beard corporate restructuring review for may 2012

Beard Group Corporate Restructuring ReviewFor May 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 available at http://bankrupt.com/restructuringreview/

____________________________________________________

Welcome to the Beard Group Corporate Restructuring Review for May 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;

http://bankrupt.com/restructuringreview/

mailto:[email protected]

• 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.

May 2012 Mega Cases

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

Danilo Muñoz reports Chapter 11 mega filings continue to rise in a small but steady pace for the past three months. There were seven Chapter 11 mega filings in May, as compared to six in April and five mega filings in March.

What stood out in May is that four of the large filers involved companies that had in excess of $1 billion in assets as of the petition date. In comparison, for the first four months of 2012, there was only mega filing that involved a company with more than $1 billion in assets.

For the first five months of 2012, there were a total of 35 mega filings, an increase compared to the 25 filings during the same period in 2011. However, the pace in 2012 was still way off compared to 2010, when there were 51 mega filings during the first five months.

The largest Chapter filing for May and, by far, for this year was by Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc. ResCap sought bankruptcy protection on May 14 with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12-12020].

_____________________________________________________________________________

Beard Group Corporate Restructuring Review for May 2012 -- page 2

ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement.

It disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012.

As part of the bankruptcy, 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 financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds.

The second largest Chapter 11 filing was by LightSquared Inc., which filed Chapter 11 bankruptcy petitions on May 14 with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12-12080]. The startup seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network.

LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements.

LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared _____________________________________________________________________________


with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing.

As of Feb. 29, 2012, LightSquared had $4.48 billion in assets (book value) and $2.29 billion in liabilities.

The third largest case was by Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, which filed for Chapter 11 reorganization together with 17 affiliates on May 3, with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12-11873]. The Company negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense.

The plan, to be filed by June 30, will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes.

Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit.

Educational publisher Houghton Mifflin Harcourt Publishing Co., rounds the list of billion-dollar filers. Houghton Mifflin commenced a prepackaged Chapter 11 reorganization on May 21 with the Bankruptcy Court for the Southern District of New York [Lead Case No. 12-12171] to carry out an agreement where senior secured creditors will swap debt for ownership. _____________________________________________________________________________


After months of good faith, arm's length negotiations among Houghton Mifflin and the informal group of holders of secured notes and their respective advisors, on May 10, 2012, the parties reached an agreement on the terms of a restructuring to completely de-lever the publisher's balance sheet.

Houghton Mifflin disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing.

In addition, Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. filed for Chapter 11 bankruptcy on May 17 with the Bankruptcy Court for the District of Nevada [Case Nos. 12-51156 and 12-51157].

Circus and Eldorado Joint Venture owns and operates the Silver Legacy Resort Casino, a premier 19th century silver mining themed hotel, casino and entertainment complex located in downtown Reno. The casino and entertainment areas at Silver Legacy are connected by skyway corridors to the neighboring Eldorado Hotel & Casino and the Circus Hotel and Casino, each of which are owned by affiliates of the debtors. Together, the three properties comprise the heart of the Reno market's prime gaming area and room base.

Circus and Eldorado has entered into a Restructuring Support Agreement with Capital Research and Management Company, a holder of a substantial portion of the mortgage notes. The RSA contemplates a proposed plan will be filed no later than June 1. The plan will contain creditor treatments that have already been negotiated with and agreed to by creditor constituents. Circus and Eldorado will seek approval of the explanatory disclosure statement within 45 days after the Petition Date and obtain confirmation of the Plan 60 days later.

_____________________________________________________________________________


WVSV Holdings LLC also filed for Chapter 11 protection on May 14 with the U.S. Bankruptcy Court in Arizona [Case No. 12-10598]. The Company is the owner of about 13,000 acres of vacant land in Buckeye, Arizona. WVSV Holdings claims that the three tracts of land planned for "future development" are worth $120 million and secure $57.3 million in debt. It scheduled $120.04 million in assets and $57.35 million in liabilities.

