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/raid1/www/Hosts/bankrupt/TCR_Public/040416.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, April 16, 2004, Vol. 8, No. 75 Headlines ACE ELECTRICAL: Gets Nod to Hire Gronek & Latham as Attorneys ADELPHIA COMMS: Employs Genetelli Consulting as Tax Consultants AIR CANADA: Non-Union Representatives Replace Two Members ALLEGIANCE TELECOM: XO Communications Begins Operation of Assets AMAZON.COM: S&P Removes Raised Ratings from CreditWatch AMERICAN GREETINGS: Commences Tender Offer for 11.75% Senior Notes AMSCAN HLDGS: S&P Cuts Corporate Debt Rating to B+ & Removes Watch ANN TAYLOR: S&P Affirms BB- Rating & Revises Outlook to Positive AURORA: Skadden Arps Collecting $638K Legal Fee Payment for Jan 04 BIOGAN INTERNATIONAL: Case Summary & Largest Unsecured Creditors BUDGET GROUP: Exclusive Solicitation Period Extended to May 10 CARROLS: Financial Restatement Delays 2003 Annual Report Filing CHAMPIONSHIP AUTO: Cart Inc.'s Bankruptcy Causes 10-K Filing Delay CN HEALTHCARE: Case Summary & 19 Largest Unsecured Creditors COMPASS AEROSPACE: Peggy Brooker Named Vice President -- Finance CROWN CASTLE: Increases 2004 Outlook Over Stronger Leasing Demand DAN RIVER: Has Until May 15 to File Schedules & Statements DELFIL INC: Voluntary Chapter 11 Case Summary DII INDUSTRIES: Thirty-Five Insurers Object to Plan Confirmation DUO DAIRY: Employs Allen & Vellone as its Special Counsel EMMIS: Commences Senior Note Tender Offer & Consent Solicitation ENERGY & ENGINE: Auditors Remove Going Concern Qualification ENRON CORP: Court Authorizes LNG-Pipeline Sale Proceeds Allocation FEDERAL-MOGUL: Denies Liability for AIG Law's $1.3 Million Claim ETPI 2000 TRUST: Case Summary & 20 Largest Unsecured Creditors FIBERMARK: U.S. Trustee Appoints Official Creditors' Committee FLEMING COMPANIES: Seeks Authority to Arbitrate 3 Retailer Claims GEXA ENERGY: Form 10-KSB Filing Delay Triggers Loan Default GLOBAL LOGISTIX: Case Summary & 20 Largest Unsecured Creditors GREENBRIAR CORPORATION: Going Concern Ability is in Doubt HAYES LEMMERZ: Resolves $226,834 Claim Dispute with Comalco HEALTHSOUTH CORP: Extends Consent Solicitations Through April 28 I2 TECHNOLOGIES: Releasing First Quarter Results on April 22 IVACO INC: Steelworkers Join Talks Tomorrow to Protect Pensions KWIK-N-NEAT INC: Case Summary & 20 Largest Unsecured Creditors LIBERATE TECHNOLOGIES: Mulls Chapter 11 Filing to Resolve Debts IT GROUP: United Rentals Presses for $372,175 Admin. Claim Payment MANUFACTURED HOUSING: S&P's Sub. B-1 Class Rating Falls to D MERCY HOSPITAL: S&P Lowers Bond Rating to BB- with Stable Outlook MIRANT: Creditors' Panel Wants to Examine The Southern Company MJ RESEARCH: Wants to Continue Hiring Ordinary Course Profs. M-WAVE INC: Addresses Auditor's Going Concern Qualification NANOGEN INC: Plans to Buy SynX Pharma for $12.2 Million NATIONAL CENTURY: Proposes Modifications to 4th Amended Plan NEUROLOGIX INC: Liquidation Plan Raises Going Concern Doubt NORTHEAST GENERATION: S&P Lowers Senior Secured Bond Rating to BB+ NOVA CHEMICALS: Board of Directors Declares Quarterly Dividends ORIENTAL AUTOMOTIVE: Demetrius & Co Replaces ATA Group as Auditors ORION TELECOMMUNICATIONS: Has Until June 1 to File Schedules ORION TELECOMMUNICATIONS: Hires Togut Segal as Attorneys PACIFIC GAS: Judge Issues Proposed Decision on General Rate Case PALMS AT WATERS: Case Summary & 7 Largest Unsecured Creditors PARMALAT GROUP: U.S. Debtors Propose Employee Retention Plan PILLOWTEX CORP: Wants Lease Decision Time Extended through July 29 PIMCO COMMERCIAL: Liquidation Plan Fails to Secure Enough Votes REDBACK NETWORKS: Reorganized Debtor Reports First Quarter Results ROTECH HEALTHCARE: Files Delayed Annual Report with SEC RUSH FINANCIAL: Expects to Reach Profitability by Year-End SALOMON BROTHERS: Fitch Junks Series 1996-C1 Class F Rating SOLA INTERNATIONAL: Assigns Executive Management Responsibilities SOLECTRON CORP: Sells Stream International to ECE Holdings' Parent SOLUTIA INC: Court Allows JP Morgan to Obtain & Examine Documents UNIFI INC: S&P Places Low-B Ratings on CreditWatch Negative UNITED AIRLINES: Fee Review Committee Issues Report UNIVERSAL ACCESS: PwC Doubts Ability to Continue as Going Concern UTEX INDUSTRIES: Case Summary & 15 Largest Unsecured Creditors W.R. GRACE: State Street Bank Sells All Stock Held by ERISA Plan WATERLINK: Shareholders to Get Nothing out of Liquidation Proceeds WEAVER INTEREST: Case Summary & 20 Largest Unsecured Creditors WEIRTON STEEL: Inks Stipulation Resolving Retiree Benefits Dispute WILLIAMS COS.: S&P Assigns B+ Rating to $400 Million Certificates WINDERMERE SCHOOL: US Trustee Fixes Creditors Meeting for May 3 WORLDCOM INC: Agrees to Satisfy Xerox's Claim for $325,000 XM SATELLITE: S&P Rates Proposed $125M Floating Rate Notes at CCC+ * Grand Jury Indicts Former Washington Redskin for Bankr. Fraud * Bid4Assets to Auction Tax-Defaulted Properties for Nev. Counties * BOOK REVIEW: Lost Prophets -- An Insider's History of the Modern Economists ********* ACE ELECTRICAL: Gets Nod to Hire Gronek & Latham as Attorneys ------------------------------------------------------------- Ace Electrical Acquisition, LLC sought and obtained approval from the U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division, to employ Gronek & Latham, LLP as its bankruptcy counsel. The Debtor selected Gronek & Latham because partners and associates of the firm are: a) admitted to practice in the Middle District of Florida; and b) are experienced in rendering the types of legal services that will be required in this case. In the continuation of the Debtor's estate and in the administration of its case, Gronek & Latham will: i) advise as to Debtor's rights and duties in this case; ii) prepare pleadings related to this case, including a disclosure statement and a plan of reorganization; and iii) take any and all other necessary action incident to the proper preservation and administration of this estate. R. Scott Shuket, Esq., assures the Court that his firm has no interest adverse to the Debtor or the estate in matters upon which it is to be engaged. Prior to the commencement of this case, the Debtor paid an advance fee of $68,900 for Postpetition services and expenses in connection with this case. The Debtor paid Gronek & Latham $11,100 for services rendered prior to commencement of this case to filing the petition for reorganization under Chapter 11 of the Bankruptcy Code and preparation of initial pleadings to be filed in this case, and prepetition expenses. However, current hourly rates of the firm are not disclosed. Headquartered in Apopka, Florida, Ace Electrical Acquisition LLC is engaged in manufacturing and buying-out products for the automotive parts rebuilding industry and also sells complete alternators and starters, and sources products from the United States as well as China, Canada and Taiwan. The Company filed for chapter 11 protection on March 23, 2004 (Bankr. M.D. Fla. Case No. 04-03224). R. Scott Shuker, Esq., at Kay, Gronek & Latham, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. ADELPHIA COMMS: Employs Genetelli Consulting as Tax Consultants --------------------------------------------------------------- The Adelphia Communications Debtors seek the Court's authority to employ The Genetelli Consulting Group to assist them with, among other things, state and local taxation issues. By notice dated November 11, 2003, the ACOM Debtors retained Genetelli as state and local tax consultants pursuant to the Court's June 27, 2002 Order authorizing them to employ ordinary course professionals. Genetelli's fees have now exceeded the cap for an ordinary course professional. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that Genetelli is a consulting firm specializing in, among other things, analysis of state and local tax issues. Genetelli has extensive expertise in tax consulting services, serving a diverse cross-section of industries and markets, including numerous Fortune 500 companies. All members of the firm's team of qualified tax professionals possess accounting experience from the nation's top four accounting firms. The firm's founder and senior member, Richard Genetelli, was formerly a partner at Coopers & Lybrand, now PricewaterhouseCoopers, serving as the national leader of the firm's state and local tax practice. According to Ms. Chapman, the ACOM Debtors seek to retain Genetelli as state and local tax consultants because, among other things, it has been providing them with tax consulting services, pursuant to the OCP Orders, and understands their businesses and the related state and local taxation issues. In addition, the firm's tax professionals possess wide experience in state and local tax issues and are well qualified to serve the ACOM Debtors in this area. Genetelli will provide tax advisory services to the ACOM Debtors in these Chapter 11 cases, including, but not limited to: (1) state tax planning; and (2) tax consulting services in connection with the ACOM Debtors' bankruptcy reorganization. In consideration for its services, Genetelli will be compensated on an hourly basis, plus reimbursement of actual and necessary expenses incurred. The hourly rates of Genetelli's professionals range between $200 and $450. According to its books and records, in the 90 days prior to the Petition Date, Genetelli received no payments from the ACOM Debtors and has no outstanding claims against them from that period. Since the Petition Date, to date, Genetelli received $48,125 in compensation for services rendered and expenses incurred in the ACOM Debtors' Chapter 11 cases and is owed around $222,430 in fees and expenses. Mr. Genetelli, the firm's President, assures the Court that Genetelli has not represented and has no relationship with: (1) the ACOM Debtors; (2) their creditors or equity security holders; (3) any other parties-in-interest in this case; (4) their attorneys and accountants; and (5) the United States Trustee or any person employed in the Office of the United States Trustee, in any matter relating to these cases. Mr. Genetelli further discloses that his firm: (1) does not hold or represent an interest adverse to the estate; and (2) is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. (Adelphia Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Non-Union Representatives Replace Two Members --------------------------------------------------------- On June 18, 2003, Mr. Justice Farley in the Ontario Superior Court of Justice appointed five persons as representatives of active Air Canada employees who are not members of a trade union or association: Employee Position -------- -------- David Robinson Senior Manager at Air Canada's St. Laurent, Quebec office Renee Smith - Valade Manager Brian MacDonald Manager Gail Morlock Administrative and Technical Support Marc Rosenberg Vice President, Sales and Products Division Recently, Ms. Smith - Valade was promoted to a confidential management position. Mr. MacDonald retired. As a result, Ms. Smith - Valade and Mr. MacDonald are unable to continue to serve as representatives of non-union employees. Thus, the Non-Union Representatives ask Mr. Justice Farley to appoint Sara Crockett and Graeme Elliott to replace Ms. Smith - Valade and Mr. MacDonald. Ms. Crockett works as director of Customer Solutions Strategy and has 10 years of service with Air Canada and Canadian Airlines International Limited. Mr. Elliott manages the Strategic Purchasing - Commercial Division and has 27 years of service with Air Canada. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and 9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLEGIANCE TELECOM: XO Communications Begins Operation of Assets ---------------------------------------------------------------- Moving one step closer to creating the nation's premier national local telecommunications services provider, XO Communications, Inc. (OTCBB:XOCM.OB) announced that it has entered into an operating agreement that will allow the company to operate the assets of Allegiance Telecom, Inc. (OTCBB:ALGXQ.OB) that XO is acquiring until final closing of the acquisition. XO also announced its new senior management team, including the creation of the new position of chief operating officer. "We are moving very quickly to integrate the assets of Allegiance Telecom with XO, bringing together the best from both companies in terms of people, network facilities, technology and business processes," said Carl Grivner, chief executive officer of XO Communications. "With our new senior management team, we can move even faster to put into place what is one of the nation's largest facilities-based providers of national local telecommunications services to businesses." The senior management team members reporting directly to Carl Grivner are: -- Lee Weiner, Senior Vice President and General Counsel -- Bill Garrahan, Acting Chief Financial Officer and Senior Vice President of Business Development -- Terri Burke, Vice President of Human Resources -- Doug Sobieski, Vice President of Broadband Wireless Services -- Wayne Rehberger, Chief Operating Officer. Reporting to Mr. Rehberger are: -- Rob Geller, Chief Information Officer -- Tom Cady, Chief Marketing Officer -- Matt Harty, President of Commercial Sales -- Ernie Ortega, President of Carrier Sales -- Rob Westervelt, President of Indirect Sales -- Mark Faris, Senior Vice President of Network Operations "As one of the nation's largest facilities-based local services competitors to the regional Bell operating companies, it is critical that we drive maximum efficiency from our operations while ensuring that our products are competitive and our organization is customer-solutions oriented," said Grivner. "Toward that end, we have created a new role of chief operating officer and named Wayne Rehberger to fill the position." "As XO's chief financial officer for the past three years, Wayne has been involved in all aspects of our operations and has played an instrumental role in improving XO's operational and financial performance," added Grivner. "In this new position, he will play an even larger role in XO's transformation, and will be a driving force behind XO's laser like focus on bringing businesses more choices for their local, national and end-to-end telecommunications needs." Matt Harty, previously regional vice president for the northeast region at Allegiance Telecom, will assume the role of president of Commercial Sales for the combined Allegiance-XO sales force. "By combining the best of the two companies' sales forces, XO has a tremendous opportunity to gain a greater share of the market for business customers," said Wayne Rehberger, Chief Operating Officer at XO Communications. "Matt Harty, who has done a superb job leading Allegiance's sales force in one the most competitive regions of the country, will join with Ernie Ortega and Rob Westervelt to lead XO's sales efforts as we move to compete even more aggressively with the regional Bell operating companies." Tom Cady, who was previously president and CEO of SOTAS, will join the company as chief marketing officer. XO has also named Doug Sobieski, previously XO's vice president for the Pacific region, to lead the company's national roll out of its Fixed Broadband Wireless services, following successful trials completed in southern California earlier this year. For additional background on the new senior management team, go to http://www.xo.com/about/executives On February 13, 2004, XO Communications was selected as the winning bidder for Allegiance Telecom, which had filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code on May 14, 2003. Under the terms of the purchase agreement, XO agreed to purchase substantially all of the assets of Allegiance Telecom and its subsidiaries except for Allegiance's customer premises equipment sales and maintenance business, operated under the name of Shared Technologies, its dedicated dial up access services business operated under an agreement with Level 3 Communications, its shared hosting business, and certain other Allegiance assets and operations. XO expects to complete its acquisition of Allegiance and obtain final state regulatory approvals during the second quarter of 2004. About Allegiance Telecom Allegiance Telecom is a facilities-based national local exchange carrier headquartered in Dallas, Texas. Allegiance Telecom is currently pursuing financial restructuring plans under Chapter 11 of the U.S. Bankruptcy Code, as previously announced on May 14, 2003. As a leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecomT" - a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source provider approach. About XO Communications XO Communications is a leading broadband telecommunications services provider offering a complete portfolio of telecommunications services, including: local and long distance voice, Internet access, Virtual Private Networking (VPN), Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband telecommunications services within and between more than 70 markets throughout the United States. AMAZON.COM: S&P Removes Raised Ratings from CreditWatch ------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Internet retailer Amazon.com and removed them from CreditWatch, where they were placed with positive implications on Feb. 10, 2004. The corporate credit rating was raised to 'B+' from 'B'. The outlook is positive. "The upgrade reflects the significant progress that Amazon has made in improving operating results and credit-protection measures, and the expectation that this trend will continue," explained Standard & Poor's credit analyst Diane Shand. "The ratings reflect the risks of rapid growth, weak levels of profitability, and high leverage. These risks are tempered by the company's solid market position in online retailing and its increasing operating efficiency." Seattle, Washington-based Amazon.com is an online seller of millions of new and used items in categories such as sporting goods, apparel and accessories, books, music, DVDs, electronics, office goods, kids and baby products, and home and garden supplies. Amazon has been successful at creating a strong brand, which is critical to the long-term success of any retailer selling goods through the Internet. The company's focus on convenience, service, selection, and content has enabled it to increase revenues at a 35% compound annual rate over the past four years. Amazon currently generates more than $5.2 billion of sales. The company has also done a good job leveraging sales against fixed costs. The operating margin increased to 9.4% in 2003, from 8.1% in 2002 and only 3.9% in 2001. Standard & Poor's expects this strong growth to continue, as consumers have responded favorably to Amazon's everyday low pricing strategy. The company is also expected to further enhance its product offerings and merchandising strategy. Still, the mature and intensely competitive retail environment could challenge Amazon. Although eBay.com is Amazon's only major online competitor, it competes against all retail channels. The difficult retail environment over the past few years has heightened competition, and the pricing strategies of financially stronger retailers could pressure the revenues and margins of relatively weaker retailers, such as Amazon. In addition, Amazon's cost structure is still high, as the company invested heavily in technology and distribution centers ahead of demand. Return on assets is only 8.0%. AMERICAN GREETINGS: Commences Tender Offer for 11.75% Senior Notes ------------------------------------------------------------------ American Greetings Corporation announced that it has commenced a cash tender offer for all of its $196.4 million outstanding 11.75 percent Senior Subordinated Notes due July 15, 2008 and a consent solicitation to amend the related note indenture. The consent solicitation will seek consents from holders of the notes to eliminate certain restrictive covenants and events of default from the note indenture. The Corporation is undertaking this initiative in an effort to reduce its future interest expense and to increase its financial flexibility. The tender offer and consent solicitation are subject to the terms and conditions set forth in the Corporation's Offer to Purchase and Consent Solicitation Statement dated April 14, 2004 and will expire at 9 a.m., Eastern time, on May 12, 2004, unless extended. The purchase price per $1,000 principal amount of notes to be paid for each validly tendered note will be (1) the redemption price of the notes plus scheduled interest to July 15, 2005 (the first optional redemption date with respect to the notes) discounted based on a yield to July 15, 2005 that is equal to the sum of (i) the yield on the 1.5 percent U.S. Treasury note due July 31, 2005, and (ii) a fixed spread of 50 basis points, less (2) an amount equal to the consent payment. In addition, accrued and unpaid interest will be paid on the tendered notes up to but not including the payment date. The purchase price for each note will be set at 2 p.m. Eastern time on May 7, 2004, unless the expiration date is extended. A consent payment of $20 per $1,000 of principal amount of notes will be paid on the date the notes are purchased to holders who tender their notes and provide their consents to the proposed indenture amendments at or prior to 5 p.m. Eastern time on April 27, 2004. Notes tendered and consents delivered at or prior to 5 p.m. on April 27, 2004 may not be withdrawn or revoked after that time. Holders of notes tendered after such date will not receive a consent payment. The offer is subject to several conditions, including the execution of an amendment to the credit agreement for the Corporation's revolving credit facility, the tender of, and the receipt of consents from holders of, at least a majority in aggregate principal amount of the notes, the execution of a supplemental indenture amending the note indenture, and other customary conditions. The Corporation anticipates receiving the credit facility amendment by the expiration date of the tender offer. The Corporation may amend, extend or terminate the tender offer and consent solicitation at its sole discretion. About American Greetings Corporation American Greetings Corporation (NYSE: AM) is one of the world's largest manufacturers of social expression products. Along with greeting cards, its product lines include gift wrap, party goods, reading glasses, candles, stationery, calendars, educational products, ornaments and electronic greetings. Located in Cleveland, Ohio, American Greetings generates annual net sales of approximately $2 billion. For more information on the Corporation, visit http://corporate.americangreetings.com/ AMSCAN HLDGS: S&P Cuts Corporate Debt Rating to B+ & Removes Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on party goods manufacturer Amscan Holdings Inc. to 'B+' from 'BB-'. The downgrade reflects the increased consolidated debt burden the company will take on after its proposed acquisition by AAH Holdings Corp., a new entity jointly controlled by affiliates of Berkshire Partners LLC and Weston Presidio. All the ratings on Amscan have been removed from CreditWatch, where they were placed March 29, 2004. The transaction will add about $96 million of incremental debt to the company's credit profile and substantially increase debt leverage and weaken credit measures. Standard & Poor's has also assigned its 'B+' bank loan rating and its '3' recovery rating to Amscan Holdings Inc.'s proposed $250 million senior secured credit facilities due 2012. The 'B+' bank loan rating is the same as Amscan's corporate credit rating; this, along with the '3' recovery rating, indicates that lenders can expect meaningful recovery of principal (50%-80%) in the event of a default. In addition, Standard & Poor's assigned its 'B-' senior subordinated debt rating to Amscan's proposed $175 million senior subordinated notes due 2014. These ratings are based on preliminary offering statements and are subject to review upon final documentation. The outlook is stable. Proceeds from the new credit facilities and notes offering will be used to finance the proposed acquisition by AAH Holdings Corp. and to repay about $277 million of outstanding debt currently residing at Amscan. The ratings on Amscan's existing bank loan and senior subordinated notes will be withdrawn upon the closing of the proposed acquisition and related financing transactions. "The ratings on Amscan reflect its highly leveraged financial profile, narrow business focus, and participation in the highly competitive, fragmented party goods industry," said Standard & Poor's credit analyst David Kang. "Somewhat mitigating these factors are the company's diverse product line and the solid growth prospects in its industry." Elmsford, New York-based Amscan designs, manufactures, and distributes party goods and metallic balloons. The decorative party goods industry is highly competitive and very fragmented, and is made up of many small independent companies and some large manufacturers. However, Amscan's product line is one of the broadest in the industry, and this has allowed the company to become a single-source supplier to key retailers. Amscan is the leading supplier to the party superstore channel, which accounts for more than 30% of all decorative party goods sales in the U.S. This segment has grown steadily during the past several years and is expected to continue exhibiting strong growth due to favorable demographic trends. Still, the company's working capital requirements are seasonal, typically peaking in the third quarter, and its financial flexibility continues to be constrained by its heavy debt burden, incurred largely as a result of its acquisition activity in the past several years and the proposed transaction. ANN TAYLOR: S&P Affirms BB- Rating & Revises Outlook to Positive ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on New York, N.Y.