beard corporate restructuring review for june 2012

7/31/2019 Beard Corporate Restructuring Review for June 2012

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Beard Group Corporate Restructuring ReviewFor June 2012

Presented byBeard Group, Inc.

P.O. Box 4250Frederick, MD 21705-4250

Voice: (240) 629-3300Fax: (240) 629-3360

E-mail: [email protected]

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

____________________________________________________

Welcome to the Beard Group Corporate RestructuringReview for June 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 discussfive topics:

first, last month's largest chapter 11 filings and otherstatistics;

second, large chapter 11 filings TCR editors anticipatein the near-term;

third, a quick review of the major pending disputes inchapter 11 cases that we monitor day-by-day;
mailto:[email protected]://bankrupt.com/restructuringreview/mailto:[email protected]://bankrupt.com/restructuringreview/


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fourth, reminders about debtors whose emergence fromchapter 11 has been delayed; and

fifth, information you're unlikely to find elsewhere about

new publicly traded securities being issued by chapter11 debtors.

June 2012 Mega Cases

Now, let's review the largest chapter 11 cases in June 2012.

Danilo Muoz reports there was only one company withassets exceeding $100 million sought Chapter 11 bankruptcyprotection in June 2012. This number is the lowest since 2010.

However, there were two Chapter 15 filers that involved over$100 million in assets in June.

The lone filer raises the total number of mega bankruptcy

cases for the first six months of 2012 to 36. This is a slightincrease from the 34 filings during the same period in 2011, butsubstantially fewer than the 57 mega filings during the first half of2010.

For the months of March to May this year, 20 companieswith over $100 million in assets sought Chapter 11 protection,including nine in May, six in April and five in March. Five of theMay filers had assets in excess of $1 billion. For the first half of

the year, six bankrupt companies had in excess of $1 billion inassets.

The lone Chapter 11 mega filer for June is NorthstarAerospace, which sought creditor protection on June 14, with theBankruptcy Court for the District of Delaware [Lead Case No. 12-_____________________________________________________________________________

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11817]. Northstar Aerospace has a deal to sell its business toaffiliates of Wynnchurch Capital, Ltd., which is subject to higherand better offers.

Chicago, Illinois-based Northstar Aerospace [--http://www.nsaero.com/ --] is an independent manufacturer offlight critical gears and transmissions. With operating subsidiariesin the United States and Canada, Northstar produces helicoptergears and transmissions, accessory gearbox assemblies,rotorcraft drive systems and other machined and fabricated parts.It also provides maintenance, repair and overhaul of componentsand transmissions.

Its plants are located in Chicago; Phoenix, Arizona andMilton and Windsor, Ontario. Northstar employs over 700 peopleacross its operations.

As of March 31, 2012, Northstar had total assets of $165.1million and total liabilities of $147.1 million. Roughly 60% of theassets and business are with the U.S. entities.

Northstar Aerospace (USA) Inc. and its Canadian parentintend to conduct an auction in Chicago where private-equityinvestor Wynnchurch Capital will open the bidding with a $70million offer, pursuant to joint cross-border bidding proceduresapproved by courts in Canada and the U.S. U.S. BankruptcyJudge Mary Walrath in Delaware authorized Northstar Aerospaceto conduct an auction on July 17 at 10:00 a.m.

Meanwhile, Cinram International Inc. and its affiliatescommenced proceedings under Chapter 15 in Delaware toBankruptcy Court ensure that they are protection from creditoractions in the U.S. and to assist with the global implementation ofthe sale. Cinram reached an agreement to sell substantially all ofits assets and operations to Najafi Companies for $82.5 million._____________________________________________________________________________



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With headquarters in Toronto, Ontario, Canada, Cinram isone of the world's largest independent manufacturers, replicatorsand distributors of DVDs and audio CDs. The balance sheet at

the end of 2011 showed total assets of $452.7 million andliabilities of $527.8 million, including $148.8 million in accountspayable.

Also, liquidators of Luxembourg-based SLS Capital S.A. fileda petition under Chapter 15 of the U.S. Bankruptcy Code with theBankruptcy Court for the Southern District of New York [Case No.12-12707] to seek recognition of proceedings in Luxembourg as a

"foreign main proceeding".

