beard group corporate restructuring reviewfor november 2012

Beard Group Corporate Restructuring ReviewFor November 2012

Presented byBeard Group, Inc.

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

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

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Welcome to the Beard Group Corporate Restructuring Review for November 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.

November 2012 Mega Cases

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

Danilo Muñoz reports there were three bankruptcy filings in November that involved companies with more than $100 million in assets. This is a decrease over the number of mega bankruptcies compared to October, when six Chapter 11 mega filings were filed. None of the Chapter 11 mega filings for November exceeded $1 billion in assets.

For the first 11 months of the 2012, a total of 11 companies have sought Chapter 11 protection with excess of $1 billion in assets; five of those cases were in May.

For the first 11 months of 2012, there were a total of 60 mega filings with assets in excess of $100 million, compared to 77 mega filings during the same period in 2011 and 96 in 2010.

The largest Chapter 11 filing in November was filed by Homer City Funding LLC, which listed estimated $500 million to $1 billion in both assets and debts in its Chapter 11 petition.

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

Homer City Funding a special-purpose entity created to finance a coal-fired electric generating facility 45 miles (72 kilometers) from Pittsburgh, Pennsylvania.

The Company initiated a prepackaged Chapter 11 reorganization on November 5, 2012, with the Bankruptcy Court for the District of Delaware [case number 12-13024] to transfer ownership of the plant. The project is operated under a lease by an affiliate of power producer Edison Mission Energy. The project's owner is an entity that is 90%-controlled by an affiliate of General Electric Capital Corp. and 10% by an affiliate of MetLife Inc.

Upon confirmation of the Plan, ownership will transfer to an entity controlled by GECC and MetLife. The new owner will issue new bonds in exchange for the existing bonds.

Homer City Funding sought and obtained approval of its prepackaged plan and disclosure statement at a hearing on December 6.

The plan was accepted pre-bankruptcy by the required majorities of $640 million in bonds, which are publicly traded. An affiliate of GECC holds $103 million, or 16%, of the bonds.

The second largest Chapter 11 filing was by American Suzuki Motor Corporation, which listed estimated assets and debts of between $100 million to $500 million.

Established in 1986, American Suzuki Motor is the sole distributor of Suzuki automobiles and vehicles in the United States. American Suzuki wholesales virtually all of its inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States.

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The dealers then market and sell the Suzuki Products to retail customers. Suzuki Motor Corp., which is the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki products. American Suzuki has 295 employees. There are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships.

American Suzuki filed a Chapter 11 petition on November 5, 2012, with the Bankruptcy Court for the Central District of California [Case No. 12-22808] to sell the business to an entity created by its parent company. The deal is subject to higher and better offers. The parent company is not included in the Chapter 11 filing.

American Suzuki also filed a plan of reorganization together with the petition. Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with the products. NounCo, Inc., a wholly owned subsidiary of parent, will purchase the Motorcycles/ATV and Marine Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services.

The third bankruptcy mega filing for November was by Monitor Company Group LP, a global consulting firm with 1,200 personnel in offices across 17 countries worldwide. Founded in 1983 by six entrepreneurs, and headquartered in Cambridge, Massachusetts, Monitor advises for-profit, sovereign, and non-profit clients on growing their businesses and economies and furthering their charitable purposes.

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Monitor and several affiliates filed for Chapter 11 bankruptcy on November 7, 2012, with the Bankruptcy Court for the District of Delaware [Case Nos. 12-13042 to 12-13062] before Judge Christopher S. Sontchi.

Monitor's consolidated unaudited financial statements as of June 30, 2012, which include the assets and liabilities of non-Debtor foreign subsidiaries, reflected total assets of roughly $202 million (including $93 million in current assets) and total liabilities of roughly $200 million.

Monitor filed for bankruptcy to sell substantially all of their businesses and assets to Deloitte Consulting LLP, a Delaware registered limited liability partnership and DCSH Limited, a UK company limited by shares, subject to higher or otherwise better offers. The base purchase price set forth in the Stalking Horse Agreement is $116.2 million, plus (i) assumption of certain liabilities and (ii) certain cure costs for assumed contracts. The Stalking Horse Agreement provides for the Stalking Horse Bidder to receive a combined breakup fee and expense reimbursement

of $4 million.

