T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, June 18, 2009, Vol. 13, No. 167
Headlines
ABITIBIBOWATER INC: Enters into Amended Securitization Facility
ABITIBIBOWATER INC: Seeks to Pay Augusta Newsprint's $9.5MM Claim
ABITIBIBOWATER INC: Seeks Canada Court OK to Pay Employees
ABITIBIBOWATER INC: Settlement With Alabama Power Gets Court Nod
ABITIBIBOWATER INC: Court Denies CEP's Request to Lift CCAA Stay
ACCESS WAREHOUSES: Case Summary & 4 Largest Unsecured Creditors
ACCURIDE CORP: Erie Unit Closes $2.5MM Improvement Financing
ADVANTA CORP: Fitch Downgrades Issuer Default Rating to 'RD'
AGT CRUNCH: U.S. Trustee Says Dechert Has Conflict of Interest
ALLEGHANY CORP: S&P Withdraws 'BB+' Preferred Stock Rating
AMALGAMATED ARMADILLO: Case Summary & 3 Largest Unsec. Creditors
AMERICAN HOUSING: To Pursue Late CEO's $24MM Life Insurance
AMERICAN INT'L: Says Maurice Greenberg Improperly Seized Shares
AMH HOLDINGS: Exchange Agreement Won't Affect S&P's 'CCC+' Rating
ANCHOR BLUE: DIP Financing From Wachovia Bank Has Interim Approval
ANCHOR BLUE: To Close Additional 14 Stores
APPALACHIAN OIL: NRC to Hold Sealed Bid Sale; July 9 Deadline Set
ASARCO LLC: Brattle Group's Testimony Contributes to Settlement
ASARCO LLC: Two Parties Object to Sale of Perth Amboy Property
ASSOCIATED MATERIALS: Exchange Pact Won't Affect S&P's CCC+ Rating
ASYST TECHNOLOGIES: Bid Protocol Approved; July 17 Hearing Set
ASYST TECHNOLOGIES: Can Use Lenders' Cash Collateral 'til June 30
AUDIO VISUAL: Moody's Cuts Corp. Family Rating to B2; Outlook Neg.
AVIS BUDGET: Moody's Takes Rating Actions on Four Series of Notes
BANK OF AMERICA: Court Can Retry Former Merrill Executives' Case
BANKUNITED FINANCIAL: Court Approves Interim Trading Procedures
BANKUNITED FINANCIAL: Court Limits Equity Trades to Protect NOLs
BALLY TOTAL: Committee Counsel Retained by Party in AGT Case
BALLY TOTAL: Opposes Admiral Insurance Bid to Lift Stay
BALLY TOTAL: Opposes H&S Journal Demand for $290,107 Rent
BEAZER HOMES: S&P Downgrades Corporate Credit Rating to 'CCC'
BLB MANAGEMENT: Moody's Withdraws 'Ca' Corporate Family Rating
BRSP LLC: Moody's Assigns 'B1' Rating on $275 Mil. Facility
BUILDING MATERIALS: Chapter 11 Filing Cues Moody's 'D' Rating
BUILDING MATERIALS: Gets Interim Approval For $80MM DIP Facility
BULLSEYE COLLISION: Case Summary & 20 Largest Unsecured Creditors
BUTLER INT'L: To Sell Assets to Meet Buyer's Month-End Deadline
CANTILLON CAPITAL: Will Close Hedge Funds
CANWEST MEDIA: Lenders Extend Forbearance to June 30; Talks Go On
CAPITAL CORP: Wilmington Trust Appointed to Creditors' Panel
CELL THERAPEUTICS: Defers Payment of 25% Executives Cash Bonuses
CHENIERE ENERGY: Board OKs $160,000 Compensation to Directors
CHRYSLER LLC: To Resume Production at 7 Assembly Plants
CLAIRE'S STORES: Balance Sheet Upside-Down by $79MM as of May 2
CONTINENTAL AIRLINES: S&P Puts 'CCC+' Rating on Subordinated Debt
COOPER BROTHERS: Case Summary & 20 Largest Unsecured Creditors
COOPER-STANDARD AUTOMOTIVE: S&P Cuts Corp. Credit Rating to 'D'
COREL CORP: Denies Knowledge on Surge in Trading Volume, Price
COYOTES HOCKEY: Owner to Work on Open, Transparent Sales Process
COYOTES HOCKEY: Buyers Need $20MM in City Aid, Jim Balsillie Says
CRITICAL ACCESS HEALTH: Case Summary & 20 Largest Unsec. Creditors
DBSI INC: Creditors Committee Seeks to File Competing Plan
DELPHI CORP: Panel Wants Discovery on Platinum Equity Deal
DESERT AMERICAN: Voluntary Chapter 11 Case Summary
EDDIE BAUER: Case Summary & 30 Largest Unsecured Creditors
EDRA BLIXSETH: Court Rejects Plea Not to Liquidate Assets
EDDIE BAUER: Files for Chapter 11; To Sell to CCMP for $202MM
EMPIRE RESORTS: Hires KPMGCF to Raise $75 Million in Capital
E*TRADE FIN'L: Unveils $1.2BB Plan to Strengthen Capital Structure
E*TRADE FIN'L: Updates on May 2009 Activity, Loan Delinquencies
ETHAN ALLEN: S&P Downgrades Corporate Credit Rating to 'BB'
FARMLAND INDUSTRIES: Legal Fees Gives Bankr. Court Jurisdiction
FELCOR LODGING: S&P Retains Negative CreditWatch on 'B-' Rating
FIRST INDUSTRIAL: Moody's Cuts Senior Unsecured Rating to 'Ba3'
