/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/140829.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, August 29, 2014, Vol. 18, No. 240 Headlines ADAMIS PHARMACEUTICALS: 3 Directors Quit Upon CEO's Request AEMETIS INC: Amends $100 Million Securities Prospectus ALLENS INC: Creditor Seeks Sanctions Against Freeborn Atty ALPHA HOME ASSOCIATION: Files Bare-Bones Ch. 11 Petition ASARCO LLC: 9th Cir. Reinstates Claims Against Union Pacific BERNARD L. MADOFF: US Defends $150B Forfeiture Claim Against Aides BIOHEALTH COLLEGE: Asks for Switch to Chapter 7 Liquidation BLUEJAY PROPERTIES: Seeks Bankruptcy Case Dismissal BOOMERANG SYSTEMS: Incurs $4 Million Net Loss in June 30 Quarter BROWN MEDICAL: Trustee Seeks Conditional Approval of Plan Outline BURGER KING: Moody's Puts 'B2' CFR on Review for Downgrade BURGER KING: Fitch Puts 'B+' IDR on CreditWatch Negative CAPMARK FINANCIAL: Inks Secret Pact with Ex-CEO CATASYS INC: Incurs $27MM Q2 Loss, Warns of Possible Bankruptcy CENTRAL ENERGY: Incurs $97K Q2 Net Loss, Warns of Bankruptcy CHESAPEAKE ENERGY: Fitch Raises IDR to 'BB'; Outlook Positive CHEYENNE HOTELS: Plan of Reorganization Confirmed CHEYENNE HOTELS: Reaches Deal with Colorado East Bank on Claims CHEYENNE HOTELS: Stipulates with Goforth Creditors on Claims CHEYENNE HOTELS: Has Deal to Keep Hampton Inn Brand CHINA TELETECH: Posts $1.2 Million Net Income in June 30 Quarter COATES INTERNATIONAL: Incurs $2.3 Million Net Loss in 2nd Quarter COLOR STAR: Withdraws Bid to Use Lenders' Cash Collateral COMMUNICATION INTELLIGENCE: Incurs $1.2 Million Net Loss in Q2 COMMUNICATION INTELLIGENCE: Has $1.85-Mil. Net Loss for Q2 of 2014 COMPETITIVE TECHNOLOGIES: Incurs $791,000 Net Loss in 2nd Qtr. COUNTRYWIDE FIN'L: Mozilo Said to Face U.S. Suit over Loans COPYTELE INC: Six Directors Elected at Annual Meeting CRUMBS BAKE SHOP: Cole Shotz Approved as Bankruptcy Counsel CRUMBS BAKE SHOP: Files Schedules of Assets and Liabilities CRUMBS BAKE SHOP: Assumption of West Madison Lease Opposed CRUMBS BAKE SHOP: U.S. Trustee Forms 3-Member Creditors Committee D.A.B. GROUP: Meeting of Creditors Adjourned to Sept. 2 DAEHAN SHIPBUILDING: U.S. Court Issues Provisional Ch. 15 Order DAYBREAK OIL: Maximilian Resources Has 9.9% Equity Stake DBSI INC: Ex-President Gets 20 Years For Ponzi-Like Fraud DETROIT, MI: Barclays Agrees to Lend $275-Mil. for Bankruptcy Exit DERIVIUM CAPITAL: Rep. Nabs $704M In Damages Over Stock Scheme DOLPHIN DIGITAL: Files Financial Statements for 2013 DR. TATTOFF: Incurs $1.6 Million Second Quarter Net Loss EAT AT JOE'S: Posts $1.6 Million Net Income in Second Quarter EDUCATION MANAGEMENT: Exchange Offer No Impact on Moody's CFR ELITE PHARMACEUTICALS: Reports $4.4MM Net Loss in June 30 Qtr. EMISPHERE TECHNOLOGIES: Has $8.07-Mil. Loss for Second Quarter EMPIRE RESORTS: Extends Executive's Employment for 1 Year ENERGY FUTURE: Keeps a Lid on Questions About Solvency ENERGY SERVICES: S&P Raises Debt Rating to 'B+' on Loan Reduction EPICOR SOFTWARE: S&P Revises Outlook to Stable & Affirms 'B' CCR FCC HOLDINGS: Files for Chapter 11 to Sell 28 Campuses FCC HOLDINGS: Seeks to Reject Leases for Vacated Premises FCC HOLDINGS: Seeks Approval to Use Cash Collateral FCC HOLDINGS: Has Teach-Out Agreements for 1,100 Students FIRST INVESTORS: Accused of Distortion in Subprime Inquiry FIRST SECURITY: Committee Finds No Irregularities in Stock Awards FOREVERGREEN WORLDWIDE: Posts $455,000 Net Income in 2nd Quarter FREE LANCE-STAR: Court to Hold Hearing on Plan Outline Sept. 25 FREEDOM INDUSTRIES: Plan Has Gifts to Nonprofits GARLOCK SEALING: Creditors Oppose Asbestos Plan Proposal GENERAL EMPLOYMENT: Incurs $634K Net Loss for Q3 Ending June 30 GENERAL MOTORS: Ch. 11 Stay Doesn't Halt Remand Bid, Calif. Says GENERAL MOTORS: Fitch Affirms 'BB+' Issuer Default Rating GENERAL MOTORS: Should Face Wrongful-Conviction Claims GLENTEL INC: S&P Assigns 'BB-' Corp. Credit Rating GLOBAL GEOPHYSICAL: Reaches Consulting Deal with COO Verghese GLOBAL GEOPHYSICAL: Taps Ernst & Young as Tax Services Provider GLYECO INC: Incurs $1.1 Million Net Loss in Second Quarter GREENESTONE HEALTHCARE: Reports $102K Income in Q2 of 2014 GREAT CHINA INTERNATIONAL: Has $404K Net Loss for 2nd Quarter GUIDED THERAPEUTICS: Incurs $2.2-Mil. Net Loss in Second Quarter HEALTHWAREHOUSE.COM INC: Delays Form 10-Q for Second Quarter HEALTHWAREHOUSE.COM INC: Obtains $1.3-Mil. From Stock Offering HERITAGE CONSOLIDATED: 9th Cir. Rules on Drillers' Appeal HIGH MAINTENANCE: Court to Hold Plan Confirmation Hearing Sept. 8 IMH FINANCIAL: Juniper Capital Reports 19% Equity Stake INERGETICS INC: Reports $1.24-Mil. Loss for Quarter Ended June 30 INSITE VISION: Reports $37.1-Mil. Net Income for Q2 of 2014 INTERNATIONAL MANUFACTURING: Trustee Files Report on 341 Meeting IRONSTONE GROUP: Incurs $74,000 Net Loss in Second Quarter JOHN SKELTON: Dallas Court Affirms Foreclosure Judgement KID BRANDS: U.S. Trustee Objects to KEIP KVN CORP: San Francisco Panel Sees No Bar to Some Carevout Sales LAGRANGE, KY: Moody's Confirms Ba2 Gen. Obligation Bonds Rating LATTICE INC: Incurs $302,000 Net Loss in Second Quarter LEHMAN BROTHERS: Eyes Sale of Unsecured Claim v. Brokerage LIME ENERGY: Incurs $660,000 Net Loss in Second Quarter MERRIMAN HOLDINGS: Incurs $220K Loss in Second Quarter METRORIVERSIDE LLC: PMC Prexy to Oversee Company Operations METRORIVERSIDE LLC: Amends List of 20 Largest Unsecured Creditors METRORIVERSIDE LLC: Can Use Cash Collateral Until Dec. 31 MF GLOBAL: Execs Allowed to Tap $15M More in D&O Coverage MICHAEL ROSE: Developer Settles with Lender, Seeks Bankruptcy Exit NATROL INC: Court Fixes Oct. 27 as General Claims Bar Date NATROL INC: Files Schedules of Assets and Liabilities NATROL INC: Access to Cash Collateral OK'd on Final Basis NAUTILUS HOLDINGS: Files Schedules of Assets and Liabilities NAUTILUS HOLDINGS: Can Use Cash Collateral Through Sept. 19 NEW BERN RIVERFRONT: Weaver Claim v. Randolph Stair Goes to Trial NEW CENTURY: Selling Tractors, Trailers at Auctions PACIFIC THOMAS: Court Denies Bid to Obtain $14.5-Mil. Loan PANACHE BEVERAGE: Has $288K Q2 Loss, May Halt Certain Operations PARADISE HOSPITALITY: Fails to Dismiss Best Western Lawsuit PITTSBURG, CA: Fitch Assigns 'BB' Rating on $109MM Sub. Tax Bonds PUERTO RICO: Interviews Underway for PREPA Restructuring Chief RANDHURST HOTEL: Case Summary & 18 Largest Unsecured Creditors REDE ENERGIA: U.S. Court Grants Plan Enforcement Relief REVEL AC: Settlements with Creditors Approved RONALD COHEN MGMT: Case Summary & 8 Largest Unsecured Creditors SAAB AB: Chinese-Backed Owner Goes Bust SHIROKIA DEVELOPMENT: Chapter 11 Case Transferred to E.D.N.Y. SIGMA LABS: Incurs $1.8-Mil. Net Loss for Quarter Ended June 30 SKYLINE MANOR: Files Schedules of Assets and Liabilities SPECTRASCIENCE INC: Reports $1.17-Mil. Loss for Q2 Ending June 30 STAR DYNAMICS: Lease Decision Period Extended to Oct. 6, 2014 STAR DYNAMICS: Seeks to Sell Assets to Mwagusi for $5-Mil. SUN BANCORP: FJ Capital Owns 5.8% of Outstanding Common Shares SYNERGY HOTEL: Case Summary & Largest Unsecured Creditors TLC HEALTH: Meeting of Creditors Adjourned to Nov. 24 TRIGEANT HOLDINGS: Files Bare-Bones Ch. 11 Petition TRISTAR WELLNESS: Delays Filing of Second Quarter Form 10-Q TUNICA-BILOXI GAMING: Moody's Cuts Corp. Family Rating to Caa3 UBL INTERACTIVE: June 30 Balance Sheet Upside-Down by $4.65MM UMED HOLDINGS: Incurs $746K Net Loss in Q2 of 2014 UNION GROVE: Case Summary & 20 Largest Unsecured Creditors UNITED AMERICAN: Authorized Common Shares Hiked to 150 Million VERAX RESTAURANT: Case Summary & 20 Largest Unsecured Creditors VERITEQ CORP: Reports Issuances of Promissory Notes WAFERGEN BIO-SYSTEMS: Hal Mintz Holds 9.9% Equity Stake WEST TEXAS GUAR: Files Chapter 11 Plan of Reorganization WEST TEXAS GUAR: Drops Bid to Value Claims of Bean Producers WOUND MANAGEMENT: Incurs $776K Net Loss for Q2 of 2014 YELLOWSTONE MOUNTAIN: Reward Offered for Tim Blixseth Assets * 8th Circ. Says Grain Tax Fraudster Deserved Longer Sentence * Relying on Lexis 'Dismissed' Report Doesn't Violate FCRA * One-Creditor, No-Asset Case Should Be Dismissed, Judge Says * Standard Chartered Fined $300-Mil. for Backlisting * Junk Companies Feeling Little Liquidity Stress, Moody's Says * Mark Kaufman Relocates to McKenna's San Francisco Office * BOOK REVIEW: Competition, Regulation, and Rationing in Health Care ********* ADAMIS PHARMACEUTICALS: 3 Directors Quit Upon CEO's Request ----------------------------------------------------------- Craig A. Johnson, Kenneth M. Cohen and Tina S. Nova, Ph.D., directors of Adamis Pharmaceuticals Corporation and members of the Audit Committee, Compensation Committee and Nominating and Governance Committee, notified the Company by letter dated Aug. 25, 2014, that they were resigning as directors of the Company and all committees effective immediately, according to a document filed with the U.S. Securities and Exchange Commission. The letter stated that on Aug. 22, 2014, Dennis J. Carlo, the Company's chief executive officer, requested that each of the resigning directors resign from the Board and from all committees. The letter also stated that without the knowledge of the resigning directors and without the participation of the Board's Nominating and Corporate Governance Committee (of which the resigning directors constituted all of the members), the chief executive officer had already identified directors to fill the vacancies created by their resignations. Messrs. Richard C. Williams, Robert B. Rothermel and William C. Denby, III, were appointed to fill the vacancies resulting from these resignations, and serve as the members of the Company's Audit Committee, Compensation Committee and Nominating and Governance Committee, with Mr. Williams as Chair of the Compensation Committee, Mr. Rothermel as Chair of the Audit Committee, and Mr. Denby as Chair of the Nominating and Governance Committee. Mr. Williams was also appointed Chairman of the Board. Since 1989, Mr. Williams has served as the founder and president of Conner-Thoele Limited, a consulting and financial advisory firm specializing in the healthcare industry and pharmaceutical segment. He has completed in excess of fifty divestments, acquisitions, financings and cross-border transactions, which have exceeded $8.0 billion. Prior to founding Conner-Thoele Limited in 1989, Mr. Williams served in a number of progressively responsible operational and financial management positions with multinational firms. These firms included American Hospital Supply Corporation, UNC Resources, Abbott Laboratories, Field Enterprises and Erbamont NV. Mr. Williams once served as a director and Vice Chairman of Strategic Planning for King Pharmaceuticals. Prior to King, he served as chairman and a director of Medco Research before Medco was acquired by King Pharmaceuticals. Mr. Williams has also been on several other public and private boards of directors, several as Chairman. Mr. Rothermel is a partner with a private investment and management firm, CroBern Management Partnership, which works exclusively within the health care industry. Currently, he serves as a board member and chairman of the audit committee of Medcor, a private healthcare company, and has also served as a board member of Cerescan, a private brain imaging company. Prior to CroBern, Mr. Rothermel spent 37 years with Deloitte & Touche, and served as a Partner and Global Managing Director of the Enterprise Risk Services practice. He also served as a member of Deloitte & Touche's Board of Directors, the firm's Global Assurance and Advisory Management Committee, the U.S. Management Committee and chaired the firm's Partner Compensation Committee. He also served as a director of Cellegy from January 2004 until its merger with Adamis in April 2009 and was Chair of the audit committee of Cellegy. Mr. Rothermel has a Bachelor of Science degree in Business Administration from Bowling Green State University. From 2002-2014, Mr. Denby was senior vice president, Commercial Operations at Santarus, Inc. which was acquired by Salix in January of 2014. At Santarus, he directed all commercial functions including Sales, Marketing, Market Research, Customer Service, Managed Care, New Product Planning and other various functions. Prior to Santarus, he was Senior Vice President, Commercial Operations and senior vice president, sales and marketing at Agouron Pharmaceuticals, Inc. Mr. Denby played leadership roles in the sale of Agouron to Warner Lambert for $2.2 billion and Santarus to Salix for $2.6 billion. Earlier in his career, he spent twenty years in various leadership management roles at Marion Merrell Dow, Inc. Mr. Denby has a Bachelor of Arts degree in English and Business from State University of New York at Fredonia and a Masters of Business Administration from Rockhurst College. Pursuant to the terms of the Company's 2009 Equity Incentive Plan, each of Mr. Denby, Mr. Rothermel and Mr. Williams received an initial non-employee director nonqualified stock option grant under the Company's to purchase 2,942 shares of common stock at an exercise price equal to the fair market value of the common stock on the date of grant. These initial grants will vest 50% on the grant date, with the balance vesting in equal monthly installments over a period of three years from the grant date. Each director will also be eligible to receive annual option grants under the provisions of the Plan relating to non-employee directors. In addition to receipt of the initial option awards, Mr. Denby, Mr. Rothermel and Mr. Williams will be eligible to receive cash directors fees pursuant to the Company's policies for compensation to directors. Each director is also entitled to reimbursement of reasonable expenses incurred in connection with board-related activities. Each director will also enter into the Company's form of indemnity agreement for directors. About Adamis San Diego, Calif.-based Adamis Pharmaceuticals Corporation (OTC QB: ADMP) is a biopharmaceutical company engaged in the development and commercialization of specialty pharmaceutical and biotechnology products in the therapeutic areas of respiratory disease, allergy, oncology and immunology. Adamis reported a net loss of $8.15 million for the year ended March 31, 2014, as compared with a net loss of $7.19 million for the year ended March 31, 2013. Mayer Hoffman McCann P.C., in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended March 31, 2014. The independent auditors noted that the Company has incurred recurring losses from operations and has limited working capital to pursue its business alternatives. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As of June 30, 2014, the Company had $11.56 million in total assets, $1.90 million in total liabilities and $9.65 million in total stockholders' equity. Bankruptcy warning "Our management intends to attempt to secure additional required funding through equity or debt financings, sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research and development efforts, or similar transactions. However, there can be no assurance that we will be able to obtain any required additional funding. If we are unsuccessful in securing funding from any of these sources, we will defer, reduce or eliminate certain planned expenditures and delay development or commercialization of some or all of our products. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment in us," the Company said in its quarterly report for the period ended June 30, 2014. AEMETIS INC: Amends $100 Million Securities Prospectus ------------------------------------------------------ Aemetis, Inc., had amended its registration statement with the U.S. Securities and Exchange Commission in connection with the sale of $100 million worth of its common stock, preferred stock, debt securities, warrants, rights and units. The Company amended the Registration Statement to delay its effective date. The preferred stock or warrants may be convertible into or exercisable or exchangeable for common or preferred stock or other of the Company's securities. The debt securities may be convertible into, or exercisable or exchangeable for, common stock. The Company's common stock is listed on the NASDAQ Global Market and trades under the symbol "AMTX." A full-text copy of the preliminary prospectus is available for free at http://is.gd/WVUCIq About Aemetis Cupertino, Calif.-based Aemetis, Inc., is an international renewable fuels and specialty chemical company focused on the production of advanced fuels and chemicals and the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products and convert first- generation ethanol and biodiesel plants into advanced biorefineries. Aemetis reported a net loss of $24.43 million on $177.51 million of revenues for the year ended Dec. 31, 2013, as compared with a net loss of $4.28 million on $189.04 million of revenues in 2012. The Company's balance sheet at June 30, 2014, showed $95.44 million in total assets, $96.53 million in total liabilities and a $1.08 million total stockholders' deficit. Bankruptcy Warning The Company said in the Annual Report for the year ended Dec. 31, 2013, "The adoptions of new technologies at our ethanol and biodiesel plants, along with working capital, are financed in part through debt facilities. We may need to seek additional financing to continue or grow our operations. However, generally unfavourable credit market conditions may make it difficult to obtain necessary capital or additional debt financing on commercially viable terms or at all. If we are unable to pay our debt we may be forced to delay or cancel capital expenditures, sell assets, restructure our indebtedness, seek additional financing, or file for bankruptcy protection." ALLENS INC: Creditor Seeks Sanctions Against Freeborn Atty ---------------------------------------------------------- Law360 reported that a creditor of bankrupt frozen vegetable producer Allens Inc. is pursuing sanctions against the Freeborn & Peters LLP attorney overseeing the company's Perishable Agricultural Commodities Act claims, arguing that the attorney delayed payment of its $3.5 million allowed claim by filing a "frivolous" objection. According to the report, Hartung Brothers Inc. filed a response brief in Arkansas bankruptcy court in further support of its motion for sanctions against attorney Jason R. Klinowski, Allens' special PACA counsel, saying that the debtors' response to its original sanctions motion doesn't offer grounds for not paying Hartung's PACA claim. About Allens Inc. Siloam Springs, Arkansas-based Allens, Inc., a maker of canned and frozen vegetables in business since 1926, filed for bankruptcy (Bankr. W.D. Ark. Case No. 13-73597) on Oct. 28, 2013, seeking to sell some divisions or reorganize as a new company. Its affiliate, All Veg Inc., also sought bankruptcy protection. Bankruptcy Judge Ben T. Barry presides over the cases. The Debtors are represented by Stan D. Smith, Esq., Lance R. Miller, Esq., and Chris A. McNulty, Esq., at Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., in Little Rock, Arkansas; and Nancy A. Mitchell, Esq., Maria J. DiConza, Esq., and Matthew L. Hinker, Esq., at Greenberg Traurig, LLP, in New York. Jonathan Hickman of Alvarez & Marsal North America, LLC, serves as the Debtors' chief restructuring officer. Cary Daniel, Nick Campbell and Markus Lahrkamp of A&M serve as assistant CROs. Lazard Freres & Co. LLC and Lazard Middle Market LLC serve as investment bankers, while GA Keen Realty Advisors, LLC, serves as real estate advisor to the Debtors. Allens Inc. scheduled $294,465,233 in total assets and $287,945,167 in total liabilities. The Official Committee of Unsecured Creditors tapped Eichenbaum Liles P.A.'s Martha Jett McAlister, Esq.; and Cooley LLP's Cathy Hershcopf, Esq., Jeffrey L. Cohen, Esq., Seth Van Aalton, Esq., and Robert B. Winning, Esq., as counsel. On Feb. 12, 2014, the Court entered the order (i) authorizing and approving the sale of substantially all of the assets of the Allens Inc. to Sager Creek Acquisition Corp. -- which is owned by investment funds controlled or advised by Sankaty Advisors LLC and GB Credit Partners LLC -- free and clear of all liens, claims, encumbrances, and interests; and (ii) approving the assumption and assignment of certain of the Debtor's executory contracts and unexpired leases. The sale closed Feb. 28. The Associated Press said the assets will be sold to Sager Creek for $124.78 million. Katy Stech, writing for Daily Bankruptcy Review, the investment vehicle won the bidding with a $160 million offer, topping stalking horse bidder Seneca Foods Corp. at a bankruptcy auction. Seneca Foods signed an agreement to purchase the Debtors' assets for $148 million plus assumption of specified debt. Counsel to the stalking horse purchaser is Tim C. Loftis, Esq., at Jaeckle, Fleishmann & Mugel, LLP, in Buffalo, New York. Local counsel to the stalking horse purchaser is Charles T. Coleman, Esq., at Wright, Lindsey & Jennings, LLP, in Little Rock, Arkansas. The Troubled Company Reporter, on June 9, 2014, reported that the U.S. Bankruptcy Court issued an order converting Allens' (nka Veg Liquidation) Chapter 11 reorganization case to Chapter 7 liquidation status, following the Company's request for conversion. Allen changed its name to Veg Liquidation Inc. after the sale of its assets. ALPHA HOME ASSOCIATION: Files Bare-Bones Ch. 11 Petition -------------------------------------------------------- Alpha Home Association of Greater Indianapolis (Indiana) Inc. filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 14-07997) in Indianapolis on Aug. 26, 2014, without stating a reason. The Debtor says its assets and debts are between $500 million and $1 billion. The case is assigned to Judge James K. Coachys. According to the docket, the deadline for governmental entities to file claims is Feb. 23, 2015. Brian D. Salwowski, Esq., in Indianapolis, serves as counsel. The Debtor has not yet filed certain required documents. The list of largest unsecured creditors, cash flow statement and balance sheet are due Sept. 2. The schedules of assets and liabilities and statement of financial affairs are due Sept. 9, 2014. Any bid seeking the appointment of a health care ombudsman is due by Sept. 25, 2014. ASARCO LLC: 9th Cir. Reinstates Claims Against Union Pacific ------------------------------------------------------------ The United States Court of Appeals, Ninth Circuit, reinstated ASARCO, LLC's contribution action against Union Pacific Railroad Co. and Union Pacific Corp. ASARCO took an appeal from the district court's dismissal of its contribution action brought under Sec. 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Sections 9601-9675. Asarco seeks to recover from Union Pacific a share of $482 million in cleanup costs Asarco paid for environmental harm at the Coeur d'Alene Superfund Site in Northern Idaho. The district court dismissed the action under Federal Rule of Civil Procedure 12(b)(6), concluding that although Asarco's claim was timely, it was barred by a 2008 settlement agreement between the parties that settled Union Pacific's claims against Asarco at the same site. The Ninth Circuit, however, held that Asarco's claim was timely, but that the parties' 2008 settlement agreement did not unambiguously release Asarco's claim. The Ninth Circuit reversed the district court's judgment dismissing the case under Rule 12(b)(6). Asarco and Union Pacific both participated in nearly a century of mining operations in the Coeur d'Alene River watershed, a 1,500- square-mile area located in Idaho's northern panhandle. Asarco operated over 20 mines in the Coeur d'Alene site, and Union Pacific built rail lines and transported ore and other materials for the region's mining and smelting facilities. In 1983, the Environmental Protection Agency ("EPA") listed the Coeur d'Alene site on the CERCLA National Priorities List. Since then the site has undergone over 30 years of cleanup efforts by the EPA, the State of Idaho, and potentially responsible parties, including Asarco and Union Pacific. The case is, ASARCO, LLC, Plaintiff-Appellant, v. UNION PACIFIC RAILROAD COMPANY, a Utah corporation; UNION PACIFIC CORPORATION, Defendants-Appellees, No. 13-35356 (9th Cir.). A copy of the Ninth Circuit's August 27, 2014 Opinion is available at http://is.gd/n8pxS9from Leagle.com. The Ninth Circuit panel consists of Circuit Judges A. Wallace Tashima and Mary H. Murguia, and District Judge Cormac J. Carney. Judge Carney wrote the opinion. Gregory Evans, Esq., and Laura G. Brys, Esq., at Integer Law Corporation, in Los Angeles, California; and Linda R. Larson, Esq., Russell C. Prugh, Esq., and Meline G. MacCurdy, Esq., at Marten Law PLLC, in Seattle, Washington, argue for Asarco. Carolyn McIntosh, Esq., and Maxine Martin, Esq., at Patton Boggs LLP, in Denver, Colorado; Ausey H. Robnett III, Esq., at Paine Hamblen LLP, in Coeur d'Alene, Idaho; and Gail L. Wurtzler, Esq., at Davis Graham & Stubbs LLP, in Denver, Colorado, argue for Union Pacific. About Asarco LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection (Bankr. S.D. Tex. Case No. 05-21207) on Aug. 9, 2005. Attorneys at Baker Botts L.L.P., and Jordan, Hyden, Womble & Culbreth, P.C., represented the Debtor in its restructuring efforts. On Dec. 9, 2009, Asarco Incorporated and Americas Mining Corporation's Seventh Amended Plan of Reorganization for the Debtors became effective and the ASARCO Asbestos Personal Injury Settlement Trust was created and funded with nearly $1 billion in assets, including more than $650 million in cash plus a $280 million secured note from Reorganized ASARCO. The Plan, which was confirmed both by the bankruptcy and district courts, reintegrated ASARCO LLC back to parent Grupo Mexico concluding the four-year Chapter 11 proceeding. BERNARD L. MADOFF: US Defends $150B Forfeiture Claim Against Aides ------------------------------------------------------------------ Law360 reported that federal prosecutors, in a new sentencing memorandum, told U.S. District Judge Laura Taylor Swain in New York that five people convicted of buttressing Bernie Madoff's 40- year investment fraud should receive the harshest sentences possible, including $150 billion in forfeitures, arguing that all five reasonably foresaw the fraud at least a decade before it collapsed in spectacular fashion. 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 commenced distributions to victims, with the fourth and latest batch of distributions done in May 2014. Distributions to eligible claimants have totaled almost $6 billion, which includes $812.2 million in committed advances from the SIPC. More than 1,100 victims have already recovered the full principal they lost in the fraud. As of May 2014, Mr. Picard has recovered or reached agreements to recover $9.8 billion since his appointment in December 2008. BIOHEALTH COLLEGE: Asks for Switch to Chapter 7 Liquidation ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that BioHealth College Inc., the for-profit operator of four Bryman College campuses in California, wants the bankruptcy judge in San Jose to convert the Chapter 11 case to a liquidation in Chapter 7 to stop the accrual of rent. BioHealth College, Inc., dba Bryman College, filed for Chapter 11 bankruptcy (Bankr. N.D. Cal. Case No. 14-53057) on July 18, 2014. Bryman College has campuses in San Jose, Hayward, San Francisco and Los Angeles. Judge Arthur S. Weissbrodt presides over the case. The Law Offices of David A. Boone, Esq., serves as counsel. In its petition, Biohealth estimated $0 to $50,000 in assets and liabilities of $1 million to $10 million. The petition was signed by Sam Shirazi, CEO. BLUEJAY PROPERTIES: Seeks Bankruptcy Case Dismissal --------------------------------------------------- Bluejay Properties, LLC, filed a motion with the U.S. Bankruptcy Court for the District of Kansas seeking an order dismissing its Chapter 11 case. The Debtor has recently completed the auction sale of its apartment complex and related property to the winning bidder, Bankers Bank of Kansas (BBOK) via a credit bid. A transfer of the property is substantially complete, the Debtor relates. Since the matter was a single asset real estate case, the sale process has essentially resulted in the disposition of that sole real estate asset, the Debtor relates. The sale, free and clear of liens, has resulted in the satisfaction of the claim of BBOK and the secured claim of University National Bank, the Debtor narrates. The Debtor sold not only the real property, but all accounts, contract rights and other personal property comprising of the secured property of these creditors. In addition, this resolves any issues of the claimed constructive trust by Kaw Valley Bank (KVB) over said property, says the Debtor. The remaining creditors in the case have also either had their claims satisfied or resolved by the action, the Debtor adds. The claim of unsecured creditor Steven H. Mustoe has been assigned to BBOK and resolved by the sale. The sale, the Debtor adds, resolved all ownership claims and interest in the property by various third-party creditors. The only parties remaining were the various sub-participants on the loan to BBOK, and those claims are resolved with the sale of the property to BBOK, the Debtor relates. "As a result, there are no significant assets in the Estate, nor are there unsecured creditors to seek further benefit from continuation of the case," the Debtor avers. The Debtor asserts that cause exists in the case as there are limited benefits to any creditor continuing the reorganization, and considering the lack of assets of the Debtor the continuation of this case would be pointless. "Thus, it is in the best interest of the parties to dismiss the case." Hearing on the motion has been scheduled for Sept. 18, 2014 at 1:30 pm. Objections, if any, are due no later than Sept. 9. Since filing for bankruptcy on Sept. 28, 2012, the Debtor has not submitted a plan or disclosure statement. Attorneys for Debtor can be reached at: Todd A. Luckman, Esq. STUMBO HANSON, LLP 2887 SW MacVicar Avenue Topeka, KS 66611 Tel No: (785) 267-3410 Fax No: (785) 267-9516 E-mail: todd@stumbolaw.com About Bluejay Properties Based in Junction City, Kansas, Bluejay Properties, LLC, doing business as Quinton Point, filed a bare-bones Chapter 11 petition (Bankr. D. Kan. Case No. 12-22680) in Kansas City on Sept. 28, 2012. Bankruptcy Judge Robert D. Berger presides over the case. Todd A. Luckman, Esq., and Kathryn E. Sheedy, Esq., at Stumbo Hanson LLP, in Topeka. The Debtor owns the Quinton Point Apartment Complex in Kansas City valued at $17 million. The Debtor scheduled liabilities of $13,112,325. The petition was signed by Michael L. Thomas of TICC Prop., managing member. Bankers' Bank of Kansas, owed approximately $13.08 million, is represented by Arthur S. Chalmers of Hite, Fanning & Honeyman, LLP. The University National Bank, owed approximately $1.2 million, is represented by Edward J. Nazar of Redmond & Nazar, L.L.P., and Todd Thompson of Thompson Ramsdell & Qualseth, P.A. There has been no official committee of unsecured creditors appointed in the case. BOOMERANG SYSTEMS: Incurs $4 Million Net Loss in June 30 Quarter ---------------------------------------------------------------- Boomerang Systems, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $4.04 million on $1.50 million of total revenues for the three months ended June 30, 2014, compared to a net loss of $2.99 million on $275,002 of total revenues for the same period in 2013. Net income for the nine months ended June 30, 2014, was $1.23 million on $4.83 million of total revenues compared to a net loss of $9 million on $564,236 of total revenues for the same period last year. As of June 30, 2014, the Company had $5.54 million in total assets, $24.56 million in total liabilities and a $19.02 million total stockholders' deficit. Cash and cash equivalents for the nine months ended June 30, 2014, increased by $1,000,508 to $1,637,448. A full-text copy of the Form 10-Q is available for free at: http://is.gd/RDT9k9 The Company separately filed with the SEC amendment No. 2 to Schedule TO Tender Offer Statement originally filed with the SEC on July 11, 2014, solely to extend the expiration date of the offer to holders of certain of its unsecured convertible promissory notes and outstanding warrants to purchase common stock to exchange those notes and warrants for shares of common stock of the Company. The Offer shall now expire at 11:59 P.M., New York City Time, on Oct. 15, 2014. About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) through its wholly owned subsidiary, Boomerang Utah, is engaged in the design, development, and marketing of automated racking and retrieval systems for automobile parking and automated racking and retrieval of containerized self-storage units. Boomerang Systems incurred a net loss of $11.22 million for the year ended Sept. 30, 2013, following a net loss of $17.42 million for the year ended Sept. 30, 2012. Bankruptcy Warning "Our operations may not generate sufficient cash to enable us to service our debt. If we were to fail to make any required payment under the Loan Agreement, notes and agreements governing our indebtedness or fail to comply with the covenants contained in the Loan Agreement, notes and agreements, we would be in default. A debt default could significantly diminish the market value and marketability of our common stock and could result in the acceleration of the payment obligations under all or a portion of our consolidated indebtedness, or a renegotiation of our Loan Agreement with more onerous terms and/or additional equity dilution. If the debt holders were to require immediate payment, we might not have sufficient assets to satisfy our obligations under the Loan Agreement, notes or our other indebtedness. It may also enable their lenders under the Loan Agreement to foreclose on the Company's assets and/or its ownership interests in its subsidiaries. In such event, we could be forced to seek protection under bankruptcy laws, which could have a material adverse effect on our existing contracts and our ability to procure new contracts as well as our ability to recruit and/or retain employees. Accordingly, a default could have a significant adverse effect on the market value and marketability of our common stock," the Company said in the annual report for the year ended Sept. 30, 2013. BROWN MEDICAL: Trustee Seeks Conditional Approval of Plan Outline ----------------------------------------------------------------- Brown Medical Center Inc.'s bankruptcy trustee has filed a motion seeking court approval of the disclosure statement outlining the company's proposed liquidation plan. In her motion, Elizabeth Guffy asked U.S. Bankruptcy Judge Jeff Bohm to approve the disclosure statement "on a conditional basis" so that the company can start the solicitation of votes from creditors by Aug. 29. Approval of the disclosure statement in a Chapter 11 case typically allows the process for soliciting votes from creditors to begin. For it to be approved by the court, the document must contain "adequate information" pursuant to section 1125 of the Bankruptcy Code. According to Ms. Guffy, the information contained in the outline for BMC's liquidation plan "is sufficient in type and detail to enable creditors and equity security holders to make an informed judgment about the plan." The bankruptcy trustee proposes a Sept. 24 deadline for voting creditors to cast their ballots. Ms. Guffy is also asking the bankruptcy judge to schedule a hearing on the confirmation of the liquidation plan. The Chapter 11 Plan BMC on Aug. 22 filed its proposed plan in U.S. Bankruptcy Court for the Southern District of Texas. Under the plan, the remaining assets, including cash and the right to receive a portion of the net proceeds from ongoing collection of accounts receivable, will vest in the "liquidating debtor" -- the company after the effective date of the plan. The proposed plan divides claims and equity interests into five classes. Class 1, which is comprised of priority non-tax claims, will be paid in full from available cash. Secured claims in Class 2 will receive either the proceeds of any collateral sold or liquidated after full payment of superior liens, or any unsold collateral securing those claims. Meanwhile, the plan proposes to distribute available cash pro rata to creditors holding general unsecured claims in Class 3. After payment in full of all general unsecured claims, each holder of a subordinated claim in Class 4 will receive a pro rata share of available cash. Class 5, which is comprised of equity interests in BMC, will be canceled as of the effective date of the plan. Any available cash after full payment of subordinated claims will be distributed pro rata to holders of equity interests. A full-text copy of the disclosure statement is available without charge at http://is.gd/6CvPE2 About Brown Medical Houston, Texas-based Brown Medical Center, Inc., is a management company that historically served as the epicenter of the operating business enterprise directly or indirectly owned or controlled by Michael Glyn Brown, including six surgery centers and related facilities. The Company sought protection under Chapter 11 of the Bankruptcy Code on Oct. 15, 2013 (Case No. 13-36405, Bankr. S.D.Tex.). The case is assigned to Judge Marvin Isgur. Brown Medical Center is represented by Spencer D. Solomon, Esq., at Nathan Sommers Jacobs, P.C., in Houston, Texas. In November 2013, the Bankruptcy Court approved the appointment of Elizabeth M. Guffy as Chapter 11 trustee. The trustee hired Porter Hedges LLP, led by Joshua W. Wolfshohl, Esq., John F. Higgins, Esq., and James Matthew Vaughn, Esq., Nick D. Nicholas, Esq., J. Patrick LaRue, Esq., and Craig M. Bergez, as counsel. The trustee tapped The Claro Group, LLC, as financial advisor and consultant. In its schedules, Brown Medical listed $13,807,746 in assets and $27,716,168 in liabilities. Brown Medical owes Crown Financial Funding, LP, the primary secured creditor, pursuant to a pre- bankruptcy promissory note in the original principal amount of $2 million, which indebtedness is secured by a security agreement from Allied Center for Special Surgery, Scottsdale, LLC covering accounts and accounts receivable which the Debtor has the right to collect. BURGER KING: Moody's Puts 'B2' CFR on Review for Downgrade ---------------------------------------------------------- Moody's Investors Service placed the ratings of Burger King Capital Holdings, LLC (BKCH) and Burger King Corporation (BKC) on review for downgrade, including BKCH's B2 Corporate Family Rating, B2-PD Probability of Default Rating and Caa1 unsecured note rating as well as BKC's Ba3 senior secured rating and B3 unsecured rating. Ratings Rationale The review for downgrade was prompted by the announcement that Burger King Worldwide Inc. (BKW), the publicly traded parent company of BKCH and BKC, entered into a definitive agreement to acquire Tim Hortons, Inc. for approximately $12.0 billion. The proposed financing for the transaction is expected to include approximately $9.5 billion of debt, $3.0 billion of 9% preferred stock, and about $2.9 billion of new common equity. The transaction is expected to close in late 2014 or early 2015. The review for downgrade reflects the material increase in debt to EBITDA to over 6.4 times (not including preferred stock) from around 3.8 times as well as the negative impact to cash flows from the increased interest burden on higher debt levels and possible dividend payments on preferred stock. Moody's review for downgrade will focus on the terms and conditions of the proposed debt and preferred stock instruments, the cost of management's intention to aggressively grow the store base, analysis of Tim Hortons (not rated by Moody's) operations and how the management plans to distribute the consolidated entity's free cash flow. Moody's review will also take into account the larger scale of the combined entity, greater revenue diversification of the brands and product offerings, and potential growth in new markets. The review will also focus on the company's financial policies in regards to shareholder based initiatives, such as dividends going forward. Ratings placed on review for downgrade are; Burger King Capital Holdings, LLC Probability of Default Rating, Placed on Review for Downgrade, currently B2-PD Corporate Family Rating (Local Currency), Placed on Review for Downgrade, currently B2 $685 million (current face amount $478 million) senior unsecured discount notes due 2019, Placed on Review for Downgrade, currently Caa1(LGD6) Burger King Corporation $1.03 billion senior secured term loan A due 2017, Placed on Review for Downgrade, currently Ba3(LGD2) $705 million senior secured term loan B due 2019, Placed on Review for Downgrade, currently Ba3(LGD2) $130 million senior secured revolver due 2015, Placed on Review for Downgrade, currently Ba3(LGD2) $800 million senior unsecured notes due 2018, Placed on Review for Downgrade, currently B3(LGD5) Outlook Actions: Burger King Capital Holdings, LLC Outlook, Changed To Rating Under Review From Stable Burger King Corporation Outlook, Changed To Rating Under Review From Stable Burger King Corporation (Burger King) owns and operates about 50 and franchises approximately 13,800 Burger King hamburger quick service restaurants. Annual revenues are about $1.0 billion, although systemwide sales are over $16 billion. Burger King is majority owned by private equity company 3G Capital. BURGER KING: Fitch Puts 'B+' IDR on CreditWatch Negative -------------------------------------------------------- Fitch Ratings has placed the ratings of Burger King Worldwide, Inc. (Burger King; NYSE: BKW) and its subsidiaries on Rating Watch Negative. The rating action follows the firm's definitive agreement to acquire Tim Hortons, Inc. (Tim Horton; NYSE: THI). At June 30, 2014, Burger King had $3 billion of total debt. The deal is valued at $12 billion including Tim Horton's $1.0 of net debt and represents a 30% premium over Tim Horton's Aug. 22, 2014 stock price. Fitch estimates that the purchase multiple is approximately 16x Tim Horton's C$834 million of EBITDA (USD 762 million based on an Aug. 22, 2014 exchange rate of 0.9138 Canadian $/USD) for the latest 12 months (LTM) ended June 29, 2014. Committed financing includes a $6.75 billion senior secured term loan B facility, $2.25 billion of second-lien notes, and $3 billion of preferred equity from Berkshire Hathaway. The transaction will result in a new publicly-traded global quick- service restaurant company with two leading brands, approximately $23 billion of system sales, and over 18,000 units. 