beard corp rest review 201112

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Beard Group Corporate Restructuring ReviewFor December 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/

____________________________________________________

Welcome to the Beard Group Corporate RestructuringReview for December 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 and otherstatistics;

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

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


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

fifth, information you're unlikely to find elsewhere about

new publicly traded securities being issued by chapter11 debtors.

December & Year 2011 Mega Cases

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

Danilo Muoz reports that the number of Chapter 11 caseswith assets in excess of $100 million declined by 22% to 83 in2011, compared to 106 in 2010.

For the month of December 2011, 5 companies filed forChapter 11 protection with assets in excess of $100 million,including one company that listed total assets in excess of $1billion.

The mega case filings in December snapped an increasingtrend of large cases for the second half of 2011. There were 8filings in November, 10 in October, 7 each in September andAugust and 4 in July.

The average number of mega cases in 2011 is about 7 permonth, compared to about 9 per month in 2010.

The largest Chapter 11 filing for December 2011 was bypublisher Lee Enterprises, which listed total assets of $1.15 billionas of the bankruptcy petition date.

For fiscal year 2011, 8 companies sought Chapter 11bankruptcy protection with assets in excess of $1 billion. Aside_____________________________________________________________________________

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


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from Lee Enterprises, the other cases are AMR Corp., DynegyHoldings LLC, General Maritime Corp., MF Global Holdings Inc.,NewPage Corporation, Borders Group and MSR Resort GolfCourse.

[Top 10 Bankruptcies for 2011]

Davenport, Iowa-based Lee Enterprises,which publishes the St.Louis Post Dispatchand the Arizona Daily

Star along with morethan 40 other dailynewspapers and about300 weeklies, filed Dec.

12, 2012, with the Bankruptcy Court for the District of Delaware[Lead Case No. 11-13918]. Judge Kevin Gross oversees thecase. Lee Enterprises disclosed total assets of $1.15 billion andtotal liabilities of $1.25 billion at Sept. 25, 2011.

Prior to commencing its chapter 11 cases, Lee Enterprisessolicited and obtained support from lenders and noteholders of anAmended Joint Prepackaged Plan of Reorganization, dated Dec.2, 2011. The Company will be seeking confirmation of the Plan ata hearing on Jan. 23, 2012. The Plan is designed to provide fullpayment to all creditors.

The second largest Chapter 11 filing was by Newport Beach,California-based William Lyon Homes and its subsidiaries, whichare primarily engaged in designing, constructing and selling singlefamily detached and attached homes in California, Arizona andNevada.

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Company PetitionDate

Court Assets

MF Global Oct. 31 S.D.N.Y. $41,046,594,000AMR Corp. Nov. 29 S.D.N.Y. $24,719,000,000Dynegy Holdings Nov. 7 S.D.N.Y. $13,765,000,000Newpage Corp. Sept. 7 Delaware $3,400,000,000MSR Resort Feb. 1 S.D.N.Y. $2,200,000,000General Maritime Nov. 17 S.D.N.Y. $1,718,598,000

Borders Group Feb. 16 S.D.N.Y. $1,280,000,000Lee Enterprises Dec. 12 Delaware $1,150,000,000Solyndra LLC Sept. 6 Delaware $854,050,000R.E. Loans LLC Sept. 13 N.D. Tex. $713,622,000R.E. Loans LLC Sept. 13 N.D. Tex. $713,622,000


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William Lyon Homes and its affiliates commenced aprepackaged Chapter 11 reorganization with the BankruptcyCourt for the District of Delaware [Lead Case No. 11-14019] onDecember 19, 2011, before Judge Christopher S. Sontchi. The

petition says assets are $593.5 million with debt totaling $606.6million as of September 30, 2011.

William Lyon had been pursuing an out-of-court restructuringsince January 2011. The reorganization plan, announced inNovember, will reduce debt on borrowed money from $510 millionto $328 million. The homebuilder intends to obtain approval ofthe bankruptcy plan at a hearing beginning Feb. 10, 2012. The

Chapter 11 plan already has been accepted by 97% in amountand 93% in number of senior unsecured notes, the company saidin a court filing.

Equipment rental company Ahern Rentals, Inc., commencedthe third largest Chapter 11 case on December 22, 2011, with theBankruptcy Court for the District of Nevada [Case No. 11-53860]before Judge Bruce T. Beesley. Ahern Rental estimated $500

million to $1 billion in assets and debts. The filing was promptedafter Ahern Rental failed to extend the maturity of its revolvingcredit facility, which had a maturity date of Aug. 21, 2011.

Delta Petroleum Corporation, an independent oil and gascompany engaged primarily in the exploration for, and theacquisition, development, production, and sale of, natural gas andcrude oil, filed for Chapter 11 protection on December 16, 2011,disclosing $375,498,248 in assets and $310,679,157 in liabilities.

