corporate restructuring review for april 2011

8/6/2019 Corporate Restructuring Review for April 2011

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Beard Group Corporate Restructuring ReviewFor April 2011

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/

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Welcome to the Beard Group Corporate RestructuringReview for April 2011, brought to you by the editors of the

Troubled Company Reporter and Troubled Company Prospector.

In this month's Corporate Restructuring Review, we'll discussfive topics:

first, last month's largest chapter 11 filings;

second, large chapter 11 filings TCR editors anticipate in

the near-term;

third, a quick review of the major pending disputes inchapter 11 cases that we monitor day-by-day;


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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 chapter 11debtors.

April 2011 Mega Cases

Now, let's review the largest chapter 11 cases in April 2011.

Danilo Muoz reports that the number of Chapter 11 filingsinvolving companies with assets in excess of $100 million hasrisen slightly in April. There were eight such filings last month.

For the first four months of 2011, a total of 25 companieswith assets of at least $100 million filed for Chapter 11bankruptcy, or an average of six companies per month. Therewere six companies with assets of at least $100 million that filed

for Chapter 11 bankruptcy in March 2011, six in February 2011,and five in January 2011.

In comparison, during the first four months of 2010, therewere a total of 41 mega cases: 7 mega cases in April that year, 12in March, 7 in February and 15 in January. That's an average ofabout 10 mega cases per month. The decline in the number ofmega cases for the first four months of this year compared to lastyear's was about 45%. For fiscal year 2010, there were a total of105 mega cases, or an average of about 9 per month.

There were no billion-dollar bankruptcies in April. Year-to-date, two billion-dollar companies have tumbled into the

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Beard Group Corporate Restructuring Review for April 2011 -- page 2


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bankruptcy courts: Borders Group and MSR Resort Golf Course,both of which filed in February.

During the same four-month period in 2010, there was no

Chapter 11 filing involving assets in excess of $1 billion.

The largest Chapter 11 filing last month was by IndianapolisDowns LLC, which estimated assets of $500 million to $1 billion inits petition. Indianapolis Downs filed for Chapter 11 protection onApril 7 with the Bankruptcy Court for the District of Delaware.

Indianapolis Downs operates a "racino," which is a combined

race track and casino, at a state-of-the-art 283-acre site inShelbyville, Indiana. It also operates two satellite wageringfacilities in Evansville and Clarksville, Indiana.

Gregory F. Rayburn, chief restructuring officer of IndianapolisDowns, relates in a court filing, "Despite the success of 2010, theDebtors faced certain operational issues inherent in the earlystages of a gaming facility and financial issues, primarily their

ability to service the long term debt incurred because of an initial$250 million state-mandated license fee and a high statutory taxrate."

The second largest filing was by Sbarro Inc., which listed$471 million in total assets and $486 million in total liabilities as ofthe Petition Date. Sbarro filed for Chapter 11 on April 4 with theBankruptcy Court for the Southern District of New York inManhattan.

Melville, New York-based Sbarro is a global Italian quickservice restaurant concept with roughly 5,170 employees, 1,045restaurants throughout 42 countries, and annual revenues inexcess of $300 million at the time of its filing.

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Sbarro said it has reached an agreement with all of itssecond-lien secured lenders and approximately 70% of its seniornoteholders on the terms of a reorganization plan that willeliminate more than half of the Company's total indebtedness.

Judge Shelley C. Chapman recently gave final approval toSbarro's $35 million debtor-in-possession financing package asan attorney revealed that a foreign strategic buyer was courtingthe Company.

Meanwhile, Majestic Capital's bankruptcy filing ranked thethird largest last month. Majestic Capital reported $436 million in

total assets and $421 million in total liabilities.

Hamilton, Bermuda-based Majestic Capital, through itssubsidiaries, is a specialty provider of workers' compensationinsurance products and services. According to its annual report,the Company had more than 1,032 policyholders with averageannual workers' compensation primary insurance policy premiumof $87,000, as of Dec. 31, 2010.