FOAMEX INTERNATIONAL: Wayzata Drops Appeal From Sale Order
FORD MOTOR: Navistar Hikes Equity Stake in Joint Ventures
FORTUNOFF FINE: PBGC Assumes Underfunded Pension Plan
GEORGIA GULF: Fitch Downgrades Issuer Default Rating to 'RD'
GETRAG TRANSMISSION: Has Liquidating Plan in Detroit Court
GLOBE RESTAURANT: Files for Chapter 7 Bankruptcy Protection
GOODMAN GLOBAL: Moody's Affirms 'B1' Corporate Family Rating
GREG MOSS: Files for Chapter 7; Talks with Trustcash Fall
GREAT SMOKEY: Voluntary Chapter 11 Case Summary
HARMAN INTERNATIONAL: Equity Offering Won't Move S&P's BB+ Rating
HARRAH'S ENTERTAINMENT: HOC Assumes $1.3BB in Note Obligations
HARTFORD FINANCIAL: Fitch Puts 'BB+' Ratings on Negative Watch
HAWAIIAN TELCOM: Terms of Proposed Reorganization Plan
HAWAIIAN TELCOM: Projects Up to 3% Recovery for Senior Noteholders
HAWAIIAN TELCOM: Disclosure Statement Hearing on August 11
HAWAIIAN TELCOM: Proposes FBG as Securities Voting Agent
HAWAIIAN TELCOM: Seeks September 30 Extension of Plan Period
HERBST GAMING: Sr. Sub Notes, Equity Get Nothing Under Plan
HEXION SPECIALTY: FTC Sets Aside Ruling on Failed Huntsman Merger
HUNTSMAN CORP: FTC Sets Aside Ruling on Failed Huntsman Merger
IMPERIAL CAPITAL: Case Summary & 20 Largest Unsecured Creditors
INDYMAC BANCORP: Trustee Sues FDIC to Recover $736MM Transfer
ISCHUS HIGH: S&P Downgrades Ratings on Class A-1S & A-1J Notes
JJJ ENTERPRISES: Voluntary Chapter 11 Case Summary
JUANA ORTEGA: Case Summary & 6 Largest Unsecured Creditors
KIWA BIO-TECH: In Talks with Investors to Resolve Event of Default
LEAR CORP: S&P Changes Recovery Ratings on $1 Bil. Loan to '3'
LIBBEY GLASS: Weak Performance Cues Moody's to Junk Ratings
LIMITED BRANDS: Fitch Assigns 'BB' Rating on $500 Mil. Notes
LINCOLN NAT'L: Fitch Keeps Low-B Ratings on Three Notes
LINENS 'N THINGS: Court Confirms Modified Third Amended Plan
LUMINENT MORTGAGE: Court Sets June 18 Plan Confirmation Hearing
MAGNA ENTERTAINMENT: Updated Case Summary & 50 Unsecured Creditors
MAGNACHIP SEMICONDUCTOR: Has Prenegotiated Chapter 11 Plan
MAGNACHIP SEMICONDUCTOR: May Use Cash Collateral Until July 8
MARK IV INDUSTRIES: Files Schedules of Assets and Liabilities
MARK IV INDUSTRIES: Secured Lenders to Own 92% of Newco Under Plan
MARY LUDENA: Case Summary & 14 Largest Unsecured Creditors
MGM MIRAGE: Gets Requisite Consents for $750MM Secured Notes
MICHAEL CALDARON: Case Summary & 20 Largest Unsecured Creditors
MOMENTIVE PERFORMANCE: Issues $200MM of 12-1/2% Notes Due 2014
MORTON INDUSTRIAL: Wins Court OK to Sell Biz for $33MM
NANOGEN INC: Court Approves Auction of Assets on June 23
NAVISTAR INT'L: Hikes Equity Stake in Joint Ventures With Ford
NORTH SHORE MUSIC: May File for Bankruptcy Protection
NORTHSHORE ASSET: Receiver to Hold Auction of Assets on July 10
NTK HOLDINGS: Taps Blackstone and Weil Gotshal as Advisors
OMNI LINGUAL SERVICES: Voluntary Chapter 11 Case Summary
OPUS SOUTH: Wachovia Bank Agrees to Pay For Firm's Bills
OSI RESTAURANT: Chief Operating Office Resigns, CEO Assumes Role
PACIFIC ENERGY: Seeks Nov. 4 Plan Deadline; Eyes Asset Sales
PAETEC HOLDING: Moody's Assigns 'B1' Rating on $350 Mil. Notes
PAETEC HOLDING: S&P Assigns 'B' Rating on $350 Mil. Debt
PALM INC: Cuts Board Seats to Eight, Names Rubinstein CEO & Prez
PENHALL HOLDING: Moody's Cuts Corporate Family Rating to 'Caa2'
PHILADELPHIA NEWSPAPERS: Gets 60-Day Extension for Plan Filing
PHILADELPHIA NEWSPAPERS: May Have Special Lawyer for Taping Issue
PPLACE TWO: Case Summary & 46 Largest Unsecured Creditors
QPC LASERS: Unit's Assets Sale Completion Cues Directors to Resign
QUANTUM CORP: Completes Offering of 4.375% Conv. Sub. Notes
QUANTUM CORP: Delays Filing of March 31 Form 10-Q Quarterly Report
QUANTUM CORP: Will Cease Issuing EMC Corp. Warrant to Buy Shares
QUANTUM CORP: Tender Offer Won't Affect S&P's 'CC' Rating
QUEBECOR WORLD: S&P Downgrades Ratings on Loan to 'B+' From 'BB-'
QUEBECOR WORLD: Committee to Retain Experts for Adversary Cases
QUEBECOR WORLD: Proposes Settlement With Vertis, et al.
