Shareholder Alleges Collusion in Blockbuster Bankruptcy

By : Erik Gruenwedel | Posted: 19 Oct 2010
egruenwedel@questex.com

A Blockbuster shareholder has filed a complaint with the court handling Blockbuster Inc.’s bankruptcy alleging CEO Jim Keyes and investor Carl Icahn conspired prior to the filing to manipulate the outcome and enrich key stakeholders.

Dallas-based Blockbuster filed a pre-packaged Chapter 11 filing Sept. 23, citing debts exceeding $1.4 billion.

Shareholder Jasbir Sandhu Oct. 12 filed the complaint with U.S. Bankruptcy Court in the Southern District of New York, claiming Keyes and Icahn worked together to thwart recapitalization efforts and increase Icahn’s return on investment by dragging the price of the bond (debt) lower.

Icahn, who once held a board seat and over time quietly divested his ownership stake in Blockbuster prior to the filing, successfully converted his remaining shares into bonds. He is considered to have played a key role in pushing through major tenants of the filing.

Sandhu, who claims to have more than 200 signed petitions in support of the complaint, alleges Keyes purposely kept Blockbuster Express kiosks operations, Blockbuster Canada and other foreign assets from the bankruptcy in order to lower the company’s portfolio value. The investor said shareholder equity should have included all Blockbuster properties.

“Selling a few international assets would have avoided Chapter 11, but Keyes followed the path that was more favorable to Carl Icahn,” Sandhu wrote in the complaint.

He is calling for a formal inquiry by the Securities and Exchange Commission.

The complaint, though separate, is based on similar concerns raised by a group called Blockbustershareholders.com, which claims 26% of the company’s common shareholders and has vowed legal action against the Blockbuster, according to Sandhu.

“Our objective is to get full disclosure from Blockbuster about the recapitalization efforts and Carl Icahn's influence,” Sandhu wrote in an e-mail.

He supports his claims in part by referencing an interview Keyes did with TheWrap.com, in which Keyes called Icahn a “good friend,” and said the maverick investor could be “even more helpful on the outside [of Blockbuster].”

Sandhu believes the repercussions individuals face filing bankruptcy (flagged credit rating) should also apply to corporations that file for Chapter 11. He said it is too easy for debt-laden companies to file for bankruptcy and wipe the slate clean, with little impact on key executives.

“I do not see Keyes moving out of Blockbuster,” Sandhu said, alluding to media reports the CEO would leave the company when it emerges from bankruptcy. “Worst-case scenario: I see a damage control initiative by Blockbuster [that] would … move Keyes to another Icahn influenced company.”

Analyst Michael Pachter with Wedbush Securities in Los Angeles, who has covered Blockbuster for years, said Sandhu’s allegations are without merit.

“It’s sour grapes,” Pachter said. “Neither of them is a bad guy. It’s a lame allegation.”

Blockbuster Seeks Funds for CEO Search

Blockbuster Inc. has asked a bankruptcy court to approve funding to retain an executive search firm for the hiring of a new CEO, according to a filing.

The move would appear to underscore efforts by Blockbuster’s senior debt holders to replace Jim Keyes, who has been CEO of the venerable packaged media rental brand since 2007.

Keyes previously was CEO of 7-Eleven.

Dallas-based Blockbuster, in the Oct. 19 filing with United States Bankruptcy Court for the Southern District of New York, formally requested $400,000 as a one-time fee for services of Korn/Ferry International.

According to the filing, a perspective CEO candidate would have to receive approval of senior lenders, with the final hiring decision made by a “supermajority of sponsoring note holders,” which includes former board member Carl Icahn.

Blockbuster filed a pre-packaged Chapter 11 bankruptcy filing Sept. 23, listing more than $1.4 billion in liabilities.

The court will hold a session on the funding request Nov. 10.

