Beard Corporate Restructuring Review for June 2013

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Beard Group Corporate Restructuring ReviewFor June 2013

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 June 2013, brought to you by the editors of the

Troubled Company Reporter and Troubled Company Prospector.

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

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

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

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


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

fifth, information you're unlikely to find elsewhere about

new publicly traded securities being issued by chapter11 debtors.

June 2013 Mega Cases

Now, let's review the largest chapter 11 cases in June 2013.

Danilo Muoz reports that the number of Chapter 11 megafilings jumped four-fold to eight for the month of June 2013. Twoof those mega filings involved companies with more than $1billion in assets.

In comparison, there were only two Chapter 11 bankruptcy

mega cases in May and five mega filings in April.

During the first six months of 2013, there were 31 megabankruptcy cases filed, including seven that involved more than$1 billion in assets.

For fiscal year 2012, there were a total of 12 companies thatfiled for Chapter 11 with excess of $1 billion in assets, five ofwhich were filed in May 2012. There were a total of 64 mega

filings with assets in excess of $100 million in 2012, compared to82 mega filings during the same period in 2011 and 106 in 2010.

The largest Chapter 11 filing in June was by ExideTechnologies Inc. This is Exide's second bankruptcy trip, havingfiled in 2002 and emerging from those proceedings in 2004._____________________________________________________________________________

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Exide returned to Chapter 11 bankruptcy on June 10, 2013, byfiling a voluntary petition with the Bankruptcy Court for the Districtof Delaware [Case No. 13-11482].

The Debtor disclosed $1.89 billion in assets and $1.14 billionin liabilities as of March 31, 2013.

Exide filed for Chapter 11 to facilitate a financial andoperational restructuring necessary to strengthen its balancesheet and its business to position the Company for futuresuccess. Only Exide's U.S. operations are included in the filing.The Company plans to continue to operate globally without

interruption during the reorganization.

Headquartered in Princeton, New Jersey, Exidemanufactures and distributes lead acid batteries and other relatedelectrical energy storage products.

The second largest Chapter 11 filing was by TMT USAShipmanagement LLC and its affiliates, which disclosed $1.52

billion in assets and $1.46 billion in liabilities on a consolidatedbasis.

TMT Group owns 17 vessels, which range in size fromapproximately 27,000 dead weight tons or "dwt" to approximately320,000 dwt.

TMT USA and 22 affiliates, including C. LadybugCorporation, sought Chapter 11 protection on June 20, 2013, with

the Bankruptcy Court for the Southern District of Texas [Case No.13-33740] after lenders seized seven vessels. TMT already fileda lawsuit in U.S. bankruptcy court aimed at forcing creditors torelease the vessels so they can return to generating income.

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The third largest Chapter 11 filing in June was by OrchardSupply Hardware Stores Corporation and affiliates, which soughtChapter 11 protection on June 16, 2013, with the BankruptcyCourt for the District of Delaware [Lead Case No. 13-11565],

before Judge Christopher S. Sontchi.

Orchard Supply and its affiliates disclosed total assets of$441 million and total debts of $480 million.

Orchard Supply filed for Chapter 11 to facilitate arestructuring of its balance sheet and a sale of its assets for $205million in cash to Lowe's Companies, Inc. That transaction is

subject to higher and better offers. In addition to the $205 millioncash, Lowe's has agreed to assume payables owed to nearly allof Orchard's supplier partners.

San Jose, California-based Orchard Supply operatesneighborhood hardware and garden stores focused on paint,repair and the backyard. It was spun off from Sears HoldingsCorp. in 2012.

The next largest Chapter 11 filing was by Vail Lake RanchoCalifornia, LLC, which listed consolidated assets, as of May 31,2013, of roughly $291 million and liabilities total $52.8 million.

Vail Lake and its affiliates own the California campgroundVail Lake Resort. The property is a large reservoir in westernRiverside County, California, located on Temecula Creek in theSanta Margarita River watershed, approximately 15 miles east of

Temecula, California. Properties cover approximately 9,000 acresand have an estimated water storage capacity of approximately51,000 acre-feet.

On June 5, 2013, Vail Lake sent five related entities -- VailLake USA, LLC or VLU; Vail Lake Village & Resort LLC or VLRC;_____________________________________________________________________________



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Vail Lake Groves LLC; Agua Tibia Ranch LLC; and OutdoorRecreational Management, LLC -- to Chapter 11 bankruptcy.