3G Capital will own 51% of the new company while Burger King and Tim Horton's shareholders will own 27% and 22%, respectively. Closing, which is subject to regulatory approval and a vote by Tim Horton's shareholders, is targeted for late 2014 or early 2015. Both firm's Board of Directors have approved the deal. Key Rating Drivers High Pro forma Leverage Fitch estimates that total adjusted debt-to-EBITDAR on a pro forma basis will range between approximately 6.0x and 8.0x versus 4.9x for the LTM period ended June 30, 2014 depending on equity credit allocated to the preferred stock. Fitch will evaluate terms of the preferred stock, allocating either 100%, 50%, or 0% equity credit based on Fitch's Treatment and Notching of Hybrids in Non- Financial Corporate and REIT Analysis criteria. Given significantly higher debt, a one-notch downgrade of Burger King's Issuer Default Rating (IDR) is possible. However, resolution of the Negative Watch will consider the combined entity's projected EBITDA growth, annual free cash flow, and the pace of deleveraging within two years of deal closing. Fitch estimates that annual free cash flow (FCF, defined as CFO less capex and dividends) could exceed $400 million annually before the 9% preferred dividend but anticipates that deleveraging will occur mainly through EBITDA growth and modest term loan amortization. The IDR will consider synergies, execution risk, and the potential currency mismatch associated with the firm's significant Canadian cash flows and U.S. based obligations. Recovery Analysis Issue level and Recovery Ratings will reflect the firm's final capital structure and Fitch's estimate of the new company's enterprise value as a going concern. Ratings will consider the issuance of senior secured and second-lien debt, the repayment of Burger King's existing debt, and the potential that Tim Horton's privately placed notes are redeemed. Tim Horton's debt includes three series of privately placed senior unsecured notes with change of control provisions that require the borrower to make an offer to repurchase the notes. Fitch believes that the payoff of Burger King's debt stems from the firm's plan to evaluate its capital structure in late 2014 as it approached the first call date on its 9.875% senior unsecured notes due 2018 and 11% senior discount notes due 2019. Strategically Sound Transaction Fitch believes the combined entity will benefit from increased efficiencies of scale, the diversification provided by two leading nearly 100% franchised quick-service restaurant brands, and multiple levers for future growth. Burger King's ability to expand Tim Horton's internationally and to reduce cost will be complemented by Tim Horton's established position in the faster growing coffee/snack category, progress with loyalty and mobile payment, and high average unit volumes. Burger King has indicated that the transaction is not being driven by tax rates, stating that its effective tax rate is currently in the mid-to-high 20% range and is largely consistent with Canadian tax rates. Tim Hortons is an iconic brand with over 42% market share in Canada and strong customer loyalty. The chain has generated 23 years of same-store sales (SSS) growth in Canada, and its store count has grown on a 4.2% compound annual growth basis since 2010. Burger King is successfully executing on its Four-Pillar plan for North America, with three consecutive quarters of SSS growth, and expanding internationally mainly through joint ventures and master franchise development agreements. These positive factors are partially offset by limited transparency regarding the financial stability of franchisees, the highly competitive U.S. restaurant industry, and execution risk due to uncertain success of Tim Horton's expansion beyond its core Canadian market. Ratings Sensitivities Future developments that may, individually or collectively, lead to a downgrade of Burger King's IDR include: -- Total adjusted debt-to-operating EBITDAR sustained above the 6.0x range, a prolonged period of SSS declines, or lower than expected FCF could result in a downgrade of Burger King's IDR. Future developments that may, individually or collectively, lead to an upgrade of Burger King's IDR include: -- An upgrade of Burger King's IDR is not anticipated in the near to intermediate term. Management has indicated a comfortable level with net debt-to-EBITDA in the 5.0x range, which based on Fitch's calculation could be equivalent to total adjusted debt-to-EBITDAR of more than 6.0x. The firm currently does not have a long-term leverage target. Fitch has placed for the following ratings of Burger King and its subsidiaries on Rating Watch Negative: Burger King Worldwide, Inc. (Parent Holding Co.) -- IDR 'B+'. Burger King Capital Holdings, LLC (BKCH/Parent of Burger King Holdings, Inc.) and Burger King Capital Finance, Inc. (BKCF/Financing Subsidiary) as Co-Issuers -- Long-term IDR 'B+'; -- 11% sr. discount notes due 2019 'B-/RR6'. Burger King Holdings, Inc. (Direct Parent of Burger King Corporation) -- Long-term IDR 'B+'. Burger King Corporation (Operating Company) -- Long-term IDR 'B+'; -- Secured revolver due 2015 'BB+/RR1'; -- Secured term loan A due 2017 'BB+/RR1'; -- Secured term loan B due 2019 'BB+/RR1'; -- 9.875% senior unsecured notes due 2018 'BB-/RR3'. CAPMARK FINANCIAL: Inks Secret Pact with Ex-CEO ----------------------------------------------- Capmark Financial Group Inc. has asked for approval of a settlement over $16.7 million in disputed stock redemption and severance payments its former president and CEO William F. Aldinger III collected following his resignation. According to Law360, the deal would put an end to Capmark's attempt to recover the compensation, which the suit alleged had been improperly approved by its board. Peg Brickley, writing for The Wall Street Journal, reported that one key detail -- how much the individual will pay -- is under wraps. The Journal said that, to explain why it's necessary to hide the amount, Capmark noted that Mr. Aldinger is retired and doesn't need the publicity that will certainly attend the news of the settlement. Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, related that Capmark said Mr. Aldinger is paying a "significant amount." Mr. Rochelle said U.S. Bankruptcy Judge Christopher S. Sontchi in Delaware authorized keeping the amount secret and will hold a hearing Sept. 19 on approval of the settlement. About Capmark Financial Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- provided financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. Capmark has 1,000 employees located in 37 offices worldwide. On Oct. 25, 2009, Capmark Financial and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 09-13684). Capmark disclosed assets of US$20 billion against total debts of US$21 billion as of June 30, 2009. Capmark's financial advisors were Lazard Freres & Co. LLC and Loughlin Meghji + Company. Capmark's bankruptcy counsel were Dewey & LeBoeuf LLP, and Richards, Layton & Finger, P.A. Beekman Advisors, Inc., is serving as strategic advisor. KPMG LLP served as tax and accounting advisor. Epiq Bankruptcy Solutions, LLC, served as claims and notice agent. The Official Committee of Unsecured Creditors tapped Kramer Levin Naftalis & Frankel LLP as its counsel and JR Myriad 1LLC as its commercial real estate business advisors. The Committee also retained Cutler Pickering Hale and Dorr LLP as its attorneys for the special purpose of providing legal services in connection with Federal Deposit Insurance Corporation matters. Protech Holdings C LLC, an affiliate of Capmark, filed for Chapter 11 protection on July 29, 2010 (Bankr. D. Del. Case No. 10-12387). Protech estimated assets and debts in excess of $1 billion as of the filing date. Since filing for Chapter 11, Capmark completed three sales to generate more than $1 billion in cash. Berkshire Hathaway Inc. and Leucadia National Corp. bought most of the business for $468 million. In April 2011, Greenline Ventures LLC completed the acquisition of the New Markets Tax Credit division of Capmark Financial Group Inc. Since inception of the NMTC program, Capmark's NMTC division has closed over $1.1 billion of NMTC investment funds and financed over $2.5 billion of projects and businesses in low income communities nationwide. Capmark won confirmation of its reorganization plan in August 2011 allowing it to distribute about $4 billion of stock, cash and new debt to unsecured creditors and streamline operations around its flagship bank. Unsecured creditors were to receive $900 million in cash, $1.25 billion in secured notes and 100 million shares in reorganized Capmark, now a bank holding company. The plan was declared effective in October. Also in October 2011, Capmark closed the sale of its low-income housing tax credit asset portfolio to Hunt Cos. Inc., a national real estate services company. El Paso, Texas-based Hunt was the successful bidder in the auction of the assets, paying $102.4 million. CATASYS INC: Incurs $27MM Q2 Loss, Warns of Possible Bankruptcy --------------------------------------------------------------- Catasys, Inc., filed with the U.S. Securities and Exchange Commission its quarterly Report on Form 10-Q disclosing a net loss of $27.44 million on $312,000 in healthcare services revenues for the three months ended June 30, 2014, compared to a net loss of $6.47 million on $107,000 of healthcare services revenues for the same period in 2013. For the six months ended June 30, 2014, the Company reported a net loss of $25.30 million on $511,000 of healthcare services revenues compared to a net loss of $3.86 million on $206,000 of healthcare services revenues for the same period last year. The Company's balance sheet at June 30, 2014, showed $2.30 million in total assets, $45.22 million in total liabilities and a $42.91 million total stockholders' deficit. "Our net cash provided by financing activities was $2.8 million for the six months ended June 30, 2014, compared with net cash provided by financing activities of $1.6 million for the six months ended June 30, 2013. Cash provided by financing activities for the six months ended June 30, 2014 consisted of the net proceeds from the securities offerings in January 2014 and May 2014, leaving a balance of $1.1 million in cash and cash equivalents at June 30, 2014," the Company stated in the Report. "We anticipate that we could continue to incur negative cash flows and net losses for the next twelve months. The financial statements do not include any adjustments relating to the recoverability of the carrying amount of the recorded assets or the amount of liabilities that might result from the outcome of this uncertainty. As of June 30, 2014, these conditions raised substantial doubt as to our ability to continue as a going concern. We expect our current cash resources to cover expenses through the end of September 2014, however delays in cash collections, revenue, or unforeseen expenditures, could impact our estimate. We are in need of additional capital and while we are currently in discussions with our existing stockholders regarding additional financing there is no assurance that additional capital can be raised in an amount which is sufficient for us or on terms favorable to us and our stockholders, if at all. If we do not obtain additional capital, there is a significant doubt as to whether we can continue to operate as a going concern and we will need to curtail or cease operations or seek bankruptcy relief. If we discontinue operations, we may not have sufficient funds to pay any amounts to stockholders," the Company added. A full-text copy of the Form 10-Q is available for free at: http://is.gd/HDlbHR About Catasys Inc. Based in Los Angeles, California, Hythiam, Inc., n/k/a Catasys, Inc., is a healthcare services management company, providing through its Catasys(R) subsidiary specialized behavioral health management services for substance abuse to health plans. Catasys reported a net loss of $4.67 million on $866,000 of total revenues for the 12 months ended Dec. 31, 2013, as compared with a net loss of $11.64 million on $541,000 of total revenues during the prior year. Rose, Snyder & Jacobs LLP, in Encino, California, 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 incurred significant operating losses and negative cash flows from operations during the year ended Dec. 31, 2013. These conditions raise substantial doubt about the Company's ability to continue as a going concern. CENTRAL ENERGY: Incurs $97K Q2 Net Loss, Warns of Bankruptcy ------------------------------------------------------------ Central Energy Partners LP filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $97,000 on $1.25 million of revenues for the three months ended June 30, 2014, compared to net income of $399,000 on $1.11 million of revenues for the same period last year. For the six months ended June 30, 2014, the Company incurred a net loss of $408,000 on $2.54 million of revenues compared to a net loss of $86,000 on $2.43 million of revenues for the same period in 2013. As of June 30, 2013, the Company had $8.25 million in total assets, $8.94 million in total liabilities and a $683,000 total partners' deficit. "There is no assurance that we will have sufficient working capital to cover ongoing cash requirements for the period of time we believe is necessary to complete an acquisition that will provide additional working capital for us. If we do not have sufficient cash reserves, our ability to pursue additional acquisition transactions will be adversely impacted. Furthermore, despite significant effort, we have thus far been unsuccessful in completing an acquisition transaction. There can be no assurance that we will be able to complete an accretive acquisition or otherwise find additional sources of working capital. If an acquisition transaction cannot be completed or if additional funds cannot be raised and cash flow is inadequate, we would be required to seek other alternatives which could include the sale of assets, closure of operations, and/or protection under the U.S. bankruptcy laws," the Company stated in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/O5BaQN About Central Energy Partners Dallas, Tex.-based Central Energy Partners LP is a publicly-traded Delaware limited partnership. It currently provides liquid bulk storage, trans-loading and transportation services for hazardous chemicals and petroleum products through its wholly-owned subsidiary, Regional Enterprises, Inc. ("Regional"). Central Energy reported a net loss of $521,000 on $4.75 million of revenues for the year ended Dec. 31, 2013, as compared with a net loss of $1.02 million on $5.47 million of revenues in 2012. Montgomery Coscia Greiich, LLP, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that Central has incurred recurring losses and has a deficit in working capital that raise substantial doubt about its ability to continue as a going concern. CHESAPEAKE ENERGY: Fitch Raises IDR to 'BB'; Outlook Positive ------------------------------------------------------------- Fitch has upgraded Chesapeake Energy's long-term Issuer Default Rating (IDR) and senior unsecured ratings to 'BB' from 'BB-' and also upgraded the company's preferred stock to 'B+' from 'B-. The ratings actions affect approximately $14.8 billion in rated securities. The Rating Outlook remains Positive. Key Rating Drivers The upgrade results from the debt reduction and capital structure simplification that has occurred over the last few months. Notably, the company has spun-off its oil services division that resulted in debt reduction of over $1 billion and paid off the $1.06 billion in preferred interest of CHK Utica, which Fitch treated as adjusted debt. The Positive Outlook is driven by Chesapeake management's intention to further de-lever and simplify its capital structure and expectations of significantly reduced free cash flow deficits in the future. Chesapeake's ratings reflect the company's large asset base, operating profile and levered capital structure. As of year-end 2013, the company had almost 2.7 billion in proved reserves with nearly 70% of those being proved developed. Chesapeake has large attractive asset positions in the Marcellus and Utica Shales, the Eagle Ford Shale, various plays in the Mid-Continent region, the Haynesville shale as well as the Barnett and Niobrara Shales. Expected 2014 production of 685,000-705,000 boe per day is comprised of approximately 16% oil, 12% NGLs and 72% natural gas and makes Chesapeake the second largest natural gas producer in the U.S. and the 10th largest in terms of liquids. The company's levered capital structure offsets the strengths of Chesapeake's asset base and operating profile. Balance sheet debt of $11.5 billion as of June 30, 2014 is augmented by other debt like obligations such as minority interests, other long-term liabilities, VPP adjustments, etc. that Fitch includes in its adjusted debt calculations. Pro forma for the redemption of the CHK Utica preferred interests in this quarter Fitch estimates adjusted debt is slightly over $15 billion exclusive of Chesapeake's preferred stock of approximately $3 billion. Liquidity Liquidity is primarily provided by the company's $4 billion corporate senior secured credit facility (due December 2015) which was undrawn at quarter end. The corporate credit facility contains various covenants and restrictive provisions and is fully and severally guaranteed by Chesapeake and certain of its wholly owned subsidiaries. The most restrictive of these covenants state that maximum debt/EBITDA must be less than 4.0X and maximum consolidated total capitalization must be less than 70%. Chesapeake is well within these covenants. The company's' near- term maturities are $396 million in 2.75% contingent convertible senior notes due 2035 that can be put or called by the company in late 2015. Maturities for 2016 include $500 million in 3.25% senior notes. Credit Metrics & Expectations Currently, Chesapeake has adjusted debt/EBITDA of approximately 3x per Fitch calculations. Remaining asset sales in 2014 are anticipated to be another $700 million in proceeds. Additionally, further additional adjusted debt reduction is expected from the redemption of CHK Cleveland Tonkawa preferred interests. While FCF deficits have been greatly reduced from prior periods Fitch still expects the company to be FCF negative by approximately $700 million- $1 billion in 2014 inclusive of capitalized interest and distributions. Going forward, Fitch expects that the company will fund capital spending, capitalized interest, dividends and distributions from operating cash flows. Operations Operationally, Chesapeake is forecasting that its production for 2014 will average between 685,000 - 705,000 boe per day, which is an absolute increase over 2013's level of 668,483 boe per day. This continues a trend of annual production increases from Chesapeake going back years. Currently, a little over half of Chesapeake's production comes from the Marcellus North, the Mid- Continent region and the Eagle Ford Shale. Realizations for natural gas relative to benchmark prices for Chesapeake are challenged because of high gathering and transport costs. Over time, efficiency gains for drilling, procurement, etc. on the cost side should help to expand margins and improve capital costs on a boe basis. The company's three-year average finding, development and acquisition is solid with cost per Fitch's calculations at $20.94 per boe while its three-year average organic F&D cost is $14.51 per boe. Organic reserve replacement last year was over 200% and Chesapeake's proved reserve life is a healthy 11 years. Rating Sensitivities: Positive: Future developments that may, individually or collectively lead to positive rating action include: -- Reducing adjusted debt/EBITDA to approximately 2.5X or below on a sustained basis; -- Continued progress in deleveraging its capital structure relative to reserves and production; -- Cash flow generation leading to consistent and, at least, neutral free cash flow generation after capex, capitalized interest, dividends and distributions. Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- Mid-cycle adjusted debt/EBITDA or 3.5 or greater on a sustained basis; -- Negative free cash flow after capex, capitalized interest, dividends and distributions leading to rising adjusted debt levels relative to reserves and production; Marked decrease in production levels or proved developed reserves relative to adjusted debt. Fitch has taken the following ratings actions on Chesapeake: -- IDR upgraded to 'BB' from 'BB-'; -- Senior unsecured notes upgraded to 'BB' from 'BB-'; -- Senior secured revolving credit facility affirmed at 'BBB-'; -- Convertible preferred stock upgraded to 'B+' from 'B'. The Rating Outlook remains Positive. CHEYENNE HOTELS: Plan of Reorganization Confirmed ------------------------------------------------- The U.S. Bankruptcy Court has confirmed Cheyenne Hotels LLC's Corrected Second Amended Chapter 11 Plan of Reorganization dated May 7, 2014. To fund payments under the Plan, the Debtor will continue its business operations and make the plan payments out of operating income of the Debtor's hotel -- a three-story, interior corridor, 107 guest room facility, with high-end common areas, including a swimming pool, fitness room, breakfast area, business center and meeting rooms -- with the exception of the payment of the Colorado East Bank & Trust claim within a year of the Effective Date, which will require either (1) a sale of an interest in the Hotel or the Debtor; or (2) a new loan. Secured creditors Gary Goforth, John F. McGivern II, JFM Limited Partnership I, and Deavid Pener ("Goforth Creditors") have agreed to subordinate the payment of their claim to a refinancing of the Colorado East Bank & Trust Secured Claim in an amount not exceeding $8,400,000, under the terms of an agreement, but subject to commercially reasonable changes as may be requested by the new lender. Accordingly, it will not be necessary to pay the Goforth Claims in full at the time the Colorado East Bank & Trust Claim is satisfied. However, if the Debtor is unable to refinance or otherwise satisfy the Colorado East Bank & Trust Secured Claim within a year of the Effective Date, it is likely that the Colorado East Bank & Trust Claim will be foreclosed and any claims that have not been satisfied before the foreclosure will not be paid. Under the Plan, the Debtor will have the right to sell the Hotel at any time. Upon sale of the Hotel, all Claims will be paid in full, or as may be agreed with the holders of the Claims. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/CHEYENNEHOTELS_2ndAmendedDS.pdf About Cheyenne Hotels Cheyenne Hotels LLC, which owns and operates the Hampton Inn & Suites in Colorado Springs, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 11-37518) on Nov. 25, 2011. Judge A. Bruce Campbell presides over the case, taking over from Judge Michael E. Romero. Thomas F. Quinn, Esq., at Thomas F. Quinn PC, serves as the Debtor's counsel. Cheyenne Hotels estimated $10 million to $50 million in both assets and debts. The petition was signed by Tanveer Khan, manager. Affiliate Cheyenne Hotel Investments LLC filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-25379) on June 28, 2011, disclosing assets of $12,912,702 and liabilities of $8,074,325 as of the Petition Date. Thomas F. Quinn, Esq., also represents Hotel Investments. Hotel Investments won confirmation of its own Chapter 11 plan on Aug. 16, 2013. A copy of the Third Amended Plan of Reorganization dated Aug. 5, 2013, is available at no charge at: http://bankrupt.com/misc/CHEYENNEHOTEL_3rdAmdPlan.PDF No committee of creditors or equity security holders has been appointed in the Debtors' cases. As reported by the Troubled Company Reporter on Jan. 6, 2014, the U.S. Trustee for Region 19 sought dismissal of the Hotel LLC case. Daniel J. Morse, as Assistant U.S. Trustee, said Cheyenne Hotels has been afforded the protections of the Bankruptcy Code for over two years but has failed to confirm a Chapter 11 Plan. Meanwhile, the bankruptcy estate continues to accrue administrative expenses, including professional fees, which are diminishing the bankruptcy estate. CHEYENNE HOTELS: Reaches Deal with Colorado East Bank on Claims --------------------------------------------------------------- Cheyenne Hotels LLC and Colorado East Bank & Trust have reached a stipulation pursuant to which the payment to the bank required under Section 6.2.3 of the Plan will be reduced from $100,000 to $50,000. The amount of the credit against the allowed secured claim of the bank will be reduced from $100,000 to $50,000. Secured creditors Gary Goforth, John F. McGivern II, JFM Limited Partnership I, and Deavid Pener ("Goforth Creditors") will consent to the terms of the stipulation and the increase in the amount of the Bank's remaining senior secured claim with priority over the Claims of the Goforth Creditors, remaining to be paid after the Effective Date being increased by $50,000. About Cheyenne Hotels Cheyenne Hotels LLC, which owns and operates the Hampton Inn & Suites in Colorado Springs, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 11-37518) on Nov. 25, 2011. Judge A. Bruce Campbell presides over the case, taking over from Judge Michael E. Romero. Thomas F. Quinn, Esq., at Thomas F. Quinn PC, serves as the Debtor's counsel. Cheyenne Hotels estimated $10 million to $50 million in both assets and debts. The petition was signed by Tanveer Khan, manager. Affiliate Cheyenne Hotel Investments LLC filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-25379) on June 28, 2011, disclosing assets of $12,912,702 and liabilities of $8,074,325 as of the Petition Date. Thomas F. Quinn, Esq., also represents Hotel Investments. Hotel Investments won confirmation of its own Chapter 11 plan on Aug. 16, 2013. A copy of the Third Amended Plan of Reorganization dated Aug. 5, 2013, is available at no charge at: http://bankrupt.com/misc/CHEYENNEHOTEL_3rdAmdPlan.PDF No committee of creditors or equity security holders has been appointed in the Debtors' cases. As reported by the Troubled Company Reporter on Jan. 6, 2014, the U.S. Trustee for Region 19 sought dismissal of the Hotel LLC case. Daniel J. Morse, as Assistant U.S. Trustee, said Cheyenne Hotels has been afforded the protections of the Bankruptcy Code for over two years but has failed to confirm a Chapter 11 Plan. Meanwhile, the bankruptcy estate continues to accrue administrative expenses, including professional fees, which are diminishing the bankruptcy estate. CHEYENNE HOTELS: Stipulates with Goforth Creditors on Claims ------------------------------------------------------------ Debtor Cheyenne Hotels, LLC and secured creditors Gary Goforth, John F. McGivern II, JFM Limited Partnership I, and Deavid Pener, ("Goforth Creditors") have entered a stipulation on the treatment of their claims under the Debtor's plan. During the course of the Chapter 11 proceedings, the Debtor has accrued unpaid adequate protection payments owing to the Goforth Creditors. Under the Stipulation, the Goforth Creditors and the Debtors agree that the amount owed for payment is $15,000, through the Effective Date of the Plan. The Debtor has requested, and the Goforth Creditors has agreed, to modify the terms of payment of the adequate protection payments, by adding the amounts to the Goforth Creditors' Secured Claim as described in the Plan, to assist the Debtor in assuring that the Debtor will have sufficient funds to make the payments required to be made as of the Effective Date of the Plan. The Debtor and the Goforth Creditors stipulate and agree: (a) The Debtor will make the payment required under Section 6.3.3 of the Plan in the amount of $50,000 to $50,000 on or before August 15, 2014; and (b) The amount of Allowed Secured Claim of the Goforth Creditors on account of such payment shall be increased by $15,000, reflecting the accrual of adequate protection payments in such amount. (c) The amount of the prepayment discount provided in Section 6.6.6 of the Plan shall be amended from $75,000 to $50,000. About Cheyenne Hotels Cheyenne Hotels LLC, which owns and operates the Hampton Inn & Suites in Colorado Springs, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 11-37518) on Nov. 25, 2011. Judge A. Bruce Campbell presides over the case, taking over from Judge Michael E. Romero. Thomas F. Quinn, Esq., at Thomas F. Quinn PC, serves as the Debtor's counsel. Cheyenne Hotels estimated $10 million to $50 million in both assets and debts. The petition was signed by Tanveer Khan, manager. Affiliate Cheyenne Hotel Investments LLC filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-25379) on June 28, 2011, disclosing assets of $12,912,702 and liabilities of $8,074,325 as of the Petition Date. Thomas F. Quinn, Esq., also represents Hotel Investments. Hotel Investments won confirmation of its own Chapter 11 plan on Aug. 16, 2013. A copy of the Third Amended Plan of Reorganization dated Aug. 5, 2013, is available at no charge at: http://bankrupt.com/misc/CHEYENNEHOTEL_3rdAmdPlan.PDF No committee of creditors or equity security holders has been appointed in the Debtors' cases. As reported by the Troubled Company Reporter on Jan. 6, 2014, the U.S. Trustee for Region 19 sought dismissal of the Hotel LLC case. Daniel J. Morse, as Assistant U.S. Trustee, said Cheyenne Hotels has been afforded the protections of the Bankruptcy Code for over two years but has failed to confirm a Chapter 11 Plan. Meanwhile, the bankruptcy estate continues to accrue administrative expenses, including professional fees, which are diminishing the bankruptcy estate. CHEYENNE HOTELS: Has Deal to Keep Hampton Inn Brand --------------------------------------------------- HLT Existing Franchise Holding LLC and Cheyenne Hotels, LLC, have entered into a stipulation regarding the Debtor's right to assume the franchise license agreement for the operation of a "Hampton Inn" hotel located in Salida, Colo. The Debtor is authorized to use the "Hampton Inn" brand and system under a Franchise License Agreement between the Debtor and HLT dated November 7, 2006. As of June 30, 2014, the Debtor is current in its monthly royalty fees, monthly program fees, and other fees and payments due under the FLA. As of May 31, 2014, HLT has incurred $39,212.66 of reasonable attorneys' fees and costs in connection with this bankruptcy case and/or to enforce its rights under the FLA. The Debtor would like to assume the FLA and HLT is willing to provide its consent for the Debtor to assume the FLA, but only upon the terms and conditions of the Stipulation. The Debtor agrees that, in order to effectuate a "cure" as required by Bankruptcy Code ? 365(b), the outstanding Legal Fees through May 31, 2014, totaling $39,212.66 must be paid to HLT. The Cure Obligation will be paid as follows: (a) Within 10 days after entry of an order confirming the Plan, the Debtor will pay HLT $25,000; (b) The balance of the Cure Obligation shall be paid by the Debtor to HLT in five equal and consecutive monthly installments of $2,500 each and a final installment of $1,712.66, the first such installment being due on August 30, 2014 and each successive installment being due on the last day of each month thereafter until the balance is paid in full. The FLA will be deemed assumed by the Debtor as of the entry of an order confirming the Plan. Under no circumstances may the Debtor assign the FLA without the express written consent of HLT. About Cheyenne Hotels Cheyenne Hotels LLC, which owns and operates the Hampton Inn & Suites in Colorado Springs, Colorado, filed for Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 11-37518) on Nov. 25, 2011. Judge A. Bruce Campbell presides over the case, taking over from Judge Michael E. Romero. Thomas F. Quinn, Esq., at Thomas F. Quinn PC, serves as the Debtor's counsel. Cheyenne Hotels estimated $10 million to $50 million in both assets and debts. The petition was signed by Tanveer Khan, manager. Affiliate Cheyenne Hotel Investments LLC filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-25379) on June 28, 2011, disclosing assets of $12,912,702 and liabilities of $8,074,325 as of the Petition Date. Thomas F. Quinn, Esq., also represents Hotel Investments. Hotel Investments won confirmation of its own Chapter 11 plan on Aug. 16, 2013. A copy of the Third Amended Plan of Reorganization dated Aug. 5, 2013, is available at no charge at: http://bankrupt.com/misc/CHEYENNEHOTEL_3rdAmdPlan.PDF No committee of creditors or equity security holders has been appointed in the Debtors' cases. As reported by the Troubled Company Reporter on Jan. 6, 2014, the U.S. Trustee for Region 19 sought dismissal of the Hotel LLC case. Daniel J. Morse, as Assistant U.S. Trustee, said Cheyenne Hotels has been afforded the protections of the Bankruptcy Code for over two years but has failed to confirm a Chapter 11 Plan. Meanwhile, the bankruptcy estate continues to accrue administrative expenses, including professional fees, which are diminishing the bankruptcy estate. CHINA TELETECH: Posts $1.2 Million Net Income in June 30 Quarter ---------------------------------------------------------------- China Teletech Holding, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q reporting net income of $1.16 million on $0 of sales for the three months ended June 30, 2014, compared to a net loss of $664,010 on $19.07 million of sales for the same period in 2013. As of June 30, 2014, the Company had $824,356 in total assets, $23,450 in total liabilities and $800,906 in total stockholders' equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/a2t6l3 About China Teletech Tallahassee, Fla.-based China Teletech Holding, Inc., is a national distributor of prepaid calling cards and integrated mobile phone handsets and a provider of mobile handset value-added services. The Company is an independent qualified corporation that serves as one of the principal distributors of China Telecom, China Unicom, and China Mobile products in Guangzhou City. On June 30, 2012, the Company strategically sold its wholly-owned subsidiary, Guangzhou Global Telecommunication Company Limited ("GGT"), to a third party. GGT was engaged in the trading and distribution of cellular phones and accessories, prepaid calling cards, and rechargeable store-value cards. China Teletech reported a net loss of $1.96 million on $30.87 million of sales for the year ended Dec. 31, 2013, as compared with net income of $53,542 on $26.62 million of sales in 2012. WWC, P.C., in San Mateo, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013, citing that the Company has incurred substantial losses which raise substantial doubt about its ability to continue as a going concern. As reported by the TCR on Aug. 7, 2014, China Teletech dismissed WWC, P.C., effective July 31, 2014. The Company engaged Albert Wong & Co. LLP as the Company's new independent registered public accountant. COATES INTERNATIONAL: Incurs $2.3 Million Net Loss in 2nd Quarter ----------------------------------------------------------------- Coates International, Ltd., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $2.35 million on $4,800 of total revenues for the three months ended June 30, 2014, compared to a net loss of $1.17 million on $4,800 of total revenues for the same period in 2013. For the six months ended June 30, 2014, the Company incurred a net loss of $2.86 million on $9,600 of total revenues compared to a net loss of $1.98 million on $9,600 of total revenues for the same period last year. The Company's balance sheet at June 30, 2014, showed $2.36 million in total assets, $7.32 million in total liabilities and a $4.96 million total stockholders' deficiency. A full-text copy of the Form 10-Q is available for free at: http://is.gd/dY7f6X About Coates International Based in Wall Township, N.J., Coates International, Ltd. (OTC BB: COTE) -- http://www.coatesengine.com/-- was incorporated on August 31, 1988, for the purpose of researching, patenting and manufacturing technology associated with a spherical rotary valve system for internal combustion engines. This technology was developed over a period of 15 years by Mr. George J. Coates, who is the President and Chairman of the Board of the Company. The Coates Spherical Rotary Valve System (CSRV) represents a revolutionary departure from the conventional poppet valve. It changes the means of delivering the air and fuel mixture to the firing chamber of an internal combustion engine and of expelling the exhaust produced when the mixture ignites. Coates International reported a net loss of $2.75 million on $19,200 of total revenues for the year ended Dec. 31, 2013, as compared with a net loss of $4.53 million on $19,200 of total revenues for the year ended Dec. 31, 2012. Cowan, Gunteski & Co., P.A., in Tinton Falls, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company continues to have negative cash flows from operations, recurring losses from operations, and a stockholders' deficiency. COLOR STAR: Withdraws Bid to Use Lenders' Cash Collateral --------------------------------------------------------- Color Star Growers of Colorado, Inc., withdrew its motion to use the cash collateral pursuant to a court order dated July 22, which approved the company's settlement agreement with lenders and the unsecured creditors' committee. Under the terms of the settlement, the lenders will, among other things, allow $750,000 of Color Star's cash collateral to be used solely for allowed administrative expenses. In exchange, the company will provide full releases to the lenders. The lenders are Regions Bank, Comerica Bank, and MCG Capital Corporation and Solutions Capital I, L.P. 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. Simon, Ray & Winikka LLP serves as special conflicts 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. COMMUNICATION INTELLIGENCE: Incurs $1.2 Million Net Loss in Q2 -------------------------------------------------------------- Communication Intelligence Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.16 million on $473,000 of total revenue for the three months ended June 30, 2014, compared to a net loss of $1.18 million on $263,000 of total revenue for the same period in 2013. Net loss for the six months ended June 30, 2014, was $2.22 million on $774,000 of total revenue compared to a net loss of $2.37 million on $498,000 of total revenue for the same period last year. As of June 30, 2014, the Company had $1.82 million in total assets, $1.29 million in total liabilities and $533,000 in total stockholders' equity. The Company has incurred significant cumulative losses since its inception and, at June 30, 2014, the Company's accumulated deficit was $121,410,000. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of June 30, 2014, the Company's cash balance was $415,000. The Company said these factors raise substantial doubt about the Company's ability to continue as a going concern. A full-text copy of the Form 10-Q is available for free at: http://is.gd/zyfWo0 About Communication Intelligence Redwood Shores, California-based Communication Intelligence Corporation is a supplier of electronic signature products and the recognized leader in biometric signature verification. In its audit report accompanying the financial statements for 2011, PMB Helin Donovan, LLP, in San Francisco, Calif., expressed substantial doubt about Communication Intelligence's ability to continue as a going concern. The independent auditors noted that of the Company's significant recurring losses and accumulated deficit. The Company reported a net loss of $4.50 million for 2011, compared with a net loss of $4.16 million for 2010. COMMUNICATION INTELLIGENCE: Has $1.85-Mil. Net Loss for Q2 of 2014 ------------------------------------------------------------------ Communication Intelligence Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.85 million on $473,000 of total revenue for the three months ended June 30, 2014, compared with a net loss of $1.96 million on $263,000 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $1.83 million in total assets, $1.29 million in total liabilities, and a stockholders' equity of $533,000. The Company has incurred significant cumulative losses since its inception and, at June 30, 2014, the Company's accumulated deficit was $121.41 million. The Company has primarily met its working capital needs through the sale of debt and equity securities. As of June 30, 2014, the Company's cash balance was $415,000. These factors raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available at: http://is.gd/zyfWo0 About Communication Intelligence Redwood Shores, California-based Communication Intelligence Corporation is a supplier of electronic signature products and the recognized leader in biometric signature verification. In its audit report accompanying the financial statements for 2011, PMB Helin Donovan, LLP, in San Francisco, Calif., expressed substantial doubt about Communication Intelligence's ability to continue as a going concern. The independent auditors noted that of the Company's significant recurring losses and accumulated deficit. Communication Intelligence reported a net loss attributable to common stockholders of $6.11 million in 2012 following a net loss attributable to common stockholders of $6.66 million in 2011. PMB Helin Donovan, LLP, in San Francisco, CA, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company's significant recurring losses and accumulated deficit raise substantial doubt about its ability to continue as a going concern. COMPETITIVE TECHNOLOGIES: Incurs $791,000 Net Loss in 2nd Qtr. -------------------------------------------------------------- Competitive Technologies, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $790,849 on $316,000 of product sales for the three months ended June 30, 2014, compared with a net loss of $677,035 on $136,100 of product sales for the same period during the prior year. Net loss for the six months ended June 30, 2014, was $1.51 million on $537,080 of product sales compared to a net loss of $1.45 million on $136,100 of product sales for the same period a year ago. The Company's balance sheet at June 30, 2014, showed $4.48 million in total assets, $10.89 million in total liabilities and a $6.41 million total shareholders' deficit. "Although we have taken steps to significantly reduce operating expenses going forward, even at these reduced spending levels, should the anticipated increase in revenue from sales of Calmare(R) medical devices and other technologies not occur, the Company may not have sufficient cash flow to fund operations through 2014. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the Company said in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/PoKU1Q About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. Competitive Technologies incurred a net loss of $3 million on $546,139 of gross profit from product sales in 2012, as compared with a net loss of $3.59 million on $1.86 million of gross profit from product sales in 2011. Mayer Hoffman McCann CPAs (The New York Practice of Mayer Hoffman McCann P.C.), in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that at Dec. 31, 2012, the Company has incurred operating losses since fiscal year 2006. COUNTRYWIDE FIN'L: Mozilo Said to Face U.S. Suit over Loans ----------------------------------------------------------- Keri Geiger, Tom Schoenberg and Greg Farrell, writing for Bloomberg News, reported that a U.S. government task force is wielding an innovative legal strategy plans to bring a civil case against Countrywide Financial Corp. co-founder Angelo Mozilo over the excesses of the subprime-mortgage boom. According to the report, citing two people with knowledge of the matter, the U.S. attorney's office in Los Angeles, relying on the Financial Institutions Reform, Recovery and Enforcement Act, is preparing to sue Mozilo and as many as 10 other former Countrywide employees. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- originated, purchased, securitized, sold, and serviced residential and commercial loans. In mid-2008, Bank of America completed its purchase of Countrywide for $2.5 billion. The mortgage lender was originally priced at $4 billion, but the purchase price eventually was whittled down to $2.5 billion based on BofA's stock prices that fell over 40% since the time it agreed to buy the ailing lender. COPYTELE INC: Six Directors Elected at Annual Meeting ----------------------------------------------------- The annual meeting of stockholders of CopyTele, Inc., was held on Friday, Aug. 8, 2014, at the law offices of Ellenoff Grossman & Schole LLP. At the Annual Meeting, the stockholders: (1) elected Lewis H. Titterton, Robert A. Berman, Dr. Amit Kumar, Bruce F. Johnson, Dale Fox and Dr. Andrea Belz to the Board of Directors to serve until the next annual meeting of stockholders; (2) ratified the appointment of Haskell & White LLP as the Company's independent auditors for fiscal year 2014; (3) approved a proposed amendment of the Company's Certificate of Incorporation, as amended, to effect a reverse stock split of the Company's common stock at a ratio of between one-for-two and one-for-twenty five with that ratio to be determined and that reverse stock split to be effected as determined by the Board in its sole discretion; and (4) approved a proposed amendment to the Company's Certificate of Incorporation to change the name of the Company from "CopyTele, Inc." to "ITUS Corporation," that name change to occur at such time and date, if at all, as determined by the Board in its sole discretion. About CopyTele Melville, N.Y.-based CopyTele, Inc.'s principal operations include the development, production and marketing of thin flat display technologies, including low-voltage phosphor color displays and low-power passive E-Paper(R) displays, and the development, production and marketing of multi-functional encryption products that provide information security for domestic and international users over several communications media. CopyTele incurred a net loss of $10.08 million for the year ended Oct. 31, 2013, as compared with a net loss of $4.25 million during the prior year. CRUMBS BAKE SHOP: Cole Shotz Approved as Bankruptcy Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized Crumbs Bake Shop Inc., et. al., to employ Cole, Schotz, Meisel, Forman & Leonard, P.A. as bankruptcy counsel nunc pro tunc to the filing date. Michael D. Sirota, Esq., shareholder of Cole Schotz, told the Court that the hourly rates of the firm's personnel are: Members $395 - $800 Special Counsel $375 - $440 Associates $195 - $420 Paralegals $170 - $250 Litigation Support Specialist $100 - $250 Mr. Sirota assures the Court that Cole Schotz is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Crumbs Bake Shop Crumbs Bake Shop, Inc. (OTCBB: CRMB), a New York-based cupcake specialty store chain, and 22 of its affiliates filed separate Chapter 11 bankruptcy petitions (Bankr. D. N.J. Lead Case No. 14-24287) on July 11, 2014. John D. Ireland signed the petitions as chief financial officer. Crumbs Bake Shop estimated assets of $10 million to $50 million and the same range of liabilities. Cole, Schotz, Meisel, Forman & Leonard, P.A., acts as the Debtors' counsel. Glass Ratner is serving as Crumbs' financial advisor. Prime Clerk LLC is the Debtors' claims and noticing agent. Judge Michael B. Kaplan oversees the jointly administered cases. The U.S. Trustee appointed three creditors to serve in the Official Committee of Unsecured Creditors. Sharon L. Levine, Esq., at Lowenstein Sandler LLP serves as Committee's counsel. * * * On July 7, 2014, the Board of Directors of Crumbs Bake Shop determined to cease operations effective immediately. The Board's determination was made after the Company lacked sufficient liquidity to maintain current operations. On the petition date, Crumbs entered into an Asset Purchase Agreement through which Lemonis Fischer Acquisition Company, LLC, a joint venture created by Marcus Lemonis LLC and Fischer Enterprises, L.L.C., will acquire the Crumbs' business as part of the Company's Chapter 11 filing. The Debtor will sell itself at a bankruptcy auction on Aug. 21. The lead bidder has a $6.5 million credit bid. A hearing to approve the sale is scheduled to take place on Aug. 26. The Company hopes to complete the sale process in approximately 60 days, pending receipt of the necessary approvals from the Bankruptcy Court. Lemonis Fischer Acquisition is represented by Louis Price, Esq., at McAfee & Taft PC. CRUMBS BAKE SHOP: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Crumbs Bake Shop, Inc., filed with the U.S. Bankruptcy Court for the District of New Jersey its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $189 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $5,514,245 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-Priority Claims $4,551,462 ----------- ----------- Total $189 $10,065,707 A copy of the schedules is available for free at http://bankrupt.com/misc/CRUMBSBAKE_117_sal.pdf About Crumbs Bake Shop Crumbs Bake Shop, Inc. (OTCBB: CRMB), a New York-based cupcake specialty store chain, and 22 of its affiliates filed separate Chapter 11 bankruptcy petitions (Bankr. D. N.J. Lead Case No. 14-24287) on July 11, 2014. John D. Ireland signed the petitions as chief financial officer. Crumbs Bake Shop estimated assets of $10 million to $50 million and the same range of liabilities. Cole, Schotz, Meisel, Forman & Leonard, P.A., acts as the Debtors' counsel. Glass Ratner is serving as Crumbs' financial advisor. Prime Clerk LLC is the Debtors' claims and noticing agent. Judge Michael B. Kaplan oversees the jointly administered cases. The U.S. Trustee appointed three creditors to serve in the Official Committee of Unsecured Creditors. Sharon L. Levine, Esq., at Lowenstein Sandler LLP serves as Committee's counsel. * * * On July 7, 2014, the Board of Directors of Crumbs Bake Shop determined to cease operations effective immediately. The Board's determination was made after the Company lacked sufficient liquidity to maintain current operations. On the petition date, Crumbs entered into an Asset Purchase Agreement through which Lemonis Fischer Acquisition Company, LLC, a joint venture created by Marcus Lemonis LLC and Fischer Enterprises, L.L.C., will acquire the Crumbs' business as part of the Company's Chapter 11 filing. The Debtor will sell itself at a bankruptcy auction on Aug. 21. The lead bidder has a $6.5 million credit bid. A hearing to approve the sale is scheduled to take place on Aug. 26. The Company hopes to complete the sale process in approximately 60 days, pending receipt of the necessary approvals from the Bankruptcy Court. Lemonis Fischer Acquisition is represented by Louis Price, Esq., at McAfee & Taft PC. CRUMBS BAKE SHOP: Assumption of West Madison Lease Opposed ---------------------------------------------------------- Landlord 303 Madison Chicago, LLC, objects to Crumbs Bake Shop, Inc., et al.'s motion to assume and assign a certain office lease between landlord and Crumbs West Madison, LLC for lease of a retail space in a building located at 303 West Madison, Chicago, Illinois. According to 303 Madison, the Debtor has no further legal or equitable interest with respect to the premises and the Debtor is unable to exercise any other rights under the lease. 303 Madison noted that a debtor may not assume a lease of nonresidential real property that was terminated prepetition pursuant to applicable law. 303 Madison narrates that in the last week of June 2014, the Debtor ceased operations at the premises -- first floor, retail space designated as Suite 125 at the premises -- and, since that time, the premises have remained closed. Pursuant to Section 18 of the lease, cessation of the Debtor's operations on the premises for a period of 15 days constitutes abandonment of the premises, which entitles landlord to declare an event of default and immediately terminate the lease. Additionally, the Debtor allegedly failed to pay required rent for the months of June and July 2014 which failures also constitute events of default under the lease entitling landlord to immediately terminate the lease. Further, according to 303 Madison, the Debtor's cure amount is inaccurate in that it does not include expenses and other costs incurred prepetition by the landlord in connection with the termination of the lease. If the lease were assumable, the correct cure amount is $30,305. 303 Madison is represented by: HOLLAND & KNIGHT, LLP 31 West 52nd Street New York, NY 10019 Barbra Parlin, Esq. Tel: (212) 513-3200 Fax: (212) 385-9010 Richard Bixter, Esq. HOLLAND & KNIGHT LLP 131 S. Dearborn 30th Floor Chicago, IL 60603 Tel: (312) 263-3600 Fax: (312) 578-6666 About Crumbs Bake Shop Crumbs Bake Shop, Inc. (OTCBB: CRMB), a New York-based cupcake specialty store chain, and 22 of its affiliates filed separate Chapter 11 bankruptcy petitions (Bankr. D. N.J. Lead Case No. 14-24287) on July 11, 2014. John D. Ireland signed the petitions as chief financial officer. Crumbs Bake Shop estimated assets of $10 million to $50 million and the same range of liabilities. Cole, Schotz, Meisel, Forman & Leonard, P.A., acts as the Debtors' counsel. Glass Ratner is serving as Crumbs' financial advisor. Prime Clerk LLC is the Debtors' claims and noticing agent. Judge Michael B. Kaplan oversees the jointly administered cases. The U.S. Trustee appointed three creditors to serve in the Official Committee of Unsecured Creditors. Sharon L. Levine, Esq., at Lowenstein Sandler LLP serves as Committee's counsel. * * * On July 7, 2014, the Board of Directors of Crumbs Bake Shop determined to cease operations effective immediately. The Board's determination was made after the Company lacked sufficient liquidity to maintain current operations. On the petition date, Crumbs entered into an Asset Purchase Agreement through which Lemonis Fischer Acquisition Company, LLC, a joint venture created by Marcus Lemonis LLC and Fischer Enterprises, L.L.C., will acquire the Crumbs' business as part of the Company's Chapter 11 filing. The Debtor will sell itself at a bankruptcy auction on Aug. 21. The lead bidder has a $6.5 million credit bid. A hearing to approve the sale is scheduled to take place on Aug. 26. The Company hopes to complete the sale process in approximately 60 days, pending receipt of the necessary approvals from the Bankruptcy Court. Lemonis Fischer Acquisition is represented by Louis Price, Esq., at McAfee & Taft PC. CRUMBS BAKE SHOP: U.S. Trustee Forms 3-Member Creditors Committee ----------------------------------------------------------------- Roberta A. Deangelis, U.S. Trustee for Region 3, appointed three creditors to serve in the Official Committee of Unsecured Creditors in the Chapter 11 cases of Crumbs Bake Shop, Inc., et al.: 1. Simon Property Group, Inc. Attn: Ronald Tucker 225 W. Washington Street Indianapolis, IN 46204 Tel: (317) 263-2346 Fax: (317) 263-7901 2. Melita Corp. Attn: Alan Carpanini 828 East 144th Street Bronx, NY 10454 Tel: (718) 392-7280 Fax: (718) 392-9674 3. Tristan Partners, L.P. Attn: Steven Wagstaff P.O. Box 3459 150 East Hanson Avenue Jackson, WY 83001 Tel: (307) 733-2284 Fax: (317) 623-1400 The Committee is represented by: Sharon L. Levine, Esq. LOWENSTEIN SANDLER LLP 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597-2500 Fax: (973) 597-2400 About Crumbs Bake Shop Crumbs Bake Shop, Inc. (OTCBB: CRMB), a New York-based cupcake specialty store chain, and 22 of its affiliates filed separate Chapter 11 bankruptcy petitions (Bankr. D. N.J. Lead Case No. 14-24287) on July 11, 2014. John D. Ireland signed the petitions as chief financial officer. Crumbs Bake Shop estimated assets of $10 million to $50 million and the same range of liabilities. Cole, Schotz, Meisel, Forman & Leonard, P.A., acts as the Debtors' counsel. Glass Ratner is serving as Crumbs' financial advisor. Prime Clerk LLC is the Debtors' claims and noticing agent. Judge Michael B. Kaplan oversees the jointly administered cases. The U.S. Trustee appointed three creditors to serve in the Official Committee of Unsecured Creditors. Sharon L. Levine, Esq., at Lowenstein Sandler LLP serves as Committee's counsel. * * * On July 7, 2014, the Board of Directors of Crumbs Bake Shop determined to cease operations effective immediately. The Board's determination was made after the Company lacked sufficient liquidity to maintain current operations. On the petition date, Crumbs entered into an Asset Purchase Agreement through which Lemonis Fischer Acquisition Company, LLC, a joint venture created by Marcus Lemonis LLC and Fischer Enterprises, L.L.C., will acquire the Crumbs' business as part of the Company's Chapter 11 filing. The Debtor will sell itself at a bankruptcy auction on Aug. 21. The lead bidder has a $6.5 million credit bid. A hearing to approve the sale is scheduled to take place on Aug. 26. The Company hopes to complete the sale process in approximately 60 days, pending receipt of the necessary approvals from the Bankruptcy Court. Lemonis Fischer Acquisition is represented by Louis Price, Esq., at McAfee & Taft PC. D.A.B. GROUP: Meeting of Creditors Adjourned to Sept. 2 ------------------------------------------------------- D.A.B Group LLC announced that the meeting of creditors, which was scheduled to be held on Aug. 19, has been adjourned to Sept. 2, at 2:00 p.m. The meeting has been adjourned on consent of the U.S. Trustee for Region 2. It will be held at the Office of the U.S. Trustee, 4th Floor, 80 Broad St., in New York. The court overseeing the bankruptcy case of a company schedules the meeting of creditors usually about 30 days after the bankruptcy petition is filed. The meeting is called the "341 meeting" after the section of the Bankruptcy Code that requires it. A representative of the company is required to appear at the meeting and answer questions under oath. The meeting is presided over by the U.S. trustee, the Justice Department's bankruptcy watchdog. About DAB Group D.A.B. Group LLC, owner of a stalled 16-story Allen Street Hotel project in Orchard Street, New York, sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 14-12057) in Manhattan on July 14, 2014, to pursue a prompt sale of the property. The case is assigned to Judge Shelley C. Chapman. The property has been in the hands of a receiver since July 18, 2011. Simon J.K. Miller, of Blank Rome LLP, serves as receiver. J. Ted Donovan, Esq., at Goldberg Weprin Finkel Goldstein LLP, in New York, serves as counsel to the Debtor. DAB Group said in a court filing that its property is continguous to the commercial property owned by its affiliate, 77-79 Rivington Street Realty LLC (Bankr. S.D.N.Y. Case No. 14-10339). Accordingly, DAB's Chapter 11 case is being filed as a related proceeding. The Debtor is currently required to file its Chapter 11 plan and disclosure statement by Nov. 12, 2014. DAEHAN SHIPBUILDING: U.S. Court Issues Provisional Ch. 15 Order --------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York issued on Aug. 21, 2014, an order granting Daehan Shipbuilding Co., Ltd., provisional relief pursuant to Section 105(A) and 1519 of the U.S. Bankruptcy Code, after finding that petitioner Byung Mo Lee, the custodian and foreign representative of the company in its Korean Bankruptcy Proceeding, has demonstrated a likelihood of success that the Company is subject to a pending foreign main proceeding in Korea and that the petitioner is the foreign representative of the company. Judge Glenn ruled that beginning Aug. 21 and continuing through the date the U.S. Court enters a final ruling on the Chapter 15 Petition, judgment creditors are, among other things, enjoined from commencing or continuing any litigation or any other action against or involving the Petitioner, the Company or its property, whether owned, chartered or leased or the proceeds thereof within the territorial jurisdiction of the United States. Moreover, Judge Glenn ruled that that beginning Aug. 21 and continuing through the date the U.S. Court enters a final ruling on the Chapter 15 Petition, the civil action currently pending in the Supreme Court of the State of New York, County of New York styled Rimpacific Navigation Inc. and Wonder Enterprises Ltd. v. Daehan Shipbuilding Co., Ltd. (Index # 650686/2014), will be stayed, and no further action will be taken by the Judgment Creditors. As previously reported by The Troubled Company Reporter, on March 3, 2014, Rimpacific Navigation Inc. and Wonder Enterprises Ltd. filed a petition for recognition of foreign judgments against the Company in the Supreme Court of the State of New York, County of New York (Index No. 650686/2014). The petition seeks the entry of an order recognizing and enforcing an English judgment rendered in favor of Rimpacific and Wonder and against the Company, and the entry of a judgment against the Company of not less than US$54,538,682. On April 16, 2014, the Company filed an answer to the Petition and asserted various defenses, including: (i) failure to state a claim; (ii) insufficient service of process; (iii) the foreign judgments do not have res judicata effect; and (iv) the English Court lacked jurisdiction, service of process in that proceeding was invalid, notice was insufficient and the underlying guarantees are invalid and repugnant to public policy. On July 24, 2014, Rimpacific and Wonder filed a motion for summary judgment in support of their petition for recognition of foreign judgments. By agreement between Rimpacific, Wonder and the Company, the latter's response to the motion for summary judgment was due on Aug. 20, 2014. About Daehan Shipbuilding Based in Haenam-gun, Jeollanam-do, Korea, Daehan Shipbuilding Co., Ltd., is engaged in the shipbuilding and repair business. On June 27, 2014, Daehan Shipbuilding applied for rehabilitation before the 4th Bankruptcy Division of the Seoul Central District Court. Byung Mo Lee, as existing chief executive officer of the Company, assumed the role of the custodian and "foreign representative" of the company. Mr. Lee filed a Chapter 15 bankruptcy petition in Manhattan (Bankr. S.D.N.Y. Case No. 14-12391) on Aug. 18, 2014, to seek recognition of the Korean rehabilitation proceedings. Judge Sean H. Lane is assigned to the U.S. case. The Debtor has tapped Michael B. Schaedle, Esq., at Blank Rome LLP, as counsel. DAYBREAK OIL: Maximilian Resources Has 9.9% Equity Stake -------------------------------------------------------- In an amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Maximilian Resources reported that as of Aug. 8, 2014, it beneficially owns 5,708,809 shares of Daybreak Oil and Gas, Inc.'s common stock, which constitutes 9.99% of the Company's issued and outstanding Common Stock, based on 57,145,236 shares of the Company's Common Stock issued and outstanding. In addition, Maximilian owns warrants to purchase up to 6,550,281 shares of Common Stock. The warrant is exercisable at $0.10 per share and expires on Aug. 28, 2016. A copy of the regulatory filing is available for free at http://is.gd/Va3qnK About Daybreak Oil Daybreak Oil and Gas, Inc. is an independent oil and natural gas exploration, development and production company. The Company is headquartered in Spokane, Washington and has an operations office in Friendswood, Texas. The Company's common stock is quoted on the OTC Bulletin Board market under the symbol DBRM.OB. Daybreak has over 20,000 acres under lease in the San Joaquin Valley of California. Daybreak Oil incurred a net loss available to common shareholders of $1.54 million for the year ended Feb. 28, 2014, as compared with a net loss available to common shareholders of $2.39 million for the same period last year. Daybreak Oil incurred a net loss of $2.23 million on $974,680 of revenue for the year ended Feb. 28, 2013, as compared with a net loss of $1.43 million on $1.31 million of revenue for the year ended Feb. 29, 2012. The Company's balance sheet at May 31, 2014, showed $12.94 million in total assets, $16 million in total liabilities and a $3.05 million total stockholders' deficit. MaloneBailey, LLP, in Houston, Texas, issued a "going concern" qualification on the consolidated financial statements for the year ended Feb. 28, 2014. The independent auditors noted that Daybreak Oil and Gas, Inc. suffered losses from operations and has negative operating cash flows, which raises substantial doubt about its ability to continue as a going concern. DBSI INC: Ex-President Gets 20 Years For Ponzi-Like Fraud --------------------------------------------------------- Law360 reported that the former president of DBSI Inc. was sentenced in Idaho federal court to 20 years in prison for his role in running a Ponzi-like scheme through the bankrupt real estate firm, while the firm's ex-general counsel was handed a five-year sentence and two other former DBSI executives received three-year sentences, prosecutors said. According to the report, U.S. District Judge B. Lynn Winmill sentenced former DBSI President Douglas L. Swenson and general counsel Mark Ellison, both 66, after finding the defendants were responsible for losses totaling $100 million. As previously reported by The Troubled Company Reporter, Judge Winmill denied motions for acquittal and a new trial filed by the former executives, after finding that the evidence presented at trial was sufficient to support Mr. Swenson's conviction on 34 counts of wire fraud and all four defendants' convictions on 44 counts each of securities fraud, the judge found. About DBSI Inc. Headquartered in Meridian, Idaho, DBSI Inc. and its affiliates were engaged in numerous commercial real estate and non-real estate projects and businesses. On Nov. 10, 2008, and other subsequent dates, DBSI and 180 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-12687). DBSI estimated assets and debts between $100 million and $500 million as of the Chapter 11 filing. Lawyers at Young Conaway Stargatt & Taylor LLP represent the Debtors as counsel. The Official Committee of Unsecured Creditors tapped Greenberg Traurig, LLP, as its bankruptcy counsel. Kurtzman Carson Consultants LLC is the Debtors' notice claims and balloting agent. Joshua Hochberg, a former head of the Justice Department fraud unit, served as an Examiner and called the seller and servicer of fractional interests in commercial real estate an "elaborate shell game" that "consistently operated at a loss" in his report released in October 2009. McKenna Long & Aldridge LLP was counsel to the Examiner. On Sept. 11, 2009, the Honorable Peter J. Walsh entered an Order appointing James R. Zazzali as Chapter 11 trustee for the Debtors' estates. On Oct. 26, 2010, the trustee won confirmation of the Second Amended Joint Chapter 11 Plan of Liquidation for DBSI, paving the way for it to pay creditors and avoid years of expensive litigation over its complex web of affiliates. The plan, which was declared effective Oct. 29, 2010, was co-proposed by DBSI's unsecured creditors committee. Pursuant to the confirmed Chapter 11 plan, the DBSI Real Estate Liquidating Trust was established as of the effective date and certain of the Debtors' assets, including the Debtors' ownership interest in Florissant Market Place was transferred to the RE Trust. Mr. Zazzali and Conrad Myers were appointed as the post- confirmation trustees. Messrs. Zazzali and Myers are represented by lawyers at Blank Rime LLP and Gibbons P.C. DETROIT, MI: Barclays Agrees to Lend $275-Mil. for Bankruptcy Exit ------------------------------------------------------------------ Mary Williams Walsh, writing for The New York Times' DealBook, reported that Barclays Capital has agreed to provide $275 million to finance Detroit's operations as it comes out of bankruptcy, according to documents filed in bankruptcy court. The DealBook related that the agreement calls for the Michigan Finance Authority to issue financial recovery bonds in that amount and for Barclays to buy them at an underwriter's discount that adds up to about $1.4 million. As the sole underwriter, Barclays will then have 150 days to resell the bonds in a syndication and public offering, the report said. A full-text copy of the Barclays Exit Financing Agreement is available at http://bankrupt.com/misc/DETROITbarclaysf0827.pdf 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. DERIVIUM CAPITAL: Rep. Nabs $704M In Damages Over Stock Scheme -------------------------------------------------------------- Law360 reported that a South Carolina federal judge awarded Florida Congressman Alan M. Grayson more than $704 million in default judgments and treble damages in three long-running suits against perpetrators of the defunct Derivium Capital LLC's "90 percent stock loans" alleged Ponzi scheme that bilked investors out of $1 billion. According to the report, in an order sprinkled with references to Charles Dickens' Bleak House and F. Scott Fitzgerald's The Great Gatsby, U.S. District Judge David C. Norton granted the hefty default judgments and treble damages in favor of Grayson. Derivium Capital LLC filed for bankruptcy after the collapse of its "stock loan" lending program, alleged to be a Ponzi scheme. Grayson Consulting, Inc., assignee of the Chapter 7 bankruptcy trustee, sought to recover from Wachovia Securities, LLC, Wachovia Securities Financial Network, LLC, and First Clearing, LLC, the assets transferred into Derivium's brokerage accounts at Wachovia and commissions, fees, and margin interest payments paid to Wachovia as fraudulent conveyances under 11 U.S.C. Sections 544 and 548. Grayson also asserted tort claims against Wachovia related to its involvement in Derivium's stock loan program. The case is Grayson et al v. Cathcart et al., Case No. 2:07-cv- 00593 (D.S.C.). DOLPHIN DIGITAL: Files Financial Statements for 2013 ---------------------------------------------------- Dolphin Digital Media Inc., on August 14, filed with the U.S. Securities and Exchange Commission its quarterly reports for the periods ended March 31, 2013, June 30, 2013 and Sept. 30, 2013. The Company incurred a net loss of $907,764 on $769,620 of revenues for the three months ended March 31, 2013, compared to a net loss of $956,575 on $0 of revenues for the same period in 2012. A copy of the Form 10-Q is available for free at: http://is.gd/bAZ2Mr For the three months ended June 30, 2013, the Company reported a net loss of $637,517 on $517,560 of total revenues compared to a net loss of $455,406 on $998,582 of total revenues for the same period last year. A copy of the Form 10-Q is available at: http://is.gd/WKjn0Q Net loss for the three months ended Sept. 30, 2013, was $441,430 on $505,950 of total revenues compared to a net loss of $1.23 million on $2.09 million of toal revenues for the same period in 2012. As of Sept. 30, 2013, the Company had $2.11 million in total assets, $8.54 million in total liabilities, all current, and a $6.43 million total stockholders' deficit. A full-text copy of the Form 10-Q is available at http://is.gd/ltOHj8 "As of September 30, 2013, the Company recorded an accumulated deficit of $36,207,500. Further, the Company has inadequate working capital to maintain or develop its operations, and it is dependent upon funds from private investors and the support of certain stockholders. These factors raise substantial doubt about the ability of the Company to continue as a going concern," the Company stated in the Report. About Dolphin Digital Coral Gables, Florida-based Dolphin Digital Media, Inc., is dedicated to the twin causes of online safety for children and high quality digital entertainment. By creating and managing child-friendly social networking websites utilizing state-of the- art fingerprint identification technology, Dolphin Digital Media, Inc. has taken an industry-leading position with respect to internet safety, as well as digital entertainment. In their report on the consolidated financial statements for the year ended Dec. 31, 2012, Crowe Horwath LLP expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has incurred net losses, negative cash flows from operations and does not have sufficient working capital. The Company reported a net loss of $3.39 million on $3.86 million of revenues in 2012, compared with a net loss of $1.23 million on $472,824 of revenues in 2011. DR. TATTOFF: Incurs $1.6 Million Second Quarter Net Loss -------------------------------------------------------- Dr. Tattoff, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.64 million on $1.12 million of total revenues for the three months ended June 30, 2014, compared with a net loss of $1.02 million on $1.06 million of revenues for the same period in 2013. For the six months ended JUne 30, 2014, the Company reported a net loss of $3.09 million on $2.19 million of revenues compared with a net loss of $2.27 million on $1.97 million of revenues for the same period in 2013. As of June 30, 2014, the Company had $2.54 million in total assets, $8.95 million in total liabilities and a $6.41 million total shareholders' deficit. "We require substantial capital to fund our growth and will continue to seek substantial amounts of capital to effectuate our business plan. We have experienced significant negative cash flow from operations to date, and we expect to continue to experience negative cash flow in the near future. Our inability to generate sufficient funds from operations and external sources will have a material adverse effect on our business, results of operations and financial condition. If we are not able to raise additional funds, we will be forced to significantly curtail or cease our operations," the Company said in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/ldqXX1 About Dr. Tattoff Beverly Hills, Calif.-based Dr. Tattoff, Inc., currently operates or provides management services to five laser tattoo and hair removal clinics located in Texas and California, all of which operate under the Company's registered trademark "Dr. Tattoff." Dr. Tattoff reported a net loss of $4.30 million on $3.65 million of revenues for the year ended Dec. 31, 2013, as compared with a net loss of $2.83 million on $3.20 million of revenues during the prior year. SingerLewak LLP, in Los Angeles, California, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company's current liabilities exceeded its current assets by approximately $5,435,000, has shareholders' deficit of approximately $4,013,000, has suffered recurring losses and negative cash flows from operations, and has an accumulated deficit of approximately $11,708,000 at Dec. 31, 2013. This raises substantial doubt about the Company's ability to continue as a going concern. EAT AT JOE'S: Posts $1.6 Million Net Income in Second Quarter ------------------------------------------------------------- Eat at Joe's Ltd. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $1.61 million on $392,605 of revenues for the three months ended June 30, 2014, compared to a net loss of $189,114 on $326,740 of revenues for the same period in 2013. For the six months ended June 30, 2014, the Company reported net income of $5.61 million on $729,776 of revenues compared to net income of $57,264 on $604,068 of revenues for the same period last year. As of June 30, 2014, the Company had $18.67 million in total assets, $10.77 million in total liabilities and $7.89 million in total stockholders' equity. "As of June 30, 2014, the Company has an accumulated deficit of $10,038,100. The Company's continued existence is dependent upon its ability to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company," the Company stated in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/FZsmSe Amends Previously Filed Financials Eat at Joe's, Ltd., filed with the SEC an amended annual report on Form 10-K/A for the period ended Dec. 31, 2013. The financial statements have been amended for failure to record the acquisition of marketable securities and the related notes payable in 2012 and 2013, along with interest, and the resulting realized and unrealized gains and losses. In addition subsequent to the issuance of the Dec. 31, 2013, financial statements, a material departure from GAAP was determined due to the Company using the valuation date subsequent to period end to value its marketable securities. The Company's restated balance sheet at Dec. 31, 2013, showed $7.60 million in total assets, $10.48 million in total liabilities and a $2.87 million total stockholders' deficit. The Company previously reported $13.75 million in total assets, $10.48 million in total liabilities and $3.26 million in total stockholders' equity. The Company incurred a net loss of $1.38 million on $1.30 million of revenues for the year ended Dec. 31, 2013, compared to net income of $2.84 million on $1.11 million of revenues in 2012. A full-text copy of the Form 10-K, as amended, is available at: http://is.gd/feh2o9 The Company separately filed an amended quarterly report for the period ended March 31, 2014. Subsequent to the issuance of the financial statements, a material departure from GAAP was determined due to the Company incorrectly using a valuation date subsequent to period end to value its marketable securities. The Company's amended balance sheet at March 31, 2014, showed $22.52 million in total assets, $10.65 million in total liabilities and $11.86 million in total stockholders' equity. The Company originally reported that the Company's balance sheet at March 31, 2014, showed $22.88 million in total assets, $10.68 million in total liabilities and $12.20 million in total stockholders' equity. A full-text copy of the Form 10-Q/A is available at http://is.gd/PX8m2q About Eat at Joe's Scarsdale, N.Y.-based Eat at Joe's, Ltd., presently owns and operates one theme restaurant located in Philadelphia, Pennsylvania. Eat at Joe's incurred a net loss of $1.38 million in 2013 following net income of $2.84 million on in 2012. Robison, Hill & Co., in Salt Lake City, Utah, 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 raising substantial doubt about its ability to continue as a going concern. EDUCATION MANAGEMENT: Exchange Offer No Impact on Moody's CFR ------------------------------------------------------------- Education Management LLC's debt restructuring plan is credit negative, but will not result in an immediate change in the company's ratings or outlook. Education Management has a Caa3 corporate family rating (CFR) and a Caa3-PD probability of default rating (PDR), with a negative ratings outlook. However, on execution of the refinancing amendment plan, Moody's will likely view the proposed transaction as a distressed exchange, which Moody's would consider to be a default per Moody's definitions. As such, Moody's would likely lower the company's PDR to LD-PD to reflect the limited default. Education Management LLC, an indirect subsidiary of Education Management Corporation based in Pittsburgh, Pennsylvania, is one of the largest providers of private post-secondary education in North America. The company's education systems (The Art Institutes, Argosy University, Brown Mackie Colleges and South University) offer associate through doctorate degrees with approximately 120,000 students. The company reported revenues of approximately $2.4 billion for the twelve months ended March 31, 2014. ELITE PHARMACEUTICALS: Reports $4.4MM Net Loss in June 30 Qtr. -------------------------------------------------------------- Elite Pharmaceuticals, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to common shareholders of $4.40 million on $1.16 million of total revenues for the three months ended June 30, 2014, compared to net income attributable to common shareholders of $921,666 on $721,689 of total revenues for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $23.96 million in total assets, $108.41 million in total liabilities and a $84.44 million total stockholders' deficit. As of June 30, 2014, the Company had cash on hand of $8.2 million and a working capital surplus of $4.8 million. A full-text copy of the Form 10-Q is available for free at: http://is.gd/qfneRi About Elite Pharmaceuticals Northvale, New Jersey-based Elite Pharmaceuticals, Inc., is a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary technology and the development and manufacture of generic pharmaceuticals. The Company has one product, Phentermine 37.5mg tablets, currently being sold commercially. Elite Pharmaceuticals disclosed a net loss attributable to common shareholders of $96.57 million on $4.60 million of total revenues for the year ended March 31, 2014, as compared with net income attributable to common shareholders of $1.48 million on $3.40 million of total revenues for the year ended March 31, 2013. EMISPHERE TECHNOLOGIES: Has $8.07-Mil. Loss for Second Quarter -------------------------------------------------------------- Emisphere Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $8.07 million on $nil of total revenue for the three months ended June 30, 2014, compared with a net loss of $13.98 million on $nil of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $1.91 million in total assets, $100.05 million in total liabilities, and a stockholders' deficit of $98.13 million. A copy of the Form 10-Q is available at: http://is.gd/wL6ZaU Roseland, N.J.-based Emisphere Technologies, Inc. (OTC BB: EMIS) is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules and commercialization of its own product candidates using its Eligen(R) Technology. These molecules could be currently available or are under development. McGladrey LLP expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has suffered recurring losses from operations, has a working capital deficiency and a significant stockholders' deficit, and has limited cash availability. EMPIRE RESORTS: Extends Executive's Employment for 1 Year --------------------------------------------------------- Empire Resorts, Inc., and Charles A. Degliomini have amended their employment agreement dated Dec. 7, 2012, to: (i) extend the term of employment of Mr. Degliomini from Dec. 31, 2014, to Dec. 31, 2015, and (ii) increase Mr. Degliomini's base salary from $250,000 to $257,500. In addition, the Employment Agreement was amended to supplement the definition of "Change in Control" such that the following will also constitute a Change in Control: "The individuals who, as of the date hereof, constitute the members of the Board (the 'Current Board Members') cease, by reason of a financing, merger, combination, acquisition, takeover or other non-ordinary course transaction affecting the Company, to constitute at least a majority of the members of the Board unless such change is approved by the Current Board Members." Mr. Degliomini serves as the Company's executive vice president. About Empire Resorts Based in Monticello, New York, Empire Resorts, Inc. (NASDAQ: NYNY) -- http://www.empireresorts.com/-- owns and operates Monticello Casino & Raceway, a video gaming machine and harness racing track and casino located in Monticello, New York, 90 miles northwest of New York City. Empire Resorts reported a net loss applicable to common shares of $27.05 million in 2013 following a net loss applicable to common shares of $2.26 million in 2012. As of June 30, 2014, the Company had $46.11 million in total assets, $55.62 million in total liabilities and a $9.51 million total stockholders' deficit. ENERGY FUTURE: Keeps a Lid on Questions About Solvency ------------------------------------------------------ Peg Brickley, writing for The Wall Street Journal, reported that Energy Future Holdings Corp. has successfully fended off questions from creditors anxious to probe the financial health of a company division that is the target of deal talks. According to the report, the questions arose in a brewing court fight over whether Energy Future owes of millions of dollars of premiums on $4 billion worth of debt attached to the division, which owns an 80% stake in the Texas transmission business, Oncor. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80 percent-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. On April 29, 2014, Energy Future Holdings and 70 affiliated companies sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 14-10979) after reaching a deal with some key financial stakeholders to keep its businesses operating while reducing its roughly $40 billion in debt. The Debtors' cases have been assigned to Judge Christopher S. Sontchi (CSS). The Debtors are seeking to have their cases jointly administered for procedural purposes. As of Dec. 31, 2013, EFH Corp. reported total assets of $36.4 billion in book value and total liabilities of $49.7 billion. The Debtors have $42 billion of funded indebtedness. EFH's legal advisor for the Chapter 11 proceedings is Kirkland & Ellis LLP, its financial advisor is Evercore Partners and its restructuring advisor is Alvarez & Marsal. The TCEH first lien lenders supporting the restructuring agreement are represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP as legal advisor, and Millstein & Co., LLC, as financial advisor. The EFIH unsecured creditors supporting the restructuring agreement are represented by Akin Gump Strauss Hauer & Feld LLP, as legal advisor, and Centerview Partners, as financial advisor. The EFH equity holders supporting the restructuring agreement are represented by Wachtell, Lipton, Rosen & Katz, as legal advisor, and Blackstone Advisory Partners LP, as financial advisor. Epiq Systems is the claims agent. Wilmington Savings Fund Society, FSB, the successor trustee for the second-lien noteholders owed about $1.6 billion, is represented by Ashby & Geddes, P.A.'s William P. Bowden, Esq., and Gregory A. Taylor, Esq., and Brown Rudnick LLP's Edward S. Weisfelner, Esq., Jeffrey L. Jonas, Esq., Andrew P. Strehle, Esq., Jeremy B. Coffey, Esq., and Howard L. Siegel, Esq. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee represents the interests of the unsecured creditors of ONLY of Energy Future Competitive Holdings Company LLC; EFCH's direct subsidiary, Texas Competitive Electric Holdings Company LLC; and EFH Corporate Services Company, and of no other debtors. The Committee has selected Morrison & Foerster LLP and Polsinelli PC for representation in this high-profile energy restructuring. The lawyers working on the case are James M. Peck, Esq., Brett H. Miller, Esq., and Lorenzo Marinuzzi, Esq., at Morrison & Foerster LLP; and Christopher A. Ward, Esq., Justin K. Edelson, Esq., Shanti M. Katona, Esq., and Edward Fox, Esq., at Polsinelli PC. ENERGY SERVICES: S&P Raises Debt Rating to 'B+' on Loan Reduction ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its issue-level rating on Energy Services Holdings LLC's senior secured debt to 'B+' (one notch above the corporate credit rating) from 'B'. S&P revised its recovery rating on this debt to '2', indicating its expectation for substantial (70% to 90%) recovery in the event of a payment default, from '3'. S&P revised its recovery rating on this debt following the company's reduction of the secured term loan to $125 million from the proposed $150 million. The revision also reflects increased amortization results in higher recovery expectations for the company's secured debt in a default scenario. S&P based its recovery expectation on the assumption that the company would continue to have a viable business in the event of a default, based on its existing customer relationships and the longer-term need for its services. The corporate credit rating incorporates S&P's view of the company's limited scale and exposure to cyclical end-markets -- albeit with some competitive advantage -- which support sustainable EBITDA margins that S&P considers average. S&P's assessment also reflects the company's controlling ownership by financial sponsor Cadent Energy Partners, and S&P's expectation that it will use a portion of the proceeds from the offering to pay a $60 million dividend (compared with the proposed $85 million) to shareholders and to refinance existing debt. S&P views financial sponsor ownership, in general, as potentially leading to increased financial leverage, such as through potential dividend recapitalizations, which are not incorporated in S&P's base-case scenario. In S&P's view, the combination of these attributes limits the company's operational and financial flexibility. S&P expects debt to EBITDA to be approximately 3.5x and funds from operations to debt of about 20% at year-end 2014 with modestly positive free operating cash flow. RECOVERY ANALYSIS -- S&P has completed a recovery analysis of the company's revised debt facilities and the recovery ratings reflect the changed capital structure. -- S&P has valued the company on a going concern basis using a 5x multiple of its projected emergence EBITDA. -- S&P estimates that, for the company to default, EBITDA would need to decline significantly, representing a material deterioration from the current state of its business. Simulated default and valuation assumptions: -- Simulated year of default: 2017 -- EBITDA at emergence: $25 mil. -- EBITDA multiple: 5x Simplified waterfall: -- Net enterprise value (after 5% admin. costs): $119 mil. -- Valuation split in % (Obligors/Non-obligors): 100/0 -- Priority claims: $4 mil. -- Collateral value available to secured creditors: $115 mil. -- Secured first-lien debt: $147 mil. -- Recovery expectations: 70% to 90% RATINGS LIST Energy Services Holdings LLC Corporate Credit Rating B/Stable/-- Upgraded; Recovery Rating Revised To From Energy Services Holdings LLC Senior Secured B+ B Recovery Rating 2 3 EPICOR SOFTWARE: S&P Revises Outlook to Stable & Affirms 'B' CCR ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Austin, Tex.