As some large banks like BB&T, SunTrust and Fifth Third Bancorp accept funding from the U.S. Treasury Department to weather the credit crisis, smaller banks are taking different steps to bolster their financial position. In one such instance, Powell Goldstein counsel Lyn Schroeder [left] is advising a South Carolina community bank on its plan to take itself private.

First South Bancorp Inc. said in a regulatory filing that it plans to convert some of its publicly traded common stock to preferred stock. The company then plans to terminate its registration with the Securities and Exchange Commission. The moves will allow First South Bancorp to save money by avoiding the reporting requirements of the Securities Exchange Act of 1934. The company estimated it will save about $110,000 per year in management time, legal and accounting fees and other expenses.

The proposal requires the approval of First South Bancorp shareholders. First South Bancorp said it first began discussing a going-private transaction with Powell Goldstein in May, according to its proxy statement. It considered other alternatives, such as a reserve stock split, before decided to pursue the going-private deal.

First South Bancorp operates six locations of First South Bank in the Palmetto State—in the cities of Bluffton, Columbia, Greenville and Spartanburg.

Lawyers from Hartman, Simons, Spielman & Wood and Sutherland are the legal advisers on the bankruptcy court-approved sale of a Georgia natural gas marketer.

Sutherland partners Tom Byrne and Knox Dobbins advised MXenergy Inc. on its agreement to acquire Catalyst Natural Gas LLC for about $2 million. Hartman Simons partners Sam Arden and Joe DeLisle were counsel to Catalyst on the deal. The sale has received approval from U.S. Bankruptcy Court Judge Joyce Bihary and from the Georgia Public Service Commission.

Catalyst, of Atlanta, filed for Chapter 11 protection on Oct. 1 in U.S. Bankruptcy Court for the Northern District of Georgia. Catalyst was a natural-gas marketing company that had served 34,000 customers in Georgia. MXenergy, of Stamford, Conn., provides natural gas and electricity in the U.S. and Canada.

In addition to the sales agreement, a host of Atlanta-area attorneys are advising clients in the Catalyst bankruptcy proceedings.

Jones & Walden partners Leon Jones and Denise Dotson are bankruptcy counsel to Catalyst, while Powell Goldstein partner Robert Mercer is legal counsel to the official committee of unsecured creditors to Catalyst.

Cohen Pollock Merlin & Small partner Gus Small is representing interested party Gas South LLC, which said in a court filing that it estimates that it’s owed about $1.5 million by either Atlanta Gas Light or by Catalyst. That debt is a result of Catalyst under-supplying the natural gas system shared by the state’s gas-marketing companies, Small wrote in a court filing on behalf of natural-gas marketer Gas South.

McKenna Long & Aldridge partners Gary Marsh and Craig Dowdy and associate David Gordon are counsel to creditor Atlanta Gas Light Co.

Rogers & Hardin partners Kimberly Myers, Tony Powers and Robert Remar are representing creditor Georgia Natural Gas, a unit of SouthStar Energy Services.

King & Spalding partner Paul Ferdinands is counsel to creditor SCANA Corp.

Morris, Manning & Martin partners Becky Patrick and David Rabin are counsel to Infinite Energy Inc. on litigation it filed against Catalyst. Hartman Simons partner David L. Pardue is defending Catalyst in the Infinite Energy litigation.

Scroggins & Williamson partners Robert Williamson and Hayden Kepner are counsel to interested party Constellation Energy Commodities Group Inc. McDermott Will & Emery partners Nathan Coco in Chicago and Robert Stephens in Houston are also advising Constellation Energy.

King & Spalding partners Carolyn Alford in Atlanta and Angela Batterson in New York advised GE Capital Corp. on its role in restructuring a financing agreement for a company that offers telephone, cable TV and Internet service in rural areas.

Otelco Inc. increased the amount of its senior credit facility to $188.5 million to allow it to acquire certain subsidiaries of Country Road Communications LLC, allowing Otelco to expand in three states. GE Capital served as the agent, lead arranger and sole bookrunner on the restructuring of the credit facility.

After the Country Road acquisition closes, Oneonta, Ala.-based Otelco will offer its services in Alabama, Maine, Massachusetts, Missouri and West Virginia.

GE Capital Markets Inc. and CoBank of Denver were lead arrangers for the financing. Raymond James Bank, CIBC Inc., Union Bank of California and Webster Bank of Hartford, Conn. were the other lenders.

King & Spalding associates Oliver Drose and Mia Hahn also worked on the transaction. Dorsey & Whitney advised Otelco. Emmet, Marvin & Martin advised Webster Bank.

Paul, Hastings, Janofsky & Walker partner Jesse Austin is representing a group of lenders—including UBS and General Electric Capital—on providing financing to a Texas-based trucking company that filed for bankruptcy this week.