In addition, OnCure Holdings, Inc., which provides

management services and facilities to oncology physician groupsthroughout the country, filed for Chapter 11 in June with totalassets of $179.3 million and total debts of $250.4 million.

OnCure Holdings and its affiliates filed Chapter 11bankruptcy petitions on June 14, 2013, with the Bankruptcy Courtfor the District of Delaware [Case Nos. 13-11540 to 13-11562].OnCure has signed a deal to sell the business to Radiation

Therapy Services Holdings Inc. for $125 million, absent higherand better offers. RTS's offer comprises $42.5 million in cashplus covering certain expenses and subject to certain workingcapital adjustments, and up to $82.5 million in assumed debt.OnCure's secured noteholders are supporting the RTS deal.

Promptly before the bankruptcy filing, OnCure entered into arestructuring support agreement with the members of an ad hoc

committee of its secured notes, constituting 100% of the lendersunder the first lien term loan credit agreement and approximately73% of the secured notes, pursuant to which they have agreed tosupport a stand-alone restructuring of the Debtors, subject to anauction process for a sale of substantially all of the Debtors'assets or the equity of reorganized OnCure pursuant to a chapter11 plan.

In addition, three companies filed for Chapter 11 protection

listing assets of between $100 million to $500 million. These areiGPS Company, Triad Guaranty Inc., and National Envelope.

iGPS Company filed a Chapter 11 bankruptcy petition onJune 4, 2013, with the Bankruptcy Court for the District of

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Delaware [Case No. 13-11459] to sell its assets to a group led byBalmoral Funds LLC, absent higher and better offers.

iGPS Company is the first and only plastic pallet pooling

rental and leasing company in the U.S. It offers plastic pallets withembedded radio frequency identification or RFID tags. Foundedin 2006, the company is headquartered in Orlando, Florida, andhas a sales and innovation center in Bentonville, Arkansas.

Triad Guaranty filed a Chapter 11 petition on June 3 with theBankruptcy Court for the District of Delaware [Case No. 13-11452]. The Company estimated assets of at least $100 million

and liabilities of less than $50,000.

Winston-Salem, N.C-based Triad Guaranty is a holdingcompany that historically provided private mortgage insurancecoverage in the United States through its wholly-ownedsubsidiary, Triad Guaranty Insurance Corporation. TGIC is anationwide mortgage insurer pursuing a run-off of its existing in-force book of business.

Triad Guaranty said in court filings that it has no significantoperating activities, and has limited remaining cash and otherassets on hand. It has been exploring various strategicalternatives, and will continue to do so from and after the PetitionDate. It continues to burn cash, with expenses ranging from$100,000 to $500,000 per quarter. Unless the expenses arereduced, the Company expects to deplete all of its remaining cashby the end of 2013 or earlier.

National Envelope is the largest privately-help manufacturerof envelopes in North America. Headquartered in Frisco, Texas,National Envelope has eight plants and 15 percent of theenvelope market.

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NE OPCO, Inc., doing business as National Envelope, alongwith affiliate NEV Credit Holdings, Inc., filed petitions seekingrelief under Chapter 11 of the Bankruptcy Code on June 10, 2013,with the Bankruptcy Court for the District of Delaware [Lead Case

No. 13-11483].

None of the two mega filings in June involved a prepackagedChapter 11 filing. During the first half of 2013, 12 of the 31 megafilings involved a prepackaged Chapter 11, or 39% of the Chapter11 mega filings.

For fiscal year 2012, 13 of the 64 mega cases involved a

prepackaged Chapter 11 filing, or about 20% of the mega cases.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.

For the month of June, two mega filings were engaged in

manufacturing while the rest were spread through differentindustries.

During the half of 2013, 10 of the mega filings belonged tothe information industry, 6 are involved in manufacturing and 4are involved in healthcare.

The Bankruptcy Court for the District of Delaware got thelions share of mega filings in June with six of the eight mega

filings.

For the first half of 2013, the Bankruptcy Court for the Districtof Delaware was the most favored venue with 20 of the 31 megafilings, while the next closest, the Bankruptcy Court for theSouthern District of New York had only 4 mega filings._____________________________________________________________________________



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In 2012, the Bankruptcy Court for the Southern District ofNew York was the most favored venue for mega filers with 21,wresting away the lead from the Bankruptcy Court for the District

of Delaware with 19 mega filings.

