/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140409.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, April 9, 2014, Vol. 18, No. 98 Headlines ACCIPITER COMMUNICATIONS: Files for Chapter 11 in Phoenix ACCIPITER COMMUNICATIONS: Asks for Court Nod to Access Cash ACCIPITER COMMUNICATIONS: Proposes Perkins Coie as Counsel ACCIPITER COMMUNICATIONS: Section 341(a) Meeting Set on April 29 AIR CANADA: Moody's Affirms 'B3' CFR & Rates $300MM Notes 'Caa2' AIR CANADA: S&P Rates Proposed $300MM Sr. Unsecured Notes 'B-' ALLONHILL LLC: Has OK to Appoint Upshot as Claims & Noticing Agent AMERICAN AIRLINES: Opposes Appeal in Supreme Court AMERICAN AIRLINES: Delivers Rich Payout APERION COMMUNITIES: Case Converted to Chapter 7 ARCHDIOCESE OF MILWAUKEE: Panel, Insurers Object to Plan Outline AVAGO TECHNOLOGIES: Fitch Assigns 'BB+' Issuer Default Rating B&G FOODS: Specialty Brands Deal No Impact on Moody's 'Ba3' CFR BENJAMIN L. BROWN: Wins Final Approval to Sell Ranch Property BERNARD L. MADOFF: Trustee to Make Distribution of $349 Million BFG INVESTMENTS: Former Owner's Suit Fails to Comply With Barton BROADWAY FINANCIAL: Incurs $1.1 Million Net Loss in 2013 BROOKSTONE HOLDINGS: Wins Interim Approval of DIP Financing BROOKSTONE HOLDINGS: Proposes KCC as Claims and Notice Agent BROOKSTONE HOLDINGS: Hiring K&L Gates as Bankruptcy Counsel BROOKSTONE HOLDINGS: Landis Rath to Act as Local, Conflicts Atty. BROOKSTONE HOLDINGS: Proposes Spencer-Led Auction on June 2 CAPITOL CITY: Incurs $5.5 Million Net Loss in 2013 CASCELLA & SON: Case Summary & 20 Largest Unsecured Creditors CENTRAL FEDERAL: Incurs $918,000 Net Loss in 2013 COLDWATER CREEK: Retailer to File for Liquidation COLOR STAR: Final Cash Collateral Hearing Set for April 14 CREATION'S GARDEN: Gets Bankruptcy Case Dismissed CUSTOM CONTRACTORS: Conduit Defense Protects IRS From Claim DETROIT, MI: Judge Hiring Expert on Plan Feasibility DETROIT, MI: Emergency Managers Says Time Short for a Plan DEVINE BLESSINGS: Case Summary & 5 Unsecured Creditors DFC GLOBAL: S&P Puts 'B' Issuer Credit Rating on Watch Negative DIALOGIC INC: Reports $53.9 Million Net Loss in 2013 DIGERATI TECHNOLOGIES: Sale-Based Plan Wins Court Approval DOTS LLC: Sells 32 Leases to Rainbow Southeast DOTS LLC: Gets Final Authority to Pay $5-Mil. to Critical Vendors DOTS LLC: Has Until Aug. 18 to Decide on Leases DUTCH LLC: S&P Assigns 'B' CCR & Rates $20MM Secured Debt 'BB-' EMERALD PERFORMANCE: S&P Raises Rating on 1st Lien Loan to 'B+' FEDERAL-MOGUL: S&P Retains B Rating Following Proposed Loan Mix FINJAN HOLDINGS: To Sublease Office Space From Investor Growth FIRST PHILADELPHIA: Court to Consider Plan Confirmation on June 19 FNBH BANCORP: Reports $2.9 Million Net Income in 2013 FREESCALE SEMICONDUCTOR: S&P Raises Unsecured Debt Rating to 'B-' FRESH & EASY: Has Until April 30 to File Plan FRIENDSHIP DAIRIES: AgStar Asks Court to Stay Plan Hearing G & Y REALTY: Section 341(a) Meeting Scheduled for May 7 GENCO SHIPPING: Bondholders May Get Preferred Treatment in Workout GENERAL MOTORS: Car Dealers Win Favorable Ruling in Fed. Circuit GENERAL MOTORS: U.S. Fines Automaker for Missing Recall Deadline GEOMET INC: Posts $35.3 Million Net Income in 2013 GOLDEN STATE PETROLEUM: S&P Affirms 'B-' Sr. Secured Rating GREEN FIELD: Can Sell Turbine Powered Technology to Noteholders GREEN FIELD: Tucson Embedded Sues for Return of Proprietary Info GUITAR CENTER: S&P Raises CCR to 'B-'; Outlook Negative HALLWOOD GROUP: Incurs $2.4 Million Net Loss in 2013 HUGHES SATELLITE: S&P Affirms 'B+' Rating on Secured Notes INDUSTRIAS VASALLO: Puerto Rico Court Won't Reverse Ruling JAMES RIVER: Case Summary & 30 Largest Unsecured Creditors JONES & WOOD: Case Summary & 20 Largest Unsecured Creditors KASPER LAND: Creditors Want Chapter 11 Trustee Appointed LABORATORY PARTNERS: Parties Agree to Continued Cash Use LAUSELL INC: Seeks Final Decree, Consummates Plan LIBERTY MEDICAL: Court Okays Raymond James as Investment Banker LIFE UNIFORM: Richard Stern Appointed as Fee Examiner LIFE UNIFORM: Fee Examiner Taps Rosner as Delaware Counsel LIFE UNIFORM: Fee Examiner Taps Luskin Stern as Counsel LIGHTSQUARED INC: Ergen Has More Evidence on Subordination LIGHTSQUARED INC: Pays $5 Million to Inmarsat to Reactivate Deal LIGHTSQUARED INC: Ergen Testifies in Confirmation Trial MACH GEN: Has Final Approval of $200-Mil. DIP Loan from Beal Bank MARINA BIOTECH: A.M. Pappas Stake at 1.9% as of Dec. 27 MASON COPPELL: Selling Assets to THIB; Proposes April 15 Auction MASON COPPELL: U.S. Trustee Forms Five-Member Creditor's Panel MF GLOBAL: Can Pay Accountants Without Court Approval MF GLOBAL: Corzine Loses 4th Bid to Dismiss Suits MONTREAL MAINE: Claimants Substituted as Plan Proponents MONTREAL MAINE: May 7 Evidentiary Hearing on Wheeling Motion MOOD MEDIA: Moody's Cuts CFR to 'B3' & Rates New Debt 'Ba3' MOOD MEDIA: S&P Revises Outlook on 'B-' Rating to Negative MOUNTAIN PROVINCE: Files Form 10-K, Incurs C$26.6MM Loss in 2013 MT. GOX: Creditors Want Karpeles to Testify in U.S. Court MULTI PACKAGING SOLUTIONS: Acquisitions No Impact on Moody's CFR NATIONAL ENVELOPE: Cenveo Share Sale Restriction Period Lapses NET TALK.COM: Inks $4.5-Mil. Purchase Agreement with Telestrata NEW LIFE INT'L: Has Continued Access to Regions Cash Collateral NORTHERN BERKSHIRE: Reopening Emergency Services A Priority OPTIMUMBANK HOLDINGS: Incurs $7.1 Million Net Loss in 2013 OVERLAND STORAGE: To Conduct "Say-on-Pay" Vote Every Year OVERLAND STORAGE: Amends Loan Agreement with Silicon Valley PA ENTERTAINMENT: Section 341(a) Meeting Set on April 29 PACIFIC STEEL: Epiq Approved as Balloting and Noticing Agent PACIFIC STEEL: Taps Burr Pilger Mayer as Financial Consultants PACIFIC STEEL: Wants to Hire Cleary Gull as Investment Banker PALM DRIVE HEALTH: Voluntary Chapter 11 Case Summary PARK DRIVE ESTATES: Voluntary Chapter 11 Case Summary PATIENT SAFETY: Now a Wholly Owned Subsidiary of Stryker PEREGRINE FINANCIAL: Trustee and Customers Settle with JPMorgan QUAD/GRAPHICS INC: Moody's Rates New Secured Bank Debt 'Ba2' QUAD/GRAPHICS INC: S&P Lowers CCR to 'BB-' on Higher Leverage QUALITY STORES: Severance Payments Are 'Wages' Subject to Tax RAMS ASSOCIATES: Confirmation Hearing Set for May 6 REGENCY CENTERS: Fitch Affirms 'BB+' Preferred Stock Rating RESIDENTIAL CAPITAL: Court Disallows Leroy Hines Claim ROBERTS LAND: Obtains Confirmation of Plan of Reorganization SANUWAVE HEALTH: RA Capital Stake at 9.9% as of March 17 SEAN DUNNE: Irish Developer Loses Appeal on Irish Petition SIMPLEXITY LLC: Auction Set for April 28, Wal-Mart Makes $10MM Bid SIMPLEXITY LLC: Selling Biz to Walmart; Proposes Bid Protocol SIMPLEXITY LLC: Creditors Committee Object to DIP Loan Approval SMHC LLC: Section 341(a) Meeting Scheduled for April 29 SMOKY MOUNTAIN: Court Allows Sunrise Holdings to Foreclose SMOKY MOUNTAIN: Request to Use Cash Collateral Denied as Moot SMOKY MOUNTAIN MOTELS: Heading for Foreclosure SOLAR POWER: Gets Default Notice From Cathay Bank SORENSON COMMUNICATIONS: Has Final Approval to Use Cash Collateral ST. VINCENT'S: Solo Practitioner Saddled With $83,500 in Sanctions SUNLAND INC: Peanut-Butter Plant Sale Reopened by Judge SWJ MANAGEMENT: Files Schedules of Assets and Liabilities TALON INTERNATIONAL: Reports $9.7 Million Net Income in 2013 TELKONET INC: Director Quits, New Board Members Appointed TLC HEALTH: Wants to Hire Lumsden & McCormick as Accountants TMT GROUP: Chairman May Sell Vantage Stake to Pay Off DIP Loan TOMSTEN INC: Baker Tilly Okayed as Tax Accountants TULVING CO: Marshall Law Firm Represents 25 Creditors TUSCANY INT'L: Equity Panel Taps Gavin/Solmonese as Fin'l Advisor VIGGLE INC: Inks Exchange Agreements with Stockholders WEST MOUNTAIN SKI: Exits Bankruptcy Protection WHEATLAND MARKETPLACE: Has Until June 30 to File Chapter 11 Plan WHEATLAND MARKETPLACE: Can Hire Weber & Associates as Accountant YOSHI'S SAN FRANCISCO: Has Access to CB&T Cash Until June 30 * High Court Hears Case on Exempt Inherited IRAs * Homestead Exemption Is Taken by Implication * Mortgage With Incorrect Metes-and-Bounds Description Is Void * Christopher Henry Joins Lowenstein Sandler as Partner * Lowenstein Sandler Named Commercial Litigation Dep't of the Year ********* ACCIPITER COMMUNICATIONS: Files for Chapter 11 in Phoenix --------------------------------------------------------- Accipiter Communications, Inc., a Phoenix-based company that provides telecommunications services to unserved or underserved, mostly rurally-situated residences and businesses in central Arizona, filed a Chapter 11 bankruptcy petition (Bankr. D. Ariz. Case No. 14-04372) in its hometown on March 28, 2014. Accipiter provides telecommunications services to 1,409 residential subscribers and 231 business subscribers, including an elementary school, an enforcement agency, a fire station, two municipal water supply facilities, and a bank. The Debtor is able to provide telecommunications services to rural customers only by participating in two federal programs: revenue subsidies from the federal Universal Service Fund ("USF"), which is administered under the authority of the Federal Communications Commission (the "FCC"), and capital debt financing provided under a rural telecommunications loan program administered by the Rural Utilities Service (the "RUS"), an agency of the U.S. Department of Agriculture (the "USDA"). As of the Petition Date, the Debtor owed approximately $20.8 million in aggregate principal to RUS. The Debtor believes there is approximately $414,000 in prepetition general unsecured claims held by trade vendors or other parties against the Debtor. The Debtor is a privately-held company, with 55.4% of the stock held by Lewis van Amerongen. The bankruptcy case is assigned to Judge George B. Nielsen Jr. The Debtor has tapped Perkins Coie LLP as counsel. A meeting of creditors is scheduled for April 29, 2014, at 11:00 a.m., according to the docket. The Debtor filed a variety of first-day motions, including requests to pay prepetition claims of employees, grant adequate assurance of payment to utilities, continue using its existing bank accounts, maintain its customer programs, and use cash collateral. Road to Bankruptcy Patrick Sherrill, the president and CEO, explained in court filings that in June 2012 the FCC implemented a cap that that limited USF support to an amount no greater than $250 per "regulated loop" per month effective in June 2012. The Debtor in January 2013 was granted by the FCC a waiver for 24 months, ensuring a somewhat higher level of USF subsidies than the unsustainable levels that would have obtained had the Debtor not been granted a waiver. Nonetheless, the Debtor, according to Mr. Sherrill, has been operating in a precarious cash flow posture since approximately July 2012. Despite the Debtor having obtained a waiver of the new USF caps, the Debtor has had to face a new existential challenge created by its lender, RUS. Since 2009, the Debtor has submitted multiple applications for new financing to RUS, and RUS has used arbitrary criteria to deny the Debtor access to new loan funding. The Debtor then sought RUS approval for restructuring of its debt. RUS refused to accept the Debtor's restructuring proposals. Mr. Sherrill relates that for more than four years, the Debtor has attempted to educate RUS on the Debtor's compliance with legal obligations placed on it by the FCC and the self-defeating strategy pursued by RUS in refusing to fund growth designed to significantly enhance the Debtor's ability to repay the RUS debt, to reduce its dependence on USF subsidies, and ultimately to qualify for more conventional third-party working capital financing. Despite these efforts and many months of unproductive negotiations regarding a restructuring of the currently outstanding RUS debt, RUS has continued to refuse to provide additional financing or restructure the existing debt in a way that would keep the Debtor's business viable. Ironically, RUS's refusal to provide the Debtor with financing threatens the Debtor's very presence in rural areas and greatly thwarts the Debtor's ability to provide expanded services in such areas. Ultimately, if the Debtor fails to meet certain growth targets necessary to reduce its need for USF subsidies, the Debtor, according to Mr. Sherrill, will be forced to close its business. "One arm of the federal government (the FCC) requires the Debtor to provide service to rural customers in order to receive USF subsidies while another arm (the RUS), required to provide financing to sustain rural investment and operations, undermines the Debtor's ability to continue servicing rural customers," Mr. Sherrill explains. "In light of the threat to the Debtor's ongoing provision of telecommunication services caused by RUS's continued refusal to comply with its own regulations and provide the Debtor with needed financing, made worse by RUS's refusal to negotiate a reasonable restructuring of even the Debtor's existing debt obligations, the Debtor was forced to file this case." According to Mr. Sherrill, reorganizing the Debtor's secured debt with RUS will restore the Debtor's cash flow and allow it to continue its customer growth, reducing the Debtor's dependence on USF subsidies while assuring that telecommunications services remain available to residents and businesses that have no other realistic option for those services. ACCIPITER COMMUNICATIONS: Asks for Court Nod to Access Cash ----------------------------------------------------------- Accipiter Communications, Inc., filed a motion with the bankruptcy court for approval to use its cash to continue operating its business in the ordinary course (which the Debtor believes is not the "cash collateral" of the Rural Utilities Service). The Debtor does not believe that RUS has a lien on the Debtor's cash or accounts receivable. Under 11 U.S.C. Sec. 363(p), RUS bears the burden of proof that it has an interest in cash collateral and, unless it sustains that burden, RUS is not entitled to adequate protection. As a result, the Debtor does not believe that it needs authority from this Court to use its cash to operate the company during this case. Out of an abundance of caution, and should the Court determine otherwise, the Debtor has filed the motion to protect its interests and ensure sufficient cash with which to operate in the ordinary course of business during this case. As an initial matter, the Debtor seeks interim approval to use its cash for a 90-day period. Assuming that RUS somehow establishes that, as of the Petition Date, it had valid, perfected, enforceable security interests in the Debtor's cash and accounts receivable, the Debtor will provide adequate protection to RUS by granting RUS replacement liens on all the Debtor's post-petition cash and accounts receivable and any post-petition-acquired personal property to the extent of any diminution in the value of RUS's collateral from and after the Petition Date. About Accipiter Communications Accipiter Communications, Inc., a Phoenix-based company that provides telecommunications services to unserved or underserved, mostly rurally-situated residences and businesses in central Arizona, filed a Chapter 11 bankruptcy petition (Bankr. D. Ariz. Case No. 14-04372) in its hometown on March 28, 2014. Accipiter provides telecommunications services to 1,409 residential subscribers and 231 business subscribers, including an elementary school, an enforcement agency, a fire station, two municipal water supply facilities, and a bank. The Debtor is able to provide telecommunications services to rural customers only by participating in two federal programs: revenue subsidies from the federal Universal Service Fund ("USF"), which is administered under the authority of the Federal Communications Commission (the "FCC"), and capital debt financing provided under a rural telecommunications loan program administered by the Rural Utilities Service (the "RUS"), an agency of the U.S. Department of Agriculture (the "USDA"). As of the Petition Date, the Debtor owed $20.8 million in aggregate principal to the RUS. The Debtor believes there is approximately $414,000 in prepetition general unsecured claims held by trade vendors or other parties against the Debtor. The Debtor is a privately-held company, with 55.4% of the stock held by Lewis van Amerongen. The bankruptcy case is assigned to Judge George B. Nielsen Jr. The Debtor has tapped Perkins Coie LLP as counsel. ACCIPITER COMMUNICATIONS: Proposes Perkins Coie as Counsel ---------------------------------------------------------- Accipiter Communications, Inc., is asking for bankruptcy court approval to employ Perkins Coie LLP as bankruptcy counsel in the Chapter 11 case. Perkins Coie possesses nationally-recognized expertise in bankruptcy matters, having been actively involved in several large chapter 11 cases recently including, among many others, those in which Jordan Kroop, Perkins Coie's lead bankruptcy lawyer in this proposed engagement, has had leading roles in this District alone: In re SunCor Homes, Inc. (debtor); In re Coyotes Hockey, LLC (debtor); In re Laughlin Ranch, LLC (debtor); In re Zounds Hearing, Inc. (debtor); In re Swift Air, LLC (two NBA team creditors); In re Mortgages Ltd. (largest creditor); In re Radical Bunny, LLC (Chapter 11 trustee); In re Danny's Family Carousel, LLC (largest creditor); In re McCulloch Corp. (committee). Jordan Kroop has represented the Debtor for well over a year in connection with a multi-faceted effort to restructure its debt obligations and address its liquidity challenges. The Debtor engaged Perkins Coie to serve as general bankruptcy counsel in connection with the planning and implementation of this Chapter 11 reorganization case in light of Perkins Coie's extensive expertise in large Chapter 11 reorganizations. The Debtor seeks to employ Perkins Coie on an hourly basis at rates consistent with those the firm routinely charges in comparable matters. Presently, the hourly rates for Perkins Coie lawyers and paralegals range between $300 to $790 for lawyers, and $125 to $250 for paralegals. Jordan Kroop's hourly rate for 2014 is $640. Perkins Coie is holding a $20,000 retainer. Mr. Kroop attests that Perkins Coie does not hold or represent an interest adverse to the Debtor's estate and is a "disinterested person," as that term is defined in 11 U.S.C. Sec. 101(14) and modified by Sec. 1107(b), with respect to the matters for which Perkins Coie is to be employed. About Accipiter Communications Accipiter Communications, Inc., a Phoenix-based company that provides telecommunications services to unserved or underserved, mostly rurally-situated residences and businesses in central Arizona, filed a Chapter 11 bankruptcy petition (Bankr. D. Ariz. Case No. 14-04372) in its hometown on March 28, 2014. Accipiter provides telecommunications services to 1,409 residential subscribers and 231 business subscribers, including an elementary school, an enforcement agency, a fire station, two municipal water supply facilities, and a bank. The Debtor is able to provide telecommunications services to rural customers only by participating in two federal programs: revenue subsidies from the federal Universal Service Fund ("USF"), which is administered under the authority of the Federal Communications Commission (the "FCC"), and capital debt financing provided under a rural telecommunications loan program administered by the Rural Utilities Service (the "RUS"), an agency of the U.S. Department of Agriculture (the "USDA"). As of the Petition Date, the Debtor owed $20.8 million in aggregate principal to the RUS. The Debtor believes there is approximately $414,000 in prepetition general unsecured claims held by trade vendors or other parties against the Debtor. The Debtor is a privately-held company, with 55.4% of the stock held by Lewis van Amerongen. The bankruptcy case is assigned to Judge George B. Nielsen Jr. The Debtor has tapped Perkins Coie LLP as counsel. ACCIPITER COMMUNICATIONS: Section 341(a) Meeting Set on April 29 ---------------------------------------------------------------- A meeting of creditors in the bankruptcy case of Accipiter Communications, Inc., will be held on April 29, 2014, at 11:00 a.m. at US Trustee Meeting Room, 230 N. First Avenue, Suite 102, Phoenix, AZ. 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. Accipiter Communications, Inc., filed a Chapter 11 bankruptcy petition (Bankr. D. Ariz. Case No. 14-04372) on March 28, 2014. The petition was signed by Patrick Sherrill as president and chief executive officer. The Debtor estimated assets and liabilities of at least $10 million. Perkins Coie LLP serves as the Debtor's counsel. Judge George B. Nielsen Jr. presides over the case. AIR CANADA: Moody's Affirms 'B3' CFR & Rates $300MM Notes 'Caa2' ---------------------------------------------------------------- Moody's Investors Service affirmed Air Canada's B3 corporate family rating (CFR), B3-PD probability of default rating, B1 first lien senior secured rating, Caa1 second lien senior secured rating and SGL-2 speculative grade liquidity rating. Moody's also assigned a Caa2 rating to the company's US$300 million proposed senior unsecured notes issue. Air Canada's 2013-1 Class A, Class B and Class C Pass Through Trust Certificates were also affirmed at Baa2, Ba3, and B2, respectively. The outlook for Air Canada and its Pass Through Trust Certificates have been changed to positive from stable. Affirmations: Issuer: Air Canada Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Speculative Grade Liquidity Rating, Affirmed SGL-2 First Lien Senior Secured, Affirmed B1 (LGD3, 32% from LGD2, 24%) Second Lien Senior Secured, Affirmed Caa1 (LGD 5, 75% from LGD4, 58%) Issuer: Air Canada 2013-1 Pass Through Trusts Senior Secured Enhanced Equipment Trust May 15, 2018, Affirmed B2 Senior Secured Enhanced Equipment Trust May 15, 2021, Affirmed Ba3 Senior Secured Enhanced Equipment Trust May 15, 2025, Affirmed Baa2 Assignments: Issuer: Air Canada Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5, 88%) Outlook Actions: Issuer: Air Canada Outlook, Changed To Positive From Stable Issuer: Air Canada 2013-1 Pass Through Trusts Outlook, Changed To Positive From Stable Ratings Rationale "The change in Air Canada's outlook to positive is underpinned by the significant reduction in its underfunded pension position, which has helped lower its adjusted financial leverage to around 6x", said Darren Kirk, Vice President and Senior Credit Officer with Moody's. "The company's improved balance sheet may support a ratings upgrade in the next 12-18 months should Moody's gain confidence that benefits from Air Canada's fleet renewal (capacity addition) plans and cost reduction initiatives will outweigh foreign exchange headwinds and intensifying competitive pressures, resulting in additional deleveraging", added Kirk. Proceeds from the new notes issuance will increase Air Canada's pro-forma cash position to about $2.5 billion. While its pro-forma leverage will increase modestly (to 6.1x from 5.9x including Moody's standard accounting adjustments for leases and pension), it will also help Air Canada to maintain good liquidity through at least 2014. Moody's expects Air Canada's significant aircraft purchases will contribute to about $400 million of free cash flow consumption in 2014 with additional cash requirements including about $200 million of surplus pension contributions (in excess of current service costs) and $374 million in current debt maturities. Air Canada's liquidity arrangements also benefit from its backstop financing arrangements for its committed aircraft expenditures (totaling $678 million in 2014) and its $100 million unused revolver. Air Canada's B3 corporate family rating incorporates the company's high financial leverage and Moody's expectation that foreign exchange headwinds and significant capacity additions planned by Air Canada and its primary domestic (and lower-cost) competitor will likely limit near term earnings growth. The rating also considers the company's high cost structure (and low operating margin) arising from its legacy carrier status and Moody's expectation that Air Canada's annual free cash flow will be modestly consumptive into the medium term as capital expenditures remain elevated due to significant planned aircraft purchases. Favorably, the rating reflects Air Canada's meaningful scale, expected benefits from its cost improvement initiatives, relatively favorable recent operating performance, leading market share of domestic, trans-border and international routes in and out of Canada, and benefits from its position in the Star Alliance network. Air Canada's debt instrument ratings have been assigned pursuant to Moody's loss-given-default (LGD) methodology. Moody's previously applied a one notch down override to instrument ratings suggested by the LGD methodology given the potential that the underfunded pension amount (an unsecured obligation) would decline, and the associated lift to the secured ratings would reduce. Given the decline in Air Canada's pension position, Moody's has now eliminated the override. Moody's uses its estimates of current market value when assessing the loan-to-value ("LTVs") of an enhanced equipment trust certificate ("EETC") financing. Moody's estimates the peak LTVs of the A, B and C tranches at about 52%, 74%, and 87%, respectively. The peak LTVs are expected to occur at the first distribution date of May 15, 2014. The EETC ratings also reflect Moody's opinion of the importance of the five Boeing B777-300ER aircraft that collateralize the transaction to the company's long-haul network strategy, the international interests subject to the Cape Town Convention and the support of the Class A and Class B liquidity facilities. The positive ratings outlook reflects the potential that Air Canada's rating may be upgraded over the next 12-18 months should Moody's gain confidence that the company's international expansion plans and cost reduction initiatives will support further earnings growth and enable additional deleveraging. An upgrade of Air Canada's CFR could occur if the company continues to execute on its expansion plans and cost reduction initiatives providing Moody's with confidence that Air Canada will maintain adjusted leverage below 6x and cash above 15% of revenues. Downward rating pressure on Air Canada's CFR could occur if Air Canada's yields contract materially without an accompanying reduction to costs, if Moody's expected Debt/ EBITDA to rise and be sustained above 8x or should cash trend towards 10% of revenues. The principal methodology used in this rating was the Global Passenger Airlines published in May 2012 and Enhanced Equipment Trust and Equipment Trust Certificates published in December 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 Saint-Laurent, Quebec, Air Canada is the largest provider of scheduled passenger services in Canada. Revenues for 2013 were approximately $12.4 billion. AIR CANADA: S&P Rates Proposed $300MM Sr. Unsecured Notes 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B-' issue-level rating and '5' recovery rating to Air Canada's proposed US$300 million senior unsecured notes due 2021. A '5' recovery rating indicates that lenders could expect modest (10%- 30%) recovery in the event of default. The corporate credit rating on Air Canada is 'B' with a stable outlook. The company will use net proceeds from the proposed notes to boost its cash position, which stood at about C$2.2 billion or about 18% of trailing 12-month revenue, and for general corporate purposes. "The modest increase in leverage is within our credit ratio targets for the company and supports our "highly leveraged" financial risk profile assessment," said Standard & Poor's credit analyst Madhav Hari. The corporate credit rating on Air Canada reflects what Standard & Poor's views as the company's "weak" business risk profile and highly leveraged financial risk profile. S&P's business risk profile assessment reflects the company operating in the North American airline sector, which it considers high risk due to cyclical demand, high competition, and capital intensity. S&P also considers Air Canada to have a higher operating cost structure compared with that of other North American carriers and low-cost airline competitors. Tempering factors include the company's strong position in Canada with 55% of the domestic market share and 36% of the transborder market and its ability to maintain a strong load factor in its operations during the past several years. The highly leveraged financial risk profile reflects S&P's expectation that Air Canada's adjusted debt to EBITDA ratio will remain in the mid-to-high 5x area in the near term, as calculated using S&P's standard adjustments, including pension and leases as debt equivalents. RATINGS LIST Air Canada Corporate credit rating B/Stable/-- Ratings Assigned US$300 million senior unsecured notes B- Recovery rating 5 ALLONHILL LLC: Has OK to Appoint Upshot as Claims & Noticing Agent ------------------------------------------------------------------ Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized Allonhill LLC to appoint Upshot Services LLC as claims and noticing agent to serve as custodian of court records and, as cuh, designated as the authorized repository for all proofs of claim filed in the Debtor's Chapter 11 case. Allonhill LLC, a professional services firm based in Denver, Colorado, that previously provided loan due diligence and credit risk management services for institutions that invest in, sell, securitize or service mortgage loans, sought protection under Chapter 11 of the Bankruptcy Code on March 26, 2014. The case is In re Allonhill, LLC, Case No. 14-bk-10663 (Bankr. D. Del.). The Debtor's General Counsel is HOGAN LOVELLS US LLP. The Debtor's Local Counsel is Neil B. Glassman, Esq., Justin R. Alberto, Esq., and Evan T. Miller, Esq., at BAYARD, P.A., in Wilmington, Delaware. Upshot Services LLC serves as the Debtor's Claims and Noticing Agent. AMERICAN AIRLINES: Opposes Appeal in Supreme Court -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that American Airlines Group Inc., the airline reorganized in bankruptcy last year, explained to the U.S. Supreme Court why there is no reason to allow an appeal by bondholders claiming they were entitled to a premium from the early repayment of what was originally $1.2 billion in aircraft bonds. According to the report, in September, the U.S. Court of Appeals in Manhattan upheld the bankruptcy court's ruling that bankruptcy law permits the airline to escape paying a make-whole fee, although it would have been payable outside of bankruptcy. Avoiding the fee through the Chapter 11 plan, the airline could refinance the bonds at a lower interest rate, saving $200 million, the company originally said. In February, the bondholders' indenture trustee filed papers asking the Supreme Court to grant an appeal, the report said. The airline has filed opposing papers. The airline said the case doesn't justify Supreme Court review because it has "no novel issues" and involves only a "straightforward interpretation" of the loan documents and the statute, the report related. The once-bankrupt airline also said it would be inequitable to allow an appeal because setting aside the lower courts' rulings would be inequitable, the report further related. The bondholders didn't submit a bond to justify a stay pending appeal, and in the meantime the airline paid $1.3 billion to pay off the bonds. The airline even paid the higher default rate of interest, according to the filing with the high court. The case in the Supreme Court is U.S. Bank Trust NA v. AMR Corp., 13-971, U.S. Supreme Court. About American Airlines AMR Corp. and its subsidiaries including American Airlines filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost- cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so- called U.S. legacy airlines to seek court protection from creditors. It was the third largest airline in the United States at the time of the bankruptcy filing. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. AMR and US Airways Group, Inc., on Feb. 14, 2013, announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The bankruptcy judge on Sept. 12, 2013, confirmed AMR Corp.'s plan to exit bankruptcy through a merger with US Airways. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. Judge Sean Lane confirmed the Plan despite the lawsuit filed by the U.S. Department of Justice and several states' attorney general complaining that the merger violates antitrust laws. In November 2013, AMR and the U.S. Justice Department a settlement of the anti-trust suit. The settlements require the airlines to shed 104 slots at Reagan National Airport in Washington and 34 at LaGuardia Airport in New York. AMR stepped out of Chapter 11 protection after its $17 billion merger with US Airways was formally completed on Dec. 9, 2013. AMERICAN AIRLINES: Delivers Rich Payout --------------------------------------- Jack Nicas, writing for The Wall Street Journal, reported that American Airlines Group Inc. distributed the last big chunk of its payout to its bankrupt predecessor's shareholders, delivering them a windfall that was even more enormous than previously expected. According to the report, the April 8 payout was based on a formula that awards shares in the new American to its predecessor's holders based in part on the new company's stock performance. As those shares have soared, some who bought stock in the predecessor eight months ago have earned a return of 13 times their investment. Anyone who held those shares from their low point in late 2011 has had their value grow 135 times. The new American was formed by the December merger between US Airways Group Inc. and American's predecessor company, AMR Corp., which entered bankruptcy in November 2011, the report related. That month, its shares plunged as low as 20 cents each, valuing the company at around $90 million. Even before the deal closed on Dec. 9, it appeared likely to be a bonanza for investors who gambled on AMR stock as bankruptcy- related cost cutting, merger synergies and an overall improvement in the airline industry boosted American's prospects, the report said. But the new company's stock has surged more than expected: It ended trading on April 8 at $35.98, up 46% since it opened. As a result, American said, one share in the former AMR has ended up having a value of almost $27 based on the current American stock price, and AMR shareholders now own about two-fifths of the new American Airlines, a total stake valued at nearly $11 billion, the report added. About American Airlines AMR Corp. and its subsidiaries including American Airlines filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost- cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so- called U.S. legacy airlines to seek court protection from creditors. It was the third largest airline in the United States at the time of the bankruptcy filing. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. The Retiree Committee is represented by Jenner & Block LLP's Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B. Hankin, Esq. AMR and US Airways Group, Inc., on Feb. 14, 2013, announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The bankruptcy judge on Sept. 12, 2013, confirmed AMR Corp.'s plan to exit bankruptcy through a merger with US Airways. By distributing stock in the merged airlines, the plan is designed to pay all creditors in full, with interest. Judge Sean Lane confirmed the Plan despite the lawsuit filed by the U.S. Department of Justice and several states' attorney general complaining that the merger violates antitrust laws. In November 2013, AMR and the U.S. Justice Department a settlement of the anti-trust suit. The settlements require the airlines to shed 104 slots at Reagan National Airport in Washington and 34 at LaGuardia Airport in New York. AMR stepped out of Chapter 11 protection after its $17 billion merger with US Airways was formally completed on Dec. 9, 2013. APERION COMMUNITIES: Case Converted to Chapter 7 ------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona converted the Chapter 11 bankruptcy case of Aperion Communities LLP to a Chapter 7 liquidation proceeding and granted Adam E. Hauf, counsel of the Debtor, to withdraw from the administrative proceeding. Mr. Hauf will remain as counsel for the estate for the purpose of the adversary proceeding pending further Court order. According to court documents, Mr. Hauf reported to the Court at the status hearing on Jan. 21, 2014, that he has not been able to contact any party associated with the Debtor. Aperion Communities LLLP filed a bare-bones Chapter 11 petition (Bankr. D. Ariz. Case No. 13-12040) on July 15, 2013. Adam E. Hauf, Esq., at The Forakis Law Firm PLC, serves as counsel. The Debtor estimated at least $10 million in assets and $1 million to $10 million in liabilities in its schedules. ARCHDIOCESE OF MILWAUKEE: Panel, Insurers Object to Plan Outline ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the bankruptcy case of The Archdiocese of Milwaukee and insurer Continental Casualty Company have filed objections to the disclosure statement explaining the Archdiocese's Chapter 11 exit plan in advance of the April 17 hearing to approve the plan outline. The Committee wants the disclosure statement revised to reflect that: "THE COMMITTEE BELIEVES THAT CONFIRMATION OF THE PROPOSED PLAN IS NOT IN THE BEST INTERESTS OF CREDITORS AND THAT THE PLAN SHOULD NOT BE CONFIRMED. THE COMMITTEE STRONGLY RECOMMENDS THAT ALL CREDITORS RECEIVEING A BALLOT VOTE TO REJECT THE PLAN." The Committee also wants the disclosure statement to provide that: "The Archdiocese contends that ANY REPRESENTATIONS OR INDUCEMENTS MADE TO SECURE YOUR ACCEPTANCE OF THE PLAN, OTHER THAN AS CONTAINED IN THIS DISCLOSURE STATEMENT, SHOULD NOT BE RELIED UPON BY YOU IN ARRIVING AT YOUR DECISION, AND SUCH ADDITIONAL REPRESENTATIONS OR INDUCEMENTS SHOULD BE REPORTED TO COUNSEL FOR THE ARCHDIOCESE, WHO SHALL IN TURN DELIVER SUCH INFORMATION TO THE BANKRUPTCY COURT FOR SUCH ACTION AS MAY BE APPROPRIATE," but that the Committee and certain abuse survivors dispute this contention and contend that solicitations of rejections of the Plan is not limited to the information contained in this Disclosure Statement. The Committee and certain Abuse Survivors also dispute the contention of the Archdiocese to the extent is suggests that the Attorney-Client privilege does not apply to protect communications between an attorney and his client concerning acceptance or rejection of the Plan. The Committee and certain Abuse Survivors also dispute that the Archdiocese is acting for the well-being of the Abuse Survivors by attempting to confirm its Plan. Rather, the Committee believes the Plan is a morally repugnant attempt to shield essentially all of its assets, save insurance proceeds, from the claims of the Abuse Survivors and obtain releases for itself and all its parishes. The Committee has filed a blacklined copy of the disclosure statement indicating the information it wants included. A copy of the blacklined copy is available at: http://bankrupt.com/misc/Milwaukee_CommitteeRedlinedDS.pdf Continental Casualty Company and several insurers, who issued or allegedly issued certain insurance policies to the Debtor, said the Disclosure Statement fails in numerous respects to provide basic information that is necessary for creditors to make an informed judgment about the Plan. This includes, without limitation: (a) failing to disclose material risks to confirmation of the Plan; (b) inaccurately describing the Plan as insurance neutral; (c) failing to sufficiently describe how the proceeds of a settlement agreement with the London Market Insurers will be allocated to the Personal Injury Settlement Trust; and (d) inadequacies in postconfirmation projections. In addition to missing information, the Disclosure Statement "contains many contingencies which are not clearly spelled out, and it would be difficult for creditors to make an informed judgment. The other objecting insurers are Granite State Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA; Federal Insurance Co.; Interstate Fire & Casualty Company and TIG Insurance Company, as successor by merger to International Insurance Company, as successor to International Surplus Lines Insurance Company; and Fireman's Fund Insurance Company. As reported in the Feb. 21, 2014 issue of the TCR, the Archdiocese of Milwaukee filed a plan of reorganization that would set aside $4 million to pay off the claims of alleged clergy sex abuse victims. The plan filed Feb. 12 with the U.S. Bankruptcy Court for the Eastern District of Wisconsin (Milwaukee) would establish a fund worth $4 million, which would be made available to sex abuse victims through a loan. Up to $1 million of that could be used to sue the archdiocese's insurance companies to increase the funds available for victims. Archbishop Jerome Listecki said in a statement that the Milwaukee archdiocese would use its property as collateral for the loan. The restructuring plan also would create a fund worth $500,000 for lifetime therapy for the victims and pay an estimated $5 million for legal and accounting fees incurred in connection with the archdiocese's bankruptcy case. Under the plan, only 128 of the 377 victims who accuse diocesan priests of abuse would be compensated. All claims not involving diocesan priests would be eliminated from consideration. The proposed plan outlines an operational structure for the archdiocese that would allow it to continue its ministry in the community. A full-text copy of the Chapter 11 reorganization plan and disclosure statement is available for free at http://is.gd/j3eXBW * * * Annysa Johnson, writing for the Journal Sentinel, reported that Jerry Topczewski, chief of staff for Archbishop Jerome Listecki, said Friday that lawyers for the committee are "re-arguing points that the court has already ruled upon." "The committee's objections have been clearly addressed, in great detail, in the disclosure statement," Mr. Topczewski said in an email to the Journal Sentinel. "After three and one-half years, we have turned a corner in this proceeding, and it is time for both the archdiocese and the community to move forward by bringing the Chapter 11 to its conclusion." About Archdiocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wis. