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Beard Group Corporate Restructuring Review For June 2013

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

An audio recording of this presentation is available at http://bankrupt.com/restructuringreview/


____________________________________________________ Welcome to the Beard Group Corporate Restructuring Review for June 2013, 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.

June 2013 Mega Cases Now, let's review the largest chapter 11 cases in June 2013. Danilo Muoz reports that the number of Chapter 11 mega filings jumped four-fold to eight for the month of June 2013. Two of those mega filings involved companies with more than $1 billion in assets. In comparison, there were only two Chapter 11 bankruptcy mega cases in May and five mega filings in April. During the first six months of 2013, there were 31 mega bankruptcy cases filed, including seven that involved more than $1 billion in assets. For fiscal year 2012, there were a total of 12 companies that filed for Chapter 11 with excess of $1 billion in assets, five of which were filed in May 2012. There were a total of 64 mega filings with assets in excess of $100 million in 2012, compared to 82 mega filings during the same period in 2011 and 106 in 2010. The largest Chapter 11 filing in June was by Exide Technologies Inc. This is Exide's second bankruptcy trip, having filed in 2002 and emerging from those proceedings in 2004.
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Exide returned to Chapter 11 bankruptcy on June 10, 2013, by filing a voluntary petition with the Bankruptcy Court for the District of Delaware [Case No. 13-11482]. The Debtor disclosed $1.89 billion in assets and $1.14 billion in liabilities as of March 31, 2013. Exide filed for Chapter 11 to facilitate a financial and operational restructuring necessary to strengthen its balance sheet and its business to position the Company for future success. Only Exide's U.S. operations are included in the filing. The Company plans to continue to operate globally without interruption during the reorganization. Headquartered in Princeton, New Jersey, Exide manufactures and distributes lead acid batteries and other related electrical energy storage products. The second largest Chapter 11 filing was by TMT USA Shipmanagement LLC and its affiliates, which disclosed $1.52 billion in assets and $1.46 billion in liabilities on a consolidated basis. TMT Group owns 17 vessels, which range in size from approximately 27,000 dead weight tons or "dwt" to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection on June 20, 2013, with the Bankruptcy Court for the Southern District of Texas [Case No. 13-33740] after lenders seized seven vessels. TMT already filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income.

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The third largest Chapter 11 filing in June was by Orchard Supply Hardware Stores Corporation and affiliates, which sought Chapter 11 protection on June 16, 2013, with the Bankruptcy Court for the District of Delaware [Lead Case No. 13-11565], before Judge Christopher S. Sontchi. Orchard Supply and its affiliates disclosed total assets of $441 million and total debts of $480 million. Orchard Supply filed for Chapter 11 to facilitate a restructuring of its balance sheet and a sale of its assets for $205 million in cash to Lowe's Companies, Inc. That transaction is subject to higher and better offers. In addition to the $205 million cash, Lowe's has agreed to assume payables owed to nearly all of Orchard's supplier partners. San Jose, California-based Orchard Supply operates neighborhood hardware and garden stores focused on paint, repair and the backyard. It was spun off from Sears Holdings Corp. in 2012. The next largest Chapter 11 filing was by Vail Lake Rancho California, LLC, which listed consolidated assets, as of May 31, 2013, of roughly $291 million and liabilities total $52.8 million. Vail Lake and its affiliates own the California campground Vail Lake Resort. The property is a large reservoir in western Riverside County, California, located on Temecula Creek in the Santa Margarita River watershed, approximately 15 miles east of Temecula, California. Properties cover approximately 9,000 acres and have an estimated water storage capacity of approximately 51,000 acre-feet. On June 5, 2013, Vail Lake sent five related entities -- Vail Lake USA, LLC or VLU; Vail Lake Village & Resort LLC or VLRC;