-based Epicor Software Corp. to stable from negative. At the same time, S&P affirmed all ratings on the company and its debt issues, including the 'B' corporate credit rating. "The rating outlook revision is based on the company's moderate revenue growth and lower debt leverage since its parent company EGL Midco Inc.'s dividend distribution in June 2013, whereby it issued $400 million paid-in-kind (PIK) toggle notes," said Standard & Poor's credit analyst David Tsui. Epicor is a mid-tier ERP solutions provider that focuses on manufacturing, retail, distribution, and services verticals. The company's primary focus is on midsize customers, and the ability of its products to be customized for specific needs allows it to compete effectively. The rating on Epicor reflects Standard & Poor's view of the company's highly recurring revenue base from its ERP software maintenance and services, and consistently positive free operating cash flow (FOCF) generation. S&P's view of the company's business risk profile is characterized by its competition with much larger and more diversified software firms, such as SAP, Oracle, and Microsoft, and its exposure to industry cyclicality, especially in the retail and housing-related end markets. However, Epicor derives a significant amount of recurring revenue from maintenance and services and has renewal rates that exceed 90% (with more than 80% of revenues from its installed customer base). S&P expects these factors to continue to provide revenue visibility. Epicor's profitability also improved to about 26% in the 12 months ended June 30, 2014, up from about 25% in the year-ago period, because of favorable product mix and improved operating leverage. The stable outlook reflects S&P's view of Epicor's highly recurring revenue base from its ERP software maintenance and services, and consistently positive free operating cash flow, while maintaining leverage at or below its current level. Although unlikely over the next 12 months, S&P could upgrade the rating if the company could achieve significant revenue growth and diversify its geography and end market exposures, , while reducing debt leverage such that is remains at or below the 5x level. S&P could lower the rating if competition intensifies, leading to significant revenue declines or profitability deterioration, resulting in leverage sustained above the mid-7x level. Debt- financed shareholder returns leading to leverage at the same level could also result in a lower rating. FCC HOLDINGS: Files for Chapter 11 to Sell 28 Campuses ------------------------------------------------------ Greenhill Capital Partners' FCC Holdings, Inc., a secondary education provider that owes secured lenders almost $50 million, sought bankruptcy protection to complete its sale for only $1 million in cash so that at least 28 of 40 campuses would not shut down. FCC, which provided secondary education in 41 campuses in 14 states, said that prepetition their liquidity was severely constrained. According to Sean Harding, the CEO and CRO, due to certain regulatory issues the Debtors options were limited; however after investigating potential alternatives, the Debtors entered into an Amended and Restated Asset Purchase Agreement with IEC Corporation on Aug. 21, 2014. The Purchase Agreement contemplates a bifurcated transaction: (1) the sale of certain campuses that, due to regulatory issues, was substantially consummated prepetition, although certain aspects of the sale (such as assumption and assignment of leases), are contemplated to be concluded post-petition and (2) a post-petition private sale of certain other campuses. The Debtors said that on or shortly after the Petition Date, they are filing with the bankruptcy court a sale motion in order to seek approval of and implement the transaction, which is the only alternative the Debtors have to keep 28 campuses up and running (subject, in the case of 9 campuses, to further approval of the DOE), approximately 8,150 students educated, and approximately 1,500 people employed. Although the transaction will not result in any significant cash proceeds for the Debtors' estates, the transaction is the best (and only) alternative available for the Debtors, according to mR. Harding. The transaction consists of two components: Step 1 Transaction The sale of certain campuses that, due to regulatory issues, was substantially consummated pre-petition, although certain aspects of the sale (such as assumption and assignment of leases), are contemplated to be concluded postpetition, and Step 2 Transaction A postpetition private sale of certain other Campuses The Debtors' secured lenders have consented to the transaction and the U.S. Department of Education has approved the Step 1 Transactions. The Debtors have sought -- but not yet received -- approval from the DOE of the Step 2 Transactions. The consideration for the transaction is $1,000,000 in cash, a $1,000,000 lender consent fee, the assumption of certain leases, contracts and other liabilities and the funding of certain expenses that will enable the Debtors to (a) keep certain parts of their businesses running (and therefore students educated) through the conclusion of the Transaction and (b) have the opportunity to conclude and implement "Teach-Out" arrangements that will allow many of the students attending campuses that are not being sold to conclude their education Prepetition Sale Mr. Harding explained that among the regulatory issues that dictated the structure of the transaction as partially consummated outside of chapter 11 are prohibitions on the use of Office of Postsecondary Education Identification ("OPEID") numbers (which allow educational institutions to receive funding under Title IV) after an institution has filed a chapter 11 case. Because of the permanent prohibition on Title IV eligibility if an institution has filed for chapter 11, a traditional 363 sale is not a practical alternative for institutions dependent on Title IV revenues. In addition, certain change in control requirements severely limits the universe of likely potential purchasers to those already in the proprietary post-secondary education industry. Prior to the Petition Date, the Company had three sets of schools -- the 14 Florida Career College schools; the 22 Anthem Education schools; and the 5 US Colleges schools, as well as "Anthem Online," its online course offerings. In order to preserve the OPEID number of the FCC Schools and allow for the assumption of the related DOE liabilities, the FCC Schools were transferred to IEC Corporation ("IEC") prior to the Petition Date in partial implementation of the Step 1 Transactions. The US Colleges are to be transferred to IEC as part of the Step 2 Transactions. In addition, and subject to DOE approval, certain of the Anthem Schools may be transferred to IEC as part of the Step 2 Transactions if DOE approval can be obtained on a timely basis (the "Step 2 Anthem Schools"). If the DOE does not timely approve the acquisition of the Step 2 Anthem Schools, then the Debtors anticipate those campuses will be shut down. Prior to the Petition Date, three of the Anthem Schools were sold to Premier Education Group, L.P. With respect to the remaining ten Anthem Schools that were not sold pre-petition and are not part of the Transaction, the Debtors have negotiated (or are in the process of negotiating) "Teach-Out" arrangements for the students at these campuses, to ensure that those students can continue their educations with as little disruption as possible. First Day Motions The Debtors on the Petition Date filed customary first-day motions to: -- jointly administer their Chapter 11 cases; -- maintain their existing bank accounts; -- prohibit utilities from discontinuing service; -- pay employee wages and benefits; -- pay sales and use taxes; -- maintain their existing insurance policies; and -- use cash collateral. The Debtors also filed motions to (i) lift the stay to allow the bank to exercise its remedies and allow the receiver to remain in place, (ii) reject certain unexpired leases; enter into certain teach-out agreements for certain campuses; and (iii) credit certain excess funds to students' accounts. The Debtors have filed an application to hire Kurtzman Carson Consultants, LLC, as claims and notice agent. About FCC Holdings FCC Holdings, Inc., and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-11987) in Delaware on Aug. 25, 2014. Headquartered in Ft. Lauderdale, Florida, FCC Holdings, Inc., and its affiliates provide quality postsecondary education in fourteen states. The FCC schools were started by David Knobel in 1994 in Fort Lauderdale, Florida, and, as of the bankruptcy filing, are owned by Greenhill Capital Partners. Prior to the Petition Date, the Company, which currently operates under the name "Anthem Education," had three sets of schools -- the 14 Florida Career College schools; the 22 Anthem Education schools; and the 5 US Colleges schools As of the Petition Date, the Debtors' outstanding secured obligations were $49,000,000, plus interest and fees, comprised of: Tranche A Loans of $18,578,846, Tranche B Loans of $29,056,430, and Existing Letters of Credit of $1,390,122. The Debtors also have unsecured debt of $15,000,000. Judge Christopher S. Sontchi is assigned to the Chapter 11 cases. The Debtors have tapped Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, as counsel, and KCC as claims and notice agent. FCC HOLDINGS: Seeks to Reject Leases for Vacated Premises --------------------------------------------------------- FCC Holdings, Inc., and its affiliated debtors filed a motion seeking approval of the rejection of certain unexpired leases of real property. The Debtors no longer operate at the premises subject to the leases, and therefore vacated the premises on or before the Petition Date. The Debtors seek to reject these leases, nunc pro tunc to the Petition Date: (1) Atlanta Carter Lindbergh Retail, LLC Att: Lockbox 936181 3585 Atlanta Ave Hapevilla, GA 30354 (2) Aurora c/o NBR Services Inc. 9200 W Cross Dr Littleton, CO 80123 P: (303) 830-2064 (3) Brookfield Decade Executive Office Buildings, LLC Decade Properties, Inc. 13555 Bishops Court, Suite 345 Brookfield, WI 53005 P: (262) 797-9215 (4) Cherry Hill ACKRIK Associates 187 Millburn Avenue Suite 6 Millburn, NJ 07041 (5) Fenton Gravois Bluffs East 8-A, LLC 9109 Watson Road Suite 400 St. Louis, MO 63126 (6) Irving Univera Partners, Inc. 14275 Midway Rd. #160 Addison, TX 75001 P: (972) 239-4144 (7) Kansas City Columbia 9001, LLC 7611 State Line Road Suite 301 Kansas City, MO 64114 P: (816) 444-0900 (8) Maryland Heights Riverport Project I, LP 13723 Riverport Dr. Suite 102 Maryland Heights, MO 63043-4819 P: (314) 770-1700 (9) Springfield Blank Aschkenasy 300 Conshohocken State Rd Suite 360 W Conshohocken, PA 19428 (10) St. Louis Park c/o Colliers International S. Fl. Property Mgmt Colliers International Mpls-St. Paul 95 Merrick Way, Suite 380 Coral Gables, FL 33134 P: (786) 5377385 About FCC Holdings FCC Holdings, Inc., and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-11987) in Delaware on Aug. 25, 2014. Headquartered in Ft. Lauderdale, Florida, FCC and its affiliates provide quality postsecondary education in fourteen states. The FCC schools were started by David Knobel in 1994 in Fort Lauderdale, Florida, and, as of the bankruptcy filing, are owned by Greenhill Capital Partners. Prior to the Petition Date, the Company, which currently operates under the name "Anthem Education," had three sets of schools -- the 14 Florida Career College schools; the 22 Anthem Education schools; and the 5 US Colleges schools. The Debtors' outstanding secured obligations are $49,000,000, plus interest and fees, comprised of: Tranche A Loans of $18.6 million, Tranche B Loans of $29.1 million, and existing letters of credit of $1.39 million. The Debtors also have unsecured debt of $15 million. Judge Christopher S. Sontchi is assigned to the Chapter 11 cases. The Debtors have tapped Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, as counsel, and KCC as claims and notice agent. FCC HOLDINGS: Seeks Approval to Use Cash Collateral --------------------------------------------------- FCC Holdings, Inc., et al.'s secured lenders have entered into a consent agreement regarding FCC's entry into an asset purchase agreement with IEC Corporation. Pursuant to the Consent Agreement, upon entry of an order granting Bank of Montreal, as administrative agent, for the benefit of the lenders, replacement liens on all post-petition assets of the Debtors and a superpriority administrative claim against the Debtors as adequate protection, the lenders have consented to the Debtors' use of cash collateral. Accordingly, the Debtors ask the bankruptcy court to enter an order (i) authorizing use of cash collateral on an interim basis effective as of the Petition Date; (ii) granting the Debtors authority to provide interim and final adequate protection; and (iii) scheduling a final hearing to consider entry of a final order authorizing the use of cash collateral. The Debtors say they do not have sufficient available sources of working capital and financing to effect the transaction contemplated in the asset purchase agreement or to preserve and maintain the value of the Debtors remaining without the use of the cash collateral. About FCC Holdings FCC Holdings, Inc., and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-11987) in Delaware on Aug. 25, 2014. Headquartered in Ft. Lauderdale, Florida, FCC and its affiliates provide quality postsecondary education in fourteen states. The FCC schools were started by David Knobel in 1994 in Fort Lauderdale, Florida, and, as of the bankruptcy filing, are owned by Greenhill Capital Partners. Prior to the Petition Date, the Company, which currently operates under the name "Anthem Education," had three sets of schools -- the 14 Florida Career College schools; the 22 Anthem Education schools; and the 5 US Colleges schools. The Debtors' outstanding secured obligations are $49,000,000, plus interest and fees, comprised of: Tranche A Loans of $18.6 million, Tranche B Loans of $29.1 million, and existing letters of credit of $1.39 million. The Debtors also have unsecured debt of $15 million. Judge Christopher S. Sontchi is assigned to the Chapter 11 cases. The Debtors have tapped Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, as counsel, and KCC as claims and notice agent. FCC HOLDINGS: Has Teach-Out Agreements for 1,100 Students --------------------------------------------------------- FCC Holdings, Inc., et al., ask the bankruptcy court to enter an order authorizing, but not directing, their entry into teach-out agreements relating to campuses that weren't sold prepetition. Institutions that decide to close an educational program, site, branch campus or the entire institution are required, typically by the applicable state regulatory agencies and the institution(s)' accrediting agencies, to submit a teach-out plan. A teach-out agreement is a written agreement between institutions that provides for the equitable treatment of students and a reasonable opportunity for students to complete their program of study if an institution, or an institutional location, ceases to operate before all enrolled students have completed their program of study. Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, explains that with respect to those campuses for which the Debtors have been unable to procure a purchaser, prior to the Petition Date the Debtors executed a number of teach-out agreements, and sought approval from the regulatory authorities and accreditors, to allow their students to continue their education with as little disruption as possible. As of the Petition Date, the Debtors had executed approximately 15 to 20 Teach-Out agreements -- covering approximately 1,100 students -- in order to provide their students with a convenient option for completing their education. The Asset Purchase Agreement executed by the Debtors with IEC Corporation contemplates the consummation of the Step 1 Transactions and the Step 2 Transactions. The Step 2 Transactions -- involving campuses where IEC does not need to acquire the existing OPEID numbers (both Anthem Education and the US Colleges) --- are intended to be fully implemented through the Chapter 11 Cases. The purchase of the Step 2 Anthem Schools is, however, subject to applicable educational approvals, including that of the DOE. The parties are continuing to seek DOE approval, however, as of the Petition Date, approval has not yet been obtained. If the Debtors do not receive a response from the DOE within the next week, however, then IEC's obligation under the Purchase Agreement to fund the operating expenses associated with the Step 2 Anthem Schools will end, and the Debtors will be forced to expeditiously execute Teach-Out Agreements with parties to provide for the continuation of the Debtors' students at those institutions and institutional locations. Throughout this process the Debtors, and their professionals, have remained in constant contact with the regulatory authorities and their accreditors. About FCC Holdings FCC Holdings, Inc., and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 14-11987) in Delaware on Aug. 25, 2014. Headquartered in Ft. Lauderdale, Florida, FCC and its affiliates provide quality postsecondary education in fourteen states. The FCC schools were started by David Knobel in 1994 in Fort Lauderdale, Florida, and, as of the bankruptcy filing, are owned by Greenhill Capital Partners. Prior to the Petition Date, the Company, which currently operates under the name "Anthem Education," had three sets of schools -- the 14 Florida Career College schools; the 22 Anthem Education schools; and the 5 US Colleges schools. The Debtors' outstanding secured obligations are $49,000,000, plus interest and fees, comprised of: Tranche A Loans of $18.6 million, Tranche B Loans of $29.1 million, and existing letters of credit of $1.39 million. The Debtors also have unsecured debt of $15 million. Judge Christopher S. Sontchi is assigned to the Chapter 11 cases. The Debtors have tapped Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, as counsel, and KCC as claims and notice agent. FIRST INVESTORS: Accused of Distortion in Subprime Inquiry ---------------------------------------------------------- Jessica Silver-Greenberg and Michael Corkery, writing for The New York Times' DealBook, reported that an auto lender in Texas, First Investors Financial Services Group, agreed to pay a $2.75 million penalty over accusations that it consistently gave giant credit reporting agencies like Experian and Equifax flawed reports about thousands of car buyers. The reports, the Consumer Financial Protection Bureau said, exaggerated the number of times that borrowers fell behind on their bills, a mistake that could jeopardize their ability to find housing or even get jobs, according to The DealBook. FIRST SECURITY: Committee Finds No Irregularities in Stock Awards ----------------------------------------------------------------- A special committee of the Board of Directors of First Security Group, Inc., had issued its report to the Board concluding that the Compensation Committee had no intention for the stock awards to constitute performance-based compensation and those awards were fully consistent with the terms of the shareholder-approved stock incentive plans for grants of non-performance based incentive compensation, according to a regulatory filing by the Company with the U.S. Securities and Exchange Commission. The Report reaches the same conclusions as previously reported as management's assessment in the June 10, 2014, Current Report on Form 8-K. The Special Committee determined that the Company should not pursue litigation or take any further actions to address the allegations. The Board of Directors of the Company formed the Special Committee to investigate allegations contained in a letter on behalf of purported shareholders of the Company alleging certain irregularities with respect to the issuance of stock awards to the Company's named executive officers, and demanding that the Board of Directors investigate claims, initiate legal action and take necessary and appropriate remedial measures. About First Security Group First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee, with $1.0 billion in assets. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A. has 26 full-service banking offices along the interstate corridors of eastern and middle Tennessee and northern Georgia. FSGBank -- http://www.FSGBank.com/-- provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, internet banking. First Security incurred a net loss of $13.44 million in 2013, a net loss of $37.57 million in 2012 and a net loss of $23.06 million in 2011. The Company's balance sheet at June 30, 2014, showed $1.01 billion in total assets, $926.11 million in total liabilities and $86.56 million in total shareholders' equity. FOREVERGREEN WORLDWIDE: Posts $455,000 Net Income in 2nd Quarter ---------------------------------------------------------------- Forevergreen Worldwide Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $454,856 on $14.12 million of net revenues for the three months ended June 30, 2014, compared to a net loss of $5,383 on $4 million of net revenues for the same period in 2013. For the six months ended June 30, 2014, the Company reported net income of $635,907 on $24.66 million of net revenues compared to a net loss of $216,839 on $6.70 million of net revenues for the same period last year. As of June 30, 2014, the Company had $5.37 million in total asets, $6.35 million in total liabilities and a $982,112 total stockholders' deficit. At June 30, 2014 the Company had cash and cash equivalents of $406,196, with a working capital deficit of $812,521. A full-text copy of the Form 10-Q is available for free at: http://is.gd/7lznfB About ForeverGreen Worldwide Orem, Utah-based ForeverGreen Worldwide Corporation is a holding company that operates through its wholly owned subsidiary, ForeverGreen International, LLC. The Company's product philosophy is to develop, manufacture and market the best of science and nature through innovative formulations as it produces and manufactures a wide array of whole foods, nutritional supplements, personal care products and essential oils. Forevergreen reported net income of $116,843 on $17.46 million of net product revenues for the year ended Dec. 31, 2013, as compared with a net loss of $790,199 on $12.49 million of net product revenues in 2012. Sadler, Gibb & Associates, LLC, in Salt Lake City, UT, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company had accumulated losses of $35,247,620 and a working capital deficit of $2,366,781 at Dec. 31, 2013, which raises substantial doubt about its ability to continue as a going concern. FREE LANCE-STAR: Court to Hold Hearing on Plan Outline Sept. 25 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia will convene a hearing Sept. 25 to consider approval of the disclosure statement outlining VA Newspaper Debtor Co.'s proposed liquidation plan. VA Newspaper, formerly known as Free Lance-Star Publishing Co. of Fredericksburg, Va., filed on August 6 a liquidation plan, which it co-proposed with the unsecured creditors' committee. The purpose of the plan is to implement a settlement and release agreement that VA Newspaper and the committee reached in July with DSP Acquisition, LLC, the buyer of substantially all of the company's assets, and the Pension Benefit Guaranty Corp. The Settlement resolves various claims and disputes among the parties, and provides for the disposition of sale proceeds and the remaining assets. The plan provides for the appointment of Florence Barnick as administrator, who will effectuate a wind-down of the company's affairs. It divides claims and interests in six classes and discusses how each class will be treated. The liquidation plan does not provide for the substantive consolidation of VA Newspaper and its affiliated debtor VA Real Estate Debtor LLC. After the effective date of the plan, the parties will be barred from seeking to substantively consolidate the companies. About The Free Lance-Star Publishing The Free Lance-Star Publishing Co. of Fredericksburg, Va., is a publishing, newspaper, radio and communications company based in Fredericksburg, Virginia and owned by the family of Josiah P. Rowe III. FLS's single, seven-day a week newspaper, The Free Lance- Star was first published in 1885 when a group of local Fredericksburg merchants and businessmen created the paper to serve the news and advertising needs of the community. FLS also owns radio stations WFLS-AM, FLS-FM, and WVBX. FLS owns the community and news portal http://www.fredericksburg.com/ FLS filed a Chapter 11 bankruptcy petition (Bankr. E.D. Va. Case No. 14-30315) in Richmond, Virginia, on Jan. 23, 2014. William Douglas Properties, L.L.C., a related entity that owns a portion of the land pursuant to which FLS operates certain aspects of its business, also sought bankruptcy protection. Judge Keith L. Phillips was initially assigned to the cases, but the cases were reassigned to Judge Kevin R. Huennekens on the Petition Date. The Debtors have tapped Lynn L. Tavenner, Esq., and Paula S. Beran, Esq., at Tavenner & Beran, PLC, as counsel; and Protiviti, Inc., as financial advisor. The U.S. Trustee for Region 4 appointed three members to the official committee of unsecured creditors. FREEDOM INDUSTRIES: Plan Has Gifts to Nonprofits ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that the proposed Chapter 11 plan of Freedom Industries Inc. offers nothing to people with claims for polluted water but provides that proceeds from a settlement with AIG Specialty Insurance Co. will go to nonprofit organizations benefiting the community harmed by the spill. The report related that assuming the claims don't come in higher, unsecured creditors will get a 9.8% recovery. About Freedom Industries Freedom Industries Inc., is engaged principally in the business of producing specialty chemicals for the mining, steel and cement industries. The Debtor operates two production facilities located in (a) Nitro, West Virginia; and (b) Charleston, West Virginia. The company, connected to a chemical spill that tainted the water supply in West Virginia, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. W.Va. Case No. 14-bk-20017) on Jan. 17, 2014. The case is assigned to Judge Ronald G. Pearson. The petition was signed by Gary Southern, president. The Debtor is represented by Mark E Freedlander, Esq., at McGuire Woods LLP, in Pittsburgh, Pennsylvania; and Stephen L. Thompson, Esq., at Barth & Thompson, in Charleston, West Virginia. On Dec. 31, 2013, four companies merged under the umbrella of Freedom Industries: Freedom Industries Inc., Etowah River Terminal LLC, Poca Blending LLC and Crete Technologies LLC. As reported in the Troubled Company Reporter on Feb. 20, 2014, Kate White, writing for The Charleston Gazette, reported that the Debtor disclosed $16 million in assets and $6 million in liabilities when it filed for bankruptcy. On Feb. 5, 2014, the U.S. Trustee appointed an official committee of unsecured creditors. The Committee retained Frost Brown Todd LLC as counsel. On March 18, the Bankruptcy Court approved the hiring of Mark Welch at MorrisAnderson in Chicago as Freedom's chief restructuring officer. GARLOCK SEALING: Creditors Oppose Asbestos Plan Proposal -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that the official committee representing creditors with asbestos claims against Garlock Sealing Technologies LLC will urge its constituents to vote against the company's reorganization plan, even though Garlock said it pays claimants in full, while the official representative of future asbestos claimants has no opposition to disclosure materials explaining the plan, although he hasn't taken a position as yet on the merits. The bankruptcy judge will hold a hearing on Oct. 7 and 8 for approval of the disclosure statement, which would allow creditors to vote on the plan, the report related. About Garlock Sealing Headquartered in Palmyra, New York, Garlock Sealing Technologies LLC is a unit of EnPro Industries, Inc. (NYSE: NPO). For more than a century, Garlock has been helping customers efficiently seal the toughest process fluids in the most demanding applications. On June 5, 2010, Garlock filed a voluntary Chapter 11 petition (Bankr. W.D.N.C. Case No. 10-31607) in Charlotte, North Carolina, to establish a trust to resolve all current and future asbestos claims against Garlock under Section 524(g) of the U.S. Bankruptcy Code. The Debtor estimated $500 million to $1 billion in assets and up to $500 million in debts as of the Petition Date. Affiliates The Anchor Packing Company and Garrison Litigation Management Group, Ltd., also filed for bankruptcy. Albert F. Durham, Esq., at Rayburn Cooper & Durham, P.A., represents the Debtor in their Chapter 11 effort. Garland S. Cassada, Esq., at Robinson Bradshaw & Hinson, serves as counsel for asbestos matters. The Official Committee of Asbestos Personal Injury Claimants in the Chapter 11 cases is represented by Travis W. Moon, Esq., at Hamilton Moon Stephens Steele & Martin, PLLC, in Charlotte, NC, Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, and Trevor W. Swett III, Esq., Leslie M. Kelleher, Esq., and Jeanna Rickards Koski, Esq., in Washington, D.C. 20005. Joseph W. Grier, III, the Court-appointed legal representative for future asbestos claimants, has retained A. Cotten Wright, Esq., at Grier Furr & Crisp, PA, and Richard H. Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick, Herrington & Sutcliffe LLP, as his co- counsel. Judge George Hodges of the United States Bankruptcy Court for the Western District of North Carolina on Jan. 10, 2014, entered an order estimating the liability for present and future mesothelioma claims against EnPro Industries' Garlock Sealing Technologies LLC subsidiary at $125 million, consistent with the positions GST put forth at trial. GENERAL EMPLOYMENT: Incurs $634K Net Loss for Q3 Ending June 30 --------------------------------------------------------------- General Employment Enterprises, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $634,000 on $9.92 million of total revenue for the three months ended June 30, 2014, compared with a net loss of $228,000 on $10.72 million of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $10.26 million in total assets, $8.62 million in total liabilities, and a stockholders' equity of $1.64 million. A copy of the Form 10-Q is available at: http://is.gd/JJ3efO General Employment Enterprises, Inc. was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. The Company's segments consist of the following: (a) professional placement services specializing in the placement of information technology, engineering, and accounting professionals for direct hire and contract staffing, (b) temporary staffing services in the agricultural industry and (c) temporary staffing services in light industrial staffing. GENERAL MOTORS: Ch. 11 Stay Doesn't Halt Remand Bid, Calif. Says ---------------------------------------------------------------- Law360 reported that attorneys for the state of California asked a New York bankruptcy judge not to halt proceedings in a suit alleging General Motors LLC concealed serious ignition switch safety defects to avoid having to issue recalls, to provide the state an opportunity to have the case sent back to state court. According to the report, the Orange County District Attorney's Office also asked for the no stay order to allow it to oppose making the suit a part of ongoing multidistrict litigation involving other ignition switch cases. About General Motors With its global headquarters in Detroit, Michigan, General Motors -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government provided financing. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. Old GM -- General Motors Corporation -- 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. The Debtors tapped Weil, Gotshal & Manges LLP Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel; and Morgan Stanley, Evercore Partners and the Blackstone Group LLP as financial advisor. 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 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: Fitch Affirms 'BB+' Issuer Default Rating --------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of General Motors Company (GM) and its General Motors Holdings LLC (GM Holdings) subsidiary at 'BB+'. In addition, Fitch has affirmed GM Holdings' secured revolving credit facility rating at 'BBB-' and GM's senior unsecured notes rating at 'BB+'. The Rating Outlook for GM and GM Holdings is Positive. Fitch has also affirmed the long-term IDRs and senior unsecured debt ratings of General Motors Financial Company, Inc. (GMF) and its affiliates at 'BB+' and the short-term IDRs of GMF and its affiliates at 'B'. The Rating Outlook for GMF and its affiliates is also Positive. KEY RATING DRIVERS -- GM GM's ratings continue to be supported by the auto manufacturer's low automotive leverage, very strong liquidity position, reduced pension obligations, strengthened product portfolio and the free cash flow (FCF) generating capability of its automotive operations. GM's ratings are further supported by the global diversity of its business, as it remains one of the largest auto manufacturers in most regions of the world, holding a strong presence in key developing markets, such as China and Latin America. The Positive Outlook reflects the trajectory of the underlying trends in GM's core business. Fitch expects the profitability of the company's key North American business to continue growing on a combination of pricing strength and further operational efficiency. Outside North America, GM's European operations remain on track to meet or exceed the company's mid-decade break- even target, while the company's Chinese joint ventures (JVs) continue to be an important source of cash despite heightened competition in that market. The funded status of the company's pension plans has improved materially over the past several years, especially in the U.S., and steps the company has taken to de-risk the plans are likely to significantly reduce volatility in the pension liability as interest rates change in the future. Fitch's primary concern is the potential for GM to experience significant cash costs resulting from the substantial number of recalls announced in the first half of 2014. Although the direct costs of the recall will be material, the greater concern is the large number of lawsuits and various investigations that have been initiated in the wake of the recalls, which could potentially have a significant adverse effect on the company's cash flow. Other concerns include GM's North American profitability, which continues to lag certain key competitors, as well as significant restructuring activities that the company has undertaken in various international regions. Recalls Although GM's core business is performing well, significant concerns have arisen over the past six months as the company has recalled over 29 million vehicles for a variety of safety-related issues. The bulk of the recalls have affected vehicles that are out of production, and there has been no discernible effect on sales of current GM vehicles. In the first half of 2014, GM recorded $2.5 billion in charges to cover the direct cost of the recalls. Fitch expects the recall charges to translate to cash costs, most of which will likely be seen in the second half of 2014 and into early 2015. However, significant uncertainty remains over the potential outcome of numerous lawsuits and federal and state investigations resulting from a decade-long delay in recalling 2.6 million vehicles with faulty ignition switches. The company has also set up a fund to compensate victims of accidents related to those switches. GM estimates the cost of the fund will be $400 million, although the company has noted that it could rise to as much as $600 million. However, there is no cap on the fund, and the actual cost will depend on the number and nature of the approved settlements. A number of lawsuits are currently awaiting a bankruptcy court decision as to whether they should be treated as prepetition or post-petition claims. Fitch sees the outcome of the bankruptcy judge's decision as potentially material to GM's credit profile, as a decision to treat all or a significant portion of the suits as prepetition claims will reduce GM's potential liability. On the other hand, a decision allowing the lawsuits to go forward as post-petition claims could expose GM to significant cash costs. Likewise, the investigations currently underway by the U.S. Department of Justice (DOJ) and a number of state attorneys general could lead to further cash settlement costs or fines. Fitch will consider any near-term developments related to the lawsuits and investigations in its ongoing evaluation of GM's ratings and will undertake rating actions as necessary. Although the potential follow-on costs of the recalls are a significant concern, Fitch has maintained its Positive Outlook on the company's ratings. Fitch believes that GM's substantial automotive liquidity position, which stood at nearly $39 billion at June 30, 2014 (including revolver availability), provides sufficient cushion to deal with several simultaneous adverse developments. Furthermore, any cash outlays are likely to take place over an extended period, perhaps two or more years, and Fitch forecasts that the company's core operations will be FCF positive over the intermediate term. Nonetheless, a significant number of adverse developments over a short timeframe could have a meaningful negative effect on GM's liquidity position. Restructuring Activities GM continues to focus on restructuring its operations in various regions of the world, which Fitch expects will result in improved margin performance outside the U.S. over the intermediate term. In Western Europe, the company's plan to close its Bochum, Germany, plant remains on track for completion by year-end 2014, and the exit of the Chevrolet brand from the region appears to be running somewhat ahead of plan. Also, on July 1, 2014, GM centralized control over all of its European operations under the newly-formed Opel Group, which will help to better align the company's strategic direction and improve efficiency in the region. Combined with a strengthening auto market, these initiatives have already contributed to an improved financial performance in Europe, and the company appears to be making progress to achieve, or exceed, its mid-decade breakeven target. In addition to its work in Western Europe, the company announced in late 2013 that it would cease manufacturing operations in Australia by year-end 2017, although it will continue to sell imported vehicles in the country. GM is also evaluating its South Korean operations, as the exit of Chevrolet from Western Europe has led to a decline in vehicle production in that country, although a portion of this decline may be offset by exports to other regions. GM plans to use cash generated in North America and from its Chinese JVs to fund its restructuring activities. Chinese Operations GM's Chinese operations, conducted through unconsolidated JVs, continue to perform well and remain important to GM's credit profile as a key source of cash for the company. Although GM had a slight market share loss in China in the first half of 2014, it nonetheless continues to hold a significant share of the Chinese market, at 14.4% in the first half of 2014. The upcoming introduction of another SUV to the market is likely to support GM's market share in the country. GM's equity in the earnings of its Chinese JVs totaled $1.1 billion in the first half of 2014, and Fitch estimates dividends from the Chinese JVs comprised the majority of the $1.3 billion in dividends received from JVs in the period. The Chinese government's recently launched antitrust investigations of a number of automakers and auto suppliers, including GM, is somewhat concerning, although Fitch does not expect an adverse outcome would have a material effect on GM's overall credit profile. Liquidity and FCF GM's automotive liquidity remains very strong. As of June 30, 2014, the company's automotive cash, cash equivalents and marketable securities totaled $28.4 billion. In addition, the company had $10.4 billion in availability on its two secured revolving credit facilities. Total automotive liquidity of $38.8 billion was up from $38.3 billion at year-end 2013 and $34.8 billion at June 30, 2013. GM's cash liquidity remains well above the $20 billion in total liquidity that Fitch views as necessary for meeting normal operational needs while providing a cushion in the event of an unexpected downturn. FCF (calculated by Fitch as automotive cash from operations less capital expenditures and dividends, both common and preferred) was $2.8 billion in the 12 months ended June 30, 2013. This included the initiation of a common dividend in the first quarter of 2014 that amounted to an approximately $1 billion use of cash in the first half of 2014. In the 12 months ended June 30, 2013, FCF was ($193) million. However, this included $2.3 billion used in conjunction with the transfer of most of the U.S. salaried pensions to a group annuity contract in the latter half of 2012. Even after adjusting for that, however, FCF, including the common dividend, was higher in the most recent period. Fitch expects GM's core underlying automotive business to be FCF positive over the next several years, although actual automotive FCF in 2014 could be modestly negative as a result of recall-related costs. In addition to cash outflows tied to recall activity, GM has several other significant cash outflows likely over the next six to 12 months. The company has previously noted that it intends to increase its equity stake in GMF by a further $700 million when the financial subsidiary closes on its purchase of Ally Financial's stake in a Chinese JV, which is likely to occur in late 2014 or early 2015. It also intends to repurchase the remaining Series A preferred stock outstanding, which it has the ability to do beginning Dec. 31, 2014. The liquidation