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. AVAGO TECHNOLOGIES: Fitch Assigns 'BB+' Issuer Default Rating ------------------------------------------------------------- Fitch Ratings assigns a 'BB+' rating to Avago Technologies Ltd.'s new wholly-owned indirect Cayman Island-based subsidiary, Avago Technologies Finance Pte. Ltd.'s (Avago), and a 'BBB-' rating to Avago's Senior Secured Credit Facilities. The Rating Outlook is Stable. Fitch's actions affect $6.1 billion of debt issuance, including the undrawn Revolving Credit Facility (RCF). The ratings and Outlook reflect Fitch's expectations for strengthening credit protection measures from meaningful voluntary debt reduction and profitability growth through the intermediate- term. Pro forma for the debt issuance and acquisition of LSI Corp. (LSI), Fitch estimates total leverage (total debt to operating EBITDA) will exceed 4(x) but decline to below 3.5x in 2015. Longer-term, Fitch anticipates total leverage below 3x. Ratings Drivers Avago will use net proceeds from the debt issuance, along with cash balances, to fund the $6.6 billion cash acquisition of LSI that is expected to close in the first half of 2014. The acquisition doubles Avago's size; makes it a leader in storage end markets; leverages both companies' application specific integrated circuits (ASIC) capabilities in wired infrastructure, and improves substantial customer and end market concentration. The ratings are supported by Avago's : i) leadership positions in secular growth markets, ii) strong profitability with expectations for profit margin expansion from cost synergies, and iii) consistent and solid annual mid-cycle FCF, providing ample financial flexibility for debt reduction. Rating concerns center on: i) Avago's initially weak credit protection measures at the acquisition's close, ii) improved but still substantial customer and end market concentration, particularly wireless infrastructure and storage markets and iii) potential integration challenges, mitigated by limited product overlap. Pro forma for Avago's acquisition of LSI, the ratings and Outlook reflect Fitch's expectations for solid operating performance, driven by secular end market growth, improving profitability with a credible operating margin expansion roadmap, and strengthening annual free cash flow (FCF). Fitch expects mid- to high-single digit organic revenue growth in fiscal 2014, driven by solid demand across end markets. Despite expectations for continued cyclicality, accelerating LTE adoption should drive secular demand, including higher smartphone shipments, increasing complexity, growing internet bandwidth demands and greater storage requirements. Customer and end market concentration is reduced but remains meaningful. Wireless communications and wired infrastructure will represent roughly half of revenues, with storage constituting a little over a third. Avago's top three customers will represent 26% of revenues. Operating profit margin initially will erode, pro forma for the acquisition. Fitch estimates operating profit margin will decline to the mid-20s from roughly 30% for the latest 12 months (LTM) ended Feb. 2, 2014, due to LSI's higher operating expense structure. Nonetheless, Fitch expects $217 million of cost synergies, which should begin contributing meaningfully to margin expansion in fiscal 2015. As a result, Fitch anticipates operating EBITDA margins returning to 30% in the intermediate- term. Fitch expects mid-cycle annual FCF will average more than $500 million beyond the near-term but will be modest in fiscal 2014 due to the impact of cash restructuring. Capital spending should return to normalized levels of $250 million or below, upon completion of Avago's multi-year capacity expansion for the manufacture of FBAR products. Cash contributions related to LSI's $335 million underfunded pension obligations should decline from $75 million in 2014. Ratings Sensitivities Avago's use of FCF for voluntary debt reduction or higher profitability from the achievement of cost synergies resulting in total leverage approaching 2.5x could result in positive rating actions, as Fitch believes the company will have the FCF capacity for debt reduction. Negative rating actions could result from: i) market share erosion at a leading customer or in aggregate, indicating an loss of technological advantage or ii) the degradation of profitability and FCF, limiting voluntary debt reduction and the company's ability to drive total leverage below 4x in the near-term. Pro forma for the transaction, Fitch believes liquidity is solid and consists of: (i) $750 million of cash and cash equivalents and (ii) a $500 million undrawn senior secured RCF expiring 2019. Consistent annual FCF also supports liquidity. Cash location is not a concern for Avago, given the company's incorporation in Singapore. Pro forma for the acquisition, total debt is $5.6 billion and consists of: i) $4.6 billion senior secured term loan B maturing in 2019 and ii) $1 billion of privately placed convertible notes due 2020. The term loan B amortizes at $46 million (1%) annually until the bullet maturity in 2019. Fitch rates Avago as follows: -- IDR 'BB+'; -- $4.6 billion Senior Secured Term Loan B 'BBB-'; and -- $500 million Senior Secured Revolving Credit Facility (RCF) 'BBB-'. B&G FOODS: Specialty Brands Deal No Impact on Moody's 'Ba3' CFR --------------------------------------------------------------- B&G Foods, Inc.'s announcement that it has entered into an agreement to acquire Specialty Brands of America, Inc. for approximately $155 million in a largely debt-financed transaction is a credit negative, but it does not immediately impact the company's Ba3 Corporate Family Rating (CFR) or stable rating outlook. BENJAMIN L. BROWN: Wins Final Approval to Sell Ranch Property ------------------------------------------------------------- Bankruptcy Judge Ralph B. Kirscher granted the motion of Benjamin L. Brown, Sr., for final approval of the auction sale of his ranch property. The Court overruled the objection of Charlie Hamwey and Real Estate by Hamwey, which asserts that Hamwey is entitled to a 6% real estate commission based on his listing agreement with the Debtor under theories of equitable estoppel and other equitable relief under 11 U.S.C. Sec. 105(a). The Debtor filed his motion for final approval of the auction sale of the ranch property on Dec. 6, 2013. The highest bid for the ranch property was $1 million plus a 10% buyer's premium. It further states that the winning bidder assigned his rights to Brian and Wanda Lilley, and that from the proceeds of the sale, after normal closing costs and property taxes, a disbursement would be made to J.P. King in the amount of $100,000 pursuant to the parties' Auction Listing Agreement and the remaining funds would be disbursed to First Interstate Bank. None of the proceeds are to be allocated to the Debtor. J.P. King received its commission from the sale and was compensated for advertising and marketing which it did not share with Hamwey. A copy of th Court's April 3, 2014 Memorandum of Decision is available at http://is.gd/Hf5nKzfrom Leagle.com. Benjamin K. Brown was represented at the hearing by Gary S. Deschenes, Esq., of Great Falls, Montana. Hamwey was represented by David T. Sulzbacher, Esq., at Christensen Fulton & Filz, PLLC, Billings, Montana. First Interstate Bank was represented by Benjamin Hursh, Esq., of Missoula, and William D. Lambdin, III, Esq., of Billings. J.P. King was represented by Bob Sullivan, Esq. Benjamin L. Brown, Sr., filed for Chapter 11 bankruptcy (Bankr. D. Mont. Case No. 11-62288) on Dec. 9, 2011. BERNARD L. MADOFF: Trustee to Make Distribution of $349 Million --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for Bernard L. Madoff Investment Securities Inc. will make a fourth distribution of $349 million, bringing total recoveries by customers so far to almost $6 billion. According to the report, the next distribution of about 3.2 percent, for approval at a hearing on April 17, means that customers will have received payment of more than 46 percent of their claims, not including as much as $500,000 advanced to each customer by the Securities Investor Protection Corp. The new distribution is thanks in part to the $325 million settlement of the trustee's claims against JPMorgan Chase & Co., the report related. That settlement was approved in February by the U.S. Bankruptcy Court in New York. Of the more than 2,500 customers, about 45 percent will have been paid in full after the fourth distribution, the report further related. All customers owed $925,000 or less will have been paid in full. So far, Irving Picard, the trustee unwinding Madoff's firm, has recovered almost $9.8 billion for customers, the report said. Everything Picard recovers eventually will go to customers because expenses of the liquidation are paid by SIPC. 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. BFG INVESTMENTS: Former Owner's Suit Fails to Comply With Barton ---------------------------------------------------------------- District Judge Nelva Gonzales Ramos in Corpus Christi, Texas, granted the motion of Michael B. Schmidt to dismiss under Fed. R. Civ. P. 12(b)(6) and the Barton Doctrine the proceeding styled as, JOHN E. VILLEGAS, et al, Plaintiffs, v. MICHAEL B. SCHMIDT, Defendant, Civil Action No. 2:13-CV-343 (S.D. Tex.). BFG Investments, L.L.C. and BFG Development, Inc. were both owned by John E. Villegas. Both Investments and Development filed for relief under Chapter 11 of the United States Bankruptcy Code in 2005. When the cases were converted to Chapter 7 in 2006, Michael B. Schmidt was appointed to act as the Chapter 7 Trustee for Investments and Lisa Nichols served as Trustee for Development. The Plaintiffs filed their Complaint, alleging that the Bankruptcy Judge issued void orders that deprived the Plaintiffs of their property. In particular, Villegas complains that he lost all value in the corporations when the automatic stay of 11 U.S.C. Sec. 362 was lifted to allow creditors to collect against corporate property without the benefit of insurance proceeds. The Plaintiffs allege that the properties had been insured by Nationwide Insurance and that the insurance should have been made available to satisfy creditors. Nationwide denied having issued any coverage and a cause of action against Nationwide was scheduled as property of the estate valued at $10 million. However, Schmidt did not pursue that claim and it was abandoned. Investments' Chapter 7 bankruptcy has been closed. Villegas' action is not filed as an appeal of any order of the Bankruptcy Court. Instead, the Plaintiffs file this action under 28 U.S.C. Sec. 1334(b) as a case that "arises under," "arises in," or is "related to" a case under the Bankruptcy Code. They seek a declaratory judgment pursuant to 28 U.S.C. Sec. 2201(a) that the Bankruptcy Court's orders were void and they sue Schmidt for his failure to pursue litigation against Nationwide, which they allege was grossly negligent and a breach of fiduciary duty. Schmidt's Motion to Dismiss states that under Barton v. Barbour, 104 U.S. 126 (1881), the Plaintiffs must to seek leave from the Bankruptcy Court before they can sue Schmidt as Chapter 7 Trustee. No such leave was sought or obtained. Schmidt also challenges the parties' standing, and complains that Villegas is enjoined from asserting any rights held by Investments and that no claim regarding Developments is appropriate because Schmidt did not serve as Chapter 7 Trustee for that entity. A copy of the Court's April 4, 2014 Order is available at http://is.gd/lVp4ukffrom Leagle.com. Plaintiffs John E. Villegas, BFG Investments LLC, and BFG Development Inc., are represented by: Chad Edward Fulda, Esq. HELLER AND ASSOCIATES LAW OFFICES PLLC 801 W. Nolana Ave., Suite 321 McAllen, TX 78504 Tel: 956-687-8181 Fax: 888-805-7885 Michael B. Schmidt, Trustee, is represented by: Michael Stuart Lee THE LEE FIRM PC 615 N Upper Broadway Street # 708 Corpus Christi, TX 78401 Tel: (361) 882-4444 BROADWAY FINANCIAL: Incurs $1.1 Million Net Loss in 2013 -------------------------------------------------------- Broadway Financial Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a loss allocable to common stockholders of $1.08 million on $15.96 million of total interest income for the year ended Dec. 31, 2013, as compared with a loss allocable to common stockholders of $693,000 on $19.89 million of total interest income for the year ended Dec. 31, 2012. As of Dec. 31, 2013, the Company had $332.48 million in total assets, $306.89 million in total liabilities and $25.59 million in total stockholders' equity. Auditors' Report "The Company did not have sufficient capital to repay the debentures when they matured, and the debentures are in default as to both principal and interest. A proposal to extend the maturity date of the debentures was approved by the requisite holders of senior securities of the trust that is the holder of the debentures on February 28, 2014, subject to several conditions including approval from the Company's regulators and senior lender and raising at least $6 million of additional equity capital that will be used in part to make certain proposed payments of accrued interest and principal on the debentures. The debentures will continue to be considered in default until the conditions of the extension are met. Also, as discussed in Note 2 and Note 15 to the financial statements, the Company and its subsidiary bank, Broadway Federal Bank, f.s.b. (the "Bank"), are both under formal regulatory agreements. Both the Company and the Bank are not in compliance with these agreements as of December 31, 2013," Crowe Horwath LLP, the Company's independent auditing firm, noted its their report on the consolidated financial statements for the year ended Dec. 31, 2013. Crowe Horwath LLP did not issue a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors previously expressed substantial doubt about the Company's ability to continue as a going concern in their report on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a tax sharing liability to its consolidated subsidiary that exceeds its available cash, the Company is in default under the terms of a $5 million line of credit with another financial institution lender in which the stock of its subsidiary bank, Broadway Federal Bank is held as collateral for the line of credit and the Company and the Bank are both under formal regulatory agreements. Furthermore, the Company and the Bank are not in compliance with these agreements and the Company's and the Bank's capital plan that was submitted under the agreements has been preliminarily approved subject to completion of its recapitalization. Failure to comply with these agreements exposes the Company and the Bank to further regulatory sanctions that may include placing the Bank into receivership. These matters raise substantial doubt about the ability of Broadway Financial Corporation to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/FwYEcx About Broadway Financial Los Angeles, Calif.-based Broadway Financial Corporation was incorporated under Delaware law in 1995 for the purpose of acquiring and holding all of the outstanding capital stock of Broadway Federal Savings and Loan Association as part of the Bank's conversion from a federally chartered mutual savings association to a federally chartered stock savings bank. In connection with the conversion, the Bank's name was changed to Broadway Federal Bank, f.s.b. The conversion was completed, and the Bank became a wholly owned subsidiary of the Company, in January 1996. The Company is currently regulated by the Board of Governors of the Federal Reserve System. The Bank is currently regulated by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. BROOKSTONE HOLDINGS: Wins Interim Approval of DIP Financing ----------------------------------------------------------- Brookstone Holdings Corp., the specialty retailer with plans to sell to bigger rival Spencer's, on April 4, 2014, won interim approval of their move to obtain $96.25 million of DIP financing from certain of the holders of prepetition second-lien notes. James M. Speltz, the president and CEO, explained that the Debtors actively solicited proposals for DIP financing from more than 20 lenders and other financial institutions. Four DIP financing proposals were received, including proposals from Wells Fargo Bank, National Association (the agent under the prepetition senior secured credit facility) and an ad hoc committee of noteholders. Although certain aspects of the DIP financing proposal made by the noteholders were more expensive than the proposal made by Wells Fargo, the noteholders' proposal is an integral component of, and foundation for, a Chapter 11 plan of reorganization sponsored by an affiliate of Spencer Spirit Holdings and supported by a majority of the prepetition noteholders. Facilitating a comprehensive restructuring of the Debtors was a feature that no other DIP lender could offer, Mr. Speltz said in a court filing. Terms of DIP Facility The Debtors propose the establishment of a superpriority secured debtor-in-possession credit facility: * The first component of the DIP Facility involves Term Loan Facility Tranche A, a $60.00 million principal amount delayed-draw term loan facility that will provide for term loans. The interest rate will be 5.50% per annum and the closing fee will be 1.25%, payable on Closing Date. * The second component involves Term Loan Facility Tranche B, a $36.25 million principal amount term loan facility consisting of (a) $6.25 million principal amount of new money term loans and (b) $30.0 million principal amount of deemed term loans that will roll-up Second Lien Notes held by certain DIP Lenders in the same principal amount. The Tranche B Term Loans will have an interest rate of 0.30% paid-in-kind per annum, and will have no closing fee. The proceeds of the DIP Facility will be used for working capital and for general corporate purposes, subject to the Approved DIP Budget, including (a) to repay all amounts outstanding under the pre-petition Wells Fargo revolver and term loan facility as of the petition date and to cash collateralize any letters of credit issued and outstanding thereunder, (b) to rollup a portion of the existing Second Lien Notes, (c) to pay the fees, costs and expenses of the DIP Agent and DIP Lenders, (d) to post cash collateral in respect of postpetition letters of credit to be issued for the benefit of the Debtors by a financial institution satisfactory to the DIP Lenders and (v) to fund weekly into a segregated account of the Debtors, the fees, costs and expenses of the Debtors' estates' professionals. The Debtors have retained Wilmington Savings Fund Society, FSB as the proposed DIP Agent. The DIP Agent will receive an administration fee of $50,000 payable on date of the closing of any sale of the Debtors. The maturity date of the DIP facility will be the earliest of (i) the 12-month anniversary of the closing date, (ii) the effective date of a Chapter 11 plan of reorganization, (iii) the date of consummation of any sale of substantially all the assets, (iv) if a final order with respect to the DIP facility is not entered, 35 calendar days after the closing date, and (v) the date of acceleration of the loans upon the occurrence of an event of default. Interim Order The final hearing on the request for DIP financing is on April 25, 2014 at 9:30 a.m. Objections are due April 18. A copy of the Interim DIP Order is available for free at: http://bankrupt.com/misc/Brookstone_Interim_DIP_Order.pdf Other First Day Motions Aside from the proposed financing, the specialty retailer on April 3 filed a motion to assume a plan support agreement with Spencer's, and submitted motions to: -- prohibit utilities from discontinuing service; -- establish bar dates for filing proofs of claims; -- implement a key employee retention plan and incentive plan; -- pay prepetition claims of shippers and warehousemen; -- honor prepetition obligations to customers; -- maintain their existing insurance policies; -- pay prepetition wages and benefits to employees; -- pay prepetition taxes and obligations; and -- maintain their existing bank accounts. The Debtors want a June 16, 2014 general claims and administrative claims bar date and a Sept. 30, 2014 governmental bar date. A copy of the CEO's affidavit in support of the first day motions is available for free at: http://bankrupt.com/misc/Brookstone_1st_Day_Affidavit.pdf About Brookstone Holdings Brookstone Holdings Corp. and its affiliated debtors on April 3, 2013, filed for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 14-10752) with a plan to sell its business to another retailer. Specialty retailer Brookstone operated 242 retail stores across 40 states and Puerto Rico as of Feb. 1, 2014. Of those stores, 195 are generally located near "center court" in America's top retail centers and 47 are located in airports. Brookstone also operates an e-commerce business that includes the Brookstone catalog and http://www.Brookstone.com/ An affiliate of Spencer Spirit Holdings Inc., the parent of gift- shop chain Spencer's, has signed a deal to pay $147 million in exchange for 100% of the reorganized debtor's equity, absent higher and better offers from other parties. As of Dec. 31, 2013, Spencer operated 644 stores in 49 states and Canada. As of the bankruptcy filing, the Debtors owe more than $50 million on a senior secured prepetition credit facility ($34.1 million on a revolver, $12.3 million on a term loan and $4.7 million on account of letters of credit), and $137.3 million to holders of junior notes. The Debtors estimate that their unsecured debt is between $75 and $85 million. The agreement with Spencer contemplates that Brookstone, headquartered in New Hampshire, will continue to operate its mall and airport stores, catalog, website, and wholesale channels, under the Brookstone brand with current employees remaining at their respective locations. The Debtors have tapped K&L Gates LLP and Landis Rath & Cobb LLP as attorneys, and Kurtzman Carson Consultants as claims agent. The DIP lenders are represented by Stroock & Stroock & Lavan LLP and Young Conaway Stargatt & Taylor LLP. BROOKSTONE HOLDINGS: Proposes KCC as Claims and Notice Agent ------------------------------------------------------------ Brookstone Holdings Corp., et al., seek approval from the bankruptcy court to appoint Kurtzman Carson Consultants LLC, as claims and noticing agent. The Debtors propose to retain KCC at the rates set forth in the services agreement. The cost of KCC's services will be paid from the Debtors' estates. The Debtors say they have thousands of creditors and other parties-in-interest involved in the Chapter 11 cases, which will likely impose heavy administrative and other burdens on the Debtors, the court and the clerk's office. KCC holds a $25,000 retainer received from the Debtors prior to the Petition Date. According to the services agreement, KCC will charge at these rates for these consulting services and rates: Discounted Position Hourly Rate -------- ----------- Executive Vice President Waived Director/Senior Managing Consultant $180 Consultant/Senior Consultant $75 to $160 Technology/Programming Consultant $65 to $120 Project Specialist $55 to $100 Clerical $30 to $50 Weekend, holidays and overtime Waived KCC will charge these hourly rates for public securities and solicitation services: Position Hourly Rate -------- ----------- Solicitation Lead/Securities Director $225 Senior Securities Consultant $200 For its noticing services, KCC will waive fees for electronic noticing, and $0.08 per page for facsimile noticing. For claims administration and management, KCC will charge $0.10 per creditor per month for license fee and data storage. For claims filing services, the firm will charge $2.50 per claim. KCC is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Brookstone Holdings Brookstone Holdings Corp. and its affiliated debtors on April 3, 2013, filed for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 14-10752) with a plan to sell its business to another retailer. Specialty retailer Brookstone operated 242 retail stores across 40 states and Puerto Rico as of Feb. 1, 2014. Of those stores, 195 are generally located near "center court" in America's top retail centers and 47 are located in airports. Brookstone also operates an e-commerce business that includes the Brookstone catalog and http://www.Brookstone.com/ An affiliate of Spencer Spirit Holdings Inc., the parent of gift- shop chain Spencer's, has signed a deal to pay $147 million in exchange for 100% of the reorganized debtor's equity, absent higher and better offers from other parties. As of Dec. 31, 2013, Spencer operated 644 stores in 49 states and Canada. As of the bankruptcy filing, the Debtors owe more than $50 million on a senior secured prepetition credit facility ($34.1 million on a revolver, $12.3 million on a term loan and $4.7 million on account of letters of credit), and $137.3 million to holders of junior notes. The Debtors estimate that their unsecured debt is between $75 million and $85 million. The agreement with Spencer contemplates that Brookstone, headquartered in New Hampshire, will continue to operate its mall and airport stores, catalog, website, and wholesale channels, under the Brookstone brand with current employees remaining at their respective locations. The Debtors have tapped K&L Gates LLP and Landis Rath & Cobb LLP as attorneys, and Kurtzman Carson Consultants as claims agent. The DIP lenders are represented by Stroock & Stroock & Lavan LLP and Young Conaway Stargatt & Taylor LLP. BROOKSTONE HOLDINGS: Hiring K&L Gates as Bankruptcy Counsel ----------------------------------------------------------- Brookstone Holdings Corp., et al., seek approval from the bankruptcy court to employ K&L Gates LLP as their general bankruptcy counsel. K&L Gates intends to apply for compensation for professional services rendered on an hourly basis and reimbursement of expenses incurred in connection with the Chapter 11 cases. K&L Gates attorneys Charles A. Dale ($720 per hour), John C. Cushing ($680 per hour) and Mackenzie L. Shea ($500 per hour) will have primary responsibility for providing services to the Debtors. To the best of the Debtors' knowledge, K&L Gates is a "disinterested person" within the meaning of 11 U.S.C. Sec. 101(14) and does not hold or represent an interest adverse to the Debtors' estates. About Brookstone Holdings Brookstone Holdings Corp. and its affiliated debtors on April 3, 2013, filed for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 14-10752) with a plan to sell its business to another retailer. Specialty retailer Brookstone operated 242 retail stores across 40 states and Puerto Rico as of Feb. 1, 2014. Of those stores, 195 are generally located near "center court" in America's top retail centers and 47 are located in airports. Brookstone also operates an e-commerce business that includes the Brookstone catalog and http://www.Brookstone.com/ An affiliate of Spencer Spirit Holdings Inc., the parent of gift- shop chain Spencer's, has signed a deal to pay $147 million in exchange for 100% of the reorganized debtor's equity, absent higher and better offers from other parties. As of Dec. 31, 2013, Spencer operated 644 stores in 49 states and Canada. As of the bankruptcy filing, the Debtors owe more than $50 million on a senior secured prepetition credit facility ($34.1 million on a revolver, $12.3 million on a term loan and $4.7 million on account of letters of credit), and $137.3 million to holders of junior notes. The Debtors estimate that their unsecured debt is between $75 million and $85 million. The agreement with Spencer contemplates that Brookstone, headquartered in New Hampshire, will continue to operate its mall and airport stores, catalog, website, and wholesale channels, under the Brookstone brand with current employees remaining at their respective locations. The Debtors have tapped K&L Gates LLP and Landis Rath & Cobb LLP as attorneys, and Kurtzman Carson Consultants as claims agent. The DIP lenders are represented by Stroock & Stroock & Lavan LLP and Young Conaway Stargatt & Taylor LLP. BROOKSTONE HOLDINGS: Landis Rath to Act as Local, Conflicts Atty. ----------------------------------------------------------------- Brookstone Holdings Corp., et al., seek approval from the bankruptcy court to employ Landis Rath & Cobb LL as their Delaware and conflicts counsel. LRC has informed the Debtors that Adam G. Landis and Kerri K. Mumfor, partners of LRC, and Kimberly A. Brown and Joseph D. Wright, associates of LRC, as well as other partners and associates of LRG who will be involved in the Chapter 11 cases, are members in good standing of various state and federal bars. The current rates of LRC partners range from $515 to $730 per hour; associates range from $315 to $475 per hour; and legal assistants range from $100 to $135 per hour. Within 90 days of the Petition Date, LRC received retainer payments from the Debtors amounting to $175,000 in advance payment for and to secure the payment of actual and estimated professional fees and disbursements to be incurred prior to the Petition Date. Adam Landis attests that the firm neither holds nor represent any interest adverse to the Debtors' estates and is a "disinterested person" within the meaning of 11 U.S.C. Sec. 327(a) and 101(14). About Brookstone Holdings Brookstone Holdings Corp. and its affiliated debtors on April 3, 2013, filed for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 14-10752) with a plan to sell its business to another retailer. Specialty retailer Brookstone operated 242 retail stores across 40 states and Puerto Rico as of Feb. 1, 2014. Of those stores, 195 are generally located near "center court" in America's top retail centers and 47 are located in airports. Brookstone also operates an e-commerce business that includes the Brookstone catalog and http://www.Brookstone.com/ An affiliate of Spencer Spirit Holdings Inc., the parent of gift- shop chain Spencer's, has signed a deal to pay $147 million in exchange for 100% of the reorganized debtor's equity, absent higher and better offers from other parties. As of Dec. 31, 2013, Spencer operated 644 stores in 49 states and Canada. As of the bankruptcy filing, the Debtors owe more than $50 million on a senior secured prepetition credit facility ($34.1 million on a revolver, $12.3 million on a term loan and $4.7 million on account of letters of credit), and $137.3 million to holders of junior notes. The Debtors estimate that their unsecured debt is between $75 million and $85 million. The agreement with Spencer contemplates that Brookstone, headquartered in New Hampshire, will continue to operate its mall and airport stores, catalog, website, and wholesale channels, under the Brookstone brand with current employees remaining at their respective locations. The Debtors have tapped K&L Gates LLP and Landis Rath & Cobb LLP as attorneys, Deloitte Financial Advisory Services LLP as their financial advisors, Jefferies LLC as their investment banker, and Kurtzman Carson Consultants as claims agent. The DIP lenders are represented by Stroock & Stroock & Lavan LLP and Young Conaway Stargatt & Taylor LLP. BROOKSTONE HOLDINGS: Proposes Spencer-Led Auction on June 2 ----------------------------------------------------------- As part of its plans to sell the business to an affiliate of Spencer Spirit Holdings Inc., Brookstone Holdings Corp., et al., are seeking entry of an order: (i) authorizing them to assume a plan sponsorship agreement with SPB Acquisition, LLC, an affiliate of Spencer Spirit Holdings, Inc.; (ii) approving procedures for the solicitation of competing offers for the right to purchase all of the new capital stock of reorganized Brookstone Holdings to be issued under the Debtors' plan of reorganization; (iii) approving a break-up fee for SPB in the event the Debtors pursue an alternative transaction; and (iv) authorizing them to conduct an auction for plan sponsorship. A hearing to approve the proposed bidding procedures is slated for April 25 at 9:30 a.m. (ET). Objections are due April 18, 2014 at 4:00 p.m. (ET). The Debtors, SPB and the ad hoc committee of second-lien noteholders have reached agreement on the terms of a Chapter 11 plan of reorganization. SPB has agreed to sponsor a Chapter 11 plan supported by the noteholders whereby SPB will acquire 100% of the newly issued shares of stock of reorganized Brookstone Holdings Corp. for $120 million in cash plus additional consideration that in the aggregate the Debtors estimate could be worth up to approximately $146.3 million. To ensure that maximum value for the shares is achieved, notwithstanding the extensive prepetition marketing efforts, the right to serve as plan sponsor will be market tested through a competitive auction process to be approved by this Court. To induce SPB to serve as a stalking horse for a plan sponsorship auction, the Debtors' have agreed, subject to the Court's approval to certain "bidder protections" including a break-up fee of $3.7 million and an expense reimbursement of $500,000. According to the Debtors, the sale of the shares to SPB, who will operate the Brookstone chain as a going concern, will preserve jobs for most of Brookstone's full and part time employees. This acquisition will also preserve relationships with landlords and vendors and will rejuvenate the Debtors both financially and operationally, Mr. Speltz tells the Court. Auction The right to serve as plan sponsor will be "market-tested" through a competitive auction process to be approved by the Court. The Debtors propose these rules: -- Any potential bidder must submit a qualified bid prior to 4:00 p.m. ET on May 28, 2014; -- Any competing bid must exceed the aggregate consideration offered by SPB by at least $4.45 million; and -- If one or more qualified bids have been submitted, the Debtors will conduct an auction on June 2, 2014 at 10:00 a.m. ET at the offices of their counsel, K&L Gates LLP, in Boston, Massachussets. The Chapter 11 Plan The transactions contemplated by the Stock Purchase Agreement with SPB will be implemented through a Chapter 11 reorganization plan. On the effective date of the Plan, the stalking horse or the prevailing bidder will purchase 100% of the shares of the reorganized company. The cash portion of the purchase price will be distributed in accordance with the SPA and term sheet attached to the Plan Sponsorship Agreement. Under the term sheet, the parties agree that the Debtors will submit a Chapter 11 plan that will provide for these terms: * Holders of DIP facility claims will receive payment in full in cash on the Effective Date. * Administrative claims and priority tax claims will be paid in full. * Holders of secured claims (other than the noteholder claims) are unimpaired; * Second lien noteholder claims will be deemed allowed in the aggregate principal amount outstanding of $125.6 million plus interest. Each holder of a noteholder claim will receive a pro rata share of (1) all of the Debtors' cash and cash equivalents other than "store cash", (2) 50% of the Effective Date "net distributable cash", (3) any residual cash from the claims and adjustment escrow and (4) and the notes. Each noteholder will also been deemed to hold an allowed general unsecured claim equal to the difference between the value of cash and property distributed on account of the secured portion of the claim and the total allowed amount of such claim. * Holders of general unsecured claims (including noteholder deficiency claims) will receive on the Effective Date a pro rata share of $1 million in cash from the proceeds of the purchase price. * Existing equity interests will be extinguished and the holders of these interests will not receive a distribution. The Debtors have agreed to various milestones, including: -- On or before April 9, 2014, the Debtors will furnish the plan sponsor with disclosure schedules required by the SPA; -- On or before April 25, 2014, the order approving the RSA and the bidding procedures will have been entered by the bankruptcy court; -- On or before May 7, 2014, the Final DIP Order will have been entered by the Bankruptcy Court; -- On or before July 7, 2014, the plan confirmation order will have become a final order and the effective date of the Plan will have occurred. About Brookstone Holdings Brookstone Holdings Corp. and its affiliated debtors on April 3, 2013, filed for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 14-10752) with a plan to sell its business to another retailer. Specialty retailer Brookstone operated 242 retail stores across 40 states and Puerto Rico as of Feb. 1, 2014. Of those stores, 195 are generally located near "center court" in America's top retail centers and 47 are located in airports. Brookstone also operates an e-commerce business that includes the Brookstone catalog and http://www.Brookstone.com/ An affiliate of Spencer Spirit Holdings Inc., the parent of gift- shop chain Spencer's, has signed a deal to pay $147 million in exchange for 100% of the reorganized debtor's equity, absent higher and better offers from other parties. As of Dec. 31, 2013, Spencer operated 644 stores in 49 states and Canada. As of the bankruptcy filing, the Debtors owe more than $50 million on a senior secured prepetition credit facility ($34.1 million on a revolver, $12.3 million on a term loan and $4.7 million on account of letters of credit), and $137.3 million to holders of junior notes. The Debtors estimate that their unsecured debt is between $75 million and $85 million. The agreement with Spencer contemplates that Brookstone, headquartered in New Hampshire, will continue to operate its mall and airport stores, catalog, website, and wholesale channels, under the Brookstone brand with current employees remaining at their respective locations. The Debtors have tapped K&L Gates LLP and Landis Rath & Cobb LLP as attorneys, Deloitte Financial Advisory Services LLP as their financial advisors, Jefferies LLC as their investment banker, and Kurtzman Carson Consultants as claims agent. The DIP lenders are represented by Stroock & Stroock & Lavan LLP and Young Conaway Stargatt & Taylor LLP. CAPITOL CITY: Incurs $5.5 Million Net Loss in 2013 -------------------------------------------------- Capitol City Banchares, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss available to common shareholders of $5.53 million on $11.38 million of total interest income for the year ended Dec. 31, 2013, as compared with a net loss available to common shareholders of $1.79 million on $13.30 million of total interest income in 2012. The Company's balance sheet at Dec. 31, 2013, showed $286.97 million in total assets, $286.26 million in total liabilities and $704,405 in total stockholders' equity. Nichols, Cauley & Associates, LLC, in Atlanta, GA, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company is operating under regulatory orders to, among other items, increase capital and maintain certain levels of minimum capital. As of December 31, 2013, the Company was not in compliance with these capital requirements. In addition to its deteriorating capital position, the Company has suffered significant losses related to nonperforming assets, and has significant maturities of liabilities within the next twelve months. These matters raise substantial doubt about the ability of Capitol City Bancshares, Inc., and subsidiaries to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/J2pE0L About Capitol City Atlanta, Georgia-based Capitol City Bancshares, Inc., was incorporated under the laws of the State of Georgia for the purposes of serving as a bank holding company for Capitol City Bank and Trust Company. The Bank operates a full-service banking business and engages in a broad range of commercial banking activities, including accepting customary types of demand and timed deposits, making individual, consumer, commercial, and installment loans, money transfers, safe deposit services, and making investments in U.S. government and municipal securities. CASCELLA & SON: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Cascella & Son Construction, Inc. 2 Easton Heights Lane Easton, CT 06612 Case No.: 14-50518 Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court District of Connecticut (Bridgeport) Judge: Hon. Alan H.W. Shiff Debtor's Counsel: James M. Nugent, Esq. HARLOW, ADAMS, AND FRIEDMAN One New Haven Ave, Suite 100 Milford, CT 06460 Tel: (203) 878-0661 Fax: (203) 878-9568 Email: jmn@quidproquo.com Total Assets: $0 Total Liabilities: $3.48 million The petition was signed by Todd Michael Cascella, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/ctb14-50518.pdf CENTRAL FEDERAL: Incurs $918,000 Net Loss in 2013 ------------------------------------------------- Central Federal Corporation filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $918,000 on $7.50 million of interest and dividend income for the year ended Dec. 31, 2013, as compared with a net loss of $3.76 million on $7.26 million of interest and dividend income in 2012. The Company incurred a net loss of $5.42 million in 2011. For the three months ended Dec. 31, 2013, the Company reported net income of $831,000 on $1.51 million of net interest income as compared with a net loss of $434,000 on $1.02 million of net interest income for the same period during the prior year. As of Dec. 31, 2013, the Company had $255.74 million in total assets, $232.88 million in total liabilities and $22.86 million in total stockholders' equity. Timothy T O'Dell, CEO, commented: "Our Leadership Team remains relentlessly focused on executing our business plan, strategy and tactics. Our success in attracting quality full-service business relationships, coupled with our success in adding talented bankers makes us highly optimistic for 2014." A copy of the Form 10-K is available for free at: http://is.gd/jwukwe About Central Federal Fairlawn, Ohio-based Central Federal Corporation (Nasdaq: CFBK) is the holding company for CFBank, a federally chartered savings association formed in Ohio in 1892. CFBank has four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio. As reported by the TCR on Feb. 4, 2014, The Office of the Comptroller of the Currency has terminated the Cease and Desist Order against CFBank, a subsidiary of Central Federal Corporation, effective Jan. 23, 2014. The CFBank Order has been in place since May 25, 2011, which was prior to the 2012 capital raise and recapitalization of Central Federal Corporation and CF Bank by the current management team and standby investor group led by Timothy O'Dell (CEO), Thad Perry (President) and Robert Hoeweler (Chairman). COLDWATER CREEK: Retailer to File for Liquidation ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Coldwater Creek Inc., a 379-store women?s wear retailer, won?t even attempt to reorganize, according to two people with knowledge of the matter. The Sandpoint, Idaho-based company has an offer from a liquidator to sell off the assets, the report said. The bankruptcy filing may take place this week, the report added. Comparable-store sales declined 17 percent for the quarter ended in November, the report related. Coldwater Creek Inc. is a specialty retailer of women's apparel, accessories, jewelry and gift items. Founded in 1984 as a catalog company, Coldwater Creek is now a multi-channel specialty retailer generating $228.5 million in net sales in the three months ended Nov. 1, 2008. The company's proprietary merchandise assortment reflects a sophisticated yet relaxed and casual lifestyle. COLOR STAR: Final Cash Collateral Hearing Set for April 14 ---------------------------------------------------------- A final hearing on Color Star Growers of Colorado, Inc., et al.'s Cash Collateral Motion has been scheduled for April 14, 2014, at 3:30 p.m. before Judge Brenda T. Rhoades in Plano, Texas. This comes after the Bankruptcy Court entered a fourth interim order allowing the Debtors access to Cash Collateral through a March 31, 2014 termination date in accordance with a prepared budget. The Termination Date can be extended upon written stipulation among the Debtors and the Lenders. On the Termination Date, all of the Debtors' cash in excess of (a) expenses incurred in accordance with the First Interim Budget through the Fourth Interim Budget that remain unpaid, plus (b) $500,000 will be paid to Lenders as an adequate protection payment. Cash Collateral permitted to be used for the Debtors' and Official Committee of Unsecured Creditors' professionals in the Fourth Interim Budget may be sed to investigate the liens, security interests and claims of the Lenders and MCG. The Debtors will have until April 17, 2014, to file and serve on the Prepetition Lenders any challenge to among other things the validity and priority of the Prepetition Lenders' liens and security interests in the Debtors' assets or the Cash Collateral. About Color Star Color Star, a grower and wholesaler of flowers and nursery stock with greenhouses and distribution centers in Colorado, Missouri and Texas, filed for Chapter 11 bankruptcy protection in December 2013. Color Star Growers of Colorado, Inc., and two affiliates filed Chapter 11 bankruptcy petitions (Bankr. E.D. Tex. Case Nos. 13- 42959 to 13-42961) on Dec. 15, 2013, in Sherman, Texas. The petitions were signed by Brad Walker, chief restructuring officer. The Debtors estimated assets of at least $10 million and liabilities of at least $50 million. Marcus A. Helt, Esq., and Evan R. Baker, Esq., at Gardere Wynne Sewell LLP, serve as the Debtors' counsel. SSG Advisors, LLC provides investment banking services, and UpShot Services LLC serves as claims, noticing and balloting agent. The Official Committee of Unsecured Creditors appointed in the Debtors' cases retained Gavin/Solmonese, LLC as financial advisors; and Raymond J. Urbanik, Esq., Deborah M. Perry, Esq., Thomas Berghman, Esq., and Isaac J. Brown, Esq., at Munsch Hardt Kopf & Harr, PC as attorneys. CREATION'S GARDEN: Gets Bankruptcy Case Dismissed ------------------------------------------------- Judge Vincent P. Zurzolo entered a ruling on March 27, 2014, dismissing the Chapter 11 cases of Creation's Garden Natural Products, Inc., et al. Creation's Garden Natural Products, Inc., filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 13-37815) in Los Angeles on Nov. 20, 2013. An affiliate, Creation's Garden Natural Food Markets, Inc., simultaneously sought bankruptcy protection. Dino Guglielmelli, president and holder of 100% of the common stock, signed the petition. The Debtors are represented by attorneys at Leven, Neale, Bender, Yoo & Brill L.L.P. Sherwood Partners, LLC, serves as financial advisor and marketing consultant. Creation's Garden Natural Products disclosed assets of $14,398,785 and liabilities of $16,991,488. CUSTOM CONTRACTORS: Conduit Defense Protects IRS From Claim ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Atlanta ruled that the Internal Revenue Service can raise the "mere conduit" defense when sued for a fraudulent transfer involving receipt of an estimated tax payment. According to the report, the case involved the owner of a bankrupt Subchapter S corporation where the company's tax liabilities or refunds flowed through to the individual on his own tax return. The dispute involved a $26,000 payment the company made to the IRS on account of what would be the owner's personal tax liability. The payment was later returned in the form of a tax refund paid by the IRS to the owner when the company incurred losses flowing through to the owner, the report said. The bankruptcy trustee sued the IRS on a fraudulent-transfer theory, contending the company was insolvent when it paid the $26,000 on behalf of the owner and received no benefit from the payment because it was discharging the owner's potential tax liability, not its own, the report related. The bankruptcy court found against the IRS and the district judge reversed, concluding that the tax agency was a "mere conduit" not subject to suit for receiving a fraudulent transfer, the report further related. On further appeal, U.S. Circuit Judge Charles R. Wilson upheld the district court in a March 26 opinion. The case is Menotte v. U.S. (In re Custom Contractors LLC), 12- 16489, U.S. Court of Appeals for the 11th Circuit (Atlanta). Headquartered in Martinez, Georgia, Custom Contractors and Associates, Inc., filed for Chapter 11 relief on Aug. 28, 2008 (Bankr. S.D. Ga. Case No. 08-11806). James T. Wilson, Jr., Esq., at James T. Wilson, Jr., PC, represents the Debtor as counsel. When the Debtor filed for bankruptcy protection, it listed assets and debts of between $10 million and $50 million each. DETROIT, MI: Judge Hiring Expert on Plan Feasibility ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Detroit's bankruptcy judge is hiring his own independent expert witness to testify on whether city's municipal debt-adjustment plan is feasible and based on reasonable assumptions. According to the report, U.S. Bankruptcy Judge Steven Rhodes said in a court filing that he has "an independent duty" to determine whether the plan is feasible, "even if no party objects to plan confirmation." The expert would testify at the confirmation hearing for Detroit's plan, the report related. The court- appointed expert would also file a written report. In a declaration filed with the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, Financial Guaranty Insurance Company said the nominating creditors agreed to nominate as labor nominees: * Robert D. Gordon, Esq. -- rgordon@clarkhill.com CLARK HILL PLC Birmingham, Michigan * Barbara A. Patek, Esq. -- bpatek@ermanteicher.com ERMAN, TEICHER, ZUCKER & FREEDMAN, P.C. Southfield, Michigan * Claude D. Montgomery, Esq. -- claude.montgomery@dentons.com DENTONS US LLP New York The nominating creditors also agreed to nominate as financial nominees: * Rick L. Frimmer, Esq. -- rfrimmer@schiffhardin.com SCHIFF HARDIN LLP Chicago, Illinois * Stephen C. Hackney, Esq. -- shackney@kirkland.com KIRKLAND & ELLIS LLP Chicago, Illinois * Guy S. Neal, Esq. -- gneal@sidley.com SIDLEY AUSTIN LLP Washington, D.C. The judge said he's seeking one or more experts in municipal finance, budgeting and planning who will be "fair, unbiased and independent," the report further related. The assignment includes analyzing the "reasonableness of the assumptions that underlie the city's cash flow forecasts and projections." A bankruptcy judge made an independent analysis of feasibility in the reorganization of Las Vegas Monorail Co., the 3.9 mile (6.3 kilometer) driverless transportation system that winds its way behind the casinos on the east side of the Las Vegas Strip, the report recalled. In that case, U.S. Bankruptcy Judge Bruce Markell, now a law professor, decided on his own from court testimony that the monorail probably couldn't refinance debt when it matured. Even though all creditors wanted him to approve the plan, Judge Markell refused and didn't give his consent to exit Chapter 11 until May 2012, when the plan had been modified to cut debt significantly. An interview of the nominees will take place on April 18 in open court. 