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Beard Group Corporate Restructuring Review For February 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 February 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.

February 2012 Mega Cases

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


Danilo Muñoz reports that Chapter 11 mega filings held steady for February 2012. There were eight companies that filed for Chapter 11 protection with assets of at least $100 million, a slight decrease from the previous month, when nine mega cases commenced.

During the first two months of 2011, there were six

companies that filed for Chapter 11 each month with assets in excess of $100 million. The average number of mega cases in 2011 is about 7 per month, compared to about 9 per month in


The largest Chapter 11 filing for February 2012 was by Church Street Health Management LLC, which listed assets of $895 million and debts totaling $303 million as of the Petition Date.

Church Street provides management services for 67 dental practices in 22 states. The Company sought Chapter 11 protection on Feb. 20, 2012, with the Bankruptcy Court for the Middle District of Tennessee [case number 12-01573].

Church Street informed the Bankruptcy Court that it will submit an agreement with a group led by Garrison Investment Group to open an auction for the assets. The group, which is being backed by the Company's senior lenders, would buy the assets subject to higher and better offers.

The second largest Chapter 11 filing was by Grubb & Ellis Co. and its affiliates, which filed Feb. 20, 2012, with the Bankruptcy Court for the Southern District of New York [lead case number 12-10685]. The Company listed $150.16 million in total assets and $167.20 million in total liabilities as of the Petition Date.

Grubb & Ellis is one of the nation's largest commercial real estate services firms, providing transaction services, property management, facilities management and valuation services through more than 100 company-owned and affiliate offices.

Grubb & Ellis filed for Chapter 11 protection to sell almost all its assets to BGC Partners Inc. Grubb & Ellis said in a statement it expects business to continue without disruption as it completes the "363" sale process as expeditiously as possible.

The third largest Chapter 11 filing was by United Retail Group, Inc., and its affiliates, on Feb. 1, 2012, with the Bankruptcy Court for the Southern District of New York [lead case number 12- 10405] before Judge Stuart M. Bernstein. The Company listed total assets of $117.2 million and total liabilities of $67.3 million.

United Retail Group Inc. owns the Avenue brand of women's fashion apparel. Avenue has 433 stores and an e-commerce site. Avenue employs roughly 4,422 employees, roughly 294 of which are located at Avenue's corporate headquarters in Rochelle Park, New Jersey or at the Troy Distribution Facility.

When it filed for bankruptcy, United Retail had a deal to sell the business to Versa Capital Management for $83.5 million, subject to higher and better offers at an auction. The Debtors say that the Versa deal will protect more than 4,000 jobs and ensure maximum creditor recoveries.

In addition, five companies filed for Chapter 11 protection listing estimated assets of between $100 million to $500 million. These are Jobson Medical Information Holdings LLC, Lancaster Maritime Corp., Energy Conversion Devices Inc., Gibraltar Kentucky Development LLC, and LSP Energy LP.

Jobson Medical Information Holdings LLC filed for Chapter 11 bankruptcy protection on Feb. 2, 2012, with the Bankruptcy Court for the Southern District of New York [case number 12-


Jobson is a privately-held health-care information and service provider that works with pharmacies, clinics, government and employer groups as well as specialty medical groups to deliver medical information.

Jobson Medical has a pre-packaged bankruptcy plan that gives the company three more years to pay off its loan and grants its secured lender equity in the new company. The agreement to support the plan requires approval from the bankruptcy court

through a confirmation order no later than March 23.

agreement also requires consummation of the Plan by March 26.


Marshall Islands-based Lancaster Maritime Corp. filed for Chapter 11 protection on Feb. 7, 2012, with the U.S. Bankruptcy Court for the Southern District of New York (White Plains) [case number 12-22294] before Judge Robert D. Drain.

Energy Conversion Devices, which manufactures and sells thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology, filed for Chapter 11 protection on Feb. 14, 2012, with the Bankruptcy Court for the Eastern District of Michigan [case number 12-43166]. Energy Conversion Devices is seeking approval of bidding procedures related to the sale of the stock or assets of the Debtors' solar business unit. The Debtor proposes an April 17 bid deadline.