On April 27, Majestic Capital announced that it received anotification from the California Department of Insurance that theDOI Insurance Commissioner had placed its principal subsidiary,Majestic Insurance Company, into conservation and rehabilitationproceedings. The Commissioner simultaneously filed a motionseeking approval for a proposed rehabilitation plan whereMajestic Insurance's insurance liabilities and certain assets will betransferred to AmTrust North America, Inc.

The fourth largest Chapter 11 filing was by SatelitesMexicanos, S.A. de C.V. and affiliates Alterna'TV InternationalCorporation and Alterna'TV Corporation, which filed on April 6,with the Bankruptcy Court for the District of Delaware.

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Satmex is a Mexico-based provider of fixed satellite servicesin the Americas, with coverage to more than 90% of thepopulation to the Americas, including more than 45 nations andterritories. Satmex also provides Latin American television

programming in the United States. In its schedules, Satmexdisclosed $393 million in total assets and $457 million in totaldebts on a stand-alone basis.

This is Satmex's second trip to Chapter 11 bankruptcy.Satmex first filed in August 2006 in New York bankruptcy courtand exited four months later with a plan to repay creditors owedabout $743 million with new debt and equity.

In the 2011 case, Satmex filed simultaneous with itsbankruptcy petition a restructuring plan supported by noteholders.Satmex announced late March that it had reached an agreementwith the holders of more than two-thirds of the outstandingprincipal amount of its first priority senior secured notes due 2011and second priority senior secured notes due 2013 to support aprepackaged plan. Delaware Bankruptcy Judge Christopher S.

Sontchi, who handles the case, set a combined hearing May 11 toconsider approval of the disclosure statement and confirmation ofSatmex's Chapter 11 plan.

Other large Chapter 11 filings in April were filed byWaterscape Resort LLC, which sought bankruptcy courtprotection on April 5, with the U.S. Bankruptcy Court for theSouthern District of New York, after defaulting on loan payments.Waterscape Resort owns the 45-story Cassa Hotel and

Residences in Midtown Manhattan. The Company estimatedmore than $100 million each in assets and debt as of thebankruptcy filing.

Prior to the bankruptcy filing, Waterscape Resort executed acontract to sell its hotel assets for $126 million (plus a payment of_____________________________________________________________________________



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$2 million relating to certain mortgage tax savings that the buyerwould realize on the transaction). Waterscape filed the bankruptcycase to address both its obligations to secured lenders and itsnumerous mechanics liens disputes.

Another large case was by Bowe Systec, Inc., which alongwith affiliates, filed Chapter 11 petitions on April 18, with theBankruptcy Court for the District of Delaware, estimating debt of$100 million to $500 million.

The Company, based in Wheeling, Illinois, claims to be oneof two leaders nationally in high volume production mail solutions,

offering a combination of hardware, services and software to highvolume mailers worldwide including financial and insurance firms,government agencies, services bureaus, utilities, and direct-mailfirms and others.

Bowe Bell + Howell sought Chapter 11 bankruptcy protectionin the U.S. as part of a deal to itself to creditor Versa CapitalManagement Inc. to pay off debt. Bowe Bell + Howell said it has

entered into an asset purchase agreement with Versa underwhich Versa and its co-investment partner Access ValueInvestors, Inc., would acquire substantially all of the Company'sassets. Versa holds the majority of the Company's outstandingsecured debt, which will be resolved through the sale.

Peregrine I, LLC, another large case, filed for Chapter 11bankruptcy protection with the Bankruptcy Court for the District ofDelaware on April 25, estimating assets and debts in excess of

$100 million. Headquartered in the Cayman Islands, Peregrine Iis an offshore drilling company backed by a unit of GeneralElectric Co.

Rounding the list of April mega cases is Maronda HomesInc., which, along with affiliates, filed for Chapter 11 bankruptcy_____________________________________________________________________________



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with the Bankruptcy Court for the Western District ofPennsylvania. Maronda Homes, citing its inability to renegotiatecredit terms, estimated assets of $100 million to $500 million anddebts of $50 million to $100 million. Maronda, based in Clinton,

Pennsylvania, near Pittsburgh, builds homes in Florida,Pennsylvania, Georgia and Kentucky.