Finally, Dewey & LeBoeuf LLP sought formal Chapter 11 bankruptcy protection with the Bankruptcy Court in Manhattan [case number 12-12321], after failing to save the law firm amid struggles with high debt and partner defections.

The New York-based firm disclosed debt of $245 million and assets of $193 million in its chapter 11 petition.

Dewey & LeBoeuf said in a statement it does not anticipate a return to business but rather a managed wind-down of affairs, followed by liquidation. Dewey & LeBoeuf expects the most significant portion of the process to be completed in the next few months. In the interim, the firm will be operating on a budget and according to a timetable to be determined by the Court.

Three of the seven mega cases in May were prepackaged or pre-negotiated. Prior to this, there was one prepackaged case commenced in April, February and January. For the first five months of this year, 6 of the 35 mega cases involved a prepackaged Chapter 11 filing, or about 17% of the mega cases.

For 2011, 13 of the 82 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 mega cases -- or about one in every three filings in 2010.

_____________________________________________________________________________


Of the mega cases in May, two were engaged in information, while the rest were engaged in finance, manufacturing, recreation, real estate, and professional services industries.

The manufacturing sector continues to lead mega filings for the first five months of 2012 with five such cases while the real estate, finance transportation and information industries has four mega filings each.

In addition, five of the seven mega filings were filed in the Southern District of New York, while one each was filed in Nevada and Arizona.

For the first five months of 2012, the Bankruptcy Court for the Southern District of New York was the most favored venue for mega filers with 14, decisively wresting the lead from the Bankruptcy Court for the District of Delaware with 7 mega filings.

For 2011, the Delaware Bankruptcy Court was the most favored of bankruptcy mega cases with 38 filings, or 46% of the mega cases, followed by the Southern District of New York with 16 filings, or 19% of the mega cases, and by the Northern District of Texas with 4 filings, or 5% of the mega cases. The rest of the bankruptcy mega cases are spread evenly throughout the various bankruptcy courts.

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

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


For 2012, the largest Chapter 11 filing was by Residential Capital LLC, which disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012.

Anticipated Large Chapter 11 Filings

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

Carlo Fernandez identified three companies that may be close to filing for bankruptcy. These are Patriot Coal, Springleaf Finance, and NextWave Wireless.

(A) Patriot Coal

Patriot Coal Corporation, a coal producer with $3.66 billion in assets and $3.12 billion in liabilities, said it has engaged The Blackstone Group to work with Davis Polk & Wardwell LLP on refinancing its credit facilities.

Standard & Poor's in May lowered its corporate rating on St. Louis, Missouri-based Patriot Coal to 'CCC' and kept the ratings on watch negative. S&P said that Patriot's proposed refinancing of its existing convertible notes and additional liquidity to support operations is highly uncertain based on current market conditions.

Moody's also said that it is reviewing the 'Caa1' rating on Patriot Coal under review for downgrade as a result of the delay in finalizing Patriot's new $625 million credit facility and the potential implications on the company's liquidity position.

_____________________________________________________________________________


Debtwire on May 21 reported that Patriot was fielding pitches from restructuring advisers in the event the company can't satisfy its near-term financing needs.

Patriot earlier in May said it entered into a commitment letter for a new revolving credit facility and new term loan facility for $625 million from three lenders: Citigroup Inc., Barclays PLC and Natixis.

"Patriot Coal Corp. is continuing to work with these lenders to strengthen its finances, including the replacement of its current credit facilities well before certain of its debt obligations become due in March 2013," the company said.

(B) Springleaf Finance

Springleaf Finance Corp., the subprime lender owned by Fortress Investment Group, reported a net loss of $47.96 million in the first quarter following a net loss of $225 million in 2011.

"If current market conditions, as well as our financial performance, do not improve or further deteriorate, we may not be able to generate sufficient cash to service our debt," the Evansville, Indiana-based company said in a regulatory filing last month.