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Vail Lake Groves LLC; Agua Tibia Ranch LLC; and Outdoor Recreational Management, LLC -- to Chapter 11 bankruptcy. In addition, OnCure Holdings, Inc., which provides management services and facilities to oncology physician groups throughout the country, filed for Chapter 11 in June with total assets of $179.3 million and total debts of $250.4 million. OnCure Holdings and its affiliates filed Chapter 11 bankruptcy petitions on June 14, 2013, with the Bankruptcy Court for the District of Delaware [Case Nos. 13-11540 to 13-11562]. OnCure has signed a deal to sell the business to Radiation Therapy Services Holdings Inc. for $125 million, absent higher and better offers. RTS's offer comprises $42.5 million in cash plus covering certain expenses and subject to certain working capital adjustments, and up to $82.5 million in assumed debt. OnCure's secured noteholders are supporting the RTS deal. Promptly before the bankruptcy filing, OnCure entered into a restructuring support agreement with the members of an ad hoc committee of its secured notes, constituting 100% of the lenders under the first lien term loan credit agreement and approximately 73% of the secured notes, pursuant to which they have agreed to support a stand-alone restructuring of the Debtors, subject to an auction process for a sale of substantially all of the Debtors' assets or the equity of reorganized OnCure pursuant to a chapter 11 plan. In addition, three companies filed for Chapter 11 protection listing assets of between $100 million to $500 million. These are iGPS Company, Triad Guaranty Inc., and National Envelope. iGPS Company filed a Chapter 11 bankruptcy petition on June 4, 2013, with the Bankruptcy Court for the District of
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Delaware [Case No. 13-11459] to sell its assets to a group led by Balmoral Funds LLC, absent higher and better offers. iGPS Company is the first and only plastic pallet pooling rental and leasing company in the U.S. It offers plastic pallets with embedded radio frequency identification or RFID tags. Founded in 2006, the company is headquartered in Orlando, Florida, and has a sales and innovation center in Bentonville, Arkansas. Triad Guaranty filed a Chapter 11 petition on June 3 with the Bankruptcy Court for the District of Delaware [Case No. 1311452]. The Company estimated assets of at least $100 million and liabilities of less than $50,000. Winston-Salem, N.C-based Triad Guaranty is a holding company that historically provided private mortgage insurance coverage in the United States through its wholly-owned subsidiary, Triad Guaranty Insurance Corporation. TGIC is a nationwide mortgage insurer pursuing a run-off of its existing inforce book of business. Triad Guaranty said in court filings that it has no significant operating activities, and has limited remaining cash and other assets on hand. It has been exploring various strategic alternatives, and will continue to do so from and after the Petition Date. It continues to burn cash, with expenses ranging from $100,000 to $500,000 per quarter. Unless the expenses are reduced, the Company expects to deplete all of its remaining cash by the end of 2013 or earlier. National Envelope is the largest privately-help manufacturer of envelopes in North America. Headquartered in Frisco, Texas, National Envelope has eight plants and 15 percent of the envelope market.
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NE OPCO, Inc., doing business as National Envelope, along with affiliate NEV Credit Holdings, Inc., filed petitions seeking relief under Chapter 11 of the Bankruptcy Code on June 10, 2013, with the Bankruptcy Court for the District of Delaware [Lead Case No. 13-11483]. None of the two mega filings in June involved a prepackaged Chapter 11 filing. During the first half of 2013, 12 of the 31 mega filings involved a prepackaged Chapter 11, or 39% of the Chapter 11 mega filings. For fiscal year 2012, 13 of the 64 mega cases involved a prepackaged Chapter 11 filing, or about 20% of the mega cases. For 2011, 13 of the 83 mega cases involved a prepackaged Chapter 11 plan as of the Petition Date -- or about 16% of the large Chapter 11 filings. For fiscal year 2010, a total of 35 prepacks/pre-arranged cases were filed out of the 106 bankruptcy mega cases -- or about one in every three filings in 2010. For the month of June, two mega filings were engaged in manufacturing while the rest were spread through different industries. During the half of 2013, 10 of the mega filings belonged to the information industry, 6 are involved in manufacturing and 4 are involved in healthcare. The Bankruptcy Court for the District of Delaware got the lions share of mega filings in June with six of the eight mega filings. For the first half of 2013, the Bankruptcy Court for the District of Delaware was the most favored venue with 20 of the 31 mega filings, while the next closest, the Bankruptcy Court for the Southern District of New York had only 4 mega filings.