SLS was a financial services company whose primarybusiness was the issuance of bonds to persons residing outsidethe United States. In the operation of its business, SLS hadcounterparties and advisors in the United States and hadsignificant assets held in custodial asset and cash accounts inNew York City. The assets held in the United States were the

primary collateral for the bonds that SLS issued.

Maitre Yann Baden, the liquidator and foreign representative,estimated SLS Capital to have assets and debts of $100 million to$500 million.

For June 2012, there was no prepackaged Chapter 11 filing.For the first six months of 2012, six of the 38 mega casesinvolved a prepackaged or pre-negotiated Chapter 11 filing, or

about 16% of the mega cases. Three of those prepack caseswere filed in May.

For 2011, 13 of the 82 mega cases involved a prepackagedChapter 11 plan as of the Petition Date -- or about 16% of thelarge Chapter 11 filings. For fiscal year 2010, a total of 35_____________________________________________________________________________



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prepack/pre-arranged cases were filed out of the 106 bankruptcymega cases -- or about one in every three filings in 2010.

For the first six months of 2012, the manufacturing sector

continues to lead the mega filings with seven, closely followed byreal estate with five. The finance, transportation and informationindustries have four mega filings each.

The Bankruptcy Court for the Southern District of New Yorkso far has been the most favored venue for mega filers during thefirst half of 2012. About 15 mega cases have been in that Districtsince January, decisively wresting the lead from the Bankruptcy

Court for the District of Delaware with 9 mega filings.

In 2011, the Delaware Bankruptcy Court was the venue for38 mega cases -- or 46% -- followed by the Southern District ofNew York with 16 filings, or 19%. The Northern District of Texashad 4 filings, or 5%. The rest of the mega cases were spreadevenly throughout the various bankruptcy courts.

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

For 2011, the largest Chapter 11 filing was filed by MFGlobal Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MFGlobal had $41.05 billion in total assets and $39.68 billion in totalliabilities.

In the first six months of 2012, the largest filer so far isResidential Capital LLC, the unprofitable mortgage subsidiary of

Ally Financial Inc. The Company filed for bankruptcy protectionon May 14 with the Bankruptcy Court for the Southern District ofNew York [Lead Case No. 12-12020]. ResCap disclosed $15.68_____________________________________________________________________________



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billion in assets and $15.28 billion in liabilities as of March 31,2012.

ResCap is selling its mortgage origination and servicing

businesses to Nationstar Mortgage LLC, and its legacy portfolio,consisting mainly of mortgage loans and other residual financialassets, to Ally Financial. Together, the asset sales are expectedto generate approximately $4 billion in proceeds.

`Anticipated Large Chapter 11 Filings

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

Carlo Fernandez identified two companies that may be closeto filing for bankruptcy. These are Globalstar and CapitalBancorp.

(A) Globalstar Inc.

Globalstar Inc. announced on May 16 the decision ofarbitrators in a commercial arbitration concerning its 2009 satellitemanufacturing contract with Thales Alenia Space France.

Although the Company and Thales may agree to otherterms, the arbitrators' ruling requires Globalstar to pay Thalesapproximately EUR53 million in Phase 3 termination charges by

June 9, 2012. The Company disputes the merits of the Awardand is currently considering its options to oppose, seek to vacate,or otherwise challenge the Award.

On June 11, Globalstar said it did not make payment of theAward to Thales on or prior to June 9. As a result, among other_____________________________________________________________________________



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things, the Award has begun to accrue simple interest. TheCompany continues to engage in discussions with Thales in aneffort to reach a consensual resolution.

On May 23, 2012, Thales commenced an action in theDistrict Court for the Southern District of New York by filing apetition to affirm the Award.

Globalstar is currently in negotiations with Thales in an effortto reach an amicable resolution of their disputes. In the event theparties fail to reach such an agreement, the Company currentlyintends to move to vacate the Award.

On the same date that Thales commenced the New York

Proceeding, Thales sent a notice to the agent under Globalstar'ssecured bank facility, pursuant to a direct agreement amongThales, Globalstar, and the Agent, dated June 5, 2009, notifyingthe Agent, among other things, of the Award, that it deems thefailure to pay the Award a default under the Construction

Agreement, and that it is reserving all of its rights under the Direct

Agreement and the Construction Agreement, including the right tosuspend performance under the Direct Agreement, if theCompany's default is not cured within 30 days of receipt of theNotice.