In 2011, the Delaware Bankruptcy Court was the mostfavored of bankruptcy mega cases with 38 filings, or 46% of themega cases, followed by the Southern District of New York with16 filings, or 19% of the mega cases, and by the Northern Districtof Texas with 4 filings, or 5% of the mega cases. The rest of thebankruptcy mega cases are spread evenly throughout the various

bankruptcy courts.

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

For 2011, the largest Chapter 11 filing was filed by MF

Global Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MFGlobal had $41.05 billion in total assets and $39.68 billion in totalliabilities.

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

For first half of 2013, the largest Chapter 11 filing was filed

by Dex One Corp., which filed for Chapter 11, listing total assetsof $2.84 billion and total liabilities of $2.79 billion.

For the first five months of 2013, Young Conaway Stargatt &Taylor LLP represented 5 of the 23 mega filings either as counselor co-counsel. The law firm represented the School Specialty,_____________________________________________________________________________



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Penson Worldwide, Super Media, Otelco and Rotech Healthcarein their respective Chapter 11 cases.

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 three companies that may be

close to filing for bankruptcy. These are: MDU Communications,Maxcom Telecomunicaciones, and Dynasil Corp.

(A) MDU Communications

Telecommunications provider MDU CommunicationsInternational Inc. said in a regulatory filing that its cash resources

will be depleted by Sept. 30.The Totowa, New Jersey-based company hasn't talked about

a potential bankruptcy filing. It said instead that it's exploring"large asset sales" or a merger.

The company's revolving-credit lender extended maturity ofthe facility to Dec. 31 from June 30, with the possibility of anextension to March 31.

The Company's balance sheet at March 31, 2013, showed

$18.04 million in total assets against $32.14 million in totalliabilities.

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(B) Maxcom Telecomunicaciones

Maxcom Telecomunicaciones SAB began soliciting votes ona prepackaged Chapter 11 reorganization plan that contemplates

the infusion of $45 million in new capital to the Mexico City-basedtelecommunications provider.

Ventura Capital Provida SA has agreed to make a capitalcontribution of US$45.0 million dollars and conduct a tender offerto acquire for cash, at a price equal to Ps.$2.90 (two pesos and90 cents). The recapitalization will be completed throughapproval of a reorganization plan in a U.S. bankruptcy court.

Under the Plan all creditors will be paid in full other thanholders of the $200 million in 11 percent first-lien notes due in2014. Holders will receive new notes for the full principal amountbearing interest initially at 6 percent and rising to 8 percent beforematurity in 2020. The reorganization has support from holders of$84 million of the 11 percent notes, Ventura and someshareholders.

In June 2013, Maxcom didn't make an $11 million interestpayment on the notes. At the time, the company said it would usethe 30- day grace period to negotiate a restructuring to be carriedout through a Chapter 11 filing in the U.S.

(C) Dynasil Corp.

Dynasil Corporation of America said at the end of May that itis not in compliance with its financial covenants under its loanagreements with its lenders and the Company is in paymentdefault with its subordinated lender. The Company's lenders mayexercise one or more of their available remedies, including the

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right to require the immediate repayment of all outstandingindebtedness.

As of March 31, 2013, the Company had approximately $8

million of Secured indebtedness with Sovereign Bank, N.A., and$3.0 million of indebtedness with Massachusetts CapitalResource Company.

As of March 31, 2013, Dec. 31, 2012, and Sept. 30, 2012,the Company is in violation of certain financial covenantscontained in each of the loan agreements that require it tomaintain certain ratios of earnings before interest, taxes,

depreciation and amortization to fixed charges and to total/seniordebt.

Additionally, although the Company continues to be currentwith all principal and interest payments with Sovereign Bank, asof March 31, 2013, the Company was delinquent on two monthsof interest payments on the Company's $3 million note fromMassachusetts Capital Resource Company.

