Beard Group Corporate Restructuring Review For December 2011

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

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

____________________________________________________ Welcome to the Beard Group Corporate Restructuring Review for December 2011, 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. December & Year 2011 Mega Cases

Now, let's review the largest chapter 11 cases in 2011. Danilo Muoz reports that the number of Chapter 11 cases with assets in excess of $100 million declined by 22% to 83 in 2011, compared to 106 in 2010. For the month of December 2011, 5 companies filed for Chapter 11 protection with assets in excess of $100 million, including one company that listed total assets in excess of $1 billion. The mega case filings in December snapped an increasing trend of large cases for the second half of 2011. There were 8 filings in November, 10 in October, 7 each in September and August and 4 in July. The average number of mega cases in 2011 is about 7 per month, compared to about 9 per month in 2010. The largest Chapter 11 filing for December 2011 was by publisher Lee Enterprises, which listed total assets of $1.15 billion as of the bankruptcy petition date. For fiscal year 2011, 8 companies sought Chapter 11 bankruptcy protection with assets in excess of $1 billion. Aside
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from Lee Enterprises, the other cases are AMR Corp., Dynegy Holdings LLC, General Maritime Corp., MF Global Holdings Inc., NewPage Corporation, Borders Group and MSR Resort Golf Course.
[Top 10 Bankruptcies for 2011]

Davenport, IowaMF Global S.D.N.Y. $41,046,594,000 based Lee Enterprises, AMR Corp. S.D.N.Y. $24,719,000,000 Dynegy Holdings S.D.N.Y. $13,765,000,000 which publishes the St. Newpage Corp. Delaware $3,400,000,000 Louis Post Dispatch MSR Resort S.D.N.Y. $2,200,000,000 General Maritime S.D.N.Y. $1,718,598,000 and the Arizona Daily Borders Group S.D.N.Y. $1,280,000,000 Star along with more Lee Enterprises Delaware $1,150,000,000 Solyndra LLC Delaware $854,050,000 than 40 other daily R.E. Loans LLC N.D. Tex. $713,622,000 R.E. Loans LLC N.D. Tex. $713,622,000 newspapers and about 300 weeklies, filed Dec. 12, 2012, with the Bankruptcy Court for the District of Delaware [Lead Case No. 11-13918]. Judge Kevin Gross oversees the case. Lee Enterprises disclosed total assets of $1.15 billion and total liabilities of $1.25 billion at Sept. 25, 2011.
Company Petition Date Oct. 31 Nov. 29 Nov. 7 Sept. 7 Feb. 1 Nov. 17 Feb. 16 Dec. 12 Sept. 6 Sept. 13 Sept. 13 Court Assets

Prior to commencing its chapter 11 cases, Lee Enterprises solicited and obtained support from lenders and noteholders of an Amended Joint Prepackaged Plan of Reorganization, dated Dec. 2, 2011. The Company will be seeking confirmation of the Plan at a hearing on Jan. 23, 2012. The Plan is designed to provide full payment to all creditors. The second largest Chapter 11 filing was by Newport Beach, California-based William Lyon Homes and its subsidiaries, which are primarily engaged in designing, constructing and selling single family detached and attached homes in California, Arizona and Nevada.
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William Lyon Homes and its affiliates commenced a prepackaged Chapter 11 reorganization with the Bankruptcy Court for the District of Delaware [Lead Case No. 11-14019] on December 19, 2011, before Judge Christopher S. Sontchi. The petition says assets are $593.5 million with debt totaling $606.6 million as of September 30, 2011. William Lyon had been pursuing an out-of-court restructuring since January 2011. The reorganization plan, announced in November, will reduce debt on borrowed money from $510 million to $328 million. The homebuilder intends to obtain approval of the bankruptcy plan at a hearing beginning Feb. 10, 2012. The Chapter 11 plan already has been accepted by 97% in amount and 93% in number of senior unsecured notes, the company said in a court filing. Equipment rental company Ahern Rentals, Inc., commenced the third largest Chapter 11 case on December 22, 2011, with the Bankruptcy Court for the District of Nevada [Case No. 11-53860] before Judge Bruce T. Beesley. Ahern Rental estimated $500 million to $1 billion in assets and debts. The filing was prompted after Ahern Rental failed to extend the maturity of its revolving credit facility, which had a maturity date of Aug. 21, 2011. Delta Petroleum Corporation, an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil, filed for Chapter 11 protection on December 16, 2011, disclosing $375,498,248 in assets and $310,679,157 in liabilities. Delta and seven of its subsidiaries filed in the District of Delaware [Case Nos. 11-14006 to 11-14013] roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business.
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Clare Oaks, operator of a namesake continuing care retirement community in Bartlett, Illinois, sought for Chapter 11 protection with the Bankruptcy Court for the Northern District of Illinois [Case No. 11-48903] on December 5, 2011. Judge Pamela S. Hollis oversees the case. In its petition, Clare Oaks estimated $100 million to $500 million in assets and debts. Of the bankruptcy mega cases in December 2011, two out of five were prepackaged Chapter 11 cases, reversing the downward trend of prepackaged bankruptcies the past six months. There was only one prepackaged bankruptcy filing the previous five months despite the rising number of bankruptcy mega cases in the second half of 2011. 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. The bankruptcy mega cases for the month of December were dispersed throughout different industries, one each in information, mining, construction, rental & leasing and healthcare. For 2011, the manufacturing industry has the most Chapter 11 mega cases with 14, followed by the accommodation & food services industry with 12, finance & insurance with 9, information with 8, and
2011 Mega Cases by Industry
Other 24% Manufacturing 17%

