effective Jan. 17, 2014. The Debtor requires LaMonica Herbst to: (a) provide legal advice with respect to the Debtor's powers and duties as a debtor-in-possession in accordance with the provisions of the Bankruptcy Code in the continued operation of the Debtor's business; (b) prepare, on behalf of the Debtor, all necessary schedules, applications, motions, answers, orders, reports, adversary proceedings and other legal documents required by the Bankruptcy Code and Federal Rules of Bankruptcy Procedure; (c) perform all other legal services for the Debtor that may be necessary in connection with the Debtor's attempt to reorganize the Debtor's affairs under the Bankruptcy Code; and (d) assist the Debtor in the development and implementation of a plan of reorganization and a marketing and sale process. LaMonica Herbst will be paid at these hourly rates: Para-professionals $125-$150 Associates $300-$400 Of-Counsel and Partners $425-$550 LaMonica Herbst will also be reimbursed for reasonable out-of- pocket expenses incurred. LaMonica Herbst was paid $7,000, plus the filing fee required by the Court, as a retainer to act as counsel to the Debtor and to represent it as a debtor and debtor-in-possession in this case. Adam P. Wofse, partner of LaMonica Herbst, 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. LaMonica Herbst can be reached at: Adam P. Wofse, Esq. LA MONICA HERBST & MANISCALCO, LLP 3305 Jerusalem Avenue Wantagh, NY 11793 Tel: (516) 826-6500 Fax: (516) 826-0222 E-mail: awofse@lhmlawfirm.com About Jamesport Development Calverton, New York-based Jamesport Development LLC filed a Chapter 11 bankruptcy petition (Bankr. E.D.N.Y. Case No. 14-70202) on Jan. 21, 2014, in Central Islip, New York. The Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in liabilities. The Debtor's Chapter 11 plan and disclosure statement are due May 21, 2014. The Debtor is represented by Salvatore LaMonica, Esq., at LaMonica Herbst and Maniscalco, in Wantagh, New York. The Hon. Robert E. Grossman oversees the case. JAMES E. COFIELD: Cadles of Grassy Meadows' Suit Goes to Trial -------------------------------------------------------------- Bankruptcy Judge Stephani W. Humrickhouse denied the motion of Cadles of Grassy Meadows II, LLC, for summary judgment on its claims brought in the adversary proceeding, CADLES OF GRASSY MEADOWS II, LLC Plaintiff v. JAMES E. COFIELD, JR. Defendant, Adv. Proc. No. H-12-00227-8-AP (Bankr. E.D.N.C.). A copy of the Court's March 5, 2014 Order is available at http://is.gd/tYMG1B from Leagle.com. "The motion for summary judgment on the claims pursuant Sec. 523(a)(4) is denied, in light of the factual determination necessary with regard to the existence of the requisite trust relationship. Further, the motion is denied on the claims pursuant to Sec. 523(a)(6), as the findings contained within the Judgment are not sufficient for this court to rule that the issue of willful and malicious injury was resolved in state court. The Judgment therefore does not support the application of collateral estoppel to Cadles' nondischargeability claim under Sec. 523(a)(6)," the Court held. Cadles seeks a declaration of nondischargeability pursuant to Sections 523(a)(4) and (a)(6) as to a debt evidenced by a state court judgment. The dispute stems from a mid-1980's business arrangement between Coolidge Bank and Trust Company and Malmart Mortgage Company, an entity of which the debtor was president. Under the arrangement, Coolidge advanced funds to Malmart, which Malmart used to make consumer construction loans. The mortgages securing such loans were pledged to Coolidge as security. In 1987, Coolidge brought suit against the debtor, in his individual capacity, among others, alleging conversion and unfair or deceptive trade conduct in connection with the satisfaction of three mortgages without Coolidge's consent and without repayment to Coolidge. After a trial in the Massachusetts Superior Court, a jury found that the debtor converted funds and engaged in unfair or deceptive trade conduct, and awarded Coolidge compensatory damages of $324,000. The Massachusetts court entered an order to this effect on June 2, 1993, and additionally found that treble damages were not warranted, instead awarding double compensatory damages pursuant to the relevant statute, in the amount of $648,000. The Judgment was subsequently assigned to Cadles. James E. Cofield, Jr. filed a Chapter 11 bankruptcy petition Bankr. E.D.N.C. Case No. 11-02034) on March 17, 2011. On April 6, 2012, the case was converted to one under chapter 7 of the Bankruptcy Code. JEH COMPANY: May Sell Equipment Pledged to Wells Fargo ------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas authorized JEH Company, et al., to sell assets pledged to Wells Fargo Equipment Finance (2004 Case 586G Wide Lift VIN No. ending in 292454 and two ramps) for $25,500. The Debtors are also authorized to pay Wells Fargo Equipment Finance the proceeds of the sale together with per diem interest accruing after the payoff amounts. Additionally, the Court ordered that Dallas County, City of McAllen, South Texas College, South Texas ISD, Tarrant County, Upshur County, Wood County and other ad valorem tax lien holders, will be and are granted a replacement lien, to the extent of any security interest held against any property sold pursuant to the Court's order, with the replacement lien attaching to the cash of JEH Company up to the full purchase price of any property sold. About JEH Company JEH Company, JEH Stallion Station, Inc., and JEH Leasing Company, Inc. filed bare-bones Chapter 11 petitions (Bankr. N.D. Tex. Case Nos. 13-42397 to 13-42399) in Ft. Worth, Texas on May 22, 2013. Mark Joseph Petrocchi, Esq., at Griffith, Jay & Michel, LLP, in Ft. Worth, serves as counsel to the Debtors. JEH Company was organized in 1982 by Jim and Marilyn Helzer. According to http://www.jehroofingcompany.com/,JEHCO buys roofing material directly from the manufacturer and sell it to contractors, builders, and homeowners. JEH Leasing owns and leases equipment and vehicles primarily for use in the business of JEHCO. Stallion is in the quarter horse and thoroughbred horse business. In its schedules, JEH Company disclosed $13,606,753 and $18,351,290 in liabilities as of the Petition Date. JEH Stallion Station, Inc., disclosed $364,007 in assets and $3,982,012 in liabilities as of the Petition Date. JEH Leasing Company, Inc., disclosed $1,242,187 in assets and $155,216 in liabilities as of the Petition Date. JEH COMPANY: Frost Bank Balks at Adequacy of Plan Outline --------------------------------------------------------- Michael J. Quilling, Esq., at Quilling Selander Lownds Winslett & Moser, P.C., on behalf of secured creditor Frost Bank, asks the U.S. Bankruptcy Court for the Northern District of Texas to deny approval of the Disclosure Statement explaining JEH Company, et al.'s Chapter 11 Plan. Frost Bank relates that pursuant to the Court's order dated Nov. 6, 2013, Frost was paid $3,632,675 plus per diem interest in full satisfaction of the JEHCO obligation to Frost under its claim. Frost said the Disclosure Statement fails to provide adequate information under the standard of Section 1125(a) of the Bankruptcy Code such that Frost can determine how much Debtors intend to pay Frost under its Stallion Claims. Frost said that pursuant to the reconciliation provided to the Debtors, Section 10.32 of the Plan documents must be amended to read: the remaining secured claims of Frost against JEH Stallion Station will be paid in full in the following amounts: a. Lease 001: $19,114 subject to a reduction by the amount of any additional adequate protection payments prior to the Effective Date; b. Loan 9002: $1,326,033 as of Feb. 18, 2014, plus a per diem thereafter of $209; c. All amounts due and owing above are subject to additional fees, expenses, and costs pursuant to the Frost loan documents; and d. In the event JEH Stallion Station fails to pay any amounts due and owing to Frost, JEHCO will pay any remaining obligations to Frost pursuant to its unconditional guaranties of the JEH Stallion Station obligations. About JEH Company JEH Company, JEH Stallion Station, Inc., and JEH Leasing Company, Inc. filed bare-bones Chapter 11 petitions (Bankr. N.D. Tex. Case Nos. 13-42397 to 13-42399) in Ft. Worth, Texas on May 22, 2013. Mark Joseph Petrocchi, Esq., at Griffith, Jay & Michel, LLP, in Ft. Worth, serves as counsel to the Debtors. JEH Company was organized in 1982 by Jim and Marilyn Helzer. According to http://www.jehroofingcompany.com/,JEHCO buys roofing material directly from the manufacturer and sell it to contractors, builders, and homeowners. JEH Leasing owns and leases equipment and vehicles primarily for use in the business of JEHCO. Stallion is in the quarter horse and thoroughbred horse business. In its schedules, JEH Company disclosed $13,606,753 and $18,351,290 in liabilities as of the Petition Date. JEH Stallion Station, Inc., disclosed $364,007 in assets and $3,982,012 in liabilities as of the Petition Date. JEH Leasing Company, Inc., disclosed $1,242,187 in assets and $155,216 in liabilities as of the Petition Date. KAHN FAMILY: Hearing on Access to Cash Continued to March 28 ------------------------------------------------------------ The Hon. Helen E. Burris of the U.S. Bankruptcy Court for the District of South Carolina continued until March 28, 2014, at 10:00 a.m., the hearing to consider Wells Fargo Bank, N.A.'s motion to prohibit Kahn Family LLC's use of cash collateral. As reported in the Troubled Company Reporter on Jan. 27, 2014, Wells Fargo asked the Court to (i) prohibit Kahn Family, LLC's use of cash collateral; and (ii) require the Debtor to account for and segregate any of Wells Fargo's cash collateral which was generated by non-debtor property and collected by the Debtor and preserve all of Wells Fargo's rights with respect to such non-debtor cash collateral. Wells Fargo is the holder of six loans to Kahn-related entities, which are generated by Mr. Kahn and secured by various collateral pledged by non-debtor and debtor entities. Collectively, the loans have a balance due of $61,802,838 as of Jan. 3, 2014. According to Wells Fargo, the Debtor has not met its burden to show Wells Fargo is adequately protected or otherwise obtained approval by the Court to use cash collateral. About Kahn Family Kahn Family, LLC, and Kahn Properties South, LLC, filed bare-bones Chapter 11 petitions (Bankr. D. S.C. Case Nos. 13-02354 and 13-02355) on April 22, 2013. Kahn Family disclosed $50 million to $100 million in assets and liabilities. R. Geoffrey Levy, Esq., at Levy Law Firm, LLC, serves as the Debtors' counsel. David G. Wolff, Esq., at Barnes, Alford, Stork & Johnson, LLP, is the Debtor's special counsel. Bill Quattlebaum, CPA of Elliott Davis, LLC, serves as its accountant. The Debtor's Plan of Reorganization dated Dec. 20, 2013, provides that payments and distributions under the Plan will be funded by (1) the sale of certain of the Debtor's real property at fair market value; (2) the transfer of certain real property of the Debtor to Gibraltar BB4, LLC; (3) conversion of certain unsecured claims against the Debtor to equity in the Reorganized Debtor; (4) cash on hand on the Effective Date; and (5) cash flow from continuing operations. KAHN FAMILY: Plan Outline Hearing Continued Until March 28 ---------------------------------------------------------- The Hon. Helen E. Burris of the U.S. Bankruptcy Court for the District of South Carolina continued until March 28, 2014, at 10:00 a.m., the hearing to consider the adequacy of information in the Disclosure Statement explaining Kahn Family, LLC's Chapter 11 Plan. Judy A. Robbins, U.S. Trustee for Region 4, objected to the Disclosure Statement filed on Dec. 20, 2013, stating that the Disclosure Statement is silent regarding a release by the Debtor against third parties in Article X of the Plan. The Disclosure Statement must be amended to discuss the legal basis for the releases of the non-debtor third parties by the debtor and what claims or causes of action the debtor may have against such parties. Additionally, the Disclosure Statement must be amended to provide additional information explaining the classification of unsecured creditors in separate classes and how the classification is fair and equitable between the creditors. There should also be a discussion of the debts owed to insiders and whether there are any disputes or defenses to the debts. Payments and distributions under the Plan will be funded by (1) the sale of certain of the Debtor's real property at fair market value; (2) the transfer of certain real property of the Debtor to Gibraltar BB4, LLC; (3) conversion of certain unsecured claims against the Debtor to equity in the Reorganized Debtor; (4) cash on hand on the Effective Date; and (5) cash flow from continuing operations. The Plan, dated Dec. 20, 2013, provides for the designation and treatment of nine classes of claims and interests in the Debtor: * Class 1 Claim is the secured claim of Wells Fargo Bank, N.A., with treatment to be determined before plan confirmation. Class 2 Claims are priority unsecured claims pursuant to Sec. 507 of the Bankruptcy Code, they will be paid in full in cash to the extent allowed. * Classes 3 to 7 are general unsecured claims against the Debtor: -- Class 3 Claim of Gibraltar will be addressed by the transfer of Hunt Club Forest property. -- Class 4 General Unsecured Trade and Vendor Claims will be paid 20% of allowed claims in cash. -- For Class 5 ABK Children's Trust Claim, Class 6 The DKR Children's Trust Claim, and Class 7 CMSC, LLC, Claim, debt will be converted to equity in the Reorganized Debtor. * No treatment has been specified for Class 8 M.B. Kahn Construction Company Claim in the plan documents. * Class 9 Equity Interests in the Debtor will be extinguished. Parties-in-interest had until Feb. 21 to file formal written objections, if any, to the Disclosure Statement. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/KAHNFAMILYds_Dec20.PDF About Kahn Family Kahn Family, LLC, and Kahn Properties South, LLC, filed bare-bones Chapter 11 petitions (Bankr. D. S.C. Case Nos. 13-02354 and 13-02355) on April 22, 2013. Kahn Family disclosed $50 million to $100 million in assets and liabilities. R. Geoffrey Levy, Esq., at Levy Law Firm, LLC, serves as the Debtors' counsel. David G. Wolff, Esq., at Barnes, Alford, Stork & Johnson, LLP, is the Debtor's special counsel. Bill Quattlebaum, CPA of Elliott Davis, LLC, serves as its accountant. The Debtor's Plan of Reorganization dated Dec. 20, 2013, provides that payments and distributions under the Plan will be funded by (1) the sale of certain of the Debtor's real property at fair market value; (2) the transfer of certain real property of the Debtor to Gibraltar BB4, LLC; (3) conversion of certain unsecured claims against the Debtor to equity in the Reorganized Debtor; (4) cash on hand on the Effective Date; and (5) cash flow from continuing operations. KASPER LAND: Proposes Kinkead as Bankruptcy Counsel --------------------------------------------------- Kasper Land and Cattle Texas, LLC, asks the bankruptcy court for approval to hire Bill Kinkead, attorney at law, and the law firm of Kinkead Law Offices to represent it in carrying out its duties under the Bankruptcy Code. Mr. Kinkead attests that he and his firm are "disinterested persons", as that term is defined in the Bankruptcy Code, and do not hold or represent an interest adverse to the estate with respect to the matter on which we are to be employed. The parties have entered into a written agreement regarding the services to be performed for the Debtor in connection with its case and the compensation to be paid for such services. About Kasper Land and Cattle Kasper Land and Cattle Texas, LLC, sought Chapter 11 protection (Bankr. N.D. Tex. Case No. 14-20074) in Amarillo, Texas, on March 3, 2014. Bill Kinkead, Esq., at Kinkead Law Offices, serves as counsel to the Debtor. The Debtor estimated $10 million to $50 million in assets and liabilities. KEMPER CORP: A.M. Best Assigns 'bb+' Rating on $150MM Debentures ---------------------------------------------------------------- A.M. Best Co. has assigned a debt rating of "bb+" to the recently issued $150.0 million 7.375% subordinated debentures due 2054 of Kemper Corporation (Chicago, IL) [NYSE: KMPR]. Concurrently, A.M. Best has assigned indicative ratings of "bbb-" to senior debt, "bb+" to subordinated debt and "bb" to preferred stock of Kemper's recently filed shelf registration. The outlook assigned to all ratings is stable. Kemper intends to use the net proceeds for general corporate purposes, which may include the partial repayment of outstanding debt. The company's financial leverage and coverage measures remain within A.M. Best's guidelines for the assigned ratings. KEYWELL LLC: Court Approves Rust Omni as Claims & Noticing Agent ---------------------------------------------------------------- The Hon. Eugene R. Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois authorized Keywell L.L.C. to employ Rust Consulting Omni Bankruptcy as claims and noticing agent. As reported in the Troubled Company Reporter on Feb. 12, 2014, the Debtor requires Rust Omni to: (a) serve as the Court's notice agent to mail certain notices to the Debtor's creditors and other parties-in-interest; (b) provide computerized claims, objection and balloting database services; (c) provide expertise, consultation, and assistance in claim and ballot processing, if appropriate; and (d) provide expertise and assistance with disseminating information about this Chapter 11 case to creditors and other parties-in-interest. Rust Omni will also be reimbursed for reasonable out-of-pocket expenses incurred. Brian Osborne, president of Rust Omni, 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. Rust Omni can be reached at: Brian Osborne RUST CONSULTING OMNI BANKRUPTCY 5955 De Soto Ave Ste 100 Woodland Hills, CA 91367-5100 Tel: (818) 906-8300 Fax: (818) 704-0415 E-mail: bosborne@omnimgt.com About Keywell L.L.C. Keywell L.L.C., nka SGK Ventures, LLC, a supplier of scrap titanium and stainless steel, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 13-37603) on Sept. 24, 2013. Mark Lozier signed the petition as president and CEO. Keywell LLC first filed schedules disclosing $22,515,017 in total assets, and $35,025,633 in total liabilities. In its amended schedules, Keywell disclosed $22,546,386 in total assets and $39,361,793 in total liabilities. Judge Eugene R. Wedoff presides over the case. Howard L. Adelman, Esq., Chad H. Gettleman, Esq., Henry B. Merens, Esq., Brad A. Berish, Esq., Mark A. Carter, Esq., Adam P. Silverman, Esq., and Nathan Q. Rugg, Esq., at Adelman & Gettleman Ltd. serve as the Debtor's counsel. Alan B. Patzik, Esq., Steven M. Prebish, Esq., and David J. Schwartz, Esq., at Patzik, Frank & Samotny Ltd. serve as the Debtor's special counsel. Eureka Capital Markets, LLC, serves as the Debtor's investment banker, while Conway MacKenzie, Inc., serves as its financial advisors. The Debtor's lenders are represented by Steven B. Towbin, Esq., and Gordon E. Gouveia, Esq., at Shaw Fishman Glantz & Towbin LLC, in Chicago, Illinois. The United States Trustee for Region 11 appointed an Official Committee of Unsecured Creditors. The panel has hired David A. Agay, Esq., Sean D. Malloy, Esq., Scott N. Opincar, Esq., Joshua A. Gadharf, Esq., and T. Daniel Reynolds, Esq., at McDonald Hopkins LLC as counsel. Alvarez & Marsal North America, LLC, serves as financial advisors to the Committee. In December 2013, the Bankruptcy Court formally approved the sale of the Debtor's assets to KW Metals Acquisition LLC for $15.8 million. The original offer was from Cronimet Holdings Inc. for $12.5 million cash. KEYWELL LLC: Gets Court Approval to Name to "SGK Ventures" ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved Keywell LLC to change its corporate name to "SGK Ventures LLC" and authorized the Debtor to modify the name on the caption of its Chapter 11 case in all future pleadings and motions. About Keywell L.L.C. Keywell L.L.C., a supplier of scrap titanium and stainless steel, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 13-37603) on Sept. 24, 2013. Mark Lozier signed the petition as president and CEO. Keywell LLC first filed schedules disclosing $22,515,017 in total assets, and $35,025,633 in total liabilities. In its amended schedules, Keywell disclosed $22,546,386 in total assets and $39,361,793 in total liabilities. Judge Eugene R. Wedoff presides over the case. Howard L. Adelman, Esq., Chad H. Gettleman, Esq., Henry B. Merens, Esq., Brad A. Berish, Esq., Mark A. Carter, Esq., Adam P. Silverman, Esq., and Nathan Q. Rugg, Esq., at Adelman & Gettleman Ltd. serve as the Debtor's counsel. Alan B. Patzik, Esq., Steven M. Prebish, Esq., and David J. Schwartz, Esq., at Patzik, Frank & Samotny Ltd. serve as the Debtor's special counsel. Eureka Capital Markets, LLC, serves as the Debtor's investment banker, while Conway MacKenzie, Inc., serves as its financial advisors. The Debtor's lenders are represented by Steven B. Towbin, Esq., and Gordon E. Gouveia, Esq., at Shaw Fishman Glantz & Towbin LLC, in Chicago, Illinois. The United States Trustee for Region 11 appointed an Official Committee of Unsecured Creditors. The panel has hired David A. Agay, Esq., Sean D. Malloy, Esq., Scott N. Opincar, Esq., Joshua A. Gadharf, Esq., and T. Daniel Reynolds, Esq., at McDonald Hopkins LLC as counsel. Alvarez & Marsal North America, LLC, serves as financial advisors to the Committee. In December 2013, the Bankruptcy Court formally approved the sale of the Debtor's assets to KW Metals Acquisition LLC for $15.8 million. The original offer was from Cronimet Holdings Inc. for $12.5 million cash. LAKESIDE CASINO: Manager Liable for Improper Wage Withholding ------------------------------------------------------------- Ruby Jumamil appeals a Washington state trial court's summary dismissal of Noel Coon from her wage withholding and wage rebating claims and dismissal of Doug West from her wage rebating claim under RCW 49.52.050 and RCW 49.52.070. Ms. Jumamil initially filed various wage claims against Lakeside Casino, LLC, d/b/a Freddie's Club Casino of Fife, her former place of employment; Mr. Coon, the Casino's sole LLC manager; and Mr. West, one of the Casino's poker room floor supervisors. After the summary dismissal of Messrs. Coon and West, a jury found the Casino liable for willful wage withholding and rebating. Shortly after the trial court entered judgment against the Casino, the Casino filed for bankruptcy (In re Lakeside Casino, LLC, No. 12-44552-BDL (Bankr. W.D. Wash. June 28, 2012)). The Casino's bankruptcy case is still pending. Ms. Jumamil argues that the trial court improperly dismissed Mr. Coon from her wage withholding claim because he willfully withheld her wages after learning about the Casino's dealer support policy, which required that poker dealers gamble an average of six hours a week to retain their seniority and which policy ultimately led to the withholding of Ms. Jumamil's wages. Ms. Jumamil also argues the trial court improperly dismissed Messrs. Coon and West from her wage rebating claim because Coon received and West collected a rebate of her wages by requiring her to gamble back her wages to the Casino under the dealer support policy. In a March 4, 2014 Opinion available at http://is.gd/X8dyQjfrom Leagle.com, the Court of Appeals of Washington, Division Two, held that a manager of an LLC is liable for improper wage withholding only where he knowingly participated in the wrongful withholding. "Because Coon failed to release Jumamil's withheld wages after learning about the dealer support policy, he knowingly and willfully withheld her wages in violation of RCW 49.52.070. Accordingly, we reverse summary judgment as to Coon, hold Coon liable for willful wage withholding, and remand for an entry of costs and reasonable attorney fees against Coon under RCW 49.52.070." the Court said. "We also reverse the summary dismissal of Coon and West from Jumamil's wage rebating claim and remand for further proceedings because there are genuine issues of material fact regarding whether Coon and West collected or received a rebate of Jumamil's wages. "We reverse and remand for further proceedings consistent with this opinion." The appellate case is, RUBY JUMAMIL, Appellant, v. LAKESIDE CASINO, LLC, a Washington limited liability company d/b/a FREDDIE'S CLUB CASINO OF FIFE; NOEL COON and JANE DOE I, husband and wife; SUSAN MUDARRI and JOHN DOE, husband and wife; and DOUG WEST and JANE DOE II, husband and wife, Respondents, No. 43620-5-II (Wash. App.). Counsel for Appellants are: Stephanie Bloomfield, Esq. GORDON THOMAS HONEYWELL PO Box 1157 Tacoma, WA, 98401-1157 - and - Eric Daniel Gilman, Esq. GORDON THOMAS HONEYWELL LLP 1201 Pacific Ave Ste 2100 Tacoma, WA, 98402-4314 Counsel for Respondents is: Thomas F. Gallagher, Esq. LAW OFFICES OF WATSON & GALLAGHER PS 3623 S. 12th St. Tacoma, WA, 98405-2133 - and - Michael E. Mcaleenan Jr., Esq. SMITH ALLING P.S. 1102 Broadway Ste 403 Tacoma, WA, 98402-3526 LANDS' END: Moody's Assigns B1 CFR & B1 Rating on $515MM Debt ------------------------------------------------------------- Moody's Investors Service assigned a B1 Corporate Family Rating to Lands' End Inc. as well as a B1 rating to the company's proposed $515 million term loan B due 2021. The rating outlook is stable. Moody's also assigned a Speculative Grade Liquidity rating of SGL- 2. The ratings assigned are subject to receipt and review of final loan documentation. Proceeds from the transaction will be used to fund a $500 million dividend to its parent company Sears Holdings ("Sears" Caa1, Stable) prior to being spun-off as a public company to Sears' shareholders. Sears intends to distribute all of the outstanding shares of Lands' End to Sears shareholders in this transaction and it will not retain any ownership interest following the spin-off. Sears and Lands' End will enter into certain arms-length contracts, including contracts related to the ongoing Lands' End Shops at Sears, Lands' End's participation in Sears' Shop Your Way program, and certain transition agreements customary for a transaction of this type. The following ratings were assigned: Lands' End Inc Corporate Family Rating at B1 Probability of Default Rating at B1-PD $515 Million Term Loan B due 2021 at B1 (LGD 4, 55%) Speculative Grade Liquidity rating at SGL-2 Ratings Rationale Lands' End B1 Corporate Family Rating reflects its high leverage following the spin-off with rent-adjusted debt/EBITDA in the mid four times range following the debt financed dividend. The B1 rating acknowledges that Lands' End has experienced erratic historical operating performance, however, initiatives under its new management team are showing signs of improvement with margins improving in the second half of 2013. The Lands' End brand remains relevant with consumers as evidenced by sales in excess of $1.5 billion, and Moody's believe the company is well positioned as consumers shift apparel spending toward online purchases. The company's international and Lands' End Outfitter business -- which provides corporate and school uniforms -- also provide additional diversification. Lands' End presence in Sears stores is a risk, noting Sears' continued contraction in its store base and its long-term track record of negative comparable store sales over the past few years, however, with only 15% of sales generated in these shops, Moody's believe this risk is modest for Lands' End as a whole. The rating is also supported by its good liquidity profile with the company expected to have access to a $175 million asset based revolver which is expected to be substantially unused except for seasonal working capital needs, and the covenant-lite nature of the proposed term loan. The B1 rating assigned to the secured Term Loan B reflects its second lien on the company's accounts receivable and inventory (the $175 million asset-based revolver will have a first lien on these assets) and a first lien on substantially all other assets of the company. The stable rating outlook reflects our expectations the company can sustain the margin recovery seen in fiscal 2013 and that the company will be able to execute the transition to a stand-alone public company without any disruption to operations. The rating outlook also considers our expectations the company is not likely to meaningfully reduce debt beyond the required payments in its debt agreements. Ratings could be upgraded if the company successfully navigates the transition to a stand-alone public company while sustaining operating performance. Quantitatively ratings could be upgraded if reporting operating margins are sustained near 10% and debt/EBITDA was sustained below 4 times while maintaining a good liquidity profile. Ratings could be downgraded if the company's recent positive trends in operating performance were to reverse or it were to encounter challenges as it transitions to a stand-alone public company. Quantitatively ratings could be downgraded if debt/EBITDA was sustained above 5 times or if liquidity were to become more constrained. Headquartered in Dodgeville, Wisconsin, Lands' End Inc. is a multi-channel retailer of casual clothing, footwear and accessories for men, women and children with products sold through catalogs, online through websites in the US and overseas as well as through 274 Lands' End Shops at Sears and standalone Lands' End Inlet Stores. Fiscal 2013 revenues exceeded $1.5 billion. 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. LG-TR-CI: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: LG-TR-CI, Inc. 777 Main Street Daytona Beach, FL 32118 Case No.: 14-02454 Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Debtor's Counsel: Walter J Snell, Esq. SNELL & SNELL, P.A. 436 N Peninsula Drive Daytona Beach, FL 32118 Tel: 386-255-5334 Email: snellandsnell@mindspring.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Ergun T. Recel, president. The Debtor listed Wells Fargo Bank, c/o Harry M Wilson, III, Esq 225 Water Street, Suite 1800, Jacksonville, FL 32202, as its largest unsecured creditor holding a claim of $2.60 million. LL MURPHREY: Dispute Over Guaranty Remanded to State Court ---------------------------------------------------------- The Court of Appeals of North Carolina reversed a superior court's orders denying D.A.N. Joint Venture Properties' motion for summary judgment and granting Larry Barrow's, Lois Barrow's, Doris Murphrey's, and Donald Stocks's motions for summary judgment in a dispute over Barrow et al.'s guaranty of the notes issued by Wachovia Bank, N.A. to L.L. Murphrey Company. The Appeals Court remanded the matter to the superior court for a determination of the amount of the guarantors' liability. At the time L.L. Murphrey filed for Chapter 11 bankruptcy in 2000, it was in default on several Wachovia notes that were guaranteed by Barrow et al. On May 4, 2001, L.L. Murphrey filed its Fourth Amended Plan of Reorganization with the bankruptcy court, which was later confirmed by the bankruptcy court in part because the "guarantors contributed $550,000 to [L.L. Murphrey] to make confirmation of its plan feasible." The Plan of Reorganization divided L.L. Murphrey's Wachovia debts into two notes: Note A and Note B. Wachovia sold Note A and Note B to Cadlerock Joint Venture, L.P., which later sold the notes to D.A.N. Joint Venture. In addition to creating two notes, the Plan provided that the "guaranties will remain in full force and effect for the Notes except as adjusted to reflect the amount of Recapitalized Debt, defined herein." Because L.L. Murphrey and D.A.N. Joint Venture could not agree on the amount of the recapitalized debt, the Debtor on April 1, 2011, asked the bankruptcy court to reopen the Chapter 11 case. L.L. Murphrey, Larry Barrow, Lois Barrow, and Doris Murphrey then filed an adversary proceeding, before the bankruptcy court, against D.A.N. Joint Venture. In the adversary proceeding, Larry Barrow, Lois Barrow, and Doris Murphrey sought a declaration that the guarantors were contingently liable for only the amount of the recapitalized debt. They also requested an injunction requiring D.A.N. Joint Venture to stop demanding payment from L.L. Murphrey and the guarantors in excess of the amount of the recapitalized debt. In an order entered on Dec. 16, 2011, the bankruptcy court found that the amount of the recapitalized debt was $6,186,362. (Troubled Company Reporter, Dec. 22, 2011). D.A.N. Joint Venture filed a motion with the bankruptcy court seeking reconsideration of the December 2011 order, which was not a final order because it did not resolve all of the claims between the parties. The bankruptcy court granted D.A.N. Joint Venture's motion. On May 10, 2012, the bankruptcy court issued a second order denying the claim for injunctive relief, because there was no showing of irreparable harm, and declaring that the liability of guarantors was capped at the amount of the recapitalized debt. (Troubled Company Reporter, May 15, 2012). Larry Barrow, Lois Barrow, and Doris Murphrey then filed a lawsuit against D.A.N. Joint Venture, Connie Murphrey, and Donald Stocks in superior court after the May 10, 2012 bankruptcy court order was entered. Larry Barrow, Lois Barrow, and Doris Murphrey assert that they are entitled to a declaration that the expiration of the statute of limitations prevents D.A.N. Joint Venture from asserting any claims against the guarantors based on the guaranties. D.A.N. Joint Venture counterclaimed and crossclaimed that the guarantors were in breach of the guaranty agreements as modified by the Plan of Reorganization. The parties then filed cross-motions for summary judgment. On appeal, D.A.N. Joint Venture argues that the May 10, 2012 bankruptcy court order, which addressed the guarantors' liability under the Plan, precluded the trial court from granting summary judgment on the grounds that the statute of limitations bars all claims asserted by D.A.N. Joint Venture against the guarantors based on the guaranties. The Appeals Court agrees in its March 4, 2014 decision available at http://is.gd/b3x4ROfrom Leagle.com. The appellate case is, LARRY BARROW, LOIS BARROW, AND DORIS MURPHREY, Plaintiffs, v. D.A.N. JOINT VENTURE PROPERTIES OF NORTH CAROLINA, LLC, CONNIE MURPHREY AND DONALD STOCKS, Defendants, No. COA13-975 (N.C. App.). White & Allen, P.A.'s John P. Marshall, Esq., and Ashley C. Fillippeli, Esq., represent the plaintiffs-appellees. Driscoll Sheedy, P.A.'s Susan E. Driscoll, argues for D.A.N. Joint Venture Properties of North Carolina, LLC. Miller & Audino, LLP's Jeffrey L. Miller, Esq., argue for defendant-appellee Donald Stocks. About L.L. Murphrey L.L. Murphrey Company was North Carolina corporation engaged in the swine business, with its principal place of business in Greene County, North Carolina. LLM filed for chapter 11 bankruptcy (Bankr. E.D.N.C. Case No. 00-03213) on June 8, 2000. On July 13, 2001, the Court entered an order confirming the Debtor's fourth amended plan of reorganization. On May 21, 2012, it filed a voluntary Chapter 7 petition (Bankr. E.D.N.C. Case No. 12-03837). LOFINO PROPERTIES: U.S. Trustee, Creditor Balk at Counsel Hiring ---------------------------------------------------------------- Daniel M. McDermott, U.S. Trustee for Region 9, objected to Lofino Properties, LLC, et al.'s motion for authorization to employ (i) Paul H. Shaneyfelt, Esq., at