beard corporate restructuring review for aprll 2013

7/30/2019 Beard Corporate Restructuring Review for Aprll 2013

1/24

Beard Group Corporate Restructuring ReviewFor April 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/

____________________________________________________

Welcome to the Beard Group Corporate RestructuringReview for April 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/


2/24

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.

April 2013 Mega Cases

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

Danilo Muoz reports that four cases were filed in Aprilinvolving assets in excess of $100 million. During the first threemonths of 2013, 16 such cases were filed.

Of the four mega cases in April, one involved at least onebillion dollar in assets, raising this year's billion dollar case total tosix. Three of those billion dollar cases were filed in March.

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. A total of 64 mega filings with assets inexcess of $100 million were filed that year, compared to 82 megafilings during the same period in 2011 and 106 in 2010.

The largest Chapter filing in April this year was by CentralEuropean Distribution Corp. or C.E.D.C. one of the world's largest

vodka producers and Central and Eastern Europe's largestintegrated spirit beverages business. The Company's primaryoperations are in Poland, Russia and Hungary.

On April 7, 2013, CEDC and two subsidiaries soughtbankruptcy protection under Chapter 11 of the Bankruptcy Code_____________________________________________________________________________

Beard Group Corporate Restructuring Review for April 2013 -- page 2


3/24

with the Bankruptcy Court for the District of Delaware [Lead CaseNo. 13-10738]. CEDC filed, together with its petition, aprepackaged Chapter 11 plan that reduces debt by US$665.2million.

The Company listed total assets of US$1.98 billion and totalliabilities of US$1.74 billion at September 30, 2012.

The Delaware Bankruptcy Court scheduled a hearing toconsider confirmation of the Plan on May 13, 2013. According tothe official vote tabulation prepared by CEDC's voting andinformation agent, impaired creditors have voted overwhelmingly

to accept the Plan.

The financial restructuring, which will eliminateapproximately US$665.2 million in debt from CEDC's and CEDCFinCo's balance sheets, does not involve the Company'soperating subsidiaries in Poland, Russia, Ukraine or Hungary andshould have no impact on their business operations. Operationsin these countries are independently funded and will continue to

generate revenue during this process. All obligations toemployees, vendors, credit support providers and governmentauthorities will be honored in the ordinary course withoutinterruption.

The second largest Chapter 11 filing was by RotechHealthcare and 114 of its subsidiary companies. Rotech filedpetitions seeking relief under chapter 11 of the Bankruptcy Codewith the Bankruptcy Court for the District of Delaware [Lead Case

No. 13-10741] to implement a pre-arranged plan negotiated withsecured lenders.

Rotech's balance sheet at September 30, 2012, showed$255.76 million in total assets, $601.98 million in total liabilities,and a $346.22 million total stockholders' deficiency._____________________________________________________________________________



4/24

Based in Orlando, Florida, Rotech provides home medicalequipment and related products and services in the United States,with a comprehensive offering of respiratory therapy and durable

home medical equipment and related services. The companyprovides equipment and services in 48 states throughapproximately 500 operating centers located primarily in non-urban markets.

Rotech also filed its plan of reorganization as the next steptowards completing its debt reduction and restructuringannounced on March 15, 2013. Once the plan, which is

supported by Consenting Holders with a majority in outstandingprinciple amount of both Rotech's 10.75% First Lien SecuredNotes and 10.5% Senior Second Lien Secured Notes, isconfirmed, Rotech expects it will have eliminated approximatelyhalf of its secured debt.

The third largest Chapter 11 filing was by GMX ResourcesInc., an independent natural gas production company. Oklahoma

City-based GMXR has 53 producing wells in Texas and Louisiana,and 7 producing wells in New Mexico. The Company's balancessheet at Sept. 30, 2012, showed $343.14 million in total assetsand $467.64 million in total liabilities.

GMXR filed for Chapter 11 protection with the BankruptcyCourt for the Western District of Oklahoma [Case No. 13-11456],on April 1, 2013, to pursue a sale of the business to securedlenders in exchange for $324.3 million in first-lien notes.