Arts & Recreation Transportation 4% Warehousing 4% Finance & Insurance 11%

Accomodation Food Services 14%

Real Estate 8%

Information 10%

Retail Trade 8%

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retail trade and real estate with 7 each. The rest were dispersed throughout different industries. Of the December mega cases, three were filed in Delaware, and one each was Delaware 46% filed in Nevada and the Northern District of Illinois. Texas, Northern For 2011, the Delaware 5% Bankruptcy Court continued to New York Southern be favored by the bankruptcy 19% 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.
Other 30%

2011 Mega Cases by State

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. 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 six companies that may be close to filing for bankruptcy. These are: Aquilex Holdings, Catalyst Paper, Quiznos Corp., AGY Holding, Residential Capital and Eastman Kodak.
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(A) Aquilex Holdings Aquilex Holdings LLC on Dec. 15, did not make a $12.5 million scheduled interest payment under its $225 million 11.125% senior unsecured bonds. At the end of December, the provider of maintenance and repair solutions to the energy industry said it reached an agreement with 100% of the holders of the first lien and second lien debt and 92% of the noteholders. Under the deal, debt would be reduced by 71%, or $322 million. The restructuring transaction, which is expected to be completed late January to mid-February, contemplates (1) the restructuring of a $130 million first lien term loan, with financial covenants reset, (2) second lien debt will be converted to preferred equity; and (3) holders of senior notes will exchange their notes for 33% of the equity or reorganized Aquilex. All trade creditors will be paid in full. In the event the exchange offer conditions are not met, the Company will commence a voluntary filing under Chapter 11 of the Bankruptcy Code. Affiliates of Centerbridge Partners, L.P., would become the controlling shareholder of Aquilex following the transaction. Aquilex had assets of $400 million against liabilities of $500 million as of September 30, 2011. Net loss was $27.5 million on $320 million of revenue in the nine months ended September 30, 2011.