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. DETROIT, MI: Emergency Managers Says Time Short for a Plan ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Kevyn Orr, Detroit's emergency manager, said time is running short for creditors to agree with the city on a Chapter 9 municipal debt-adjustment plan. He said creditors already have enough information to negotiate a plan and don't need more, the report related. Further delay threatens to end agreements with the Michigan legislature and private philanthropies to provide cash minimizing cuts in pensions, according to the report. 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. DEVINE BLESSINGS: Case Summary & 5 Unsecured Creditors ------------------------------------------------------ Debtor: Devine Blessings, Inc 1400 Coleman Ave, Suite B23 Santa Clara, CA 95050 Case No.: 14-51505 Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Hon. Charles Novack Debtor's Counsel: Eliza Xuan Wang, Esq. MERIDIAN LAW 675 N 1st St. #765 San Jose, CA 95112 Tel: (408)289-8868 Email: ewang@meridianlawcorp.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Thomas John Spielbauer, president. A list of the Debtor's five largest unsecured creditors is available for free at http://bankrupt.com/misc/canb14-51505.pdf DFC GLOBAL: S&P Puts 'B' Issuer Credit Rating on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings, including the 'B' issuer credit rating, on DFC Global Corp. on CreditWatch with negative implications. "Our CreditWatch negative listing follows DFC's lowered earnings guidance and announced buyout agreement with an affiliate of Loan Star Funds," said Standard & Poor's credit analyst Igor Koyfman. Loan Star has committed cash of $750 million, which S&P expects it will use to purchase DFC's common stock--approximately $370 million--and for general corporate purposes. DFC outlined in an 8K filed with the Securities and Exchange Commission that Jefferies Finance LLC and Credit Suisse committed to a $125 million revolving credit facility and a $750 million bridge loan to help fund the buyout. S&P expects DFC will use the proceeds to retire most of its existing debt and that the company will establish a more permanent capital structure after the transaction closes. S&P expects the transaction will reduce DFC's total debt. However, the company's weaker-than-expected financial performance, underpinned by new lending guidelines in the U.K., will offset the expected improvement in leverage. In a separate press release, DFC reduced its fiscal 2014 EBITDA guidance to between $151 million to $156 million, from $170 million to $200 million. On April 1, 2014, U.K.'s Financial Conduct Authority (FCA) took over regulatory responsibilities of the consumer credit industry, including payday lending, from the Office of Fair Trade (OFT). DFC operates under a single set of consumer lending laws that covers the entire country. In February 2014, the new regulator released details on its proposed regime, including tougher rules for payday lenders. Specifically, these rules involve affordability assessments, specific disclosures and risk warnings, a limitation of two roll-overs per customer (extending a loan term for a fee), and a continuous payment authority (limitation on collection attempts) of two attempts to seek loan repayment. The FCA also announced that it will impose a cap on payday loans in January 2015. DFC is in the process of aligning its business to conform to the FCA's new guidelines. The rollover and continuous payment authority limitations, which will become effective July 1, 2014, represent the most significant change to DFC's product offering, in S&P's view. Together, they have resulted in lower loan volume, higher losses, and higher collection expense. Volume has declined because some customers can't continue to refinance their loan, and the company has tightened its underwriting standards. Losses have increased because customers can't repay the loan when it comes due and DFC has collection limitations due to changes to the continuous payment authority. Lastly, collection expense has increased because the company has invested in infrastructure and staff to comply with the new regulatory regime. S&P's rating on DFC is based on the company's exposure to regulatory risk, high leverage, and expected private equity ownership. Other considerations include DFC's geographic and product diversity -- relative to other companies operating in its market segment -- and significant resources dedicated to compliance and risk management. S&P plans to resolve the CreditWatch listing following analysis of DFC's financials in conjunction with the closing of the proposed transaction, which DFC said it expects to close in the third quarter of calendar-year 2014, pending satisfaction of various closing conditions, financing, and regulatory approvals. As a result of S&P's review, it can affirm or lower its ratings. S&P could affirm the rating if DFC reduces its debt and maintains debt to EBITDA below 6.0x. Otherwise, S&P would likely lower the rating. DIALOGIC INC: Reports $53.9 Million Net Loss in 2013 ---------------------------------------------------- Dialogic Inc. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $53.93 million on $132.08 million of total revenue for the year ended Dec. 31, 2013, as compared with a net loss of $37.61 million on $160.07 million of total revenue in 2012. For the three months ended Dec. 31, 2013, the Company reported a net loss of $37.03 million on $37 million of total revenue as compared with a net loss of $5.25 million on $36.99 million of total revenue for the same period during the prior year. As of Dec. 31, 2013, the Company had $66.72 million in total assets, $133.72 in total liabilities and a $66.99 million total stockholders' deficit. Bankruptcy Warning "In the event of an acceleration of our obligations under the Term Loan Agreement or Revolving Credit Agreement and our failure to pay the amounts that would then become due, the Revolving Credit Lender or Term Lenders could seek to foreclose on our assets. As a result of this, we would likely need to seek protection under the provisions of the U.S. Bankruptcy Code and/or our affiliates might be required to seek protection under the provisions of applicable bankruptcy codes," the Company said in the Annual Report. A copy of the Form 10-K is available for free at: http://is.gd/bR0jUT About Dialogic Milpitas, Cal.-based Dialogic Inc. provides communications platforms and technology that enable developers and service providers to build and deploy innovative applications without concern for the complexities of the communication medium or network. DIGERATI TECHNOLOGIES: Sale-Based Plan Wins Court Approval ---------------------------------------------------------- U.S. Bankruptcy Judge Jeff Bohm in Houston, Texas, signed off on an agreed order confirming the Joint Plan of Reorganization for Digerati Technologies Inc. The Plan was filed Feb. 27, 2014, by these parties-in-interest: * Riverfront Capital LLC, * Recap Marketing and Consulting LLP, * Rainmaker Ventures II Ltd., and WEM Equity Capital Investments Ltd., * Hurley Fairview LLC, * Terry Dishon, * Sheyenne Rae Nelson Hurley, and * the Debtor On March 3, the Court gave conditional approval to the Disclosure Statement and set April 4 as the confirmation hearing. The Plan contemplates a significant reduction in the Debtor's operations and debt through the sale of two of the Debtor's units -- Hurley Enterprises and Dishon Disposal Inc. Proceeds from the sale will be used to help fund the Plan. The Debtor will continue to own the common stock of its remaining subsidiary, Shift8 Technologies, Inc., which is a holding company for Digerati Networks Inc. and Shift8 Networks, Inc., f/k/a Digerati Broadband Inc. The Plan separates Claims into six classes and Interests into two classes. General unsecured claims, including holders of convertible debentures, will be paid in full under the Plan without postpetition interest, from the net sale proceeds of either Dishon Disposal or Hurley Enterprises, whichever occurs first. On March 25, the Plan Proponents filed a plan supplement naming James J. Davis as independent director for the Reorganized Debtor. Pursuant to the Court's order, Mr. Davisis approved as independent director. Arthur Smith and William McIlwain are also approved as directors. William Greendyke is appointed the trustee of the Grantor Trust and will serve as disbursing agent. The Order provides that if Dishon Disposal is not sold by Aug. 31, 2014, the automatic stay will terminate to permit the holders of Allowed Class 1 Secured Claims to pursue legal remedies. Moreover, if Hurley Enterprises is not sold by Aug. 31, the automatic stay will terminate to permit the holders of Allowed Class 2 Secured Claims to pursue their legal remedies. As reported by the Troubled Company Reporter, the Plan has projected to have an effective date of Dec. 31. Under the Plan, Terry Dishon's secured claims tied to pre- bankruptcy notes, in the principal amount of $30 million, is grouped in Class 1 and will be paid in full from the proceeds of the sale of Dishon Disposal. If Terry Dishon's Class 1 Allowed Secured Claim is not paid in full, the deficiency balance will be waived except for a claim for certain refund as provided in the plan. The secured claims of Hurley Fairview LLC ($20 million) and Sheyenne Rae Nelson Hurley ($10 million) are placed in Class 2 under the plan and will be paid in full from the proceeds from the sale of Hurley Enterprises Inc. If Class 2 secured claims are not paid in full, the deficiency balance will be waived except for a claim for certain refund as provided in the plan. Holders of Class 1 and Class 2 claims are impaired and entitled to vote on the plan. Holders of general unsecured claims of $1,000 or less are placed in Class 3; they will be paid in full without postpetition interest, within 30 days after confirmation of the plan, from available surplus cash on hand. They are impaired. Holders of general unsecured claims in excess of $1,000 are grouped in Class 4, and will be paid in full, without postpetition interest, from the net sale proceeds of either the Dishon or Hurley divisions, whichever comes first, from the so-called Dishon plan carve-out, the Hurley plan carve-out or from financing. Payment will be made 30 days after the closing date or upon allowance of the claim. The conversion feature permitting conversion of debt to common stock contained in any convertible debentures is revoked. Alternatively, holders of Class 4 claims may elect to reduce the claim to $1,000 and be included in Class 3. Class 5 consists of "Subordinated Unsecured Claims Arising Out Of Disputed Rights To Preferred Series 'A' Interests." They will be paid after creditors in Classes 1 to 4 are paid in full. All stock certificates representing Preferred Series A shares are deemed cancelled. Class 6 consists of "Super Voting Rights Arising Out Of The Disputed Rights Of Preferred Series 'E' Interests" of Oleum Capital LLC. All stock certificates for Series E shares are deemed cancelled, and the holders won't receive any distribution. Holders of equity interests of Digerati common stock are grouped in Class 7, while holders of warrants, preferred stock, and stock options issued by Digerati prior to the confirmation are in Class 8. According to the plan, Class 7 shareholders will retain their common stock in Digerati and remain 100% of the shareholders of the reorganized company. Meanwhile, the warrants, preferred stock, and stock options issued by Digerati will be deemed cancelled. The Agreed Order was signed by the Plan Proponents through their counsel. Counsel to Riverfront Capital, Hurley Fairview, Terry Dishon and Sheyenne Rae Nelson Hurley: COKINOS BOSIEN & YOUNG Craig E. Power, Esq. Misty A. Segura, Esq. Tiffany M. Melchers, Esq. Four Houston Center 1221 Lamar St., 16th Flr Houston, TX 77010 Tel: 713-535-5500 Fax: 713-535-5533 E-mail: cpower@cbylaw.com msegura@cbylaw.com tmelchers@cbylaw.com Counsel to Recap Marketing, WEM Equity and Rainmaker Ventures II: WALKER & PATTERSON PC Miriam Goott, Esq. 4815 Dacoma St Houston, TX 77092 Tel: 713-956-5577 E-mail: jjp@walkerandpatterson.com - and - THE KELLEY LAW FIRM Lloyd E. Kelley, Esq. 2726 Bissonnet, Suite 240 PMB 12 Houston, TX 77005 Tel: 281-492-7766 Fax: 281-652-5973 E-mail: Kelley@lloydkelley.com About Digerati Technologies Digerati Technologies, Inc., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 13-33264) in Houston, on May 30, 2013. Digerati -- http://www.digerati-inc.com-- is a diversified holding company which owns operating subsidiaries in the oil field services and the cloud communications industry. Digerati and its subsidiaries maintain Texas Offices in San Antonio and Houston. The Debtor has no independent operations apart from its subsidiaries. The Debtor's subsidiaries include Shift 8 Networks, a cloud communication service, Hurley Enterprises, Inc., and Dishon Disposal, Inc., both oil field services companies. The Debtor disclosed $60 million in assets and $62.5 million in liabilities as of May 29, 2013. Bankruptcy Judge Jeff Bohm oversees the case. Deirdre Carey Brown, Esq., Annie E. Catmull, Esq., Melissa Anne Haselden, Esq., Mazelle Sara Krasoff, Esq., and Edward L Rothberg, at Hoover Slovacek, LLP, in Houston, represent the Debtor as counsel. The Debtor tapped Gilbert A. Herrera and Herrera Partners as the investment banker. Earlier in the case, Rhode Holdings, LLC, sought the transfer of venue of Digerati's Chapter 11 case to the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division. The case, however, stayed in Houston Bankruptcy Court. DOTS LLC: Sells 32 Leases to Rainbow Southeast ---------------------------------------------- Dots, LLC, et al., sought and obtained authority from the U.S. Bankruptcy Court for the District of New Jersey to assume and assign to Rainbow Southeast Leasing, Inc., 32 unexpired leases of non-residential real property. The Debtors have entered into a stalking horse purchase agreement with Rainbow, under which Rainbow committed to purchase up to 201 leases for a purchase price of $2.1 million. In orders dated March 31, 2014, the Court authorized the Debtors to sell six leases to Rainbow. In an order dated March 27, the Court authorized the Debtors to sell 26 leases to Rainbow. Bill Rochelle, the bankruptcy columnist for Bloomberg News, said another hearing is set for April 22 for approval to sell an additional 145 leases in stores where going-out-of-business sales are under way. 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. DOTS LLC: Gets Final Authority to Pay $5-Mil. to Critical Vendors ----------------------------------------------------------------- Dots LLC, et al., obtained final authority from the U.S. Bankruptcy Court for the District of New Jersey to to pay all or part of, on a case-to-case basis, the prepetition claims of critical vendors in an aggregate amount not to exceed $5 million. The Order provides that if a Critical Vendor refuses to supply goods to the Debtors on Customary Trade Terms following payment of any portion of its Critical Vendor Claim, or fails to comply with any trade agreement it entered into with the Debtors, the Debtors are authorized to, in their discretion and without further order of the Court, (i) declare that any Trade Agreement between the Debtors and such Critical Vendor is terminated, and (ii) declare that any payments made to a Critical Vendor on account of its Critical Vendor Claim, whether pursuant to a Trade Agreement or otherwise, be deemed to have been in payment of then-outstanding postpetition claims of that Critical Vendor without further order of the Court. 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. DOTS LLC: Has Until Aug. 18 to Decide on Leases ----------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended Dots, LLC, et al.'s time to assume or reject their unexpired nonresidential real property leases to the earlier of: (a) Aug. 18, 2014, or (b) the date of the entry of an order confirming a Chapter 11 plan in the Debtors' bankruptcy cases. Smart Apparel (U.S.), Inc., a counterparty to an unexpired lease of non-residential real property, complained that the Debtors failed to remit the monthly rental payment for their use and occupancy of premises in a building known as 1400 Broadway, New York. Smart Apparel asserted that the failure to pay postpetition rent is one of the factors the Court should consider when determining whether to extend the Debtors' time to assume or reject. The Court overruled Smart Apparel's objection. Smart Apparel is represented by Seth H. Lieberman, Esq. -- slieberman@pryorcashman.com -- and Patrick Sibley, Esq. -- psibley@pryorcashman.com -- at PRYOR CASHMAN LLP, in New York. 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. DUTCH LLC: S&P Assigns 'B' CCR & Rates $20MM Secured Debt 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Vernon, Calif.-based women's apparel producer Dutch LLC. The outlook is stable. At the same time, S&P assigned its 'BB-' issue-level rating to the company's proposed $20 million secured revolving credit facility due 2019. The recovery rating is '1', indicating S&P's expectation for very high (90% to 100%) recovery for debtholders in the event of a payment default. S&P also assigned its 'B' issue-level rating to the company's proposed $200 million secured term loan due 2020. The recovery rating is '3', indicating S&P's expectation for meaningful (50% to 70%) recovery for debtholders in the event of a payment default. Standard & Poor's is assigning ratings to Dutch in conjunction with its pending refinancing transaction, which will include the repayment of mezzanine debt the company's owners hold. "We expect the transaction to be leverage-neutral," said Standard & Poor's credit analyst Linda Phelps. The ratings on Dutch reflect Standard & Poor's assessment of the company's financial risk profile as "aggressive," for which indicative ratios include leverage of 4x to 5x. Additionally, the ratings reflect S&P's assessment that the company has a "vulnerable" business risk profile. This assessment incorporates the company's small scale, narrow business focus on high-end contemporary women's apparel, and heavy reliance on its flagship Joie brand. (Dutch LLC is a privately held company and does not publicly disclose its financial statements.) EMERALD PERFORMANCE: S&P Raises Rating on 1st Lien Loan to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its issue-level rating on Emerald Performance Materials LLC's first-lien term loan to 'B+' from 'B'. S&P revised the recovery rating on this debt to '2', indicating its expectation of substantial (70% to 90%) recovery of principal in the event of a default. At the same time, S&P affirmed its 'B' corporate credit rating on Emerald Performance Holding Group LLC. The outlook is stable. The upgrade of the first-lien debt reflects the company's growth and increased profitability as a result of its significant investments in benzoic-acid based plasticizers (K-Flex) at both its Kalama and Rotterdam facilities. "We believe that these investments have strengthened the company's competitive position within its niche markets and would support a higher recovery in the event of a payment default," said Standard & Poor's credit analyst Pranay Sonalkar. The corporate credit rating is based on S&P's assessment of Emerald's business risk profile as "fair" and financial risk profile as "highly leveraged". S&P's assessment of Emerald's "fair" business risk profile reflects the company's narrow product focus, limited track record and exposure to some highly cyclical end-markets related to autos, tires, coatings and adhesives. These weaknesses are partly offset by its respectable positions in niche products, improving EBITDA margins and good customer and geographic diversity. The stable outlook on Emerald Performance Holding Group reflects Standard & Poor's expectation that the company's niche position in key specialty chemicals and recent investments in K-Flex will continue to support operating margins at current levels and allow the company to maintain FFO to debt of above 10% and leverage of about 5x. S&P also expects the company to generate good free cash flow in 2014 and 2015 as a result of lower capital expenditures. Although S&P considers an upgrade unlikely, it could raise the ratings if the company's business risk profile improves, possibly as a result of increased operating efficiency or a stronger competitive advantage, and the company were to maintain an FFO to total adjusted debt ratio of more than 15% through a business cycle. This would also require financial policies that support the higher rating. S&P could lower the rating if unexpected cash outlays or business difficulties significantly reduce the company's liquidity. In addition, S&P could lower the rating if an acquisition or dividend caused leverage to exceed 6.5x and the company to generate negative free cash flow. S&P thinks this could occur if the company were to pursue a $200 million dividend and operating margins were to decline by 200 basis points. FEDERAL-MOGUL: S&P Retains B Rating Following Proposed Loan Mix --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings (including issue ratings) and outlook on Federal-Mogul Holdings Corp. (B/Negative/--) are unchanged following the company's announced change to its proposed loan mix. S&P now expects the company's proposed four-year term loan B to be $700 million (up from $500 million) and the proposed seven-year term loan C to be $1.9 billion (down from $2.1 billion). The term loans B and C are pari passu and the total debt raised remains the same, thus, the issue-level and recovery ratings are unchanged. The negative outlook on the corporate credit rating reflects S&P's view that the company needs to address all upcoming maturities to retain the current rating. However, S&P expects to revise its outlook to stable upon closing of this proposed transaction, which would extend maturities and significantly reduce refinancing risk for the next few years. RATINGS LIST Federal-Mogul Holdings Corp. Corporate Credit Rating B/Negative/-- Ratings Unchanged Federal-Mogul Holdings Corp. Senior Secured $700M term loan B due 2018 (up from $500M) B Recovery Rating 4 $1.9B term loan C due 2021 (down from $2.1B) B Recovery Rating 4 FINJAN HOLDINGS: To Sublease Office Space From Investor Growth -------------------------------------------------------------- Finjan Holdings, Inc., received the consent of the master landlord for a Sublease, dated as of March 10, 2014, with Investor Growth Capital, Inc. ("Sublandlord"), pursuant to which the Company will sublease 2,613 square feet of office space located at 333 Middlefield Avenue, Suite 110, Menlo Park, California, 94025 from Sublandlord. Beginning on the Commencement Date and through Nov. 30, 2017, the Company will owe to Sublandlord an initial annual rent of $164,619, payable in equal monthly installments, unless earlier terminated by either party in accordance with the Lease. The annual rental rate is subject to an approximately 3 percent increase each anniversary of the Commencement Date during the Term. Upon the execution of the Lease, the Company delivered $14,999 as a security deposit to be held and applied (or returned) in accordance with the Lease. A copy of the Sublease Agreement is available for free at: http://is.gd/0ekb35 About Finjan Finjan, formerly known as Converted Organics, is a leading online security and technology company which owns a portfolio of patents, related to software that proactively detects malicious code and thereby protects end-users from identity and data theft, spyware, malware, phishing, trojans and other online threats. Founded in 1997, Finjan is one of the first companies to develop and patent technology and software that is capable of detecting previously unknown and emerging threats on a real-time, behavior-based basis, in contrast to signature-based methods of intercepting only known threats to computers, which were previously standard in the online security industry. Converted Organics disclosed a net loss of $8.42 million in 2012, as compared with a net loss of $17.98 million in 2011. Finjan Holdings' balance sheet at Sept. 30, 2013, showed $30.35 million in total assets, $927,000 in total liabilities and $29.42 million in total stockholders' equity. Moody, Famiglietti & Andronico, LLP, in Tewksbury, Massachusetts, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing recurring losses and negative cash flows from operations and an accumulated deficit that raises substantial doubt about the Company's ability to continue as a going concern. FIRST PHILADELPHIA: Court to Consider Plan Confirmation on June 19 ------------------------------------------------------------------ A hearing will be convened on June 19, 2014 at 10:00 a.m. in the U.S. Bankruptcy Court for the District of New Jersey to consider confirmation of the Chapter 11 Plan proposed by First Philadelphia Holdings, LLC. The Debtor proposed a Liquidating Plan, where it seeks to accomplish payments by (i) marketing its real estate for sale, (ii) making payment to its secured creditors from the proceeds of the sale, and (iii) making payment to unsecured creditors funded by the Debtor's managing member, George M. Diemer. Mr. Diemer has committed to fund a $20,000 distribution. The real property in question is located at 6501 New State Road aka Tacony Street, Philadelphia, Pennsylvania. Chief Judge Gloria M. Burns approved the Disclosure Statement, as amended, describing the Plan on March 26, 2014. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/FIRSTPHILADELPHIA_AmdDSMar26.pdf About First Philadelphia First Philadelphia Holdings, LLC, is a Pennsylvania limited liability company formed on or about March 14, 2005. The Debtor is headquartered in New Jersey and is in the business of owning real estate located at 6501 New State Road a/k/a Tacony Street, Philadelphia, Pennsylvania. The Company filed a Chapter 11 petition (Bankr. D.N.J. Case No. 12-39767) on Dec. 21, 2012. The Debtor scheduled $15,000,000 in assets and $10,346,981 in liabilities as of the Chapter 11 filing. Judge Gloria M. Burns presides over the case. Maureen P. Steady, Esq., who has an office in Marlton, New Jersey, serves as the Debtor's bankruptcy counsel. In its schedules, the Debtor disclosed $15,000,000 in total assets and $10,346,981 in total liabilities. No official committee of unsecured creditors, trustee or examiner has been appointed in the Debtor's Chapter 11 case. FNBH BANCORP: Reports $2.9 Million Net Income in 2013 ----------------------------------------------------- FNBH Bancorp, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $2.97 million on $10.45 million of total interest and dividend income for the year ended Dec. 31, 2013, as compared with net income of $329,000 on $11.06 million of total interest and dividend income in 2012. As of Dec. 31, 2013, the Company had $312.29 million in total assets, $287.18 million in total liabilities and $25.10 million in total shareholders' equity. BDO USA, LLP, in Grand Rapids, Michigan, did not issue a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. BDO USA previously expressed substantial doubt about the Company's ability to continue as a going concern in their report on the consolidated financial statements for the year ended Dec. 31, 2012. "The Corporation's subsidiary bank ("Bank") is significantly undercapitalized under regulatory capital guidelines and, during 2009, the Bank entered into a consent order regulatory enforcement action ("consent order") with its primary regulator, the Office of the Comptroller of the Currency. The consent order requires management to take a number of actions, including, among other things, increasing and maintaining its capital levels at amounts in excess of the Bank's current capital levels. As discussed in Note 20, the Bank has not yet met the higher capital requirements and is therefore not in compliance with the consent order. As a result of the uncertain potential impact of future regulatory actions, circumstances exist that raise substantial doubt about the Corporation's ability to continue as a going concern." A copy of the Form 10-K is available for free at: http://is.gd/VnZjDJ About FNBH Bancorp Howell, Michigan-based FNBH Bancorp, Inc., is a one-bank holding company, which owns all of the outstanding capital stock of First National Bank in Howell. The Bank was originally organized in 1934 as a national banking association. As of Dec. 31, 2011, the Bank had approximately 85 full-time and part-time employees. The Bank serves primarily five communities, Howell, Brighton, Green Oak Township, Hartland, and Fowlerville, all of which are located in Livingston County. * * * This concludes the Troubled Company Reporter's coverage of FNBH Bancorp until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. FREESCALE SEMICONDUCTOR: S&P Raises Unsecured Debt Rating to 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its issue rating on Austin, Texas-based Freescale Semiconductor Inc.'s senior unsecured debt to 'B-' from 'CCC+' based on the company's use of equity proceeds to redeem approximately $416 million of unsecured debt on March 20, 2014. S&P views these debt repayment transactions as positive for senior unsecured debtholders' recovery prospects. As such, S&P has revised its recovery rating on the senior unsecured debt to '5', signifying modest (10% to 30%) recovery prospects under S&P's default scenario. S&P's corporate credit rating on Freescale Semiconductor Inc. remains 'B' with a stable outlook. RATINGS LIST Freescale Semiconductor Inc. Corporate Credit Rating B/Stable/-- Upgraded Freescale Semiconductor Inc. To From Senior Unsecured B- CCC+ Recovery Rating 5 6 FRESH & EASY: Has Until April 30 to File Plan --------------------------------------------- The exclusive plan filing period of Old FENM, Inc., f/k/a Fresh & Easy Neighborhood Market Inc., and its debtor affiliates, was extended by the U.S. Bankruptcy Court for the District of Delaware until April 30, 2014. The Debtors' exclusive solicitation period was also extended until June 29. The Debtors originally asked for the extension of their exclusive plan filing date until May 30, but the Court only partially granted their request after the Official Committee of Unsecured Creditors objected to another 60-day extension of the exclusive plan filing date, noting the lack of progress on a consensual Chapter 11 plan since the Debtors' last request for extension. The Committee told the Court that it was only willing to support one final 30-day extension of exclusivity through April 30, in the hope of reaching finality on the terms of a consensual plan and avoiding unnecessary, time consuming, and expensive litigation. The Committee said its frustration is magnified by virtue of the fact that little complexity remains with respect to the Chapter 11 cases or a plan. The Committee pointed out that now that various asset sales have closed, the Debtors' estates currently have more than $125 million in cash. Bill Rochelle, the bankruptcy columnist for Bloomberg News, recalled that the Debtors had promised to file a liquidating Chapter 11 plan early this year with full payment for creditors other than Tesco Plc, its Cheshunt, England-based owner. The Debtors, in support of their extension request, said further extension will allow (i) the last of the scheduled bar dates established in the Chapter 11 cases -- the governmental bar date - - to pass; and (ii) them to consensually resolve or object to significant claims in order to obtain a more accurate estimate of the total claims against the estate. The Committee argued that the pool of non-insider unsecured claims is not expected to exceed the $50 million the Debtors anticipated at the outset of the case, and there are no secured, priority or administrative claims that would preclude the Debtors from proposing a full-pay plan without further delay. The Court ruled that to the extent the Debtors require additional extensions of the exclusive periods, the Debtors will (i) inform the Committee in writing no later than April 17 of their intent to request additional extensions of time; and (ii) include the motion on the agenda for the omnibus hearing scheduled for April 22. The Debtors are represented by Mark D. Collins, Esq., John H. Knight, Esq., and William A. Romanowicz, Esq., at RICHARDS, LAYTON & FINGER, P.A., in Wilmington, Delaware; and Paul D. Leake, Esq., and Lisa Laukitis, Esq., at JONES DAY, in New York. The Committee is represented by Bradford J. Sandler, Esq., and Jeffrey N. Pomerantz, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. About Fresh & Easy Neighborhood Fresh & Easy Neighborhood Market Inc., and its affiliate filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-12569 and 13-12570) on Sept. 30, 2013. The petitions were signed by James Dibbo, chief financial officer. Judge Kevin J. Carey presides over the case. Fresh & Easy owes $738 million to Cheshunt, England-based Tesco, the U.K.'s biggest retailer. Fresh & Easy never made a profit and lost an average of $22 million a month in the 12 months ended in February, according to court papers. Jones Day serves as lead bankruptcy counsel. Richards, Layton & Finger, P.A., serves as local Delaware counsel. Alvarez & Marsal North America, LLC, serves as financial advisors, and Alvarez & Marsal Securities, LLC, serves as investment banker. Prime Clerk LLC acts as the Debtors' claims and noticing agent. Gordon Brothers Group, LLC, and Tiger Capital Group, LLC, serves as the Debtors' consultant. The Debtors estimated assets of at least $100 million and liabilities of at least $500 million. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed five creditors to serve in the Official Committee of Unsecured Creditors in the Chapter 11 cases of Fresh & Easy Neighborhood Market Inc., et al. Pachulski Stang Ziehl & Jones LLP serves as counsel to the Committee. FTI Consulting, Inc. serves as its financial advisor. The Debtors closed, on or about Nov. 26, 2013, the sale of about 150 supermarkets plus a production facility in Riverside, California, to Ron Buckle's Yucaipa Cos. Pursuant to the sale terms, the bankruptcy company changed its name, and the name of the case, to Old FENM Inc. FRIENDSHIP DAIRIES: AgStar Asks Court to Stay Plan Hearing ---------------------------------------------------------- The Bankruptcy Court, according to Friendship Dairies' case docket, rescheduled from April 10, 2014, to April 11, at 1:30 p.m., the hearing on creditor AgStar Financial Services, FLCA's motion to stay consideration of the Third Amended Plan of Reorganization, pending appeal. AgStar, as loan servicer and attorney in fact for McFinney Agri-Finance, LLC, submitted on March 25, its motion to stay consideration of the Third Amended Plan. AgStar, by and though its counsel, Scott C. Sandberg, Esq., at Snell & Wilmer L.L.P., filed an objection to the Third Amended Plan on the grounds, among others, that the Court must not consider the Third Amended Plan until the District Court has ruled on the appeal of the stay relief order. U.S. Bankruptcy Judge Robert Jones 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. 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. 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. G & Y REALTY: Section 341(a) Meeting Scheduled for May 7 -------------------------------------------------------- A meeting of creditors in the bankruptcy case of G & Y Realty, LLC, will be held on May 7, 2014, at 11:00 a.m. at Suite 1401, One Newark Center. Proofs of claim are due by Aug. 5, 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. An involuntary Chapter 11 bankruptcy petition was filed against G & Y Realty, LLC (Bankr. D.N.J. Case No. 14-16010) on March 28, 2014. The petition were signed by Sabir, Inc., S. N. Walz, LLC, and Samia Ventor LLC. The petitioners hold an aggregate claim of $4.15 million. Broege, Neumann, Fischer & Shaver serves as the petitioners' counsel. Judge Rosemary Gambardella presides over the case. GENCO SHIPPING: Bondholders May Get Preferred Treatment in Workout ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that senior lenders to dry-bulk cargo ship operator Genco Shipping & Trading Ltd. may decide to give favorable treatment to bondholders to avoid a lengthy reorganization. According to the report, the $125 million in 5 percent senior unsecured convertible notes went for 51.125 cents on the dollar on Feb. 19. On March 24, the last trade was for 83.623 cents, the report said, citing Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. GENERAL MOTORS: Car Dealers Win Favorable Ruling in Fed. Circuit ---------------------------------------------------------------- Former dealers of General Motors Corporation and Chrysler LLC whose franchises were terminated in the automakers' bankruptcies, sued, alleging that the terminations constituted a taking because the government required them as a condition of its providing financial assistance to GM and Chrysler and/or to the companies that succeeded them in the bankruptcies. The government moved to dismiss the suits for failure to state a claim. The United States Court of Federal Claims denied dismissal, and the government brought these interlocutory appeals. The United States Court of Appeals, Federal Circuit, on Monday held that, "Because we lack the benefit of a fully developed factual record, we do not at this stage address every issue the government raises. As to the issues we do address, we reject the government's arguments for dismissal. While we hold that the complaints are deficient because they do not sufficiently allege that the economic value of the plaintiffs' franchises was reduced or eliminated as a result of the government's actions, we nonetheless affirm the Claims Court's decision to deny dismissal at this point in the proceedings. The proper remedy is to grant the plaintiffs leave to amend their complaints to include the necessary allegations, and on remand the Claims Court shall do so." The case is A&D AUTO SALES, INC. v. U.S.Nos. 2013-5019, 2013-5020 (Federal Cir.). A copy of the Appeals Court's April 7 ruling is available at http://is.gd/uWikQlfrom Leagle.com. The panel consists of Circuit Judges Pauline Newman, Timothy D. Dyke, and Richard G. Taranto. About Chrysler Group Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Ram Truck, Mopar(R) and Global Electric Motorcars (GEM) brand vehicles and products. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Ram Truck. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30, 2009, sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). The U.S. and Canadian governments provided Chrysler LLC with $4.5 billion to finance its bankruptcy case. In connection with the bankruptcy filing, Chrysler reached an agreement to sell all assets to an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC in June 2009, formally sold substantially all of its assets to the new company, named Chrysler Group LLC. * * * Chrysler has a 'B1' corporate family rating from Moody's. Moody's upgraded the rating from 'B2' to 'B1' in February 2013. Moody's said that the upgrade reflects Moody's expectation that Chrysler will be able to sustain the progress it has made during the past 18 months in strengthening its competitive position in North America. About General Motors Corp., nka 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. GENERAL MOTORS: U.S. Fines Automaker for Missing Recall Deadline ---------------------------------------------------------------- Jeff Bennett, writing for The Wall Street Journal, reported that federal auto safety regulators blasted General Motors Co. for failing to answer questions about its ignition switch recall, levying a $28,000 fine and warning it could seek stiffer penalties through the federal courts. According to the report, the National Highway Traffic Safety Administration said it plans to fine the auto maker $7,000 a day until it answers all of its questions on the circumstances surrounding why GM took nearly a decade to recall 2.6 million vehicles world-wide equipped with defective ignition switches. GM has linked the defect to 13 deaths. NHTSA Chief Counsel Kevin Vincent, in a letter released on April 8, said the agency will turn the matter over to the Department of Justice if the auto maker fails to pay the assessed penalties and continues to delay responding to its information request, the report related. GM missed an April 3 deadline to answer the agency's 107 questions. NHTSA's action is a blow to GM Chief Executive Mary Barra, who last week cited an internal investigation by Chicago attorney Anton Valukas as grounds for declining to answer members of Congress' detailed questions about the ignition switch recall, the report further related. GM responded to the agency's letter, saying it "has worked tirelessly from the start to be responsive to NHTSA's special order and has fully cooperated with the agency to help it have a full understanding of the facts," the report cited. 