The company said in a regulatory filing: "If our lenders wereto accelerate our debt payments, our assets may not be sufficientto fully repay the debt and we may not be able to obtain capitalfrom other sources at favorable terms or at all. If additionalfunding is required, this funding may not be available on favorableterms, if at all, or without potentially very substantial dilution to ourstockholders. If we do not raise the necessary funds, we mayneed to curtail or cease our operations, sell certain assets and/or

file for bankruptcy, which would have a material adverse effect onour financial condition and results of operations," according to theCompany's quarterly report for the period ended March 31, 2013.

Watertown, Massachusetts-based Dynasil develops andmanufactures detection and analysis technology, precision_____________________________________________________________________________



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instruments and optical components for the homeland security,medical and industrial markets.

The Company's balance sheet at March 31, 2013, showed

$28.27 million in total assets against $17.07 million in totalliabilities.

* * *

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 largechapter 11 cases that Troubled Company Reporter editorsmonitor day-by-day.

(A) Idearc Inc.

Ivy Magdadaro reports that Verizon Communications Inc.

won a complete victory on June 18 when a federal district judge inDallas threw out the remainder of a $9.8 billion lawsuit begunalmost three years ago by creditors of Idearc Inc.

Idearc implemented a reorganization plan in January 2010mostly worked out before the Chapter 11 filing in March 2009._____________________________________________________________________________



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Reducing debt from $9 billion to $2.75 billion, the plan created atrust that filed the lawsuit in Dallas. In January, U.S. DistrictJudge A. Joe Fish ruled after a non-jury trial that Idearc wassolvent and worth $12 billion when spun off. Given solvency, the

judge told both sides to file papers explaining why the entire suitshould or shouldn't be dismissed. The Idearc creditors' committeeresponded in mid-March with papers contending that thecompany was never properly formed, thus making Verizon liablefor the debt.

In a 22-page opinion, Judge Fish dismissed the entire suit.He said the finding of solvency was fatal to claims known as

constructive fraudulent transfer, where transactions can be setaside if made for inadequate consideration when a company isinsolvent. Judge Fish similarly dismissed claims for actual intentto hinder, delay or defraud creditors. He said any circumstantialevidence of fraudulent intent was "negated" by his conclusion thatDallas-based Idearc was solvent and worth $12 billion at the timeof the spinoff.

The judge also failed to go along with technical theories thata dividend was illegal because Idearc never had more than onedirector when there should have been three. Judge Fish said hewas unable to find "any case in which a court found that a solventcorporation's dividend was illegal solely because of a technicalviolation."

The dismissal of the suit gives creditors the right to appeal.Although setting aside a judge's finding of fact about solvency is

difficult, the creditors can now raise on appeal the question ofwhether they were entitled to a jury trial. Earlier in the case,Judge Fish ruled that there was no right to a jury trial.

Headquartered in D/FW Airport, Texas, Idearc, Inc., nowknown as SuperMedia Inc., is the second largest U.S. yellow_____________________________________________________________________________



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pages publisher. The Company was spun off from VerizonCommunications.

(B) Extended Stay

At around June 20, Blackstone Group LP agreed to pay $10million to settle a lawsuit that had sought $8.4 billion for its role inthe sale and subsequent bankruptcy of hotel chain Extended StayInc. Citigroup Inc, an adviser to Blackstone that took control ofExtended Stay in a 2007 leveraged buyout, agreed to pay$200,000. Bank of America Corp., which advised Blackstone,

was also released from the lawsuits as part of the settlement.

In 2007, Blackstone sold the 680-hotel chain for $8 billion toprivate equity investor, David Lichtenstein. After Extended Stayfiled for bankruptcy, Finbarr O'Connor, the trustee acting for thebenefit of Extended Stay's creditors, filed five lawsuits in 2011.The lawsuits alleged that Blackstone skimmed $2.1 billion fromthe sale of the chain. The trust also asked the court for $6.3

billion in punitive damages because it alleged Blackstone andothers maliciously breached their duties to Extended Staycreditors.

The settlement excluded Mr. Lichtenstein.

A July 18 hearing has been scheduled for the Court'sconsideration of the Blackstone and Citigroup settlements.

