Beard Group Corporate Restructuring Review For May 2013

Presented by Beard Group, Inc. P.O. Box 4250 Frederick, MD 21705-4250 Voice: (240) 629-3300 Fax: (240) 629-3360 E-mail: nina@beard.com

An audio recording of this presentation is available at http://bankrupt.com/restructuringreview/

____________________________________________________ Welcome to the Beard Group Corporate Restructuring Review for May 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 discuss five topics: first, last month's largest chapter 11 filings and other statistics; second, large chapter 11 filings TCR editors anticipate in the near-term; third, a quick review of the major pending disputes in chapter 11 cases that we monitor day-by-day;

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fourth, reminders about debtors whose emergence from chapter 11 has been delayed; and fifth, information you're unlikely to find elsewhere about new publicly traded securities being issued by 11 debtors. May 2013 Mega Cases

Now, let's review the largest chapter 11 cases in May 2013. Danilo Muoz reports that two Chapter 11 cases were filed involving more than $100 million in assets in May 2013. During the previous month, there were five bankruptcy mega filings, including one that involved more than $1 billion in assets. Through May 2013, a total of 23 mega cases were filed, including five that involved more than $1 billion in assets. For fiscal year 2012, there were a total of 12 companies that filed for Chapter 11 with excess of $1 billion in assets. Five of those billion-dollar cases were filed in May that year. Meanwhile, a total of 64 mega filings with assets in excess of $100 million were filed in 2012, compared to 82 mega filings during the same period in 2011 and 106 in 2010. The month's largest Chapter 11 filing was by Sound Shore Medical Center of Westchester, Mount Vernon Hospital Inc., Howe Avenue Nursing Home and related entities. They sought Chapter 11 protection on May 29, 2013, with the Bankruptcy
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Court for the Southern District of New York in White Plains [Lead Case No. 13-22840]. The Sound Shore entities are the largest "safety net" providers for Southern Westchester County in New York. Affiliated with New York Medical College, Sound Shore is a notfor-profit 242-bed, community based-teaching hospital located in New Rochelle, New York. Mountain Vernon Hospital is a voluntary, not-for-profit 176-bed hospital located in Mount Vernon, New York. Howe Avenue Nursing Home is a 150-bed, comprehensive facility. Sound Shore disclosed assets of $159.6 million and liabilities totaling $200 million. Revenue of $241.8 million in 2012 resulted in an operating loss of $16.4 million. The second largest Chapter 11 filing in May was filed by Oak Rock Financial LLC, an asset-based lender. Oak Rock put itself into Chapter 11 on May 6 with the U.S. Bankruptcy Court for the Eastern District of New York in Central Islip [Case No. 13-72251]. The company disclosed assets of $131.1 million and debt totaling $99.9 million in the Chapter 11 papers. On April 29, three Israeli banks filed an involuntary Chapter 7 petition claiming that Oak Rock is a "massive fraud" that represented having $2.5 million of additional borrowing power from its bank lenders when in reality the loans were overdrawn by $47 million. The fraud allegations have been corroborated by Oak Rock's newly appointed Chief Restructuring Officer Clifford Zucker, from CohnReznick LLP. Mr. Zucker described the discovery of "misconduct" by company President John Murphy, saying he misstated collateral standing behind $90 million in secured bank
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loans. Mr. Murphy, who is the target of an FBI investigation, has since resigned and "is now nowhere to be found." Oak Rock provided revolving lines of credit to dealers in consumer goods who used advances to finance purchases by the dealers' own customers. In addition to the bank loan, Oak Rock financed the business by selling $62.8 million in participations in the loans it made to customers, according to a court filing by Mr. Zucker. None of the two mega filings involved a prepackaged or prearranged bankruptcy. During the first five months of 2013, 12 of the 23 mega filings involved a prepackaged Chapter 11. 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 prepackaged Chapter 11 plan as of the Petition Date -- or about 16% of the large Chapter 11 filings. For fiscal year 2010, a total of 35 prepacks/pre-arranged cases were filed out of the 106 bankruptcy mega cases -- or about one in every three filings in 2010. For the month of May, one mega filing each came from the finance and healthcare industries. During the first five months of 2013, 10 of the mega filings belonged to the information industry, 4 are involved in manufacturing and 3 are involved in healthcare. The distribution of bankruptcy mega cases by industry for 2012 is: Manufacturing Information Finance & Insurance 10 16% 8 13% 7 11%