Blockbuster Shareholders Make Fraud Claims

NEW YORK (TheStreet) -- Is there security fraud and manipulation in Blockbuster's( bankruptcy filing? Shareholders seem to think so. BLOAQ.PK)

Shareholder Jasbir Sandhu filed a complaint with the U.S. Bankruptcy Court in the Southern District of New York earlier in the month, claiming that CEO Jim Keyes and billionaire investor Carl Icahn worked together to stymie recapitalization efforts in order to increase the return on investment for Icahn and other stakeholders.

Icahn stepped down from the board of directors back in January, citing Institutional Shareholder Services guidelines regarding how many directorships he can hold. He also sold off nearly 80% of his stake in the company.

Days prior to Blockbuster's Chapter 11 filing, it was reported that Icahn purchased $100 million in the company's debt.

Sandhu, who is being backed up by 200 other shareholders who signed a petition, is claiming Keyes purposely kept Blockbuster Express kiosks operations, Blockbuster Canada and other international assets from the bankruptcy in order to downplay the company's portfolio value. The investor said shareholder equity should have included all Blockbuster properties.

"Jim Keyes continued to create a bankruptcy fear to support Icahn's plan," Sandhu wrote in the filing. "Carl Icahn, on the other hand, continued to reduce his shareholder position to drag the prices of the bond down. Jim Keyes and Carl Icahn may have already known the exact date and outcome of Chapter 11 filing."

Other allegations include Keyes and Icahn playing a role in failing the reverse split and class conversion measures that ultimately pushed Blockbuster's stock to be delisted from the New York Stock Exchange.

Sandhu cites an article from TheWrap.com, where Keyes was quoted as saying Icahn "remains a good friend" and "could be even more helpful on the outside."

Sandhu is calling for an SEC investigation.

28-Sep-2010 PMC SEC filed 8K agreement to buyout CHRXQ plus debt

28-Sep-2010
Entry into a Material Definitive Agreement, Financial Statements and Exhibits

Item 1.01. Entry into a Material Definitive Agreement. On September 26, 2010, PharMerica Corporation (the "Company"), entered into an Asset Purchase Agreement (the "Agreement") with Chem Rx Corporation and certain of its wholly-owned subsidiaries (collectively, the "Seller"), under which the Company has agreed to purchase substantially all of the assets and selected vendor contracts of the Seller (collectively the "Assets"), subject to the terms and conditions contained in the Agreement.
The Seller has filed voluntary petitions for Chapter 11 bankruptcy protection in the Delaware District of the United States Bankruptcy Court (the "Bankruptcy Court"). It is intended that the acquisition of the Assets would be accomplished through the sale, transfer, and assignment of the Assets by the Seller to the Company in a sale undertaken pursuant to Section 363 of the United States Bankruptcy Code (the "Bankruptcy Code"). The Company is seeking to be designated as the "stalking horse" in the bankruptcy proceedings. The acquisition is subject to the approval of the Bankruptcy Court and the Seller not receiving a higher offer from a third-party through a Court-approved auction process.
Under the terms of the Agreement, the Company has agreed, absent any higher or otherwise better bid, to acquire the Assets from the Seller for $70,600,000 in cash plus the assumption of specified liabilities related to the Assets. The Company has deposited $3,530,000 into escrow which will be credited to the purchase price on the completion of the acquisition of the Assets. If the Agreement is terminated, the deposit will be returned to the Company unless the Company defaults under the Agreement, in which event the deposit will be retained by the Seller without limitation of other remedies available to Seller under the Agreement. If the Bankruptcy Court approves the Agreement and the Agreement is later terminated for certain reasons, including because the Seller enters into a competing transaction, the Seller may be required to pay the Company a termination fee equal to $1,412,000.
The Agreement contains customary representations and warranties of the parties. The asset purchase transaction is expected to close during the fourth quarter of 2010, subject to a number of customary conditions, which, among others, include the entry of the Bidding Procedures Order and the Sale Order by the Bankruptcy Court, antitrust and other customary regulatory approvals, the performance by each party of its obligations under the Agreement, and the material accuracy of each party's representations.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which will be filed as an exhibit to the Company's quarterly report on Form 10-Q for the quarter ending on September 30, 2010.