Mr. Muoz also reports that two of last month's mega caseswere prepackaged or pre-negotiated in nature. Year-to-date, 8 ofthe 25 mega cases had a prepackaged Chapter 11 plan as of thePetition Date -- or about 33% of the mega cases. For fiscal year2010, a total of 35 prepacks or pre-arranged cases were filed --

about one in every three filings in 2010.

Of the April mega cases, four went to Delaware, three wentto the Southern District of New York and the last went to theWestern District of Pennsylvania in Pittsburgh. In March, fourmega cases went to Delaware, one went to New Jersey and thelast filed in Puerto Rico. In February, three went to the SouthernDistrict of New York, one went to Delaware, one went to the

Southern District of Texas and one went to the Middle District ofGeorgia. Of the January mega-cases, four went to Delaware andthe remaining mega case went to the Northern District of Texas.For the first four months of 2011, 13 mega-cases went toDelaware and 7 went to the Southern District of New York.

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 of

its filing.

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._____________________________________________________________________________



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Carlo Fernandez compiled a list of three large companieshe's convinced are nearing Chapter 11 bankruptcy: BakersFootwear, Jackson Hewitt and Dynegy.

(A) Bakers Footwear

St. Louis, Missouri-based Bakers Footwear Group, Inc., anational, mall-based, specialty retailer for women's footwear andaccessories, said that it had "positive sales trends" beginning inJune 2008 through April 2011. However, its ability to maintain its

liquidity position is highly dependent on sustaining these salestrends. The Company noted that net losses in recent years havenegatively impacted its liquidity and financial position. Accordingto the Company, absent the positive sales trends, it would have toobtain additional sources of liquidity, or take additional cost cuttingmeasures.

"If we cannot obtain needed financing, our operations may

be materially negatively impacted and we may be forced intobankruptcy or to cease operations and you could lose yourinvestment in the Company," Bakers Footwear said in its annualreport filed with the Securities and Exchange Commission.

Ernst & Young LLP, the auditor, has expressed substantialdoubt about Bakers Footwear's ability to continue as a goingconcern. The independent auditors noted that the Company hasincurred substantial losses from operations in recent years and

has a significant working capital deficiency.

The Company's balance sheet at Jan. 29, 2011 showed$48.01 million in total assets, and $53.99 million in total liabilities.

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(B) Jackson Hewitt

Jackson Hewitt Tax Service Inc. has amended its creditagreement, giving it an extra three weeks, until May 20, to make aprincipal payment and strike a restructuring deal with its lender.The Company said it negotiated an amendment to its creditagreement with Wells Fargo to have additional time for thecompany and the lenders to agree upon a mutually satisfactoryrestructuring.

The Company had previously revealed that it was attemptingto negotiate a restructuring of its balance sheet with its lenders,including a possible pre-packaged bankruptcy. Jackson Hewitt, atax return preparation services provider, had $316 million in totalassets and $378 million in total liabilities as of October 31, 2010.

(C) Dynegy

Dynegy Inc. has hired bankruptcy advisors for its potentialdebt restructuring. Dynegy is also in talks with lenders aboutamending its credit facility as it likely won't satisfy financialcovenants later this year.

The Company's credit facility consists of a $1.08 billionrevolving credit facility, an $850 million term letter of credit facilityand a $68 million senior secured term loan facility. The Company

is compliant with the EBITDA-to-Consolidated Interest Expensecovenant as of March 31, 2011.

However, Dynegy projects it will not be in compliance withthis covenant beginning in the third or fourth quarter. To continueas a going concern over the next 12 months, the Company said it_____________________________________________________________________________



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must, in the near-term (i) meet the financial covenants so that itcan access its Credit Facility, (ii) amend or replace its CreditFacility or obtain a waiver of certain of its requirements, or (iii)otherwise secure additional capital.

Dynegy's Credit Facility includes a revolving credit facilitywhich had undrawn capacity of $649 million at March 31, 2011,and expires by its terms on April 2, 2012.