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(B) Catalyst Paper Catalyst Paper Corp. said Dec. 15 that it will defer interest payment of US$21 million on US$110 million and US$280 million of 11% senior secured notes due December 2016. The Richmond, British Columbia-based manufacturer of specialty mechanical printing papers, newsprint and pulp had assets of C$1.45 billion and debts of C$1.31 billion as of September 30, 2011. The Company said it has deferred the payment while it "reviews alternatives to address its capital structure." Discussions are ongoing with certain holders of the Company's 2016 Notes and holders of US$250 million outstanding 7.375% Senior Notes due 2014. Catalyst said operations will continue as usual. Catalyst first announced its plans to pursue a restructuring of its balance sheet in June. Perella Weinberg Partners serves as the Company's financial advisor. (C) Quiznos Corp. Denver, Colorado-based Quiznos Corp. has reached an agreement with majority of its secured lenders and Avenue Capital for a financial restructuring through an exchange offer. Avenue Capital will become majority shareholder after the deal is completed. The Company will file for Chapter 11 bankruptcy if the exchange offer is not completed.
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Quiznos, operator of the quick-service restaurant chains and pioneer of the toasted sandwich, said the deal provides for a consensual financial restructuring plan that will reduce the Company's current debt substantially and provide an infusion of $150 million of new equity capital to help position Quiznos for future growth. The proposed transaction provides for Avenue Capital, an investment firm that currently holds a significant amount of the Company's first- and second-lien debt, to become the majority owner of the Company through a $150 million equity infusion and the conversion of debt to equity. Avenue's equity funding will be used to reinvest in the business and retire a portion of the Company's first-lien debt. Quiznos has entered into a restructuring support agreement with parties representing 75.1% of its first-lien loans and 72.8% of its second-lien loans. Under terms of the proposed exchange offer, the holders of roughly $650 million in first-lien loans will be repaid $75 million in cash and will extend the maturity of the balance of their loans until the five year anniversary of the closing of the restructuring. All first-lien lenders will be given the opportunity to exchange an aggregate of roughly $200 million of their first-lien debt for new second-lien debt on a pro rata basis if they so desire. As part of the exchange offer, certain lenders have already agreed to exchange approximately $150 million of their existing first-lien loans for new second-lien loans. Holders of roughly $225
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million of second-lien loans will exchange their loans for a pro rata share of 40% of the new equity of reorganized Quiznos. The closing of the exchange offer is conditioned upon, among other considerations, 100% of the aggregate principal amount of the first- and second-lien loans being validly tendered and not withdrawn. In addition, in order to consummate the outof-court exchange offer, the Company is seeking significant concessions from certain other creditors, including certain former executives of the Company, certain landlords, and certain former area developers. As an alternative to the Exchange Offer, the Company will simultaneously commence a solicitation of acceptances of a prepackaged Plan of Reorganization to implement a restructuring pursuant to a voluntary case under Chapter 11 of the U.S. Bankruptcy Code. The Company would make a voluntary Chapter 11 filing only if it does not receive tenders from 100% of the first- and second-lien holders or does not satisfy other conditions to closing, including sufficient concessions from certain other creditors and certain landlords. The terms of the pre-packaged Chapter 11 plan would provide less favorable treatment for the lenders and certain other creditors and landlords than under the proposed out-of-court exchange offer. Quiznos' financial advisor is Moelis & Company and its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison L.L.P. Vinson & Elkins L.L.P. is acting as the company's financing counsel.

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(D) AGY Holding AGY Holding Corp. at the end of the year has seen its CEO leave the post, its operating performance further deteriorating, and Standard & Poor's and Moody's providing further downgrades to junk territory. In announcing the exit of Douglas J. Mattscheck as CEO, AGY Holding said Alvarez & Marsal is providing interim managers, an interim CEO and an interim executive vice president of operations. The producer of fiberglass yarns and high-strength fiberglass reinforcements used in composites applications has reported a net loss of net loss of $21.10 million on $141.54 million of net sales for the nine months ended September 30, 2011, following a net loss of $14.57 million on $183.67 million of net sales for the year ended December 31, 2010. Net Loss in 2009 was $93.51 million. The Company's balance sheet at September 30, 2011, showed $294.72 million in total assets and $288.21 million in total liabilities. S&P, which cut the Company's corporate rating to 'CCC-', said, "Our rating action reflects our view that AGY's credit quality has deteriorated due to ongoing weakness in its operating performance, a decline in liquidity, and the potential for insufficient liquidity to meet interest payments in 2012." As of September 30, 2011, S&P points out, AGY reported total liquidity of $17 million including $16.2 million of availability under its unrated revolving credit facility. AGY reported that it expected liquidity to decline to levels of around $12.4 million in November following the payment of nearly $10 million in
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semiannual interest on its notes. It also expects effective availability to be lower than the reported figures, because the company is also subject to a fixed-charge coverage ratio covenant if availability under its revolving credit facility declines to below $6.25 million. (E) Residential Capital ResCap's financial trouble and talks about the mortgagelender's potential bankruptcy filing has been ongoing for years. The Wall Street Journal reported in November that Ally Financial Inc., formerly owned by General Motors Co., has been considering whether to put its ResCap business into bankruptcy in an effort to resolve its mortgage woes. According to a recent report, sources told The New York Post that Ally Bank will not force its ResCap unit into bankruptcy as part of a restructuring of the troubled mortgage subsidiary, as that would put the entire bank at risk. There has been a lot of interaction between Ally and ResCap, making it hard to argue that ResCap is a completely separate entity and that Ally is not responsible for claims, a source said. The NY Post reported that ResCap owes Ally more than $1.2 billion in April. ResCap also must have $250 million of net worth to meet loan covenants, and a debt investor said it would likely fall below that amount in the coming weeks. So Ally, which took $17 billion in taxpayer bailouts, likely needs to invest more in ResCap to keep it solvent, the investor said, according to the Post. The Journal said November that Ally has hired Kirkland & Ellis and investment bank Evercore Partners Inc. on a possible restructuring of ResCap.
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In November 2011, Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on ResCap to 'CCC' from 'B+'; and Fitch Ratings cut its Long-term Issuer Default Rating on Rescap to 'CCC' from 'B'. In December 2011, Dominion Bond Rating Service affirmed its Issuer and Long-Term Debt ratings of ResCap at "C." Fitch cited the deteriorating year-to-date operating performance, magnified by a $442 million net loss reported in its third fiscal quarter; significant reduction in the tangible net worth covenant cushion; and uncertainty regarding future capital/financial support from Ally. Fitch said ResCap is close to violating the $250 million minimum tangible net worth covenant -it posted $331 million in the third quarter of 2011, from $772 million in the second quarter of 2011 and $846 million at December 31, 2010 -- required under its credit facilities and servicing agreement with a GSE. (F) Eastman Kodak According to Mr. Fernandez, Eastman Kodak Co. could be the year's first billion-dollar bankruptcy filer. The Wall Street Journal, citing "people familiar with the matter", reported that Eastman Kodak is preparing a bankruptcy filing -- at the end of January or early February -- should efforts to sell a trove of digital patents fall through. Sources told the Journal that Kodak is in discussions with potential lenders for around $1 billion in so-called debtor-in possession financing that would keep it afloat during bankruptcy proceedings.