Another mega case filer is Yarway Corporation, which soughtChapter 11 protection with the Bankruptcy Court for the District ofDelaware [Case No. 13-11025], on April 22, 2013, to deal withclaims arising from asbestos containing products it allegedly soldas early as the 1920s._____________________________________________________________________________



5/24

Yarway, a unit of Tyco International Ltd., originallymanufactured pipe clamps, steam traps, valves and controls.Yarway's asbestos-related liabilities derive from the company's (i)

purported use of asbestos-containing gaskets and packing,manufactured by others, in its production of steam valves andtraps from the 1920s to 1970s, and (ii) alleged manufacture ofexpansion joint packing that was allegedly made up of acompound of Teflon and asbestos from the 1940s to the 1970s.

Over the past five years, about 10,021 new asbestos claimshave been asserted against Yarway, including 1,014 in Yarway's

2013 fiscal year ending March 31, 2013.

Yarway estimated assets and debts in excess of $100 millionas of the Chapter 11 filing.

Two of the four bankruptcy mega filings in April involved aprepackaged Chapter 11 plan. During the first quarter of 2013, 10of the 16 mega filings involved a prepackaged filing.

For fiscal year 2012, 13 of the 64 mega cases -- about 20%-- were prepackaged in nature. This is an increase from 2011where 13 of the 83 mega cases -- or about 16% -- were prepacks.For fiscal year 2010, a total of 35 prepacks/pre-arranged caseswere filed out of the 106 bankruptcy mega cases -- or about onein every three filings in 2010.

For April this year, two of the four mega filings came from the

manufacturing industry. During the four months of 2013, 10 of themega filings belonged to the information industry while 4 areinvolved in manufacturing.

The distribution of bankruptcy mega cases by industry for2012 is:_____________________________________________________________________________



6/24

Manufacturing 10 cases 16%Information 8 cases 13%Finance & Insurance 7 cases 11%

Real Estate 6 cases 9%Transportation 5 cases 8%Others 28 cases 44%

The distribution of bankruptcy mega cases by industry for2011 is:

Manufacturing 14 cases 17%

Accommodation & Food Services 12 cases 14%Finance & Insurance 9 cases 11%Information 8 cases 10%Retail Trade 7 cases 8%Real Estate 7 cases 8%Others 26 cases 32%

Three of the four Chapter 11 mega cases in April were filed

in the Bankruptcy Court for the District of Delaware.

For the first four months of 2013, the Delaware BankruptcyCourt cornered 14 of the 20 mega filings, while the SouthernDistrict of New York had two mega filings.

Last year, the Bankruptcy Court for the Southern District ofNew York was the most favored venue for mega filers with 21.The Delaware Bankruptcy Court had 19 of the mega cases.

In 2011, the Delaware Bankruptcy Court was the mostfavored venue with 38 filings, or 46% of the mega cases, followedby the Southern District of New York with 16 filings, or 19% of themega cases, and by the Northern District of Texas with 4 filings,

_____________________________________________________________________________



7/24

or 5% of the mega cases. The rest of the bankruptcy mega casesare spread evenly throughout 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.

For 2011, the largest Chapter 11 filing was filed by MFGlobal 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 four months 2013, the largest Chapter 11 filing wasfiled by Dex One Corp., which listed total assets of $2.84 billionand total liabilities of $2.79 billion in its petition.

For the first three months of 2013, Young Conaway Stargatt& Taylor LLP represented 5 of the 20 mega filings either ascounsel or co-counsel. The law firm represented the SchoolSpecialty, Penson Worldwide, Super Media, Otelco and RotechHealthcare in their respective Chapter 11 cases.

_____________________________________________________________________________



8/24

Anticipated Large Chapter 11 Filings

Now, let's turn to the topic of large chapter 11 filings Troubled

Company Reporter editors anticipate in the near-term.

Carlo Fernandez identified 5 companies that may be close tofiling for bankruptcy. These are Orchard Supply, Energy FutureHoldings, Excel Maritime Carriers, Maxcom Telecom andPhysiotherapy Associates.