"We are currently discussing with lenders the terms uponwhich an amendment to the Credit Facility or a new credit facilitycould be implemented. We expect the capacity of any amended

or new credit facility to be less than the current capacity of $1billion and to be at a higher cost," the Company said.

In April, Dynegy announced that the law firm of White &Case LLP and the financial advisory firm of Lazard Freres & Co.LLC have been retained to advise the company and the Financeand Restructuring Committee of Dynegy's Board of Directors ondebt restructuring activities. The purpose of the committee is to

undertake a comprehensive review of Dynegy's variousrestructuring alternatives, including, without limitation, ifappropriate, reviewing and evaluating (i) possible changes to thecapital structure of Dynegy, including the issuance, repurchase orprepayment of indebtedness or equity securities and (ii) possiblesales of Dynegy's assets. Investment bank Houlihan Lokey isadvising Dynegy creditors.

Through its subsidiaries, Houston, Texas-based Dynegy Inc.

produces and sells electric energy, capacity and ancillary servicesin key U.S. markets. Dynegy had $9.8 billion in total assets and$7.18 billion in total liabilities as of March 31, 2011. It incurred anet loss of $77 million on $505 million of revenue for three monthsended March 31, 2011, compared with net income of $145 millionon $858 million of revenue in the same period in 2010._____________________________________________________________________________



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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 experiencingfinancial distress or restructuring their balance sheets in a judicialproceeding. Stay tuned to learn more about obtaining a trialsubscription to the TCR at no cost or obligation.

Major Pending Disputes In Chapter 11 Cases

Next we'll quickly review major pending disputes in threelarge chapter 11 cases that Troubled Company Reporter editorsmonitor day-by-day.

(A) Lehman Brothers

Ivy Magdadaro identified two major disputes in the LehmanBrothers bankruptcy. The disputes involve litigation between thetrustee for Lehman's brokerage unit and Barclays Plc, and thecompanys own suit against JPMorgan Chase in an effort torecover billions of dollars for Lehman creditors.

(1) Lehman-Barclays Dispute

According to Ms. Magdadaro, Barclays scored anothervictory against Lehman, as Bankruptcy Judge James Peck for theSouthern District of New York said in a May 9 hearing that hewould not oppose an agreement by the trustee of Lehman'sbroker unit, James Giddens, to pay Barclays $1.1 billion related tosecurities clearing._____________________________________________________________________________



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The trading assets from which the $1.1 billion would betaken are held in the so-called "clearance boxes" to clear trades.Barclays previously argued that those assets should have been

transferred to it in September 2008, when Barclays boughtLehman's North American broker unit business.

The Lehman liquidating trustee originally said it only owed$869 million on those trading assets, while Barclays said thevalue of some of the securities have gone up and that it shouldreceive more than $1 billion. The Lehman trustee subsequentlyconceded to the $1 billion payment amount.

However, another $2 billion in "margin assets" are in thedispute. The margin assets refer to deposits held to back trades.On April 28, the Lehman trustee demanded $2.1 billion of thosemargin assets from Barclays, plus 9% interest.

Judge Peck declined to rule on the continuing "marginassets" dispute at the May 9 hearing. He said the issue will need

"some thought" and added that another hearing date will be setfor it.

Judge Peck, however, said the demand for margin isconsistent with a ruling he issued in February 2011, compellingBarclays to pay or return any cash it had taken in the broker unitsale deal. The judge made the comment after Barclays lawyerDavid Boies said that negotiations over the margin assets disputehave reached "the end of the road."

Mr. Boies said Barclays understood the February 2011 rulingto exclude non-cash margin. Barclays said of a total of $4 billionin margin, about $1.5 billion involves securities maturing in morethan 3 months and about $640 million of non-cash margin hadmaturities longer than 15 years._____________________________________________________________________________



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Judge Peck questioned why he was not informed at trial thatsome of the margin were invested in long-term securities. TheBarclays lawyer explained that the argument at the trial was

whether Barclays should pay cash and cash equivalents.

