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Beard Group Corporate Restructuring Review For August 2012

Presented by Beard Group, Inc. P.O. Box 4250 Frederick, MD 21705-4250 Voice: (240) 629-3300 Fax: (240) 629-3360 E-mail:

An audio recording of this presentation is available at

Welcome to the Beard Group Corporate Restructuring Review for August 2012, brought to you by the editors of the Troubled Company Reporter and Troubled Company Prospector.

In this month's Corporate Restructuring Review, we'll discuss five topics:

• first, last month's largest chapter 11 filings and other statistics;

• second, large chapter 11 filings TCR editors anticipate in the near-term;

• third, a quick review of the major pending disputes in chapter 11 cases that we monitor day-by-day;

• fourth, reminders about debtors whose emergence from chapter 11 has been delayed; and

• fifth, information you're unlikely to find elsewhere about new publicly traded securities being issued by chapter 11 debtors.

August 2012 Mega Cases

Now, let's review the largest chapter 11 cases in August


Danilo Muñoz reports that there were six Chapter 11 filings that exceeded $100 million in total assets for the month of August, an increase from four such cases in July and one in June.

One of the six mega filers for August listed total assets in excess of $1 billion as of the petition date.

For the first eight months of the year, a total of 48 mega filings with assets in excess of $100 million have been made, a slight increase from the 44 mega filings during the same period in 2011, and substantially lower than the 71 mega filings during the first eight months of 2010.

Also, for the first eight months of 2012, there were a total of 11 companies that sought Chapter 11 protection involving assets exceeding $1 billion. Three of those billion dollar cases were filed in July, five were commenced in May.

The largest Chapter 11 mega filing for the month of August is by ATP Oil & Gas Corporation, which sought Chapter 11

protection on Aug. 17 with the Bankruptcy Court for the Southern

District of Texas [case number 12-36187].

disclosed $3.64 billion in assets and $3.49 billion in liabilities as of March 31, 2012.

The company

Houston-based ATP is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP filed for bankruptcy to undertake a comprehensive financial restructuring. The primary reason for the reorganization began with the Macondo well blowout in April 2010 and the imposition beginning in May 2010 of the moratoria on drilling and related activities in the Gulf of Mexico.

The second largest filer is Contec Holdings Ltd., the market leader in the repair and refurbishment of customer premise equipment for the cable industry. The Company repairs more than two million cable set top boxes annually, while also providing logistical support services for over 12 million units of cable equipment annually.

Contec listed total assets of $494.6 million and total liabilities of $372.6 million as of March 31, 2012.

Contec and its affiliates sought Chapter 11 protection on Aug. 29, with the Bankruptcy Court for the District of Delaware [Lead Case No. 12-12437] with a plan of reorganization that has the support of senior lenders and noteholders.

Contec plans a speedy trip through bankruptcy with a debt- for-equity swap that will displace the private-equity firm and leave banks in charge, attorneys said at a court hearing Aug. 30. Contec is seeking a combined hearing on the Plan and Disclosure Statement. It anticipates completing the Chapter 11 process within the next 60 days.

Next is Broadview Networks Holdings Inc., which, together with 27 affiliates, sought Chapter 11 protection on Aug. 22, with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12-13579]. The bankruptcy petitions were filed alongside a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually.

Broadview Networks is a communications and I.T. solutions provider to small and medium sized business and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid- Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C.

The Company's balance sheet at June 30, 2012, showed $255 million in total assets, $378 million in total liabilities, and a $123 million total stockholders' deficiency.

The fourth largest Chapter 11 filing is by KV Pharmaceutical Company, a fully integrated specialty pharmaceutical firm that develops, manufactures, markets, and acquires technology- distinguished branded and generic/non-branded prescription pharmaceutical products.

K-V Pharmaceutical and certain of its domestic subsidiaries filed voluntary Chapter 11 petitions on Aug. 4 with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12- 13346] to restructure their financial obligations.

K-V Pharmaceutical's balance sheet at March 31, 2012, showed $253.4 million in total assets, $734.1 million in total liabilities and a $480.7 million total shareholders' deficit.

