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/raid1/www/Hosts/bankrupt/TCR_Public/050421.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 21, 2005, Vol. 9, No. 93 Headlines 360NETWORKS: Asks Court for Final Decree Closing Subsidiary Cases AES CLESA: Fitch Says Outlook on BB+ Corporate Rating is Stable AFC ENTERPRISES: S&P Puts B+ Rating on $250 Million Secured Loan ASSET SECURITIZATION: Fitch Affirms Low-B Ratings on Three Classes ATHEROGENICS INC: Will Report First Quarter Results Today AVAYA INC: Reports $36 Mil. Income from Second Quarter Operations AVOTUS CORP: Formally Asks Shareholders to Okay Going Private Deal BOBBY DEAL: Case Summary & 20 Largest Unsecured Creditors BORDEN CHEMICAL: Gets Court Nod to Delay Entry of Final Decree BURLINGTON IND: Inks Pact to Resolve RLI Insurance's $1.4M Claim CALPINE CORP: Will Host First Quarter Earnings Call on May 2 CATHOLIC CHURCH: Spokane Gets Court Snub to Split Litigants Board CATHOLIC CHURCH: Spokane Litigants Wants to Retain Traxi LLC CELLNET TECHNOLOGY: S&P Junks $100 Million Senior Secured Facility COMM 2001: Fitch Upgrades Three Low-B 2001-J1 Mortgage Certs. COTT CORPORATION: Will Release First Quarter Financials Today CRYOPAK IND: Closes 2nd Tranche of Private Debenture Placement D & K STORES: Wants to Hire Broege Neumann as Bankruptcy Counsel D & K STORES: Section 341(a) Meeting Slated for May 5 DELAFIELD 246 CORP: Disclosure Statement Hearing Set for May 19 DPL INC.: 10-K Filing Prompts S&P to Lift Rating to BB ELANTIC TELECOM: Confirmed Plan Delivers 62% to Unsecured Class ELLIOTT POPHAM: Case Summary & 20 Largest Unsecured Creditors EURO GLOBAL: Case Summary & 18 Largest Unsecured Creditors EXIDE TECHNOLOGIES: Board Appoints Jerome York as Director EXIDE TECH: Wants Court to Approve Amended BTM Settlement Pact FIBERMARK INC: Court Directs U.S. Trustee to Appoint Examiner FRIEDMAN'S: Secures Plan Filing Extension & CEO Incentive Pay GINGISS GROUP: Court Converts Ch. 11 Cases to Ch. 7 Liquidation H. LIEBLICH: Voluntary Chapter 11 Case Summary HEALTHSOUTH: Joel Gordon Resigns as Director & Chairman Emeritus HOLLINGER INC: Prices Retractable Common Shares at $5.32 Per Share HOLLINGER INT'L: Delaware Court Affirms Canadian Court's Decision HOLLYWOOD CASINOS: Judge Callaway Halts Filing of Competing Plan IAP WORLDWIDE: S&P Puts Low-B Ratings on Three Bank Loans INTERSTATE BAKERIES: Delays Filing of Annual & Quarterly Reports INTERSTATE BAKERIES: Teamsters Want Until May 21 to File Claim IPSCO INC: Hosting First Quarter Webcast on Tuesday JAMIE A. HAWLEY: Voluntary Chapter 11 Case Summary KAISER ALUMINUM: Senior Noteholders Argue Notes Are Indeed Senior KRAMONT REALTY: Centro Watt Merger Prompts Moody's to Hold Ratings LAIDLAW INT'L: Writes Off $127 Million of Deferred Tax Assets LARRY BJURLIN: Voluntary Chapter 11 Case Summary LEWIS UNIVERSITY: Moody's Holds Ba1 Rating on $27 Million Bonds LYONDELL CHEMICAL: Good Performance Prompts S&P to Lift Ratings MAGSTAR TECHNOLOGIES: Equity Deficit Narrows to $4.9M at Dec. 31 MASSMUTUAL HIGH: Fitch Ups Fixed-Rate Secured Sub. Notes to BB METROPOLITAN MORTGAGE: Files Amended Chapter 11 Plan in Washington METROPOLITAN MORTGAGE: Plans to Sell Hawaii Lots to Generate Cash METROPOLITAN MORTGAGE: Taps Fulcrum Financial as Consultants MIRANT CORP: MAGi Bondholders Says Plan is Unconfirmable MIRANT CORP: Wrightsville Sale Hearing Scheduled on May 25 MORGAN STANLEY: Fitch Puts Low-B Ratings on Three Mortgage Certs. NATIONAL ENERGY: Court Confirms ET Debtors' First Amended Plan NORTHERN OFFSHORE LIMITED: Section 304 Petition Summary PILLOWTEX CORP: Committee Probes Executives' Links to Oaktree PROTECTION ONE: Fitch Upgrades 2 Junk Ratings; Puts B+ on New Debt QUAKER FABRIC: BofA Provides 5-Year $70 Million Senior Bank Loan RCN CORP: Bankruptcy Court Lifts Injunction in ERISA Litigation RELIANCE GROUP: Court Approves Minor Correction to RFSC Plan RIVERSTONE INSURANCE: Section 304 Petition Summary SHAW COMMS: Buys Back 4.35 Million Class B Shares for Cancellation SOVEREIGN BANCORP: Fitch Affirms Ratings & Revises Outlook to Pos. STEAKHOUSE PARTNERS: Auditors Raises Going Concern Doubt STELCO INC: Councilman Supports Tricap's Appointment as Advisor STRUCTURED ASSET: Fitch Junks Class 3-B-4 1992-2 Mortgage Issues TEKNI-PLEX: Amending Solicitation to Show Increased Indebtedness TELESYSTEM INT'L: Sets May 19 Meeting to Okay Sale to Vodafone TEXAS BOOT: Case Summary & 20 Largest Unsecured Creditors TFM S.A.: Places $460 Million of 9-3/8% Senior Notes Due 2012 THYSSENKRUPP BUDD: Budcan Buys 91.5% of Minority Common Shares TRANSMETA CORP: Increases First Quarter Cash Guidance to $42 Mil. TRUMP ENTERTAINMENT'S: Moody's Junk $1.25B Senior Unsecured Notes UAL CORP: Court Denies Appointment of Section 1113 Representative UAL CORPORATION: Paying Amendment Fees to Club DIP Lenders UAL CORP: Wants to Enter Into Transition Pact with Air Wisconsin US AIRWAYS: Discusses Merger with America West USGEN NEW ENGLAND: Bankruptcy Court Sets Solicitation Procedures VARTEC TELECOM: Has Until June 1 to File Plan of Reorganization VITAL LIVING: Losses & Deficit Prompt Going Concern Doubt WV FIBER: Case Summary & 20 Largest Unsecured Creditors XL-CARE AGENCY: Case Summary & 4 Largest Unsecured Creditors * Many Bankruptcy Code Amendments Take Effect October 17 * Keen Realty Says New Bankruptcy Law Has a Surprise for Retailers * National Retail Federation Applauds Bankruptcy Code Amendments ********* 360NETWORKS: Asks Court for Final Decree Closing Subsidiary Cases ----------------------------------------------------------------- Section 350(a) of the Bankruptcy Code provides that "[a]fter an estate is fully administered and the court has discharged the trustee, the court shall close the case." Rule 3022 of the Federal Rules of Bankruptcy Procedure further provides that "[a]fter an estate is fully administered in a Chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case." By this motion, Reorganized 360networks, Inc. and its debtor- affiliates ask the United States Bankruptcy Court for the Southern District of New York to enter a final decree closing their subsidiaries' Chapter 11 cases. The Subsidiary Cases are: Case No. Debtor -------- ------ 01-13722 Telecom Central, L.P. 01-13726 360networks Holdings (USA) Inc. 01-13729 360fiber Inc. 01-13734 360fiber (USA 2) Inc. 01-13736 360fiber (USA 3) Inc. 01-13738 360networks (USA) of Virginia Inc. 01-13740 360networks LLC 01-13742 360networks Illinois LLC 01-13744 360networks Iowa LLC 01-13746 360networks Kentucky LLC 01-13724 360networks Louisiana LLC 01-13727 360networks Michigan LLC 01-13733 360networks Tennessee LLC 01-13737 360carrier Management Inc. 01-13743 TRES Management LLC 01-13745 Meet Me Room LLC 01-13747 Carrier Centers Georgia, Inc. 01-13748 Carrier Center LA, Inc. 01-13749 Texas Carrier Centers Inc. 01-13750 360pacific (USA) Inc. 01-13730 360networks Mississippi LLC Alan J. Lipkin, Esq., at Willkie Farr & Gallagher LLP, in New York, relates that only a limited number of tasks remain to be completed in the Reorganized Debtors' Chapter 11 cases, including resolution of some outstanding claims and final distribution to unsecured creditors. In addition, the Official Committee of Unsecured Creditors continues to pursue: (a) certain avoidance actions that the Committee was authorized to prosecute under the Plan; and (b) the objections to the claims of the defendants in those actions. "While the Debtors were not substantively consolidated under the Plan, general unsecured claims against the Debtors were aggregated for purposes of voting and distribution. Therefore, open items relating to the Subsidiary Cases can be handled under the Lead Case," Mr. Lipkin says. The Reorganized Debtors believe that the Court can handle the few matters remaining open through the Lead Case. Thus, Mr. Lipkin notes, there would be no reason to keep the Subsidiary Cases open. Mr. Lipkin believes that the Subsidiary Cases have been "fully administered" within meaning of Section 350 of the Bankruptcy Code and the Plan has been substantially consummated within meaning of Section 1101(2) of the Bankruptcy Code for these additional reasons: (a) the Confirmation Order has been final; (b) all of the property proposed to be transferred under the Plan has been transferred; (c) the Reorganized Debtors have assumed the business or management of the property under the Plan; (d) payments under the Plan have commenced; and (e) essentially all motions, contested matters and adversary proceedings have been finally resolved with regard to the Subsidiary Cases. Mr. Lipkin adds that by closing the Subsidiary Cases, the Reorganized Debtors would no longer incur the quarterly United States Trustee fees for those cases, thereby preserving the assets for their estates and creditors. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company and its 22 debtor-affiliates filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) AES CLESA: Fitch Says Outlook on BB+ Corporate Rating is Stable --------------------------------------------------------------- Fitch Ratings has affirmed the local and foreign currency corporate ratings and Zurich Political Risk Insured Notes rating of AES Clesa y Compania, S. en C. de C.V. at 'BB+' and revised the Rating Outlook to Stable from Negative. The Outlook revision follows the sovereign Rating Outlook revision to Stable from Negative, which had previously constrained the ratings of AES Clesa. AES Clesa's ratings are based on its low business risk profile, efficient operations, stable cash flow generator, and constructive regulatory environment. The company's distribution business is essentially operated as a natural monopoly in El Salvador, reducing competition and other business risks. Energy losses from both technical and nontechnical factors are reasonable for a nonurban electric distributor in Latin America (11.4%). Management's strategy is to continue focusing on improving quality of service standards, lowering costs, and enhancing revenues to further strengthen the company's business position. The ratings of AES Clesa also incorporate the economic, political, and other sovereign risks inherent in investments in El Salvador. The local and foreign currency ratings are constrained by El Salvador's 'BB+' credit rating. The Rating Outlook of El Salvador was revised to Stable from Negative in February 2005 and reflects progress on fiscal consolidation, the recently passed tax reforms, and improved political environment. Moreover, the potential implementation of Central America Free Trade Agreement could promote export and economic growth, which is needed to sustain the fiscal consolidation process and reduce public sector debt further. During 2004, AES consolidated several of