Austin, a financial services and restructuring partner in Paul Hastings’ Atlanta office, specializes in debtor-in-possession lending, according to the law firm’s web site.

The trucking industry has been hit hard [see Deal Watch Blog story from Oct. 10] by a variety of factors, including a rise in fuel costs and declines in shipments by retailers and automakers. A number of trucking companies have filed for bankruptcy this year, including Jevic Holding Corp. and Jim Palmer Trucking.

GWLS Holdings Inc.’s Greatwide Logistics Services filed for Chapter 11 protection on Monday in U.S. Bankruptcy Court for the District of Delaware. Greatwide is financing its daily operations with debtor-in-possession lending of as much as $73.6 million from UBS, GE Capital and Abelco Finance LLC, according to a court filing. Paul Hastings is advising UBS, GE Capital and Abelco.

Greatwide, of Dallas, operates dozens of subsidiaries engaged in freight trucking, logistics and brokerage industries. The company’s customers include Wal-Mart, Ford Motor, General Motors and UPS, according to Greatwide’s web site.

As part of its Chapter 11 filing, Greatwide said that it has agreed to sell itself to two private equity firms, Centerbridge Capital Partners LP and D.E. Shaw & Co., according to a press release. Other companies will be allowed to make higher offers during the bankruptcy procedure, Greatwide said.

Among Greatwide’s largest creditors are Comdata Corp. of Birmingham, Ala., and Atlanta, owed an estimated $2.5 million in trade debt; Ryder Transportation Services of Atlanta, owed an estimated $200,000; and Great Dane Trailers of Atlanta, owed $52,000.

Willkie Farr & Gallagher and Young, Conaway, Stargatt & Taylor are bankruptcy co-counsel to Greatwide. Paul Hastings partner Leslie Plaskon in New York is working with Austin on advising the DIP lenders.

Before this fall’s stock market crash, mergers-and-acquisitions activity remained steady among private equity firms that focus on middle-market and small-market companies. Although the giant private equity firms—think Blackstone Group and KKR & Co.—may have slowed their activity this summer, midsized players like Arcapita Bank of Bahrain, and Navigation Capital Partners and VVS Capital, both of Atlanta, continued to swing deals. Arcapita acquired CEPL, a European warehouse logistics service in August, while Navigation and VVS teamed up in May to purchase Brown Trucking Co.

Now even that segment of the M&A world has dried up. King & Spalding partner Ray Baltz [left] in Atlanta, who is co-chair of the law firm’s private equity practice group, discusses the factors that have forced private equity firms to sit on billions of dollars of capital, with nowhere to place the money. The conversation has been edited for brevity and clarity.

Private equity firms have raised billions of dollars in capital, and it’s waiting to be invested. Are private equity firms sitting on the sidelines, waiting to make acquisitions, until the market normalizes?

Private equity firms continue to look for attractive investment opportunities. That’s what their organizations are set up to do. A large part of what’s going on is that there are not very many attractive business being put on the market for sale in this environment. If you are a business that is at all tied to the credit markets or to the housing industry, you are in a nuclear winter. Now is not the right time to put yourself up for sale, unless it’s a truly distressed sale. And there are some private equity firms that look at nothing but companies in distressed situations.

Even for healthy businesses, now is not the time to sell either. If you operate in an otherwise stable industry (not housing and not tied to the credit markets), and your business hasn’t declined at the same rate as valuations on Wall Street have declined, it’s still not time to put your business up for sale.

If you are a private equity firm or a buyout group, it’s not that you are unwilling to buy, it’s that there aren’t a lot of businesses on the market available to buy.

I also think sellers are being advised, perhaps incorrectly, by some investment bankers or financial advisers that because there is no leveraged financing available, if you put yourself up for sale, the private equity firms won’t participate in a sale process and you won’t get fair value.

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The star-crossed run of a Gwinnett County order-fulfillment company appears to be nearing a close.

Innotrac Corp., of Duluth, announced on Oct. 6 that GSI Commerce Inc. would acquire the company for $62 million in cash, stock and assumed debt. The merged company, which will retain the Innotrac name, combines Innotrac’s business of fulfilling customer orders for Target and AT&T with GSI Commerce’s business of operating web sites for American Eagle Outfitters, Toys “R” Us and other retailers.

Kilpatrick Stockton partners David Stockton and David Eaton in Atlanta advised Innotrac. Blank Rome partner Francis E. Dehel in Philadelphia advised GSI Commerce.

For Innotrac, the deal represents more than a strategic combination with a rival. It allows Innotrac to untangle itself from a criminal probe of a Ponzi scheme that was not of its own doing. A federal judge and a court-appointed receiver have both concluded that Innotrac was not involved with the operation of the Ponzi scheme and was not at fault.