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In 2012, the Bankruptcy Court for the Southern District of New York was the most favored venue for mega filers with 21, wresting away the lead from the Bankruptcy Court for the District of Delaware with 19 mega filings. In 2011, the Delaware Bankruptcy Court was the most favored of bankruptcy mega cases with 38 filings, or 46% of the mega cases, followed by the Southern District of New York with 16 filings, or 19% of the mega cases, and by the Northern District of Texas with 4 filings, or 5% of the mega cases. The rest of the bankruptcy 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 $41.05 billion in total assets and $39.68 billion in total liabilities. For 2012, the largest Chapter 11 filing was by Residential Capital LLC, which disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. For first half of 2013, the largest Chapter 11 filing was filed by Dex One Corp., which filed for Chapter 11, listing total assets of $2.84 billion and total liabilities of $2.79 billion. For the first five months of 2013, Young Conaway Stargatt & Taylor LLP represented 5 of the 23 mega filings either as counsel or co-counsel. The law firm represented the School Specialty,
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Penson Worldwide, Super Media, Otelco and Rotech Healthcare in their respective Chapter 11 cases.

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 three companies that may be close to filing for bankruptcy. These are: MDU Communications, Maxcom Telecomunicaciones, and Dynasil Corp. (A) MDU Communications Telecommunications provider MDU Communications International Inc. said in a regulatory filing that its cash resources will be depleted by Sept. 30. The Totowa, New Jersey-based company hasn't talked about a potential bankruptcy filing. It said instead that it's exploring "large asset sales" or a merger. The company's revolving-credit lender extended maturity of the facility to Dec. 31 from June 30, with the possibility of an extension to March 31. The Company's balance sheet at March 31, 2013, showed $18.04 million in total assets against $32.14 million in total liabilities.

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(B) Maxcom Telecomunicaciones Maxcom Telecomunicaciones SAB began soliciting votes on a prepackaged Chapter 11 reorganization plan that contemplates the infusion of $45 million in new capital to the Mexico City-based telecommunications provider. Ventura Capital Provida SA has agreed to make a capital contribution of US$45.0 million dollars and conduct a tender offer to acquire for cash, at a price equal to Ps.$2.90 (two pesos and 90 cents). The recapitalization will be completed through approval of a reorganization plan in a U.S. bankruptcy court. Under the Plan all creditors will be paid in full other than holders of the $200 million in 11 percent first-lien notes due in 2014. Holders will receive new notes for the full principal amount bearing interest initially at 6 percent and rising to 8 percent before maturity in 2020. The reorganization has support from holders of $84 million of the 11 percent notes, Ventura and some shareholders. In June 2013, Maxcom didn't make an $11 million interest payment on the notes. At the time, the company said it would use the 30- day grace period to negotiate a restructuring to be carried out through a Chapter 11 filing in the U.S. (C) Dynasil Corp. Dynasil Corporation of America said at the end of May that it is not in compliance with its financial covenants under its loan agreements with its lenders and the Company is in payment default with its subordinated lender. The Company's lenders may exercise one or more of their available remedies, including the
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right to require the immediate repayment of all outstanding indebtedness. As of March 31, 2013, the Company had approximately $8 million of Secured indebtedness with Sovereign Bank, N.A., and $3.0 million of indebtedness with Massachusetts Capital Resource Company. As of March 31, 2013, Dec. 31, 2012, and Sept. 30, 2012, the Company is in violation of certain financial covenants contained in each of the loan agreements that require it to maintain certain ratios of earnings before interest, taxes, depreciation and amortization to fixed charges and to total/senior debt. Additionally, although the Company continues to be current with all principal and interest payments with Sovereign Bank, as of March 31, 2013, the Company was delinquent on two months of interest payments on the Company's $3 million note from Massachusetts Capital Resource Company. The company said in a regulatory filing: "If our lenders were to accelerate our debt payments, our assets may not be sufficient to fully repay the debt and we may not be able to obtain capital from other sources at favorable terms or at all. If additional funding is required, this funding may not be available on favorable terms, if at all, or without potentially very substantial dilution to our stockholders. If we do not raise the necessary funds, we may need to curtail or cease our operations, sell certain assets and/or file for bankruptcy, which would have a material adverse effect on our financial condition and results of operations," according to the Company's quarterly report for the period ended March 31, 2013. Watertown, Massachusetts-based Dynasil develops and manufactures detection and analysis technology, precision
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instruments and optical components for the homeland security, medical and industrial markets. The Company's balance sheet at March 31, 2013, showed $28.27 million in total assets against $17.07 million in total liabilities. * * *

In addition to the challenged companies mentioned in Mr. Fernandez's report, the Troubled Company Reporter provides ongoing 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) Idearc Inc. Ivy Magdadaro reports that Verizon Communications Inc. won a complete victory on June 18 when a federal district judge in Dallas threw out the remainder of a $9.8 billion lawsuit begun almost three years ago by creditors of Idearc Inc. Idearc implemented a reorganization plan in January 2010 mostly worked out before the Chapter 11 filing in March 2009.