REAL MEX: Mulls Offering of $110 Million Senior Secured Notes
REGIONS FINANCIAL: Fitch Cuts Long-Term Issuer Default Rating
RESORTS MEZZANINE: Collateral to be Sold at July 7 Public Auction
RESERVE MANAGEMENT: To Make Second Payout From Int'l Liquidity
RIVIERA HOLDINGS: Files Form 25 With SEC to Delist Common Stock
SABRE HOLDINGS: S&P Downgrades Corporate Credit Rating to 'SD'
SALEM COMMUNICATIONS: S&P Puts 'B-' Rating on CreditWatch Negative
SARAHE ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors
SCO GROUP: Inks Deal to Sell Unix Business to Gulf Capital
SEA CONTAINERS: Post-Confirmation Report for November 2008 Period
SEA CONTAINERS: Post-Confirmation Report for December 2008 Period
SEA CONTAINERS: Post-Confirmation Report for March 2009 Period
SENDTC INC: Seeks Court Approval on Sale to PHIDS Inc.
SHOPPES AT SILVER: Files for Chapter 11 Bankruptcy Protection
SIMTROL INC: Files Amendment to Specification of Shares Issued
SINCLAIR BROADCAST: Moody's Cuts Corporate Family Rating to 'B3'
SMITTY'S BUILDING: Court Confirms Chapter 11 Plan
SOUTHWEST ACADIA: Case Summary & 5 Largest Unsecured Creditors
SPECTRUM BRANDS: U.S. Trustee Fails to Name Creditors' Committee
STAR TRIBUNE: Reaches Tentative Pact With Teamsters Union
SWOLEN LLC: Case Summary & 7 Largest Unsecured Creditors
TARRAGON CORP: Court Approves KEIP for 8 Dallas Employees
TLC VISION: Former CEO to Receive $1-Mil. in Severance Payments
TRANS READ: Case Summary & 3 Largest Unsecured Creditors
TRUMP ENTERTAINMENT: Donald Trump Submits Offer to Acquire Firm
VINEYARD CHRISTIAN: Court Okays Bid Protocol; June 19 Auction Set
VINTAGE AT THE MESA: Case Summary & 19 Largest Unsecured Creditors
VRAD INVESTMENTS: Voluntary Chapter 11 Case Summary
WASHINGTON COUNTY: Will File for Chapter 11 Bankruptcy Protection
WATERFORD CUSTOM: Case Summary & 20 Largest Unsecured Creditors
WCI COMMUNITIES: Plan Filing Period Extended to June 30
WILLIAM LYON: S&P Raises Corporate Credit Rating to 'CCC-'
WR BERKLEY: Moody's Assigns 'Ba1' Initial Preferred Stock Rating
ZILA INC: Posts $1.4 Million Net Loss in Quarter ended April 30
* Factory Production and Wholesale Prices Make Record Lows
* Gov't Turns Down Auto Suppliers' Plea for Up to $10BB in Aid
* Household Wealth Drops $1.3 Trillion in First Quarter
* ICSC Retail Bankruptcy Program in Atlantic City on July 10
* Standard & Poor's Says 2009 Defaults Already Higher Than 2008
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
Thursday, June 18, 2009
Wednesday, June 17, 2009
EDDIE BAUER: Case Summary & 30 Largest Unsecured Creditors
Debtor: Eddie Bauer Holdings, Inc.
10401 N.E. 8th Street, Suite 500
Bellevue, WA 98004
Bankruptcy Case No.: 09-12099
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Eddie Bauer, Inc. 09-12100
Eddie Bauer Fulfillment Services, Inc. 09-12101
Eddie Bauer Diversified Sales, LLC 09-12103
Eddie Bauer Services, LLC 09-12104
Eddie Bauer International Development, LLC 09-12105
Eddie Bauer Information Technology, LLC 09-12106
Financial Services Acceptance Corporation 09-12107
Spiegel Acceptance Corporation 09-12108
Type of Business: Established in 1920 in Seattle, Eddie Bauer is a
specialty retailer that sells outerwear, apparel
and accessories for the active outdoor
lifestyle. The Eddie Bauer brand is a nationally
recognized brand that stands for high quality,
innovation, style and customer service. Eddie
Bauer products are available at 371 stores
throughout the United States and Canada, through
catalog sales and online at
http://www.eddiebauer.com/ Eddie Bauer
participates in a joint venture in Japan and has
licensing agreements across a variety of product
categories.
Chapter 11 Petition Date: June 17, 2009
Court: District of Delaware
Judge: Mary F. Walrath
The Debtors' Counsel: David S. Heller, Esq.
Josef S. Athanas, Esq.
Heather L. Fowler, Esq.
Latham & Watkins LLP
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, IL 60606
Tel: (312) 876-7700
Fax: (312) 993-9767
http://www.lw.com/
Co-Counsel: Kara Hammond Coyle, Esq.
Michael R. Nestor, Esq.
Young Conaway Stargatt & Taylor LLP
The Brandywine Bldg.