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Real Estate Transportation Others

6 9% 5 8% 28 44%

The distribution of bankruptcy mega cases by industry for 2011 is: Manufacturing 14 17% Accommodation & Food Services 12 Finance & Insurance 9 11% Information 8 10% Retail Trade 7 8% Real Estate 7 8% Others 26 32% 14%

For the month of May, one mega filing each was filed in the Southern and Eastern Districts of New York. For the first five months of 2013, the Bankruptcy Court for the District of Delaware cornered the lions share with 14 of the 20 mega filings, while the Southern District of New York had only 4 mega filings. Last year, the Bankruptcy Court for the Southern District of New 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 most favored venue with 38 filings, or 46% of the mega cases, followed by the Southern District of New York with 16 filings, or 19% of the mega cases, and by the Northern District of Texas with 4 filings, or 5% of the mega cases. The rest of the bankruptcy mega cases are spread evenly throughout the various bankruptcy courts.

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Lehman Brothers Holding Corp. remains the biggest corporate bust in history. Lehman, which filed in 2008, had $639 billion in total assets and $613 billion in total debts at that time of its filing. For 2011, the largest Chapter 11 filing was filed by MF Global Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MF Global had $41.05 billion in total assets and $39.68 billion in total liabilities. For 2012, the largest Chapter 11 filing was by Residential Capital LLC, which disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. For first five months 2013, the largest Chapter 11 filing was filed by Dex One Corp., which filed for Chapter 11, listing total assets of $2.84 billion and total liabilities of $2.79 billion. Other billion-dollar filers are: Dex One's merger partner, Supermedia Inc.; publisher Reader's Digest; vodka producer Central European Distribution Corp. or CEDC; and New Jersey casino operator Revel. For the first five months of 2013, Young Conaway Stargatt & Taylor LLP represented 5 of the 23 mega filings either as counsel or co-counsel. The law firm represented the School Specialty, Penson Worldwide, Super Media, Otelco and Rotech Healthcare in their respective Chapter 11 cases.

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.
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Carlo Fernandez identified four companies that may be close to filing for bankruptcy. These are: UniTek Global, Energy Future Holdings, Excel Maritime and Maxcom Telecommunications. (A) UniTek Global UniTek Global Services, Inc. failed to make the interest payment that was due May 29, 2013 within the applicable grace period under its term loan credit agreement. Unitek has forbearance agreements with lenders under its term and revolving credit agreements. UniTek announced that it has initiated a process to explore refinancing alternatives for its debt to address its tightening financial covenants and liquidity situation. UniTek, based in Blue Bell, Pennsylvania, provides fulfillment and infrastructure services to media and telecommunication companies in the United States and Canada. Standard & Poor's credit analyst Michael Weinstein said, "We do not believe that the company will have sufficient liquidity to make this interest payment until it negotiates with its lenders, as the company is operating with a negligible cash balance and we do not believe it currently has access to capacity under its asset-based revolving credit facility. "Despite the company's intention to refinance and amend its credit facility, we believe the company might pursue a distressed exchange or file for bankruptcy under Chapter 11 if an attempt to refinance is not successful," Mr. Weinstein added.