Item 9.01 Financial Statements and Exhibits. (d) Exhibits.
Exhibit No. Description
99.1 Press Release of the Company, dated September 27, 2010

Nortel to Sell Ottawa Carling Campus for a cash purchase price of CDN$208 million

Nortel to Sell Ottawa Carling Campus to Public Works and Government Services Canada

Press Release Source: Nortel On Tuesday October 19, 2010, 8:00 am

TORONTO, ONTARIO--(Marketwire - 10/19/10) - Nortel(1) Networks Corporation (OTC.BB:NRTLQ - News) today announced that as part of its focus on maximizing value for its stakeholders, its principal operating subsidiary Nortel Networks Limited and Nortel Networks Technology Corporation (together, Nortel) have entered into a sale agreement with Public Works and Government Services Canada (PWGSC) for the sale of Nortel's Ottawa Carling Campus, for a cash purchase price of CDN$208 million. The sale, targeted to close at end of year, is subject to customary closing conditions as well as approval of certain governmental authorities and of the Ontario Superior Court of Justice.
The Ottawa Carling Campus is located on 370 acres of land in Ottawa's National Capital Commission greenbelt, and is comprised of 11 interconnected buildings totaling over 2 million square feet.
The sale agreement provides for Nortel to continue to occupy parts of the Campus for varying periods of time to facilitate Nortel's continuing work on its global restructuring including work under the transition services agreements with the various buyers of Nortel's sold businesses. All other existing leases will be assumed by PWGSC, including leases with buyers of Nortel's businesses. With respect to the lease with Ciena, the purchaser of the Optical Networking and Carrier Ethernet (MEN) business, Nortel is directed by PWGSC under the sale agreement to exercise, on closing, Nortel's early termination rights under the lease, shortening the lease from 10 years to 5 years. This will result, pursuant to the lease with Ciena, in the repayment to Ciena of US$33.5 million from the escrowed sale proceeds from the MEN sale.
The sale agreement further provides that at closing title will be delivered free and clear of all encumbrances, including the charge in favour of Nortel Networks Inc. with respect to an intercompany loan agreement, under which US$75 million is outstanding as previously announced and reported.
As previously announced, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.
About Nortel
For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.
Certain statements in this press release may contain words such as "could," "expects," "may," "should," "will," "anticipates," "believes," "intends," "estimates," "targets," "plans," "envisions," "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on Nortel's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. Nortel's assumptions, although considered reasonable by Nortel at the date of this press release, may prove to be inaccurate and consequently Nortel's actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) risks and uncertainties relating to the Creditor Protection Proceedings including: (a) risks associated with Nortel's ability to: stabilize the business and maximize the value of Nortel's businesses; obtain required approvals and successfully consummate pending and future divestitures; ability to satisfy transition services agreement obligations in connection with divestiture of operations; successfully conclude ongoing discussions for the sale of Nortel's other assets or businesses; develop, obtain required approvals for, and implement a court approved plan; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel's; generate cash from operations and maintain adequate cash on hand in each of its jurisdictions to fund operations within the jurisdiction during the Creditor Protection Proceedings; access the EDC Facility given the current discretionary nature of the facility, or arrange for alternative funding; if necessary, arrange for sufficient debtor-in-possession or other financing; continue to have cash management arrangements and obtain any further required approvals from the Canadian Monitor, the U.K. Administrators, the French Administrator, the Israeli Administrators, the U.S. Creditors' Committee, or other third parties; raise capital to satisfy claims, including Nortel's ability to sell assets to satisfy claims against Nortel; maintain R&D investments; realize full or fair value for any assets or business that are divested; utilize net operating loss carryforwards and certain other tax attributes in the future;