-based specialty women's apparel retailer Ann Taylor Inc. to positive from stable. The 'BB-' corporate credit rating was affirmed. "The outlook revision reflects an improving financial profile following Ann Taylor's solid operating performance in 2003, and Standard & Poor's expectations that this level of operating performance could be sustained," said Standard & Poor's credit analyst Ana Lai. "The ratings continue to reflect the company's high business risk given its participation in the highly competitive and volatile specialty apparel industry, inconsistent operating performance, and the rapid growth strategy at the Ann Taylor Loft business. These factors are somewhat mitigated by the company's more focused merchandising strategy, improved inventory management, and adequate credit-protection measures." Ann Taylor is a specialty retailer of better-quality women's apparel, focused on full wardrobing. The company's solid operating performance in 2003 was driven by the success of its Ann Taylor Loft (ATL) concept and Ann Taylor Stores' (ATS) renewed focus on its core competencies. As a result, same-store sales increased 6% in 2003 (3.6% at ATS and 10.3% at ATL), and operating margins expanded to 23.8% from 23.3% in 2002 due to positive sales leverage and higher gross margins from increased full-price selling. The company has successfully rolled out its Ann Taylor Loft concept over the past few years. The operating trends at this growth unit have been solid, with relatively consistent comparable-store sales gains and strong margin contribution due to its successful merchandising strategy. Nevertheless, the company is subject to significant fashion risk, and past merchandise missteps at ATS have contributed to an inconsistent operating performance. The success of the Ann Taylor Loft concept has helped offset weakness at Ann Taylor Stores. Still, the company continues to expand the Ann Taylor Loft concept at a rapid pace, adding 61 new stores in 2003. AURORA: Skadden Arps Collecting $638K Legal Fee Payment for Jan 04 ------------------------------------------------------------------ Skadden, Arps, Slate, Meagher & Flom, LLP, legal counsel in Aurora Foods, Inc.'s chapter 11 case, asks the Court to approve its compensation application for the period beginning January 1, 2004 through January 31, 2004. The firm incurred $797,001 in legal fees, but only seeks payment of $637,601, which is 80% of Skadden Arp's total fees. The firm also seeks reimbursement of $34,982 in actual and necessary expenses. J. Gregory Milmoe, a partner at Skadden Arps, summarizes the time expended by each professional, totaling 2,074.40 hours: Professional Title Hours Worked ------------ ----- ------------ Eric M. Davis Partner 132.5 Sally McDonald Henry Partner 199.9 J. Gregory Milmoe Partner 12.9 Patricia Moran Partner 85.4 Peter J. Neckles Partner 4.6 Stephanie R. Feld Counsel 17.4 Thomas J. Matz Counsel 123.9 David E. Schwartz Counsel 4.7 David E. Barrett Associate 227.5 C. Michael Chitwood Associate 94.2 Patrick M. Creaven Associate 7.9 Dolores De Elizalde Associate 194.2 Jamie L. Edmonson Associate 84.9 Jarett Epstein Associate 63.7 Elizabeth A. Fanous Associate 57.1 Sion Kim Associate 2.9 Vivienne C. LaBorde Associate 4.7 Jason M. Liberi Associate 148.8 Douglas W. Squasoni Associate 28.2 Robert A. Weber Associate 133.9 Gregory S. Weisman Associate 141.6 Louis D. Wilson Associate 7.3 Malikah Ashby Paraprofessional 121.1 Aitor Baraibar Paraprofessional 5.2 Douglas Culhane Paraprofessional 5.0 John M. Guthrie Paraprofessional 4.0 Constance A. Kaplan Paraprofessional 8.7 Michael L. Kreiner Paraprofessional 42.6 Rebecca J. Levy Paraprofessional 13.4 Larkin Moore Paraprofessional 7.1 Stephanie Skelly Paraprofessional 11.5 Venda A. Skinner Paraprofessional 5.9 Ronald E. Wittman, Jr. Paraprofessional 53.1 ------- 2,074.4 Mr. Milmoe provides the number of hours devoted to specific projects in the Debtors' cases: Project Category Hours Spent ---------------- ----------- General Corporate Advice 205.7 Business Operations/Strategic Planning 1.4 Case Administration 220.2 Claims Administration (General) 13.6 Claims Administration (Reclamation/Trust Funds) 1.0 Creditor Meetings/Statutory Committees 24.0 Disclosure Statement/Voting Issues 392.1 Employee Matters (General) 18.2 Executory Contracts (Personalty) 26.4 Financing (DIP and Emergence) 41.2 Intellectual Property 10.7 Leases (Real Property) 10.8 Litigation (General) 0.8 Non-working Travel Time 16.3 Regulatory and SEC Matters 52.9 Reorganization Plan/Plan Sponsors 879.2 Retention/Fee Matters (SASM&F) 118.4 Retention/Fee Matters/Objections (Others) 9.1 Tax Matters 1.0 U.S Trustee Matters 9.2 Utilities 12.3 Vendor Matters 9.9 The $34,982 actual and necessary charges and disbursements are: Expense Cost ------- ---- Computer Legal Research $5,903 Long Distance Telephone 771 In-House Reproduction 8,395 Outside Reproduction 13,618 Outside Research 613 Out-of-town Travel 3,245 Courier & Express Carriers 2,247 Postage 166 Other 24 Aurora Foods Inc. -- http://www.aurorafoods.com/-- based in St. Louis, Missouri, produces and markets leading food brands, including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and Chef's Choice(R) skillet meals. With $1.2 billion in reported assets, Aurora Foods, Inc., and Sea Coast Foods, Inc., filed for chapter 11 protection on December 8, 2003 (Bankr. D. Del. Case No. 03-13744), to complete a pre-negotiated sale of the company to J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and C. Dean Metropoulos and Co. Judge Walrath confirmed the Debtors' pre-packaged plan on Feb. 20, 2004. Sally McDonald Henry, Esq., and J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP provide Aurora with legal counsel, and David Y. Ying at Miller Buckfire Lewis Ying & Co., LLP provides financial advisory services. (Aurora Foods Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) BIOGAN INTERNATIONAL: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Biogan International, Inc. 55 York Street, 8th Floor Toronto, Ontario, Canada M5J 1R7 Bankruptcy Case No.: 04-11156 Type of Business: The Debtor explores, selects, smelts and sells mineral products and by-products. The Debtor has a Cooperative Joint Venture agreement with Hechi Industrial Co, Ltd. The activities under the Joint Venture agreement include smelting and mining of non-ferrous metals in the Guangxi Province of China. Chapter 11 Petition Date: April 15, 2004 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Michael R. Nestor, Esq. Young Conaway Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19899 Tel: 302-571-6600 Fax: 302-571-1253 Total Assets: $9,038,612 Total Debts: $8,280,792 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Hodgon Russ Trade Debt $264,528 One M&T Plaza, Ste 2000 Buffalo, NY 14203-2391 Ron J. Tolman Unpaid Wages and $234,706 Promissory Note and Interest Rutan & Tucker LLP Trade Debt $173,376 Macleod Dixon LLP Trade Debt $119,253 Rulon Tolman Loans $89,714 King & Wood PRC Lawyers Trade Debt $68,700 KPMG Huazhen Trade Debt $60,825 Davies Ward Philips & Trade Debt $50,399 Vineberg Micon International Limited Trade Debt $33,463 Wandworth & Smith, PC Trade Debt $27,000 J. Tolman Accounting Trade Debt $24,700 Benson To Trade Debt $23,279 George Brenner Trade Debt $23,629 Rob Doyle Unpaid Expenses $19,557 John R. Hansen Trade Debt $4,943 BCE Emergis Inc. Trade Debt $4,200 Robert C. Montgomery Wages $3,914 William Glazier Trade Debt $2,652 AFH Enterprises Trade Debt $1,500 Public Ease, Inc. Trade Debt $1,500 BUDGET GROUP: Exclusive Solicitation Period Extended to May 10 -------------------------------------------------------------- As previously reported, Judge Case entered an order extending the Budget Group Inc.'s exclusive period to solicit acceptances for their Plan to April 7, 2004. Debtors Seek One More Extension On the heels of that order, the Debtors made another request for a further extension of their Exclusive Solicitation Period to May 10, 2004. Robert S. Brady, Esq., at Young, Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, recounts that the Debtors, the Official Committee of Unsecured Creditors and the U.K. Administrator worked together to develop a consensual plan of liquidation. Pursuant to the Scheduling Order, April 20, 2004 has been established as the date to consider confirmation of the Second Amended Plan. Votes have been solicited for the Debtors' proposed plan and are currently being tabulated. Additionally, April 20, 2004 has been established as the date of the hearing to consider the settlement agreement between the Debtors, the Committee, Cendant Corporation and Cherokee Acquisition Corporation. In light of the Scheduling Order and the fact that the Committee and all other parties have agreed to this hearing date, the Debtors ask the Court to extend the Exclusive Solicitation Period through the date of the Rescheduled Confirmation Hearing at a minimum. Mr. Brady assures the Court that the extension will not prejudice the legitimate interests of any creditors. The Debtors, the Committee and the U.K. Administrator continue to work cooperatively through the myriad issues remaining in these cases. Additionally, the Debtors continue to make timely payments of all their postpetition obligations. The Court will convene a hearing on May 10, 2004 to consider the Debtors' request. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the United States Bankruptcy Court for the District of Delaware, the Debtors' Exclusive Solicitation Period is automatically extended through the conclusion of that hearing. Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. (Budget Group Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) CARROLS: Financial Restatement Delays 2003 Annual Report Filing --------------------------------------------------------------- Carrols Corporation announced that, as a result of a review of its accounting treatment with respect to sale/leaseback transactions of its restaurant properties entered into during the period from 1991 through 2000, it will restate its financial statements for these periods including fiscal years 2001, 2002 and the first nine months of 2003. Carrols will record such sale/leaseback transactions as financing transactions rather than as sale/leaseback transactions as previously reported in its consolidated financial statements during such periods. Accounting for sale/leaseback transactions as financing transactions requires that the assets subject to such transactions be added back to Carrols' balance sheets as if they had not been sold and that the proceeds from these sales, including gains previously deferred over the lease term, be classified as financing obligations. In addition, the operating lease payments under these leases will be recharacterized as payments of interest and principal during prior and future periods. The estimated effect of the restatement on Carrols' financial statements for the year ended December 31, 2003 will be an increase in earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $9 million to $83.7 million from $74.7 million that was previously reported and a decrease in net income of approximately $1.6 million to $2.3 million from $3.9 million that was previously reported. In addition, as of December 31, 2003 Carrols will record an asset of approximately $64.3 million, classified as assets under financing obligations, and a liability of approximately $84.7 million, classified as financing obligations and a cumulative decrease to its accumulated earnings of approximately $9.6 million due to these restatements. All such financial information and adjustments are estimates and subject to change, pending the completion of Carrols' financial statements for 2003 as well as the prior restated periods, and the completion of the audit of those statements by the Company's auditors, PricewaterhouseCoopers LLP. Carrols will reflect the restated periods in its Annual Report on Form 10- K for the year ended December 31, 2003. The filing of such Annual Report on Form 10-K will be delayed pending the finalization of Carrols' financial statements for 2003 as well as the prior restated periods. In addition, as a result of the recharacterization for accounting purposes of the sale/leaseback transactions as financing transactions rather than as sale/leaseback transactions, Carrols will be in technical default of certain of its financial and other covenants under its senior secured credit facility. Carrols has initiated discussions with its senior secured lenders and is confident that it will be able to favorably resolve this issue. Alan Vituli, Chairman and CEO of Carrols, stated, "Carrols believed it was in compliance with generally accepted accounting principles in accounting for its sale/leaseback transactions in its audited consolidated financial statements. Certain provisions in some of the Company's sale/leaseback transactions have resulted in Carrols need to restate its financial statements. Those provisions have minimal commercial impact upon the relevant terms of the lease. Had Carrols been aware of the potential impact of these provisions upon Carrols' financial statements, we believe that both Carrols and the respective lessors would have agreed to exclude those provisions from each lease without affecting any of the material terms of such leases." Mr. Vituli added, "We wish to emphasize that the restatement has no impact upon our business including our liquidity and free cash flow. In addition, the restatement does not alter the accounting treatment of our sale/leaseback transactions entered into during 2002 and 2003, which totaled $61.4 million. During the year ended December 31, 2003, Carrols reduced the principal amount outstanding under its senior credit facility by $63.2 million and made principal payments during the first quarter of 2004 of $12.4 million, including a voluntary principal prepayment of $9.0 million on the term debt under the facility. The balance outstanding under the senior credit facility as of March 31, 2004 was approximately $111.1 million. Compared with the prior year, same store sales during the first quarter at our Pollo Tropical and Taco Cabana restaurants remain strong. Same store sales at our Burger King restaurants have stabilized and it appears that from February and March results the Burger King brand is in the early stage of a turnaround." Carrols Corporation is one of the largest restaurant companies in the U.S. operating 534 restaurants in 16 states as of December 31, 2003. Carrols is the largest franchisee of Burger King restaurants with 351 Burger Kings located in 13 Northeastern, Midwestern and Southeastern states. It also operates two regional Hispanic restaurant chains that operate or franchise more than 200 restaurants. Carrols owns and operates 123 Taco Cabana restaurants in Texas and Oklahoma, and franchises nine Taco Cabana restaurants. Carrols also owns and operates 60 Pollo Tropical restaurants in South and Central Florida, and franchises 24 Pollo Tropical restaurants in Puerto Rico (19 units), Ecuador and South Florida. CHAMPIONSHIP AUTO: Cart Inc.'s Bankruptcy Causes 10-K Filing Delay ------------------------------------------------------------------ Championship Auto Racing Teams, Inc. (OTC Bulletin Board: CPNT) announced that it will be unable to file its 2003 Annual Report on Form 10-K with the U.S. Securities and Exchange Commission (SEC) by the extension deadline of April 14, 2004. On March 30, 2004, the Company filed a Form 12b-25 with the SEC, which grants an automatic fifteen-day extension to the Form 10-K filing deadline in order to complete the audit of its financial statements for the year ended December 31, 2003. In the Form 12b-25, the Company stated that it was unable to complete its financial statements by March 30, 2004 due primarily to the fact that its operating subsidiary CART, Inc. filed for bankruptcy under the U.S. Bankruptcy Code in December 2003. The sale of substantially all the assets of CART, Inc., and certain other assets, was completed on February 13, 2004. The Company and its accountants have been working diligently to finalize the financial statements and the 10-K as quickly as possible. However, at this time, the Company is unable to predict when it will be in a position to file its Form 10-K. About Championship Auto Racing Teams, Inc. Championship Auto Racing Teams, Inc. previously owned and operated the ChampCar World Series. The Company has sold all of its operating assets and is in the process of winding up its affairs. * * * On November 11, 2003, in response to a request by the management of Championship Auto Racing Teams Inc., that Deloitte & Touche LLP, the Company's independent auditor, reissue its report on the Company's financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, and in connection with the filing by the Company of a proxy statement on November 13, 2003 relating to the pending transaction with Open Wheel Racing Series LLC, Deloitte & Touche informed management that its report on the Company's financial statements as of December 31, 2002 and 2001, and for each of the three years in the period ended December 31, 2002 would include an explanatory paragraph indicating that developments during the nine-month period ended September 30, 2003 raise substantial doubt about the Company's ability to continue as a going concern. CN HEALTHCARE: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: CN Healthcare Services Inc. 13250 South Gessner Missouri City, Texas 77489 Bankruptcy Case No.: 04-34623 Type of Business: The Debtor operates Healthcare Facilities. Chapter 11 Petition Date: March 31, 2004 Court: Southern District of Texas (Houston) Judge: William R. Greendyke Debtor's Counsel: Jeffrey Lawrence Wilner, Esq. Wilner and Taylor 1415 Louisiana, Suite 4175 Houston, TX 77002 Tel: 713-650-3000 Total Assets: $584,563 Total Debts: $1,327,774 Debtor's 19 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Ugwuanyi Family Limited 5 Year Lease Office $471,700 Partnership Property 16349 April Ridge Houston, TX 77083 Old Vine-Clear Lake Assoc. goods/services $19,000 LLC XO Communication goods/services $12,791 Jonathan, Edith Unsecured Loan $9,360 BCB Property 2 Year Lease Office $8,625 Property Houston Employment Weekly goods/services $6,626 Odoh, Charles Unsecured Loan $6,000 Quest Communication $6,000 Tri-Star Telecommunications $2,430 Inc. Houston Chronicle goods/services $2,318 Houston Community Newspapers goods/services $2,127 Kellmarc Home Health goods/services $1,940 Therapies Nurseweek Publishing goods/services $1,695 Cutrona, Anthony For attorney services $1,500 Birch Telecom, Inc. Comm'l goods/services $948 Unified Business Supply, Inc goods/services $578 Corporate Express goods/services $419 Freedom Medical Inc. goods/services $400 Seyah, Ltd., d/b/a Hometeam goods/services $214 Protection COMPASS AEROSPACE: Peggy Brooker Named Vice President -- Finance ---------------------------------------------------------------- Compass Aerospace, a provider of precision-machined parts, sheet metal parts, and integrated kits and assemblies, announces the appointment of Peggy J. Brooker as vice president of finance. Headquartered in Southern California, Compass Aerospace is a $70 million company with facilities strategically located across the U.S. that serve both the commercial and defense markets. Ms. Brooker comes to Compass Aerospace with more than 20 years of expertise in the financial services industry. Ms. Brooker's most recent experience was serving as a principal of Ernst & Young, Australia, for the $150 million audit and advisory services division specializing in the financial services sector of the marketplace. Ms. Brooker instituted "best practices" knowledge management for the firm's internal information sharing systems. Among her other achievements, she led a 30-person team in administering the largest insolvency project in U.S. history, which resulted in successfully reviving the receivership. Ms. Brooker earned her Bachelor of Science degree in Business/Accounting from the University of Southern California and is a licensed Certified Public Accountant by the State of California. Compass Aerospace Executive Vice President David Chetwood states, "Peggy's ability to develop innovative business strategies and her strong financial expertise will be an asset as Compass continues to grow as one of the leaders in the aerospace integration arena." Compass Aerospace, headquartered in Southern California, is a diversified, multi-location manufacturer of structural components and assemblies supporting a wide range of aircraft OEMs worldwide. Compass provides an array of advanced machining, fabrication, and supply chain and logistics management services for commercial, military and general aviation markets. These include current models as well as advanced, next-generation aircraft, known for their lightweight and overall efficiency. * * * As reported in the Troubled Company Reporter's March 4, 2004 edition, Compass Aerospace Corporation just completed an out-of- court restructuring of its capital and debt structure. In the restructuring, the company's senior lenders, who already owned approximately 10% of the equity of Compass, agreed to the receipt of additional equity interests in the company in exchange for a reduction in the company's outstanding senior indebtedness. Existing stockholders received nominal consideration for their equity in the restructuring. As a result of the restructuring, the company's senior lenders now own all of the equity interests in Compass Aerospace and the company reduced its outstanding principal amount of senior indebtedness from approximately $45 million to $15 million. Compass President and Chief Executive Officer John R. Reimers stated, "I am pleased to be able to announce this restructuring. We have been able to reduce the debt of the company by over sixty percent (60%) which we believe will enable Compass to continue its quest to be a world-class leader in aerospace integration." CROWN CASTLE: Increases 2004 Outlook Over Stronger Leasing Demand ----------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) announced it has increased its 2004 outlook, based primarily on stronger than expected leasing demand in the first half of 2004. For the full year 2004, Crown Castle has adjusted certain elements of its financial guidance, including raising its site rental and broadcast transmission revenue outlook for the full year 2004 from between $860 million and $870 million to between $875 million and $885 million, an increase of $15 million. Crown Castle has raised its expectations for adjusted EBITDA from between $455 million and $470 million to between $465 million and $475 million and for free cash flow outlook from between $145 million and $160 million to between $150 million and $160 million for the full year 2004. Crown Castle's outlook reflects increased leasing activity in the United States and a projected use of working capital of approximately $10 million for the full year 2004. Crown Castle plans to release its first quarter 2004 results after the close of trading on May 5, 2004. Crown Castle International Corp. (S&P, B- Corporate Credit Rating, Stable Outlook) engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftop sites as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage in the United States, United Kingdom and Australia. The company owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle visit: http://www.crowncastle.com/ Crown Castle's December 31, 2003 balance sheet shows a working capital deficit of $20,074,000 DAN RIVER: Has Until May 15 to File Schedules & Statements ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern of Georgia, Newnan Division, gave Dan River, Inc., and its debtor-affiliates an extension to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors have until May 15, 2004 to file their Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- is a designer, manufacturer and and marketer of textile products for the home fashions, apparel fabrics and industrial markets. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. DELFIL INC: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Delfil Inc. 1881 Bering Suite 39 Houston, TX 77057 Bankruptcy Case No.: 04-20429 Chapter 11 Petition Date: April 5, 2004 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtor's Counsel: William Arthur Whittle, Esq. Attorney at Law 5151 Flynn Parkway, Suite 406 Corpus Christi, TX 78403 Tel: 361-887-6993 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor did not file a list of its 20-largest creditors. DII INDUSTRIES: Thirty-Five Insurers Object to Plan Confirmation ---------------------------------------------------------------- A consortium of thirty-five insurance companies: * ACE Property & Casualty Insurance Company * Allianz AG * Allianz Global Risks US Insurance Company * Allstate Insurance Company * American Home Assurance Company * American International Underwriters Insurance Company * American Re-Insurance Co. * Appalachian Mutual Insurance Co. * Birmingham Fire Insurance Company of Pennsylvania * Central National Insurance Company of Omaha * Century Indemnity Company * Everest Reinsurance Company * Executive Risk Indemnity, Inc. * Federal Insurance Company * Fireman's Fund Insurance Company * Granite State Insurance Company * Insurance Company of the State of Pennsylvania * Landmark Insurance Company * Lexington Insurance Company * Liberty Mutual Insurance Co. * Maryland Casualty Company * Mt. McKinley Insurance Company * National Surety Corporation * National Union Fire Insurance Company of Pittsburgh, PA * New Hampshire Insurance Company * OneBeacon America Insurance Company * Pacific Employers Insurance Company * Seaton Stonewall Insurance Company * St. Paul Mercury Insurance Company * TIG Insurance Company * U.S. Fire Insurance Company * Union Atlantique de Assurances * Zurich American Insurance Company * Zurich Insurance Company * Zurich International Ltd. asserts that: (a) The DII Industries, LLC's Plan cannot be confirmed because of the Debtors' bankruptcy cases and it was not filed in good faith or for a valid reorganizational purpose. (b) The Plan cannot be confirmed because the Plan and its proponents have not complied with the applicable provisions of the Bankruptcy Code and it has been proposed by a means forbidden by law. (c) The Plan cannot be confirmed because it does not comply with applicable provisions of the Bankruptcy Code and is proposed by a means forbidden by law with respect to the legal representative appointed pursuant to Section 524(g)(4)(B)(ii): -- no legal representative can be appointed constitutionally because demand holders and future silica claimants can be fully compensated by the Debtors, and so their due process rights cannot be abridged; -- the legal representative has a personal conflict of interest due to his selection and remuneration by Debtors; -- the legal representative has a conflict of interest because he represents potential asbestos and silica demand holders and claimants who are not similarly situated; -- the legal representative does not represent all asbestos and silica demand holders, as the Plan classifies as "claimants" individuals who properly should be classified as demand holders; -- the legal representative has a conflict of interest in being asked to review a plan that he negotiated and hence is not independent; and -- the legal representative has a conflict of interest because he represents both asbestos and silica demand holders and claimants when their interests are adverse. (d) The Plan cannot be confirmed because the Court cannot appropriately enter a Plan Confirmation Order containing one or more "channeling injunctions." (e) The Plan cannot be confirmed in that the pursuit of demands outside the procedures prescribed by the Plan is not likely to threaten the Plan's purpose to deal equitably with claims and future demands. (f) The Plan cannot be confirmed because under the Plan, the trust to be set up will not be funded in whole or in part by the securities of one or more of the Debtors. (g) The Plan cannot be confirmed because under the Plan, the trust to be set will not obligate any Debtors to fund the trust with dividends. (h) The Plan cannot be confirmed because under the Plan, the trust to be set up will not own, or by the exercise of rights granted under the Plan would not be entitled to own if specified contingencies occur, a majority of voting shares of each of the Debtors, the parent corporation of the Debtors, or a subsidiary of each of the Debtors that is also a Debtor. (i) The Plan cannot be confirmed because it will not pay, or provide reasonable assurance that the trust will value and be in a financial position to pay, present claims and future demands that involve similar claims in substantially the same manner. (j) The Plan cannot be confirmed because it is not fair and equitable with respect to persons that might subsequently assert demands, in light of the benefits provided, or to be provided, to the trust on behalf of Debtors: -- substantially similarly situated individuals are treated disparately depending on whether they are classed as a "claimant" or a "demand" holder; -- substantially similarly situated individuals are paid disparately, depending on what lawyer or law firm represents them; and -- substantially similarly situated individuals are paid disparately depending on whether or not they filed prepetition actions against the Debtors and their related companies. (k) The Plan cannot be confirmed because "asymptomatics" -- individuals who have been exposed to asbestos and who may have some sub-clinical physiological changes related to asbestos exposure, but who are not currently suffering from any symptoms of an asbestos-related disease -- are paid under the Plan, as both creditors and, pursuant to the TDPs, holders of allowable demands, and thus the Plan has been proposed by a means forbidden by law: -- under federal law, a person who is asymptomatic is not a holder of a claim or a demand and, thus, should not be paid; -- under state law, asymptomatics do not have cognizable claims