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(B) Energy Future Holdings If and when Energy Future Holdings Corp. ends up in bankruptcy, the value of the Texas power plant owner won't be sufficient to cover the $22.6 billion in first-lien debt owing by unit Texas Competitive Electric Holdings Co., according to a report by Morningstar Institutional Credit Research. In an effort to restructure TCEH's approximately $32 billion in debt, the company disclosed in April that it had proposed that TCEH's first-lien lenders exchange debt for $5 billion cash or new long-term debt of TCEH plus 85 percent of the parent's equity. The creditors turned down the offer. Absent agreement with creditors, Morningstar sees bankruptcy as being precipitated by a loan-covenant violation late this year on senior debt or inability to refinance a $3.8 billion TCEH term loan that matures in October 2014. Energy Future incurred a net loss of $3.36 billion on $5.63 billion of operating revenues for 2012. This follows net losses of $1.91 billion in 2011 and $2.81 billion in 2010. The Company's balance sheet at Dec. 31, 2012, showed $40.97 billion in total assets, $51.89 billion in total liabilities and a $10.92 billion total deficit. (C) Excel Maritime Excel Maritime Carriers Ltd., on June 10 commenced soliciting acceptances of the Joint Prepackaged Chapter 11 Plan of Reorganization. The Plan is supported by a steering committee of secured lenders.
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The voting deadline to accept or reject the Plan is June 28. The Company estimates its total enterprise value to be between $575 million and $625 million, with a mid-point of $600 million. Under the Plan, the lenders will receive a restructured obligation of approximately $771 million plus 100 percent of the stock in the reorganized company with an estimated recovery of 77 percent of the face amount of their claims. Holders of general unsecured claims, with estimated amount of $163 million, have estimated recovery of 3 percent. Based in Athens, Greece, Excel Maritime is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. Excel owns a fleet of 40 vessels and, together with 7 Panamax vessels under bareboat charters, operates 47 vessels. The balance sheet for December 2011 had assets of $2.72 billion and liabilities totaling $1.16 billion. (D) Maxcom Telecom Maxcom Telecommunications had a net loss of 136 million Mexican pesos on 2.2 billion Mexican pesos of net revenues in 2012, as compared with a net loss of 513 million Mexican pesos on 2.4 billion Mexican pesos of net revenues in 2011 The Company's balance sheet at December 31, 2012, showed 4.9 billion in total assets against 2.8 billion Mexican pesos in total liabilities.
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KPMG Cardenas Dosal, S.C., in Mexico City, Mexico, issued a going concern qualification on the financial statements, noting that the Company has experienced recurring losses, declines in revenues, cash flows and cash balances. The Company's Senior Notes are due December 15, 2014, for which semi-annual interest payments are due on June 2013, December 2013 and June 2014. The Company acknowledged that its ability to continue operating as a going concern is dependent upon its ability to obtain sufficient cash to pay the outstanding interest payments and to restructure its senior notes. The Company plans to address this situation be considering all of its alternative including, but not limited to: * savings in capital expenditures by ceasing capital expenditures for expansion projects and by limiting capital expenditures only to maintain the current operations; * looking for new investors to obtain a capital injection; * refinancing of the outstanding notes in order to extend their maturity; * other restructuring proceedings, for instance by the commencement of a voluntary restructuring under Chapter 11 of the Unites States Bankruptcy Code." Maxcom Telecomunicaciones, headquartered in Mexico City, Mexico, is a facilities-based telecommunications provider using a "smart-build" approach to deliver last-mile connectivity to micro,
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small and medium-sized businesses and residential customers in the Mexican territory. * * *