Shaneyfelt & Associates LLC, as counsel for debtor Lofino Properties, LLC; and (ii) Joshua M. Kin, Esq., as case attorney for debtor Southland 75, LLC. At the first day hearing, the U.S. Trustee reiterated his concerns on the record regarding Mr. Kin's representation of both Debtors as a result of retention issues generated by conflicts of interest between the Debtors. In response, the Court noted that no retention applications were pending. During further discussion, the U.S. Trustee and the Court agreed on the record that the Debtors' retention issues under 11 U.S.C. Sec. 327(a) must be resolved before a hearing on the pending dispositive motions because both Debtors would need unconflicted counsel to present their evidence to the Court. The U.S. Trustee, in his objection, stated that, among other things, no estate funds are available for payment to Messrs. Kin and Shaneyfelt. In separate filings, GLICNY Real Estate Holding LLC also objected to the Debtors' applications. GLICNY Real Estate said the Chapter 11 trustee has previously retained the firm of Wood & Lamping, LLP, as counsel and approval of the Debtors' application would be unnecessary in addition to being contrary to law. GLICNY Real Estate added that allowing the use of GLICNY's cash collateral to pay attorney fees is unnecessary, contrary to law and would severely prejudice GLICNY. The Troubled Company Reporter on Feb. 21, 2014, reported on Lofino Properties' bid to hire counsel. The Debtor stated the employment of Mr. Shaneyfelt as counsel is necessary to perform the legal services normally associated with the reorganization process, including, but not limited to, providing legal representation at all hearings, negotiating with creditors or claimants, and formulating a plan of reorganization and disclosure statement in conformity with the requirements of the Bankruptcy Code. The Debtor told the Court that Mr. Shaneyfelt charges $250 per hour, and paralegals charge between $110 and $145 per hour. The Debtor said Mr. Shaneyfelt is a "disinterested person" within the meaning of the Bankruptcy Code. About Lofino Properties & Southland 75 Dayton, Ohio-based Lofino Properties, LLC, which owns retail stores, sought bankruptcy protection (Bankr. S.D. Ohio Case No. 13-34099) on Oct. 4, 2013. Lofino Properties listed assets of $19.91 million and liabilities of about $13.15 million. A sister company, Southland 75 LLC, which owns a strip shopping center, sought bankruptcy protection (Bankr. S.D. Ohio Case No. 13-34100) on the same day. Southland 75 listed assets of $8.09 million and liabilities of $5.62 million. The Hon. Judge Lawrence S. Walter presides over the cases. According to the petitions, attorneys at Pickrel, Schaeffer, and Ebeling, in Dayton, Ohio, represent the Debtors as counsel. The petitions were signed by Michael D. Lofino, managing member. The Debtors have been operating under state court receiverships since May 2013. On Oct. 17, 2013, the Bankruptcy Court entered an order denying the Debtors' motion for joint administration of their cases. LONG BEACH MEDICAL: Proposes Garfunkel Wild as Counsel ------------------------------------------------------ Long Beach Medical Center and Long Beach Memorial Nursing Home Inc. seek approval from the bankruptcy court to employ Garfunkel Wild, PC, as general bankruptcy counsel. GW has for 30 years represented LBMC and Komanoff as general counsel providing a broad array of legal services including healthcare, financing, litigation and real estate related work. GW also has devoted a substantial amount of time over the last several months negotiating the terms of an asset purchase agreement with South Nassau Communities Hospital for the sale of substantially all of the Debtors' real property assets relating to the Hospital and the real property and operating assets of the Nursing Home. For its work as bankruptcy counsel, GW will seek compensation based on its normal hourly rate in effect for the period in which services are rendered and will seek reimbursement of reasonable out-of-pocket expenses. GW will utilize partners and associates in various areas of expertise to prosecute the case. The rates to be charged by professionals from GW range from $190 to $535 per hour and its rate for paraprofessionals range from $145 to $225 per hour. The attorneys who will be primarily responsible for providing services to the Debtors and their respective billing rates are: Hourly Rate ----------- Burton Weston Partner $535 Afsheen Shah Partner $430 Adam T. Berkowitz Senior Attorney $395 Andrew J. Schulson Partner $460 Burton S. Weston, a shareholder at the firm, attests that GW is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Long Beach Medical Center Long Beach Medical Center, formerly Long Beach Memorial Hospital, was a 162-bed, community-based hospital offering primary, acute, emergency and long-term health care to residents of Long Beach, New York. Founded in 1922, LBMC was a teaching facility for the New York College of Osteopathic Medicine. LBMC was shut down after superstorm Sandy devastated the hospital in October 2012. Long Beach Memorial Nursing Home Inc, runs the The Komanoff Center for Geriatric and Rehabilitative Medicine, a 200-bed skilled nursing facility affiliated with LBMC. It provides services for residents requiring long term nursing home care and short term post-acute (sub-acute) care. Currently there are 127 residents of Komanoff. Long Beach Medical and Komanoff sought Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Case No. 14-70593) on Feb. 19, 2014. Long Beach estimated assets of at least $10 million and debts of at least $50 million. Garfunkel Wild P.C. serves as the Debtors' counsel. GCG, Inc., is the Debtors' claims and noticing agent. The Hon. Alan S. Trust presides over the cases. South Nassau Communities Hospital has offered $21 million to purchase the assets. SNCH will be the stalking horse bidder at the auction. LONG BEACH MEDICAL: Final Hearing on $4.5MM Loan on March 10 ------------------------------------------------------------ Long Beach Medical Center and Long Beach Memorial Nursing Home Inc. at a hearing on March 10, 2014 will seek approval of $4.5 million of DIP financing from buyer South Nassau Communities Hospital. The salient terms of the DIP facility are: Maximum Principal Amount: Not to exceed $4.5 million on a multiple draw term loan basis Use of Proceeds: Initial loans and advances of up to $1.8 million will be used to pay for working capital needs and other operating requirements. Upon final approval of the DIP financing, the proceeds will be used in accordance with the agreed budget. Interest, Fees & Expenses: Interest on the outstanding balance of the DIP revolving loans will be payable at an interest rate of 7% per annum. Term: The Debtor's authorization to borrow funds will terminate on the earlier of (i) June 30, 2014, or (b) the occurrence of an event of default. Right to Credit Bid: The lender will have the right to "credit bid". Reorganization Milestones: The Debtors, under the DIP Facility, are required to sell their assets. The Debtors are required to: * obtain approval of the bid and sale procedures by March 11. * conduct an auction on or before April 17. * obtain bankruptcy court approval of the sale on or before April 21. * close the sale transaction on or before June 30, 2014. The Debtors also seek approval to use cash collateral. The proceeds of substantially of the Debtors' receivables constitute cash collateral of certain of Komanoff's prepetition secured creditors, including, the Pension Benefit Guaranty Corp. and SNCH. The Debtors will provide the secured creditors with adequate protection liens and superpriority claims. As reported in the March 4, 2014 edition of the TCR, Judge Alan S. Trust of the U.S. Bankruptcy Court for the Eastern District of New York authorized the Debtors to borrow on an emergency basis up to a total amount of $900,000. The Debtors, under the DIP Facility, are required to conduct an auction for the sale of all or substantially all of the Debtors' assets on or before April 17, 2014. The Debtors are also required to have obtained Court approval of the sale of their assets on or before April 21, and close the sale transaction on or before June 30. A full-text copy of the Interim DIP Order is available for free at http://bankrupt.com/misc/LONGBEACHdipord0226.pdf South Nassau Communities Hospital in Oceanside, New York, is represented by: PROSKAUER ROSE LLP Eleven Times Square New York, NY 10036 Attn: Richard J. Zall, Esq. About Long Beach Medical Center Long Beach Medical Center, formerly Long Beach Memorial Hospital, was a 162-bed, community-based hospital offering primary, acute, emergency and long-term health care to residents of Long Beach, New York. Founded in 1922, LBMC was a teaching facility for the New York College of Osteopathic Medicine. LBMC was shut down after superstorm Sandy devastated the hospital in October 2012. Long Beach Memorial Nursing Home Inc, runs the The Komanoff Center for Geriatric and Rehabilitative Medicine, a 200-bed skilled nursing facility affiliated with LBMC. It provides services for residents requiring long term nursing home care and short term post-acute (sub-acute) care. Currently there are 127 residents of Komanoff. Long Beach Medical and Komanoff sought Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Case No. 14-70593) on Feb. 19, 2014. Long Beach estimated assets of at least $10 million and debts of at least $50 million. Garfunkel Wild P.C. serves as the Debtors' counsel. GCG, Inc. is the Debtors' claims and noticing agent. The Hon. Alan S. Trust presides over the cases. South Nassau Communities Hospital has offered $21 million to purchase the assets. SNCH will be the stalking horse bidder at the auction. LONG BEACH MEDICAL: Monday Hearing on Sale of Most Assets --------------------------------------------------------- Long Beach Medical Center and Long Beach Memorial Nursing Home Inc. at a hearing on March 10, 2014, will seek approval of proposed bidding procedures in connection with the sale of their real estate and personal property assets, including the operating assets of The Komanoff Center for Geriatric and Rehabilitative Medicine. South Nassau Communities Hospital, which is providing $4.5 million funding for the Chapter 11 effort, has agreed to be the stalking horse bidder for the assets. It has signed a deal to purchase the assets for $21 million, absent higher and better offers. It is anticipated that SNCH will continue to operate the Komanoff nursing home. The parties also will continue to pursue FEMA funding to repair and reconfigure the LBMC campus facilities. As is customary in a sale transaction of this nature, the purchase agreement provides for the payment of a termination fee in the amount of $640,000 and expense reimbursement not to exceed $210,000. These amounts -- totaling just 4% of the sale price -- are payable in the event that a higher or better offer is accepted by the Debtors. The sale transaction is conditioned upon (i) Attorney General and New York State Supreme Court approval consistent with the New York Not-For-Profit Laws, and (ii) all requisite approvals required by DOH and any other regulatory authority asserting jurisdiction over the Debtors. The Debtors are soliciting other offers for the assets. The Debtors propose an April auction for the assets if other offers in addition to SNCH's are received. The Debtors, under the DIP Facility provided by SNCH, are required to obtain approval of the bid and sale procedures by March 11, conduct an auction on or before April 17, obtain bankruptcy court approval of the sale on or before April 21, and close the sale transaction on or before June 30, 2014. About Long Beach Medical Center Long Beach Medical Center, formerly Long Beach Memorial Hospital, was a 162-bed, community-based hospital offering primary, acute, emergency and long-term health care to residents of Long Beach, New York. Founded in 1922, LBMC was a teaching facility for the New York College of Osteopathic Medicine. LBMC was shut down after superstorm Sandy devastated the hospital in October 2012. Long Beach Memorial Nursing Home Inc. runs the The Komanoff Center for Geriatric and Rehabilitative Medicine, a 200-bed skilled nursing facility affiliated with LBMC. It provides services for residents requiring long term nursing home care and short term post-acute (sub-acute) care. Currently there are 127 residents of Komanoff. Long Beach Medical and Komanoff sought Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Case No. 14-70593) on Feb. 19, 2014. Long Beach estimated assets of at least $10 million and debts of at least $50 million. Garfunkel Wild P.C. serves as the Debtors' counsel. GCG, Inc. is the Debtors' claims and noticing agent. The Hon. Alan S. Trust presides over the cases. South Nassau Communities Hospital is represented in the case by Richard J. Zall, Esq., at Proskauer Rose LLP. LONGVIEW POWER: Plan Confirmation Hearing on Monday --------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware rescheduled to March 10, 2014, at 10:00 a.m., the hearing to consider confirmation of Longview Power, LLC, et al.'s Joint Plan of Reorganization. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/LONGVIEWPOWERds.pdf As reported in the Troubled Company Reporter on Dec. 27, 2013, the Debtor won court permission to start polling creditors on a Chapter 11 restructuring that swaps more than $1 billion in debt for equity and provides money to fix its troubled plant. Once creditors cast their ballots, Longview will return to court to seek confirmation of the Chapter 11 exit plan, the report related. Under the plan, existing lenders have agreed to provide $150 million to fund emergence and repair the plant, which is in West Virginia. Under the Plan, general unsecured creditors owed an estimated $4.5 million will get a recovery of 5.5% to 22%. About Longview Power LLC Longview Power LLC is a special purpose entity created to construct, own, and operate a 695 MW supercritical pulverized coal-fired power plant located in Maidsville, West Virginia, just south of the Pennsylvania border and approximately 70 miles south of Pittsburgh. The project is owned 92% by First Reserve Corporation (First Reserve or sponsor), a private equity firm specializing in energy industry investments, through its affiliate GenPower Holdings (Delaware), L.P., and 8% by minority interests. Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case. 13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery L. Keffer, the Company's chief executive officer, president, treasurer and secretary. The Debtor estimated assets and debts of more than $1 billion. Judge Brendan Linehan Shannon presides over the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A., serve as the Debtors' counsel. Lazard Freres & Company LLC acts as the Debtors' investment bankers. Alvarez & Marsal North America, LLC, is the Debtors' restructuring advisors. Ernst & Young serves as the Debtors' accountants. The Debtors' claims agent is Donlin, Recano & Co. Inc. The Debtor disclosed assets of $1,717,906,595 plus undisclosed amounts and liabilities of $1,075,748,155 plus undisclosed amounts. Roberta A. DeAngelis, U.S. Trustee for Region 3, disclosed that as of September 11, 2013, a committee of unsecured creditors has not been appointed in the case due to insufficient response to the U.S. Trustee's communication/contact for service on the committee. LOS GATOS HOTEL: Must Hire Broker to Market Hotel ------------------------------------------------- U.S. Bankruptcy Judge Arthur S. Weissbrodt tossed the proposal of Los Gatos Hotel Corporation to sell its namesake hotel to Greystone Hotels through a private sale without marketing or competitive bidding pursuant to a Plan of Reorganization. The judge required the Debtor to market the Hotel for sale with the assistance of a broker. The Court will hold another hearing to consider the Debtor's hiring of a broker. Creditor Terrie Ogilvie Christiansen had filed the motion asking the Court to compel the Debtor to hire a broker and market the hotel property for sale. The U.S. Bankruptcy Court for the Northern District of California continued until March 6, 2014, at 3:00 p.m., the hearing to consider the Ogilvies' motion. As reported in the Troubled Company Reporter on Dec. 27, 2013, the Ogilvies asked the Court to require the Debtor to retain a broker and expose the hotel to the market before seeking approval of any sale. According to the Ogilvies, the decision to ignore market alternatives is unusual enough; choosing to do so in the face of dramatic recent increases in hospitality industry values in the Bay Area is inexplicable. The hotel is profitable and has substantial equity, so there is no need for an urgent sale. The Debtor must be required to retain a broker and to expose the hotel to the market before it asks the Court to approve a quick sale. Counsel for the Ogilvies is: Michael St. James, Esq. ST. JAMES LAW, P.C. 155 Montgomery Street, Suite 1004 San Francisco, CA 94104 Tel: (415) 391-7566 Fax: (415) 391-7568 E-mail: michael@stjames-law.com Greystone Hotels appeared at this week's hearing through: Eric D. Horodas, President 51 Federal Street, Suite 203 San Francisco, CA 94107 About Los Gatos Hotel San Jose, California-based Los Gatos Hotel Corporation, dba Hotel Los Gatos, was formed in 2000 to build and operate Hotel Los Gatos, a full-service boutique hotel in downtown Los Gatos, California. Los Gatos Hotel filed for Chapter 11 bankruptcy protection on December 27, 2010 (Bankr. N.D. Cal. Case No. 10-63135). The Debtor disclosed $17,191,277 in assets and $12,896,468 in liabilities as of the Chapter 11 filing. Affiliate Blossom Valley Investors, Inc., filed a separate Chapter 11 petition on September 10, 2009 (Bankr. N.D. Cal. Case No. 09-57669). Jeffry A. Davis, Esq., at Mintz Levin Cohn Ferris Glovsky Popeo, serves as the Debtor's bankruptcy counsel. The Debtor has tapped OSAS Inc. as financial advisor and investment banker. LUCAS ENERGY: Receives NYSE MKT Listing Noncompliance Notice ------------------------------------------------------------ Lucas Energy, Inc. on March 6 disclosed that on February 28, 2014, Lucas was notified by the NYSE MKT that the Company is not in compliance with one of the Exchange's continued listing standards as set forth in Part 10 of the NYSE MKT Company Guide. Specifically, Lucas is not in compliance with Section 1003(a)(iv) of the Company Guide in that it has sustained losses which are so substantial in relation to its overall operations or existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether the Company will be able to continue operations and/or meet its obligations as they mature. The notice is based on a review by the Exchange of information that the Company has publicly disclosed, including information contained in the Company's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 13, 2014, which included the interim consolidated financial statements for the three and nine month periods ended December 31, 2013. In order to maintain its listing on the Exchange, the Exchange has requested that the Company submit a plan of compliance by March 14, 2014 addressing how it intends to regain compliance with Section 1003(a)(iv) of the Company Guide by April 14, 2014. Lucas's management previously recognized the need to engage in financing transactions or other strategic alternatives to address the Company's financial requirements, and the Company issued a press release on December 13, 2013 outlining those initiatives. The Company subsequently hired Global Hunter Securities in January 2013, and as of March 6, 2014, the Company is reviewing various proposals relating to proposed transactions to among other things, increase the Company's liquidity. The Company intends to submit a Plan in the prescribed form to the Exchange by the required due date, specifying activities that the Company plans to complete in the near future which may include equity financings, strategic alliances, debt recapitalization or other arrangements to address the concerns of the Exchange and regain compliance with the Exchange's continued listing standards. While the Company may not be able to complete planned initiatives or obtain necessary financing in sufficient amounts to meet its ongoing obligations or on acceptable terms, the Company's management believes that through its best efforts, the Company plans to complete one or more transactions that will bring the Company into compliance with NYSE MKT guidelines by April 14, 2014. Receipt of the letter does not have any immediate effect on the listing of the Company's shares on the Exchange, except that until the Company regains compliance with the Exchange's listing standards, a ".BC" indicator will be affixed to the Company's trading symbol. The Company's business operations, SEC reporting requirements and debt instruments are unaffected by the notification, provided that if the Plan is not acceptable, or the Company does not make sufficient progress under the Plan or reestablish compliance by April 14, 2014, then the Company will be subject to the Exchange's delisting procedures. The Company may then appeal a staff determination to initiate such proceedings in accordance with the Exchange's Company Guide. About Lucas Energy, Inc. Lucas Energy (nyse mkt:LEI) -- http://www.lucasenergy.com-- is engaged in the acquisition and development of crude oil and natural gas from various known productive geological formations, including the Austin Chalk, Eagle Ford and Buda/Glen Rose. Based in Houston, Lucas Energy's management team is committed to building a platform for growth and the development of its five million barrels of proved Eagle Ford and other oil reserves while continuing its focus on operating efficiencies and cost control. M/I HOMES: Fitch Puts 'B+/RR3' Rating to $200MM Credit Facility --------------------------------------------------------------- Fitch Ratings has affirmed the ratings for M/I Homes, Inc. (NYSE: MHO), including the company's Issuer Default Rating (IDR) at 'B'. The Rating Outlook is Stable. Fitch has also assigned a 'B+/RR3' rating to MHO's $200 million unsecured revolving credit facility that matures on July 18, 2016. Key Rating Drivers MHO's ratings and Outlook reflect the company's execution of its business model in the current housing environment, management's demonstrated ability to manage land and development spending, adequate liquidity position, improving credit metrics and Fitch's expectation of further moderate improvement in the housing market in 2014. Improving Credit Metrics MHO's credit metrics have improved significantly over the past two years as the housing market continues to recover. Leverage as measured by debt to EBITDA declined from 13.8x at the end of 2011 to 7.0x at year-end 2012 and 5.1x at the conclusion of 2013. Similarly, EBITDA to interest increased from 0.7x in 2011 to 1.6x in 2012 and 2.5x in 2013. Fitch expects further improvement in these credit metrics in 2014, with debt to EBITDA projected to be below 5x and interest coverage approaching 3x. The Industry Housing metrics all showed improvement in 2013. Total housing starts increased 18.3%. Existing home sales gained 9.2% to 5.09 million in 2013, while new home sales grew 16.6% to 428,000. Average single-family new home prices, which dropped 1.8% in 2011, increased 8.7% in 2012 and rose 9.8% to $320,900 in 2013. Median home prices expanded 2.4% in 2011 and then grew 7.9% in 2012 and expanded 8.4% to $265,800 last year. Housing metrics should increase in 2014 due to faster economic growth (prompted by improved household net worth, industrial production and consumer spending), and consequently some acceleration in job growth (as unemployment rates decrease to 6.9% for 2014 from an average of 7.5% in 2013), despite somewhat higher interest rates, as well as more measured home price inflation. Total housing starts should increase 16.5% and top 1 million. New home sales are forecast to advance about 20%, while existing home volume increases 2%. Higher Interest Rates And Housing Activity The most recent Freddie Mac average mortgage rate was 4.37%, up 4 basis points (bps) sequentially from the previous week and about 92 bps higher than the average rate during the month of April 2013, a recent low point for mortgage rates. While the current rates are still well below historical averages, the sharp increase in rates and rising home prices are moderating affordability. There has been some short-term volatility in certain housing metrics following the increase in interest rates (and higher home prices) during the past eight months as well as harsh winter weather conditions in some parts of the country during the early part of 2014. Existing home sales (on a seasonally adjusted basis) fell 5.1% on a month-over-month basis in January 2014 following a 0.8% improvement in December, a 5.8% decline in November, a 2.5% contraction in October, and a 1.3% decrease in September. New home sales in January 2014 grew 9.6% following a 3.8% month-over- month decline in December, a 1.8% decrease in November, a 12.2% improvement in October, and a 3.9% increase in September. For the public homebuilders in Fitch's coverage, net order gains have substantially slowed or turned negative during the second half of 2013 following strong gains in the first half of the year. On average, net orders for these builders fell 1.6% during the fourth quarter of 2013 (4Q'13) compared with a 1.5% increase during 3Q'13, a 16.8% improvement during 2Q'13, and a 28.2% growth during 1Q'13. While Fitch does not expect the current higher mortgage rates to derail the housing recovery, a continued sharp increase in rates could further slow it down. Adequate Liquidity Position The company completed several capital markets transactions during 2013 that further enhanced its liquidity position. In March 2013, MHO issued $86.3 million of 3% convertible senior subordinated notes due 2018 and 2.461 million common shares, for total combined net proceeds of $137.3 million. In July 2013, the company also entered into a new $200 million three-year unsecured revolving credit facility. This credit facility replaced the company's $140 million secured revolver, which was set to mature on Dec. 31, 2014. In April 2013, MHO redeemed 2,000 of its outstanding 9.75% series A preferred shares for $50.4 million in cash. In May 2013, MHO resumed dividend payments on these preferred shares after the company ceased dividend payments in 2008 due to restrictions under its bond indenture. The dividends are non-cumulative and the company has the option to redeem the remaining preferred shares. MHO paid $3.7 million of dividends on preferred shares during 2013. MHO ended 2013 with $128.7 million of unrestricted homebuilding cash and $187.6 million of borrowing availability under its $200 million revolving credit facility that matures in 2016. The company has no major debt maturities until 2017, when $57.5 million of convertible senior subordinated notes mature. Land Strategy After significantly reducing its lot inventory during the 2006 to 2009 periods, MHO began to focus on growing its business in late 2009 by investing in new communities and entering new markets. In 2010, the company increased its total lot position by 9.2% and expanded into the Houston, Texas market. During 2011, the company entered the San Antonio, Texas market and also grew its total lot position by 1.8%. MHO extended its geographic footprint by expanding further into Texas, entering the Austin market in 2012 and the Dallas/Fort Worth market in 2013. Total lots controlled increased 37.2% in 2012 and 39.6% in 2013. MHO maintains an approximately 5.7-year supply of total lots controlled, based on trailing 12 months deliveries, and 2.9 years of owned land. Total lots controlled were 19,831 at Dec. 31, 2013. About 50.9% of the lots are owned and the balance is controlled through options. Historically, MHO developed about 80% of its communities from which it sells product, resulting in inventory turns that were moderately below average as compared to its public peers. During the recent downturn, MHO had been less focused on land development as most land purchases were developed lots. In 2011, only 5% of land purchases were raw lots. During the past two years, MHO has been purchasing more raw land due to the decline in the availability of developed lots. Management estimates that raw land purchases accounted for about 60% and 50% of total land purchases during 2012 and 2013, respectively. The percentage of lots internally developed by the company increased to 81% during 2013 from 73% during 2012 and 51% during 2011. Land Spending and Cash Flow MHO spent $323.6 million on land and development during 2013 ($216.8 million for land and $106.8 million for development) compared with $195.1 million expended during 2012 ($138.7 million for land and $56.4 million for development) and $117 million in total spending during 2011. Based on the current environment, MHO projects $400 million to $500 million of land and development spending for all of 2014. During 2013, MHO reported negative cash flow from operations (CFFO) of $74 million compared with negative $47 million during 2012 and negative $34 million during 2011. Fitch expects MHO will have negative CFFO of about $125 million to $175 million in 2014 as the company continues to expand its land position and increases houses under construction. Fitch is comfortable with this strategy given the company's healthy liquidity position and management's demonstrated ability to manage its spending. Rating Sensitivities Future ratings and Outlooks will be influenced by broad housing- market trends as well as company specific activity, such as trends in land and development spending, general inventory levels, speculative inventory activity (including the impact of high cancellation rates on such activity), gross and net new order activity, debt levels and especially free cash flow trends and uses, and the company's cash position. A Positive Outlook may be considered in the next 6-12 months if the recent volatile industry data stabilizes (as expected) and the recovery in housing is maintained, MHO's credit metrics are sustained or improve further (particularly debt to EBITDA below 5.5x and interest coverage exceeding 2.25x), and the company preserves a healthy liquidity position (above $100 million) with a combination of unrestricted cash and revolver availability. Conversely, negative rating actions could occur if the recovery in housing dissipates; MHO's 2014 revenues drop by the mid-teens while the EBITDA margins decline below 5%; leverage exceeds 9x; and MHO maintains an overly aggressive land and development spending program that leads to consistent and significant negative quarterly cash flow from operations and meaningfully diminished liquidity position (perhaps below $50 million). Fitch affirms the following ratings for MHO: -- Long-term IDR at 'B'; -- Senior unsecured notes at 'B+/RR3'; -- Convertible senior subordinated notes at 'CCC+/RR6'; -- Series A non-cumulative perpetual preferred stock at 'CCC/RR6'. Fitch has also assigned a 'B+/RR3' rating to the company's $200 million unsecured revolving credit facility. The Rating Outlook is Stable. The Recovery Rating (RR) of 'RR3' on MHO's senior unsecured notes indicates good recovery prospects for holders of this debt issue. MHO's exposure to claims made pursuant to performance bonds and the possibility that part of these contingent liabilities would have a claim against the company's assets were considered in determining the recovery for the unsecured debt holders. The 'RR6' on MHO's convertible senior subordinated notes and preferred stock indicates poor recovery prospects in a default scenario. Fitch applied a going concern valuation analysis for these recovery ratings. MARTIFER SOLAR: US Trustee Forms Five-Member Creditor's Panel ------------------------------------------------------------- Tracy Hope Davis, the U.S. Trustee for Region 17, appointed five creditors to serve on the Official Committee of Unsecured Creditors for the Chapter 11 bankruptcy case of Martifer Solar USA Inc. The members of the Committee are: 1) Robert Babcock EPG Solar, LLC 54254 Wisconsin Avenue #600 Chevy Chase, MD 20815 2) Charles M. Forman, Chapter 7 Trustee SatCon Technology Corp. 80 Route 4 East, Suite #290 Paramus, NJ 07652 3) Sandra James Patriot Solar Group 1007 Industrial Avenue Albion, MI 49224 4) Adeh Mirzakhani Solar Optimum, Inc. 501 West Glenoaks Blvd. Suite 555 Glendale, CA 21202 5) Timothy Lamotte Northern Land Clearing, Inc. P.O. Box 504 1290 Park Street Palmer, MA 01069 About Martifer Solar Martifer Solar USA, Inc., and Martifer Aurora Solar LLC filed separate Chapter 11 bankruptcy petitions (Bankr. D. Nev. Case Nos. 14-10357 and 14-10355) in Las Vegas on Jan. 21, 2014. Martifer Solar USA, which is based in Los Angeles, California, estimated $10 million to $50 million in assets and liabilities. Bankruptcy Judge August B. Landis oversees the case. The Debtors tapped Brett A. Axelrod, Esq., and Micaela Rustia Moore, Esq., at Fox Rothschild LLP, in Las Vegas, as counsel, and Armory Consulting Co. as restructuring and financial advisor. The Debtors tapped Foley Hoag LLP as special Massachusetts litigation counsel with respect to a pending litigation relating to EPG Solar, LLC; and Foley & Lardner LLP as special solar counsel. Cathay Bank, a prepetition lender, is represented by Michael Gerard Fletcher, Esq., and Reed S. Waddell, Esq., at Frandzel Robins Bloom & Csato, L.C.; and Natalie M. Cox, Esq., and Randolph L. Howard, Esq., at Kolesar & Leatham. Martifer Solar Inc., the proposed DIP Lender, and ultimate parent of the Debtors, is represented by Samuel A. Schwartz, Esq., and Bryan A. Lindsey, Esq., at The Schwartz Law Firm Inc. MATTAMY GROUP: Moody's Assigns B1 Rating on $100MM Add-on Notes --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Mattamy Group Corporation's $100 million of notes that are being tacked on to its existing $300 million of USD senior unsecured notes due 2020, with proceeds of these tack-on notes to be used for growth capital. In the same rating action, Moody's affirmed the company's Ba3 corporate family rating, Ba3-PD probability of default ratings, and a B1 rating on the existing senior unsecured notes due 2020. The outlook remains stable. The following rating actions were taken: B1 (LGD5, 77%) rating assigned to the US$100 million (C$111 million) of tack-on USD senior unsecured notes due November 15, 2020 Corporate family rating affirmed at Ba3; Probability of default rating affirmed at Ba3-PD; $300 million (C$333 million) of USD senior unsecured notes due November 15, 2020 affirmed at B1 (LGD5, 77%) C$200 million of senior unsecured notes due November 15, 2020 affirmed at B1 (LGD5, 77%) Stable outlook maintained. Ratings Rationale The Ba3 corporate family rating reflects Moody's expectation that Mattamy's long history of strong Canadian gross margin performance and positive net income generation will continue while the US operations will continue to grow and gradually close the current profitability gap with the Canadian operations. Moody's also expect that the company will continue to limit both its speculative construction and off-balance sheet activities to relatively modest amounts. In addition, while the company's extensive land holdings map to a low rating on our homebuilding methodology grid and there appears to be a concentration