Delta and seven of its subsidiaries filed in the District ofDelaware [Case Nos. 11-14006 to 11-14013] roughly six weeksbefore the Jan. 31, 2012 scheduled maturity of its $38.5 millionsecured credit facility with Macquarie Bank Limited and afterseveral months of unsuccessful attempts to sell the business._____________________________________________________________________________



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2011 Mega Cases by IndustryManufacturing

17%

Accomodation

Food Services

14%

Retail Trade

8%Information

10%Real Estate

Finance &

Insurance

11%

Transportation

Warehousing

4%

Arts &

Recreation

4%

Other

24%

Clare Oaks, operator of a namesake continuing careretirement community in Bartlett, Illinois, sought for Chapter 11protection with the Bankruptcy Court for the Northern District of

Illinois [Case No. 11-48903] on December 5, 2011. JudgePamela S. Hollis oversees the case. In its petition, Clare Oaksestimated $100 million to $500 million in assets and debts.

Of the bankruptcy mega cases in December 2011, two out offive were prepackaged Chapter 11 cases, reversing thedownward trend of prepackaged bankruptcies the past sixmonths. There was only one prepackaged bankruptcy filing the

previous five months despite the rising number of bankruptcymega cases in the second half of 2011.

For 2011, 13 of the 83 mega cases involved a prepackagedChapter 11 plan as of the Petition Date -- or about 16% of thelarge Chapter 11 filings. For fiscal year 2010, a total of 35prepacks/pre-arranged cases were filed out of the 106 bankruptcymega cases -- or about one in every three filings in 2010.

The bankruptcy mega cases for the month of Decemberwere dispersed throughout different industries, one each ininformation, mining, construction, rental & leasing and healthcare.

For 2011, themanufacturing industryhas the most Chapter11 mega cases with

14, followed by theaccommodation & foodservices industry with12, finance &insurance with 9,information with 8, and_____________________________________________________________________________



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2011 Mega Cases by State

Delaware

46%

New York

Southern

19%

Texas, Northern

5%

Other

30%

retail trade and real estate with 7 each. The rest were dispersedthroughout different industries.

Of the December megacases, three were filed inDelaware, and one each wasfiled in Nevada and theNorthern District of Illinois.For 2011, the DelawareBankruptcy Court continued tobe favored by the bankruptcy

mega cases with 38 filings, or46% of the mega cases, followed by the Southern District of NewYork with 16 filings, or 19% of the mega cases, and by theNorthern District of Texas with 4 filings, or 5% of the mega cases.The rest of the bankruptcy mega cases are spread evenlythroughout the various bankruptcy courts.

Lehman Brothers Holding Corp. remains the biggest

corporate bust in history. Lehman, which filed in 2008, had $639billion in total assets and $613 billion in total debts at that time ofits 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.

Carlo Fernandez identified six companies that may be closeto filing for bankruptcy. These are: Aquilex Holdings, CatalystPaper, Quiznos Corp., AGY Holding, Residential Capital andEastman Kodak.

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(A) Aquilex Holdings

Aquilex Holdings LLC on Dec. 15, did not make a $12.5

million scheduled interest payment under its $225 million 11.125%senior unsecured bonds.

At the end of December, the provider of maintenance andrepair solutions to the energy industry said it reached anagreement with 100% of the holders of the first lien and secondlien debt and 92% of the noteholders. Under the deal, debt wouldbe reduced by 71%, or $322 million.

The restructuring transaction, which is expected to becompleted late January to mid-February, contemplates (1) therestructuring of a $130 million first lien term loan, with financialcovenants reset, (2) second lien debt will be converted topreferred equity; and (3) holders of senior notes will exchangetheir notes for 33% of the equity or reorganized Aquilex. All tradecreditors will be paid in full.

In the event the exchange offer conditions are not met, theCompany will commence a voluntary filing under Chapter 11 ofthe Bankruptcy Code.

Affiliates of Centerbridge Partners, L.P., would become thecontrolling shareholder of Aquilex following the transaction.

Aquilex had assets of $400 million against liabilities of $500

million as of September 30, 2011. Net loss was $27.5 million on$320 million of revenue in the nine months ended September 30,2011.

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(B) Catalyst Paper

Catalyst Paper Corp. said Dec. 15 that it will defer interestpayment of US$21 million on US$110 million and US$280 million

of 11% senior secured notes due December 2016.

The Richmond, British Columbia-based manufacturer ofspecialty mechanical printing papers, newsprint and pulp hadassets of C$1.45 billion and debts of C$1.31 billion as ofSeptember 30, 2011.

The Company said it has deferred the payment while it

"reviews alternatives to address its capital structure."

Discussions are ongoing with certain holders of theCompany's 2016 Notes and holders of US$250 millionoutstanding 7.375% Senior Notes due 2014.

Catalyst said operations will continue as usual.

Catalyst first announced its plans to pursue a restructuring ofits balance sheet in June.

Perella Weinberg Partners serves as the Company'sfinancial advisor.

(C) Quiznos Corp.