Two of the three Chapter 11 mega filing for November was a prepackaged bankruptcy filing. There was only one prepackaged Chapter 11 filing for October and zero in September. For the first eleven months of 2012, 13 of the 60 mega cases involved a prepackaged Chapter 11 filing, or about 22% of the mega cases.

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Greater than Prepackaged Total No.

Month $1,000 Cases of Cases

January 7 2 0 1 9

February 7 1 0 1 8

March 3 1 1 0 5

April 4 1 1 1 6

May 4 0 5 3 9

June 1 0 0 0 1

July 1 0 3 2 4

August 4 1 1 2 6

September 3 0 0 0 3

October 5 1 0 1 6

November 2 1 0 2 3

Total 41 8 11 10 60

Large Chapter 11 Cases for 2012($ in Mil.)

Total Assets

$100 to $500 $500 to $1,000

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 bankruptcy mega cases -- or about one in every three filings in 2010.

For the first 11 months of 2012, the manufacturing industry continues to lead mega filings with ten, followed by finance and information industries with seven mega filings each and the real estate industry with six mega filings.

For the first 11 months of 2012, the Bankruptcy Court for the Southern District of New York was the most favored venue for mega filers with 20, closely followed by the Bankruptcy Court for the District of Delaware with 17 mega filings.

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

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

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

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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.

The law firm with the most representations of Chapter 11 mega filings either as a lead or co-counsel is

For the past eleven months, the law firm of Young Conaway Stargatt & Taylor LLP snagged the most mega case assignments, working as co-counsel or local counsel. DLA Piper LLP got three hundred-million dollar assignments. Fifteen other law firms landed in the third spot, working on two mega cases.

Young Conaway represents Journal Register Company, Southern Air Holdings, Contract Research Solutions, Arctic Glacier and Buffets Inc. DLA Piper represents Starlight Investments, Reddy Ice and Trident Microsystems.

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 3 companies that may be close to filing for bankruptcy. The cases are LodgeNet Interactive, Edison Mission Energy, and THQ Inc.

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(A) LodgeNet Interactive

LodgeNet Interactive Corporation posted a net loss of $105.71 million on $278.71 million of total revenues for the nine months ended September 30, 2012, compared with a net loss of $1.78 million on $321.21 million of total revenues for the same period a year ago.

Following the third quarter results, the South Dakota-based connectivity solutions provider said that decline in revenue and the payment terms of its vendor forbearance agreements created liquidity constraints on its operations and related financial results. "These liquidity constraints and our non-compliance with certain of our debt covenants have resulted in there being substantial doubt about our ability to continue as a going concern," the Company said.

To maintain continued service from HBO and DirecTV, the Company entered into forbearance agreements with each of them. The Company has negotiated a revision to its forbearance agreement with DirecTV, whereby the Company's November payment has been deferred to December 17, 2012, at which time the Company will be obligated to pay them $20 million. The Company has also negotiated a revision to its forbearance agreement with HBO, whereby the Company will make a current payment of $1.5 million to them, representing a partial payment of the Company's November obligation, defer the balance to December and owe them a payment of $6 million on December 17, 2012.

"If we are unable to obtain sufficient liquidity to make such payments, which is likely, or such payments are not further deferred, we would be forced to file under Chapter 11 of the U.S. Bankruptcy Code in December. The Company is in active

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negotiations with its lenders and a potential investor in an effort to structure an orderly bankruptcy process."

The Company's balance sheet at September 30, 2012, showed $291.74 million in total assets against $448.72 million in total liabilities.

(B) Edison Mission Energy

Edison Mission Energy elected not to make the $97 million of interest payments due on November 15, 2012 for unsecured EME bonds maturing in 2017, 2019 and 2027.

EME's unsecured bonds generally provide for a 30-day grace period for interest payments before an event of default shall be deemed to have occurred. If the interest payments are not made prior to the expiration of the grace period on December 17, 2012, then generally either the Trustee or the holders of not less than 25% in aggregate principal amount of the bonds may declare the entire principal amount of the bonds and the interest accrued thereon to be due and payable immediately.

EME said its failure to pay indebtedness under its unsecured bonds will likely result in EME's filing for protection under Chapter 11 of the U.S. Bankruptcy Code.