The February 2011 ruling entered by Judge Peck followed athree-way fight, where (1) Barclays said it was owed $3 billion onits purchase of the Lehman broker unit; (2) the Lehman trusteedemanded $7 billion from Barclays; and (3) the New York-basedLehman parent company sought an alleged $11 billion "windfall"Barclays made on the broker unit purchase. On February 22,

Judge Peck held that the broker unit sale transaction was faireven as the sale process was less than perfect. Thus, theLehman parent and the Lehman trustee lost their bid to recoverthe alleged $11 billion windfall.

The judge also held that Barclays should return any cash itmay have received from the broker unit sale. He, however, left itto the parties to work out the exact dollar amounts that should

change hands. If the parties cannot agree on how much is owedby whom, the Court may have to re-open the trial to compute theexact numbers. Until the Court puts dollar amounts into theFebruary 22 decision, neither side can appeal.

On April 29, Lehman wrote the bankruptcy judge a letterseeking $500 million from Barclays for failing to pay bonuses theUK bank agreed to when it bought the Lehman brokerage unit.The day before that Barclays asked the Court to clarify which

assets it is entitled to in relation to its purchase of the Lehmanunit.

Barclays argues that it had paid all promised bonuses.

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Lehman and two creditor groups have proposed competingChapter 11 plans. Hearings on the three plans before JudgePeck have been scheduled for June 28.

(2) Lehman-JP Morgan Dispute

In April 2011, Lehman and the official committee ofunsecured creditors appointed in its case sought dismissal of theamended counterclaims filed by JPMorgan in billion-dollarlawsuits among the parties.

Lehman sued JPMorgan in May 2010 accusing it of takingadvantage of insider information to extract $8.6 billion of assetsfrom the estate in 2008. JPMorgan was Lehman's clearing bankat the time it filed for bankruptcy protection. JPMorgan filed acountersuit in December 2010 and amended it in February 2011.JPMorgan said Lehman left it with billions in unpaid loans securedby "bad assets" left out in the Lehman-Barclays sale deal.

Lehman asserts that JPMorgan's counterclaims are"contingent" and that, if JPMorgan has a legitimate dispute, it iswith Barclays and not with it. Lehman maintains that it cannot beheld liable for allegedly representing that Barclays would lateracquire all of the Lehman broker business or concealing thatBarclays that would not in fact purchase all of those assets.

Lehman also notes that JPMorgan supported the sale andexecuted two release settlements with Barclays in relation to

those transactions, but never voiced accusations of Lehman'swrongdoing. Lehman asserts that it is now untimely for JPMorganto come up with a story that Lehman conspired with Barclays toharm JPMorgan with respect to the subject securities.

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Meanwhile, James Giddens, the liquidating trustee for theLehman broker unit, said he has negotiated a settlement withJPMorgan where the clearing bank has agreed to return morethan $800 million of cash and securities to resolve the trustee's

claims. The assets include $755 million of cash and about $106million of securities. The settlement is said to the biggestaffirmative settlement for Lehman customers. Despite theJPMorgan settlement though, the Lehman trustee still needs toresolve $42.7 billion in claims.

(B) Tribune

According to Ms. Magdadaro, the plan approval process inthe bankruptcy case of Tribune Co. is still ongoing beforeBankruptcy Judge Kevin Carey of the District of Delaware.Resolution of the disputed $13 billion leveraged buy-out of thecompany in 2007 is also pending.

Two competing plans are before the Court, one backed by

Tribune, the Creditors Committee, Oaktree Capital, AngeloGordon and JPMorgan; and the other by Aurelius CapitalManagement, Deutsche Bank, Law Debenture Trust andWilmington Trust. The Tribune-backed plan contemplates lawsuitreleases for some of the Buy-Out lender parties but not theCompany's directors and officers. The Aurelius-backed plan callsfor the prosecution of all Buy-Out parties.

Entities and personalities connected to the Buy-Out are

lenders JPMorgan Chase and Merrill Lynch Capital Corporation,Mr. Zell, and other Tribune directors and officers.