If the parties are not able to reach a mutually agreeableresolution, if the Award is confirmed, final, and non-appealableand thereafter remains unpaid without resolution, or if Thalesterminates the Construction Agreement, Globalstar said it may be

required to consider strategic alternatives, including, withoutlimitation, seeking protection under Chapter 11 of the U.S.Bankruptcy Code.

Covington, Louisiana-based Globalstar provides mobilesatellite voice and data services. Globalstar offers these services_____________________________________________________________________________



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status in exchange for approximately 47% of the restructuredcompany.

Succinctly, the financial restructuring plan is being pursued

on two simultaneous tracks:

* An out-of-court restructuring and capital raise consistingof an exchange of its outstanding trust preferred securities,unsecured capital notes and Series A preferred stock with thesimultaneous infusion of new equity from outside investors.

* Alternatively, an in-court financial restructuring and

simultaneous capital raise from outside investors, referred to inapplicable documents as the "Standby Plan."

Capitol Bancorp Limited is a national community bankingcompany, with a network of bank operations in 16 states.Founded in 1988, Capitol Bancorp Limited has executive officesin Lansing, Michigan and Phoenix, Arizona.

The Company's balance sheet at March 31, 2012, showed$2.05 billion in total assets against $2.17 billion in total liabilities.

* * *

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 experiencingfinancial distress or restructuring their balance sheets in a judicial

proceeding. Stay tuned to learn more about obtaining a trialsubscription to the TCR at no cost or obligation.

Major Pending Disputes In Chapter 11 Cases_____________________________________________________________________________



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Next, we'll quickly review major pending disputes in largechapter 11 cases that Troubled Company Reporter editors

monitor day-by-day.

(A) Lehman Brothers

Ivy Magdadaro provides updates in the various disputesLehman Brothers is involved in.

Lehman Brothers won another round in the first week of Julyin the $8.6 billion battle with JP Morgan Chase Bank, as abankruptcy judge refused to dismiss objections by Lehmanagainst JPMorgan's claim.

In a 15-page opinion dated July 3, Bankruptcy Judge JamesPeck explained why he won't strike some of the objectionsLehman raised to the JPMorgan claim. The bankruptcy judge

denied JPMorgan's attempt to strike two parts of Lehman'sobjection, saying it would be "premature" to throw out thoseobjections. Judge Peck said the dispute was "within the contextof an ongoing larger multi-layered litigation concerning the netamounts that may ultimately be payable by these parties to oneanother."

In its lawsuit, Lehman accused New York-based JPMorganof helping to cause its 2008 collapse by demanding $8.6 billion in

collateral as backing for loans. JPMorgan, saying it lent Lehman$70 billion around the time of its 2008 collapsed, sued back --alleging it was deceived into making the loans.

In April, Judge Peck told Lehman it cannot sue JPMorganover transactions governed by so-called safe harbor law, devised_____________________________________________________________________________



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to protect banks dealing with weak companies. By doing so, thejudge took away Lehman's easy way of getting money fromJPMorgan or canceling its claims. Lehman has twice askedJudge Peck to reconsider. In February, JPMorgan it would give

Lehman almost $700 million to settle part of the lawsuit, though itcontinues to fight for most of its claims.

In a separate $3 billion lawsuit, New York District JudgeKatherine Forrest on June 5 ruled largely in favor of Barclays inthe UK bank's long standing dispute with James Giddens, theliquidation trustee of Lehman Brothers Inc.'s broker unit, relatingto Barclays' 2008 purchase of the broker business in September

2008 after Lehman collapsed.

Judge Forrest held that Barclays is entitled to most of the$2.05 billion in margin assets, overturning Bankruptcy JudgeJames Peck's ruling that ruled that the trustee was entitled to themoney.

The district judge, however, rejected Barclays' claim to $769

million in Lehman Brothers' customer reserve accounts and $507million that is considered part of Lehman's required Reserve BankAccount.

Judge Forrest also ruled that about $2 billion in "clearancebox" accounts at the Depository Trust & Clearing Corp. will alsostay with Barclays, affirming Judge Peck's decision.