K-V Pharmaceutical filed for Chapter 11 the same day that a $45 million payment was due to be paid to Cytyc Prepnatal Products Corp. and Hologic Inc. K-V bought the worldwide rights to FDA-approved drug Makena from Hologic in 2011.

Capitol Bancorp Ltd. is the fifth largest Chapter 11 filer for August. Capitol Bancorp sought bankruptcy protection on Aug. 9, before the Bankruptcy Court for the Eastern District of Michigan [Case Nos. 12-58409 and 12-58406]. In its petition, Capitol Bancorp scheduled $112.6 million in total assets and $195.6 million in total liabilities.

Capitol Bancorp is a community banking company with a network of individual banks and bank operations in 10 states and

total consolidated assets of roughly $2.0 billion as of June 30,


Bankruptcy Judge Walter Shapero in Michigan will convene a hearing Sept. 18 to consider confirmation of Capitol Bancorp's prepackaged Chapter 11 plan of reorganization. Before filing for bankruptcy, Capitol Bancorp solicited votes from all debt and equity holders for a prepackaged Chapter 11 plan of reorganization.

The Prepack Plan contemplates the conversion of all current trust preferred security holders, unsecured senior note holders, current preferred equity shareholders and current common equity shareholders into new classes of common stock which will retain 53 percent of the voting control and value of the restructured company.

In addition, Oxley Development Company, LLC, filed for Chapter 11 filing with estimated assets of between $100 million to $500 million. Oxley Development filed a Chapter 11 petition on

Aug. 6 with the Bankruptcy Court for the Northern District of Georgia [Case No. 12-69799].

Oxley Development, a single asset real estate under Section 101(51B) of the Bankruptcy Code, owns the Laurel Bluff and Lauren Island, in Camden County, Georgia.

This is not the first time Oxley has sought bankruptcy protection. In October 2011, Oxley filed a petition with the Southern District of Georgia Bankruptcy Court [Case No. 11- 21338] but that case was dismissed at the behest of the United States Trustee.

For August 2012, two of the four Chapter 11 filings -- Contec Holdings and Capitol Bancorp -- were prepackaged or pre- arranged in nature, bringing the total number of prepacks for the first eight months of the year to 10. That's a roughly 21 percent rate out of the 42 mega cases filed thus far.

There were also two prepack Chapter 11s in July, none in June and three in May.

The number of prepack cases this year are in step and could exceed those in 2011. Last year, 13 of the 82 mega cases involved prepacks. That's roughly 16 percent of the large Chapter 11 filings. For year 2010, a total of 35 prepacks or pre-arranged cases were filed out of the 106 bankruptcy mega cases -- or about one in every three filings in 2010.

For the first eight months of 2012, eight of the mega filers come from the manufacturing sector. The real estate, finance and information industries each had six mega cases.

For the first eight months of the year, the Bankruptcy Court for the Southern District of New York continues to be the most

favored venue for mega filers with 18, followed by the Bankruptcy Court for the District of Delaware with 10 mega filings.

Last year, 46 percent of the mega cases -- 38 filings -- flocked to the Delaware Bankruptcy Court, followed by the Southern District of New York with 16 filings, or 19 percent, and by the Northern District of Texas with 4 filings, or 5 percent of the mega cases. The rest of the mega cases are spread evenly throughout the various bankruptcy courts.

Lehman Brothers Holding Corp. remains the biggest corporate bust in history. Lehman, which filed in 2008, had $639 billion in total assets and $613 billion in total debts at that time of its filing.

For 2011, the largest Chapter 11 filing was filed by MF Global Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MF Global had $41 billion in total assets and $39.7 billion in total liabilities.

For 2012, the largest Chapter 11 filing was by Residential Capital LLC, which disclosed $15.7 billion in assets and $15.3 billion in liabilities as of March 31, 2012.

Anticipated Large Chapter 11 Filings

Now, let's turn to the topic of large chapter 11 filings Troubled Company Reporter editors anticipate in the near-term.

Carlo Fernandez identified four companies that may be close to filing for bankruptcy. These are: USEC Inc., Bakers Footwear, Aventine Renewable Energy, and Reader's Digest.


USEC Inc. said in a filing with the Securities and Exchange Commission in August that it "may pursue discussions" with creditors about "restructuring our balance sheet."