Springleaf, which had $15.6 billion in assets and $14.2 billion in liabilities as of March 31, reportedly hired restructuring lawyers as it struggles to raise new funds and grapples with billions in debt coming due later this year. Fortress Investment Group's consumer lending unit, Springleaf Financial Services had hired law firm, Dewey & LeBoeuf, to restructure its business, a person close to the matter told Reuters.

_____________________________________________________________________________


Springleaf, previously owned by bailed-out insurer American International Group, provides loans, retail financing and other credit related products to customers. It is partly owned by the U.S. government.

(C) NextWave Wireless

NextWave Wireless Inc., which exited bankruptcy reorganization in 2005, reported a net loss of $28.5 million, following a net loss of $264 million in 2011.

In March, NextWave submitted financial statements for 2011 in which the auditors said the company doesn't have the ability to repay maturing debt.

As of March 31, 2012, the aggregate principal amount of its secured indebtedness was $1.06 billion, including $142.8 million in senior notes and $200.5 million in second lien notes, and $718.5 million in third lien notes.

"Our current cash reserves are not sufficient to meet our payment obligations under our secured notes at their current maturity dates. Additionally, we may not be able to consummate sales of our wireless spectrum assets yielding sufficient proceeds to retire this indebtedness at the current scheduled maturity dates. If we are unable to further extend the maturity of our secured notes, or identify and successfully implement alternative financing to repay our secured notes, the holders of our Notes could proceed against the assets pledged to collateralize these obligations. These conditions raise substantial doubt about our ability to continue as a going concern. Insufficient capital to repay our debt at maturity would significantly restrict our ability to operate and could cause us to seek relief through a filing in the

_____________________________________________________________________________


United States Bankruptcy Court," the Company said in a regulatory filing last month.

As of March 31, 2012, the Company has assets of $457 million and debts of $1.16 billion.

* * *

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

Major Pending Disputes In Chapter 11 Cases

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

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

On or around May 4, in the $8.6 billion lawsuit Lehman Brothers Holdings commenced against JP Morgan Chase & Co, the bankrupt bank filed a motion asking Judge James Peck of the U.S. Bankruptcy Court in Manhattan to reconsider his dismissal of some claims in the complaint.

_____________________________________________________________________________


The reconsideration motion is aimed at resurrecting claims related to guarantees given to JPMorgan in August and September 2008.

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

Lehman said "millions of dollars" might be gained for its creditors if it had the right to pursue the funds.

The reconsideration motion, which is on the bankruptcy court's calendar for July 12, was filed after Judge Peck issued an opinion on April 19, saying that Lehman cannot claim money from JPMorgan for securities transactions governed by the U.S. bankruptcy laws' safe harbors.

Safe harbor laws can shield some financial transactions from being included in the pool of assets divided among creditors when a company files for Chapter 11. JPMorgan previously said that its requests for more collateral in the weeks before Lehman's collapse were related to repurchase contracts and derivatives that fall under the safe harbor laws.

Lehman, however, argued that the transactions JPMorgan sought to immunize were not protected by the safe harbor laws because they were not settlements of securities transactions.

Lehman filed the lawsuit alleging JPMorgan helped cause the company's bankruptcy by demanding $8.6 billion in collateral. JPMorgan, which served as Lehman's main clearing bank in the

_____________________________________________________________________________


2008 financial crisis, allegedly threatened to discontinue its services unless the company posted excessive collateral.

Meanwhile, Treasury Secretary Timothy Geithner said JPMorgan's controversial asset grab from Lehman was "immaterial" to the company's collapse. According to court papers filed on or about May 17, Mr. Geithner said the government takeover of Fannie Mae and Freddie Mac in the days before the Sept15, 2008 Chap 11 filing result in institutional investors and clearing banks 'pulling away' from financial institutions, including Lehman, and was the real reason that the investment bank entered a death spiral. Mr. Geithner was the president of the Federal Reserve Bank of New York at the time of Lehman's collapse.

Mr. Geithner believed Lehman was running out of time to raise capital or find a buyer. By Friday evening, Sept. 12, Lehman could not open for business the next Monday without an acquirer that could guarantee Lehman's trading positions, Mr. Geithner believed.