In a 59-page decision, Judge Forrest said the bankruptcy

judge erred in superimposing "terms of ambiguity" on the finalsale document called a clarification letter, which outlined theterms of the Lehman broker business sale to Barclays. "Thebankruptcy court fully understood the letter's terms -- it just did notlike them," said Judge Forrest.

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Mr. Giddens wasted no time and on June 7, two days afterthe Forrest ruling was handed down, took an appeal of JudgeForrest's order -- which the order that upset the trustee's $1.5billion victory in the bankruptcy court over Barclays. The trustee

said he needs the money to pay hedge funds and othercustomers. Elliot Management Corp., on June 30, demanded thatMr. Giddens make an initial $3.2 billion payment to creditors.

On July 6, Barclays filed a cross-appeal of the same June 5district court ruling. Barclays contends that the district judge erredby not awarding it an additional $1.3 billion. The UK bank, as ofthe June 5 ruling, has won as much as $5 billion but now wants all

of the remaining $1.3 billion in assets in dispute.

(B) Tribune Co

As Tribune Co. closes in on the confirmation of its Chapter11 plan, news reports note that attention has been turned to themajor litigation over the failed leveraged buyout of the media

company that drove it into bankruptcy more than three years.

In 2007, Chicago-based investor Sam Zell bought out themedia company for $8.2 billion, turning the company private. InDecember 2008, faced with about $13 billion in debt related to theLBO, Tribune filed for bankruptcy in Delaware.

A bankruptcy investigation turned up evidence the LBO wastainted with fraud, setting the stage for creditor lawsuits. The

litigation could be worth hundreds of millions of dollars for Tribunecreditors.

The current Tribune plan focuses on settling legal clamsagainst lenders in the LBO. The plan would leave Tribune in thehands in an ownership group led by JPMorgan Chase; distressed_____________________________________________________________________________



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debt specialist Angelo, Gordon & Co and hedge fund OaktreeCapital Management. The plan would also allow creditors topursue claims against shareholders who benefited from thebuyout.

Aurelius Capital Management, LP and other creditors, whowill be left with less than full payment under Tribune's plan, arecounting on a big payoff from the lawsuits against largeshareholder McCormick Foundation, other shareholders, Tribuneleaders and former leaders, and professionals who advised on theLBO deal. These creditors are thus trying to convince Tribune toleave them with enough cash to pursue the litigation.

On June 8, JPMorgan, on behalf of senior lenders, agreed tohike up the budget for the litigation trust under the current Planversion. Officials who will advise it will be paid $60,000 a year,instead of the $25,000 in the original plan. Tribune has alsoagreed to get the litigation trust started with a $20 million loan.

In return, Tribune's unpaid creditors agreed to drop protests

over an estimated $72.3 million worth of legal fees and expensesthat the company will be covering for attorneys for senior lenders,lenders on a bridge loan, and members of the official unsecuredcreditors committee.

Judge Kevin Carey said he might issue a written decision onthe Tribune plan in early July.

(C) Tronox Inc.

Robert J. Rock of AlixPartners LLP told a New Yorkbankruptcy court in June that Tronox Inc., was insolvent followingits 2005 initial public offering.

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The expert's testimony was offered in the lawsuit Tronoxcommenced against its former parent, Kerr-McGee Corp., and

Anadarko Petroleum Corp. over legacy environmental liabilitiesTronox says sent it into bankruptcy. The trial on the case kicked

off in mid-May 2012 in bankruptcy court. The judge is reportedlytrying the case without a jury.

Mr. Rock also said Kerr-McGee employed flawed practicesfor setting reserves for possible liabilities, which causedunderstatements in Tronox's environmental and tort practices.

The lawsuit alleges that when Kerr-McGee spun off its

chemical business and paint pigment plant into Tronox in 2006,the parent imposed on Tronox 70 years of 'legacy liabilities,' thatinclude environmental remediation and retiree litigations. Themore profitable oil and gas assets of the parent were acquired by

Anadarko three months after the spin-off was completed fornearly $17 billion.

The U.S. government seems to agree with Tronox, saying

the deal was a "two-step fraudulent scheme" in order to transferassets to Anadarko where they would be out of reach of futurecreditors of the defunct chemical firm. Lawyers for the U.S.government estimate the value of the assets transferred at nearly$15 billion, plus an additional $10 billion for interest andappreciation.