The Bethesda, Maryland-based supplier of enriched uranium fuel for commercial nuclear power plants also said it may be forced to discontinue production at the plant in Paducah, Kentucky, when an agreement to continue operations expires in May 2013. The company's financial problems result in part from declining demand after the 2011 earthquake and tsunami in Japan, followed by the meltdown of the Fukushima reactors and a shutdown of nuclear plants in Japan and Germany.

In August, Standard & Poor's lowered the corporate rating by one grade to CCC.

The Company reported a net loss of $540.70 million in 2011, compared with net income of $7.50 million in 2010.

(B) Bakers Footwear

Bakers Footwear Group Inc., at the end of August announced a series of actions designed to restructure its business for improved results, liquidity and long-term growth. The plan includes a reduction of between 72 to 77 stores, which will be fully in place by year-end fiscal 2012 through the second quarter of 2013. The company is selling leases and other assets for up to 52 store locations to Aldo U.S., Inc. for $6.4 million, subject to landlord consents. Bakers currently has 230 stores nationwide.

The Company said it is continuing to work with Crystal Financial, its senior lender on its revolving credit facility. Although the Company is in default on its credit line, primarily relating to over-advances in excess of the contractual limit generally between $1 million and $1.5 million, Crystal has continued to fund the Company and has not taken collection action against it. The Company is in negotiations to secure a forbearance agreement with Crystal and, ultimately, an amendment and waiver agreement to return it to compliance.

As a result of lower than planned sales and lower than planned inventory receipts, beginning in July 2012, the Company has not complied with the maximum borrowing limits, or its obligation to repay excess amounts, as provided in the Credit Agreement.

The Company reported a net loss of $10.95 million for the year ended Jan. 28, 2012, net losses of $9.29 million and $9.08 million in the prior years.

(C) Aventine Renewable

Aventine Renewable Energy Holdings, Inc., which emerged from bankruptcy three years ago, retained Houlihan last month amid another liquidity crunch. Aventine entered into forbearance agreements with lenders.

At the end of August, however, Aventine announced it has entered into a restructuring agreement with 100 percent of its term loan lenders. Holders of approximately 60 percent of the common stock have also approved the agreement. Under the terms of this agreement the Company would convert the majority of its outstanding term loan debt into newly issued common equity

of the Company, representing, on a fully diluted basis, approximately 92.5 percent of the issued and outstanding common stock after the issuance.

If completed, the Company expects the restructuring to reduce the Company's existing debt by approximately $135 million and significantly lower the Company's annual cash interest expense. As part of the transactions, the term loan lenders have also agreed to provide $30 million in the form of additional indebtedness.

With the commitment of all the requisite stakeholders the transactions are expected to be consummated without any court approvals. The transactions are targeted to close by the end of the third quarter of 2012.

The Company's balance sheet at March 31, 2012, showed $384.90 million in total assets against $248.91 million in total liabilities.

(D) Reader's Digest

Reader's Digest Association Inc. emerged from bankruptcy in February 2010 but its ratings are again in junk territory: its corporate family rating is 'Caa1' from Moody's and its 'CCC+' from Standard & Poor's.

Moody's outlook is negative. Moody's said RDA's Caa1 CFR reflects weak revenue and earnings performance for the 1st half of 2012 and expectations that performance will continue to be weak going forward, the corresponding increase in leverage, and the potential for a violation of its financial covenants for its secured term loan that was put in place in March 2012. The weak interest coverage ratio and history of negative free cash flow is

also reflected in the rating. The decline in results are particularly concerning given that some of the businesses that generated poor performance last year, such as its Lifestyle & Entertainment division and Every Day with Rachael Ray magazine have been sold or classified as a discontinued operation.

Moody's notes that revenue declined in all of its divisions over the past six month period caused by lower response rates to its marketing campaigns in international markets and secular declines in its magazine business in North America. The company's results for the full year are largely determined by the upcoming fourth quarter which could be difficult given the current economic environment in Europe. Its direct marketing division will be challenged to update its product offerings away from its traditional focus on books, music and videos.