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. GEOMET INC: Posts $35.3 Million Net Income in 2013 -------------------------------------------------- GeoMet, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $35.31 million on $38.20 million of total revenues for the year ended Dec. 31, 2013, as compared with a net loss of $149.95 million on $39.38 million of total revenue during the prior year. As of Dec. 31, 2013, the Company had $54.80 million in total assets, $90.65 million in total liabilities, $43.40 million in mezzanine equity and a $79.26 million total stockholders' deficit. Hein & Associates LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning On Feb. 13, 2014, the Company and its wholly-owned subsidiaries, GeoMet Operating Company, Inc. and GeoMet Gathering Company, LLC, entered into an asset purchase agreement to sell substantially all of the Company's remaining assets, comprising coalbed methane interests and other assets located in the Appalachian Basin in McDowell, Harrison, Wyoming, Raleigh, Barbour and Taylor Counties, West Virginia and Buchanan County, Virginia to ARP Mountaineer Productions, LLC, and a wholly-owned subsidiary of Atlas Resource Partners, L.P., for a purchase price of $107 million, subject to various purchase price adjustments. "If the Asset Sale is not consummated and we are unable to find another viable purchaser for our assets, we will likely file bankruptcy as we will have no operating assets to continue the business," the Company said in the Annual Report. A copy of the Form 10-K is available for free at: http://is.gd/CwiKu6 About Geomet Inc. Houston, Texas-based GeoMet, Inc., is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane) and non-conventional shallow gas. Its principal operations and producing properties are located in the Cahaba and Black Warrior Basins in Alabama and the central Appalachian Basin in Virginia and West Virginia. It also owns additional coalbed methane and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of March 31, 2012, it owns a total of 192,000 net acres of coalbed methane and oil and gas development rights. GOLDEN STATE PETROLEUM: S&P Affirms 'B-' Sr. Secured Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its senior secured rating on Golden State Petroleum Transport Corp. at 'B-', and removed it from CreditWatch positive. The outlook is negative. The '4' recovery ratings is unchanged. The 'B-' rating reflects weak financial performance with a DSCR below 1x based on current charter rates and a reliance on liquidity to meet debt service unless charter rates improve from current levels. Although the sale of the VLCC Ulysses will support credit in terms of debt reduction, the sale amount was insufficient to pay the outstanding debt of $39 million in full. The sale was prompted by the allowance in the indenture's supplement for Golden State to sell only Ulysses within one year after it came off charter on March 15, 2013, provided that the proceeds were sufficient to redeem the principal amount of notes allocable to the vessel, plus accrued and unpaid interest to the redemption date. A similar sale of the VLCC Ulriken would also require an amendment to the indenture. Golden State plans to use a portion of the proceeds to redeem one- half of its 8.04% secured notes during the next few months, doing so with the proceeds of the sale as well as amounts in the Ulysses' debt service reserve account. After the redemption, Golden State will have $39 million in debt outstanding, which amortizes through 2019. "The negative outlook reflects our expectation that current charter rates are likely to keep DSCRs at below 1x, resulting in a liquidity drain," said Standard & Poor's credit analyst Michael Ferguson. S&P would likely consider a downgrade within the next 12 months or so if Golden State exhausts liquidity faster than expected, which might stem from a further weakening of charter rates, or if S&P do not expect DSCRs to rise to at least the 1x level based on its view of future rates. Factors that could lead S&P to revise the outlook to stable would be a material increase in charter rates during the next two years along with liquidity sufficient to support a downturn in rates. GREEN FIELD: Can Sell Turbine Powered Technology to Noteholders --------------------------------------------------------------- Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized Green Field Energy Services, Inc., et al., to sell their membership interest in Turbine Powered Technology, LLC, to TPT Acquisition, Inc., an entity to be formed by, and owned by, holders of notes issued by GFES on Nov. 15, 2011. The purchase price for the Membership Interests will be in the form of a credit bid in the amount of $17,750,000 in principal amount of the Notes. Upon the closing, the Buyer will cause notes in the aggregate principal amount of $17,750,000 to be surrendered in exchange for the Membership Interests. As a condition to closing, the Seller will first transfer $1,500,000 of the Noteholders' cash collateral to either TPT or the Buyer. GFES owns or will own prior to closing 52.21% of the issued and outstanding Membership Interests in the Company. The Court denied all objections to the motion to the extent not previously withdrawn or resolved or sustained, including the limited response filed by Tucson Embedded Systems, Inc., which complained that certain terms and references in the proposed form of order submitted with the motion appear to be inapposite to the instant motion and certain terms in the proposed form of order refer to entities or parties not yet identified. 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. Judge Kevin Gross approved the disclosure statement explaining the Debtors' Plan of Liquidation and scheduled the hearing to consider confirmation of the Plan for April 23, 2014, at 2:00 p.m. (Eastern Time). Objections to the confirmation of the Plan are due April 15. Allowed general unsecured claims estimated to total $78,800,000, will be paid 13% of their full amount, while allowed senior noteholder claims estimates to total $254,000,000 will be paid 25% of their asserted amount. The Liquidation Plan is premised upon a settlement reached by and among the Debtors, SWEPI, LP, Michel Moreno and Turbine Powered Technology, LLC, which centers around the contribution of the MOR/TGS Interests by the Moreno Entities to NewCo in exchange for certain interests in NewCo and the releases by Debtors and certain holders of claims. The Plan is premised upon a waiver of Deficiency Claim of the Senior Secured Notes Indenture Trustee and Senior Secured Noteholders. 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: Tucson Embedded Sues for Return of Proprietary Info ---------------------------------------------------------------- Tucson Embedded Systems, Inc., sued Green Field Energy Services, Inc., for judgment declaring that the so-called "gas boss software" and "well report software" are not property of the estate and that, under the non-disclosure agreement they entered into prior to the Petition Date, the Debtor is required to return all materials containing Tucson's confidential proprietary information, including the two software. Marc S. Casarino, Esq., at WHITE AND WILLIAMS LLP, in Wilmington, Delaware; and Donald L. Gaffney, Esq., and Evans O?Brien, Esq., at SNELL & WILMER L.L.P., in Phoenix, Arizona, represent Tucson. 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. Judge Kevin Gross approved the disclosure statement explaining the Debtors' Plan of Liquidation and scheduled the hearing to consider confirmation of the Plan for April 23, 2014, at 2:00 p.m. (Eastern Time). Objections to the confirmation of the Plan are due April 15. Allowed general unsecured claims estimated to total $78,800,000, will be paid 13% of their full amount, while allowed senior noteholder claims estimates to total $254,000,000 will be paid 25% of their asserted amount. The Liquidation Plan is premised upon a settlement reached by and among the Debtors, SWEPI, LP, Michel Moreno and Turbine Powered Technology, LLC, which centers around the contribution of the MOR/TGS Interests by the Moreno Entities to NewCo in exchange for certain interests in NewCo and the releases by Debtors and certain holders of claims. The Plan is premised upon a waiver of Deficiency Claim of the Senior Secured Notes Indenture Trustee and Senior Secured Noteholders. 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. GUITAR CENTER: S&P Raises CCR to 'B-'; Outlook Negative ------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Westlake Village, Calif.-based Guitar Center Holdings Inc. to 'B-' from 'SD'. The outlook is negative. At the same time S&P withdrew its issue-level ratings on the company's $323 million asset-based lending (ABL) revolver and $650 million term loan following the completed refinancing of these debt instruments. In addition, S&P withdrew its issue-level ratings on both the $401.8 million holding company and $375 million operating company notes following the completion of the exchange. "The rating action follows the completed restructuring, whereas the company exchanged more than $500 million of its balance sheet debt into preferred equity," said credit analyst Mariola Borysiak. "The transaction improves the company's cash flow generation and liquidity profile, which S&P now views as 'adequate'". The negative outlook reflects the risks associated with management's execution plans to sustain stable performance at the Guitar Center and Music & Arts divisions and revitalize the underperforming Direct Response segment. S&P projects liquidity will remain adequate for the company over the next 12 months. Downside scenario: S&P could consider a lower rating if management's initiatives fail to stabilize performance. This coupled with increasing competition, mainly from online players, would hurt profitability and lead to negative free operating cash flow for the company. Under this scenario S&P would view the company's liquidity as "less than adequate" and its capital structure as unsustainable. Upside scenario: Any positive ratings momentum would be predicated on the company's ability to stabilize operations and turn around its underperforming Direct Response segment. Under this scenario, consistent sales and EBITDA growth would lead to debt leverage (including preferred stock) improving toward 7x and resulting in S&P's reassessment of the comparable ratings analysis modifier to "neutral" from the current "negative". Because preferred stock accrues dividends (which S&P treats as debt in its ratio calculation), S&P believes EBITDA growth of nearly 20% from 2013 fiscal year levels is necessary for debt leverage to decline to around 7x. HALLWOOD GROUP: Incurs $2.4 Million Net Loss in 2013 ---------------------------------------------------- The Hallwood Group Incorporated filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $2.40 million on $129.23 million of textile products sales for the year ended Dec. 31, 2013, as compared with a net loss of $17.94 million on $130.52 million of textile products sales in 2012. The Company incurred a net loss of $6.33 million in 2011. The Company's balance sheet at Dec. 31, 2013, shows $62.12 million in total assets, $23.33 million in total liabilities and $38.78 million in total stockholders' equity. Deloittee & Touche LLP, in Dallas, Texas, issued a "going concern qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company is dependent on its subsidiary to receive the cash necessary to fund its ongoing operations and obligations. It is uncertain whether the subsidiary will be able to make payment of dividends to fund the Company's ongoing operations and obligations. These conditions raise substantial doubt about its ability to continue as a going concern. A copy of the Form 10-K is available for free at: http://is.gd/IlErvz About Hallwood Group Dallas, Texas-based The Hallwood Group Incorporated (NYSE MKT: HWG) operates as a holding company. The Company operates its principal business in the textile products industry through its wholly owned subsidiary, Brookwood Companies Incorporated. Brookwood is an integrated textile firm that develops and produces innovative fabrics and related products through specialized finishing, treating and coating processes. Prior to October 2009, The Hallwood Group Incorporated held an investment in Hallwood Energy, L.P. ("Hallwood Energy"). Hallwood Energy was a privately held independent oil and gas limited partnership and operated as an upstream energy company engaged in the acquisition, development, exploration, production, and sale of hydrocarbons, with a primary focus on natural gas assets. The Company accounted for the investment in Hallwood Energy using the equity method of accounting. Hallwood Energy filed for bankruptcy in March 2009. In connection with the confirmation of Hallwood Energy's bankruptcy in October 2009, the Company's ownership interest in Hallwood Energy was extinguished and the Company no longer accounts for the investment in Hallwood Energy using the equity method of accounting. Hallwood Group incurred a net loss of $17.94 million in 2012, as compared with a net loss of $6.33 million in 2011. HUGHES SATELLITE: S&P Affirms 'B+' Rating on Secured Notes ---------------------------------------------------------- Standard & Poor's Ratings Services revised the recovery rating on Hughes Satellite Systems Corp.'s senior secured notes to '3' from '4', and affirmed the 'B+' issue-level rating on the secured notes and the 'B-' issue level rating on its senior unsecured notes. The '6' recovery rating on the senior unsecured notes remains unchanged. The '3' recovery rating indicates prospects for meaningful recovery (50%-70%) in the event of a payment default. The '6' recovery rating indicates prospects for negligible recovery (0%- 10%) in the event of a payment default. The revision of the recovery rating on the senior secured notes reflects S&P's reassessment of recovery prospects, which incorporates a reduction in priority claims outstanding at the point of default. The 'B+' corporate credit rating and stable outlook on Hughes remain unchanged and reflect S&P's anchor of 'bb-' (based on S&P's "fair" business risk and "aggressive" financial risk profile assessments for the company), which S&P lowered by one notch to a 'b+' standalone credit profile due to a "negative" financial policy assessment. The negative financial policy assessment is based on S&P's view that management may increase leverage relative to its base case in order to accommodate funding for additional satellites and other strategic initiatives. The standalone credit profile of 'b+' was not affected by S&P's group rating methodology. While S&P considers Hughes to be core to parent company EchoStar Corp., S&P also considers the group credit profile to be a 'b+'. RECOVERY ANALYSIS -- S&P has revised its recovery rating on the senior secured notes to '3' from '4' following a reduction in priority claims assumed outstanding at the point of default. -- Issue-level ratings remain unchanged. -- Standard & Poor's default scenario contemplates the company's satellite-based communications services facing weak demand, pricing pressure, and higher operating expense in the currently faster-growing consumer and small business segment due to competition from lower-cost terrestrial network options and high operating costs associated with near-term launches. Simulated default assumptions -- Simulated year of default: 2018 -- EBITDA at the time of default of about $232 million (the simulated level of the company's fixed charges (interest expense, required amortization, and minimum maintenance capital expenditures)) -- An emergence multiple of 5x -- Administrative claims of 5% of enterprise value Simplified waterfall -- Net enterprise value (after 5% administrative costs): $1,101 Million -- Valuation split in % (obligors/nonobligors): 90/10 -- Priority claims: $438 million -- Collateral value available to secured creditors: $553 Million -- Secured first-lien debt: $1,136 million -- Recovery expectations: 50% to 70% -- Total value available to unsecured claims: $110 million -- Senior unsecured debt and pari-passu claims: $1,517 million -- Recovery expectations: 0% to 10% Note: All debt amounts include six months of prepetition interest. RATINGS LIST Hughes Satellite Systems Corp. Corporate Credit Rating B+/Stable/-- Issue Rating Affirmed; Recovery Rating Revised Hughes Satellite Systems Corp. TO FROM Senior Secured B+ B+ Recovery Rating 3 4 Issue Rating Affirmed; Recovery Rating Unchanged Hughes Satellite Systems Corp. Senior Unsecured B- Recovery Rating 6 INDUSTRIAS VASALLO: Puerto Rico Court Won't Reverse Ruling ---------------------------------------------------------- In the case styled as, INDUSTRIAS VASALLO, INC. Plaintiff, v. PUERTO RICO ELECTRIC POWER AUTHORITY Defendant, Adv. Proc. No. 09-00258 (Bankr. D.P.R.), Bankruptcy Judge Brian K. Tester denied the Motion to Alter or Amend Judgment pursuant to Fed. R. Civ. P. 59 and Fed. R. Bankr. P. 9023 filed by Intervenor-Plaintiff, United Surety & Indemnity Company. On Dec. 22, 2009, IndustriasVassallo filed a complaint against the Puerto Rico Electric Power Authority asserting that PREPA owed the Debtor $3,449,161.12 in damages resulting from electric power interruptions and/or fluctuations to the Debtor's Coto Laurel manufacturing plant. In January 2010, USIC sought and obtained permission to intervene. On Oct. 5, 2012, PREPA filed its Motion for Summary Judgment against USIC's complaint in intervention. USIC had previously issued a $450,000 bond to jointly and severally guarantee payment by the Debtor to PREPA upon the Debtor's failure to meet its obligation. After considering all arguments and responses, on Dec. 19, 2013, the Court entered an order granting partial summary judgment in favor of PREPA. Careful consideration of the record demonstrated that the Debtor owes PREPA a minimum of $450,000, and USIC must therefore indemnify. As there is no genuine issue of material fact as to the minimum amount owed to PREPA, the Court appropriately granted partial summary judgment. On Jan. 2, 2014, USIC filed the Motion to Alter or Amend Judgment. PREPA responded by filing its Motion to Strike USIC's Motion. Due to USIC's failure to comply with L.Cv.R. 7(d), on April 1, 2014, the Court determined that only the first 15 pages of USIC's Motion to Alter or Amend Judgment would be considered. According to Judge Tester, motions under Fed. R. Civ. P. 59(e) must either present newly discovered evidence or clearly establish a manifest error of law. USIC has simply failed to do so, and is not entitled to reconsideration. Industrias Vassallo, Inc., filed for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 08-07752) on Nov. 17, 2008. A copy of the Court's April 7, 2014 Opinion and Order is available at http://is.gd/ramnhcfrom Leagle.com. JAMES RIVER: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor affiliates filing separate Chapter 11 bankruptcy petitions: Debtor Case No. ------ -------- James River Coal Company 14-31848 901 E. Byrd Street, Suite 1600 Richmond, VA 23219 BDCC Holding Company, Inc. 14-31850 901 E. Byrd Street, Suite 1600 Richmond, VA 23219 Bell County Coal Corporation 14-31851 Route 1, Box 290 Middlesboro, KY 40965 Bledsoe Coal Corporation 14-31852 Bledsoe Coal Leasing Company 14-31853 Blue Diamond Coal Company 14-31856 Highway 699 48 Beech Fork Road Slemp, KY 41763 Buck Branch Resources LLC 14-31857 901 E. Byrd Street, Suite 1600 Richmond, VA 23219 Chafin Branch Coal Company, LLC 14-31858 Eolia Resources, Inc. 14-31860 901 E. Byrd Street, Suite 1600 Richmond, VA 23219 Hampden Coal Company, LLC 14-31861 US Route 52 S Gilbert, WV 25621 International Resource Partners LP 14-31862 International Resources Holdings I LLC 14-31863 International Resources Holdings II LLC 14-31864 International Resources, LLC 14-31866 96 MacCorkle Avenue, SW Charleston, WV 25303 IRP GP Holdco, LLC 14-38167 901 E. Byrd Street, Suite 1600 Richmond, VA 23219 IRP Kentucky LLC 14-31868 IRP LP Holdco Inc. 14-31869 IRP WV Corp. 14-31870 James River Coal Sales, Inc. 14-31871 James River Coal Service Company 14-31872 James River Escrow Inc. 14-31873 Jellico Mining, LLC 14-31874 Johns Creek Coal Company 14-31875 Johns Creek Elkhorn Coal Corporation 14-31876 Johns Creek Processing Company 14-31877 Laurel Mountain Resources LLC 14-31878 Leeco, Inc. 14-31879 Logan & Kanawha Coal Co., LLC 14-31880 McCoy Elkhorn Coal Corporation 14-31881 Rockhouse Creek Development, LLC 14-31882 Shamrock Coal Company, Incorporated 14-31883 Snap Creek Mining, LLC 14-31884 Triad Mining, Inc. 14-31885 Triad Underground Mining, LLC 14-31886 Type of Business: Producer and marketer of coal in the Central Appalachia and the Midwest coal regions of the United States. Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court Eastern District of Virginia (Richmond) Judge: Hon. Kevin R. Huennekens Debtors' Counsel: Marshall S. Huebner, Esq. Brian M. Resnick, Esq. Michelle M. McGreal, Esq. DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, NY 10017 http://www.davispolk.com Phone: (212) 450-4000 Fax: (212) 607-7973 Email: marshall.huebner@davispolk.com brian.resnick@davispolk.com michelle.mcgreal@davispolk.com Debtors' Local: Tyler P. Brown, Esq. Counsel Henry Pollard Long, III, Esq. Justin F. Paget, Esq. HUNTON & WILLIAMS, LLP 951 East Byrd Street Riverfront Plaza East Tower Richmond, VA 23219-4074 Tel: (804) 788-8200 Email: tpbrown@hunton.com hlong@hunton.com jpaget@hunton.com Debtors' Special KILPATRICK TOWNSEND & STOCKTON LLP Counsel: Debtors' Financial PERELLA WEINBERG PARTNERS L.P. Advisor: Debtors' Investment DEUTSCHE BANK SECURITIES INC. Banker & M&A Advisor: Debtors' Notice, EPIQ BANKRUPTCY SOLUTIONS, LLC Claims and Administrative Agent: Estimated Estimated Assets Debts ----------- ----------- James River Coal Company $1.06BB $818.6MM BDCC Holding Company, Inc. $500MM-$1BB $500MM-$1BB Bell County Coal Corporation $500MM-$1BB $500MM-$1BB Blue Diamond Coal Company $500MM-$1BB $500MM-$1BB Buck Branch Resources LLC $500MM-$1BB $500MM-$1BB Eolia Resources, Inc. $500MM-$1BB $500MM-$1BB Hampden Coal Company, LLC $500MM-$1BB $500MM-$1BB International Resources, LLC $500MM-$1BB $500MM-$1BB IRP GP Holdco, LLC $500MM-$1BB $500MM-$1BB The petitions were signed by Peter T. Socha, president, chief executive officer. Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank National Association Notes $270,000,000 Attn: Specialized Finance 60 Livingston Avenue Mail Station?EP-MN-W52N St. Paul, MN 55107-2292 Phone: (800) 934-6802 Fax: (651) 495-8158 U.S. Bank National Association Notes $133,900,000 Attn: Specialized Finance 60 Livingston Avenue Mail Station-EP-MN-W52N St. Paul, MN 55107-2292 Phone: (800) 934-6802 Fax: (651) 495-8158 U.S. Bank National Association Notes $47,300,000 Attn: Specialized Finance 60 Livingston Avenue Mail Station-EP-MN-W52N St. Paul, MN 55107-2292 Phone: (800) 934-6802 Fax: (651) 495-8158 U.S. Bank National Association Notes $13,300,000 Attn: Specialized Finance 60 Livingston Avenue Mail Station?EP-MN-W52N St. Paul, MN 55107-2292 Phone: (800) 934-6802 Fax: (651) 495-8158 Whayne Supply Company Trade Payables $2,103,222 Department 8326 Carol Stream, IL 60122-8326 Phone: (502) 774-4441 Fax: (502) 775-2666 Norfolk Southern Corporation Trade Payables $1,448,812 Three Commercial Place Norfolk, VA 23510 Phone: (855) 667-3655 Fax: (757) 664-5069 Lazard Freres & Co., LLC Trade Payables $899,448 30 Rockefeller Plaza New York, NY 10020 Phone: (212) 632-6000 Fax: (212) 332-5944 Mine Service Companny Inc Trade Payables $563,891 2342 S. Ky. Hwy 15 Hazard, KY 41701 Phone: (606) 436-3191 Fax: (606) 436-3194 Warex LLC Trade Payables $544,365 2323 Kotter Avenue Evansville, IN 47715 Phone: (812) 473-6066 Fax: (812) 477-8381 Joy Global Underground Mining Trade Payables $538,352 811 Boone Trail Road Duffield, VA 24244-0256 Phone: (276) 698-1673 Fax: (276) 431-4625 Austin Powder Co. Trade Payables $533,166 25800 Science Park Drive Cleveland, OH 44194 Phone: (276) 298-8501 Fax: (216) 464-4418 Macallister Machinery Co. Trade Payables $454,084 7515 E. 30th Street Indiapolis, IN 46219 Phone: (216) 464-2400 Fax: (216) 464-4418 Natural Resource Partners, LP Trade Payables $444,033 601 Jefferson Street Suite 3600 Houston, TX 77002 Phone: (713) 751-7507 Fax: (713) 650-0606 Natural Resource Partners, L.P. Trade Payables $424,641 601 Jefferson Street Suite 3600 Houston, TX 77002 Phone: (713) 751-7507 Fax: (713) 650-0606 Acin, LLC Trade Payables $404,963 C/O NRP (Operating) LLC 5260 Irwin Road Huntington, WV 25705 Phone: (304) 522-5757 Fax: (304) 522-5401 Express Scripts, Inc. Trade Payables $313,460 21653 Network Place Chicago, IL 60673-1216 Phone: (314) 919-4658 Fax: (800) 769-3968 Aquatic Resources Management Trade Payables $297,536 2265 Harrodsburg Road, Suite 100 Lexington, KY 40504 Phone: (859) 388-9595 Fax: (859) 381-1005 United Central Industrial Trade Payables $275,865 Supply Co 1241 Volnteer Pkwy Suite 1000 Bristol, TN 37620 Phone: (423) 573-7300 Fax: (412) 573-7297 Coalfield Lumber Company, Inc. Trade Payables $265,637 Route 645 Inez, KY 41224 Phone: (606) 298-3150 Fax: (606) 298-3114 Synenergy Partners, LLC Trade Payables $260,489 520 S. 4th Street Boonville, IN 47601 Phone: (812) 315-0552 Fax: (812) 715-1122 Nalco Chemical Co. Trade Payables $249,651 1601 W. Diehl Road Napperville, IL 60563-1198 Phone: (630) 305-1000 Fax: (630) 305-2900 Peabody Terminals, LLC Trade Payables $205,962 General Engineering, Company Trade Payables $190,518 Rudd Equipment Company Trade Payables $187,757 Pocahontas Land Corp. Trade Payables $185,242 Bluegrass Materials Co. LLC Trade Payables $183,869 Leslie Co Circuit Court Clerk Trade Payables $182,714 Rice Oil Company, Inc. Trade Payables $173,320 Kentucky State Treasurer Trade Payables $168,652 Da Lubricant Co. Inc. Trade Payables $156,055 JONES & WOOD: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Jones & Wood, Inc. 1702 Minnesota Ave., SE #1 Washington, DC 20020 Case No.: 14-00209 Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court District of Columbia (Washington, D.C.) Judge: Hon. Martin Teel, Jr. Debtor's Counsel: Wendell W. Webster, Esq. WEBSTER, FREDRICKSON, CORREIA & PUTH, PLLC 1775 K Street, NW, Suite 600 Washington, DC 20006 Tel: 202- 659-8510 Fax: (202) 659-4082 Email: gspence@wfcplaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Lambertine W. Jones, principal. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/dcb14-209.pdf KASPER LAND: Creditors Want Chapter 11 Trustee Appointed -------------------------------------------------------- Secured creditors of Kasper Land and Cattle Texas, LLC, ask the Court to appoint a Chapter 11 trustee. Hearing on this request is scheduled on April 24, 2014, at 10:30 a.m. As of filing the Debtor's Chapter 11 cases, these creditors assert over $3 million in unpaid balance with interest from Kasper Land: (a) Herring Bank (b) Monarch Trust Company (c) estate of Jane Slemp Burgess (d) Chain-C, Inc. Kasper Land has a single asset consisting of its farmland and related irrigation equipment and derives all its income from a lease of the farmland to Kasper Farms, J.V. David R. Langston, Esq., at Mullin Hoard & Brown, LLP, in Lubbock, Texas, relates that the Kasper Farms Lease for the 2014 crop season, assuming it was entered into before filing bankruptcy, has not been assumed by Kasper Farms nor approved by the Court. According to Mr. Langston, Kasper Land told its secured creditors that lease payment for 2014 has already been paid and it has used those funds to pay farmland taxes and interest. Thus, Kasper Land has no other source of income during 2014 and is not entitled to additional income from the lease until early 2015. Therefore, Kasper Land has no means by which to commence making monthly payments of interest to secured creditors or any means by which to fund a plan of reorganization, says Mr. Langston. Mr. Langston relates that all indications show that Kasper Land will fail to plant crops during 2014 and will fail to properly maintain their farmland. This holds risk that the land value over the course of the bankruptcy will significantly diminish. Mr. Langston adds that farming this amount of land without sufficient financing or a source of independent cash to pay for the expenses necessary to carry out good farming practices means that there is likely to be a resurgence of noxious weeds on the real estate. Mr. Langston asserts the need to appoint a Chapter 11 trustee because of Kasper Land's mismanagement in the leasing of their farmland to a third party that does not have the ability to adequately conduct farming operations. He notes that a Chapter 11 trustee will be able to immediately move to lease the farmland to a third party capable of paying a cash rental, and timely planting the spring crops. 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. Kasper Land scheduled $23,170,640 in total assets, and $13,420,213 in total liabilities. LABORATORY PARTNERS: Parties Agree to Continued Cash Use -------------------------------------------------------- In November 2013, the Bankruptcy Court released an order in Laboratory Partners, Inc.'s Chapter 11 cases, which: (a) approved postpetition financing; (b) authorized the use of cash collateral; (c) granted liens and provided superpriority administrative expense status; (d) granted adequate protection; and (e) modified the automatic stay. In connection with the pending maturity of the approved financing and payment of amounts due, Laboratory Partners and its agent and lenders agreed that obligations have been paid in full and liens will be terminated. The parties further agree that Laboratory Partners is permitted to continue to use cash collateral. In that regard, Laboratory Partners seeks the Court's authority to continue using cash collateral, thus amending the Court's previous order. Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, notes that Laboratory Partners require the continued use of cash collateral to maintain sufficient working capital to preserve assets value, continue the process to sell assets, pursue and confirm a Chapter 11 plan, and preserve and maximize the value of their estates. Ms. Fay relates Laboratory Partners and its agents and lenders have agreed that it may retain a portion of asset sale proceeds and use that amount as cash collateral consistent with an agreed revised budget. About Laboratory Partners Laboratory Partners Inc., a Cincinnati-based provider of lab and pathology services, and several affiliates filed petitions for Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-12769) on Oct. 25, 2013, in Delaware. In its assets, the Debtor disclosed $43,034,702.91 in total assets and at least $132,357,067.42 (plus unknown) in total liabilities. The debtor-affiliates are Kilbourne Medical Laboratories, Inc., MedLab Ohio, Inc., Suburban Medical Laboratory, Inc., Biological Technology Laboratory, Inc., Terre Haute Medical Laboratory, Inc., and Pathology Associates of Terre Haute, Inc. Certain of the Debtors do business as MEDLAB. Judge Peter J. Walsh presides over the case. Laboratory Partners is represented by Morris, Nichols, Arsht & Tunnell LLP's Robert Dehney, Esq., and Erin R. Fay, Esq.; and Pillsbury Winthrop Shaw Pittman LLP's Leo T. Crowley, Esq., and Margot P. Erlich, Esq. and Jonathan J. Russo, Esq. BMC Group Inc. serves as claims and administrative agent. Duff & Phelps Securities LLC serves as the Debtors' investment bankers. The Official Committee of Unsecured Creditors has retained Otterbourg P.C., as Lead Co-Counsel; Klehr Harrison Harvey Branzburg LLP as Delaware Counsel; and Carl Marks Advisory Group LLC, as financial advisors. In March 2014, the Bankruptcy Court authorized the Debtors to sell their so-called "Talon Division," which refers to the clinical laboratory and anatomic pathology services to (i) physicians, physician officers and medical groups in Indiana, Illinois, and (ii) Union Hospital, Inc., in Terre Haute and Clinton, Indiana, to Laboratory Corporation of America Holdings for $10.5 million. An auction was cancelled after the Debtors received no competing bid during the bid deadline. The Court also authorized the Debtors to sell certain of their assets relating to their nuclear medicine business to Union Hospital, Inc. LAUSELL INC: Seeks Final Decree, Consummates Plan ------------------------------------------------- Lausell Inc. asks the Court to issue a final decree that its Chapter 11 plan has been substantially consummated. Charles A. Cuprill-Hernandez, Esq., in San Juan Puerto Rico, relates that in compliance with the provision of the plan, Lausell has made these payments: (a) Costs and expenses of administration including a $613,376 postpetition accounts payable. (b) Holders of allowed priority tax claims for $10,000 or less amounting to $15,878. The remaining unsecured priority tax claim of the State Insurance Fund was assumed by the purchaser of Lausell's assets, La-Re 2 Group, LLC. (c) Class 1 - secured claim of Firstbank Puerto Rico and Citibank, N.A., reduced to $5.6 million as agreed by the parties. (d) Class 2 - claim of Puerto Rico Industrial Development Co. from prepetition rents for $952,362 and postpetition claims for unpaid rents was assumed by La-Re 2, as part of the consideration paid for the purchase of Lausell's assets. No payments were made under the plan. (e) Class 3 - holders of claims arising from the assumption of executory contracts. (f) Class 4 - the claim of La-Re Group, LLC, arising from the prepetition lease contract arrears related to Lausell's Barceloneta leased facilities, did not receive payment under the plan, as La-Re Group, LLC condoned the claim, upon confirmation of the plan. (g) Class 5 - La-Re 2's claim arising from amounts due on lease contract for Lausell's Rio Piedras' leased facilities, did not receive any dividends as La-Re 2 purchased substantially all of Lausell's assets and condoned the claim. (h) Class 6 - Holders of allowed general unsecured claims, including those from rejected executory contracts, but excluding banks' deficiency claim and any claims of Lausell's insiders and affiliates, were paid in full on a pro-rata basis from the $50,000 carve out reserved from the sale proceeds. As reported by the Troubled Company Reporter on Nov. 6, 2013, the Bankruptcy Court on Oct. 31 entered an order confirming Lausell Inc.'s Amended Chapter 11 Plan dated June 3. About Lausell Inc. Lausell, Inc., filed a bare-bones Chapter 11 petition (Bankr. D.P.R. Case No. 12-02918) on April 17, 2012, in Old San Juan, Puerto Rico. Lausell, also known as Aluminio Del Caribe, is a manufacturer of windows and doors. Bankruptcy Judge Mildred Caban Flores oversees the case. Charles Alfred Cuprill, Esq., at Charles A. Curpill, P.S.C. Law Offices, in San Juan, Puerto Rico, serves as counsel to the Debtor. The Bayamon, Puerto Rico-based company disclosed $34,059,950 in assets and liabilities of $24,489,414 in its amended schedules. LIBERTY MEDICAL: Court Okays Raymond James as Investment Banker --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Liberty Medical Supply Inc. and its debtor-affiliates to employ Raymond James & Associates Inc. as their investment banker, nunc pro tunc Feb. 6, 2014. The firm will: a) review and analyze the Company's business, operations, properties, financial condition and prospects; b) assist the Company in identifying financial and strategic institutional investors or other investors who may be interested in participating in the transaction; c) contact interested parties which Raymond James, after consultation with the Company's management, believes meet certain industry, financial, and strategic criteria and assist the Company in negotiating and structuring a transaction; d) advise the Company as to potential mergers or acquisitions, and the sale or other disposition of any of the Company's assets or businesses; e) participate in the Company's board of directors meetings as determined by the Company to be appropriate, and, upon request, provide periodic status reports and advice to the board with respect to matters falling within the scope of Raymond James' retention; f) as reasonably requested by the Company, provide testimony in the matter brought by the Company pursuant to Chapter 11 of the Bankruptcy Code, case number 13-10262-PJW, pending before the Court with respect to a proposed financing transaction or a business combination transaction; and g) if requested by the Company, provide a valuation report or testimony in support of a plan of reorganization. The Debtors will pay the firm a monthly advisory fee of $75,000. In addition, the Debtors agreed to pay the firm a cash fee upon closing a financing transaction, whether on a standalone basis or to consummate any other transaction, equal to the greater of $550,000 and 3.0% of the aggregate gross proceeds of all debt or equity capital raised which fees shall be paid immediately out of the proceeds of such placement. Furthermore, at the closing of any business combination transaction, the firm will be paid a cash fee out of proceeds as a cost of sale at the closing of a business combination transaction, equal to the greater of $550,000 and 2.0% of "Consideration". The Debtors assured the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Liberty Medical Entities that own diabetics supply provider Liberty Medical led by ATLS Acquisition, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 13-10262) on Feb. 15, 2013, just less than three months after a management buy-out and amid a notice by the lender who financed the transaction that it's exercising an option to acquire the business. Liberty has been in business for 22 years serving the needs of both type 1 and type 2 diabetic patients. Liberty is a mail order provider of diabetes testing supplies. In addition to diabetes testing supplies, the Debtors also sell insulin pumps and insulin pump supplies, ostomy, catheter and CPAP supplies and operate a large mail order pharmacy. Liberty operates in seven different locations and has 1,684 employees. Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, serves as the Debtor's counsel; Ernst & Young LLP to provide investment banking advice; and Epiq Bankruptcy Solutions, LLC, as claims and noticing agent for the Clerk of the Bankruptcy Court. An official committee of unsecured creditors has been appointed in the case and consists of LifeScan, Inc., Abbott Laboratories, and Teva Pharmaceuticals USA, Inc. They are represented by Joseph H. Huston Jr., Esq., Maria Aprile Sawczuk, Esq., and Camille C. Bent, Esq., of Stevens & Lee P.C. as well as Bruce Buechler, Esq., S. Jason Teele, Esq., and Nicole Stefanelli, Esq. of Lowenstein Sandler LLP. The Committee has tapped Mesirow Financial Consulting, LLC, as financial advisors. LIFE UNIFORM: Richard Stern Appointed as Fee Examiner ----------------------------------------------------- LUCH Wind Down Corp., at the Court's direction, conferred with the official committee of unsecured creditors and the U.S. Trustee regarding the appointment of a fee examiner. Discussions resulted into a stipulation where the parties sought and received the Court's approval to appoint Richard Stern, Esq., at Luskin Stern & Eisler LLP, in New York as independent fee examiner. Richard Stern is tasked to review and assess all applications filed by retained professionals and the fees and reimbursement of expenses. The fee examiner is further authorized to: (a) file comments on the public Court docket regarding any application by a retained professional; (b) communicate its concerns regarding any application to the retained professional; (c) request that retained professionals provide budgets, staffing plans, or other information; (d) establish procedures to facilitate the preparation and review of applications; (e) recommend procedures to facilitate the preparation and review of applications; (f) appear and be heard on any matter before the Court; (g) file and litigate objections to the allowance of any application; (h) take, defend or appear in any appeal regarding an application; (i) conduct discovery; and (j) retain, subject to Court approval, professionals to represent or assist the fee examiner. Nashville, Tenn.-based Smoky Mountain Motels, Inc. -- fka Music City Motels, Inc., and dba Smoky Shadows Motel & Conference Center -- filed for Chapter 11 bankruptcy (Bankr. E.D. Tenn. Case No. 14- 30557) on Feb. 26, 2014. Bankruptcy Judge Richard Stair Jr. oversees the case. Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, serves as the Debtor's counsel. Smoky Mountain Motels disclosed total assets of $11.43 million and total liabilities of $8.72 million. The petition was signed by Eddie Rhines, president. LIFE UNIFORM: Fee Examiner Taps Rosner as Delaware Counsel ---------------------------------------------------------- Richard Stern, the court-appointed fee examiner in the Chapter 11 cases of LUHC Wind Down Corp., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ The Rosner Law Group LLC, as Delaware counsel nunc pro tune to March 5, 2014. The Court appointed the fee examiner to review and assess requests for allowance of fees and expenses by certain professionals in the Chapter 11 cases. RLG will assist him in complying with local Delaware law. Frederick B. Rosner, a principal of RLG which maintains an office for the practice of law at 824 N. Market Street, Suite 810, Wilmington, Delaware, tells the Court that the principal attorneys and paralegal designated to represent the fee examiner and their discounted hourly rates are: Mr. Rosner, attorney $250 Scott J. Leonhardt, attorney $250 Julia B. Klein, attorney $250 Paralegals $150 The Court will convene a hearing on May 1, 2014, at 2:00 p.m., to consider the request. Objections, if any, are due April 14, at 4:00 p.m. About Life Uniform Life Uniform was founded in 1965 when Angelica Corporation decided to enter the retail uniform industry. The first Life Uniform store opened in 1965 in Clayton, Missouri. At present, Life Uniform is the nation's largest independently owned medical professional supplier. Sun Uniform LLC acquired Life Uniform in July 2004. Since the acquisition by Sun the company addressed sagging profitability and overhead issues and quickly drove increases in profitability through a combination of store rationalization and sensible corporate overhead initiatives. However, recent performance has been declining in terms of revenue. This is due to the company's liquidity issues, which prevented the company from completing its e-commerce system upgrade, encourage better pricing from vendors, and maintain sufficient capital. Life Uniform Holding Corp., Healthcare Uniform Company, Inc., and Uniform City National Inc. filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-11391 to 13-11393) on May 29, 2013. The petitions were signed by Bryan Graiff, COO, CFO, VP, secretary, and treasurer. Life Uniform Holding disclosed $10,695,870 in assets and $36,821,034 in liabilities as of the Chapter 11 filing. Life Uniform and Uniform City received court authority on July 26 to sell the business for $22.6 million to Scrubs & Beyond LLC. There were no competing bids, so an auction wasn't held. First lien lender CapitalSource Finance LLC is owed on a $11.5 million revolver and $26 million term loan. CapitalSource is represented by Brian T. Rice, Esq., at Brown Rudnick LLP; and Jeffrey C. Wisler, Esq., at Connolly Gallagher LLP. Sun Uniforms Finance LLC is owed $6.1 million in principal on a second lien note and holds two additional notes, each in the original principal of $1.08 million. Angelica Corp. holds an unsecured junior subordinate not in the principal amount of $5.48 million. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions acts as the Debtors' administrative agent, and claims and noticing agent. The Debtors' financial advisor is Capstone Advisory Group, LLC. Crowe Horwath LLP serves as tax accountants and Brown Smith Wallace LLC as wind-down tax accountants. The Official Committee of Unsecured Creditors is represented by Seth Van Aalten, Esq., at Cooley LLP, and Ann M. Kashishian, Esq., at Cousins Chipman & Brown, LLP as counsel. The U.S Trustee for Region 3 appointed Boris Segalis of InfoLawGroup LLP as consumer privacy ombudsman in the case. LIFE UNIFORM: Fee Examiner Taps Luskin Stern as Counsel ------------------------------------------------------- Richard Stern, the court-appointed fee examiner in the Chapter 11 cases of LUHC Wind Down Corp., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Luskin, Stern & Eisler LLP as counsel. Luskin Stern will, among other things: a) assist in the review of the fee applications and related invoices for compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the U.S. Trustee Guidelines, and the Local Rules and Orders of the Court; b) assist in any hearings or other proceedings before the Court to consider the fee applications; and c) assist with legal issues raised by inquiries to and from the retained professionals; Mr. Stern, a member of Luskin Stern, which maintains offices at Eleven Times Square, New York City, tells the Court that his current hourly rate is $800, however, the firm is voluntarily reducing hourly rates by 10 percent for the matter. He expects that substantially all of the anticipated work on the matter will be done by a junior associate, Alex Talesnick, and a paralegal. The current customary hourly rates and discounted rates of Luskin Stern attorneys are: Partners Current Rate Discounted Rate -------- ------------ --------------- Richard Stern $800 $720 Michael Luskin $800 $720 Nathan Eisler $800 $720 Associates Matthew O'Donnell $630 $567 Richard Favata $630 $567 Stephan Hornung $525 $472 Kristen Jensen $360 $324 Alex Talesnick $360 $324 Paraprofessionals $225 $202 Mr. Stern adds that Luskin Stern has received no compensation for its work on behalf of the fee examiner. Mr. Stern assures the Court that Luskin Stern does not have an interest materially adverse to the interests of the Debtors' estates or of any class of creditors or equity security holders of the Debtors. The Court will convene a hearing on May 1, 2014, at 2:00 p.m. Objections, if any, are due April 14, at 4:00 p.m. About Life Uniform Life Uniform was founded in 1965 when Angelica Corporation decided to enter the retail uniform industry. The first Life Uniform store opened in 1965 in Clayton, Missouri. At present, Life Uniform is the nation's largest independently owned medical professional supplier. Sun Uniform LLC acquired Life Uniform in July 2004. Since the acquisition by Sun the company addressed sagging profitability and overhead issues and quickly drove increases in profitability through a combination of store rationalization and sensible corporate overhead initiatives. However, recent performance has been declining in terms of revenue. This is due to the company's liquidity issues, which prevented the company from completing its e-commerce system upgrade, encourage better pricing from vendors, and maintain sufficient capital. Life Uniform Holding Corp., Healthcare Uniform Company, Inc., and Uniform City National Inc. filed Chapter 11 petitions (Bankr. D. Del. Case Nos. 13-11391 to 13-11393) on May 29, 2013. The petitions were signed by Bryan Graiff, COO, CFO, VP, secretary, and treasurer. Life Uniform Holding disclosed $10,695,870 in assets and $36,821,034 in liabilities as of the Chapter 11 filing. Life Uniform and Uniform City received court authority on July 26 to sell the business for $22.6 million to Scrubs & Beyond LLC. There were no competing bids, so an auction wasn't held. First lien lender CapitalSource Finance LLC is owed on a $11.5 million revolver and $26 million term loan. CapitalSource is represented by Brian T. Rice, Esq., at Brown Rudnick LLP; and Jeffrey C. Wisler, Esq., at Connolly Gallagher LLP. Sun Uniforms Finance LLC is owed $6.1 million in principal on a second lien note and holds two additional notes, each in the original principal of $1.08 million. Angelica Corp. holds an unsecured junior subordinate not in the principal amount of $5.48 million. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions acts as the Debtors' administrative agent, and claims and noticing agent. The Debtors' financial advisor is Capstone Advisory Group, LLC. Crowe Horwath LLP serves as tax accountants and Brown Smith Wallace LLC as wind-down tax accountants. The Official Committee of Unsecured Creditors is represented by Seth Van Aalten, Esq., at Cooley LLP, and Ann M. Kashishian, Esq., at Cousins Chipman & Brown, LLP as counsel. The U.S Trustee for Region 3 appointed Boris Segalis of InfoLawGroup LLP as consumer privacy ombudsman in the case. LIGHTSQUARED INC: Ergen Has More Evidence on Subordination ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that although LightSquared Inc.'s trial against Dish Network Corp. Chairman Charles Ergen ostensibly was completed, Ergen is asking the judge to take more evidence. According to the report, Ergen claims he has documents to show that the delay in completing bond trades was the fault of an investment bank, not part of a strategy on his part to interfere with LightSquared's restructuring efforts. LightSquared wants the judge to subordinate Ergen's claim so he's paid behind other creditors, the report said. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Pays $5 Million to Inmarsat to Reactivate Deal ---------------------------------------------------------------- Peter B. de Selding, writing for SpaceNews.com, reported Inmarsat said April 4 that LightSquared has resumed cash payments to mobile satellite services operator Inmarsat after a two-year hiatus following LightSquared's filing for Chapter 11 reorganization. In a notice to the London Stock Exchange, London-based Inmarsat said LightSquared made a $5 million deposit April 3 to reactivate an agreement with the two companies on the reorganization of L-band radio spectrum. The report also related that Inmarsat said LightSquared, having now reactivated its agreement, will owe Inmarsat $12.5 million every three months, plus an additional $5 million per quarter for the first 10 quarters. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. LIGHTSQUARED INC: Ergen Testifies in Confirmation Trial ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Charles Ergen, chairman of Dish Network Corp., testified in bankruptcy court that he learned about technical problems on the day of an auction in December that led him to withdraw his $2.2 billion offer to acquire LightSquared Inc. According to the report, Ergen gave testimony in the confirmation trial where the U.S. Bankruptcy Court in New York will decide whether to approve LightSquared's Chapter 11 plan. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Alvarez & Marsal North America, LLC, is the financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. MACH GEN: Has Final Approval of $200-Mil. DIP Loan from Beal Bank ----------------------------------------------------------------- MACH Gen, LLC, et al., obtained final authority from the U.S. Bankruptcy Court for the District of Delaware to borrow up to $200 million from Beal Bank USA, the first-lien lender on a $483 million term loan and a $144 million revolving credit. Financing for the Chapter 11 case plus collection of accounts receivable is designed to pay off the pre-bankruptcy revolving credit, Bill Rochelle, the bankruptcy columnist for Bloomberg News, said. The Beal loan will continue after bankruptcy, Mr. Rochelle noted. CLMG Corp. serves as administrative agent and collateral agent to Beal Bank and other DIP Lenders. The Court will convene a hearing on April 11, 2014, to consider the adequacy of the disclosure statement explaining the Debtors' plan and the confirmation of the plan, which was a result of a series of discussions under which the significant majorities of the Debtors' stakeholders agreed to support the restructuring and vote to accept the Plan pursuant to a Restructuring Support Agreement, dated as January 15, 2014, among MACH Gen and (i) holders of 100% of the First Lien Revolver Claims and First Lien Term Loan Claims; (ii) holders of in excess of 75% of the Second Lien Claims; and (iii) holders of in excess of 85% of the Interests in MACH Gen, LLC. About MACH Gen MACH Gen, LLC, and four of its affiliates, sought protection under Chapter 11 of the Bankruptcy Code on March 3, 2014. The lead case is In re MACH Gen, LLC, Case No. 14-10461 (Bankr. D.Del.). The case is assigned to Judge Mary F. Walrath. The Debtors' general counsel is Matthew S. Barr, Esq., Tyson M. Lomazow, Esq., and Michael E. Comerford, Esq., at MILBANK, TWEED, HADLEY & MCCLOY LLP, in New York; and Russell C. Silberglied, Esq., John H. Knight, Esq., and Zachary L. Shapiro, Esq., at RICHARDS, LAYTON, & FINGER P.A., in Wilmington, Delaware. The Debtors' financial advisors and investment bankers are Mark Hootnick, Brian Bacal, Gregory Doyle, and Roger Wood from MOELIS & COMPANY. Protiviti, Inc., serves as consultant. Prime Clerk LLC serves as claims and noticing agent and administrative advisor. The Debtors said they had $750 million in total assets and $1.6 billion in total liabilities as of Dec. 31, 2013 The petitions were signed by Garry N. Hubbard, chief executive officer. MARINA BIOTECH: A.M. Pappas Stake at 1.9% as of Dec. 27 ------------------------------------------------------- In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, A. M. Pappas & Associates, LLC, and its affiliates disclosed that as of Dec. 27, 2013, they beneficially owned 320,000 shares of common stock of Marina Biotech, Inc., representing 1.9 percent of the shares outstanding. A copy of the regulatory filing is available for free at http://is.gd/URBCB7 About Marina Biotech Marina Biotech, Inc., headquartered in Bothell, Washington, is a biotechnology company focused on the discovery, development and commercialization of nucleic acid-based therapies utilizing gene silencing approaches such as RNA interference ("RNAi") and blocking messenger RNA ("mRNA") translation. The Company's goal is to improve human health through the development, either through its own efforts or those of its collaboration partners and licensees, of these nucleic acid-based therapeutics as well as the delivery technologies that together provide superior treatment options for patients. The Company has multiple proprietary technologies integrated into a broad nucleic acid-based drug discovery platform, with the capability to deliver novel nucleic acid-based therapeutics via systemic, local and oral administration to target a wide range of human diseases, based on the unique characteristics of the cells and organs involved in each disease. On June 1, 2012, the Company announced that, due to its financial condition, it had implemented a furlough of approximately 90% of its employees and ceased substantially all day-to-day operations. Since that time substantially all of the furloughed employees have been terminated. As of Sept. 30, 2012, the Company had approximately 11 remaining employees, including all of its executive officers, all of whom are either furloughed or working on reduced salary. As a result, since June 1, 2012, its internal research and development efforts have been minimal, pending receipt of adequate funding. KPMG LLP, in Seattle, expressed substantial doubt about Marina Biotech's ability to continue as a going concern following the 2011 financial results. The independent auditors noted that the Company has ceased substantially all day-to-day operations, including most research and development activities, has incurred recurring losses, has a working capital and accumulated deficit and has had recurring negative cash flows from operations. The Company reported a net loss of $29.42 million in 2011, compared with a net loss of $27.75 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $8.01 million in total assets, $10.36 million in total liabilities and a $2.35 million total stockholders' deficit. "The market value and the volatility of our stock price, as well as general market conditions and our current financial condition, could make it difficult for us to complete a financing or collaboration transaction on favorable terms, or at all. Any financing we obtain may further dilute the ownership interest of our current stockholders, which dilution could be substantial, or provide new stockholders with superior rights than those possessed by our current stockholders. If we are unable to obtain additional capital when required, and in the amounts required, we may be forced to modify, delay or abandon some or all of our programs, or to discontinue operations altogether. Additionally, any collaboration may require us to relinquish rights to our technologies. These factors, among others, raise substantial doubt about our ability to continue as a going concern." "Although we have ceased substantially all of our day-to-day operations and terminated substantially all of our employees, our cash and other sources of liquidity may only be sufficient to fund our limited operations until the end of 2012. We will require substantial additional funding in the immediate future to continue our operations. If additional capital is not available, we may have to curtail or cease operations, or take other actions that could adversely impact our shareholders," the Company said in its quarterly report for the period ended Sept. 30, 2012. MASON COPPELL: Selling Assets to THIB; Proposes April 15 Auction ---------------------------------------------------------------- Mason Coppell OP, LLC, Mason Georgetown OP, LLC, Mason Mesquite OP, LLC, and Mason Round Rock OP, LLC operate five skilled nursing homes in Texas. Mason Georgetown RealCo, LLC, owns the real estate and building for the operations of Mason Georgetown. They initiated the Chapter 11 cases to effectuate a prompt transfer of their assets and operations to preserve patient safety and any potential value for creditors. Joe E. Marshall, Esq., at Munsch Hardt Kopf & Harr, P.C., in Dallas, Texas, relates that efforts to address financial and operational concerns have been extensive and involved all of the constituencies including primary lender, Oxford Finance LLC, the landlords for each of the facilities, the current management company, StoneGate Senior Living, LLC, and an organized group of primary vendors comprising over 80% of the unsecured debt. After exploring potential out of court transactions and attempting to manage and extend their lending availability with Oxford, Mason determined that it simply could no longer continue operations in a manner that preserved patient safety without the protections of Chapter 11 and the implementation of an expedited and court approved sale process. Mason asks the Court to approve an expedited sale process for the transfer of their interests in certain assets to THI of Baltimore, Inc., or its designees or a third party submitting a higher and better offer as approved by the Court. THIB executed a confidentiality agreement over three weeks prior to the filing of Mason's bankruptcy case and has been engaged in due diligence and negotiations with all parties. While Mason has been a party to prepetition negotiations with THIB, the initial contact with this proposed purchaser was through the vendors committee. The vendors have also negotiated directly with THIB and the primary financial terms of the proposed transaction with THIB arose from those negotiations. Mr. Marshall notes that the assets to be marketed, auctioned and sold include: (a) facility assets including inventory, fixtures, furniture, equipment, vehicles, software and certain intangible assets, including books and records pertaining to operations and patient care, and, to the extent transferable, all licenses, permits, certifications; and (b) fee title to the land, and the building, appurtenances, fixtures and equipment comprising the Estrella Oaks facility. Proposed bid procedures and bid protection include: (a) The bid by THIB is approved as the stalking horse bid. (b) Court approval of THIB's stalking horse bid includes approval of expense reimbursement up to $100,000 and a breakup fee of $540,000, if the THIB bid is overbid. (c) Mason will continue to solicit interest and bidding by other potential bidders as promptly as possible. (d) Each party interested in bidding must deliver a written and duly executed offer no later than 5:00 p.m. (Central Time) on April 11, 2014 by Louis E. Robichaux IV, Mason's chief restructuring officer, at lrobichaux@deloitte.com (e) Mason will notify all bidders whether their bid constitutes a qualified bid on or before 9:00 a.m. (CST) on April 14, 2014. (f) If Mason determines that they have received more than one qualified bid, an auction will be held on April 15, 2014, at 1:00 p.m. (CST), at the offices of Munsch Hardt Kopf & Harr, P.C., 500 N. Akard, Dallas, Texas. In that regard, Mason asks the Court to approve the bid procedures, bid protections, notice procedures and objection procedures, which will govern the sale of its assets. In response to Mason's request, the official committee of unsecured creditors asks the Court to give them until April 11 to file any objection to the terms of the sale documents and to set any objection for hearing for April 16. George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, in Dallas Texas, explains that the committee wants more time to fully review the details of the sale documents, meet with the parties to resolve questions or concerns about the effect of those documents on matters affecting the unsecured creditors, and if necessary object to them. About Mason Coppell Mason Coppell OP, LLC, et al., filed Chapter 11 bankruptcy petitions (Bankr. N.D. Tex. Case Nos. 14-31327 to 14-14-31334) on March 18, 2014. The Debtors estimated assets of at least $10 million and debts of at least $10 million. Munsch Hardt Kopf & Harr PC serves as the Debtors' counsel. Wick Phillips Gould & Martin LLP is the Debtors' local counsel. Deloitte Transactions and Business Analytics, LLP, acts as the Debtors' restructuring advisor with Louis Robichaux serving as chief restructuring officer. MASON COPPELL: U.S. Trustee Forms Five-Member Creditor's Panel -------------------------------------------------------------- William T. Neary, the U.S. Trustee for Region 6, appointed five creditors to the Official Committee of Unsecured Creditors for the Chapter 11 bankruptcy cases of Mason Coppell OP, LLC, and its debtor-affiliates. The members of the Committee are: a) Healthcare Services Group, Interim Chair Attention: Ray Crouse 3220 Tillman Drive, Ste. 300 Bensalem, PA 19020 Email: rcrouse@hcsgcorp.com Tel: (267) 525-8514 b) RehabCare Group East, Inc. dba RehabCare Group Therapy Services, Inc. Attention: Janice McBroom Email: janice.mcbroom@RehabCare.com Tel: (314) 659-2106 c) Pharmacy Corporation of America dba PharMerica Attention: Berard Tomassetti Email: Berard.Tomassetti@pharmerica.com Tel: (502) 627-7361 d) Rob McIntosh 5310 Harvest Hill Rd., Ste. 209 Dallas, TX 75230 Email: rob@mcintoshsearch.com Tel: (214) 521-2900 e) Senior Care Centers Attention: Andrew Kerr 2828 N. Harwood, Suite 2000 Dallas, TX 75201 Email: akerr@seniorcarecentersltc.com Tel: (214) 981-44481 About Mason Coppell Mason Coppell OP, LLC, et al., filed Chapter 11 bankruptcy petitions (Bankr. N.D. Tex. Case Nos. 14-31327 to 14-14-31334) on March 18, 2014. The Debtors estimated assets of at least $10 million and debts of at least $10 million. Munsch Hardt Kopf & Harr PC serves as the Debtors' counsel. Wick Phillips Gould & Martin LLP is the Debtors' local counsel. Deloitte Transactions and Business Analytics, LLP, acts as the Debtors' restructuring advisor with Louis Robichaux serving as chief restructuring officer. MF GLOBAL: Can Pay Accountants Without Court Approval ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating MF Global Inc., the defunct commodities broker, must disclose how much he is paying accountants, although the bankruptcy court has no power to approve their fees, U.S. Bankruptcy Judge Martin Glenn ruled on March 21. According to the report, Knighthead Capital Management LLC purchased a $75,000 claim against the MF Global brokerage and within two weeks filed papers asking Judge Glenn to require trustee James Giddens to disclose how much he paid to accountants. Knighthead also wanted Judge Glenn to approve accountants' fees. Knighthead said accounting fees for MF Global seem proportionately greater than they were in the liquidation of much larger Lehman Brothers Inc., for which Giddens is also the trustee liquidating the brokerage, the report related. As brokers, both Lehman and MF Global are liquidated under the Securities Investor Protection Act, or SIPA, where only parts of bankruptcy law are applicable. After a section-by-section analysis of SIPA, Judge Glenn summarized by saying there are two payment regimes in brokerage liquidations, and both differ from ordinary bankruptcies and Chapter 11 reorganizations, the report further related. Although trustees and trustees' attorneys in brokerage liquidations must file fee requests with the bankruptcy court, the judge in most cases must approve the recommendation of the Securities Investor Protection Corp., the report said. With regard to all other professional fees, the court has no statutory power to grant, deny or modify fee requests, Judge Glenn said in his opinion. About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058), after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MF GLOBAL: Corzine Loses 4th Bid to Dismiss Suits ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Jon Corzine, the former U.S. senator and onetime co- chairman of Goldman Sachs Group Inc., for a fourth time failed to persuade a federal district judge to dismiss suits brought against him and other MF Global Inc. officers following liquidation of the commodity brokerage, where $1.6 billion in customer funds were mishandled. According to the report, U.S. District Judge Victor Marrero in Manhattan on March 24 said he wouldn't throw out a suit filed by the trust for creditors created under parent company MF Global Holdings Ltd.'s Chapter 11 plan. In his opinion, the judge said Corzine claimed that "nothing happened at MF Global" for which a single company officer "could bear any legal responsibility," the report related. Judge Marrero rejected that conclusion, saying "it is reasonable to infer" that someone at some time "did something wrong to set in motion such an extraordinary chain of events causing such extensive harm to so many people," the report further related. On three other occasions in the past six months, Judge Marrero has rebuffed Corzine's attempts to dismiss suits concerning MF Global's failure to segregate $1.6 billion in customer funds, the report pointed out. Andrew Levander, Esq., a lawyer for Corzine at Dechert LLP, didn't return a call seeking comment on the ruling, the report said. The lawsuit is In re MF Global Holdings Ltd. Securities Litigation, 11-cv-07866, U.S. District Court, Southern District of New York (Manhattan). About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. On Oct. 31, 2011, MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058), after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. On Nov. 7, 2011, the United States Trustee appointed the statutory creditors' committee in the Debtors' cases. At the behest of the Statutory Creditor's Committee, the Court directed the U.S. Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the Bankruptcy Court entered an order approving the appointment of Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC, as Chapter 11 trustee. On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services LLC and MF Global FX Clear LLC filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and 11-15810). On Dec. 27, the Court entered an order installing Mr. Freeh as Chapter 11 Trustee of the New Debtors. On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr. Freeh also was installed as its Chapter 11 Trustee. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. The Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. The Official Committee of Unsecured Creditors has retained Capstone Advisory Group LLC as financial advisor, while lawyers at Proskauer Rose LLP serve as counsel. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. In April 2013, the Bankruptcy Court approved MF Global Holdings' plan to liquidate its assets. Bloomberg News reported that the court-approved disclosure statement initially told creditors with $1.134 billion in unsecured claims against the parent holding company why they could expect a recovery of 13.4% to 39.1% from the plan. As a consequence of a settlement with JPMorgan, supplemental materials informed unsecured creditors their recovery was reduced to the range of 11.4% to 34.4%. Bank lenders will have the same recovery on their $1.174 billion claim against the holding company. As a consequence of the settlement, the predicted recovery became 18% to 41.5% for holders of $1.19 billion in unsecured claims against the finance subsidiary, one of the companies under the umbrella of the holding company trustee. Previously, the predicted recovery was 14.7% to 34% on bank lenders' claims against the finance subsidiary. MONTREAL MAINE: Claimants Substituted as Plan Proponents -------------------------------------------------------- The Unofficial Committee of Wrongful Death Claimants in the Chapter 11 case of Montreal Maine & Atlantic Railway, Ltd., amended the disclosure statement for its Chapter 11 Plan to provide that the Plan Proponent consists of 47 claimants as individual parties, each of them representatives of an estate of a victim of the explosion in Lac-Megantic, Quebec, from the derailment of a train operated by the Debtor. To recall, the Court ruled that the Unofficial Committee and its counsel have failed to comply with Rule 2019 of the Federal Rules of Bankruptcy Procedure, and as a result of that failure, the Unofficial Committee and its counsel will not be heard on any pending matter in the Debtor's Chapter 11 case. On the record at the March 12 hearing, the U.S. Bankruptcy Court for the District of Maine ordered the hearing on the Disclosure Statement continued to April 8, at 10:00 a.m., subject to the Plan Propoents' Rule 2019 compliance. The Wrongful Death Claimants are represented by George W. Kurr, Jr., Esq., at GROSS, MINSKY & MOGUL, P.A., in Bangor, Maine; and Daniel C. Cohn, Esq., Taruna Garg, Esq., and Ashley Whyman, Esq., at MURTHA CULLINA LLP, in Boston, Massachusetts. About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson, P.A., has been named as chapter 11 trustee. His firm serves as his chapter 11 bankruptcy counsel, led by Michael A. Fagone, Esq., and D. Sam Anderson, Esq. Development Specialists, Inc., serves as the Chapter 11 trustee's financial advisor. Gordian Group, LLC, serves as the Chapter 11 Trustee's investment banker. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana served as counsel to MM&A. It now serves as counsel to the Chapter 11 Trustee. Justice Martin Castonguay oversees the case in Canada. The Canadian Transportation Agency suspended the carrier's operating certificate after the accident, due to insufficient liability coverage. The town of Lac-Megantic, Quebec, has sought financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent a derailment. In the Canadian case, Andrew Adessky at Richter Consulting has been appointed CCAA monitor. The CCAA Monitor is represented by Sylvain Vauclair at Woods LLP. MM&A Canada is represented by Patrice Benoit, Esq., at Gowling LaFleur Henderson LLP. The U.S. Trustee appointed a four-member official committee of derailment victims. The Official Committee is represented by: Richard P. Olson, Esq., at Perkins Olson; and Luc A. Despins, Esq., at Paul Hastings LLP. There's also an unofficial committee of wrongful death claimants consisting of representatives of the estates of the 46 victims. This group is represented by George W. Kurr, Jr., Esq., at Gross, Minsky & Mogul, P.A.; Daniel C. Cohn, Esq., at Murtha Cullina LLP; Peter J. Flowers, Esq., at Meyers & Flowers, LLC; Jason C. Webster, Esq., at The Webster Law Firm; and Mitchell A. Toups, Esq., at Weller, Green Toups & Terrell LLP. After the U.S. Trustee formed the Official Committee, the ad hoc committee filed papers asking the U.S. Court to have the official committee disbanded. The ad hoc group said it represents 46 victims of the disaster. On Jan. 23, 2014, the Debtors won authorization to sell substantially all of their assets to Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group, for $15.7 million. The Bankruptcy Courts in the U.S. and Canada approved the sale. The Fortress unit is represented by Terence M. Hynes, Esq., and Jeffrey C. Steen, Esq., at Sidley Austin LLP. On Jan. 29, 2014, an ad hoc group of wrongful-death claimants submitted a plan, which would give 75 percent of the $25 million in available insurance to the families of those who died after an unattended train derailed in Lac-Megantic, Quebec, in July. The other 25 percent would be earmarked for claimants seeking compensation for property that was damaged when much of the town burned. Former U.S. Senator George Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995 and who is now chairman emeritus of law firm DLA Piper LLP, would administer the plan and lead the effort to wrap up MM&A's Chapter 11 bankruptcy. MONTREAL MAINE: May 7 Evidentiary Hearing on Wheeling Motion ------------------------------------------------------------ The Hon. Louis J. Kornreich of the U.S. Bankruptcy Court for the District of Maine issued a scheduling order as to lender Wheeling & Lake Erie Railway Company's motion to enforce the order on Montreal Maine & Atlantic Railway Ltd.'s cash collateral use. A final evidentiary hearing will be held on the enforcement motion on May 7, 2014, at 10:00 a.m. Prior to the final hearing, Wheeling and Robert J. Keach, the trustee of the Montreal Maine & Atlantic, Ltd., will conduct enforcement motion-related discovery and briefing according to this schedule: A. the trustee will submit his discovery requests to Wheeling, if any, on April 3; B. Wheeling will respond to such requests and, subject to any objection it may make, produce all documents and data responsive to the trustee's discovery by April 12; C. Wheeling will be entitled to conduct the deposition of Donald Gardner on a date and at a time to be determined between during the week of April 7 to April 11; D. the trustee will be entitled to conduct the deposition of Wheeling on a date and at a time between April 18 and April 25; E. if any party object to a discovery request or the responses to a discovery request, the parties will attempt to resolve such objection without intervention by the Court; if they are unable to do so, the Court will schedule a telephonic discovery conference upon request of a party; and F. the parties will submit supplemental briefs by April 30. The parties will also submit lists of witnesses and exhibits for the May 7 hearing by April 30. If the Debtor or Richter Advisory Group, Inc., the Canadian monitor, desire to intervene in the contested matter, then they will be permitted to do so; however whether or not either of MMA Canada and the monitor file such notice of intent to intervene, both will be bound by the terms of the order. About Montreal Maine Montreal, Maine & Atlantic Railway Ltd., the railway company that operated the train that derailed and exploded in July 2013, killing 47 people and destroying part of Lac-Megantic, Quebec, sought bankruptcy protection in U.S. Bankruptcy Court in Bangor, Maine (Case No. 13-10670) on Aug. 7, 2013, with the aim of selling its business. Its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., meanwhile, filed for protection from creditors in Superior Court of Quebec in Montreal. Robert J. Keach, Esq., at Bernstein, Shur, Sawyer, and Nelson, P.A., has been named as chapter 11 trustee. His firm serves as his chapter 11 bankruptcy counsel, led by Michael A. Fagone, Esq., and D. Sam Anderson, Esq. Development Specialists, Inc., serves as the Chapter 11 trustee's financial advisor. Gordian Group, LLC, serves as the Chapter 11 Trustee's investment banker. U.S. Bankruptcy Judge Louis H. Kornreich has been assigned to the U.S. case. The Maine law firm of Verrill Dana served as counsel to MM&A. It now serves as counsel to the Chapter 11 Trustee. Justice Martin Castonguay oversees the case in Canada. The Canadian Transportation Agency suspended the carrier's operating certificate after the accident, due to insufficient liability coverage. The town of Lac-Megantic, Quebec, has sought financial aid to restore the gutted community and a civil complaint alleges a failure to take steps to prevent a derailment. In the Canadian case, Andrew Adessky at Richter Consulting has been appointed CCAA monitor. The CCAA Monitor is represented by Sylvain Vauclair at Woods LLP. MM&A Canada is represented by Patrice Benoit, Esq., at Gowling LaFleur Henderson LLP. The U.S. Trustee appointed a four-member official committee of derailment victims. The Official Committee is represented by: Richard P. Olson, Esq., at Perkins Olson; and Luc A. Despins, Esq., at Paul Hastings LLP. There's also an unofficial committee of wrongful death claimants consisting of representatives of the estates of the 46 victims. This group is represented by George W. Kurr, Jr., Esq., at Gross, Minsky & Mogul, P.A.; Daniel C. Cohn, Esq., at Murtha Cullina LLP; Peter J. Flowers, Esq., at Meyers & Flowers, LLC; Jason C. Webster, Esq., at The Webster Law Firm; and Mitchell A. Toups, Esq., at Weller, Green Toups & Terrell LLP. After the U.S. Trustee formed the Official Committee, the ad hoc committee filed papers asking the U.S. Court to have the official committee disbanded. The ad hoc group said it represents 46 victims of the disaster. On Jan. 23, 2014, the Debtors won authorization to sell substantially all of their assets to Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group, for $15.7 million. The Bankruptcy Courts in the U.S. and Canada approved the sale. The Fortress unit is represented by Terence M. Hynes, Esq., and Jeffrey C. Steen, Esq., at Sidley Austin LLP. On Jan. 29, 2014, an ad hoc group of wrongful-death claimants submitted a plan, which would give 75% of the $25 million in available insurance to the families of those who died after an unattended train derailed in Lac-Megantic, Quebec, in July. The other 25% would be earmarked for claimants seeking compensation for property that was damaged when much of the town burned. Former U.S. Senator George Mitchell, a Democrat who represented Maine in the U.S. Senate from 1980 to 1995 and who is now chairman emeritus of law firm DLA Piper LLP, would administer the plan and lead the effort to wrap up MM&A's Chapter 11 bankruptcy. As reported by the Troubled Company Reporter on April 3, 2014, Judge Kornreich ruled that the unofficial committee of wrongful death claimants and its counsel have failed to comply with Rule 2019 of the Federal Rules of Bankruptcy Procedure, and as a result of that failure, the Unofficial Committee and its counsel will not be heard on any pending matter in the case. MOOD MEDIA: Moody's Cuts CFR to 'B3' & Rates New Debt 'Ba3' ----------------------------------------------------------- Moody's Investors Service downgraded Mood Media Corporation's corporate family rating (CFR) to B3 from B2, rated the company's new secured bank credit facility Ba3, and also downgraded the company's probability of default rating to B3-PD from B2-PD, its existing senior secured credit facility rating to Ba3 from Ba2 and its senior unsecured notes rating to Caa1 from B3. The company's speculative grade liquidity rating was also downgraded, to SGL-3 from SGL-2 (to adequate from good) and the rating outlook was revised to stable from developing. The rating action was prompted by expectations that the company would continue to have difficulty substantiating the value proposition, by way of margin and EBITDA expansion, of its in- store/customer-premises, subscription digital audio and visual advertising/branding services, integrating past acquisitions, and reversing negative free cash flow so that it can begin to reduce debt. After last April's announcement of the company evaluating strategic alternatives to enhance shareholder value, Mood Media installed a new leadership team, initiated restructuring and cost savings actions and revised its go-to-market strategy. However, since it is not clear that these initiatives will significantly enhance the company's free cash generation, and with Debt/EBITDA leverage having increased to about 6x, Mood Media's ratings were downgraded. With the strategic re-evaluation process completed, the outlook was revised to stable. The rating action occurs in conjunction with a refinance transaction which is modestly credit-negative because total debt increases by ~$18 million. However, by extending the term to maturity of bank credit facilities, augmenting liquidity, and revising financial covenants, the transaction has off-setting credit-positive features. Ratings for the to-be-replaced facilities will be withdrawn in due course. The following summarizes the rating actions and Mood Media's ratings: Issuer: Mood Media Corporation Assignments: Senior Secured Credit Facility: Assigned Ba3 (LGD2, 13%) Downgrades: Corporate Family Rating: Downgraded to B3 from B2 Probability of Default Rating: Downgraded to B3-PD from B2-PD Senior Secured Credit Facility: Downgraded to Ba3 (LGD2, 13%) from Ba2 (LGD2, 13%) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD4, 69%) from B3 (LGD4, 69%) Speculative Grade Liquidity Rating: Downgraded to SGL-3 from SGL-2 Outlook Action: Outlook: Changed to Stable from Developing Ratings Rationale Mood Media's B3 CFR is influenced primarily by elevated Debt/EBITDA leverage of about 6x plus uncertainties concerning the company's business model and its ability to generate significant free cash flow. It is not clear that ongoing restructuring and cost savings actions and a revised go-to-market strategy -- resulting from a recent leadership transition -- will improve free cash generation sufficiently to allow meaningful de-levering capacity. There are also risks that new competitors or alternative delivery mechanisms could disrupt Mood Media's plans to expand its digital audio and visual advertising/branding services. As an issuer with material international operations, the timely and tax- effective repatriation of cash flow may also be challenging. The rating is supported by the company's leading position as a branding services company, its royalty-free music library which contains costs, broad customer diversification, low capital intensity and growth potential. Rating Outlook The outlook is stable given Moody's expectations of Debt/EBITDA remaining in the 6x range through 2014 and 2015. What Could Change the Rating - UP Should the business model stabilize and the ability to generate significant free cash flow be substantiated, with FCF/Debt of no worse than 5% and Debt/EBITDA declining below 5x, positive ratings actions would be considered. What Could Change the Rating - DOWN Should Moody's expect that the company would be cash flow negative for a sustained period or should liquidity deteriorate materially, or were Debt/EBITDA expected to be sustained beyond 6.5x, adverse outlook and ratings pressure would result. Headquartered in Toronto, Canada, and with annual sales of approximately $500 million, Mood Media Corporation provides subscription branding and advertising services using primarily in- store/premises digital audio and visual media. MOOD MEDIA: S&P Revises Outlook on 'B-' Rating to Negative ---------------------------------------------------------- Standard & Poor's Ratings Services revised its 'B-' corporate credit rating outlook on Canada-based in-store media company Mood Media Corp. to negative from stable. At the same time, S&P assigned the company's proposed first-lien term loan and revolving credit facility a 'B+' issue-level rating, with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery for debt holders in the event of default. The negative outlook reflects the declining trend in audio revenue and uncertainty surrounding management's ability to reverse the trend. S&P views Mood Media's business risk profile as "vulnerable," based on the company's integration missteps, decline in average revenue per user (ARPU), and minimal product diversity. This is a revision from S&P's previous assessment of the company's business risk as "weak." S&P assess the company's financial risk profile as "highly leveraged," based on the company's leverage of 6.7x based on 2013 EBITDA. The vulnerable business risk profile reflects the company's narrow business focus on in-store music solutions, heightened competition from music streaming services, and weak business execution. Although the company has been growing visual in-store marketing, this remains a very small part of the business (5.6% of recurring revenue in 2013). The company's previous management also failed to realize the expected synergies from acquisitions and under- invested in the sales force. The company is now focused on rebuilding its sales efforts in order to restore revenue growth. Audio ARPU declined in 2013, while the number of client sites was roughly flat. S&P believes growth in visual and audio sites, as a result of the renewed sales efforts, may not be enough to offset ARPU declines in 2014. Playing music legally in commercial settings requires a public performance license. S&P believes that the increasing presence of Internet radio broadcasters and Internet connectivity has lowered barriers to entry, potentially providing retailers with more options that both provide the required licenses, and those that amount to piracy. S&P's assessment of Mood Media's financial risk profile as highly leveraged is based on its expectation that leverage will remain in the mid-6x area over the intermediate term, consistent with leverage above 5x that S&P associates with a highly leveraged financial risk profile. Although S&P expects discretionary cash flow to improve from a deficit of $18 million in 2013, it believes that it will remain slightly negative in 2014. As a result, S&P expects the company will have little-to-no ability to repay debt in 2014, other than through depleting cash balances. S&P expects leverage to moderate slightly in 2014, to the low-6x area, largely as a result of expense cuts and lower restructuring and transaction related expenses. S&P could lower the rating if the company is not able to complete the proposed transaction as proposed, given that the company has a thin 7% EBITDA margin of compliance with its recently amended EBITDA coverage of interest covenant, its tightest covenant. Even if the company does complete the refinancing, S&P could lower the rating if it concludes that Mood Media will not be able to establish and maintain a 10% EBITDA margin of compliance with covenants on the proposed bank debt. Additional considerations that could figure in a downgrade scenario include clear indications that deteriorating ARPU trends will not moderate, causing discretionary cash flow deficits and depletion of cash balances. Although unlikely over the intermediate term, S&P could revise the outlook to stable if it concludes that Mood Media will be able to stabilize revenue trends, generate consistently positive discretionary cash flow, and address the 2015 convertible debt maturity. An outlook revision would also likely entail the company establishing at least a 10% EBITDA margin of compliance with covenants in advance of covenant tightening. MOUNTAIN PROVINCE: Files Form 10-K, Incurs C$26.6MM Loss in 2013 ---------------------------------------------------------------- Mountain Province Diamonds Inc. has filed the 2013 annual report on Form 20-F and confirmed that the auditors' report received from its independent public accounting firm on its audited financial statements for the fiscal year ended Dec. 31, 2013, contained a going concern explanatory note. Mountain Province's Annual Financial Statements were included in Form 20-F for its filings in the United States with the Securities and Exchange Commission on March 26, 2014. Mountain Province's Annual Financial Statements are also filed on SEDAR at www.sedar.com in Canada. Mountain Province reported a net loss of C$26.60 million for the year ended Dec. 31, 2013, as compared with a net loss of C$3.33 million in 2012. As of Dec. 31, 2013, the Company had C$110.36 million in total assets, $19.17 million in total liabilities and $91.19 million in total shareholders' equity. KPMG LLP, in Toronto, Canada, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company expects to require additional capital resources to meet planned expenditures in 2014. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that casts substantial doubt about the Company's ability to continue as a going concern. Mountain Province Diamonds is a 49 percent participant with De Beers Canada in the Gahcho Kue JV located at Kennady Lake in Canada's Northwest Territories. The Gahcho Kue Project consists of a cluster of four diamondiferous kimberlites, three of which have a probable mineral reserve of 31.3 million tonnes grading 1.57 carats per tonne for total diamond content of 49 million carats. Gahcho Kue is the world's largest and richest new diamond development project. A December 2010 feasibility study filed by Mountain Province (available on SEDAR) indicates that the Gahcho Kue project has an IRR of 33.9 percent. About Mountain Province Diamonds Headquartered in Toronto, Canada, Mountain Province Diamonds Inc. (TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/-- is a Canadian resource company in the process of permitting and developing a diamond deposit known as the "Gahcho Kue Project" located in the Northwest Territories of Canada. The Company's primary asset is its 49 percent interest in the Gahcho Kue Project. Mountain Province disclosed a net loss of C$3.33 million for the year ended Dec. 31, 2012, a net loss of C$11.53 million in 2011, and a net loss of C$14.53 million in 2010. The Company's balance sheet at Sept. 30, 2013, showed C$81.07 million in total assets, C$12.42 million in total liabilities and C$68.64 million in total shareholders' equity. MT. GOX: Creditors Want Karpeles to Testify in U.S. Court --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Mark Karpeles, principal of the bankrupt Mt. Gox Bitcoin exchange, should be compelled to appear in the U.S. to give testimony under oath, a pair of creditors told the U.S. Bankruptcy Court in Dallas in papers filed March 25. According to the report, the creditors, Gregory Greene and Joseph Lack, said they need to examine Karpeles "as soon as possible" to determine whether Mt. Gox is entitled to be in Chapter 15 bankruptcy in the U.S. They said papers filed so far with the bankruptcy court don't say where the firm's assets and creditors are located. Greene and Lack consequently don't know whether to oppose a Chapter 15 case altogether or contend the case should be heard elsewhere in the U.S., the report related. The creditors told the court that Karpeles agreed to be examined in April in Taipei, the report further related. He so far won't come to the U.S., even though the creditors offered to pay travel expenses. At a hearing in Dallas, a lawyer for Mt. Gox said the filing was made in Dallas because that's where servers are located containing computer backup data, the report added. Greene is a named plaintiff in a class action against Mt. Gox filed on Feb. 27 in Chicago. About Mt. Gox Bitcoin exchange MtGox Co., Ltd., filed a petition under Chapter 15 of the U.S. Bankruptcy Code on March 9, 2014, days after the company sought bankruptcy protection in Japan. The bankruptcy in Japan came after the bitcoin exchange lost 850,000 bitcoins valued at about $475 million "disappeared." The Japanese bitcoin exchange that halted trading in February 2014. It filed for bankruptcy protection in the U.S. to prevent customers from targeting the cash it holds in U.S. bank accounts. The Chapter 15 case is In re MtGox Co., Ltd., Case No. 14-31229 (Bankr. N.D. Tex.). The Chapter 15 Petitioner is Robert Marie Mark Karpeles, the company's chief executive officer. Mr. Karpeles is represented by John E. Mitchell, Esq., and David William Parham, Esq., at BAKER & MCCKENZIE LLP, in Dallas, Texas. The company said it has estimated assets of $10 million to $50 million and debts of $50 million to $100 million. MULTI PACKAGING SOLUTIONS: Acquisitions No Impact on Moody's CFR ---------------------------------------------------------------- Moody's Investors Service says Multi Packaging Solutions, Inc.'s ("MPS") recent debt-financed acquisitions are credit negative but will not result in changes to the B2 Corporate Family Rating (CFR) of MPS's parent, Chesapeake/MPS Merger Limited ("Chesapeake/MPS"), or any of the company's debt instrument ratings. Chesapeake/MPS has a stable ratings outlook. Chesapeake/MPS Merger Limited, through its main operating subsidiaries in the US and Europe, is a global provider of consumer packaging products and solutions to the consumer, health care, and multi-media markets. NATIONAL ENVELOPE: Cenveo Share Sale Restriction Period Lapses -------------------------------------------------------------- In September 2013, Cenveo, Inc. acquired certain assets of National Envelope through the bankruptcy process. As part of the consideration for the acquisition, Cenveo issued approximately 2.1 million shares to the debt holders of National Envelope. Under the terms of the purchase agreement, the debt holders were restricted from selling the Cenveo shares for a period of six months from the date of the acquisition. This six months period has now lapsed. Cenveo believes that the recent increased trading activity and volatility in its stock is largely related to the expiration of the six month restriction period. Mr. Robert G. Burton, Sr., Chairman and Chief Executive Officer, stated: "While we have just entered the second quarter, I am pleased with the progress that we are making across the Company. Our integration efforts with National Envelope are in full gear and we are seeing improvements across the rest of our businesses. I look forward to sharing this positive momentum on our first quarter earnings call on May 8, 2014. Additionally, we will be presenting at the Barclays High Yield conference in Phoenix, Arizona on May 13th and 14th." About Cenveo Headquartered in Stamford, Connecticut, Cenveo -- http://www.cenveo.com-- is a global provider of print and related resources, offering world-class solutions in the areas of custom boxes, custom labels, shrink sleeve labels, envelopes, commercial print , content management and publisher solutions. The company provides a one-stop offering through services ranging from design and content management to fulfillment and distribution. About National Envelope National Envelope is the largest privately-help manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market. Revenue of $427 million in 2012 resulted in a $60.1 million net loss, continuing an unbroken string of losses since 2007. NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-11483) on June 10, 2013. The company disclosed liabilities including $148.4 million in secured debt, with $37.5 million owing on a revolving credit and $15.6 million on a secured term loan. There is a $55.7 million second-lien debt 82 percent held by a Gores Group LLC affiliate. National Envelope, then known as NEC Holdings Corp., first sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 10-11890) on June 10, 2010. The business was bought by Gores Group LLC for $208 million in a bankruptcy sale. National Envelope, through NE OPCO, has returned to bankruptcy to pursue a plan of reorganization or sell the assets as a going concern via 11 U.S.C. Sec. 363. The Debtor plans to facilitate a sale of the business with publicly traded competitor Cenveo Inc. In the new Chapter 11 case, the company has tapped the law firm Richards, Layton & Finger as counsel, PricewaterhouseCoopers LLP as financial adviser, and Epiq Bankruptcy Solutions as claims and notice agent. The Gores Group is represented by Weil, Gotshal and Manges LLP and Lowenstein Landler LLP. Salus Capital Partners, the DIP agent, is represented by Choate, Hall & Stewart LLP and Morris Nichols Arsht & Tunnell LLP. Wells Fargo Capital Finance, LLC, the prepetition senior agent, is represented by Goldberg Kohn Ltd and DLA Piper. NET TALK.COM: Inks $4.5-Mil. Purchase Agreement with Telestrata --------------------------------------------------------------- Net Talk.Com, Inc., and Telestrata LLC, executed a Restricted Stock and Warrant Purchase Agreement, pursuant to which, in part, Telestrata has agreed to purchase from the Company: (a) 25,441,170 shares of its restricted common stock; and (b) a common stock purchase warrant entitling Telestrata to purchase shares of common stock of the Company equal to 20 percent of the then outstanding shares of common stock of the Company. The collective purchase price for the Purchased Shares and the Warrant is $4,571,939, payable as follows: (a) $500,000 in the form of the conversion and cancellation of two promissory notes issued by the Company to the Purchaser, (b) $837,373 to the Company by wire transfer from, or on behalf of, the Purchaser, and (c) payment and satisfaction by Purchaser of $2,734,566 of liabilities of the Company. The Purchaser's investment is to help the Company achieves its financial, operational and patent litigation goals. At Closing, the Board of Directors of the Company will be increased to seven members consisting of: (a) Nadir Aljazrawi, (b) Firas Aljazrawi, (c) Raya Alsaigh, (d) Anastasios Kyriakides (e) Kenneth Hosfeld, (f) George Gabb and (d) TBD. The board of directors will hold office until the next annual meeting of shareholders and until their successor is duly elected and qualified or until their resignation or removal. In addition, the following individuals have been appointed as officers of the Company. Chairman of the Board/CEO: Anastasios Kyriakides President: Samer Bishay CFO: Steven Healy COO: Nicholas Kyriakides CTO: Garry Paxinos EVP: Kenneth Hosfeld The Company has entered into compensation arrangements with all officers except the president. The Company is not currently paying salaries to the president. Samer Bishay is, and since 2012 has been, president of Ice Wireless Inc., a Canadian provider of wireless services. Additionally, since 2001, Mr. Bishay has served as President and CEO of Iristel, Inc., a leading Canadian wireless and wireline IP services provider. As part of his duties with each of Ice Wireless and Iristel, Mr. Bishay oversees global and domestic strategies to ensure business objectives are in line with telecommunications trending needs guaranteeing continued success in highly competitive markets. Mr. Bishay earned an Honours Bachelor of Science from York University. The Company executed a Secured Promissory Note dated Feb. 27, 2014, in favor of the Purchaser for $4,071,940. Interest accrues at 5 percent and is due at maturity date which is March 1, 2016. Advanced payments are required based certain conditions with qualified financing as defined in the Secured Promissory Note. A copy of the Form 8-K is available for free at: http://is.gd/c8GosU About Net Talk.com Based in Miami, Fla., Net Talk.com, Inc., is a telephone company, that provides, sells and supplies commercial and residential telecommunication services, including services utilizing voice over internet protocol technology, session initiation protocol technology, wireless fidelity technology, wireless maximum technology, marine satellite services technology and other similar type technologies. Net Talk.com incurred a net loss of $14.71 million on $5.79 million of total revenue for the year ended Dec. 31, 2012, as compared with a net loss of $26.17 million on $2.72 million of total revenue for the year ended Sept. 30, 2011. The Company's balance sheet at Sept. 30, 2013, showed $4.73 million in total assets, $25.87 million in total liabilities, $5 million in redeemable preferred stock, and a $26.14 million total stockholders' deficit. Going Concern/Bankruptcy Warning "The presentation of financial statements in accordance with GAAP contemplates that operations will be sustained for a reasonable period. However, we have incurred operating losses of $884,879 and $3,740,984 during the three and nine months ended September 30, 2013, and operating losses of $2,041,541 and $12,553,836 during the three and nine months ended September 30, 2012, respectively. The company is also highly leveraged with $16,068,911 in senior debentures, $1,070,087 in demand notes, $500,000 in 5% Secured Convertible Promissory Notes and $1,400,000 in mortgage debt. In addition, during the nine months ended September 30, 2013 and 2012, we used cash of $1,634,097 and $3,741,980, respectively, in support of our operations. As more fully discussed in Note 5, we have material redemption requirements associated with our senior debentures and demand notes, due during the year ended December 31, 2013. Since our inception, we have been substantially dependent upon funds raised through the sale of preferred stock and warrants to sustain our operating and investing activities. These are conditions that raise substantial doubts about our ability to continue as a going concern for a reasonable period." "We have never sustained profits and our losses could continue. Without sufficient additional capital to repay our indebtedness, we may be required to significantly scale back our operations, significantly reduce our headcount, seek protection under the provisions of the U.S. Bankruptcy Code, and/or discontinue many of our activities which could negatively affect our business and prospects," the Company said in the quarterly report for the period ended Sept. 30, 2013. NEW LIFE INT'L: Has Continued Access to Regions Cash Collateral --------------------------------------------------------------- In the Chapter 11 case of New Life International, the Hon. Randall S. Mashburn of the U.S. Bankruptcy Court for the Middle District of Tennessee signed off on an agreed order regarding the use of cash collateral of, and provision of adequate protection to, secured creditor Regions Bank. As reported in the Troubled Company Reporter on March 19, 2014, the Debtor owns numerous parcels of improved and unimproved parcels of real property, including two parcels of improved real estate encumbered by liens in favor of Regions. Prepetition, NLI executed two promissory notes in the original principal amounts of $361,250 and $467,500. Regions was granted first-in-priority liens in parcels of property in Monteagle, Tennessee. The Debtor and Regions have agreed on the terms on which the Debtor will retain and continue to use the property and provide adequate protection to Regions, to which it is entitled under 11 U.S.C. Sec. 361 and 363. The agreed order provides that the Debtor is authorized to use the cash collateral of Regions during the period between Dec. 31, 2013, through the date of the entry of an order confirming a Chapter 11 plan of liquidation, the dismissal of the case, the conversion of the case to Chapter 7, or the appointment of a Chapter 11 trustee, subject to the following provisions concerning the adequate protection of Regions' lien on and security interest in the properties and any income generated from the operations of the properties. The Debtor is also authorized to use Regions' cash collateral to pay amounts or any fees payable to the Clerk of the Court and to the U.S. Trustee. As adequate protection from any diminution in value of Regions' collateral, the Debtor will Regions i) a replacement lien on all of the Debtor's assets of the same type in which Regions claims to hold prepetition liens or security interests; and ii) as additional adequate protection to the interests of Regions, the Debtor will make periodic payments to Regions on the last day of each month, commencing on the entry of the agreed order for the month of February 2014, and on the last day of each month thereafter until modified by subsequent Order of the Court, in the amount of $6,371. In consideration of the payments, Regions agrees not to assert its right to collect or have allowed interest at the default rate for each month for which the payments are timely made. About New Life International New Life International, a religious corporation originally incorporated under the name "World Bible Society", sought Chapter 11 bankruptcy protection (Bankr. M.D. Tenn. Case No. 13-bk-10974) in Nashville, Tennessee, on Dec. 31, 2013. The Debtor disclosed $44,651,301 in assets and $46,362,805 in liabilities as of the Chapter 11 filing. NLI's sources of revenue include donations of goods, money and other property, investment earnings, sale of Christian-themed merchandise and earnings from other real estate and operating entities. Other names used by the Debtor are the National Community Foundation, The New Life Group, and Band Angels. The Debtor has tapped Gullett Sanford Robinson & Martin, PLLC as attorneys and Kraft CPAs Turnaround & Restructuring Group, PLLC, as financial consultant. The U.S. Trustee for Region 8 appointed an official committee of unsecured creditors consisting of Robert T. Abbotts, Dorthy F. Mack, James D. Rice, Richard M. Taylor, and Sharon L. Upton-Rice. NORTHERN BERKSHIRE: Reopening Emergency Services A Priority ----------------------------------------------------------- Andy McKeever, writing for iBerkshires.com, reported Judge Henry J. Boroff, who is presiding over the Chapter 7 liquidation filing of Northern Berkshire Healthcare, on Monday agreed that reopening the emergency services in North Berkshire was a priority. The judge went so far as to wonder if he shouldn't put in an extra layer of authority to uphold the state's previous order for Berkshire Medical Center to operate the Emergency Department. The report said the court-appointed Trustee Harold B. Murphy, Esq., at Murphy & King PC, attorneys for the state and Berkshire Health Systems and major creditor Wells Fargo Bank assured Judge Boroff that they were in agreement. Northern Berkshire Healthcare announced last month it would close North Adams Regional Hospital on March 28. The Board of Trustees cited a worsening financial status following Chapter 11 bankruptcy in 2011, financial restructuring and the closing of its psychiatric facility in January. iBerkshires.com's Mr. McKeever reported that Berkshire Superior Court Judge John J. Agostini, at the request of the attorney general's office, issued a temporary restraining order preventing assets critical to the ER's reopening from being removed and charging Berkshire Medical Center LLC to take over its operations. A hearing on the restraining order set for April 8 in Hampden Superior Court, where Judge Agostini is presiding, has been postponed to next week. The report said BMC is currently maintaining the electronic records, answering phones and providing maintenance and security on the NARH campus. The state has licensed BMC to operate a satellite emergency facility, but further federal approvals are required. About Northern Berkshire Healthcare Northern Berkshire Healthcare, Inc., is a non-profit healthcare corporation in northern Berkshire County, Massachusetts. Together with its affiliates, Northern Berkshire Healthcare operated the North Adams Regional Hospital and a visiting nurse association and hospice in North Adams, Massachusetts. Northern Berkshire Healthcare, Inc., North Adams Regional Hospital, Inc., Visiting Nurse Association & Hospice of Northern Berkshire, Inc., Northern Berkshire Healthcare Physicians Group, Inc., and Northern Berkshire Realty, Inc., filed for Chapter 11 bankruptcy (Bankr. D. Mass. Case No. 11-31114) on June 13, 2011, to address their overleveraged balance sheet and effect a reorganization of their operations. On the same day, Northern Berkshire Community Services, Inc., filed a petition for Chapter 7 relief also in the District of Massachusetts bankruptcy court. Judge Henry J. Boroff presides over the Debtors' cases. Steven T. Hoort, Esq., James A. Wright, III, Esq., Jonathan B. Lackow, Esq., and Matthew F. Burrows, Esq., at Ropes & Gray LLP, in Boston, Mass., serve as the Debtors' bankruptcy counsel. The Debtors' Financial Advisors are Carl Marks Advisory Group LLC. GCG Inc. serves as claims and noticing agent. Northern Berkshire disclosed $22,957,933 in assets and $53,379,652 in liabilities as of the Chapter 11 filing. The petition was signed by William F. Frado, Jr., president. William K. Harrington, the U.S. Trustee for Region 1, appointed five members to the official unsecured creditors' committee in the Debtors' cases. The Committee tapped Duane Morris LLP as its counsel. The Debtors obtained confirmation of their Chapter 11 plan on April 10, 2012. According to the Troubled Company Reporter on June 8, 2012, Northern Berkshire Healthcare said on June 5, 2012, it has emerged from Chapter 11 reorganization. OPTIMUMBANK HOLDINGS: Incurs $7.1 Million Net Loss in 2013 ---------------------------------------------------------- Optimumbank Holdings, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $7.07 million on $5.28 million of total interest income for the year ended Dec. 31, 2013, as compared with a net loss of $4.69 million on $5.16 million of total interest income in 2012. As of Dec. 31, 2013, the Company had $128.78 million in total assets, $128.99 million in total liabilities and a $216,000 total stockholders' deficit. A copy of the Form 10-K is available for free at: http://is.gd/1HuupG About OptimumBank Holdings OptimumBank Holdings, Inc., headquartered in Fort Lauderdale, Fla., is a one-bank holding company and owns 100 percent of OptimumBank, a state (Florida)-chartered commercial bank. The Company offers a wide array of lending and retail banking products to individuals and businesses in Broward, Miami-Dade and Palm Beach Counties through its executive offices and three branch offices in Broward County, Florida. Optimumbank Holdings disclosed a net loss of $4.69 million in 2012, as compared with a net loss of $3.74 million in 2011. Regulatory Matters Effective April 16, 2010, the Bank consented to the issuance of a Consent Order by the Federal Deposit Insurance Corporation and the the Florida Office of Financial Regulation, also effective as of April 16, 2010. The Consent Order represents an agreement among the Bank, the FDIC and the OFR as to areas of the Bank's operations that warrant improvement and presents a plan for making those improvements. The Consent Order imposes no fines or penalties on the Bank. The Consent Order will remain in effect and enforceable until it is modified, terminated, suspended, or set aside by the FDIC and the OFR. OVERLAND STORAGE: To Conduct "Say-on-Pay" Vote Every Year --------------------------------------------------------- Based on the results of the vote at the annual meeting of shareholders held on June 18, 2013, and consistent with the recommendation of the Board of Directors of Overland Storage, Inc., the Board has determined to conduct a Say-on-Pay Vote every year until the next required advisory vote on the frequency of future Say-on-Pay Votes. About Overland Storage San Diego, Cal.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. Overland Storage incurred a net loss of $19.64 million on $48.02 million of net revenue for the fiscal year ended June 30, 2013, as compared with a net loss of $16.16 million on $59.63 million of net revenue during the prior fiscal year. Moss Adams LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013, citing recurring losses and negative operating cash flows which raise substantial doubt about the Company's ability to continue as a going concern. As of Dec. 31, 2013, the Company had $31.62 million in total assets, $34.93 million in total liabilities and a $3.30 million total shareholders' deficit. OVERLAND STORAGE: Amends Loan Agreement with Silicon Valley ----------------------------------------------------------- Overland Storage, Inc., and its wholly-owned subsidiary, Tandberg Data GmbH, entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank on March 19, 2014. The Amended and Restated Credit Facility amends and restates the Loan and Security Agreement, dated as of Aug. 9, 2011, by and between the Company and Silicon Valley Bank, as previously amended. The Amended and Restated Credit Facility provides for an $8,000,000 revolving line of credit, which includes a $3,000,000 sublimit for advances to the German Subsidiary, as well as a separate credit line of $750,000 for letters of credit, foreign exchange contracts and cash management. The revolving line of credit is subject to a borrowing-base initially equal to 80 percent of the value of certain accounts receivable of the Company and the German Subsidiary. The maturity date of the Amended and Restated Credit Facility is Aug. 7, 2015. Obligations with respect to advances made to the Company under the Amended and Restated Credit Facility are secured by a pledge of substantially all of the Company's assets other than intellectual property and certain other assets. Borrowings by the Company under the Amended and Restated Credit Facility will bear interest at the Prime Rate plus a margin of either 1.00 percent or 1.25 percent, depending on the Company's net cash. Borrowings by the German Subsidiary under the Amended and Restated Credit Facility will bear interest at the Prime Rate plus a margin of either 2.00 percent or 2.25 percent, depending on the Company's net cash. The Company is also obligated to pay other facility fees and arrangement fees customary for a credit facility of this size and type. A copy of the Amended and Restated Loan and Security Agreement is available for free at http://is.gd/BgU8ao About Overland Storage San Diego, Cal.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. Overland Storage incurred a net loss of $19.64 million on $48.02 million of net revenue for the fiscal year ended June 30, 2013, as compared with a net loss of $16.16 million on $59.63 million of net revenue during the prior fiscal year. Moss Adams LLP, in San Diego, California, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013, citing recurring losses and negative operating cash flows which raise substantial doubt about the Company's ability to continue as a going concern. As of Dec. 31, 2013, the Company had $31.62 million in total assets, $34.93 million in total liabilities and a $3.30 million total shareholders' deficit. PA ENTERTAINMENT: Section 341(a) Meeting Set on April 29 -------------------------------------------------------- A meeting of creditors in the bankruptcy case of Philadelphia Entertainment and Development Partners, L.P., will be held on April 29, 2014, at 1:00 p.m. at 833 Chestnut Street, Suite 501, Philadelphia, PA. 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. Philadelphia Entertainment and Development Partners, L.P., filed a Chapter 11 bankruptcy petition (Bankr. E.D. Pa. Case No. 14-12482) on March 31, 2014. Brian R. Ford signed the petition as authorized signatory. The Debtor estimated assets of at least $10 million and liabilities of at least $50 million. DLA Piper LLP (US) serves as the Debtor's counsel. Judge Magdeline D. Coleman oversees the case. PACIFIC STEEL: Epiq Approved as Balloting and Noticing Agent ------------------------------------------------------------ The Hon. Roger L. Efremsky of the U.S. Bankruptcy Court for the Northern District of California authorized Pacific Steel Casting Company, et al., to employ Epiq Bankruptcy Solutions, LLC as the Debtors' official claims, noticing and balloting agent. Michael W. Malter, Esq., at Binder & Malter, LLP, on behalf of the Debtors, stated that the agreement has been amended to address concerns raised by the U.S. Trustee and the Court at the March 13, 2014 hearing. As requested by the U.S. Trustee at that hearing, the arbitration clause and the provision related to crisis and communication management have been removed. The Court further indicated that it would not approve an indemnity clause for anything more than ordinary negligence and requested that the indemnity clause in the agreement specifically exclude gross negligence and willful misconduct. The indemnity clause has been revised to comply with the Court's request and now expressly excludes losses resulting from Epiq's gross negligence or willful misconduct. Epiq is authorized to, among other things: i) distribute required notices to parties in interest; ii) receive, maintain, docket, and otherwise administer the proofs of claim filed in the Debtors cases; and iii) provide such other noticing, claims, and administrative services as required by the Debtors and that would fall within the purview of services to be provided by the Clerk's Office. The order also provided that in the event Epiq is unable to provide the services set out in the order, Epiq will immediately notify the Debtors' counsel and cause all relevant creditor information to be turned over to another noticing agent with the advice and consent of the Debtors' counsel. About Pacific Steel Casting Company Pacific Steel Casting Company and Berkeley Properties, LLC, separately filed Chapter 11 bankruptcy petitions (Bankr. N.D. Cal. Case Nos. 14-41045 and 14-41048) on March 10, 2014. Pacific Steel's petition was signed by Charles H. Bridges, Jr., chief financial officer and director. The Law Offices of Binder and Malter, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims, noticing and balloting agent. The Debtors estimated assets and liabilities of at least $10 million. Pacific Steel makes carbon, low-alloy and stainless steel castings for U.S. and international customers, largely for heavy-duty trucks and construction equipment. Tracy Hope Davis, the United States Trustee for Region 17, appointed seven creditors to serve on the Official Committee of Unsecured Creditors. PACIFIC STEEL: Taps Burr Pilger Mayer as Financial Consultants -------------------------------------------------------------- Pacific Steel Casting Company, et al., ask the U.S. Bankruptcy Court for the Northern District of California for permission to employ Burr Pilger Mayer, a certified public accounting firm, as financial consultants. BPM will, among other things: a. assist in the preparation of cash collateral budgets, review all expenditures to ensure conformity with those budgets and to support the loan underwriting process; b. develop financial analysis, as necessary to support the loan underwriting process; and c. assist in the loan closing process. The hourly rates of BPM's personnel are: Experience Level Rate ---------------- ---- Principals $325 - $500 Directors and Managers $215 - $450 Supervisors, Seniors, and Staff $65 - $250 Administrative $55 - $65 On March 6, 2014, BPM received payment of: 1. $69,064 from PSC for services rendered from Nov. 7, 2013, through March 6, 2014, that exceeded the initial $2,500 retainer on behalf of both PSC and BP; and 2. a $50,000 prepetition retainer from PSC on behalf of both PSC and BP for the chapter 11 bankruptcy cases. BPM was not owed any amounts by PSC or BP on the Petition Date About Pacific Steel Casting Company Pacific Steel Casting Company and Berkeley Properties, LLC, separately filed Chapter 11 bankruptcy petitions (Bankr. N.D. Cal. Case Nos. 14-41045 and 14-41048) on March 10, 2014. Pacific Steel's petition was signed by Charles H. Bridges, Jr., chief financial officer and director. The Law Offices of Binder and Malter, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims, noticing and balloting agent. The Debtors estimated assets and liabilities of at least $10 million. Pacific Steel makes carbon, low-alloy and stainless steel castings for U.S. and international customers, largely for heavy-duty trucks and construction equipment. Tracy Hope Davis, the United States Trustee for Region 17, appointed seven creditors to serve on the Official Committee of Unsecured Creditors. PACIFIC STEEL: Wants to Hire Cleary Gull as Investment Banker ------------------------------------------------------------- Pacific Steel Casting Company, et al., ask the Bankruptcy Court for the Northern District of California for permission to employ Cleary Gull Inc. as investment banker. Cleary Gull will, among other things: 1. assist in developing an overall strategy for a transaction; 2. become familiar with the business, operations, properties, financial condition, prospects, and management philosophy of the company; and 3. review the historical and projected financial performance and determining a current valuation of the Company. John Peterson, managing director of Cleary Gull, tells the Court that the firm's compensation structure, includes: a) ISR Fee: a fee for initial advisory services rendered in three installments as: * $37,500 - Execution of the letter agreement; * $25,000 - Receipt of proposed initial indication of interest, letter of intent, memorandum of understanding or other proposal for a Transaction from an interested party; and * $25,000 - acceptance by the Company or the owner(s) of a majority of its outstanding shares of a letter of intent, memorandum of understanding or other agreement in principle or proposal for a transaction from an interested party b) Transaction and Incentive Fees: Cleary Gull's compensation for the services is largely dependent on the outcome of the assignment. If a transaction is consummated, then the Company will pay Cleary Gull a success fee, in cash via wire transfer at consummation of the transaction, of $400,000, less the amount of the ISR Fee paid by the Company, plus an incentive fee equivalent to five percent of the aggregate consideration equal to or in excess of $18,000,000 To the best of the Debtors' knowledge, Cleary Gull is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Pacific Steel Casting Company Pacific Steel Casting Company and Berkeley Properties, LLC, separately filed Chapter 11 bankruptcy petitions (Bankr. N.D. Cal. Case Nos. 14-41045 and 14-41048) on March 10, 2014. Pacific Steel's petition was signed by Charles H. Bridges, Jr., chief financial officer and director. The Law Offices of Binder and Malter, LLP, serves as the Debtors' counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims, noticing and balloting agent. The Debtors estimated assets and liabilities of at least $10 million. Pacific Steel makes carbon, low-alloy and stainless steel castings for U.S. and international customers, largely for heavy-duty trucks and construction equipment. Tracy Hope Davis, the United States Trustee for Region 17, appointed seven creditors to serve on the Official Committee of Unsecured Creditors. PALM DRIVE HEALTH: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Palm Drive Health Care District 501 Petaluma Ave. Sebastopol, CA 95472 Case No.: 14-10510 Type of Business: Health Care Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court Northern District of California (Santa Rosa) Debtor's Counsel: Michael A. Sweet, Esq. FOX ROTHSCHILD LLP 235 Pine St. #1500 San Francisco, CA 94104 Tel: (415)364-5540 Email: msweet@foxrothschild.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The petition was signed by Thomas Harlan, chief executive officer. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. PARK DRIVE ESTATES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Park Drive Estates LLC 70-58 173rd Street Flushing, NY 11365 Case No.: 14-60573 Chapter 11 Petition Date: April 7, 2014 Court: United States Bankruptcy Court Northern District of New York (Utica) Debtor's Counsel: Thomas Paul Hughes 23 Oxford Road New Hartford, NY 13413 Tel: (315) 223-3043 Fax: (315) 735-7924 Email: thughes@23oxfordroad.com Total Assets: $3.15 million Total Liabilities: $25,000 The petition was signed by Barbara Klapper, member. The Debtor did not file a list of its largest unsecured creditors when it filed the petition. PATIENT SAFETY: Now a Wholly Owned Subsidiary of Stryker -------------------------------------------------------- Pursuant to the Agreement and Plan of Merger, dated as of Dec. 31, 2013, by and among Stryker Corporation, PS Merger Sub Inc., a wholly owned subsidiary of Stryker, and Patient Safety Technologies, Inc., on March 24, 2014, Merger Sub was merged with and into the Company, with the Company continuing as the surviving In the Merger: (i) each share of common stock, par value $0.0001 per share, of the Company outstanding immediately prior to the effective time of the Merger, other than dissenting shares and shares of Capital Stock owned by the Company, Stryker or Merger Sub or any of their subsidiaries, was converted into the right to receive $2.22 in cash, without interest; (ii) each share of Series A Convertible Preferred Stock, par value $1.00 per share, of the Company outstanding immediately prior to the Effective Time, other than Excluded Shares, was converted into the right to receive $100.00 in cash, without interest; and (iii) each share of Series B Convertible Preferred Stock, par value $1.00 per share, of the Company outstanding immediately prior to the Effective Time, other than Excluded Shares, was converted into the right to receive $296.00 in cash, without interest. In addition, each vested and exercisable option to acquire Common Stock that is outstanding immediately prior to the Effective Time of the Merger will be canceled and terminated in exchange for the right to receive a payment in cash equal to the product of (a) the total number of Common Stock for which such option remains outstanding and unexercised prior to the effective time and (b) the excess (if any) of the Common Consideration over the exercise price of such option. All unvested options will become immediately vested and exercisable. As a result of the Merger, a change in control of the Company occurred, and the Company is now a wholly owned subsidiary of Stryker. The total amount of funds used to complete the Merger was approximately $120 million, which was funded through Stryker's available cash on hand. In accordance with the Merger Agreement, as a result of the Merger, the directors of Merger Sub immediately prior to the Effective Time became the directors of the Company following the Effective Time. In connection with the Merger, both Brian E. Stewart and David C. Dreyer ceased to serve as officers of the Company on March 24, 2014. Immediately following the Effective Time, the directors of the Company appointed Timothy J. Scannell to serve as president, David G. Furgason to serve as vice president, Jeanne M. Blondia to serve as vice president and treasurer and Dean H. Bergy to serve as vice president and secretary. At the Effective Time, the certificate of incorporation and the bylaws of the Company were amended and restated in accordance with the terms of the Merger Agreement. A copy of the Form 8-K is available for free at: http://is.gd/3jPVDP To Cease Filing of Reports with SEC The Company intends to file with the Securities and Exchange Commission a certification on Form 15 to terminate its registration under Section 12(g) of the Securities Exchange Act of 1934 or to suspend its reporting obligations under Sections 13 and 15(d) of the 34 Act as promptly as practicable. The Company filed with the SEC post-effective amendments to the following registration statements: (1) Registration Statement on Form S-1 filed on July 2, 2012, and declared effective on July 16, 2012, the Company registered for resale from time to time 2,499,998 shares of the Company's common stock, par value $0.0001 per share. (2) Registration Statement on Form S-1 filed on May 10, 2011, and declared effective on May 11, 2011, as amended, pursuant to which the Company registered for resale from time to time 31,244,769 shares of the Company's common stock par value $0.0001 per share. (3) Registration Statement on Form S-8 registering the offer and sale of the Company's common stock, par value $0.0001 per share, issuable pursuant to the Non-Statutory Stock Option Plan for the Directors of The Franklin Holding Corporation and The Franklin Holding Corporation Stock Incentive Plan; (4) Registration Statement on Form S-8 filed on May 3, 2005, registering the offer and sale of the Common Shares issuable pursuant to the (i) Consulting Agreement, entered into as of April 5, 2005, with Health West Marketing Incorporated, (ii) Consulting Agreement, entered into as of Dec. 10, 2004, with Apex Financial Management Services L.L.C., (iii) Agreement dated April 1, 2005, with Crescent Communications, (iv) Agreement dated Oct. 18, 2004, with Aegis Securities Corp. and (v) Stock Option and Restricted Stock Plan, effective March 30, 2005; (5) Registration Statement on Form S-8 registering the offer and sale of Common Shares issuable pursuant to the (i) Patient Safety Technologies, Inc., 2009 Stock Option Plan (ii) Non-Plan Stock Option Agreements granting options to various officers, directors, employees and former employees of Patient Safety Technologies, Inc. outside of the Stock Option and Restricted Stock Plan and the 2009 Stock Option Plan; (6) Registration Statement on Form S-8 filed on March 26, 2013, registering the offer and sale of the Common Shares, issuable pursuant to the (i) 2009 Stock Option Plan, as amended and (ii) Non-Plan Stock Option Agreements granting options to various officers, directors, employees and former employees of Patient Safety Technologies, Inc. outside of the Stock Option and Restricted Stock Plan and the 2009 Stock Option Plan, as amended; The Company is seeking to deregister all shares of Common Stock that remain unsold under the Registration Statements because its obligation to keep the Registration Statements effective pursuant to the terms of its agreement with the selling stockholders has terminated. About Patient Safety Technologies Patient Safety Technologies, Inc. (OTC: PSTX) -- http://www.surgicountmedical.com/-- through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge(TM) System, a system designed to improve the standard of patient care and reduce health care costs by preventing the occurrence of surgical sponges and other retained foreign objects from being left inside patients after surgery. RFOs are among one of the most common surgical errors. The Company's balance sheet at Sept. 30, 2013, showed $18.71 million in total assets, $5.56 million in total liabilities and $13.15 million in stockholders' equity. Patient Safety incurred a net loss applicable to common shareholders of $1.91 million for the nine months ended Sept. 30, 2013. The Company incurred a net loss of $2.20 million in 2012 and a net loss of $1.89 million in 2011. PEREGRINE FINANCIAL: Trustee and Customers Settle with JPMorgan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee for Peregrine Financial Group Inc. reached a settlement of his disputes with JPMorgan Chase Bank NA in tandem with settlement of a class lawsuit on behalf of Peregrine customers. According to the report, the settlement enables JPMorgan to release more than $14 million held in a blocked account to cover the bank's claim to be indemnified for expenses and losses stemming from the customers' class-action suit. Peregrine trustee Ira Bodenstein was keen to have a global settlement because the bank's expenses in the class suit threatened to erode what he could recover from the blocked account, the report said. The settlement, coming up for approval on April 16 in U.S. Bankruptcy Court in Chicago, calls for the New York-based bank to receive about $1.9 million in full satisfaction of $2.2 million in claims it filed, the report related. The payments will come from the accounts at the bank. The payments will leave $14 million from what was a total of $15.9 million in the blocked account, the report further related. Because customers will waive claims against the bank, JPMorgan will release its hold on the $14 million. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's CEO Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial is the regulated unit of the brokerage PFGBest. QUAD/GRAPHICS INC: Moody's Rates New Secured Bank Debt 'Ba2' ------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Quad/Graphics, Inc.'s new senior secured credit facilities and B1 rating to the company's new senior unsecured notes. At the same time, Quad's Ba2 corporate family rating (CFR), Ba2-PD probability of default ratings (PDR) and the company's SGL-1 (very good) speculative grade liquidity (SGL) rating were affirmed and the ratings outlook was maintained at stable. Ratings of existing credit facilities will be withdrawn in due course. The proceeds from the new Ba2 credit facility (comprised of an $850 million 5-year revolving term loan, a $450 million 5-year term loan A and a $300 million 7-year term loan B) and the new B1 senior unsecured notes ($300 million 8-year notes) will be used to repay the existing credit facility (comprised of an $850 million revolving term loan due 2017, a $450 million term loan A due 2017 and a $200 million term loan B due 2018) as well cash to the balance sheet, which Moody's expect will be used to fund future acquisitions. While the transaction increases Debt/EBITDA leverage by 0.2x to 3.0x (on a Moody's fully-adjusted basis), it is viewed as being ratings neutral given EBITDA and synergies from the Brown acquisition, and has positive considerations including extended maturities, increased liquidity and reduced cost of capital. Since most of Quad's debt is secured and represents the vast majority of the company's liabilities, with proportionately little loss-absorbing junior capital, Quad's bank credit facility is rated at the same Ba2 level as the company's CFR. The junior- ranking senior unsecured notes are disadvantaged by the top heavy liability structure, the unsecured notes are rated two notches below the company's CFR at B1. Issuer: Quad/Graphics, Inc. Assignments: Senior Secured Bank Credit Facility, Assigned Ba2 (LGD3, 41%) Senior Unsecured Notes, Assigned B1 (LGD5, 89%) Rating Actions: Corporate Family Rating, affirmed at Ba2 Probability of Default Rating, affirmed at Ba2-PD Senior Secured Bank Credit Facility, affirmed at Ba2 (LGD3, 45%) [will be withdrawn in due course] Speculative Grade Liquidity Rating, affirmed at SGL-1 Outlook, maintained at Stable Ratings Rationale Quad's Ba2 corporate family rating is influenced by revenue declines and exposures to the challenges in the commercial printing industry. Even with the general economy showing modest positive growth, Moody's expect Quad's organic revenues to decline by 2%-to-3% over the next couple of years. Industry-wide revenue and profitability are expected to be under significant pressure for the foreseeable future and restructuring expenses are expected to be the norm for companies in this sector. These negative trends are partially mitigated by Quad's financial conservatism which is displayed by ongoing debt reduction and maintaining leverage in a target range for net debt-to-EBITDA of 2.0x-to-2.5x (Quad's Q4-13 measure was 2.4x vs. an equivalent Moody's adjusted figure of 2.8x). Quad also maintains solid liquidity and shows caution in providing cash returns to shareholders. Rating Outlook The outlook is stable based on expectations that the company will continue to show fiscal conservatism including operating within its targeted unadjusted net debt-to-EBITDA range of 2.0x-to-2.5x. What Could Change the Rating - UP Given solid liquidity and improved industry fundamentals and top- line growth, a ratings upgrade may be considered if (RCF-CapEx)/TD were expected to be sustained well above 10% while (EBITDA- CapEx)/IntExp was well above 4x (measures include Moody's standard adjustments). An upgrade would also involve clarity concerning dividend plans. What Could Change the Rating - DOWN Moody's would consider a downgrade if (RCF-CapEx)/Debt were expected to be sustained at approximately 5% or below and (EBITDA- CapEx)/IntExp was less than 3.5x (measures include Moody's standard adjustments). A significant debt-financed acquisition and/or adverse liquidity developments could also result in downward rating pressure. Headquartered in Sussex, Wisconsin, Quad/Graphics, Inc. (Quad) is a publicly traded leading North American commercial printing company. Annual revenues are in the $5.2 billion range of which 91% comes from US operations while 6% comes from South American operations and 3% from European operations. QUAD/GRAPHICS INC: S&P Lowers CCR to 'BB-' on Higher Leverage ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Sussex, Wis.-based printing company Quad/Graphics Inc. to 'BB-' from 'BB'. The outlook is stable. At the same time, S&P assigned the company's proposed $1.6 billion senior secured credit facility a 'BB-' issue-level rating, with a recovery rating of '3', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. The facility consists of an $850 million revolving credit facility due 2019, $450 million term loan A due 2019, and $300 million term loan B due 2021. In addition, S&P assigned the company's proposed $300 million senior unsecured notes a 'B' issue-level rating, with a recovery rating of '6', indicating its expectation for negligible (0% to 10%) recovery in the event of a payment default. The downgrade reflects the increase in adjusted leverage beyond S&P's 3x threshold for the company at a 'BB' rating, where S&P expects it will remain as the company combats low- to mid-single- digit percent annual organic revenue declines, amid long-term structural declines in most of its end markets. As of Dec. 31, 2013, Quad's adjusted leverage was 3x. However, pro forma for the refinancing and acquisition of Brown Printing Company, adjusted leverage increased to roughly 3.2x. Additionally, the company's operational pressures have not subsided as organic revenue declined about 4.5% in 2013 and the adjusted EBITDA margin fell to 11.6% from 12.3% in 2012. Given the increase in adjusted leverage and declining operating fundamentals, S&P revised its financial risk profile assessment to "significant" from "intermediate," indicating increased risk. S&P views Quad's business risk profile as "weak." The company's print products are well-diversified, but the majority of its end markets, including books, magazines, retail inserts, and directories face unfavorable structural changes as content and advertising dollars shift to digital media. These trends have caused printing volumes to decline, which in turn has resulted in lower industry capacity utilization and aggressive pricing tactics by market participants that have eroded profitability. Quad's non-print revenue consists mostly of its logistics segment, which accounts for about 10% of total revenue. The company has undertaken marketing solutions initiatives for its clients, but S&P do not expect those efforts to drive incremental revenue in the short term. S&P views Quad's management and governance as "fair." S&P views Quad's financial risk profile as "significant," based on its pro forma adjusted leverage calculation of 3.2x. As of Dec. 31, 2013, Quad's adjusted leverage (which includes adjustments for pension and operating leases) was 3x, only just meeting S&P's threshold for adjusted leverage for the company at the "intermediate" financial risk profile. S&P expects the company to reduce debt through cash contributions to the underfunded pension and post-retirement liability and through debt amortization payments in 2014 and 2015. At the same time, S&P also expects that declines in EBITDA resulting from the organic decline of the business will offset debt reduction, keeping adjusted leverage over 3x. QUALITY STORES: Severance Payments Are 'Wages' Subject to Tax ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that severance payments to employees are "wages" subject to tax and withholding, the U.S. Supreme Court ruled on March 25, deciding a case argued on Jan. 14. According to the report, the case arose from the bankruptcy liquidation of retailer Quality Stores Inc. The U.S. Court of Appeals in Cincinnati ruled that severance payments aren't wages under the Federal Insurance Contributions Act and aren't subject to withholding. The March 25 high court ruling reversing the appeals court has several implications for companies in bankruptcy and their employees, Mr. Rochelle said, noting that: first, paying severance is more expensive because the bankrupt company must pay its share of FICA taxes; and second, the payments are taxable to the employees, meaning they will have less disposable income as well as out of a job. Classifying severance as wages may also limit employees' ability to claim unemployment benefits, the report related. FICA withholdings fund the Social Security and Medicare programs, the report further related. Although the Quality Stores case involved only $1 million, the government persuaded the Supreme Court to hear the case because there are more than $1 billion in refund claims pending by 2,400 taxpayers advancing theories like that rejected in the high court on March 25. The case in the Supreme Court is U.S. v. Quality Stores Inc., 12- 1408, U.S. Supreme Court (Washington). About Quality Stores Based in Muskegon, Michigan, Quality Stores Inc. was a specialty retailer of farm and agriculture-related merchandise. On Oct. 22, 2001, the Company was sent to bankruptcy after a group of holders of the 10-5/8% senior notes filed an involuntary petition before the U.S. Bankruptcy Court for the Western District of Michigan, in Grand Rapids. RAMS ASSOCIATES: Confirmation Hearing Set for May 6 --------------------------------------------------- Judge Christine M. Gravelle is set to consider confirmation of the proposed Second Modified Plan of Reorganization in a 2:00 p.m., May 6, 2014 hearing. The judge approved the adequacy of the Second Modified Disclosure Statement describing the Plan on March 18, 2014. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/RAMSASSOCIATES_2ndDSmar18.pdf Written acceptances, rejections or objections to the Plan should be filed with the Debtor's attorney no less than seven dayvs before the Confirmation Hearing. About Rams Associates Rams Associates LP was formed in 1990 for the purpose of acquiring and operating an ice rink then operated under the name American Hockey & Ice Skating Center located in Farmingdale, New Jersey for a purchase price of $1,800,000 for the land and building. Rams expended another $3,200,000 to build-out the arena and purchase the necessary equipment to operate the Arena. Rams continues to own and operate the ice rink, under the name Jersey Shore Arena. On June 25, 2013, an involuntary petition under chapter 7 of the Bankruptcy Code, 11 U.S.C. Sec. 101, et seq., was filed against Rams, which proceeding was assigned Case No. 13-23969 (CMG). On July 16, 2013, Rams Associates filed a superseding Chapter 11 petition (Bankr. D.N.J. Case No. 13-25541) in Trenton, New Jersey. On July 30, 2013, a consent order substantively consolidating the cases was entered by the Bankruptcy Court, which allowed for Rams to proceed with the superseding chapter 11 case. Judge Christine M. Gravelle presides over the case. Morris S. Bauer, Esq. And Larry K. Lesnik, Esq., of McLaughlin & Marcus, P.A., serves as the Debtor's counsel. The Debtor estimated assets and debts of at least $10 million. REGENCY CENTERS: Fitch Affirms 'BB+' Preferred Stock Rating ----------------------------------------------------------- Fitch Ratings has affirmed the credit ratings of Regency Centers Corp. (NYSE: REG) and its operating partnership, Regency Centers, L.P., (collectively REG, or the company) as follows: Regency Centers Corporation -- Issuer Default Rating (IDR) at 'BBB'; -- Preferred stock at 'BB+'. Regency Centers, L.P. -- IDR at 'BBB'; -- Unsecured revolving facilities at 'BBB'; -- Senior unsecured term loan at 'BBB'; -- Senior unsecured notes at 'BBB'. The Rating Outlook is Stable. Key Rating Drivers The affirmation is based on improvements in operating fundamentals and Fitch's expectations that leverage and fixed charge coverage metrics will stabilize or improve slightly from current levels. Absent any further deleveraging initiatives, Fitch expects REG to maintain credit metrics within a range appropriate for the 'BBB' IDR. Improving Fundamentals Pro-rata same-store property net operating income (NOI) grew at a healthy rate of 4% in both 2013 and 2012, driven in part by increasing occupancy. Rent growth has been strong across both new leases and renewals. Fitch expects that same-property NOI will continue to grow in the low single digits through 2016 with the company maintaining its current occupancy rate. Additionally, the company's lease expiration schedule is manageable, with no year representing more than 14% of expiring pro-rata minimum base rent, further improving the durability of rental cash flows, absent tenant bankruptcies. Appropriate Credit Metrics REG's pro-rata leverage was 5.7x for the year ended Dec. 31, 2013, down from 6.3x and 6.5x as of year-end 2012 and 2011, respectively. The decrease in leverage has been mostly driven by net asset sales with proceeds used to reduce debt coupled with improved property performance. Fitch projects the company's leverage to sustain at current levels through 2016 which would be appropriate for the rating. Fitch defines leverage as net debt divided by recurring operating EBITDA. REG's pro-rata fixed-charge coverage ratio was 2.0x for the year ended Dec. 31, 2013, up from 1.9x in both 2012 and 2011. Fitch projects REG's fixed charge coverage will sustain in the low 2x's through 2016. Fitch defines fixed-charge coverage as recurring operating EBITDA less straight-line rents, leasing commissions and tenant and building improvements, divided by total interest incurred and preferred stock dividends. Limited Development Risk Although REG was a prolific developer during the last real estate cycle, the company is now taking a more measured approach. The company's net cost to complete in-progress developments was only 1.6% of its gross undepreciated assets as of Dec. 31, 2013, down from 2.1% in 2012 and up marginally from 1.5% in 2011. This compares to 12.8% as of 2007. The size of the overall development pipeline has decreased materially since the start of the global financial crisis, reflective of an overall de-risking of the company's strategy. Fitch expects the company to gradually increase its development pipeline by starting $165 million of annual developments and redevelopments from 2014 through 2016. Strong Unencumbered Asset Coverage of Unsecured Debt; Uneven Debt Maturity Profile REG's implied unencumbered asset value covered its net unsecured debt by 2.6x for the year ended Dec. 31, 2013 when applying an 8% stressed capitalization rate to unencumbered NOI. This ratio is strong for the 'BBB' rating and indicative of good contingent liquidity. REG has some unevenness in its debt maturity schedule with large unsecured bond maturities contributing to 19.3% of pro-rata debt maturing in 2015 and 21.6% maturing in 2017. However, refinancing risk is mitigated by the company's strong unencumbered asset pool and demonstrated access to the unsecured debt and equity markets. Appropriate Liquidity For the period Jan. 1, 2014 to Dec. 31, 2015, REG's sources of liquidity (unrestricted cash, availability under its unsecured revolving credit facility and projected retained cash flows from operating activities after dividends) exceed uses of liquidity (pro rata debt maturities, amortization, projected recurring capital expenditures and development) by 1.2x. Under a scenario whereby 80% of REG's pro-rata secured debt is refinanced with new secured debt, liquidity coverage would improve to 1.4x. The company has demonstrated strong access to various forms of capital over the past few years, mitigating near-term refinance risk. Consistent Affo Payout Ratio REG's dividend payout ratio has ranged between 85% and 92% of adjusted funds from operations (AFFO) over the past five years, indicative of a modest amount of internally generated capital. Fitch expects the company's dividend coverage will remain within this recent historical range over the next three years. Moderate Geographic Concentration REG's community and neighborhood shopping center portfolio has moderate geographic and anchor tenant concentrations. 54% of REG's annualized base rent is derived from properties located within the states of California, Florida and Texas. However, the company is exposed to various markets within the three largest states, reducing the headline concentration risk. Although REG's three largest tenants by annual base rents represent nearly 12% of annual base rents, this tenant concentration is offset by the fact that Fitch rates two of the top three tenants as investment grade. The company's three largest tenants are The Kroger Co. (4.7%, IDR of 'BBB' by Fitch), Publix Super Markets Inc. (4.3%), Safeway Inc. (2.7%, IDR of 'BBB-' by Fitch). However, Safeway Inc. is currently on Rating Watch Negative, and would likely be downgraded to 'B' assuming the proposed Cerberus acquisition (announced March 2014), was completed as proposed. Preferred Stock Notching The two notch differential between REG's IDR and its preferred stock rating is consistent with Fitch's criteria for corporate entities with a 'BBB' IDR. Pro-Rata Rationale Fitch looks at REG's property portfolio profile, credit statistics, debt maturities, and liquidity position based on combining its wholly-owned properties and its pro-rata share of co-investment partnerships, to analyze the company as if each of the co-investment partnerships was dissolved via distribution in kind. Several of REG's co-investment partnerships provide for unilateral dissolution. Most of these co-investment partnerships provide for a distribution in kind in the event of a dissolution, whereby REG and its limited partner unwind the partnership by distributing the underlying properties (and related property-level debt, if any) to each partner based on each partner's respective ownership percentage in the partnership. Further, the company has supported its co-investment partnerships in the past by raising common equity to repay or refinance its share of secured debt, demonstrating its willingness to de-lever these partnerships. Fitch views REG's partnership platform positively as it provides REG with broader market insights and incremental fee and property income. In addition, the partnership platform provides the company additional acquisition opportunities that REG may not consider for wholly-owned assets, such as entering a market that REG may not choose to enter on its own or to acquire assets that may not meet certain size parameters for the consolidated portfolio. Via common equity follow-on offerings, the company has also reduced leverage in its partnerships to levels consistent with leverage on the wholly-owned consolidated portfolio. Stable Outlook The Stable Outlook is based on continued improvement in retail fundamentals and Fitch's expectation that leverage and coverage will remain relatively unchanged over the next two years. Rating Sensitivities The following factors may have a positive impact on REG's ratings and/or Outlook: -- Fitch's expectation of pro-rata leverage sustaining below 5.5x for several quarters (pro-rata leverage was 5.7x as of Dec. 31, 2013); -- Fitch's expectation of fixed charge coverage sustaining above 2.3x for several quarters (pro-rata coverage was 2.0x for the year ended Dec. 31, 2013). The following factors may have a negative impact on REG's ratings and/or Outlook: -- Fitch's expectation of leverage sustaining above 7.0x for several quarters; -- Fitch's expectation of fixed charge coverage sustaining below 1.8x for several quarters. A liquidity shortfall (REG had a base case liquidity coverage ratio of 1.2x as of Dec. 31, 2013). RESIDENTIAL CAPITAL: Court Disallows Leroy Hines Claim ------------------------------------------------------ Bankruptcy Judge Martin Glenn sustained the ResCap Borrower Claims Trust's Fifty-Eighth Omnibus Objection to (A) Amended and Superseded Borrower Claims; (B) Late Filed Borrower Claims; and (C) Non-Debtor Borrower Claims, solely as it relates to claim number 7312, filed by Leroy Hines. Through the Objection, the Borrower Claims Trust seeks an order disallowing and expunging several claims on different grounds. The Trust objects to the Hines Claim because it was filed after the bar date. Hines filed an opposition to the Objection. Hines filed his claim on Nov. 20, 2013, asserting a $38,789.36 secured claim and a $2,600 priority claim against Residential Capital, LLC, listing "Mortgage Note" as the basis for his claim. A copy of the Court's April 7, 2014 Memorandum Opinion and Order is available at http://is.gd/yfDzk2from Leagle.com. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities at March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap sold most of the businesses for a combined $4.5 billion. The Bankruptcy Court in November 2012 approved ResCap's sale of its mortgage servicing and origination platform assets to Ocwen Loan Servicing, LLC and Walter Investment Management Corporation for $3 billion; and its portfolio of roughly 50,000 whole loans to Berkshire Hathaway for $1.5 billion. Judge Martin Glenn in December 2013 confirmed the Joint Chapter 11 Plan co-proposed by Residential Capital and the Official Committee of Unsecured Creditors. ROBERTS LAND: Obtains Confirmation of Plan of Reorganization ------------------------------------------------------------ Judge Paul M. Glenn approved the Chapter 11 Plan of Roberts Land & Timber Investment Corp. and Union Land & Timber Corp. as satisfying the confirmation requirements under the Bankruptcy Code. The judge simultaneously granted the Debtors' request to modify the Plan after finding that the proposed modification does not adversely change the treatment of the claims of the creditors that voted to accept the Debtors' prior plan. As previously reported by The Troubled Company Reporter, the Debtor, through its Restated Joint Plan of Reorganization filed Aug. 23, 2013, sought to restructure debt owed to creditors including Farm Credit. The Plan amends and restates all previous plans (as modified from time to time) in their entireties that have been filed by the Debtors. With respect to the Secured Claim of Farm Credit of Florida, ACA, as successor by merger to Farm Credit of North Florida, ACA, in the amount of approximately $13 million, the Plan provides that, at the sole and exclusive option of the Debtors, the Debtors will inform the Court of their determination to elect to treat Farm Credit's Allowed Class 4 Claim under Plan Treatment 1, Plan Treatment 2 or Plan Treatment 3. About Roberts Land Roberts Land & Timber Investment Corp. filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 11-03851) in Jacksonville, Florida, on May 25, 2011. Affiliate Union Land & Timber Corp. also sought Chapter 11 protection (Case No. 11-03853). Anthony W. Chauncey, Esq., at The Decker Law Firm, P.A., in Live Oak, Florida; and James H. Post, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, serve as counsel for the Chapter 11 Debtors. The Debtors are real estate holding and development companies as well as holder of private mortgages. The Debtors receive income from the sale and development of real estate, management of real estate developments, mortgage receivables, cattle grazing leases and hunting leases. In its schedules, Roberts Land disclosed assets of $26.7 million with debt totaling $12.2 million, all secured. The principal properties are 1,500 acres in Baker County, Florida and 3,300 acres in Union County, Florida. In its schedules, Union Land disclosed $2,376,170 in assets and $11,945,819 in liabilities as of the petition date. SANUWAVE HEALTH: RA Capital Stake at 9.9% as of March 17 -------------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, RA Capital Management, LLC, and its affiliates disclosed that as of March 17, 2014, they beneficially owned 4,674,972 shares of common stock of Sanuwave Health, Inc., representing 9.9 percent of the shares outstanding. A cop of the regulatory filing is available for free at http://is.gd/p4IMvN About SANUWAVE Health Alpharetta, Ga.-based SANUWAVE Health, Inc., is an emerging global regenerative medicine company focused on the development and commercialization of noninvasive, biological response activating devices for the repair and regeneration of tissue, musculoskeletal and vascular structures. BDO USA, LLP, in Atlanta, Georgia, 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 a net working capital deficit, and is economically dependent upon future issuances of equity or other financing to fund ongoing operations, each of which raise substantial doubt about its ability to continue as a going concern. SANUWAVE Health reported a net loss of $6.40 million on $769,217 of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $10.23 million on $802,572 of revenue in 2011. The Company's balance sheet at Sept. 30, 2013, showed $1.75 million in total assets, $7.80 million in total liabilities and a $6.04 million total stockholders' deficit. SEAN DUNNE: Irish Developer Loses Appeal on Irish Petition ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Sean Dunne, an Irish real-estate developer, was barred from appealing a ruling by the U.S. Bankruptcy Court in Connecticut allowing an Irish bank creditor to have him also ruled bankrupt in Ireland. According to the report, Ulster Bank Ireland Ltd., one of Dunne's two main bank creditors, filed an involuntary bankruptcy petition against him in Ireland in February 2013. Before the bank was able to locate Dunne and serve the petition on him, Dunne filed a voluntary Chapter 7 bankruptcy petition in Bridgeport, Connecticut, near where Dunne said he resides. Dunne's Chapter 7 petition automatically barred Ulster Bank from proceeding with the Irish bankruptcy. At the bank's request, the Connecticut bankruptcy judge signed an order in June allowing the Irish bankruptcy to proceed to a limited degree, the report related. Dunne filed an appeal, although he failed to persuade the bankruptcy judge to stay the Irish bankruptcy pending appeal. U.S. District Judge Janet Bond Arterton in Hartford, Connecticut, dismissed Dunne's appeal on March 11, the report further related. She said the appeal was moot because she couldn't set aside the ruling by the Irish court declaring him bankrupt. She also said it would be inequitable to preclude Ulster Bank from participating in the selection of an Irish trustee. Judge Arterton said the appeal was moot because she couldn't give any effective relief even if the bankruptcy judge were wrong in allowing him to be declared bankrupt in Ireland, the report added. About Sean Dunne Irish real estate developer Sean Dunne filed a liquidating Chapter 7 bankruptcy petition (Bankr. D. Conn. Case No. 13-50484) on March 30, 2013, in Bridgeport, Connecticut. Mr. Dunne says he now lives and works in Connecticut. Mr. Dunne said he filed for bankruptcy in the U.S. because Ulster Bank was applying to an Irish court for permission to commence bankruptcy proceedings there. The formal lists of property and debt Dunne filed in May in the U.S. court shows assets with a total claimed value of $55.2 million and liabilities totaling $942.2 million. The assets include $40.8 million of real estate, all in Ireland. Among the $280.2 million in secured creditors and $612.2 million in unsecured creditors, almost all are in Ireland. SIMPLEXITY LLC: Auction Set for April 28, Wal-Mart Makes $10MM Bid ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the procedures governing the sale of certain equipment, intellectual property, contract rights and other assets of Simplexity, LLC, et al., to Wal-Mart Stores, Inc., subject to higher and better bids. The Stalking Horse Bidder will (a) pay to the Debtors on the closing date, an amount equal to $10 million, or, in the event that there is an auction for the stalking horse assets, an amount equal to the final bid by the stalking horse bidder, and (b) assume certain liabilities. The deadline for submitting bids for the assets is April 25. If Qualified Bids are timely received by the Debtors, the auction will take place on April 28, at 10:00 a.m. (prevailing Eastern Time), at the offices of proposed counsel to the Debtors, Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware. The sale hearing will be held on April 30. Objections to the proposed sale is April 23. All objections that have not been withdrawn, waived or settled are overruled, including the objections raised by Roberta A. DeAngelis, U.S. Trustee for Region 3, the Official Committee of Unsecured Creditors, Reliance Communications LLC, and Sprint Solutions, Inc. The U.S. Trustee took issue with the bid procedures that seeks to approve the payment of a "success fee" to Frank C. Bennett, III, the Debtor' chief executive officer and, on the Petition Date, only remaining employee. The U.S. Trustee asserted that pursuant to Section 503(c)(1) of the Bankruptcy Code, bonus payments to insiders of the type sought in the motion are subject to a strict standard if they are for the purpose of inducing employees to remain with the Debtors' business. The Committee told the Court that it is very concerned about the amount of the combined break- up fee/expense reimbursement as well as restrictions that the proposed purchaser has placed on diligence access to certain of its employees. The Committee urged that the Court limit the aggregate amount of the lead bidder's combined break-up/expense reimbursement to $300,000. The Court approved the proposed termination fee of $300,000 and the expense reimbursement equal to the aggregate amount of reasonable out-of-pocket costs and expenses. Reliance Communications complained that the motion does not set forth sufficient information regarding the assets to be sold to enable a prospective bidder to differentiate between the stalking horse assets and excluded assets. Sprint Solutions complained that the sale cannot be free and clear of Sprint's interests in the PMSI Collateral and Setoff Rights without its consent or appropriate money satisfaction, pursuant to Section 363 of the Bankruptcy Code. Sprint, Cellco Partnership d/b/a Verizon Wireless, and T-Mobile USA, Inc., assert a purchase money security interest in inventory the Debtors purchased from the PMSI Creditors on credit and the proceeds from the Debtors' sale of the inventory, and that the purchase money security interest has priority over any conflicting security interest in the PMSI Collateral. Peter S. Partee, Sr., Esq., and Michael P. Richman, Esq., at HUNTON & WILLIAMS LLP, in New York; and Christopher A. Ward, Esq., and Shanti M. Katona, Esq., at POLSINELLI PC, in Wilmington, Delaware, represent the Committee. Richard J. McCord, Esq., and Jaspreet S. Mayall, Esq., at Certilman Balin Adley & Hyman, LLP, in East Meadow, New York, represent Reliance Communications. Brett D. Fallon, Esq. -- bfallon@morrisjames.com -- at MORRIS JAMES LLP, in Wilmington, Delaware; and David I. Swan, Esq. -- dswan@mcguirewoods.com -- at McGUIREWOODS LLP, in Tysons Corner, Virginia. About Simplexity Simplexity, LLC, sought protection under Chapter 11 of the Bankruptcy Code on March 16, 2014 (Case No. 14-10569, Bankr. D.Del.). The case is before Judge Kevin Gross. The Debtors' counsel is Kenneth J. Enos, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware. Prime Clerk LLC serves as claims and noticing agent. Simplexity LLC and Simplexity Services LLC both estimated $10 million to $50 million in assets, and $50 million to $100 million in liabilities. The U.S. Trustee for Region 3 appointed five members to an official committee of unsecured creditors. SIMPLEXITY LLC: Selling Biz to Walmart; Proposes Bid Protocol ------------------------------------------------------------- Simplexity, LLC, asks the Court to approve bidding and sale procedures to govern the sale of its assets. Sale Process Before their shutdown, Simplexity and its affiliates were the largest independent online activator of mobile phones in the United States through their consumer wireless division. They also offered a software platform to assist retailers through their retail transaction services division. However, Simplexity found itself with a rapidly declining cash balance and tightening liquidity that resulted in several events of defaults. It began exploring potential strategic alternatives, including a sale of assets. During the first quarter of 2014, Simplexity began to heavily market its assets. Despite these developments, Simplexity failed to find sufficient funding to continue operations before the marketing process could get meaningfully under way. On March 12, 2014, Simplexity terminated all employees and ceased operations. Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that Simplexity and advisors were contacted by several parties, mostly retail partners, which expressed an interest in moving quickly toward the consummation of an expedited purchase of assets. The retail partners rely heavily on the infrastructure provided by the software platform to support sales and activation of wireless phones. Simplexity believes that its assets are extremely valuable to the retailers, pending availability of replacement partners. Once replacements are found, asset value will greatly diminish and Simplexity will be left with no choice but to move forward with a fire-sale liquidation. Accordingly, Simplexity filed for Chapter 11 bankruptcy to implement an expedited yet orderly sale process that will maximize value for stakeholders. Simplexity will seek the Court's authority to retain Rutberg & Co. as their investment banker to assist in the marketing and sale process. Simplexity also retained 19 former employees including Chief Executive Officer Frank Bennett III, who will receive, upon Court approval, 5% of excess sale proceeds over $7 million or $50,000, which amount is greater. Simplexity, in consultation with Rutberg and advisors, determines that an expedited sale process concluding within the 45-day maturity of its postpetition financing provides the best prospect for value. Mr. Enos notes that should the sale process take any longer, they may not be able to obtain meaningful incremental value for stakeholders. Stalking Horse Agreement In March 2014, Simplexity and Wal-Mart Stores, Inc., entered into a stalking horse agreement. However, Simplexity will continue the marketing process to ensure that it will get the best offers for its assets. Highlights of the stalking horse agreement are: (a) Wal-Mart will pay $10 million and assume liabilities; (b) Assets to be sold include equipment, intellectual property, physical and virtual systems, assigned contracts, books and records, goodwill and going concern value, and domain names; (c) Simplexity intends to conduct a public auction process for the assets; and (d) Simplexity will pay Wal-Mart a $300,000 termination fee plus reimbursement of costs if an alternate transaction is consummated with another bidder. Bidding Procedures Simplexity submits to the Court its bidding procedures, which terms include: (a) Assets not subject to the stalking horse agreement are also available for purchase including URL's and bidding platform; (b) To participate in the bidding process, each bidder must execute a confidentiality agreement; (c) Each bid must include a good faith deposit amounting to 10% of the bid, which will be returned if the bid is not successful; (d) Bid deadline is on April 25, 2014, at four in the afternoon, prevailing Eastern Time; (e) Send bids to: (1) Simplexity LLC 10790 Parkridge Blvd. Suite 200 Reston, Virginia 20191 Attn: Frank Bennett III E-mail: fbennett@simplexity.com (2) Young Conaway Stargatt & Taylor LLP Rodney Square, 1000 North King Street Wilmington, Delaware 19801 Attn: Robert S. Brady, Esq. Attn: Edmon L. Morton, Esq. Attn: Sean M. Beach, Esq. E-ail: rbrady@ycst.com emorton@ycst.com sbeach@ycst.com (3) Rutberg & Co. 351 California St., Suite 1110 San Francisco 94104 Attn: Barry A. Newman E-mail: bnewman@rutbergco.com Notice Procedures and Assignment Procedures Simplexity also submits for Court approval its notice procedures and assignment procedures. To facilitate the sale, Simplexity seeks the Court's authority to assume and assign to either Wal-Mart or the successful bidder its assets and contracts in accordance with the assignment procedures. SIMPLEXITY LLC: Creditors Committee Object to DIP Loan Approval --------------------------------------------------------------- The Official Committee of Unsecured Creditors asserts that the proposed DIP financing facility of Simplexity LLC, et al., should be disapproved in its entirety. "It is unnecessary, confers no material benefit on the Debtors' bankruptcy estates, and functions solely to protect Fifth Third Bank -- the lender who precipitously ended the Debtors' operations and single-handedly eliminated the vast majority of the Debtors' going concern value by sweeping the funds earmarked to pay the Debtors' payroll on the eve of the chapter 11 filings," says the Committee. The Committee also points out that since the Debtors' operations ended, the Debtors should be able to live on cash collateral pending the consummation of the sale of their remaining assets. Counsel to the Committee adds that the proposed DIP financing also contains a list of offensive provisions, including: -- a waiver of surcharge rights under Sec. 506(c) of the Bankruptcy Code; and -- Fifth Third Bank's demand for liens and superpriority administrative claims on avoidance actions and their proceeds. The Creditors Committee is represented by: HUNTON & WILLIAMS LLP Peter S. Partee, Sr., Esq. Michael P. Richman, Esq. 200 Park Avenue New York, New York 10166-0136 Tel No: (212) 309-1000 -- and -- POLSINELLI PC Christopher A. Ward, Esq. Shanti M. Katona, Esq. 222 Delaware Avenue, Suite 1101 Wilmington, Delaware 19801 Tel No: (302) 252-0920 About Simplexity Simplexity, LLC, sought protection under Chapter 11 of the Bankruptcy Code on March 16, 2014 (Case No. 14-10569, Bankr. D.Del.). The case is before Judge Kevin Gross. The Debtors' counsel is Kenneth J. Enos, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware. Prime Clerk LLC serves as claims and noticing agent. Simplexity LLC and Simplexity Services LLC both estimated $10 million to $50 million in assets, and $50 million to $100 million in liabilities. A five-member panel -- composed of Radioshack Corporation, VXI Global Solutions, LLC, Applied Information Sciences, Inc., Receivable Management Services, and Kevin Williams -- has been named as official unsecured creditors committee in the case. SMHC LLC: Section 341(a) Meeting Scheduled for April 29 ------------------------------------------------------- A meeting of creditors in the bankruptcy case of SMHC LLC will be held on April 29, 2014, at 2:00 p.m. at room 315 E, 211 W. Fort St. Bldg. Detroit 341. Creditors have until July 28, 2014, to submit their proofs of claim. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. SMHC LLC and Value Homes, LLC, filed separate Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 14-45579 and 14- 45581) on April 1, 2014. The petitions were signed by Ralph Scofield as member. SMHC estimated assets and debts of at least $10 million. Kerr, Russell and Weber, PLC, serves as the Debtors' counsel. Judge Marci B McIvor presides over the case. SMOKY MOUNTAIN: Court Allows Sunrise Holdings to Foreclose ---------------------------------------------------------- The Bankruptcy Court terminated the automatic stay, pursuant to Section 362 of the Bankruptcy Code, to allow Sunrise Holdings of PG, LLC, to foreclose its liens encumbering all assets of debtor Smoky Mountain Motels, Inc. Sunrise is the assignee and successor-in-interest to Capital Bank. In March 2012, Smoky Mountain received confirmation of its reorganization plan, which specifically prohibits the motel chain from filing another Chapter 11 bankruptcy for 180 days from completing payments to Capital Bank due on September 1, 2013. Lynn Tarpy, Esq., at Tarpy, Cox, Fleishman& Leiveille, PLLC, in Knoxville, Tennessee, told the Court that Smoky Mountain filed its subsequent Chapter 11 cases within the six-month period as prohibited by the confirmed plan. Sunrise was not made aware of the prohibited bankruptcy filing until February 28, 2014, just minutes before the commencement of a foreclosure on the motel chain's real and personal property. Smoky Mountain contested Sunrise's request to lift the automatic stay but failed to submit, as directed by the Court, a brief in support of its contention that it is not bound by the automatic stay waiver provisions in the confirmed plan. Nashville, Tenn.-based Smoky Mountain Motels, Inc. -- fka Music City Motels, Inc., and dba Smoky Shadows Motel & Conference Center -- filed for Chapter 11 bankruptcy (Bankr. E.D. Tenn. Case No. 14- 30557) on Feb. 26, 2014. Bankruptcy Judge Richard Stair Jr. oversees the case. Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, serves as the Debtor's counsel. Smoky Mountain Motels disclosed total assets of $11.43 million and total liabilities of $8.72 million. The petition was signed by Eddie Rhines, president. SMOKY MOUNTAIN: Request to Use Cash Collateral Denied as Moot ------------------------------------------------------------- Smoky Mountain Motels, Inc., sought the Bankruptcy Court's permission to use cash collateral of Sunrise Holdings of PG, LLC, to be able to operate on a day to day basis. Sunrise subsequently contested the request citing, among other things, that it requires additional adequate protection. Smoky Mountain owes Sunrise over $8 million based on notes, a deed of trust and security agreement, and a UCC-1 financing statement. On March 27, 2014, the Court lifted the automatic stay, pursuant to Section 362 of the Bankruptcy Code, to allow Sunrise to foreclose its liens encumbering all assets of Smoky Mountain. With that ruling, the Court deems Smoky Mountain's request to use Sunrise's cash collateral as moot. Nashville, Tenn.-based Smoky Mountain Motels, Inc. -- fka Music City Motels, Inc., and dba Smoky Shadows Motel & Conference Center -- filed for Chapter 11 bankruptcy (Bankr. E.D. Tenn. Case No. 14- 30557) on Feb. 26, 2014. Bankruptcy Judge Richard Stair Jr. oversees the case. Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, serves as the Debtor's counsel. Smoky Mountain Motels disclosed total assets of $11.43 million and total liabilities of $8.72 million. The petition was signed by Eddie Rhines, president. SMOKY MOUNTAIN MOTELS: Heading for Foreclosure ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Smoky Shadows Motel, Tower & Conference Center is to be foreclosed by secured lender Sunrise Holdings of PG LLC. According to the report, the a U.S. bankruptcy judge in Knoxville, Tennessee, signed an order on March 27 allowing Sunrise to complete the foreclosure. The new case is In re Smoky Mountain Motels Inc., 14-bk-30557, U.S. Bankruptcy Court, Eastern District Tennessee (Knoxville). A 2011 case was In re Smoky Mountain Motels Inc., 11-bk-32571, U.S. Bankruptcy Court, Eastern District Tennessee (Knoxville). SOLAR POWER: Gets Default Notice From Cathay Bank ------------------------------------------------- Solar Power, Inc., received notice from Cathay Bank stating that the Company is in default under the Business Loan Agreement dated Dec. 26, 2011, and as amended on Jan. 2, 2013, due to (i) the Company failing to make payments as due pursuant to the Loan Agreement and pursuant to the forbearance agreements entered into between the parties, and (ii) the guarantor, LDK Solar Co., Ltd., the majority shareholder of the Company, filing a Winding Up Petition in the Financial Services Division of the Grand Court of the Cayman Islands on Feb. 24, 2014. Based on these events of default, Cathay Bank has accelerated the entire principal balance due under the Loan Agreement. The Company owes approximately $4.25 million under the Loan Agreement, plus accrued interest and fees. The balance under the Loan Agreement will continue to incur interest at 11 percent per year. The Loan Agreement is secured against the personal property assets of the Company. Delays 2013 Form 10-K Solar Power was unable to file its annual report on Form 10-K for the year ended Dec. 31, 2013, within the prescribed time period due to accounting issues related to its Italian operations and subsequent delays in completing the required consolidation under U.S. GAAP. The process of compiling and disseminating the information required to be included in the Form 10-K for the relevant fiscal period, as well as the completion of the required review of its financial information, could not be completed without incurring undue hardship and expense, the Company said in a regulatory filing with the U.S. Securities and Exchange Commission. About Solar Power Roseville, Cal.