Beard Corporate Restructuring Review for July 2013

7/29/2019 Beard Corporate Restructuring Review for July 2013

1/23

Beard Group Corporate Restructuring ReviewFor July 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 July 2013, brought to you by the editors of theTroubled 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/


2/23

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

fifth, information you're unlikely to find elsewhere aboutnew publicly traded securities being issued by

chapter 11 debtors.

July 2013 Mega Cases

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

Danilo Muoz reports that there were four bankruptcy megafilings in July that involved companies with more than $1 billion intotal assets, including the largest Chapter 9 municipal bankruptcyfiling in history.

In addition, there were three others which filed forbankruptcy in July listing estimated assets of between $100million to $500 million, including one Chapter 15 bankruptcy filing.

The total number of bankruptcy mega filings in July was six,a decrease compared to eight for the month of June, whichincluded two companies with more than $1 billion in assets.There were only two bankruptcy mega filings in May 2013.

During the first seven months of 2013, there were 37 megabankruptcy filings reported, including 11 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 of_____________________________________________________________________________

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


3/23

which were filed in May 2012. There were a total of 64 megafilings 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 July was filed by Mexico City-based Maxcom Telecomunicaciones, S.A.B. de C.V., which filedfor Chapter 11 on July 23, 2013, with the U.S. Bankruptcy Courtfor the District of Delaware [case number 13-11839] before JudgePeter Walsh, to implement its previously announcedrecapitalization and debt restructuring. The Company listed$11.11 billion in total assets and $402.28 million in total liabilities.

Under the Chapter 11 plan of reorganization, Maxcom willcomplete a comprehensive recapitalization and debt restructuringthat is expected to significantly reduce Maxcom's debt serviceexpense and position Maxcom for growth with a US$45 millioncapital infusion. As of the voting deadline of July 23, 2013, over98 percent in amount and over 93 percent in number of theholders of 11% Senior Notes due 2014 that cast ballots voted toaccept the Plan, which exceeds the amount required for the court

to approve the Plan.

Maxcom expects to complete its restructuring, which issubject to U.S. Bankruptcy Court approval and the conditions setforth in the recapitalization agreement and the restructuring andsupport agreement, within approximately 60 days and anticipatesemerging from Chapter 11 by early fall.

The second largest Chapter 11 filing in July was by Hamilton,

Bermuda-based Excel Maritime Carriers Ltd. and its affiliates,which listed $2.72 billion in assets and $1.16 billion in liabilities.The Company filed for Chapter 11 protection on July 1, 2013, withthe Bankruptcy Court for the Southern District of New York [casenumber 13-23060] before Judge Robert Drain.

_____________________________________________________________________________



4/23

Excel Maritime owns and operates a fleet of 40 dry bulkcarriers and a provider of worldwide seaborne transportationservices for dry bulk cargoes, such as iron ore, coal and grains,as well as bauxite, fertilizers and steel products. Excel Maritime

concurrently announced that it has entered into an agreementwith its senior secure lenders on the terms of a financialrestructuring, the terms of which are substantially similar to thepreviously announced agreement in principle the Companyreached with the steering committee of its senior lenders, thereport related. This agreement provides the Company with up to$80 million of additional liquidity, significantly strengthens itsfinancial profile and positions Excel Maritime for future growth and

success.

In addition, Stamford, Connecticut-based Cengage Learningfiled for Chapter 11 with the U.S. Bankruptcy Court for theSouthern District of New York [case number 13-44106]. Cengageestimated assets and liabilities of more than $1 billion.

Cengage Learning provides innovative teaching, learning

and research solutions for the academic, professional and librarymarkets worldwide. The company's products and services aredesigned to foster academic excellence and professionaldevelopment, increase student engagement, improve learningoutcomes and deliver authoritative information to peoplewhenever and wherever they need it.

In conjunction with the Chapter 11 filing, Cengage Learningentered into a restructuring support agreement with an ad hoc

committee of first lien lenders who hold approximately $2 billion ofthe Company's first lien debt. In this agreement, the lenderscommitted to support a restructuring transaction that will eliminatemore than $4 billion in debt from Cengage Learning's balancesheet and position the Company to implement management'sstrategic business plan._____________________________________________________________________________



5/23

The city of Detroit, Michigan filed the largest Chapter 9municipal bankruptcy petition in U.S. history, listing assets andliabilities in excess of $1 billion. Detroit filed for Chapter 9

bankruptcy on July 18 with the Bankruptcy Court for the EasternDistrict of Michigan [case number 13-53846].