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According to the Journal, people familiar with the matter said Kodak is in discussions with large banks including J.P. Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. for those funds. Kodak has also held discussions with bondholders about a bankruptcy financing package, the people said. Another hedge fund that doesn't hold Kodak debt, Cerberus Capital Management LP, has also held talks with Kodak on behalf of a group willing to provide the financing, the people said. If it files for bankruptcy, Kodak would try to sell its portfolio of 1,100 patents through a court-supervised bankruptcy auction. Kodak's balance sheet at Sept. 30, 2011, showed $5.10 billion in total assets and $6.75 billion in total liabilities. In July 2011, the Company announced that it is exploring strategic alternatives, including a potential sale, related to its digital imaging patent portfolios. Kodak hired Jones Day as legal adviser and investment bank Lazard Ltd., but denied rumors it was filing for bankruptcy. It also enlisted FTI Consulting Inc. In December, Kodak hired Sullivan & Cromwell's restructuring practice, replacing Jones Day. A group of Kodak's bondholders has formed an informal committee and hired law firm Akin Gump Strauss Hauer & Feld LLP for advice. * * *

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
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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 three large chapter 11 cases that Troubled Company Reporter editors monitor day-by-day. (A) Lehman Brothers Ivy Magdadaro reports that another major dispute in the Lehman Brothers case has been added to two existing disputes with major banks. The recent dispute is over an alleged Archstone deal contract breach. The other two disputes are with London-based Barclays Plc and with New York-based JP Morgan Chase. Lehman Brothers Holdings Inc. sued Bank of America Corp and Barclays Plc for breach of contract after the two banks agreed to sell their 26.5% stake in apartment landlord Archstone to Sam Zell's Equity Residential and granted the Chicago-based company an option to buy the second half of their stake in Archstone for $1.33 billion or more. In a December 15 lawsuit filed in the U.S. Bankruptcy Court in Manhattan, Lehman sought to clarify the terms of its right to buy the Archstone stake; to make Bank of America and Barclays carry out their obligations under agreements in place; and to postpone deadlines for the purchase. Lehman is seeking an injunction that would stop Bank of America and Barclays from completing any transfer to Zell's company. It also seeks to divest
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the banks of their voting rights in Archstone, and to recovery damages and legal fees from them. Lehman told the two banks that it would buy half of their stake in Archstone for $1.33 billion. Lehman said its original agreement with the two banks gave it until Jan. 23 to get court approval for its purchase, make a $66 million deposit, and complete the deal by paying out the balance of the $1.33 billion. Lehman is complaining that Bank of America and Barclays have been negotiating for months on selling their Archstone stake, but failed to provide information about the sale process on a regular basis and in a commercially reasonable manner. Bankruptcy Judge James Peck on December 21 told Lehman to sit down with the two banks and resolve their $1.3 billion dispute over the Archstone stake. The judge said Lehman should be holding "business meetings" with the banks, not "suing" them. Archstone, which Lehman acquired in a $22 billion leveraged buyout with Tishman Speyer Properties LP, has ownership interests in hundreds of apartment developments from Washington and New York to San Francisco. Lehman is seeking to sell Archstone, its biggest real-estate asset, for $6 billion to help pay creditors with claims of about $370 billion but must first gain control of the company, according to a person familiar with the plan. Meanwhile, Lehman's other legal battle with Barclays in relation to the London-based bank's purchase of Lehman broker business is not showing signs of coming to an end, as the U.S. Securities and Exchange Commission sided with Lehman in the $3 billion dispute with Barclays over assets, saying Lehman didn't