(B) Saab

US District Judge Gershwin Drain on June 10 dismissed a$3 billion lawsuit filed by Dutch car maker Spyker Cars NVagainst General Motors Co._____________________________________________________________________________



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Spyker sued GM last August, accusing it of attempting tobankrupt Saab after the US automaker had already sold thecompany to Spyker. GM in effect blocked the sale of Saab to

China's Zhejiang Youngman Lotus Automobile Company byprohibiting the transfer of some of its intellectual property. But thecourt found that GM had a "contractual right" to approve ordisapprove any change of ownership. Furthermore, Judge Drainsaid the contract between GM and Spyker "is clear, unambiguousand absolute" on the matter.

GM sold Saab to Spyker in 2010. Saab filed for bankruptcy

protection less than a year later after GM blocked its sale to theChinese automaker.

On June 19, Spyke said it will seek dismissal of its billion

dollar lawsuit against GM following a "careful review" of thecourt's opinion.

(D) Patriot Coal

In the first week of June, Patriot Coal Corp. and the UnitedMine Workers union filed appeals from litigations they lost at theend of May in the U.S. Bankruptcy Court in St. Louis, Missouri.

While Patriot is content with having its appeal decided by apanel of three bankruptcy judges on the Bankruptcy AppellatePanel, the union is having its appeal decided by a federal district

judge. The union filed an appeal from the May 29 opinion by U.S.Bankruptcy Judge Kathy A. Surratt-States allowing Patriot tomodify union contracts and reduce the guarantee of lifetimemedical care for retirees.

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The May 29 opinion generally permits Patriot to reducewages and benefits for its 1,600 active union miners to levelsprovided to its non-union employees. This could includescrapping wage increases, cutting vacation days and overtime

pay, and reducing pension contributions.

Patriot appealed the judge's dismissal of a lawsuit where thecoal producer was attempting to force former owner PeabodyEnergy Corp. to continue paying benefits for some retirees at ahigher level even though Patriot will be paying lower benefits.

Although the union conceded Patriot needed concessions tosurvive, Judge Surratt-States wrote her 102-page opinion in May

to explain why the union was wrong in contending she shouldleave the door open to restoring the higher level of wages andbenefits as soon as 2016. In the lawsuit with Peabody, JudgeSurratt-States decided that the plain language of the parties'contracts allows the former owner to guarantee no more benefitsthan those Patriot is paying.

Patriot began carrying out wage and benefit changes for

active employees July 1.

Nevertheless, the Company said on July 2 that it has made"substantial progress" towards a deal with the miners union on thebenefit cuts and wage reductions. Ongoing talks likely concernPatriot's plan to trim its $1.6 billion in long-term health careobligations to retirees.

Patriot is the 10th largest coal producer in the US. The

company employs about 4,000 people, about 41% of whom areunion members. It filed for bankruptcy in July last year after beinghit hard by dropping coal prices brought on by a glut of cheapnatural gas.

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Delayed Exits From Chapter 11

Julie Anne Lopez-Toledo reports about three Chapter 11debtors whose emergence from Chapter 11 has been delayed:Quigley, Flintkote and W.R. Grace.

(A) Quigley

Quigley Company Inc. has emerged from its heavily litigatedChapter 11 asbestos reorganization.

U. S. Bankruptcy Judge Stuart M. Bernstein held on June26, 2013, after a contested hearing, that Quigley Company, awholly owned subsidiary of Pfizer Inc., could emerge from itsChapter 11 reorganization despite a dissenting creditor class andan objecting group of asbestos personal injury claimants. The

Quigley reorganization plan discharged at least $5.6 billion ofcurrent and future asbestos liability, provided Pfizer with aninjunction barring further Quigley-related asbestos claims andcrammed down a rejecting class of silica personal injuryclaimants.

Quigley, a former manufacturer of industrial refractoryproducts used mostly in the steel industry, had been besieged,since 1980, with massive asbestos litigation arising out of its

manufacture and sale of three asbestos-containing products.When it filed its Chapter 11 petition, approximately 212,000asbestos personal injury claims totaling $1.2 billion, were pendingagainst it and its corporate parent, Pfizer. Uncontradicted experttestimony during the case estimated about 260,000 futureasbestos claims against Quigley, extending until 2058, with an_____________________________________________________________________________



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undiscounted value of $4.4 billion. When Quigley sought Chapter11 relief, Pfizer was also a defendant with respect to 280,000claims, based on the claimants asserted exposure to Quigleysproducts. The growing number of asbestos claims forced Quigley

to file a Chapter 11 petition when its remaining insurancecoverage, shared with and bought by Pfizer, began to erode.