Gibraltar Kentucky Development, LLC, filed a Chapter 11 bankruptcy protection on Feb. 10, 2012, with the Bankruptcy Court for the Southern District of Florida [case number 12-13289]. Gibraltar Kentucky Development is part of the Gibraltar Energy Group. The various companies of the group are involved with the drilling, development and production of oil and gas, as well as, the sale of coal and timber.

LSP Energy Limited Partnership sought bankruptcy protection on Feb. 10, 2012, with the Bankruptcy Court for the District of Delaware [case number 12-10460]. The Debtors' electric generation facility consists of three-gas fired combined cycle electric generating units with a total capacity of 837 megawatts. The facility sits on a 58-acre parcel of real property in Batesville, Mississippi.

LSP says that while in Chapter 11, it will complete an orderly sale of its assets or the ownership interests in LSP for the benefit of all stakeholders.

In addition, Philip J. Reynolds filed a Chapter 15 petition on behalf of Winnipeg, Canada-based Arctic Glacier Inc. with the Bankruptcy Court for the District of Delaware [case number 12- 10603] before Judge Kevin Gross. Arctic Glacier manufactures packaged ice for distribution in Canada and the United States.

Mr. Muñoz reports that, of the eight mega cases in February 2012, only one was a prepackaged bankruptcy, that of Jobson Medical Information Holdings.

For the first two months of 2012, only two of the 17 mega cases involved a prepackaged Chapter 11 filing.

For 2011, 13 of the 82 mega cases were prepackaged in nature -- 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.

Four industries led the pack in mega filings: manufacturing, information, real estate and transportation. Each of these industries had two bankruptcy mega filings each for the first two months of 2012. The rest of the bankruptcy mega filings were spread through various industries.

In February 2012, four of the eight mega filings were in the Southern District of New York, while the Bankruptcy Court for the District of Delaware had only one. In January 2012, four of the nine mega cases, or 44%, were filed in Delaware.

For the first two months of 2012, the Bankruptcy Courts for the Southern District of New York and Delaware had five bankruptcy mega cases, leading the rest of the pack by a wide margin.

2011 was a busy year for the Delaware Bankruptcy Court, as it continued to be favored by mega cases with 38 filings, or 46%; followed by the Southern District of New York with 16 filings, or 19%, and by the Northern District of Texas with 4 filings, or 5% of the mega cases.

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.

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: Barney's, DirectBuy Holdings, Northstar Aerospace, Reichhold Industries, Circus & Eldorado, and Pinnacle Airlines

(A) Barney's

New York-based luxury retailer Barney's New York Inc. said in February it has hired advisors for a debt restructuring and is in talks with lenders. Barneys said it is in discussions with a small group of lenders to improve its balance sheet and position the retailer for long-term success.

According to The Wall Street Journal, Barneys has retained bankruptcy and restructuring lawyers at Kirkland & Ellis.

The privately held 40-store luxury department store chain needs to refinance a $200 million credit line that comes due in September. The debt load is mostly the result of a private-equity takeover of the company five years ago that burdened it with an additional $500 million in debt.

Istithmar World, the investment arm of state-owned Dubai World, paid $942.3 million for Barneys in a 2007 buyout.

(B) DirectBuy Holdings

DirectBuy Holdings Inc., operator of the membership-based discount club, missed interest payment due Feb 1, 2011, on its $335 million senior secured notes.

Standard & Poor's Ratings Services as a result lowered its corporate credit rating on Merrillville, Indiana-based DirectBuy Holdings to 'D' from 'CC'.

"We assign a 'D' rating when we believe that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. Standard & Poor's interprets 'as they come due' as payment no later than five business days after the due date for payment, even if an obligation has a grace period longer than five business days and we expect payment to be made more than five business days after the due date but before the expiration of the grace period. The company is seeking to restructure its balance sheet and, in our opinion, could file for protection under Chapter 11," S&P said.