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Kilpatrick Stockton partner John Mills in Atlanta is representing Mitsubishi Motors Credit of America Inc. in the bankruptcy case of a South Carolina car dealer.

Joe Gibson Automotive Inc. of Spartanburg, S.C., on July 16 filed for Chapter 11 protection in U.S Bankruptcy Court for the District of South Carolina. Joe Gibson Automotive filed for bankruptcy after dozens of consumers sued the dealer, claiming fraudulent advertising and business practices.

Mitsubishi Motors Credit is a secured lender in the case, having provided financing to Joe Gibson to purchase vehicles. Mitsubishi Motors Credit is owed about $1.86 million by Joe Gibson Automotive, according to court documents.

McCarthy Law Firm partner Bill McCarthy and Walker & Reibold partner Harry Walker, both of Columbia, S.C., are representing Joe Gibson Automotive.

Joe Gibson Automotive operated Mitsubishi and Suzuki dealerships in Spartanburg and Gaffney, S.C. The largest dealership in Spartanburg closed on Aug. 2, according to the Herald-Journal of Spartanburg.

Three Morris, Manning & Martin lawyers advised apparel maker Boxercraft Inc. on a recapitalization.

MMM partners Sandy Smith and Bernard Coleman and associate Natasha Bell were counsel to Boxercraft, Smith said. Miller & Martin partner Jonathan Kent advised private equity fund River Associates Investments LLC of Chattanooga, Tenn., which provided the new financing. VRA Partners LLC of Atlanta was Boxercraft’s financial advisor. Terms of the recapitalization weren’t disclosed.

Boxercraft, of Atlanta, makes boxers, shorts, pants and shirts targeted to children and teenagers.

All Terrain Monsters, a South Georgia company that makes extra-large all-terrain vehicles, filed for Chapter 11 bankruptcy after its primary lender threatened to foreclose on some of its property.

Georgia A.T.M. Inc. of Glenwood, Ga., the corporate parent of All Terrain Monsters, filed for bankruptcy on Oct. 6 in U.S. Bankruptcy Court for the Southern District of Georgia in Dublin.

All Terrain Monsters is owned by the Gilder family, including Thomas R. “Tommy” Gilder III; his wife, Vicki Gilder; and his brother, Fred Gilder. The Gilders also own Gilder Timber Co. of Glenwood. All Terrain Monsters, which employed four people as of the date of the bankruptcy filing, makes all-terrain vehicles used in hunting, farming and racing and for search-and-rescue teams. Prices for each vehicle start at $13,000, according to the All Terrain Monsters web site.

All Terrain Monsters said in a court filing that its largest debt is $1.5 million owed to Montgomery Bank & Trust of Ailey, Ga. Montgomery Bank & Trust had said it planned to foreclose on 108 acres of the Gilder family’s property, according to an Oct. 3 letter to the Gilders from the company’s legal counsel, Stone & Baxter partner Ward Stone Jr. in Macon.

Stone is bankruptcy counsel to All Terrain Monsters. Brown Rountree partner Charles H. Brown in Statesboro is advising Montgomery Bank & Trust.

Aflac Inc. may bid to acquire one of American International Group Inc.’s Japanese life insurance assets, Bloomberg News reported.

Aflac may attempt to purchase the Alico Japan life insurance unit, which AIG is putting up for sale, Aflac CEO Daniel Amos told Bloomberg Television. Aflac gets 70 percent of its sales in Japan.

Alston & Bird and Skadden, Arps, Slate, Meagher & Flom have handled some corporate work for the Columbus, Ga. insurance company in recent years. Alston advised Aflac as a creditor seeking claims in the Parmalat bankruptcy case, according to Alston’s web site. Skadden partner Michael P. Rogan in 2006 advised Aflac on a securities offering in connection with a deferred compensation plan. Skadden counsel Nancy G. Rubin in Washington has advised Aflac on general corporate and securities matters, according to the law firm’s web site.

Aflac’s general counsel, Joey M. Loudermilk, has been with the company since 1983.

Aflac is most interested in Alico because of the similarity of the products they offer, Amos said. Alico is Japan's fifth-largest life insurer.

“Alico has been a competitor of ours for years, and we think Alico has a lot of potential in terms of an acquisition,” Amos said Oct. 10.

AIG said Oct. 3 it is seeking to sell life insurance and retirement businesses as it tries to repay an $85 billion loan extended by the U.S. government to keep the insurer from collapsing, Bloomberg said. In addition to Alico, AIG is selling its AIG Edison Life Insurance Co. and AIG Star Life Insurance Co. units in Japan.