Denver, Colorado-based Quiznos Corp. has reached anagreement with majority of its secured lenders and AvenueCapital for a financial restructuring through an exchange offer.Avenue Capital will become majority shareholder after the deal iscompleted. The Company will file for Chapter 11 bankruptcy if theexchange offer is not completed._____________________________________________________________________________



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Quiznos, operator of the quick-servicerestaurant chains and pioneer of thetoasted sandwich, said the deal provides

for a consensual financial restructuringplan that will reduce the Company'scurrent debt substantially and provide aninfusion of $150 million of new equitycapital to help position Quiznos forfuture growth.

The proposed transaction provides for Avenue Capital, an

investment firm that currently holds a significant amount of theCompany's first- and second-lien debt, to become the majorityowner of the Company through a $150 million equity infusion andthe conversion of debt to equity. Avenue's equity funding will beused to reinvest in the business and retire a portion of theCompany's first-lien debt.

Quiznos has entered into a restructuring support agreement

with parties representing 75.1% of its first-lien loans and 72.8% ofits second-lien loans.

Under terms of the proposed exchange offer, the holders ofroughly $650 million in first-lien loans will be repaid $75 million incash and will extend the maturity of the balance of their loans untilthe five year anniversary of the closing of the restructuring. Allfirst-lien lenders will be given the opportunity to exchange anaggregate of roughly $200 million of their first-lien debt for new

second-lien debt on a pro rata basis if they so desire.

As part of the exchange offer, certain lenders have alreadyagreed to exchange approximately $150 million of their existingfirst-lien loans for new second-lien loans. Holders of roughly $225

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million of second-lien loans will exchange their loans for a pro ratashare of 40% of the new equity of reorganized Quiznos.

The closing of the exchange offer is conditioned upon,

among other considerations, 100% of the aggregate principalamount of the first- and second-lien loans being validly tenderedand not withdrawn. In addition, in order to consummate the out-of-court exchange offer, the Company is seeking significantconcessions from certain other creditors, including certain formerexecutives of the Company, certain landlords, and certain formerarea developers.

As an alternative to the Exchange Offer, the Company willsimultaneously commence a solicitation of acceptances of a pre-packaged Plan of Reorganization to implement a restructuringpursuant to a voluntary case under Chapter 11 of the U.S.Bankruptcy Code. The Company would make a voluntaryChapter 11 filing only if it does not receive tenders from 100% ofthe first- and second-lien holders or does not satisfy otherconditions to closing, including sufficient concessions from certain

other creditors and certain landlords.

The terms of the pre-packaged Chapter 11 plan wouldprovide less favorable treatment for the lenders and certain othercreditors and landlords than under the proposed out-of-courtexchange offer.

Quiznos' financial advisor is Moelis & Company and its legaladvisor is Paul, Weiss, Rifkind, Wharton & Garrison L.L.P. Vinson

& Elkins L.L.P. is acting as the company's financing counsel.

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(D) AGY Holding

AGY Holding Corp. at the end of the year has seen its CEOleave the post, its operating performance further deteriorating,

and Standard & Poor's and Moody's providing further downgradesto junk territory.

In announcing the exit of Douglas J. Mattscheck as CEO,AGY Holding said Alvarez & Marsal is providing interimmanagers, an interim CEO and an interim executive vicepresident of operations.

The producer of fiberglass yarns and high-strength fiberglassreinforcements used in composites applications has reported anet loss of net loss of $21.10 million on $141.54 million of netsales for the nine months ended September 30, 2011, following anet loss of $14.57 million on $183.67 million of net sales for theyear ended December 31, 2010. Net Loss in 2009 was $93.51million.

The Company's balance sheet at September 30, 2011,showed $294.72 million in total assets and $288.21 million in totalliabilities.

S&P, which cut the Company's corporate rating to 'CCC-',said, "Our rating action reflects our view that AGY's credit qualityhas deteriorated due to ongoing weakness in its operatingperformance, a decline in liquidity, and the potential for insufficientliquidity to meet interest payments in 2012."

As of September 30, 2011, S&P points out, AGY reportedtotal liquidity of $17 million including $16.2 million of availabilityunder its unrated revolving credit facility. AGY reported that itexpected liquidity to decline to levels of around $12.4 million inNovember following the payment of nearly $10 million in_____________________________________________________________________________



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semiannual interest on its notes. It also expects effectiveavailability to be lower than the reported figures, because thecompany is also subject to a fixed-charge coverage ratiocovenant if availability under its revolving credit facility declines to

below $6.25 million.

(E) Residential Capital

ResCap's financial trouble and talks about the mortgage-lender's potential bankruptcy filing has been ongoing for years.The Wall Street Journal reported in November that Ally Financial

Inc., formerly owned by General Motors Co., has beenconsidering whether to put its ResCap business into bankruptcy inan effort to resolve its mortgage woes.

According to a recent report, sources told The New YorkPost that Ally Bank will not force its ResCap unit into bankruptcyas part of a restructuring of the troubled mortgage subsidiary, asthat would put the entire bank at risk. There has been a lot of

interaction between Ally and ResCap, making it hard to argue thatResCap is a completely separate entity and that Ally is notresponsible for claims, a source said.