(A) Orchard Supply

Orchard Supply Hardware Stores Corp. has reportedly hiredrestructuring lawyers at DLA Piper and financial advisors from FTIConsulting. Lenders involved in restructuring talks have enlistedturnaround firm Zolfo Cooper LLC and lawyers at Dechert LLP,The Wall Street Journal reported, citing people familiar with thetalks.

The sources said Orchard Supply and its lenders arediscussing an out-of-court restructuring or a prepackagedbankruptcy filing.

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

Orchard Supply has obtained a waiver from its term loanlenders related to the leverage ratio covenant for the fiscalquarters ending February 2, 2013 and the quarter ending May 4,2013.

_____________________________________________________________________________



9/24

S&P in April lowered its corporate credit rating on OrchardSupply one notch to 'CCC-'. S&P believes that a default,distressed exchange, or redemption could be inevitable within sixmonths, without unanticipated significantly favorable changes in

the company's circumstances.

(B) Energy Future Holdings

Energy Future Holdings Corp. reported a net loss of $569million on $1.26 billion of operating revenues for the three monthsended March 31, 2013, wider than the net loss of $304 million on

$1.22 billion of revenue reported during the same period last year.

In a regulatory filing in April, Energy Future confirmed it hasbeen in talks with creditors regarding proposed changes to theCompanies' capital structure. This includes a consensualrestructuring of TCEH's approximately $32 billion of debt via aprepackaged plan of reorganization by commencing voluntarycases under Chapter 11 of the U.S. Bankruptcy Code.

No agreement has been reached.

Energy Future has retained Kirkland & Ellis LLP andEvercore Partners for advice on the restructuring. Creditors haveretained Paul, Weiss, Rifkind, Wharton & Garrison LLP andMillstein & Co., L.P.

Energy Future, formerly known as TXU Corp., is a privately

held diversified energy holding company with a portfolio ofcompetitive and regulated energy businesses in Texas. TheCompany's balance sheet at March 31, 2013, showed $40.1billion in total assets and $51.6 billion in total liabilities.

_____________________________________________________________________________



10/24

(C) Excel Maritime

Excel Maritime Carriers Ltd. may file for bankruptcyprotection with a restructuring plan negotiated with lenders. To

enable ongoing discussions, lenders have agreed to extend theforbearance they had granted in connection with the principalinstallments that have become due in the current fiscal yearthrough May 31, 2013. The Company's access to the escrowedfunds to fund its equity raising commitment has been similarlyextended to May 31.

Dow Jones' Daily Bankruptcy Review reported in April that

Excel has hired Skadden, Arps, Slate, Meagher & Flom LLP andBracewell & Giuliani LLP as its attorneys; and Miller Buckfire &Co. as its financial adviser.

Excel owns a fleet of 39 vessels. It is based in Greece butincorporated in Liberia.

(D) Maxcom Telecom

Maxcom Telecomunicaciones SAB has admitted it'sconsidering a Chapter 11 bankruptcy filing, among other options,after a takeover deal with Ventura Capital Privado SA collapsed.

The Mexican phone company said in a statement that only61.93% of old notes were tendered in a bond exchange, notenough to complete a swap, which was a requirement for an

equity offer from Ventura Capital.

"In light of this outcome, Maxcom is considering all of itsalternatives including, but not limited to, commencement of aChapter 11 case or other restructuring proceeding," the companysaid in the statement._____________________________________________________________________________



11/24

Maxcom was seeking to complete the 2.90-pesos-a-sharetakeover offer, which would include an investment of $45 millionto use for network improvements, to better compete with America

Movil SAB, Mexico's biggest phone company.

Maxcom said its operational and financial position hasfurther deteriorated by virtue of not having received the capitalcontribution and, without additional sources of capital, thecompany may not be able to make the coupon payment due onJune 15, 2013, with respect to the company's outstanding seniorsecured notes and the Company may not be able to meet other

financial obligations as they come due.