amount for the Series A preferred stock is $3.9 billion. Fitch estimates that capital expenditures will be about $4 billion in the latter half of 2014, and total dividend spending (including common and preferred dividends) is likely to be about $1.2 billion in the second half of the year. Profitability and Leverage Although GM's profitability continues to strengthen, it remains lower than several of its primary competitors. In North America, GM's first-half 2014 EBIT-adjusted margin (based on the company's figures) would have been 8.6%, excluding $2.3 billion in recall charges, up from 7.3% in the first half of 2013 but still below several mass-market competitors, as well as the company's own 10% margin target. Fitch's calculated EBITDA margin for the full company's auto operations in the 12 months ended June 30, 2014, was 6.8%, including the recall charges, and the company's FCF margin was 1.8%. Although both figures represent an improvement from the year-earlier period, they continue to fall below several key global mass-market automakers. Fitch expects GM's profitability to increase as it focuses on improving its product portfolio and improved operational efficiency. A sustained increase in margins relative to its competitors would be a driver of a potential future upgrade. GM's automotive leverage remains low for the rating category. As of June 30, 2014, leverage (automotive debt/Fitch-calculated EBITDA) was only 0.7x, and funds from operations (FFO) adjusted leverage was 0.9x. GM ended the second quarter of 2014 with $7.5 billion in automotive debt, primarily comprised of senior unsecured notes, non-U.S. bank borrowings, non-U.S. private note placements and capital leases. Excluding the senior unsecured notes, the majority of GM's remaining consolidated automotive debt is non-recourse to the parent company. Along with its strong liquidity position, GM's low leverage is an important contributor to the company's financial flexibility. Pensions The funded status of GM's pension plans has improved significantly over the past several years. As of year-end 2013, GM's global pension plans (including unfunded plans outside the U.S.) were underfunded by $20 billion, with only $7.3 billion of that amount in the U.S. This was down from a global underfunded status of $28 billion, including $14 billion in the U.S., at year-end 2012. In percentage terms, the funded status of GM's U.S. plans was about 90% at year-end 2013, up from 83% at year-end 2012. Most of the year-over-year improvement was the result of an increase in the assumed interest rate used to discount the obligations. For the U.S. plans, the company used a discount rate of 4.46% in 2013 versus 3.59% in 2012, and for the non-U.S. plans, the discount rate increased to 4.1% from 3.7%. With the substantial improvement in the funded status of GM's pension plans, the company's contribution requirements have declined. In 2014, GM has no required contributions to its U.S. plans, although it expects to contribute $100 million to its non- qualified U.S. plans. Outside the U.S., where a substantial portion of the company's pension obligations are in unfunded plans, the company expects to contribute $749 million. GM continues to shift the allocation of its pension plan assets to reduce the plans' sensitivity to interest rate changes. It is unlikely that the company will have any required contributions to its U.S. plans over the next several years. Notching GM Holdings' secured revolving credit facility is rated 'BBB-', one notch above the subsidiary's IDR of 'BB+', to reflect the substantial collateral coverage backing the facility, which includes most of the company's tangible assets in the U.S. According to Fitch's notching criteria, 'BBB-' is the highest possible security rating for an issuer with an IDR of 'BB+'. KEY RATING DRIVERS -- GMF The rating affirmation of GMF and its affiliates reflect the direct linkage to GM's ratings. Fitch considers GMF to be a 'core' subsidiary of GM based on actual and potential support provided to GMF from GM, increasing percentage of GMF's earning assets related to GM, and strong financial and operational linkages between the companies. The ratings also reflect GMF's seasoned management team, improving funding profile, consistent operating performance, good asset quality, and adequate capitalization and liquidity. Growth in Earning Assets As a result of Ally Financial's international operations (IO) acquisition, earning assets have experienced a significant shift in terms of credit composition, with subprime loans declining to 32% of total earning assets as of June 30, 2014, from over 80%, at the end of 2012, which is viewed positively by Fitch. Earning assets ended at $36.9billion in the second quarter of 2014 (2Q'14), up 41% from $26.2 billion in 2Q'13, driven primarily by the addition of the IO assets and significant growth in leasing. Lease originations increased to $1.5 billion in 2Q'14, up 88% from $0.8 billion in 2Q'13, driven by competitive product offerings and increased dealer acceptance. End of period lease balance was $4.7 billion at June 30, 2014, up 74% from $2.7 billion at June 30, 2013. Fitch notes that leasing is a relatively riskier strategy as it further exposes the company to residual value risk. Fitch expects the company to conservatively assess residual values, particularly in the current market where used car values remain unusually high and are expected to moderate. Earning assets are expected to grow as GMF is expanding its dealer and commercial lending business and is in the initial stages of rolling out a prime lending platform. Fitch will monitor the company's growth and expansion into these products paying particular attention to underwriting standards, credit quality, profitability and leverage metrics. Operating Performance Normalizing Operating performance remains solid driven by growth in earning assets, but margins and return ratios are gradually declining reflecting the run-off of higher-yielding pre-acquisitions receivables and the general shift in the asset mix from higher- return, higher-risk subprime loans to lower-return, lower-risk prime and commercial loans. Net income increased to $320 million in 1H14, up 13% from $284 million in the first half of 2013 (1H'13), driven by higher operating lease income and contribution from the IO business, which was partially offset by higher provisioning expense due to credit normalization and higher interest expense from the IO business. Pre-tax margin was a solid 21.3% in 1H'14, but down compared to 31.5% in 1H'13, primarily due to inclusion of the lower-return IO business. Fitch expects GMF to remain solidly profitable through the remainder of 2014 and 2015; however, margins are expected to decline as prime quality receivables, which typically have lower APRs, are added to the portfolio, thus bringing down the average portfolio yield. Solid Asset Quality GMF's asset quality continues to be strong; however, asset quality metrics are expected to slightly weaken in 2H'14, driven by normalizing credit performance, weaker seasonal trends in the fiscal second half, and an overall shift in the portfolio vintage. This decline should be partially offset by the increase in prime quality receivables from the IO business, and the roll-out of prime lending in the U.S, which should help maintain the overall asset quality of the portfolio. On a consolidated basis, net charge-offs were 1.9% and 1.4% in 2013 and 2Q'14, respectively, compared to 2.5% and 1.4% in 2012 and 2Q'13, respectively, due to the inclusion of the IO portfolio, which is primarily prime quality and therefore carries fewer losses. On a consolidated basis, delinquencies were 5.8% and 5.1% in 2013 and 2Q'14, respectively, compared to 8.2% and 4.8% in 2012 and 2Q'13, respectively. Improved credit performance, particularly in the U.S., has been influenced by improved recovery rates on repossessions due to a robust used car values. Fitch expects recovery rates to normalize as used car values moderate from the current high levels, further supporting its view on normalizing credit trends. Improving Funding Profile GMF's funding profile has improved since GM's acquisition, with increasing access to unsecured debt markets. Still, the company relies heavily on secured debt, with approximately 77% of funding in the form of ABS debt and secured revolving (warehouse) facilities as of 2Q'14. Unsecured debt has increased to account for 23% of total funding in 2Q'14, from 14% in 2012 and 6% in 2011. Furthermore, in July 2014, GMF issued $1.5 billion in senior unsecured notes at attractive spreads. Fitch expects unsecured debt as a percentage of total debt will gradually increase going forward. Adequate Leverage and Liquidity Capitalization and leverage levels have been adequately maintained to reflect the growth and riskiness of earning assets. However, leverage has increased since the IO acquisition, which is comprised of relatively lower risk assets. Leverage, measured as debt to tangible equity, increased to 6.0x at June 30, 2014 from 5.8x at year-end 2013 (YE13), and 3.3x at YE12. Management calculated leverage (earning assets to tangible equity) was 6.9x at June 30, 2014 and was in line with its articulated target of 6.0x to 8.0x. Leverage is expected to slightly increase with the close of China JV acquisition and the continued roll-out of the prime lending platform. On a risk adjusted basis, leverage is in line with other Fitch-rated auto captives, whose underlying portfolios are of higher credit quality compared to GMF's. Further increase in leverage without a commensurate decline in riskiness of the earning assets will be viewed negatively by Fitch. GMF's liquidity position is adequate at $4.8 billion as of June 30, 2014, including $1.4 billion in unrestricted cash, $1.8 billion of borrowing capacity on unpledged assets, $1 billion of borrowing capacity on committed unsecured credit lines and $600 million borrowing capacity on its intercompany credit facility. Liquidity is further enhanced by GMF's $1 billion tax deferral agreement with GM and GM's decision to not take any dividends out of GMF to date. Unsecured debt maturities are manageable with $1 billion of senior notes coming due in 2016. RATING SENSITIVITIES -- GM Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- Increasing the North American EBIT margin to near 10% on a sustained basis. -- Improving the profitability of the company's European operations. -- Sustained positive FCF generation, excluding unusual items. -- Increased clarification that the follow-on costs of the recalls can be managed while keeping automotive cash liquidity at $20 billion or higher. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- A decline in cash liquidity below $20 billion for a prolonged period. -- Significant negative developments related to the recalls that result in a greater-than-expected cash outflow. -- A sustained period of negative fCF generation. -- A change in financial policy, particularly around maintaining high liquidity and low leverage. -- A need to provide extraordinary financial assistance to GMF in the case of a liquidity event at the finance subsidiary. RATING SENSITIVITIES -- GMF The Positive Rating Outlook on GMF is linked to that of its parent. GMF's ratings will move in tandem with its parent. Any change in Fitch's view on whether GMF remains core to its parent could change this rating linkage with its parent. A material increase in leverage without a corresponding decrease in the risk of the portfolio, an inability to access funding for an extended period of time, and/or significant deterioration in the credit quality of the underlying loan and lease portfolio, could become restraining factors on the parent's ratings. Fitch has affirmed the following ratings with a Positive outlook: GM -- Long-term IDR at 'BB+'; -- Senior unsecured rating at 'BB+'. GM Holdings -- Long-term IDR at 'BB+'; -- Secured revolving credit facility at 'BBB-'. GMF -- Long-term IDR at 'BB+'; -- Senior unsecured debt at 'BB+'; -- Short-term IDR at 'B'; GMAC Bank GmbH -- Long-term IDR at 'BB+'; -- Senior unsecured debt at 'BB+'; -- Short-term IDR at 'B'; -- Commercial paper at 'B'; GMAC (UK) Plc -- Long-term IDR at 'BB+'; -- Short-term IDR at 'B'; -- Short-term debt at 'B'. GENERAL MOTORS: Should Face Wrongful-Conviction Claims ------------------------------------------------------ Law360 reported that trustee Wilmington Trust Co. filed a brief with the New York bankruptcy court, saying General Motors LLC should face claims filed by a former employee over his wrongful conviction for rape. According to the report, Wilmington argued that, based the overturning of the employee's conviction did not occur until after the issuance of the 2009 sale order in the automaker's bankruptcy case, the order cannot be used as the basis to prevent him from brining claims against GM. The report said Roger Dean Gillispie sued General Motors and other defendants in 2013, claiming GM employees conspired with law enforcement officials in aiding his wrongful conviction by providing an image of Gillispie on a company identification card. The automaker, meanwhile, argued that the order selling its assets included a prohibition against asserting claims against New GM based on Old GM's conduct or successor liability, the report related. About General Motors With its global headquarters in Detroit, Michigan, General Motors -- http://www.gm.com/-- is one of the world's largest automakers, traces its roots back to 1908. General Motors Co. was formed to acquire the operations of General Motors Corp. through a sale under 11 U.S.C. Sec. 363 following Old GM's bankruptcy filing. The U.S. government provided financing. The deal was closed July 10, 2009, and Old GM changed its name to Motors Liquidation Co. Old GM -- General Motors Corporation -- 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. The Debtors tapped Weil, Gotshal & Manges LLP Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel; and Morgan Stanley, Evercore Partners and the Blackstone Group LLP as financial advisor. 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 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. GLENTEL INC: S&P Assigns 'BB-' Corp. Credit Rating -------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB-' long-term corporate credit rating and stable outlook to Burnaby, B.C.-based Glentel Inc., a retailer of wireless telecommunication products and services. On a pro forma basis, S&P expects the company to have about C$200 million of funded debt outstanding. At the same time, Standard & Poor's assigned its 'BB-' issue-level rating and '4' recovery rating to Glentel's proposed C$200 million senior unsecured notes due in 2019. The '4' recovery rating indicates S&P's expectation for average (30%-50%) recovery in default. "We understand that proceeds from the notes will be used to refinance existing bank debt, fund working capital, and for general corporate purposes," said Standard & Poor's credit analyst Madhav Hari. "The ratings are contingent on our reviewing final documentation and completion of the transaction as described to us," Mr. Hari added. The ratings on Glentel are based on S&P's "weak" business risk and "significant" financial risk profile assessments for the company, the combination of which drives an anchor rating of 'bb-'. Standard & Poor's analytical modifiers have a neutral overall effect on its 'BB-' long-term corporate rating on the company. As a retailer of wireless communications services and solutions, Glentel offers a choice of network carrier and mobile products and services. The company is the largest independent multicarrier mobile phone retailer in Canada and sells mobile offerings of Rogers Wireless and Bell Mobility -- the No. 1 and No. 3 wireless service providers in Canada, respectively. In Canada, the company also offers wireless systems and hardware, rental equipment, and system implementation services to businesses. In the U.S., Glentel operates Diamond Wireless and Wireless Zone, which are two of the six national premium retailers for Verizon Wireless -- the largest wireless provider in the country. The company also has retail operations in Australia, where it sells services for Vodafone Group PLC and certain mobile virtual network operators. The stable outlook reflects anticipated revenue growth in Canada and the U.S. from customer upgrade activity as well as new subscriptions that should allow Glentel to modestly improve its profitability and operating cash flow. Under these parameters, S&P expects the company to improve its adjusted debt-to-EBITDA ratio to the low-3x area in the next couple of years. S&P could consider a downgrade should Glentel's adjusted debt-to-EBITDA ratio weaken to 4x or higher, which could result from weaker volumes in the Canadian and U.S. operations, large debt-funded acquisitions, or the pursuit of aggressive shareholder distributions. Although less likely in the near term, consideration for an upgrade would depend on the company deleveraging to below 3x on a sustained basis, which would require stronger volume performance and cost control driving EBITDA margins to the 10% area. GLOBAL GEOPHYSICAL: Reaches Consulting Deal with COO Verghese ------------------------------------------------------------- Global Geophysical Services Inc., et al, seeks Bankruptcy Court permission to enter into a consulting agreement with P. Mathew Verghese. Mr. Verghese currently serves as chief operating officer of the Debtors. To retain certain benefits of his institutional knowledge and to otherwise smooth the transition that his departure entails, the Debtors have negotiated a consulting agreement with Mr. Verghese. He will no longer be considered an employee of the Debtors effective September 1, 2014. Mr. Verghese has agreed to provide consultation services to the Debtors on an as-needed basis regarding ongoing operations, financial matters, financial reporting issues and other services as the Debtors may request. Primarily, Mr. Verghese will assist: (1) the Debtors in cooperating with pending SEC and FINRA investigations; and (2) with existing litigation to which the Debtors are parties or other litigation and matters relating to the Debtors' bankruptcy cases. For these services, the Debtors propose to pay Mr. Verghese a monthly consulting fee of $10,000, in arrears, in an aggregate amount not to exceed $180,000. In addition, for shorter period of (i) six months or (ii) until Mr. Verghese secures employment with an employer that offers medical benefits, the Debtors will pay Mr. Verghese $1,500 per month in arrears to assist with obtaining replacement medical coverage. Moreover, no additional payments would be made to Mr. Verghese under his Employment Agreement with the Debtors, but he would be eligible to receive a payment for accrued but unused vacation time in accordance with the existing policy of the Company and other standard employee-vested benefits. With the exception of vacation time and the vested benefits, Mr. Verghese will be releasing the Debtors and their respective directors and officers, employees and agents, insurers, investors, lenders and their affiliates, and any employee benefit plans and the fiduciaries and agents of those plans, for all claims, including claims for severance under the Verghese Employment Agreement. The Debtors relate that they discussed the terms of Consulting Agreement at length with their DIP Financing Lenders and the Official Committee of Unsecured Creditors prior to filing the Consulting Agreement Motion. About Global Geophysical, Autoseis et al. Global Geophysical Services Inc., a provider of seismic data for the oil and gas drilling industry, sought bankruptcy protection, intending to reorganize on its own with additional capital or explore a sale or other transaction. Based in Missouri City, Texas, Global Geophysical disclosed assets of $468.7 million and liabilities totaling $407.3 million as of Sept. 30, 2013. Liabilities include $81.8 million on a secured term loan owing to TPG Specialty Lending Inc. and Tennenbaum Capital Partners LLC. TPG is the lenders' agent. Global also owes $250 million on two issues of 10.5 percent senior unsecured notes, with Bank of New York Mellon Trust Co. as indenture trustee. Global Geophysical and five affiliates, including Autoseis, Inc. (lead debtor), filed Chapter 11 petitions in Corpus Christi, Texas (Bankr. S.D. Tex. Lead Case No. 14-20130) on March 25, 2014. The Debtors are represented by C. Luckey McDowell, Esq., Omar Alaniz, Esq., and Ian E. Roberts, Esq., at Baker Botts, LLP, in Dallas, Texas; and Shelby A. Jordan, Esq., and Nathanial Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth, & Holzer, PC in Corpus Christi, Texas. Alvarez & Marsal serves as the Debtors' restructuring advisors, Fox Rothschild Inc. as financial advisor, and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 7, has selected seven creditors to the Official Committee of Unsecured Creditors. The Committee tapped Greenberg Traurig, LLP as counsel; and Lazard Freres & Co. LLC and Lazard Middle Market LLC, as financial advisors and investment bankers. The Ad Hoc Group of Noteholders and the DIP Lenders are represented by Marty L. Brimmage, Jr., Esq., Charles R. Gibbs, Esq., Michael S. Haynes, Esq., and Lacy M. Lawrence, Esq., at Akin Gump Strauss Hauer & Feld LLP. Prepetition secured lender TPG is represented by David M. Bennett, Esq., Tye C. Hancock, Esq., and Joseph E. Bain, Esq., at Thompson & Knight LLP; and Adam C. Harris, Esq., Lawrence V. Gelber, Esq., David M. Hillman, Esq., and Brian C. Tong, Esq., at Schulte Roth & Zabel LLP. GLOBAL GEOPHYSICAL: Taps Ernst & Young as Tax Services Provider --------------------------------------------------------------- Global Geophysical Services Inc., et al., filed a motion with the U.S. Bankruptcy Court for the Southern District of Texas seeking to employ Ernst & Young LLP as their Tax Services Provider. Among other things, the firm is expected to provide these services: * Prepare various calculations, including book-tax differences as requested by the Debtors for use in preparation of their U.S. GAAP tax provision, book-income tax accruals and related SEC footnote and MD&A disclosures; * Assist in documenting international, federal, state and/or local benefit/exposure that may be subject to tax authority challenge; and * Prepare tax provision working papers for review by the Debtors. EY will provide the ASC 740 Tax Assistance and Routine On-Call Tax Advisory Services at its standard hourly rates. For the 2013 U.S. Tax Compliance work, EY will charge the Debtors a flat rate of $90,000, payable in two $45,000 installments. EY will also seek reimbursement of all reasonable, necessary and documented out-of- pocket expenses. The firm's standard rates are: Position Rate -------- ----- Partner $650 Senior Manager $585 Manager $435 Senior $320 Staff $170 EY assures the Court that it is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. About Global Geophysical, Autoseis et al. Global Geophysical Services Inc., a provider of seismic data for the oil and gas drilling industry, sought bankruptcy protection, intending to reorganize on its own with additional capital or explore a sale or other transaction. Based in Missouri City, Texas, Global Geophysical disclosed assets of $468.7 million and liabilities totaling $407.3 million as of Sept. 30, 2013. Liabilities include $81.8 million on a secured term loan owing to TPG Specialty Lending Inc. and Tennenbaum Capital Partners LLC. TPG is the lenders' agent. Global also owes $250 million on two issues of 10.5 percent senior unsecured notes, with Bank of New York Mellon Trust Co. as indenture trustee. Global Geophysical and five affiliates, including Autoseis, Inc. (lead debtor), filed Chapter 11 petitions in Corpus Christi, Texas (Bankr. S.D. Tex. Lead Case No. 14-20130) on March 25, 2014. The Debtors are represented by C. Luckey McDowell, Esq., Omar Alaniz, Esq., and Ian E. Roberts, Esq., at Baker Botts, LLP, in Dallas, Texas; and Shelby A. Jordan, Esq., and Nathanial Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth, & Holzer, PC in Corpus Christi, Texas. Alvarez & Marsal serves as the Debtors' restructuring advisors, Fox Rothschild Inc. as financial advisor, and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 7, has selected seven creditors to the Official Committee of Unsecured Creditors. The Committee tapped Greenberg Traurig, LLP as counsel; and Lazard Freres & Co. LLC and Lazard Middle Market LLC, as financial advisors and investment bankers. The Ad Hoc Group of Noteholders and the DIP Lenders are represented by Marty L. Brimmage, Jr., Esq., Charles R. Gibbs, Esq., Michael S. Haynes, Esq., and Lacy M. Lawrence, Esq., at Akin Gump Strauss Hauer & Feld LLP. Prepetition secured lender TPG is represented by David M. Bennett, Esq., Tye C. Hancock, Esq., and Joseph E. Bain, Esq., at Thompson & Knight LLP; and Adam C. Harris, Esq., Lawrence V. Gelber, Esq., David M. Hillman, Esq., and Brian C. Tong, Esq., at Schulte Roth & Zabel LLP. GLYECO INC: Incurs $1.1 Million Net Loss in Second Quarter ---------------------------------------------------------- Glyeco, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.11 million on $1.60 million of net sales for the three months ended June 30, 2014, compared to a net loss of $199,435 on $1.41 million of net sales for the same perid last year. Net loss for the six months ended June 30, 2014, was $2.30 million on $3.26 million of net sales compared to a net loss of $678,363 on $2.65 million of net sales for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $15.56 million in total assets, $2.92 million in total liabilities and $12.64 million in total stockholders' equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/WYoYOx About GlyEco, Inc. Phoenix, Ariz.-based GlyEco, Inc., is a green chemistry company formed to roll-out its proprietary and patent pending glycol recycling technology that transforms waste glycols, a hazardous material, into profitable green products. GlyeCo reported a net loss of $4.01 million in 2013, a net loss of $1.86 million in 2012.and a net loss of $592,171 in 2011. Semple, Marchal & Cooper, LLP, in Phoenix, Arizona, 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 yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable profitable operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. GREENESTONE HEALTHCARE: Reports $102K Income in Q2 of 2014 ---------------------------------------------------------- Greenestone Healthcare Corporation filed its quarterly report on Form 10-Q, noting that as of June 30, 2014, it has a working capital deficiency of $3,478,218 and accumulated deficit of $12,367,062. The Company said it will be dependent upon the raising of additional capital through placement of common shares, and, or debt financing in order to implement its business plan. The Company reported net income of $102,461 on $1.64 million of total revenue for the three months ended June 30, 2014, compared with a net loss of $241,438 on $1.53 million of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $1.18 million in total assets, $4.06 million in total liabilities, and a stockholders' deficit of $2.88 million. A copy of the Form 10-Q is available at: http://is.gd/tvLF9y Greenestone Healthcare Corporation -- http://www.greenestone.net/ -- operates medical and healthcare clinics in Ontario, Canada. GreeneStone's clinics serve to add overflow capacity to an increasingly stretched provincial healthcare system, and provide private alternatives to publicly available healthcare services. Its four medical clinics (three in Toronto, along with a facility in Muskoka, Ontario) offer various medical services, including addiction treatment, endoscopy, minor cosmetic procedures, and executive health care services. GREAT CHINA INTERNATIONAL: Has $404K Net Loss for 2nd Quarter ------------------------------------------------------------- China International Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $404,000 on $1.88 million of total revenue for the three months ended June 30, 2014, compared with net income of $42,700 on $2.3 million of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $57.6 million in total assets, $35.0 million in total liabilities, and a stockholders' equity of $22.7 million. The Company has a working capital deficit of $26.5 million and $28.1 million as of June 30, 2014 and Dec. 31, 2013, respectively. In addition, the Company has incurred net loss in the period ended June 30, 2014 and Dec. 31, 2013 of $754,000 and $1.81 million, respectively. As the Company has limited cash flow from operations, its ability to maintain normal operations is dependent upon obtaining adequate cash to finance its overhead, sales and marketing activities. Additionally, in order for the Company to meet its financial obligations, including salaries, debt service and operations, it has maintained substantial short term bank loans that have historically been renewed each year. These factors raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available at: http://is.gd/jVQJQG About Great China International Shenyang, P.R.C.-based Great China International Holdings, Inc., was incorporated in the State of Nevada on Dec. 4, 1987, under the name of Quantus Capital, Inc. The Company, through its various indirect subsidiaries, has been engaged for more than 20 years in commercial and residential real estate investment, development, sales and/or management in the city of Shenyang, Liaoning Province, in the People's Republic of China. GUIDED THERAPEUTICS: Incurs $2.2-Mil. Net Loss in Second Quarter ---------------------------------------------------------------- Guided Therapeutics, Inc., announced its operating results for the second quarter and six months ended June 30, 2014. The net loss attributable to common stockholders for the second quarter of 2014 was approximately $2.2 million, or $0.03 per share, compared to approximately $2.9 million, or $0.04 per share, in the second quarter of 2013. For the six month period ended June 30, 2014, the net loss attributable to common stockholders was approximately $3.8 million, or $0.05 per share, compared to $4.7 million, or $0.07 per share, in the year ago period. Cash on hand at June 30, 2014 was approximately $485,000, as compared to approximately $613,000 at Dec. 31, 2013. "LuViva revenues continue to build, with an increase of 65% sequentially from the first quarter, on the shipment of units and disposables to Nigeria, Turkey, Mexico and the U.K.," said Gene Cartwright, chief executive officer of Guided Therapeutics. "This keeps us on track to generate product sales in the low- to mid- range of our projections of $1 million to $3 million for 2014. To support the anticipated demand we see for LuViva looking out into 2015, over the remainder of the year we intend to hire additional assembly staff in anticipation of doubling our production capacity of LuViva units." Revenue and other income for the second quarter ended June 30, 2014, was approximately $212,000, including approximately $201,000 in sales of LuViva(R) devices and disposables and $11,000 from contract and grant income. Revenue for the quarter ended June 30, 2013, was comprised of product sales of approximately $116,000 and contract and grant income of approximately $222,000. Revenue for the six month period ending June 30, 2014, was approximately $353,000, including approximately $323,000 in sales of LuViva devices and disposables and $30,000 from contract and grant income. A full-text copy of the press release is available at: http://is.gd/t77Pvh About Guided Therapeutics Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP) -- http://www.guidedinc.com/-- is developing a rapid and painless test for the early detection of disease that leads to cervical cancer. The technology is designed to provide an objective result at the point of care, thereby improving the management of cervical disease. Unlike Pap and HPV tests, the device does not require a painful tissue sample and results are known immediately. GT has also entered into a partnership with Konica Minolta Opto to develop a non-invasive test for Barrett's Esophagus using the LightTouch technology platform. Guided Therapeutics reported a net loss attributable to common stockholders of $10.39 million on $820,000 of contract and grant revenue for the year ended Dec. 31, 2013, as compared with a net loss of $4.35 million on $3.33 million of contract and grant revenue during the prior year. UHY LLP, in Sterling Heights, Michigan, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company's recurring losses from operations and accumulated deficit raise substantial doubt about its ability to continue as a going concern. Bankruptcy Warning "The Company's capital-raising efforts are ongoing. If sufficient capital cannot be raised by the end of 2014, the Company has plans to curtail operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support and additional NCI, NHI or other grant funding. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In such a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate and/or file for bankruptcy protection," the Company stated in the Form 10-Q for the quarter ended March 31, 2014. HEALTHWAREHOUSE.COM INC: Delays Form 10-Q for Second Quarter ------------------------------------------------------------ HealthWarehouse.com, Inc., filed with the U.S. Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its quarterly report on Form 10-Q for the period ended June 30, 2014. The Company has encountered a delay in assembling the information, in particular its financial statements for the quarter ended June 30, 2014, required to be included in its 2014 Form 10-Q Quarterly Report, and was unable to file its Form 10-Q without unreasonable effort or expense. The Company expects to file its 2014 Form 10-Q Quarterly Report with the SEC within five calendar days of the prescribed due date. About HealthWarehouse.com HealthWarehouse.com, Inc., headquartered in Florence, Kentucky, is a U.S. licensed virtual retail pharmacy ("VRP") and healthcare e-commerce company that sells brand name and generic prescription drugs as well as over-the-counter ("OTC") medical products. Marcum LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing significant losses and the need to raise additional funds to meet the Company's obligations and sustain its operations. The Company reported a net loss of $5.57 million on $11.08 million of net sales for the year ended Dec. 31, 2012, as compared with a net loss of $5.71 million on $10.36 million of net sales during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $1.52 million in total assets, $5.97 million in total liabilities and a $4.45 million total stockholders' deficiency. Bankruptcy Warning "The Company recognizes it will need to raise additional capital in order to fund operations, meet its payment obligations and execute its business plan. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, attempt to extend note repayments, attempt to negotiate the preferred stock redemption and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. If the Company is unable to obtain financing on a timely basis, the Company could be forced to sell its assets, discontinue its operation and /or seek reorganization under the U.S. bankruptcy code," the Company said in its quarterly report for the period ended Sept. 30, 2013. HEALTHWAREHOUSE.COM INC: Obtains $1.3-Mil. From Stock Offering -------------------------------------------------------------- HealthWarehouse.com sold 8,686,670 shares of common stock, par value $0.001 per share, in a private offering to an individual and institutional accredited investors at $0.15 per share. Warrants to purchase 4,343,332 shares of common stock at $0.30 per share were issued to the purchasers in the private offering. The warrants expire five years from the date of issuance. The Company realized $1,303,000 in gross proceeds from the offering, or $1,224,820 in net proceeds. The Company may issue up to $2,000,000 of common stock in the private offering. The shares of common stock and warrants issued in the private offering were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof and Rule 506 of Regulation D thereunder. About HealthWarehouse.com HealthWarehouse.com, Inc., headquartered in Florence, Kentucky, is a U.S. licensed virtual retail pharmacy ("VRP") and healthcare e-commerce company that sells brand name and generic prescription drugs as well as over-the-counter ("OTC") medical products. Marcum LLP, in New York, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012, citing significant losses and the need to raise additional funds to meet the Company's obligations and sustain its operations. The Company reported a net loss of $5.57 million on $11.08 million of net sales for the year ended Dec. 31, 2012, as compared with a net loss of $5.71 million on $10.36 million of net sales during the prior year. As of June 30, 2014, the Company had $1.02 million in total assets, $5.50 million in total liabilities and a $4.48 million total stockholders' deficit. HERITAGE CONSOLIDATED: 9th Cir. Rules on Drillers' Appeal --------------------------------------------------------- Endeavor Energy Resources, L.P. and Acme Energy Services, Inc., performed drilling work on Heritage Consolidated, L.L.C.'s well, but were never paid. The Drillers subsequently filed a mineral lien on the well, and then a claim in the Debtors' bankruptcy. The bankruptcy court dismissed the Drillers' constructive trust and equitable lien claims and granted summary judgment to the Debtors on the Drillers' mineral contractor's and subcontractor's lien claims. The district court affirmed. In an August 27 Opinion, the United States Court of Appeals, Fifth Circuit, affirmed the district court's dismissal of the Drillers' constructive trust and equitable lien claims. The Fifth Circuit reversed and remanded the district court's grant of summary judgment on the Drillers' mineral subcontractors' lien claims because the Drillers submitted sufficient evidence to survive summary judgment. The case is, ENDEAVOR ENERGY RESOURCES, L.P.; ACME ENERGY SERVICES, INCORPORATED, D/B/A RIG MOVERS EXPRESS, D/B/A BIG DOG DRILLING, Appellants, v. HERITAGE CONSOLIDATED, L.L.C.; HERITAGE STANDARD CORPORATION, Appellees, No. 13-10969 (5th Cir.). A copy of Appeals Court's deicison is available at http://is.gd/1TrQcC from Leagle.com. Circuit Judge Jennifer Walker Elrod penned the decision on behalf of a three-judge panel of the appellate court. About Heritage Consolidated Heritage Consolidated LLC is a privately held company whose core operations consist of exploration for, and acquisition, production, and sale of, crude oil and natural gas. Heritage Consolidated filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 10-36484) on Sept. 14, 2010, in Dallas, Texas. Its affiliate, Heritage Standard Corporation, also filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 10-36485). The Debtors each estimated assets and debts of $10 million to $50 million. The Debtors tapped Malouf & Nockels LLP's as special counsel; Munsch Hardt Kopf & Harr, P.C.; Rochelle McCullough, LLP; HSC, RM LLP as special bankruptcy counsel to HSC; and Bridge Associates, LLC, as financial advisor and designate Scott Pinsonnault as interim chief restructuring officer. The U.S. Trustee for Region 6 formed an Official Committee of Unsecured Creditors in the Chapter 11 cases. The Committee is represented by Chamberlain, Hrdlicka, White, Williams & Aughtry, as counsel. The Bankruptcy Court confirmed the Debtors' second amended joint plan of reorganization on Aug. 26, 2013. HIGH MAINTENANCE: Court to Hold Plan Confirmation Hearing Sept. 8 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas will hold a hearing on Sept. 8 to consider the confirmation of Chapter 11 plan proposed by High Maintenance Broadcasting LLC and GH Broadcasting Inc. The Debtors on Jan. 6 filed a plan of reorganization. Among other things, the restructuring plan provides for the substantive consolidation of the companies' estates for purposes of distributions under the plan, and all classes of claims will be paid as if the companies were a single enterprise. About High Maintenance Broadcasting and GH Broadcasting High Maintenance Broadcasting LLC owns and operates full power television station KUQI-TV (Channel 38), which is licensed in Corpus Christi, Texas, and is primarily affiliated with the Fox TV network. It also owns the FCC license to operate the station as well as domain name kuquitv.com. GH Broadcasting Inc. owns and operates two lower-power TV broadcast stations KXPX (Channel 14) and KTOV (Channel 21), which are licensed in Corpus Christi, as well as related equipment and FCC licenses for those stations. On June 17, 2013, an involuntary petition for relief (Bankr. S.D. Tex. Case No. 13-20270) was filed against High Maintenance by Robert Behar, Estrella Behar, Leibowitz Family, Pedro Dupouy, Latin Capital, Pan Atlantic Bank & Trust, Ltd., Sumit Enterprises, LLC, Jose Rodriguez, Leon Perez, Jays Four, LLC, Benjamin J. Jesselson, Jesselson Grandchildren, Joseph Kavana, Sawicki Family, Shpilberg Mgmt, Saby Behar Rev, Morris Bailey pursuant to section 303 of the Bankruptcy Code. An involuntary petition under Chapter 11 of the U.S. Bankruptcy Code was also filed against GH Broadcasting, Inc., on July 2, 2013. GH Broadcasting owns and operates television broadcast stations KXPX CA and KTOV LP, which are licensed in Corpus Christi, Texas. On July 24, 2013, the Debtors filed responses to the involuntary petition, in which they assented to the entry of an order for relief. The Court entered on July 25, 2013, consensual orders for relief in each of the Debtors' cases. On Aug. 1, 2013, the Court entered an order for the joint administration of the cases. The Debtors' counsel are Patrick J. Neligan Jr., Esq., and John D. Gaither, Esq., at Neligan Foley LLP. The noteholders include Robert Behar, Estrella Behar, Leibowitz Family Broadcasting, LLC, Lermont Trading, Ltd., and Jays Four, LLC. The noteholders are represented by Ronald A. Simank, Esq., at Schauer & Simank, P.C. IMH FINANCIAL: Juniper Capital Reports 19% Equity Stake ------------------------------------------------------- In a Schedule 13D filed with the U.S. Securities and Exchange Commission, Juniper Capital Partners, LLC, and its affiliates disclosed that as of July 24, 2014, they beneficially owned 3,604,852 shares of common stock of IMH Financial Corporation representing 19.12 percent of the shares outstanding. The amount consists of shares of the Company's Common Stock issuable upon conversion of 2,604,852 shares of Series B-1 Cumulative Convertible Preferred Stock held by Juniper NVM, LLC, and JCP Realty Partners, LLC, and shares of the Company's Common Stock issuable upon exercise of a warrant held by Juniper NVM, LLC. A copy of the regulatory filing is available for free at: http://is.gd/Np8ie6 About IMH Financial Scottsdale, Ariz.