Tronox has said its former in-house counsel, Roger Addison,knew of the fraud that led to the bankruptcy filing.

Anadarko has denied the allegations, arguing that theseparation of the chemical business from the oil and gas assetswas done to maximize shareholder value. Reports note theTronox lawsuit has lopped $2 billion off the market capitalizationof Anadarko._____________________________________________________________________________



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In the week before the trial began, Bankruptcy Judge AllanGrouper ruled that Anadarko is not a proper defendant in thelawsuit because it maintained Kerr-McGee is an isolated business

unit. Now, Tronox and the U.S. government are only going afterKerr-McGee and related business, which are nonetheless ownedby Anadarko, for recovery in connection with the spin-off andliabilities.

The litigation trust pursuing the case on behalf of Tronox isrepresented by Kirkland & Ellis LLP. The defendants arerepresented by Weil Gotshal & Manges LLP, Bingham McCutchen

LLP and Klee Tuchin Bogdanoff & Stern LLP.

(D) TOUSA Inc.

Former secured lenders to an affiliate of TOUSA Inc., areasking the U.S. Court of Appeals for the Eleventh Circuit to holdan en banc hearing on their request for reconsideration of a May

2012 decision by the appellate court, which held that the banksreceived fraudulent transfers exceeding $400 million.

On May 15, 2012, a three-judge panel of the Eleventh Circuitoverturned a district court decision, which forcefully quashed abankruptcy court ruling to avoid, as a fraudulent transfer, a $400million settlement and loan repayment by the parent company to agroup of lenders referred to as the Transeastern lenders. TheTOUSA parent's settlement and loan repayment was funded with

the proceeds of new loans which were secured by guaranteesand liens granted by subsidiaries who were not liable for theoriginal loan.

In the request for rehearing, the lenders claim that thebankruptcy judge wasn't entitled to make a final ruling on a_____________________________________________________________________________



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fraudulent transfer claim in view of a decision one year ago by theU.S. Supreme Court called Stern v. Marshall. The lenders arguethat the district court wasn't obliged to give any deference to thebankruptcy judge's opinion. The lenders also seek rehearing on a

second ground -- focusing on the fact that they didn't receive liensthat were the fraudulently transferred property but that theyreceived cash from TOUSA to pay off existing loans thehomebuilder company paid.

Delayed Exits From Chapter 11

Julie Anne Lopez-Toledo reports about two Chapter 11debtors whose emergence from Chapter 11 has been delayed:Tribune Co. and WR Grace.

(A) Tribune Co.

Judge Kevin J. Carey of the U.S. Bankruptcy Court for the

District of Delaware indicated that he may issue a ruling onconfirmation of the Companys Fourth Amended Joint Plan ofReorganization by July.

Judge Carey said he will either approve the Plan or provideTribune and its creditors a roadmap on how to fix it so it can beconfirmed.

According to the Chicago Tribune, the disputes on the Plan

have come down to five "relatively small" issues that need to beresolved, including the language on payment of professional feesand technical issues on the litigation trust. The report said thelitigation trust is a vital issue for junior creditors because itpreserves claims against parties related to Sam Zell's 2007

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leveraged buy-out of Tribune, which the junior creditors say leftthe company insolvent.

Judge Carey scheduled a telephonic hearing for June 11 to

confirm resolution or address any unresolved issues stated on therecord during the Confirmation Hearing, according to a notice filedwith the Court.

The bankruptcy judge said he would convene a statusconference on his decision in early July, if necessary.

Judge Carey held hearings to confirm the Plan on June 7

and 8.

The main contention in Tribune's bankruptcy case is thesettlement of certain causes of action arising from the 2007leveraged buy-out of Tribune, contemplated by the Chapter 11Plan filed by Tribune; the Official Committee of UnsecuredCreditors; Oaktree Capital Management, L.P.; Angelo, Gordon &Co., L.P.; and JPMorgan Chase Bank, N.A. In contrast, the rival

group of Aurelius Capital, WTC, and Senior Indenture TrusteesDeutsche Bank Trust Company Americas and Law DebentureTrust Company of New York seek to retain those causes of actionand pursue them vigorously per their competing Chapter 11 Plan.

A multidistrict litigation is currently before a New York federalcourt to recover billions of dollars from entities who participated inthe buy-out.