the administrative and operational functions of its four Salvadorian distribution companies (AES Clesa, CAESS, EEO, and DEUSEM). The consolidation is expected to improve customer service, operational efficiency, and purchasing power. In addition, several alliances with commercial financial institutions were executed, expanding the payment and information network service while reducing the number of owned commercial offices. Interest coverage ratios remained flat in 2004 compared with 2003 as increased physical sales in 2004 were offset by lower prices. Sales grew to 683 GWh in 2004 from 625 GWh in 2003. Energy spot prices in El Salvador were lower than in the previous year (average price for 2004 was $69/MWh versus $77.2/MWh in 2003). EBITDA margins have been stable with the exception of 2001 when EBITDA was pressured by lower demand reflecting the effects of the 2001 earthquakes and a high overcontracted position. EBITDA in 2004 was $21.2 million resulting in interest coverage ratio of 2.7 times versus EBITDA of $22.2 million and coverage of 2.8x in 2003. Leverage has improved over the past year as the company's debt has been amortizing since December 2003. Debt to EBITDA has improved from 3.3 at December 2002 to 2.7 as of December 2004. The company's outstanding debt is a $58 million dollar notes, which $38 million began semi-annual amortizations in December 2003-2010 and the remaining $20 million will begin amortizing semi-annually in December 2005 through 2012. Going forward, credit protections measures are expected to improve based on continued demand growth, operational efficiency improvement, and a debt level reduction. Operational expenses are expected to decrease given the operational synergies of the consolidation of many of administrative departments at the AES distribution companies in El Salvador. Capital expenditures of approximately $4.5 million are estimated for 2005 and are expected to be funded with internal cash flow. AES Clesa is an electricity distribution company based in Santa Ana, El Salvador. It serves approximately 257,000 customers in the western region of El Salvador, including Santa Ana, the country's second-largest city, as well as other surrounding areas. AES Clesa is 79.66% owned by AES El Salvador, an indirect subsidiary of AES and Energia Global International. AFC ENTERPRISES: S&P Puts B+ Rating on $250 Million Secured Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Atlanta, Georgia-based AFC Enterprises Inc.'s planned $250 million secured bank loan. A recovery rating of '4' was also assigned to the loan, indicating the expectation for marginal recovery of principal (25%-50%) in the event of a payment default. Borrowings, along with the proceeds from the sale of Church's Chicken, will be used for a shareholder transaction and to repay the company's debt. At the same time, Standard & Poor's raised its corporate credit rating on AFC to 'B+' from 'B'. The rating was removed from CreditWatch, where it was previously placed with positive implications. The rating outlook is stable. "The ratings reflect AFC's participation in intensely competitive quick-service sector of the restaurant industry, increased competition from larger hamburger chains, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robert Lichtenstein. "These risks are only partially mitigated by the company's established presence in the industry and its minimal capital requirements as an operator of a predominantly (97%) franchised system." AFC now operates only Popeyes Chicken & Biscuits Restaurants after divesting its Church's Chicken, Cinnabon, and Seattle's Best Coffee brands. Popeyes, with 2004 systemwide sales of about $1.5 billon, is the third-largest domestic quick-service chicken restaurant, with about a 10% market share. However, KFC, a unit of YUM! Brands Inc., is the leading competitor in the sector, with about a 38% market share, followed by Chick-Fil-A, with about an 11% market share. Moreover, the major hamburger chains, including McDonalds and Wendy's, have increased their chicken offerings, especially in boneless, providing additional competition for chicken operators. Popeyes (with a mainly bone-in chicken menu) plans to introduce new boneless chicken offerings to capture part of the growing boneless chicken market. ASSET SECURITIZATION: Fitch Affirms Low-B Ratings on Three Classes ------------------------------------------------------------------ Fitch Ratings upgrades and removes from Rating Watch Positive the classes of Asset Securitization Corporation's commercial mortgage pass-through certificates, series 1996-MD VI: -- $44.8 million class A-4 to 'AA+' from 'AA'; -- $22.4 million class A-5 to 'AA' from 'A-'. These classes are affirmed by Fitch: -- $49.2 million class A-6 'BBB'; -- $71.6 million class A-7 'BB+'; -- $35.8 million class B-1 'B-'; -- $1,000 class B-1H at 'B-'. Classes A-1C, interest-only class CS-3, class A-2 and class A-3 are not rated by Fitch. The upgrades are due to loan repayments and scheduled amortization. As of the April 2005 remittance date, the transaction has paid down 50.4% since issuance. Currently, three of the four remaining loans in the pool have a Fitch debt service coverage ratio that is greater than issuance. The Horizon portfolio continues to exhibit declining performance and remains a loan of concern. Representing 20.9% of the pool, the loan is