The city of Detroit was weighed down by more than $18billion in accrued obligations. Emergency manager Kevin Orr saidhe hopes to get through the bankruptcy process by late summeror fall of next year.

In addition to these billion-dollar Chapter 11 mega filings, twoother companies filed for Chapter 11 listing estimated assets ofbetween $100 million to $500 million -- Agfeed Industries Inc. and

American Roads LLC. Pioneer Freight Futures Company Limitedfiled for Chapter 15 bankruptcy listing estimated assets ofbetween $100 million to $500 million.

AgFeed Industries, formerly known as M2 P2, LLC, is an

international agribusiness with operations in the U.S. and China.

AgFeed Industries and its affiliates filed voluntary petitionsunder Chapter 11 of the Bankruptcy Code on July 15 with theBankruptcy Court for the District of Delaware [Case No. 13-11761]. The Company has a deal to sell most of its subsidiariesto The Maschhoffs, LLC, for cash proceeds of $79 million, absenthigher and better offers.

American Roads LLC operates highways including the mile-long Detroit Windsor Tunnel linking the U.S. with Canada.

American Roads sought bankruptcy court protection on July 25,2013, with the Bankruptcy Court for the Southern District of NewYork [Case No. 13-12412] citing $830 million in debt related toswaps and bonds._____________________________________________________________________________



6/23

Pioneer Freight Futures Co. Ltd. is a defunct British VirginIslands-based firm that traded shipping futures, filed for Chapter15 bankruptcy to help further its liquidation by tracking down any

assets that it may have in the U.S.

Two of the mega filings in July involved a prepackagedChapter 11 filing that of Excel Maritime and Maxcom. Duringthe first seven months of 2013, 14 of the 37 mega filings involveda prepackaged Chapter 11, or 38% of the Chapter 11 megafilings.

For fiscal year 2012, 13 of the 64 mega cases involved aprepackaged 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 July, two mega filings were engaged ininformation while the rest were spread through differentindustries.

During the seven months of 2013, 12 of the mega filingsbelonged to the information industry, 7 are involved inmanufacturing and 4 are involved in healthcare.

The Bankruptcy Court for the District of Delaware and the

Southern District of New York had two mega filings each in July.However, for the seven months of 2013, the Bankruptcy Court forthe District of Delaware was the most favored venue with 22 ofthe 37 mega filings, while the next closest, the Bankruptcy Courtfor the Southern District of New York had only 6 mega filings.

_____________________________________________________________________________



7/23

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 Districtof 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 variousbankruptcy 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 MFGlobal Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MF

Global 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 seven months of 2013, the largest Chapter 11 filingwas filed by Maxcom Telecomunicaciones, S.A.B. de C.V., which

filed for Chapter 11 on July 23, 2013, with the U.S. BankruptcyCourt for the District of Delaware, listing $11.11 billion in totalassets and $402.28 million in total liabilities.

For the first seven months of 2013, Young Conaway Stargatt& Taylor LLP represented 7 of the 37 mega filings either as_____________________________________________________________________________



8/23

counsel or co-counsel. The law firm represented the SchoolSpecialty, Penson Worldwide, Super Media, Otelco and RotechHealthcare, Agfeed Industries and Maxcom Telecomunicacionesin 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 two companies that may be closeto filing for bankruptcy. These are: RadioShack and EnergyFuture Holdings.

(A) RadioShack

RadioShack Corp. has tapped Peter J. Solomon Co. to raise

financing.

The Wall Street Journal's sources said RadioShack doesn'thave a clear strategy for its finances and is exploring alternatives.They said the chain has sufficient liquidity and time to size up itsoptions.

Debtwire in July reported that RadioShack was looking tohire a financial adviser to help fix the chain's balance sheet.

RadioShack sells consumer electronics and peripherals,including cellular phones. It operates roughly 4,700 stores in theU.S. and Mexico.

_____________________________________________________________________________



9/23

RadioShack had a net loss of $139.4 million in 2012, ascompared with net income of $72.2 million in 2011.

RadioShack's balance sheet at Dec. 31, 2012, showed $2.29

billion in total assets, $1.70 billion in total liabilities and $598.7million in total stockholders' equity.

(B) Energy Future

Energy Future Holdings Corp is mulling a voluntary Chapter11 filing for some or all of its subsidiaries, the company said in a

regulatory filing in early August.

The Company said it is engaged in discussions with advisorsregarding changes to its capital structure.