S&P placed the ratings on CreditWatch with negative implications. "The CreditWatch placement reflects our concern that continued weak operating performance and negative discretionary cash flow may result in meaningful reduction in the company's cash balances and that it may need an amendment to its credit facility within the next year," said Standard & Poor's credit analyst Minesh Patel. "Reader's Digest's direct mail and publishing business are subject to significant medium term structural risks, and we view a meaningful decline in liquidity or a covenant violation as a key short-term catalyst that would contribute to a payment default."

Reader's Digest, headquartered in New York, is a global media and direct marketing company that markets books, magazine, recorded music collections, home video products and other products worldwide. Revenues for the last twelve months ended June 30, 2012, totaled $1.3 billion. Reader's Digest emerged from Chapter 11 bankruptcy on February 19, 2010.




In addition to the challenged companies mentioned in Mr. Fernandez's report, the Troubled Company Reporter provides on- going reporting about more than 3,000 companies experiencing financial distress or restructuring their balance sheets in a judicial proceeding. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation.

Major Pending Disputes In Chapter 11 Cases

Next, we'll quickly review major pending disputes in large chapter 11 cases that Troubled Company Reporter editors monitor day-by-day.

(A) Lehman Brothers

Ivy Magdadaro provides updates on the various disputes Lehman Brothers is involved in.

Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York declined Lehman Brothers Holdings Inc.’s invitation to revisit and revise his ruling in an $8.6 billion lawsuit against JP Morgan Chase & Co. In an August 7 decision, the bankruptcy judge said he was satisfied with the way he had dealt with the issues.

Lehman, which is gathering money for a second payment to creditors, filed the motion asking the bankruptcy judge to reconsider the dismissal of some claims in the lawsuit. The

company said it might gain hundreds of millions of dollars if Judge Peck reinstated the claims he dismissed.

The claims are related to guarantees given to JPMorgan in the months leading up to Lehman’s bankruptcy filing.

Lehman argued in the court filing that the dismissal was a mistake because the guarantees themselves will be relied upon by JPMorgan to assert unsecured claims if the company wins on the other claims that were not dismissed. By throwing out the guarantees, JPMorgan won't have any claim at all should Lehman win on other theories.

The reconsideration motion was filed after Judge Peck issued an opinion on April 19, saying Lehman cannot claim money from JPMorgan for securities transactions governed by the so-called safe harbor law. Safe harbor laws can shield some financial transactions from being included in the pool of assets divided among creditors when a company files for Chapter 11 protection.

JPMorgan served as Lehman’s main clearing bank in the 2008 financial crisis.

Lehman Brothers emerged from bankruptcy protection in March as a $65 billion bankruptcy plan was approved. The firm has started making out partial payments to creditors under the plan in April and has stated that has already paid $22 billion to creditors as of late July 2012.

(B) Tronox Inc.

Anadarko Petroleum Corp. said on August 8 it still expects to win a case brought by paint materials company Tronox Inc. but noted a settlement of the $25 billion lawsuit is less likely.

Anadarko related that its recent attempts to resolve the dispute through mediation have “reached an impasse.”

Due to the change in its opinion as to the probable form of resolution, Anadarko related in a filing with the U.S. Securities and Exchange Commission that it is no longer setting aside $525 million to settle the case.

However, while Anadarko does not expect to lose at trial, it estimated a potential loss of $1.4 billion.

In its $25 billion dollar fraudulent transfer lawsuit, Tronox has claimed that when it was spun off in 2005 by parent company Kerr-McGee Corp., which Anadarko later bought, it had been saddled with liabilities that led to its January 2009 bankruptcy filing. Tronox emerged from Chapter 11 protection in February


With the support of the U.S. Environmental Protection Agency, Tronox also claims that Anadarko should pay for environmental clean-up at more than 2,000 polluted U.S. sites.

Trial in case started in May 2012, which was later stayed to give way to mediation talks. The trial resumed in late July. It is reported that John M. Rauh, the parent company’s former accounting head, took the stand in a New York bankruptcy court on August 9 in the company's bid to refute Tronox’s allegations that the spin-off was done in bad faith. Mr. Rauh testified that the chemical business was financially sound beforehand.

Delayed Exits From Chapter 11

Julie Anne Lopez-Toledo reports about four Chapter 11 debtors whose emergence from Chapter 11 has been delayed:

Tribune Co., W.R. Grace, Quigley, and Flintkote.