collateralized by five factory outlet centers located in three states. The adjusted net cash flow for the trailing 12 months ending Sept. 30, 2004, has declined 41.9% from the underwritten Fitch NCF at issuance. Fitch's DSCR is now below 1.00 times at .97x. versus 1.56x at issuance. The weighted average occupancy level of the centers continues to decline as well. As of September 2004, the weighted average occupancy was 85%, down from 89% as of December 2003 and 94% at issuance. The largest loan in the pool, the MHP loan, representing 48.3% of the pool, consists of four full-service hotels located in three states. While the TTM September 2004 numbers show a small decline over year-end 2003, the Fitch stressed DSCR improved slightly to 1.84x as compared to 1.81x for YE 2003. This is primarily attributed to principal amortization which resulted in a lower outstanding loan balance. The Columbia Sussex portfolio represents 23.8% of the pool and is secured by 10 full-service hotels located in seven states. Hotel flags consist of Marriott, Sheraton, Radisson and Holiday Inn. TTM operating results ending Sept. 30, 2004 have shown improvement over the past year, with Fitch's DSCR increasing to 1.69x as compared to 1.31x for YE 2003. The weighted average revenue per available room and occupancy for the portfolio have both improved as well. The last loan in the transaction, representing 7% of the pool balance, is the Palmer Square loan. The loan is secured by a mixed use property consisting of three mixed use office and retail buildings, a full-service hotel and a two parking facilities. The TTM DSCR as of September 2004 increased to 3.12x as compared to YE 2003 DSCR of 2.88x. The weighted average occupancy remains strong at 95% as of September 2004. Fitch will continue to monitor this transaction for any additional changes in operating performance. ATHEROGENICS INC: Will Report First Quarter Results Today --------------------------------------------------------- AtheroGenics Inc. (Nasdaq: AGIX) expects to report its first quarter 2005 results of operations on today, April 21, 2005, before the U.S. financial markets open. Company officials will provide a company update and discuss first quarter results via conference call and webcast today, April 21, 2005, at 9:00 a.m. ET. To access the call, dial: 1-877-407-8031 (domestic) -- or -- 1-201-689-8031 (international) five minutes prior to the start time. A replay of the call will be available from 11:00 a.m. ET on April 21, until 11:59 p.m. ET on April 28, 2005. Rebroadcast numbers are: 1-877-660-6853 (domestic) -- or -- 1-201-612-7415 (international) account number 286 and conference ID number 146369. To access the call by live webcast, please log on to the Investor Relations/Investor Calendar section of the company's corporate website at http://www.atherogenics.com/ An archived version of the webcast will be available at the same location through July 21, 2005. AtheroGenics, Inc. -- http://www.atherogenics.com/-- is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including heart disease (atherosclerosis), rheumatoid arthritis and asthma. The Company has two drug development programs currently in the clinic. AtheroGenics' lead compound, AGI-1067, is being evaluated in the pivotal Phase III clinical trial called ARISE, as an oral therapy for the treatment of atherosclerosis. AGI-1096 is a novel, oral agent in Phase I that is being developed for the prevention of organ transplant rejection in collaboration with Fujisawa. AtheroGenics also has preclinical programs in rheumatoid arthritis and asthma using its novel vascular protectant(R) technology. As of December 31, 2004, AtheroGenics' stockholders' deficit widened to $35,942,382 compared to a $18,839,547 deficit at September 30, 2004. AVAYA INC: Reports $36 Mil. Income from Second Quarter Operations ----------------------------------------------------------------- Avaya Inc., (NYSE: AV) reported $36 million income from continuing operations in the second fiscal quarter of 2005. In the same quarter last year the company reported $103 million income from continuing operations. Included in the $103 million were one-time items that had a $63 million net favorable impact. Avaya's second fiscal quarter 2005 revenues increased 21 percent to $1.222 billion compared to revenue of $1.006 billion in the second fiscal quarter of 2004. The revenue increase reflected the impact of recent acquisitions and revenue growth outside of the United States. The company said U.S. product and services revenues declined year-over-year. Avaya's overall IP product sales rose nearly 30 percent year-over-year. Outside of the United States, IP product sales rose more than 50 percent compared to the year ago period. "Although our performance this quarter was not up to our expectations, we're confident in the opportunity in IP telephony and our competitive advantage," said Don Peterson, chairman and CEO, Avaya. "Three key factors affected our overall performance: our implementation of a new go-to-market model in the United States, which has created some disruption affecting U. S. sales, the impact of the Tenovis integration and early signs of potential softness in the U.S. technology market. We will take actions to manage our business, including a tighter focus on cost control, to meet these challenges, improve our performance in the