On Oct. 31 2011, Judge Carey issued an opinion denyingconfirmation of the competing Chapter 11 Plans. Nevertheless,the bankruptcy judge opined that Tribune's Plan better paves theway towards the Debtors' goal to reorganize by resolvingsignificant claims. The bankruptcy judge also held that the DCLPlan Settlement treats creditors fairly._____________________________________________________________________________



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Tribune amended the DCL Plan several times to incorporatethe Bankruptcy Court's previous rulings, including the ruling onallocation disputes under the DCL Plan. Aurelius and several

parties renewed their objections to the current DCL Plan, focusingon its technical aspects, including the structure of the litigationtrust and payment of professional fees.

The Plan contemplates the turnover of ownership to holdersof the company's loan, a group that includes DCL PlanProponents JPMorgan Chase & Co. and Oaktree CapitalManagement LP and Angelo, Gordon & Co., according to

Reuters. They will appoint the company's seven-member board.

Tribune needs to obtain Federal CommunicationsCommission's approval to transfer its broadcasting businessesbefore it can emerge from bankruptcy.

Tribune Chief Reorganization Officer Don Liebentritt said heis hopeful that a July decision on the Plan would not delay

Tribune's application with the FCC. The FCC cannot rule onTribune's request without a confirmation order, but the company isworking on it.

Mr. Liebentritt has considered the FCC approval a "wildcard," in an effort to exit bankruptcy smoothly, saying it isuncertain whether organizations that objected to Tribune'sprevious licensing applications will object this time.

In a Bloomberg interview, Mr. Liebentritt said if Tribuneobtains approval of the Plan by July, it will emerge frombankruptcy by August or at the end of the year latest, dependingon the outcome of the FCC application.

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At the June 8 hearing, Aurelius and its group made it clearthat they plan to appeal Judge Carey's decision and vigorouslypursue the preserved claims.

As of February 16, 2012, Tribune has a distributable value of$7.372 billion.

Tribune filed for Chapter 11 in December 2008.

(B) W.R. Grace

After being in bankruptcy for 11 years, W.R. Graces Chapter11 case may finally come to an end in the coming days.

Judge Ronald L. Buckwalter of the U.S. District Court for theDistrict of Delaware issued on June 11, 2012, an amendedmemorandum opinion and order overruling all objections andconfirming W.R. Grace and its debtor affiliates' Joint Plan ofReorganization in its entirety.

The Appellants had until July 11 to file any considerations, atwhich point W.R. Grace will have an additional 30 days torespond. Then the Third Circuit Court of Appeals will make itsdecision.

Grace may actually be able to exit bankruptcy even beforeall they are all settled, depending on the details of the appeals.But first, the courts must receive all appeals.

Grace won bankruptcy court approval of the Plan on January31, 2011. The District Court affirmed the Plan about a year later,on January 30, 201.

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Numerous parties-in-interest filed motions to reconsider,alter and clarify the Affirmation Order. Various appeals have alsobeen filed. The parties seeking clarification or amendment to theOrder include Sealed Air Corporation, Cryovac, Inc., and

Fresenius Medical Care Holdings, Inc.; the Libby Claimants; andGarlock Sealing Technologies, LLC.

Judge Buckwalter's Amended Memorandum Opinion andOrder includes additional language clarifying that all injunctionsand releases in the Joint Plan, and not merely the injunctionunder Section 524(g) of the Bankruptcy Code are approved,issued and affirmed.

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

* * *

The Troubled Company Reporter provides detailed reporting

about every chapter 11 filing nationwide. Stay tuned to learn moreabout obtaining a trial subscription to the TCR at no cost orobligation.

New Publicly Traded Securities

Psyche Maricon Castillon reports about four companies thatissued or will issue shares of new common stock upon

emergence pursuant to the plans of reorganization they filed intheir Chapter 11 cases in June 2012. These are: DeltaPetroleum, Indianapolis Downs, Houghton Mifflin, and Reddy Ice.

(A) Delta Petroleum_____________________________________________________________________________



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Delta Petroleum filed with the U.S. Bankruptcy Court a JointChapter 11 Plan of Reorganization and Disclosure Statement thatallows the Debtors to deleverage their balance sheets through

their agreement with the Plan Sponsor to form a new limitedliability company with assets contributed by Laramie and theDebtors, including each party's oil and gas, surface real estate,and related assets located in Garfield and Mesa Counties,Colorado.