Santa Ana, California-based Edison Mission Energy is a engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME's subsidiaries and affiliates owned or leased interests in 39 operating projects with an aggregate net physical capacity of 10,979 MW of which EME's pro rata share was 9,852 MW.

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The Company's balance sheet at September 30, 2012, showed $8.17 billion in total assets against $6.68 billion in total liabilities.

(C) THQ Inc.

THQ Inc. has entered into a forbearance agreement with Wells Fargo Capital Finance LLC. Under the agreement, Wells Fargo has agreed to forbear from exercising its rights and remedies against THQ and its subsidiaries with respect to previous events of default under its credit facility. The period of the forbearance currently extends to January 15, 2013, during which time Wells Fargo has agreed to make additional loans to the company subject to the terms and conditions of the forbearance agreement.

Additionally, THQ has entered into exclusive negotiations with a financial sponsor regarding financing alternatives which may result in, among other things, significant and material dilution to shareholders.

THQ is a worldwide developer and publisher of interactive entertainment software. THQ's balance sheet at September 30, 2012, showed $265.41 million in total assets against $306.58 million in total liabilities.

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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

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

Major Pending Disputes In Chapter 11 Cases

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

(A) Lehman Brothers

Ivy Magdadaro updates on one of the disputes involving Lehman Brothers.

In November 2012, Lehman settled with Citigroup but its battle with JP Morgan continues.

James Giddens, the trustee unwinding Lehman Brothers Inc. (LBI), reached an agreement with Citigroup in mid-November ending a protracted legal fight over more than $1 billion that Lehman deposited at the bank on September 19, 2008, just three days after its holding company sought bankruptcy protection.

The deal, which requires approval of the U.S. Bankruptcy Court in Manhattan, credits the estate of LBI -- Lehman's brokerage arm -- with $360 million in cash for distribution to customers and other creditors. Citigroup will forgo another $75 million claim that was contingently paid to the estate at the beginning of the liquidation, according to the settlement.

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The agreement also calls for the dismissal of a lawsuit the trustee filed against Citigroup early last year. Under that lawsuit, the LBI Trustee sought to recover the $1 billion deposit. He also filed claims to recover over $300 million in cash and securities. To the allegations in the lawsuit, Citigroup responded that the amount was part of the Bankruptcy Code's "safe harbor" provisions and cannot be included in the creditors' asset pool.

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 protection.

Separately, Lehman renewed its legal battles with Citigroup and JP Morgan Chase & Co., accusing the banks of creating billions of dollars in "phantom losses" to ensure they recovered 100% of their derivatives claims. The lawsuit was filed on September 14 this year in a Manhattan federal court, seeking rejection of over $2.2 billion in derivative obligations. The recently filed case is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 12-01874, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The two banks denied wrongdoing and said the lawsuit is without merit.

A two-year old $8.6 billion lawsuit among the parties, captioned Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan), also remains pending. The case is over JPMorgan's role in the collapse of Lehman in 2008. JPMorgan in turn filed a $6.3 billion dollar countersuit. JPMorgan agreed to pay $700 million to settle part of the lawsuit. In addition, Judge James Peck has narrowed scope to the lawsuit, refusing to reinstate certain claims on transactions said to be governed by "safe harbor" law.

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In other news, the LBI Trustee late in November reached a settlement with a German affiliate to settle $1.35 billion bankruptcy fight. In a November 29 filing with the US Bankruptcy Court in Manhattan, Mr. Giddens said Lehman Brothers Bankhaus AG can assert a claim of $600 million against the trustee, down from the $1.35 billion Bankhaus originally wanted. A court hearing on the matter is scheduled for January 16 next year.

The trustee also obtained bankruptcy court on November 15 of a $6 billion settlement with Switzerland-based Lehman Brothers Finance AG. The deal slashes LB Finance's $6 billion claim to $550 million -- about $190 million will be granted as a higher priority customer status, with the remaining $360 million classified as an unsecured claim.

However, Lehman's holding company continues to spar with LB Finance over billions of dollars in claims and counterclaims with respect to derivative guarantees and intercompany loans. LB Finance says the holding company owes it $15.4 billion, while Lehman says the Swiss unit owes it $14.2 billion and that the two claims should be "set off," leaving a net claim of $1.2 billion against the holding company.