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Reducing debt from $9 billion to $2.75 billion, the plan created a trust that filed the lawsuit in Dallas. In January, U.S. District Judge A. Joe Fish ruled after a non-jury trial that Idearc was solvent and worth $12 billion when spun off. Given solvency, the judge told both sides to file papers explaining why the entire suit should or shouldn't be dismissed. The Idearc creditors' committee responded in mid-March with papers contending that the company was never properly formed, thus making Verizon liable for the debt. In a 22-page opinion, Judge Fish dismissed the entire suit. He said the finding of solvency was fatal to claims known as constructive fraudulent transfer, where transactions can be set aside if made for inadequate consideration when a company is insolvent. Judge Fish similarly dismissed claims for actual intent to hinder, delay or defraud creditors. He said any circumstantial evidence of fraudulent intent was "negated" by his conclusion that Dallas-based Idearc was solvent and worth $12 billion at the time of the spinoff. The judge also failed to go along with technical theories that a dividend was illegal because Idearc never had more than one director when there should have been three. Judge Fish said he was unable to find "any case in which a court found that a solvent corporation's dividend was illegal solely because of a technical violation." The dismissal of the suit gives creditors the right to appeal. Although setting aside a judge's finding of fact about solvency is difficult, the creditors can now raise on appeal the question of whether they were entitled to a jury trial. Earlier in the case, Judge Fish ruled that there was no right to a jury trial. Headquartered in D/FW Airport, Texas, Idearc, Inc., now known as SuperMedia Inc., is the second largest U.S. yellow
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pages publisher. The Company was spun off from Verizon Communications. (B) Extended Stay At around June 20, Blackstone Group LP agreed to pay $10 million to settle a lawsuit that had sought $8.4 billion for its role in the sale and subsequent bankruptcy of hotel chain Extended Stay Inc. Citigroup Inc, an adviser to Blackstone that took control of Extended Stay in a 2007 leveraged buyout, agreed to pay $200,000. Bank of America Corp., which advised Blackstone, was also released from the lawsuits as part of the settlement. In 2007, Blackstone sold the 680-hotel chain for $8 billion to private equity investor, David Lichtenstein. After Extended Stay filed for bankruptcy, Finbarr O'Connor, the trustee acting for the benefit of Extended Stay's creditors, filed five lawsuits in 2011. The lawsuits alleged that Blackstone skimmed $2.1 billion from the sale of the chain. The trust also asked the court for $6.3 billion in punitive damages because it alleged Blackstone and others maliciously breached their duties to Extended Stay creditors. The settlement excluded Mr. Lichtenstein. A July 18 hearing has been scheduled for the Court's consideration of the Blackstone and Citigroup settlements. (B) Saab US District Judge Gershwin Drain on June 10 dismissed a $3 billion lawsuit filed by Dutch car maker Spyker Cars NV against General Motors Co.