avoid the substantive consolidation of NNI's assets and liabilities with those of one or more other U.S. Debtors; attract and retain customers or avoid reduction in, or delay or suspension of, customer orders as a result of the uncertainty caused by the Creditor Protection Proceedings; maintain market share, as competitors move to capitalize on customer concerns; operate Nortel's business effectively under the new organizational structure, and in consultation with the Canadian Monitor, and the U.S. Creditors' Committee and work effectively with the U.K. Administrators, French Administrator and Israeli Administrators in their respective administration of the EMEA businesses subject to the Creditor Protection Proceedings; continue as a going concern; actively and adequately communicate on and respond to events, media and rumors associated with the Creditor Protection Proceedings that could adversely affect Nortel's relationships with customers, suppliers, partners and employees; retain and incentivize key employees and attract new employees as may be needed; retain, or if necessary, replace major suppliers on acceptable terms and avoid disruptions in Nortel's supply chain; maintain current relationships with reseller partners, joint venture partners and strategic alliance partners; obtain court orders or approvals with respect to motions filed from time to time; resolve claims made against Nortel in connection with the Creditor Protection Proceedings for amounts not exceeding Nortel's recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to Nortel's interests; reject, repudiate or terminate contracts; and (b) risks and uncertainties associated with: limitations on actions against any Debtor during the Creditor Protection Proceedings; the values, if any, that will be prescribed pursuant to any court approved plan to outstanding Nortel securities and, in particular, that Nortel does not expect that any value will be prescribed to the NNC common shares or the NNL preferred shares in any such plan; the delisting of NNC common shares from the NYSE; and the delisting of NNC common shares and NNL preferred shares from the TSX;
and (ii) risks and uncertainties relating to Nortel's business including: the sustained economic downturn and volatile market conditions and resulting negative impact on Nortel's business, results of operations and financial position and its ability to accurately forecast its results and cash position; cautious capital spending by customers as a result of factors including current economic uncertainties; fluctuations in foreign currency exchange rates; any requirement to make larger contributions to defined benefit plans in the future; a high level of debt, arduous or restrictive terms and conditions related to accessing certain sources of funding; the sufficiency of workforce and cost reduction initiatives; any negative developments associated with Nortel's suppliers and contract manufacturers including Nortel's reliance on certain suppliers for key optical networking solutions components and on one supplier for most of its manufacturing and design functions; potential penalties, damages or cancelled customer contracts from failure to meet contractual obligations including delivery and installation deadlines and any defects or errors in Nortel's current or planned products; significant competition, competitive pricing practices, industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; any material, adverse affects on Nortel's performance if its expectations regarding market demand for particular products prove to be wrong; potential higher operational and financial risks associated with Nortel's international operations; a failure to protect Nortel's intellectual property rights; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; failure to maintain integrity of Nortel's information systems; changes in regulation of the Internet or other regulatory changes; and Nortel's potential inability to maintain an effective risk management strategy.
For additional information with respect to certain of these and other factors, see Nortel's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(1)Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.