Fitch Ratings has downgraded the issuer default ratings ofEnergy Future to 'CC' from 'CCC'. The ratings reflect the highlyleveraged capital structure, sufficient but declining liquidity, and

currently constrained, but growing distributions and tax paymentsfrom subsidiary Oncor Electric Delivery Company LLC.

For the second quarter 2013, Energy Future reported a netloss of $71 million compared with a net loss of $696 million for thesecond quarter 2012.

Discussions with holders of first lien senior secured claimsregarding a restructuring began in March this year.

As of June 30, 2013, the Company had $39.10 billion in totalassets against $50.66 billion in total liabilities.

_____________________________________________________________________________



10/23

Energy Future is a privately held diversified energy holdingcompany with a portfolio of competitive and regulated energybusinesses in Texas.

* * *

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 trial

subscription to the TCR at no cost or obligation.

Major Pending Disputes In Chapter 11 Cases

Next, we'll quickly review major pending disputes in largechapter 11 cases that Troubled Company Reporter editors

monitor day-by-day.

(A) Patriot Coal

Ivy Magdadaro reports that Patriot Coal Corp. could know bythe end of August whether a district judge in St. Louis, Missouri,will uphold a late May ruling by a bankruptcy judge allowing thecoal producer to modify union contracts and the guarantee of

lifetime medical care for retirees.

Previously, after conducting a trial, U.S. Bankruptcy JudgeKathy A. Surratt-States concluded in late May that Patriot meteach of the five requirements for modifying labor contracts andretiree health benefits. The United Mine Workers union appealed._____________________________________________________________________________



11/23

The union filed its brief on July 2, explaining why the bankruptcyjudge was in error. Patriot's brief followed on July 26. Theunion's reply brief was due Aug. 7. The matter is before U.S.District Judge Carol E. Jackson.

Patriot has asserted that the union's appeal is futile becauseJudge Jackson can't overturn findings of fact by Judge Surratt-States unless they were "clearly erroneous." The appeals werefiled in the first week of June.

The appeal is United Mine Workers of America v. PatriotCoal Corp. (In re Patriot Coal Corp.), 13-01086, U.S. District

Court, Eastern District Missouri (St. Louis).

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

(B) Detroit

U.S. Bankruptcy Judge Steven Rhodes agreed with Detroitat a July 24 hearing and stopped lawsuits challenging the city'sbankruptcy, declaring his courtroom as the exclusive venue forlegal action in the largest filing by a local government in U.S.history.

Judge Rhodes' decision was a major victory for Detroit,especially after Ingham County Judge Rosemarie Aquilina, in thefirst week of July, said Gov. Rick Synder ignored the MichiganConstitution and acted illegally in approving Detroit's bankruptcyfiling. That ruling and others had threatened to derail the case.

_____________________________________________________________________________



12/23

Retirees had sued, claiming the bankruptcy threatened theirpensions that are protected by the constitution. Detroit has about21,000 retired workers who are owed benefits -- with underfundedobligations of about $3.5 billion for pensions and $5.7 billion for

retiree health coverage.

There are three lawsuits in state courts challenging thebankruptcy. They mostly focus on a provision in the MichiganConstitution that says public pensions "shall not be diminished orimpaired." Pensions have not been frozen or reduced in thebankruptcy so far, but officials say there are shortfalls in the fundsand that payouts could be at risk.

In March, the governor appointed Kevyn Orr, a bankruptcyexpert, as Detroit's emergency manager. Mr. Orr had sweepingpowers to reshape city finances but recommended bankruptcyafter failing to reach any significant deals with creditors, includingWall Street bankers and Detroit pension funds. Many of thosecreditors, however, accused him of being inflexible and believebankruptcy always was the plan.

(C) Garlock Sealing

The U.S. Bankruptcy Court in Charlotte, North Carolina,presided over trial, which started on July 22 that seeks to resolvethe issue of how much Garlock Sealing Technologies LLC owesindividuals who have been or will be diagnosed withmesothelioma.

Garlock says its liability to current and future asbestosvictims is $125 million. An expert witness for the companytestified in the last of July that Garlock has already paid at least$1.3 billion in related damages.

_____________________________________________________________________________



13/23

Attorneys representing victims nationwide are notimpressed. They say the company owes $1.3 billion more.

U.S. Bankruptcy Judge George Hodges oversees the

dispute over the valuation of Garlock's asbestos liability.

Based in Palmyra, New York, Garlock, a subsidiary of EnProIndustries of Charlotte, makes seals and gaskets for industriesincluding petrochemicals, power generation, mining andpharmaceuticals. These products produce asbestos, a knowncarcinogen.