(A) Tribune Co.

Delaware Bankruptcy Judge Kevin Carey ruled on August 22 that creditors of Tribune Co. must post a $1.5 billion bond if they want to keep the company's Chapter 11 plan of reorganization on hold while they pursue an appeal.

Judge Carey ordered the temporary suspension of his July 23 order approving Tribune's restructuring plan but with the condition that creditors post a bond by August 29.

Judge Carey agreed with creditors who claimed they would be "irreparably harmed" if he let Tribune's plan become effective before the appeal.

"It will certainly be difficult to unscramble the egg if the plan is allowed to go effective," the bankruptcy judge said.

"Although I am satisfied that I have thoroughly -- and correctly -- examined and determined the disputed issues in the 2011 Confirmation Opinion, the Reconsideration Decision, the Allocation Decision and the Fourth Amended Plan Decision, the Movants have made an adequate showing of likelihood of success on the merits with respect to the issues on appeal to require analysis of the remaining Rule 8005 factors," Judge Carey said in his August 22 opinion.

Junior creditors led by New York-based investment fund Aurelius Capital Management LP previously challenged the bankruptcy judge's July 23 decision that gives a group of senior creditors control of the bankrupt publisher.

The group complained that holders of some $2 billion in Tribune debt stand to recover very little under the settlement of claims, which is part of the restructuring plan.

Bond trustees -- Law Debenture Trust Co. of New York and Deutsche Bank Trust Co. -- also appealed the July 23 order, saying the plan under-compensates senior bondholders relative to other, similarly situated creditors.

If the appeals fail or if creditors fail to post the bond, Tribune would be free to move on to the next phase in Tribune's bankruptcy: getting approval from the Federal Communications Commission to transfer its TV and radio broadcast licenses to the new owners.

Meanwhile, Tribune CEO Eddy Hartenstein told employees in an e-mail that the bondholders had indicated at the hearing that "they would be either unwilling or unable to post such a bond."

Prior to the August 22 decision, Tribune disclosed that a delay in the implementation of the company's Chapter 11 exit plan could cause at least $1.5 billion to $3 billion damage.

"Sentencing the company to remain in bankruptcy for additional months or years would harm the company in numerous material and distinct ways," argued Tribune counsel, Norman Pernick, at Cole Schotz Meisel Forman & Leonard P.A.

Mr. Pernick pointed out that during a recent period of relative calm in the bankruptcy case, Tribune spent as much as $4.7 million per month.

As part of his ruling, Judge Carey also denied a request by the bond trustees and EGI-TRB LLC to speed up the appeal process by taking their case directly to the United States Court of Appeals for the Third Circuit in Philadelphia.

Judge Carey said the issues raised by the bond trustees and EGI-TRB are not entitled to certification for direct appeal. The bankruptcy judge dismissed their claim that certification would materially advance their case, arguing that there are other issues on appeal challenging the confirmation of the restructuring plan.

Also in August, Tribune received a go-signal to enter into an agreement with Bank of America and Merrill Lynch, Pierce, Fenner & Smith in connection with exit financing. The agreement authorizes the newspaper chain to pay certain fees and expenses and furnish certain indemnities related to the financing. The funding consists of a $300 million asset-based senior secured credit with a letter of credit sub-facility of up to $100 million.

(B) W.R. Grace

The timing of W.R. Grace & Co.'s emergence from bankruptcy remains uncertain.

For the first six months of fiscal year 2012, Grace spent $30.4 million on expenses and costs related to the bankruptcy proceeding.

Grace filed for Chapter 11 bankruptcy in April 2001, weighed down by asbestos-related claims. A district court approved its

reorganization plan earlier this year, clearing a major hurdle for it to emerge from bankruptcy protection.

The plan was reaffirmed in June but eight parties filed notices of appeal before a July 11 deadline.

(C) Quigley

Pfizer Inc.’s non-operating subsidiary, Quigley Co., won permission to have creditors vote on another iteration of a bankruptcy-exit plan that would bar most asbestos claims against the two companies.

Bankruptcy Chief Judge Stuart Bernstein of the Southern District of New York on August 15 approved Quigley’s sixth reorganization plan draft after objections that it won’t resolve whether Pfizer devised the plan in bad faith and manipulated the bankruptcy for its benefit.