(B) Tribune Co.

As Tribune Co. prepares to exit its four-year bankruptcy, thousands of former employees and shareholders likely will remain stuck in litigation with the media conglomerate's creditors for years. Tribune's plan partially pays off creditors but also lets some of IOU-holders revive litigation to squeeze employees and shareholders for additional repayment. About 50 cases filed in state and federal courts nationwide have been consolidated in New York but were put on hold for the past two years pending Tribune's emergence._____________________________________________________________________________


Chief among the creditors' targets are former Tribune executives, directors and advisers, including current Tribune Chairman Sam Zell and former CEO Dennis FitzSimons, who led Tribune through a 2007 leveraged buyout that saddled the company with $13 billion in debt. Rank-and-file employees who stock or collected deferred compensation in the LBO and even elderly investors who long ago bought Tribune stock may also be exposed.

Some of the defendants have received settlement offers from the creditors, but most aren't taking it. The creditors include companies that held Tribune debt before the LBO and unsecured creditors in the bankruptcy case.

Tribune's bankruptcy exit plan establishes a trust to pursue creditor claims. New York-based lawyer Marc Kirschner will oversee the trust once Tribune exits bankruptcy.

U.S. District Judge William Pauley III, who is overseeing the litigation in New York, will take up the cases against the former executives, directors and advisers on the deal, such as Morgan Stanley, only after he decides in March whether to dismiss the cases against some or all members of the broader group of stockholders.

The directors and officers who orchestrated the $8 billion LBO are more attractive targets partly because they're covered by $200 million in Tribune insurance. Their lawyers are lined up to do battle.

According to reports, Matt Kipp, an attorney at Skadden Arps Slate Meagher & Flom in Chicago who represents the special committee of Tribune directors who reviewed the LBO transaction said the committee members at all times acted well within their _____________________________________________________________________________


professional judgment and fully discharged their duties as directors. Attorneys for Messrs. Zell and FitzSimons, the Robert R. McCormick Foundation and some other defendants in that group decline to comment on behalf of their clients, according to news reports.

Many of the affected Tribune employees are working together to weigh their legal options, says Jim O'Shea, a former managing editor of the Chicago Tribune and former editor of the Los Angeles Times, according to Crain's Chicago Business.

(C) Tronox

Trial in the billion dollar lawsuit by Tronox Inc. creditors against Kerr-McGee Corp., officially ended in the third week of November 2012. Both parties filed voluminous papers giving US Bankruptcy Judge Allan Gropper differing recommendations on how he should rule.

The trial started in May.

Judge Gropper should be issuing a decision in the coming weeks on whether Kerr-McGee must pay $14 billion in damages to creditors of former unit Tronox Inc.

The lawsuit was filed in May 2009, where the trust for Tronox creditors alleged that in order to shed billion of dollars in environmental and retiree liabilities, Kerr-McGee broke up the business where Tronox was spun off and left with the unprofitable assets. Tronox said this scenario led to its collapse and ultimately, its bankruptcy filing. The U.S. Government sided with Tronox's allegations and has since took over the lead in the case.

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Kerr-McGee has asserted the fraudulent transfer lawsuit is without merit.

Judge Gropper may issue a binding ruling or only release a suggested opinion. If the judge enters a final decision, the parties can proceed to an appeal process in federal court. If howver a recommendation is released, a district judge can make his or her own findings.

Anadarko Petroleum Corp., Kerr-McGee's parent, had been a defendant in the suit until May when Judge Gropper threw out the complaint as to the parent. He said that Tronox's fraudulent transfer theories only worked against Kerr-McGee, Anadarko's wholly owned subsidiary. Within 90 days of the spinoff, Anadarko made a buyout offer and subsequently acquired Kerr-McGee for $18.4 billion in August 2006.

Delayed Exits From Chapter 11

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

(A) Tribune Co.

In Tribune Co.'s Chapter 11 case, the Company announced it got final approval from the Federal Communications Commission to transfer its broadcast licenses to its new owners.