Confirmation hearings commenced in March and the initialphase was completed in April. Post-trial briefs are due in May.Closing arguments are set for June 14._____________________________________________________________________________



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Judge Carey didn't chose between both plans in March,saying the plans didn't satisfy him. Tribune CEO Sam Zell hascalled for the rejection of both plans because neither plan

adequately protects him from potential lawsuits.

Another round of amendments was filed by the PlanProponents to their plan versions in April. Both Tribune andAurelius changed the form of payment being offered to the otherside under the plans, but neither gave up more value to the other.The Proponents don't expect the plan changes to alter the resultsof the already solicited votes.

Judge Carey is expected to enter a ruling May 17 onTribune's request to send out ballots again and Aurelius' decisionnot to re-solicit votes in light of the perceived notion that seniorlenders will not change their minds after years of fighting withbondholders.

Tribune is the second largest newspaper publisher in the

U.S. It filed for bankruptcy in Dec. 2008.

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The Troubled Company Reporter provides detailed reportingabout every chapter 11 filing nationwide. Stay tuned to learn moreabout obtaining a trial subscription to the TCR at no cost orobligation.

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Delayed Exits From Chapter 11

Julie Anne Lopez reports about three Chapter 11 debtorswhose emergence from Chapter 11 has been delayed: Tribune

Co., WR Grace & Co., Lehman Brothers, and Washington Mutual.

(A) Tribune

In Tribune, the Court on April 14, 2011, completed the initialphase of the confirmation hearing in connection with thecompeting Chapter 11 Plans filed by (i) the Debtors, the CreditorsCommittee, Oaktree Capital, Angelo Gordon and JPMorgan; and

(ii) Aurelius Capital Management, Deutsche Bank, Law DebentureTrust and Wilmington Trust.

At the April 14 hearing, the Court established a tentativebriefing and closing arguments schedule. At a hearing held onApril 21, the Court further set certain deadlines and requirementsfor the confirmation hearing briefing and directed that counselconfer and file a form of order embodying the briefing schedule

discussed on the record.

At the conclusion of the April 14 hearing, the PlanProponents, at the direction of the Court, conferred and greedupon (i) certain procedures related to the admission of documentsand deposition testimony into evidence for consideration inconnection with the confirmation hearing; and (ii) the resolution ofobjections by the Plan Proponents to the admission of certaindocuments and deposition testimony.

The most recent hearing relating to confirmation of theCompeting Plans was on April 23 to discuss re-solicitation issues.

Tribune and Aurelius also submitted to Judge Carey theiramended Chapter 11 Plans of Reorganization._____________________________________________________________________________



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Tribune filed its Second Amended Joint Plan ofReorganization on April 26, while Aurelius submitted its ThirdAmended Joint Plan of Reorganization on April 25.

Judge Carey established this schedule to govern the briefingand closing arguments phase of the hearing:

May 11 -- Competing Plan Proponents will file openingpost-trial briefs.

May 20 -- The Plan Proponents will submit reply briefs.

May 27 -- The Plan Proponents will file post-trial briefs.

June 14 -- The Court will hear closing arguments.

Tribune's Chapter 11 reorganization began in December2008.

(B) W.R. Grace

W.R. Grace, which marked its 10th year in bankruptcy onApril 2, 2011, has not yet emerged from Chapter 11.

In its earnings report filed April 26 for the first quarter endedMarch 31, 2011, Grace disclosed that the United States DistrictCourt for the District of Delaware has scheduled a hearing on

June 28 for oral argument on appeals to the order confirming itsJoint Plan of Reorganization.

Several parties have taken an appeal from Judge JudithFitzgerald's confirmation order on January 31.

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The parties include the Official Committee of UnsecuredCreditors, a group of lenders under the prepetition bank creditfacilities, Garlock Sealing Technologies, the state of Montana, HerMajesty the Queen in Right of Canada, and BNSF Railway

Company.

The timing of Grace's emergence from Chapter 11 willdepend on affirmation of the Plan by the District Court and thesatisfaction or waiver of the other conditions set forth in the Plan,including the resolution of any further appeals. Grace said it ispreparing to consummate the Plan as quickly as practicable.