Contact:

Contacts:
Nortel
Media Relations
MediaRelations@nortel.com
www.nortel.com

Stay Tuned for a Special Report on Camelot Entertainment Group, Inc

Camelot Entertainment Group Inc [OTC: CMGR]

Spartans,

We have been watching this Company for awhile and we like what we see. Yes the Company has been issueing some shares, however look at the 8-K filings, the shares where to individuals who performed services for them, the fact that these people took shares instead of cash is very bullish to me.

Additionally they have been paying off debt.

They have a new insider filed 10-12-2010.

New movie release coming.

All filings are current.

The biggie, real people, real company, real products!

Stay tuned for a Special Report on Camelot Entertainment Group, INC.

DD with Court Filings on the PMC Buyout offer on CHRXQ

DD with Court Filings on the PMC Buyout offer on CHRXQ

Introduction
On May 11, 2010, Chem Rx Corporation ("Chem Rx" or "Debtor"), filed petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware.  Based in Long Beach, New York, Chem Rx claims to be the third largest long term care pharmacy in the United States (a link to the company's website is available here).  Chem Rx's customers include nursing homes, group homes, correctional institutions and other long-term care facilities.  The company sells both prescription and non-prescription drugs, medical equipment and surgical supplies to institutions in New York, New Jersey, Pennsylvania and Florida.  See Chem Rx's Declaration in Support of Chapter 11 Petitions and Request for First Day Relief (the "Declaration") at *2.
Background
As stated in its Declaration, Chem Rx was founded in 1958 as a retail pharmacy in New York.  By growing internally, and making certain acquisitions, Chem Rx grew to be the third largest long-term pharmacy in the U.S., behind Omnicare, Inc. and PharMerica Corporation.  The Debtor operates under four subsidiaries, each licensed in a separate state.  Acting primarily as a distributor, Chem Rx purchases pharmaceuticals in bulk and re-sells the product in response to physician orders.
Events Leading to Bankruptcy

Here is a link to the actual, Declaration Filed May 11, 2010, it’s a great read as it list events leading to this filing.

http://delawarebankruptcy.foxrothschild.com/uploads/file/Chem%20Rx%20Declaration.pdf

The Buy out Agreement

http://www.bizjournals.com/louisville/stories/2010/09/27/daily1.html?ana=yfcpc

http://finance.yahoo.com/news/Chem-Rx-Signs-Agreement-With-prnews-2984142627.html?x=0&.v=1

The 8-K filed with the SEC confirming the buyout offer

http://biz.yahoo.com/e/100928/pmc8-k.html

The 8-k High Lights

·          Under the terms of the Agreement, the Company has agreed, absent any higher or otherwise better bid, to acquire the Assets from the Seller for $70,600,000 in cash plus the assumption of specified liabilities related to the Assets.

·         PHARMERICA MAKES BID TO ACQUIRE CHEM RX CORPORATION

·         LOUISVILLE, Kentucky (September 27, 2010 ) – PharMerica Corporation (NYSE: PMC), a national provider of institutional pharmacy and hospital pharmacy management services, today announced that it has signed an asset purchase agreement to acquire substantially all of the assets of Chem Rx Corporation for $70.6 million. The acquisition is subject to the approval of the Bankruptcy Court and Chem Rx not receiving a higher offer from a third-party through a Court-approved auction process. PharMerica intends to pay the purchase price with existing cash and borrowings under its revolving line of credit.

·         What does PhamMerica Gain by Being designated as the, “Stalking Horse”

·         If the Bankruptcy Court approves the Agreement and the Agreement is later terminated for certain reasons, including because the Seller enters into a competing transaction, the Seller may be required to pay the Company a termination fee equal to $1,412,000.

PharMerica-Chem Rx deal gets antitrust clearance

http://finance.yahoo.com/news/PharMericaChem-Rx-deal-gets-apf-4013348308.html?x=0&.v=1

Chem Rx's Bidding Procedures, Breakup Fee OK'd

http://www.law360.com/registrations/user_registration?article_id=199696&concurrency_check=false

Law360, New York (October 07, 2010) -- A bankruptcy court judge has approved bidding procedures for Chem Rx Corp. that include a 2 percent breakup fee, putting more weight behind PharMerica Corp.'s $70.6 million bid for the pharmacy chain.
In a Wednesday order, Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware also set an Oct. 29 auction date and Nov. 2 sale hearing.
Facts

A stated in the Declaration filed on May 11, 2010, in the United States Bankruptcy Court for the District of Delaware, there are approximately 14 million shares of outstanding common stock.

Jerry Silva the CEO and founder of the Company, and Steven Silva and their affiliated trust own 52% of the 14 million shares of the outstanding common shares.

The Auction Date is October 29 and the Sale hearing is November 2^nd, 2010.

~Story Developing~

http://delawarebankruptcy.foxrothschild.com/uploads/file/Chem%20Rx%20Declaration.pdf