1000 West Street, 17th Floor
P.O. Box 391
Wilmington, DE 19899
Tel: (302) 571-6600
Fax: (302) 571-1253
http://www.ycst.com/
Restructuring Advisor: Alvarez and Marsal North America LLC
600 Lexington Avenue, 6th Floor
New York, NY 10022
Tel: (212) 759-4433
Fax: (212) 759-5532
http://www.alvarezandmarsal.com/
Claims Agent: Kurtzman Carson Consultants LLC
2335 Alaska Avenue
El Segundo, CA 90245
Tel: (866) 967-1781
http://www.kccllc.net/
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtors' Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York Bond Indenture $75,000,000
Attn: Mary Lagumina Trustee
Corporate Trust
Administration
101 Barclay Street Floor 8W
New York, NY 10286
Tel: (212) 815-4812
Fax: (212) 815-5704
U.S. Customs Service Trade Claim $2,500,000
Attn: Mike Hagge
ACH Debit Applications
Revenue Division
6650 Telecom Drive, Suite 100
Indianapolis, IN 46278
Tel: (317) 298-1200 ext. 1098
Fax: (317) 298-1259
Kristal D. Scherer Litigation $1,600,000
Sheldon A. Ostroff
Law Offices of Sheldon A.
Ostroff
1441 State St.
San Diego, CA 92101
Tel: (619) 544-0881
Fax: (619) 544-0892
RR Donnelley Trade Claim $855,526
Receivables Inc.
Attn: Tom Van Westrienen
5050 1st Ave S, Ste 101
Seattle, WA 98134
Tel: (425) 450-1292
Fax: (425) 417-5732
Expeditor's International Trade Claim $700,000
Attn: Jannelle Farina
21318 64th Ave. S.
Kent, WA 98032
Tel: (206) 407-2935
Fax: (206) 835-7013
Boom! Trade Claim $464,976
Spiegel Creditors Bank Accounts $450,000
Midland Paper Co. Trade Claim $299,469
Vipdesk Connect Inc. Trade Claim $250,000
Fry Inc. Trade Claim $225,000
Stageplan Inc. Trade Claim $217,807
Newgistics Trade Claim $200,000
Scheiner Commercial Trade Claim $178,571
Epsilon Trade Claim $150,000
Vulcan Mgmt/Smart Services Trade Claim $150,000
UPromise Trade Claim $136,480
FedEx Trade Claim $131,024
Meisel C. Laminack Trade Claim $130,000
Performics Trade Claim $124,827
Russell Reynolds Trade Claim $123,747
National Print Trade Claim $111,665
Colorgraphics Trade Claim $106,000
Tranzact Trade Claim $100,000
Vanney Associates Trade Claim $99,042
Kiva Designs Trade Claim $92,044
South Central Power Trade Claim $84,243
AT&T Trade Claim $81,888
Voda Studios Trade Claim $72,835
Danny Hernandez Litigation Unknown
The petition was signed by Marvin Edward Toland, senior vice president and chief financial officer.
--------------
Today's Troubled Company Reporter contains 30 case summaries of companies with at least $1 million in assets. The Troubled Company Reporter provides definitive coverage of financially distressed companies, those with junk ratings and those that have filed for Chapter 11. For a 30-day free trial, go to http://www.bankrupt.com
For real-time updates, follow twitter.com/road2bankruptcy
10401 N.E. 8th Street, Suite 500
Bellevue, WA 98004
Bankruptcy Case No.: 09-12099
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Eddie Bauer, Inc. 09-12100
Eddie Bauer Fulfillment Services, Inc. 09-12101
Eddie Bauer Diversified Sales, LLC 09-12103
Eddie Bauer Services, LLC 09-12104
Eddie Bauer International Development, LLC 09-12105
Eddie Bauer Information Technology, LLC 09-12106
Financial Services Acceptance Corporation 09-12107
Spiegel Acceptance Corporation 09-12108
Type of Business: Established in 1920 in Seattle, Eddie Bauer is a
specialty retailer that sells outerwear, apparel
and accessories for the active outdoor
lifestyle. The Eddie Bauer brand is a nationally
recognized brand that stands for high quality,
innovation, style and customer service. Eddie
Bauer products are available at 371 stores
throughout the United States and Canada, through
catalog sales and online at
http://www.eddiebauer.com/ Eddie Bauer
participates in a joint venture in Japan and has
licensing agreements across a variety of product
categories.
Chapter 11 Petition Date: June 17, 2009
Court: District of Delaware
Judge: Mary F. Walrath
The Debtors' Counsel: David S. Heller, Esq.
Josef S. Athanas, Esq.
Heather L. Fowler, Esq.
Latham & Watkins LLP
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, IL 60606
Tel: (312) 876-7700
Fax: (312) 993-9767
http://www.lw.com/
Co-Counsel: Kara Hammond Coyle, Esq.
Michael R. Nestor, Esq.
Young Conaway Stargatt & Taylor LLP
The Brandywine Bldg.
1000 West Street, 17th Floor
P.O. Box 391
Wilmington, DE 19899
Tel: (302) 571-6600
Fax: (302) 571-1253
http://www.ycst.com/
Restructuring Advisor: Alvarez and Marsal North America LLC
600 Lexington Avenue, 6th Floor
New York, NY 10022
Tel: (212) 759-4433
Fax: (212) 759-5532
http://www.alvarezandmarsal.com/
Claims Agent: Kurtzman Carson Consultants LLC
2335 Alaska Avenue
El Segundo, CA 90245
Tel: (866) 967-1781
http://www.kccllc.net/
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtors' Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York Bond Indenture $75,000,000
Attn: Mary Lagumina Trustee
Corporate Trust
Administration
101 Barclay Street Floor 8W
New York, NY 10286
Tel: (212) 815-4812
Fax: (212) 815-5704
U.S. Customs Service Trade Claim $2,500,000
Attn: Mike Hagge
ACH Debit Applications
Revenue Division
6650 Telecom Drive, Suite 100
Indianapolis, IN 46278
Tel: (317) 298-1200 ext. 1098
Fax: (317) 298-1259
Kristal D. Scherer Litigation $1,600,000
Sheldon A. Ostroff
Law Offices of Sheldon A.