of this land in the Greater Toronto Area, Moody's employ a qualitative override based on our judgment that the land is conservatively valued and that the Canadian housing market, although it appears to be slowing, enjoys certain features and support mechanisms that are currently lacking in the US housing market. At the same time, the ratings incorporate a stretched pro forma adjusted debt leverage of close to 55% (as of November 30, 2013), negative cash flow generation, the cyclicality of the homebuilding and land development industries, a US housing market attempting to regain momentum after a seven-month pause in its formerly rapid growth trajectory; and a Canadian housing market also struggling to gain traction. The company possesses an adequate liquidity position, supported by over C$180 million of pro forma cash and equivalents as of November 30, 2013 and approximately C$135 million available under its C$500 million revolving credit facility due October 28, 2015, net of C$20 million of borrowings and about C$345 million of LC commitments. Mattamy also has sufficient headroom under financial covenants in the credit agreement, which include debt to tangible net worth, interest coverage, and minimum tangible net worth. The stable outlook reflects our expectation that Mattamy will improve its credit metrics as North American homebuilding recovers, gradually reduce its debt leverage, and grow its tangible net worth. Moody's do not anticipate any upgrade or positive outlook within the next 12 months. The B1 rating assigned to the proposed senior unsecured tack-on notes, which is one notch below the corporate family rating, reflects the notes' junior capital position relative to the large amount of senior secured debt remaining in Mattamy's capital structure. The principal methodology used in this rating was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Established in 1978, headquartered in Oakville, Ontario, Canada, and owned 100% by Peter Gilgan, Mattamy Group Corporation constructs single-family attached and detached homes and has a presence in two provinces in Canada and five states in the U.S. In the last 12 months ended November 30, 2013, the company generated approximately C$1.5 billion in revenues (roughly 2/3 in Canada) and C$135 million of net income. MERRILL COMMUNICATIONS: Moody's Alters Outlook to Positive ---------------------------------------------------------- Moody's Investors Service has changed the ratings outlook for Merrill Communications LLC to positive from stable. At the same time, Moody's has affirmed all of Merrill's ratings, including its B3 Corporate Family Rating ("CFR"). The outlook has been raised in recognition of the company's recent trend of modest financial improvements as it restructures its operating model, and to reflect our expectation that the company will achieve a material degree of deleveraging over the next year as this trend continues. The positive outlook also takes into account interest savings to be realized due to the recent re-pricing of its term loan. Affirmations: Issuer: Merrill Communications LLC Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Secured Term Loan, Affirmed B1 (LGD3, 30%) Senior Secured Revolving Credit Facility, Affirmed Ba3 (LGD1, 1%) Issuer: Merrill Communications LLC Outlook, Changed To Positive From Stable Ratings Rationale The change in ratings outlook reflects Moody's expectations that Merrill will experience steady revenue growth through FY 2015 (ending January 31, 2015), which along with margin improvement, will result in positive free cash flow over this period. Moody's believe this will allow the company to de-lever through both debt reduction and earnings improvement. Total Debt to EBITDA (including Moody's standard adjustments) is estimated at approximately 5.1 times as of FYE January 31, 2014, demonstrating a deleveraging trend since the company restructured its debt in February 2013. Supported by evidence of improving operating margins, Moody's expect that a continued slow improvement in earnings over the near term will result in leverage approaching 4.5 times by the end of FY 2015, which is solid for B2 rated companies in this sector. Other credit metrics should also improve to levels more supportive of a higher rating over this period: EBITA to Interest in excess of 2 times and Retained Cash Flow to Debt of over 15%. Moody's notes that cash interest coverage is significantly stronger, as a large portion of reported interest expense represents PIK interest on approximately $200 million of HoldCo notes. As importantly, the ability of the company to achieve earnings growth that results in such deleveraging will indicate steady progress in the execution of its operating plans, which includes improving and expanding its key service offerings. Nonetheless, Merrill's B3 CFR also considers a significant concentration of the company's revenue base with financial services sector customers. The company has a substantial amount of exposure to volatility in capital markets activity, with over 40% of FY 2014 revenues derived from the company's DataSite (highly secure Virtual Data Room tool for online collaboration among multiple parties) and Transaction and Compliance Services (workflow management of security registration statements and other offering materials) segments. Because demand from this sector is largely driven by transaction volume, and is therefore unpredictable by nature, companies such as Merrill servicing this sector are expected to have credit metrics that are stronger than typical for its rating category. The company has recently made strides to improve revenue diversity, expanding offerings to other sectors such as legal and life science industries, and success in executing this strategy will be an important factor in the longer term improvement in the company's risk profile. The ratings could be upgraded if Merrill continues to demonstrate revenue growth at steady margins, applying free cash flow towards debt reduction, while maintaining a good liquidity profile. The following credit metrics would support an upgrade: Debt to EBITDA of less than 4.5 times, EBITA to interest in excess of 2 times, and Retained Cash Flow to Debt above 15%. The ratings could be lowered if revenue or margins unexpectedly weaken over the near term, reversing the current de-leveraging trends and weakening liquidity due to negative free cash flow generation. Debt to EBITDA of above 6 times or EBITA to Interest approaching 1 time would warrant lower rating consideration. Merrill Communications LLC provides document and data management services, litigation support, branded communication programs, fulfillment, imaging, and printing services to the financial, insurance, legal, life sciences and other market segments. The company generated approximately $816 million of revenue for the fiscal year ended January 31, 2014. The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. MF GLOBAL: Customers to Be Paid in Full After Corzine Loses ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jon Corzine and other former executives of MF Global Inc., along with auditor PricewaterhouseCoopers LLC, were dealt a fourth defeat on Feb. 20 by U.S. District Judge Victor Marrero, who upheld a bankruptcy court ruling allowing the defunct commodity broker's customers to be paid in full. According to the report, the bankruptcy judge was correct in approving a settlement that "satisfied everyone" except the executives and the auditors, who are being sued by the MF Global trustee and customers. Had Judge Marrero rejected the settlement, it probably would have meant dismissal of the suits on a technicality, even though Corzine and the others might otherwise have been liable for $1.6 billion in customer funds that was mishandled and precipitated the MF Global bankruptcy, the judge said. The MF Global brokerage trustee, James Giddens, put together three settlements, including with the U.S. Commodity Futures Trading Commission and JPMorgan Chase & Co., the report related. The bankruptcy court ruled that proceeds from the settlements didn't represent customers' money that was mishandled and thus wouldn't be applied automatically to cover the shortfall on their claims. As required by the CFTC, the settlement upheld by Judge Marrero nonetheless provided that MF Global's general estate would advance the settlement funds to customers to pay their claims in full, the report further related. In return, customers are to allow the trustee to continue pursuing their suits against Corzine, the auditors and other executives. Corzine, a former U.S. senator and once a co-chairman of Goldman Sachs Group Inc., lost on several grounds, the report added. Judge Marrero said neither Corzine nor the others had the right to appeal because they weren't creditors. The judge also said he was "at a loss to understand why they believe that the bankruptcy court's order has any effect on their defenses" in the lawsuits. Judge Marrero's decision was made in PricewaterhouseCoopers LLP v. Giddens (In re MF Global Inc.), 13-cv-8893, U.S. District Court, Southern District of 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. MGM RESORTS: Incurs $38.3 Million Net Loss in Fourth Quarter ------------------------------------------------------------ MGM Resorts International reported a net loss attributable to the Company of $38.33 million on $2.51 billion of revenues for the three months ended Dec. 31, 2013, as compared with a net loss attributable to the Company of $1.22 billion on $2.29 billion of revenues for the same period in 2012. For the 12 months ended Dec. 31, 2013, the Company incurred a net loss attributable to the Company of $156.60 million on $9.80 billion of revenues as compared with a net loss attributable to the Company of $1.76 billion on $9.16 billion of revenues for the same period during the prior year. The Company's balance sheet at Dec. 31, 2013, $26.11 billion in total assets, $18.23 billion in total liabilities and $7.87 billion in total stockholders' equity. "In 2013 we achieved our best operating performance since the recession. The fourth quarter finished strong, with 6% Adjusted EBITDA growth at our wholly owned domestic resorts and record quarters at MGM China and CityCenter," said Jim Murren, Chairman and CEO. "In 2014, we expect our Las Vegas properties to continue to improve, driven by a strong convention calendar and the completion of several capital initiatives on the Las Vegas Strip. In Macau, we continue to yield our existing resort and are well underway in more than doubling our footprint in the world's largest gaming market with MGM Cotai set to open early 2016." A copy of the press release is available for free at: http://is.gd/Gv6IdY About MGM Resorts MGM Resorts International (NYSE: MGM) -- http://www.mgmresorts.com/-- has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50 percent investments in four other properties in Nevada, Illinois and Macau. MGM Resorts reported a net loss attributable to the Company of $1.76 billion in 2012 as compared with net income attributable to the Company of $3.11 billion in 2011. Bankruptcy Warning "We have a significant amount of indebtedness maturing in 2015 and thereafter. Our ability to timely refinance and replace such indebtedness will depend upon the foregoing as well as on continued and sustained improvements in financial markets. If we are unable to refinance our indebtedness on a timely basis, we might be forced to seek alternate forms of financing, dispose of certain assets or minimize capital expenditures and other investments. There is no assurance that any of these alternatives would be available to us, if at all, on satisfactory terms, on terms that would not be disadvantageous to us, or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements." "Our ability to comply with these provisions may be affected by events beyond our control. The breach of any such covenants or obligations not otherwise waived or cured could result in a default under the applicable debt obligations and could trigger acceleration of those obligations, which in turn could trigger cross defaults under other agreements governing our long-term indebtedness. Any default under our senior credit facility or the indentures governing our other debt could adversely affect our growth, our financial condition, our results of operations and our ability to make payments on our debt, and could force us to seek protection under the bankruptcy laws," the Company said in its annual report for the year ended Dec. 31, 2012. * * * As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on MGM Resorts International to 'B-' from 'CCC+'. In March 2012, S&P revised the outlook to positive from stable. "The revision of our rating outlook to positive reflects strong performance in 2011 and our expectation that MGM will continue to benefit from the improving performance trends on the Las Vegas Strip," S&P said. In March 2012, Moody's Investors Service affirmed its B2 corporate family rating and probability of default rating. The affirmation of MGM's B2 Corporate Family Rating reflects Moody's view that positive lodging trends in Las Vegas will continue through 2012 which will help improve MGM's leverage and coverage metrics, albeit modestly. Additionally, the company's declaration of a $400 million dividend ($204 million to MGM) from its 51% owned Macau joint venture due to be paid shortly will also improve the company's liquidity profile. The ratings also consider MGM's recent bank amendment that resulted in about 50% of its $3.5 billion senior credit facility being extended one year from 2014 to 2015. As reported by the TCR on Oct. 15, 2012, Fitch Ratings has affirmed MGM Resorts International's (MGM) Issuer Default Rating (IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise) IDR at 'B+'. MILAGRO OIL: S&P Withdraws 'D' Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services said it withdrew its ratings, including its 'D' corporate credit and debt ratings, on Houston- based Milagro Oil & Gas Inc. at the company's request. MINI MASTER: Hires Pietrantoni Mendez as Special Counsel -------------------------------------------------------- Mini Master Concrete Services, Inc. seeks authorization from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Pietrantoni, Mendez & Alvarez, LLC ("PMA") as special counsel. The Debtor wants to employ the services of PMA to proceed with the appeal process as its special counsel under 11 U.S.C. Section 327(e). Prior to the filing of its Chapter 11 petition, the Debtor has a pending litigation case before the Court of First Instance of Puerto Rico, San Juan Section -- Master Concrete Corporation v. Juan Carlos M'ndez, Secretario de Hacienda, Civil Number K CO2006- 0018 (507) re: Challenge of Deficiencies for Excise Taxes. On Jan. 16, 2014, the Court of First Instance issued judgment in the case against Master Concrete, entered on the record on Jan. 22, 2014, dismissing the complaint challenging the Department of the Treasury of Puerto Rico's final determination of excise tax deficiencies for the tax periods of February to March 2000; April 2000 to March 2001; and April 2001 to March 2002, respectively, for $98,630.92, $547,542.70, and $465,988.71. The appeal of the judgment was due Feb. 21, 2014, and the Debtor has been advised by PMA that it should be undertaken, which PMA has agreed to handle on its behalf. PMA will be paid at these hourly rates: Jorge Perez Diaz $290 Maria D. Trelles $210 Liz A. Cruz $165 Jason Aguilo $160 PMA will also be reimbursed for reasonable out-of-pocket expenses incurred. Jorge Perez Diaz, counselor-at-law of PMA, 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. PMA can be reached at: Jorge Perez Diaz, Esq. PIETRANTONI, MENDEZ & ALVAREZ, LLC Popular Center, 19th Floor 208 Ponce de Leon Ave. San Juan, PR 00918 Tel: (787) 274-1212 Fax: (787) 274-1470 E-Mail: jperez@pmalaw.com Mini Master Concrete aka Mini Master aka Empresas Master filed a Chapter 11 petition (Bankr. D. P.R. Case No. 13-10302) on Dec. 11, 2013, in Old San Juan, District of Puerto Rico. Charles Alfred Cuprill, Esq., at Charles A Cuprill, PSC Law Office, in San Juan, in Puerto Rico, serves as counsel to the Debtor. The petition was signed by Carmen Betancourt, president. MINI MASTER: Seeks Court Approval to Hire Jesus Nieves as Auditor ----------------------------------------------------------------- Mini Master Concrete Services, Inc. asks for permission from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Jesus Mora Nieves, CPA as its auditor, to audit the Debtor's balance sheet as of Mar. 31, 2014, and the related statements of income, retained earnings, and cash flows for the year then ended. Mr. Nieves' compensation consists of a fee ranging from $9,000 to $10,000 for the monitoring and audit of the year ending Mar. 31, 2014, to be payable upon presentation. Mr. Nieves 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. Mr. Nieves can be reached at: Mr. Jesus M. Mora Nieves, CPA Urb. Jardines de Caparra, Calle 26, LL1 Bayamon, PR 00959 Tel: (787) 612-5104 Fax: (787) 775-1294 E-mail: jmmn23@gmail.com Mini Master Concrete aka Mini Master aka Empresas Master filed a Chapter 11 petition (Bankr. D. P.R. Case No. 13-10302) on Dec. 11, 2013, in Old San Juan, District of Puerto Rico. Charles Alfred Cuprill, Esq., at Charles A Cuprill, PSC Law Office, in San Juan, in Puerto Rico, serves as counsel to the Debtor. The petition was signed by Carmen Betancourt, president. MINI MASTER: Hires Jose Andino as Debt Collection Counsel --------------------------------------------------------- Mini Master Concrete Services, Inc. asks for permission from the U.S. Bankruptcy Court for the District of Puerto Rico to employ Jose E. Andino Delgado, Esq. ("Mr. Andino") as counsel for debt collection services. The Debtor seeks to employ the services of Mr. Andino to continue providing the services as its special counsel under 11 U.S.C. Section 327 (e). The Debtor wishes to retain Mr. Andino in these proceedings subject to Court approval in accordance to Rule 2014 of the Federal Rules of Bankruptcy Procedure, on the basis of a 15% contingency fee for extrajudicial debt collections, 20% contingency fee for cases that require the filing of a collection claim, 20% contingency fee for collections relative to closed accounts and returned checks for insufficient funds, plus expenses. The compensation to Mr. Andino shall be from funds as may be available to the Debtor and to which the Debtor may be legally entitled. Mr. Andino 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. Mr. Andino can be reached at: Jose E. Andino Delgado, Esq. Urb. Los Ingenieros #500 Fernando Caler Street San Juan, PR 00918-2753 Tel: (787) 767-3687 Fax: (787) 767-3687 E-mail: lcdoandino@onelinkpr.net Mini Master Concrete aka Mini Master aka Empresas Master filed a Chapter 11 petition (Bankr. D. P.R. Case No. 13-10302) on Dec. 11, 2013, in Old San Juan, District of Puerto Rico. Charles Alfred Cuprill, Esq., at Charles A Cuprill, PSC Law Office, in San Juan, in Puerto Rico, serves as counsel to the Debtor. The petition was signed by Carmen Betancourt, president. MONARCH COMMUNITY: Banc Fund Stake at 9.8% as of Dec. 31 -------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Banc Fund VIII L.P. and its affiliates disclosed that as of Dec. 31, 2013, they beneficially owned 850,000 shares of common stock of Monarch Community Bancorp, Inc., representing 9.8 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/4hcpr6 About Monarch Community Coldwater, Michigan-based Monarch Community Bancorp, Inc., was incorporated in March 2002 under Maryland law to hold all of the common stock of Monarch Community Bank, formerly known as Branch County Federal Savings and Loan Association. The Bank converted to a stock savings institution effective Aug. 29, 2002. In connection with the conversion, the Company sold 2,314,375 shares of its common stock in a subscription offering. In their audit report on the consolidated financial statements for the year ended Dec. 31, 2012, Plante & Moran, PLLC, in Grand Rapids, Michigan, expressed substantial doubt about Monarch Community's ability to continue as a going concern, noting that the Corporation has suffered recurring losses from operations and as of Dec. 31, 2012, did not meet the minimum capital requirements as established by its regulators. The Corporation reported a net loss of $353,000 on $6.8 million of net interest income (before provision for loan losses) in 2011, compared with a net loss of $10.9 million on $7.5 million of net interest income (before provision for loan losses) in 2010. Total non-interest income was $4.0 million for 2011, compared with $3.7 million for 2010. The Company's balance sheet at Dec. 31, 2013, showed $171.05 million in total assets, $151.33 million in total liabilities, and $19.72 million in stockholders' equity. MOSS FAMILY: Wants to Hire Beachwalk Realty as Broker ----------------------------------------------------- Moss Family Limited Partnership and Beachwalk, L.P. seek authorization from the U.S. Bankruptcy Court for the Northern District of Indiana to employ Beachwalk Realty, LLC as broker, to sell certain property of the Debtors. The Debtors requires Beachwalk Realty to sell the property situated in Michigan City, LaPorte County, Indiana, commonly known as 109 Mary Street, 201 Joe Lane, 103 Mary Street and 103 Joe Lane, which are legally described as "Lots 132B, 135B, 128B and 168B in Beachwalk Phase 3B, Michigan Twp., Laporte County, Michigan City, IN 46360". Thomas J. Moss, broker of Beachwalk Realty, 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. Beachwalk Realty can be reached at: Thomas J. Moss BEACHWALK REALTY, LLC 212 Beachwalk Ln La Porte, IN 46360-1782 Tel: (219) 873-1855 Fax: (219) 873-1859 E-mail: tmoss43@comcast.net About Moss Family Moss Family Limited Partnership and Beachwalk, L.P., filed Chapter 11 petitions (Bankr. N.D. Ind. Case Nos. 12-32540 and 12-32541) on July 17, 2012. Judge Harry C. Dees, Jr., presides over the case. Daniel Freeland, Esq., at Daniel L. Freeland & Associates, P.C., represents the Debtors. Moss Family disclosed $6,609,576 in assets and $6,299,851 in liabilities as of the Chapter 11 filing. MT. GOX: Mizuho Pushed to End Dealings with Bitcoin Exchange ------------------------------------------------------------ Takashi Mochizuki and Atsuko Fukase in Tokyo and Kathy Chu in Hong Kong, writing for The Wall Street Journal, reported that in the months before Mt. Gox's collapse, the bitcoin exchange was coming under increasing pressure from one of its banks, which complained about an unmanageable volume of money transfers and repeatedly asked the exchange to close its account with the bank, people familiar with the situation say. According to the report, Mizuho Bank, which handled international wire transfers and other Mt. Gox business at a branch in Tokyo's Shibuya district, had become worried about Mt. Gox as early as mid-2013, following reports that the U.S. Department of Homeland Security had seized money from a Mt. Gox account at a U.S. bank, these people say. Mizuho started having concerns about Mt. Gox's large volumes of money transfers at a time when U.S. authorities were investigating whether business dealings involving bitcoin could be linked to money laundering, the Journal said, citing one person close to the situation. That person also confirmed the authenticity of a recording, circulating widely on the Internet through social media, of a conversation in Japanese between an official from Mizuho Bank and Mt. Gox's head, Mark Karpeles, in late January, the report added. The tape indicated that Mizuho was stepping up a push to disassociate itself from Mt. Gox. In the conversation, the bank official repeated a request that Mt. Gox close its account with Mizuho and warned that it might take steps to close it if Mt. Gox refused, the report related. Mr. Karpeles said on the tape he wanted to keep the account. MT. GOX: Plaintiffs in Class Suit Seek to Freeze U.S. Assets ------------------------------------------------------------ Rachel Abrams, writing for The New York Times' DealBook, reported that customers of Mt. Gox are trying to freeze assets in the United States of the bankrupt Bitcoin exchange and its chief executive, Mark Karpeles. According to the report, plaintiffs in a class-action lawsuit filed a motion seeking a temporary injunction to keep Mr. Karpeles or his company from moving any money outside of the United States. They also want a full accounting of any assets Mt. Gox has left. Mr. Gox, a Japan-based virtual currency marketplace, filed for bankruptcy on Feb. 28, and Mr. Karpeles said it had lost all 750,000 customer Bitcoins, as well as 100,000 of its own -- or more than $450 million worth, the report said. Although the company has a subsidiary incorporated in Delaware, it's unclear what accounts, if any, the company held in the United States. "There were weaknesses in the system,' the report cited Mr. Karpeles as saying during a news conference in Tokyo to discuss the bankruptcy. "I'm truly sorry to have caused inconvenience.' Gregory Greene, an Illinois man who claims to have eventually acquired more than $25,000 worth of Bitcoins on Mt. Gox, filed his class-action lawsuit, three days after the company's website went offline, charging "systematic misuse and misappropriation of its users' property,' the report related. MT. LAUREL LODGING: Wins Court OK to Hire Pinnacle as Appraiser --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana authorized Mt. Laurel Lodging Associates LLP to employ Pinnacle Advisory Group as appraiser and expert witness, nunc pro tunc to the Nov. 4, 2013 petition date. As reported in the Troubled Company Reporter on Feb. 14, 2014, prior to the petition date, the Debtor retained Pinnacle to prepare an appraisal of the Debtor's Hotel pursuant to the terms and conditions of the engagement letter. Also prior to the petition date, the Debtor paid Pinnacle a flat fee in the amount of $15,000 for the preparation of such appraisal, which did not include the Debtor's agreement to reimburse Pinnacle for its reasonable costs, including travel time. For all additional work relating to the appraisal, including testimony at depositions and trial, the Debtor agreed to pay Pinnacle on an hourly basis. Pinnacle's hourly rates range from $300-$400 per hour. Pursuant to an additional engagement letter dated Dec. 2, 2013, the Debtor and its affiliates collectively retained Pinnacle to provide further advisory services relating to, among other things, the value of the fixtures and personal property located within Debtor's and its affiliate's hotels. The Debtor requested that Pamela McKinney from Pinnacle prepare an expert report and provide expert testimony at a cash collateral hearing that was scheduled for Dec. 20, 2013. The Debtor and its affiliates collectively agreed to pay Pinnacle $7,500, plus reimbursement of reasonable costs, for these additional services. In connection with these services, Sun paid Pinnacle $3,500, thereby leaving a balance of $4,000 plus reasonable costs. Pursuant to an additional engagement letter dated Jan. 8, 2014, the Debtor and its affiliates retained Pinnacle so that Pamela McKinney could testify at the Cash Collateral Hearing. The Debtor and its affiliates agreed to pay Pinnacle an additional $5,000 fee, plus travel related expenses, for these additional services. Rachel Roginsky, owner of Pinnacle, 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. Pinnacle can be reached at: Rachel Roginsky PINNACLE ADVISORY GROUP 164 Canal Street Boston, MA 02114 Tel: (617) 722-9916 Fax: (617) 722-9917 E-mail: rroginsky@pinnacle-advisory.com About Mt. Laurel Lodging Mt. Laurel Lodging Associates, LLP, and its six affiliates sought protection under Chapter 11 of the Bankruptcy Code on Nov. 4, 2013 (Case No. 13-bk-11697, Bankr. S.D. Ind.). The case is assigned to Judge Robyn L. Moberly. The petition lists the assets and debt as both exceeding $10 million on the Mount Laurel property. The Debtors are represented by Brian A Audette, Esq., and David M Neff, Esq., at Perkins Coie LLP, in Chicago, Illinois; and Andrew T. Kight, Esq., and Michael P. O'Neil, Esq., at Taft Stettinius & Hollister LLP, in Indianapolis, Indiana. The National Republic Bank of Chicago, a secured creditor, is represented by James E. Carlberg, Esq., and James P. Moloy, Esq., at Bose McKinney & Evans LLP, in Indianapolis, Indiana; and Timothy P. Duggan, Esq., at Stark & Stark, P.C., in Lawrenceville, New Jersey. NAVISTAR INTERNATIONAL: Reports $248MM First Quarter Loss --------------------------------------------------------- Lou Whiteman, writing for The Deal, reported that troubled truckmaker Navistar International Corp. reported a fiscal first quarter loss of $248 million on weaker demand for military products and continued issues with its shift to a more environmentally friendly commercial vehicle. According to the report, Lisle, Ill.-based Navistar said that sales for the quarter were $2.2 billion, a drop of more than 15% from the same three months a year prior. The company in addition to sales weakness was hit by a $21 million unfavorable impact from foreign exchange rates and an $18 million asset impairment charge. Navistar has been floundering in recent years due to problems stemming from its 2001 decision to invest more than $700 million in an ambitious, but so far not viable, technology designed to meet higher emission standards, the report related. Navistar has had a string of quarterly losses due to tepid sales and high warranty expenses relating to its troubled engine design, but the company insists the worst is behind it. "We signaled that this would be a tough quarter due to our mid- range product transition, the ongoing reduced sales in our military business, and because the first quarter, historically, represents the weakest operational period of the year for us," CEO Troy A. Clarke said in a statement, the report cited. "Clearly, we have more hard work to do to rebuild our market share and further reduce our costs, but we continue to make progress on our Drive to Deliver, and we feel we're off to a solid start in 2014." Gimme Credit LLC senior high yield analyst Vicki Bryan in a note said one persistent reason for concern at Navistar is that customers seem to favor engines made by rival Cummins Inc. over Navistar's in-house alternative, the report further related. Navistar began offering trucks with Cummins engines to buy it time while it reworked its own design, but that option is a drain on resources. 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 Oct. 9, 2013, edition of the TCR, Moody's Investors Service affirmed the ratings of Navistar International Corporation, including the B3 Corporate Family Rating (CFR). The ratings reflect Moody's expectation that Navistar's successful incorporation of Cummins engines throughout its product line up will enable the company to regain lost market share, and that progress in addressing component failures in 2010 vintage-engines will significantly reduce warranty expenses. 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. As reported by the TCR on Jan. 24, 2013, Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for Navistar International Corporation and Navistar Financial Corporation at 'CCC' and removed the Negative Outlook on the ratings. The removal reflects Fitch's view that immediate concerns about liquidity have lessened, although liquidity remains an important rating consideration as NAV implements its selective catalytic reduction (SCR) engine strategy. Other rating concerns are already incorporated in the 'CCC' rating. NEW CENTURY TRS: Cromwell's $2 Million Claim Untimely ----------------------------------------------------- Bankruptcy Judge Kevin J. Carey denied the request of Kimberly S. Cromwell, pro se, to consider her proof of claim timely filed. The New Century Liquidating Trust, by and through Alan M. Jacobs, the Liquidating Trustee, filed an objection to the Motion. After discovery and an unsuccessful mediation, an evidentiary hearing was held on the Motion and, thereafter, the parties filed post- hearing submissions. Ms. Cromwell filed her request on May 26, 2010, along with a proof of claim, asserting a claim in the amount of $2 million based on violations of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act, fraud, fraudulent conveyance, and violations of business and professional codes. The proof of claim also refers to litigation pending in Contra Costa County Superior Court in California. The proof of claim was not received by the Debtors' Claims Agent until June 10, 2010. Ms. Cromwell argues that her proof of claim should not be considered untimely because the Debtors did not provide her with actual notice of the Bar Date. The Trustee argues that Ms. Cromwell was an unknown creditor at the time the Bar Date Notice was served and, therefore, was not entitled to actual notice of the Bar Date. A copy of the Court's March 4, 2014 Memorandum is available at http://is.gd/51emsvfrom Leagle.com. About New Century Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- was a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The Company was among firms hit by the collapse of the subprime mortgage business industry in 2006. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they disclosed total assets of $36,276,815 and total debts of $102,503,950. The Company sold its assets in transactions approved by the Bankruptcy Court. The Bankruptcy Court confirmed the Second Amended Joint Chapter 11 Plan of Liquidation of the Debtors and the Official Committee of Unsecured Creditors on July 15, 2008, which became effective on Aug. 1, 2008. An appeal was taken and, on July 16, 2009, District Judge Sue Robinson issued a Memorandum Opinion reversing the Confirmation Order. On July 27, 2009, the Bankruptcy Court entered an Order Granting Motion of the Trustee for an Order Preserving the Status Quo Including Maintenance of Alan M. Jacobs as Liquidating Trustee, Plan Administrator and Sole Officer and Director of the Debtors, Pending Entry of a Final Order Consistent with the District Court's Memorandum Opinion. On Nov. 20, 2009, the Court entered an Order confirming the Modified Second Amended Joint Chapter 11 Plan of Liquidation. The Modified Plan adopted, ratified and confirmed the New Century Liquidating Trust Agreement, dated as of Aug. 1, 2008, which created the New Century Liquidating Trust and appointed Alan M. Jacobs as Liquidating Trustee of New Century Liquidating Trust and Plan Administrator of New Century Warehouse Corporation. NEW PLAN LEARNING: Fitch Affirms 'BB-' Rating on $33MM Rev. Bonds ----------------------------------------------------------------- Fitch Ratings has affirmed its 'BB-' rating on the following educational facility revenue bonds for the Industrial Development Authority of the County of Pima. The bonds are issued on behalf of the New Plan Learning Inc. (NPL) Project: -- $32.57 million tax-exempt series 2011A; -- $545,000 taxable series 2011B The Rating Outlook is Stable. Security The bonds are secured by the gross revenues of NPL and are primarily comprised of lease payments from four participant schools (the participants) located in Illinois and Ohio. Participant lease payments are sized to exceed their allocated portion of debt service and meet 120% of maximum annual debt service (MADS) coverage requirement. A mortgage is provided on each participant's school facility. Key Rating Drivers Weak Participant Finances: The 'BB-' rating for NPL's series 2011 bonds reflects the speculative grade credit profiles of the participants and the exclusion of contributions of any participating charters operating less than five years when calculating debt service coverage (DSC) in pooled transactions. Structure Provides Coverage Cushion: The transaction's required reserves and participant annual lease payments, which are allocated in excess of debt service, provide incremental credit strength to augment what Fitch considers the weakest credit profile within a pool of four participants. Each charter school's standalone credit metrics reflect varying but generally speculative grade characteristics. Enrollment Growth Sustained: Student demand at the OH schools is stable. Current student counts exceed management projections and if sustained and leveraged appropriately, should improve school performance. Management Organization Standards High: Concept Schools (Concept), the charter school management firm, requires high academic standards and overall compliance with each participant school's authorized charters. Rating Sensitivities Enrollment Growth And Coverage: The four schools' ability to transform enrollment growth into operating sustainability is imperative for ratings improvement. The inability to effect positive traction year over year would indicate a perennially weak pool of participants and will negatively pressure the rating. Standard Sector Concerns: A limited financial cushion; substantial reliance on enrollment-driven, per pupil funding; and charter renewal risk are credit concerns common among all charter school transactions that, if pressured, could negatively impact the rating over time. Credit Profile The pool participants include Chicago Math and Science Academy (CMSA), located in Chicago, IL; Horizon Science Academy (HSAD), located in Dayton, OH; and Horizon Science Academy Springfield (HSAS) and Horizon Science Academy Toledo (HSAT), both located in Toledo, OH. NPL leases charter school facilities to the participants for which it receives (from each school on a several basis) lease rental payments that are structured so that the combined lease payments cover debt service 1.2x per the bond documents. Fitch inquired about each school's charter status with its respective authorizer and gained comfort that each of the participants generally comply with their current charter terms. Limited Operating History Constrains Coverage The financial performance of the individual participants is a key consideration in ascertaining the credit strength of the pool to meet its lease payments, and therefore debt service obligations. Fitch acknowledges that DSC was achieved for fiscal 2013 and no notice of violation is currently posted for the current fiscal year. However, Fitch's approach to pool transactions excludes charters with less than five years of operating history or at least one renewal. HSAD, authorized in 2009, will complete five years of operations in the next year. Therefore HSAD payments toward DSC are excluded until that time; the school contributes approximately 22% of the annual debt service requirement. Lease payments from the three other participants who have more than five years of operating history, cumulatively yield less than 1x DSC, a feature consistent with a speculative grade credit rating. Demand Measures Stabilizing Fitch views the enrollment growth at each of the Ohio schools for 2012-2013 school year positively and notes the persistence of enrollment for the 2013-2014 school year. HSAT, HSAS and HSAD each enrolled 506, 430, and 348 students, respectively, for fiscal 2013; preliminary counts for fiscal 2014 indicate 540, 427, and 349 students at the respective schools. Fitch expects that stability in these counts and some growth expected at the HSAD campus will improve the consolidated financial performance of the pool. CMSA, the sole non-Ohio school, is at full capacity with 605 students for the current school year. Financial And Debt Profiles Remain Speculative Grade Fiscal 2013 operating performance generally improved for most schools as measured by margin performance. HSAD did not post an audit for fiscal 2013 and management reports that this is due to delays at the state level. This lack of an audited financial statement is viewed as a weakness. Fitch assessed the ability of each school to meet its annual lease payment, the relevant burden it places on operations, and the extent of liquidity available to each school to offset weak operations. Each participant's credit characteristics marginally improved year over year, reflecting margins for fiscal 2013 ranging from 1.5% to negative 6.5%, MADS burdens that accounted for up to 21% of operating revenue, and net income available for debt service. Balance sheet resources at the individual participant level remain virtually non-existent. Fitch expects balance sheet resources to improve as enrollment drives improved financial viability in each of the OH schools. Bond Provisions Not Met Bond provisions for NPL are strong with multiple reserves providing an excess cushion and a required DSC ratio of 1.2x. Additionally, each participant is required to maintain cash on hand equal to 12% of annual operating expenses. This measure is not currently met by any of the four participants. While the required covenant violation is expected to be remedied by either a waiver or retaining a consultant, Fitch acknowledges that meeting this particular liquidity requirement is challenging during the ramp-up period. Bondholders have a security interest in NPL's gross revenue fund in which the indenture requires NPL maintain no less than 12% of aggregate corporate revenues (the definition for which includes rents from non-financed schools). Other reserves held at the trustee and available to cover debt service shortfalls include the bond revenue fund ($500,000) and a cash funded debt service reserve funded at MADS. The capital and maintenance operating fund is currently being funded after depletion for an expansion of the original HSAT project. NPL is replenishing the fund over 36 months to its original size of $1 million. Fitch views the fund as a credit neutral factor. All of the reserve balances are tested quarterly. Diminishment of balances at the bond revenue fund, coupled with insufficient balances at the NPL gross revenue fund could likely result in a rating action. Replenishment of the various reserves is subject to excess funds received from participant lease payments and would only occur after satisfying debt service. Concept continues to be integral to the success of the four schools. Concept's management practices have historically driven strong academic outcomes and fiscal oversight at its other schools and Fitch believes this experience should bode well for long-term operations and financial performance of the four participant schools. NPL was formed in 2005 by the founders of Concept to provide a facilities solution for charter schools that were administered and managed by Concept. NPS PHARMACEUTICALS: Incurs $13.5 Million Net Loss In 2013 ---------------------------------------------------------- NPS Pharmaceuticals, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $13.50 million on $155.59 million of total revenues for the year ended Dec. 31, 2013, as compared with a net loss of $18.73 million on $130.64 million of total revenues during the prior year. In 2011, the Company incurred a net loss of $36.26 million. For the three months ended Dec. 31, 2013, the Company posted net income of $7.76 million on $54.45 million of total revenues as compared with a net loss of $12.20 million on $27.18 million of total revenues for the same period in 2012. As of Dec. 31, 2013, the Company had $292.22 million in total assets, $187.33 million in total liabilities and $104.89 million in total stockholders' equity. "2013 was a transformative year in which we successfully established NPS as a global commercial rare disease company with the US launch of Gattex and the regaining of the ex-US rights to our two products, said Francois Nader, MD, president and chief executive officer of NPS Pharmaceuticals. "Looking forward to 2014, we will continue to execute our growth strategy to build a premier global orphan drug business. Our key initiatives are growing Gattex sales in the US, launching Revestive in certain ex- US markets, securing US approval of Natpara for hypoparathyroidism, and building a global pipeline of innovative, 'first-in' or 'best-in' rare disease therapeutics. " A copy of the Form 10-K is available for free at: http://is.gd/ezdYjp 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. ORCKIT COMMUNICATIONS: Holders Seek Stay of Proceedings ------------------------------------------------------- The trustees of the Orckit Communication's Series A and Series B note holders filed a petition with the District Court of Tel Aviv for a stay of proceedings and the appointment of Mr. Yoav Kfir as a trustee over the Company. The Court ordered that the Company file its response by the end of business on Feb. 19, 2014, and scheduled a hearing on Feb. 20, 2014. The petition proposes a stay of proceedings for a period of 90 days or until the Court rules otherwise, during which: * No legal actions may be taken against the Company without the approval of the Court; * No receiver may be appointed with respect to the assets of the Company without the approval of the Court; * No creditor of the Company (including the Office of the Chief Scientist) may seek personal relief without the approval of the Court; * The Trustee would be authorized to take any action in the name of the Company; * The Trustee would be authorized to utilize the assets of the Company and to engage service providers and professionals, as necessary, including the employment of any employees of the Company, in order to implement his actions as trustee; * The Trustee would make payments from the account of the Company solely for services and products to be provided to the Company during the period of the stay in the context of its ongoing activities and in order to advance the arrangement proceedings and rehabilitation of the Company; and * Any action to be taken in the name of the Company would require the signature of the Trustee or another person authorized by the Trustee. As reported by the TCR on June 24, 2013, Orckit filed a petition with the District Court of Tel Aviv-Jaffa regarding a proposed plan of arrangement with the holders of Orckit's Series A notes and Series B notes under Section 350 of the Israeli Companies Law, 5759-1999. 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: Court Approves Deloitte FAS as Accountant --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Overseas Shipholding Group, Inc. and its debtor-affiliates to employ Deloitte Financial Advisory Services LLP as fresh start accounting services provider, nunc pro tunc to Dec. 10, 2013. As reported in the Troubled Company Reporter on Jan. 24, 2014, Deloitte FAS is anticipated to provide fresh start accounting services, as requested by the Debtors and agreed to by Deloitte FAS including the following services: (a) Planning for the Debtors' determination of and substantiation of the Fresh-Start Balance Sheet under ASC 852; -- assist management in its development of an implementation approach for freshstart accounting, starting with any necessary training support and culminating in a strategy and work plan for the project; -- advise and provide recommendations to management in connection with its determination of plan of reorganization ("POR") adjustments necessary to record the impact of the POR to the books of entry of the appropriate legal entities; -- assist management in its determination of asset and liability adjustments. (b) Other Related Advice and Assistance with Accounting and Financial Reporting; -- advise management as it prepares accounting information and disclosures in support of public and private financial filings such as 10-K, 10-Q's, public registration statements, statutory reporting or lender statements; -- advise management as it evaluates existing internal controls and develops new controls for fresh start accounting implementation; -- assist management with its responses to questions or other requests from the Debtors' external auditors regarding bankruptcy accounting and reporting matters. and other fresh-start adjustments as necessary to comply with the accounting and reporting requirements of ASC 852 and ASC 805 (Business Combinations); -- assist management with its identification of tangible and intangible assets (the "Assets"), as well as liabilities for fresh start accounting purposes; -- analyze estimates or other analyses performed by others, if any, including, without limitation, management, and assist management in identifying additional efforts required to address open items; -- assist management with its identification and estimation of specific assets and liabilities in accordance with ASC 820 for purposes of preparing accounting adjustments, financial statements and related disclosures of the restructured entities upon confirmation of the POR and emergence from the Cases; -- advise management as it assigns assets, including, without limitation, goodwill, and liabilities to its three reporting units, international crude tankers, international product carriers and U.S. flag vessels; -- coordinate information for auditor review; and -- advise management as it addresses company-specific issues surrounding allocations to specific assets, legal entities, cost centers, operating segments and reporting units. Included as a specific task that the Debtors may request Deloitte FAS to perform would be preparation of reports that the Debtors may provide to their auditors as audit evidence in support of the values established by the Debtors under fresh-start accounting in connection with the Cases. (c) Application Support: Assist management in its preparation and implementation of the accounting treatments and systems updates for its fresh start accounting implementation as of the fresh-start reporting date. Application support includes the following items as applicable: -- definition of specific processing requirements; -- programming specifications; -- application configuration and set-up; -- interface development; -- data cleansing and reconciliation; and -- project management and administration. Deloitte FAS will be paid at these hourly rates: Partner/Principal/Director $675 Senior Manager $575 Manager $455 Senior $390 Consultant $240 Deloitte FAS will also be reimbursed for reasonable out-of-pocket expenses incurred. Anthony Sasso, director of Deloitte FAS, 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. Deloitte FAS can be reached at: Anthony Sasso DELOITTE FINANCIAL ADVISORY SERVICES LLP 100 Kimball Drive Parsippany, NJ 07054-0319 Tel: (973) 602-6000 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. OXYSURE SYSTEMS: Sinacola Stake at 7.9% as of Feb. 14 ----------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Sinacola Commercial Properties, Ltd., disclosed that as of Feb. 14, 2014, it beneficially owned 1,936,202 (includes 436,945 shares of common stock issuable upon exercise of warrants within 60 days of Feb. 14, 2014, and 209,271 shares of restricted common stock) of OxySure Systems, Inc., representing 7.9 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/0aCl3C About OxySure Systems Frisco, Tex.-based OxySure Systems, Inc. (OTC QB: OXYS) is a medical technology company that focuses on the design, manufacture and distribution of specialty respiratory and emergency medical solutions. The company pioneered a safe and easy to use solution to produce medically pure (USP) oxygen from inert powders. The Company owns nine (9) issued patents and patents pending on this technology which makes the provision of emergency oxygen safer, more accessible and easier to use than traditional oxygen provision systems. The Company's balance sheet at Sept. 30, 2013, showed $1.20 million in total assets, $1.51 million in total liabilities and a $310,451 total stockholders' deficit. Going Concern "Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. While we have turned a profit during the three months ended September 30, 2013, historically we have been suffering from recurring loss from operations. We have an accumulated deficit of $14,703,693 and $14,258,667 at September 30, 2013 and December 31, 2012, respectively, and stockholders' deficits of $310,451 and $652,125 as of September 30, 2013 and December 31, 2012, respectively. We require substantial additional funds to manufacture and commercialize our products. Our management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available," the Company said its quarterly report for the period ended Sept. 30, 2013. "In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying September 30, 2013 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern," the Company added. PHI INC: Moody's Rates New $500MM Senior Unsecured Notes 'B2' ------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to PHI, Inc.'s (PHI) proposed $500 million senior unsecured notes due 2019. PHI's other ratings and stable outlook were unchanged. Net proceeds from this offering will be used to redeem $300 million in outstanding 2018 notes, $98.4 million in revolving credit facility debt, and for general corporate purposes including the acquisition of aircraft currently leased by the company and newly-built aircraft currently on order. "While this transaction increases debt level slightly, pro forma leverage will remain solidly anchored in the B1 CFR level," said Sajjad Alam, Moody's Analyst. Issuer: PHI, Inc. Assignments: $500 million senior unsecured notes, assigned B2 (LGD4-60%) Ratings Rationale The new 2019 senior unsecured notes are rated B2, one notch below PHI's B1 CFR under Moody's Loss Given Default Methodology. The lower note rating reflects the priority claim of the $150 million secured revolving credit facility that has a first-lien claim on PHI's accounts receivable and inventory. PHI's B1 Corporate Family Rating (CFR) reflects its limited scale within the broader oilfield services industry, concentration in the Gulf of Mexico (GoM), the relatively high proportion of light helicopters in its aircraft fleet, and its exposure to the volatile offshore oil and gas industry. The B1 CFR also recognizes PHI's significantly improved leverage profile, growing fleet, long-standing customer relationships with large credit-worthy customers, leading market share in the GoM, durable contracts and its focus on oil and gas production operations which provide more stable revenues than exploration and development type activities. PHI should have good liquidity in 2014. Pro forma for the note offering, the company will retain roughly $200 million in cash and short-term investments and an undrawn $150 million revolving credit facility. Cash and short-term investments should cover capital requirements for 2014 without incremental revolver borrowings. PHI has options to purchase six leased large helicopters in 2014, and six additional helicopters in 2015. The company will likely continue to use a mix of operating leases and early lease buyout options to add heavy helicopters to its fleet. The revolving credit facility matures in September 2015 and Moody's expect PHI to remain in compliance with its financial covenants through 2014. PHI has substantial back-door liquidity given its 230 owned aircraft are unencumbered. The stable outlook assumes continued healthy oil and gas drilling activities in the GoM. An upgrade could be considered if EBITDA can be sustained above $200 million with leverage remaining below 3.5x. Moody's would also look for PHI to source more revenues from areas outside of the GoM and more clarity around strategic growth plans. The CFR will likely be downgraded if debt/EBITDA exceeds 5x. A negative rating action could also result if liquidity appears insufficient to meet next twelve months funding requirements. The principal methodology used in this rating was the Global Oilfield Services Rating Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. PHI, Inc. is a Louisiana based provider of helicopter transportation services primarily to the offshore oil and gas industry in the Gulf of Mexico. The company also provides air medical transportation in the US and Saudi Arabia. PHI INC: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on Lafayette, La.-based helicopter service provider PHI Inc. to 'BB-' from 'B+'. The outlook is stable. S&P also assigned its 'BB-' issue-level rating (the same as the corporate credit rating) to the company's $500 million senior unsecured notes due 2019. The recovery rating on this debt is '4', which indicates S&P's expectation of average (30% to 50%) recovery in the event of default. The company is using the senior unsecured note proceeds to repay its existing $300 million 8.625% senior unsecured notes, repay approximately $80 million on its revolving credit facility, and purchase approximately $100 million of aircraft lease buy-outs. The rating action reflects PHI's success in expanding its air medical segment. Over the past couple of years, the air medical segment has grown in revenue and profitability. In 2013, it accounted for 32% of the company's revenue, and S&P expects growth to continue in 2014. "The stable outlook reflects our expectation that the company will continue to benefit from a healthy level of activity in the deepwater Gulf of Mexico," said Standard & Poor's credit analyst Stephen Scovotti. "It also reflects our view that the company will continue to expand its air medical segment in 2014, which will improve its diversity. We also expect the company to sustain FFO to debt of greater than 25% over the next 12 months." S&P could lower the rating if PHI's cash flow generation weakened below its current expectations, such that FFO to debt fell below 20% with no near-term remedy. Given robust conditions in the deepwater Gulf of Mexico, S&P considers such a decline unlikely in the near term. A lower rating could also be considered if a more aggressive financial policy was pursued that resulted in a deterioration of credit measures. S&P could raise the rating due to an improvement in PHI's business risk profile and a more favorable view of the company's competitive position, including its diversity of operations. Given the relatively small size and scope of the company, S&P do not anticipate an upgrade during the next 12 months. PLAZA HEALTHCARE: 17 Affiliates File Chapter 11 Petitions --------------------------------------------------------- Plaza Healthcare Center LLC and Plaza Convalescent Center LP each filed a voluntary petition under Chapter 11 of the Bankruptcy Code on March 4, 2014. The following day, 17 of their affiliates filed for bankruptcy protection, namely: Debtor Case No. ------ -------- Belmont Heights Healthcare Center 14-11358 dba Country Villa Belmont Heights Healthcare Center 1730 Grand Avenue Long Beach, CA 92707 Claremont Healthcare Center Inc. 14-11375 dba Country Villa Claremont Healthcare Center 590 S. Indian Hill Blvd. Claremont, CA 92707 Country Villa East LP 14-11371 dba Country Villa Pavilion Nursing Center dba Country Villa Sheraton Nursing and Rehab Center dba Country Villa East Nursing Center dba Country Villa Terrace Nursing Center dba Country Villa Terrace Assisted Living Center 5916 W. Pico Blvd. Los Angeles, CA 92707 Country Villa Imperial LLC 14-11370 DBA Healthcare Center of Bella Vista 933 E. Deodar Street Ontario, CA 92707 Country Villa Nursing Center Inc. 14-11364 Country Villa Southbay LLC 14-11360 East Healthcare Center LLC 14-11372 Los Feliz Healthcare Center LLC 14-11368 Mountainside Operating Company 14-11367 North Healthcare Center LLC 14-11366 North Point Health & Wellness Center 14-11365 RRT Enterprises LP 14-11363 Sheraton Healthcare Center LLC 14-11362 South Healthcare Center LLC 14-11361 Westwood Healthcare Center LLC 14-11359 Westwood Healthcare Center LP 14-11376 dba Country Villa Westwood LP 12121 Santa Monica Blvd. Los Angeles, CA 92707 Wilshire Healthcare Center LLC 14-11373 dba Country Villa Westwood Convalescent Center 12121 Santa Monica Blvd. Los Angeles, CA 92707 Type of Business: Debtors provide assisted living, skilled nursing, rehabilitation, and other health-care related services. Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Hon. Catherine E. Bauer Debtors' Counsel: Ron Bender, Esq. Monica Y Kim, Esq. Krikor J Meshefejian, Esq. Lindsey L Smith, Esq. LEVENE, NEALE, BENDER, YOO & BRILL LLP 10250 Constellation Blvd Ste 1700 Los Angeles, CA 90067 Tel: 310-229-1234 Email: rb@lnbyb.com myk@lnbrb.com kjm@lnbrb.com lls@lnbyb.com Estimated Estimated Assets Liabilities ------------ ----------- Belmont Heights Healthcare $1MM-$10MM $1MM-$10MM Westwood Healthcare Center LLC $1MM-$10MM $1MM-$10MM Country Villa Imperial $1MM-$10MM $1MM-$10MM Country Villa East LP $10MM-$50MM $10MM-$50MM Claremont Healthcare Center $1MM-$10MM $1MM-$10MM Westwood Healthcare Center LP $1MM-$10MM $1MM-$10MM The petitions were signed by Stephen Reissman, CEO. A. List of Belmont Heights Healthcare's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Department of Health Services $631,539 Acctg Section/MS 1101 PO Box 997415 Sacramento, CA 95899 Interface Rehab Inc. $159,896 McKesson Medical-Surgical $149,469 Modern Health Pharmacy $136,315 Omnicare, Inc. $73,195 Healthcare Services Group Inc. $54,501 Sysco/Credit Dept. $29,282 SRC Medical $18,874 Procopio, Cory, Hargreaves & Savitch LLC $13,543 Twin Medical LLC $10,868 California Association of Health FAC $8,308 Diagnostic Laboratories $7,446 Grand NF LLC $7,078 Direct Supply Inc. $6,748 Mc Kenna Long and Aldridge $6,663 Dairy King Milk $5,845 Dynamic Medical Systems Inc. $4,899 Hooper, Lundy & Bookman Inc. $4,294 Southern California Edison Company $4,210 Interactive Medical Systems Inc. $2,524 B. List of Westwood Healthcare Center LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Department of Health Services $512,192 Acctg Section/MS 1101 PO Box 997415 Sacramento, CA 95899 Interface Rehab Inc. $308,216 774 S Placenta Avenue #200 Placentia, CA 92870 Modern Health Pharmacy $124,044 Omnicare, Inc. $90,272 Healthcare Services Group Inc. $50,739 McKesson Medical-Surgical $50,056 Pharmacy Advantage $28,011 Sysco/Credit Dept. $21,559 Procopio, Cory, Hargreaves & Savitch LLC $13,543 Dairy King Milk $9,332 LA DWP $7,250 McKenna Long and Aldridge $6,663 Calif Association of Health FAC $6,320 Direct Supply Inc. $4,578 Diagnostic Laboratories $4,336 Dynamic Medical Systems Inc. $4,003 Interactive Medical Systems Inc. $3,711 The Gas Company $2,020 Butler Chemical $1,495 Waste Management $1,218 C. List of Country Villa Imperial's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Department of Health Services $201,230 Interface Rehab Inc. $164,018 Skilled Nursing Pharmacy $29,512 McKesson Medical-Surgical $25,046 California Association of Health FAC $4,189 Sysco of Central California $3,835 Krieger Family Trust $2,588 Dairy King Milk $2,556 Ontario Municipal Utilities Company $2,100 Southern California Edison Company $1,850 Diagnostics Laboratories $1,772 Butler Chemical $1,121 The Gas Company $850 Direct Supply Inc. $370 Office Depot $333 Harbor Linen $317 Sunflower Landscape Service $300 SNF Forms & Supplies $226 Ancillary Provider Services $176 Thermal Combustion Innovators Inc. $72 D. List of Country Villa East LP's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Department of Health Services $1,330,918 Acctg Section/MS 1101 PO Box 997415 Sacramento, CA 95899 Interface Rehab Inc. $818,222 Modern Health Pharmacy $474,053 McKesson Medical-Surgical $186,860 Healthcare Services Group Inc. $183,224 Omnicare, Inc. $137,588 Procopio, Cory, Hargreaves & Savitch LLC $54,174 Dairy King Milk $32,210 Direct Supply Inc. $26,590 LA DWP $22,800 California Association of Health FAC $17,184 Interactive Medical Systems Inc. $11,617 Monarch Plumbing & Mechanical $10,863 Sysco/Credit Dept $9,696 SRC Medical $9,312 Superior Convalescent LLC $8,084 Diagnostic Laboratories $7,297 Access Air Conditioning $6,863 MC Kenna Long and Aldridge $6,663 Dynamic Medical Systems Inc. $6,559 E. List of Claremont Healthcare's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ ---------------- ------------ Department of Health Services $540,590 Acctg Section/MS 1101 PO Box 997415 Sacramento, CA 95899 Interface Rehab Inc. $170,156 Healthcare Services Group Inc. $102,929 Skilled Nursing Pharmacy $48,384 McKesson Medical-Surgical $25,193 Omnicare, Inc. $21,276 Procopio, Cory, Hargreaves & Savitch LLC $13,543 Dairy King Milk $10,785 California Association of Heath FAC $7,030 Golden State Water Company $6,820 MC Kenna Long and Aldridge $6,663 Sysco/Credit Dept $6,539 Dynamic Medical Systems Inc. $5,973 Monarch Plumbing & Mechanical $5,646 Omega Healthcare Investors, Inc. $4,121 Southern California Edison Company $4,100 Direct Supply Inc. $3,796 HD Supply Facilities Maintenance LT $3,549 The Gas Company $2,200 Carl's Laundry Repair Inc. $1,740 F. List of Westwood Healthcare Center LP's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ ---------------- ------------ Department of Health Services $512,192 Acctg Section/MS 1101 PO Box 997415 Sacramento, CA 95899 Interface Rehab Inc. $308,216 774 S Placentia Avenue #200 Placentia, CA 92870 Modern Health Pharmacy $124,044 Omnicare, Inc. $90,272 Healthcare Services Group Inc. $50,739 McKesson Medical-Surgical $50,056 Pharmacy Advantage $28,011 Sysco/Credit Dept $21,559 Procopio, Cory, Hargreaves & Savitch LLC $13,543 Dairy King Milk $9,332 LA DWP $7,250 McKenna Long and Aldridge $6,663 California Association of Health FAC $6,320 Direct Supply Inc. $4,578 Diagnostic Laboratories $4,336 Dynamic Medical Systems Inc. $4,003 Interactive Medical Systems Inc. $3,711 The Gas Company $2,020 Butler Chemical $1,495 Waste Management $1,218 PONCE DE LEON: Amending Cash Collateral Budget ---------------------------------------------- Ponce de Leon 1403, Inc., asks the U.S. Bankruptcy Court for the District of Puerto Rico to approve an amendment to the terms governing the continued use of PRLP 2011 Holdings LLC's cash collateral. On June 19, 2012, the Court granted the Debtor's use of PRLP's cash collateral. The Court extended the use of cash collateral until the confirmation date and determined that 70 percent of the sales price of individual condominium units constitutes adequate protection to PRLP. The Debtor said it is in urgent need to amend its prior budget for the use of the cash collateral and provide payment to allowed expenses for operations, and to reinstate the 70 percent payment to PRLP as adequate protection. The Debtor also request that the Court note that the property securing its obligations to PRLP is valued at approximately $10 million whereas the outstanding obligation to PRLP is $7.4 million. About Ponce De Leon San Juan, P.R.-based Ponce De Leon 1403, Inc., developed, constructed, and operates the Metro Plaza Tower condominium and commercial property project in Santurce, Puerto Rico. The Metro Plaza Tower project consists of two 15-story towers atop a base structure that serves as a parking garage, common area, and retail space. Each tower houses 87 residential units. The base structure provides approximately 567 parking spaces and has approximately 14,000 square feet of commercial space available for lease. The common areas of the project include a swimming pool, a gym, gardens and a gazebo. Ponce De Leon 1403 Inc. filed for Chapter 11 protection (Bank. D. P.R. Case No. 11-07920) on Sept. 19, 2011. The Debtor estimated both assets and debts of between US$10 million and US$50 million. Carmen Conde Torres, Esq., and Luisa S. Valle Castro, at C. Conde & Assoc., in Old San Juan, Puerto Rico, represent the Debtor as counsel. The confirmation of the Plan of Reorganization dated April 13, 2012, is scheduled for April 1, 2014. The Debtor won approval of the explanatory Disclosure Statement on June 25, 2012. The Debtor amended the Plan on Jan. 25, 2013. Under the Plan, the Debtor will generate revenue by selling all of the remaining residential units and selling or leasing commercial spaces in the Metro Plaza Towers Projected including the public parking spaces. PRESIDIO INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services said it affirmed its 'B+' corporate credit rating on Greenbelt, Md.-based Presidio Inc. The outlook is stable. At the same time, S&P assigned a 'B+' issue-level rating with a recovery rating of '4' to the company's proposed $600 million senior secured term loan due 2017. The '4' recovery rating indicates S&P's expectation for average recovery (30% to 50%) in the event of payment default. S&P will withdraw its ratings on the company's existing term loan following the completion of the transaction. "The ratings reflect Presidio's 'aggressive' financial risk profile with leverage in the high-3x area, pro forma for the proposed transaction, up from the mid-2x area, and its 'weak' business risk profile derived from the fragmented and competitive IT services sector, supplier concentration, and moderate scale," said Standard & Poor's credit analyst Christian Frank. The corporate credit rating is affirmed because S&P had incorporated capacity for re-leveraging events, consistent with the expected financial policies of its private equity owners. The stable outlook reflects S&P's view that the company's ability to expand its relationship with existing customers, along with an improving macroeconomic environment and moderating headwinds from the federal segment, is likely to result in revenue growth at or above the industry average and EBITDA expansion over the next 12 months. S&P could lower our ratings if the company maintains leverage of more than 5x on a sustained basis because of declines in profitability resulting from pricing pressure from competitors or suppliers, debt-financed acquisitions or shareholder returns, or a disruption in Presidio Inc.'s access to third-party lease financing. S&P views an upgrade as unlikely, given its expectation that the company's financial sponsor ownership structure will preclude a sustained reduction in leverage. QUANTUM FOODS: Hires BMC Group as Administrative Advisor -------------------------------------------------------- Quantum Foods, LLC, et al., seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ BMC Group, Inc., as administrative advisor. The Debtors have also sought and obtained authority from the Court to employ BMC as their notice and claims agent. As administrative agent, BMC will assist with, among other things, solicitation balloting and tabulation and calculation of votes for the purposes of plan voting, and assist the Debtors with administrative tasks in the preparation of their schedules of assets and liabilities and statements of financial affairs, and other appropriate reports, exhibits, and schedules of information. BMC agrees to charge the Debtors its standard prices for its services and supplies at the rates or prices in effect on the day the services and supplies are provided to the Debtors. The Debtors agree to reimburse BMC for any out-of-pocket expenses necessarily incurred in support of the services provided by BMC. Tinamarie Feil, president of Client Services for BMC Group, Inc., assures the Court that her 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. A hearing to consider approval of the application to hire BMC as administrative advisor is set for March 12, 2014 at 10:00 a.m. (ET). Objections are due March 5. About Quantum Foods Founded in 1990 and headquartered in Bolingbrook, Illinois, Quantum Foods, LLC -- http://www.quantumfoods.com-- provides protein products made from beef, poultry and pork. Quantum Foods and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-10318) on Feb. 18, 2014, to facilitate the sale of substantially all their business to CTI Foods Holding Co., LLC. The Debtors' primary secured indebtedness totals $50.2 million, owing to lenders led by Crystal Financial, LLC, as administrative and collateral agent. Quantum Foods is being advised in its restructuring by Winston & Strawn, City Capital Advisors, LLC and FTI Consulting, Inc. Young, Conaway, Stargatt & Taylor, LLP, is the local counsel. City Capital Advisors is the investment banker. BMC Group is the claims and notice agent. QUANTUM FOODS: Has Interim OK to Pay Up to $3MM for Vendor Claims ----------------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware gave Quantum Foods, LLC, et al., interim authority to pay certain prepetition claims of critical vendors, provided that all payments will be subject to the prior written approval of Crystal Financial LLC, the administrative and collateral agent for the DIP Lenders. The Interim Claims Cap must not exceed $3 million in the aggregate unless otherwise ordered by the Court and with the consent of the DIP Agent, Judge Carey said. A final hearing on the motion will be held on March 12, 2014, at 1:00 p.m. (ET). Objections are due March 5. If no objections are filed to the motion, the Court may enter a final order without further notice or a hearing. About Quantum Foods Founded in 1990 and headquartered in Bolingbrook, Illinois, Quantum Foods, LLC -- http://www.quantumfoods.com-- provides protein products made from beef, poultry and pork. Quantum Foods and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-10318) on Feb. 18, 2014, to facilitate the sale of substantially all their business to CTI Foods Holding Co., LLC. The Debtors' primary secured indebtedness totals $50.2 million, owing to lenders led by Crystal Financial, LLC, as administrative and collateral agent. Quantum Foods is being advised in its restructuring by Winston & Strawn, City Capital Advisors, LLC and FTI Consulting, Inc. Young, Conaway, Stargatt & Taylor, LLP, is the local counsel. City Capital Advisors is the investment banker. BMC Group is the claims and notice agent. RADIOSHACK CORP: Offers Bonuses to Retain Execs During Turnaround ----------------------------------------------------------------- Ben Fox Rubin, writing for The Wall Street Journal, reported that RadioShack Corp. said it will offer up to $1.5 million in retention bonuses to its top executives, in an effort to maintain its leadership through a difficult turnaround. The Journal said the deals were unveiled a day after the struggling electronics retailer said it will close as many as 1,100 U.S. stores, one out of every four that it operates itself, after a sharp drop in sales over the holidays. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that RadioShack disclosed that sales in the fourth quarter fell 20 percent to $935.4 million while comparable-store sales declined 19 percent. The loss in the fourth quarter increased to $191.4 million, making for eight consecutive quarterly losses. Andrea Cheng, writing for MarketWatch, reported that RadioShack said in a conference call it is not considering "prepackaged bankruptcy" because it has "sufficient" liquidity to meet its obligations. The company, according to Ms. Cheng, made the comment after a question on whether it will do that to get out of store leases quicker. The retention payments will be provided if the executives stay at the company through March 2015, the Journal related. The company said it is offering the payments to give "due consideration of the skills and talent deemed critical to the company's business turnaround efforts currently underway." Chief Executive Joseph Magnacca, who joined the company last year, stands to gain the largest retention payment at $500,000, the Journal noted. He was also offered a one-time bonus payment of up to $600,000 to be paid in April 2015, if certain milestones being reached in the company's turnaround. Chief Financial Officer John Feray and Troy H. Risch, executive vice president of store operations, were each offered $275,000, the Journal further related. Chief Human Resources Officer Telvin Jeffries is eligible for $250,000. Michael S. DeFazio, senior vice president of store concepts, was offered $187,500. The $324.8 million in 6.75 percent senior unsecured notes due 2019 last traded on March 4 for 58.865 cents on the dollar, to yield 19.77 percent, Bloomberg said, citing Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The stock fell 17 percent on March 4, closing at $2.25 in New York trading, Bloomberg added. The five-year high was $24 on April 21, 2010. The low was $1.90 on Nov. 23, 2012. About Radioshack Corporation RadioShack (NYSE: RSH) -- -- http://www.radioshackcorporation.com -- is a national retailer of innovative mobile technology products and services, as well as products related to personal and home technology and power supply needs. RadioShack's retail network includes more than 4,300 company-operated stores in the United States, 270 company-operated stores in Mexico, and approximately 1,000 dealer and other outlets worldwide. Radioshack disclosed a net loss of $139.4 million in 2012, as compared with net income of $72.2 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $1.60 billion in total assets, $1.21 billion in total liabilities and $394 million in total stockholders' equity. * * * As reported by the TCR on Dec. 26, 2013, Standard & Poor's Ratings Services raised the corporate credit rating on the Fort Worth, Texas-based RadioShack Corp. to 'CCC+' from 'CCC'. "The upgrade reflects an improved liquidity position with a recent financing that increased funded debt by $125 million and increased the company's revolving credit borrowing capacity, which improved the company's liquidity by approximately $200 million," said credit analyst Charles Pinson-Rose. In the Dec. 30, 2013, edition of the TCR, Fitch Ratings has affirmed its 'CCC' Long-term Issuer Default Rating (IDR) on RadioShack Corporation. The IDR reflects the significant decline in RadioShack's profitability and cash flow, which has become progressively more pronounced over the past two years. As reported by the TCR on March 6, 2013, Moody's Investors Service downgraded RadioShack Corporation's corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3- PD. RadioShack's Caa1 Corporate Family Rating reflects Moody's opinion that the overall business strategy of the company to reverse the decline in profitability has not gained any traction. Troubled Company Reporter, citing The Wall Street Journal, reported on March 5, 2014, that RadioShack plans to cut back its store count, after a sharp drop in sales over the holidays left it with a $400 million loss in 2013. The electronics retailer said it could close as many as 1,100 U.S. stores -- one out of every four that it operates itself -- underscoring the difficulty it has had adapting to a fast changing consumer landscape. REEVES DEVELOPMENT: Court Denies IberiaBank's Case Conversion Bid ----------------------------------------------------------------- The Bankruptcy Court, according to Reeves Development Company LLC's case docket, denied secured creditor IberiaBank's motion to convert the Debtor's Chapter 11 case to one under Chapter 7 of the Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 4, 2014, the Debtor opposed the request of IberiaBank, stating that it has acted as a reasonable debtor-in-possession in conducting its affairs and has made significant improvements on its property. According to the Debtor, it has filed an amended Chapter 11 plan of reorganization, which utilizes the actual developments and planned developments to pay all allowed claims in the case in full within a reasonable period of five years. The Debtor adds that the amended plan is in the best interest of all creditors of the estate. Neither conversion nor the appointment of a trustee is warranted in this case, and it should be allowed to present of its amended plan to creditors for voting, the Debtor said. As reported in the TCR on Jan. 8, 2014, IberiaBank cited these reasons in seeking conversion of the case: a. substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; b. gross mismanagement of the estate; c. failure to maintain appropriate insurance that pose a risk to the estate or to the public; d. unauthorized use of cash collateral substantially harmful to one or more creditors; e. failure to comply with an order of the court; and f. unexpected failure to satisfy timely and filing or reporting requirement established by this title or by any rule applicable to a case under this chapter. As reported in the TCR on Nov. 11, 2013, IberiaBank objected to Reeves' bid to obtain court approval to use a portion of the funds considered to be the bank's cash collateral. Reeves in October asked the Bankruptcy Court for green light to use the cash collateral to fund a material pit project in Lake Charles, Louisiana. Ronald Bertrand, Esq., said creditors including IberiaBank "do not have the ability to monitor what is going on as to their cash collateral" because the company doesn't file its financial reports on time. About Reeves Development Reeves Development Company, LLC, operated as design build contractor offering its services primarily in markets located within Texas and Louisiana. It filed a Chapter 11 petition (Bankr. W.D. La. Case No. 12-21008) in Lake Charles, Louisiana, on Oct. 30, 2012. The Company's equity holders are Charles and Suzanne Reeves 50% and MMA, INC., 50%. The closely held developer was founded in 1998 by Charles Reeves Jr. It has about 80 employees and generates about $40 million in annual revenue, according to its Web site. Bankruptcy Judge Robert Summerhays oversees the case. Arthur A. Vingiello, Esq., at Steffes, Vingiello & McKenzie, LLC, in Baton Rogue, Louisiana, represents the Debtor as counsel. Reeves Development scheduled assets of $15,454,626 and liabilities of $20,156,597 as of the Petition Date. Affiliate Reeves Commercial Properties, LLC (Bankr. W.D. La. Case No. 12-21009) also sought court protection. Creditor Iberiabank is represented by Ronald J. Bertrand, Esq., in Lake Charles, Louisiana. REEVES DEVELOPMENT: Court Approved Amended Disclosure Statement --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Louisiana, according to Reeves Development Company, LLC's case docket, approved on Feb. 21 the adequacy of information in the Amended Disclosure Statement explaining the Debtor's Plan of Reorganization dated Dec. 31, 2013. The case docket also provided that the Court will not set confirmation. The Court will hold a status conference in open court on March 20, 2014. As reported by the TCR on Jan. 10, 2014, the Amended Disclosure Statement reveals that as to the Class 15 Unsecured Claim of Branch Banking and Trust, to the extent that BB&T is not fully compensated from the assets of Houma Dollar Partner, LLC, the excess amount will be included in the unsecured claims of the Debtor. The assets of Houma Dollar Partners are expected to generate net sales proceeds sufficient to satisfy the claims of BB&T. This claim is currently estimated to total $6,000,000. The Claimant has agreed to a settlement of claims against the Debtor in exchange for certain concessions from Debtors affiliated Company Houma Dollar Partners, LLC. In exchange for these concessions, the Debtor has agreed to forgo any payments due from Houma Dollar Partners, LLC. As reported in the TCR on Feb. 10, 2014, Iberiabank filed an objection to the Debtor's amended version of the Disclosure Statement. A full-text copy of the Dec. 31 version of the Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/REEVESDEV_AmdDSDec31.PDF About Reeves Development Reeves Development Company, LLC, a commercial and residential real estate developer, filed a Chapter 11 petition (Bankr. W.D. La. Case No. 12-21008) in Lake Charles, Louisiana, on Oct. 30, 2012. The closely held developer was founded in 1998 by Charles Reeves Jr., its sole owner. Reeves Development has about 80 employees and generates about $40 million in annual revenue, according to its Web site. Bankruptcy Judge Robert Summerhays oversees the case. Arthur A. Vingiello, Esq., at Steffes, Vingiello & McKenzie, LLC, in Baton Rogue, Louisiana, represents the Debtor as counsel. Reeves Development scheduled assets of $15,454,626 and liabilities of $20,156,597 as of the Petition Date. Affiliate Reeves Commercial Properties, LLC (Bankr. W.D. La. Case No. 12-21009) also sought court protection. RESIDENTIAL CAPITAL: U.S. Attorney Gets Transcripts From Examiner ----------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York authorized Residential Capital LLC's Chapter 11 examiner to turn over interview records to the federal government who is investigating the former mortgage-servicing unit of possible violations related to residential mortgage-backed securities. Bill Rochelle, the bankruptcy columnist for Bloomberg News, pointed out that the Chapter 11 Examiner, Arthur Gonzalez, a former bankruptcy judge, was relieved of his duties as examiner and in the process was given immunity from being forced to turn over documents or information to third parties who might serve him subpoenas. His immunity from subpoenas, however, didn't apply to governmental investigations, Mr. Rochelle said. The subpoena, which the U.S. attorney?s office for the Central District of California issued last fall, seeks to gather information as part of a civil investigation into ?whether there is or has been a violation? of federal laws related to ?conduct undertaken in connection with residential mortgage-backed securities,? Jacqueline Palank, writing for Daily Bankruptcy Review, related. Gonzalez will turn over transcripts of witness interviews by April 9, the Bloomberg report said. In the meantime, he will give notice to everyone whom he interviewed, giving them an opportunity to seek an injunction from a court barring the turnover of transcripts. Gonzalez, Bloomberg noted, didn?t want witness statements publicly available because they were taken under a pledge of confidentiality. Bloomberg recalled that in his report, Gonzalez concluded that ResCap had about $3.1 billion in claims against its parent, Ally Financial Inc., that were ?likely to prevail? or ?more likely than not to prevail.? ResCap?s plan, which confirmed in December last year, was based partly on a $2.1 billion settlement contribution from Ally. During his probe, Mr. Gonzalez interviewed 83 witnesses -- including ResCap and Ally executives -- all of which were recorded and transcribed, Ms. Palank said. 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. RITE AID: Expands Distribution Agreement with McKesson ------------------------------------------------------ McKesson Corporation and Rite Aid Corporation signed an expanded distribution agreement to include both brand and generic pharmaceuticals. The new five-year agreement, which extends through March 2019, creates efficiencies for both companies by leveraging the strength of Rite Aid as one of the leading national drugstore chains in the United States, and McKesson as a leader in pharmaceutical sourcing and supply chain management. McKesson and Rite Aid have a long history as trusted partners in ensuring the availability of essential medications to patients. As part of the expanded agreement, McKesson will assume responsibility for the sourcing and distribution of generic pharmaceuticals for Rite Aid as part of McKesson's One Stop proprietary generics program. Rite Aid stores will benefit from the full value of McKesson's daily direct-to-store delivery service model for brand and generic pharmaceutical products, ensuring the highest levels of service for their customers. "I am extremely proud of McKesson's industry-leading service levels and the strength of our global sourcing and supply chain capabilities; which mean that we deliver the right products at the right time with exceptional efficiency for our customers," said John H. Hammergren, chairman and chief executive officer, McKesson Corporation. "Rite Aid has been a valued customer to McKesson for more than 16 years and I am honored at the trust they have placed in us as we expand our partnership." "We are excited to expand our partnership with McKesson," said John Standley, Rite Aid's chairman and chief executive officer. "The combination of Rite Aid's and McKesson's generic purchasing scale and sourcing expertise, in conjunction with McKesson's industry-leading drug distribution capabilities, will enable us to achieve supply chain efficiencies, provide even better service to Rite Aid customers, and generate additional cash flow to fuel our company's growth." About McKesson Corporation McKesson Corporation, currently ranked 14th on the FORTUNE 500, is a healthcare services and information technology company dedicated to making the business of healthcare run better. McKesson partners with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in every setting. McKesson helps its customers improve their financial, operational, and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, healthcare information technology, and business and clinical services. For more information, visit www.mckesson.com. About Rite Aid Corp. Drugstore chain Rite Aid Corporation (NYSE: RAD) -- http://www.riteaid.com/-- based in Camp Hill, Pennsylvania, is one of the nation's leading drugstore chains with 4,626 stores in 31 states and the District of Columbia. Rite Aid disclosed net income of $118.10 million on $25.39 billion of revenue for the year ended March 2, 2013, as compared with a net loss of $368.57 million on $26.12 billion of revenue for the year ended March 2, 2012. As of Nov. 30, 2013, the Company had $7.13 billion in total assets, $9.36 billion in total liabilities and a $2.22 billion total stockholders' deficit. * * * As reported by the TCR on March 1, 2013, Moody's Investors Service upgraded Rite Aid Corporation's Corporate Family Rating to B3 from Caa1 and Probability of Default Rating to B3-PD from Caa1-PD. At the same time, the Speculative Grade Liquidity rating was revised to SGL-2 from SGL-3. This rating action concludes the review for upgrade initiated on Feb. 4, 2013. Rite Aid carries a 'B-' corporate credit rating from Standard & Poor's Ratings Services. RIVER VALLEY DAIRY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: River Valley Dairy, LLC P.O. Box 1929 Anthony, NM 88021 Case No.: 14-10641 Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court New Mexico (Albuquerque) Judge: Hon. David T. Thuma Debtor's Counsel: Daniel J Behles, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Tel: 505-242-1218 Fax: 505-242-2836 Email: dan@behles.com - and - Arin Elizabeth Berkson, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Phone: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - Bonnie Bassan Gandarilla, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Phone: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - George M Moore, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Phone: 505-242-1218 Fax: 505-242-2836 Email: mbglaw@swcp.com - and - Koo Im Sakayo Tong, Esq. MOORE, BERKSON & GANDARILLA, P.C. 3800 Osuna Rd NE, STE #2 Albuquerque, NM 87109 Phone: 505-242-1218 Fax: 505-242-2836 Email: kooimt@swcp.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Bruce Bonestroo, managing member. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/nmb14-10641.pdf ROAD INFRASTRUCTURE: Moody's Cuts CFR to B1 & Rates New Debt B1 --------------------------------------------------------------- Moody's Investors Service downgraded Road Infrastructure Investment, LLC's (RII) Corporate Family Rating (CFR) to B2 from B1 following the company's announced financing proposal and assigned B1 ratings to its revolving credit facility due 2019 and senior secured first lien term loan due 2021, and a Caa1 rating to its second lien term loan due 2021. The proposed debt financings, which will raise balance sheet debt by $184 million, will partially finance the $84 million acquisition of Eberle Design, Inc., fund a $159 million dividend to RII's equity sponsor and be used to repay $376 million of existing debt. RII's proposed ratings are subject to final review of the offering documents at closing. The rating outlook is stable. The following summarizes the ratings activity: Road Infrastructure Investment, LLC Ratings Downgraded: Corporate Family Rating -- B2 from B1 Probability of Default Rating -- B2-PD from B1-PD Ratings Assigned: $75 million senior secured revolving credit facility due 2019 -- B1 (LGD3, 35%) $390 million senior secured (first lien) term loan due 2021 -- B1 (LGD3, 35%) $170 million senior secured (second lien) term loan due 2021 -- Caa1 (LGD5, 86%) Ratings to be Withdrawn: $38 million senior secured revolving credit facility due 2017 -- Ba3 (LGD3, 33%) ** $240 million senior secured (first lien) term loan due 2018 -- Ba3 (LGD3, 33%) ** $115 million senior secured (second lien) term loan due 2018 -- B3 (LGD5, 83%) ** ** ratings will be withdrawn following repayment of the debt Outlook: Stable Ratings Rationale The downgrade of RII's CFR to B2 reflects the increase in leverage to 7.1x (pro forma Debt to EBITDA as of September 2013), which is substantially higher than its existing leverage of 5.4x and weakly places RII in the B2 rating category. The company's B2 CFR does not provide it the flexibility to increase its leverage or make further acquisitions prior to de-levering. The $84 million acquisition of Eberle will provide approximately $10 million of additional annual EBITDA and diversify RII's involvement in the technology sector of the traffic safety marketplace beyond its traditional paint and plastic road markings product offerings. However, a large portion of the $184 million increase in balance sheet debt will be used to fund a dividend of $159 million, thus increasing leverage without supplementing cash flow. Limiting factors for the rating are the company's size (revenues of less than $550 million after the Eberle acquisition), limited product diversity, dependency on government funding, and significant seasonality of revenues. In support of the rating, the majority of RII's revenue is generated from maintenance spending, limiting the government's capability to eliminate projects or cut spending. While the company has maintained a stable customer base, should economic conditions worsen, the government bidding process could hinder future growth potential. RII is expected to draw on its revolver to meet seasonal working capital demands to support the peak second and third quarters selling season. The ratings are supported by RII's leading positions in the traffic paint and thermoplastic segments which Moody's estimates to be several times larger than that of RII's closest competitors. The company's solid EBITDA margins (approximately 17% on a pro forma basis), broad geographic manufacturing footprint, and longstanding relationships with its customers, are supportive of the rating. Moody's expect the purchase and integration of Eberle, which is currently owned by RII's equity sponsor, will result in limited disruption to RII's existing businesses. The company is expected to have adequate liquidity supported by cash balances (approximately $18 million at closing), a $75 million revolving credit facility (undrawn at closing) and expected positive free cash flow on an annual basis. The company benefits from having no near-term debt maturities (other than a 1% amortization of the first lien term loan principal), limited capital expenditure requirements and not paying a regular dividend. However, its seasonal working capital requirements could exceed $50 million. The revolving credit facility will have a springing financial covenant that RII will be required to comply with at times of peak working capital needs. The B2 ratings and stable outlook incorporate Moody's expectation that the company will generate positive free cash flow going forward, which will result in modest debt reduction. The ratings could be downgraded should the company not generate positive free cash flow annually and leverage (debt / EBITDA) does not decline below 6.5x in the first half 2015. The ratings have limited upside at the current time due to RII's heavy debt burden, but the ratings could be upgraded if leverage declined below 5x on a sustained basis. The principal methodology used in this rating was the Global Chemical Industry Rating Methodology published in December 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Road Infrastructure Investment, LLC, headquartered in Thomasville, NC, is a producer of pavement and safety marking products primarily for the highway safety market. Revenues for the twelve months ending December 31, 2013, pro forma for the Eberle acquisition, are estimated to be $516 million. RUTH JONES: Inaction Prompts Judge to Dismiss Appeal Over Sale -------------------------------------------------------------- Senior District Judge Charles S. Haight, Jr., in Connecticut tossed an appeal by debtor Ruth Jones from an order of Bankruptcy Judge Alan Shiff approving a sale of property of her estate on or about Sept. 14, 2012. According to Judge Haight, Ms. Jones moved seven times for an extensions to file her brief with respect to the appeal. The District Court granted three of these motions, extending her filing deadline from October 30, 2012 to December 14, 2012, to January 31, 2013, and finally to March 29, 2013. Despite this series of extensions, Ms. Jones has failed to file her brief for almost 10 months after the last set deadline, March 29, 2013. That failure, following numerous extensions, suggests negligence and perhaps even bad faith, warranting dismissal, the judge said. Richard Coan, the trustee of Ms. Jones's bankruptcy estate, sought to dismiss her appeal due to her failure to prosecute. The appellate case is, RICHARD COAN, TRUSTEE, Movant, v. FAIRFIELD COUNTY BANK CORP., RIDGEFIELD BANK MORTGAGE CORPORATION, BANK OF AMERICA, N.A., BAC HOME LOAN SERVICING, L.P., CONNECTICUT COMMUNITY BANK, N.A., WELLS FARGO BANK F/K/A FIRST UNION NATIONAL BANK, CUSTOMERS BANK F/K/A USA BANK, N.A., CARLOS SEVERINO, AND MERS/DEVON KAY CAPITAL, LLC, Respondents, Civil Case No. 3:12-CV- 1476 (CSH) (D. Conn.). A copy of Judge Haight's March 3, 2014 Ruling is available at http://is.gd/of5lFefrom Leagle.com. New Canaan, Connecticut-based Ruth Jones filed for Chapter 11 on Aug. 14, 2009 (Bankr. D. Conn. Case No. 09-51596). Peter L. Ressler, Esq., at Groob Ressler & Mulqueen, represented the Debtor in her restructuring efforts. In her petition, the Debtor listed total assets of $10,900,000 and total debts of $14,690,061. SBARRO LLC: Preparing to File for Bankruptcy Protection ------------------------------------------------------- Sbarro LLC, the Italian restaurant chain that's a fixture in mall food courts, is preparing to file for prepackaged bankruptcy protection as soon as next week as it continues to struggle with flagging sales, various news agencies reported, citing people familiar with the matter. This would be Sbarro's second trip to bankruptcy. Emily Glazer, writing for Daily Bankruptcy Review, reported that the pizza chain is soliciting votes due by the end of this week for a so-called prepackaged restructuring plan that could streamline its trip through bankruptcy court, these people said. If it gets enough votes, Sbarro could file for Chapter 11 protection as early as Sunday, they said. Closely held Sbarro, which carries about $140 million in debt, said in mid-February it was closing 155 of the 400 restaurants it owns in North America to cut costs, the Journal related. The majority of its U.S. restaurants are located in airports and mall food courts. Lauren Coleman-Lochner and Beth Jinks, writing for Bloomberg News, reported that the sluggish economy hasn?t been kind to other pizza chains, noting that Uno Restaurant Holdings Corp., another Italian restaurant company, filed for bankruptcy in January 2010, saying the economic slump had caused more diners to stay home, hurting its 200 U.S. pizzerias. 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. The Troubled Company Reporter, on Feb. 25, 2014, citing a report from The Wall Street Journal, said Sbarro 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. SCHOOL SPECIALTY: Posts Net Loss of $30.1MM in Q3 Fiscal 2014 ------------------------------------------------------------- School Specialty, Inc., on March 5 reported its fiscal 2014 third quarter and nine month results for the period ended January 25, 2014. Commenting on the Company's performance, Jim Henderson, School Specialty's Chairman and Interim Chief Executive Officer stated, "We continue to make progress in our Process Improvement initiatives and are on track to realize the anticipated cost savings this year and next. Our Distribution Center consolidation has gone smoothly and the changes we've made in our Sales, Merchandising and Marketing structure are generating new efficiencies and opportunities. I am encouraged with our progress and believe we're on track to realize our stated financial projections for the year. Additionally, recent order trends in our Distribution segment are encouraging and we're gearing up for future adoptions in our Curriculum segment. Based on our performance to date, the efficiencies we're generating and what is believed to be an improved market outlook, we see our business stabilizing with potential upside moving into our next fiscal year." During the period January 28, 2013 through June 11, 2013, School Specialty and certain of its subsidiaries operated as debtors-in- possession under bankruptcy court jurisdiction. In accordance with Financial Accounting Standards Board Accounting Standards Codification 852, Reorganizations, for periods including and subsequent to the filing of the Chapter 11 petition through the bankruptcy emergence date of June 11, 2013, all expenses, gains and losses that result from the reorganization were reported separately as reorganization items in the Consolidated Statements of Operations. Net cash used for reorganization items was disclosed separately in the Consolidated Statement of Cash Flows, and liabilities subject to compromise were reported separately in the Consolidated Balance Sheets. As of June 11, 2013, the Company adopted fresh-start accounting in accordance with ASC 852. The adoption of fresh-start accounting resulted in the Company becoming a new entity for financial reporting purposes. Accordingly, the financial statements on or prior to June 11, 2013 are not comparable with the financial statements for periods after June 11, 2013. The consolidated financial statements as of January 25, 2014 and for the three months and thirty-three weeks then ended and any references to "Successor" or "Successor Company" relate to the financial position and results of operations of the reorganized Company subsequent to bankruptcy emergence on June 11, 2013. References to "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of the Company prior to the bankruptcy emergence. Management believes that the presentation of Non-GAAP Financial Information, referred to as the Combined Adjusted Results, are reconciled to the most comparable GAAP measures and offer the best comparisons for the comparable fiscal nine month period. For further information on the Company's Results of Operations and related Balance Sheet and Cash Flow items, please refer to the Company's Form 10-Q for the period ending January 25, 2014 on file with the Securities and Exchange Commission. Third Quarter Financial Results -- Revenues for the three months ended January 25, 2014 were $74.7 million, a decrease of 7.6% or $6.1 million as compared to $80.8 million reported for the three months ended January 26, 2013. Distribution segment revenues declined by 5.3%, or $3.5 million from the three months ended January 26, 2013, and were primarily related to lower sales in the Furniture business, which decreased by approximately $3 million, while sales for the Supplies business were virtually flat for the comparable year- over-year periods. Curriculum segment sales declined 16.4% or $2.5 million from the three months ended January 26, 2013. The decline was felt in the Science and Reading businesses in addition to a $0.6 million decline related to the sale of the Company's agenda print plant assets. -- Gross profit margin for the three months ended January 25, 2014 was 35.4% as compared to 36.4% for the three months ended January 26, 2013. Distribution segment gross margin was 32.6% as compared to 33.5% for the three months ended January 25, 2014 and January 26, 2013, respectively. The decline in the Distribution segment gross margins was primarily due to a reduction in vendor rebates and a shift in product mix, both of which resulted in approximately 40 basis points each of the decline. Curriculum segment gross margin was 49.3% as compared to 48.4%, an increase of 90 basis points. -- Selling, general and administrative (SG&A) expenses for the three months ended January 25, 2014 were $48.7 million as compared to $60.2 million for the comparable year-ago period, a decrease of $11.6 million. SG&A attributable to the Distribution and Curriculum segments decreased by $5.5 million and Corporate SG&A decreased by $6.1 million, when comparing the fiscal 2014 and fiscal 2013 periods. Distribution segment SG&A declined by $3.4 million, or 14.8%, primarily due to lower total personnel costs of $1.2 million, as well as lower catalog costs of $0.7 million. The revenue decline for the comparable periods also resulted in a decrease in the variable warehouse and transportation costs of approximately $0.7 million. Curriculum segment SG&A declined by $2.1 million or 13.7%, primarily due to a $1.2 million reduction in intangible amortization recognized in the third quarter of fiscal 2013 as compared to the same period this year, as well as a reduction in payroll costs. The reduction in intangible amortization is related to the revaluation of intangible assets as part of fresh-start accounting. Corporate SG&A decline was due primarily to $4.7 million of prior year bankruptcy-related costs associated with professional fees paid prior to the Chapter 11 filing. Approximately $1.7 million of the decline was due to lower payroll and benefits, as well as lower depreciation expense of $1.0 million as a result of fresh-start accounting. These declines were partially offset by $1.6 million of costs associated with the Company's process improvement actions. -- The Company reported an operating loss of $24.7 million for the three months ended January 25, 2014 as compared to an operating loss of $76.6 million in the comparable year-ago period. This improvement is primarily related to a $45.8 million goodwill and other intangible asset impairment charge in last year's third quarter. -- Net interest expense decreased $3.3 million, from $8 million in the third quarter of fiscal 2013 to $4.7 million in the third quarter of fiscal 2014. The Predecessor Company recorded $3.8 million of interest expense on its convertible debt in the third quarter of fiscal 2013, of which $2.3 million was non-cash interest expense. There was no interest expense on the convertible