-based IMH Financial Corporation was formed from the conversion of IMH Secured Loan Fund, LLC, or the Fund, a Delaware limited liability company, on June 18, 2010. The conversion was effected following a consent solicitation process pursuant to which approval was obtained from a majority of the members of the Fund to effect the Conversion Transactions and involved (i) the conversion of the Fund from a Delaware limited liability company into a Delaware corporation named IMH Financial Corporation, and (ii) the acquisition by the Company of all of the outstanding shares of the manager of the Fund Investors Mortgage Holdings Inc., or the Manager, as well as all of the outstanding membership interests of a related entity, IMH Holdings LLC, or Holdings on June 18, 2010. IMH Financial reported a net loss of $26.20 million in 2013, a net loss of $32.19 million in 2012 and a net loss of $35.19 million in 2011. The Company's balance sheet at June 30, 2014, showed $224.85 million in total assets, $128.40 million in total liabilities and $96.45 million in total stockholders' equity. INERGETICS INC: Reports $1.24-Mil. Loss for Quarter Ended June 30 ----------------------------------------------------------------- Inergetics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.24 million on $523,615 of total revenue for the three months ended June 30, 2014, compared with a net loss of $932,697 on $66,667 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $3.01 million in total assets, $12.69 million in total liabilities, $9.09 million in preferred stock and a stockholders' deficit of $141,463. The Company has a working capital deficit, significant debt outstanding, incurred substantial net losses for the six months ended June 30, 2014 and 2013 and has accumulated a deficit of approximately $91 million at June 30, 2014. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. A copy of the Form 10-Q is available at: http://is.gd/AyZBvF About Inergetics Inc. Paramus, N.J.-based Inergetics, Inc., formerly Millennium Biotechnologies Group, Inc., is a holding company for its subsidiary Millennium Biotechnologies, Inc. Millennium is a research based bio-nutraceutical corporation involved in the field of nutritional science. Millennium's principal source of revenue is from sales of its nutraceutical supplements, Resurgex Select(R) and Resurgex Essential(TM) and Resurgex Essential Plus(TM) which serve as a nutritional support for immuno-compromised individuals undergoing medical treatment for chronic debilitating diseases. Millennium has developed Surgex for the sport nutritional market. The Company's efforts going forward will focus on sales of Surgex in powder, bar and ready to drink forms. INSITE VISION: Reports $37.1-Mil. Net Income for Q2 of 2014 ----------------------------------------------------------- InSite Vision Incorporated filed its quarterly report on Form 10- Q, reporting net income of $37.15 million on $6.35 million of total revenue for the three months ended June 30, 2014, compared with a net income of $12.12 million on $19.24 million of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $4.81 million in total assets, $7.04 million in total liabilities, and a stockholders' deficit of $2.22 million. A copy of the Form 10-Q is available at: http://is.gd/CSeTMN Based in Alameda, California, InSite Vision Incorporated (OTCBB: INSV) -- http://www.insitevision.com/-- is committed to advancing new and superior ophthalmologic products for unmet eye care needs. The company's product portfolio utilizes InSite Vision's proven DuraSite(R) bioadhesive polymer core technology, a platform that extends the duration of drug retention on the surface of the eye, thereby reducing frequency of treatment and improving the efficacy of topically delivered drugs. Burr Pilger Mayer, Inc., expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has recurring losses from operations, available cash and short-term investment balances and accumulated deficit. The Company's balance sheet at Dec. 31, 2013, showed $14.2 million in total assets, $49.3 million in total liabilities, and a stockholders' deficit of $35.1 million. INTERNATIONAL MANUFACTURING: Trustee Files Report on 341 Meeting ---------------------------------------------------------------- Beverly McFarland, the bankruptcy trustee of International Manufacturing Group Inc., announced that the meeting of creditors pursuant to Section 341 of the Bankruptcy Code concluded Aug. 22. The bankruptcy trustee appeared at the meeting with her lawyer, Jennifer Niemann of Felderstein Fitzgerald Willoughby & Pascuzzi LLP. IMG Chief Financial Officer Ursula Klein and her lawyer Marc Caraska of the Law Office of Marc A. Caraska attended the meeting on behalf of the company. Creditors Mike Hooper, Nancy Pedersen and Janine Jones also appeared at the meeting, according to a report filed by the bankruptcy trustee in U.S. Bankruptcy Court for the Eastern District of California. About International Manufacturing Deepal Wannakuwatte, the mastermind of a $150 million Ponzi scheme, put himself and his company, International Manufacturing Group Inc., into Chapter 11 after he pleaded guilty to one count of wire fraud and agreed to a 20-year prison sentence. The bankruptcy filing was part of his plea bargain with federal prosecutors. Mr. Wannakuwatte is the former owner of the Sacramento Capitols tennis team. International Manufacturing Group, Inc., filed a bare-bones Chapter 11 bankruptcy petition (Bankr. E.D. Cal. Case No. 14-25820) in Sacramento, on May 30, 2014. The case is assigned to Judge Robert S. Bardwil. The Debtor has tapped Marc A. Caraska, in Sacramento, as counsel. In June 2014, Beverly N. McFarland was appointed as Chapter 11 trustee for the Debtor. She has tapped Felderstein Fitzgerald Willoughby & Pascuzzi LLP as her bankruptcy counsel; Diamond McCarthy LLP as her special litigation counsel; Gabrielson & Company as accountant; and Karen Rushing as bookkeeper outside the ordinary course of business. According to the docket, governmental entities have until Nov. 26, 2014, to file claims. The U.S. Trustee for Region 7 appointed a three-member unsecured creditors panel comprising of Byron Younger, Janine Jones, and Steve Whitesides. IRONSTONE GROUP: Incurs $74,000 Net Loss in Second Quarter ---------------------------------------------------------- Ironstone Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $74,451 for the three months ended June 30, 2014, compared to a net loss of $52,385 for the same period in 2013. Net loss for the six months ended June 30, 2014, was $133,975 compared to a net loss of $93,040 for the same period last year. As of June 30, 2014, the Company had $2.57 million in total assets, $1.71 million in total liabilities and $852,667 in total stockholders' equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/xkJAeD About Ironstone Group San Francisco, Calif.-based Ironstone Group, Inc., and subsidiaries have no operations but are seeking appropriate business combination opportunities. Madsen & Associates CPA's, Inc., in Murray, Utah, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2012. The independent auditors noted that the Company does not have the necessary working capital for its planned activity, which raises substantial doubt about its ability to continue as a going concern. As reported by the TCR on Jan. 14, 2014, Madsen & Associates was dismissed by Ironstone. The Company engaged Burr Pilger Mayer, Inc., as its new independent registered public accounting firm. JOHN SKELTON: Dallas Court Affirms Foreclosure Judgement -------------------------------------------------------- District Judge Jane J. Boyle in Dallas, Texas, affirmed the order of the bankruptcy court granting summary judgment and entering final judgment on foreclosure against John and Dyann Skelton, and in favor of Urban Trust Bank and Cenlar FSB. The bankruptcy court overseeing Mr. Skelton's case determined that Urban Trust holds title to a promissory note signed by Mr. Skelton. Mr. Skelton, who admittedly defaulted on the Note, and his wife, Dyann, initiated these proceedings in an effort to prevent foreclosure of the secured property. The bankruptcy court rejected the Skeltons' contention that Urban Trust is not entitled to enforce the Note -- a decision the Skeltons challenged on appeal. The Note was originally signed by Mr. Skelton on May 4, 2007. The $1,043,500 interest-only period fixed Note was made payable to Greenpoint Mortgage Funding, Inc. and secured by a Deed of Trust, which both Skeltons signed, also on May 4, 2007. The Deed of Trust was, in turn, secured by real property located at 5020 Abbot Avenue, Highland Park, Texas. The case is, JOHN F. SKELTON, III, and DYANN SKELTON, Appellants, v. URBAN TRUST BANK, and CENLAR FSB, Appellees, Civil Action No. 3:13-CV-4226-B (N.D. Tex.). A copy of the District Court's August 25, 2014 Memorandum Opinion and Order is available at http://is.gd/SNkvnTfrom Leagle.com. The Skeltons are represented by Carl D Hughes, Jr, Esq., at Carl Hughes PC Law Firm; and Gregory Alan Whittmore, Esq., at the Law Office of Gregory A Whittmore. Urban Trust Bank and Cenlar FSB, are represented by: C Ed Harrell, Esq. Dominique Varner, Esq. J Mark Davis, Esq. Michael L Weems, Esq. HUGHES WATTERS & ASKANASE LLP 333 Clay Street, 29th Floor Houston, TX 77002 Tel: (713) 328-2803 Fax: (713) 759-6834 E-mail: eharrell@hwa.com dvarner@hwa.com mdavis@hwa.com mweems@hwa.com John Skelton filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-34350) on July 2, 2012. KID BRANDS: U.S. Trustee Objects to KEIP ---------------------------------------- BankruptcyData reported that the U.S. Trustee assigned to the Kid Brands objected to the Debtors' request for approval of a key employee incentive plan, saying the motion fails to disclose the identity, job title and job description of the individuals who will be paid aggregate bonuses of between $140,000 and $360,000. In addition, the Motion fails to disclose what the cost to the Debtors' estates would be on an employee by employee basis, the U.S. Trustee said, according to BData. About Kid Brands Based in Rutherford, New Jersey, Kid Brands, Inc., is a designer, importer, marketer, and distributor of infant and juvenile consumer products. Its operating subsidiaries consist of Kids Line, LLC, CoCaLo, Inc., Sassy, Inc., and LaJobi, Inc. Providing "everything but the baby" for a child's nursery, the company sells infant bedding and accessories under the Kids Line and CoCaLo brands; nursery furniture under the LaJobi brand; and baby care items under the Kokopax and Sassy brands. Citing their inability to raise capital due to contingent liabilities and operational issues, Kid Brands and six of its U.S. subsidiaries each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 14-22582) on June 18, 2014. To preserve the value of their assets, the Debtors are pursuing a sale of the assets pursuant to section 363 of the Bankruptcy Code. As of April 30, 2014, the Debtors had $32.40 million in total assets and $109.1 million in total liabilities. As of the Petition Date, unsecured debts totaled $54 million. Judge Donald H. Steckroth oversees the cases. The Debtors have sought and obtained an order directing joint administration of their Chapter 11 cases. Lowenstein Sandler LLP serves as the Debtors' counsel. PricewaterhouseCoopers LLP is the Debtors' financial advisor. GRL Capital Advisors acts as the Debtors' restructuring advisors. GRL's Glenn Langberg served as the Debtors' chief restructuring officer. Mr. Langberg also oversaw the bankruptcy and sales of Big M Inc., operator of the Mandee and Annie Sez stores. Rust Consulting/Omni Bankruptcy is the Debtors' claims and noticing agent. Salus Capital Partners LLC and Sterling National Bank have committed to provide up to $49 million in DIP financing to the Debtors. KVN CORP: San Francisco Panel Sees No Bar to Some Carevout Sales ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that the U.S. Bankruptcy Appellate Panel in San Francisco has issued a decision saying that there's no rule prohibiting a Chapter 7 trustee from selling fully encumbered property in return for a carve out of sale proceeds. According to the report, U.S. Bankruptcy Judge Meredith Jury, writing for the three-judge appellate panel, said there's no prohibition against carve-out sales, although there is a presumption of impropriety in view of past abuses. The case is In re KVN Corp., 13-1318, U.S. Ninth Circuit Bankruptcy Appellate Panel (San Francisco). LAGRANGE, KY: Moody's Confirms Ba2 Gen. Obligation Bonds Rating --------------------------------------------------------------- Moody's Investors Service has confirmed the Ba2 rating on City of LaGrange's (KY) general obligation bonds, affecting $3.4 million in parity debt. Debt service on the bonds is secured by an annual ad valorem tax, levied against all taxable property in the city without legal limitation as to rate or amount. Moody's have also removed the rating from review. The rating was placed under review with direction uncertain on June 27, 2014 due to the lack of sufficient fiscal 2013 financial information, which Moody's have since been received. Summary Rating Rationale The conclusion of the review and confirmation of the Ba2 rating reflects the receipt of unaudited fiscal 2013 financials, which indicate improving reserves. The rating also reflects the city's modest tax base, average socioeconomic profile, and an elevated debt burden. Strengths -- Improved debt profile with bullet maturity refinancing -- Rapid principal amortization Challenges -- Elevated debt burden -- Increasing debt service cost -- History of late audits What Could Make The Rating Go UP -- Trend of surplus operations resulting in stronger reserves -- Substantial tax base growth What Could Make The Rating Go DOWN -- Inability to manage increasing debt service cost -- Trend of operating deficits leading and declining reserves -- Significant erosion of tax base LATTICE INC: Incurs $302,000 Net Loss in Second Quarter ------------------------------------------------------- Lattice Incorporated filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q reporting a net loss of $302,293 on $2.25 million of revenue for the three months ended June 30, 2014, compared to net income of $51,160 on $1.91 million of revenue for the same period last year. Net loss for the six months ended June 30, 2014, was $779,085 on $4.58 million of revenue compared to a net loss of $65,667 on $4.09 million of revenue for the same period in 2013. As of June 30, 2014, the Company had $5.94 million in total assets, $7.90 million in total liabilities and a $1.96 million total shareholders' deficit. "At June 30, 2014, our working capital deficiency was approximately $2,372,000 which improved from a working capital deficiency of approximately $4,490,000 at December 31, 2013. Cash from operations and available capacity on current credit facilities are insufficient to cover liabilities currently due and the liabilities which will mature over the next twelve months. Additionally, we are past due on promissory notes with investors and payables with trade creditors. We have several payment arrangements in place but face continuing pressures with negotiating payment arrangements with trade creditors regarding overdue payables. These conditions raise substantial doubt regarding our ability to continue as a going concern," the Company stated in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/AU0qU9 About Lattice Inc. Pennsauken, New Jersey-based Lattice Incorporated provides telecommunications services to correctional facilities and specialized telecommunication service providers in the United States. Lattice Incorporated reported a net loss of $1 million on $8.26 million of revenue for the year ended Dec. 31, 2013, as compared with a net loss of $570,772 on $7.53 million of revenue during the prior year. Rosenberg Rich Baker Berman & Company, in Somerset, New Jersey, in Somerset, New Jersey, 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 a history of operating losses, has a working capital deficit and requires additional working capital to meet its current liabilities. These factors raise substantial doubt about the Company's ability to continue as a going concern. LEHMAN BROTHERS: Eyes Sale of Unsecured Claim v. Brokerage ---------------------------------------------------------- Tom Corrigan and Patrick Fitzgerald, writing for The Wall Street Journal, reported that Lehman Brothers Holdings Inc. said that it may seek to sell off some of its $6.9 billion unsecured claim against its U.S. brokerage arm. According to the report, citing a statement, the Lehman parent company and its units said it "intends to explore monetization opportunities" related to the unsecured claims, but the company said there was no guarantee it would follow through with the sale. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LIME ENERGY: Incurs $660,000 Net Loss in Second Quarter ------------------------------------------------------- Lime Energy Co. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q reporting a net loss available to common stockholders of $660,000 on $13.59 million of revenue for the three months ended June 30, 2014, compared to a net loss available to common stockholders of $2.04 million on $12.94 million of revenue for the same period last year. Net loss available to common stockholders for the six months ended June 30, 2014, was $3.29 million on $25.87 million of revenue compared to a net loss available to common stockholders of $8.74 million on $24.15 million of revenue for the same period in 2013. As of June 30, 2014, the Company had $26.83 million in total assets, $18.21 million in total liabilities and $8.61 million in total stockholders' equity. As of June 30, 2014, the Company had cash and cash equivalents of $1.0 million (including restricted cash of $500,000, compared to $7.4 million (including $500,000 of restricted cash) as of Dec. 31, 2013. "Lime Energy's ability to deliver cost effective energy efficient resources and improved customer satisfaction for its utility partners has been rewarded with substantial expansion of its existing programs as well as award of major new programs," stated Adam Procell, Lime Energy president & CEO. "In the second quarter, we delivered on our objectives of gross margin improvement and Selling, general and administrative ("SG&A") expense reduction. With these improvements in place, we are looking to pick up the pace to drive a profitable second half." A full-text copy of the Form 10-Q is available for free at: http://is.gd/MwJUCb About Lime Energy Headquartered in Huntersville, North Carolina, Lime Energy Co. -- http://www.lime-energy.com-- is engaged in planning and delivering clean energy solutions that assist its clients in their energy efficiency and renewable energy goals. The Company's solutions include energy efficient lighting upgrades, energy efficient mechanical and electrical retrofit and upgrade services, water conservation, building weatherization, on-site generation and renewable energy project development and implementation. The Company provides energy solutions across a range of facilities, from high-rise office buildings, distribution facilities, manufacturing plants, retail sites, multi-tenant residential buildings, mixed use complexes, hospitals, colleges and universities, government sites to small, single tenant facilities. Lime Energy reported a net loss available to common stockholders of $18.51 million in 2013, a net loss of $31.81 million in 2012 and a net loss of $18.93 million in 2011. MERRIMAN HOLDINGS: Incurs $220K Loss in Second Quarter ------------------------------------------------------ Merriman Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $220,655 on $4.62 million of total revenue for the three months ended June 30, 2014, compared with a net loss of $1.31 million on $2.33 million of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $7.04 million in total assets, $5.62 million in total liabilities, and a stockholders' equity of $1.42 million. A copy of the Form 10-Q is available at: http://is.gd/G391qp San Francisco, California-based Merriman Holdings, Inc., is a financial services holding company that provides capital markets services, corporate services, and investment banking through its wholly-owned operating subsidiary, Merriman Capital, Inc. MC is an investment bank and securities broker-dealer focused on fast growing companies and institutional investors. Marcum, LLP, expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has recurring losses, negative cash flows from operations, and an accumulated deficit as of Dec. 31, 2013, and 2012. METRORIVERSIDE LLC: PMC Prexy to Oversee Company Operations ----------------------------------------------------------- Pinnacle Management Corp. President Mark Nicholson has been appointed to oversee the operations of MetroRiverside LLC while the company is in bankruptcy protection. U.S. Bankruptcy Judge Dennis Montali appointed Mr. Nicholson upon request from the company. MetroRiverside says the PMC officer is "competent" to perform the company's duties and obligations since he is already familiar with its operations. PMC has a management agreement with Pinnacle GP, LLC, the general partner of Pinnacle Investment Partners LP. Pinnacle Investment is a managing member of MetroRiverside, according to court papers. About MetroRiverside, LLC MetroRiverside, LLC, filed a Chapter 11 bankruptcy petition (Bankr. N.D. Calif. Case No. 14-30901) on June 12, 2014. The petition was signed by Siavash Barmand as manager. The Debtor disclosed total assets of $18.79 million and total liabilities of $21.80 million. MacDonald Fernandez LLP serves as the Debtor's counsel. Judge Dennis Montali oversees the case. The Debtor operates a Hyatt Place hotel, franchised from Hyatt Place Franchising LLC. The Hotel is located at 3500 Market Street, Riverside, California. METRORIVERSIDE LLC: Amends List of 20 Largest Unsecured Creditors ----------------------------------------------------------------- MetroRiverside, LLC on August 18 filed with the U.S. Bankruptcy Court for the Northern District of California an amended list of creditors holding 20 largest unsecured claims. The list now contains: Creditors Nature of Claim Amount --------- --------------- -------- The Redevelopment Agency -- $20,660,000 of the City of Riverside Anthony Glaves Unsecured Loan $154,777 Russell Schwartz Unsecured Loan $105,466 City of Riverside Public Utilities $14,518 Utilities Central Parking System Vendor $14,290 Paul Cliff Legal Services $7,690 Lobb & Cliff LLP Sysco Riverside Inc. Vendor $6,684 Franchise Tax Board 2013 Tax Assessment $6,120 Bankruptcy Unit American Hotel Register Co. Vendor Admin Claim $4,140 AT&T Telephone Services $2,163 Bulk TV & Internet Vendor $2,090 Tri-State Security Vendor $2,077 Patrol Inc. Ecolab Vendor $1,888 Starbucks Vendor Admin Claim $1,653 Destination Imagination Vendor $1,030 Vistar Vendor $1,015 Riverside Marriott Vendor $909 Wasserstrom Company Vendor $891 Buy Efficient Vendor $809 Orange Cleaners Vendor $769 In the same filing, MetroRiverside also reported that it has $18.81 million in total assets and $21.85 million in total liabilities. The assets include real properties worth $17 million and personal properties worth more than $1.81 million. The filing also shows that MetroRiverside owes $20.66 million in secured debt and more than $1.19 million in unsecured debt. About MetroRiverside, LLC MetroRiverside, LLC, filed a Chapter 11 bankruptcy petition (Bankr. N.D. Calif. Case No. 14-30901) on June 12, 2014. The petition was signed by Siavash Barmand as manager. The Debtor disclosed total assets of $18.79 million and total liabilities of $21.80 million. MacDonald Fernandez LLP serves as the Debtor's counsel. Judge Dennis Montali oversees the case. The Debtor operates a Hyatt Place hotel, franchised from Hyatt Place Franchising LLC. The Hotel is located at 3500 Market Street, Riverside, California. METRORIVERSIDE LLC: Can Use Cash Collateral Until Dec. 31 --------------------------------------------------------- U.S. Bankruptcy Judge Dennis Montali approved an agreement between MetroRiverside, LLC and City of Riverside authorizing the further use of the company's cash collateral. Under the agreement, the company's authorization to use the cash collateral will automatically expire on December 31 or the effective date of any confirmed plan of reorganization. The parties can extend the expiration date by written agreement. A full-text copy of the agreement is available without charge at http://is.gd/s8hYlj An earlier order issued by Judge Montali allowed the company to use its cash collateral until Aug. 7 only. However, the court order that was entered on July 16 permitted MetroRiverside to use its cash collateral to pay asset management and receiver fees. Prior to that, the company was prohibited by Judge Montali's July 8 decision from using the collateral to pay those fees. About MetroRiverside, LLC MetroRiverside, LLC, filed a Chapter 11 bankruptcy petition (Bankr. N.D. Calif. Case No. 14-30901) on June 12, 2014. The petition was signed by Siavash Barmand as manager. The Debtor disclosed total assets of $18.79 million and total liabilities of $21.80 million. MacDonald Fernandez LLP serves as the Debtor's counsel. Judge Dennis Montali oversees the case. The Debtor operates a Hyatt Place hotel, franchised from Hyatt Place Franchising LLC. The Hotel is located at 3500 Market Street, Riverside, California. MF GLOBAL: Execs Allowed to Tap $15M More in D&O Coverage --------------------------------------------------------- Law360 reported that Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York allowed Jon Corzine and other former MF Global Holdings Ltd. executives and employees to tap an additional $15 million from the directors and officers insurance. According to Joseph Checkler, writing for The Wall Street Journal, the former executives have already tapped about $47.5 million of the insurance for their legal defense, including unpaid bills. The Journal related that Judge Glenn has set a "soft cap" of $55 million for the defense costs and has reiterated that he is unhappy about the defense costs, especially considering the former executives have yet to give depositions in a federal court lawsuit. 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. MICHAEL ROSE: Developer Settles with Lender, Seeks Bankruptcy Exit ------------------------------------------------------------------ Micah Maidenberg, writing for Crain's Chicago Business, reported that developer Michael Rose, president of Mokena-based Location Finders International Inc., asked U.S. Bankruptcy Judge Carol Doyle to dismiss the Chapter 11 case he initiated in July, saying that he and his biggest creditor, U.S. Bank N.A., have negotiated a settlement. According to the report, Mr. Rose owes the bank $68 million of the $170 million of the total liabilities he disclosed in court. NATROL INC: Court Fixes Oct. 27 as General Claims Bar Date ---------------------------------------------------------- The Bankruptcy Court established Oct. 27, 2014, as the deadline for any individual or entities other than governmental units and certain other specified parties, must file proofs of claim in the chapter 11 cases of Natrol, Inc., et al., related to prepetition claims, including Section 503(b)(9) administrative priority claims. The Debtors, in their motion also requested that the Court set Dec. 8, at 4:00 p.m. as the governmental claims bar date. About Natrol, Inc. Headquartered in Chatsworth, Calif., Natrol, Inc. -- http://www.natrol.com-- is a wholly owned subsidiary of Plethico Pharmaceuticals Limited. Plethico Pharmaceuticals Limited (BSE: 532739. BO: PLETHICO) engages in the manufacturing, marketing and distribution of pharmaceutical and allied healthcare products around the world. Natrol products are made in the U.S. Established in 1980, Natrol, Inc. has been a global leader in the nutrition industry, and a trusted manufacturer and marketer of a superior quality of herbs and botanicals, multivitamins, specialty and sports nutrition supplements made to support health and wellness throughout all ages and stages of life. Natrol products are available in health food stores, drug and grocery stores, and mass-market retailers, and through Natrol.com and other online retailers. Natrol distributes products nationally through more than 54,000 retailers as well as internationally in over 40 other countries through distribution partners. Natrol, Inc., and its six affiliates sought bankruptcy protection on June 11, 2014 (Case No. 14-11446, Bankr. D. Del.). The case is assigned to Judge Brendan Linehan Shannon. The Debtors are represented by Robert A. Klyman, Esq., and Samuel A. Newman, Esq., at GIBSON, DUNN & CRUTCHER LLP, in Los Angeles, California; and Michael R. Nestor, Esq., Maris J. Kandestin, Esq., and Ian J. Bambrick, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware. The Debtors' Claims and Noticing Agent is EPIQ SYSTEMS INC. The Debtors requested that the Court approve the employment of (i) Jeffrey C. Perea of the firm Conway MacKenzie Management Services, LLC as chief financial officer and for CMS to provide temporary employees to assist Mr. Perea in carrying out his duties; (ii) Stephen P. Milner of the firm Squar, Milner, Peterson, Miranda & Williamson LLP as chief restructuring officer and for CMS to provide temporary employees to assist Mr. Milner in carrying out his duties; (iv) BDO USA, LLP as auditor; (v) TaxGroup Partners as tax services provider. The U.S. Trustee for Region 3 on June 19 appointed five creditors of Natrol, Inc. to serve on the official committee of unsecured creditors. The Committee tapped to retain Otterbourg P.C. as lead counsel; (ii) Pepper Hamilton LLP as Delaware counsel; and (iii) CMAG as financial advisors. NATROL INC: Files Schedules of Assets and Liabilities ----------------------------------------------------- Natrol, Inc., filed on Aug. 15 its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $83,932,462 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $68,652,342 E. Creditors Holding Unsecured Priority Claims undetermined F. Creditors Holding Unsecured Non-Priority Claims $18,522,045 ----------- ----------- Total $83,932,462 $87,174,387 A copy of the schedules is available for free at http://bankrupt.com/misc/NATROLINC_350_sal.pdf Natrol and its affiliates were given an extension until Aug. 18 of the deadline to file their schedules of assets and liabilities and statements of financial affairs. About Natrol, Inc. Headquartered in Chatsworth, Calif., Natrol, Inc. -- http://www.natrol.com-- is a wholly owned subsidiary of Plethico Pharmaceuticals Limited. Plethico Pharmaceuticals Limited (BSE: 532739. BO: PLETHICO) engages in the manufacturing, marketing and distribution of pharmaceutical and allied healthcare products around the world. Natrol products are made in the U.S. Established in 1980, Natrol, Inc. has been a global leader in the nutrition industry, and a trusted manufacturer and marketer of a superior quality of herbs and botanicals, multivitamins, specialty and sports nutrition supplements made to support health and wellness throughout all ages and stages of life. Natrol products are available in health food stores, drug and grocery stores, and mass-market retailers, and through Natrol.com and other online retailers. Natrol distributes products nationally through more than 54,000 retailers as well as internationally in over 40 other countries through distribution partners. Natrol, Inc., and its six affiliates sought bankruptcy protection on June 11, 2014 (Case No. 14-11446, Bankr. D. Del.). The case is assigned to Judge Brendan Linehan Shannon. The Debtors are represented by Robert A. Klyman, Esq., and Samuel A. Newman, Esq., at GIBSON, DUNN & CRUTCHER LLP, in Los Angeles, California; and Michael R. Nestor, Esq., Maris J. Kandestin, Esq., and Ian J. Bambrick, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware. The Debtors' Claims and Noticing Agent is EPIQ SYSTEMS INC. The Debtors requested that the Court approve the employment of (i) Jeffrey C. Perea of the firm Conway MacKenzie Management Services, LLC as chief financial officer and for CMS to provide temporary employees to assist Mr. Perea in carrying out his duties; (ii) Stephen P. Milner of the firm Squar, Milner, Peterson, Miranda & Williamson LLP as chief restructuring officer and for CMS to provide temporary employees to assist Mr. Milner in carrying out his duties; (iv) BDO USA, LLP as auditor; (v) TaxGroup Partners as tax services provider. The U.S. Trustee for Region 3 on June 19 appointed five creditors of Natrol, Inc. to serve on the official committee of unsecured creditors. The Committee tapped to retain Otterbourg P.C. as lead counsel; (ii) Pepper Hamilton LLP as Delaware counsel; and (iii) CMAG as financial advisors. NATROL INC: Access to Cash Collateral OK'd on Final Basis --------------------------------------------------------- The Bankruptcy Court entered an agreed order authorizing Natrol Inc., et al.'s use of cash collateral on a final basis. As reported in the Troubled Company Reporter on July 29, 2014, lenders asserting interest in the cash collateral include Ableco Finance LLC, A5 Funding L.P. and certain funds affiliated with Cerberus Capital Management, LP pursuant to a prepetition credit agreement dated as of March 5, 2013. The Debtors would use the cash collateral for working capital and general corporate purposes and costs and expenses. As adequate protection from any diminution in value of the lenders' collateral, the Debtors will grant the secured parties adequate protection liens on unencumbered property; replacement liens in the postpetition collateral, including newly created inventory and accounts receivable from non-traceable proceeds of prepetition collateral, and a superpriority administrative expense claim status. About Natrol, Inc. Headquartered in Chatsworth, Calif., Natrol, Inc. -- http://www.natrol.com-- is a wholly owned subsidiary of Plethico Pharmaceuticals Limited. Plethico Pharmaceuticals Limited (BSE: 532739. BO: PLETHICO) engages in the manufacturing, marketing and distribution of pharmaceutical and allied healthcare products around the world. Natrol products are made in the U.S. Established in 1980, Natrol, Inc. has been a global leader in the nutrition industry, and a trusted manufacturer and marketer of a superior quality of herbs and botanicals, multivitamins, specialty and sports nutrition supplements made to support health and wellness throughout all ages and stages of life. Natrol products are available in health food stores, drug and grocery stores, and mass-market retailers, and through Natrol.com and other online retailers. Natrol distributes products nationally through more than 54,000 retailers as well as internationally in over 40 other countries through distribution partners. Natrol, Inc., and its six affiliates sought bankruptcy protection on June 11, 2014 (Case No. 14-11446, Bankr. D. Del.). The case is assigned to Judge Brendan Linehan Shannon. The Debtors are represented by Robert A. Klyman, Esq., and Samuel A. Newman, Esq., at GIBSON, DUNN & CRUTCHER LLP, in Los Angeles, California; and Michael R. Nestor, Esq., Maris J. Kandestin, Esq., and Ian J. Bambrick, Esq., at YOUNG CONAWAY STARGATT & TAYLOR, LLP, in Wilmington, Delaware. The Debtors' Claims and Noticing Agent is EPIQ SYSTEMS INC. Natrol, Inc. disclosed $83,932,462 in assets and $87,174,387 in liabilities as of the Chapter 11 filing. The Debtors requested that the Court approve the employment of (i) Jeffrey C. Perea of the firm Conway MacKenzie Management Services, LLC as chief financial officer and for CMS to provide temporary employees to assist Mr. Perea in carrying out his duties; (ii) Stephen P. Milner of the firm Squar, Milner, Peterson, Miranda & Williamson LLP as chief restructuring officer and for CMS to provide temporary employees to assist Mr. Milner in carrying out his duties; (iv) BDO USA, LLP as auditor; (v) TaxGroup Partners as tax services provider. The U.S. Trustee for Region 3 on June 19 appointed five creditors of Natrol, Inc. to serve on the official committee of unsecured creditors. The Committee tapped to retain Otterbourg P.C. as lead counsel; (ii) Pepper Hamilton LLP as Delaware counsel; and (iii) CMAG as financial advisors. NAUTILUS HOLDINGS: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Nautilus Holdings No. 2 Limited filed with the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $115,741,183 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $0 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-Priority Claims $2,671,538 ----------- ----------- Total $115,741,183 $2,671,538 Copies of the schedules are available for free at: http://is.gd/WWB18L About Nautilus Holdings Nautilus Holdings Limited and 20 affiliated companies, including Nautilus Holdings No. 2 Limited, filed bare-bones Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 14-22885) in White Plains, New York, on June 23, 2014. The affiliates are Nautilus Holdings No. 2 Limited; Nautilus Shipholdings No. 1 Limited; Nautilus Shipholdings No. 2 Limited; Nautilus Shipholdings No. 3 Limited; Able Challenger Limited; Charming Energetic Limited; Dynamic Continental Limited; Earlstown Limited; Findhorn Osprey Limited; Floral Peninsula Limited; Golden Knighthead Limited; Magic Peninsula Limited; Metropolitan Harbour Limited; Metropolitan Vitality Limited; Miltons' Way Limited; Perpetual Joy Limited; Regal Stone Limited; Resplendent Spirit Limited; Superior Integrity Limited; and Vivid Mind Limited. The Debtors' cases have been assigned to Judge Robert D. Drain, and are being jointly administered for procedural purposes. Hamilton, Bermuda-based Nautilus estimated $100 million to $500 million in assets and debt. Monrovia, Liberia-based Reminiscent Ventures S.A. owns 100% of the stock. Nautilus has tapped Jay Goffman, Esq., Mark A. McDermott, Esq., Shana A. Elberg, Esq., and Suzanne D.T. Lovett, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, as counsel; and AP Services, LLC, as financial advisor. Epiq Bankruptcy Solutions LLC serves as the claims and noticing agent. NAUTILUS HOLDINGS: Can Use Cash Collateral Through Sept. 19 ----------------------------------------------------------- Judge Robert Drain entered a fourth interim order authorizing Nautilus Holdings Limited, et al., to use cash collateral, which order authorizes the Debtors' use of cash through and including the week ending Sept. 19, 2014. The Debtors are to provide the administrative agents of their Prepetition Loan Facilities an updated 4-week cash flow forecast and budget in accordance with the Interim Cash Collateral Order. As a condition for the Cash Collateral Use, the Debtors' prepetition lenders are entitled to certain adequate protection to the extent of any diminution of their interests in the cash collateral. Among other things, the lenders are granted (i) allowed senior administrative expense claims in the amount of the Diminution with superpriority status over all other claims, subject only to a carve-out, and (ii) adequate protection liens in the amount of the Diminution subject to a carve-out. During the term of the Fourth Interim Cash Collateral Order, only 60% of the management fees owed to Synergy Management Services Limited will be paid out in the ordinary course of business. The remaining 40% will be pooled and won't be paid out to Synergy until further Court order. The Bankruptcy Court will hold a final hearing on Sept. 12, 2014 at 10:00 a.m. (Eastern Time). About Nautilus Holdings Nautilus Holdings Limited and 20 affiliated companies, including Nautilus Holdings No. 2 Limited, filed bare-bones Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 14-22885) in White Plains, New York, on June 23, 2014. The affiliates are Nautilus Holdings No. 2 Limited; Nautilus Shipholdings No. 1 Limited; Nautilus Shipholdings No. 2 Limited; Nautilus Shipholdings No. 3 Limited; Able Challenger Limited; Charming Energetic Limited; Dynamic Continental Limited; Earlstown Limited; Findhorn Osprey Limited; Floral Peninsula Limited; Golden Knighthead Limited; Magic Peninsula Limited; Metropolitan Harbour Limited; Metropolitan Vitality Limited; Miltons' Way Limited; Perpetual Joy Limited; Regal Stone Limited; Resplendent Spirit Limited; Superior Integrity Limited; and Vivid Mind Limited. The Debtors' cases have been assigned to Judge Robert D. Drain, and are being jointly administered for procedural purposes. Hamilton, Bermuda-based Nautilus estimated $100 million to $500 million in assets and debt. Monrovia, Liberia-based Reminiscent Ventures S.A. owns 100% of the stock. Nautilus has tapped Jay Goffman, Esq., Mark A. McDermott, Esq., Shana A. Elberg, Esq., and Suzanne D.T. Lovett, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, as counsel; and AP Services, LLC, as financial advisor. Epiq Bankruptcy Solutions LLC serves as the claims and noticing agent. NEW BERN RIVERFRONT: Weaver Claim v. Randolph Stair Goes to Trial ----------------------------------------------------------------- U.S. Bankruptcy Judge Stephani W. Humrickhouse denied the motion for summary judgment filed by Randolph Stair and Rail Company regarding the third-party complaint of Weaver Cooke Construction, LLC, on accunt of the the negligence and breach of express warranty claims Weaver Cooke asserts against Randolph Stair related to the development of the SkySail Luxury Condominiums in New Bern, North Carolina. The Court said genuine issues of material fact still exist and Randolph Stair's motion for summary judgment on its statute of limitations defense will be denied. A copy of Judge Humrickhouse's' August 27 Order available at http://is.gd/wbUWGrfrom Leagle.com. Debtor New Bern Riverfront Development, LLC, the owner and developer of the SkySail Project, filed on March 30, 2009, an action in Wake County Superior Court against nine individual defendants related to the alleged defective construction of the SkySail Condos. The named defendants in the State Action included: New Bern's general contractor, Weaver Cooke; Travelers Casualty and Surety Company of America; National Erectors Rebar, Inc. f/k/a National Reinforcing Systems, Inc.; and certain subcontractors of the general contractor. The State Action was removed to the United States District Court for the Eastern District of North Carolina on December 16, 2009, and subsequently transferred to this court on February 3, 2010. After voluntarily dismissing its causes of action as to the subcontractors named as defendants in the State Action, New Bern filed its first amended complaint on May 6, 2010, asserting claims against Weaver Cooke; Travelers; National Erectors Rebar, Inc. f/k/a NRS, and the additional parties of J. Davis Architects, PLLC, and Fluhrer Reed, PA. Weaver Cooke filed an answer to New Bern's first amended complaint and a third-party complaint against Wachovia Bank, National Association and Wells Fargo & Company f/d/b/a Wachovia Corporation. Absent as third-party defendants in Weaver Cooke's original third-party complaint were any of the subcontractors hired by Weaver Cooke during the construction of the SkySail Project. Weaver Cooke then filed its second, third-party complaint asserting claims of negligence, contractual indemnity and breach of express warranty against many of the subcontractors hired during the construction of the SkySail Project, including Randolph Stair. About New Bern Riverfront Cary, North Carolina-based New Bern Riverfront Development, LLC, is the developer of SkySail Condominium, consisting of 121 residential condominiums (plus 1 commercial/non-residential unit) located on Middle Street on the waterfront in historic downtown New Bern, North Carolina, and sells the SkySail Condominiums in the ordinary course of business. New Bern Riverfront filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.C. Case No. 09-10340) on Nov. 30, 2009. John A. Northen, Esq., at Northen Blue, LLP, represents the Debtor. The Company disclosed $31,515,040 in assets and $25,676,781 in liabilities as of the Chapter 11 filing. New Bern Riverfront has filed an Amended Plan of Reorganization, which represents a consensual plan negotiated with the Debtor's secured creditor, Wells Fargo