The NY Post reported that ResCap owes Ally more than $1.2billion in April. ResCap also must have $250 million of net worthto meet loan covenants, and a debt investor said it would likely fallbelow that amount in the coming weeks. So Ally, which took $17billion in taxpayer bailouts, likely needs to invest more in ResCap

to keep it solvent, the investor said, according to the Post.

The Journal said November that Ally has hired Kirkland &Ellis and investment bank Evercore Partners Inc. on a possiblerestructuring of ResCap.

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In November 2011, Standard & Poor's Ratings Serviceslowered its long-term counterparty credit rating on ResCap to'CCC' from 'B+'; and Fitch Ratings cut its Long-term Issuer DefaultRating on Rescap to 'CCC' from 'B'. In December 2011,

Dominion Bond Rating Service affirmed its Issuer and Long-TermDebt ratings of ResCap at "C."

Fitch cited the deteriorating year-to-date operatingperformance, magnified by a $442 million net loss reported in itsthird fiscal quarter; significant reduction in the tangible net worthcovenant cushion; and uncertainty regarding futurecapital/financial support from Ally. Fitch said ResCap is close to

violating the $250 million minimum tangible net worth covenant --it posted $331 million in the third quarter of 2011, from $772million in the second quarter of 2011 and $846 million atDecember 31, 2010 -- required under its credit facilities andservicing agreement with a GSE.

(F) Eastman Kodak

According to Mr. Fernandez, Eastman Kodak Co. could bethe year's first billion-dollar bankruptcy filer.

The Wall Street Journal, citing "people familiar with thematter", reported that Eastman Kodak is preparing a bankruptcyfiling -- at the end of January or early February -- should efforts tosell a trove of digital patents fall through.

Sources told the Journal that Kodak is in discussions withpotential lenders for around $1 billion in so-called debtor-inpossession financing that would keep it afloat during bankruptcyproceedings.

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According to the Journal, people familiar with the matter saidKodak is in discussions with large banks including J.P. MorganChase & Co., Citigroup Inc. and Wells Fargo & Co. for thosefunds. Kodak has also held discussions with bondholders about a

bankruptcy financing package, the people said. Another hedgefund that doesn't hold Kodak debt, Cerberus Capital ManagementLP, has also held talks with Kodak on behalf of a group willing toprovide the financing, the people said.

If it files for bankruptcy, Kodak would try to sell its portfolio of1,100 patents through a court-supervised bankruptcy auction.

Kodak's balance sheet at Sept. 30, 2011, showed $5.10billion in total assets and $6.75 billion in total liabilities.

In July 2011, the Company announced that it is exploringstrategic alternatives, including a potential sale, related to itsdigital imaging patent portfolios. Kodak hired Jones Day as legaladviser and investment bank Lazard Ltd., but denied rumors itwas filing for bankruptcy. It also enlisted FTI Consulting Inc.

In December, Kodak hired Sullivan & Cromwell'srestructuring practice, replacing Jones Day.

A group of Kodak's bondholders has formed an informalcommittee and hired law firm Akin Gump Strauss Hauer & FeldLLP for advice.

* * *

In addition to the challenged companies mentioned in Mr.Fernandez's report, the Troubled Company Reporter provides on-going reporting about more than 3,000 companies experiencingfinancial distress or restructuring their balance sheets in a judicial_____________________________________________________________________________



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

Major Pending Disputes In Chapter 11 Cases

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 reports that another major dispute in theLehman Brothers case has been added to two existing disputeswith major banks. The recent dispute is over an allegedArchstone deal contract breach. The other two disputes are withLondon-based Barclays Plc and with New York-based JP MorganChase.

Lehman Brothers Holdings Inc. sued Bank of America Corpand Barclays Plc for breach of contract after the two banksagreed to sell their 26.5% stake in apartment landlord Archstoneto Sam Zell's Equity Residential and granted the Chicago-basedcompany an option to buy the second half of their stake inArchstone for $1.33 billion or more.

In a December 15 lawsuit filed in the U.S. Bankruptcy Court

in Manhattan, Lehman sought to clarify the terms of its right tobuy the Archstone stake; to make Bank of America and Barclayscarry out their obligations under agreements in place; and topostpone deadlines for the purchase. Lehman is seeking aninjunction that would stop Bank of America and Barclays fromcompleting any transfer to Zell's company. It also seeks to divest_____________________________________________________________________________



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the banks of their voting rights in Archstone, and to recoverydamages and legal fees from them.

Lehman told the two banks that it would buy half of their

stake in Archstone for $1.33 billion. Lehman said its originalagreement with the two banks gave it until Jan. 23 to get courtapproval for its purchase, make a $66 million deposit, andcomplete the deal by paying out the balance of the $1.33 billion.

Lehman is complaining that Bank of America and Barclayshave been negotiating for months on selling their Archstone stake,but failed to provide information about the sale process on a

regular basis and in a commercially reasonable manner.