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Spyker sued GM last August, accusing it of attempting to bankrupt Saab after the US automaker had already sold the company to Spyker. GM in effect blocked the sale of Saab to China's Zhejiang Youngman Lotus Automobile Company by prohibiting the transfer of some of its intellectual property. But the court found that GM had a "contractual right" to approve or disapprove any change of ownership. Furthermore, Judge Drain said the contract between GM and Spyker "is clear, unambiguous and absolute" on the matter. GM sold Saab to Spyker in 2010. Saab filed for bankruptcy protection less than a year later after GM blocked its sale to the Chinese automaker. On June 19, Spyke said it will seek dismissal of its billion dollar lawsuit against GM following a "careful review" of the court's opinion. (D) Patriot Coal In the first week of June, Patriot Coal Corp. and the United Mine Workers union filed appeals from litigations they lost at the end of May in the U.S. Bankruptcy Court in St. Louis, Missouri. While Patriot is content with having its appeal decided by a panel of three bankruptcy judges on the Bankruptcy Appellate Panel, the union is having its appeal decided by a federal district judge. The union filed an appeal from the May 29 opinion by U.S. Bankruptcy Judge Kathy A. Surratt-States allowing Patriot to modify union contracts and reduce the guarantee of lifetime medical care for retirees.

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The May 29 opinion generally permits Patriot to reduce wages and benefits for its 1,600 active union miners to levels provided to its non-union employees. This could include scrapping wage increases, cutting vacation days and overtime pay, and reducing pension contributions. Patriot appealed the judge's dismissal of a lawsuit where the coal producer was attempting to force former owner Peabody Energy Corp. to continue paying benefits for some retirees at a higher level even though Patriot will be paying lower benefits. Although the union conceded Patriot needed concessions to survive, Judge Surratt-States wrote her 102-page opinion in May to explain why the union was wrong in contending she should leave the door open to restoring the higher level of wages and benefits as soon as 2016. In the lawsuit with Peabody, Judge Surratt-States decided that the plain language of the parties' contracts allows the former owner to guarantee no more benefits than those Patriot is paying. Patriot began carrying out wage and benefit changes for active employees July 1. Nevertheless, the Company said on July 2 that it has made "substantial progress" towards a deal with the miners union on the benefit cuts and wage reductions. Ongoing talks likely concern Patriot's plan to trim its $1.6 billion in long-term health care obligations to retirees. Patriot is the 10th largest coal producer in the US. The company employs about 4,000 people, about 41% of whom are union members. It filed for bankruptcy in July last year after being hit hard by dropping coal prices brought on by a glut of cheap natural gas.

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Delayed Exits From Chapter 11 Julie Anne Lopez-Toledo reports about three Chapter 11 debtors whose emergence from Chapter 11 has been delayed: Quigley, Flintkote and W.R. Grace. (A) Quigley Quigley Company Inc. has emerged from its heavily litigated Chapter 11 asbestos reorganization. U. S. Bankruptcy Judge Stuart M. Bernstein held on June 26, 2013, after a contested hearing, that Quigley Company, a wholly owned subsidiary of Pfizer Inc., could emerge from its Chapter 11 reorganization despite a dissenting creditor class and an objecting group of asbestos personal injury claimants. The Quigley reorganization plan discharged at least $5.6 billion of current and future asbestos liability, provided Pfizer with an injunction barring further Quigley-related asbestos claims and crammed down a rejecting class of silica personal injury claimants. Quigley, a former manufacturer of industrial refractory products used mostly in the steel industry, had been besieged, since 1980, with massive asbestos litigation arising out of its manufacture and sale of three asbestos-containing products. When it filed its Chapter 11 petition, approximately 212,000 asbestos personal injury claims totaling $1.2 billion, were pending against it and its corporate parent, Pfizer. Uncontradicted expert testimony during the case estimated about 260,000 future asbestos claims against Quigley, extending until 2058, with an