Bank, N.A. The Debtor contemplates selling properties. NEW CENTURY: Selling Tractors, Trailers at Auctions --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that New Century Transportation Inc., a small-cargo trucking line, is selling tractors and trailers as well as miscellaneous equipment at a series of public auctions. According to the report, a bankruptcy judge in New Jersey authorized the public sales this month following a request by the trustee, Catherine E. Youngman. The case is In re New Century Transportation Inc., 14-bk-22093, U.S. Bankruptcy Court, District of New Jersey (Trenton). PACIFIC THOMAS: Court Denies Bid to Obtain $14.5-Mil. Loan ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California denied the request of Pacific Thomas Corp. to borrow $14.5 million from Eagle Group Finance. The company initially proposed to borrow more than $6.5 million from another lender Thorofare Capital. At a hearing held earlier this year, the court found several deficiencies in the motion filed by the Company and declined to grant its request to obtain the loan. The hearing was continued to allow Pacific Thomas to fix the deficiencies. On July 17, the company filed a revised motion in which it sought approval to obtain $14.5 million loan from Eagle Group Finance. Summit Bank, a secured creditor of Pacific Thomas, criticized the company for proposing what it says is an "entirely new and different transaction." The bank, which claims it is owed more than $8.7 million, also argued that the loan wasn't enough to fund a bankruptcy plan. The revised motion also drew flak from Bank of the West. The bank expressed concern it would only receive partial payment for its claims from the company. About Pacific Thomas Corp. Walnut Creek, California, Pacific Thomas Corporation filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 12-46534) in Oakland on Aug. 6, 2012, estimating in excess of $10 million in assets and liabilities. The Debtor is related to Pacific Thomas Capital, which specializes in real estate services, focusing on the investment, ownership and development of commercial real estate properties, according to http://www.pacificthomas.com/ Real estate activities has spanned throughout the Hawaiian Islands as well as U.S. West Coast locations in California, Nevada, Arizona and Utah. Hawaii based activities are managed under the name Thomas Capital Investments. Bankruptcy Judge M. Elaine Hammond presides over the case. Anne- Leith Matlock, Esq., at Matlock Law Group, P.C., serves as general counsel. The petition was signed by Jill V. Worsley, COO, secretary. Kyle Everett was named Chapter 11 trustee of the Debtor. Craig C. Chiang, Esq., at Buchalter Nemer, P.C., in San Francisco, Calif., represents the Chapter 11 trustee as counsel. In its schedules, the Debtor disclosed $19,960,679 in assets and $16,482,475 in liabilities as of the petition date. In January 2014, Judge Hammond entered an order holding that Pacific Thomas Corp.'s Fourth Amended Disclosure Statement, filed on Dec. 31, 2013, is not approved for the reasons stated on the record at the Jan. 16 hearing. Pursuant to the Plan, the Debtor proposes to avail of a loan from Thorofare Capital to pay off some secured claims. The new loan would be refinanced by the reorganized company before the loan terms expires. If the reorganized company fails to do so, the safe storage parcels of the Pacific Thomas properties will be sold. PANACHE BEVERAGE: Has $288K Q2 Loss, May Halt Certain Operations ---------------------------------------------------------------- Panache Beverage Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to the Company of $288,147 on $655,689 of net revenues for the three months ended June 30, 2014, compared to a net loss attributable to the Company of $935,888 on $1.42 million of net revenues for the same period in 2013. For the six months ended June 30, 2014, Panache Beverage reported a net loss attributable to the Company of $1.72 million on $1.29 million of net revenues compared to a net loss attributable to the Company of $1.74 million on $2.84 million of net revenues for the same period a year ago. As of June 30, 2014, the Company had $5.73 million in total assets, $13.16 million in total liabilities and a $7.43 million total deficit. The Company had cash on hand of $276,200 as of June 30, 2014, including restricted cash. The Company expects this amount to be insufficient to fund future operating cash flow and will require additional capital. The Company said it is in the process of evaluating potential sources of that capital and may use equity or debt instruments to fund its future operating cash flow or enter into a strategic arrangement with one or more third parties. The Company had an accumulated deficit of $10,366,003 as of Dec. 31, 2013, and $12,089,689 as of June 30, 2014. The Company anticipates that it may continue to incur operating losses for the foreseeable future. "[I]t is possible that we may never achieve positive earnings and, if we do achieve positive earnings, we may not be able to achieve them on a sustainable basis. If we are unable to achieve or sustain profitability, we may need to curtail, suspend or terminate certain operations. We have very limited cash available to meet our obligations at this time," the Company warned in the Report. A full-text copy of the Form 10-Q is available for free at: http://is.gd/AYhYHl About Panache Beverage New York-based Panache Beverage, Inc., specializes in the strategic development and aggressive early growth of spirits brands establishing its assets as viable and attractive acquisition candidates for the major global spirits companies. Panache builds its brands as individual acquisition candidates while continuing to develop its pipeline of new brands into the Panache portfolio. Panache Beverage reported a net loss of $4.58 million in 2013 following a net loss of $3.27 million in 2012. In their report on the consolidated financial statements for the year ended Dec. 31, 2013, Silberstein Ungar, PLLC, expressed substantial doubt about the Company's ability to continue as a going concern, citing that the Company has limited working capital and has incurred losses from operations. As reported by the TCR on Aug. 28, 2014, Silberstein Ungar resigned as Panache Beverage's independent accounting firm. KLJ & Associates, LLP, was hired as the Company's new accountants. PARADISE HOSPITALITY: Fails to Dismiss Best Western Lawsuit ----------------------------------------------------------- Arizona District Judge David G. Campbell denied the requests of Paradise Hospitality, Inc., Dae In Kim, and Jane Nam Kim to dismiss a lawsuit by Best Western International Inc. Best Western alleges that the Defendants failed to pay off their account balance of $793, 958.32 and to remove Best Western symbols from the hotel and advertising. The complaint asserts 11 claims, including breach of contract, breach of guaranty, breach of the implied covenant of good faith and fair dealing, unjust enrichment, unfair competition, and trademark infringement. The case is, Best Western International Incorporated, Plaintiff, v. Paradise Hospitality Incorporated, et al., Defendants, No. CV- 14-00337-PHX-DGC (D. Ariz.). A copy of the Court's August 26, 2014 Order is available at http://is.gd/TWiMDXfrom Leagle.com. Best Western International Incorporated is represented by: Craig Solomon Ganz, Esq. BALLARD SPAHR LLP 1 East Washington Street, Suite 2300 Phoenix, AZ 85004-2555 Tel: 602-798-5400 Fax: 602-798-5595 E-mail: ganzc@ballardspahr.com - and - Janel Marie Glynn, Esq. Tyler James Carrell, Esq. GALLAGHER & KENNEDY PA 2575 E. Camelback Road Suite 1100 Phoenix, AZ 85016 E-mail: janel.glynn@gknet.com tyler.carrell@gknet.com Paradise Hospitality Incorporated and the Kims are represented by: Howard C Meyers, Esq. BURCH & CRACCHIOLO PA 702 E Osborn Rd #200 Phoenix, AZ 85014 Tel:(602) 234-8762 About Paradise Hospitality Based in Fullerton, California, Paradise Hospitality, Inc., owns a hotel located in Toledo, Ohio and a retail shopping center in El Dorado, Arkansas. The Debtor manages and operates the Hotel. Haydn Cutler company currently manages the Retail Center. The Company filed for Chapter 11 bankruptcy (Bankr. C.D. Cal. Case No. 11-24847) on Oct. 26, 2011, about three weeks after it lost the right to use the Crowne Plaza for its hotel. For now, the hotel has been renamed Plaza Hotel Downtown Toledo. Judge Erithe A. Smith presided over the bankruptcy case. Giovanni Orantes, Esq., at Orantes Law Firm, P.C., in Los Angeles, represented the Debtor as counsel. The Debtor disclosed $15,628,687 in assets and $21,430,333 in liabilities as of the Chapter 11 filing. The Petition was signed by the Debtor's president, Dae In Kim, a Korean businessman who lives in southern California. Dae In Kim filed an individual petition for Chapter 11 bankruptcy on Nov. 23, 2011. PITTSBURG, CA: Fitch Assigns 'BB' Rating on $109MM Sub. Tax Bonds ----------------------------------------------------------------- Fitch Ratings assigns the following underlying rating to the Successor Agency to the Redevelopment Agency of the City of Pittsburg, CA's (the agency) tax allocation bonds (TABs): -- $109.7 million subordinate TABs series 2004A at 'BB' on Rating Watch Positive. In addition, Fitch has placed the following bonds issued by the former Pittsburg Redevelopment Agency (former RDA) on Rating Watch Positive: -- $245.4 million subordinate TABs (taxable) series 2006B and subordinate refunding TABs series 2006C and 2008A 'BB-'. Prior to the rating actions the Rating Outlook on the TABs was Stable. SECURITY The TABs are secured by a subordinate lien on non-housing tax increment revenues, net of county administrative fees, and are payable per statute from former housing revenues on a subordinate basis to housing TABs. The TABs are additionally secured by cash- funded debt service reserve funds (DSRF) sized to the IRS maximum and supplemental DSRFs required per the terms of the 2004A bonds' letter of credit (LOC) sized to varying amounts by bond series. KEY RATING DRIVERS RATING WATCH POSITIVE: The Rating Watch Positive reflects Fitch's expectation for continued improved performance from the project area tax base and debt service coverage over the intermediate term. This expectation is tempered by the uncertainty surrounding the agency's renewal of a letter of credit (LOC) expiring in December 2014, as materially higher costs for liquidity could negatively impact projected debt service coverage levels. LOW COVERAGE, VARIABLE RISKS: The low rating levels reflect weak debt service coverage and variable rate structural risks. Although tax increment revenues now fully cover maximum annual debt service (MADS) and seem poised for further growth, the project area's AV historically has exhibited high volatility, and has been subject to frequent appeals from its highly concentrated industrial taxpayers. VARIABLE TABS' HIGH CASH RESERVES: The 2004A variable rate TABs' positive one-notch distinction is due to their extremely strong DSRF levels, sized to $34.4 million (31% of 2004A par and 305% of MADS). Fitch believes these reserves provide bondholders with a material degree of additional protection against a hypothetically severe AV stress scenario. GROWTH LIKELY DESPITE APPEALS: The project area enjoys good intermediate-term growth prospects due to the city's availability of vacant land, large-scale residential construction in progress, rising home values, and major infrastructure projects that could lead to auxiliary growth. However, a backlog of pending appeals could dampen growth over the near-term. RATING SENSITIVITIES LOC RENEWAL: Fitch likely will upgrade the bonds if the agency renews its LOC, expiring in December, with an affordable related fee that does not materially and negatively affect projected debt service coverage levels. TAX BASE PERFORMANCE: The ratings may change, depending on the performance and sustainability of the project area's tax base. CREDIT PROFILE Pittsburg is located in Contra Costa County and benefits from its location within the large and diverse San Francisco Bay Area employment market and the presence of several large industrial enterprises. Most local economic indicators are weak despite the city's geographic advantages. The project area comprises a large 5,750 acres, making up over 70% of the city's fiscal 2014 AV. Although the project area's tax base contains a fair degree of diversification by property type, there is high concentration among the top 10 payers who make up 33% of incremental value (IV) (30% of AV). FY15 AV SIGNIFICANTLY HIGHER THAN EXPECTED The project area's fiscal 2015 AV increased a solid 7.9%, rising to levels not seen since before fiscal 2010. The gain significantly out-performed Fitch's prior base case assumption of a 1.8% AV loss, which had been conservatively crafted in light of a large overhang of pending appeals, a granted appeal of $49 million, and a low CPI adjustment of 0.45%. Although the latter two factors are included in fiscal 2015 AV, the former is not, and may weigh somewhat on fiscal 2016 AV performance. Fiscal 2015 AV performance increased MADS coverage to 1.03x from 0.95x and 0.93x in fiscal years 2014 and 2013, respectively. Fiscal 2015 MADS coverage would have been 1.05x if not for a one- time $2 million deferred LOC fee payable on Dec. 31, 2014, of which $1 million is recurring at current rating levels. Coverage would improve further if not for Fitch's conservative coverage methodology, which excludes $333,000 in annual loan repayments, $1.5 million of interest earnings, and any supplemental property tax revenues, which are highly variable. The agency's semi-annual cash flow projections show a cash flow surplus of $8 million in calendar 2015 growing to $15 million in 2016, based on a reasonable 2% AV growth assumption. The agency will be able to retain cash surpluses for some time as it builds up its debt service funds, as noted below. OUT-YEAR AV GROWTH POISED TO BENEFIT FROM NEW CONSTRUCTION AV levels in fiscal 2016 and beyond are likely to benefit from elevated construction levels. New housing construction is proceeding at a pace of about 200 single family homes annually, with an approximate annual value of $68.8 million (2.8% of fiscal 2014 AV) based on agency-reported median sales values of $534,500. Multi-family construction is also expected to boost AV, but the timing of such developments is difficult to predict. The city has approved over 2,500 new housing units within the project area, and expects thousands more given the availability of vacant land and in-fill development opportunities. A portion of anticipated projects are related to a planned Bay Area Rapid Transit rail extension into the project area. Rising real estate prices also bode well for out-year AV growth. City home values are up 11% through June, according to Zillow. Property values as of Jan. 1, 2015 will form the basis for fiscal 2016 AV. VARIABLE RATE STRUCTURAL RISKS The 2004A TABs are variable rate with a variable-to-fixed interest rate swap and make up 45% of subordinate debt by par value. Because the variable rate TABs are secured on a parity lien with the agency's fixed rate subordinate TABs, the variable rate structure exposes all subordinate debt to interest rate risk and a potential termination payment if the swap is terminated. The swap counterparty may terminate the swap if the agency's debt is downgraded to below 'BBB-' by S&P, which is the current rating level. Management estimates the termination payment at roughly $14 million. The termination payment would be subordinate to subordinate debt service and all pass-through payments and likely could not be paid rapidly, if at all, based on current debt service coverage levels and other agency obligations. As a result, the swap counterparty may not be incentivized to terminate the swap if the option becomes available. Further, given its subordination to debt service, Fitch would not expect failure to make a termination payment to result in a TAB default. The agency is also exposed to LOC renewal and fee hike risks, with the LOC scheduled to expire in December 2014. An inability to extend or replace the agency's LOC would result in conversion of the variable rate TABs to bank bonds, which could raise interest costs to as high as 12%, adding substantially to annual interest costs. Fitch estimates fixed rate TAB debt service reserves could last approximately four years under these conditions before depletion, assuming no AV growth. Due to the 2004As' out-sized reserve levels and declining projected LOC costs as the bonds are paid down, these bonds could avoid reserve depletion through maturity under the same severe conditions. 2004A TABs BENEFIT FROM HIGH RESERVE LEVELS The 2004A TABs benefit from atypically high cash reserves that Fitch believes provides bondholders with materially higher credit quality than the fixed rate reserve levels, which are nonetheless good overall. In addition to the standard indenture-required DSRF (currently $7.9 million), the 2004As have a $26.5 million supplemental reserve as a condition of prior LOC extensions. Combined, these reserve levels equal $34.4 million, or 31% of the 2004A TABs' outstanding par value. The fixed rate TABs also have an LOC-required reserve, but it is significantly smaller at $5.5 million, and it must be used to replenish any hypothetical draw- down of the 2004A TAB reserves, providing limited benefit to the non-2004A TABs. Per the TABs' indentures the agency must retain two years' worth of debt service payments in the TABs' debt service funds, which is on top of the above-mentioned reserves. Historically the agency only retained one year's worth, and is now in the process of reaching compliance with the indenture requirement by retaining surplus tax increment that otherwise would have been distributed to overlapping taxing entities or subordinate pass-through payees. As a result, the agency projects that already high cash levels will grow further. PUERTO RICO: Interviews Underway for PREPA Restructuring Chief -------------------------------------------------------------- Reuters, citing two people briefed on the matter, reported that candidates are being interviewed for a chief restructuring officer at Puerto Rico's struggling power authority, the Puerto Rico Electric Power Authority, or PREPA. According to Reuters, Prepa must hire a CRO by Sept. 8 under an agreement with creditors as it works on developing a restructuring plan to revive the utility, which has more than $9 billion in debt. RANDHURST HOTEL: Case Summary & 18 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Randhurst Hotel Partners, LLC 37 W. Bridge Street, Suite 105 Dublin, OH 43017 Case No.: 14-31480 Chapter 11 Petition Date: August 27, 2014 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Hon. Benjamin Goldgar Debtor's Counsel: Ira Bodenstein, Esq. SHAW, FISHMAN, GLANTZ & TOWBIN LLC 321 N. Clark Street, Suite 800 Chicago, IL 60610 Tel: 312 666-2861 Fax: 312 275-0556 Email: ibodenstein@shawfishman.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Matt Studer, authorized manager. A list of the Debtor's 18 largest unsecured creditors is available for free at http://bankrupt.com/misc/ilnb14-31480.pdf REDE ENERGIA: U.S. Court Grants Plan Enforcement Relief ------------------------------------------------------- Bankruptcy Judge Shelley C. Chapman on August 27 issued a "MEMORANDUM DECISION GRANTING PLAN ENFORCEMENT RELIEF PURSUANT TO CHAPTER 15 OF THE BANKRUPTCY CODE" in the Chapter 15 case of Rede Energia S.A. In this proceeding brought pursuant to chapter 15 of the Bankruptcy Code, Jose Carlos Santos, the Foreign Representative of Rede Energia S.A., sought the U.S. Bankruptcy Court's assistance, pursuant to sections 1507 and 1521, in enforcing the terms of Rede's Brazilian reorganization plan. The Foreign Representative sought the following relief: (i) an order granting full faith and credit to (a) the Brazilian reorganization plan and (b) the Brazilian court order confirming the plan, including a continuation of the injunction of acts in the United States in contravention of the confirmation order, and (ii) an order authorizing and directing the Indenture Trustee for Rede's 11.125 percent perpetual notes and the Depository Trust Company to take the actions necessary to carry out the terms of the Brazilian reorganization plan, including making payments to Rede's noteholders. Certain of Rede's noteholders object to the relief as being contrary to public policy of the United States and urge the Court to allow them to return to Brazil and negotiate for an improvement on the distribution they are to receive under the Brazilian reorganization plan. The noteholders allege that what the Foreign Representative describes as a proceeding that indisputably comports with fundamental principles of U.S. bankruptcy law and civilized jurisprudence is in fact a wholesale trampling of their rights that was conceived of and executed by the Brazilian government and rubberstamped by the Brazilian bankruptcy court. "While there are certainly aspects of the Brazilian proceeding that differ in form and substance from what might occur in the United States, the Court nonetheless concludes . . . that Rede's Foreign Representative is entitled to the relief requested," Judge Chapman said in her Memorandum available at http://is.gd/amjQGg from Leagle.com. Attorneys for Foreign Representative, Jose Carlos Santos are: J. Christopher Shore, Esq. Thomas MacWright, Esq. WHITE & CASE LLP 1155 Avenue of the Americas New York, NY 10036-2787 E-mail: cshore@whitecase.com tmacwright@whitecase.com - and - John K. Cunningham, Esq. Richard S. Kebrdle, Esq. WHITE & CASE LLP 200 South Biscayne Boulevard, Suite 4900 Miami, FL 33131-2352 E-mail: jcunningham@whitecase.com rkebrdle@whitecase.com Attorneys for Ad Hoc Group of Rede Noteholders are: Timothy B. DeSieno, Esq. Mark W. Deveno, Esq. BINGHAM McCUTCHEN LLP 399 Park Avenue New York, NY 10022-4689 E-mail: tim.desieno@bingham.com mark.deveno@bingham.com About Rede Energia S.A. Rede Energia S.A. is one of the largest electric power companies in Brazil. It operates through subsidiaries, which are engaged in the distribution, generation and trading of electricity in Brazil. Rede supplies electricity to 3.3 million customers in 436 municipalities in six Brazilian states. In 2012, Rede distributed 14,442 GWh of energy, recorded net loss of R$665.8 million, and gross operating revenue of R$7.515 billion. As of Dec. 31, 2012, Rede and its subsidiaries' total assets were valued at R$9 billion. Rede Energia filed a Chapter 15 petition in Manhattan (Bankr. S.D.N.Y. Case No. 14-10078) on Jan. 16, 2014, to seek recognition of its restructuring proceedings in Brazil. Rede Energia is estimated to have more than $1 billion in assets and liabilities. Jose Carlos Santos, the administrator in the Brazilian judicial reorganization proceeding, as foreign representative, signed the Chapter 15 bankruptcy petition. He is represented by John K. Cunningham, Esq., at White & Case, LLP, in Miami. Rede was previously the parent of Centrais Electricas do Para S.A. ("CELPA"), an electricity distribution concessionary for the Para region in Brazil. CELPA filed a judicial restructuring proceeding in Brazil in 2012 pursuant to which Rede's ownership in CELPA was sold to a non-affiliated third party. CELPA filed a petition for Chapter 15 relief (Bankr. S.D.N.Y. Case No. 12-14568) in Manhattan on Nov. 9, 2012. The CELPA case was closed April 25, 2013. REVEL AC: Settlements with Creditors Approved --------------------------------------------- BankruptcyData reported that the U.S. Bankruptcy Court approved settlement agreements between Revel AC and certain of its creditors. According to BData, the Debtor filed a motion to estimate five contingent and/or unliquidated disputed claims held by the Claimants arising from the construction of the Revel Casino Resort. The Claimants filed construction liens against the Debtor's property and have asserted in their various claims that they are owed an amount in excess of $23.6 million. Because the Debtor believes the value of the claims subject to the Estimation Motion are grossly inflated, the Debtor sought to estimate those claims in the aggregate amount of $1.6 million, so as to reduce the magnitude of the priming litigation at the final DIP hearing. BData further related, "Under the Tishman settlement, the Debtors and Tishman have agreed to mutual releases of claims, disputes, and actions, liabilities etc. According to the Barham settlement, Revel Entertainment Group will be entitled to deduct and retain the sum of $230,000 for damages, while REG is to pay the balance of funds of $270,000 to Barham in two separate instalments. REG and Barham have agreed to provide mutual releases and discharges to one another. Under the other settlements REG shall pay Stone Concrete $600,000. Imperial and PDM have agreed to accept from Revel AC as consideration for the releases granted a payment of $1,700,000 in the Tishman/PDM/ Imperial settlement agreement." About Revel AC Revel AC, Inc. -- http://www.revelresorts.com/-- owns and operates Revel, a Las Vegas-style, beachfront entertainment resort and casino located on the Boardwalk in the south inlet of Atlantic City, New Jersey. Revel AC Inc. and five of its affiliates sought bankruptcy protection (Bankr. D.N.J., Lead Case No. 14-22654) on June 19, 2014, to pursue a quick sale of the assets. The Chapter 11 cases are assigned to Judge Gloria M. Burns. The Debtors' Chapter 11 cases are jointly consolidated for procedural purposes. Revel AC estimated assets ranging from $500 million to $1 billion, and the same amount of liabilities. White & Case, LLP, and Fox Rothschild, LLP, serve as the Debtors' Counsel, and Moelis & Company, LLC, is the investment banker. The Debtors' solicitation and claims agent is Alixpartners, LLP. The prepetition first lenders are represented by Cadwalader, Wickersham & Taft LLP. The prepetition second lien lenders are represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP. The DIP agent is represented by Milbank, Tweed, Hadley & McCloy LLP. This is Revel AC's second trip to bankruptcy. The company first sought bankruptcy protection (Bankr. D.N.J. Lead Case No. 13- 16253) on March 25, 2013, with a prepackaged plan that reduced debt by $1.25 billion. Less than two months later on May 15, 2013, the 2013 Plan was confirmed and became effective on May 21, 2013. RONALD COHEN MGMT: Case Summary & 8 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Ronald Cohen Management Company 1701 Rockville Pike, Suite B-20 Rockville, MD 20852 Case No.: 14-23399 Chapter 11 Petition Date: August 27, 2014 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Hon. Wendelin I. Lipp Debtor's Counsel: Stephen A. Metz, Esq. SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A. 12505 Park Potomac Avenue, 6th Floor Potomac, MD 20854 Tel: (301) 230-6564 Fax: (301) 230-2891 Email: smetz@shulmanrogers.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Ronald J. Cohen, president. A list of the Debtor's eight largest unsecured creditors is available for free at http://bankrupt.com/misc/mdb14-23399.pdf SAAB AB: Chinese-Backed Owner Goes Bust --------------------------------------- Christina Zander, writing for The Wall Street Journal, reported that a Swedish court denied bankruptcy protection for the Chinese- backed company which owns Sweden's Saab automobile brand, saying the suggested financial solutions were "vague and entirely undocumented." According to the report, National Electric Vehicle Sweden AB, said it petitioned a local Swedish court for bankruptcy protection to reconstruct its business and to "make time for ongoing talks" with potential investors. The court, however, noted that NEVS doesn't have the liquidity required to fulfill its obligation during the restructuring period, the Journal said. About Saab Cars N.A. More than 40 U.S.-based Saab dealerships have signed an involuntary chapter 11 bankruptcy petition for Saab Cars North America, Inc., (Bankr. D. Del. Case No. 12-10344) on Jan. 30, 2012. The petitioners, represented by Wilk Auslander LLP, assert claims totaling $1.2 million on account of "unpaid warranty and incentive reimbursement and related obligations" and/or "parts and warranty reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile & Associates, in New York, signed the Chapter 11 petition on behalf of the dealers. Donlin, Recano & Company, Inc. (DRC), has been retained to provide claims and noticing agent services to Saab Cars North America, Inc. in its Chapter 11 case. The dealers want the vehicle inventory and the parts business to be sold, free of liens from Ally Financial Inc. and Caterpillar Inc., and "to have an appropriate forum to address the claims of the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg News. Saab Cars N.A. is the U.S. sales and distribution unit of Swedish car maker Saab Automobile AB. Saab Cars N.A. named in December an outside administrator, McTevia & Associates, to run the company as part of a plan to avoid immediate liquidation following its parent company's bankruptcy filing. Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Saab Automobile AB, Saab Automobile Tools AB and Saab Powertain AB filed for bankruptcy on Dec. 19, 2011, after running out of cash. On Feb. 24, 2012, the U.S. Court, in consideration of the petition filed on Jan. 30, 2012, granted Saab Cars North America, Inc., relief under Chapter 11 of the Bankruptcy Code. Attorneys Stevens & Lee, P.C., and Butzel Long, represent the Debtors as counsel. On March 9, 2012, the U.S. Trustee formed an official Committee of Unsecured Creditors and appointed these members: Peter Mueller Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander LLP as general bankruptcy counsel, and Polsinelli PC as its Delaware counsel. As of July 16, 2013, all conditions to consummation of the Third Amended Plan of Liquidation of Saab North America, Inc., set forth in Article 6.1 of the Plan were either satisfied or waived. Accordingly, on July 18, 2013, counsel for the Liquidating Trustee sent notice that the Effective Date occurred with respect to the Plan. SHIROKIA DEVELOPMENT: Chapter 11 Case Transferred to E.D.N.Y. ------------------------------------------------------------- The Chapter 11 bankruptcy case of Shirokia Development, LLC, has been transferred from the U.S. Bankruptcy Court for the Southern District of New York to the U.S. Bankruptcy Court for Eastern District of New York (Brooklyn), (Bankr. E.D.N.Y. Case No. 14-44373). Judge Nancy Hershey Lord is assigned to the case. Shirokia Development, LLC, a real property owner in Flushing, New York, currently being controlled by a receiver, filed a Chapter 11 bankruptcy petition in Manhattan, on Aug. 12, 2014. Hong Qin Jiang signed the petition as authorized individual. The Debtor disclosed total assets of $28.40 million and total liabilities of $15.45 million. The Debtor has tapped Dawn Kirby Arnold, Esq., at DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, as counsel. SIGMA LABS: Incurs $1.8-Mil. Net Loss for Quarter Ended June 30 --------------------------------------------------------------- Sigma Labs, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.8 million on $114,813 of total revenue for the three months ended June 30, 2014, compared with a net loss of $122,478 on $307,985 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $4.51 million in total assets, $86,606 in total liabilities, and stockholders' equity of $4.43 million. The Company has sustained losses since its inception. The ability of the Company to continue as a going concern is dependent on expanding income opportunities, according to the regulatory filing. A copy of the Form 10-Q is available at: http://is.gd/bcdBV1 Santa Fe, New Mexico-based Sigma Labs, Inc., specializes in the development and commercialization of novel and unique manufacturing and materials technologies. Since its inception, the Company has generated revenues primarily from consulting services it provides to third parties. SKYLINE MANOR: Files Schedules of Assets and Liabilities -------------------------------------------------------- Skyline Manor, Inc., filed with the U.S. Bankruptcy Court for the Northern District of District of Nebraska its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $18,500,000 B. Personal Property $1,392,926 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $11,916,126 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $1,816,751 ----------- ----------- TOTAL $19,892,926 $13,732,877 About Skyline Manor Skyline Manor, Inc., operates a retirement community in Omaha. The facility offers apartments, assisted-living units, skilled nursing beds and hospice care. Skyline Manor filed a Chapter 11 bankruptcy petition (Bankr. D. Neb. Case No. 14-80934) on May 8, 2014. The petition was signed by John W. Bartle as chief restructuring officer. Judge Thomas L. Saladino presides over the case. The Debtor estimated assets of at least $10 million and liabilities between $10 million to $50 million. SPECTRASCIENCE INC: Reports $1.17-Mil. Loss for Q2 Ending June 30 ----------------------------------------------------------------- SpectraScience, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.17 million on $nil of total revenue for the three months ended June 30, 2014, compared with a net loss of $663,930 on $46,487 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $2.47 million in total assets, $8.26 million in total liabilities, and a stockholders' deficit of $5.79 million. The Company expects to incur significant additional operating losses through at least the end of 2014, as it completes proof-of- concept trials, conducts outcome-based clinical studies and increases sales and marketing efforts to commercialize the WavSTAT4 Systems in Europe. If the Company does not receive sufficient funding, there is substantial doubt that the Company will be able to continue as a going concern. A copy of the Form 10-Q is available at: http://is.gd/xD0UNX About SpectraScience SpectraScience, Inc. (OTC QB: SCIE) is a San Diego based medical device company that designs, develops, manufactures and markets spectrophotometry systems capable of determining whether tissue is normal, pre-cancerous or cancerous without physically removing tissue from the body. The WavSTAT(TM) Optical Biopsy System uses light to optically scan tissue and provide the physician with an immediate analysis. On Nov. 6, 2007, the Company acquired the assets of Luma Imaging Corporation in an equity transaction accounted for as an acquisition of assets and now operates LUMA as a wholly-owned subsidiary of the Company. As reported in the TCR on April 25, 2013, McGladrey LLP, in Des Moines, Iowa, in its report on the Company's financial statements for the year ended Dec. 31, 2012, said the Company has suffered recurring losses from operations and its ability to continue as a going concern is dependent on the Company's ability to attract investors and generate cash through issuance of equity instruments and convertible debt. "This raises substantial doubt about the Company's ability to continue as a going concern." On Feb. 3, 2014, SpectraScience dismissed McGladrey as the Company's independent registered accounting firm effective immediately, and engaged HJ Associates & Consultants, LLP, as replacement accounting firm. STAR DYNAMICS: Lease Decision Period Extended to Oct. 6, 2014 ------------------------------------------------------------- U.S. Bankruptcy Judge Charles M. Caldwell has extended Star Dynamics Corporation's time to assume or reject a lease by an additional 90 days, or through Oct. 6, 2014. Richard K. Stovall, Esq., at Allen Kuehnle Stovall & Neuman LLP, in Columbus, Ohio, tells the Court that continued use of leases are critical to Star Dynamics' ability to continue to operate as a going concern, with the ultimate goal of a sale of all its assets. The lessor may have reversionary interests to the improvements built on its premises, which would represent a windfall if its lease was rejected. Star Dynamics is in need of additional time to appraise its financial situation to make an informed decision and continues to explore all of its options in light of an intended sale of its assets pursuant to Section 363 of the Bankruptcy Code. About STAR Dynamics STAR Dynamics Corp. develops, sales, and services instrumentation radar systems for missile test ranges utilized by the United States and foreign governments. Located principally in Hilliard, Ohio, with satellite offices in Herndon, Virginia and Sandestin Florida, it has 112 full-time employees. STAR Dynamics filed a petition for Chapter 11 protection (Bankr. S.D. Ohio Case No. 13-59657) on Dec. 10, 2013, in Columbus, Ohio, in part to halt a lawsuit by BAE Systems Plc. According to its first-day motions and as of Nov. 30, 2013, it has assets of $28,470,788.13, liabilities of $50,892,360.12 and gross sales of $8,140,140.93. In its schedules, the Debtor listed $12,138,334 in total assets and $50,740,343 in total liabilities. BAE is an American subsidiary of a global-level defense contractor based in Great Britain, with more than 50,000 employees world-wide. BAE has its headquarters in Arlington, Virginia, and like the Debtor, is engaged in the radar range business for the testing of missiles and other weaponry. Bankruptcy Judge Charles M. Caldwell oversees the case. Thomas R. Allen, Esq., Richard K. Stovall, Esq., and Erin L. Pfefferle, Esq., at Allen Kuehnle Stovall & Neuman LLP serve as the Debtor's bankruptcy counsel. Michael J. Sullivan, Esq., Russell A. Williams, Esq., Julie E. Adkins, Esq., Louis T. Isaf, Esq., and Nanda K. Alapati, Esq., at Womble Carlyle Sandridge & Rice LLP, serve as special counsel with respect to litigation involving BAE Systems and with respect to the completion of prepetition patent work. Sagent Advisors LLC serves as financial advisor. STAR DYNAMICS: Seeks to Sell Assets to Mwagusi for $5-Mil. ---------------------------------------------------------- STAR Dynamics Corporation asks the bankruptcy court for authority to sell substantially all of the assets to Mwagusi, LLC, subject to higher and better offers, for the total purchase price of $5,000,000, with the purchase price paid by a dollar for dollar credit applied towards the secured indebtedness owed by STAR to Resort Development of Destin, Inc., who would be entitled to receive any sales proceeds. In the event there are any competitive bids, the Debtor seeks approval of bid procedures under which third parties are afforded an opportunity to make a higher and better bid in cash, and affording buyer and any third party bidders a final opportunity to increase their respective bids at auction. The Court has scheduled a hearing on the motion on Sept. 19, 2014 at 1:00 p.m. (Eastern Time). The purchase agreement provides for a sale of certain of the Debtor's property on these principal terms: A. The purchase price will be $5,000,000, payable as follows: Buyer, who is related to RDDI, will pay $5,000,000 of the purchase price by a dollar for dollar credit applied towards the secured indebtedness owed by STAR to RDDI (who would be otherwise entitled to receive any sales proceeds); B. STAR will be permitted to retain its cash and account receivables, free and clear of any secured claims, to be applied towards priority administrative expenses. C. No brokers are involved in this sale, and no broker's fees will be paid. The sale will be free and clear of all liens, claims and encumbrances against the property. The Purchase Agreement may be terminated by Buyer if the Debtor does not obtaining bankruptcy court approval to the sale of the Property within 30 days of the execution of the Purchase Agreement, with the closing to occur within two business days after the Bankruptcy Court's entry of an Order approving such sale, and the satisfaction or waiver of conditions. The sale is subject to higher and better offers which are to be made within the time for any parties to object to this proposed sale. Any third party bid shall be in cash and at least $25,000 over the Purchase Price, with all cash proceeds to be paid to secured creditors (RDDI until paid in full, and then Mr. Becnel) at closing, and with Buyer having the opportunity, should there be one or more bidders, to enter into competitive bidding for the Property, with bid increments of $25,000 or more. Any proposed auction would be held as soon as possible at the Bankruptcy Court immediately after the hearing scheduled for the approval of the Purchase Agreement or the terms and condition of any further auction, with the approval of the highest and best bid to be made by the Court immediately thereafter. Any third party bidders would have to demonstrate to the Bankruptcy Court bidder's ability to consummate a closing on the purchase of the Property, in cash, within two business days after Court Approval. Such third party bidders will be required to bring a $100,000 deposit in the form of a cashier's check to the auction to be paid upon the approval of their bid as the highest and best bid. The deposit shall not be refundable and, in addition to any other remedy, shall be retained by the Debtor should such Approved and Successful bidder not consummate the transaction within two business days of Court Approval, or within any longer period of time agreed to by the parties. About STAR Dynamics STAR Dynamics Corp. develops, sales, and services instrumentation radar systems for missile test ranges utilized by the United States and foreign governments. Located principally in Hilliard, Ohio, with satellite offices in Herndon, Virginia and Sandestin Florida, it has 112 full-time employees. STAR Dynamics filed a petition for Chapter 11 protection (Bankr. S.D. Ohio Case No. 13-59657) on Dec. 10, 2013, in Columbus, Ohio, in part to halt a lawsuit by BAE Systems Plc. According to its first-day motions and as of Nov. 30, 2013, it has assets of $28,470,788.13, liabilities of $50,892,360.12 and gross sales of $8,140,140.93. In its schedules, the Debtor listed $12,138,334 in total assets and $50,740,343 in total liabilities. BAE is an American subsidiary of a global-level defense contractor based in Great Britain, with more than 50,000 employees world-wide. BAE has its headquarters in Arlington, Virginia, and like the Debtor, is engaged in the radar range business for the testing of missiles and other weaponry. Bankruptcy Judge Charles M. Caldwell oversees the case. Thomas R. Allen, Esq., Richard K. Stovall, Esq., and Erin L. Pfefferle, Esq., at Allen Kuehnle Stovall & Neuman LLP serve as the Debtor's bankruptcy counsel. Michael J. Sullivan, Esq., Russell A. Williams, Esq., Julie E. Adkins, Esq., Louis T. Isaf, Esq., and Nanda K. Alapati, Esq., at Womble Carlyle Sandridge & Rice LLP, serve as special counsel with respect to litigation involving BAE Systems and with respect to the completion of prepetition patent work. Sagent Advisors LLC serves as financial advisor. SUN BANCORP: FJ Capital Owns 5.8% of Outstanding Common Shares -------------------------------------------------------------- FJ Capital Management, LLC, and its affiliates disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that as of Aug. 21, 2014, they beneficially owned 1,023,058 shares of common stock of Sun Bancorp representing 5.87 percent of the shares outstanding. The shares consist of 126,034 shares of common stock held by FJ Capital Long/Short Equity Fund LLC, of which FJ Capital Management LLC is the managing member, 858,686 shares held by Bridge Equities III LLC, of which FJ Capital Management LLC is the sub-investment advisor, and 38,338 shares of common stock held by a managed account that FJ Capital Management manages and that is the record owner. A copy of the regulatory filing is available at http://is.gd/1nJaWe About Sun Bancorp Sun Bancorp, Inc. (NASDAQ: SNBC) is a bank holding company headquartered in Vineland, New Jersey, with its executive offices located in Mt. Laurel, New Jersey. Its primary subsidiary is Sun National Bank, a full service commercial bank serving customers through more than 60 locations in New Jersey. On April 15, 2010, Sun National Bank entered into a written agreement with the OCC which contained requirements to develop and implement a profitability and capital plan which provides for the maintenance of adequate capital to support the Bank's risk profile in the current economic environment. Sun Bancorp reported a net loss available to common shareholders of $9.94 million in 2013, a net loss available to common shareholders of $50.49 million in 2012, and a net loss available to common shareholders of $67.50 million in 2011. The Company's balance sheet at June 30, 2014, showed $2.89 billion in total assets, $2.66 billion in total liabilities and $227.65 million in total shareholders' equity. SYNERGY HOTEL: Case Summary & Largest Unsecured Creditors --------------------------------------------------------- Debtor affiliates filing separate Chapter 11 bankruptcy petitions: Debtor Case No. ------ -------- Synergy Hotel Group, LLC 14-01350 dba Clarion Hotel and Convention Center 2902 Route 97 Glenwood, MD 21738 Fritsch Family Partners, LLC 14-01351 dba Clarion Hotel & Convention Center 2902 Rt 97 Glenwood, MD 21738 Chapter 11 Petition Date: August 27, 2014 Court: United States Bankruptcy Court Northern District of Iowa (Cedar Rapids) Judge: Hon. Thad J. Collins Debtors' Counsel: Robert Cardell Gainer, Esq. CUTLER LAW FIRM 1307 50th Street West Des Moines, IA 50266 Tel: 515-223-6600 Fax: 515-223-6787 Email: rgainer@cutlerfirm.com Total Total Assets Liabilities ---------- ----------- Synergy Hotel Group $3.78MM $8.82MM Fritsch Family Partners $3,000 $8.59MM Total Assets: $3.78 million Total Liabilities: $8.82 million The petitions were signed by Charles Fritsch V, managing member. A list of Synergy Hotel Group's 11 largest unsecured creditors is available for free at http://bankrupt.com/misc/ianb14-01350.pdf A list of Fritsch Family's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/ianb14-01351.pdf TLC HEALTH: Meeting of Creditors Adjourned to Nov. 24 ----------------------------------------------------- The meeting of creditors of TLC Health Network has been adjourned to Nov. 24, at 12:00 p.m. It will be held at Buffalo UST -- Olympic Towers. The court overseeing the bankruptcy case of a company schedules the meeting of creditors usually about 30 days after the bankruptcy petition is filed. The meeting is called the "341 meeting" after the section of the Bankruptcy Code that requires it. A representative of the company is required to appear at the meeting and answer questions under oath. The meeting is presided over by the U.S. trustee, the Justice Department's bankruptcy watchdog. 