The company filed for bankruptcy in 2010. To get out ofbankruptcy, Garlock must come up with a figure to cover futurepayments to those who blame company products for their canceror other illnesses. In court filing, Garlock placed liability "at ornear zero," saying its products are safe but agreed to set up a$270 million trust fund to cover claims.

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 Co. is now seeking federal court approval of itsChapter 11 plan already confirmed by a bankruptcy judge in NewYork.

_____________________________________________________________________________



14/23

Judge Stuart M. Bernstein in June overruled objections froma group of personal injury plaintiffs who said the Chapter 11 planwas the latest in a long-line of "afflicted" strategies devised byPfizer to shield itself from asbestos liabilities.

Quigley's Chapter 11 plan calls for Pfizer to contribute anadditional $964 million worth of cash, insurance and other assetsto fund a trust that will pay asbestos personal-injury claims.

Decades ago, Pfizer 's Quigley unit made industrial productsthat used the toxic material, which causes cancer and lungdisease, and makes injuries slow to manifest. Along with its

parent, Quigley was targeted with hundreds of thousands of injuryclaims, seeking more than $1 billion in damages. Estimatesduring the bankruptcy put the potential liability for future damageclaims at more than $4 billion.

If the plan is put into effect, those liabilities will be channeledto a trust and away from Pfizer and Quigley.

Judge Bernstein, who rejected an earlier version of theQuigley plan in part due to settlements that swayed plan-votingresults, confirmed Quigley's Chapter 11 plan at a hearing June 26in the U.S. Bankruptcy Court in Manhattan. Because Quigley'sChapter 11 plan resolves personal injury claims, it must beapproved by a federal district judge as well.

Quigley has started the process of getting a federal judge tosign off on the Chapter 11 plan, filing papers in the U.S. District

Court in New York that say the sole objector to the plan when itwas considered by the bankruptcy court has said it will notappeal.

_____________________________________________________________________________



15/23

The confirmed plan boosts Pfizer 's contribution to the trustand follows a separate $860 million settlement with asbestosclaimants that had blocked the earlier plan.

Quigley entered bankruptcy in 2004.

(B) Flintkote

The Hon. Mary F. Walrath of the U.S. Bankruptcy Court forthe District of Delaware, at the behest of Flintkote Company andFlintkote Mines Limited, extended the Debtors' exclusive periods

to file a proposed Chapter 11 plan until Nov. 30, 2013; and solicitacceptances for that plan until Jan. 31, 2014, respectively.

The Flintkote entities have told the Court that the planproponents' cooperative efforts to confirm a consensual plan willbe protected by extending the exclusive periods. Flintkote relatedthat on Dec. 21, 2012, the Court entered its memorandum opinionoverruling objections to the Amended Joint Plan of

Reorganization, confirming plan and recommending theaffirmation of confirmation and of the so-called Section 524(g)injunction.

On Jan. 4, 2013, Imperial Tobacco Canada Limited andcertain of its wholly owned subsidiaries, including GenstarCorporation, filed a notice of appeal from the confirmation opinionand the confirmation order, and the appeal is pending before theDistrict Court.

(C) W.R. Grace

A three-judge panel in the U.S. Court of Appeals for the ThirdCircuit on July 24, 2013, denied Garlock Sealing Technologies_____________________________________________________________________________



16/23

LLC's appeal from the Chapter 11 reorganization plan of W.R.Grace & Co.

The Third Circuit affirmed a Delaware federal court decision

upholding an earlier ruling by the bankruptcy court that Garlocklacked standing to block the reorganization plan, rejectingGarlock's contention that it would be injured by the plan.

The Third Circuit explained that, under the Bankruptcy Code,any "party in interest, including the debtor, the trustee, a creditors'committee, an equity security holders' committee, a creditor, anequity security holder, or an indenture trustee," has standing to

"raise and ... be heard on any issue" in a bankruptcy case. Thatlist of parties in interest is not exclusive and it "has beenconstrued to create a broad right of participation in Chapter 11cases" that includes "anyone who has a legally protected interestthat could be affected by a bankruptcy proceeding." Nonetheless,"Article III standing and standing under the Bankruptcy Code areeffectively coextensive."

A party objecting to the confirmation of a plan forreorganization under Chapter 11 must therefore "meet therequirements for standing that litigants in all federal cases faceunder Article III of the Constitution."