Ostroff
1441 State St.
San Diego, CA 92101
Tel: (619) 544-0881
Fax: (619) 544-0892
RR Donnelley Trade Claim $855,526
Receivables Inc.
Attn: Tom Van Westrienen
5050 1st Ave S, Ste 101
Seattle, WA 98134
Tel: (425) 450-1292
Fax: (425) 417-5732
Expeditor's International Trade Claim $700,000
Attn: Jannelle Farina
21318 64th Ave. S.
Kent, WA 98032
Tel: (206) 407-2935
Fax: (206) 835-7013
Boom! Trade Claim $464,976
Spiegel Creditors Bank Accounts $450,000
Midland Paper Co. Trade Claim $299,469
Vipdesk Connect Inc. Trade Claim $250,000
Fry Inc. Trade Claim $225,000
Stageplan Inc. Trade Claim $217,807
Newgistics Trade Claim $200,000
Scheiner Commercial Trade Claim $178,571
Epsilon Trade Claim $150,000
Vulcan Mgmt/Smart Services Trade Claim $150,000
UPromise Trade Claim $136,480
FedEx Trade Claim $131,024
Meisel C. Laminack Trade Claim $130,000
Performics Trade Claim $124,827
Russell Reynolds Trade Claim $123,747
National Print Trade Claim $111,665
Colorgraphics Trade Claim $106,000
Tranzact Trade Claim $100,000
Vanney Associates Trade Claim $99,042
Kiva Designs Trade Claim $92,044
South Central Power Trade Claim $84,243
AT&T Trade Claim $81,888
Voda Studios Trade Claim $72,835
Danny Hernandez Litigation Unknown
The petition was signed by Marvin Edward Toland, senior vice president and chief financial officer.
--------------
Today's Troubled Company Reporter contains 30 case summaries of companies with at least $1 million in assets. The Troubled Company Reporter provides definitive coverage of financially distressed companies, those with junk ratings and those that have filed for Chapter 11. For a 30-day free trial, go to http://www.bankrupt.com
For real-time updates, follow twitter.com/road2bankruptcy
DBSI INC: Creditors Committee Seeks to File Competing Plan
The official committee of unsecured creditors in the Chapter 11 cases of DBSI, Inc. and its affiliated debtors asks the U.S. Bankruptcy Court for the District of Delaware for an order
(l)(a) pursuant to 11 U.S.C. Sec. 1121(d) terminating the
Debtors' exclusive rights under 11 U.S.C. Sec. 1121
solely to allow the Committee to file and solicit
acceptances of a chapter 11 plan, or, in the
alternative,
(b) pursuant to 11 U.S.C. Sec. 1104(a) directing the
appointment of a trustee to be in possession, and to
manage the affairs and operations, of the Debtors'
estates in replace of the Debtors; and
(2) further continuing the hearing on the Debtors' disclosure
statement.
As reported by the TCR on May 13, 2009, DBSI Inc. and its debtor-affiliates delivered to the Court a joint Chapter 11 plan of liquidation, which creates a liquidating trust on the plan's effective date. Under the plan, among other things, holders of unsecured claims against the Debtors will receive a pro rata share. However, the Debtors' plan did not indicate the estimated recovery that unsecured creditors would receive. A full-text copy of the Debtors' Joint Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?3cbd
Dennis A. Meloro, Esq., at Greenberg Traurig LLP, in Wilmington, Delaware, asserts that DBSI's "beleaguered and conflicted" insider management to should now cede control over the plan process. "These chapter 11 cases began under the cloud of fraud allegations and distrust, darkened by a class action securities fraud suit and further darkened by the Debtors' misguided attempts to obtain insider releases and other concessions via a self-inflicted threat to immediately reject their entire TIC master-lease portfolio."
Non-Filed Entities
The Creditors Committee notes that 181 DBSI affiliates have sought chapter 11 relief in the jointly administered cases, but there are many more Non-Filed Entities that remain outside of chapter 11 protection. Collectively, the Debtors and the Non-Filed Entities comprise a vast byzantine network of interconnected interests in numerous commercial real estate and non-real estate projects and businesses.
According to Mr. Meloro, after a careful review by the Committee (and the examiner appointed in the Chapter 11 cases) of the Debtors' schedules of assets and liabilities and the disclosure statement to their proposed Plan, these fundamental truths have emerged:
-- An entire universe of DBSI entities (the "Non-Filed
Entities") with untold assets have been obscured and excluded
from the Chapter 11 proceedings, despite a vast web of
intercompany claims that binds them to the Debtors under the
purview of the Court; and
-- The pervasively overlapping insider ownership of these Non-
Filed Entities creates significant conflicts of interest that
have rendered DBSI management incapable of honoring their
fiduciary duties to proceed with a chapter 11 plan designed
to further the best interests of the estates.
The Committee relates the Non-Filed Entities include Kastera, LLC and subsidiaries DBSI Investments Limited Partnership, Stellar Technologies LLC and several subsidiary technology companies, DBSI Redemption Reserve, numerous limited partnerships in which DBSI'Inc., DBSI Investments Limited Partnership and DCI, Inc. are general partners, numerous special purpose entities (generally limited liability companies), dissolved partnerships and other miscellaneous entities.
Mr. Meloro asserts that the overlap among the DBSI Debtors and the Non-Filed Entities and the sweeping entanglement among their financial affairs are demonstrated by these intercompany claims and transfers:
-- A $192 million claim by DBSI Inc. against DBSI Redemption
Reserve.