Bankruptcy Judge James Peck on December 21 toldLehman to sit down with the two banks and resolve their $1.3billion dispute over the Archstone stake. The judge said Lehmanshould be holding "business meetings" with the banks, not "suing"them.

Archstone, which Lehman acquired in a $22 billion leveragedbuyout with Tishman Speyer Properties LP, has ownershipinterests in hundreds of apartment developments fromWashington and New York to San Francisco. Lehman is seekingto sell Archstone, its biggest real-estate asset, for $6 billion tohelp pay creditors with claims of about $370 billion but must firstgain control of the company, according to a person familiar withthe plan.

Meanwhile, Lehman's other legal battle with Barclays inrelation to the London-based bank's purchase of Lehman brokerbusiness is not showing signs of coming to an end, as the U.S.Securities and Exchange Commission sided with Lehman in the$3 billion dispute with Barclays over assets, saying Lehman didn't_____________________________________________________________________________



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have enough money to pay customers. The SEC voiced itsopinion in a Dec. 23 filing with a Manhattan court.

The trustee liquidating the Lehman broker unit said he

identified a $5 billion shortfall in customer reserve accounts. TheSEC related in its filing that as long as there is a shortfall,Barclays only has a conditional claim on as much as $1.3 billionreserved for customers.

In October, Barclays and the Lehman broker unit trustee,James Giddens, both appealed Judge Peck's ruling that gaveBarclays only a conditional right to $769 million in the reserve

account, unless Mr. Giddens had enough to pay customers. Inaddition to the $769 million, reserves include $507 million inmargin for customer transactions at the Options Clearing Corp.,the SEC said. Judge Peck told Barclays in a February 2011 rulingto return $2 billion in margin assets to Lehman, and he told Mr.Giddens to give Barclays at least $1.1 billion in clearance assets.Both sides filed court papers on Dec. 23 in support of theirappeals. The appeals are expected to be decided by Judge

Richard J. Howell of the U.S. District Court for the SouthernDistrict of New York in February.

As to Lehman's $8.6 billion fight with JPMorgan, U.S. DistrictJudge Richard Sullivan said he will defer a decision on whetherthe lawsuit belongs in the district court. The judge said on Dec.30 that a federal bankruptcy judge must first rule on JPMorgan'smove to dismiss the case.

New York-based JPMorgan is fighting a lawsuit by Lehmanthat alleges the lender helped cause the failed bank's 2008collapse by demanding $8.6 billion in collateral. JPMorgan is alsodefending $6 billion in claims that Lehman objects to and arguing

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it acted properly in seeking security for loans made during thecredit crisis.

(B) Washington Mutual

Washington Mutual, the biggest bank to fail in U.S. history,said on December 12 it reached a settlement in a disputebetween shareholders and certain creditors that had beenblocking a bankruptcy-exit plan valued at more than $7 billion.The agreement, brokered by a court-appointed mediator, calls fornoteholders to contribute $75 million to the only unit of WaMu that

will exit bankruptcy as well as loan the entity $125 million. Thereorganized company would be owned by preferred and commonshareholders.

Judge Mary Walrath must approve the new settlement.Details of the agreement were filed as part of a new version of thecompany's reorganization plan -- the seventh amended planversion -- which must also be approved before creditors can be

paid. The bankruptcy plan also includes a three-way settlementdeal aimed at aimed at resolving billion-dollar lawsuits amongWaMu, the Federal Deposit Insurance Corp. and JPMorganChase. The deal provides for the dismissal of the lawsuits andthe distribution of assets among the parties.

WaMu's banking business was sold by the FDIC toJPMorgan for $1.88 billion in 2008. Soon after the sale, a legalbattle among the parties began on who owned what part of the

failed bank.

Meanwhile, in a December 28 court filing, holders of $1.5billion in WaMu trust-preferred securities scheduled a January 11hearing where they plan to ask the bankruptcy judge to halt theprocess of confirming WaMu's latest bankruptcy plan._____________________________________________________________________________



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(C) Tribune Co.

In Tribune Co., no final resolution is in sight on the disputesamong creditors over the company's 2007 leveraged buyout asBankruptcy Judge Kevin Carey in Delaware said a confirmationhearing in the case is not likely to take place until May.

Many of the disputes related to the leverage buyout includealleged fraudulent conveyance claims. Tribune creditors haveeven filed formal lawsuits in late 2010 to hold Tribune executives,

including Sam Zell, and lenders liable for any fraudulent transfersin the LBO. These suits have been stayed pending progress inTribune's efforts to confirm a bankruptcy plan.

Judge Carey earlier rejected two earlier versions of Tribune'sbankruptcy plan. The Company has since submitted a thirdversion of the plan, which is pending court approval.

Tribune is in disagreement with its junior bondholders led byhedge fund Aurelius Capital Management on how to treatpotential claims or lawsuits against the parties involved in theLBO.