(C) Lehman Brothers

In Lehman Brothers, three Chapter 11 plans are nowcompeting to reorganize the company. The plans cover thespectrum on the issue known as substantive consolidation. Onegroup of creditors led by Paulson & Co. presented a plan thatcalls for substantive consolidation. The newest plan, filed late

April by a group including affiliates of Deutsche Bank andGoldman Sachs Group Inc., is not premised on substantiveconsolidation. Lehmans own plan falls somewhere in the middle,in an attempt at compromise with creditors seeking substantiveconsolidation.

In substantive consolidation, the assets derived from allLehman companies are thrown into one pot and creditors of allcompanies are treated alike. Guarantees arent honored and

inter-company debt is disregarded. As a result, some creditorgroups may come out better and some worse.

There will be a hearing in bankruptcy court on June 28 toconsider approval of disclosure statements explaining the plans.

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Lehman is aiming for a November hearing to approve one of theplans.

Lehman has been in bankruptcy since Sept. 15, 2008.

(D) Washington Mutual

Creditors are once again voting on WaMus modifiedreorganization plan.

Washington Mutual won court approval in March to send out

a revised plan to creditors for a vote. The revised plan containsinformation that spells out the financial effect of a potential findingthat some or all of the hedge funds profited based on confidentialChapter 11 data.

Voting ends May 13. The hearing for approval of the plan isset for June 6.

Washington Mutuals stay in bankruptcy began in September2008 when regulators seized its banking unit.

New Publicly Traded Securities

Psyche Maricon Castillon reports about five companies whoissued or will issue shares of new common stock uponemergence pursuant to the plans of reorganization they filed in

their Chapter 11 cases. These are SatMex, Aliante Holdings andStation Casinos, Orchard Brands, GSC Group, and WolverineTube.

(A) SatMex_____________________________________________________________________________



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Satelites Mexicanos, S.A. de C.V., filed voluntary petitionsfor a prepackaged plan of reorganization under Chapter 11 onApril 6.

Satmex has reached an agreement with the holders of morethan two-thirds of the outstanding principal amount of its FirstPriority Senior Secured Notes due 2011 and Second PrioritySenior Secured Notes due 2013 to support the PrepackagedPlan.

The Plan contemplates that the recapitalization will be

financed with the proceeds of an offering of up to US$325 millionin aggregate principal amount of new senior secured debtfinancing and the proceeds of a rights offering of equity securitiesin the indirect parent of reorganized Satmex to eligible holders ofSecond Priority Senior Secured Notes in an aggregate amount ofup to US$96.25 million. Eligible holders of Second Priority SeniorSecured Notes will also have the right to invest in their pro ratashare of a follow-on issuance of equity securities in an aggregate

amount of up to $40 million, which may be called by thereorganized company for purposes of funding the constructionand launch of Satmex 7.

(B) Aliante Holdings/Station Casinos

Station Casinos Inc.'s subsidiaries, Aliante Holdings LLC andtwo of its affiliates, will issue shares of new common stock

pursuant to the prepackaged Chapter 11 plan of reorganizationthe companies filed on April 12.

Under the Joint Plan, Reorganized Aliante Gaming willdistribute to each Holder of an Allowed Class AGL.1 Claim -- orthe Holders designee -- their Pro Rata share of [a] 100% of the_____________________________________________________________________________



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New Aliante Equity and [b] 100% of the New Secured AlianteDebt. Each Holder of an Allowed Class AGL.1 Claim may alsoelect to exchange its New Aliante Equity for New Secured AlianteDebt, or New Secured Aliante Debt for New Aliante Equity. After

solicitation but before the Aliante Effective Date, Aliante Gaming,in consultation with the Aliante Administrative Agent and theAliante Consenting Lenders, will determine the extent to which theexchanges are possible.

(C) Orchard Brands

Meanwhile, Orchard Brands emerged from bankruptcy onApril 25 after receiving confirmation of its plan the week before.The Company was in bankruptcy for approximately three months.The Company's plan provides for the reorganized company'sissuance of shares of new common stock. Through therestructuring process, the Company was able to eliminateapproximately $420 million of debt.