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have enough money to pay customers. The SEC voiced its opinion in a Dec. 23 filing with a Manhattan court. The trustee liquidating the Lehman broker unit said he identified a $5 billion shortfall in customer reserve accounts. The SEC related in its filing that as long as there is a shortfall, Barclays only has a conditional claim on as much as $1.3 billion reserved for customers. In October, Barclays and the Lehman broker unit trustee, James Giddens, both appealed Judge Peck's ruling that gave Barclays only a conditional right to $769 million in the reserve account, unless Mr. Giddens had enough to pay customers. In addition to the $769 million, reserves include $507 million in margin for customer transactions at the Options Clearing Corp., the SEC said. Judge Peck told Barclays in a February 2011 ruling to return $2 billion in margin assets to Lehman, and he told Mr. Giddens to give Barclays at least $1.1 billion in clearance assets. Both sides filed court papers on Dec. 23 in support of their appeals. The appeals are expected to be decided by Judge Richard J. Howell of the U.S. District Court for the Southern District of New York in February. As to Lehman's $8.6 billion fight with JPMorgan, U.S. District Judge Richard Sullivan said he will defer a decision on whether the lawsuit belongs in the district court. The judge said on Dec. 30 that a federal bankruptcy judge must first rule on JPMorgan's move to dismiss the case. New York-based JPMorgan is fighting a lawsuit by Lehman that alleges the lender helped cause the failed bank's 2008 collapse by demanding $8.6 billion in collateral. JPMorgan is also defending $6 billion in claims that Lehman objects to and arguing
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it acted properly in seeking security for loans made during the credit crisis. (B) Washington Mutual Washington Mutual, the biggest bank to fail in U.S. history, said on December 12 it reached a settlement in a dispute between shareholders and certain creditors that had been blocking a bankruptcy-exit plan valued at more than $7 billion. The agreement, brokered by a court-appointed mediator, calls for noteholders to contribute $75 million to the only unit of WaMu that will exit bankruptcy as well as loan the entity $125 million. The reorganized company would be owned by preferred and common shareholders. Judge Mary Walrath must approve the new settlement. Details of the agreement were filed as part of a new version of the company's reorganization plan -- the seventh amended plan version -- which must also be approved before creditors can be paid. The bankruptcy plan also includes a three-way settlement deal aimed at aimed at resolving billion-dollar lawsuits among WaMu, the Federal Deposit Insurance Corp. and JPMorgan Chase. The deal provides for the dismissal of the lawsuits and the distribution of assets among the parties. WaMu's banking business was sold by the FDIC to JPMorgan for $1.88 billion in 2008. Soon after the sale, a legal battle among the parties began on who owned what part of the failed bank. Meanwhile, in a December 28 court filing, holders of $1.5 billion in WaMu trust-preferred securities scheduled a January 11 hearing where they plan to ask the bankruptcy judge to halt the process of confirming WaMu's latest bankruptcy plan.
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(C) Tribune Co. In Tribune Co., no final resolution is in sight on the disputes among creditors over the company's 2007 leveraged buyout as Bankruptcy Judge Kevin Carey in Delaware said a confirmation hearing in the case is not likely to take place until May. Many of the disputes related to the leverage buyout include alleged fraudulent conveyance claims. Tribune creditors have even filed formal lawsuits in late 2010 to hold Tribune executives, including Sam Zell, and lenders liable for any fraudulent transfers in the LBO. These suits have been stayed pending progress in Tribune's efforts to confirm a bankruptcy plan. Judge Carey earlier rejected two earlier versions of Tribune's bankruptcy plan. The Company has since submitted a third version of the plan, which is pending court approval. Tribune is in disagreement with its junior bondholders led by hedge fund Aurelius Capital Management on how to treat potential claims or lawsuits against the parties involved in the LBO. Tribune is the second largest newspaper publisher in the U.S. It listed $13 billion in debt and $7.6 billion in assets when it filed for bankruptcy protection in December 2008. It owns the Chicago Tribune, Los Angeles Times, six other newspapers and 23 television stations.