(C) NorthStar Aerospace

Northstar Aerospace, Inc. said the forbearance agreement entered into with the syndicate of lenders under the Company's existing credit facility has been extended. Under the forbearance agreement, as extended, the lenders have agreed to forbear from

the exercise of their rights under the credit facility through March 23, 2012, provided Northstar provides a plan and timeline for repayment of the secured liabilities or recapitalization of the Company determined satisfactory by the lenders by March 6,


Northstar said it is continuing its process of exploring and evaluating strategic alternatives. No assurances can be given that further extension of forbearance by the banks and major customer will be provided or that the issues being faced by the Company will be resolved satisfactorily.

The forbearance agreement has been extended twice. The original iteration had a Feb. 17 expiry date. The first amendment extended the forbearance until Feb. 24.

Northstar is an independent manufacturer of flight critical gears and transmissions.

Northstar has debt including $26 million outstanding on a revolving credit and $20 million on a term loan, according to data compiled by Bloomberg.

(D) Reichhold Industries

Research Triangle Park, North Carolina-based Reichhold Industries Inc., one of the world's largest suppliers of unsaturated polyester resins for composites, missed a Feb. 15 scheduled interest on its $195 million senior unsecured notes which mature on Aug. 15, 2014

Reichhold has announced that more than 70% of senior unsecured noteholders have agreed in principle to exchange their notes for the same principal amount of senior secured notes due 2017, to be completed by April 15, 2012. The exchange offer will allow Reichhold to avoid cash interest payments for two years, saving the firm $35.1 million in cash.

Moody's views this a positive for the firm's liquidity, as is the extension of the notes' maturity for about two and one-half years. However, after two years Reichhold will revert to paying cash interest on the new notes balance, which will have increased by almost $60 million because of paying interest in kind and increase the annual cash interest burden from $17.5 million to about $23 million.

Reichhold has 20 manufacturing sites and 5 technology centers located around the world.

(E) Circus and Eldorado

Circus & Eldorado Joint Venture, owner and operator of the Silver Legacy Resort Casino, a themed hotel-casino and entertainment complex in Reno, Nevada, defaulted on its secured notes upon maturity on March 1, 2012, but has a forbearance agreement that expires March 15.

Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. issued 10-1/8% mortgage notes pursuant to an Indenture,

dated as of March 5, 2002, by and among the Partnership, Capital

and The Bank of New York, as trustee.

March 1, 2012, but the partnership failed to pay $142.8 million principal amount of notes and accrued interest of $7.23 million.

The notes matured

The Partnership said it is in continuing discussions with potential financing sources and the holders of the Notes regarding a restructuring of its obligations.

The partnership reported a net loss of $4.0 million on $95.6 million of revenues for nine months ended Sept. 30, 2011, compared with a net loss of $3.7 million on $95.1 million of revenues for the same period last year.

The Company's balance sheet at Sept. 30, 2011, showed $267.8 million in total assets and $165.4 million in total liabilities.

Moody's Investors Service has lowered Circus and Eldorado's probability of default Rating to D from Ca. Standard & Poor's Ratings Services lowered its corporate credit rating on the partnership to 'D' from 'CCC-'.

(F) Pinnacle Airlines

Pinnacle Airlines Corp., which flies as Delta Connection, United Express and US Airways Express, warned in a letter to employees in February that it may be forced to file for Chapter 11 absent a deal with United Airlines.

Pinnacle is a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Pinnacle's operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize.

The Company reported $8.81 million on $938.05 million of total operating revenue for the nine months ended Sept. 30, 2011,

compared with net income of $17.02 million on $729.13 million of total operating revenue for the same period the year before.

"We still have work to do to reduce our costs and we still have work to do to make our partner agreements profitable. Unless we have long-term agreements in place, the best way for us to improve our financial performance and ensure a viable future for our company may still be the court-supervised Chapter 11 process," said Sean Menke, president and CEO of Pinnacle, in the February 2012 letter.

The Company's balance sheet at Sept. 30, 2011, showed $1.53 billion in total assets, $1.42 billion in total liabilities and $112.31 million in total stockholders' equity.