In addition to the challenged companies mentioned in Mr. Fernandez's report, the Troubled Company Reporter provides ongoing reporting about more than 3,000 companies experiencing financial distress or restructuring their balance sheets in a judicial proceeding. 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 large chapter 11 cases that Troubled Company Reporter editors monitor day-by-day. (A) TOUSA Bankruptcy homebuilder TOUSA Inc. on June 6 asked a Florida bankruptcy judge to approve a settlement whereby its insurers will pay $67 million to end a lawsuit accusing Tousa's top brass of disregarding their duty to the company and its creditors. The $67 million could be the last missing piece before the liquidating homebuilder can move ahead with bankruptcy court approval of a Chapter 11 plan filed in mid-May. As with everything in Tousa, the dispute with the insurance companies revolved around a fraudulent transfer before
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bankruptcy where Tousa operating affiliates were made liable on debt which previously had not been their responsibilities. The judgment finding fraudulent transfers was upheld in the US Court of Appeals in Atlanta. Alongside the main suit, Tousa's creditors sued the company's directors and officers for authorizing the fraudulent transfers. There were also lawsuits with insurance companies that provided directors' and officers' liability insurance over the question of whether there was liability on the policies. Among the insurance companies involved are Federal Insurance Co., XL Specialty Insurance Co. and Zurich American Insurance Co. Tousa's secured lenders also sued the directors and officers, who turned the claims over to the insurance companies. In settlement, the insurers will pay $67 million, with $47.9 million going to creditors of the Tousa companies that were forced to shoulder debt improperly. The first lien lenders receive $7.66 million, while second-lien lenders take home $11.5 million. Some of the insurance companies also pay $8.27 million of the directors' and officers' defense costs. The new settlement was crafted by mediator Peter L. Borowitz, who was also responsible for the larger settlement underlying the Chapter 11 plan. The settlement took two years to work out in mediation. The Florida bankruptcy court will convene a July 11 hearing to hear merits of the settlement. The appeal in the Circuit Court of Appeals was Citicorp North America Inc. v. Official Committee of Unsecured Creditors (In re Tousa Inc.), 11-11071, U.S. Court of Appeals for the Eleventh Circuit (Atlanta).