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Delayed Exits From Chapter 11 Julie Anne Lopez reports about four Chapter 11 debtors whose emergence from Chapter 11 has been delayed: Washington Mutual, Tribune Co., WR Grace and Nebraska Book. (A) Washington Mutual Washington Mutual Inc. in December agreed to a settlement with some creditors involved in its Chapter 11 bankruptcy case and filed a new reorganization plan. Washington Mutual said in a statement on Dec. 12 that the settlement will allow it to distribute more than $7 billion to its creditors. The settlement must still be approved by the U.S. Bankruptcy Court for the District of Delaware. Michael Willingham, chairman of the committee of equity security holders appointed in the company's Chapter 11 proceedings, said, "The comprehensive settlement . . . represents a fair and reasonable recovery for the thousands of equity holders of the company who have been following this case closely for three years." Washington Mutual's bankruptcy case is three years old and its reorganization plans have twice been rejected by Bankruptcy Court Judge Mary Walrath. The company is hoping to exit bankruptcy protection by the end of February. It has a hearing scheduled for Jan. 11, 2012 in which the bankruptcy court will consider approval of the reorganization plan's disclosure statement. The company also plans to ask the
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bankruptcy court for a mid-February hearing to confirm its reorganization plan. The Federal Deposit Insurance Corp. seized WaMu's Seattle-based flagship bank in 2008 and sold its assets to JPMorgan for $1.9 billion in the largest bank failure in U.S. history. Under terms of the settlement, the reorganized assets of Washington Mutual will include equity interests in WMI Investment Corp. and WM Mortgage Reinsurance Co. A reorganized Washington Mutual will receive $75 million in funding from certain creditors. Exit financing provided by settlement noteholders will include a $125 million senior secured credit facility that will be used to fund working capital as well as for general corporate purposes and eligible originations and acquisitions. The majority of the reorganized company's common equity will be distributed to its current preferred and common equity holders. Its board will initially be made up of four members chosen by the equity committee and one member selected by lenders under the credit agreement. (B) Tribune Co. Tribune Co.'s long-running sojourn in bankruptcy shows no sign of ending soon. Judge Kevin J. Carey said in a ruling that he wouldn't hold a hearing on plans to end the three-year bankruptcy until May at the earliest. Tribune had been hoping to resolve the case in the next few months.
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Even if Judge Carey keeps to his deadline, it will probably take months more for the media conglomerate to emerge from bankruptcy and obtain needed federal regulatory approvals for the transfer of broadcasting and other licenses to new owners. Tribune is the parent company of the Los Angeles Times, the Chicago Tribune and other newspaper, television and media properties. The case pits Tribune and it senior creditors, including Oaktree Capital Management in Los Angeles and JPMorgan Chase & Co. in New York, against a group of junior bondholders led by hedge fund Aurelius Capital Management in New York. The two sides have battled furiously over their competing plans to reorganize the company. Judge Carey directed the adversaries to try to reach an agreement on scheduling matters "with a view toward a confirmation hearing to be held in mid- to late-May 2012." The case could end "very quickly" if the two sides resolve their differences, "but the track record of this case suggests that won't happen," said Douglas Baird, a law professor at the University of Chicago. In his order, Judge Carey reversed part of a ruling he made in October that seemed to give an advantage to a deeply subordinated class of note holders known as the Phones. At the time, Judge Carey indicated that the Phones class should be able to recover at least part of a claim with a face value of $1.2 billion, getting its share from money that would otherwise go to Aurelius and other junior creditors.