Under the plan, lenders with a first-priority of repayment areowed about $324 million and will convert their debt into 95% ofthe reorganized Orchard Brands' equity and about $243 million innew loans. Lenders with a secondary priority of repayment areowed about $289 million and will get the remaining 5% of theequity.

Unsecured creditors will only see collections by a litigationtrust funded with $1 million to cover initial expenses. Holders of

unsecured notes receive nothing.

Kirkland & Ellis LLP acted as Orchard Brands legal counsel,and Alvarez & Marsal and Moelis & Company acted as itsfinancial advisors.

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(D) GSC Group

Approval of a reorganization plan for GSC Group Inc. could

end up involving a little-known procedure called designation,where some votes are disregarded. Otherwise, there might be astalemate where no plan could be confirmed. Alternatively, GSCsassets might be sold to break the stalemate. GSC characterizeditself as a diversified alternative investment manager.

All of the secured lenders of GSC other than Black DiamondCapital Finance LLC filed a Chapter 11 plan in April to prevent a

sale of the business by the Chapter 11 trustee, James L. Garrity.

The plan calls for the reorganized company's issuance ofshares of new common stock. The Lenders will receive all thenew stock and $160 million in new 10% senior notes to mature in2026. Unsecured creditors would receive nothing.

The plan proponents include affiliates of Credit Agricole SA,

UBS AG, and General Electric Capital Corp.

Originally named Greenwich Street Capital Partners Inc.when it was a subsidiary of Travelers Group Inc., GSC becameindependent in 1998 and at one time had $28 billion of assetsunder management. Market reverses, termination of some funds,and withdrawal of customers investments reduced funds undermanagement at the time of bankruptcy to $8.4 billion.

Based in Florham Park, New Jersey, GSC listed assets of$119 million against debt totaling $313 million at the time of itsbankruptcy filing.

(E) Wolverine Tube_____________________________________________________________________________



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Wolverine Tube Inc., a producer of copper tubing formanufacturers of heating, ventilation and cooling equipment,obtained approval of the disclosure statement explaining its

prepackaged plan of reorganization. The disclosure statementapproval allows creditors to vote on the plan that was negotiatedbefore the Company's Chapter 11 filing in November.

The bankruptcy judge has set aside June 2 for theconfirmation hearing on the plan.

Before the Chapter 11 case began, the plan was supported

by holders of 71% of the $131 million in senior secured notes.Under the plan, secured notes will be converted into almost all thenew common equity plus a new secured note for $30 million.

Because the existing pension plan had to be terminated, thedelay in scheduling confirmation was caused by the need to workout a settlement with the Pension Benefit Guaranty Corp. onterms acceptable to the noteholders.

That agreement calls for PBGC to be paid $4 million oneyear after the plan becomes effective. In addition to 5% of thenew common stock, PBGC will receive another $16 million spreadout over the following 10 years. If there is a sale of the business,PBGC will be prepaid.

The petition listed assets of $115 million against debt totaling$237 million.

The plan pays general unsecured creditors in full of up to$6.7 million. Existing common and preferred shareholders willreceive nothing. Plainfield Asset Management LLC, a signatory tothe plan-support agreement, is both a secured noteholder and apreferred shareholder._____________________________________________________________________________



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In May 2009 Wolverine completed an exchange offer where$122 million of maturing 10.5% unsecured notes were exchangedfor the 15% senior secured notes that would have matured in

2012. The notes traded on April 11 for $40.19, according toTrace, the bond-price reporting system of the Financial IndustryRegulatory Authority.

The Huntsville, Alabama-based company said revenue for2010 was around $280 million.

* * *

That ends the Beard Group Corporate Restructuring Review forApril 2011, brought to you by the editors of the Troubled CompanyReporter and Troubled Company Prospector. If you'd like toreceive the Troubled Company Reporter for 30-days at no cost --and with no strings attached -- call Nancy Frasier or CharlieCovell 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, isbankrupt-dot-com-slash-free-trial.

Tune in to our next Restructuring Review on June 16th. Thankyou for listening.

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corporate restructuring review for april 2011

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