United States and build on our strength in other markets." Year-To-Date Results Revenues for the first six months of fiscal 2005 were $2.370 billion, an increase of 20 percent compared to revenues of $1.977 billion for the first six months of fiscal 2004. Avaya earned $69 million or 15 cents per diluted share from continuing operations in the first six months of fiscal 2005, compared to income from continuing operations of $133 million or 30 cents per diluted share in the first six months of 2004. Outlook for the Year Avaya said it expects its performance in the second half will improve with sequential increases in the third fiscal quarter in revenues and profitability and with revenue growth and profitability accelerating in the fourth fiscal quarter. However, the company believes it will not meet its previously stated goals for growing revenues, operating income and operating margin in fiscal 2005. Stock Buyback Program Avaya said its board of directors authorized a share repurchase plan. Under the plan, Avaya is authorized to repurchase up to $500 million of its outstanding shares of common stock from time to time over the next two years. These repurchases will be made at management's discretion in the open market or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements and are subject to market conditions, share price, the terms of Avaya's credit facility and other factors. The plan does not obligate Avaya to acquire any particular amount of common stock and the plan may be suspended or discontinued at any time. The stock repurchase plan will be funded using Avaya's cash on hand. Second Fiscal Quarter Highlights Customer Wins The U.S. Customs and Border Protection, a Federal agency responsible for protecting the nation's borders and ports of entry, is using Avaya Communication Manager and Avaya Media Servers to link its headquarters in Washington, D.C. with its branch offices to support business continuity and disaster recovery. Security has been supported through a security assessment conducted by Avaya Global Services, the installation of an Avaya Security Gateway and Avaya's media encryption. AOL Europe, the European business unit of America Online, Inc., the world's leading interactive services company with more than 29 million members globally, has awarded Avaya a contract to provide three contact centers covering 14 locations with IP telephony. These new IP contact centers will enable AOL to improve the speed, cost and reliability of customer services it offers to its more than 6.3 million members in France, Germany, the UK and Ireland. BAR Honda will use IP telephony and modular messaging to improve mobile communication for over 100 employees while competing at 19 races all over the world -- from Monaco to Brazil. At each race, BAR Honda's trackside operations are supported by mobile offices built into large trucks. The mobile offices enable employees to use softphones across broadband telephony to make communication easier and reduce communication costs while on location in other countries by an estimated 30 percent. Tianjin Electric Power Corp. -- TEPCO, a leading power company in China, selected Avaya technology and solutions for building a converged communications system in an effort to raise efficiency and benefit from advanced communications functions and applications. Avaya will provide a total solution comprising an Avaya S8700 media server, G650 gateway, IP phones and IP Softphones. Mercedes Benz-Colombia installed an Avaya IP Telephony solution to improve customer satisfaction and cost efficiencies throughout the organization, connecting the company's main office in Bogota with a showroom in the north of the city, and a bus maintenance facility. The Avaya solution also includes unified communication, which incorporates e-mail, voice mail and fax and allows users to access information from any phone, check e-mail and voice mail, set up conference calls, and manage directories and databases for contacts using voice commands. DIRECTV implemented Avaya MultiVantage(TM) Communications Applications in new contact centers. The implementation is a centralized, IP contact center where calls and applications are distributed to agents in the two new centers. Awards Avaya received "Best in Test" back-to-back awards in competitive testing for both large and mid-sized IP PBXs by Miercom, an independent test lab. In the large category, Avaya was the only vendor to record a perfect call-completion rating under grueling load tests of 50,000 calls an hour, and had the fastest call- control failover time, which indicates the speed of recovery in the event of a system disruption. In Miercom's mid-market tests Avaya IP telephony solutions again earned one of the highest scores ever reported in the competition, which is widely recognized as the most rigorous and prestigious in the industry. Avaya's Session Initiation Protocol telephony solutions received an Editor's Choice Award from Network Computing magazine for providing the best interoperability with third-party phones and a mature, rich set of features. Avaya received the Frost and Sullivan Award for Contact Center End-User Choice in North America based on a survey of senior contact center decision-makers, being voted the overwhelming favorite in every category measured -- including best overall solution, customer service, and training -- and