Pfizer contributed a total of $964 million in value toimplement the Quigley reorganization plan. That contributionconsisted of approximately $500 million of shared insuranceassets, $260 million of cash, $126 million of secured debtforgiveness and a $44 million dollar commercial building occupied

under a long-term lease generating at least $2.5 million a yearthrough 2026. In addition to its plan contribution, Pfizer had paidanother $1.25 billion to other large groups of claimants who hadasserted claims against it. The details of these non-plansettlements were disclosed during the Chapter 11 case.

The federal courts issued no less than 18 decisions duringthe contentious Quigley case. Most recently, the United States

Supreme Court denied Pfizers petition for a writ of certiorariregarding a 2012 decision by the Court of Appeals for the SecondCircuit holding that the injunction obtained by Quigley for thebenefit of Pfizer had certain limits. In that decision, the Court of

Appeals also held that Quigley had properly obtained theinjunction, reaffirming the bankruptcy courts broad jurisdiction toprotect Quigleys critically important insurance assets.

Other decisions by the Southern District of New York and the

Bankruptcy Court during the case affirmed the validity of Quigleyspreliminary injunction staying suits against Pfizer, Quigleysclassification of its creditors, and denied an effort to have atrustee or examiner appointed to investigate Quigleys affairs.

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Critically important to the courts, Quigley had anindependent board of directors and counsel with no ties to Pfizer.The court had denied confirmation of Quigleys earlierreorganization plan because of what it viewed as Pfizers

improper settlements with certain claimants and inadequatecontribution to the plan. After further negotiations with Quigley, thecreditors committee and future claims representative, Pfizerincreased its plan contribution by at least $750 million. Pfizer alsosettled with a key group of litigants and their counsel for another$820 million to cover its separate liability.

An entire class of silica personal injury claimants had voted

against the Quigley plan. Because Quigley proved, withoutcontradiction, that: (a) it had reasonably and properly placed thesilica claimants in a separate class; (b) the silica claimants wouldreceive less in a Chapter 7 liquidation than they would get underthe Plan; and (c) no class of creditors or shareholders junior to theclass would receive anything, the court crammed down the silicaclass i.e., held that its acceptance was unnecessary.

One group of asbestos claimants objected to the Quigleyplan, arguing that it had been proposed in bad faith becausePfizer had settled its own liabilities with other claimants, but notwith this group. The objectors also challenged Quigleysclassification of creditor claims, Pfizers payments to other settlersand the courts allocation of Pfizers derivative liability (23 percent)for Quigleys direct asbestos liability. After receiving undisputedevidence from Quigley and Pfizer going to the parties good faith,Quigleys independence from Pfizer and the future viability of

Quigleys reorganized business, the court rendered its decisionfrom the bench after hearing arguments. It found that: Quigleysplan had been proposed in good faith; Quigley had properlyclassified the different categories of creditors; Quigley wasentitled to cram down the class of silica claimants despite theirrejection of the plan; its prior allocation of Pfizers derivative_____________________________________________________________________________



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liability remained valid; and that Quigleys plan was in the bestinterests of Quigleys creditors.

(B) Flintkote

Flintkote Company and Flintkote Mines Limited have askedthe Bankruptcy Court to extend their exclusive periods to file aproposed Chapter 11 Plan until Nov. 30, 2013; and solicitacceptances for that Plan until Jan. 31, 2014, respectively. This isthe Debtors' 25th motion for exclusivity extensions. The Courthas granted 24 prior extensions of the exclusive periods.

On Dec. 21, 2012, the Court entered its memorandumopinion overruling objections to the Amended Joint Plan ofReorganization, confirming Plan and recommending theaffirmation of confirmation and of the so-called Section 524(g)injunction.

On Jan. 4, 2013, Imperial Tobacco Canada Limited and

certain of its wholly-owned subsidiaries, including GenstarCorporation, ("ITCAN") filed a notice of appeal from theconfirmation opinion and the confirmation order, and the appeal ispending before the District Court. ITCAN and the PlanProponents have each submitted all of their briefs, and the DistrictCourt has scheduled a hearing on July 31, to consider oralarguments concerning the appeal.