debt in the third quarter of fiscal 2014, as the convertible debt was cancelled on the Effective Date in accordance with the Reorganization Plan. Partially offsetting this decline was approximately $0.8 million of incremental term loan interest expense related to an increase in average Successor term loan borrowings as compared to the pre-bankruptcy term loan, partially offset by a decrease in the borrowing rate. -- The Company recorded $0.9 million of expenses for reorganization items in the third quarter of fiscal 2014, which consisted primarily of fees associated with activities as part of the Reorganization Plan. -- Net loss for the third quarter of fiscal 2014 was $30.1 million compared with a net loss of $109.9 million in the comparable period last year. On a diluted per share basis, net loss was $30.14 for the three months ended January 25, 2014 as compared to a net loss per diluted share of $5.81 in the three months ended January 26, 2013. -- Adjusted earnings before income taxes, depreciation and amortization (EBITDA) was ($14.6) million in the fiscal 2014 third quarter as compared to ($17.9) million in the comparable fiscal 2013 period. Process Improvement Program Update In fiscal 2014, School Specialty launched a Process Improvement Program to better align its operating groups, enhance systems and processes and drive efficiencies to improve the customer experience. As part of this program, the Company's Salina, KS distribution center was closed in the third quarter of fiscal 2014. This facility is classified as held for sale on the January 25, 2014 consolidated balance sheet. Additionally, as part of the program, the Company also closed its Fresno, CA distribution center and announced the build-out and reconfiguration of its Mansfield, OH distribution center and warehouse. All initiatives in accordance with the distribution center consolidation are tracking to plan; inventory has successfully been transitioned and the Company is now gearing up for its upcoming peak selling season. School Specialty reaffirmed on March 5 that its primary work streams associated with the various Process Improvement Programs are tracking to plan and that it is on track to realize the anticipated cost savings in fiscal 2014 and annualized cost savings of $12-$15 million. In addition to the distribution center consolidation, the Company is focused on improving operational efficiencies. SKU rationalization programs, customer care outsourcing initiatives, and Marketing and Merchandising alignment efforts are all underway and progressing to plan. Currently, there is a big emphasis on Sales & Operational Planning and identifying key metrics and processes that will help drive future business decisions and the Company's go-to-market strategy. School Specialty has embarked on Phase II initiatives, which includes detailed territory mapping and market segmentation, and a competitive analysis across states and districts as the Company seeks to return to growth in the upcoming fiscal years. In addition to the anticipated efficiencies and cost savings, School Specialty expects to generate over $20 million in one-time cash generation in fiscal 2014 and continues to look for other ways to improve its financial performance and balance sheet. Mr. Henderson continued, "Our organization has really come together and is aligning behind a common goal -- servicing our customers. We've focused on improving our back-end support, operations in particular, and we intend to do everything possible to ensure our customers receive the products and solutions they order on time and at the most competitive prices. We've re-established payment terms with a majority of our vendors, our inventory position is clean, and we're pre-building furniture solutions to meet anticipated customer requirements. Our Supplies business is showing signs of improvement as well, and while curriculum sales are down, we believe we're well positioned over the coming years, especially with the anticipated adoption of Common Core Standards and Next Generation Science Standards. While industry-wide challenges remain, the market and our business are showing signs of stabilization and I am confident in our ability to generate consistent returns for our stakeholders." Nine Month Financial Results Non-GAAP combined results for the nine months ended January 25, 2014 include results of operations for the Successor Company for the thirty-three weeks ended January 25, 2014 and the Predecessor Company for the six weeks ended June 11, 2013. These results are compared to the Predecessor Company for the nine months ended January 26, 2013. -- Combined revenues for the nine months ended January 25, 2014 were $522.5 million, an 8.3% decline from revenues of $569.8 million in the comparable year-ago period. Distribution segment combined revenues decreased 7.4% from the nine months ended January 26, 2013. Approximately $12 million and $18 million of the decline were related to the supplies and furniture product lines, respectively. The decline in combined revenues was primarily related to the fact that revenue in the back-to-school season was adversely impacted by factors related to the Chapter 11 Cases. The rate of decline in the Distribution segment's orders has lessened, post-emergence, and the Company believes this indicates a stabilization of revenue as it moves into the upcoming back-to-school season. Curriculum segment combined revenues decreased 10.3% from the nine months ended January 26, 2013. Approximately $5 million of the decline is related to large curriculum orders from the prior year, which were not expected to recur in the current year and approximately $9 million is related to declines in the Company's student planner and agenda product lines. The Company is in the process of transitioning its agenda offerings to digital formats, which should help offset future declines. Revenues through the first nine months of the year are tracking in line with projections. -- Combined gross margin for the nine months ended January 25, 2014 was 38.8% as compared to 39.6% for the nine months ended January 26, 2013. This decline is due to a combination of reduced vendor rebates in the current year in the Company's Distribution segment. This decline was also due to lower margins in the Curriculum segment, as sales for curriculum-related products are under pressure until Common Core Standards are finalized across states, and school budgets improve. -- Combined SG&A expenses for the nine months ended January 25, 2014 were $184.9 million as compared to $202.7 million for the comparable year-ago period, a decrease of $17.9 million. This was primarily a result of reduced catalog costs, lower personnel costs, reductions in combined depreciation and intangible amortization, and warehouse and freight savings. Additionally, the Company incurred $5.3 million of costs associated with process improvement actions, and incurred $4.7 million of bankruptcy- related costs, which were incurred in last year's third quarter. -- Combined operating income for the nine months ended January 25, 2014 was $12.0 million as compared to an operating loss of $22.8 million for the nine months ended January 26, 2013. This increase is related primarily to an impairment charge of $45.8 million in the prior year, partially offset by a combined $6.0 million of restructuring and other facility exit costs in the current year. -- Combined interest expense decreased $11.9 million from $27.3 million for the nine months ended January 26, 2013 to $15.4 million for the nine months ended January 25, 2014. This was due primarily to $11.3 million of interest expense on the Company's convertible debt for the nine months ended January 26, 2013, of which $6.8 million was non-cash interest expense. Interest expense on the convertible debt was not accrued subsequent to the Chapter 11 filing and the convertible debt was canceled in accordance with the Company's Reorganization Plan. For the nine months ended January 25, 2014, interest expense associated with the Successor Company's New Term Loan was approximately $1.7 million greater than the Predecessor Company's term loan interest expense for the nine months ended January 26, 2013 due to an increase in average borrowings under the New Term Loan Credit Agreement, as compared to the pre-bankruptcy term loan, partially offset by a decrease in the interest rate. Additionally, interest expense for the nine months ended January 26, 2013 included $2.5 million of debt issuance cost write-offs, as compared to zero in the current year, associated with the debt refinancing completed in May 2012. -- During the third quarter of fiscal 2013, the Company recorded a $25.1 million prepayment charge related to the acceleration of the obligations under the Bayside term loan credit agreement. In the second quarter of fiscal 2014, an agreement was reached with Bayside, who retained $21 million and refunded the Company $5.4 million ($4.1 million of which was a partial refund of the early termination fee and the balance of which was a recovery of interest expense). There was no additional activity related to this item in the third quarter of fiscal 2014. -- In the nine months ended January 25, 2014, the Company recorded a $79.3 million net reorganization gain. This consisted of $162.4 million of cancellation of indebtedness income related to the settlement of prepetition liabilities and changes in the Predecessor Company's capital structure related to the Reorganization Plan, offset by $30.2 million of fresh-start adjustments, $21.4 million of cancellation of debt upon the issuance of equity, $18.5 million of professional, financing and other fees, $7.0 million of contract rejections and $5.1 million of other reorganization adjustments. -- Combined net income for the nine month period ended January 25, 2014 was $77.6 million compared with a net loss of $77.4 million in the comparable nine month period last year. On a diluted per share basis, net income was $5.53 for the nine months ended January 25, 2014, as compared to a net loss per diluted share of $4.09 for the nine months ended January 26, 2013. -- Combined Adjusted EBITDA was $46.6 million in the fiscal 2014 nine month period as compared to $53.9 million in the comparable fiscal 2013 period. This decline was primarily related to lower sales volumes for the comparable nine month periods, partially offset by savings realized in SG&A. Market Outlook School Specialty on March 5 reaffirmed its prior revenue and EBITDA guidance for fiscal 2014 and anticipates revenues will be approximately $620 to $630 million, still trending towards the mid to high-end of that range. Additionally, the Company continues to project Adjusted EBITDA of $40-$44 million. Restructuring charges in fiscal 2014 are expected to be in the range of $12 to $14 million. Capital expenditures, previously estimated at $18 million, are expected to be approximately $16 to $17 million. Mr. Henderson concluded, "As of the quarter end, our outstanding borrowings on our new term loan were just over $144 million, with nothing outstanding on our ABL. We will continue to take steps to improve our capital position and generate cash flow in order to free up resources to invest in our business. Our Board, management team and all employees remain committed to improving the customer experience and enhancing long-term value for all stakeholders." School Specialty intends to publish an accompanying presentation on its financial results shortly. The Company will not be hosting a teleconference, but management will be available to address questions after the filing of this supplemental information. About School Specialty Based in Greenville, Wisconsin, School Specialty is a supplier of educational products for kindergarten through 12th grade. Revenue in 2012 was $731.9 million through sales to 70% of the country's 130,000 schools. School Specialty and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 (Bankr. D. Del. Lead Case No. 13-10125) on Jan. 28, 2013. The petition estimated assets of $494.5 million and debt of $394.6 million. The Debtors are represented by lawyers at Paul, Weiss, Rifkind, Wharton & Garrison LLP and Young, Conaway, Stargatt & Taylor, LLP. Alvarez & Marsal North America LLC is the restructuring advisor and Perella Weinberg Partners LP is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The ABL Lenders are represented by lawyers at Goldberg Kohn and Richards, Layton and Finger, P.A. The Ad Hoc DIP Lenders led by U.S. Bank are represented by lawyers at Stroock & Stroock & Lavan LLP, and Duane Morris LLP. The lending consortium consists of some of the holders of School Specialty Inc.'s 3.75% Convertible Subordinated Notes Due 2026. The Official Committee of Unsecured Creditors appointed in the case is represented by lawyers at Brown Rudnick LLP and Venable LLP. Bayside is represented by Pepper Hamilton LLP and Akin Gump Strauss Hauer & Feld LLP. School Specialty in April 2013 decided to reorganize rather than sell. The company filed a so-called dual track plan that called for selling the business at auction on May 8 or reorganizing while giving stock to lenders and unsecured creditors. The company later served a notice that the auction was canceled and the plan would proceed by swapping debt for stock to be owned by lenders, noteholders, and unsecured creditors. School Specialty's Second Amended Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection in June 2013. The plan gave 87.5 percent of the reorganized company's stock to lenders who provided $155 million in replacement financing, for a predicted full recovery. Noteholders owed $170.7 million took the other 12.5 percent of the stock, for an estimated 6 percent recovery. SEDONA DEVELOPMENT: Seeks Entry of Final Decree Closing Cases ------------------------------------------------------------- Reorganized Debtor, Villa Renaissance, LLC, has asked the U.S. Bankruptcy Court for the District of Arizona to enter final decrees and to close the cases of Sedona Development Partners, LLC, et al., effective as of Dec. 31, 2013. The Debtors Sedona Development and The Club at Seven, and Specialty Mortgage Corp. confirmed their Joint Plan of Reorganization dated Feb. 6, 2013. Pursuant to the Joint Plan, the operations of the Debtors were consolidated under Villa Renaissance as the Reorganized Debtor, which was vested, as of the effective date of the Joint Plan, with all property of the Debtors' estates that were not transferred to creditors as provided in the Joint Plan. Since the entry of the confirmation order, the Reorganized Debtor has substantially consummated the provisions of the Joint Plan in that the debts have been paid or satisfied in compliance and in accordance with the Joint Plan. About Sedona Development Partners Sedona Development Partners owns an 18-hole golf course and related properties, including luxury villas, a practice park, range house, tennis courts and related facilities in Sedona, Arizona, known generally as Seven Canyons. The Club at Seven Canyons, LLC, operates the golf course and related facilities for SDP. SDP is the manager and sole member of the Club. Sedona Development Partners filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 10-16711) on May 27, 2010. The Club at Seven Canyons filed a separate Chapter 11 petition (Bankr. D. Ariz. Case No. 10-16714). John J. Hebert, Esq., Philip R. Rudd, Esq., and Wesley D. Ray, Es., at Polsinelli Shughart PC, in Phoenix, Ariz., assist the Debtors in their restructuring efforts. Lender Specialty Trust is represented by Joseph E. Cotterman, Esq., and Nathan W. Blackburn, Esq., at Gallagher & Kennedy, P.A. Sedona disclosed $29,171,168 in assets and $121,679,994 in liabilities. Sedona Development Partners, LLC, and The Club at Seven Canyons, LLC, filed with the U.S. Bankruptcy Court for the District of Arizona on June 17, 2011, a second amended joint disclosure statement in support of their second amended joint pan of reorganization. The Debtors' disclosure statement was approved on June 28, 2011. SENTINEL MANAGEMENT: Says BNY Mellon Ignored Appeals Court ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the validity of Bank of New York Mellon Corp.'s $312 million secured claim against bankrupt money manager Sentinel Management Group Inc. will depend on what the U.S. Court of Appeals in Chicago meant when it said in August that the trustee "should be able" to void the bank's lien. The report related that the appeals court last year concluded that a district judge was wrong to dismiss the Sentinel trustee's claims against the New York-based bank. The appeals panel sent the case back to U.S. District Judge James B. Zagel in Chicago, where Sentinel trustee Frederick Grede filed papers in November asserting that the bank has no further defenses against claims of fraudulent transfer and equitable subordination. Grede based his argument in part on the appeals court's conclusion that the facts determined by Judge Zagel showed there was actual intent to hinder, delay or defraud Sentinel's creditors, according to the report. Consequently, the appeals court said in the next sentence, the trustee "should be able" to void the bank's lien. The appeals court didn't say "must," however, and its choice of word left the door open for the bank to argue against voiding the lien, the report further related. Given that the higher court's ruling wasn't absolute, BNY argued in January, there's still room to conclude that the bank none the less should prevail and the lawsuit should be dismissed once again. Grede responded, saying the bank is trying to ignore the appeals court decision by saying the higher court "misapplied" the law, the report added. In his latest filing, Grede stressed how the appeals court determined that the bank got its liens with "actual intent" to hinder, delay or defraud creditors. The suit in district court is Grede v. Bank of New York, 08-cv- 02582, U.S. District Court, Northern District of Illinois (Chicago). The appeal is In re Sentinel Management Group Inc., 10- 03787, U.S. Court of Appeals for the Seventh Circuit (Chicago). About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- was a full service firm offering a variety of security solutions. The Company filed a voluntary Chapter 11 petition (Bankr. N.D. Ill. Case No. 07-14987) on Aug. 17, 2007. Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd., represented the Debtor. Lawyers at Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represented the Official Committee of Unsecured Creditors. When the Debtor sought bankruptcy protection, it estimated assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP, represent the Chapter 11 Trustee. The Court confirmed the Fourth Amended Chapter 11 Plan of Liquidation for Sentinel on Dec. 15, 2008, which created a Liquidation Trust. The Plan became effective Dec. 17, 2008, and Mr. Grede was appointed Liquidation Trustee. SEVEN ARTS: Delays Form 10-Q for Dec. 31 Quarter ------------------------------------------------ Seven Arts Entertainment Inc. was unable to timely file its quarterly report on Form 10-Q for the fiscal quarter ended Dec. 31, 2013, due to a delay in completing the financial statements required to be included therein, and the review procedures related thereto, which delay could not be eliminated by the Company without unreasonable effort and expense. In accordance with Rule 12b-25 of the Securities Exchange Act of 1934, the Company expects to file the Form 10-Q for the quarter ended Dec. 31, 2013, no later than the fifth calendar date following the proscribed due date. About Seven Arts Los Angeles-based Seven Arts Entertainment, Inc. (OTC QB: SAPX) was founded in 2002 as an independent motion picture production and distribution company engaged in the development, acquisition, financing, production and licensing of theatrical motion pictures for exhibition in domestic (i.e., the United States and Canada) and foreign theatrical markets, and for subsequent worldwide release in other forms of media, including home video and pay and free television. The Company reported a net loss of $22.4 million on $1.5 million of total revenue for the fiscal year ended June 30, 2013, compared with a net loss of $11.2 million on $4.1 million of total revenue for the fiscal year ended June 30, 2012. The Hall Group, CPAs, in Dallas, Texas, expressed substantial doubt about the Company's ability to continue as a going concern following the financial results for the year ended June 30, 2013, citing the Company's recurring losses from operations and net capital deficiency. As of Sept. 30, 2013, the Company had $15.58 million in total assets, $23.93 million in total liabilities and a $8.35 million total shareholders' deficit. SFX ENTERTAINMENT: S&P Assigns 'B-' CCR; Outlook Negative --------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B-' corporate credit rating to New York City-based SFX Entertainment Inc. (SFXE). The outlook is negative. At the same time, S&P assigned the company's $220 million senior secured second-lien notes an issue-level rating of 'B-' with a recovery rating of '3', indicating S&P's expectation for meaningful (50% to 70%) recovery for lenders in the event of a payment default. "We base the 'B-' corporate credit rating on our assessment of SFXE as a company rapidly expanding through acquisitions in the electronic dance music live event niche," said Standard & Poor's credit analyst Christopher Thompson. "Our business risk assessment of SFXE is 'vulnerable,' because of the company's limited track record, acquisitive growth strategy, lack of business diversity, risks associated with the company's founder leading its strategy (key personnel risk), and headline risks related to substance abuse at its events," he added. S&P assess the company's financial risk profile as "highly leveraged," based on SFXE's proposed financing and current free cash flow deficit. S&P's management and governance assessment of SFXE is "fair." The outlook is negative. SFXE lacks sufficient history as a stand-alone company, and the future operating performance of the consolidated entity is uncertain. S&P views the company as subject to significant key personnel risk, as well as execution risk related to its acquisitive strategy. If the company's business model ultimately proves to be sustainable, the company will likely experience increased competition from other players in the live entertainment industry that have more substantial financial resources. S&P also sees the risk that the company's proposed marketing partnerships fail to have a meaningful contribution to operating performance. Additionally, EDM's popularity could decrease in the future, especially if substance abuse or other adverse incidents diminish the popularity of the company's events. S&P views a downgrade as more probable than an upgrade in the intermediate term. A downgrade would likely entail significantly lower-than-expected attendance at the company's live events, which could be caused by a weak global economy or a lack of interest in electronic music. A downgrade is also possible if the company does not achieve enough scale through its live events and marketing partnerships to support meaningful EBITDA expansion, resulting in cash flow becoming insufficient to cover the interest burden on the proposed debt. S&P would consider revising the outlook to stable if it become convinced that the company's recent and pending acquisitions are delivering consistent operating performance, resulting in free cash flow generation that facilitates debt leverage consistently below 5x. SOLOMONS ONE: Assignment of Contract Rights Not Valid ----------------------------------------------------- Bankruptcy Judge Thomas J. Catliota granted summary judgment to Solomons One, LLC, on Count 1 of its lawsuit against V. Charles Donnelly and Deborah Steffen, and declared that the Assignment of Contract Rights dated December 4, 2012, executed by Mr. Donnelly and Ms. Steffen is to be avoided and of no further force or effect. Judge Catliota said the Assignment was not authorized in accordance with the terms of the Debtor's operating agreement. Judge Catliota said Count 2 of the Complaint (which seeks to avoid the Assignment as a preference), Count 3 (which seeks to avoid the Assignment as a constructive fraudulent conveyance), and Count 4 (which seeks to avoid the Assignment as an actual fraudulent conveyance) are dismissed without prejudice as moot. Mr. Donnelly and Ms. Steffen, along with four other individuals, are members of Solomons One. The primary dispute centers on an Assignment of Contract Rights dated December 4, 2012, executed by the Defendants. The Assignment purports to assign from Solomons One to Mr. Donnelly, in trust for the benefit of the members of the Debtor, certain rights to construct a pier on the Patuxent River adjacent to real property partially owned by the Debtor. The pier rights are the subject of state court litigation against the State of Maryland and Calvert County, Maryland, that seeks to establish the scope and value of those rights. The litigation has been stayed by the bankruptcy case. The litigation can continue once the dispute over who holds those rights, and in turn, who can pursue the litigation, is resolved. The Debtor, as Plaintiff, disputes that the Assignment is valid or was properly authorized by its members. In four counts of the complaint, the Plaintiff seeks an order avoiding the Assignment. Count 1 seeks an order declaring that the Assignment was not authorized in accordance with the terms of the Plaintiff's operating agreement. Count 2 seeks to avoid the Assignment as a preference, while Counts 3 and 4 seek to avoid the Assignment as a constructive or actual fraudulent transfer, respectively. In three counts of the complaint, the Plaintiff seeks damages from one or both of Defendants for their actions arising from the execution and recording of the Assignment, namely, for legal malpractice against Donnelly (Count 5), intentional misrepresentation and fraud against Defendants (Count 6) and usurpation of corporate opportunity against Donnelly (Count 7). In Count 8, the Plaintiff seeks damages against Mr. Donnelly for violating the automatic stay under 11 U.S.C. Sec. 362 based on a post-petition filing he made in the state court litigation. The Defendants filed a motion to dismiss or for summary judgment, which the Plaintiff opposes, and the Plaintiff filed a cross motion for summary judgment on Counts 1, 4 and 8, opposed by the Defendants. The court held a hearing on the motions on Feb. 21, 2014. The Plaintiff is actively seeking to sell the real property which purportedly is benefited from the pier rights, and the sale process would be enhanced if the state court litigation over the pier rights is resolved timely, or at least, if the question of who holds the right to pursue the state court litigation claim is resolved. In his ruling, Judge Catliota said the court will resolve the motions to the extent necessary to determine who holds the pier rights, and will defer the remaining issues raised in the motions for a more orderly resolution. The case is, The case is, Solomons One, LLC Plaintiff, v. V. Charles Donnelly and Deborah Steffen Defendants, Adv. Proc. No. 13-00580-TJC (Bankr. D. Md.). A copy of the Court's March 4, 2014 "Proposed Statement Of Material Facts Not In Dispute And Proposed Conclusions Of Law Granting Summary Judgment To Plaintiff On Count 1" is available at http://is.gd/MbouGVfrom Leagle.com. Solomons One, LLC, is a limited liability company formed in 2005 under the laws of the State of Maryland. Solomons One's members, and their purported ownership interests, are: Dr. Alfred Greenberg, Halina Greenberg jointly 48-1/3%; Catherine Erickson- File; 2-1/3%; Christine McNelis 1%; V. Charles Donnelly 24-1/3%; and Deborah A. Steffen 24%. Solomons One was formed to acquire, purchase, lease, sell and develop the real property located at 14538 Solomons Island Road, Solomons, Maryland. It entered into a joint venture with McNelis to purchase the Property. It a 70% fee simple interest in the Property and McNelis acquired the remaining stake. The Property includes a commercial office building, which is leased out to several businesses, and a small cottage, which is leased out as a residence. Solomons One sought Chapter 11 protection (Bankr. D. Md. Case No. 13-24475) on Aug. 23, 2013, listing under $1 million in both assets and debts. Copies of the petition and list of crditors are available at: http://bankrupt.com/misc/mdb13-24475p.pdf http://bankrupt.com/misc/mdb13-24475c.pdf Solomons One is represented by Susan Jaffe Roberts, Esq., at Whiteford, Taylor & Preston, LLP, as counsel. SPRINGLEAF HOLDINGS: S&P Revises Outlook to Pos. & Affirms B- ICR ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Springleaf Finance Corp. to positive from stable and affirmed its 'B-' long-term issuer credit rating. At the same time, S&P assigned its 'B-' issuer credit rating and positive outlook on Springleaf Holdings Inc. (Springleaf). The 'B-' issuer credit rating and positive outlook reflects Springleaf's declining leverage, reduced 2017 debt tower, growing access to funding through the securitization markets, and improving earnings. Springleaf began taking significant remedial steps to reduce the company's 2017 debt maturities, which began the year at $7.4 billion. Over 2013, the company was able to restructure the amount maturing in 2017 to $2.4 billion. This $5 billion restructure was accomplished by using $1.45 billion from two residential mortgage-backed securitizations (RMBS) to pay down debt, issuing $1.25 billion in unsecured notes (staggered maturities starting in 2020), and extending $750 million of its secured term loan until 2019. The company's capital position also benefited from $231 million in equity that the company raised in connection with its recent IPO. As a result of all of these transactions, Springleaf's debt to adjusted total equity (ATE) has declined to 7.8x as of Sept. 30, 2013, from 9.0x at the end of 2012. "Despite some recent positive developments, our ratings on Springleaf reflect the company's high leverage, dependence on wholesale funding, financial sponsor ownership, and stressed liquidity profile as the company continues to deleverage its balance sheet," said Standard & Poor's credit analyst Stephen Lynch. "The company's limited competition in the nonprime consumer lending market and prudent underwriting policies are countervailing strengths to the rating." The positive outlook recognizes the firm's improved debt maturity ladder, recent access to the securitization market, slowly improving earnings, and existing cash holdings. S&P could raise the ratings on the firm if management obtains more stable funding for its consumer lending business, if earnings show stable growth, or if debt to equity were to fall sustainably below 5x. "We could revise the outlook to stable or lower the rating if Springleaf has trouble securitizing its consumer loan portfolio, if earnings metrics deteriorate, or if management chose a more aggressive financial policy," said Mr. Lynch. S&P could also lower the rating if leverage were to unexpectedly start to increase or if the company's liquidity position deteriorates. SPIRIT AEROSYSTEMS: Moody's Rates $540MM Secured Term Loan 'Ba1' ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Spirit's planned $540 million secured term loan B, the proceeds of which will be used to refinance Spirit's existing $550 million secured term loan B. All other ratings are unaffected. Ratings assigned: $540 million senior secured term loan B due 2020, assigned at Ba1, LGD3, 33% Ratings unaffected: Corporate Family Rating, Ba2 Probability of Default Rating, Ba2-PD $650 million senior secured revolver due 2017, Ba1, LGD3, 33% $550 million senior secured term loan due 2019, Ba1, LGD3, 33% $300 million senior notes due 2017, Ba3, LGD5, 81% $300 million senior notes due 2020, Ba3, LGD5, 81% $300 million senior notes due 2022, Ba3, LGD5, 81% Speculative Grade Liquidity Rating, SGL-3 Rating Outlook: Negative The Ba2 corporate family rating reflects the company's leading position in the aerostructures market, Spirit's role as a critical supplier to Boeing on key aircraft, and credit metrics--excluding forward loss charges--which are supportive for the rating category. Spirit's SGL-3 rating reflects an adequate liquidity profile and expectations of improving cash generation in the near- term following several years of volatile cash flows. The negative rating outlook incorporates continued concerns surrounding the company's forward loss charges and recognizes that Spirit, despite the corrective actions already taken, must demonstrate the effectiveness of its efforts to better manage the ramp-up and execution process tied to the contracts that gave rise to these charges. The principal methodology used in this rating was the Global Aerospace and Defense published in June 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. Spirit AeroSystems, Inc., headquartered in Wichita, Kansas, is an independent non-OEM designer and Tier-1 manufacturer of commercial aircraft aerostructures. Components include fuselages, pylons, struts, nacelles, thrust reversers, and wing assemblies, primarily for Boeing but also for Airbus, Gulfstream and others. Revenues were approximately $6 billion for the twelve months ended December 13, 2013. STAFFORD MANAGEMENT: Case Summary & 11 Unsecured Creditors ---------------------------------------------------------- Debtor: Stafford Management I LLC 5840 Bannecker Road, Suite 110 Columbia, MD 21044-3188 Case No.: 14-10787 Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Judge: Hon. Robert G. Mayer Debtor's Counsel: Robert Easterling, Esq. ROBERT B. EASTERLING, ATTORNEY 2217 Princess Anne St., Ste. 100-2 Frederickburg, VA 22401 Phone: (540)373-5030 Email: eastlaw@easterlinglaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Michael A. Carnock, manager. A list of the Debtor's 11 largest unsecured creditors is available for free at http://bankrupt.com/misc/vaeb14-10787.pdf STEAK N SHAKE: Moody's Assigns 'B2' Corp. Family Rating ------------------------------------------------------- Moody's Investors Service assigned B2 Corporate Family and B2-PD Probability of Default Ratings to Steak n Shake Operations, Inc. ("Steak n Shake") and assigned B1 ratings to the company's proposed $250 million senior secured credit facilities, which will consist of a $30 million revolving credit facility and $220 million term loan. The ratings outlook is stable. Proceeds from the proposed term loan will be used primarily to refinance existing debt, put $55 million of cash on the balance sheet to be used for permitted investments (including capital spending, acquisitions and investments), and fund a $50 million cash dividend to Steak n Shake's parent company, Biglari Holdings Inc. ("BH"). The assigned ratings are subject to review of final documentation. Ratings assigned: Corporate Family Rating (CFR) at B2; Probability of Default Rating (PDR) at B2-PD; $30 million senior secured revolver due 2019 at B1 (LGD3, 43%); $220 million senior secured term loan due 2021 at B1 (LGD3, 43%) The ratings outlook is stable Ratings Rationale Steak n Shake's B2 Corporate Family Rating reflects the high pro forma debt and leverage stemming from the proposed transaction. The company's financial policy is aggressive due to its history of paying significant dividends to BH. The company is once again increasing leverage to bring future cash