An issue that keeps resurfacing -- whether Pfizer’s actions are “just another attempt to buy the vote” of asbestos claimants -- will be addressed at a trial when Quigley seeks final confirmation of its plan after a vote, Judge Bernstein said.

His ruling may lead to an end to the seven-year Chapter 11 case over how the former maker of products for the steel industry and its parent, the world’s largest drugmaker, will resolve their liability for asbestos claims.

Under the draft plan, Pfizer would contribute assets to a trust to cover claims that Quigley’s past products caused asbestos- related injuries.

Asbestos claims against Quigley may total $4.45 billion over 42 years, according to testimony cited by Judge Bernstein in September 2010, when he denied Quigley’s request to exit bankruptcy under a prior plan.

At the time, the court found Pfizer’s proposed contribution of $216.2 million wasn’t enough to pay asbestos claimants, who may have fared better by suing the company under civil tort law.

Pfizer has since increased its contributions, and in March 2011 a committee formed by asbestos claimants settled with Pfizer and will receive $800 million under the agreement.

Tracy Hope Davis, the acting United States Trustee, objected to the current disclosure statement, which explains the plan terms, pointing out that the concerns raised by Judge Bernstein in his September 2010 ruling still haven’t been resolved. In that ruling, Judge Bernstein found Pfizer “wrongly manipulated the voting process to assure confirmation of the plan, and thereby gain the benefit of the channeling injunction” by giving some asbestos claimants incentives to vote in favor of the plan, the acting U.S. Trustee said.

Under the bankruptcy code, channeling injunctions allow companies to limit future liabilities by channeling them to a trust.

The acting U.S. Trustee said the current plan still doesn’t disclose whether settlements Pfizer made with asbestos victims are consistent with historic standards, and why asbestos claimants who settled their lawsuits against Pfizer before Quigley’s bankruptcy have a right to vote. It would only give some asbestos claimants 7.5 percent of what they seek and block them from making future claims against Pfizer under tort law, where they might get an estimated 23 percent of what they seek, the trustee added.

Quigley filed the sixth version of its plan on June 29. The new documents address an April appeals court ruling on how Pfizer can use Quigley’s bankruptcy to protect itself from asbestos claims. That court found that the law firm of Peter Angelos can sue Pfizer based on manufacturer liability under Pennsylvania law.

The new plan’s exception for claims under state law would be null and void if the appeals court’s decision was modified on rehearing or by the Supreme Court, Quigley said in the plan.

Angelos began suing Pfizer in 1999, saying that because the drug company’s logo appeared on Quigley products, it should have liability for the asbestos-containing products.

Reaud, Morgan & Quinn LLP, a law firm that represents asbestos claimants, objected, saying Pfizer is paying $300 million more to the 40,000 claimants represented by the committee than it paid 193,000 earlier, to “settle the claims of the most outspoken opponents” of its reorganization plan.

Hissey Kientz LLP, a law firm which said it represents 3,200 claimants with diseases such as mesothelioma and lung cancer, joined in Reaud Morgan’s objection. A committee of unsecured creditors and Pfizer said they supported the current disclosure statement.

Albert Togut, a representative for people who haven’t yet manifested asbestos-related illnesses but will do so in the future and bring claims against the asbestos trust, said in court papers he was still resolving issues with Quigley and Pfizer.

Christopher Loder, a Pfizer spokesman, said the company is “pleased with the court’s decision to approve Quigley’s disclosure

statement” and looks forward to moving ahead with the bankruptcy.

Quigley, founded in 1916, made three products for the steel industry from the 1940s to the 1970s that contained asbestos. Pfizer bought Quigley in 1968. The unit stopped most operations in 1992. It has been in bankruptcy since 2004.

(D) Flintkote

The Flintkote Company and Flintkote Mines Limited asked Delaware Bankruptcy Judge Judith K. Fitzgerald to further extend to January 31, 2013, the period during which the Companies have the exclusive right to file a Chapter 11 plan of reorganization. Flintkote also asked the Court to extend to March 31 next year, the period during which they have the exclusive right to solicit plan votes.