Tribune is the second largest newspaper publisher in theU.S. It listed $13 billion in debt and $7.6 billion in assets when itfiled for bankruptcy protection in December 2008. It owns theChicago Tribune, Los Angeles Times, six other newspapers and

23 television stations.

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Delayed Exits From Chapter 11

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

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

(A) Washington Mutual

Washington Mutual Inc. in December agreed to a settlementwith some creditors involved in its Chapter 11 bankruptcy caseand filed a new reorganization plan.

Washington Mutual said in a statement on Dec. 12 that thesettlement will allow it to distribute more than $7 billion to itscreditors. The settlement must still be approved by the U.S.Bankruptcy Court for the District of Delaware.

Michael Willingham, chairman of the committee of equitysecurity holders appointed in the company's Chapter 11

proceedings, said, "The comprehensive settlement . . . representsa fair and reasonable recovery for the thousands of equity holdersof the company who have been following this case closely forthree years."

Washington Mutual's bankruptcy case is three years old andits reorganization plans have twice been rejected by BankruptcyCourt Judge Mary Walrath.

The company is hoping to exit bankruptcy protection by theend of February.

It has a hearing scheduled for Jan. 11, 2012 in which thebankruptcy court will consider approval of the reorganizationplan's disclosure statement. The company also plans to ask the_____________________________________________________________________________



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bankruptcy court for a mid-February hearing to confirm itsreorganization plan.

The Federal Deposit Insurance Corp. seized WaMu's

Seattle-based flagship bank in 2008 and sold its assets toJPMorgan for $1.9 billion in the largest bank failure in U.S. history.

Under terms of the settlement, the reorganized assets ofWashington Mutual will include equity interests in WMI InvestmentCorp. and WM Mortgage Reinsurance Co.

A reorganized Washington Mutual will receive $75 million in

funding from certain creditors. Exit financing provided bysettlement noteholders will include a $125 million senior securedcredit facility that will be used to fund working capital as well asfor general corporate purposes and eligible originations andacquisitions.

The majority of the reorganized company's common equitywill be distributed to its current preferred and common equity

holders. Its board will initially be made up of four memberschosen by the equity committee and one member selected bylenders under the credit agreement.

(B) Tribune Co.

Tribune Co.'s long-running sojourn in bankruptcy shows nosign of ending soon.

Judge Kevin J. Carey said in a ruling that he wouldn't hold ahearing on plans to end the three-year bankruptcy until May at theearliest. Tribune had been hoping to resolve the case in the nextfew months.

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Even if Judge Carey keeps to his deadline, it will probablytake months more for the media conglomerate to emerge frombankruptcy and obtain needed federal regulatory approvals for thetransfer of broadcasting and other licenses to new owners.

Tribune is the parent company of the Los Angeles Times, theChicago Tribune and other newspaper, television and mediaproperties.

The case pits Tribune and it senior creditors, includingOaktree Capital Management in Los Angeles and JPMorganChase & Co. in New York, against a group of junior bondholders

led by hedge fund Aurelius Capital Management in New York.

The two sides have battled furiously over their competingplans to reorganize the company.

Judge Carey directed the adversaries to try to reach anagreement on scheduling matters "with a view toward aconfirmation hearing to be held in mid- to late-May 2012."

The case could end "very quickly" if the two sides resolvetheir differences, "but the track record of this case suggests thatwon't happen," said Douglas Baird, a law professor at theUniversity of Chicago.

In his order, Judge Carey reversed part of a ruling he madein October that seemed to give an advantage to a deeplysubordinated class of note holders known as the Phones.

At the time, Judge Carey indicated that the Phones classshould be able to recover at least part of a claim with a face valueof $1.2 billion, getting its share from money that would otherwisego to Aurelius and other junior creditors.

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That opened the door to a parallel demand from TribuneChairman Sam Zell, whose affiliate owns a similar note. It wasZell who acquired the company in a highly leveraged buyout inDecember 2007, a deal that landed it in bankruptcy a year later.

Judge Carey reversed himself, saying that the Phones classwas not on a par with Aurelius and other junior creditors forpurposes of recovering bankruptcy assets.

(C) W.R. Grace

W.R. Grace & Co., whose bankruptcy-exit plan is being heldup by appeals, says it expects to be stuck in its decade-longChapter 11 case past March.

The Plan, co-proposed by the Official Committee of AsbestosPersonal Injury Claimants, the Official Committee of EquitySecurity Holders, and the Asbestos Future ClaimantsRepresentative appointed in Grace's bankruptcy case, is before

the District Court pending appeals from various parties, includinga group of prepetition bank lenders and the Official Committee ofUnsecured Creditors.

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

(D) Nebraska Book

Nebraska Book Co. reviewed the performance of its 138 off-campus bookstores and decided to close seven. Landlords atanother 40 locations agreed to extend the deadline until April 30for the company to decide whether to terminate the leases. Theextension gives Nebraska Book more time to negotiate lower rent._____________________________________________________________________________



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Nebraska Book said that the 170 on-campus storescontinue to perform well. The closing stores will operate untilFebruary to accommodate demand for the second semester.