The FCC approved the license transfers and granted waivers so the company could keep newspapers and nearby _____________________________________________________________________________


television stations in five markets including New York. The approval was granted under a procedure that didn't require a vote by the agency's five commissioners.

Tribune's Chief Executive Officer Eddy Hartenstein said they were "extremely pleased" with the FCC action.

Mr. Hartenstein said in an e-mailed news release that the decision will enable the company to continue moving forward toward emergence from Chapter 11 -- a process it expects to complete over the course of the next several weeks.

FCC Commissioner Ajit Pai was also pleased with the approval, saying it facilitates Tribune's exit from bankruptcy, grants the company permanent waiver in the Chicago market, and allows it to maintain its newspaper-broadcast combinations in New York, Los Angeles, Miami-Ft. Lauderdale, and Hartford-New Haven markets.

In a November 16 statement, Mr. Pai said given the financial conditions confronting the newspaper industry, companies that continue to operate daily newspapers should be applauded rather than saddled with artificial and outdated regulatory burdens.

The approval is one of the two steps Tribune needs to emerge from bankruptcy protection. In July, the company obtained an order from the U.S. Bankruptcy Court for the District of Delaware, which confirmed its Chapter 11 plan of reorganization.

The court order gave a group of senior creditors control of the Chicago media company, which owns the Chicago Tribune, Los Angeles Times, KTLA-TV Channel 5 and other media properties. The new owners include JPMorgan Chase & Co. and

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hedge funds Oaktree Capital Management and Angelo Gordon & Co.

New York-based investment fund Aurelius Capital Management LP and other lower-ranking creditors previously filed an appeal to overturn the bankruptcy court's July order. As part of that effort Aurelius tried unsuccessfully to block Tribune from leaving bankruptcy while the appeal went forward.

That appeal is still on file although both sides said previously in court that once Tribune leaves bankruptcy, the appeal is unlikely to disrupt how the ownership will be divided or change the company's future.

Often, bankruptcy appeals are dropped after a company exits Chapter 11 protection because it can be difficult to reverse many of the actions that take place when a bankruptcy case ends.

The junior creditors said the settlement of claims, which is part of the restructuring plan is unreasonable, pointing out that holders of some $2 billion in Tribune debt stand to recover very little under the settlement, and are being barred from suing the banks that financed the 2007 leveraged buyout of Tribune.

In other developments, Tribune, which owns eight daily newspapers, has approached bankers about selling its papers.

The company's owners are seeking an adviser for a possible sale after it exits bankruptcy by December 31, people with knowledge of the matter said.

Selling some of Tribune's papers would raise cash for the company, which also owns 23 television stations and stakes in more than 50 websites. The company is valued at about $7

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billion, including publishing, media and other assets, with $2.06 billion in cash.

Rupert Murdoch, chairman and chief executive officer of News Corp., reportedly expressed interest to take a close look at Tribune's newspaper assets.

News Corp. is splitting into two companies, with one focused on newspapers and publishing. This new company may give Mr. Murdoch more latitude to pursue newspaper acquisitions.

In November, Tribune also received a go-signal from Delaware Bankruptcy Judge Kevin Carey to get loans from Bank of America N.A. and other lenders to finance their exit from bankruptcy protection. The loan consists of a senior secured asset-based revolving credit facility of up to $300 million, and a senior secured term loan facility of up to $1.1 billion. The $300 million loan will be provided by BofA and a group of lenders to finance Tribune's operations after the effectiveness of its restructuring plan. The $1.1 billion loan will be provided by a syndicate of banks and financial institutions arranged by a group led by J.P. Morgan, and will be used to fund cash distributions to creditors.

In connection with the financing, Judge Carey also authorized the company to pay certain fees and expenses and furnish indemnities as allowed administrative expenses.

On July 23, 2012, the Bankruptcy Court confirmed Tribune's restructuring plan, which contemplates that the Company may, in its discretion, enter into a post-effective date facility. The Plan was jointly proposed by the Company, the Official Committee of Unsecured Creditors, Oaktree Capital Management L.P., Angelo, Gordon & Co. L.P., and JPMorgan Chase Bank N.A.

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Tribune filed for bankruptcy four years ago.