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undiscounted value of $4.4 billion. When Quigley sought Chapter 11 relief, Pfizer was also a defendant with respect to 280,000 claims, based on the claimants asserted exposure to Quigleys products. The growing number of asbestos claims forced Quigley to file a Chapter 11 petition when its remaining insurance coverage, shared with and bought by Pfizer, began to erode. Pfizer contributed a total of $964 million in value to implement the Quigley reorganization plan. That contribution consisted of approximately $500 million of shared insurance assets, $260 million of cash, $126 million of secured debt forgiveness and a $44 million dollar commercial building occupied under a long-term lease generating at least $2.5 million a year through 2026. In addition to its plan contribution, Pfizer had paid another $1.25 billion to other large groups of claimants who had asserted claims against it. The details of these non-plan settlements were disclosed during the Chapter 11 case. The federal courts issued no less than 18 decisions during the contentious Quigley case. Most recently, the United States Supreme Court denied Pfizers petition for a writ of certiorari regarding a 2012 decision by the Court of Appeals for the Second Circuit holding that the injunction obtained by Quigley for the benefit of Pfizer had certain limits. In that decision, the Court of Appeals also held that Quigley had properly obtained the injunction, reaffirming the bankruptcy courts broad jurisdiction to protect Quigleys critically important insurance assets. Other decisions by the Southern District of New York and the Bankruptcy Court during the case affirmed the validity of Quigleys preliminary injunction staying suits against Pfizer, Quigleys classification of its creditors, and denied an effort to have a trustee or examiner appointed to investigate Quigleys affairs.

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Critically important to the courts, Quigley had an independent board of directors and counsel with no ties to Pfizer. The court had denied confirmation of Quigleys earlier reorganization plan because of what it viewed as Pfizers improper settlements with certain claimants and inadequate contribution to the plan. After further negotiations with Quigley, the creditors committee and future claims representative, Pfizer increased its plan contribution by at least $750 million. Pfizer also settled with a key group of litigants and their counsel for another $820 million to cover its separate liability. An entire class of silica personal injury claimants had voted against the Quigley plan. Because Quigley proved, without contradiction, that: (a) it had reasonably and properly placed the silica claimants in a separate class; (b) the silica claimants would receive less in a Chapter 7 liquidation than they would get under the Plan; and (c) no class of creditors or shareholders junior to the class would receive anything, the court crammed down the silica class i.e., held that its acceptance was unnecessary. One group of asbestos claimants objected to the Quigley plan, arguing that it had been proposed in bad faith because Pfizer had settled its own liabilities with other claimants, but not with this group. The objectors also challenged Quigleys classification of creditor claims, Pfizers payments to other settlers and the courts allocation of Pfizers derivative liability (23 percent) for Quigleys direct asbestos liability. After receiving undisputed evidence from Quigley and Pfizer going to the parties good faith, Quigleys independence from Pfizer and the future viability of Quigleys reorganized business, the court rendered its decision from the bench after hearing arguments. It found that: Quigleys plan had been proposed in good faith; Quigley had properly classified the different categories of creditors; Quigley was entitled to cram down the class of silica claimants despite their rejection of the plan; its prior allocation of Pfizers derivative
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liability remained valid; and that Quigleys plan was in the best interests of Quigleys creditors. (B) Flintkote Flintkote Company and Flintkote Mines Limited have asked the Bankruptcy Court to extend their exclusive periods to file a proposed Chapter 11 Plan until Nov. 30, 2013; and solicit acceptances for that Plan until Jan. 31, 2014, respectively. This is the Debtors' 25th motion for exclusivity extensions. The Court has granted 24 prior extensions of the exclusive periods. On Dec. 21, 2012, the Court entered its memorandum opinion overruling objections to the Amended Joint Plan of Reorganization, confirming Plan and recommending the affirmation of confirmation and of the so-called Section 524(g) injunction. On Jan. 4, 2013, Imperial Tobacco Canada Limited and certain of its wholly-owned subsidiaries, including Genstar Corporation, ("ITCAN") filed a notice of appeal from the confirmation opinion and the confirmation order, and the appeal is pending before the District Court. ITCAN and the Plan Proponents have each submitted all of their briefs, and the District Court has scheduled a hearing on July 31, to consider oral arguments concerning the appeal. According to Flintkote, the Plan Proponents' cooperative efforts to confirm a consensual plan will be protected by extending the exclusive periods. The Plan represents extensive negotiations between the Plan Proponents and their cooperative efforts to formulate a consensual plan of reorganization that successfully rehabilitates Flintkote and maximizes the pool of assets available to creditors.