Earlier, Nebraska Book, faced with violating loan covenants,received approval from the bankruptcy court to loosen termsunder the loan agreement financing the Chapter 11 effort. Inreturn, the college bookseller is paying fees and higher interestrates.

Financing for the reorganization includes a $75 million

revolving credit and a $125 million term loan. As of Sept. 30, theterm loan was fully drawn, although nothing was outstanding onthe revolver. At the time, the balance sheet showed $120 millionin cash, a court filing says.

Nebraska Book negotiated looser cumulative cash flowcovenants with the lenders. In return, the lenders wereauthorized by the bankruptcy court to be paid a 0.25% fee on the

aggregate amount of the commitments. In addition, the interestrates rose 1.5 percentage points on both loans. The commitmentfee increased 0.5 percentage point to 0.75%.

Nebraska Book filed under Chapter 11 in June in Wilmington,Delaware, with an agreement to emerge quickly fromreorganization. Court schedules show that the company can'tleave Chapter 11 until March 22, at the earliest.

Nebraska Book's pre-arranged plan didn't work, given itsinability to secure $250 million in outside financing. The planwould have paid off first- and second-lien debt in full, while givingmost of the new equity to subordinated noteholders of theoperating company and holders of notes issued by the holdingcompany._____________________________________________________________________________



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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.

New Publicly Traded Securities

Psyche Maricon Castillon reports about five companies thatissued or will issue shares of new common stock uponemergence pursuant to the plans of reorganization they filed intheir Chapter 11 cases in December 2011. These are: DynegyHoldings, Great Atlantic & Pacific Tea Company, Lee Enterprises,William Lyon Homes, and TerreStar Corporation.

(A) Dynegy Holdings

Dynegy Holdings LLC and its parent, Dynegy Inc., filed aplan of reorganization and an accompanying disclosure statementfor Dynegy Holdings in early December.

Under the terms of the proposed Plan for Dynegy Holdingsand consistent with a restructuring support agreement, allcreditors holding unsecured obligations of Dynegy Holdings,

including $3.4 billion of senior notes, $200 million of subordinatednotes, approximately $130 million of accrued interest, and theguaranty obligations associated with the Roseton andDanskammer leases, will receive:

* a $400 million cash payment, subject to adjustment_____________________________________________________________________________



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as set forth in the Plan;

* $1.0 billion, subject to adjustment as set forth in thePlan, of new 11% senior secured notes due 2018 to

be issued by Dynegy and secured by the equity andassets of certain entities owning the Company'sseparate coal and gas-fueled generatingbusinesses (or an equivalent cash payment, if theCompany obtains the financing elsewhere on noless favorable terms); and

* $2.1 billion of Dynegy's new convertible preferred

stock. The convertible preferred stock will not beconvertible at the option of the holders but willmandatorily convert into common stock comprising97% of Dynegy's fully diluted common stock onDecember 31, 2015, if not earlier redeemed.Dynegy will have the right to redeem the convertiblepreferred stock, subject to certain restrictions, atvarying discounts through the end of 2013.

(B) Great Atlantic & Pacific Tea Co.

Great Atlantic & Pacific Tea Company filed with the Court aJoint Chapter 11 Plan of Reorganization and related DisclosureStatement.

Pursuant to the Plan, investors are providing New Money

Commitment of $490 million in the form of (i) $210 million faceamount of privately placed New Second Lien Notes, (ii) $210million face amount of privately placed New Convertible ThirdLien Notes, and (iii) an $80 million New Equity Investment.

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The proceeds of the New Money Commitment will allow theDebtors to make distributions pursuant to the Plan, includingpaying certain secured creditors in full in cash, and will provide acash pool of $40 million, less the amount distributed pursuant to a

so-called Substantive Consolidation Settlement Cash Pool, fordistributions to General Unsecured Creditors. The Plan providesfor a settlement and compromise of the intercreditor issuesrelating to whether the liabilities and assets of the Debtors shouldbe substantively consolidated for purposes of distributions underthe Plan.

The Bankruptcy Court in White Plains, New York, approved a

revised disclosure statement explaining the Plan on Dec. 20. Therevised disclosure statement said creditors can expect to recover2.1% to 2.7%.

The hearing to consider confirmation of the plan will beginFeb. 6.

The plan was made possible by $490 million in debt and

equity financing to be provided by Yucaipa Cos., Goldman SachsGroup Inc. and Mount Kellett Capital Management LP.

Confirmation of the plan was simplified when A&P settledwith holders of 79% of the $310 million in second-lien notes. Inreturn for being paid in full in cash when the plan is implemented,second-lien creditors are dropping their claim for additionalinterest or a make-whole payment.

(C) Lee Enterprises

Lee Enterprises and more than 20 affiliated Debtors filed forChapter 11 protection with the U.S. Bankruptcy Court in theDistrict of Delaware in December. Concurrent with the petition,_____________________________________________________________________________



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the Company also filed an Amended Joint Prepackaged Plan ofReorganization and related Disclosure Statement.