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 two large chapter 11 cases that Troubled Company Reporter editors monitor day-by-day.

(A) Lehman Brothers

Ivy Magdadaro reports that pending disputes involving Lehman Brothers and each of Citigroup, Barclays and JPMorgan Chase.

(1) Lehman v. Citigroup

Lehman Brothers has sued Citigroup Inc.'s Citibank unit seeking the return of $2.5 billion in collateral given to Citibank prior to Lehman's Chapter 11 filing.

In a Feb. 8 complaint filed with in Manhattan bankruptcy court, Lehman alleged that the transfers to Citibank were fraudulent and may be recovered under bankruptcy law.

Lehman is also seeking "hundreds of millions" owed by Citibank and wants the $2 billion of claims Citibank filed against the bankrupt investment bank reduced or denied. Lehman said Citibank's $2 billion claims are inflated.

Citibank reportedly said it is entitled to $2 billion of Lehman's cash to secure its claim on Lehman which would otherwise be unsecured. This so-called setoff "is in violation of the bankruptcy code," Lehman asserted in its complaint.

Danielle Romero-Apsilos, a spokeswoman for Citigroup, said the recent lawsuit is an "unjustified attempt by the Lehman estates to renege on their obligations to Citi and claw back assets to which they have no right." She pointed out that Citi took the cash to protect itself and its shareholders from loss.

Separately, Citigroup is fighting a $1.3 billion demand by Lehman's brokerage unit and has settled its differences with the company's European affiliate.

(2) Lehman v. Barclays

Ms. Magdadaro also reports that Lehman's two other long- standing major disputes -- one with Barclays Plc over the sale of the Lehman broker unit, and the other with JPMorgan Chase over the bank's role in the collapse of Lehman -- remain pending before the New York bankruptcy court.

In February 2012, Lehman and Barclays were continuing their appeals from Bankruptcy Judge James Peck's split decision last year to aspects of the parties' billion dollar lawsuit relating to the 2008 sale of the Lehman brokerage unit. In his decision, Judge Peck told Barclays to return $2 billion in margin assets to the Lehman broker unit trustee, James Giddens, while ordering the trustee to give to the U.K. bank at least $1.1 billion, and possibly another $769 million in a reserve account.

On Feb. 11, lawyers for Barclays and the Lehman trustee filed final written arguments with the U.S. District Court in Manhattan. The case is before District Judge Katherine Forrest.

Barclays is asking the district court to overturn Judge Peck's decision over the turnover of $2 billion in a margin account to the trustee. Barclays asserts that much of the money in that account was explicitly designated to go to the British bank as part of the sale. Barclays seeks to enforce the deal struck in 2008 to buy Lehman's broker business, saying it would "jeopardize" future sales of distressed companies if contracts and promises were not honored.

The Lehman trustee, on the other hand, renewed its argument that the bankruptcy court was correct to assign the money to the brokerage customers.

(3) Lehman v. JPMorgan

Meanwhile, in Lehman's $8 billion lawsuit against JPMorgan, Lehman's unsecured creditors asked the U.S. district court in Washington on Feb. 16 to force U.S. Treasury Secretary Timothy Geithner to testify on JPMorgan's role in the bankruptcy. They want Mr. Geithner to be forced to give a deposition by a March 16 deadline.

Mr. Geither, the Lehman creditors allege, had more than 35 phone conversations with then-Lehman Chief Executive Richard Fuld and more than 10 with JPMorgan Chief Executive Jamie Dimon in the week before Lehman's bankruptcy filing.

The U.S. Treasury Dept did not issue a comment on the matter.

Lehman sued JPMorgan in May 2010, saying the clearing bank demanded over $8.6 billion in collateral from Lehman in September 2008, triggering a liquidity squeeze that contributed to Lehman's collapse. JPMorgan countersued, claiming Lehman tricked it into lending $70 billion in the days before the collapse and left it with toxic and worthless securities.