was cited for having the easiest and most open integrated solution. Contact Center Express, the company's first multimedia contact center solution designed specifically for medium-sized businesses received a "2004 Product of the Year" award by Customer Interaction Solutions Magazine, the leading trade publication in the CRM, call center and teleservices space. Products/Alliances Avaya will deliver advanced mobility capabilities powered by its Internet Protocol-based software to the Nokia-developed Series 60 Platform. The company's Communication Manager software-part of the suite of Avaya MultiVantage(TM) Communications Applications- will transform Series 60 mobile devices into fully functional office phones, extending full business telephony capabilities to mobile users. Avaya Remote Managed Services is one of the first commercially available remote services that enables businesses to monitor and manage their converged Internet protocol telephony networks -- in which voice and data share the same network infrastructure -- without disrupting voice service. The new software-based service proactively monitors the relationship between voice and data IP applications as well as their shared physical network infrastructure in a holistic way to enable businesses to quickly detect and in many cases automatically resolve performance issues at their source, before they can affect network operation. Avaya expanded its DeveloperConnection program to include qualified systems integrators, service providers and customers. There currently are more than 400 software and hardware developer companies around the globe who are members. They have created hundreds of innovative solutions tested for Avaya compliance. Avaya is also creating a technology incubator, open without restriction, that enables developers to learn about Avaya technologies, obtain discounted pricing for certification training and products, and have access to the company's application programming interfaces at no cost. Avaya hosted a conference call with a listen-only Q&A session to discuss these results on Tuesday, April 19, 2005. For those unable to participate, there will be a playback available through April 26, 2005. For the replay, if you are calling from within the United States, please dial 800-642-1687. If you are calling from outside the United States, please dial 706-645-9291. The passcode for the replay is 4869246. Avaya, Inc. -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. * * * As reported in the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Basking Ridge, New Jersey-based Avaya, Inc., to 'BB' from 'B+'. "The rating upgrade reflects an improved business profile, characterized by a better market environment for enterprise telephony products, greater geographic and product coverage, and a leaner cost structure, along with a stronger financial profile, including improved profitability, sharp reductions in funded debt and an improved liquidity position," said Standard & Poor's credit analyst Joshua Davis. S&P says the outlook is revised to stable. As reported in the Troubled Company Reporter on Jan. 21, 2005, Moody's Investors Service upgraded the senior implied rating of Avaya, Inc., to Ba3 from B1. Moody's simultaneously withdrew the ratings of the 11-1/8% senior secured notes that have been substantially redeemed. The ratings outlook is positive. Ratings upgraded include: * Senior implied rating to Ba3 from B1 * Issuer rating to B1 from B2 * Shelf registration for senior unsecured debt and preferred stock to (P)B1 and (P)B3 from (P)B2 and (P)Caa1, respectively. Ratings withdrawn include: * Senior secured notes at B1. AVOTUS CORP: Formally Asks Shareholders to Okay Going Private Deal ------------------------------------------------------------------ Avotus Corporation (TSX Venture: AVS) mailed its management proxy circular to holders of common shares of record as of April 14, 2005, in connection with the previously announced proposed going-private transaction. As reported in the Troubled Company Reporter on Apr. 18, 2005, Avotus is seeking shareholder approval for a plan to take the Corporation private in response to a proposal from Jefferson Partners, Avotus' largest shareholder controlling approximately 15% of the outstanding common shares and 72% of the outstanding preferred shares. The Company's board of directors, acting on the recommendation of a committee of independent directors of Avotus formed to consider the proposal, has recommended to common shareholders that the proposal be accepted. The ratio to be used in the proposed common share consolidation is one new Avotus common share for each 1,850,000 existing Avotus common shares. Avotus has entered into support agreements with shareholders holding an aggregate of 11,649,129 common shares (representing 63.69% of the outstanding common shares of Avotus) and 81,620,239 series A preferred shares (representing 99.04% of the outstanding series A preferred shares of Avotus) in connection with the proposed transaction. Shareholders having entered support agreements include: * Roynat Capital, Inc. (1,897,092 common shares and 10,394,754 series A preferred shares of Avotus), * Manulife Financial Corporation, (1,612,904 common shares of Avotus), and * Avotus directors (2,388,281 common shares of Avotus). Debt Financing In connection with the going private transaction, Jefferson