flow forward in order to fund a dividend to BH and make other investments. While the proposed credit facilities will set limits on future dividends, investments and acquisitions, future shareholder friendly activities could still occur. For the twelve month period ended December 18, 2013, pro forma lease-adjusted leverage is expected to approach 6.0 times and interest coverage is expected to fall below 2.0 times. Operating performance has softened over the last twelve months as customer traffic gains have slowed, but remain positive, and did not offset increased commodity costs and significant investments being made to affect future growth. The rating also reflect the company's relatively modest scale in terms of revenue, number of units, and narrow product offering, as well as potential fluctuations in operating performance related to continued weak consumer spending and significant exposure to commodity inputs such as beef. The B2 rating also reflects Steak n Shake's strong brand awareness in its core markets, with geographic reach across 28 states in the Midwestern and Southern United States, and established track record of profitable growth led by consistently positive same store sales, particularly customer traffic, over the past several years. Liquidity is good, with a sizeable pro forma cash balance, positive free cash flow and excess revolver availability expected to more than cover cash flow needs over the next twelve months, including a significant increase in capital spending for growth initiatives and store remodeling. The proposed revolver will contain a minimum leverage financial covenant under which ample cushion is expected to be set. The B1 rating assigned to the first lien credit facilities reflect the first lien position on all assets of the company except certain equity interests in Cracker Barrel Old Country Store, Inc. and Lion fund II, L.P., and company-owned real estate, the latter of which lenders will have a springing lien upon the incurrence of default or if Fixed Charge Coverage (as defined in the credit agreement) falls below 1.0 time. These excluded assets comprise over 50% of company assets as of December 18, 2013. The facilities benefit from the sizeable amount of junior claims in the capital structure, including accounts payable and leases. The stable rating outlook assumes that Steak n Shake will effectively manage growth while maintaining good liquidity and moderately reducing leverage. Sustained growth in revenue and profitability while demonstrating the willingness and ability to achieve and maintain leverage below 5.0 times could lead to a ratings upgrade. Ratings could be downgraded if operating performance were to materially weaken, or if financial policies were to become more aggressive, leading to sustained deterioration in credit metrics or weaker liquidity. Debt/EBITDA sustained over 6.0 times, or interest coverage falling below 1.25 times, could lead to a downgrade. Steak n Shake is a restaurant chain that primarily serves burgers and milk shakes, operating 418 company owned restaurants and franchising 108 units in 28 states (including one international location). As a wholly-owned subsidiary of Biglari Holdings Inc. (NYSE: BH), Steak n Shake generated about $742 million of revenue in the latest twelve month period ended December 18, 2013. The principal methodology used in this rating was the Global Restaurant Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. STELERA WIRELESS: Taps HSPG & Associates as Tax Provider -------------------------------------------------------- Stelera Wireless LLC asks the U.S. Bankruptcy Court for the Western District of Oklahoma for permission to employ HSPG & Associates PC as accounting and tax services provider. The Debtor tells the Court that Eric F. Percival and David Gaither, partners at the firm, will be primarily responsible for the accounting and tax services provided to the Debtor in this matter. The firm will be required to render include, providing any accounting and tax services necessary to complete the dissolution of the Debtor including, but not limited to, completion of tax returns, investigating and resolving any outstanding tax issues, accounting and tax services needed to ensure the closing of the FCC License sales, and other general accounting and tax activities. The firm's current hourly rates for work of this nature: Partners $200 Managers $125 Staff $100 The Debtor assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. Judge Jackson has extended the Debtor's exclusive periods to file a Chapter 11 Plan until May 1, 2014, and solicit acceptances for that Plan until July 1. STERLING BLUFF: Court Approves Hiring of Stone & Baxter as Counsel ------------------------------------------------------------------ The Hon. Edward J. Coleman, III of the U.S. Bankruptcy Court for the Southern District of Georgia authorized Sterling Bluff Investors LLC to employ Stone & Baxter, LLP as attorneys. As reported in the Troubled Company Reporter, Stone & Baxter will undertake this representation at their standard hourly rates, which now range $195 to $425 for each attorney, and $125 per hour for research assistants and paralegals, including all travel time. The rates are subject to periodic adjustment by the firm. The firm is currently holding $41,000 as a retainer, which was paid with funds loaned to the Debtor by SBI Loan, LLC, an affiliate of the Debtor. Austin E. Carter, Esq., a partner at the firm, attests that Stone & Baxter does not hold or represent any interest adverse to the Debtor or the estate and the firm and its attorneys are disinterested persons. About Sterling Bluff Sterling Bluff Investors, LLC, a Georgia limited liability company formed for the purpose of acquiring and owning lots in a subdivision known as the Ford Plantation, Bryan County, Georgia, and also certain club memberships in the Ford Plantation Club, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ga. Case No. 14-40200) in Savannah, Georgia, on Feb. 3, 2014. The Debtor's counsel is Austin E. Carter, Esq., at Stone & Baxter, LLP, in Macon, Georgia. The Debtor estimated assets and debt of $10 million to $50 million. The petition was signed by Michael Greene, manager. SWA BASELINE: Court Approves Engelman Berger as Counsel ------------------------------------------------------- SWA Baseline, LLC sought and obtained permission from the Hon. Brenda Moody Whinery of the U.S. Bankruptcy Court for the District of Arizona to employ Engelman Berger, P.C. as counsel, effective Feb. 5, 2014. The Debtor requires Engelman Berger to: (a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and property; (b) represent the Debtor at all interviews, meetings, Court hearings, adversary proceedings or contested matters that have been or may be filed herein; (c) attend meetings and negotiate with representatives of creditors and other parties-in-interest and advising and consulting on the conduct of this bankruptcy case, including all of the legal and administrative requirements of operating in chapter 11; (d) assist the Debtor with the preparation of its Schedules of Assets and Liabilities and Statements of Financial Affairs; (e) advise the Debtor with respect to any contemplated sales of assets and business combinations, formulating and implementing appropriate closing procedures for such transactions, and preparing and prosecuting all motions and pleadings necessary to obtain the Court's authorization for such transactions; (f) advise the Debtor with respect to any post-petition financing and cash collateral arrangements; negotiating, drafting and prosecuting all documents, motions and pleadings relating thereto; (g) advise the Debtor on all matters relating to the assumption, rejection or assignment of unexpired leases and executory contracts; (h) advise the Debtor with respect to legal issues arising in or relating to the Debtor's ordinary course of business, including attending meetings of management, financial and turnaround advisors, property management firms, and other professionals employed by the Debtor; (i) take all necessary actions to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the Debtor, objecting to claims filed against the Debtor's estate, and negotiating and effecting settlements of the same; (j) prepare, negotiate and take all actions necessary to obtain approval and confirmation of a disclosure statement, plan of reorganization and related agreements and documents; and (k) perform all other legal services relating to the administration and conduct of the Debtor's estate in its efforts to reorganize. Engelman Berger will be paid at these hourly rates: Shareholders $375-$500 Associates $220-$350 Paralegals $175-$185 Engelman Berger will also be reimbursed for reasonable out-of- pocket expenses incurred. Prior to the Filing Date, Engelman Berger provided legal representation and advice to the Debtor relating to insolvency work and collection defense. Engelman Berger received a retainer from the Debtor of $180,000, for its services in this regard, and for its services as bankruptcy counsel for the Debtor. Engelman Berger has offset its pre-petition fees and costs in the amount of $23,697 against the Retainer, which included the $1,213 bankruptcy filing fee. Accordingly, Engelman Berger has been compensated for all known fees and reimbursed for all known expenses incurred before the chapter 11 filing. In accordance with the Amendment to the Retainer Agreement that the Debtor executed on Feb. 4, 2014, the Debtor agreed that Engelman Berger will use up to $25,000 of the Retainer, subject to funds availability, to fund the retainers, fees and costs of experts engaged by the Firm to assist with the Chapter 11 proceedings. Engelman Berger has provided legal representation and advice to the Debtor prior to the Filing Date relating to insolvency work and collection defense. Thus, prior to the Filing Date, Engelman Berger also paid a $1,000 retainer to an expert consultant, as described in the preceding paragraph. Engelman Berger presently holds the remaining retainer of $154,020 in its Trust Account, and will not apply any of these funds without Court approval. Patrick A. Clisham, shareholder of Engelman Berger, 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. Engelman Berger can be reached at: Patrick A. Clisham, Esq. ENGELMAN BERGER, P.C. 3636 North Central Avenue, Suite 700 Phoenix, AZ 85012 Tel: (602) 222-4968 Fax: (602) 222-4999 E-mail: pac@eblawyers.com About SWA Baseline SWA Baseline, LLC, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), filed a Chapter 11 bankruptcy petition (Bankr. D. Ariz. Case No. 14-01418) on Feb. 5, 2014. Andrew J. Briefer signed the petition as designated representative. Patrick A. Clisham, Esq., at Engelman Berger PC, in Phoenix, serves as the Debtor's counsel. The Hon. Brenda Moody Whinery oversees the case. SWJ HOLDINGS: Management Unit Files for Chapter 11 in Delaware -------------------------------------------------------------- SWJ Holdings, LLC filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 14-10376) on Feb. 25, 2014, estimating $10 million to $50 million in assets and less than $10 million in liabilities. A related entity -- SWJ Management, LLC -- filed for Chapter 11 protection (Bankr. D. Del. Case No. 14-10460) on March 3, 2014. It estimated $10 million to $50 million in assets and $1 million to $10 million in liabilities. Judge Christopher S. Sontchi is assigned to the case. Bruce Duke, Esq., in Mount Laurel, New Jersey, serves as counsel to the Debtors. According to the docket, the schedules of assets and liabilities and the statement of financial affairs of SWJ Management are due March 18, 2014. The Debtor's Chapter 11 plan and disclosure statement are due July 1, 2014. SWJ HOLDINGS: Bankruptcy Filing Improper, Owners Allege ------------------------------------------------------- Jeffrey R. Pocaro, Esq. -- jrpesq@aol.com -- in Fanwood, New Jersey, wrote a letter to Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware alleging that Bruce Duke and Richard Annunziata should be sanctioned with fines for improper filing of a falsified bankruptcy petition for SWJ Holdings, LLC. Mr. Pocaro relates that he represents SWJ Holdings, and the 70% owners of SWJ Holdings, headed by managing member William Mournes, have asked him to write the Court about the partial bankruptcy petition. Mr. Pocaro pointed out, among other things, that Mr. Duke is a New Jersey attorney that is not admitted to practice law in the State of Delaware. He further pointed out that SWJ Holdings does not operate out of 443 Austin Road, in Mahopac, New York, and does not maintain an office at 2711 Centerville Road, Suite 400, in Wilmington, Delaware. The Wilmington address, according to Mr. Pocaro, is for the registered agent for service, Corporation Service Company. Mr. Pocaro adds that Mr. Annunziata does not own 30% of SWJ Holdings as the sale of the 30% ownership from Steven Podell was never approved by the 70% owners of SWJ Holdings, as required by the company's operating agreement. "The bankruptcy was simply filed in a bold, but stupid attempt to gain a tactical advantage in ongoing litigation," Mr. Pocaro asserts. The litigation Mr. Pocaro was referring to is entitled Mocco v. Licata, pending in the Superior Court of New Jersey. SWJ Holdings, LLC, sought protection under Chapter 11 of the Bankruptcy Code on Feb. 25, 2014 (Case No. 14-10376, Bankr. D.Del.). The Debtor's counsel is Bruce Duke, Esq., in Mount Laurel, New Jersey. The Debtor has estimated assets ranging from $10 million to $50 million and estimated debts ranging from $1 million to $10 million. The petition was signed by Richard Annunziata, managing member. TENET HEALTHCARE: Moody's Rates $400MM Sr. Secured Notes 'B3' ------------------------------------------------------------- Moody's Investors Service assigned a B3 (LGD 5, 81%) rating to Tenet Healthcare Corporation's proposed offering of $400 million of senior unsecured notes due 2019. Moody's understands that the proceeds of the offering will be used for general corporate purposes, including the repayment of amounts outstanding under the company's revolving credit agreement. Given that Moody's do not expect an increase in leverage from this offering, there is no change to the existing ratings of the company, including the B1 Corporate Family Rating and B1-PD Probability of Default Rating. The stable rating outlook is unchanged. Moody's rating actions are summarized below. Ratings assigned: $400 million senior unsecured notes due 2019 at B3 (LGD 5, 81%) LGD assessments revised: Senior secured notes to Ba3 (LGD 3, 30%) from (LGD 3, 31%) Senior unsecured notes to B3 (LGD 5, 81%) from (LGD 5, 82%) Ratings Rationale Tenet's B1 Corporate Family Rating reflects Moody's expectation that debt to EBITDA will be high following the acquisition of Vanguard Health Systems but will return to a level approaching 5.0 times by the end of 2014. Moody's anticipates that improvement in credit metrics will result from a combination of realized synergies from the acquisition and benefits from the implementation of the provisions of the Affordable Care Act. Offsetting some of the benefit of healthcare reform is Moody's expectation that certain industry challenges will likely continue, including pricing pressure from changes in Medicare reimbursement, slower growth in healthcare utilization as co-pay and deductible amounts increase and higher expenses associated with physician alignment initiatives. The rating also incorporates Moody's expectation that the company will remain disciplined in the use of incremental debt for acquisitions or shareholder initiatives until leverage is reduced from the pro forma acquisition level. Finally, Moody's anticipates that free cash flow will be modest in the near term given significant capital spending requirements and will limit the ability to meaningfully repay debt. Given that Moody's anticipates improvement in the credit metrics from pro forma levels throughout 2014, an upgrade of the rating in the near term is not expected. However, the rating could be upgraded if the company is able to reduce and maintain leverage below 4.0 times. Moody's could downgrade the rating if the company fails to see the expected improvements in operating performance, experiences disruptions in the integration of the Vanguard operations or increases leverage for acquisitions or shareholder initiatives such that debt to EBITDA will be sustained above 5.0 times. Moody's could also downgrade the rating if free cash flow, prior to discretionary reinvestment in the business, is expected to be negative. The principal methodology used in this rating was the Global Healthcare Service Providers published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Tenet, headquartered in Dallas, Texas, is one of the largest for- profit hospital operators by revenues. At December 31, 2013 the company's subsidiaries operated 77 hospitals as well as 183 outpatient centers. The company also offers other services, including revenue cycle management, health care information management and patient communications services. Tenet generated revenue of approximately $11.1 billion for the year ended December 31, 2013 after considering the provision for doubtful accounts. TENET HEALTHCARE: S&P Assigns 'CCC+' Rating to $600MM Notes ----------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'CCC+' issue-level rating (two notches below the 'B' corporate credit rating on the company) to Tenet Healthcare Corp.'s proposed $600 million senior unsecured notes. S&P assigned a '6' recovery rating, indicating its expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. The notes will be sold pursuant to Rule 144A under the Securities Act. Tenet will use the proceeds for general corporate purposes, and to repay existing senior unsecured indebtedness. The issue-level ratings are the same as S&P's existing senior unsecured ratings. S&P's ratings on Dallas-based Tenet reflect its "weak" business risk profile highlighted by reimbursement risk and some reliance on its top three states for nearly half of total revenues. In addition, Tenet operates in several large markets that S&P believes are competitive. S&P incorporated its expectation that adjusted debt leverage will remain above 5x into its revision of the company's financial risk profile to "highly leveraged" from "aggressive". Significant capacity on its revolving credit facility and lack of covenant pressure support its "adequate" liquidity. RATINGS LIST Tenet Healthcare Corp. Corporate Credit Rating B/Stable/-- New Rating Tenet Healthcare Corp. $600 million senior unsecured notes CCC+ Recovery rating 6 TENNESSEE METAL WORKS: Case Summary & 20 Top Unsecured Creditors ---------------------------------------------------------------- Debtor: Tennessee Metal Works, Inc. 1111 Foster Avenue Nashville, TN 37210 Case No.: 14-01785 Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Hon. Keith M Lundin Debtor's Counsel: Joseph P Rusnak, Esq. TUNE ENTREKIN & WHITE PC 315 Deaderick Street Ste 1700 Nashville, TN 37238-1700 Tel: 615 244-2770 Fax: 615 244-2778 Email: JRUSNAK@TEWLAWFIRM.com Total Assets: $656,636 Total Liabilities: $1.15 million The petition was signed by Michael T. O'Connor, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/tnmb14-01785.pdf TRANS ENERGY: Presented at The Oil & Services Conference -------------------------------------------------------- Trans Energy, Inc. 's Chairman Steve Lucado and president John Corp presented at EnerCom 's The Oil & Services Conference 12 on Wednesday, Feb. 19, 2014. The conference was held at the Omni Hotel in San Francisco, California. The Trans Energy management team was also available on Tuesday, February 18 and Wednesday, February 19 prior to their presentation for one-on-one investor meetings. Investment community professionals interested in scheduling a one-on-one investor meeting with management should contact Brian Brooks at EnerCom, Inc. (303) 296-8834 or Bbrooks@enercominc.com Additional information regarding Trans Energy, including maps, investor presentations, news releases and videos can be found at the Company 's new website www.transenergyinc.com. Trans Energy will regularly update information on the website to provide investors with the most up to date information on the Company and its operations. The presentation focused on the company 's development efforts in the Marcellus Shale, specifically in Marion, Marshall, and Wetzel counties in Northern West Virginia. The presentation covered the following topics: General information about Trans Energy, Inc. Discussion of drilling results Production history and future drilling plans Wet gas economics SEC Reserves Debt financing = Credit Agreement Other information About Trans Energy St. Mary's, West Virginia-based Trans Energy, Inc. (OTC BB: TENG) -- http://www.transenergyinc.com/-- is an independent energy company engaged in the acquisition, exploration, development, exploitation and production of oil and natural gas. Its operations are presently focused in the State of West Virginia. Trans Energy incurred a net loss of $21.20 million in 2012 as compared with net income of $8.92 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $83.06 million in total assets, $85.46 million in total liabilities and a $2.40 million total stockholders' deficit. TRANS ENERGY: Mark Woodburn Holds 7.2% Equity Stake --------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Mark D. Woodburn disclosed that for the calendar year 2013, he beneficially owned 965,110 shares of common stock of Trans Energy, Inc., representing 7.2 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/Wnn4GF About Trans Energy St. Mary's, West Virginia-based Trans Energy, Inc. (OTC BB: TENG) -- http://www.transenergyinc.com/-- is an independent energy company engaged in the acquisition, exploration, development, exploitation and production of oil and natural gas. Its operations are presently focused in the State of West Virginia. Trans Energy incurred a net loss of $21.20 million in 2012 as compared with net income of $8.92 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $83.06 million in total assets, $85.46 million in total liabilities and a $2.40 million total stockholders' deficit. TRANS ENERGY: Clarence Smith Stake at 9.2% as of Dec. 31 -------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Clarence E. Smith disclosed that for calendar year 2013, he beneficially owned 1,219,413 shares of common stock of Trans Energy, Inc., representing 9.2 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/VmQShp About Trans Energy St. Mary's, West Virginia-based Trans Energy, Inc. (OTC BB: TENG) -- http://www.transenergyinc.com/-- is an independent energy company engaged in the acquisition, exploration, development, exploitation and production of oil and natural gas. Its operations are presently focused in the State of West Virginia. Trans Energy incurred a net loss of $21.20 million in 2012 as compared with net income of $8.92 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $83.06 million in total assets, $85.46 million in total liabilities and a $2.40 million total stockholders' deficit. TRAVELPORT LLC: Moody's Affirms 'Caa1' Corp. Family Rating ---------------------------------------------------------- Moody's Investors Service has affirmed the Caa1-PD and assigned a limited default (LD) designation to Travelport LLC's Caa1-PD probabilty of default rating (PDR). The PDR has therefore changed to Caa1-PD/LD (formerly Caa1-PD) following Travelport's publication of its full-year results, in which it announced that it had entered into debt-for-equity swaps totalling USD135 million on its subordinated debt. Concurrently, Moody's has also affirmed Travelport's Caa1 corporate family rating (CFR) and the B1 ratings of the senior secured debt. Moody's has also affirmed the Caa2 ratings of the second lien, the Caa2 rating of the senior unsecured notes and the Caa3 ratings of the subordinated unsecured notes. The outlook on all ratings is negative. "We have assigned a limited default designation to Travelport's PDR because the debt-for-equity transaction represents a distressed exchange, which is deemed an event of default under our definitions," says Knut Slatten, a Moody's Assistant Vice President-Analyst and lead analyst for the issuer. Moody's expects to remove the "/LD" indicator after approximately three business days. Ratings Rationale Assignation Of 'Ld' Designation The change of Travelport's PDR to Caa1-PD/LD reflects Moody's view that the debt-for-equity transaction constitutes a distressed exchange, which is an event of default under Moody's definitions. While a debt-for-equity swap does not automatically constitute a default, it strongly indicates one even if the swap is priced at or slightly above par as equity typically carries a higher degree of uncertainty and volatility than a debt promise. Unlike the April 2013 transaction, which included a debt-for- equity swap at the holding company level (Travelport Holdings Limited, not rated), this transaction affects the debt at the operating company level (Travelport LLC). Also, while this transaction is small relative to the group's overall capital structure, it is the latest in a series of adjustments to the capital structure, including maturity extensions, which have cumulatively had a negative impact on its creditors' position. In this context, Moody's has determined that the transaction constitutes a distressed exchange for Travelport LLC. Should there be further similar modest exchange adjustments over the next few months, continuing this series, Moody's would not expect to call an additional default. Affirmation Of The Caa1 CFR The affirmation of Travelport's Caa1 CFR is driven by (1) an improvement in underlying operating performance, which has seen Travelport return to EBITDA growth; (2) an improvement in Travelport's liquidity profile, which -- in addition to reduced leverage -- will also see diminished interest expenses and an anticipated higher headroom to financial covenants following the debt-for-equity transaction. Affirmation Of Existing Debt Instruments As the transaction will have no impact on the relative ranking of the existing debt-instruments, Moody's has affirmed the (1) B1 rating on the senior secured debt; (2) Caa2 rating of the second lien debt instruments and senior unsecured notes; and (3) Caa3 rating of the subordinated unsecured notes. Following the transaction, Moody's expects that Travelport's liquidity profile will be adequate. Whilst the rating agency expects that Travelport will produce positive free cash flows in 2014, the company's liquidity profile is dented by a still tight headroom to financial covenants. There are no upcoming debt maturities over the next 12 months. Rationale For Negative Outlook The maintenance of the negative outlook essentially reflects Travelport's continued high leverage, measured as adjusted debt/EBITDA. A stabilisation of the outlook would require Travelport showing throughout 2014 that its capital structure is sustainable by achieving a reduction in its leverage towards 7.0x debt/EBITDA over time. What Could Change The Rating Up/Down Given Travelport's high leverage, any positive rating pressure is unlikely in the short term. However, Moody's could stabilise the ratings if the group succeeds in implementing the deleveraging trend outlined above. Conversely, negative pressure would likely be exerted on the rating if Travelport should fail in deleveraging from the high levels. Finally, negative pressure could also result if Travelport's near-term liquidity were to become constrained. Given the group's lack of near-term debt maturities, constrained liquidity would likely result from a lack of covenant headroom on the company's loans. Principal Methodology The principal methodology used in this rating was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Atlanta, Georgia, Travelport is a leading provider of transaction processing services to the travel industry through its global distribution system (GDS) business, which includes the group's airline information technology solutions business. During FY2013, the group reported revenues and adjusted EBITDA of $2.1 billion and $517 million, respectively. TRAVELPORT HOLDINGS: S&P Lowers CCR to 'SD' on Debt-To-Equity Swap ------------------------------------------------------------------ Standard and Poor's Rating Services said that it lowered to 'SD' (selective default) from 'CCC+' its long-term corporate credit ratings on U.S.-based travel services provider Travelport Holdings Ltd. and its indirect primary operating subsidiary Travelport LLC (together, Travelport). At the same time, S&P lowered to 'D' (default) from 'CCC-' its issue rating on Travelport's senior subordinated notes due 2016. The recovery rating on these notes is unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery prospects in the event of a payment default. S&P affirmed all its other issue ratings on Travelport. In particular: -- It affirmed its issue rating on the first-lien senior secured debt facilities at 'B'. The recovery rating on the first-lien facilities is unchanged at '1', indicating S&P's expectation of very high (90%-100%) recovery prospects in the event of a payment default. -- S&P affirmed its issue rating on the second-lien $860 million bank loan at 'CCC+'. The recovery rating on this loan is unchanged at '4', indicating S&P's expectation of average (30%-50%) recovery prospects in the event of a payment default. -- S&P affirmed its issue ratings on the other senior unsecured debt at 'CCC-'. The recovery rating on this debt is unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery prospects in the event of a payment default. The downgrades follow the completion of Travelport's debt-to- equity swap of its senior subordinated notes due 2016. Travelport agreed with Morgan Stanley, and certain funds and accounts managed by P. Schoenfeld Asset Management LP and Alliance Bernstein LP, to swap $135 million of the subordinated notes for about a 10% stake in Travelport. S&P understands that the aim of the swap is to reduce Travelport's overall leverage. "According to our criteria, we view the exchange of the subordinated notes as distressed and tantamount to a default. This is because we believe there has not been adequate compensation for the investors involved in this swap and because the debt-to-equity swap alters the ranking of the senior subordinated notes to a more junior position. In our view, it is difficult to value the stake offered to the investors as Travelport is not a listed entity," S&P added. S&P's recovery ratings on all of Travelport's other rated debt are unchanged. S&P expects to reassess its corporate credit rating on Travelport, its liquidity analysis, and any effect of the debt-to-equity swap on its recovery analysis within one month. TRONOX LTD: Names Richard Muglia as General Counsel --------------------------------------------------- Tronox Limited on March 6 announced the appointment of Richard Muglia as senior vice president, general counsel, and corporate secretary. Mr. Muglia has served as deputy general counsel of Tronox since February 2013. Prior to that, he was a partner at Skadden, Arps, Slate, Meagher & Flom LLP, the international law firm, since 1994, and has more than 30 years of legal experience. Mr. Muglia is a graduate of Williams College, and holds a Master of Public Health from Yale University. He received his law degree from Columbia University, where he was a Harlan Fiske Stone Scholar. In his new post, effective March 1, 2014, he will serve as a corporate officer and will report to Tom Casey, the chairman and CEO of Tronox Limited. Mr. Muglia replaces Michael Foster, who will leave Tronox on May 31, 2014. During the transition, Mr. Foster will retain his leadership role as the senior vice president of the Tronox legal group. Mr. Foster joined Tronox in 2003 and served as chief legal counsel since 2008. During his tenure, the company passed several significant milestones, including the negotiated settlement of environmental, litigation and other liabilities resulting from the Kerr-McGee spinoff in 2005; the structuring of a plan and ultimate emergence from bankruptcy in 2011; listing on the New York Stock Exchange and the acquisition of the Exxaro Mineral Sands business in 2012; and, $2.4 billion in financings in 2012 and 2013. About Tronox Ltd. Tronox -- http://www.tronox.com-- engages in the production and marketing of mineral sands, titanium dioxide pigment and electrolytic products. Through the integration of its pigment and mineral sands businesses, the company provides its customers a dependable supply of brightening solutions for a variety of end uses. 