According to Flintkote, the Plan Proponents' cooperative

efforts to confirm a consensual plan will be protected by extendingthe exclusive periods. The Plan represents extensivenegotiations between the Plan Proponents and their cooperativeefforts to formulate a consensual plan of reorganization thatsuccessfully rehabilitates Flintkote and maximizes the pool ofassets available to creditors._____________________________________________________________________________



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The Official Committee of Asbestos Personal InjuryClaimants and the legal representative of future asbestosclaimants support the relief sought.

In line with the recent retirement of former Bankruptcy JudgeJudith Fitzgerald, Flintkote's Chapter 11 case has been re-assigned to Judge Mary F. Walrath of the U.S. Bankruptcy Courtfor the District of Delaware.

(C) W.R. Grace

W.R. Grace was due in court June 17 for a hearing over itsbankruptcy restructuring plan.

Bank lenders' appeal of orders confirming W.R. Grace &Co.'s plan were scheduled to be argued before the U.S. Court of

Appeals in Philadelphia. The plan, which was confirmed by thebankruptcy and district courts, can't be implemented because pre-

bankruptcy secured bank lenders filed an appeal.

The banks argue that they are entitled to $185 million ininterest on their claims because shareholders are retaining stockworth $4.9 billion. Banks filing the appeal include Bank of AmericaNA, Barclays Bank Plc and JPMorgan Chase Bank NA.

Grace, which has been in bankruptcy protection for anastounding 12 years, has nevertheless thrived, helped by the

shale revolution. "Obviously, we're all eager to come out ofbankruptcy," says CFO Hudson La Force.

Grace has projected to complete its reorganization by theend of this year. It filed for Chapter 11 in April 2001.

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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 of six companies whointend to issue shares of new common stock upon emergencepursuant to the plans of reorganization they filed or intend to file intheir Chapter 11 cases in June 2013. These companies are: KITDigital, Rotech Healthcare, American Airlines, PMI Group,

Conexant Systems, and K-V Pharmaceutical.

(A) KIT Digital

KIT Digital filed in early June a plan of reorganization thatproposes the cancellation of all shares of KDI Common Stock andthe issuance of two different series of shares of reorganized KDIClass A Common Stock.

The Reorganized KDI will issue Reorganized KDI Class A1Common Stock, representing 10.71% of all Reorganized KDIInterests, to the DIP Facility Lender. The remainder ofReorganized KDI Class A1 Common Stock will be reserved for (i)shares to be issued to WTI, (ii) shares to be issued to the Plan_____________________________________________________________________________



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Sponsor Group, and (iii) shares to be issued upon the conversionof the Reorganized KDI Class B Common Stock.

Reorganized KDI Class A2 Common Stock will be reserved

to be issued upon exercise of Reorganized KDI Warrants toEquity Subscribers and exercising Holders of Litigation Warrants.Proceeds of the exercise of Reorganized KDI Warrants will notexceed $12.5 million and will be used to redeem up to 50% of theReorganized KDI Class B Common Stock issued to the PlanSponsor Group pursuant to the Plan.

(B) Rotech Healthcare

Rotech Healthcare twice amended its Chapter 11 Plan ofReorganization and related Disclosure Statement in June. ThePlan consists of 115 separate Chapter 11 Plans -- one Plan foreach Debtor that will emerge as a reorganized entity.

Under the Plan, each holder of an Allowed First Lien Claim

will receive Cash in an amount equal to the Allowed amount of itsFirst Lien Claim and each holder of an Allowed Second LienNotes Claim will receive (x) its pro rata share of 100% of thecommon equity of the reorganized Company, subject to dilutionby the equity interests issued under the Management EquityIncentive Program, and (y) the right to participate in the NewSecond Lien Term Loan.

All the Company's outstanding shares will be cancelled and

extinguished, and no holder of an Equity Interest in Rotech willreceive a distribution on account thereof. Trade creditors andvendors who agree to maintain or reinstate payment terms asexisting prior to the Commencement Date will be paid in full uponthe effective date of the Plan. Other unsecured claims will be paid

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their Pro Rata Share of $1,500,000 and except as otherwise setforth in the Plan.

(C) American Airlines

Judge Sean Lane of the U.S. Bankruptcy Court in Manhattanapproved the disclosure statement explaining American Airlines'Chapter 11 plan of reorganization.