The disclosures come in response to questions from lawyers for Lehman's creditors in the $8.6 billion lawsuit. Also responding to creditors' questions was former Treasury Secretary Hank Paulson. He said it would have been impossible to save Lehman without a buyer as the government wasn't willing to commit money to a Lehman rescue.

As to the three and one-half year old court fight between Lehman Brothers and Barclays on $3 billion in assets tied to the UK bank's purchase of Lehman's North American brokerage business, May has been a silent month. Oral arguments from both parties on appeals over Manhattan court decisions resumed on April 20 but U.S. District Judge Katherine Forrest hasn't said when she'll rule on the case. The Manhattan court decisions _____________________________________________________________________________


ordered Barclays to return $2 billion in margins to James Giddens, the Lehman brokerage's trustee, while the trustee was ordered to give to Barclays at least $1.1 billion, and possibly another $769 million.

As to developments related to the Archstone-related lawsuit, Lehman Brothers's bankruptcy estate has reached a deal on May 24 to acquire a bigger stake in apartment-building owner Archstone for $1.58 billion, according to sources. The deal calls for Lehman to buy the stake from Bank of America Corp. and Barclays PLC, according to unnamed persons familiar with the matter.

BofA and Barclays joined Lehman in a $22.2 billion leveraged buy-out of Archstone in 2007. Lehman's estate owns 73.5% of Colorado-based Archstone and has sought to buy the remaining 26.5% that it doesn't already own.

In December, Sam Zell's Equity Residential offered to acquire a 26.5% stake in Archstone from the 2 banks for $1.33 billion. It subsequently agreed to a $1.5 billion minimum bid for the Archstone stake. But Lehman exercised its right to match offers for the stake and acquired it instead. In fact, Lehman filed a lawsuit in bankruptcy court accusing that co-owners Bank of America and Barclays "conspired" to try to sell their once-53% stake in Archstone to competitor Equity Residential.

Lehman officially emerged from bankruptcy protection in March after more than three years in Chapter 11 and began repaying creditors last month under the estate's $65 billion bankruptcy plan. Various suits and claims fights, however, could continue for years.

_____________________________________________________________________________


Delayed Exits From Chapter 11

Julie Anne Lopez-Toledo reports about five Chapter 11 debtors whose emergence from Chapter 11 has been delayed: Tribune Co., WR Grace, Nebraska Book, Pittsburgh Corning, and Quigley.

(A) Tribune Co.

In Tribune Company’s Chapter 11 case, the company submitted to Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware on May 4, 2012, amended exhibits to their Fourth Amended Joint Plan of Reorganization.

The Amendment provides that on the effective date of the Plan, the Reorganized Debtors may enter into an asset-based facility or other revolving credit facility of up to $300 million, with a letter of credit of up to $100 million. The proceeds of the exit facility will be used to finance the working capital needs and general corporate purposes of the borrowers and their subsidiaries. However, the Reorganized Debtors' entry into the Exit Facility is discretionary and is not a condition to confirmation of effectiveness of the Plan.

Moreover, Reorganized Tribune, as lender, and the Litigation Trust, as borrower, will enter into a delayed draw facility in the aggregate principal amount of $20 million to be used for payment of reasonable and documented costs and expenses of the Litigation Trust.

The Plan Proponents also identified the name and position of individuals who will serve as the initial officers of the Reorganized Debtors.

_____________________________________________________________________________


The Court was scheduled to convene a hearing on June 7 to consider confirmation of the Debtors' Plan.

Objections to confirmation of the Plan were due May 21. The parties that have filed objections to the Plan include the Senior Noteholders, Wilmington Trust Company, EGI-TRB LLC, the Company's former Directors and Officers, Citadel Equity Fund, the U.S. Government, and State Taxing Authorities.

The Debtors' deadline to file their brief in support of the confirmation of the Plan was June 1.

Tribune filed for Chapter 11 in December 2008.