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(B) Patriot Coal Patriot Coal Corp. has been granted permission to tear up its collective bargaining agreements with the United Mine Workers (UMW) and escape its obligations to provide health care to its retirees. The May 29 ruling by US Bankruptcy Judge Kathy A. Surratt-States threatens the health care for some 21,000 retirees and their dependents and promises to bring down the labor costs of its more than 1,650 unionized miners to the level of its nonunion workforce. Under the ruling, Patriot will be allowed to change its collective bargaining agreements for both its active union workforce and retirees. The company said the ruling would permit it to adjust wages, benefits and work rules for union employees to a level consistent with the regional labor market. Under its approved bankruptcy plan, Patriot will cease providing health care to retirees and instead form a UMW Retiree Healthcare Trust, which will be structured as a Voluntary Employees Benefits Association (VEBA) to be administered by the union. The company will provide the VEBA with $15 million in cash, a fraction of its retiree health care costs now averaging nearly $7 million a month. The UMW will be given a 35% stake in the reorganized company giving the union a financial stake in ratcheting up the exploitation of its membership in the future company. Patriot is the first major coal company to fall victim to the economic crisis of 2008, and its bankruptcy proceedings are closely followed throughout the coal mining industry. It filed for
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bankruptcy in July 2012 as coal demand dipped and stricter environmental regulations were being implemented. In her ruling, Judge Surratt-States acknowledged the receipt by the court of over 900 letters from retired coal miners and the working conditions they endured for the promise of health care for life and an earned pension. However, the judge said her decision had to be grounded in what the Bankruptcy Code and legal precedent required. She also said her decision had to balance the interests of the retirees with some 4,200 workers currently employed by Patriot. Patriot Coal was created on October 31, 2007 when Peabody Energy - the worlds largest coal company - sold its union operations east of the Mississippi to the new company. Peabody sold the new company 13% of its coal reserves but burdened it with $617 million, or about 40%, of its healthcare liabilities, as well as a raft of below-market coal contracts. Amidst all these, Judge shied away from answering the charge that Patriot was created to fail. (C) Lehman Brothers The trustee unwinding Lehman Brothers' defunct brokerage continued his fight with Barclays Plc over more than $2 billion on May 29, with judges grilling lawyers on both sides over a key document that governed the British bank's purchase of Lehman's key assets on the hectic September 2008 weekend that presaged the financial crisis. The definition of cash as a focal point, as three judges from the U.S. Court of Appeals for the Second Circuit in New York tried to determined if a bankruptcy judge properly approved a so-called clarification letter.
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Trustee James W. Giddens is appealing a 2012 U.S. District Court decision handing Barclays most of the money in a "margin" account. The ruling was a win for Barclays in what was part of a larger battle over whether Barclays negotiated a "secret discount" when it bought Lehman, a dispute also won by Barclays in a 2010 bankruptcy court trial. While Mr. Giddens's appeal was of the 2012 decision by U.S. District Judge Katherine Forrest, the judges focused almost entirely on the original bankruptcy-court decision. Mr. Giddens, who is in charge of paying back Lehman's customers, said U.S. Bankruptcy Judge James Peck strictly ordered "no cash" should go to Barclays from Lehman in the 2008 sale. The judge approved the sale at a hearing on Sept. 19, 2008, a Friday, and told Lehman and Barclays to hash out the details over the weekend. Those details included, among other things, Lehman giving Barclays exchange-traded derivatives and the cash tied to them. The clarification letter depicted those assets and other transactions, but was never expressly approved by Judge Peck. Judge Gerard E. Lynch of the Court of Appeals said Judge Peck seemed to give a mixed message regarding the letter. Judge Ralph K. Winter Jr. asked William Maguire, a Hughes Hubbard & Reed LLP lawyer representing Mr. Gidden, several questions about the exchange-traded derivative accounts that were transferred to Barclays. In 2010, Lehman sued Barclays for billions of dollars, accusing the British bank of negotiating a discount that wasn't adequately disclosed to the court when it bought Lehman's broker-dealer unit in 2008. Lehman sought to recover what it called more than $11 billion in ill-gotten gains by Barclays.
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For its part, Barclays argued in the months-long trial that both sides negotiated in good faith, and the deal, approved by Judge Peck just days after the investment bank collapsed into bankruptcy, was Lehman's best option. While Lehman lost on its claims of a negotiated discount, the trustee won on his dispute regarding the margin account and other accounts. That prompted Barclays to appeal, and last June, a U.S. District Court judge agreed with the British bank. Mr. Giddens is reserving more than $5 billion in case of an unfavorable ruling on the dispute with Barclays. In other matters, JPMorgan Chase & Co., which is fighting an $8.6 billion lawsuit by Lehman Brothers told a judge in late May it needs judicial assistance to seek testimony from David Swanson, a lawyer at Lehmans U.K. affiliate. JPMorgan, accused of speeding Lehmans 2008 bankruptcy by demanding too much collateral for loans, said Mr. Swansons evidence is necessary to show that Lehman in fact defrauded its bank into lending $5 billion against risky securities known as Racers. At the time, the former investment banks own German affiliate wouldnt accept the securities as collateral, JPMorgan said in a federal court filing in Manhattan on May 24. The banks request to the judge follows a move by Lehman to force Bruno Iksil, a French national known as the London Whale trader at JPMorgan, to answer questions. Lehmans request for international judicial assistance has been received by French authorities, according to a letter filed in court on May 6 by the office that handles such requests.
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Delayed Exits From Chapter 11 Julie Anne Lopez-Toledo reports about three Chapter 11 debtors whose emergence from Chapter 11 has been delayed: Pittsburgh Corning, Quigley and W.R. Grace. (A) Pittsburgh Corning After 13 years in bankruptcy, Pittsburgh Corning Corp. is seeing some light at the end of the tunnel. A judge has given the thumbs up to a reorganization plan that calls for a $3.5 billion trust to resolve thousands of asbestosrelated claims that caused the company to seek protection under Chapter 11. U.S. Bankruptcy Judge Judith Fitzgerald approved a plan for Pittsburgh Corning to establish a trust to settle 235,000 lawsuits from people who claimed the company manufactured and sold asbestos insulation that caused cancer and other illnesses. She overruled final objections by insurance companies trying to halt the reorganization of the building-supply company. Judge Fitzgerald refused on May 25 to reconsider her initial approval of the reorganization plan, which relies partly on insurance proceeds to pay victims of asbestos exposure. Insurers led by Mt. McKinley Insurance Co., had asked Judge Fitzgerald to reconsider her decision, claiming she erred May 16 when she tentatively approved a plan to create a $3.5 billion asbestos trust.