(B) W.R. Grace

W.R. Grace & Co. Chief Executive Officer Fred Festa remains positive on the outcome of the appeals from the Company's Chapter 11 Plan of Reorganization now pending before the U.S. Court of Appeals for the Third Circuit.

During a conference call on Grace's third quarter financial results in early November, Mr. Festa indicated there are currently five appeals pending after three appeals were withdrawn as a result of the settlement entered into by Grace and claimants relating to asbestos claims in Libby, Montana. Mr. Festa added that they are in the middle of the briefing schedule, which will be completed by year-end. The Third Circuit is expected to hear oral arguments in the first quarter of 2013.

Grace projects that it could complete its reorganization by the end of 2013 if the proceedings on the appeals conclude as scheduled.

Mr. Festa emphasized that Grace's Chapter 11 proceeding was not and will not be a hindrance for its strategic plans and business operations. He added that the fourth quarter of 2013 is the most realistic timing for mergers. He, however, pointed out that the only real impact the Chapter 11 has is on the Company's ability to return cash to shareholders.

Grace has been in Chapter 11 protection for more than 11 years since it delivered its petition to the U.S. Bankruptcy Court for the District of Delaware on April 2, 2001.

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A district court approved its reorganization plan earlier this year, clearing a major hurdle for it to emerge from bankruptcy protection. The plan was reaffirmed in June but eight parties filed notices of appeal before a July 11 deadline.

(C) Quigley

Quigley Co.’s parent, Pfizer Inc., is asking the U.S. Supreme Court to review a federal appeals court’s ruling that allows certain asbestos-related lawsuits against the company because Quigley was the main target of the suits and it went through bankruptcy reorganization.

The ruling by the U.S. Circuit Court of Appeals for the Second Circuit “frustrates the congressional purposes” of the law written to deal with asbestos-related bankruptcies, Pfizer said in its petition for a writ of certiorari.

The Law Offices of Peter G. Angelos has been pushing for the courts to allow the suits. The Supreme Court requested November 6 that the Angelos firm file a response by December 6.

In April, the Second Circuit said Pfizer can face suits over asbestos-containing products made by its unit Quigley Co. The products included Insulag, an asbestos-containing insulation, which Quigley made from the 1930s until the 1970s.

Quigley, which Pfizer bought in 1968, at one time faced suits by more than 160,000 plaintiffs, and it filed for bankruptcy in 2004.

Pfizer made no asbestos-containing products of its own. The Angelos firm argued, however, that Pfizer was liable because it put its logo on some advertisements for Quigley products,

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identifying both companies as manufacturers of the asbestos-containing products.

In 2008, the U.S. Bankruptcy Court for the Southern District of New York enjoined the claims. It said Pfizer’s alleged liability arose from its ownership of Quigley, and the claims must be channeled toward the trust created out of the bankruptcy.

The U.S. District Court for the Southern District of New York reversed the Bankruptcy Court, and the Second Circuit affirmed.

In its petition for certiorari, Pfizer says the question of whether the suits should be enjoined is crucial to the resolution of asbestos-related bankruptcies.

The company says the issues presented concern the scope of asbestos-channeling injunctions under 11 U.S.C. Section 524(g), which directly impacts the funding, disposition and finality of nearly every asbestos-related Chapter 11 case nationwide.

Pfizer says that if the Second Circuit’s ruling stands, corporate parents will be discouraged from contributing the funds needed to make Section 524(g) trusts effective for compensating asbestos victims.

The company says Congress enacted Section 524(g) to encourage companies in Pfizer’s position to contribute assets to asbestos bankruptcy trusts “in exchange for a broad channeling injunction.”

Pfizer says the high court should grant the petition and reverse the Second Circuit’s judgment.

Last month, Quigley asked Bankruptcy Judge Stuart M. Bernstein to extend the voting deadline on its Chapter 11 plan by _____________________________________________________________________________


two weeks, saying Hurricane Sandy's aftermath has disadvantaged creditors in the Northeast, who have requested more time.

Quigley asked Judge Bernstein to extend the deadline by which holders of claims against it must vote to accept or reject its fifth amended plan of reorganization from November 16 to November 30.

Quigley, in bankruptcy since 2004, filed the sixth version of its plan June 29, and obtained Judge Bernstein's permission to have creditors vote on the draft plan on August 15.