-based Solar Power, Inc., is a global solar energy facility ("SEF") developer offering its own brand of high- quality, low-cost distributed generation and utility-scale SEF development services. Primarily, the Company works directly with and for developers around the world who hold large portfolios of SEF projects for whom it serves as an engineering, procurement and construction contractor. The Company also performs as an independent, turnkey SEF developer for one-off distributed generation and utility-scale SEFs. Solar Power disclosed a net loss of $25.42 million in 2012, as compared with net income of $1.60 million in 2011. The Company's balance sheet at Sept. 30, 2013, showed $132.92 million in total assets, $119.71 million in total liabilities and $13.20 million in total stockholders' equity. Crowe Horwath LLP, in San Francisco, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has incurred a current year net loss of $25.4 million, has an accumulated deficit of $23.8 million, has experienced a significant reduction in working capital, has past due related party accounts payable and material adverse change and default clauses in certain debt facilities under which the banks can declare amounts immediately due and payable. Additionally, the Company's parent company LDK Solar Co., Ltd, has experienced financial difficulties, which among other items, has caused delays in project financing. These matters raise substantial doubt about the Company's ability to continue as a going concern. SORENSON COMMUNICATIONS: Has Final Approval to Use Cash Collateral ------------------------------------------------------------------ Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware gave Sorenson Communications, Inc., et al., final authority to use cash collateral in which any first lien secured party has an interest in pursuant to any prepetition loan document. As of the Petition Date, the Debtors were unconditionally indebted and liable to the First Lien Secured Parties for all of the obligations pursuant to, and in accordance with the terms of, the First Lien Credit Agreement in an aggregate principal amount of approximately $545 million, plus prepetition interest and fees. According to Bill Rochelle, the bankruptcy columnist for Bloomberg News, the cash collateral is intended to be sufficient to carry the Salt Lake City-based company until a confirmation hearing on April 10 for approval of a reorganization plan approved by creditors before the Chapter 11 filing on March 3. The second-lien notes last traded on Feb. 21 for 87.282 cents on the dollar, Mr. Rochelle said, citing Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. A full-text copy of the Final Cash Collateral Order is available at http://bankrupt.com/misc/SORENSONcashcol0326.pdf About Sorenson Communications Sorenson Communications, Inc., and its affiliates sought protection under Chapter 11 of the Bankruptcy Code on March 3, 2014. The lead case is In re Sorenson Communications, Inc. Case No. 14-10454 (Bankr. D.Del.). The case is assigned to Judge Brendan Linehan Shannon. The companies provide video relay services (VRS) for people with hearing loss. Sorenson Communications has a prepackaged plan of reorganization that was reached with a substantial majority of its owners and second lien note holders. The Debtors' counsel is James H.M. Sprayregen, Esq., Patrick J. Nash, Jr., Esq., Ross M. Kwasteniet, Esq., and Noah J. Ornstein, Esq., at KIRKLAND & ELLIS LLP, in Chicago, Illinois; Timothy P. Cairns, Esq., at PACHULSKI STANG ZIEHL & JONES LLP, in Wilmington, Delaware; and Laura Davis Jones, Esq., at PACHULSKI STANG ZIEHL & JONES LLP, in Wilmington, Delaware. The Debtors' restructuring consultant is Alixpartners LLC. The Debtors' financial advisor and investment banker is Moelis & Company LLC. Kurtzman Carson Consultants, LLC, serves as claims and noticing agent and administrative advisor. The Debtors had assets totaling $645 million and debts totaling $1.4 billion as of Jan. 31, 2014. The petitions were signed by Scott Sorensen, chief financial officer. ST. VINCENT'S: Solo Practitioner Saddled With $83,500 in Sanctions ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a lawyer practicing by herself was saddled with $83,500 in sanctions for violating an injunction in a confirmed Chapter 11 plan. According to the report, Chief Bankruptcy Judge Cecelia Morris in New York said she didn't let the lawyer, Sheryl Menkes, off the hook based on her "unsupported contention that she is a sole practitioner who is unable to pay." Judge Morris imposed the sanctions in a March 21 opinion citing the lawyer's "deliberate, bad faith, vexatious conduct." Menkes said she is appealing the decision. The report related that the dispute arose after confirmation of the liquidating Chapter 11 plan for St. Vincent's hospital in Manhattan. Menkes filed a lawsuit on behalf of her client against the hospital in state court, saying she intended to recover from insurance. Menkes's client hadn't filed a claim in bankruptcy although given notice of the Chapter 11 proceedings, Judge Morris said. The hospital's creditors' liquidating trustee told Menkes the suit violated an injunction in the confirmed plan, the report further related. She was also told there was no insurance. The hospital's trustee obtained an order from Judge Morris compelling Menkes to withdraw the state-court suit. Menkes appealed, sought a stay, and filed a motion for reconsideration. Judge Morris imposed an $83,500 sanction, consisting of attorneys' fees the hospital's creditors' trustee expended in state and bankruptcy court halting the lawsuit, the report said. When Menkes claimed she didn't have the money to pay the sanction, Judge Morris gave her a deadline to file her tax returns and other documents under seal showing her inability to pay. SUNLAND INC: Peanut-Butter Plant Sale Reopened by Judge ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge in the liquidation of Sunland Inc., a producer of peanuts and peanut butter, took the unusual step of reopening a sale to allow a bid by a potential buyer who didn't participate in the court-sanctioned auction. According to the report, Sunland filed for Chapter 7 liquidation in October after a salmonella outbreak in 2012 resulted in a recall of all its products. At the request of the Chapter 7 trustee for the owner of the Portales, New Mexico, peanut-butter plant, U.S. Bankruptcy Judge David T. Thuma in Albuquerque approved holding an auction on March 20, with a first bid of about $17.5 million, the report related. The winning bidder was Hampton Farms LLC with a $20.05 million offer. On March 21, just before the hearing to approve the sale, Golden Boy Foods Ltd. called the trustee expressing a willingness to bid $25 million, the report further related. Golden Boy explained how it thought the sale had already occurred. Judge Thuma said in an opinion on March 25 that he had the authority to reopen the auction and that he believed Golden Boy is a legitimate suitor because it deposited $25 million in escrow to back up the bid. Portales, N.M.-based Sunland, Inc., on Oct. 8, 2013, initiated proceedings under Chapter 7 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Mexico. The case docket number is 13-13301-7. SWJ MANAGEMENT: Files Schedules of Assets and Liabilities --------------------------------------------------------- SWJ Management LLC filed its schedules of assets and liabilities in the U.S. Bankruptcy Court for the District of Delaware, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $450,000,000 B. Personal Property $400 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $160,688,414 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $518,785 ------------ ------------ TOTAL $450,000,000 $161,207,200 A copy of the Debtor's amended schedules is available for free at http://is.gd/MRh7VH SWJ Management, LLC, filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 14-10460) on March 3, 2014. The petition was signed by Richard Annunziata as managing member. The Debtor estimated assets of at least $10 million and debts of at least $1 million. Bruce J. Duke, LLC, serves as the Debtor's counsel. The Hon. Christopher S. Sontchi oversees the case. TALON INTERNATIONAL: Reports $9.7 Million Net Income in 2013 ------------------------------------------------------------ Talon International, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $9.73 million on $52.44 million of net sales for the year ended Dec. 31, 2013, as compared with net income of $679,347 on $44.60 million of net sales in 2012. As of Dec. 31, 2013, the Company had $20.52 million in total assets, $16.09 million in total liabilities and $4.43 million in total stockholders' equity. For the quarter ended Dec. 31, 2013, the Company reported net income of $7.48 million on $11.93 million of net sales as compared with net income of $26,978 on $11.38 million of net sales for the same period a year ago. "We are very pleased with our performance in fiscal year 2013," noted Lonnie Schnell, Talon's chief executive officer. "We saw solid performance in 2013 from all of our product lines as we continued to strengthen our position with core customers as well as build upon our global brand nominations. We ended the year with our seventh consecutive quarterly increase in revenues and quarterly net income results," Schnell continued. A copy of the Form 10-K is available for free at: http://is.gd/JdY2Jq Files Form S-8 Talon International registered with the SEC 10,190,000 shares of common stock issuable under the Company's Amended and Restated Talon International, Inc. 2008 Stock Incentive Plan. The proposed maximum aggregate offering price is $2.3 million. A copy of hte Form S-8 registration statement is available for free at: http://is.gd/nEzcOf About Talon International Woodland Hills, Cal.-based Talon International, Inc. (OTC BB: TALN) -- http://www.talonzippers.com/-- is a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers. Talon manufactures and distributes zippers and other fasteners under its Talon(R) brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands under its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands and manufacturers including Wal-Mart, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. Talon has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh. * * * This concludes the Troubled Company Reporter's coverage of Talon International until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. TELKONET INC: Director Quits, New Board Members Appointed --------------------------------------------------------- Glenn A. Garland, a member of the Board of Directors of Telkonet, Inc., and the Chairman of the Compensation Committee of the Board of Directors, notified the Company of his intention to resign from the Board effective April 1, 2014. The resignation is not due to any disagreement with the Company, and Mr. Garland has expressed his willingness to assist with any transitional issues during the remainder of his tenure on the Board. On March 24, 2014, the Board of Directors of the Company appointed Jeffrey P. Andrews and Kellogg L. Warner to the Company's Board of Directors effective April 1, 2014. Mr. Andrews was also appointed Chairman of the Company's Compensation Committee, while Mr. Warner was appointed Chairman of the newly-formed Strategic Planning Committee. Mr. Andrews, 47, is currently a member of the executive leadership team of GSF/KanPak, LLC, a leader in the aseptic processing and packaging of beverages in the high-tech food industry. He has extensive experience in the clean technology space serving in senior operational, strategic and advisory roles, including chairing the advisory board for the Technology Innovation Program at the National Institute of Standards and Technology. He earned a Bachelor of Science from Binghamton University and an MBA from Johns Hopkins University. Mr. Warner, 58, is currently the president of Deerpath Associates, a business and technology consultancy. He has over 30 years of experience in the energy services and electric and gas utility industry, and 15 years as chief executive of major energy consulting and service firms. He is currently leading a national initiative on Conservation Voltage Reduction (CVR) as a utility energy efficiency strategy. Mr. Warner received a Bachelor of Arts from Williams College and a MSCE in Resource Planning from Stanford University. In accordance with the Company's Non-Employee Director Compensation Policy, Messrs. Andrews and Warner will receive a monthly board retainer of $3,000, and an additional monthly fee of $1,000 in connection with their service as committee chairmen. On April 1, 2014, they will each receive a one-time grant of an option to purchase one hundred thousand (100,000) shares of the Company's common stock at a strike price equal to the closing price of the Company's common stock on the grant date. Prior to their appointment to the Board, there were no material relationships between Messrs. Andrews and Warner and the Company or any of its other directors or executive officers. About Telkonet Milwaukee, Wisconsin-based Telkonet, Inc., is a clean technology company that develops and manufactures proprietary energy efficiency and smart grid networking technology. Telkonet disclosed net income of $390,080 on $12.75 million of total net revenue for the year ended Dec. 31, 2012, as compared with a net loss of $1.90 million on $11.18 million of total net revenue during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $13.86 million in total assets, $5.68 million in total liabilities, $1.44 million in total redeemable preferred stock and $6.74 million in total stockholders' equity. Baker Tilly Virchow Krause, LLP, in Milwaukee, Wisconsin, issued "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company has a history of operating losses and negative cash flows from operations, and an accumulated deficit of $117,954,116 that raise substantial doubt about the Company's ability to continue as a going concern. TLC HEALTH: Wants to Hire Lumsden & McCormick as Accountants ------------------------------------------------------------ TLC Health Network asks the U.S. Bankruptcy Court for the Western District of New York for permission to employ Lumsden & McCormick, LLP as accountants to perform audit and tax services. The Debtor relates that Lumsden has served in this role for many years. Michael J. Grimaldi, CPA, a partner of Lumsden, tells the Court that the Debtor and Lumsden have agreed that the firm will charge and be paid a blended hourly rate of $165 for services rendered, and that it will be reimbursed according to the firm's customary reimbursement policies. To the best of the Debtor's knowledge, Lumsden is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About TLC Health Network TLC Health Network filed a Chapter 11 petition (Bankr. W.D.N.Y. Case No. 13-13294) on Dec. 16, 2013. The petition was signed by Timothy Cooper as Chairman of the Board. The Debtor estimated assets of at least $10 million and debts of at least $1 million. Jeffrey A. Dove, Esq., at Menter, Rudin & Trivelpiece, P.C., serves as the Debtor's counsel. Damon & Morey LLP is the Debtor's Special Health Care Law and Corporate Counsel. The Bonadio Group is the Debtor's accountants. Howard P. Schultz & Associates, LLC is the Debtor's appraiser. The case is assigned to the Hon. Carl L. Bucki. A three-member panel composed of Cannon Design, Chautauqua Opportunities, Inc., and Jamestown Rehab Services has been appointed as the official unsecured creditors committee. Bond, Schoeneck & King, PLLC is the counsel to the Committee. The Committee has tapped NextPoint LLC as financial advisor. Gleichenhaus, Marchese & Weishaar, PC is the general counsel for Linda Scharf, the Patient Care Ombudsman of TLC Health. TMT GROUP: Chairman May Sell Vantage Stake to Pay Off DIP Loan -------------------------------------------------------------- Eric Martin, writing for TradeWindsNews.com, reported that U.S. Bankruptcy Judge Marvin Isgur has approved a plan that will see Nobu Su sell down some of his stake in Vantage Drilling to help pay off a defaulted $20.2 million loan owed by Today Makes Tomorrow. The sales are aimed at meeting a series of payments to close the so-called debtor-in-possession financing from Macquarie Bank. The bank provided the loan to help carry TMT through its Chapter 11 bankruptcy but TMT was unable to repay the loan when it came due in February. The bank has struck a forbearance deal that will see it paid off gradually by June. The report said Vantage objected to the sale. Its lawyer, William Greendyke, Esq., at Fulbright & Jaworski, said at a hearing, "We're terrified that there's going to be a big drop of shares on the market that's going to affect the market price." Mr. Su, TMT's chairman, controls a 33% stake in Vantage, making him the Houston driller's largest shareholder. The report also said financial services company Raymond James was hired to sell shares in Vantage Drilling. In a separate report, Mr. Martin said Vantage's lawyer has argued that Judge Isgur did not have jurisdiction over the shares because their owner, Mr. Su's F3 Capital, was not one of the TMT entities that filed for bankruptcy. Judge Isgur disagreed. The report also said Vantage has filed papers asking Judge Isgur to stay his order authorizing the shares sale pending appeal. Vantage is involved in a separate lawsuit with Mr. Su alleging that he fraudulently obtained his stake in the company. The report also said lawyers for TMT have filed an objection to Vantage's request, arguing that the shares could have been sold even without Isgur?s recent order. They pointed out that "Without share sales, the DIP Lender would have the right immediately to seize all of the debtors' cash and move to sell all of the debtors' vessels," according to the report. About TMT Group Known in the industry as TMT Group, TMT USA Shipmanagement LLC and its affiliates own 17 vessels. Vessels range in size from approximately 27,000 dead weight tons (dwt) to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 13- 33740) in Houston, Texas, on June 20, 2013 after lenders seized seven vessels. TMT filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income. TMT has tapped attorneys from Bracewell & Giuliani LLP as bankruptcy counsel and AlixPartners as financial advisors. On a consolidated basis, the Debtors have $1.52 billion in assets and $1.46 billion in liabilities. TOMSTEN INC: Baker Tilly Okayed as Tax Accountants -------------------------------------------------- The Hon. Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota authorized Tomsten, Inc., to employ the firm of Baker Tilly Virchow Krause, LLP, as accountants to perform additional services relating to tax advice, the preparation of tax returns and a limited-scope audit on the Debtor's 401(k) plan. According to an amended application, the Debtor previously engaged Baker Tilly to perform accounting services. John Lindell, a partner at Baker Tilly, tells the Court that the Debtor's obligation to indemnify Baker Tilly under any of the employment agreements will not include claims where it is finally determined that the liability arises from the willful misconduct, fraud, bad faith, self-dealing breach of fiduciary duty or gross negligence of Baker Tilly. Mr. Lindell assures the Court that Baker Tilly is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Tomsten Inc. Hennepin, Minnesota-based Tomsten, Inc., doing business as Archiver's, filed a bare-bones Chapter 11 petition (Bankr. D. Minn. Case No. 13-42153) in Minneapolis on April 29, 2013. The Debtor estimated assets of at least $10 million and liabilities of at least $1 million as of the Chapter 11 filing. The Debtor has tapped and Michael L. Meyer, Esq., and the firm of Ravich Meyer Kirkman McGrath Nauman & Tansey as counsel. Judge Gregory F. Kishel presides over the case. Steven M. Rubin and the law firm of Leonard Street and Deinard serve as the Debtor's corporate counsel. M Squared Group, Inc., is the Debtor's marketing consultant while Lighthouse Management Group, Inc., is the Debtor's financial consultant. Baker Tilly Virchow Krause, LLP, serve as tax accountant to the Debtor. The Debtor also hired Quasimodo Advertising to aid in the marketing of the Debtor's products and services. The Official Unsecured Creditors' Committee is represented by Jay Jaffe, Esq., at Faegre Baker Daniels LLP. CBIZ Accounting, Tax and Advisory of New York, LLC, serves as the Committee's financial advisor. TULVING CO: Marshall Law Firm Represents 25 Creditors ----------------------------------------------------- A City News Service article posted on WalnutCreek.Patch.com says Walnut Creek-based attorney Chuck Marshall of Marshall Law Firm is representing multiple debtors who are owed a collective $1.2 million from Tulving Co., a precious-metals dealer in Southern California that declared bankruptcy and is facing a Secret Service probe. According to the report, Mr. Marshall said he represents 25 of Tulving's clients, who are owed a total of $1.2 million, with a range of $10,000 up to $250,000. He also said that about a month ago, Secret Service representatives contacted him for help in tracking down attorneys who represented the company's owner, Hannes Tulving Jr. "Right now, though, everything's in a holding pattern as we're waiting to see what happens with the Chapter 11 bankruptcy," Mr. Marshall said, according to the report. The Tulving Company Inc., in Newport Beach, filed for Chapter 11 bankruptcy (Bankr. C.D. Cal. Case No. 14-11492) on March 10, 2014. Judge Erithe A. Smith presides over the case. Andrew S Bisom, Esq., at The Bisom Law Group, serves as the Debtor's counsel. In its petition, Tulving Co. estimated under $50,000 in assets and $1 million to $10 million in liabilities. The petition was signed by Hannes Tulving. Jr., president. A list of the Debtor's nine largest unsecured creditors is available for free at http://bankrupt.com/misc/cacb14-11492.pdf Dan McCue at Courthouse News Service reported that Victor Hannan has filed a purported class action in San Francisco federa court alleging that Tulving scammed thousands of customers by accepting money for pricey coins it never delivered. Mr. Hannan claims that in January he agreed to buy 2,000 "2014 American Eagle 1-Ounce Silver Coins" from Tulving, at $23.25 per coin -- a total of $46,500. Hannan says he trusted the information on Tulving's Web site, which said "that over the last thirty years, Tulving Company 'has bought and sold over 1.1 million individual coins,' and that from 1999 through March 30, 2013, Tulving Company bought and sold in excess of $2.1 billion in precious metals." TUSCANY INT'L: Equity Panel Taps Gavin/Solmonese as Fin'l Advisor ----------------------------------------------------------------- The Official Committee of Equity Security Holders in the Tuscany International Holdings (U.S.A.) Ltd., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Gavin/Solmonese LLC as its financial advisor. Gavin/Solmonese will, among other things: a) review and analyze historical financial performance, and transactions between and among the Debtors, their creditors, affiliates and other entities; b) review the assumptions underlying the business plans and cash flow projections for the assets involved in any potential asset sale or plan of reorganization; and c) determining the reasonableness of the projected performance of the Debtors, both historically and future. Edward T. Gavin, CTP, managing director and founding partner of the firm Gavin/Solmonese, tells the Court that his hourly rate is $625. The hourly rates of other personnel are: Wayne P. Weitz $525 Stanley Mastil $375 From time to time, other Gavin/Solmonese professionals may be involved in the cases as needed. Hourly rates for the professionals range from $250 to $650. Reasonable non-working travel time will be charged at one-half of the applicable hourly rate unless actual work is performed during such travel time, in which case the full hourly rate will be charged. To the best of the Equity Committee's knowledge, Gavin/Solmonese does not hold any interest adverse to the interests of the Equity Committee or Debtors' equity security holders. The Court will convene a hearing on May 6, 2014, at 2:00 p.m., to consider the request. Objections, if any, are due April 21, at 4:00 p.m. About Tuscany International Tuscany International Holdings (U.S.A.) Ltd. and Tuscany International Drilling Inc. sought protection from creditors under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 14-10193) in Delaware on Feb. 2, 2014. Tuscany also commenced ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. Pursuant to a restructuring support agreement with prepetition lenders holding 95% of the prepetition loans, the Debtors have agreed to sell substantially all of the assets of TID to lenders in exchange for a credit bid of certain of their debt, effectuated through a plan of reorganization. Headquartered in Calgary, Alberta, Tuscany is engaged in the business of providing contract drilling and work-over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador. The Debtor disclosed $414,624,292 in assets and $207,332,530 in liabilities as of the Chapter 11 filing. The Colombian and Brazilian businesses are operated by certain non-debtor affiliates, while the Ecuador business is operated by branch office of debtor TID. As of the Petition Date, Tuscany entities owned 26 rigs, of which 12 are located in Colombia, nine in Brazil and five in Ecuador. Of the 26 rigs, 15 were contracted and operational as of the Petition Date and five were directly owned by the Debtors. Latham & Watkins LLP's Mitchell A. Seider, Esq., Keith A. Simon, Esq., David A. Hammerman, Esq., and Annemarie V. Reilly, Esq.; and Young Conaway Stargatt & Taylor, LLP's Michael R. Nestor, Esq., and Kara Hammond Coyle, Esq., serve as the Debtors' co-counsel. FTI Consulting Canada, Inc.'s Deryck Helkaa is the chief restructuring officer. Prime Clerk LLC is the claims and notice agent, and administrative agent. McCarthy Tetrautt LLP is the special Canadian counsel. Deloitte & Touche LLP provides tax services. GMP Securities, LLC serves as investment banker. The Debtors' plan of reorganization dated March 3, 2014, proposes that a newly-formed entity organized by certain prepetition lenders will credit bid a principal amount of the Prepetition Credit Agreement Claims or DIP Facility Claims to be determined in exchange for all or substantially all of the assets of the HoldCo. The U.S. Trustee said that an official committee of unsecured creditors has not been appointed in the Debtors' cases. An Official Committee of Equity Security Holders has been appointed in the case. The Equity Committee has tapped as bankruptcy counsel Adam G. Landis, Esq., Kerri K. Mumford, Esq., James S. Green Jr., Esq., J. Landon Ellis, Esq., and Joseph D. Wright, Esq., at Landis Rath & Cobb LLP. VIGGLE INC: Inks Exchange Agreements with Stockholders ------------------------------------------------------ A special committee of the board of directors of Viggle Inc. approved, and on Jan. 8, 2014, upon the recommendation of the special committee, the board of directors approved, a recapitalization of the Company pursuant to which Sillerman Investment Company LLC, an affiliate of Robert F.X. Sillerman, the Company's Chairman and chief executive officer, and the other holders of the Company's Series A Convertible Redeemable Preferred Stock and Series B Convertible Preferred Stock will exchange their shares of Series A Preferred Stock and Series B Preferred Stock for shares of the Company's common stock, par value $.001 per share. As of March 24, 2014, there are 34,275 shares of Series A Preferred Stock outstanding, each of which has a stated value of $1,000 and accrues dividends at 7 percent per annum. Each share of Series A Preferred Stock will be exchanged for a number of shares of Common Stock equal to the stated value of the share, plus all accrued and unpaid dividends thereon, multiplied by 16. For example, if a share of Series A Preferred Stock has $20 in accrued and unpaid dividends, then the stated value of such share plus accrued and unpaid dividends on the share would equal $1,020, and the share would be exchanged for 16,320 shares of Common Stock, which amount will be further combined into 204 shares after giving effect to the Company's 1-for-80 reverse stock split that was effective as of March 19, 2014. In addition, as of March 24, 2014, there are 21,804.2 shares of Series B Preferred Stock outstanding with a stated value of $1,000 per share. Each share of Series B Preferred Stock will be exchanged for one share of Common Stock, which will then be further combined into 0.0125 shares after giving effect to the Company's 1-for-80 reverse stock split. Based on the amount of accrued dividends as of March 24, 2014, the shares of Series A Preferred Stock and Series B Preferred Stock would be exchanged for a total of 7,103,298 shares of Common Stock, after giving effect to the Company's 1-for-80 reverse stock split. On March 18, 2014, the Company entered into Exchange Agreements with each of the holders of Series A Preferred Stock and Series B Preferred Stock, pursuant to which each of the holders agreed to exchange their shares of Series A Preferred Stock and Series B Preferred Stock. Consummation of the Exchange is contingent upon the completion of the closing of a public offering of equity securities pursuant to an effective S-1 registration statement under which the Company raises at least $20,000,000 in net cash proceeds. In considering the terms of the Exchange, the special committee of the Company's board of directors was advised by independent legal counsel and financial advisors. A copy of the Form 8-K is available for free at: http://is.gd/chJR6T About Viggle New York City-based Viggle Inc. is a loyalty marketing company. The Company has developed a loyalty program for television that gives people real rewards for checking into the television shows they are watching on most mobile operating system. Viggle users can redeem their points in the app's rewards catalog for items such as movie tickets, music, or gift cards. Viggle incurred a net loss of $91.40 million on $13.90 million of revenues for the year ended June 30, 2013, as compared with a net loss of $96.51 million on $1.73 million of revenues during the prior year. As of Dec. 31, 2013, the Company had $60.63 million in total assets, $53.94 million in total liabilities, $37.71 million in series A convertible redeemable preferred stock, and a $31.02 million total stockholders' deficit. BDO USA, LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company has suffered recurring losses from operations and at June 30, 2013, has deficiencies in working capital and equity that raise substantial doubt about its ability to continue as a going concern. WEST MOUNTAIN SKI: Exits Bankruptcy Protection ---------------------------------------------- Larry Rulison, writing for the Times Union, reported that West Mountain Ski Area in Queensbury has exited bankruptcy restructuring after less than a year. The report said Spencer Montgomery, director of operations, says the mountain broke even this winter. The ski area plans to revamp its snow-making operation in the short term and add amenities such a lodging and new ski lifts in the long term. WHEATLAND MARKETPLACE: Has Until June 30 to File Chapter 11 Plan ---------------------------------------------------------------- The Hon. Pamela S. Hollis of the U.S. Bankruptcy Court for the Northern District of Illinois extended the exclusive periods of Wheatland Marketplace LLC to: a) file a Chapter 11 plan until June 23, 2014; and b) solicit acceptances of that plan through and until Aug. 3, 2014. As reported in the Troubled Company Reporter on March 26, 2014, Thomas W. Toolis, Esq., at Jahnke Sullivan & Toolis, LLC, in Frankfort, Illinois, told the Court that the extension will allow Wheatland to focus its energy on successfully navigating its Chapter 11 case. Since the commencement of its Chapter 11 case, Wheatland has devoted substantial time and resources to the pursuit of potential refinance of its debt, noted Mr. Toolis. Wheatland Marketplace, LLC, owner of a commercial retail center in Naperville, Illinois, filed a Chapter 11 bankruptcy petition (Bankr. N.D. Ill. Case No. 13-46492) in Chicago on Dec. 3, 2013. The Debtor has tapped Thomas W. Toolis, Esq., at Jahnke, Sullivan & Toolis, LLC, in Frankfurt, Illinois, as counsel. Coleen J. Lehman Trust and Lucy Koroluk each holds a 50% membership interest in the Debtor. The Debtor reported $10,999,006 in total assets, and $7,052,778 in total liabilities. WHEATLAND MARKETPLACE: Can Hire Weber & Associates as Accountant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois authorized Wheatland Marketplace LLC to employ Weber & Associates CPA LLC as its accountant. As reported in the Troubled Company Reporter on Feb. 21, 2014, the Debtor told the Court that the firm is expected to prepare its Federal and State Tax returns for a flat fee of $1,900. The Debtor assured the Court that the firm is a "disinterested person" within the meaning of the Bankruptcy Code. Wheatland Marketplace, LLC, owner of a commercial retail center in Naperville, Illinois, filed a Chapter 11 bankruptcy petition (Bankr. N.D. Ill. Case No. 13-46492) in Chicago on Dec. 3, 2013. The Debtor has tapped Thomas W. Toolis, Esq., at Jahnke, Sullivan & Toolis, LLC, in Frankfurt, Illinois, as counsel. Coleen J. Lehman Trust and Lucy Koroluk each holds a 50% membership interest in the Debtor. The Debtor reported $10,999,006 in total assets, and $7,052,778 in total liabilities. YOSHI'S SAN FRANCISCO: Has Access to CB&T Cash Until June 30 ------------------------------------------------------------ The Hon. Roger L. Efremsky of the U.S. Bankruptcy Court for the Northern District of California signed off on a stipulation for Yoshi's San Francisco LLC's continued use of cash collateral. The stipulation entered between the Debtor and secured creditor California Bank & Trust provides that the Debtor or its representatives or agents may use cash collateral on a daily basis for a period until June 30, 2014, for expenses necessary and essential to keep the business open and operating, including expenses for historically normal payroll, advertising, bank fees, supplies, food and beverage, utilities, telephone, essential repairs and maintenance, equipment leases, performers, and insurance. As adequate protection from any diminution in value of the lender's collateral, the Debtor will pay to CB&T monthly adequate protection payments in an amount of not less than $8,000 as payment toward Yoshi's indebtedness to CB&T. The monthly adequate protection payments will be made no later than April 15, 2014, and the 15th of each month thereafter during the stipulation period. CB&T is also granted a replacement lien in all assets of the Debtor's estate acquired on or after Feb. 26, 2014, the date of entry of the order for relief. In a previous order, CB&T consented to the Debtor's use of cash collateral until March 26. About Yoshi's San Francisco An involuntary Chapter 11 bankruptcy petition (Bankr. N.D. Calif. Case No. 12-49432) was filed on Nov. 28, 2012, against Yoshi's San Francisco, aka Yoshi's San Francisco LLC, an upscale nightclub, music venue, and Japanese restaurant located in Oakland. The alleged creditors are Yoshi's Japanese Restaurant, allegedly owed $1.28 million; Apex Refrigeration Corp., owed $504; and East Bay Restaurant Supply Inc., owed $2,707. Judge Roger L. Efremsky oversees the case, taking over from Judge M. Elaine Hammond. Scott H. McNutt, Esq., and Shane J. Moses, Esq., at McNutt Law Group, represent the Debtor as counsel. YSF opened its doors in December 2007. The project was part of a partnership involving the City and County of San Francisco and a real estate developer, Fillmore Development Commercial, LLC. YSF is a California limited liability company with two members, both of which are corporate entities. The majority member is Yoshi's Fillmore, LLC, of which Yoshi's Japanese Restaurant in Oakland is the principal member and manager. The minority member is Fillmore Jazz Club, LLC, a group of investors managed by Michael Johnson, who also manages the developer, FDC. There is a provision in the YSF operating agreement that requires unanimous agreement to take certain actions that have a permanent effect on the company such as the filing of a voluntary Chapter 11 restructuring. This predictably led to acrimony and gridlock, and prevented YSF management from taking what it believed were the those actions necessary in the face of the company's continued financial situation. On Oct. 29, 2012, FDC filed a lawsuit in state court seeking appointment of a receiver to take over control of YSF. YSF recognized that this would be ultimately unproductive, because it would be highly disruptive and potentially lead to loss of the Yoshi's name, as well as the manager who has been the driving force behind Yoshi's for 40 years. YSF determined that the only option to allow the continued operation of Yoshi's and protect the interests of all creditors was for creditors of Yoshi's to file an involuntary bankruptcy petition against YSF. Fillmore is represented by Sara L. Chenetz, Esq., at Blank Rome LLP. * High Court Hears Case on Exempt Inherited IRAs ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Supreme Court heard arguments in a case to decide whether an inherited individual retirement account is protected from creditors' claims in bankruptcy. Justice Steven Breyer summed up the issue on March 24 by saying it isn't an "easy case" because "common sense" didn't get him "anywhere" near finding the answer, according to the report. Mr. Rochelle said the high court is interpreting Section 521(b)(3)(C) of the Bankruptcy Code, which exempts assets from claims of creditors in bankruptcy if they are "retirement funds to the extent that those funds are in a fund or account that is exempt from taxation" under provisions in the Internal Revenue Code. Both sides conceded that an inherited IRA is exempt from tax. Federal courts of appeal are split on the issue, Mr. Rochelle noted. In April 2013, the U.S. Court of Appeals in Chicago, in Clark v. Rameker, ruled that inherited IRAs aren't exempt in bankruptcy and thus belong to creditors. In 2012, the federal appeals court in New Orleans concluded that the "plain meaning" of the statutes make inherited IRAs exempt. Based on questions asked by the justices, the case seems to boil down to whether judges can give their own interpretation to "retirement funds" and thereby deny exempt status to retirement accounts that aren't taxed, Mr. Rochelle said. Although the inherited IRA was tax-exempt in the case before the court on March 24, the Chicago appeals court didn't believe the account represented "retirement funds" because the bankrupt could have used the money immediately, albeit with adverse tax consequences. Kannon K. Shanmugam, Esq. -- kshanmugam@wc.com -- from Williams & Connolly LLP in Washington argued for the bankrupt. Danielle Spinelli, Esq. -- danielle.spinelli@wilmerhale.com -- of Wilmer Cutler Pickering Hale & Dorr LLP in Washington argued for the bankruptcy trustee. Mr. Rochelle said both were law clerks for justices of the Supreme Court. The case argued was IRAs is Clark v. Rameker, 13-299, U.S. Supreme Court, (Washington). * Homestead Exemption Is Taken by Implication --------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a Florida couple in Chapter 13 were charged with taking the homestead exemption even though they didn't claim the exemption, U.S. District Judge Sheri Polster Chappell in Fort Myers, Florida, said in a March 12 opinion. According to the report, the couple owned a home worth $104,000. It was encumbered by a $149,600 first mortgage and a $71,900 second mortgage. They "stripped off" the second mortgage, giving the second-lien lender an unsecured claim and otherwise removing the mortgage from the property. The couple didn't claim Florida's homestead exemption, the report related. Instead, they elected to take the so-called wildcard exemption giving them $8,000 in exemptions on other property because they didn't use the homestead exemption. On objection from the Chapter 13 trustee, the bankruptcy judge disallowed use of the wildcard exemption, the report further related. The couple appealed unsuccessfully to Judge Chappell. Were the couple in Chapter 7, prior cases said they could use the wildcard exemption, Mr. Rochelle said. The result is different in Chapter 13, the judge said, relying on a Florida Supreme Court decision analyzing Florida's homestead exemption. The case is Valone v. Waage (In re Valone), 13-cv-00171, U.S. District Court, Middle District Florida (Fort Myers). * Mortgage With Incorrect Metes-and-Bounds Description Is Void -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a mortgage was unenforceable in bankruptcy because the metes and bounds description of the property was inaccurate, although the street address was correct. According to the report, a couple owned a home and subsequently bought an adjacent vacant parcel. Later, they refinanced the home mortgage with a new lender, paying off the existing mortgage. The new mortgage listed the correct street address of the home, while using the metes and bounds description of the vacant parcel, the report related. The bank sought to have the bankruptcy court reform the mortgage, thus creating a valid lien on the home, the report further related. The bankruptcy judge refused and, in substance, voided the mortgage. The lender appealed to U.S. District Judge Timothy S. Black in Columbus, Ohio, who sided with the bankruptcy court. Relying on a prior Ohio case, Judge Black cited the bankruptcy trustee's status as a hypothetical bona-fide purchaser of the home without notice of the mortgage under Section 544(a)(3) of the Bankruptcy Code, the report said. The case is Bank of New York v. Shelley, 13-136, U.S. District Court, Southern District of Ohio (Columbus). * Christopher Henry Joins Lowenstein Sandler as Partner ------------------------------------------------------- Lowenstein Sandler LLP continues to strengthen its rapidly-growing private equity and mergers and acquisitions practices with the addition of Christopher Henry as a partner. Mr. Henry, 41, joins Lowenstein Sandler's New York office from Ropes & Gray LLP, where he had been a partner since 2006. Close on the heels of Michael Brosse, 43, who joined the firm from Kirkland & Ellis in January, Mr. Henry is the second lateral partner from a top 25 law firm to join Lowenstein Sandler's M&A and private equity group in 2014. "Our strategy is to broaden and deepen the services that our transaction, litigation and bankruptcy practices provide to our clients, and we've seen tremendous demand for M&A counsel, especially from private equity firms," said Gary M. Wingens, Lowenstein Sandler's chairman and managing partner. "Chris is an exceptional lawyer. He puts clients first and shares our commitment to our colleagues and communities. He's a great fit for our very busy M&A practice and his extensive private equity experience will surely be an asset for our many sophisticated fund management clients." The firm enjoyed strong overall revenue growth in 2013 thanks largely to a 19% increase in revenue from transactional work. The M&A and private equity practice groups continue to see the terrific growth of the prior year, representing financial sponsors, funds and public and private companies, particularly in middle market transactions. Mr. Henry's practice focuses on representing public companies, private equity sponsors and their portfolio companies, and privately-owned businesses in mergers and acquisitions, leveraged buyouts, growth investments, dispositions, joint ventures and equity and debt financings. "Lowenstein Sandler is competing against the biggest firms to advise on significant deals," said Mr. Henry. "There is an impressive game plan to grow the firm and it is executing perfectly. Its platform for middle-market M&A work is exceptionally strong. I'm excited to contribute to a growing practice at such a dynamic firm." Mr. Henry earned his J.D. magna cum laude from Harvard Law School, and his B.A. magna cum laude from Brown University. About Lowenstein Sandler LLP Lowenstein Sandler is a national provider of transactional, litigation, and bankruptcy and creditors' rights legal services to many of the country's top companies and funds. The firm has close to 300 lawyers in its New York, New Jersey and California. * Lowenstein Sandler Named Commercial Litigation Dep't of the Year ------------------------------------------------------------------ New Jersey Law Journal's second annual Litigation Departments of the Year competition selected Lowenstein Sandler LLP as the winner in the Commercial Litigation category. A profile of Lowenstein's Commercial Litigation practice appears in the April 7 special supplement of the Law Journal. The competition is open to any firm with a New Jersey presence and considers cases lead by New Jersey attorneys in all jurisdictions. "Our nationally recognized litigators are at their best with complex issues and high stakes, blending exceptional analytical and mediation skills with client advocacy and courtroom savvy," said Gary M. Wingens, Lowenstein Sandler Chairman and Managing Partner. "We are delighted and proud to be recognized by New Jersey Law Journal," said Michael B. Himmel, Chair of the Litigation Department. "Our clients recognize our world-class litigation capabilities and our exceptional focus on their business needs. We are grateful to our clients for the trust they place in us and for selecting us to represent them in their most sensitive and critical business situations." Lowenstein's Commercial & Business Litigation practice group has handled nearly every type of commercial dispute, from partnership rights to real estate matters to D&O liability, across a range of industries that includes leading pharmaceutical and life sciences companies, telecommunications companies, major manufacturers, as well as the world's leading private equity and hedge fund investment managers. About Lowenstein Sandler LLP Lowenstein Sandler is a national provider of transactional, litigation, and bankruptcy and creditors' rights legal services to many of the country's top companies and funds. The firm has close to 300 lawyers in its New York, New Jersey and California. ********* 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 ***