The company said it is currently assembling a plan intendedto achieve that restructuring, which includes the company'sassessment of the implications that the plan will have, if any, onits financial position, results of operations, cash flows and relateddisclosures.

The company expects to report 2.2 billion pesos in netrevenues for the year ended December 31, 2012. The companyexpects to report net loss of 136.1 million pesos for the yearended December 31, 2012, which reflects operating loss, as wellas interest expense.

(E) Physiotherapy Associates

Physiotherapy Associates Holdings Inc., a provider ofoutpatient physical therapy, on May 1 didn't make a $12.5 millioninterest payment on senior notes.

Although there is 30-day grace period for the payment, thefailure to pay ended a waiver under a bank-loan agreement_____________________________________________________________________________



12/24

required by failure to file 2012 financial statements. Moody'slowered the corporate credit another two grades to Caa3, on topof a downgrade one month ago.

The Exton, Pennsylvania-based company generated $365million in revenue for the year ended in September. The companywas acquired in May 2012 by Court Square Capital Partners LP.

* * *

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) Patriot Coal

Ivy Magdadaro reports that a long-awaited hearing began onApril 29 in the bankruptcy case of Patriot Coal Corp. where thecompany insists it must significantly cut thousands of retirees'health care and pension benefits or risk liquidation -- a claim thatthe United Mine Workers of America union strongly rejects. Thescenario highlights a management-labor fight._____________________________________________________________________________



13/24

Patriot's benefits cuts have been the most contentiousaspect of its bankruptcy case, when it estimated it would have tospend $1.6 billion to cover retirees' health care costs.

The union labeled the proposed cuts as immoral and unfair.The union, along with consumers, have staged weeks of protestsagainst Patriot and former parent, Peabody Energy Corp.

In March, Patriot gave the union a proposal that wouldcreate a trust with a maximum of $300 million from future profit-sharing to fund some level of health benefits. Patriot also agrees

to give the union a 35% equity stake in the company once itemerges from bankruptcy.

Union leaders have alleged that when Patriot was spun offas a separate company in 2007, Peabody saddled it with pensionand long-term health care obligations that would prove to be tooburdensome and would have to be shed. Peabody denied allthese allegations, rather it pointed out that it was on Patriot's

watch when a series of unforeseen events affecting coalproducers occurred -- which include the global financial crisis,burdensome federal regulations and drop in the price of coal.

Patriot itself is seeking court permission to investigate its2007 spinoff from Peabody, saying the transaction freed Peabodyof $600 million in healthcare and environmental liabilities.

Also in March, Patriot sued Peabody saying it wants to

ensure that Peabody doesn't try to use the bankruptcy to avoid itsown health care obligations to some 3,100 retirees whosebenefits would not be included in the package Patriot proposed tothe union.

_____________________________________________________________________________



14/24

The Patriot-Peabody lawsuit was the first order of businessat the April 29 hearing.

Attorneys for Patriot accused Peabody of pursuing "a free

ride on Patriot's bankruptcy to escape its obligations."

Attorneys for Peabody asked the judge to dismiss thecomplaint, calling the lawsuit premature and not filed in the proper

jurisdiction. Peabody said the lawsuit isn't "ripe" because itdepends on the outcome of Patriot's negotiation with its union.

The bankruptcy judge has not issued a ruling on the matter.

Patriot, which mines for coal in West Virginia and Kentucky,

filed for bankruptcy in a Missouri court in July as coal demanddecreased and it faced stricter environmental regulations.

(B) Ambac Financial

Ambac Financial Group Inc. finally cleared the last remaininghurdle to its exit from Chapter 11 protection when it obtainedbankruptcy court approval on April 29 of a settlement with US taxauthorities, the Internal Revenue Service in particular, over itstreatment of credit-default swaps.

Ambac will pay $1.9 million to the United States, on behalf ofthe IRS, under the settlement, while Ambac Assurance Corp willpay $100 million to the United States. The company will also pay

additional amounts, based on any payments received under anexisting tax-sharing agreement.