(B) W.R. Grace

There has been no news of W.R. Grace exiting bankruptcy in the last 30 days.

In the last reporting period, W.R. Grace filed a motion with the Bankruptcy Court to approve definitive agreements among itself, co-proponents of the Debtors' plan of reorganization, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. That April 20 motion appears pending.

Under the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan.

District Judge Ronald Buckwalter had also ordered parties-in-interest – including the Debtors, Official Committee of Asbestos Personal Injury Claimants and Garlock Sealing Technologies LLC to appear before the District Court on May 1 to address all issues related to Garlock's motion for reargument, rehearing and to alter _____________________________________________________________________________


or amend Judge Buckwalter's January 30 decision affirming the confirmation of the Debtors' plan of reorganization.

Judge Buckwalter was expected to rule on Garlock's Motion after the Parties presented their arguments in support of or opposition to Garlock's Motion at the May 1 hearing.

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

(C) Nebraska Book

Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware confirmed on May 30, 2012, the Third Amended Joint Plan of Reorganization filed by NBC Acquisition Corp. and its subsidiaries, including Nebraska Book Company. The Company expects to emerge from Chapter 11 in mid-June 2012.

The plan gives the new stock plus a new $100 million second-lien note to holders of the existing $200 million in second-lien debt, for a projected 81% recovery.

The Company's President and CEO Barry Major said, "We entered into this court process with a set of specific goals and while our journey hasn't been without a few bumps, we have accomplished our goals and are preparing to emerge as a stronger company."

"With the support of our lenders we have been able to successfully navigate our Chapter 11 process and are focused on what lies ahead for our organization," he added.

_____________________________________________________________________________


Each class of claimants entitled to vote on the Plan voted to accept the Plan, including a 10% senior secured notes due 2011; an 8.625% senior subordinated notes due 2012. And holders of general unsecured claims voted to accept the Plan.

On June 27, 2011, the Company filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware to restructure approximately $450 million in loans and bonds. Through the Plan, the Company will reduce the debt on their balance sheet by approximately $270 million, in part by procuring a consensual conversion of $100 million of the Company's 10% senior secured notes due 2011 into equity in the reorganized Company.

Lincoln, Nebraska-based Nebraska Book Company, Inc., is one of the leading providers of new and used textbooks for college students in the United States. Nebraska Book and seven affiliates filed separate Chapter 11 petitions on June 27, 2011. Hon. Peter J. Walsh presides over the case.

Nebraska Book was unable to confirm a pre-packaged Chapter 11 plan that would have swapped some of the existing debt for new debt, cash and the new stock, due to an inability to secure $250 million in exit financing.

(D) Pittsburgh Corning

Two insurance companies raised objections to Pittsburgh Corning Corp.'s proposed Chapter 11 reorganization plan in April, arguing that provisions governing millions of dollars of asbestos settlement payouts are murky and could pose liability hazards for the insurers down the line.

_____________________________________________________________________________


Mt. McKinley Insurance Co. and Everest Reinsurance Co. lodged their concerns in response to a judge's order directing Pittsburgh Corning and its parent, PPG Industries, to describe how the plan and related documents might be used in future insurance coverage litigation.

The two companies renewed their opposition in May.

Between 1962 and 1972, Pittsburgh Corning manufactured pipe insulation that contained asbestos. At least 140,000 lawsuits have been filed related to the product, and the litigation pushed the company into Chapter 11 bankruptcy.

PPG and Corning have co-owned the joint venture, which is based in Plum, since 1937.

PPG developed a reorganization plan in response to Judge Fitzgerald's 2006 decision to disallow PPG from establishing a trust to pay asbestos claims. PPG's obligation to the trust would have consisted of cash payments totaling $825 million paid over 15 years. In addition, PPG would contribute 1.4 million shares of PPG stock or the cash equivalent, and PPG's shares of Pittsburgh Corning and Pittsburgh Corning Europe.

The judge rejected the initial plan for a trust because it included asbestos cases not related to Pittsburgh Corning. The latest reorganization plan had the support of the asbestos claimants' committee and the future claimants' representative.