(B) Appleseed's Intermediate

Affiliates of Golden Gate Capital Corp. failed to persuade a federal district judge in Delaware to dismiss a fraudulent transfer lawsuit arising from the April 2007 leveraged buy-out of Orchard Brands Corp., aka Appleseed's Intermediate Holdings LLC, a clothing retailer that implemented a Chapter 11 plan in April 2011.

Originally filed in bankruptcy court by a trust created for creditors under the plan, the suit contends that private equity investor Golden Gate was the mastermind of an LBO that left Orchard insolvent from $500 million in new secured debt and a $310 million dividend paid to the investors along with the completion of the acquisition.

The suit alleges that the dividend and the new debt were founded on "baseless" projections about profitability. The suit seeks to recover the $310 million dividend, along with millions of dollars in transaction and management fees that the operating companies were required to pay following the LBO.

U.S. District Judge Joseph E. Irenas wrote a 29-page opinion on March 1 concluding that Golden Gate isn't entitled to dismissal of the complaint. Judge Irenas said that the facts laid out in the complaint, taken at face value, make good claims for fraudulent transfer, of types known as constructive and intentionally fraudulent.

Judge Irenas ruled that the $310 million dividend isn't protected by the safe harbor in Section 546(e) of the Bankruptcy Code. He said the dividend wasn't protected because there was no exchange, as would be the case when securities were brought or sold. A dividend is a "one way payment" that doesn't fall under the safe harbor, he said.

The judge left the door open for Golden Gate to seek to dismiss the case later, when facts are better developed to show whether the suit was begun after the three-year time limit expired.

The complaint lays out details about the $725.1 million in financing that resulted from the LBO. All but $73.3 million was secured. Large parts of the complaint were redacted, leaving out details about alleged misconduct.

Judge Irenas said the plaintiff hadn't shown grounds to keep the complaint secret. He directed that the complaint be filed publicly.

Appleseed's and its affiliates filed for bankruptcy protection on Jan. 19, 2011. Appleseed's is owned by Golden Gate. While reducing debt by $420 million, the company's plan created the creditors' litigation trust that filed the lawsuit. Robert N. Michaelson is the litigation trustee.

Orchard Brands is a holding company that wasn't itself in Chapter 11.

Delayed Exits From Chapter 11

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

Washington Mutual, Tribune Co., WR Grace and Nebraska Book Company.

(A) Washington Mutual

Washington Mutual Inc. received long-sought court approval to exit bankruptcy and repay $7 billion to creditors, ending more than three years of court battles between hedge funds investors, shareholders and JPMorgan Chase & Co.

The reorganization plan will distribute the money to creditors, many of which are hedge fund investors who specialize in buying securities of bankrupt companies.

The former parent of Washington Mutual bank, the largest bank to fail in U.S. history, postponed the start of a confirmation hearing on Thursday for last-minute talks to win over a group of holdout preferred shareholders.

Once that deal was clinched in the early afternoon, the bank holding company had the support of every class of creditors for its reorganization plan.

WaMu said in a statement that Bankruptcy Judge Mary Walrath in Delaware will enter an order officially confirming the plan.

William Kosturos, the bank's chief restructuring officer, called the confirmation a "monumental achievement," saying in a statement the company is looking forward to putting the plan in place and starting to pay back its creditors.

A small mortgage reinsurance business will exit bankruptcy, owned by the preferred and common shareholders of Washington Mutual. Shareholders had fought for ownership of the reorganized company, which they argued will own tax credits worth billions of dollars. Washington Mutual and its creditors have played down the value of the tax benefits.

Washington Mutual's namesake lending business was seized by regulators in September 2008 at the height of the financial crisis. The bank was immediately sold by the Federal Deposit Insurance Corp to JPMorgan Chase & Co for $1.88 billion. Washington Mutual filed for bankruptcy the next day, and legal battles quickly followed over who owned which assets.

The confirmation hearing was the company's third attempt to end its bankruptcy.

Judge Walrath rejected the company's two previous plans, in part because of her concerns that a group of hedge funds had used their role negotiating the bankruptcy plan to exploit nonpublic information in trading Washington Mutual securities.