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That opened the door to a parallel demand from Tribune Chairman Sam Zell, whose affiliate owns a similar note. It was Zell who acquired the company in a highly leveraged buyout in December 2007, a deal that landed it in bankruptcy a year later. Judge Carey reversed himself, saying that the Phones class was not on a par with Aurelius and other junior creditors for purposes of recovering bankruptcy assets. (C) W.R. Grace W.R. Grace & Co., whose bankruptcy-exit plan is being held up by appeals, says it expects to be stuck in its decade-long Chapter 11 case past March. The Plan, co-proposed by the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative appointed in Grace's bankruptcy case, is before the District Court pending appeals from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. Grace filed for Chapter 11 reorganization in 2001 to protect itself from more than 100,000 personal injury claims. (D) Nebraska Book Nebraska Book Co. reviewed the performance of its 138 offcampus bookstores and decided to close seven. Landlords at another 40 locations agreed to extend the deadline until April 30 for the company to decide whether to terminate the leases. The extension gives Nebraska Book more time to negotiate lower rent.
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Nebraska Book said that the 170 on-campus stores continue to perform well. The closing stores will operate until February to accommodate demand for the second semester. Earlier, Nebraska Book, faced with violating loan covenants, received approval from the bankruptcy court to loosen terms under the loan agreement financing the Chapter 11 effort. In return, the college bookseller is paying fees and higher interest rates. Financing for the reorganization includes a $75 million revolving credit and a $125 million term loan. As of Sept. 30, the term loan was fully drawn, although nothing was outstanding on the revolver. At the time, the balance sheet showed $120 million in cash, a court filing says. Nebraska Book negotiated looser cumulative cash flow covenants with the lenders. In return, the lenders were authorized by the bankruptcy court to be paid a 0.25% fee on the aggregate amount of the commitments. In addition, the interest rates rose 1.5 percentage points on both loans. The commitment fee increased 0.5 percentage point to 0.75%. Nebraska Book filed under Chapter 11 in June in Wilmington, Delaware, with an agreement to emerge quickly from reorganization. Court schedules show that the company can't leave Chapter 11 until March 22, at the earliest. Nebraska Book's pre-arranged plan didn't work, given its inability to secure $250 million in outside financing. The plan would have paid off first- and second-lien debt in full, while giving most of the new equity to subordinated noteholders of the operating company and holders of notes issued by the holding company.
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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 about five companies that 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 December 2011. These are: Dynegy Holdings, Great Atlantic & Pacific Tea Company, Lee Enterprises, William Lyon Homes, and TerreStar Corporation. (A) Dynegy Holdings Dynegy Holdings LLC and its parent, Dynegy Inc., filed a plan of reorganization and an accompanying disclosure statement for Dynegy Holdings in early December. Under the terms of the proposed Plan for Dynegy Holdings and consistent with a restructuring support agreement, all creditors holding unsecured obligations of Dynegy Holdings, including $3.4 billion of senior notes, $200 million of subordinated notes, approximately $130 million of accrued interest, and the guaranty obligations associated with the Roseton and Danskammer leases, will receive: * a $400 million cash payment, subject to adjustment
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as set forth in the Plan; * $1.0 billion, subject to adjustment as set forth in the Plan, of new 11% senior secured notes due 2018 to be issued by Dynegy and secured by the equity and assets of certain entities owning the Company's separate coal and gas-fueled generating businesses (or an equivalent cash payment, if the Company obtains the financing elsewhere on no less favorable terms); and * $2.1 billion of Dynegy's new convertible preferred stock. The convertible preferred stock will not be convertible at the option of the holders but will mandatorily convert into common stock comprising 97% of Dynegy's fully diluted common stock on December 31, 2015, if not earlier redeemed. Dynegy will have the right to redeem the convertible preferred stock, subject to certain restrictions, at varying discounts through the end of 2013. (B) Great Atlantic & Pacific Tea Co. Great Atlantic & Pacific Tea Company filed with the Court a Joint Chapter 11 Plan of Reorganization and related Disclosure Statement. Pursuant to the Plan, investors are providing New Money Commitment of $490 million in the form of (i) $210 million face amount of privately placed New Second Lien Notes, (ii) $210 million face amount of privately placed New Convertible Third Lien Notes, and (iii) an $80 million New Equity Investment.