Partners has committed to provide Avotus with debt financing to provide sufficient funds to redeem all fractional common shares following the consolidation, up to a maximum of $2.8 million. Jefferson Partners has also committed to provide Avotus with additional debt financing to support the funding of its 2005 business plan, up to a maximum of $4 million. Affiliates of Jefferson Partners, holding 3,805,399 common shares and 59,835,266 series A preferred shares and the board of directors of Avotus have indicated that they will vote in favour of the consolidation. Shareholders holding an aggregate of 4,718,104 common shares and 20,601,964 series A preferred shares, including Roynat Capital Inc. (which holds 1,981,684 common shares and 10,394,754 preferred shares) and certain former shareholders of Formity Systems, Inc. (which hold 1,082,755 common shares and 10,207,210 preferred shares), have entered into support agreements with Avotus and an affiliate of Jefferson Partners whereby they have agreed, among other things, to vote in favour of the consolidation. Of the shareholders who have indicated their support for the consolidation, 4,242,284 common shares are held by shareholders who will be included among the Minority Shareholders. It is anticipated that additional shareholders will enter into support agreements with Avotus and a subsidiary of Jefferson Partners following the date hereof setting out their agreement to vote in favour of the consolidation as well as the terms of their ongoing involvement as shareholders of Avotus following the consolidation. As continuing shareholders, the shareholders, including Jefferson Partners and Roynat Capital Inc., will not be included among the Minority Shareholders. May 16 Annual Meeting Avotus plans to solicit common shareholder approval for the going- private transaction coincident with its annual meeting of shareholders on May 16, 2005. The annual and special meeting will be held at Avotus' head office at 110 Matheson Boulevard West, Suite 300, Mississauga, Ontario. Avotus Corporation -- http://www.avotus.com/-- provides solutions that dramatically reduce the cost and complexity of enterprise communications. Intelligent Communications Management is Avotus' unique model for a single, actionable environment that enables any company to bring together decision-critical information about communications expense management, procurement and systems usage for wired, wireless and VoIP systems. Deployed as an onsite or hosted application, or as a completely outsourced value-added managed solution, Avotus enables dramatic savings while improving productivity and efficiency. Avotus is empowering Fortune 500 companies as well as thousands of other organizations worldwide to gain insight into and control over their communications environment. Its solutions are strongly supported and endorsed by industry-leading partners such as Avaya, Cisco, and Nortel. At September 30, 2004, Avotus Corporation's balance sheet deficit narrowed to $536,144 compared to a $16,881,103 deficit at December 31, 2003. BOBBY DEAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Bobby Ray Deal dba Nashville Warehouse Tire 2530 Franklin Road Nashville, Tennessee 37204 Bankruptcy Case No.: 05-04765 Type of Business: The Debtor is a tire wholesaler and retailer. Chapter 11 Petition Date: April 19, 2005 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street Ste 410 Nashville, Tennessee 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $1,420,000 Total Debts: $1,367,427 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Harris, Iathia $75,000 c/o Denty Cheatham 43 Music Square West Nashville, TN 37203 Goodyear Tire and $52,000 Rubber Co. [Address not provided] Wells Fargo $50,058 Mastercard P.O. Box 348750 Sacramento, CA 95834 Rabin Tire Company $37,819 c/o Steven P. Westbrook P.O. Box 150349 Nashville, TN 37215 MBNA America $26,755 P.O. Box 15137 Wilmington DE 19886 American Express (U) $19,869 P.O. Box 360002 FT Lauderdale, FL 33336 VISA $18,464 Bankcard Services P.O. Box 15026 Wilmington, DE 19850 Citibank M/C (U) $17,953 P.O. BOX 8111 South Hackensack, NJ 076068111 Wooten, George $15,000 c/o Denty Cheatham, Esq. 43 Music Square West Nashville, TN 37203 IRS (P) $14,358 801 Broadway MDP146 Nashville, TN 37203 American Express Bank $14,316 P.O. Box 30799 Salt Lake City, UT 84130 MBNA America $14,088 P.O. Box 15137 Wilmington DE 19886 Citibank M/C (U) $5,000 P.O. Box 6575 The Lakes, NV 88901 American Express $4,802 P.O. Box 650448 Dallas, TX 75265 Citibank M/C (U) $4,598 P.O. Box 6575 The Lakes, NV 88901 Home Depot (U) $4,518 P.O. Box 105980 Department 51 Atlanta, GA 303535980 Citadel Broadcasting $3,200 506 2nd Avenue South Nashville, TN 37210 American Express (U) $3,189 P.O. BOX 360002 FT Lauderdale, FL 33336 US Bankcorp $2,790 P.O. Box 790448 Saint Louis, MO 63179 Fisher Anderson LC $644 13475 Danielson Street, Suite 120 Poway, CA 92064 BORDEN CHEMICAL: Gets Court Nod to Delay Entry of Final Decree -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Borden Chemicals and Plastics Operating Limited Partnership and BCP Management, Inc.'s request to delay entry of a final decree in their chapter 11 cases until Aug. 15, 2005. The Court likewise extended the time by which the Debtors must file their final reports through July 15, 2005. Entry of a Final Decree and the filing of a