U.S. Bankruptcy Court Judge Mary Walrath approved the plan, which various stakeholders must vote to accept or reject before a March 7 deadline.

(B) Tribune

Tribune Company and its debtor affiliates; the Official Committee of Unsecured Creditors; Oaktree Capital Management, L.P.; Angelo, Gordon & Co., L.P.; and JPMorgan Chase Bank, N.A. submitted to Judge Kevin J. Carey of the U.S.

Bankruptcy Court for the District of Delaware a modified Third Amended Joint Plan of Reorganization and accompanying supplemental disclosure document, as modified on February 20,


On December 29, 2011, the Court issued an opinion and related order that clarified and modified certain aspects of the October 31, 2011 opinion denying confirmation of the competing plans filed in the case. On January 24, 2012, Judge Carey established deadlines for the (i) resolution of the Allocation Disputes and (ii) consideration of the DCL Plan Proponents' Supplemental Disclosure Document, Solicitation Procedures Motion and the Third Amended Joint Plan.

The Third Amended Plan contains modifications that conform to the Confirmation Opinion, as modified by the Reconsideration Opinion, and miscellaneous provisions.

The Third Amended Plan provides that holders of claims will receive the same distributions as those provided under the Second Amended Plan of Reorganization subject to any further adjustments necessary to reflect the adjudication or resolution of the Allocation Disputes.

In the Confirmation Opinion, the Court found persuasive Lazard's January 2011 Reorganized Value Analysis and concluded that "the Debtors' Total Distributable Value is $7.019 billion."

Accordingly, the Debtors are updating the Court-approved valuation of $7.019 billion to reflect the impact on value of developments since completion of the January 2011 Reorganized Value Analysis. However, the Debtors are still completing the valuation update. The DCL Proponents expect to provide additional disclosure regarding such update before the hearing on the Supplemental Disclosure Document.

Judge Carey scheduled for March 23, 2012, the hearing to consider approval of the Solicitation Procedures Motion, including approval of the Supplemental Disclosure Document. Parties have until March 9, 2012 to file any objections to the Solicitation Procedures Motion.

Tribune Co., which owns the Chicago Tribune, Los Angeles Times, WGN Ch. 9 and many other media properties, has been in bankruptcy since Dec. 8, 2008.

(C) W.R. Grace

Plan Proponents W.R. Grace & Co. and its debtor affiliates, the Official Committee of Equity Security Holders, the Official Committee of Asbestos-related Personal Injury Claimants, and the

Future Claims Representative asked the U.S. District Court for the District of Delaware to make two limited and specific amendments to the memorandum opinion and order that Judge Ronald L. Buckwalter issued on January 30, 2012, affirming the Debtors' Joint Plan of Reorganization.

The Plan Proponents seek (1) an addition to the Affirmation Order to clarify that all the injunctions and releases in the Joint Plan, not just the injunction under Section 524(g) of the Bankruptcy Code, are approved, issued and affirmed; and (2) revisions to two paragraphs of the Memorandum Opinion to conform the opinion more closely to the language of the Joint Plan regarding jury trials.

The Plan Proponents believe it would be prudent at this stage and would not cause any delay to modify the Order and the jury trial section of the Memorandum Opinion.

Laura Davis Jones at Pachulski Stang said Sealed Air Corporation and Fresenius Medical Care Holdings, Inc., whose settlement agreements provide for payment of more than $1 billion to the trusts created by the Joint Plan, have pointed out to the Plan Proponents that the language in the Order does not expressly reference certain of the Joint Plan's injunctions, in addition to the Section 524(g) injunction, and releases that protect their rights, and have suggested certain modification to the Order to clarify the breadth and force of the injunctions.

Sealed Air and Fresenius are contemporaneously filing their own motion requesting identical revised language in the Order.