The Official Committee of Asbestos Personal Injury Claimants supports the extension request.

Flintkote filed an amended joint plan of reorganization on July 17, 2009, along with a supplemental document describing the minor modifications embodied under the Modified Amended Plan. The plan documents were further modified in August 2010, August 2011, and November 2011.

The Court approved a supplemental disclosure document on July 30, 2009.

The Modified Amended Plan was accepted by majority of all the classes of creditors and asbestos claimants, including nearly 95 percent of the Asbestos Personal Injury Claimants. The trial

on confirmation of the Modified Amended Plan was held on October 25-26, 2010; September 12-13, and Sept. 19, 2011.

The Modified Amended Plan has now been accepted by all classes of creditors and claimants, including the vast majority of Asbestos Personal Injury Claimants.

"Preserving exclusivity at this crucial point in the plan process is necessary to further one of the principal goals of the Chapter 11 process -- the successful rehabilitation of a debtor through a consensual plan of reorganization," Flintkote has stated in bankruptcy court filings.

Flintkote is a defendant in more than 157,000 asbestos- related personal injury claims pending in various jurisdictions and an unknown number of future asbestos-related personal injury claims. Its current and future liability for Asbestos Personal Injury Claims is estimated to exceed $3 billion. The Plan proposes establishing a so-called Section 524(g) trust to fairly and equitably address and resolve the large number and amount of Asbestos Personal Injury Claims.

Flintkote successfully negotiated and formulated the Modified Amended Plan with the Asbestos Claimants Committee and Future Claimants Representative. Flintkote is in the process of resolving certain non-asbestos-related claims filed against the bankruptcy estate and, in this regard, has made significant progress in negotiating remediation and entering into settlement agreements with various environmental claimants. Flintkote is also continuing in its efforts to negotiate "buy-out" arrangements with remaining insurers.

Headquartered in San Francisco, California, Flintkote is engaged in the business of manufacturing, processing and distributing building materials. Flintkote Mines Limited is a

subsidiary of Flintkote Company and is engaged in the mining of base-precious metals.

Flintkote filed for Chapter 11protection on April 30, 2004. Flintkote Mines filed for Chapter 11 relief on Aug. 25, 2004.

In its bankruptcy petition, Flintkote Company estimated more than $100 million each in assets and debts. When Flintkote Mines Limited filed for protection from its creditors, it estimated assets of $1 million to $50 million, and debts of more than $100 million.




The Troubled Company Reporter provides detailed reporting about every chapter 11 filing nationwide. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation.

New Publicly Traded Securities

Psyche Castillon reports there were three companies who issued or will issue shares of new common stock upon emergence pursuant to the plans of reorganization they filed in their Chapter 11 cases in August 2012. These are: Bicent Power, Delta Petroleum, and Broadview Networks.

(A) Bicent Power

Bicent Holdings LLC, the owner of two electric power plants capable of generating 168 megawatts, won court approval of its restructuring plan swapping lenders’ debt for almost all of the reorganized company’s equity.

Judge Kevin Gross in the Bankruptcy Court in Wilmington, Delaware, approved the reorganization plan paving the way for Bicent to exit court protection in just over three months.

Under the company’s restructuring plan negotiated with creditors before filing bankruptcy, lenders with a first priority of repayment, owed about $147.2 million, will get 95 percent of the reorganized company’s equity, for a recovery estimated between 38.3 percent and 60.4 percent. Barclays Bank Plc is agent for the lenders.

Lenders that backstopped Bicent’s bankruptcy loan will get the remaining 5 percent of the reorganized stock.

Lenders that are second in line to be repaid, owed about $128.5 million, will get $1.5 million cash and warrants to purchase as much as 12.5 percent of the new equity, for an estimated recovery of 4.4 percent. U.S. Bank N.A. serves as agent for the $128.5 million in debt.

The two lender groups, the only creditors that voted on the plan, unanimously accepted the proposal.

Unsecured creditors holding $25.4 million in claims and mezzanine lenders holding debt totaling $65.2 million won’t get any recovery under the plan.

(B) Delta Petroleum

Delta Petroleum Corp., an oil and natural-gas explorer and developer, will receive court approval of its restructuring plan setting up a joint venture with Laramie Energy II LLC.