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The proceeds of the New Money Commitment will allow the Debtors to make distributions pursuant to the Plan, including paying certain secured creditors in full in cash, and will provide a cash pool of $40 million, less the amount distributed pursuant to a so-called Substantive Consolidation Settlement Cash Pool, for distributions to General Unsecured Creditors. The Plan provides for a settlement and compromise of the intercreditor issues relating to whether the liabilities and assets of the Debtors should be substantively consolidated for purposes of distributions under the Plan. The Bankruptcy Court in White Plains, New York, approved a revised disclosure statement explaining the Plan on Dec. 20. The revised disclosure statement said creditors can expect to recover 2.1% to 2.7%. The hearing to consider confirmation of the plan will begin Feb. 6. The plan was made possible by $490 million in debt and equity financing to be provided by Yucaipa Cos., Goldman Sachs Group Inc. and Mount Kellett Capital Management LP. Confirmation of the plan was simplified when A&P settled with holders of 79% of the $310 million in second-lien notes. In return for being paid in full in cash when the plan is implemented, second-lien creditors are dropping their claim for additional interest or a make-whole payment. (C) Lee Enterprises Lee Enterprises and more than 20 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware in December. Concurrent with the petition,
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the Company also filed an Amended Joint Prepackaged Plan of Reorganization and related Disclosure Statement. The Plan is the product of extensive negotiations between the Prospective Debtors and their existing stakeholders. During the months leading up to the solicitation, the Company and its legal and financial advisors engaged in extensive negotiations with prepetition lenders. As of September 8, 2011, Lee Enterprises and the Prepetition Lenders holding more than 50% in number and 66.7% in amount of Claims under the Prepetition Credit Facilities had entered into a support agreement, which was amended as of December 2, 2011. The Support Agreement, among other things, commits the lenders to support a restructuring of the Company's debt structure. The salient terms of the Plan are: * The maturity of the remaining $127.6 million in 9.05% first-lien notes due April 2012, known as the Pulitzer notes, will be modified and extended. The interest rate on the Pulitzer notes will be raised initially to 10.55%, increasing annually thereafter. * Lenders owed $548.2 million under a term loan and $307.6 million under a revolving credit will receive 15% of the stock plus a $689.5 million term loan, a $40 million revolving credit not expected to be drawn initially, and a $175 million term loan. * Unsecured creditors will be paid in full. Prepetition trade debt total $10.6 million. * Shareholders will retain their stock with minimal
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dilution. (D) William Lyon Homes William Lyon Homes and 20 affiliated entities filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, on Dec. 19. In excess of 97% in dollar amount and in excess of 93% in number of holders of its senior notes that cast ballots, voted to approve a Prepackaged Joint Plan of Reorganization, as did the Company's senior secured lender. The Lyon family also supports the Plan. The Plan provides new capital investments of $85 million and strengthens the Company's long-term capital structure by eliminating short-term debt maturities and reducing interest expense. Approximately $180 million in principal amount of debt will be eliminated as part of the recapitalization, resulting in a 37% reduction in overall debt. Annual cash interest expense will be reduced by nearly $25 million or approximately 45% of current levels. Existing senior management will continue managing the Company; and the Lyons will remain on the board, with General Lyon continuing as chairman. The Plan further provides for the Lyon family to invest $25 million in exchange for 20% common equity (before dilutive impact of warrants) and warrants for an additional 9.1% of common equity. In addition, the senior secured lender will receive a $235 million secured note; senior noteholders will exchange $284 million in principal of existing senior notes for $75 million in secured notes; senior noteholders will also receive 28.5%
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common equity (before dilutive impact of warrants) and the Company will propose a rights offering for $10 million in common equity and $50 million in new convertible preferred equity. The Company has also secured a commitment for a new $30 million credit facility from its senior secured lender, which will be used to support operations and ensure adequate liquidity during the restructuring process. The Bankruptcy Court scheduled a February 10, 2012 joint hearing to consider both the Disclosure Statement and Prepackaged Joint Plan. Interested parties must file objections on or before February 3, 2012. (E) TerreStar Corporation TerreStar Corporation filed with the U.S. Bankruptcy Court a First Amended Joint Chapter 11 Plan and First Amended Disclosure Statement. The Plan provides that holders of Allowed Unsecured Claims will receive full satisfaction of their Claims, in the form of the New TSC Notes. The remaining value of the Reorganized TSC Debtors will be transferred to the holders of TSC Series A and B Preferred Shares in the form of the New Common Stock of Reorganized TSC. After taking into account the value distributed to unsecured creditors, and assuming that the Claims asserted by Elektrobit Inc. Van Vlissingen and Company, Jefferies & Company, Inc. and other vendors are allowed in full, the equity value of Reorganized TSC being transferred to the holders of TSC Series A and B Preferred Shares is between $144.8 million3 and $154.8 million, while the face value of the interests held by the holders of TSC
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Series A Preferred Shares is $90 million and TSC Series B Preferred Shares is $318.5 million (not including amounts owed on account of earned but unpaid dividends). In the event the Claims asserted by Elektrobit, Van Vlissingen and Company and Jefferies are disallowed in their entirety, the equity value of Reorganized TSC being transferred to the holders of TSC Series A and B Preferred Shares is between $177.2 million and $187.2 million. Accordingly, after repaying the holders of TSC Series A and B Preferred Shares, there is simply no value remaining to distribute to any other equity interest holders. * * *

That ends the Beard Group Corporate Restructuring Review for December 2011, 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 February 16th. Thank you for listening.

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