Ms. Jones says the Plan Proponents' requested wording changes do not alter any of the Court's analysis or the bases on which it upheld the Joint Plan's treatment of jury trial rights. She points out that the Plan Proponents merely ask the Court to

modify certain wordings to ensure that the Memorandum Opinion is consistent with the terms of the Joint Plan that the Memorandum Opinion is affirming.

Anderson Memorial Hospital and BNSF Railway Company separately have asked the District Court for an extension of time to file a notice of appeal from Judge Buckwalter's memorandum opinion and order affirming the confirmation of the Debtors' Joint Plan.

The deadline to appeal the Opinion and Order was Feb. 29.

Garlock Sealing, Cryovac Inc., and Fresenius have filed motions to amend and clarify the Opinion and Order. Anderson meanwhile said it is prudent and in the best interest of all parties to have a clear resolution of these issues prior to the filing of any notice of appeal of the Opinion and Order.

Grace filed for Chapter 11 reorganization in 2001 to protect itself from more than 100,000 personal injury claims.

(D) Nebraska Book

Judge Peter Walsh in late February signed an order granting NBC Acquisition Corp., parent company of college book wholesaler and bookstore operator Nebraska Book Company, a second extension to file a Chapter 11 reorganization plan.

Nebraska now has until April 23 to create a plan to emerge from pre-arranged bankruptcy. The solicitation period goes through June 21, almost exactly one year to the day since the company entered bankruptcy protection.

As noted in a declaration by COO and president Barry S. Major, the reason for the extensions is that “various macroeconomic indicators had disrupted capital markets and made exit financing more difficult to obtain.”

At the time of its bankruptcy filing last June, Nebraska Book reported $657.2 million in assets and $564 million in debt as of February 14, 2011. The company is funding post-petition operations with a $200 million Superpriority DIP Credit agreement, which was amended at the end of December.




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 six 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 February 2012. These are: Jobson Medical Information Holdings, Trailer Bridge, William Lyon Homes, Great Atlantic & Pacific Tea, Ener1, and Peak Broadcasting.

(A) Jobson Medical

Jobson Medical Information Holdings LLC filed in early February for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in Manhattan armed with a pre-packaged bankruptcy plan that gives the company three more years to pay off its loan and grants its secured lender equity in the new company.

The Debtor reached an agreement with lender General Electric Capital Corp. after beginning negotiations last August to restructure its $117.3 million loan, which matured Dec. 1, 2011. The new loan, which has the same principal amount, will mature Dec. 14, 2014. In exchange for the extension, GE Capital will receive 20% equity in the company. Unsecured creditors with claims totaling about $2 million will be paid in full. The Plan allows the Class A shareholders to retain 80% of the new stock. The existing Class B shareholders retain nothing.

Bankruptcy Judge Sean Lane was slated to hold a combined hearing on March 5 on the adequacy of the disclosure statement and the confirmation of the Prepackaged Plan.

(B) Trailer Bridge

Trailer Bridge filed with the U.S. Bankruptcy Court a First Amended Chapter 11 Plan of Reorganization and related Disclosure Statement.

On the Effective Date, the Reorganized Debtor will obtain new financing in the approximate amount of $31 million. Funds from the exit facility will be used to satisfy the DIP Facility Claims, support other payments required to be made under the Plan, pay transaction costs, and fund working capital and other general corporate purposes of the Reorganized Debtor following the Effective Date.

The Corporate Governance Documents of the Reorganized Debtor will provide for the authorization of and issuance of New Common Stock in the Reorganized Debtor to the holders of Allowed Noteholder Deficiency Claims which will be subject to dilution based upon the issuance of New Common Stock issued pursuant to any New Management Incentive Plan as set forth in Article IV of the Plan, and Allowed Old Common Interests.

If creditors accept and the plan is technically proper, secured noteholders owed $86.3 million will receive a new secured note for $65 million plus some of the new stock, for a projected 75% recovery. Unsecured claims, not including noteholders' deficiency claims, total $4.5 million to $6.5 million. Unsecured creditors are to split up $3.5 million cash. If they don't take home a 85% recovery in cash, they also receive some of the new stock and warrants. The projected recovery for unsecured creditors is 65% to 95%. If unsecured creditors accept the plan and receive 85% cash, existing shareholders will receive 15 cents for each old share, or some of the new stock.