The Plan is the product of extensive negotiations between

the Prospective Debtors and their existing stakeholders. Duringthe months leading up to the solicitation, the Company and itslegal and financial advisors engaged in extensive negotiationswith prepetition lenders.

As of September 8, 2011, Lee Enterprises and thePrepetition Lenders holding more than 50% in number and 66.7%in amount of Claims under the Prepetition Credit Facilities had

entered into a support agreement, which was amended as ofDecember 2, 2011. The Support Agreement, among other things,commits the lenders to support a restructuring of the Company'sdebt structure.

The salient terms of the Plan are:

* The maturity of the remaining $127.6 million in

9.05% first-lien notes due April 2012, known as thePulitzer notes, will be modified and extended. Theinterest rate on the Pulitzer notes will be raisedinitially to 10.55%, increasing annually thereafter.

* Lenders owed $548.2 million under a term loan and$307.6 million under a revolving credit will receive15% of the stock plus a $689.5 million term loan, a$40 million revolving credit not expected to be drawn

initially, and a $175 million term loan.

* Unsecured creditors will be paid in full. Prepetitiontrade debt total $10.6 million.

* Shareholders will retain their stock with minimal_____________________________________________________________________________



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dilution.

(D) William Lyon Homes

William Lyon Homes and 20 affiliated entities filed forChapter 11 protection with the U.S. Bankruptcy Court in theDistrict of Delaware, on Dec. 19.

In excess of 97% in dollar amount and in excess of 93% innumber of holders of its senior notes that cast ballots, voted toapprove a Prepackaged Joint Plan of Reorganization, as did the

Company's senior secured lender. The Lyon family also supportsthe Plan.

The Plan provides new capital investments of $85 millionand strengthens the Company's long-term capital structure byeliminating short-term debt maturities and reducing interestexpense.

Approximately $180 million in principal amount of debt willbe eliminated as part of the recapitalization, resulting in a 37%reduction in overall debt. Annual cash interest expense will bereduced by nearly $25 million or approximately 45% of currentlevels. Existing senior management will continue managing theCompany; and the Lyons will remain on the board, with GeneralLyon continuing as chairman.

The Plan further provides for the Lyon family to invest $25

million in exchange for 20% common equity (before dilutiveimpact of warrants) and warrants for an additional 9.1% ofcommon equity. In addition, the senior secured lender will receivea $235 million secured note; senior noteholders will exchange$284 million in principal of existing senior notes for $75 million insecured notes; senior noteholders will also receive 28.5%_____________________________________________________________________________



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common equity (before dilutive impact of warrants) and theCompany will propose a rights offering for $10 million in commonequity and $50 million in new convertible preferred equity.

The Company has also secured a commitment for a new$30 million credit facility from its senior secured lender, which willbe used to support operations and ensure adequate liquidityduring the restructuring process.

The Bankruptcy Court scheduled a February 10, 2012 jointhearing to consider both the Disclosure Statement andPrepackaged Joint Plan. Interested parties must file objections

on or before February 3, 2012.

(E) TerreStar Corporation

TerreStar Corporation filed with the U.S. Bankruptcy Court aFirst Amended Joint Chapter 11 Plan and First AmendedDisclosure Statement.

The Plan provides that holders of Allowed Unsecured Claimswill receive full satisfaction of their Claims, in the form of the NewTSC Notes. The remaining value of the Reorganized TSCDebtors will be transferred to the holders of TSC Series A and BPreferred Shares in the form of the New Common Stock ofReorganized TSC.

After taking into account the value distributed to unsecured

creditors, and assuming that the Claims asserted by ElektrobitInc. Van Vlissingen and Company, Jefferies & Company, Inc. andother vendors are allowed in full, the equity value of ReorganizedTSC being transferred to the holders of TSC Series A and BPreferred Shares is between $144.8 million3 and $154.8 million,while the face value of the interests held by the holders of TSC_____________________________________________________________________________



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Series A Preferred Shares is $90 million and TSC Series BPreferred Shares is $318.5 million (not including amounts owedon account of earned but unpaid dividends).

In the event the Claims asserted by Elektrobit, VanVlissingen and Company and Jefferies are disallowed in theirentirety, the equity value of Reorganized TSC being transferred tothe holders of TSC Series A and B Preferred Shares is between$177.2 million and $187.2 million. Accordingly, after repaying theholders of TSC Series A and B Preferred Shares, there is simplyno value remaining to distribute to any other equity interestholders.

* * *

That ends the Beard Group Corporate Restructuring Review forDecember 2011, brought to you by the editors of the TroubledCompany Reporter and Troubled Company Prospector. If you'dlike 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 addyou to the distribution list. That telephone number, again, is (240)629-3300 and that Web site address, again, is bankrupt-dot-com-slash-free-trial.

Tune in to our next monthly Restructuring Review on February16th. Thank you for listening.

beard corp rest review 201112

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