and, thus, should not be paid; -- similarly situated asymptomatics would not be treated fairly and equitably or substantially similarly under the Plan; -- attorneys who negotiated the Plan on behalf of purported claimants had a disqualifying conflict of interest because they represented both symptomatics and asymptomatics, whose interests are in conflict; -- the legal representative for potential demand holders did not represent all similarly situated potential demand holders, and so his representation was inadequate as a matter of law; and -- persons who do not have cognizable claims were permitted to vote on the Plan. (l) The Plan cannot be confirmed because persons purportedly represented by certain law firms were permitted to vote on the Plan even though these purported representatives did not have, or did not present to the Court as required by Rule 2019 of the Federal Rules of Bankruptcy Procedure evidence of authority to vote on the creditors' behalf. As a result, the votes purportedly cast by these alleged representatives must be invalidated or designated. The law firms in question include: -- Foster and Sear, L.L.P. -- McCurdy & McCurdy, L.L.P. -- Baron & Budd, P.C. -- Floyd Jones Rios Wahrlick P.C. -- Robert G. Taylor II, P.C. -- Silber Pearlman, L.L.P. -- Maritime Asbestosis Legal Clinic, a Division of the Jacques Admiralty Law Firm, P.C. -- Wilentz, Goldman & Spitzer, A Professional Corporation (m) The Plan cannot be confirmed because the Plan improperly and unlawfully impairs Insurers and adversely affects their rights in violation of law and their contractual rights. Furthermore, the purported "insurance neutrality" clauses of the Plan do not actually render the Plan "neutral" as to Insurers. Instead, the Plan: -- purports to seek and obtain the Court's approval and endorsement of a "settlement" of asbestos and silica claims, entered into by Debtors and Halliburton without the Insurers' consent, that pays excessive amounts to claimants and demand holders and pays claimants and demand holders who have no legal right to obtain compensation; -- makes no provision to honor the Insurers' contractual rights to control or participate in the settlement or defense of claims handled through the TDPs; -- fails to protect the Insurers from acceleration of amounts due and demands to pay, including but not limited to the claims and demands of asymptomatics who otherwise would not be in a position to obtain settlements or proceed until after they suffered an asbestos-related disease or condition; -- does not protect the Insurers from the practical effects of a settlement presumptively being considered fair and reasonable by a later fact finder based on the Court's confirmation of the Plan; -- does not protect the Insurers from demands to pay amounts included in the settlements that are related to, or arise from, risks not insured; -- does not adequately preserve the Insurers' rights to assert that the Debtors' resort to the bankruptcy confirmation process in these circumstances is itself a breach of contract and a violation of duties owed by the Debtors to the Insurers; -- does not protect the Insurers from the claim that the approval of the Plan would constitute a judgment or adjudication of the Debtors' liabilities to asbestos and silica claimants and demand holders, instead of a claims and demands settlement without the Insurers' consent; -- does not protect the Insurers from otherwise unnecessary coverage litigation and its expense; and -- does not protect the Insurers' constitutional and contractual rights to insist that any liabilities they are being called on to pay under their contracts be determined by a common-law court or jury, rather than by settlements without the Insurers' consent or through an administrative process such as that which the TDPs would establish. (n) The Plan cannot be confirmed because it improperly enlists the aid of the Court in the Debtors' breaches of their contracts with the insurers and Debtors' violation of the Insurers' rights and remedies afforded by law and contract. (o) The Plan cannot be confirmed because the Debtors seek to use the Court, their Plan, their Chapter 11 cases, and the confirmation process to insulate them from the consequences of their own violations of their insurance policies and coverage-in- place agreements. (p) The Plan cannot be confirmed because the TDPs are deficient.: -- similarly situated individuals will not be reimbursed in substantially the same manner; -- demand holders will not be reimbursed in a fair and equitable manner; -- asymptomatics and others without cognizable claims will be reimbursed; -- the medical and diagnostic criteria are insufficiently rigorous, thus permitting persons to receive payments from the Trust even though they do not have any legally enforceable right to payment; -- the claims adjustment and allowance procedures are insufficiently rigorous, permitting persons to qualify for payment without providing proof that any of the Debtors are liable for their injuries or alleged conditions or that statutes of limitation have not lapsed; -- the claims adjustment and allowance procedures do not adequately address relevant factors, including but not limited to exposure levels, latency periods, smoking, and other causations; -- those with less severe injuries can be compensated more than those with more severe injuries; -- no provision is made for insurers to have any role in the defense or settlement of claims to be paid through the TDP processes, notwithstanding provisions in insurance policies and coverage-in-place agreements that expressly give insurers such rights; -- the amounts proposed to be paid to claimants are excessive; and -- the Plan and TDP procedures circumvent the Insurers' right to file a proof of claim on behalf of a creditor, as an entity that is liable to the creditor with the Debtors or that has secured the creditor. (q) The Plan cannot be confirmed because there is no class of impaired claimants that has properly voted in its favor. (r) To the extent any of the Insurers have impaired claims under the Plan, they were not permitted to exercise their right to vote in favor of or against the Plan. (s) To the extent it incorporates a "channeling injunction" and trust for silica claims, the Plan cannot be confirmed because such channeling injunction and trust are not "necessary or appropriate to carry out the provisions of title 11" and so are not authorized. (t) The Plan cannot be confirmed because the findings and determinations to be made under it are not accurate. (u) The Plan cannot be confirmed because votes were not solicited or procured in good faith and in accordance with the provisions of the Bankruptcy Code. (v) The Plan cannot be confirmed because it does not provide the same treatment for each claim or interest of a particular class and the holders of the claims and interests have not agreed to a less favorable treatment. (w) The Plan cannot be confirmed because it places in a class those whose interests are not substantially similar. (x) The Plan cannot be confirmed because it proposes to discharge entities other than the Debtors for both asbestos and silica liabilities, in contravention of Section 524(e) of the Bankruptcy Code, which provides that the discharge of a debtor will not affect the liability of other entities for the discharged debts. (y) The Plan cannot be confirmed because the Plan and the TDPs seek to preclude insurers and other parties-in-interest from exercising their statutory right to object to claims as provided in Sections 502(a) and 1109. The Thirty-Five Insurers also contend that the Disclosure Statement supporting the Debtors' Plan cannot be approved because it failed to provide parties with adequate information as required by Section 1125(a)(1). In addition, the Thirty-Five Insurers aver that the Solicitation Procedures proposed by the Debtors are improper and inadequate in that: (1) persons having claims, including some or all of the Insurers, were not solicited to vote and not permitted to vote; (2) persons not having claims, including asymptomatics and holders of demands, were solicited and permitted to vote; and (3) persons were permitted to cast votes on behalf of other persons without showing that they had authorization to vote on behalf of such other persons. The Thirty-Five Insurers tell the Court that the Plan Confirmation Process deprives them of their rights to due process, to the extent that the unnecessarily accelerated schedule set forth in the Court's February 18, 2004 Order establishing Case Management Procedures in connection with Objections to the confirmation of the Debtors' Plan and the Court's announced intent to restrict presentation of plan objectors case-in-chief at the Confirmation Hearing to just one and a half days. * * * St. Paul Mercury Insurance Company and Lumbermens Mutual Casualty Company separately filed joinders to the Thirty-Five Insurers' objections to the Debtors' Plan, to the adequacy of the Disclosure Statement, and to the Solicitation Procedures. Travelers Casualty and Surety Company, Associated International Insurance Company, and Evanston Insurance Company also join in and adopt certain arguments and statements made in support of the Thirty-Five Insurers' Objection. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) DUO DAIRY: Employs Allen & Vellone as its Special Counsel --------------------------------------------------------- Duo Dairy, Ltd., LLLP is asking permission from the U.S. Bankruptcy Court for the District of Colorado to employ Allen & Vellone, PC as its Special Counsel. Allen & Vellone, as special counsel, will represent the Debtor to: (i) investigate, and if necessary pursue potential lender liability claims and/or actions against Debtor's primary secured lender, American Ag., a branch of Western National Bank; and (ii) investigate, and if appropriate, to pursue preferential transfers and/or fraudulent conveyances actions likewise against American Ag. The Firm received a $15,000 retainer from Debtor. Allen & Vellone will bill the Debtor in its current hourly rates of Designation Billing Rate ----------- ------------ attorneys $125 to $285 per hour law clerks paralegals $85 per hour The Debtor assures the Court that the Firm has no connection with the Debtor, creditors, the U.S. Trustee or any person employed by the U.S. Trustee, or any other party in interest, their respective attorneys and/or accountants. Headquartered in Loveland, Colorado, Duo Dairy, LTD., LLP, filed for chapter 11 protection on March 12, 2004 (Bankr. D. Colo. Case No. 04-14827). Jeffrey A. Weinman, Esq., and William A. Richey, Esq., at Weinman & Associates, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated debts and assets of over $10 million EMMIS: Commences Senior Note Tender Offer & Consent Solicitation ---------------------------------------------------------------- Emmis Communications Corporation (Nasdaq: EMMS) announced that it has commenced a tender offer and consent solicitation for any and all of its $286.275 million principal amount at maturity 12-1/2% Senior Discount Notes due 2011 and that Emmis Operating Company has commenced a tender offer and consent solicitation for any and all of its $300 million principal amount 8-1/8% Senior Subordinated Notes due 2009. The total consideration (including the consent payment described below) in connection with the offers is $1,000 per $1,000 principal amount at maturity for the Senior Discount Notes and $1,043.13 per $1,000 principal amount plus accrued but unpaid interest for the Senior Subordinated Notes. The terms and conditions of the tender offer are set forth in an Offer to Purchase and Consent Solicitation Statement dated April 14, 2004. In conjunction with the tender offer, each company is soliciting the consent of holders of Notes to eliminate substantially all of the restrictive covenants and certain events of default under the indentures for the Notes. The consent payment of $15.00 per $1,000 principal amount at maturity of the Senior Discount Notes and the consent payment of $2.50 per $1,000 principal amount of the Senior Subordinated Notes will be paid only for the Notes tendered prior to the Consent Payment Deadline, which will be 5:00 p.m., New York City Time, on April 26, 2004, unless extended. Holders who tender their Notes into the tender offer after the Consent Payment Deadline will receive the consideration described above less the consent payment amount. Notes may not be tendered without delivering consents to the amendment to the indentures for the Notes as described above. The tender offers will expire at 12:00 a.m., midnight, New York City Time, on May 11, 2004, unless extended. Closing of the tender offers is subject to: (i) the consummation of any necessary debt financing to fund the total consideration for the Notes tendered and to refinance the existing credit facility of Emmis Operating Company; (ii) the tender of a majority in principal amount of each class of Notes by the holders; (iii) the receipt of the requisite consents from the holders of Notes; and (iv) certain other customary conditions. Goldman, Sachs & Co., Deutsche Bank Securities Inc., Banc of America Securities LLC and Credit Suisse First Boston are the Dealer Managers and Solicitation Agents for the tender offer and consent solicitation. Questions concerning the tender offer or consent solicitation may be directed to Goldman, Sachs & Co. toll- free at (800) 828-3182 or at (212) 357-3019. The Information Agent is Georgeson Shareholder Communications Inc. Copies of documents may be obtained from Georgeson Shareholder Communications Inc., at (212) 440-9800 or toll-free at (866) 399-8748. Emmis - Great Media, Great People, Great Service(SM) Emmis is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis' 23 FM and four AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as Austin, Phoenix, St. Louis, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, sixteen television stations, award- winning regional and specialty magazines and ancillary business in broadcast sales and publishing. Emmis Communications Corporation is a holding company and conducts substantially all of its business operations through Emmis Operating Company and its subsidiaries. Emmis Operating Company is a wholly-owned subsidiary of Emmis Communications Corporation ENERGY & ENGINE: Auditors Remove Going Concern Qualification ------------------------------------------------------------ Energy & Engine Technology Corporation (OTC Bulletin Board: EENT) (EENT) filed its annual report with the Securities and Exchange Commission on Form 10-KSB. The report included audited financial statements that no longer contain a going concern qualification from its independent auditors. The significance of the removal of the going concern is that the financial statements are no longer qualified by an opinion which states that there is substantial doubt that the entity can continue as a going concern. Willard G. McAndrew, EENT's CEO, stated that "The Company is encouraged by its progress in 2003. Removal of the going concern qualification is another milestone in our plan to continually seek to improve the Company's financial condition and liquidity. However, we will not rest on our laurels and continue to focus on continuing to increase marketing and sales and improving operations with the long term goals being continued growth and eventual profitability. The initial plan for the Company has been carefully constructed and executed to provide a solid foundation for the Company's future growth. 2004 will be an exciting year for the Company." According to the financial data set forth in the 10-KSB, in summary form, the Company reported as follows, in part: Twelve Months Ended Dec. 31: 2003 2002 Net Sales $ 383,262 $ 99,257 Net income (5,041,657) (1,680,989) Net income per share (0.12) (0.11) Figures in parentheses are losses. Although there was a significant increase in net sales, net income decreased from ($1,680,989) to ($5,041,657), and net income per share from (.11) to (.12). According to Item 6 of the Company's 10-KSB (Management's Discussion and Analysis), the losses were in large part due to the fact that in 2003 the Company was still in a development stage, thus requiring outlays of cash and equity to cover expenses without corresponding revenue returns. Additionally, the Company paid for approximately $236,861 worth of inventory and parts (listed in current assets as of the year end) and retired approximately $250,000 in debt. Lastly, the Company's Consolidated Statements of Operations for the Year Ended December 31, 2003, show that $3,355,718 of the net loss was due to stock based compensation (which consisted mostly of stock issuances for fundraising and acquisition activities). As EENT continues to transition from product and business development to business operation and production, cash flow and revenues should increase significantly. Also, as stated in Note 16, to the Company's Consolidated Financial Statements for the Year Ended December 31, 2003, Subsequent Events, the Company successfully raised approximately $1,815,500 in cash from investors through private placements in the first quarter of 2004. About Energy & Engine Technology Corporation (EENT) EENT -- http://www.eent.net/-- headquartered in Plano, Texas, develops and markets auxiliary power generators for the long haul trucking industry. The Company's common stock is traded on the OTC Bulletin Board under the symbol "EENT". The Company's flagship product, the AXP 1000, is an idle-reduction technology device, designed for new and retrofit installation on semi truck tractors, that provides power generation without requiring the operation of the truck's engine. Powered by an EPA- approved and CARB-certified engine, the AXP 1000 maintains the truck's battery power while delivering electricity for air conditioning, heating, and the operation of televisions, appliances and other devices, to the sleeper cab, thereby reducing fuel consumption, air/noise pollution and long-term truck maintenance costs. (Instead of the 10-15 gallons of diesel fuel consumed through idling each day, the AXP 1000 consumes approximately 1 gallon of diesel fuel in an equivalent amount of time). The Company is targeting a significant market opportunity created by governmental mandates that limit the aggregate amount of idling time available to long haul truckers. Management believes that Federal and State regulations, along with new and more stringent legislation that became effective in January 2004, have paved the way for a $2.5 billion industry. There are an estimated 500,000 or more Class 8 sleeper trucks currently operating in the U.S., with over 80,000 new Class 8 trucks being produced each year. Management believes that even moderate penetration of the market for anti-idling devices could result in significant sales and earnings for the Company. Anticipated metrics on unit sales suggest that for each 1,000 AXP 1000 units sold (at $5,000 each), the Company should generate gross revenue of approximately $5,000,000. ENRON CORP: Court Authorizes LNG-Pipeline Sale Proceeds Allocation ------------------------------------------------------------------ On October 2, 2002, the Court authorized and approved the Purchase and Sale Agreement between the Tractebel Entities and the Enron Entities -- Enron Corporation, Enron North America Corporation, Enron Global Markets LLC, Calypso Pipeline LLC, Enron Caribbean Basin LLC, Enron LNG Marketing LLC and Enron Global LNG LLC -- for the LNG Pipeline Assets. Under the Purchase Agreement, Tractebel paid $11,000,000 in cash and is obligated to up to $25,000,000 in additional Contingent Consideration. Pursuant to the Sale Order, the final allocations of the Proceeds among EGL, Calypso, Enron Marketing and Enron Bahamas LNG Ltd. and Hawksbill Creek LNG Ltd. -- the Sellers -- and the disbursement and use of the Proceeds will be determined by an order from the Bankruptcy Court and the Cayman Islands Court. In consultation with their advisors, Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court, the Sellers have determined that the allocation of the $11,000,000 cash Purchase Price, plus the accrued interest, this way: (i) EBL will receive 50% of the Purchase Price, which equals $5,500,000 plus the interest accrued on that amount; (ii) Calypso is to receive 50% of the Purchase Price minus $1 and further reduced by settled cure payments aggregating $835,718, which equals $4,664,281 plus the interest accrued on that amount; and (iii) Enron Marketing is to receive $1. is fair and reasonable. EBL's advisors, the Joint Official Liquidators, are making the appropriate filings with the Cayman Island Court to request approval of the proposed Allocation. The Creditors Committee and their advisors has been fully advised and consulted as to the proposed Allocation and do not object to the Allocation. Solvent Voluntary Liquidation The Debtors and the Joint Official Liquidators agreed to proceed with an "Out of Court" Solvent Voluntary Liquidation of three offshore non-debtors -- Hawksbill, Enron Bahamas LNG Holdings Ltd and Enron Bahamas Co. Ltd. -- and an official liquidation of EBL supervised by the Cayman Islands Court. By liquidating Hawksbill, EBL Holdings and EBC by means of the SVL, as opposed to an insolvent liquidation, Mr. Sosland asserts that the Enron Offshore Entities can realize substantial saving, as an SVL is a much more cost-effective means to liquidate an entity. In addition, Mr. Sosland points out, an SVL will save many months of court administration. To effectuate an SVL, Mr. Sosland reports, all intercompany liabilities of the Enron Offshore Entities will need to be subordinated to third party claims, such that their third party liabilities are paid in full. Furthermore, the Subordinating Debtors -- Enron, ENA, EGM, Calypso and ECB -- will need to agree not to assert any claim against any Enron Offshore Entity for intercompany liabilities that are not paid by the Enron Offshore Entities. The Debtors estimate that by subordinating their intercompany claims to those of third party creditors to effectuate an SVL, the third party creditors will receive approximately $32,396 more from the initial $11,000,000 cash proceeds than they would otherwise receive on a pro rata basis. By proceeding in this manner, the Subordinating Debtors will be allowed to share the benefits of the administrative expense savings, which should exceed the cost of subordinating to the third party creditors. To capitalize on this opportunity, Judge Gonzalez authorizes the Debtors to: (i) the final allocation of Purchase Price Proceeds and its disbursement to parties entitled to them; (ii) the subordination of claims held by the Subordinating Debtors to those claims of the third party creditors of EBL Holdings, EBC, Hawksbill and EBL to facilitate a solvent liquidation and winding up the Enron Offshore Entities; and (iii) EGL to direct the Joint Official Liquidators to pay in full the claims of third party creditors proved in the SVLs of Hawksbill, EBL Holdings and EBC from the Purchase Price Proceeds allocated to, and received by EBL as a result of the allocation of the Purchase Price Proceeds. (Enron Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Denies Liability for AIG Law's $1.3 Million Claim ---------------------------------------------------------------- The Federal-Mogul Corporation Debtors assert that they are not liable for 34 claims and ask the Court to expunge the claims. Twenty of the claims reflect $0 amounts. The 14 other claims are: Claimant Claim No. Debtor Amount -------- --------- ------ ------ AIG Law Dept-Bankruptcy 6644 Ferodo America $1,335,000 6660 TN Industries 94,203 Jon Belk 4102 FM Corp 2,379 Chemical and Allied 4239 FM Ignition 3,342 Department of Treasury 3667 FM Puerto Rico 80,003 FM Puerto Rico 14,834 3670 FM Global Inc. 240,000 3669 FM Corp 190,000 3668 FM Worldwide 230,000 FM Worldwide 98 Jack Deyoung 188 FM Corp 25,000 Ellenore Earle 1118 FM Global Inc. 86,884 Harley Higgs 208 FM Global Inc. 102,827 Irvin Anthony Irk 2468 Unknown 1,900 Oppenheimer, Blend 741 FM Global Inc. 86,884 Jeff Rigdon 2586 FM Corp 3,894 Headquartered in Southfield, Michigan, Federal-Mogul Corporation - - http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $ 10.15 billion in assets and $ 8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) ETPI 2000 TRUST: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: ETPI 2000 Trust dba Hero's Waterworld dba ETPI 2000 Trust, LLC 405 East Lexington Avenue, Suite 201 El Cajon, California 92020 Bankruptcy Case No.: 04-70234 Chapter 11 Petition Date: April 5, 2004 Court: Western District of Texas (Midland) Judge: Ronald B. King Debtor's Counsel: Michael G. Kelly, Esq. Rush Kelly Morgan Dennis Corzine & Hansen PC P.O. Box 1311 Odessa, TX 79760-1311 Tel: 432-367-7271 Fax: 432-363-9121 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ ACS Network, Inc. Debt $240,000 ACS Network, Inc. Debt $58,148 Texas Comptroller of Public Debt $42,815 Accts. TXU Energy Debt $37,894 Capital Growth Planning, Inc Debt $22,800 Midland Co. Central Debt $12,352 Appraisal Dist. Texas Workforce Commission Debt $10,176 Gary Brown & Associates, Inc Debt $4,526 Nugent & Newham, PC Debt $4,526 Michael Ondrusek Debt $4,500 Earth Color Houston, LP Debt $3,992 Century Graphics Debt $3,398 Szabo Associates Debt $3,214 Kathy Reeves Debt $2,913 Univision 18 Debt $2,420 Data Duplicators, Inc. Debt $2,190 Stan's Frozen Foods, Inc. Debt $2,148 Ronald McDonald House Debt $1,900 Charities Ervin Plumbing & Supply Inc. Debt $1,833 FBC Enterprises, Inc. Debt $1,457 FIBERMARK: U.S. Trustee Appoints Official Creditors' Committee -------------------------------------------------------------- The United States Trustee for Region 2 appointed 5 creditors to serve on an Official Committee of Unsecured Creditors in FiberMark, Inc.'s Chapter 11 cases: 1. AIG Global Investment Group, Inc. 2929 Allen Parkway, A37 Houston, Texas 77019 Attn: Thomas A. Musante, Managing Director, Chairperson 1 SunAmerica Center, 37th Floor Los Angeles, CA 90067-6022 Telephone No.: (310) 772-6867 Telefax No.: (310) 772-6115 2. Wilmington Trust Company As Indenture Trustee for the 10.75% Senior Notes Due 2011 and 9.375% Senior Notes Due 2006 Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attn: James J. McGinley 520 Madison Avenue, 33rd Floor New York, NY 10022 Telephone No.: (212) 415-0522 Telefax No.: (212) 415-0513 3. Solution Dispersions, Inc. 130 Waterworks Avenue P.O. Box 8 Cynthiana, Kentucky 41031 Attn: William Stoeppel or Marvin McFarlen Telephone No.: (859) 234-8468 Telefax No.: (859) 234-0131 4. Post Advisory Group, LLC 11755 Wilshire Boulevard, Suite 1400 Los Angeles, California 90025 Attn: Kathy Choi Telephone No.: (310) 996-9646 Telefax No.: (310) 996-9669 5. E.I. DuPont de Nemours & Company 4417 Lancaster Pike Wilmington, Delaware 19805 Attn: C. Richard Shade, Jr. Telephone No.: (302) 999-5941 Telefax No.: (302) 999-2690 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J. Baker, Esq., David M. Turetsky, Esq., Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FLEMING COMPANIES: Seeks Authority to Arbitrate 3 Retailer Claims ----------------------------------------------------------------- The Fleming Debtors ask the Court to approve binding, final arbitration of certain specified claims and causes of action, including any related counterclaims, asserted by or against them with regard to these retailers: (1) Park-N-Shop and the Wonder Stores, Inc.; (2) Young's Foods, LLC, also known as Port City Grocers; and (3) C.V. Family Foods, Inc. The arbitration should be binding because the Debtors and each of the Retailers are parties to prepetition agreements that require the parties to submit disputes between them to final, binding arbitration. The Debtors seek to collect debts owed to them by the Retailers. To resolve the Debtors' claims against the Retailers and any related counterclaims the Retailers may assert against them as inexpensively and expeditiously as possible, the Debtors ask Judge Walrath to: (a) authorize them to institute an arbitration proceeding against each of the Retailers to resolve their claims; (b) authorize arbitrators selected from a national roster of the AAA arbitrators to proceed with any arbitration proceeding; (c) modify the automatic stay to allow a Retailer party to an arbitration proceeding to assert and pursue any counterclaims against the Debtor party or parties to the arbitration proceeding, in the arbitration proceeding without any presumption as to the validity or enforceability of such counterclaim; (d) authorize a Retailer party to an arbitration proceeding to offset any amount that the arbitrator determines the Retailer owes to a Debtor party to the arbitration proceeding against any amount the Debtor party to the arbitration is determined by the arbitrator to owe the Retailer party so long as the amounts owed to and by the Debtors are both debts that arose prepetition or postpetition; (e) prohibit the enforcement of any award or the collection of any amount awarded to any Specified Retailer in the arbitration proceeding except as by offset, or by the filing of a proof of claim; and (f) authorize them to pay their portion of the administrative fees and expenses incurred in the arbitration proceeding, the arbitrator's fees and expenses, and any other fees and costs, including witness expenses, incurred in the arbitration proceeding, and authorizing the AAA and the arbitrators to apply the payments to their fees and expenses. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) GEXA ENERGY: Form 10-KSB Filing Delay Triggers Loan Default ----------------------------------------------------------- Gexa Energy Corp. (OTCBB:GEXC), a Texas Retail Electricity Provider, announced that it will not file its Annual Report on Form 10-KSB for the year ended Dec. 31, 2003 by the April 14, 2004 extended deadline. The Company had previously filed with the Securities and Exchange Commission a notice on Form 12b-25 stating that it would be unable to file its Form 10-KSB by March 31, 2004 and extending the period in which it intended to file to April 14, 2004. The delay in filing the Form 10-KSB does not change the Company's previous guidance for revenues in 2003. The Company's Audit Committee has substantially completed its previously announced independent review of the Company's internal controls related to financial reporting and the other matters raised by the Company's auditors. The Company has also retained a CFO consultant, Kirk Michael, to assist in the process of completing the audit and a review of its internal control policies while the Company completes its search for a chief financial officer. Progress is being made on all these issues; however, the Company will need additional time to complete its review of these matters. Also, additional time will be required to complete work related to the audit of the Company's 2003 financial statements. The Company cannot at this time estimate when these procedures and the audit will be completed. Delay in filing the Form 10-KSB beyond April 29, 2004 would place the Company in default under its loan agreement with The Catalyst Fund, Ltd., and the lender would have the right, but not the obligation, to accelerate payment of the debt. If required, the Company will request a waiver of such default. If such waiver is not granted, the Company has sufficient cash reserves to fully repay the $3 million balance of the Catalyst loan, but the Company would need to seek additional financing to support its operations in 2004. In addition, the late filing of the 10-KSB will eliminate for one year the Company's ability to use S-3 registration statements to register the resale of any securities sold in private placements, and will also eliminate the availability of Rule 144 for resales of restricted securities by shareholders until such time as the 10-KSB is filed. Neil Leibman, chairman and chief executive officer, stated, "Our financial team continues to work on completing the audit and financial reports consistent with our commitment to accuracy and transparency in financial reporting. In addition, the operations team is focused on providing quality retail electric service to our customers, as well as pursuing additional business opportunities associated with strong customer demand. We believe that these factors will result in higher revenues and customer counts for the first quarter of 2004 as compared to the same period a year ago. We will provide additional details regarding the outlook for 2004 when we deliver our 2003 earnings." About Gexa Energy Gexa Energy is a Texas-based retail electric provider, which entered the market as deregulation began on Jan. 1, 2002. The Company offers residential and all size commercial customers in the Texas restructured retail energy market competitive prices, pricing choices, and improved customer friendly service. GLOBAL LOGISTIX: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Global Logistix Group, Inc. 1501 Val Mex Drive Hidalgo, Texas 78557 Bankruptcy Case No.: 04-10417 Chapter 11 Petition Date: March 31, 2004 Court: Southern District of Texas (Brownsville) Judge: Richard S. Schmidt Debtor's Counsel: Paul Lee Wiley, Esq. Attorney at Law P.O. Box 2764 Harlingen, TX 78551-2764 Tel: 956-425-1818 Fax: 956-425-2849 Total Assets: $346,000 Total Debts: $1,182,645 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Lone Star National Bank Advancing of Monies $689,000 P.O. Box 1227 Pharr, Texas 78577-1227 Ridge Sharyland R/E Partners $102,000 First Industrial, LP $43,000 Internal Revenue Service $30,000 Citicorp Vendor Finance, Inc. $27,625 Wright Express Fleet Services $26,774 French Ellison Truck Center For goods purchased $26,770 or Services rendered Transportes Yael $21,875 DE LAGE LANDEN $16,800 ADM Transport $16,092 DE LAGE LANDEN $13,718 U.S. Cargohandlers $10,591 Hales, Bradford, and Allen, $10,500 LLP Fleet Pride $9,261 Multiservicios Express $7,516 Daniel Campos $6,875 LRQA, Inc. $6,722 T.A.C. $6,135 Gulf Systems, Inc. $6,109 CitiCapital $5,000 GREENBRIAR CORPORATION: Going Concern Ability is in Doubt --------------------------------------------------------- Greenbriar Corporation (AMEX:GBR) announced operating results as of December 31, 2003. Operating revenues for 2003 were $5,034,000 compared to $4,422,000 for 2002. The Company's operating loss was $777,000 for the period ending December 31, 2003 compared to a loss of $2,345,000 for the period ending December 31, 2002. Net income for 2003 was $222,000 compared to a loss of $8,377,000 for 2002. Earnings per share for 2003 were $0.31 compared to a loss of $11.67 per share in 2002. "2003 was a transition year for Greenbriar Corporation," said Gene S. Bertcher, President and Chief Executive Officer. "We were able to further and substantially reduce our operating losses compared to prior years and finish the year with an overall profit," Bertcher stated. On January 12, 2004, the Greenbriar Corporation filed a Form 8-K incorporating a press release in which it disclosed that it the Company had received a pre-assessment letter from the Internal Revenue Service referencing Section 6700 of the Internal Revenue Code. In it's Form 10-K for 2003 the Company said the following: "In December 1991 the Company sold four nursing homes to a not- for-profit corporation in exchange for tax exempt bonds issued on behalf or the acquiring corporation by government authorities. The bonds were issued in three lettered series. The aggregate principal amount of the Series A bonds was $8,700,000, the aggregate principal amount of the series B bonds was $1,000,000 and the aggregate amount of the series C bonds was $6,700,000. Interest on the bonds was payable semi-annually. A nationally recognized law firm opined that the interest on the bonds would be tax-exempt. In March 1992, pursuant to a plan promulgated and recommended by a nationally recognized investment banking firm, the Series C bonds were converted to zero coupon status and their value was enhanced by substituting higher grade collateral. The substitute collateral, which consisted of zero coupon U.S. Treasury obligations, was placed in trust to defease the Series C bonds, in exchange for the underlying mortgage. The Series C bonds were then sold for approximately $47,000,000. A gain was recorded equal to the proceeds received by the Company of $6,252,000 after deducting transaction costs and the cost of the higher grade collateral. A nationally recognized law firm opined that the defeasance of the bonds would not adversely affect the tax exempt status. In December 1992, again pursuant to a plan promulgated and recommended by a nationally recognized investment banking firm, the Series A bonds were converted to zero coupon status, their value enhanced by substituting zero coupon U.S. Treasury obligations as collateral and the collateral placed in trust in exchange for the mortgage underlying the Series A bonds in a transaction similar to the sale of the Series C bonds. The Series A bonds were then sold for approximately $20,000,000. A gain was recorded equal to the proceeds received by the Company of $2,081,000 after deducting transaction costs and the cost of the higher grade collateral. On January 8, 2004 the Company was notified by the Internal Revenue Service (IRS) in the form of a Section 6700 Pre-Assessment Letter that the IRS was considering assessing penalties under Section 6700 of the Internal Revenue Code as a result of the Company's organization or assistance in connection with the issuance and sale of the Series A and Series C bonds. In general, Section 6700 of the IRS Code imposes a penalty on any person or organization who organizes or assists in organizing an entity or participates in the sale of any interest in an entity and makes or furnishes or causes another person to make or furnish a statement with respect to the allowably of any deduction, the excludability of any income which the person knows or has reason to know is false or fraudulent as to any material matter. The penalty prescribed in Section 6700 is the lesser of 100% of the gross income derived from the activity or $1,000 for each such activity. Each entity or arrangement shall be treated as a separate activity. If it is ultimately determined that the Company is subject to a fine that fine would be the lesser of $1,000 per activity or the gross proceeds the Company received. Effectively the fine would be calculated based upon a determination as to what constitutes an activity. The IRS has informed the Company that the Series A and C bonds were purchased by 266 individuals or entities. If the penalty is computed by considering each sale an activity the maximum exposure to the Company would be $267,000. However, neither Section 6700 nor, to the Company's knowledge, relevant authorities specify what constitutes an activity. The IRS has indicated that the $1,000 per activity should be computed in a manner other than the number of individuals who purchased the bonds however they have not indicated to the Company any basis or authority for their position. If the IRS's assertions as to the number of activities exceeds 8,333 activities then the Company believes the maximum exposure would be the total proceeds received and income recorded of $8,333,000. The transactions which the IRS is examining involved technically complex financial and legal issues and were undertaken on the advice of and reliance on the investment banking firm, the law firms that issued the tax exempt bond legal opinions and other professionals. The Company believed in 1992 and still believes that its actions were appropriate in all respects. The Company and the IRS are engaged in negotiations regarding settling this twelve year old matter. However, there is no assurance that any settlement will be achieved. In the absence of a settlement, the Company intends to contest the IRS's position in court. Any litigation may be expensive and time consuming. However, if this matter is litigated the Company believes that it will prevail on the merits. Should it not prevail in this matter the Company intends to pursue actions against the professionals who advised the Company regarding the sale of the bonds." "In light of the uncertainties regarding the ultimate outcome of this matter the auditors have included a going concern uncertainty paragraph in their Report of Independent Certified Public Accountants for the Financial Statements for the Year Ended December 31, 2003," Bertcher further stated. HAYES LEMMERZ: Resolves $226,834 Claim Dispute with Comalco ----------------------------------------------------------- On June 25, 2003, Comalco Aluminum Limited asserted a $226,834 administrative expense claim against Hayes Lemmerz International, Inc. The Reorganized Debtors objected to the Claim. To avoid substantial, uncertain and costly litigation over the claim dispute, the parties stipulate and agree that: (a) The administrative expense claim is allowed for $226,834; (b) Comalco's administrative expense request and the Reorganized Debtors' objection to the Claim are resolved; and (c) The Reorganized Debtors and Comalco will bear their own costs with respect to all events relating to the Claim and the Objection. The Court promptly approves the parties' stipulation. (Hayes Lemmerz Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) HEALTHSOUTH CORP: Extends Consent Solicitations Through April 28 ---------------------------------------------------------------- HEALTHSOUTH Corp. (OTC Pink Sheets: HLSH) today announced that it is extending its solicitation of consents from holders of its 6.875% Senior Notes due 2005, 7.375% Senior Notes due 2006, 7.000% Senior Notes due 2008, 8.500% Senior Notes due 2008, 8.375% Senior Notes due 2011, 7.625% Senior Notes due 2012 and 10.750% Senior Subordinated Notes due 2008 until 11:59 p.m., New York City Time, on April 28, 2004. The consent solicitations, which commenced on March 16, 2004, were previously scheduled to expire on 11:59 p.m., New York City Time, on April 13, 2004. Joel C. Gordon, acting HEALTHSOUTH chairman of the board, said, "We are extremely encouraged by the significant positive response that we have received so far and we have decided to extend the consent solicitations in order to allow all holders the opportunity to participate." About HEALTHSOUTH HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative health care services with nearly 1,700 facilities nationwide and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com/ * * * As reported in Troubled Company Reporter's December 26, 2003 edition, Standard & Poor's Ratings Services withdrew its ratings on HEALTHSOUTH Corp. due to insufficient information about the company's operating performance, including a lack of audited financial statements. Standard & Poor's does not expect the company to be able to provide restated historical financial statements, or to be able to generate current-period financial statements, until at least the second half of 2004. The company has not filed audited financial statements since Sept. 30, 2002. On April 2, 2003, Standard & Poor's lowered its ratings on HEALTHSOUTH Corp. to 'D' after the company failed to make required principal and interest payments on a subordinated convertible bond issue that matured on April 1, 2003. HEALTHSOUTH is currently embroiled in extensive litigation over several years of allegedly fraudulent financial statements and is understood to be in discussions with its creditors about restructuring its debt. Nearly all members of senior management have left the company, and most of the important corporate functions have been assumed by professional advisors. Although HEALTHSOUTH continues to operate its business, neither its operations nor its financial performance can be assessed by Standard & Poor's with confidence until the company can generate audited financial statements. I2 TECHNOLOGIES: Releasing First Quarter Results on April 22 ------------------------------------------------------------ i2 Technologies, Inc., a leading provider of end-to-end supply chain management solutions, announced its intention to release earnings for the first quarter of 2004 on Thursday, April 22, 2004, after the close of the stock market. Following the earnings release, Company management will host a conference call. The call is scheduled to begin at 5:00 p.m. EDT. A webcast of the event will be open to the public and can be accessed via the company's Web site at http://www.i2.com/investor/ An audio replay of the event will be available for approximately 24 hours following the call. To access the replay, dial 800-475- 6701 and enter pass code 728796. The webcast of the event will also be archived via the company's Web site at http://www.i2.com/investor/ About i2 i2 -- whose December 31, 2003 balance sheet shows a total shareholders' equity deficit of about $255 million -- is a leading provider of closed-loop supply chain management solutions. The company designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2's worldwide customer base consists of some of the world's market leaders -- including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com/ IVACO INC: Steelworkers Join Talks Tomorrow to Protect Pensions --------------------------------------------------------------- United Steelworkers Ontario/Atlantic Director Wayne Fraser says Steelworkers and pensioners in L'Orignal are fully behind the union's position of protecting pensions and taking Ivaco to task for its secrecy and its refusal to include the union in seeking out a potential buyer. Fraser said meetings will be held with Ivaco workers and pensioners in London, Port Colborne and Mississauga on Saturday, April 17. "Hundreds of workers and pensioners are coming out to the meetings because they know how crucial it is to have widespread support as we face the company in court proceedings under the antiquated Companies Creditors Arrangement Act (CCAA)," Fraser said. "They also know that the union is the last line of defence against the attack on their pensions. "We are fed up with a process that excludes the legitimate role of workers and their unions in moving forward towards a restructured company," he said, adding that, despite the union's willingness to have constructive dialogue, Ivaco Inc. "has consistently acted in a high-handed, provocative and confrontational manner." Fraser added that Steelworkers are being excluded from information about potential purchasers of Ivaco because of the union's refusal to sign confidentiality agreements. As well, the company is refusing to uphold the collective agreement, an advantage granted Ivaco by Judge James Farley in the initial order placing Ivaco under CCAA protection. "We have a responsibility to our membership to be as open as possible, and the company, with the backing of the court, wants the whole process to be conducted in secret," said Fraser. Ivaco is still planning to seek court approval to pay huge bonuses, worth hundreds of thousands of dollars to its senior executives while failing to make pension contributions and refusing to pay severance and termination pay to its laid-off workers. "The management of Ivaco is the problem, not the wages and pensions of hard-working men and women." The Saturday meetings begin at 11 a.m. at the Columbo Club in Beachvile, near London. The United Steelworkers represents about 1,000 Ivaco workers in Ontario. KWIK-N-NEAT INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Kwik-N-Neat, Inc. 7819 Pipers Creek San Antonio, Texas 78251 Bankruptcy Case No.: 04-52127 Type of Business: The Debtor provides Dry Cleaning & Laundry Services. See http://www.kwik-n-neat.com/ Chapter 11 Petition Date: April 6, 2004 Court: Western District of Texas (San Antonio) Judge: Leif M. Clark Debtor's Counsel: David T. Cain, Esq. Law Office of David T. Cain 9862 Lorene, Suite 200 San Antonio, TX 78216 Tel: 210-308-0388 Fax: 210-341-8432 Total Assets: $1,231,583 Total Debts: $1,396,015 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 & 1120 Taxes $704,405 Special Procedures-Insolvency 300 E. 8th Street, STOP 5026AUS Austin, TX 78701 Dominion Advisory Group Lease Agreement $87,366 Marbach West Realty Lease Agreement $79,024 Dale Maness Lease Agreement $72,600 Ironwood Partners, Ltd. Lease Agreement $64,800 Lymanco Properties Lease Agreement $61,500 Michael Shapprio Lease Agreement $26,250 Saermco, Wurzbach Plaza, Ltd Breach of lease $17,084 Laborde & Associates Accounting Services $16,417 Texas Comptroller of Public Sales Taxes $10,904 Accounts Warfield, a General Breach of lease $10,728 partnership Texas Workforce Commission Abstract of Assessment $7,617 thru 10/2003 City of San Antonio Hazmat Incident $5,983 Cynthia Cuevas Lease Agreement $4,800 American Advertising Advertising Services $4,650 Eagle Construction & Services $3,740 Environmental Register Tapes Unlimited Advertising Services $3,313 Adams & Polunsky 2001 & 2003 Tax $2,476 Reduction Services Phillip 66 Company Fuel $2,210 ADT Security Services Security Alarm $780 Services LIBERATE TECHNOLOGIES: Mulls Chapter 11 Filing to Resolve Debts --------------------------------------------------------------- Liberate Technologies (OTC: LBRT), a leading provider of software for digital cable systems, announced financial results for its third fiscal quarter ended February 29, 2004. Liberate's revenues for its third fiscal quarter were $1.7 million, compared to $5.3 million for the same quarter of the prior fiscal year. Before offsets for amortization of deferred costs related to warrants, revenues were $2.6 million for the third quarter and $6.6 million for the same quarter of the prior fiscal year. The net loss for the quarter was $7.5 million, or $0.07 per share, compared to a loss of $26.1 million, or $0.25 per share, for the same quarter of the prior fiscal year. As of February 29, 2004, Liberate had cash and short-term investments of $222.3 million, a decrease of $9.0 million during the quarter. In addition to cash and short-term investments, the Company had $10.9 million in restricted cash held as security for office leases. The Company is considering filing under Chapter 11 of the U.S. Bankruptcy Code to further strengthen its financial position and significantly reduce its cost structure, and emerge as a stronger company to deliver products and services to its customers. The Company currently has a number of potential liabilities and exposures, including those arising from leases on excess facilities in San Carlos, California and in the United Kingdom, claims from former employees, equipment leases, outstanding contracts with certain vendors and licensees, and pending shareholder and patent litigations. The Company is continuing its efforts to reach consensual resolution of many of these liabilities. However, if these liabilities cannot be resolved, the Company is considering seeking the benefits of filing under Chapter 11 to complete its restructuring. For example, the Company believes that a Chapter 11 filing would allow the Company to reduce substantially its lease obligations on excess office space, as lease claims in bankruptcy for rejected leases are limited to rent for the greater of 12 months or 15% of the balance of the term not exceeding three years. The savings to the company in connection with leases rejected in a Chapter 11 proceeding could total approximately $38.0 million. In the event the Company determines to move forward with a Chapter 11 filing, the Company intends to file a proposed Plan of Reorganization that would pay 100% of all valid claims. The Company plans to seek prompt approval of such Plan of Reorganization in order to emerge from Chapter 11 within a period of 4 to 6 months. In a Chapter 11 proceeding, the Company would continue to execute on its business plan, including continued compliance with active contracts with customers and vendors, and service and support of its customers and their cable subscribers. Given the Company's cash position, coupled with the workforce and expense reductions implemented last year, the Company expects to have ample working capital to operate its business in usual course and continue to expand its business. At this time, Liberate continues to evaluate restructuring alternatives, and has not made a final decision on whether to pursue a Chapter 11 reorganization. "We will continue efforts, as part of our restructuring plan, to resolve our outstanding liabilities. However, if we cannot reach an appropriate resolution in the coming weeks, we believe it may well be in the best interests of our shareholders, employees and customers to proceed with a Chapter 11 filing," said David Lockwood, Chairman and CEO of Liberate. "Regardless of a financial restructuring to reduce our liabilities, we will continue to execute on our business plan, investing in the development of our technology platform and delivering our products and services to existing customers. In addition, we will continue to aggressively market to new customers in order to grow revenues." About Liberate Technologies Liberate Technologies is a leading provider of software for digital cable systems. Based on industry standards, Liberate's software enables cable operators to run multiple services -- including High-Definition Television, Video on Demand, and Personal Video Recorders -- on multiple platforms. Headquartered in San Mateo, California, Liberate has offices in Ontario, Canada, and the United Kingdom. IT GROUP: United Rentals Presses for $372,175 Admin. Claim Payment ------------------------------------------------------------------ Richard W. Riley, Esq., at Duane Morris LLP, in Wilmington, Delaware, relates between the dates of January 15, 2002 and May 28, 2002, United Rentals, Inc. continued to provide rental equipment to the IT Group, Inc. Debtors on a postpetition basis. The rental equipment United Rentals provided was necessary for the preservation of the Debtors' estates, and inured to the benefit of the Debtors' estates, in that it permitted the Debtors to continue to complete their work on various construction projects, and ultimately either receive payment from the owners for the work performed, or alternatively sell the contract to the Shaw Group, which ultimately assumed some of the Debtors' contractual obligations. Mr. Riley points out that the Debtors incurred rental equipment expenses totaling $372,175, which is due and owing to United Rentals, for rental equipment provided between the Petition Date and May 28, 2002. United Rentals, therefore, asks the Court to compel the Debtors to pay its $372,175 administrative expense claim. Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. -- http://www.theitgroup.com-- together with its 92 direct and indirect subsidiaries, is a leading provider of diversified, value-added services in the areas of consulting, engineering and construction, remediation, and facilities management. The Company filed for chapter 11 protection on January 16, 2002 (Bankr. Del. Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate Meagher & Flom, represents the Debtors in their restructuring efforts. On September 30, 2001, the Debtors listed $1,344,800,000 in assets and 1,086,500,000 in debts. (IT Group Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) MANUFACTURED HOUSING: S&P's Sub. B-1 Class Rating Falls to D ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the subordinate B-1 class of Manufactured Housing Contract Senior/Subordinate Pass-Through Trust 2000-2 to 'D' from 'CCC-'. The lowered rating reflects the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investment. This transaction reported an outstanding liquidation loss interest shortfall for the B-1 class on the April 2004 payment date. Standard & Poor's believes that interest shortfalls for this deal will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pool of collateral, as well as the location of B-1 writedown interest at the bottom of the transaction payment priorities (after distributions of senior principal). In addition, the high level of monthly losses has caused the complete principal writedown on the B-1 class, resulting in the partial principal writedown of the M-2 class. MERCY HOSPITAL: S&P Lowers Bond Rating to BB- with Stable Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating two notches to 'BB-' from 'BB+' on the Erie County Industrial Development Agency, N.Y.'s bonds, issued for Mercy Hospital of Buffalo. The outlook is stable. "The lower rating reflects an extremely weak balance sheet evidenced by declining liquidity and continued equity transfers out of the organization," said Standard & Poor's credit analyst Charlene Butterfield. Factors that support the rating include membership in Catholic Health System, a regional system in the Buffalo area that provides system-level oversight, management, and access to liquidity that Mercy may not be able to access on its own; improved operations generating adequate debt service coverage; and increasing business volumes. The bonds are secured by a revenue pledge of Mercy. Mercy is a member of Catholic Health System Inc., a Buffalo-based organization with five hospitals and a number of long-term-care facilities. Catholic Health East, Ascension Health, the Franciscan Sisters of Saint Joseph, and the Diocese of Buffalo jointly sponsor the system. The sponsors retain some reserved powers, with Catholic Health East retaining the ultimate ability to control management if necessary. The former developing outlook reflected the possibility that the rating would go up if Catholic Health East (rated 'A') executed a guarantee agreement on Mercy's behalf, and the possibility that the rating would go down if the guarantee agreement were not signed. The guarantee was not completed and there is no intention at this time to revisit the guarantee idea. Business volumes at Mercy have been steadily increasing since the phased closure of Our Lady of Victory, which began in 2000. Our Lady of Victory is also a Catholic Health System member. To accommodate the growth in surgical volumes, Mercy has begun the expansion of its operating unit, which is to be completed sometime in 2004. Mercy is planning a $9 million-$10 million debt issue in late 2004 to reimburse its prior expenditure for the $3 million operating unit expansion and refinance a portion of its outstanding debt, including the rated debt. To foster the growth in volumes, Mercy plans to recruit orthopedic and general surgeons, as well as interventional cardiologists and intensivists by the end of 2004. MIRANT: Creditors' Panel Wants to Examine The Southern Company -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Mirant Corporation seeks the Court's authority, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, to examine The Southern Company. Jason S. Brookner, Esq., at Andrews & Kurth LLP, in Dallas, Texas, tells the Court that the Committee desires to investigate Southern Company's divestiture of Mirant Corporation. The Committee intends to conduct this investigation to determine whether Mirant has claims against Southern Company in connection with the divestiture. Attorneys for the Committee and for Southern Company have already conferred and agreed on a procedure and schedule for production of documents and for a Rule 2004 examination of a Southern Company representative. Equity Committee Objects The investigation that the Mirant Creditors Committee seeks to conduct relates to a potentially crucial issue of common concerns to all three official committees. The Equity Committee believes that no one committee or the Debtors should be authorized to proceed independently on this matter. Any such investigation should be conducted collaboratively and coordinated among the three committees and the Debtors. Each of the committees and the Debtors should be entitled to participate meaningfully in the investigation in a coordinated, cost-effective and reasonable manner. Each committee and the Debtors should be equal participants, and not just bystanders in this investigation, which should be conducted in a manner to both maximize its benefit to the estates and to minimize the costs thereof. Debtors Are Not in Favor of Examination Robin Phelan, Esq., at Haynes and Boone LLP, in Dallas, Texas, tells the Court that the Debtors are stunned by the Mirant Creditors Committee's request. As the Mirant Creditors Committee is well aware, the claims they seek to investigate belong to the Debtors and constitute potentially valuable assets of the Debtors' estates. Moreover, the right to exclusively prosecute those claims lies with the Debtors. Should there be a valid basis for asserting claims against Southern, the Debtors have every intention of pursuing them aggressively and to the fullest extent permitted by law with the appropriate input from all interested constituencies. The Debtors have no desire to waive their work product and reveal the scope and extent of their own investigation of Southern at this time. For several months, the Debtors have been investigating all potential claims against Southern and have begun the process of employing appropriate procedures for evaluating the collected data, including the establishment of a review committee on Mirant's Board of Directors comprised entirely of disinterested directors. To the extent that the Mirant Creditors Committee had ever asked, the Debtors would have gladly revealed the full extent of their efforts under existing joint defense and prosecution arrangements. Instead, Mr. Phelan relates, the Mirant Creditors Committee, with no explanation whatsoever, unilaterally sought not only to duplicate the Debtors' efforts, but also to appropriate unto itself the critical strategic decisions regarding: (i) when to disclose potential litigation; (ii) when and which documents to seek in advance of a potential litigation; (iii) when and from whom to seek depositions in advance of filing a complaint; and (iv) how to sequence party and non-party depositions to best advantage of the Debtors' cases. Mr. Phelan points out that there is, and can be, no dispute that Section 1103 of the Bankruptcy Code and Rule 2004 of the Federal Rules of Bankruptcy Procedure provide all official committees with broad powers to investigate matters affecting a bankruptcy estate. However, it is not without limits. A committee is not permitted: -- to seize control of litigation that may inure to the benefit of all; -- to bypass the requirement established by the Fifth Circuit in "Louisiana World Exposition" for exercising dominion and control over estate causes of action; and -- discovery that interfere with the Debtors' proper efforts to preserve and protect assets of their estates. To protect their estates from potentially irreparable harm, the Debtors ask the Court to deny the Mirant Creditors Committee's request. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) MJ RESEARCH: Wants to Continue Hiring Ordinary Course Profs. ------------------------------------------------------------ MJ Research, Incorporated seeks emergency approval from the U.S. Bankruptcy Court for the District of Nevada, to continue the employment of the professionals it utilizes in the ordinary course of its businesses. The Debtor reports that it customarily retains the services of various attorneys, accountants, consultants, appraisers, insurance advisors and other professionals to represent them in matters arising in the ordinary course of business The Debtor desires to retain the Ordinary Course Professionals without the necessity of a formal retention application and compensate the professionals for postpetition services rendered. The ordinary course professionals provide services relating to: (i) tax preparation and other tax advice; (ii) consulting regarding business development; (iii) legal advice with respect to routine litigation and real estate issues; (iv) employee relations; and (v) other matters requiring the expertise and assistance of professionals. The Debtor point out that in light of the number of Ordinary Course Professionals involved, it would be impractical and inefficient if the Debtor were forced to submit individual applications and proposed retention orders to the Court for each such Ordinary Course Professional. If the Debtor is forced to replace its existing Ordinary Course Professionals with others who lack the expertise and background knowledge of the Debtor's operations, the estate undoubtedly will incur significant and unnecessary expense related to transition costs. The Debtor proposes that it be permitted to pay, without formal application to the Court by any Ordinary Course Professional, 100% of the fees and costs to each of the Professionals upon the submission of an appropriate invoice setting forth in detail the nature of the services rendered after the Petition Date, provided that such fees and disbursements do not exceed a total of $20,000 per month per Ordinary Course Professional. Headquartered in Reno, Nevada, MJ Research, Incorporated -- http://www.mjr.com/-- is a leading biotechnology company specializing in the instrument and reagent technology needed for modern biological research. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. D. Nev. Case No. 04-50861). Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. M-WAVE INC: Addresses Auditor's Going Concern Qualification ----------------------------------------------------------- On April 8, 2004, M-Wave, Inc. (Nasdaq:MWAV) filed its Form 10-K for the year ended December 31, 2003 with the Securities and Exchange Commission. Included in the Form 10-K are consolidated financial statements of the Company that are audited by Grant Thornton LLP, independent auditors, for the year ended December 31, 2003. Grant Thornton LLP has issued an opinion with respect to the financial statements that raises substantial doubt about the Company's ability to continue as a going concern and references in that respect Note 3 to the financial statements. In particular, the opinion states: "As discussed in Note 3 to the financial statements, the Company incurred a loss during year ended December 31, 2003, and as of that date, the Company's current liabilities exceeded its current assets. These factors, among others, as described in Note 3, raise substantial doubt about the Company's ability to continue as a going concern. The 2003 financial statements do not include any adjustments that might result from the outcome of this uncertainty." In response to the opinion, Jim Mayer, Managing Member of Credit Support International, LLC, Chief Restructuring Advisor to M- Wave's Board of Directors, commented: "We clearly understand that as of December 31, 2003 the impact of our restructuring was not evident. However, as publicly disclosed in press releases and related SEC filings beginning in February 2004 and as a subsequent event in the Company's 2003 Form 10-K Report filed last week, M- Wave is effecting a significant restructuring of its operations and financial condition. In particular, the Company changed its business model to cease domestic manufacturing, which had become unprofitable, in favor of providing domestic and offshore supply chain management services to its customers; sold its manufacturing assets; paid all its bank term debt; reduced by 83% its delinquent vendor debt, that was originally $3.1 million and is scheduled to be fully paid by May 31, 2004 and closed on an accounts receivable purchase facility March 31, 2004, providing for funding of up to $2.5 million with Silicon Valley Bank. These factors, combined with a general upswing in our printed circuit board business, give us confidence that M-Wave will have sufficient capital resources to successfully complete the restructuring during fiscal year 2004." About M-Wave, Inc. Established in 1988 and headquartered in the Chicago suburb of West Chicago, Illinois, M-Wave is a value-added service provider of high performance circuit boards. The Company's products are used in a variety of telecommunications and industrial electronics applications. M-Wave services customers like Federal Signal on digital products and Celestica -- Nortel and Remec with its patented bonding technology, Flexlink IITM, and its supply chain management services including Virtual Manufacturing (VM) and the Virtual Agent Procurement Program (VAP) whereby customers are represented in Asia either on an exclusive or occasional basis in sourcing and fulfilling high volume and technology circuit board production in Asia through the Company's Singapore office. The Company trades on the Nasdaq National market under the symbol "MWAV." Visit the Company on its web site at www.mwav.com. About Credit Support International (CSI) Established in 1991 by a European-American joint venture between Groupe Warrant of Belgium and DiversiCorp, Inc. of Dallas, Texas, CSI provided cross-border collateral control that linked lenders to their assets located both inside the U.S. and Western Europe. In 1998, CSI was split off from the two partner companies and evolved into a specialized consulting firm devoted to transitional and troubled middle market companies. Jim Mayer, its Managing Member, has 18 years of experience including 12 years as CEO of DiversiCorp, Inc. and has managed or directed more than 50 engagements with troubled companies and provided a variety of services directly to clients including: due diligence, workout, collateral control, corporate restructuring, bankruptcy support, cross-border secured finance and interim management. Mayer has served on several boards of directors including the Turnaround Management Association. NANOGEN INC: Plans to Buy SynX Pharma for $12.2 Million ------------------------------------------------------- On February 9, 2004, Nanogen, Inc. entered into a Combination Agreement with SynX Pharma Inc. whereby the Company plans to acquire SynX for approximately Canadian $16.3 million (approximately U.S.$12.2 million) in an all-stock transaction by way of a court-approved plan of arrangement. The transaction is subject to the approval of holders of SynX common shares and debentures, court approval and other customary closing conditions. Nanogen currently develops and commercializes molecular diagnostics products and tests for the gene-based testing market for sale primarily in the United States, Europe and the Pacific Rim. For more information, go to http://www.nanogen.com/ In its Form 10-K For the fiscal year ended December 31, 2003, Nanogen Inc, reports: "We expect that our existing capital resources, combined with $33.7 million in gross proceeds from the sale of the Company's common stock in March 2004, and anticipated revenues from potential product sales, reagent rentals, leases or other types of acquisition programs for the NanoChip System, sponsored research agreements, contracts and grants will be sufficient to support our planned operations, including an estimated investment of approximately $6-8 million related to the pending acquisition of SynX and wind down costs related to our joint venture, Nanogen Recognomics, through at least the next eighteen months. This estimate of the period for which we expect our available sources of liquidity to be sufficient to meet our capital requirements is a forward-looking statement that involves risks and uncertainties, and actual results may differ materially. "Our future liquidity and capital funding requirements will depend on numerous factors including, but not limited to, commercial success of our products, or lack thereof, the extent to which our products under development are successfully developed and gain market acceptance, the timing of regulatory actions regarding our potential products, the costs and timing of expansion of sales, marketing and manufacturing activities, prosecution and enforcement of patents important to our business and any litigation related thereto, the results of clinical trials, competitive developments, and our ability to maintain existing collaborations and to enter into additional collaborative arrangements. "We have incurred negative cash flow from operations since inception and do not expect to generate positive cash flow to fund our operations for at least the next several years. We may need to raise additional capital to fund our research and development programs, to scale-up manufacturing activities and expand our sales and marketing efforts to support the commercialization of our products under development. Additional capital may not be available on terms acceptable to us, or at all. If adequate funds are not available, we may be required to curtail our operations significantly or to obtain funds through entering into collaborative agreements or other arrangements on unfavorable terms. Our failure to raise capital on acceptable terms when needed could have a material adverse effect on our business, financial condition or results of operations." NATIONAL CENTURY: Proposes Modifications to 4th Amended Plan ------------------------------------------------------------ Pursuant to Section 1127(a) of the Bankruptcy Code and Rule 3019 of the Federal Rules of Bankruptcy Procedure, National Century Financial Enterprises, Inc. seeks the Court's authority to modify the Fourth Amended Joint Plan of Liquidation Plan and deem that the Modifications be accepted by all creditors who previously accepted the Plan. The proposed Modifications are: A. Clarifications Regarding the Debtors' Estates Several provisions of the Plan, including Sections I.A.36, III.A.1, IV.B.4.a, IV.C.2, IV.C.4.a and IV.D.4.a., would be modified to clarify that they apply to the Debtors' Estates, in addition to the Debtors. B. Distribution Record Date Because the Debtors sought a waiver in the Confirmation Order of the 10-day stay period pursuant to Rule 3020(e) of the Federal Rules of Bankruptcy Procedure, the definition of "Distribution Record Date" in Section I.A.49 of the Plan would be modified to be the first Business Day after the Confirmation Date. C. NPF XII Initial Restricted SPV Funds Distribution The definition of the amount of the "NPF XII Initial Restricted SPV Funds Distribution" inadvertently did not include an adjustment for funds that will have been used as cash collateral prior to the Effective Date, and thus will not be available for distribution. D. Priority Tax Claims In response to the objections filed by the State of Ohio and the Internal Revenue Service, Section III.A.2.a of the Plan will be modified to: (a) shorten to quarterly the interval of payments to holders of Allowed Priority Tax Claims; and (b) adjust from the effective yield of the three-month treasury bill sold at the auction immediately proceeding the Effective Date to the statutory rate for unpaid taxes under applicable non-bankruptcy law the interest rate paid on the claims. E. Restructuring Transactions Section IV.A.1.b of the Plan would be modified to reflect certain changes in the Restructuring Transactions that will occur on the Effective Date, to achieve a post-Effective Date structure that is intended to help ensure preservation of the Estates' Claims for the benefit of the Debtors' creditors. F. Transactions in Furtherance of Plan In accordance with the Modifications to Section IV.A.1.b of the Plan, Section IV.A.3.a of the Plan would be modified to indicate the actions the Trustees may take in implementing the Plan, including their designation, to the extent necessary or appropriate, as the Estates' representative, pursuant to Section 1123(b)(3)(B) of the Bankruptcy Code. G. Constituent Documents and Directors and Officers of the Debtors Section IV.A.5 of the Plan would be added to provide for the amendment of the Debtors' constituent documents and the appointment by the Unencumbered Assets Trustee of directors and officers of the Debtors after the Effective Date. H. Limitation of Liability Section XIII.B of the Plan would be modified to conform with the provisions set forth in Section IV.E.3 of the Plan and to limit the releases therein provided to parties related to the Debtors. A free copy of the proposed modifications to the Debtors' Fourth Amended Plan of Liquidation is available at: http://bankrupt.com/misc/natlcent4thplan_modifications.pdf Charles M. Oellermann, Esq., at Jones Day Reavis & Pogue, in Chicago, Illinois, asserts that under Section 1127(a), a plan proponent may modify its plan prior to confirmation so long as the modified plan meets the requirements of Sections 1122 and 1123 of the Bankruptcy Code. Bankruptcy Rule 3019 provides that: "In a chapter 9 or chapter 11 case, after a plan has been accepted and before its confirmation, the proponent may file a modification of the plan. If the court finds after hearing on notice to the trustee, any committee appointed under the Code, and any other entity designated by the court that the proposed modification does not adversely change the treatment of the claim of any creditor or the interest of any equity security holder who has not accepted in writing the modification, it shall be deemed accepted by all creditors and equity security holders who have previously accepted the plan." Mr. Oellermann notes that the Plan, with the Modifications, meets the requirements of Sections 1122 and 1123. Moreover, the Modifications do not adversely change the treatment under the Plan of the claim of any creditor of, or the interest of any equity security holder in, the Debtors. The Debtors also ask the Court to schedule the hearing on the proposed Modifications at the beginning of the Confirmation Hearing scheduled to commence today, April 14, 2004. CSFB, et al. Object Credit Suisse First Boston LLC, Credit Suisse First Boston, New York Branch, JPMorgan Chase Bank, Bank One, N.A. and Deloitte & Touche complain that "[t]he new language remains confusing and the modified plan provisions may continue to unfairly and impermissibly impair setoffs, counterclaims and defenses of CSFB, et al., but in new and different ways." According to Sherri Blank Lazear, Esq., at Baker & Hostetler, in Columbus, Ohio, the modifications affect provisions that: -- are of substantial importance to CSFB, et al.; -- may involve very substantial sums; and -- are quite complex and difficult to interpret. After the adjournment of the initially scheduled Confirmation Hearing, the Debtors' counsel engaged in lengthy discussions with counsel for certain third party objectors in an effort to resolve the objections made to the release, injunction and setoff provisions of the Plan. After weeks of apparent effort to reach an agreement, Ms. Lazear contends, the modifications represent an abrupt repudiation of those discussions and an attempt by the Debtors to move in an entirely different direction. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEUROLOGIX INC: Liquidation Plan Raises Going Concern Doubt ----------------------------------------------------------- Effective February 10, 2004, pursuant to an Agreement and Plan of Merger dated August 13, 2003, and amended by Amendment No. 1 to Agreement and Plan of Merger dated November 14, 2003, between Change Technology Partners, Inc., CTP/N Merger Corp. (Merger Sub), a wholly-owned subsidiary of CTP, and Neurologix, Inc., Merger Sub was merged with and into Old Neurologix, with Old Neurologix continuing as the surviving corporation and becoming a wholly- owned subsidiary of the Company. As a result of the Merger, the Company changed its name to Neurologix, Inc., Old Neurologix changed its name to Neurologix Research, Inc. and the shareholders of Old Neurologix now own approximately 68% of the Company's outstanding capital stock. On February 20, 2004, the Audit Committee of the Board of Directors engaged the accounting firm of J.H. Cohn LLP, Old Neurologix' historical independent accountants, to replace the firm of KPMG LLP, the Company's independent accountants as of the date of the merger. KPMG did not resign or decline to stand for re-election, but was dismissed on February 23, 2004 as part of the change of control to allow the appointment of J.H. Cohn as the Company's principal accountants. The audit report of KPMG for the audit of the consolidated financial statements as of December 31, 2001 and 2002 and for the two years ended December 31, 2002, dated March 27, 2003, contained two explanatory paragraphs. The first explanatory paragraph referred to the Company's change in its method of accounting for goodwill and other intangible assets, in 2002. The second explanatory paragraph referred to the uncertainty of the Company to continue as a going concern. As discussed, the Company adopted a plan of liquidation and dissolution that raises substantial doubt about its ability to continue as a going concern. NORTHEAST GENERATION: S&P Lowers Senior Secured Bond Rating to BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on Northeast Generation Co.'s senior secured bonds to 'BB+' from 'BBB-'. The outlook remains negative. Select Energy and NGC are affiliates, both owned 100% by Northeast Utilities (NU; BBB+/Negative/--). Select Energy buys the power produced by NGC under a three-year contract. The rating action reflects the near-term expiration of the Select Energy contract and the potential that Select Energy may not extend the contract on terms favorable to the NGC bondholders. Under Standard & Poor's long-term gas price assumption of $3.25 per million BTU, NGC's stand-alone operations do not support an investment-grade rating. Under a low gas price merchant scenario, debt service coverage ratios could fall to 1x. It should be noted that while Standard & Poor's rates the NU companies on a consolidated basis, NGC has been somewhat separated from the consolidation given that it has non-recourse debt and could, in the future, represent an asset that does not have strategic value to NU, depending on the company's long-term strategy. "Currently, Standard & Poor's believes that NGC represents an important asset to support Select Energy's retail and wholesale marketing business, and that is why the ratings are not totally de-linked," said credit analyst Arleen Spangler. NGC, an indirect wholly owned subsidiary of NU, owns, operates, and maintains a portfolio of 1,292 MW of generating assets and firm capacity located in the New England region. The assets comprise various generating resources, the majority of which are a 1,080 MW pumped storage facility and several conventional hydro stations. NOVA CHEMICALS: Board of Directors Declares Quarterly Dividends --------------------------------------------------------------- Notice is hereby given that the Board of Directors of NOVA Chemicals Corporation has declared the following quarterly dividend, payable on the 15th day of August, 2004, to shareholders of record at the close of business on the 30th day of July, 2004. Common Shares, Dividend No. 41 Dividend of $0.10 per share on the outstanding Common Shares. For further information: R. E. J. Kemle, Assistant Corporate Secretary, (403) 750-3834 NOVA Chemicals (S&P, BB+ Long-Term Corporate Credit Rating, Positive) is a focused, commodity chemical company that produces ethylene, polyethylene, styrene monomer and styrenic polymers, which are used in a wide range of consumer and industrial goods. NOVA Chemicals manufactures its products at 18 operating facilities located in the United States, Canada, France, the Netherlands and the United Kingdom. The company also has five technology centers that support research and development initiatives. NOVA Chemicals Corporation shares trade on the Toronto and New York stock exchanges under the trading symbol NCX. Visit NOVA Chemicals on the Internet at http://www.novachemicals.com/ ORIENTAL AUTOMOTIVE: Demetrius & Co Replaces ATA Group as Auditors ------------------------------------------------------------------ On February 27, 2004, Oriental Automotive Parts Development (China) Co., Ltd. engaged Demetrius & Co., LLC as its independent auditors for the year ended December 31, 2003 to replace the firm of ATA CPA Group, LLC, (formerly Grace T. Fan, CPA, LLC) who resigned to serve as the Company's independent public accountants on February 27, 2004. Following the engagement, Demetrius & Co, LLC will audit the Company's financial statements as of, and for, the year ended December 31, 2003 and will respond to the comments of the Securities and Exchange Commission in connection with the Company's filing on a registration statement on Form SB-2. The decision to accept ATA's resignation and engage Demetrius & Co., LLC as the Company's independent auditors was approved by the Board of Directors of the Company on February 27, 2004. ATA issued a going concern statement on its report on the Company's financial statements for the period from August 30, 2002 to September 30, 2002. ORION TELECOMMUNICATIONS: Has Until June 1 to File Schedules ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York, gave Orion Telecommunications Corp., an extension to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor has until June 1, 2004 to file its Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in New York, New York, Orion Telecommunications Corp. -- http://www.oriontelecommunications.com/-- is a market- leading manufacturer and distributor of telecommunication services. The company filed for chapter 11 protection on April 1, 2004 (Bankr. S.D.N.Y. Case No. 04-12203). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,347,957 in total assets and $97,588,754 in total debts. ORION TELECOMMUNICATIONS: Hires Togut Segal as Attorneys -------------------------------------------------------- Orion Telecommunications Corp., seeks the approval of the U.S. Bankruptcy Court for the Southern District of New York, to employ Togut, Segal & Segal LLP as its bankruptcy counsel. The Debtor points out that they need the services of a bankruptcy counsel to render legal services relating to the administration of these chapter 11 cases and the issues that may arise from the management and operation of the Debtor's business. Specifically, the Debtor expects Togut Segal to: a) assist in the preparation of financial statements, schedules of assets and liabilities, statement of financial affairs, and other reports and documentation required by the Bankruptcy Code and the Bankruptcy b) representing the Debtor at hearings on matters pertaining to their affairs as debtor-in-possession; c) prosecute and defend litigated matters that may arise during this chapter 11 case; d) negotiate, formulate, and confirm a plan of reorganization for the Debtor; e) counsel and represent the Debtor concerning the assumption or rejection of executory contracts and leases, administration of claims, and numerous other bankruptcy related matters arising from this case; and f) perform such other bankruptcy services that are desirable and necessary for the efficient and economic administration of this chapter 11 case. Albert Togut, Esq., reports that his firm will bill the Debtor its current hourly rates ranging from: Designation Billing Rate ----------- ------------ partners $590 to $720 per hour associates $195 to $505 per hour paralegals and law clerks $115 to $180 per our Headquartered in New York, New York, Orion Telecommunications Corp. -- http://www.oriontelecommunications.com/-- is a market- leading manufacturer and distributor of telecommunication services. The company filed for chapter 11 protection on April 1, 2004 (Bankr. S.D.N.Y. Case No. 04-12203). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,347,957 in total assets and $97,588,754 in total debts. PACIFIC GAS: Judge Issues Proposed Decision on General Rate Case ---------------------------------------------------------------- On April 6, 2004, a proposed decision was issued in Pacific Gas and Electric Company's 2003 general rate case pending at the California Public Utilities Commission. Dinyar B. Mistry, PG&E Vice-President and Controller, explains that the 2003 GRC determines the amount of authorized base revenues PG&E can collect from customers to recover its basic business and operational costs for electricity and natural gas distribution operations and for electricity generation operations for 2003 and succeeding years. The administrative law judge's proposed decision would approve the July 2003 and September 2003 settlement agreements reached among PG&E and various consumer groups to set PG&E's 2003 revenue requirements for its electricity generation and electricity and natural gas distribution operations. The proposed decision would approve the terms of the settlement agreements that provide for an attrition adjustment in 2004, 2005 and 2006 based on changes in the Consumer Price Index, except the ALJ recommends that the settlement agreements be modified to delete the provision for a minimum attrition adjustment amount in each year. If the proposed decision is adopted by the CPUC, Mr. Mistry says, PG&E's total 2003 revenue requirements, as provided in the settlement agreements, would be set at approximately: * $2.5 billion for electric distribution operations, representing a $236 million increase over the current authorized amount; * $927 million for natural gas distribution operations, representing a $52 million increase over the current authorized amount; and * $912 million for electricity generation operations, representing a $38 million increase over the current authorized amount. In addition, under the proposed decision, if PG&E forecasts a second refueling outage at the Diablo Canyon nuclear power plant in any one year the generation revenue requirement would be increased to reflect a fixed revenue requirement of $32 million per refueling outage, adjusted for changes in the CPI in the manner described in the proposed decision. According to Mr. Mistry, the proposed minimum attrition adjustments for electricity and natural gas distribution revenue requirements for 2004, 2005 and 2006 are 2.00 percent, 2.25 percent and 3.00 percent. The proposed minimum attrition adjustments for electricity generation revenue requirements for 2004, 2005 and 2006 are 1.50 percent, 1.50 percent and 2.50 percent. If the proposed decision is adopted, the aggregate attrition adjustment for 2004 would be approximately $61 million based on the actual change in the CPI of 1.4 percent. "This would reflect a reduction of approximately $21 million compared to the Utility's November 2003 request for approximately $82 million (excluding the $32 million allowance for a second refueling outage in 2004) based on the proposed minimum attrition adjustments," Mr. Mistry says. If the proposed decision is adopted and the actual changes in the CPI for 2005 and 2006 are less than the proposed minimum attrition adjustment amounts for those years, the actual attrition adjustment amounts in 2005 and 2006 would be less than the amounts would have been under the settlement agreements. Mr. Mistry adds that the proposed decision also would authorize the establishment of new balancing accounts, effective January 1, 2004, to ensure that PG&E recovers its authorized revenue requirements regardless of the level of sales. The proposed decision would reject the Utility's request for approximately $75 million in additional revenue requirements to fund a pension contribution. If adopted, the proposed decision would be retroactive to January 1, 2003. Comments on the proposed decision are due on April 26, 2004 and reply comments are due on May 3, 2004. PG&E Corporation and PG&E are unable to predict whether the proposed decision will be adopted by the CPUC. If the CPUC does not approve the settlement agreements, PG&E's ability to earn its authorized rate of return for the years until the next GRC would be adversely affected. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) PALMS AT WATERS: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: The Palms At Waters Edge 655 Loop 337, #402 New Braunfels, Texas 78130 Bankruptcy Case No.: 04-51709 Type of Business: Real Estate. Chapter 11 Petition Date: March 23, 2004 Court: Western District of Texas (San Antonio) Judge: Leif M. Clark Debtor's Counsel: R. Glen Ayers, Jr. Langley and Banack, Inc. 745 East Mulberry, 9th Floor San Antonio, TX 78212 Tel: 210-736-6600 Fax: 210-735-6889 Total Assets: $3,675,000 Total Debts: $1,145,000 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wylie A. Eaton Salaries $404,000 655 Loop 337, #402 New Braunfels, TX 78130 Andrew D. Thomas Legal Fees $65,000 Henry Grun, Jr. Legal Fees $35,000 Pat H. Symons Work Performed $18,000 Kathleen Peterson, et al. Money Borrowed $5,000 William Lund, et al. $0 Gregory T. Perkes Notice Only $0 PARMALAT GROUP: U.S. Debtors Propose Employee Retention Plan ------------------------------------------------------------ The Parmalat Group U.S. Debtors ask Judge Drain to approve their key employee retention plan and ordinary course merit increases with respect to certain vice presidents to encourage the retention of high-level management employees whose responsibilities are directly and significantly impacted by the Chapter 11 cases. The Retention Plan will help ensure that the Key Employees continue to provide essential services necessary to the Debtors' business in these critical times and alleviate concerns regarding job security in light of the uncertainty prevalent in Chapter 11 cases and the potential sale of substantially all of their assets. Prepetition Bonus Program The extensive media coverage concerning the financial situation and allegations of wrongdoing of the U.S. Debtors' foreign affiliates before the Petition Date had serious adverse consequences for the Debtors' business and negatively impacted the morale of the Debtors' employees. As a result, several important employees, including two of the Debtors' top salespersons, left the company during this time. To combat the risk of additional turnover by valuable employees resulting from the Debtors' negative publicity and continued liquidity problems, in January 2004 the Debtors established a program to provide bonus payments to certain valuable employees on condition that they remained until the end of 2004. The Bonus Program provided for the payment of one-time retention bonuses to nine valuable employees whose responsibilities were directly and significantly impacted by the liquidity crisis and ongoing restructuring efforts. Specifically, the employees entered into employee retention agreements that provided for one- time bonus payments ranging from $10,000 to $25,000, with a forfeiture provision requiring the employee to reimburse the U.S. Debtors for the entire bonus should the employee resign or be terminated for cause before December 31, 2004. The bonuses under the Bonus Program were designed to encourage valuable employees to remain employed by the Debtors through the end of 2004. These employees are even more critical to the Debtors now in light of the need to maximize the value of the Debtors' business as a going concern during the Sale Process, ensuring the highest purchase price and the greatest return to creditors. The Retention Plan The U.S. Debtors identified two Key Employees who did not receive bonuses under the Bonus Program even though they are critical to the success of the Sale Process, and have levels of responsibility similar to those employees involved in the Bonus Program. The Debtors also determined that the continuation of their prepetition severance program with respect to the Vice Presidents is necessary to alleviate concerns that the Vice Presidents have expressed about job security as a result of the negative publicity, and to help ensure that the Vice Presidents remain during the Sale Process. Accordingly, the Debtors formulated a retention plan with two principal components: (i) A bonus component designed to retain the two Key Employees in a manner similar to the Bonus Program; and (ii) The continuation of the Debtors' prepetition severance program with respect to the Vice Presidents. A. The Bonus Payments The Retention Plan provides for bonus payments to two employees: -- Timothy Barber, Vice President of Operations; and -- Stefanos Kandilas, Controller of Fresh Milk. The Retention Plan provides for bonuses of $25,000 and $10,000 to Messrs. Barber and Kandilas, with payment to be made upon the first to occur of: (i) completion of the sale of substantially all of the U.S. Debtors' assets; (ii) termination without cause; or (iii) December 31, 2004. The bonus will not be paid to either Key Employee if he resigns or is terminated by the U.S. Debtors for cause before the earlier of the completion of the Sale Process or December 31, 2004. The retention of Messrs. Barber and Kandilas is critical to the success of the U.S. Debtors' business operations and the continued control of fresh milk. As Vice President of Operations, Mr. Barber oversees day-to-day operations of the Debtors' five manufacturing sites. Mr. Barber's responsibilities include monitoring safety, quality, environmental concerns, and the cost per gallon of milk being produced. Mr. Barber is also involved in capital expenditures, raw milk procurement, material purchasing, and negotiation of co-pack agreements for the Grand Rapids site. Mr. Kandilas, a certified public accountant, supervises month end closings and analyzes financial results and balance sheets. Mr. Kandilas works closely with operations to obtain accurate information and provide guidance to accountants during the budget process. Mr. Kandilas is also responsible for financial analysis of new contracts for both existing and new customers. Because neither Key Employee would receive the bonuses until the earlier of completion of the Sale Process or December 31, 2004, the bonus payments to Messrs. Barber and Kandilas will encourage them to remain employed throughout the Sale Process and work productively to ensure that the Debtors are efficient in their ongoing operations. B. The Severance Program The U.S. Debtors also seek authority to continue to honor their obligations under their existing Severance Program with respect to seven Vice Presidents. The Severance Program generally provides benefits for eligible employees if their employment is permanently terminated as a result of a reduction in the Debtors' workforce or an elimination of the employees' present job position. To receive severance under the Severance Program, the employee must be classified as a regular, full-time, non-union employee. The employee also must be in good standing with the Debtors and termination cannot be for cause, retirement, or resignation prior to the offering of separation benefits. The Severance Program provides that Vice Presidents who meet the minimum requirements and execute a separation agreement, will receive six months severance support unless superseded by a Vice President's agreement with the U.S. Debtors. A Vice President will not be entitled to severance if he is offered similar employment on similar terms by a purchaser of the Debtors' assets. The maximum estimated severance expense with respect to the Vice Presidents is $629,905. Merit Increases Although the U.S. Debtors provided merit increases to most of their non-union employees on February 1, 2004, they did not provide the annual merit increases to their Vice Presidents before the Petition Date. In line with prepetition practices, the Debtors now seek to implement these pay increases with respect to the Vice Presidents. With respect to two Vice Presidents, the Merit Increases will entail a fixed dollar increase to their base compensation to bring their salaries, which are below the market rate for persons with similar levels of responsibility, to a competitive level commensurate within the market. The base salaries of the other four Vice Presidents will be increased by a fixed percentage consistent with current market rates for merit increases. Lowell Dunn, Vice President of Engineering, already received an increase on February 1, 2004 in the ordinary course of business. Therefore, Mr. Dunn will not receive an additional Merit Increase. _______________________________________________________________ | | | | | | Name | Position | Type of | Merit | | | | Payment | Increase | |__________________|________________|________________|__________| | | | | | | Anthony Mayzun | VP Finance & | Flat increase | $20,000 | | | Administration | in base salary | | |__________________|________________|________________|__________| | | | | | | John P. Clifford | VP Human | Flat increase | 20,000 | | | Resources | in base salary | | |__________________|________________|________________|__________| | | | | | | Timothy Barber | VP Operations | 3% increase in | 5,400 | | | | base salary | | |__________________|________________|________________|__________| | | | | | | Davide Broglio | VP Supply | 3% increase in | 5,114 | | | Chain | base salary | | |__________________|________________|________________|__________| | | | | | | Michael Janis | VP and GM Milk | 3% increase in | 4,338 | | | Products | base salary | | |__________________|________________|________________|__________| | | | | | | Stephen O'Brien | VP and GM | 3% increase in | 4,800 | | | Georgia | base salary | | |__________________|________________|________________|__________| The Merit Increases aggregate $59,652 on an annualized basis. The U.S. Debtors propose that the Merit Increases be made retroactive to February 1, 2004, the date on which they implemented the annual merit adjustments for their other non- union employees. The U.S. Debtors believe that the Merit Increases are in the ordinary course of their business and do not require court approval under Section 363(b)(1) of the Bankruptcy Code. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Wants Lease Decision Time Extended through July 29 ------------------------------------------------------------------ Gilbert R. Saydah, Jr., Esq., at Morris Nichols Arsht & Tunnel, in Wilmington, Delaware, tells the Court that the Pillowtex Corporation Debtors remain parties to a few non-residential real property leases listed on the Real Property Leases Schedule but no longer subject to GGST's designation rights. It is also possible that other inadvertent omissions may have occurred in the preparation of the Real Property Leases Schedule and that the Debtors may still be party to certain unexpired leases that are subject to GGST's designation rights, but that are not covered by the extension of the Debtors' period to assume or reject the Leases under the GGST Sale Order. Given that the Sale Agreement entitles GGST to direct the Debtors to assume and assign leases until the Non-Fee Designation Expiration Date -- the period during which the Debtors are authorized, at the direction of GGST, to assume or reject the Real Property Leases -- the Debtors need another extension of their Lease Decision Period. The Non-Fee Designation Expiration Date is the earlier of July 29, 2004 and the expiration of the relevant lease, subject to further extension as provided in the Sale Agreement. By this motion, the Debtors ask the Court to further extend their Lease Decision Period to 120 more days, through and including July 29, 2004. The proposed extension coincides with the current outside date for the Non-Fee Designation Expiration Date under the terms of the Sale Agreement. The Court will convene a hearing on May 14, 2004 to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Lease Decision Period is automatically extended through the conclusion of that hearing. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sells top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis & Poque represents the Debtors in their restructuring efforts. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) PIMCO COMMERCIAL: Liquidation Plan Fails to Secure Enough Votes --------------------------------------------------------------- PIMCO Commercial Mortgage Securities Trust, Inc. (NYSE:PCM), a closed-end investment company investing primarily in commercial mortgage-backed securities, held its Annual Meeting of Shareholders of the Fund. The meeting was held for the following purposes: (1) to consider a proposal to liquidate the Fund, and (2) to consider whether to elect Messrs. E. Philip Cannon and William J. Popejoy to serve as members of the Fund's Board of Directors for the terms expiring in 2007, and until their successors are elected and qualify. Consistent with the Board's recommendation to shareholders, the proposal to liquidate the Fund failed to receive the necessary affirmative vote of two-thirds (66 2/3%) of the Fund's shares outstanding. Therefore, the Fund will not be liquidated as proposed. The proposal to elect Messrs. Cannon and Popejoy to serve as members of the Board of Directors was approved. For further information, contact Erik Velicer at (866) 746-2606. Past performance is no guarantee of future results. Investment return, dividend rate and share price will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. REDBACK NETWORKS: Reorganized Debtor Reports First Quarter Results ------------------------------------------------------------------ Redback Networks Inc. (Nasdaq:RBAK), a leading provider of broadband networking systems, announced its first quarter 2004 results for the period ended March 31, 2004. Net revenue for the first quarter of 2004 was $30.2 million, compared with $28.4 million for the fourth quarter of 2003 and $29.5 million for the first quarter of 2003. On January 5, 2004 the company received $30.0 million from Technology Crossover Ventures in exchange for 651,749 shares of the company's Series B Convertible Preferred shares and warrants exercisable for 1,629,373 shares of common stock. The company ended its first quarter of 2004 with $42 million of unrestricted cash. GAAP net loss for the first quarter of 2004 was $33 million or $0.64 per share attributable to common stockholders based on weighted average shares outstanding of 51.4 million compared to a GAAP net loss of $24.9 million or $0.14 per share based on weighted average shares outstanding of 179.7 million in the first quarter of 2003. Included in the GAAP net loss for the first quarter of 2004 were charges of $25.1 million including a deemed dividend and accretion on preferred stock of $16.8 million, deferred stock compensation charges of $5.3 million, amortization of intangible assets resulting from fresh start accounting of $2.7 million and other charges of $0.3 million. Non-GAAP net loss for the first quarter of 2004 was $7.9 million or $0.15 per share based on weighted average shares outstanding of 51.4 million compared to a non-GAAP net loss of $23.2 million or $0.13 per share based on weighted average shares outstanding of 179.7 million in the first quarter of 2003. Non-GAAP results exclude amortization of intangible assets arising from fresh-start accounting, the proceeds from the sale of inventory as scrap, amortization of stock-based compensation, amortization of the fair value of warrants issued in connection with a lease agreement, a deemed dividend to the preferred stockholders due to a beneficial conversion feature and accretion of a dividend payable to the preferred stockholders. See the attached table for a reconciliation of our non-GAAP results to GAAP results. The company emerged from Chapter 11 bankruptcy on January 2, 2004. Results for the period following our emergence from Chapter 11 reflect fresh-start accounting adjustments as required by generally accepted accounting principles (GAAP). Additionally, on January 2, 2004, in connection with our restructuring, we canceled our existing common stock and issued new common stock. The recapitalization of the company resulted in approximately 52 million shares of common stock outstanding as compared with 183 million shares of common stock outstanding before the restructure. Accordingly, our financial results for periods following our emergence from bankruptcy are not comparable to our results for prior periods. The activity of the company for the period January 1, 2004 through January 2, 2004 is included in the pre-bankruptcy or "predecessor" company. The activity of the company for the period January 3, 2004 through March 31, 2004 is included in the post bankruptcy or "successor" company. About Redback Networks Inc. Redback Networks Inc., a leading provider of broadband networking systems, enables carriers and service providers to build third- generation broadband networks that can profitably deliver simplified, personalized, portable subscriber services to consumers and businesses. The company's carrier-class, consumer- scale SmartEdge(R) Router and Service Gateway platforms for Consumer IP combine subscriber management systems and edge routing in conjunction with the NetOp(TM) element and policy management platform to provide a powerful, flexible infrastructure for managing both subscribers and value-added services. Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a growing and global customer base of more than 500 carriers and service providers, including major local exchange carriers (LECs), inter-exchange carriers (IXCs), PTTs and service providers. ROTECH HEALTHCARE: Files Delayed Annual Report with SEC ------------------------------------------------------- On March 31, 2004, Rotech Healthcare Inc. (Pink Sheets:ROHI) filed a Form 12b-25 with the Securities and Exchange Commission seeking an extension to file its Annual Report on Form 10-K. The additional time was required to evaluate the treatment of the amortization of its senior debt facility deferred issue costs as it relates to the accelerated principal debt payments made by the Company on these facilities. This evaluation is now complete and will result in additional non cash interest expense charges in 2003. Net earnings (loss) changes to fiscal year 2003 are as follows: (dollars as thousands) Q1 Q2 Q3 Q4 2003 ------- ------- ------- ------- ------- Previously Reported $5,343 $(6,463) $2,842 $8,063 $9,785 Adjustment (346) (216) (543) (267) (1,372) As Restated $4,997 $(6,679) $2,299 $7,796 $8,413 These changes will be reflected in the Company's Annual Report on Form 10-K being filed today with the Securities and Exchange Commission and will have no impact on the Company's compliance with any of its financial covenants relating to its borrowing facilities. About Rotech Healthcare Rotech Healthcare Inc. is a leading provider of home respiratory care and durable medical equipment and services to patients with breathing disorders such as chronic obstructive pulmonary diseases (COPD). The Company provides its equipment and services in 48 states through approximately 500 operating centers, located principally in non-urban markets. Rotech's local operating centers ensure that patients receive individualized care, while its nationwide coverage allows the Company to benefit from significant operating efficiencies. * * * As reported in the Troubled Company Reporter's December 16, 2003 edition, Standard & Poor's Ratings Services placed its 'BB' corporate credit, its 'BB' senior secured, and 'B+' subordinated debt ratings on home respiratory provider Rotech Healthcare Inc. on CreditWatch with negative implications. "The action reflects Orlando, Fla.