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The trust and the plan now go before a U.S. district court judge for a second approval, which is required for all asbestosrelated bankruptcy cases that create a victims trust fund. Phillip M. Martineau, Chairman and CEO of Pittsburgh Corning said the trust is intended to help support the people and families who were harmed by asbestos. He further added that while the legal work continues, and the Chapter 11 process is not yet fully concluded, the confirmation of the Plan of Reorganization is a turning point, leading the Company closer to the consummation of the Chapter 11 proceedings. Under the bankruptcy plan, Pittsburgh Cornings parents -Corning Inc. and PPG Industries Inc. -- may shift their liability for asbestos claims to the trust, which the companies and the insurers would fund. Corning and PPG would give the trust the right to collect on their insurance policies under the plan, which Mt. McKinley claimed would unfairly alter the policies. During a court hearing May 23, Judge Fitzgerald gave the insurers a final chance to talk her out of her decision. At the end of the hearing, she said she was unlikely to change her mind and asked the parties to submit any minor wording changes to her proposed order before she made a final ruling. Pittsburgh Corning has operated under Chapter 11 protection since April 16, 2000. (B) Quigley Quigley Co. Inc., a defunct Pfizer Inc. unit, now has a clearer path to exiting its eight-year bankruptcy after a holdout group of creditors moved in May to reverse their votes and support the
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reorganization plan designed to resolve the companys multibillion-dollar asbestos liability. Pfizer previously set a June 26, 2013 confirmation hearing for its fifth amended Chapter 11 reorganization plan. The June hearing date marks Quigley's first bid for confirmation since U.S. Bankruptcy Judge Stuart M. Bernstein denied its fourth amended plan in September 2010 after finding that the company manipulated creditor votes and engineered the case for its own benefit. Quigley, which Pfizer bought in 1968, at one time faced suits by more than 160,000 plaintiffs. It filed for bankruptcy in 2004. (C) W.R. Grace Bank lenders' appeal from orders confirming W.R. Grace & Co.'s plan will be argued June 17 in the U.S. Court of Appeals in Philadelphia. The plan, which was confirmed by the bankruptcy and district courts, can't be implemented because pre-bankruptcy secured bank lenders filed an appeal. Arguments will be held on June 17 in the U.S. Court of Appeals in Philadelphia. The banks argue on appeal that they are entitled to $185 million in interest on their claims because shareholders are retaining stock worth $4.9 billion. Banks filing the appeal include Bank of America NA, Barclays Bank Plc and JPMorgan Chase Bank NA. Grace projects it could complete its reorganization by the end of this year. It filed for Chapter 11 in April 2001.
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The Troubled Company Reporter provides detailed reporting about every chapter 11 filing nationwide. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation. New Publicly Traded Securities Psyche Maricon Castillon reports of five companies who issued or will issue shares of new common stock upon emergence pursuant to the plans of reorganization they filed or intend to file in their Chapter 11 cases in May 2013. These companies are: PMI Group, Otelco Inc., School Specialty, American Airlines and AMF Bowling. (A) PMI Group PMI Group Inc., once the owner of a mortgage-insurance company, proposed a plan of reorganization under which holders of $691 million in senior unsecured notes are predicted to have a 29 percent recovery. General unsecured creditors with $6.3 million to $10.3 million in claims are to recover 26 percent to 27 percent. In addition to pro rata distributions of cash, unsecured creditors and noteholders will receive stock in reorganized PMI. There are no secured creditors. Senior noteholders recover slightly more than general creditors because noteholders benefit from subordination provisions in $52.9 million in subordinated notes whose holders receive nothing from the plan.
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At the outset of Chapter 11, PMI had $165 million in cash. The hoard since then increased to $200 million available for distribution to creditors under the plan. The company still has about $1.2 billion in tax loss carry forwards. The total will be reduced by debt forgiven through bankruptcy. (B) Otelco Inc. Otelco Inc.'s prepackaged plan of reorganization became effective, and the Company emerged from Chapter 11 protection in May. Otelco's Plan provides for the following: -- each holder of the senior secured term loan claims will receive its pro rata share of (i) term loan obligations of the Company under the new senior secured credit facility of not more than $142 million, maturing on April 30, 2016; (ii) a cash payment of no less than $20 million and (iii) the new Class B common stock representing 7.5% of the total economic and voting interest in reorganized Otelco; -- reinstatement of allowed senior secured revolving loan claims, as amended, with availability of up to $5 million, pursuant to the new senior secured credit facility agreement and each holder of the Company's outstanding subordinated notes to receive a pro rata share of the new Class A common stock; -- reinstatement of allowed general unsecured claims in full, provided, that, if holders of Class 5 subordinated notes claims vote to reject the Plan, holders of allowed general unsecured claims will receive a cash payment equal to 40.5% of the allowed amount of such general unsecured claim; and
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-- cancellation of all of the Company's existing equity interests. (C) School Specialty School Specialty Inc. overcame spirited opposition to win the signature of the bankruptcy judge May 23 on a confirmation order approving the Chapter 11 reorganization plan. Under the Plan, new common stock with voting rights will be issued to the Company's current noteholders and Ad Hoc DIP lenders. For a predicted full recovery, the plan gives 87.5 percent of the reorganized company's stock to lenders who provided $155 million in replacement financing. Noteholders owed $170.7 million are receiving the other 12.5 percent of the stock, for an estimated 6 percent recovery. Trade suppliers, with $35.6 million in claims, receive 20 percent in cash, although not until almost seven years after confirmation. Their claims in the meantime will accrue interest at 5 percent. Alternatively, trade suppliers who continue to provide trade credit will be paid 45 percent in about seven years, with interest accruing at 10 percent. Among the Plan opponents, holders of $17 million of the $157.5 million in 3.75 percent convertible subordinated debentures wanted the opportunity to purchase part of the bankruptcy financing at full value and participate in buying the lion's share of the new equity. (D) American Airlines