-- A $124 million claim by DBSI Redemption Reserve against
Stellar Technologies LLC. Stellar is a holding company for
various technology companies, which appear to have been the
ultimate recipients of substantial investments that were
down-streamed from DBSI Redemption Reserve.
-- A $99.8 million claim by DBSI Redemption Reserve against
DBSI Investments Limited Partnership. The Committee and
the examiner continue to investigate the extent to which
DBSI Investments Limited Partnership distributed these
funds to its insider general partners and/or its controlled
limited partnership subsidiaries or otherwise.
-- A $28.5 million claim by DBSI 2008 Notes Corporation
against Stellar. This claim may be secured by Stellar's
ownership interest in technology companies.
-- A $13 million claim by DBSI Guaranteed Capital Corporation
against Stellar. This claim may be secured by Stellar's
ownership interest in technology companies.
-- A $9 million claim by DBSI Real Estate Funding Corporation
against DBSI Investments Limited Partnership.
-- An $8.8 million claim by DBSI 2008 Notes Corporation
against DBSI Western Technologies LLC, which is the holding
company for Non-Filed Entity DBSI Western Electronics LLC.
-- A $7.8 million claim by DBSI Redemption Reserve against
Western Technologies.
-- A $7 million claim by DBSI Inc. against Kastera LLC.
-- A $7 million claim by DBSI 2006 Secured Notes Corporation
against Kastera Homes LLC. Kastera Homes LLC borrowed from
DBSI 2006 Notes Corporation to fund its development of
certain residential real estate projects. The Kastera
Homes LLC borrowings are secured by mortgages and deeds of
trust in favor of DBSI 2006 Notes Corporation in the
underlying real estate.
-- A $6.5 million claim by REF against DBSI Redemption
Reserve.
-- A $3.7 million claim by DBSI Guaranteed Capital Corporation
against Western Technologies, which may be secured by
Western Technologies' ownership interest in DBSI Western
Electronics LLC.
-- A $2.1 million claim by REF against Kastera Homes LLC. REF
also lent funds to Kastera Homes LLC for the development of
residential real estate projects, which loans are secured
by mortgages and deeds of trust in favor of REF in the
underlying real estate.
According to the Committee, aside from the intercompany claims, the Debtors directly or indirectly own majority interests in the Non-Filed Debtors.
During plan negotiations, the Committee inquired of the Debtors how they intended to resolve these significant Non-Filed Entity issues. After months of asking, the Committee received the answer that the Debtors will not proceed with a plan that makes any attempt to incorporate the Non-Filed Entities in any way.
Fiduciary Duties
"Whether the Debtors are motivated by pie-in-the-sky visions of retaining value or simply setting up a new scheme to leverage releases, the Debtors are not honoring their fiduciary duties to maximize value for the benefit of the estates and their constituencies," Mr. Meloro contends. "Instead, the Debtors are plainly acting to further the conflicted self-interests of others."
After reviewing its options, the Committee believes that terminating exclusivity solely to allow the Committee to files its own plan and disclosure statement will best serve the interest of the Debtors' estates.
The Debtors, Mr. Meloro points out do not have the resources and liquidity to endure a protracted stay in chapter 11. He says confirmation of DBSI's plan, which fails to incorporate the Non-Filed Entities, will only expose a liquidating trustee to future litigation and continued attempts to assert control by the DBSI insiders.
The Committee states is preparing and will be prepared to file a plan and disclosure statement that will actively engage the Non-Filed Entity issues and leave a post-confirmation liquidating trustee in control of the assets from which distributions to creditor beneficiaries will be generated. Other than addressing the crucial issue of how to incorporate the Non-Filed Entities, the Committee's plan does not require substantial modification to the Debtors' plan. Thus, the double-track confirmation process can proceed apace (and benefit from at least the preliminary results of the examiner's investigation), Mr. Meloro contends.
"A competing plan process will prevent the Debtors from forcing creditors to choose between an incomplete plan that omits the Non-Filed Entities and no plan at all," Mr. Meloro points out.
If the Court is not inclined to terminate exclusivity to allow competing chapter 11 plans, the Committee proposes that the Court appoint a chapter 11 trustee. Mr. Meloro asserts that absent the ability for the Committee to propose a plan, a neutral third party not only to investigate the Debtors' affairs (as is being done by the examiner), but also to have and exercise the authority to manage those affairs through the chapter 11 plan process, is necessary.
Committee's Plan
The Committee intends to file a competing plan that largely mirrors the Debtors' plan with the addition of several key provisions to address the Non-Filed Entities, including:
-- The Committee's plan will address the intercompany claims
among Debtors and Non-Filed Entities -- particularly those
involving DBSI Redemption Reserve Fund and DBSI
Investments Limited Partnership;
-- The Committee's plan will include a mechanism for the direct
transfer of the Kastera Collateral and the resolution of
claims among the Debtors and the Kastera affiliates;
-- The Committee's plan will include a mechanism to vest the
liquidating trust with the technology company claims and
ownership interests held by Stellar and Western;
-- The Committee's plan will specifically delineate the
transfer of other Non-Filed Entities and assets, and the
resolution of other claims among Debtors and Non-Filed
Entities.
According to Mr. Meloro, in contrast to the Debtors' plan, the Committee's plan will (i) be accompanied by full and complete disclosure regarding the Debtors and the Non-Filed Entities, (ii) maximize value for the benefit of the Debtors' estates and constituents, (iii) ensure that a post-confirmation liquidating trust will not be handcuffed by third-party disputes, and (iv) provide the closure and certainty that parties in interest need to move on from these very difficult chapter 11 cases.