Reorganized Delta will retain (i) a 33.34% interest in theJoint Venture Company, and (ii) $75 million in Cash, subject to

certain adjustments set forth in the Contribution Agreement,drawn from a senior secured term loan credit facility obtained bythe Plan Sponsor on behalf of the Joint Venture Company.Proceeds of the JV Company Credit Facility will be applied to paythe administrative expenses of the Debtors' estates, including thedebtor-in-possession financing facility.

The Plan further provides that the Holders of General

Unsecured Claims and Noteholder Claims will receive their ProRata shares of an aggregate of 100% of Reorganized Delta'sNew Common Stock in full satisfaction of their Claims, althoughHolders of General Unsecured Claims may elect instead toreceive Cash equal to 15% of the Allowed amount of such Claimon the Effective Date.

(B) Indianapolis Downs

Indianapolis Downs filed with the U.S. Bankruptcy Court aFirst Amended Joint Plan of Reorganization and relatedDisclosure Statement. The Recapitalization set forth in the Planwill result in each Holder of a Class 3 Claim receiving its Pro RataShare of (i) all of the New Second Lien Term Loan, or in the_____________________________________________________________________________



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alternative, all of the proceeds from the Alternative Second LienFinancing, (ii) 95% of the New Unsecured PIK Term Loan issuedand outstanding on the Effective Date and (iii) 95% of the NewSeries A Warrants issued and outstanding on the Effective Date.

Each Holder of a Class 4 Claim will receive (i) 5% of theNew Unsecured PIK Term Loan issued and outstanding on theEffective Date, (ii) 5% of the New Series A Warrants issued andoutstanding on the Effective Date and (iii) 100% of the NewSeries B Warrants issued and outstanding on the Effective Date.

All of the DIP Claims, Administrative Claims, and Priority Tax

Claims will be paid in full as provided in the Plan. The Plan alsoprovides that Other Priority Claims and Other Secured Claims willbe Unimpaired. Holders of General Unsecured Claims andHolders of Interests will receive no Distribution under the Plan.

(C) Houghton Mifflin

The U.S. Bankruptcy Court approved the DisclosureStatement and concurrently confirmed the Chapter 11 Plan ofReorganization of Houghton Mifflin Harcourt Publishing. The Plansubsequently became effective and the Company emerged fromChapter 11 protection.

Under the Plan, senior creditors will receive 100% of the newcommon equity, subject to dilution from the managementincentive plan and the new warrants, plus $30.3 million in cash.

All of the Debtors' existing debt balances will be eliminated.Existing common equity holders will receive 7-year warrants for5% of the new common stock, with an enterprise value strikeprice of $3.1 billion.

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This book publisher filed for Chapter 11 protection on May21, 2012, listing $2.7 billion in total pre-petition assets.

(D) Reddy Ice

Reddy Ice Holdings' Plan of Reorganization is now effective,and the Company has emerged from Chapter 11 protection. TheCompany is now majority-owned by affiliates of CenterbridgePartners.

Through the Plan, (i) the Debtors' financial debt will be

reduced by approximately $145 million, (ii) the Debtors' cashinterest expense will be reduced by approximately $20 millionannually and (iii) the Debtors will receive new equity capitalinfusions totaling approximately $25.5 million, including a $7.975million preferred stock investment by Centerbridge CapitalPartners II, or one or more of its parallel funds and a $17.5 millionpreferred stock rights offering to holders of the Debtors' pre-petition second lien secured notes backstopped by Centerbridge.

The packaged ice manufacturer and distributor filed for Chapter11 protection on April 12, 2012, listing $434 million in total pre-petition assets.

* * *

That ends the Beard Group Corporate Restructuring Reviewfor June 2012, brought to you by the editors of the TroubledCompany Reporter and Troubled Company Prospector. If you'd

like to receive the Troubled Company Reporter for 30-days at nocost -- and with no strings attached -- call Nina Novak at (240)629-3300 or visit bankrupt-dot-com-slash-free-trial and we'll addyou 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._____________________________________________________________________________



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Tune in to our next monthly Restructuring Review on August16th. Thank you for listening.

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beard corporate restructuring review for june 2012

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