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. TRIGEANT HOLDINGS: Files Bare-Bones Ch. 11 Petition --------------------------------------------------- Trigeant Holdings, Ltd., and Trigeant, LLC, sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 14-29027 and 14-29030) in West Palm Beach, Florida, on Aug. 25, 2014. Boca Raton, Florida-based Trigeant Holdings estimated $50 million to $100 million in assets and liabilities. Trigeant LLC estimated less than $10 million in assets and less than $50 million in debt. Judge Paul G. Hyman, Jr., is assigned to the case. Governmental entities have until Aug. 23, 2015 to file claims. The Debtors have the law firm of Berger Singerman LLP as counsel. TRISTAR WELLNESS: Delays Filing of Second Quarter Form 10-Q ----------------------------------------------------------- TriStar Wellness Solutions, Inc., filed with the U.S. Securities and Exchange Commission a Notification of Late Filing on Form 12b- 25 with respect to its quarterly report on Form 10-Q for the period ended June 30, 2014. According to the Company, data and other information regarding certain material operations of the Company, as well as its financial statements required for the filing, are not currently available and could not be made available without unreasonable effort and expense. The Company anticipates its financial results for the six months ended June 30, 2014, will differ significantly from the same period of the prior year due to: (i) the Asset Purchase Agreement with NorthStar Consumer Products, LLC, that closed on Feb. 12, 2013; and (ii) the Company's acquisition of HemCon Medical Technologies Inc., that closed on May 6, 2013. "Unlike the six months ended June 30, 2013, our financial statements for the six months ended June 30, 2014 will reflect the operations of HemCon for the entire period, which relate to the development, manufacturing and marketing of innovative wound care/infection control medical devices. The operations we acquired as a result of our acquisition of HemCon will significantly impact our revenue and cost of goods sold, operating expenses, as well as change our net profit/loss for the six months ended June 30, 2014 when compared to the same period a year ago. The exact impact will not be known until our financial statements for the six months ended June 30, 2014 are completed," the Company stated. TriStar Wellness Solutions, Inc., offers products and technologies in the areas of wound care, women's health and therapeutic skin care. The Company is based in Westport, Connecticut. The Company's balance sheet at March 31, 2014, showed $5.27 million in total assets, $12.1 million in total liabilities, and stockholders' deficit of $6.83 million. TUNICA-BILOXI GAMING: Moody's Cuts Corp. Family Rating to Caa3 -------------------------------------------------------------- Moody's Investors Service downgraded Tunica-Biloxi Gaming Authority's (TBGA or the Authority) Corporate Family Rating to Caa3 from Caa2, its Probability of Default Rating to Caa3-PD from Caa2-PD, and its senior unsecured note rating to Caa3 from Caa2. The rating outlook is negative. Rating Rationale The downgrade reflects the double digit declines in TBGA's EBITDA that increases the likelihood that TBGA will have difficulty refinancing its $150 million senior notes when they come due in November 2015. The EBITDA declines in each of the last six quarters have been caused by increased competition in its primary market area in central Louisiana. In addition to Moody's concerns about the sustainability of TBGA's capital structure, the Caa3 Corporate Family Rating (CFR) reflects its high leverage -- debt/EBITDA was 6.8 times for the trailing twelve months ended June 29, 2014 (or above 10 times debt/EBITDA less tribal distributions) -- and weak interest coverage of EBITDA less capex/interest of about 1.1 times. The opening of two new competitors -- L'auberge Baton Rouge and the Jena Choctaw Pines Casino just north of Alexandria, LA -- along with reduce spending by visitors to TBGA's Paragon casino -- has caused its gaming revenue declines to outpace its expense reductions. Despite Moody's expectation for negative free cash flow over the next 12 months, TBGA's modest cash balances should be sufficient to cover the deficiencies, at least until its notes mature in November 2015. The negative rating outlook reflects Moody's expectations that TBGA's earnings will continue to remain under pressure in the near term which will result in the Authority having difficulty refinancing its notes in November 2015 without a restructuring. The negative rating outlook also takes into consideration the uncertainty surrounding the management of the casino as the Authority has decided not to renew the contract of its management company and has not named a new managing company. TBGA's ratings could be downgraded if liquidity deteriorates or its probability of default increases for any reason. Ratings are unlikely to be upgraded in the near-term without material improvement in earnings or a successful refinancing of its senior unsecured notes due 2015. Ratings downgraded: -- Corporate Family Rating to Caa3 from Caa2 -- Probability of Default Rating to Caa3-PD from Caa2-PD -- $150 million 9.0% senior unsecured notes due 2015 to Caa3 (LGD4) from Caa2 (LGD4) Tunica-Biloxi Gaming Authority is an unincorporated governmental agency of the Tunica-Biloxi Tribe of Louisiana. TBGA owns and operates the Paragon Casino Resort located in Marksville, Louisiana. As of June 29, 2014 the casino had 1,655 slot machines, 44 house banked table games (including blackjack and specialty games), nine poker tables, a pari-mutuel off-track betting room and live keno. The facility also features a convention/entertainment center, three full-service restaurants, a 550 seat buffet, 18 hole golf course and a 535-room hotel. The principal methodology used in this rating was Global Gaming Industry published in June 2014. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. UBL INTERACTIVE: June 30 Balance Sheet Upside-Down by $4.65MM ------------------------------------------------------------- UBL Interactive, Inc., filed its quarterly report on Form 10-Q, reporting a net income of $377,421 on $1.36 million of total revenue for the three months ended June 30, 2014, compared with a net loss of $327,108 on $923,415 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $2.62 million in total assets, $7.27 million in total liabilities, and a stockholders' deficit of $4.65 million. The Company had an accumulated deficit at June 30, 2014 and a net loss for the nine months then ended. These factors raise substantial doubt about the Company's ability to continue as a going concern, according to the regulatory filing. A copy of the Form 10-Q is available at: http://is.gd/1N3t1j UBL Interactive, Inc., provides a set of online identity management tools and services to businesses seeking to optimize their presence in location based search results on Web, mobile and social platforms. The Company's profile management services allow businesses to take control of profile pages in trafficked, search engines and social media sites, providing enhanced content about their products and services. As part of these services, the Company also provides an expanding range of analytical and monitoring tools. The Company offers services in the United States of America, Canada, The United Kingdom and Australia. The Company provides its listing services to businesses directly from its site, and through interactive marketing agencies and channel sales partnerships. UMED HOLDINGS: Incurs $746K Net Loss in Q2 of 2014 -------------------------------------------------- UMED Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $745,562 on $4,103 of total revenue for the three months ended June 30, 2014, compared with a net loss of $609,056 on $3,019 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $2.1 million in total assets, $3.68 million in total liabilities, and a stockholders' deficit of $1.58 million. The Company has incurred a deficit of $5,265,490 as of June 30, 2014. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations, according to the regulatory filing. A copy of the Form 10-Q is available at: http://is.gd/o5zFtl UMED Holdings, Inc., is a Fort Worth, Texas-based global diversified holding company that owns and operates businesses in a variety of industries including energy, oil and gas, aerospace, food and beverage, and mining. UNION GROVE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Union Grove Saw & Knife, Inc. 157 Sawtooth Lane Union Grove, NC 28689 Case No.: 14-50617 Chapter 11 Petition Date: August 27, 2014 Court: United States Bankruptcy Court Western District of North Carolina (Statesville) Judge: Hon. Laura T. Beyer Debtor's Counsel: Melanie D. Johnson Raubach, Esq. HAMILTON STEPHENS STEELE MARTIN PLLC 201 S. College Street, Suite 2020 Charlotte, NC 28244 Tel: 704-227-1059 Fax: 704-344-1483 Email: mraubach@lawhssm.com - and - Glenn C. Thompson, Esq. HAMILTON STEPHENS STEELE & MARTIN PLLC 201 S. College St., Suite 2020 Charlotte, NC 28244-2020 Tel: (704) 227-1067 Fax: (704) 344-1483 Email: gthompson@lawhssm.com Total Assets: $1.22 million Total Liabilities: $1.19 million The petition was signed by Edward A. Bissell, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/ncwb14-50617.pdf UNITED AMERICAN: Authorized Common Shares Hiked to 150 Million -------------------------------------------------------------- United American Healthcare Corporation filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State, increasing the number of authorized shares of common stock of the Corporation to 150 million, according to a regulatory filing with the U.S. Securities and Exchange Commission. Article 3 of the Articles of Incorporation of the Corporation has been amended to read: "The total number of shares of capital stock that the Corporation is authorized to issue is One Hundred and Fifty Five Million (155,000,000) shares, of which (i) Five Million (5,000,000) shares are designated as preferred stock, par value $0.001 per share, and (ii) One Hundred and Fifty Million (150,000,000) shares are designated as common stock, par value $0.001 per share." About United American Chicago-based United American Healthcare, through its wholly owned subsidiary Pulse Systems, LLC, provides contract manufacturing services to the medical device industry, with a focus on precision laser-cutting capabilities and the processing of thin-wall tubular metal components, sub-assemblies and implants, primarily in the cardiovascular market. The Company disclosed a net loss of $769,000 on $3.23 million of contract manufacturing revenue for the six months ended Dec. 31, 2013, as compared with net income of $82,000 on $3.83 million of contract manufacturing revenue for the same period in 2012. Bravos & Associates, CPA's, in Bloomingdale, Illinois, issued a "going concern" qualification on the consolidated financial statements for the year ended June 30, 2013. The independent auditors noted that the Company's liabilities and working capital raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at March 31, 2014, showed $14.95 million in total assets, $13.11 million in total liabilities and $1.84 million in total shareholders' equity. VERAX RESTAURANT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Verax Restaurant Group, Inc. dba Denny's Restaurant 8019 4760 E. Cesar Chavez Ave. Los Angeles, CA 90022 Case No.: 14-26418 Chapter 11 Petition Date: August 26, 2014 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Hon. Richard M Neiter Debtor's Counsel: Giovanni Orantes, Esq. THE ORANTES LAW FIRM, A.P.C. 3435 Wilshire Blvd Ste 2920 Los Angeles, CA 90010 Tel: 888-619-8222 Fax: 877-789-5776 Email: go@gobklaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Zinaida Pishik, president. A list of the Debtor's 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/cacb14-26418.pdf VERITEQ CORP: Reports Issuances of Promissory Notes --------------------------------------------------- VeriTeQ Corporation entered into a securities purchase agreement effective on Aug. 20, 2014, with an accredited investor pursuant to which the Company issued and sold to the Investor a convertible promissory note, bearing interest at 6% per annum, in the amount of $127,500. The 6% Note matures on Aug. 4, 2015, and may be converted in whole or in part into the Company's common stock, at the option of the holder at a conversion price equal to a 40% discount from the average of the three lowest daily trading prices in the ten trading days prior to the day that the holder requests conversion. Trading price means, as of any date, the lowest trading price on the Over-the-Counter Bulletin Board, or applicable trading market as reported by a reliable reporting service mutually acceptable to the Company and the holder. However, in no event will the holder be entitled to convert any portion of the 6% Note if that conversion would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of the Company's common stock, subject to possible adjustment as provided in the 6% Note. Assignment of Corbin Note The Company entered into an assignment agreement, dated Aug. 4, 2014, with an accredited investor, which became effective on Aug. 20, 2014, pursuant to which the Accredited Investor purchased from Corbin Properties LLC a note in the amount of $183,500. The Corbin Note now matures on Aug. 4, 2015, and may be converted in whole or in part into the Company's common stock, at the option of the holder at a conversion price equal to a 40% discount from the average of the three lowest daily trading prices in the ten trading days prior to the day that the holder requests conversion. Trading price means, as of any date, the lowest trading price on the Over-the-Counter Bulletin Board, or applicable trading market as reported by a reliable reporting service mutually acceptable to the Company and the Accredited Investor. However, in no event will the holder be entitled to convert any portion of the Corbin Note if that conversion would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of the Company's common stock, subject to possible adjustment as provided in the Corbin Note. Securities Purchase Agreement On Aug. 13, 2014, the Company entered into a securities purchase agreement with an accredited investor, which became effective on Aug. 21, 2014, pursuant to which the Company issued and sold to the purchaser a convertible promissory note in the aggregate principal amount of $42,500. The note, which accrues interest at a rate of 8% per annum, will mature on May 15, 2015. The note provides the Company with several pre-payment options with varying amount due depending upon the timing of the prepayment. The note may be converted in whole or in part into the Company's common stock, at the option of the holder, at any time following 180 days after issuance and until the maturity date, unless the conversion or share issuance under the conversion would cause the holder to beneficially own in excess of 4.99% of the Company's common stock. The conversion price will be 61% multiplied by the market price. Promissory Note dated August 25, 2014 On Aug. 25, 2014, the Effective Date the Company issued a master convertible promissory note to an accredited investor in the amount of $115,000, which included an original issue discount, or OID, in the amount of $10,000. The Company netted cash of $92,000 after payment of the Lender's expenses and a finder's fee. Under the terms of the Master Note, the Lender will have the right, but not the obligation to lend additional funds to the Company in up to four additional tranches, each in the amount of $100,000, at any time or from time to time beginning on the Effective Date and ending one year from the date that the entire outstanding balance of the most recently funded promissory note has been repaid. Each Subsequent Note will have an initial outstanding balance of $110,000, consisting of $100,000 payable in cash and a $10,000 OID. No Subsequent Note will be considered a valid, binding or enforceable obligation of the Company until the Lender delivers to the Company: (i) the purchase price for the applicable Subsequent Note, and (ii) a copy of the applicable Subsequent Note. The Master Note and any Subsequent Note will be interest free for the first 90 days after issuance. If a note is not repaid in 90 days, it will bear a one-time interest charge of 12%. The notes may be prepaid anytime within 90 days of issuance. After 90 days, the note may be prepaid subject to the Lender's consent and a 125% prepayment premium. 8% Convertible Redeemable Note On Aug. 26, 2014, the Company issued and sold a convertible promissory note in the principal amount of $100,000. The Company has agreed to pay the purchaser's expenses and fees in connection with the issuance of the note. The note matures on Aug. 26, 2015. The note may be converted in whole or in part into the Company's common stock, at the option of the holder, at any time after issuance and until the maturity date. The conversion price will be 60% of the lowest three closing prices for the Company's common stock during the 10 trading day period ending on the date of receipt of the conversion notice. About VeriTeQ VeriTeQ (formerly known as Digital Angel Corporation) develops innovative, proprietary RFID technologies for implantable medical device identification, and dosimeter technologies for use in radiation therapy treatment. VeriTeQ offers the world's first FDA cleared RFID microchip technology that can be used to identify implantable medical devices, in vivo, on demand, at the point of care. VeriTeQ's dosimeters provide patient safety mechanisms while measuring and recording the dose of radiation delivered to a patient in real time. For more information on VeriTeQ, please visit www.veriteqcorp.com . Veriteq Corporation reported a net loss of $15.07 million on $18,000 of sales for the year ended Dec. 31, 2013, as compared with a net loss of $1.60 million on $0 of sales for the year ended Dec. 31, 2012. As of June 30, 2014, the Company had $7.04 million in total assets, $14.16 million in total liabilities and a $7.12 million total stockholders' deficit. EisnerAmper LLP, in New York, New York, 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 incurred recurring net losses, and at Dec. 31, 2013, had negative working capital and a stockholders' deficit. These events and conditions raise substantial doubt about the Company's ability to continue as a going concern. WAFERGEN BIO-SYSTEMS: Hal Mintz Holds 9.9% Equity Stake ------------------------------------------------------- Hal Mintz and his affiliates disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that as of Aug. 22, 2014, they beneficially owned 560,000 shares of common stock of WaferGen Bio-Systems, Inc., representing 9.91 percent of the shares outstanding. A copy of the Schedule 13G is available for free at http://is.gd/0FF0zS About WaferGen Bio-systems Fremont, California-based WaferGen Bio-systems, Inc., engages in the development of systems for gene expression quantification, genotyping and stem cell research. Since 2008, the Company's primary focus has been on the development, manufacture and marketing of its SmartChip System, a genetic analysis platform used for profiling and validating molecular biomarkers in the life sciences and pharmaceutical drug discovery industries. WaferGen reported a net loss attributable to common stockholders of $17.71 million in 2013, following a net loss attributable to common stockholders of $8.97 million in 2012. The Company's balance sheet at June 30, 2014, showed $9.41 million in total assets, $7.69 million in total liabilities and $1.71 million in total stockholders' equity. SingerLewak LLP, in San Jose, California, issued a "going concern" qualification on the consoliated financial statements for the year ended Dec. 31, 2013. The independent auditors noted that the Company has incurred operating losses and negative cash flows from operating activities since inception which raise substantial doubt about the Company's ability to continue as a going concern. WEST TEXAS GUAR: Files Chapter 11 Plan of Reorganization -------------------------------------------------------- West Texas Guar, Inc. on August 25 filed with the U.S. Bankruptcy Court for the Northern District of Texas its proposed plan to exit Chapter 11 protection. The plan of reorganization, which West Texas Guar co-proposed with Scopia Windmill Fund LP, would allow the company to continue to operate, process guar beans and sell them for money to pay creditors while the court litigates the lien rights of Scopia and the guar bean producers. Edgar Montalvo, who has been working as West Texas Guar's chief restructuring officer since April 9, will continue to manage the operations of the company, which will be owned by Scopia, according to the disclosure statement outlining the company's restructuring plan. Farmers who supplied beans to West Texas Guar during the 2013-2014 growing season will receive a percentage distribution based on the outcome of current pending litigation in connection with the validity and priority of their liens. The proposed plan divides claims and interests into nine classes and discusses how each class will be treated. Classes 1 and 2 are comprised of priority non-tax claims and secured tax claims, respectively. Class 3 is comprised of secured claims held by Scopia while Class 4 is comprised of secured claims of creditors who supplied West Texas Guar with guar beans prior to its bankruptcy pursuant to their written agreements. Claims asserted by other secured creditors are classified in Class 6. Class 5 is comprised of lenders of Class 4 creditors who assert a lien in guar beans and who sent a notice to the company under Section 1324 of the Food Security Act. Meanwhile, general unsecured claims are classified in Class 7. Holders of subordinated claims in Class 8 and interests in West Texas Guar in Class 9 won't receive distributions under the plan. All interests in West Texas Guar will be canceled when the company officially emerges from bankruptcy, according to the disclosure statement. The disclosure statement is available for free at http://is.gd/P1ju6r About West Texas Guar Representatives of 24 farms filed an involuntary Chapter 11 bankruptcy petition (Bankr. N.D. Tex. Case No. 14-50056) on March 14, 2014, against West Texas Guar Inc. The farmers claim they are owed nearly $4 million for seed they've delivered on the 2013 harvest but haven't been paid for. Guar is a seed crop that has a variety of uses in human and animal food production, textiles and fracking for oil and gas wells. Judge Robert L. Jones oversees the case. The farmers are represented by R. Byrn Bass, Jr., Esq., Attorney at Law. WTG is represented by Samuel M. Stricklin, Esq., Tricia R. DeLeon, Esq., and Lauren C. Kessler, Esq., at Bracewell & Giuliani LLP, in Dallas, Texas. WEST TEXAS GUAR: Drops Bid to Value Claims of Bean Producers ------------------------------------------------------------ West Texas Guar, Inc. withdrew its motion to value the claims filed by guar bean producers against the company. The company on June 6 sought approval from the U.S. Bankruptcy Court for the Northern District of Texas to value the claims in connection with a settlement agreement it made with the producers regarding the use of its cash collateral. One of the conditions of the settlement is for West Texas Guar to pay 75% of each producer's undisputed claim in full satisfaction of that claim. Prior to the settlement, the company on May 7 filed a motion for use of cash collateral in which it asked for court approval to resume business operations, and deposit a certain amount of its proceeds into account as "adequate protection" for the producers, according to court filings. About West Texas Guar Representatives of 24 farms filed an involuntary Chapter 11 bankruptcy petition (Bankr. N.D. Tex. Case No. 14-50056) on March 14, 2014, against West Texas Guar Inc. The farmers claim they are owed nearly $4 million for seed they've delivered on the 2013 harvest but haven't been paid for. Guar is a seed crop that has a variety of uses in human and animal food production, textiles and fracking for oil and gas wells. Judge Robert L. Jones oversees the case. The farmers are represented by R. Byrn Bass, Jr., Esq., Attorney at Law. WTG is represented by Samuel M. Stricklin, Esq., Tricia R. DeLeon, Esq., and Lauren C. Kessler, Esq., at Bracewell & Giuliani LLP, in Dallas, Texas. WOUND MANAGEMENT: Incurs $776K Net Loss for Q2 of 2014 ------------------------------------------------------ Wound Management Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $775,924 on $544,350 of total revenue for the three months ended June 30, 2014, compared with a net loss of $32,336 on $415,693 of total revenue for the same period in 2013. The Company's balance sheet at June 30, 2014, showed $2.21 million in total assets, $2.36 million in total liabilities, and a stockholders' deficit of $141,463. The Company has current liabilities in excess of current assets and has a stockholders' deficiency. The Company has had limited operations and has not been able to develop an ongoing, reliable source of revenue to fund its existence. The Company's day-to-day expenses have been covered by proceeds obtained and services paid by the issuance of stock and notes payable. The adverse effect on the Company's results of operations due to its lack of capital resources can be expected to continue until such time as the Company is able to generate additional capital from other sources. These conditions raise substantial doubt about the Company's ability to continue as a going concern, according to the regulatory filing. A copy of the Form 10-Q is available at: http://is.gd/Ig797D About Wound Management Fort Worth, Texas-based Wound Management Technologies, Inc., markets and sells the patented CellerateRX(R) product in the expanding advanced wound care market; particularly with respect to diabetic wound applications. Wound Management disclosed a net loss of $1.84 million on $1.17 million of revenue for the year ended Dec. 31, 2012, as compared with a net loss of $12.74 million on $2.21 million of revenue during the prior year. The Company's balance sheet at Sept. 30, 2013, showed $1.18 million in total assets, $6.66 million in total liabilities and a $5.48 million total stockholders' deficit. Pritchett, Siler & Hardy, P.C., in Salt Lake City, Utah, 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 substantial losses and has a working capital deficit which factors raise substantial doubt about the ability of the Company to continue as a going concern. YELLOWSTONE MOUNTAIN: Reward Offered for Tim Blixseth Assets ------------------------------------------------------------ Matt Volz, writing for The Associated Press, reported that the trustee representing Yellowstone Club creditors offered a reward to anyone who can help uncover property or bank accounts the luxury resort's co-founder might have hidden from bankruptcy proceedings. According to the report, Brian Glasser, an attorney with Bailey & Glasser LLP of Charleston, West Virginia, offered 10 percent of the profits of the liquidated assets recovered from Tim Blixseth to anyone with information that leads to their discovery. About Yellowstone Mountain Located near Big Sky, Montana, Yellowstone Mountain Club LLC -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Club and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Montana, Case No. 08-61570) on Nov. 10, 2008. The Company's owner affiliate, Edra D. Blixseth, filed a separate Chapter 11 petition on March 27, 2009 (Case No. 09-60452). Attorneys at Bullivant Houser Bailey PC and Bekkedahl & Green PLLC represented Yellowstone. The Debtors hired FTI Consulting Inc. and Ronald Greenspan as CRO. The official committee of unsecured creditors were represented by Parsons, Behle and Latimer; and James H. Cossitt, Esq., as counsel. Credit Suisse, the prepetition first lien lender, was represented by Skadden, Arps, Slate, Meagher & Flom. In June 2009, the Bankruptcy Court entered an order confirming Yellowstone's Chapter 11 Plan. Pursuant to the Plan, CrossHarbor Capital Partners LLC acquired equity ownership in the reorganized Club for $115 million. Marc S. Kirschner, Esq., was appointed the Trustee of the Yellowstone Club Liquidating Trust created under the Plan. * 8th Circ. Says Grain Tax Fraudster Deserved Longer Sentence ------------------------------------------------------------- Law360 reported that the Eighth Circuit upheld a 46-month sentence against a man convicted of defrauding a federally licensed grain operator in Iowa through bribery, threats and deception, saying lies he told during his prosecution warrant the enhanced penalty. According to the report, the appeals court found that Michael Recker lied about not knowing an elevator employee prosecutors claimed he had bribed and coerced into participating in the scheme or about the checks sent from a girlfriend's account to pay the employee. The case is United States v. Michael Recker, Case No. 13-2639 (8th Cir.). * Relying on Lexis 'Dismissed' Report Doesn't Violate FCRA ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that U.S. District Judge Tanya Walton Pratt in Indianapolis found no violation of the federal Fair Credit Reporting Act when a credit-reporting company, which receives all of its information about consumer bankruptcies from Lexis, shows a consumer bankruptcy as "dismissed" even though it was voluntarily withdrawn. According to the report, Judge Pratt said in her opinion that the FCRA doesn't require "unreasonable procedures just to ensure greater accuracy," relying in part on testimony from Lexis saying there's no way to devise a computer system to cull cases that were withdrawn. The case is Childress v. Experian Information Systems Inc., 12-01529, U.S. District Court, Southern District of Indiana (Indianapolis). * One-Creditor, No-Asset Case Should Be Dismissed, Judge Says ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that that U.S. District Judge Sam A. Lindsay ruled that it was error for a bankruptcy judge to deny a motion to dismiss filed by the sole creditor of a company with no assets, saying there was no purpose to the Chapter 7 bankruptcy of a fund sued by the bankruptcy trustee of the group founded by Ponzi schemer Thomas Petter. According to the report, Judge Lindsay said as a corporation, the fund would receive no discharge in Chapter 7 and creditors couldn't benefit because there was nothing to distribute. In the fund's case, the Petters trustee was the only creditor aside from one insider. The case is Kelley v. Cypress Financial Trading Co. LP, 13-02282, U.S. District Court, Northern District Texas (Dallas). * Standard Chartered Fined $300-Mil. for Backlisting ---------------------------------------------------- Ben Protess and Chad Bray, writing for The New York Times' DealBook, reported that the New York State's financial regulator has entered into a settlement under which Standard Chartered will pay a $300 million and suspend an important business activity because of the bank's failure to fulfill its promise to weed out transactions prone to money-laundering. According to the report, the New York regulator is penalizing Standard Chartered for running afoul of a 2012 settlement with state and federal authorities, which resolved accusations that the bank, in part through its New York branch, processed transactions for Iran and other countries blacklisted by the United States. * Junk Companies Feeling Little Liquidity Stress, Moody's Says -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, and Sherri Toub, a Bloomberg News writer, reported that latest statistics from Moody's Investors Service showed that bankruptcies will be few among junk-rated companies. According to the report, Moody's liquidity stress index crept up to 4.1 percent in mid- August from 3.9 percent in mid-July. * Mark Kaufman Relocates to McKenna's San Francisco Office ---------------------------------------------------------- With many California cities continuing to show signs of fiscal distress, McKenna Long & Aldridge has relocated litigation partner Mark Kaufman, co-chair of the firm's Municipal Reform & Innovation practice, to its San Francisco office from the Atlanta office. His practice focuses on advising financially distressed cities and towns -- as well as tax-exempt bondholders, bond insurers and other public finance stakeholders -- on issues and strategies stemming from fiscally challenged municipal credits. One of the country's leading municipal restructuring lawyers, Mr. Kaufman was recently honored by the Turnaround Atlas Awards as winner of the Out-of-Court Restructuring of the Year Award for Middle Markets. He was also selected as Mid-Market Restructuring Lawyer of the Year and listed as one of the top 100 restructuring and turnaround professionals in the world. Some of that recognition reflected Mr. Kaufman's role as lead counsel advising the Governor-appointed Receiver of the City of Harrisburg, PA in concluding a complex financial restructuring without resorting to Chapter 9 bankruptcy filing. Mr. Kaufman was able to successfully work with a broad group of bondholders and other creditors in developing an out-of-court plan of reorganization for the Pennsylvania state capital in restructuring more than $400 million in debt. His contributions weren't lost on local constituents -- an article inn Harrisburg's daily newspaper last December commented, "In the extraordinarily complex world of bankruptcy law, Kaufman is one of the best." Mr. Kaufman will lead McKenna's work in municipal restructuring matters in California at a time when local governments across the state are facing a gauntlet of challenges, from underfunded public pension plans to a shrinking tax base and nagging high unemployment. Three California cities have filed Chapter 9 bankruptcies in the last several years -- San Bernadino, Stockton and Vallejo -- and a fourth, Mammoth LLakes, had its case dismissed. Frequent news reports have identified numerous other cities throughout the state that could face default on public debt -- including Oakland, San Jose, Fresno and Compton. "California represents the largest collection of municipal governments of any state in the country -- and it's no secret that many of those cities have remained under severe fiscal stress since the recession," said Charley Maher, who recently was named managing partner for McKenna's San Francisco office. "Having Mark Kaufman resident in our office, with his deep knowledge of distressed public debt, and coming off his tremendous success in helping bring Harrisburg back from the brink, is a huge asset for our West Coast insolvency group," Mr. Maher added. "Mark's breadth of knowledge on municipal reform and restructuring complements our existing litigation, transaction and financial practices throughout the state." Mr. Kaufman commented: "California is unique laboratory for municipal reform -- the state has enormmous wealth and marketplace vitality, and is home to many of the country's most profitable and innovative companies. But it's also straining in many areas from job loss, corporate exodus, poor fiscal management and other problems that have squeezed many municipalities. I'm looking forward to working with local governments as well as investors and other key participants in the state's tax-exempt arena in finding the best solutions to fiscal problems." He previously served as President of the Bankruptcy Section of the Atlanta Bar Association and is a former chair of Georgia's Bankruptcy Bench and Bar Conference, as well as the Southeastern Bankruptcy Law Institute. He earned his J.D. from Harvard Law School (1973) and his B.S. from Cornell University (1969). McKenna's San Francisco office, located in the city's financial district, has more than 40 attorneys experienced in a wide range of practices, including real estate finance, business litigation, insurance coverage, product liability and toxic torts, environmental and energy law, intellectual property, unfair trade practices, product regulation and other areas. About McKenna Long & Aldridge McKenna Long & Aldridge LLP -- http://www.mckennalong.com-- is an international law firm with 575 attorneys and public policy advisors in 15 offices and 13 markets. The firm is uniquely positioned at the intersection of law, business and government, representing clients in the areas of complex litigation, corporate law, energy, environment, finance, government contracts, health care, infrastructure, insurance, intellectual property, private client services, public policy, real estate, and technology. * BOOK REVIEW: Competition, Regulation, and Rationing in Health Care ----------------------------------------------------- Author: Greenberg, Warren Publisher: Beard Group Paperback: 188 pages List Price: $34.95 Review by: Gail Hoelscher Order you personal copy today at http://tinyurl.com/m9rpon8 This book is fundamental reading for those involved directly in health care as well as those interested and concerned about the past, present and future of the health care industry in the United States. Originally published in 1990, Warren Greenberg examined the U.S. health care sector over the period 1960-1988 using standard industrial organization economic analysis. He looked at regulation and competition, antitrust elements, technology, and rationing, as well as pricing behavior and advertising. Although some experts claimed the health care industry to be unique and outside the purview of such analysis, Dr. Greenberg demonstrated that all industries differ in their own ways, but nonetheless can be analyzed using these techniques. Dr. Greenberg's first goal in writing this book was to educate the layperson about the economics of the health care industry. Economists have pointed out two major potential differences between health care and other sectors of the economy: uncertainty of demand and imperfect and imbalanced information on the part of providers and consumers. Dr. Greenberg agrees with the first and less so with the second. Obviously, the timing, extent and length of future illness and the demand for medical services are impossible to know. A good deal of the consumer's uncertainty is smoothed over by health insurance. The uncertainty for insurance companies in the sector is somewhat different than that for other industries: while consumers commonly seek more health care than they would if they were not covered, it is rare for someone to burn down his own home just to collect the insurance. With regard to the imbalance in information, physicians do indeed know more about a particular illness and treatment than the average potential patient, but Dr. Greenberg asks how that differs from plumbing, law and accounting! Dr. Greenberg identified and described the industries that make up the health care sector: medical services, hospitals, insurance, and long-term care. He explored market failures and imperfections in each and detailed some of the measures government has taken to correct these imperfections. For example, he described the efforts of the federal government to force competition in the medical services field and how barriers to entry imposed by physicians' lobbies to limit the number of physicians in practice were lifted, physicians were permitted to advertise, and restrictions on the services of non-physicians were eased. He recounted efforts to require hospitals to disclose information on mortality rates, infections, and medical complications. Dr. Greenberg's second goal in writing the book was to consider policy options. Although he claims skepticism of regulation (after working for the federal government), he believes that ongoing efforts to devise a more efficient and equitable health care system will require more competition, regulation, and rationing. He examined the Canadian, British and Dutch systems, so fascinating and different from ours, and found the Dutch system the least regulatory and most equitable. This book is a primer on the health care industry. Dr. Greenberg explains economic terms in a straightforward and clear way without condescension and takes the reader way beyond Economics 101. Although the sector has changed significantly since this book was published, Dr. Greenberg's analysis of the past offers valuable insight into why our system evolved the way it did and what direction it might take in future. ********* 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 ***