(E) Quigley

Pfizer Inc.’s bankrupt Quigley Co. unit will continue its eight-year bankruptcy, and seeks to challenge a federal appeals court ruling, a Pfizer lawyer said._____________________________________________________________________________


Jay Goffman told U.S. Bankruptcy Judge Stuart Bernstein in Manhattan court on May 10 that Pfizer may challenge a higher court’s ruling in April that found Pfizer isn’t entitled to protection from some asbestos claims related to Quigley.

Pfizer also plans to proceed with Quigley’s bankruptcy, and seeks to have it exit court protection in September.

“We think they got it wrong,” Mr. Goffman said of the April appeals court ruling, adding that Pfizer may bring a challenge to the U.S. Supreme Court.

Quigley, founded in 1916, made three products for the steel industry from the 1940s to the 1970s that contained asbestos. Pfizer bought Quigley in 1968, and the company stopped most operations in 1992, filing for bankruptcy in 2004. Pfizer has said it never made or sold any Quigley products, and some claimants hadn’t released Pfizer from alleged “derivative liability.”

Judge Bernstein had ruled in bankruptcy court that Quigley’s Chapter 11 case barred certain lawsuits against Pfizer. A May 2011 decision in district court reversed the order, and Pfizer had appealed that ruling.

“We affirm the district court,” three judges said in April’s ruling that upheld the May decision. In doing so, they found that the law firm Peter G. Angelos can sue Pfizer based on manufacturer liability under Pennsylvania law.

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

_____________________________________________________________________________


Mr. Goffman also told Judge Bernstein on May 10 that Quigley plans to file a Chapter 11 plan by the end of May that is based on terms with creditors it has already negotiated.

Lawyers for creditors as well as the U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, said they would object to any plan that was the same as the old one.

“We don’t want a do-over of what happened last time,” said Greg Zipes, a lawyer for the U.S. Trustee.

The U.S. Trustee, an arm of the Justice Department, had asked the bankruptcy court to end Quigley’s Chapter 11, citing the fact that creditors alleging asbestos-related health issues have been unable to sue New York-based Pfizer during the case, and many of them have died.

Judge Bernstein had said Pfizer had manipulated the bankruptcy process, and refused to allow Quigley to exit Chapter 11 court protection under a deal with Pfizer.

During Quigley’s bankruptcy, a committee of creditors known as the “Ad Hoc Committee of Tort Victims” also asked in October 2010 to have Quigley’s bankruptcy dismissed so it could bring tort claims, which are otherwise blocked by bankruptcy law.

Asbestos claims against Quigley may total $4.45 billion during the next 42 years, according to testimony cited by Judge Bernstein in September. In November, Pfizer reported a $701 million third-quarter charge for asbestos litigation related to Quigley.

* * *

_____________________________________________________________________________


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 who issued or will issue shares of new common stock upon emergence pursuant to the plans of reorganization they filed in their Chapter 11 cases in May 2012. These are: Hawker Beechcraft, General Maritime, Reddy Ice Holdings, Houghton Mifflin, and Nebraska Book.

(A) Hawker Beechcraft

Aircraft manufacturer Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 protection after striking a deal with creditors to swap some $2 billion in debt for control of the reorganized company.

Investment firms Centerbridge Partners, Angelo Gordon & Co., Sankaty Advisors LLC, and Capital Research & Management own large pieces of Hawker's $1.8 billion in senior debt, which they will swap for the bulk of the company's new equity.

The government's pension insurer, the Pension Benefit Guaranty Corp., and bondholders led by Deutsche Bank AG as trustee, are owed more than $650 million and are Hawker's largest unsecured creditors, according to bankruptcy court papers.

_____________________________________________________________________________


Hawker's three pension plans are 56% funded, with $769 million in assets to cover $1.4 billion in benefits, the PBGC said. If Hawker were to terminate the plans, the PBGC said it would be on the hook for $533 million of the $611 million shortfall.