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The Official Committee of Asbestos Personal Injury Claimants and the legal representative of future asbestos claimants support the relief sought. In line with the recent retirement of former Bankruptcy Judge Judith Fitzgerald, Flintkote's Chapter 11 case has been reassigned to Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware. (C) W.R. Grace W.R. Grace was due in court June 17 for a hearing over its bankruptcy restructuring plan. Bank lenders' appeal of orders confirming W.R. Grace & Co.'s plan were scheduled to be argued before the U.S. Court of Appeals in Philadelphia. The plan, which was confirmed by the bankruptcy and district courts, can't be implemented because prebankruptcy secured bank lenders filed an appeal. The banks argue that they are entitled to $185 million in interest on their claims because shareholders are retaining stock worth $4.9 billion. Banks filing the appeal include Bank of America NA, Barclays Bank Plc and JPMorgan Chase Bank NA. Grace, which has been in bankruptcy protection for an astounding 12 years, has nevertheless thrived, helped by the shale revolution. "Obviously, we're all eager to come out of bankruptcy," says CFO Hudson La Force. Grace has projected to complete its reorganization by the end of this year. It filed for Chapter 11 in April 2001.
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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 Maricon Castillon reports of six companies who intend to issue shares of new common stock upon emergence pursuant to the plans of reorganization they filed or intend to file in their Chapter 11 cases in June 2013. These companies are: KIT Digital, Rotech Healthcare, American Airlines, PMI Group, Conexant Systems, and K-V Pharmaceutical. (A) KIT Digital KIT Digital filed in early June a plan of reorganization that proposes the cancellation of all shares of KDI Common Stock and the issuance of two different series of shares of reorganized KDI Class A Common Stock. The Reorganized KDI will issue Reorganized KDI Class A1 Common Stock, representing 10.71% of all Reorganized KDI Interests, to the DIP Facility Lender. The remainder of Reorganized KDI Class A1 Common Stock will be reserved for (i) shares to be issued to WTI, (ii) shares to be issued to the Plan
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Sponsor Group, and (iii) shares to be issued upon the conversion of the Reorganized KDI Class B Common Stock. Reorganized KDI Class A2 Common Stock will be reserved to be issued upon exercise of Reorganized KDI Warrants to Equity Subscribers and exercising Holders of Litigation Warrants. Proceeds of the exercise of Reorganized KDI Warrants will not exceed $12.5 million and will be used to redeem up to 50% of the Reorganized KDI Class B Common Stock issued to the Plan Sponsor Group pursuant to the Plan. (B) Rotech Healthcare Rotech Healthcare twice amended its Chapter 11 Plan of Reorganization and related Disclosure Statement in June. The Plan consists of 115 separate Chapter 11 Plans -- one Plan for each Debtor that will emerge as a reorganized entity. Under the Plan, each holder of an Allowed First Lien Claim will receive Cash in an amount equal to the Allowed amount of its First Lien Claim and each holder of an Allowed Second Lien Notes Claim will receive (x) its pro rata share of 100% of the common equity of the reorganized Company, subject to dilution by the equity interests issued under the Management Equity Incentive Program, and (y) the right to participate in the New Second Lien Term Loan. All the Company's outstanding shares will be cancelled and extinguished, and no holder of an Equity Interest in Rotech will receive a distribution on account thereof. Trade creditors and vendors who agree to maintain or reinstate payment terms as existing prior to the Commencement Date will be paid in full upon the effective date of the Plan. Other unsecured claims will be paid
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their Pro Rata Share of $1,500,000 and except as otherwise set forth in the Plan. (C) American Airlines Judge Sean Lane of the U.S. Bankruptcy Court in Manhattan approved the disclosure statement explaining American Airlines' Chapter 11 plan of reorganization. The Plan, to recall, is based on the proposed merger between American Airlines and US Airways. Under the Plan, equity in the combined company will be split, with 72% going to AMR Corp.'s stakeholders and creditors and 28% to US Airways. New shares of common stock to be issued by the merged company will be allocated to, among others, creditors, the Allied Pilots Association (13.5%), the Association of Professional Flight Attendants (3%), and the Transport Workers Union of America, AFL-CIO (4.8%). (D) PMI Group Judge Brendan L. Shannon of the U.S. Bankruptcy Court in Delaware approved the disclosure statement explaining PMI Group, Inc.'s plan of reorganization and scheduled the confirmation hearing for mid July. The Debtor's Plan provides that holders of allowed secured claims generally will retain their liens or receive the benefit of their collateral under the Plan. Each holder of an allowed general unsecured claim will receive its pro rata share of creditor cash and new common stock.