The IRS has disputed the eligibility of billions of dollars of taxrefunds Ambac said it could claim as a result of its net operating

_____________________________________________________________________________



15/24

losses. The settlement reduces Ambac's entitlement to theserefunds by $1.1 billion.

The settlement also resolves an adversary complaint filed by

Ambac against the IRS in 2010, seeking a declaration that Ambacand members of its consolidated tax group have no tax liability fortax years 2003 to 2008, and that Ambac is entitled to retain about$700 million in tax refunds it received from carrying back lossesresulting from credit default swap contracts.

Delayed Exits From Chapter 11

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

(A) W.R. Grace

W.R. Grace & Co., still in Chapter 11 reorganization after 12years, received court approval for bonuses costing $18.9 million iftargets are met. For executives, the bonuses will be paid in stock.There were no objections. The company has won court approvalto pay bonuses every year since the bankruptcy filing in April2001 to deal with asbestos claims.

The company may also soon be in a position to exit

bankruptcy. The bank lenders' appeal of the orders confirmingGrace's plan will be argued in June in the U.S. Court of Appeals inPhiladelphia. The plan, which was confirmed by the bankruptcyand district courts, can't be implemented because pre-bankruptcysecured bank lenders filed an appeal. Arguments will be held onJune 17 in the U.S. Court of Appeals in Philadelphia._____________________________________________________________________________



16/24

The banks argue on appeal that they are entitled to $185million in interest on their claims because shareholders areretaining stock worth $4.9 billion. Banks filing the appeal include

Bank of America NA, Barclays Bank Plc and JPMorgan ChaseBank NA.

Grace projects it could complete its reorganization by theend of this year.

(B) Flintkote

The U.S. Bankruptcy Court for the District of Delawareapproved a stipulation that resolves a bid by Imperial TobaccoCanada Limited and certain wholly-owned subsidiaries, includingGenstar Corporation, for a District Court review of the BankruptcyCourt's order confirming The Flintkote Company, et al.'s Plan ofReorganization.

The stipulation was entered among Flintkote, Imperial, theAsbestos Personal Injury Claimants, and James J. McMonagle, inhis capacity as Future Claimants Representative.

Judge Fitzgerald has confirmed Flintkote's Amended JointPlan of Reorganization, which deals with asbestos personal injuryclaims. The Plan is supported by the Official Committee of

Asbestos Personal Injury Claimants and the Future Claimants'Representative. Judge Fitzgerald's findings that the Plan

complies with Sections 1129 and 524(g) in all respects still needto be affirmed by the District Court.

Imperial expressed that it wanted a review of theconfirmation opinion and confirmation order through an appeal.The Plan Proponents wished to avoid post-trial motion practice_____________________________________________________________________________



17/24

and further wished to reach an agreement on the standard ofreview applicable to the Bankruptcy Court's findings of fact.

In relation to this, Imperial and the Plan Proponents have

reached an agreement on the procedure for the District CourtReview that provides for an orderly, efficient and timely reviewprocess.

The stipulation provides for, among other things:

1. All findings of fact of the Bankruptcy Court will besubject to the "clearly erroneous" standard of review

by the District Court.

2. Neither Imperial nor any of the Plan Proponents willrequest an evidentiary hearing or affirmativelyseek to reopen the evidentiary record before theDistrict Court. The parties agree that, absentrequest for an evidentiary hearing orsupplementation of the evidentiary record as raised

sua sponte by the District Court, the District CourtReview will be based solely on the record beforethe Bankruptcy Court and the briefingcontemplated in the stipulation.

(C) Quigley

In April, a Texas appeals court overturned an $8.7 million

judgment against Pfizer Inc. and its defunct subsidiary QuigleyCo. Inc. after the company announced it had reached asettlement in bankruptcy court with a group of asbestos victims.

_____________________________________________________________________________



18/24

Pfizer previously set a June 26, 2013 confirmation hearingfor its fifth amended Chapter 11 reorganization plan, almost nineyears after the pharmaceutical giant entered bankruptcy.