-based Rotech's vulnerability to recently signed Medicare legislation that could hurt the company's reimbursement for both respiratory drugs and durable medical equipment," said Standard & Poor's credit analyst Jesse Juliano. RUSH FINANCIAL: Expects to Reach Profitability by Year-End ---------------------------------------------------------- Rush Financial Technologies, Inc., dba RushTrade(r) Group, (OTCBB:RSHF) announced that it has filed its Form 10-KSB for the year ended December 31, 2003: "While total revenues decreased, one division of our Investment Services group, RushTrade, showed a dramatic increase in revenues from $114,131 in 2002 to $1,056,479 in 2003, a 926% increase. The Company expects revenues from the RushTrade business unit to continue to increase in 2004. Total revenues decreased $2,682,594, or 68% from $3,931,316 in 2002 to $1,248,722 in 2003, reflecting the decrease in revenue from Investment Services from $3,915,346 in 2002, to $1,236,086 in the year ended 2003. The decrease in revenues is primarily due to the Company's decision to reposition itself into a direct access brokerage firm and a real-time technology development company. Future revenues for Investment Services are expected to be derived almost entirely from the RushTrade direct access brokerage operations. "Management believes its recent transition away from retail brokerage operations and into a direct access brokerage firm and a real-time technology development company is succeeding, as evidenced by our improved bottom line. Our net loss improved to $2,475,497, or $0.25 per share, for the year ended 2003, from a net loss for 2002 of $3,131,636, or $0.40 per share. Our net loss per share from 2002 to 2003 improved by 38%, while our total net loss improved by 21%. Management believes that the Company's current operational structure will allow us to reduce our net loss and achieve a level of profitability by year-end 2004. "The consolidated financial statements were prepared assuming that the Company will continue as a going concern. At December 31, 2003, the Company's current liabilities exceeded its current assets by $2,013,601 and it incurred a net loss of $2,475,947 in 2003 and $3,131,636 in 2002. KBA Group, our auditors, felt these matters raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, the Company believes that it will be able to continue to raise the funds necessary until it reaches a sustainable level of profitability." About Rush Financial Technologies, Inc. Rush Financial Technologies, Inc. operates through two primary subsidiaries: RushGroup Technologies, Inc., the Company's financial technology development subsidiary, develops and operates proprietary real- time portfolio management software products, order management systems, direct-access trading software applications and a data center. Utilizing a number of proprietary technologies and its exclusive Direct Access Routing Technology (DART(tm)), RushGroup offers real-time market data platforms and Direct Access products to meet the needs of active online investors, semi-professional traders and institutional portfolio managers. RushTrade Securities, Inc, a wholly-owned subsidiary of the Company and a fully disclosed introducing broker/dealer and member NASD and SIPC, offers securities and online brokerage services to its retail customers utilizing RushGroup's software products. RushTrade customer trades are cleared through and customer accounts are held at a third party clearing firm. RushTrade is registered in all 50 U.S. states and accepts customers from most foreign countries. RushTrade customer accounts are self-directed and RushTrade does not provide advice or make trade recommendations. The Company is headquartered in Dallas, Texas and its common stock is traded on the OTC.BB Market under the symbol "RSHF." For more information about RushTrade and the RushGroup products, visit http://www.rushtrade.com/and http://www.rushgroup.com/ SALOMON BROTHERS: Fitch Junks Series 1996-C1 Class F Rating ----------------------------------------------------------- Salomon Brothers Mortgage Securities VII, Inc.'s mortgage pass- through certificates, series 1996-C1 are downgraded by Fitch Ratings as follows: -- $11.1 million class F to 'CCC' from 'B+'. Fitch also upgrades the following class: -- $9.5 million class D to 'AAA' from 'AA+'. Additionally, the following classes are affirmed by Fitch: -- $1.1 million class B 'AAA'; -- $14.8 million class C 'AAA'; -- Interest-only class IO 'AAA'; -- $21.2 million class E 'BBB-'. Fitch does not rate the $4.1 million class G certificates. The downgrade of class F is due to the deteriorating performance of the Clubhouse Inn loan portfolio (33%), secured by five hotel properties. The loans are 90 days delinquent and in special servicing. The year-end (YE) 2003 weighted average debt service coverage ratio was 0.68 times (x) and occupancy was 50%. The special servicer is currently determining workout options. The upgrade of class D is due to an increase in credit enhancement since issuance. As of the March 2004 distribution date, the pool's aggregate certificate balance has been reduced by 71% to $62.0 million from $212 million at issuance. The pool is concentrated, with only ten loans remaining. The largest loan (40%) is secured by an office property in Redmond, WA. The property was 90% occupied as of September 2003. Realized losses in the pool total $4.9 million, or 2.0% of the original principal balance. SOLA INTERNATIONAL: Assigns Executive Management Responsibilities ----------------------------------------------------------------- SOLA International Inc. announced that it has assigned new responsibilities to members of the company's executive management team. Barry Packham has been assigned responsibility for the operation and development of the company's businesses in North America and will also assume interim responsibility for Latin America; Mark Ashcroft will adopt similar responsibilities for Europe, while David Cross will oversee Asia Pacific. Commenting on these changes, Jeremy Bishop said, "The functional leadership approach that we have employed over the past three years enabled the company to successfully rationalize and restructure its operations. The benefits of that initiative are now clearly evidenced by our improved productivity and financial performance. This provides a platform that allows us to focus on the creation of incremental profits and cash flow through the marketing of the products and services that provide our competitive advantage." "This objective requires a group of senior executives that is responsible, on a daily basis, for the commercial, manufacturing and distribution activities in their respective regions, as well as the development of regional strategy and investment recommendations. It is appropriate that the executive managers who led and executed the company's turn-around should now hold accountability for the next phase in our evolution." Packham joined SOLA International Inc. as group vice president, manufacturing development in February 1993. In May 2000 he was appointed executive vice president, global manufacturing and logistics. Prior to joining SOLA, he held manufacturing and general management positions with Eastman Kodak and Leigh-Mardon Pty Ltd. Ashcroft joined SOLA International Inc. in August 1998 as managing director UK Operations. In December, 2001 he was appointed president, American Commercial Operations and vice president Europe. Prior to joining SOLA, he held strategy and market development positions at Applied Chemicals International Pty Ltd. Cross joined SOLA International Inc. in August 1993 as finance director Australia. In April 2003 he was appointed vice president business planning and development. Prior to joining SOLA, he held commercial and finance positions with Clark Shoes and worked as a chartered accountant for KPMG. Said Packham, "The commercial strategy established under the leadership of Mark Ashcroft and executed by the North American team has resulted in seven consecutive quarters of sales growth in what has been a flat market overall. I look forward to building upon those strategies and tactics which have been instrumental in returning top-line growth to this region." Ashcroft commented, "I am proud of what we have accomplished over the last two years in the North American market. We have launched Teflon(R) EasyCare lenses and secured a distribution base for that breakthrough product with the acquisition of Great Lakes Coating laboratory. Further, we have launched two progressive lenses, SOLAOne(TM) and AO Easy, which are achieving great success in the market. I am confident that this success will continue under Barry's leadership." Cross stated, "I am enthusiastic about the challenge of the Asia Pacific role. SOLA has always been a key player in this region and I look forward to strengthening our position. This region contains a diverse mix of cultures and economies with significant opportunities for growth." Messrs. Packham, Ashcroft and Cross, Ron Dutt (chief financial officer) and Bishop now comprise the SOLA International Inc. executive management team. San Diego, California-based SOLA makes plastic and glass spectacle lenses and holds a leading manufacturing and technology position in the growing plastic lens segment of the market. * * * As reported in the Troubled Company Reporter's December 15, 2003 edition, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit and senior secured bank loan ratings on eyeglass lens manufacturer SOLA International Inc. and removed the ratings from CreditWatch, where they were placed Oct. 29, 2003. At the same time, Standard & Poor's lowered SOLA's senior unsecured debt rating to 'B' from 'BB-' as a result of the increased encumbrance on assets imposed by the company's new bank facilities--more than 30% of adjusted assets. Standard & Poor's also withdrew its rating on SOLA's 11% senior unsecured euro notes, nearly all of which have been repaid. The outlook is stable, reflecting the fact that SOLA's restructuring and its sales and marketing initiatives, as well as its investments in North American prescription processing laboratories, appear to have stemmed erosion in the company's financial measures. This, together with a stronger capital structure, greater financial flexibility, and lower interest costs, contribute to a more resilient credit profile. "The speculative-grade ratings reflect SOLA's operating concentration in eyeglass lenses, a well-penetrated, mature, and innovative industry that faces external challenges from other forms of vision correction," said Standard & Poor's credit analyst Jill Unferth. "The ratings also reflect the company's moderately aggressive capital structure. These factors are partly offset by its meaningful global market share, which is second only to Essilor International. The company also has strong regional distribution channels, a higher margin product mix reflecting its recent launches of branded and advanced products, and adequate liquidity." SOLECTRON CORP: Sells Stream International to ECE Holdings' Parent ------------------------------------------------------------------ The parent company of ECE Holdings, Inc., a leading global provider of outsourced technical support and customer service and funded by H.I.G. Capital, announced it has acquired Stream International from Solectron Corporation. Both ECE and Stream have built their reputations on providing outsourced technical support and customer service to high- technology companies. The synergies between the two companies will enable the companies to further grow their global client base among industries such as software publishing, hardware manufacturing, and Internet services. "ECE and Stream have consistently prided themselves on superior service to the customers of high-tech products and services," said Toni Portmann, President and CEO of ECE and Stream. "Our business models are closely aligned, the leadership of both companies is passionate about our business, and there is excitement throughout the organizations about what the future will bring. It is striking how the same business values pervade both ECE and Stream: a deep commitment to customer service, a dedication to controlling clients' support costs, and an enthusiasm for additional global growth." Stream and ECE will have a combined global reach of 19 contact centers in the U.S., Canada, Europe, and Asia with over 10,000 employees and additional capacity for growth. ECE is a global technical support and customer service outsourcing provider. The company's award-winning systems and processes provide effective contact center solutions that help clients achieve business efficiencies and provide an exceptional service experience to their customers. For more information, visit http://www.ece.com/ Stream International is a global provider of customer relationship management (CRM) support services for leading technology companies and e-businesses. Stream employees around the world enhance more than 40 million customer experiences a year using Stream's fully integrated suite of e-mail, chat, voice and self-help solutions. For more information, visit Stream's Web site at http://www.stream.com/ H.I.G. Capital, a leading private equity investment firm, has a controlling interest in over 50 companies with combined revenues in excess of $5 billion. With offices in Miami, Atlanta, Boston, and San Francisco, H.I.G. specializes in the acquisition of leading middle market companies with strong growth potential. For more information contact Rick Rosen at (305) 379-2333 or visit H.I.G. Capital's Web site at http://www.higcapital.com/ Solectron -- http://www.solectron.com/-- (S&P, B+ Corporate Credit Rating Stable Outlook) provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, Calif., and had sales from continuing operations of $9.8 billion in fiscal 2003. SOLUTIA INC: Court Allows JP Morgan to Obtain & Examine Documents ----------------------------------------------------------------- Before the Petition Date, the Solutia, Inc. Debtors and The Chase Manhattan Bank, as Indenture Trustee, entered into an October 1, 1997 Indenture. J.P. Morgan Chase Bank is Chase Manhattan Bank's successor. Pursuant to the Indenture, the Debtors issued these debentures to the public: (a) $150,000,000 in 6.72% notes due October 15, 2037; and (b) $300,000,000 in 7.375% notes due October 15, 2027. Eric A. Schaffer, Esq., at Reed Smith LLP, in Pittsburgh, Pennsylvania, relates that under the Indenture, the Debtors agreed that they would not incur any debt secured by any lien without providing that the Securities would be secured equally and ratably with the debt, unless the aggregate principal amount of all of the debt then outstanding plus other obligations would not exceed 15% of the consolidated net tangible asset. On July 25, 2002, the Debtors and the bank syndicate lenders re- negotiated and amended the existing revolving credit facility. Among other amendments, the Amended Credit Facility: (a) extended the maturity of the Facility until August 2004; (b) reduced the Facility from $800,000,000 to $600,000,000; and (c) provided both a $300,000,000 term loan and a $300,000,000 revolving credit facility. As consideration for the amendments, the Debtors agreed to provide additional collateral to the bank syndicate lenders and, in compliance with the terms of the Equal and Ratable Clause of the Indenture, provided J.P. Morgan with security for the benefit of the noteholders. The Debtors' obligations to the bank syndicate lenders and to J.P. Morgan were secured by: (a) a first-priority lien, shared with J.P. Morgan pursuant to the Equal and Ratable Clause, on: * the Debtors' production facilities located in Martinsville, Virginia and Pensacola, Florida; * 100% of the stock of the subsidiary-guarantor, CPFilms Inc.; and * all intercompany indebtedness of CPFilms Inc.; (b) a second-priority lien on: * 65% of the voting stock (and 100% of all other stock) of Monchem International, Inc.; * 100% of the stock of the remaining subsidiary- guarantors, Monchem, Inc. and Solutia Systems, Inc.; * all intercompany debt of all subsidiary guarantors -- other than CPFilms Inc.; * substantially all of the subsidiary guarantors' accounts receivable and inventory and certain intellectual property; and * 65% of the voting stock (and 100% of all other stock) of Solutia Europe, S.A./N.V. and Solutia U.K. Holdings Limited; and (c) a second-priority lien, shared with J.P. Morgan pursuant to the Equal and Ratable Clause, on the Debtors' production facilities located in: -- Chocolate Bayou, Texas; -- Decatur, Alabama; -- Indian Orchard, Massachusetts; -- Greenwood, South Carolina; and -- Trenton, Michigan. The Debtors' obligations under the Amended Credit Facility were also secured by a first-priority lien on the Second-Priority Facilities Collateral that was limited to $236,000,000, which is the Debtors' calculation of 15% of their Consolidated Net Tangible Assets. Within 90 days of the Petition Date, the Debtors announce that they have received a firm commitment from a lender to refinance their existing revolving credit facility and anticipate finalizing the transaction shortly. In an October 9, 2003 press release, the Debtors reported that the debts due under the Amended Credit Facility were retired fully with proceeds of a Financing Agreement entered into with Ableco Finance, LLC, as collateral trustee. The Debtor's October 9, 2003 press release also reported that the effect of the Ableco Prepetition Loan Agreement, and associated release of certain liens and security interests previously existing in favor of their former bank syndicate lenders, was to "revert" the Securities to unsecured obligations. Pursuant to the Ableco Prepetition Loan Agreement, the Debtors obtained, inter alia, a $150,000,000 revolving credit facility and two term loans totaling $200,000,000. Most of the proceeds from the Ableco Prepetition Loan Agreement were used to pay down the obligations to the bank syndicate lenders under the Amended Credit Facility. The Debtors' obligations to Ableco were secured by liens on: (i) the Principal Properties located in: -- Martinsville, Virginia; -- Indian Orchard, Massachusetts; -- Trenton, Michigan; and -- Chocolate Bayou, Texas; and (ii) all of the non-voting capital stock of Monchem International, Inc. The liens were granted to the extent that they may be effected without requiring that the Lien or Mortgage be granted to, and shared equally and ratably with, J.P. Morgan. The Ableco prepetition financing was orchestrated and designed to strip J.P. Morgan's liens. Pursuant to a Security Agreement dated October 8, 2003, between certain of the Debtors and Ableco, the Debtors granted security interests to Ableco in substantially all of their personal property. The Indenture imposes a limit on the amount of indebtedness that may be secured before implicating the bondholders' protections under the Equal and Ratable Clause. Pursuant to the Ableco prepetition agreements, the maximum aggregate principal amount of obligations that constitutes "debt" secured by the Principal Properties and the capital stock of, or indebtedness of, a Restricted Subsidiary was limited to $1,000 below the amount of the Senior Lien Limit. Just eight days prior to the Ableco prepetition financing, the Debtors had $192,000,000 of liquidity. Immediately after the Ableco prepetition financing, the Debtors' liquidity decreased by $42,000,000 to $150,000,000. The Debtors sought approval of the DIP Loan Facility pursuant to the Financing Agreement with Ableco dated December 16, 2003. Citibank, N.A. ultimately replaced Ableco as the DIP lender. The Court approved the DIP Loan Facility with Citibank subject to the Trustee's express reservation of rights with respect to all claims that the debenture holders and the Trustee may have under the Indenture with respect to the Ableco Prepetition Loan Agreement, the Ableco DIP Loan Agreement, or any related transactions, against the Debtors, or any third parties. Pursuant to Rules 2004, 4001, 7034, 9014, and 9016 of the Federal Rules of Bankruptcy Procedure, J.P. Morgan Chase Bank seeks the Court's authority to further investigate, assess, and prosecute any potential claims and protect any rights and remedies it may have under the Bankruptcy Code, the Indenture, or at law or in equity. * * * Judge Beatty allows J.P. Morgan Chase Bank, as Indenture Trustee, to examine the Debtors and request the production of relevant documents under Bankruptcy Rule 2004. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIFI INC: S&P Places Low-B Ratings on CreditWatch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on textile manufacturer Unifi Inc. on CreditWatch with negative implications, including the company's 'B+' long-term corporate credit and senior unsecured debt ratings. Unifi's total debt outstanding at Dec. 28, 2003, was about $266 million. The CreditWatch placement follows Unifi's recent announcement that it intends to create a wholly owned subsidiary to produce yarns in China, and that it is looking for locations to establish this start-up business. "Standard & Poor's is concerned about the additional capital investment for this venture as well as business risks associated with setting up business in a new country," said Standard & Poor's credit analyst Susan Ding. Another factor contributing to the CreditWatch listing is the company's weakening financial measures. Unit volume and pricing have declined in both the polyester and nylon yarn businesses, and this, along with the company's unabsorbed fixed costs, has put pressure on Unifi's margins. Furthermore, it is uncertain how the upcoming elimination of international quotas on apparel and textile goods will affect Unifi's business profile. Standard & Poor's will meet with management to discuss its business and financial plans in light of these concerns. Unifi is a manufacturer and processor of textured polyester and nylon yarns. Unifi's yarns are found in home furnishings, apparel and industrial fabrics, automotive upholstery, and hosiery. UNITED AIRLINES: Fee Review Committee Issues Report --------------------------------------------------- The UAL Corporation Fee Review Committee, formed to monitor fees requested by professionals, seeks to maintain a reasonable level of professional fees given the complexity and size of the Debtors' Chapter 11 cases and the needs of each Professional's clients. The Fee Review Committee members reviewed the Third Interim Fee Applications, and, where appropriate, asked for further information from the Professionals about certain identified issues. In addition, at the U.S. Trustee's request, Professionals who seek compensation based on an hourly basis submitted to the U.S. Trustee electronic files containing those Professionals' time tickets so that the U.S. Trustee could review and analyze the files to identify certain issues as set forth in the Billing Guidelines. Michael P. O'Neil, Esq., at Sumner, Bernard & Ackerson, in Indianapolis, Indiana, advises the Court that the Fee Review Committee has voted and recommends that the payment of fees and reimbursement of expenses as requested by the Professionals in the Third Interim Fee Applications be allowed in these amounts: Professional Fees Requested Expenses Total ------------ -------------- -------- ----- Deloitte & Touche $844,534 $3,448 $847,982 Huron Consulting Group 2,526,376 75,174 2,601,550 Kirkland & Ellis 6,982,579 462,761 7,445,340 KPMG 2,242,710 57,201 2,299,911 Paul Hastings 25,866 2,024 27,890 Piper Rudnick 47,874 1,581 49,455 Sonnenschein Nath 2,717,167 145,387 2,862,554 Vedder Price 1,725,558 59,408 1,783,966 Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIVERSAL ACCESS: PwC Doubts Ability to Continue as Going Concern ----------------------------------------------------------------- Universal Access Global Holdings Inc. (Nasdaq: UAXS) announced results for the quarter ended December 31, 2003 and for full-year 2003. Fourth Quarter Operating Results For the quarter ended December 31, 2003, revenues decreased 7% to $15.7 million from $16.9 million in the third quarter of 2003. The decline in revenue, which was due primarily to disconnections, was partly offset by new revenues totaling $1.1 million. Gross profit for the fourth quarter was $5.2 million, an increase of 16% from $4.5 million in the third quarter. Gross margin was 33% versus 27% in the preceding quarter. The increase in gross margin was primarily the result of a decline of $500,000 in disconnect penalties from the third quarter to the fourth quarter, an increase of approximately $200,000 in disconnection revenues in the fourth quarter and an increase of more than $100,000 in high margin consulting revenues sold through our Government Services Group. Operations and administration expense (excluding stock compensation) in the fourth quarter was $6.5 million compared to $7.9 million in the third quarter. Operations and administration expense in the third quarter was higher primarily due to the payment of $700,000 as a result of a lease termination in that quarter. In addition, due to a decline in revenue streams related to specific assets during the fourth quarter, Universal Access recorded an impairment of $2.9 million related to a UTX facility and a long-term carrier asset that was previously recorded due to the company receiving favorable pricing terms. The company's net loss in the fourth quarter was ($5.8 million) or ($0.51) per share versus ($7.9 million) or ($0.81) in the third quarter. "During the fourth quarter we continued to focus on controlling our cost structure while simultaneously executing our plans for growing revenue within our new vertical markets," said Randy Lay, CEO of Universal Access. "Unfortunately, our financial results continued to reflect disconnections that offset the $1.1 million in new business we generated during the quarter. We are pleased with our growth in the Government market and in the development of our new line of network infrastructure information services and products. Both of these areas leverage intelligence and information contained within our proprietary Universal Information Exchange(R) (UIX(R)) database, which is central to the value we provide to our customers and market." Full-Year 2003 Results In 2003, the private line market was significantly affected by weak enterprise IT spending as well as carrier retrenchments and price compression. During 2003, Universal Access recorded revenues of $70.3 million, down 31% from $101.2 million for the same period last year. The decline was due primarily to circuit disconnections and lengthening new business cycles. Gross margin for 2003 was $22.1 million, down 15% from 2002, primarily due to the decrease in revenues. Gross margin percentage for 2003 was 31% compared to 26% for the year ago period. The increase in gross margin percentage in 2003 was primarily attributable to the company continuing to pay the underlying costs for circuits in 2002 for which no revenue was recognized because the company's customers went bankrupt, and increased costs in 2002 because the company disconnected circuits prior to the completion of their minimum service term and, as a result, paid early termination charges. Operations and administration expense (excluding stock compensation expense) fell 45% to $29.8 million from $53.7 million during the prior year. The reduction in operating expenses was a result of a reduction in payroll related costs in 2003 along with a reversal of bad debt expense in 2003 as a result of improved collections of outstanding customer balances. Net loss for the full-year 2003 was ($23.0) million, or ($2.94) per share, versus ($94.8) million, or ($19.26) per share, in 2002. Commenting on the year, Lay said, "Overall, 2003 was a challenging year for Universal Access as we continued to witness a high level of disconnections in a relatively unstable marketplace. That being said, we were pleased with our ability to reduce our operating costs during the year and to secure additional funding through the CityNet transaction in July 2003. Furthermore, we continued to generate new business and penetrate new areas of potential growth while also developing new products that can help our customers save money. We will remain focused on executing our strategic plan in the months ahead." Audit Opinion Universal Access' independent auditor, PricewaterhouseCoopers LLP expressed its opinion with respect to the company's financial statements for the year ended December 31, 2003, that will be filed on April 14, 2004 with the Securities and Exchange Commission in the company's Annual Report on Form 10-K. PwC's opinion included an explanatory paragraph expressing doubt about Universal Access' ability to continue as a going concern. This announcement is made in compliance with the new Nasdaq Rule 4350 (b), which requires separate disclosure of receipt of an audit opinion that contains a going concern qualification. Cash Position The company finished the fourth quarter with $18.5 million in cash (including cash and cash equivalents of $16.74 million, and restricted cash of $1.738 million) compared to $19.0 million at the end of the third quarter. In the fourth quarter, the company received a $330,000 letter of credit back from one of its landlords due to a settlement that occurred in the third quarter, in addition to making positive working capital adjustments. "We continued to make progress in our cost cutting initiatives without sacrificing customer service or our ability to generate new business. By doing so, we have further streamlined our operations to create a more efficient company overall. We will continue to identify additional opportunities for cost savings throughout the organization going forward," said Brian Coderre, Universal Access' CFO. About Universal Access Universal Access (Nasdaq: UAXS) is a leading communications network integrator for carriers and service providers expanding into markets and areas beyond their own network presence. Founded in 1997, the company is a single, independent source of analysis, design, planning and provisioning (installing) of end-to-end data and voice networks for more than 120 U.S. and international telecom carriers, cable companies, system integrators, and government customers. Over the past seven years, Universal Access has created the industry's leading network infrastructure database, the Universal Information Exchange (UIX). The UIX holds real-time information on the availability, location, and prices for thousands of data and voice circuit connections, and covers 145 million physical U.S. telecom locations collected from more than 400 sources, including 120 carriers. For further information about Universal Access, go to http://www.universalaccess.net/ UTEX INDUSTRIES: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Utex Industries, Inc. 10810 Old Katy Road, Suite 100 Houston, Texas 77043 Bankruptcy Case No.: 04-34427 Type of Business: The Debtor has been in the fluid sealing industry since 1940. It has expanded its market base to include: oil and gas, petrochemical, pulp and paper, power generation, fossil and nuclear fuel, agriculture, municipalities and a variety of other industries. See http://www.utexind.com/ Chapter 11 Petition Date: March 26, 2004 Court: Southern District of Texas (Houston) Judge: William R. Greendyke Debtor's Counsel: William A. Wood III, Esq. Bracewell & Patterson, LLP 711 Louisiana Street, Suite 2900 Houston, TX 77002-2781 Tel: 714-223-2900 Estimated Assets: $10 Million to $50 Million Estimated Debts: More than $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mary Wayne Weison Unsecured Note $266,567 4606 Pine Street Payable Houston, TX 77401 Judy Ann Looper Unsecured Note $211,172 Payable Estate of Joe W. Heathcott Unsecured Note $96,214 Payable Mary Skelnik Asbestos Unknown Patrick N. Haines Asbestos Unknown Eric Bogdan Asbestos Unknown Peter A. Kraus Asbestos Unknown D. Allen Hossley Asbestos Unknown Richard A. Dodd Asbestos Unknown Lawrence Madeksho Asbestos Unknown Ron C. Eddins Asbestos Unknown Greg Jones Asbestos Unknown D. Allen Hossley Asbestos Unknown Mike Kaeske Asbestos Unknown Brent Coon Asbestos Unknown W.R. GRACE: State Street Bank Sells All Stock Held by ERISA Plan ---------------------------------------------------------------- W. R. Grace & Co. (NYSE:GRA) announced that it was informed by State Street Bank and Trust Company, which acts as investment manager and independent fiduciary for the Grace stock fund in Grace's Savings and Investment Plan (a plan qualified under Section 401(k) of the Internal Revenue Code), that State Street has sold substantially all of the shares of Grace common stock held by the Plan to a single buyer at $3.50 per share. Grace is a leading global supplier of catalyst and silica products, specialty construction chemicals, building materials, and sealants and coatings. With annual sales of approximately $2 billion, Grace has over 6,000 employees and operations in nearly 40 countries. For more information, visit http://www.grace.com/ (W.R. Grace Bankruptcy News, Issue No. 559; Bankruptcy Creditors' Service, Inc., 215/945-7000) WATERLINK: Shareholders to Get Nothing out of Liquidation Proceeds ------------------------------------------------------------------ Waterlink Inc. had been an international provider of integrated water and air purification solutions for both industrial and municipal customers, and was incorporated in Delaware on December 7, 1994. With the sale of substantially all of its operating assets in February 2004, the Company has no source of continuing revenue. The activities of Waterlink are now devoted to the administration of the Chapter 11 Cases. On June 27, 2003, the Debtors filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. Waterlink reports that general and administrative expenses for the three months ended December 31, 2003 and 2002 were $204,000 and $288,000, respectively. Amortization of financing costs of $76,000 for the three months ended December 31, 2002 represented the amortization of a bank amendment fee relating to an amendment that extended the maturity date of the Company's senior credit facility from October 1, 2001 to January 15, 2002. Waterlink incurred approximately $1,056,000 of costs associated with the administration of the Chapter 11 Cases during the three months ended December 31, 2003. Substantially this entire amount was related to professional fees. Liquidity And Capital Resources In connection with the sale of substantially all of the assets of Waterlink for approximately $35.2 million, a portion of the proceeds have been provisionally allocated to unencumbered property sold. This amount has not been subject to a final determination by the Bankruptcy Court and Waterlink cannot definitively determine what amounts will be left for distribution to creditors. Management believes that the Waterlink's equity securities are worthless because it does not expect that any assets will be distributed to stockholders, and that the equity securities will be extinguished in the Chapter 11 Cases. WEAVER INTEREST: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Weaver Interest, Inc. P.O. Box 50070 Austin, Texas 78763 Bankruptcy Case No.: 04-11931 Type of Business: The Debtor designs, plans and constructs a single and multi-family real estate ventures. Chapter 11 Petition Date: April 5, 2004 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Christopher J. Tome, Esq. 8650 Spicewood Springs Road PMB #504 Austin, TX 78759-4322 Tel: 512-249-1904 Fax: 512-249-1920 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Larry Korenek Construction Cost $423,319 c/o Charles S. Baker dispute 600 Congress Avenue Ste 2900 Austin, TX 78701-2978 Jim and Linda Tobin Construction Fees $328,466 1609 Shoal Creek Blvd. Austin, TX 78701 O'Leary Weaver, Inc. Corporate payable $103,339 Ron Dillee Business Loan $75,000 C/o Summit Financial Group Antonio Maldonado Business Loan $55,000 Herman, Howry & Breen Attorney's Fees $34,457 Alamo Crane Trade Debt $30,000 Law Firm of Robert Dorsett Attorney Fees $30,000 Chrysler Financial $29,619 Internal Revenue Service 941 Taxes $29,270 Dennis Eakin Construction Fee $29,353 First American Bank Credit card purchases $24,356 King Architectural Metals Trade Debt $22,750 A-1 Drainage Trade Debt $19,000 Ray Wilkerson $17,500 Home Depot Credit card purchases $15,845 Robert McManus Business loan $15,000 Lowes Credit card purchases $13,832 Mario Gutierez Attorney's Fees $13,122 NAMASCO Trade Debt $12,915 WEIRTON STEEL: Inks Stipulation Resolving Retiree Benefits Dispute ------------------------------------------------------------------ On March 15, 2004, the Bankruptcy Court authorized Weirton Steel Corporation to terminate retiree benefits effective as of April 1, 2004, subject, however, to submission to the Court of a stipulated order on or before April 1, 2004, memorializing the agreement between the Debtors and the Retiree Committee. The Debtors and the Retiree Committee now stipulate and agree that: (a) The Retiree Committee, on behalf of the constituency it represents, will receive a payment for retiree benefits under Section 1114 of the Bankruptcy Code for $1,400,000. The amount will be paid by the Debtors on or before April 8, 2004 to the undersigned counsel for the benefit of the constituency represented by the Retiree Committee. The payment will be made into an escrow account and available only for the use of the Retiree Committee's constituency; (b) The Retiree Payment will inure solely to the benefit of the constituency that the Retiree Committee represents for the primary purpose of defraying, to the extent practicable in a tax free manner, certain costs of providing life insurance coverage for the benefit of the constituency and for the purpose of defraying, to the extent practicable in a tax free manner, health insurance costs of the constituency -- the Substitute Retiree Benefits; (c) The Debtors will use good faith best efforts to assist the Retiree Committee in finalizing and effecting the Substitute Retiree Benefits for the benefit of the constituency represented by the Retiree Committee, through the earliest to occur of: (1) closing under a sale to a Court-approved purchaser; (2) conversion to Chapter 7 or dismissal of the Debtors' bankruptcy case; (3) cessation of going concern operations by the Debtors; (4) confirmation of a plan of reorganization or a plan of liquidation; or (5) successful implementation of the Substitute Retiree Benefits. The Debtors' good faith best efforts will include, if Practicable, the Debtors' temporary sponsorship of a voluntary employee benefit association in accordance with Section 501(c)(9) of the Internal Revenue Code. The sponsorship of the VEBA will in no event continue after the closing under a sale to a Court approved purchaser, the cessation of going concern operations by the Debtors, the conversion or dismissal of the Debtors' Chapter 11 bankruptcy proceeding, or the confirmation of a plan of reorganization that effectuates the sale of the Debtors' assets. The Debtors will have no obligation to retain or fund any insurance coverage that may be required to insure their officers, agents, employees or responsible persons against liability in connection with the Company's sponsorship of a VEBA. (d) The Bankruptcy Court's approval of the Stipulation will in no way limit the rights of the Retiree Committee to seek modification as contemplated by Section 1114(g) of the Bankruptcy Code; (e) The Retiree Committee will remain in place and will be represented by its present Court-approved professionals through the Effective Date. The Debtors will continue to pay the reasonable and necessary fees and expenses of the Retiree Committee's professionals through the Effective Date in an amount not to exceed $100,000; and (f) Through the Effective Date, the Debtors will make available to the professionals of the Retiree Committee information, records and analyses, to the extent available to the Debtors, as the Retiree Committee may reasonably request to carry out the goals of the Stipulated Order through the Effective Date. After the Effective Date, and to the extent requested, the Debtors will use its best efforts to make the information, records and analyses available to the professionals of the Retiree Committee or to the entity administering the Substitute Retiree Benefits. (Weirton Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS COS.: S&P Assigns B+ Rating to $400 Million Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to The Williams Cos. Inc. Credit Linked Certificate Trust's $400 million 6.75% fixed-rate certificates due April 15, 2009. The rating reflects the credit quality of The Williams Cos. ('B+') as the borrower under the credit agreement, and Citibank N.A. ('AA/A-1+') as swap counterparty, seller under the subparticipation agreement, and account bank under the certificate of deposit. The rating addresses the likelihood of the trust making payments on the certificates as required under the amended and restated declaration of trust. WINDERMERE SCHOOL: US Trustee Fixes Creditors Meeting for May 3 --------------------------------------------------------------- The United States Trustee will convene a meeting of Windermere School Partners L.L.L.P.'s creditors at 9:00 a.m., on May 3, 2004 in Suite 600 at SouthTrust Building, 6th Floor, 135 West Central Boulevard, Orlando, Florida 32801. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Windermere, Florida, Windermere School Partners L.L.L.P., filed for chapter 11 protection on March 31, 2004 (Bankr. M.D. Fla. Case No. 04-03610). Frank M. Wolff, Esq., at Wolff Hill McFarlin & Herron PA represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. WORLDCOM INC: Agrees to Satisfy Xerox's Claim for $325,000 ---------------------------------------------------------- Worldcom Inc. and Xerox Capital Services have settled their dispute through mediation with former bankruptcy judge Jay L. Gueck. In an agreed order signed by Judge Gonzalez, the Debtors and Xerox stipulate that: -- All their existing contracts and agreements will terminate effective as of February 29, 2004. Xerox will waive and release any claim for damages resulting from the termination, upon the resolution of all disputes; -- The Debtors will pay Xerox $325,000, in satisfaction of Xerox's $528,062 administrative claim and all amounts owed on invoices dated from July 21, 2002 to October 21, 2003, except for invoices provided with respect to the Production Copiers -- the high-end commercial copiers used in the Debtors' national reprographics center; -- The parties reserve all their rights with respect to the Reserved Invoices, which relate to the services provided with respect to the Production Copiers; -- All claims by the Debtors for previously made credits or payments, except those related to Production Copiers, are extinguished; -- Certain pricing terms will apply to any invoice dated after October 21, 2003. Any service rendered by Xerox after February 29, 2004 will be invoiced according to the "time and materials" pricing published on Xerox's Internet site. The parties agree to negotiate in good faith regarding the invoices for a period of eight weeks after March 1, 2004, to resolve and reconcile the amounts owed by the Debtors for the invoices dated after October 21, 2003. If the parties cannot agree to the amount payable on the invoices, they will mediate the disputes with Mr. Gueck in Dallas, Texas, at an agreed date and time; -- The hearing on Xerox's request is adjourned to June 1, 2004, at 10:00 a.m.; and -- The stipulation expressly excludes, and will not be construed to affect, any contract or agreement with Xerox with respect to the Production Copiers. Headquarterd in Clinton, Mississippi, WorldCom, Inc., -- http://www.worldcom.com-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. (Worldcom Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) XM SATELLITE: S&P Rates Proposed $125M Floating Rate Notes at CCC+ ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'CCC+' rating to XM Satellite Radio Inc.'s proposed Rule 144A $125 million senior secured floating rate notes due 2009. At the same time, Standard & Poor's affirmed its 'CCC+' corporate credit rating on the company and its parent, XM Satellite Radio Holdings Inc., which are analyzed on a consolidated basis. The outlook is stable. Proceeds will primarily be used to refinance existing debt. On a pro forma basis, the Washington, D.C.-based satellite radio broadcaster will have about $744 million in debt, before discounts. "The proposed transaction will not materially alter XM's financial profile," according to Standard & Poor's credit analyst Steve Wilkinson. He added, "Modest benefits include freeing up liquidity by repaying the outstanding balance on its $100 million revolving credit facility from General Motors Corp., prepaying $35 million of debt due to Boeing Co. that was due in the fourth quarter, and lowering the interest rate on this debt." The stable outlook reflects near-term comfort provided by XM's liquid assets, its consistent operating progress, and good support from GM. Ratings could come under pressure if XM does not make meaningful progress in reducing its EBITDA losses during 2004 or fails to maintain sizable liquid assets. Unforeseen costs or operating problems related to its satellites that accelerate costs or degrade service quality, could also lead to a re-evaluation of the ratings. * Grand Jury Indicts Former Washington Redskin for Bankr. Fraud --------------------------------------------------------------- Thomas M. DiBiagio, United States Attorney for the District of Maryland, announced that a federal grand jury has returned an indictment charging Ozzie Clay, 61, of Silver Spring, Maryland, with mail fraud, wire fraud, bankruptcy fraud, money laundering and arson offenses in connection with two fraud schemes and an intentional fire at a business formerly operated by Clay. The 17-count indictment charges Clay, who once played for the Washington Redskins, with 13 felony offenses relating to his operation of Armorguard Manufacturing Company, Inc., which manufactured and installed security doors and related home improvement products and services. Using various corporate entities, in 1999 Clay acquired the stock of Armorguard and Frager Bears, Inc., a Maryland corporation which owned property located in Temple Hills, Maryland where Armorguard's business was located. By 2000, Clay's business entities were declared in default on approximately $1 million in loans extended to Armorguard and Frager Bears by SunTrust Bank and its predecessors; Armorguard had failed to pay its federal withholding taxes; the Maryland Home Improvement Commission revoked Armorguard's state license to enter into home improvement contracts; and Armorguard's insurer cancelled its coverage. The indictment charges that during the first and second weeks of August 2000, Armorguard failed to make salary payments to its employees, and on August 14, 2000, a number of Armorguard employees walked off of their jobs because they were not getting paid. The following day, the indictment alleges, Clay caused a fire to be set at Armorguard, which caused extensive damage to the premises. The Prince George's County Fire Department investigated and determined that the sprinkler system had been deactivated, that ignitable liquid had been utilized in setting the fire, and that there were multiple points of origin for the fire. The indictment alleges that Clay committed arson offenses, schemed to defraud SunTrust Bank, the insurer, and prospective purchasers of Clay's businesses, from whom he had solicited $30,000 in deposits, and laundered the proceeds of the fraud scheme. The indictment charges Clay with two counts of mail fraud, four counts of wire fraud, and three counts of money laundering in connection with this scheme. The indictment contains two counts of bankruptcy fraud relating to Clay's filing of an allegedly fraudulent Chapter 11 bankruptcy action for Frager Bears. The indictment also charges Clay with a separate fraud scheme, between 1999 and 2003, involving a scheme to defraud a mortgage company by using a nominee buyer to purchase a home Clay occupied in Silver Spring. The indictment alleges one count of mail fraud and one count of wire fraud in connection with the acquisition of the mortgage and the purchase of the real estate. It further charges two counts of bankruptcy fraud. The indictment alleges that when Clay and his nominee became delinquent on mortgage payments, Clay fraudulently sought to fend off foreclosure by transferring a portion of the property to a corporation he controlled and by placing the entity into bankruptcy. The indictment seeks forfeiture of $50,000 of money laundering proceeds. The maximum penalties for the charges set forth in the indictment include terms of imprisonment of five years (mail fraud, wire fraud and bankruptcy fraud), 10 years (money laundering) and 20 years (arson), along with a $250,000 fine. The charge of committing arson to commit another felony carries a mandatory 10- year term of imprisonment, to run consecutive to any other sentence, and a $250,000 fine. All counts provide for a period of supervised release following release from prison and mandatory restitution. An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. The criminal charges in this indictment are the result of a joint investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the United States Attorney's Office. The case is being prosecuted by Assistant U.S. Attorneys Stuart A. Berman and James M. Trusty. * Bid4Assets to Auction Tax-Defaulted Properties for Nev. Counties ------------------------------------------------------------------ Bid4Assets, Inc., a leading online auction site for high-end assets from government, non-profits and private industry, announced that it will auction 111 tax-defaulted properties for Washoe, Lander and White Pine Counties in Nevada. The online auctions will be held April 21 - 27, 2004 on the Bid4Assets Web site, http://www.bid4assets.com/nevada. This is the first time Washoe, Lander and White Pine counties have conducted a tax sale online, following in the footsteps of their neighboring county, Elko, the first county in Nevada to move its tax sales online on the Bid4Assets Web site. "I am very optimistic about the potential for enhancing our sales after observing Elko County's success," commented Washoe County Treasurer, Bill Berrum. Elko County is offering 328 tax-defaulted properties in its third online auction on the Bid4Assets Web site starting April 27 - 30, 2004. The details of the three county auctions are as follows: * Washoe County is offering 83 properties located in Reno, Sparks, Sun Valley and other areas. The properties are zoned agriculture, commercial and residential. Minimum bids range from $422 to $77,774. * Lander County is offering 11 properties located in Battle Mountain and Kingston. The properties are zoned single family residence, vacant single family, vacant industrial, vacant commercial and vacant unknown. Minimum bids range from $700 - $2,500. * White Pine County is offering 17 properties located in Ely, East Ely, Ruth, McGill, Cherry Creek, Lund and Preston. The properties are zoned residential, vacant unknown, vacant commercial and vacant residential. Minimum bids range from $1,000 - $6,500. Due diligence materials, including tax information and maps are available for viewing online at Bid4Assets. Interested bidders should go to http://www.bid4assets.com/nevadafor more information. Bidders who are unable to bid online can contact Bid4Assets toll-free at 1-877-427-7387 to request an off-line bid form. "Bid4Assets is helping innovative counties streamline the sale of its tax- defaulted properties. By using the Internet, we are able to reduce administrative costs, reach more buyers and sell a greater number of properties at each sale. The ultimate beneficiary is the tax-payer," said Bid4Assets Vice President of Corporate Marketing Jenny Lynch. Bid4Assets has successfully sold thousands of tax-defaulted properties for several counties in California including San Bernardino, San Diego, Kern, Sierra and Modoc and more recently for counties in Idaho and Michigan. Bid4Assets has conducted sales of seized, surplus and non-strategic assets for more than 40 federal, state and local government agencies nationwide. Clients include the U.S. Marshals Service, the Department of Energy, the states of Georgia and Maryland. About Bid4Assets, Inc. Bid4Assets -- http://www.bid4assets.com/-- is a leading online auction site where serious buyers and sellers meet to transact high-end assets from government, non-profit and private industry. We help our clients by providing customized solutions such as online, webcast and traditional auctions, as well as Storefronts and Private Auction Exchanges. Bid4Assets focuses on high-end assets, selling real estate, personal property, financial instruments and bankruptcy claims to a worldwide network of buyers. The company is located in Silver Spring, Md., phone (301) 650-9193, fax (301) 650-9194. * BOOK REVIEW: Lost Prophets -- An Insider's History of the Modern Economists ---------------------------------------------------- Author: Alfred L. Malabre, Jr. Publisher: Beard Books Softcover: 256 pages List Price: $34.95 Review by Henry Berry Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/1587981807/internetbankrupt Alfred Malabre's personal perspective on the U.S. economy over the past four decades is firmly grounded in his experience and knowledge. Economics Editor of The Wall Street Journal from 1969 to 1993 and author of its weekly "Outlook" column, Malabre was in a singular position to follow the U.S. economy in recent decades, have access to the major academic and political figures responsible for economic affairs, and get behind the crucial economic stories of the day. He brings to this critical overview of the economy both a lively, often provocative, commentary on the picture of the turns of the economy. To this he adds sharp analysis and cogent explanation. In general, Malabre does not put much stock in economists. "In sum, the profession's record in the half century since Keynes and White sat down at Bretton Woods [after World War II] provokes dismay." Following this sour note, he refers to the belief of a noted fellow economist that the Nobel Prize in this field should be discontinued. In doing so, he also points out that the Nobel for economics was not one originally endowed by Alfred Nobel, but was one added at a later date funded by the central bank of Sweden apparently in an effort to give the profession of economists the prestige and notice of medicine, science, literature and other Nobel categories. Malabre's view of economists is widespread, although rarely expressed in economic circles. It derives from the plain fact that modern economists, even hugely influential ones such as John Meynard Keynes, are wrong as many times as they are right. Their economic theories have proved incomplete or shortsighted, if not basically wrong-headed. For example, Malabre thinks of the leading economist Milton Friedman and his "monetarist colleagues" as "super salespeople, successfully merchandising.an economic medicine that promised far more than it could deliver" from about the 1960s through the Reagan years of the 1980s. But the author not only cites how the economy has again and again disproved the theories and exposed the irrelevance of wrong-headedness of the policy recommendations of the most influential economists of the day. Malabre also lays out abundant economic data and describes contemporary marketplace and social activities to show how the economy performs almost independently of the best analyses and ideas of economists. Malabre does not engage in his critiques of noted economists and prevailing economic ideas of recent decades as an end in itself. What emerges in all of his consistent, clear-eyed, unideological analysis and commentary is his own broad, seasoned view of economics-namely, the predominance of the business cycle. He compares this with human nature, which is after all the substance of economics often overlooked by professional and academic economists with their focus on monetary policy, exchange rates, inflation, and such. "The business cycle, like human nature, is here to stay" is the lesson Malabre aims to impart to readers interested in understanding the fundamental, abiding nature of economics. In Lost Prophets, in language that is accessible and jargon-free, this author, who has observed, written about, and explained economics from all angles for several decades, persuasively makes this point. In addition to holding a top position at The Wall Street Journal, Malabre is also the author of the books, Understanding the New Economy and Beyond Our Means, which received the George S. Eccles Prize from the Columbia Business School as the best economics book of 1987. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Rizande B. Delos Santos, Paulo Jose A. Solana, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***