(B) General Maritime

Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan confirmed General Maritime Corp.'s plan to exit bankruptcy under the control of private equity firm Oaktree Capital Management LP, the company's top lender before its Chapter 11 filing.

The plan was tweaked in March to satisfy the objections of unsecured creditors who previously thought they were being treated unfairly. The judge overruled objections from one holder of senior notes and a group of shareholders. No major creditors objected to the plan at the final plan hearing.

The linchpin of the proposal calls for Oaktree, owed more than $200 million at the time of General Maritime's November Chapter 11 filing, to make a $175 million equity investment in the company in exchange for nearly all of the reorganized shipping company's stock. The proposal will slash General Maritime's pre-bankruptcy debt by more than 40%.

The company's unsecured creditors as recently as late March were set to recover between 0.75% and 1.88% of what they were owed. Now, they're set to recover about 5.41% of what they're owed.

Under the confirmed plan, unsecured creditors, including a key group that owns more than $310 million in notes, will get 2% of the reorganized General Maritime's equity and warrants to purchase up to 3% more of the equity in addition to the $6 million _____________________________________________________________________________


in cash. 97% of General Maritime's unsecured creditors that voted on the plan voted yes.

General Maritime Plan's became effective days after the plan was confirmed.

(C) Reddy Ice Holdings

Reddy Ice Holdings filed with the U.S. Bankruptcy Court a First Amended Joint Plan of Reorganization. According to the Plan, on the Effective Date, Reorganized Reddy Holdings will (i) issue Reorganized Reddy Holdco Common Stock for distribution to holders of Allowed Second Lien Notes Claims and Allowed Interests in Reddy Holdings in accordance with Article III herein and (ii) issue the Reorganized Reddy Holdco Preferred Stock in connection with the Rights Offering and the Investment Agreement.

All of the shares of Reorganized Reddy Holdco Preferred Stock and Reorganized Reddy Holdco Common Stock issued pursuant to the Plan will be duly authorized, validly issued, fully-paid and non-assessable.

Pursuant to the Investment Agreement, the Sponsor will receive on the Effective Date one share of Reorganized Reddy Holdco Class A Common Stock, which will entitle the Sponsor to 10,000,000 votes on all matters upon which holders of the Reorganized Reddy Holdco Common Stock or Reorganized Reddy Holdco Preferred Stock have the right to vote."

(D) Houghton Mifflin

_____________________________________________________________________________


Houghton Mifflin Harcourt Publishing and more than 20 affiliated debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York. Concurrent with the petition, the Company also filed with the Court a Prepackaged Joint Plan of Reorganization and related Disclosure Statement.

The Plan, which is supported by the vast majority of the Company's key financial stakeholders, will eliminate $3.1 billion of debt through a debt to equity transaction and reduce our annual cash interest costs.

Under terms of its Plan, the Company will convert its existing bank and bond debt into 100% of the equity in the reorganized Company; trade creditors and other unsecured creditors will be paid in full in the ordinary course. If their class votes in favor of the Plan, existing equity holders will receive warrants exercisable for up to 5% of the equity in the reorganized Company. In addition, the Company has received a commitment for $500 million in financing from Citigroup Global Markets.

(E) Nebraska Book Company

The U.S. Bankruptcy Court confirmed Nebraska Book's Third Amended Joint Plan of Reorganization, and the Company expects to emerge from Chapter 11 in mid-June 2012.

The Third Amended Plan provides for better recoveries for several classes of claims. Holders of senior secured notes will recover 81% of their estimated $200 million claim, holders of 8.625% notes claims will recover 3% of their estimated $79 million claim, and holders of general unsecured claims will recover 4% of their estimated $11 million to $14 million claims.

_____________________________________________________________________________


* * *

That ends the Beard Group Corporate Restructuring Review for May 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 July 16th. Thank you for listening.

_____________________________________________________________________________


beard corporate restructuring review for may 2012

Documents

major pending

aggregate

current market

safe harbor

residential

revolving

fortress investment

troubled company