The June hearing date marks Quigley's first bid forconfirmation since U.S. Bankruptcy Judge Stuart M. Bernsteindenied its fourth amended plan in September 2010 after findingthat the company manipulated creditor votes and engineered thecase for its own benefit.

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

* * *

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 five companies whoissued or will issue shares of new common stock uponemergence pursuant to the plans of reorganization they filed orintend to file in their Chapter 11 cases in April 2013. Thesecompanies are: Newland International, Eastman Kodak, Ambac

Financial, Reader's Digest, and Geokinetics, Inc.

_____________________________________________________________________________



19/24

(A) Newland International

Newland International Properties Corp., a unit of Panama-based Ocean Point Development Corp. that developed luxury

hotel and condominium known as the "Trump Ocean ClubInternational Hotel & Tower," located in Panama City, Panama,has sought Chapter 11 protection in New York in the UnitedStates with a bankruptcy exit plan that would further restructure$220 million secured notes used to finance the project.

Bankruptcy Judge Martin Glenn will convene a hearing toconsider confirmation of the Plan and approval of the explanatory

disclosure statement on May 28, 2013.

Prepetition, the Debtor negotiated with noteholders and onJan. 23, 2013, executed a plan support agreement withNoteholders representing 41.76% in aggregate principal amountof the prepetition senior secured notes. The Chapter 11 plan filedby the Debtor on the Petition Date embodies the terms of thePSA.

The Plan provides for these terms:

* Unclassified claims. Administrative expense claims,professional compensation claims and priority tax claims will bepaid in full and are unimpaired. Recovery: 100%

* Secured Notes. Each holder of an allowed prepetitionsenior secured notes claim will receive new notes. The new

notes will reschedule the Debtor's principal payment obligations tomore closely align such obligations with the cash flows expectedto be generated by sales and closings on unit purchaseagreements Noteholders are impaired. Recovery: 95% to 100%.

_____________________________________________________________________________



20/24

* General Unsecured Claims. General unsecured claims,including trade claims, will be reinstated, paid in full or otherwiserendered unimpaired. The Debtor owes $32.1 million in principalamount of unsecured trade debt as of March 13, 2013. Recovery:

100%.

* Interests. Interests will be reinstated. Interest holdersare unimpaired and are presumed to have accepted the Plan.Recovery: N/A

The Debtor commenced solicitation of votes prepetition.Only the lone impaired class -- the secured noteholders -- was

entitled to vote on the Plan. According to Epiq BankruptcySolutions, LLC, the tabulation agent, accepting votes from holdersof 100% in number and 100% in amount of all voted claims fromnoteholders were received prior to the voting deadline.

(B) Eastman Kodak

Eastman Kodak Co. filed a reorganization plan anddisclosure statement on April 30, just before the deadline set inthe loan agreement financing for the Debtor to file a plan. Theplan offers full payment to holders of the remaining $375 million insecond-lien notes by giving them 85 percent of the stock onemergence from bankruptcy.

Negotiations are also under way on a rights offering togenerate additional cash so the second-lien debt can be paid in

full in cash, with interest. The draft disclosure statement showedthe second-lien noteholders and unsecured creditors wouldrecover nothing in liquidation. Other than the conclusion about norecovery for junior creditors, the disclosure materials as yet don'thave a liquidation analysis explaining the zero recovery.

_____________________________________________________________________________



21/24

The plan offers 15 percent of the stock to unsecuredcreditors with $2.7 billion in claims. On account of their $635million claim for loss of retirement benefits, retirees will share prorata in the 15 percent of the stock. The disclosure statement

doesn't predict how much unsecured creditors and retirees shouldrecover under the plan. It says the recovery under the plan wouldbe "better than liquidation" where they would receive nothing.

(C) Ambac Financial

Ambac Financial Group, Inc. on May 1 announced the

effectiveness of its Second Modified Fifth Amended Plan ofReorganization, which marks the completion of its financialrestructuring and Ambac's emergence from Chapter 11bankruptcy protection.