Those requirements include that the party has suffered aninjury in fact, the Third Circuit further explained. Although any"specific, identifiable triffle of injury will do," Article III requires thatthere be some "invasion of a legally protected interest that is (a)

concrete and particularized, and (b) actual or imminent, notconjectural or hypothetical."

Garlock argues that it has suffered an injury in fact becauseit has rights to contribution and setoff that will be harmed by theJoint Plan. In other words, Garlock claims that the Plan threatens_____________________________________________________________________________



17/23

to diminish contribution payments and setoff amounts it mayreceive from Grace in future cases. Garlock concedes, however,that there is no evidence that it has ever sought contribution orsetoff in the past due to Grace's liability, and it does not assert

that it has any current claims against Grace. Rather, it explainsthat it resolved prior cases "against the backdrop of" those rights,making it unnecessary to actually assert contribution or setoffclaims.

The Third Circuit found that that explanation does notaddress the absence of any contribution and setoff claims arisingfrom cases brought against Garlock after Grace entered

bankruptcy. Once Grace filed for Chapter 11 protection, allactions against the company were subject to an automatic stayunder Section 362 of the Bankruptcy Code. Therefore, between2001 and 2010, plaintiffs with joint claims against Grace andGarlock were able to recover only from Garlock. Yet Garlockconcedes that there is no evidence that it ever "suffered a

judgment for which Grace owes it contribution during Grace'sbankruptcy."

Garlock's alleged future injury can thus only be calledspeculative, and it fails to satisfy Article III's requirements forstanding, the Third Circuit ruled. In order for the Joint Plan tothreaten Garlock's contribution and setoff rights, Garlock musthave a basis for asserting those rights, the Third Circuit said.That there may be future plaintiffs with claims against both Graceand Garlock -- which is by no means a certainty -- does not byitself provide that foundation, as those claims must also produce

verdicts or settlements that entitle Garlock to contribution orsetoff, the Third Circuit added.

Grace, which has been in bankruptcy protection for anastounding 12 years, has projected to complete its reorganizationby the end of this year. It filed for Chapter 11 in April 2001._____________________________________________________________________________



18/23

* * *

The Troubled Company Reporter provides detailed reporting

about 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

According to Psyche Maricon Castillon, five companiesintend 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 July 2013. These companies are: ExcelMaritime, Biovest International, Synagro Technologies, K-VPharmaceutical, and Maxcom Telecom.

(A) Excel Maritime

Excel Maritime Carriers Ltd., the operator of 38 dry-bulkvessels, filed a Chapter 11 plan on July 15 to implement areorganization worked out before its July 1 bankruptcy filing.

The Plan will give ownership to secured lenders owed $771million, although the lenders will allow current owner GabrielPanayotides to keep control, at least initially. Unsecured creditors

with claims totaling $163 million will receive a $5 million, eightpercent note for a predicted recovery of 3 percent. Holders of$150 million in unsecured convertible notes make up the bulk ofthe unsecured-claim pool.

_____________________________________________________________________________



19/23

Unsecured creditors are to receive the note only if the classvotes in favor of the plan. An ad hoc group among holders of theconvertible notes already said the plan is "inappropriate andunconfirmable." They oppose the idea of allowing Panayotides to

have the exclusive right to "buy back" the Athens-based companywhile giving a "nominal distribution" to unsecured creditors. Excelfiled an explanatory disclosure statement to explain the plan. Ifthe bankruptcy court in Manhattan approves disclosure materialsat a Sept. 30 hearing, secured and unsecured creditors can beginvoting on the plan.

Trade suppliers owed $16.5 million will be paid in full in the

ordinary course of business to avoid having the vessels seized,the company previously said. In addition to the stock, the plangives secured lenders new restructured secured notes for $771million. Outside the plan, the lenders will allow Mr. Panayotidesto buy 60 percent of the stock from them for a $10 millionunsecured note and the turnover to the company of a $20 millionescrow account. He will have the right to buy another 15 percentby March 2015 for $20 million. If he doesn't buy the additional

stock, the lenders' equity ownership will rise to 75 percent. Mr.Panayotides will control a majority of the board initially. If hedoesn't buy the additional stock, he loses control. If he purchasesthe additional stock, the new notes will mature in 2018.Otherwise, they mature a year earlier.

Excel says its enterprise value ranges from $575 million to$625 million, with a midpoint of $600 million. The midpoint valueis how the disclosure statement arrives at a 77 percent recovery

for secured creditors. According to the disclosure statement, thenew stock going to the lenders has "option value only."