The Plan, to recall, is based on the proposed mergerbetween American Airlines and US Airways. Under the Plan,

equity in the combined company will be split, with 72% going toAMR Corp.'s stakeholders and creditors and 28% to US Airways.

New shares of common stock to be issued by the mergedcompany will be allocated to, among others, creditors, the AlliedPilots Association (13.5%), the Association of Professional Flight

Attendants (3%), and the Transport Workers Union of America,AFL-CIO (4.8%).

(D) PMI Group

Judge Brendan L. Shannon of the U.S. Bankruptcy Court inDelaware approved the disclosure statement explaining PMIGroup, Inc.'s plan of reorganization and scheduled theconfirmation hearing for mid July.

The Debtor's Plan provides that holders of allowed securedclaims generally will retain their liens or receive the benefit of theircollateral under the Plan.

Each holder of an allowed general unsecured claim willreceive its pro rata share of creditor cash and new common stock._____________________________________________________________________________



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Allowed General Unsecured Claims, estimated to range from $6.3million to $10.3 million, are expected to recover 26-27% of theirclaim amount. Allowed senior notes claims, estimated to total$691 million, are expected to recover 29% of their claim amount.

Allowed subordinated note claims, estimated to total $52.9 million,will recover 0% of their claim amount due to subordinationprovisions.

Each holder of an allowed convenience claim will receive90% of the amount of its allowed convenience claim in cash onthe effective date or as soon as reasonably practicable thereafter.

Holders of equity interests will receive no distribution underthe Plan.

(E) Conexant Systems

In early June, Conexant Systems, Inc., obtained bankruptcycourt approval of its chapter 11 plan of reorganization under

which it will issue new shares of common stock.

The new shares of common stock will be issued to SFMCapital Holdings Limited, an entity managed by Soros FundManagement LLC, which extended approximately $195 million ofsecured debt to the Debtor. The deal is part of the pre-arrangedrestructuring. The Secured Lender will also receive $76 million innew unsecured notes in exchange for its claims. The unsecurednotes will be issued by a holding company, which can elect to

either pay interest in cash or accrue interest in kind, and will benon-recourse to the reorganized Conexant operating company.

So unsecured creditors wouldn't oppose the plan, the potwas increased to $2.9 million from $2 million. In addition, secured

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lenders agreed to waive their $114.5 million deficiency claim, thusnot depleting the recovery by unsecured creditors.

(F) K-V Pharmaceutical

Currently pending for approval before the U.S. BankruptcyCourt in Manhattan is K-V Pharmaceutical Company's Sixth

Amended Joint Chapter 11 Plan of Reorganization and a relateddisclosure statement.

The Plan, which aims to restructure all of the Debtors'liabilities in a manner designed to maximize recovery tostakeholders and to enhance the financial viability of theReorganized Debtors, contemplates the cancellation of existingshares of common stock and the issuance of new shares ofcommon stock upon emergence from bankruptcy.

The Plan reflects an agreement and compromise among the

Debtors, the Official Committee of Unsecured Creditors, theholders of at least 75 percent in dollar amount of the Class 3Senior Secured Notes Claims, and the holders of approximately97 percent in dollar amount of Class 6 Convertible SubordinatedNotes Claims.

Under this agreement and compromise, each holder of anAllowed Senior Secured Notes Claim will receive its pro ratashare of a Cash distribution in the amount of (i) $231,409,850;

plus (ii) the amount of any postpetition interest and accretedoriginal issue discount amount determined by the BankruptcyCourt to be owed to the holders of Senior Secured Notes underthe subordination provisions of the Convertible SubordinatedNotes Indenture.

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The Debtors' existing indebtedness in respect of ConvertibleSubordinated Notes Claims will be cancelled and exchanged for 7percent of the New Common Stock of Reorganized KV.

Each holder of an Allowed General Unsecured Claim againstany Debtor will receive Cash in an amount equal its Pro RataShare of $10,250,000.

* * *

That ends the Beard Group Corporate Restructuring Review

for June 2013, 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 nocost -- and with no strings attached -- call Nina Novak at (240)629-3300 or visit bankrupt-dot-com-slash-free-trial and we'll addyou to the distribution list. That telephone number, again, is (240)629-3300 and that Web site address, again, is bankrupt-dot-com-slash-free-trial.

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

Documents

Beard Corporate Restructuring Review for June 2013