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. UNIFIED 2020: Chapter 11 Trustee Can Hire Litzler as Accountant --------------------------------------------------------------- The Bankruptcy Court authorized Daniel J. Sherman, the Chapter 11 trustee of Unified 2020 Realty Partners, LP, to retain Litzler, Segner, Shaw & Mckenney, LLP as accountants effective as of January 9, 2014, to be paid out of the estate as approved by the Court. Litzler Segner will assist the Trustee in reviewing bank records, financial records, and other information which may be necessary to administer the case; file Federal Income Tax Returns to reflect the administration of assets during the case; prepare other tax reports required to be filed by the Trustee; and other services that may be requested by the Trustee. James R. Shaw, a certified public accountant at Litzler Segner, assures the Court that his Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Unified 2020 Realty Unified 2020 Realty Partners, LP, was formed in November 2007 to own the real property and improvements located at 2020 Live Oak Street, in Dallas, Texas. The property is comprised of a 12-story office building and an adjacent three-story parking garage and annex. Unified 2020 filed a petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 13-32425) in its home-town in Dallas on May 6, 2013. The petition was signed by Edward Roush as president of general partner. Judge Stacey G. Jernigan presides over the Chapter 11 case. In its schedules, the Debtor disclosed $280,178,409 in assets and $46,378,972 in liabilities. Arthur I. Ungerman, Esq., and Kerry S. Alleyne-Simmons, Esq., at the Law Office of Arthur Ungerman, in Dallas, Texas, represent the Debtor. Peter C. Lewis, Esq., and Jacob W. Sparks, Esq., at Scheef & Stone, LLP, in Dallas, Texas, represent United Central Bank. The Debtor consented to the appointment of a trustee, and on Aug. 9, 2013, Daniel J. Sherman was appointed as Chapter 11 trustee. Kevin D. McCullough, Esq., of Rochelle McCullough L.L.P. serves as general bankruptcy counsel to the trustee. The Debtor have obtained permission from the Bankruptcy Court to proceed with the pursuit of its disclosure statement and plan, in tandem or parallel with any effort by the trustee to propose a plan. UNIFIED 2020: Chapter 11 Trustee Taps CBRE as Real Estate Broker ---------------------------------------------------------------- Daniel J. Sherman, the Chapter 11 Trustee for Unified 2020 Realty Partners LP, asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ CBRE Inc. as his real estate broker to provide trustee marketing services for the property for a proposed sale, transfer, or other disposition of the Debtor's property. The Chapter 11 Trustee says it commenced an orderly liquidation of the Debtor's property at 2020 Live Oak, Dallas, Dallas County, Texas. The Trustee notes it made this decision after weighing various alternatives, ultimately deciding that selling the Property is in the best interests of the estate. The Chapter 11 Trustee proposes to pay the firm a commission-based fee structure as consideration for the services: Sale Price Fee ---------- --- Over $20 million 3% $15-$20 million 3.5% Under $15 million 4% The Chapter 11 Trustee assures the Court that the firm is a "disinterested person" within the meaning of the Bankruptcy Code. About Unified 2020 Realty Unified 2020 Realty Partners, LP, was formed in November 2007 to own the real property and improvements located at 2020 Live Oak Street, in Dallas, Texas. The property is comprised of a 12-story office building and an adjacent three-story parking garage and annex. Unified 2020 filed a petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 13-32425) in its home-town in Dallas on May 6, 2013. The petition was signed by Edward Roush as president of general partner. Judge Stacey G. Jernigan presides over the Chapter 11 case. In its schedules, the Debtor disclosed $280,178,409 in assets and $46,378,972 in liabilities. Arthur I. Ungerman, Esq., and Kerry S. Alleyne-Simmons, Esq., at the Law Office of Arthur Ungerman, in Dallas, Texas, represent the Debtor. Peter C. Lewis, Esq., and Jacob W. Sparks, Esq., at Scheef & Stone, LLP, in Dallas, Texas, represent United Central Bank. The Debtor consented to the appointment of a trustee, and on Aug. 9, 2013, Daniel J. Sherman was appointed as Chapter 11 trustee. Kevin D. McCullough, Esq., of Rochelle McCullough L.L.P. serves as general bankruptcy counsel to the trustee. The Debtor has obtained permission from the Bankruptcy Court to proceed with the pursuit of its disclosure statement and plan, in tandem or parallel with any effort by the trustee to propose a plan. UNIFIED 2020: Taps Terracon to Conduct Property Assessment ---------------------------------------------------------- Daniel J. Sherman, the Chapter 11 Trustee for Unified 2020 Realty Partners LP, asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Terracon Consultants Inc. to conduct a high level property condition assessment, phase I environmental site assessment, and asbestos assessment for the Debtor's property at a cost of $29,300 to the estate, which shall be paid out of existing cash collateral The Chapter 11 Trustee says it commenced an orderly liquidation of the Debtor's property at 2020 Live Oak, Dallas, Dallas County, Texas. The Trustee notes it made this decision after weighing various alternatives, ultimately deciding that selling the Property is in the best interests of the estate. The Chapter 11 Trustee assures the Court that the firm is a "disinterested person" within the meaning of the Bankruptcy Code. About Unified 2020 Realty Unified 2020 Realty Partners, LP, was formed in November 2007 to own the real property and improvements located at 2020 Live Oak Street, in Dallas, Texas. The property is comprised of a 12-story office building and an adjacent three-story parking garage and annex. Unified 2020 filed a petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 13-32425) in its home-town in Dallas on May 6, 2013. The petition was signed by Edward Roush as president of general partner. Judge Stacey G. Jernigan presides over the Chapter 11 case. In its schedules, the Debtor disclosed $280,178,409 in assets and $46,378,972 in liabilities. Arthur I. Ungerman, Esq., and Kerry S. Alleyne-Simmons, Esq., at the Law Office of Arthur Ungerman, in Dallas, Texas, represent the Debtor. Peter C. Lewis, Esq., and Jacob W. Sparks, Esq., at Scheef & Stone, LLP, in Dallas, Texas, represent United Central Bank. The Debtor consented to the appointment of a trustee, and on Aug. 9, 2013, Daniel J. Sherman was appointed as Chapter 11 trustee. Kevin D. McCullough, Esq., of Rochelle McCullough L.L.P. serves as general bankruptcy counsel to the trustee. The Debtor has obtained permission from the Bankruptcy Court to proceed with the pursuit of its disclosure statement and plan, in tandem or parallel with any effort by the trustee to propose a plan. USEC INC: Uranium Supplier Files for Bankruptcy ----------------------------------------------- USEC Inc. initiated prepackaged reorganization by filing a Chapter 11 petition in Delaware. The uranium supplier succumbed to bankruptcy after struggling with weak prices for the enriched uranium it supplies to nuclear power plants and difficulties in financing for major project. The company said in court papers that prices for low-enriched uranium have plummeted more than 30 percent since March 2011, when a tsunami crippled the Fukushima nuclear power plant in Japan. Reuters noted that demand for nuclear fuel remains weak, with more than 50 reactors going off line in Japan and Germany since the tsunami. Tokyo Electric Power Co., the operator of the Fukushima nuclear plant, has historically been one of USEC's largest customers, Reuters said, citing regulatory filings. USEC also counts on Exelon Corp. and Entergy Corp. among its customers. The prepackaged reorganization is backed by those holding about 65% of the company's debt and investors Toshiba Corp and Babcock & Wilcox Investment Co, will replace USEC's debt and stock with a new debt issue totaling $240.4 million and new stock, news sources said. Noteholders will get $200 million of new debt and a 79% stake in the reorganized company, several news sources noted. Toshiba and Babcock & Wilcox Investment will each receive $20.19 million of new debt and 8% of the new shares. Existing USEC stockholders will receive 5% of the new shares. The company's proposed reorganization plan requires court approval. The disclosure statement explaining the plan pegs the recovery by convertible noteholders at 39 percent on account of the new debt, saying the value of the new stock is too speculative to quantify, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported. The recovery on the preferred stock is listed as 35.1 percent, again without a value for the new stock. USEC's bankruptcy affects only the holding company and excludes the operating companies that own the assets. USEC listed assets of $70 million and liabilities of $1.07 billion as of Dec. 31, Reuters noted. The assets figure don't include properties belonging to the operating companies not in bankruptcy, Bloomberg said. The USEC holding company owes $274 million to subsidiaries, which debt will remain after bankruptcy, Bloomberg added. Peg Brickley, writing for Daily Bankruptcy Review, said USEC's bankruptcy balance sheet reshaping could be upset if sanctions disrupt the company's long-standing supply line from Russia, according to papers filed in Court. USEC's convertible notes traded on March 4 for 39 cents on the dollar, Bloomberg related, citing Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. When the forthcoming reorganization was announced in December, the notes traded for 17 cents on the dollar. Reuters said shares of the company, which said in December it expected to file for bankruptcy protection, fell as much as 46 percent to $3.01 in premarket trading on March 5. USEC's legal advisor for the restructuring is Latham & Watkins LLP, its financial advisor is Lazard, and its restructuring advisor is Alix Partners LLP. USEC, Reuters said, expects to emerge from bankruptcy protection in 90 to 120 days. The case is In re USEC Inc., 14-bk-10475, U.S. Bankruptcy Court, District of Delaware (Wilmington). USEC INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: USEC Inc. aka USEC 6903 Rockledge Drive, Suite 400 Bethesda, MD 20817 Case No.: 14-10475 Type of Business: Supplier of enriched uranium fuel for commercial nuclear power plants. Chapter 11 Petition Date: March 5, 2014 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Hon. Christopher S. Sontchi Debtor's General Counsel: D. J. Baker, Esq. Rosalie Walker Gray, Esq. Adam S. Ravin, Esq. Annemarie V. Reilly, Esq. LATHAM & WATKINS LLP 885 Third Avenue New York, NY 10022 Tel: (212) 906-1200 Fax: (212) 751-4864 Email: dj.baker@lw.com adam.ravin@lw.com Debtor's Delaware Counsel: Mark D. Collins, Esq. Michael Joseph Merchant, Esq. Amanda R. Steele, Esq. RICHARDS, LAYTON AND FINGER, P.A. 920 N. King Street Wilmington, DE 19801 Phone: 302-651-7838 Fax: 302-428-7838 Email: collins@RLF.com merchant@rlf.com steele@rlf.com Debtor's Special Finance Counsel: VINSON & ELKINS LLP Debtor's Investment Banker: LAZARD FRERES & CO. LLC Debtor's Management Services Providers: AP SERVICES, LLC Debtor's Claims/ Noticing Agent: LOGAN & COMPANY INC. Debtor's Tax Professionals: DELOITTE TAX LLP Debtor's Independent Auditor: PRICEWATERHOUSECOOPERS LLP Debtor's Fresh Start Accounting Services Provider: KPMG LLP Total Assets: $70 million Total Liabilities: $1.07 billion The petition was signed by John R. Castellano, chief restructuring officer. List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CSC Trust Company of Delaware Unsecured Debt $536,733 2711 Centerville Road Suite 220 Wilmington, DE 19808 G E Betz Trade Debt $74,299 Williams Jensen PLLC Consultant Fees $30,000 Bluewater Strategies LLC Consultant Fees $20,000 Mercury Public Affairs LLC Consultant Fees $15,000 OB-C Group LLC Consultant Fees $15,000 The Grossman Group LLC Consultant Fees $10,000 Compass Consulting Group LLC Consultant Fees $10,000 G A Kraut Co Inc Consultant Fees $9,883 CQ Roll Call Inc. Consultant Fees $9,570 Marriott Business Services Trade Debt $8,232 MKS Instruments Inc. Trade Debt $7,738 City Electric Supply Co. Trade Debt $6,972 VAT Inc. Trade Debt $6,428 C3 Energy LLC Consultant Fees $5,000 Edison Electric Institute Trade Organization $4,000 REA Parts Inc. Trade Debt $3,143 Pike County Chamber of Commerce Trade Organization $2,500 Kelsan Inc. Trade Debt $2,343 Glockner Oil Co. Inc. Trade Debt $2,342 VERTIS HOLDINGS: Can Sell Medina Property for $200K to Smith Road ----------------------------------------------------------------- The Hon. Christopher S. Sontchi has authorized Vertis Holdings Inc. to sell a real estate property plus related equipment and furniture to Smith Road Enterprises LLC for $200,000. Under the Asset Purchase Agreement, the Purchaser will assume no liabilities or obligations as part of the transactions, except the obligations set forth in the APA to be performed by the Purchaser. The Debtor is the fee simple owner of a real property identified in the Asset Purchase Agreement, dated February 5, 2014, by and between Vertis, Inc., and Smith Road Enterprises, LLC. Various items of furniture, fixtures, furnishings, equipment, and other tangible personal property are presently located at the Real Property. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08- 11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10- 16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanley Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. On Jan. 16, 2013, Quad/Graphics completed the acquisition of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. VERTIS HOLDINGS: ACG Can Sell Stevensville, Ontario Property ------------------------------------------------------------ The Bankruptcy Court has authorized American Color Graphics Inc. (ACG) to sell its real property, equipment and furniture located at 3565 Eagle Street in Stevensville, Ontario, Canada, to 2030247 Ontario, Inc., under the Purchase and Sale Agreement, dated November 14, 2013. The Court has authorized scheduling an auction if ACG receives additional higher or better offers for the Stevensville Assets. In addition, ACG is authorized to pay an expense reimbursement not to exceed $12,500 to the Stalking Horse Bidder. At Closing, ACG is authorized and directed to pay GA Keen any fee or commission due and owing to it in connection with the sale of the Stevensville Assets pursuant to the terms of the Engagement Agreement. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08- 11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10- 16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanley Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. On Jan. 16, 2013, Quad/Graphics completed the acquisition of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. VERTIS HOLDINGS: Atlanta Property to Be Auctioned Off Monday ------------------------------------------------------------ Judge Christopher Sontchi has authorized Vertis Holdings Inc. to hold an auction for its real property located at 3371 Hamilton Boulevard in Atlanta, Georgia, to Georgia LLC under a Purchase and Sale Agreement dated January 16, 2014. Assets sold will include all furniture, fixtures, furnishings, equipment, and other tangible personal property and remnants of the copper wiring left on the floor on the Real Property. The Court has authorized scheduling an auction if the Debtor receives additional higher or better offers for the Atlanta property. In addition, the Debtor is authorized to pay a break-up fee of $7,548 to the Stalking Horse Bidder in the event that it is not the successful bidder. Interested bidders were required to submit a Qualifying Bid prior to the Bid Deadline of March 6, 2014, at 4:00 p.m. (Eastern Standard Time). The Auction will be conducted on March 10, 2014, starting at 10:00 a.m. (Eastern Standard Time). The Court shall hold the Sale Hearing on March 14, 2014, at 11:00 a.m. (Eastern Daylight Time), at which time the Court will consider approval of the sale of the Atlanta Assets. About Vertis Holdings Vertis Holdings Inc. -- http://www.thefuturevertis.com/-- provides advertising services in a variety of print media, including newspaper inserts such as magazines and supplements. Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821), returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to sell the business to Quad/Graphics, Inc., for $258.5 million, subject to higher and better offers in an auction. As of Aug. 31, 2012, the Debtors' unaudited consolidated financial statements reflected assets of approximately $837.8 million and liabilities of approximately $814.0 million. Bankruptcy Judge Christopher Sontchi presides over the 2012 case. Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal, and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised by Blackstone Advisory Partners, Arnold & Porter LLP and Foley & Lardner LLP, special counsel for antitrust advice. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Quad/Graphics is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 22,000 full-time equivalent employees working from more than 50 print-production facilities as well as other support locations throughout North America, Latin America and Europe. Vertis first filed for bankruptcy (Bankr. D. Del. Case No. 08- 11460) on July 15, 2008, to complete a merger with American Color Graphics. ACG also commenced separate bankruptcy proceedings. In August 2008, Vertis emerged from bankruptcy, completing the merger. Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its assets and debts of more than $1 billion. Affiliates also filed separate Chapter 11 petitions -- American Color Graphics, Inc. (Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No. 10- 16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The bankruptcy court approved the prepackaged Chapter 11 plan on Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The plan reduced Vertis' debt by more than $700 million or 60%. GE Capital Corporation, which serves as DIP Agent and Prepetition Agent, is represented in the 2012 case by lawyers at Winston & Strawn LLP. Morgan Stanley Senior Funding Inc., the agent under the prepetition term loan, and as term loan collateral agent, is represented by lawyers at White & Case LLP, and Milbank Tweed Hadley & McCloy LLP. On Jan. 16, 2013, Quad/Graphics completed the acquisition of Vertis Holdings for a net purchase price of $170 million. This assumes the purchase price of $267 million less the payment of $97 million for current assets that are in excess of normalized working capital requirements. ZALE CORP: To be Acquired by Signet in a $1.4 Billion Deal ---------------------------------------------------------- Signet Jewelers Limited and Zale Corporation have entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21.00 per share in cash consideration. "This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise," stated Mike Barnes, Signet's chief executive officer. "The addition of Zale to the Signet family is consistent with our long- term growth strategy and leverages our combined operating expertise to create better choices for our customers, new opportunities for our employees, and makes us a more attractive partner to our vendors. In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders. We are excited about the prospects for the combined company and the many opportunities that this creates for our future. I am happy to say it is our intention that Zale will continue to run under current leader CEO, Theo Killion, who would report directly to me after the transaction closes." The acquisition strengthens Signet's omni-channel presence with some of the most recognizable jewelry store brands in the world, each operating as stand-alone brands including: Kay Jewelers, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Zales, and Peoples. "Having successfully completed our multi-year turnaround program to return to profitability, Signet's operating strengths will enable us to accelerate Zale's performance improvement for the benefit of our current and future guests," commented Killion. Signet's offer represents a premium of 41 percent over Zale's closing price as of Feb. 18, 2014. The transaction would be valued at approximately $1.4 billion, representing an enterprise value to last twelve months Oct-13 Adjusted EBITDA1 multiple of 7.4x2. As part of the transaction, Signet has entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of approximately 22 percent of Zale's common stock. The transaction is expected to be high single-digit percentage accretive to earnings in the first full fiscal year after the close of the transaction, excluding acquisition accounting adjustments and one-time transaction costs. The acquisition is expected to be financed through bank debt, other debt financing and the securitization of a significant portion of Signet's accounts receivable portfolio. The transaction is subject to Zale stockholder approval, certain regulatory approvals and customary closing conditions. J.P. Morgan Securities LLC acted as exclusive financial advisor and provided a fairness opinion to the board of directors of Signet and J.P. Morgan Chase Bank, N.A. committed to provide bridge financing for the transaction. Weil, Gotshal & Manges LLP acted as legal counsel to Signet in connection with the transaction. BofA Merrill Lynch acted as financial advisor and Cravath, Swaine & Moore LLP acted as legal counsel to Zale in connection with the transaction. On Feb. 19, 2014, and in connection with the execution of the Merger Agreement, Z Investment Holdings, LLC, which holds warrants exercisable into 11,064,684 shares of the Company's common stock entered into a Voting and Support Agreement with Signet and the Company. Pursuant to the Voting Agreement, Z LLC has agreed, among other things, to exercise its warrants and to vote the shares of the Company's common stock issued upon that exercise in favor of the adoption of the Merger Agreement and has agreed not to dispose of such shares while the Voting Agreement is in effect. The Voting Agreement shall terminate upon termination of the Merger Agreement, and certain other specified events. On Feb. 19, 2014, the Company sent a letter to its employees and prepared additional materials to discuss with its employees, which are available for free at: http://is.gd/63UdMZ http://is.gd/un7WoH A copy of the Agreement and Plan of Merger is available for free at http://is.gd/X8pyi0 Additional information is available for free at: http://is.gd/pQPCd8 About Signet Signet Jewelers Limited is the largest specialty jewelry retailer in the US and UK. Signet's US division operates over 1,400 stores in all 50 states primarily under the name brands of Kay Jewelers and Jared The Galleria Of Jewelry. Signet's UK division operates approximately 500 stores primarily under the name brands of H.Samuel and Ernest Jones. Further information of Signet is available at www.signetjewelers.com. See also www.kay.com, www.jared.com, www.hsamuel.co.uk and www.ernestjones.co.uk. 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 Corp reported a net loss of $27.30 million for the three months ended Oct. 31, 2013. Zale Corp disclosed net earnings of $10.01 million for the year ended July 31, 2013, as compared with a net loss of $27.31 million for the year ended July 31, 2012. The Company incurred a net loss of $112.30 million for the year ended July 31, 2011 and a net loss of $93.67 million for the year ended July 31, 2010. 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. ZBB ENERGY: Obtains NYSE MKT Listing Compliance Period Extension ---------------------------------------------------------------- ZBB Energy Corporation on March 6 disclosed that the NYSE MKT has determined to extend the date by which the Company is required to regain compliance with Section 1003(a)(iv) of the NYSE MKT Company Guide to May 30, 2014. The determination was based on the Exchange's review of the Company's Form 10-Q filed with the Securities and Exchange Commission on February 14, 2014. As previously reported, on October 8, 2013, the Company received notice from the Exchange staff indicating that the Company was not in compliance with the Exchange's stockholders' equity continued listing requirements contained in Sections 1003(a)(ii) and 1003(a)(iii) of the Company Guide or the Exchange's financial condition continued listing requirements contained in Section 1003(a)(iv) of the Company Guide. The notice provided that the Company should submit a plan that would reestablish compliance with the listing requirements. On November 14, 2013 the Company submitted a plan designed to reestablish compliance with the Exchange's continued listing standards. On December 31, 2013, the Exchange staff notified the Company that it had accepted the Company's compliance plan and granted the Company an extension until April 15, 2015, to regain compliance with the continued listing standards contained in Sections 1003(a)(ii) and 1003(a)(iii) of the Company Guide. In addition, the Exchange initially granted the Company until February 18, 2014 to regain compliance with the continued listing standards contained Section 1003(a)(iv) of the Company Guide. Failure to make progress consistent with the compliance plan or to regain compliance with the continued listing standards by the end of the applicable extension periods could result in the Company's shares being delisted from the Exchange. The Company will be able to continue its listing during the plan period pursuant to the extension and will be subject to periodic review by the Exchange staff. About ZBB Energy Corporation ZBB Energy Corporation (nyse mkt:ZBB) -- http://www.zbbenergy.com -- designs, develops, and manufactures advanced energy storage, power electronic systems, and engineered custom and semi-custom products targeted at the growing global need for distributed renewable energy, energy efficiency, power quality, and grid modernization. ZBB's corporate offices, engineering and development, and production facilities are located in Menomonee Falls, WI, USA with a research facility also located in Perth, Western Australia. ZBB has a joint venture with Meineng Energy, a provider of energy storage systems and solutions to the greater China market. * Lawyer Disqualification Waived by Three-Year Wait --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Arthur Spatt, in Brooklyn, New York, reversed a bankruptcy court's order granting a motion to disqualify a lawyer, holding that by waiting three years, the defendant waived his right to disqualify the lawyer for the plaintiff who was suing him. According to the report, the lawyer gave advice before the Company filed for Chapter 11 to company executives about how they might acquire the business through a sale blessed by the bankruptcy court. The business was sold and the plan confirmed. The company's bankruptcy lawyer continued representing the trust and sued a former company executive. The executive sought to have the lawyer disqualified, and the bankruptcy judge granted the motion, requiring the lawyer to return of $100,000 from fees that had been paid by the company, the report related. The bankruptcy judge based the disqualification on the notion that the lawyer informally gave advice to individual executives about how to buy the business and didn?t disclose the relationship in retention papers. Judge Spatt said there was waiver because the executive knew the facts for three years before seeking disqualification and ?delayed for tactical reasons," the report further related. Judge Spatt sent the case back to the bankruptcy court to determine whether the lawyer could be disqualified for having made insufficient disclosure about his relationships with secured creditors. The case is KLG Gates LLP v. Brown, 13-cv-04972, U.S. District Court, Eastern District New York (Brooklyn). * Bankruptcies Down 13% in 2014 From Previous Year -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although the 72,000 bankruptcies in February were about 15% more than January at a daily rate, filings last month were 12 percent fewer than in February 2013. For two months this year, total individual and business bankruptcies in the U.S. are 13 percent below the same period last year, the Bloomberg report said, citing data compiled from court records by Epiq Systems Inc. The states with the most filings per capita were Tennessee, Georgia and Alabama, the same as in 2013, the report related. Business bankruptcies declined even more last month, the report further related. The total of 2,800 commercial bankruptcies in February represented a 24 percent plunge from February 2013 and a 3 percent decline from January. Chapter 11 filings in February, where larger companies reorganize or liquidate, were 27 percent less than the same month in 2013, Mr. Rochelle said, citing Epiq. * Junk-Bond Covenant Quality Improves on Lower Volume in January ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, citing Moody's Investors Service, reported that junk-bond covenant quality improved in January for a third month in a row, even though the volume of new issues fell. According to the report, the Moody's covenant-quality improved to 3.84 in January from 4.00 in December, based on an index in which 5 is the weakest quality and 1 the strongest. The record low for covenant quality was 4.26 in October, the report said. For newly issued bonds in the Caa range, the January index was 3.63, a significant improvement over 4.39 in December. Caa bonds represented 38 percent of January issues, the Bloomberg report said, citing Moody's. * Milwaukee's Pamela Pepper Nominated for District Court -------------------------------------------------------- Wisconsin's Federal Nominating Commission has chosen a Milwaukee lawyer, a federal bankruptcy judge, and a Milwaukee circuit court judge as candidates to fill a judicial vacancy on the U.S. District Court for the Eastern District of Wisconsin. Named on Feb. 14, 2014, in a joint press release from U.S. Senators Tammy Baldwin and Ron Johnson, the nominees are: Beth Kushner, of von Briesen & Roper S.C., Milwaukee; Pamela Pepper, chief judge for the U.S. Bankruptcy Court for the Eastern District of Wisconsin; and William Pocan, a judge for the Milwaukee County Circuit Court. The opening results from the departure of U.S. District Judge Charles Clevert Jr., who moved into senior status on the court. The names will now go to President Barack Obama, who will appoint one to fill the judicial vacancy. Obama's appointee must be confirmed by the U.S. Senate after a hearing before the Senate Judiciary Committee. In a press release, the U.S. Senators from Wisconsin praised the work of the Federal Nominating Commission and the State Bar of Wisconsin, which provides administrative support to the commission: "I appreciate all the hard work by the bipartisan Judicial Commission and State Bar to help examine the highly qualified candidates that applied to serve the state of Wisconsin as a Federal Judge for the Eastern District of Wisconsin," Johnson said. "I especially want to thank Senator Baldwin for working with me in a cooperative, bipartisan fashion. We have now successfully worked together to fill two important judicial vacancies for the citizens of Wisconsin." "The filling of judicial vacancies has been a top priority for me since I was sworn in to the U.S. Senate last year," Baldwin said. "The people of Wisconsin deserve to have these vacancies filled and this is an important step forward in providing Wisconsin with highly qualified public servants who will work hard for them in our judicial system. Each of the nominees Senator Johnson and I are recommending to President Obama are experienced, highly qualified, and would make an outstanding federal district judge." About the Nominees Attorney Beth Kushner specializes in complex litigation and handles an array of business and commercial disputes at Von Briesen in Milwaukee. She graduated from the Virginia Law School in 1979, and earned admission to the State Bar of Wisconsin in 1980. Kushner, who obtained her B.A. from the University of Milwaukee in 1975, also handles product liability, fraud and RICO cases, antitrust disputes, and class actions. Kushner served as assistant general counsel to Rexnord Corporation before joining von Briesen. The Hon. Pamela Pepper was appointed to the U.S. Bankruptcy Court for the Eastern District in 2005, and has served as chief judge since 2010. She obtained her law degree from Cornell Law School in 1989 and obtained Wisconsin admission in 1995. Pepper clerked for the Eleventh Circuit Court of Appeals after law school and was a federal prosecutor in Milwaukee and Chicago from 1990 to 1997. She was also a solo criminal defense practitioner for eight years before her appointment to the bench. The Hon. William Pocan has served as a circuit court judge in Milwaukee County since his appointment in 2006 (election in 2007). He currently works in the felony division. Pocan, who grew up in Kenosha, graduated from U.W. Law School in 1984 and worked as a private practitioner for 22 years before his appointment to the circuit court bench. About the Nominating Commission Wisconsin's bipartisan Federal Nominating Commission is charged with making recommendations to U.S. senators for vacancies in federal judgeships and U.S. attorney positions. The commission was established in 1979 by Wisconsin's two U.S. senators William Proxmire and Gaylord Nelson, and the process has endured since then. Attorneys Michelle Behnke and Paul Swanson co-chaired the Commission for the Eastern District judicial vacancy. Other commission members are William T. Curran, Richard Esenberg, Frederic Fleishauer and Barbara Zack Quindel. * Lifland Eulogized as Iconic for Decades on Bench -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Burton R. Lifland, a U.S. Bankruptcy Judge in New York for almost 34 years until his death in January, was a "force of nature," Chief Bankruptcy Judge Cecelia G. Morris said at his memorial service. According to the report, Chief Judge Robert A. Katzmann of the U.S. Court of Appeals in Manhattan and Chief Judge Loretta Preska of the U.S. District Court for the Southern District of New York were among the speakers who lauded Judge Lifland for his innovations in the U.S. and around the world. Judge Katzmann called Judge Lifland an "iconic judge" whom he admired for his pragmatism and concern for equity, the report related. Judge Lifland's son Howard said his father "never had a bad word to say about anyone, except an attorney who appeared before him unprepared." The report noted that Judge Lifland may be longest remembered as a principal draftsman of Chapter 15 of the U.S. Bankruptcy Code, which deals with multinational bankruptcies. The model law he wrote has been adopted around the world, enabling distributions to creditors under one law and in one country, rather than in disparate jurisdictions. Judge Lifland also initiated electronic filing of bankruptcy documents, a method adopted by bankruptcy courts nationwide, along with federal district courts and courts of appeals, the report added. The system makes court filings accessible to anyone with a computer, facilitating the burgeoning business of trading claims against bankrupt companies. * BOOK REVIEW: PANIC ON WALL STREET: A History Of America's Financial Disasters ----------------------------------------------------------- Author: Robert Sobel Publisher: Beard Books Softcover: 469 Pages List Price: $34.95 Review by: Gail Owens Hoelscher http://www.beardbooks.com/beardbooks/panic_on_wall_street.html "Mere anarchy is loosed upon the world, the blood-dimmed tide is loosed, and everywhere the ceremony of innocence is drowned; the best lack all conviction, while the worst are full of passionate intensity." What a terrific quote to find at the beginning of a book on a financial catastrophe! First published in 1968. Panic on Wall Street covers 12 of the most painful episodes in American financial history between 1768 and 1962. Author Robert Sobel chose these particular cases, among a dozen or so others, to demonstrate the complexity and array of settings that have led to financial panics, and to show that we can only make ;the vaguest generalizations" about financial panic as a phenomenon. In his view, these 12 all had a great impact on Americans of the time, "they were dramatic, and drama is present in most important events in history." They had been neglected by other fiancial historians. They are: William Duer Panic, 1792 Crisis of Jacksonian Fiannces, 1837 Western Blizzard, 1857 Post-Civil War Panic, 1865-69 Crisis of the Gilded Age, 1873 Grant's Last Panic, 1884 Grover Cleveland and the Ordeal of 183-95 Northern Pacific Corner, 1901 The Knickerbocker Trust Panic, 1907 Europe Goes to War, 1914 Great Crash, 1929 Kennedy Slide, 1962 Sobel tells us there is no universally accepted definition if financial panic. He quotes William Graham Sumner, who died long before the Great Crash of 1929, describing a panic as ".a wave of emotion, apprehension, alarm. It is more or less irrational. It is superinduced upon a crisis, which is real and inevitable, but it exaggerates, conjures up possibilities, take away courage and energy." Sobel could find no "law of panics" which might allow us to predict them, but notes their common characteristics. Most occur during periods of optimism ("irrational exuberance?"). Most arise as "moments of truth," after periods of self-deception, when players not only suddenly recognize the magnitude of their problems, but are also stunned at their inability to solve them. He also notes that strong financial leaders may prove a mitigating factor, citing Vanderbilt and J.P. Morgan. Sobel concludes by saying that although financial panics have proven as devastating in some ways as war, and while much research has been carried out on war and its causes, little research has been done on financial panics. Panics on Wall Street stands as a solid foundation for later research on the topic. ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***