_____________________________________________________________________________



20/23

(B) Biovest International

Biovest International Inc. won bankruptcy court approval fora Chapter 11 reorganization plan, complementing the previously

approved sale of the business in exchange for debt owing tosecured lenders Corps Real LLC and Laurus/Valens Funds.

With the Plan approved, lenders can take ownership throughthe plan or by virtue of the court's approval of a sale. If thetransfer of ownership occurs by implementation of the plan, thesale approval will become void. There was an auction at the endof May to ensure that there was no purchase offer better than the

lenders'.

The lenders are buying the business in exchange for $44million in debt. In return for their claims totaling $10.3 million,unsecured creditors will have 7 million shares. Biovest's majorityowner Accentia Biopharmaceuticals Inc. will have one share ofstock for every dollar of ultimately approved claims. The lenderswill have the remainder of the 100 million shares of stock being

issued.

Accentia has an unsecured claim against Biovest for $5million, according to the disclosure statement approved by thebankruptcy court. The lenders won't acquire the business underthe plan unless and until the bankruptcy court determines that

Accentia isn't the owner of technology claimed by Biovest.

In mid-July, Biovest successfully emerged from Chapter 11

reorganization, formally completing its restructuring andrecapitalization strategy.

_____________________________________________________________________________



21/23

(C) Synagro Technologies

Synagro Technologies received approval from the U.S.Bankruptcy Court in Delaware of the disclosure statement

explaining its reorganization plan.

The Plan is sponsored by Synagro Infrastructure Company,Inc., and is intended to effectuate the Plan Sponsor's acquisitionof Synagro Tech's business in exchange for approximately $480million, including Cash of approximately $465 million, and theassumption of certain liabilities. The existing Equity Interests inSynatech and Synagro Drilling will be cancelled. The Synatech

New Common Stock will be issued to the Plan Sponsor, and theDrilling New Common Stock will be issued to DrillCo.

(D) K-V Pharmaceutical

K-V Pharmaceutical amended its Joint Chapter 11 Plan ofReorganization and related Disclosure Statement for the sixth

time in late July.

According to the Disclosure Statement, "The overall purposeof the Plan is to provide for the restructuring of the Debtors'liabilities in a manner designed to maximize recovery tostakeholders and to enhance the financial viability of theReorganized Debtors. The Plan reflects an agreement andcompromise among the Debtors, the Creditors' Committee, theholders of at least 75% in dollar amount of the Class 3 Senior

Secured Notes Claims, and the holders of approximately 97% indollar amount of Class 6 Convertible Subordinated Notes Claims.

Under the agreement and compromise:

_____________________________________________________________________________



22/23

(a) each holder of an Allowed Senior Secured Notes Claimwill receive its pro rata share of a Cash distribution in the amountof (i) $231,409,850 (i.e., the total amount of Senior Secured NotesClaims for prepetition principal and interest owing under the

Senior Secured Notes less unamortized original issue discount);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 (which amounts, if any, shall be determined bythe Bankruptcy Court in connection with confirmation of the Plan);

(b) the Debtors' existing indebtedness under the DIP CreditAgreement will be paid in full in Cash;

(c) the Debtors' existing indebtedness in respect ofConvertible Subordinated Notes Claims will be cancelled andexchanged for 7% of the New Common Stock of Reorganized KV;and

(d) each holder of an Allowed General Unsecured Claimagainst any Debtor shall receive Cash in an amount equal its ProRata Share of $10,250,000.

(E) Maxcom Telecom

Maxcom Telecommunicaciones SAB, a Mexico City-basedphone company, sought protection under Chapter 11 and filed a

plan of reorganization.

The plan, which was supported by more than 98 percent ofthe holders of the company's $200 million in 11 percent seniorsecured bonds who voted on it before the bankruptcy filing,

_____________________________________________________________________________



23/23

provides for the issuance of new notes upon the company'semergency.

Under the proposal, all creditors except the senior

noteholders will be paid in full. Ventura Capital agreed to make a$45 million capital infusion and offered to buy outstanding sharesfor 2.90 pesos each. Senior noteholders would get $200 million innew notes with reduced interest and extended maturities,according to the statement. They will also have the right to buyequity that isn't subscribed in the offering, worth as much as 15percent of the value of their notes.

* * *

That ends the Beard Group Corporate Restructuring Reviewfor July 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 onSeptember 16th. Thank you for listening.

_____________________________________________________________________________

Beard Corporate Restructuring Review for July 2013

Documents

Transcript of Beard Corporate Restructuring Review for July 2013