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Allowed General Unsecured Claims, estimated to range from $6.3 million to $10.3 million, are expected to recover 26-27% of their claim amount. Allowed senior notes claims, estimated to total $691 million, are expected to recover 29% of their claim amount. Allowed subordinated note claims, estimated to total $52.9 million, will recover 0% of their claim amount due to subordination provisions. Each holder of an allowed convenience claim will receive 90% of the amount of its allowed convenience claim in cash on the effective date or as soon as reasonably practicable thereafter. Holders of equity interests will receive no distribution under the Plan. (E) Conexant Systems In early June, Conexant Systems, Inc., obtained bankruptcy court approval of its chapter 11 plan of reorganization under which it will issue new shares of common stock. The new shares of common stock will be issued to SFM Capital Holdings Limited, an entity managed by Soros Fund Management LLC, which extended approximately $195 million of secured debt to the Debtor. The deal is part of the pre-arranged restructuring. The Secured Lender will also receive $76 million in new unsecured notes in exchange for its claims. The unsecured notes will be issued by a holding company, which can elect to either pay interest in cash or accrue interest in kind, and will be non-recourse to the reorganized Conexant operating company. So unsecured creditors wouldn't oppose the plan, the pot was increased to $2.9 million from $2 million. In addition, secured
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lenders agreed to waive their $114.5 million deficiency claim, thus not depleting the recovery by unsecured creditors.

(F) K-V Pharmaceutical Currently pending for approval before the U.S. Bankruptcy Court in Manhattan is K-V Pharmaceutical Company's Sixth Amended Joint Chapter 11 Plan of Reorganization and a related disclosure statement. The Plan, which aims to restructure all of the Debtors' liabilities in a manner designed to maximize recovery to stakeholders and to enhance the financial viability of the Reorganized Debtors, contemplates the cancellation of existing shares of common stock and the issuance of new shares of common stock upon emergence from bankruptcy. The Plan reflects an agreement and compromise among the Debtors, the Official Committee of Unsecured Creditors, the holders of at least 75 percent in dollar amount of the Class 3 Senior Secured Notes Claims, and the holders of approximately 97 percent in dollar amount of Class 6 Convertible Subordinated Notes Claims. Under this agreement and compromise, each holder of an Allowed Senior Secured Notes Claim will receive its pro rata share of a Cash distribution in the amount of (i) $231,409,850; plus (ii) the amount of any postpetition interest and accreted original issue discount amount determined by the Bankruptcy Court to be owed to the holders of Senior Secured Notes under the subordination provisions of the Convertible Subordinated Notes Indenture.
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The Debtors' existing indebtedness in respect of Convertible Subordinated Notes Claims will be cancelled and exchanged for 7 percent of the New Common Stock of Reorganized KV. Each holder of an Allowed General Unsecured Claim against any Debtor will receive Cash in an amount equal its Pro Rata Share of $10,250,000. * * *

That ends the Beard Group Corporate Restructuring Review for June 2013, 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-comslash-free-trial. Tune in to our next monthly Restructuring Review on August 16th. Thank you for listening.

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