Under the draft plan, Pfizer would contribute assets to a trust to cover claims that Quigley’s past products caused asbestos-related injuries.

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The Troubled Company Reporter provides detailed reporting about every chapter 11 filing nationwide. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation.

New Publicly Traded Securities

Psyche Maricon Castillon reports of four companies which 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 November 2012. These are: NewPage, Broadview Networks, FirstFed, and Hawker Beechcraft.

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(A) NewPage Corp.

NewPage filed with the U.S. Bankruptcy Court Second Amended Joint Chapter 11 Plan and Disclosure Statement, which provide for the following terms:

-- the First Lien Noteholders will receive, among other consideration, 100 percent of the equity in the Reorganized Debtors

-- the Second Lien Noteholders and certain other unsecured creditors (excluding certain trade creditors) will receive their pro rata share of (i) $30 million in cash and (ii) the first $50 million in proceeds that are realized by a Litigation Trust

After the first $50 million received by the Litigation Trust, any additional proceeds received by the Litigation Trust will be shared by the First Lien Noteholders, the Second Lien Noteholders and certain unsecured creditors.

The First Lien Noteholders will be entitled to receive distributions on account of the foregoing distributions through the enforcement of certain subordination rights and/or their deficiency claim, as provided for in the Plan.

Certain trade creditors who agree to provide credit terms as specified in the Plan will receive a 15% recovery on their Claims over a two year period.

On the Effective Date of the Plan, the Debtors will fund the Litigation Trust with: (i) $40 million in cash (less $500,000 retained by the Debtors for the SEO Professional Fees) that the Debtors had previously allocated to resolving issues related to PM35 located in the Debtors' Stevens Point, Wisconsin mill, and (ii) the Committee Litigation Claims._____________________________________________________________________________


In addition, the NewPage Debtors will provide $5 million for trust administration expenses, which will be repaid to the Debtors from certain proceeds of the Litigation Trust (other than the initial $40 million cash deposit).

(B) Broadview Networks Holdings

Broadview Networks Holdings' Plan became effective, and the Company emerged from Chapter 11 protection.

Holders of $300 million in 11.375% first-lien senior notes took home $150 million in new five-year 10.5 percent secured notes and 97.5% of the new common stock, while preferred shareholders, the only other class voting on the plan, were given warrants. The 2.5% of the stock not going to senior noteholders is earmarked for management.

As a result of the restructuring, Broadview Networks Holdings reduced its outstanding senior notes by 50%, reduced its annual interest expense by approximately $18 million and has access to free cash flow that will partially be used for general working capital and growth opportunities. Now that the Plan has been consummated and all regulatory approvals have been obtained, the Company has a new debt structure including $150 million of senior secured notes with a five-year maturity and a $25 million revolving credit facility.

(C) FirstFed Financial

The U.S. Bankruptcy Court confirmed the Second Amended Chapter 11 Plan of Reorganization filed by FirstFed Financial and Holdco Advisors. _____________________________________________________________________________


Holders of $157.8 million in debentures can recover 16.7% to 24% through distribution of new stock.

The Reorganized Debtor will continue to operate the Debtor's business as a going concern in the investment and financial services sector, and will pursue litigation, including litigation with the Federal Deposit Insurance Corporation, and make Distributions under the Plan.

FirstFed Financial, which was a holding company for First Federal Bank of California, filed for Chapter 11 protection on January 6, 2010, listing $7.5 billion in pre-petition assets.

(D) Hawker Beechcraft

Hawker Beechcraft Acquisition Company filed with the U.S. Bankruptcy Court an Amended Chapter 11 Plan and related Disclosure Statement.

The Plan contemplates a debt-for-equity exchange under which Holders of Allowed Senior Credit Facility Claims will receive 81.1% of the New Common Stock of Reorganized HBI. Holders of Allowed Senior Notes Claims, Allowed Subordinated Notes Claims, Allowed General Unsecured Claims and Allowed PBGC Unsecured Claims will receive 18.9% of the New Common Stock of Reorganized HBI.

The Plan also contemplates entry into exit credit facilities.

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That ends the Beard Group Corporate Restructuring Review for November 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 January 16th. Thank you for listening.

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beard group corporate restructuring reviewfor november 2012

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