Accordingly, the Committee proposes this plan schedule in the event that the Court terminates exclusivity for the Committee to files its plan:
* June 29, 2009 - Committee files its plan and disclosure
statement (the Debtor should file revised
plan and disclosure statement prior to this
date).
* July 28, 2009 - Examiner files preliminary report.
* July 31, 2009 - Committee and Debtors file amended
plans/disclosure statement(s) with any
revisions prompted by examiner report.
* Aug. 4, 2009 - Continued hearing on Committee/Debtor plans
and disclosure statement(s).
* Aug. 25, 2009 - Confirmation objection deadline for
Committee-Debtor plans.
* Aug. 31, 2009 - Confirmation hearing for Committee/Debtor
plans.
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 November 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). 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. When the Debtors
filed for protection from their creditors, they listed assets and
debts both between $100 million and $500 million.
Joshua Hochberg, a former head of the Justice Department fraud unit, has been named examiner to investigate allegations of fraud by the Debtors and their management.
------------------
The Troubled Company Reporter provides definitive coverage of financially distressed companies, those with junk ratings and those that have filed for Chapter 11. For a 30-day free trial, go to http://www.bankrupt.com
For real-time updates, follow twitter.com/road2bankruptcy
(l)(a) pursuant to 11 U.S.C. Sec. 1121(d) terminating the
Debtors' exclusive rights under 11 U.S.C. Sec. 1121
solely to allow the Committee to file and solicit
acceptances of a chapter 11 plan, or, in the
alternative,
(b) pursuant to 11 U.S.C. Sec. 1104(a) directing the
appointment of a trustee to be in possession, and to
manage the affairs and operations, of the Debtors'
estates in replace of the Debtors; and
(2) further continuing the hearing on the Debtors' disclosure
statement.
As reported by the TCR on May 13, 2009, DBSI Inc. and its debtor-affiliates delivered to the Court a joint Chapter 11 plan of liquidation, which creates a liquidating trust on the plan's effective date. Under the plan, among other things, holders of unsecured claims against the Debtors will receive a pro rata share. However, the Debtors' plan did not indicate the estimated recovery that unsecured creditors would receive. A full-text copy of the Debtors' Joint Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?3cbd
Dennis A. Meloro, Esq., at Greenberg Traurig LLP, in Wilmington, Delaware, asserts that DBSI's "beleaguered and conflicted" insider management to should now cede control over the plan process. "These chapter 11 cases began under the cloud of fraud allegations and distrust, darkened by a class action securities fraud suit and further darkened by the Debtors' misguided attempts to obtain insider releases and other concessions via a self-inflicted threat to immediately reject their entire TIC master-lease portfolio."
Non-Filed Entities
The Creditors Committee notes that 181 DBSI affiliates have sought chapter 11 relief in the jointly administered cases, but there are many more Non-Filed Entities that remain outside of chapter 11 protection. Collectively, the Debtors and the Non-Filed Entities comprise a vast byzantine network of interconnected interests in numerous commercial real estate and non-real estate projects and businesses.
According to Mr. Meloro, after a careful review by the Committee (and the examiner appointed in the Chapter 11 cases) of the Debtors' schedules of assets and liabilities and the disclosure statement to their proposed Plan, these fundamental truths have emerged:
-- An entire universe of DBSI entities (the "Non-Filed
Entities") with untold assets have been obscured and excluded
from the Chapter 11 proceedings, despite a vast web of
intercompany claims that binds them to the Debtors under the
purview of the Court; and
-- The pervasively overlapping insider ownership of these Non-
Filed Entities creates significant conflicts of interest that
have rendered DBSI management incapable of honoring their
fiduciary duties to proceed with a chapter 11 plan designed
to further the best interests of the estates.
The Committee relates the Non-Filed Entities include Kastera, LLC and subsidiaries DBSI Investments Limited Partnership, Stellar Technologies LLC and several subsidiary technology companies, DBSI Redemption Reserve, numerous limited partnerships in which DBSI'Inc., DBSI Investments Limited Partnership and DCI, Inc. are general partners, numerous special purpose entities (generally limited liability companies), dissolved partnerships and other miscellaneous entities.
Mr. Meloro asserts that the overlap among the DBSI Debtors and the Non-Filed Entities and the sweeping entanglement among their financial affairs are demonstrated by these intercompany claims and transfers:
-- A $192 million claim by DBSI Inc. against DBSI Redemption
Reserve.
-- A $124 million claim by DBSI Redemption Reserve against
Stellar Technologies LLC. Stellar is a holding company for
various technology companies, which appear to have been the
ultimate recipients of substantial investments that were
down-streamed from DBSI Redemption Reserve.
-- A $99.8 million claim by DBSI Redemption Reserve against
DBSI Investments Limited Partnership. The Committee and
the examiner continue to investigate the extent to which
DBSI Investments Limited Partnership distributed these
funds to its insider general partners and/or its controlled
limited partnership subsidiaries or otherwise.
-- A $28.5 million claim by DBSI 2008 Notes Corporation
against Stellar. This claim may be secured by Stellar's
ownership interest in technology companies.
-- A $13 million claim by DBSI Guaranteed Capital Corporation
against Stellar. This claim may be secured by Stellar's
ownership interest in technology companies.
-- A $9 million claim by DBSI Real Estate Funding Corporation
against DBSI Investments Limited Partnership.
-- An $8.8 million claim by DBSI 2008 Notes Corporation
against DBSI Western Technologies LLC, which is the holding
company for Non-Filed Entity DBSI Western Electronics LLC.
-- A $7.8 million claim by DBSI Redemption Reserve against
Western Technologies.