Under the terms of the restructuring, all allowed claims ofAmbac's former creditors were discharged and such creditorsreceived new common stock, and in certain instances, new

warrants, issued by the reorganized company. Ambac's newcommon stock and warrants are listed on the NASDAQ GlobalSelect Market under the ticker symbols AMBC and AMBCW,respectively. All common stock of the Company in existence priorto Ambac's emergence from bankruptcy has been cancelled.Holders of such existing stock have not, and will not, receivedistributions under the Plan.

Although Ambac Financial secured court approval of its

Chapter 11 plan more than a year ago, the lack of resolution ofclaims by the Internal Revenue Service prevented the insuranceholding company from implementing the plan and emerging frombankruptcy. On April 8, Ambac filed papers in bankruptcy courtfor approval of settlement with the IRS and announced that mostother conditions to the settlement have been satisfied. The_____________________________________________________________________________



22/24

settlement calls for Ambac to pay the IRS $1.9 million while theinsurance company pays $100 million. In the future, Ambac willalso pay the IRS a portion of money it receives from a tax sharingagreement. The settlement reduces net operating losses by $1.1

billion.

(D) Reader's Digest

Reader's Digest Association Inc.'s publisher received a NewYork bankruptcy judge's approval of its disclosure statement,allowing the company to begin soliciting creditor votes for its

Chapter 11 exit plan.

According to the report, the plan calls for RDA Holdings Co.,which entered bankruptcy in February for the second time, to beturned over to bondholders' control upon its emergence from theChapter 11 proceedings. The plan calls for the conversion of$231 million in senior noteholder claims to new equity andanother $244.9 million to general unsecured creditors.

Reader's Digest's revised reorganization plan and disclosurestatement explains to pay unsecured creditors with $380 million inclaims why they should be satisfied with a sharing of $500,000 fora recovery of 0.1%.

The plan is designed to carry out an agreement negotiatedbefore the Chapter 11 filing with holders of 70% of what amountsto $475.9 million in second-lien floating-rate notes. The plan

would reduce debt by 80% from conversion $231 million of thenotes into the new equity. The noteholders' deficiency claim of$244.9 million would be treated as a general unsecured claim ifunsecured creditors don't vote for the plan.

_____________________________________________________________________________



23/24

(E) Geokinetics

Geokinetics Inc. has an approved Chapter 11 plan. Holdersof $300 million in 9.75 percent senior secured notes take

ownership in exchange for debt, for a predicted 70 percentrecovery. Before bankruptcy, holders of 85 percent of the notesvoted for the plan as did holders of all the preferred stock.Holders of $141 million in preferred stock receive $6 million incash for a 4 percent recovery, according to the disclosurestatement. Unsecured creditors with as much as $13.2 million inclaims will be paid in full.

The Company expects to emerge from chapter 11 in earlyMay 2013 after the conditions to effectiveness of the Plan aresatisfied.

The Plan, which was overwhelmingly approved by theCompany's stakeholders in connection with its pre-packagedsolicitation of votes for the Plan, provides for the payment in full ofthe Company's $50 million secured credit facility, the conversion

of the $300 million (plus accrued and unpaid interest) of theCompany's senior secured notes into newly issued commonequity of the reorganized Company and the payment of allowedgeneral unsecured claims in full either at the conclusion of thechapter 11 case or in the ordinary course of business. Theoutstanding borrowings under the Company's debtor-in-possession credit facility will be repaid with shares of NewCommon Stock at a discount to Plan value, as provided in thePlan.

* * *

That ends the Beard Group Corporate Restructuring Reviewfor April 2013, brought to you by the editors of the Troubled_____________________________________________________________________________



24/24

Company 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 add

you to the distribution list. That telephone number, again, is (240)629-3300 and that Web site address, again, is bankrupt-dot-com-slash-free-trial.

Tune in to our next monthly Restructuring Review on June16th. Thank you for listening.

_____________________________________________________________________________

beard corporate restructuring review for aprll 2013

Documents