The bankruptcy court in Jacksonville, Florida scheduled a March 16 confirmation hearing to approve both the disclosure statement and the plan.

(C) William Lyon Homes

William Lyon Homes emerged from its voluntary pre- packaged chapter 11 reorganization with the effectiveness of its plan of reorganization having occurred on February 25. The U.S. Bankruptcy Court confirmed the Company's pre-packaged plan of reorganization on February 10th, just 53 days after its plan and related petitions were filed.

Upon emergence from Chapter 11 protection, approximately $180 million in principal amount of debt will be eliminated as part of the recapitalization plan, resulting in a 37% reduction in overall debt. Annual cash interest expense will also be reduced by nearly $25 million or approximately 45% compared with current levels.

The Plan exchanges the notes for equity and generates $85 million in new cash. Holders owed $300 million on senior unsecured notes are to exchange the debt for $75 million in new secured notes plus 28.5% of the common equity. The Lyon family will invest $25 million in return for 20% of the common stock and warrants for another 9.1%. Senior secured lenders led by ColFin WLH Funding LLC, an affiliate of real-estate finance and investment company Colony Financial Inc., would receive a new $235 million 10.25% three-year secured note for existing secured claim of at least $206 million in principal. There will be a rights offering to buy $10 million in common stock and $50 million in convertible preferred stock, representing 51.5% of the new equity. A noteholder has agreed to buy any of the offering that isn't purchased.

(D) Great Atlantic & Pacific Tea Company

The U.S. Bankruptcy Court confirmed Great Atlantic & Pacific Tea Company's First Amended Joint Plan of Reorganization, dated February 17, 2012, despite objections filed by several parties. The Plan provides for, among other things, a $490 million in financing from Yucaipa Cos., cancellation of existing equity interests and zero recovery for shareholders. Yucaipa's Ron Burkle will be chairman of the reorganized entity.

(E) Ener1

Ener1, Inc., said the U.S. Bankruptcy Court in Manhattan has confirmed its pre-packaged Plan of Reorganization, as modified, which clears the way for the company to emerge from its Chapter 11 reorganization by mid-March. The plan provides for a restructuring of the company's long-term debt and the infusion of up to $86 million of new equity funding, which will support the continued operation of Ener1's subsidiaries.

In addition to the new equity funding, the holders of the existing senior notes, the convertible notes and a line of credit have agreed to restructure their debt in a partial debt-for-equity exchange. All of the current common stock will be cancelled when the plan becomes effective, and new common and preferred stock will be issued to both the current note holders and in consideration of the new equity funding that will flow into the company. The existing notes will be exchanged for a combination of cash, new equity and new notes.

Ener1's plan is expected to become effective within the next two weeks.

(F) Peak Broadcasting

Peak Broadcasting received confirmation from the U.S. Bankruptcy Court in Delaware of its reorganization plan, which was approved by the majority of the Debtor's creditors.

The senior lenders, mainly Oaktree Capital and Rabobank, will become the new owners, pending approval by the Federal Communications Commisision of license transfers.

Nearly all of the equity at Peak is currently held by various Duff Ackerman & Goodrich investment funds, with CEO Todd Lawley and other execs having only small personal stakes.

Under the plan, Peak’s assets will go to a new company, with the senior creditors as the 100% owners.

According to the plan, the first lien holders are owed $87.5 million. In addition to owning 100% of the new Peak they’ll also be issuing a new $37 million loan. Second lien debt of $18 million is held by Bernard National Loan Investors as successor to D.B. Zwirn Special Opportunities Fund. It will be paid $1,025,000 under the plan.

Duff Ackerman & Goodrich will be paid $3.3 million for a senior second lien.

Unsecured claims by creditors like Arbitron (owed $38,000), Premiere Radio Network (owed $18,000), Katz Radio (owed $17,000) and ASCAP ($16,000) are unimpaired and are to be paid in full.




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