U.S. Bankruptcy Judge Kevin J. Carey said he will approve Denver-based Delta’s plan giving creditors equity interests in a reorganized company that will own 33 percent of the joint venture, Piceance Energy LLC, after clarifying language is added.

Under the restructuring plan there would be two entities: the joint venture and the reorganized Delta, according to court papers. Reorganized Delta would get one-third of the equity interest in the venture and Laramie the rest, according to court documents. Delta would also get $75 million to make payments under the plan.

Piceance Energy would hold the companies’ oil and gas, surface real estate and other related assets in Colorado’s Garfield and Mesa counties. Delta’s oil and gas lease with Buzzard Creek Elk Ranch in Mesa County would be excluded.

Delta has received two other offers to co-sponsor its reorganization plan since reaching a deal with Laramie, Kathryn Coleman, a lawyer for the company, told Judge Carey. But Ms. Coleman said that despite the offers there wasn’t enough reason to delay seeking approval of the plan today for one of them because the company doesn’t want to lose Laramie “to chase something that may or may not be real.”

“Things aren’t all buttoned-up with Laramie,” she said, noting that they still need to complete exit financing. If one of those offers matures into something “we have no option but to go

forward with that,” Ms. Coleman said. The company may cancel the deal with Laramie up until the day the plan becomes effective.

After holding bidding on April 24 and 25 to either sell the assets or sponsor a reorganization plan, Delta determined that Laramie made the “highest and best offer” for the assets, according to court documents. The company determined it could provide a greater recovery for stakeholders if they allowed offers to back a recovery plan that would preserve its net operating loss carryforwards and other tax attributes. Delta has about $885 million in NOLs, which could result in about $309.8 million in tax savings, court papers show.

(C) Broadview Networks

Broadview Networks and its 27 affiliates sought Chapter 11 protection and filed a pre-packaged plan, whose approval will be determined in an October 3 hearing.

The Prepackaged Plan provides that:

* Holders of senior secured notes aggregating $317.1

million, although impaired, will recover 100 percent in the form of

(i) 97.5 percent of the common stock, of reorganized Broadview, subject to dilution by shares of new common stock issued pursuant to the management equity plan or upon exercise of the new warrants, and (ii) $150 million of new 10.5 percent senior secured notes due 2017.

* Holders of claims of up to $14 million under the five-year

revolving credit facility -- or ABL Facility -- are unimpaired and will

be paid in full. Broadview intends to pay the claims shortly after the commencement of the Reorganization Cases pursuant to the DIP Facility.

* Holders of general unsecured claims estimated at $25

million to $27 million are not impaired and will be paid in full in cash or will have their claims reinstated as of the Effective Date.

* Holders of existing preferred interests are to recover $14.6

million. In exchange for the cancellation of their preferred interests, they will receive (i) 2.5 percent of the New Common Stock, subject to dilution by shares of new common stock issued pursuant to the Management Equity Plan or upon exercise of the new warrants, and (ii) two series of 8-year warrants to purchase up to (A) 11 percent of the fully diluted New Common Stock, subject to dilution by the 4 percent Warrants and (B) 4 percent of the fully diluted New Common Stock.

* Holders of other equity interests won't receive anything and their existing equity interests will be cancelled.

Broadview intends to enter into a New ABL Facility that will provide total borrowing commitment upon consummation of the Prepackaged Plan of no less than $25 million. The New ABL Facility in a drawable principal amount of at least $25 million will be used by Reorganized Broadview to (a) fund post-Effective Date general corporate purposes of the reorganized company in the ordinary course of business (including working capital requirements) and (b) make any payments required under the Prepackaged Plan.




That ends the Beard Group Corporate Restructuring Review for August 2012, brought to you by the editors of the Troubled Company Reporter and Troubled Company Prospector. If you'd like to receive the Troubled Company Reporter for 30-days at no

cost -- and with no strings attached -- call Nina Novak at (240) 629-3300 or visit bankrupt-dot-com-slash-free-trial and we'll add you to the distribution list. That telephone number, again, is (240) 629-3300 and that Web site address, again, is bankrupt-dot-com- slash-free-trial.

Tune in to our next monthly Restructuring Review on October 16th. Thank you for listening.