-- A $7 million claim by DBSI Inc. against Kastera LLC.
-- A $7 million claim by DBSI 2006 Secured Notes Corporation
against Kastera Homes LLC. Kastera Homes LLC borrowed from
DBSI 2006 Notes Corporation to fund its development of
certain residential real estate projects. The Kastera
Homes LLC borrowings are secured by mortgages and deeds of
trust in favor of DBSI 2006 Notes Corporation in the
underlying real estate.
-- A $6.5 million claim by REF against DBSI Redemption
Reserve.
-- A $3.7 million claim by DBSI Guaranteed Capital Corporation
against Western Technologies, which may be secured by
Western Technologies' ownership interest in DBSI Western
Electronics LLC.
-- A $2.1 million claim by REF against Kastera Homes LLC. REF
also lent funds to Kastera Homes LLC for the development of
residential real estate projects, which loans are secured
by mortgages and deeds of trust in favor of REF in the
underlying real estate.
According to the Committee, aside from the intercompany claims, the Debtors directly or indirectly own majority interests in the Non-Filed Debtors.
During plan negotiations, the Committee inquired of the Debtors how they intended to resolve these significant Non-Filed Entity issues. After months of asking, the Committee received the answer that the Debtors will not proceed with a plan that makes any attempt to incorporate the Non-Filed Entities in any way.
Fiduciary Duties
"Whether the Debtors are motivated by pie-in-the-sky visions of retaining value or simply setting up a new scheme to leverage releases, the Debtors are not honoring their fiduciary duties to maximize value for the benefit of the estates and their constituencies," Mr. Meloro contends. "Instead, the Debtors are plainly acting to further the conflicted self-interests of others."
After reviewing its options, the Committee believes that terminating exclusivity solely to allow the Committee to files its own plan and disclosure statement will best serve the interest of the Debtors' estates.
The Debtors, Mr. Meloro points out do not have the resources and liquidity to endure a protracted stay in chapter 11. He says confirmation of DBSI's plan, which fails to incorporate the Non-Filed Entities, will only expose a liquidating trustee to future litigation and continued attempts to assert control by the DBSI insiders.
The Committee states is preparing and will be prepared to file a plan and disclosure statement that will actively engage the Non-Filed Entity issues and leave a post-confirmation liquidating trustee in control of the assets from which distributions to creditor beneficiaries will be generated. Other than addressing the crucial issue of how to incorporate the Non-Filed Entities, the Committee's plan does not require substantial modification to the Debtors' plan. Thus, the double-track confirmation process can proceed apace (and benefit from at least the preliminary results of the examiner's investigation), Mr. Meloro contends.
"A competing plan process will prevent the Debtors from forcing creditors to choose between an incomplete plan that omits the Non-Filed Entities and no plan at all," Mr. Meloro points out.
If the Court is not inclined to terminate exclusivity to allow competing chapter 11 plans, the Committee proposes that the Court appoint a chapter 11 trustee. Mr. Meloro asserts that absent the ability for the Committee to propose a plan, a neutral third party not only to investigate the Debtors' affairs (as is being done by the examiner), but also to have and exercise the authority to manage those affairs through the chapter 11 plan process, is necessary.
Committee's Plan
The Committee intends to file a competing plan that largely mirrors the Debtors' plan with the addition of several key provisions to address the Non-Filed Entities, including:
-- The Committee's plan will address the intercompany claims
among Debtors and Non-Filed Entities -- particularly those
involving DBSI Redemption Reserve Fund and DBSI
Investments Limited Partnership;
-- The Committee's plan will include a mechanism for the direct
transfer of the Kastera Collateral and the resolution of
claims among the Debtors and the Kastera affiliates;
-- The Committee's plan will include a mechanism to vest the
liquidating trust with the technology company claims and
ownership interests held by Stellar and Western;
-- The Committee's plan will specifically delineate the
transfer of other Non-Filed Entities and assets, and the
resolution of other claims among Debtors and Non-Filed
Entities.
According to Mr. Meloro, in contrast to the Debtors' plan, the Committee's plan will (i) be accompanied by full and complete disclosure regarding the Debtors and the Non-Filed Entities, (ii) maximize value for the benefit of the Debtors' estates and constituents, (iii) ensure that a post-confirmation liquidating trust will not be handcuffed by third-party disputes, and (iv) provide the closure and certainty that parties in interest need to move on from these very difficult chapter 11 cases.
Accordingly, the Committee proposes this plan schedule in the event that the Court terminates exclusivity for the Committee to files its plan:
* June 29, 2009 - Committee files its plan and disclosure
statement (the Debtor should file revised
plan and disclosure statement prior to this
date).
* July 28, 2009 - Examiner files preliminary report.
* July 31, 2009 - Committee and Debtors file amended
plans/disclosure statement(s) with any
revisions prompted by examiner report.
* Aug. 4, 2009 - Continued hearing on Committee/Debtor plans
and disclosure statement(s).
* Aug. 25, 2009 - Confirmation objection deadline for
Committee-Debtor plans.
* Aug. 31, 2009 - Confirmation hearing for Committee/Debtor
plans.
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 November 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). 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. When the Debtors
filed for protection from their creditors, they listed assets and
debts both between $100 million and $500 million.
Joshua Hochberg, a former head of the Justice Department fraud unit, has been named examiner to investigate allegations of fraud by the Debtors and their management.
------------------
The Troubled Company Reporter provides definitive coverage of financially distressed companies, those with junk ratings and those that have filed for Chapter 11. For a 30-day free trial, go to http://www.bankrupt.com
For real-time updates, follow twitter.com/road2bankruptcy
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