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American Airlines received court approval of the disclosure statement explaining its plan of reorganization. The plan, which is hinged to its merger with US Airways, provides that unsecured creditors with $2.6 billion in claims and creditors with $6.8 billion in claims backed by aircraft will receive a full recovery. The company's shareholders will get a 3.5% stake in the combined company with the potential for additional shares. Under the merger, equity in the combined company will be split, with 72% to AMR's stakeholders and creditors and 28% to US Airways shareholders. (E) AMF Bowling A hearing to consider confirmation of AMF Bowling's plan of reorganization is scheduled to occur in June. The Company's Plan, which calls for the merger with upscale bowling alley chain Bowlmor, provides for second-lien creditors owed $80 million to own the company. The Plan provides for these terms: * First-lien debt will be paid in full with interest at the nondefault rate. * In exchange for debt, the second-lien creditors will receive 20 percent of the stock of the combined companies, to be called Bowlmor AMF. * The report notes that to receive another 57.5 percent of the combined companies' equity, second-lien noteholders can participate in an offering to provide a $50 million second-lien loan.

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* Unsecured creditors with claims totaling from $29 million to $34 million will share a cash pot of $2.35 million for a recovery of 7 percent to 8 percent. * Second-lien holders' deficiency claim won't participate in the pool for unsecured creditors. * In return for contributing Bowlmor to the new company, owners of Strike Holdings will receive 22.5 percent of the equity. The offering is backstopped by Cerberus, JPMorgan and Credit Suisse, which will purchase any part of the loan not subscribed by other second-lien holders. The official unsecured creditors' committee and holders of about 80 percent of the second-lien debt and 30 percent of the first lien support the new plan. The original plan had offered $300,000 -- or a 1% recovery -- for unsecured creditors. * * *

That ends the Beard Group Corporate Restructuring Review for May 2013, brought to you by the editors of the Troubled Company Reporter and Troubled Company Prospector. If you'd like to receive the Troubled Company Reporter for 30-days at no cost -- and with no strings attached -- call Nina Novak at (240) 629-3300 or visit bankrupt-dot-com-slash-free-trial and we'll add you to the distribution list. That telephone number, again, is (240) 629-3300 and that Web site address, again, is bankrupt-dot-comslash-free-trial. Tune in to our next monthly Restructuring Review on July 16th. Thank you for listening.
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