Final Report occur when administration of the Estate is complete. Since these cases are liquidating Chapter 11 cases, the Debtors believe they need to keep their cases open in order to marshal its assets for distribution under the Plan. Since the effective date, the Debtors say they have devoted substantial time to resolve issues between the estates: -- prosecuting hundreds of preference actions; -- reviewing, reconciling, and objecting to claims filed against the Debtors' bankruptcy estates; and -- liquidating Borden's remaining real estate assets and emissions credits. Although the Debtors do not anticipate their cases will be very active, a few preference actions and claims objections need to be resolved. Those actions should increase the size of the estates, and reduce the number of claims against the estates. The Debtors add that there are still other assets remaining to be sold. Headquartered in Geismar, Louisiana, Borden Chemicals and Plastics Operating Limited Partnership filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware on Apr. 1, 2001 (Bankr. D. Del. Case Nos. 01-01268). On March 22, 2002, the Company's affiliate, BCP Management, Inc., filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware (Bankr. D. Del. Case No. 02-10875). The Court confirmed the Debtors' Third Amended Joint Plan of Liquidation on Feb. 5, 2003, allowing the Debtors to emerge from bankruptcy protection on March 13, 2003. BURLINGTON IND: Inks Pact to Resolve RLI Insurance's $1.4M Claim ---------------------------------------------------------------- The BII Distribution Trust, the North Carolina Self-Insurance Guaranty Association and RLI Insurance Company have agreed to resolve certain of their disputes with respect to Claim No. 1039. On July 11, 2002, RLI Insurance filed Claim No. 1039 for $1,408,000, asserting a $250,000 secured claim and a $1,158,000 unsecured claim. Claim No. 1039 was filed a result of a contingent liability that RLI Insurance alleged it would have pursuant to nine separate surety bonds outstanding as of the Petition Date. The Bonds RLI Insurance issued six surety bonds to U.S. Customs totaling $554,000 and two performance bonds totaling $54,000, which were included as part of the Claim. On April 4, 2001, RLI Insurance also issued Bond No. CMS0100298 for $800,000 to the North Carolina Department of Insurance related to the Debtors' contingent liability for their workers' compensation claims incurred during their seven-year period of self-insurance from October 1, 1990, through September 30, 1997, at certain textile and manufacturing plants located in North Carolina. The Workers' Compensation Bond comprises the Debtors' statutory deposit pursuant to N.C. Gen. Stat. 97-185. The Debtors were authorized to continue complying with prepetition obligations arising from the workers' compensation programs and to continue complying with obligations to RLI Insurance. The Letter of Credit Claim No. 1039 asserts that an irrevocable standby Letter of Credit, identified by JP Morgan Chase Bank as Letter of Credit #72434, as amended, secures any and all of the liability asserted in the Claim. The Letter of Credit was originally issued in March 2002 for $250,000 and subsequently increased to $850,000 in November 2002. The Letter of Credit will expire on March 11, 2006. The NCSIGA was created to pay certain covered claims for insolvent self-insured employers. Pursuant to the North Carolina state laws, the Debtors' statutory deposit has been transferred to the NCSIGA, which is entitled to expend the proceeds of the Workers' Compensation Bond for the payment of Covered Claims and related expenses. As of March 10, 2005, the NCSIGA has not assumed payment of the Debtors' Covered Claims and has not made any demand on the Workers' Compensation Bond. In addition, there are no known outstanding liabilities with respect to the Performance Bonds or the Custom Bonds. The Debtors have objected to the allowance of Claim No. 1039, asserting that: -- their records reflect that the Claim is not a valid obligation of the Debtors' estates and no amount is owing or due; -- the Claim is a contingent claim which should be reduced to zero; -- a certain portion of any liability under the Claim has been assumed by Insuratex, Ltd.; and -- the Claim is entitled to secured status to the extent and in the form of the Letter of Credit issued for RLI Insurance's benefit. In response, RLI Insurance reasserted its right to a secured claim for $850,000 and an unsecured claim for $595,000. RLI Insurance argued that it has not been released from any liability under any of the nine separate surety bonds it issued on the Debtors' behalf and still outstanding as of the Petition Date. To resolve their disputes, the parties agree that: (a) Any claim that RLI Insurance may have against the Trust, the Debtors and their estates, whether asserted in Claim No. 1039 or otherwise, is secured by the Letter of Credit; (b) RLI Insurance's right to payment on account of the liabilities asserted in the Claim or otherwise, will be limited to its rights to any amounts available under the Letter of Credit; (c) In complete and absolute satisfaction of the Claim, RLI Insurance will draw on the entire proceeds of the Letter of Credit and pay to the NCSIGA $800,000, as complete satisfaction and in exchange for an immediate, complete and full release of the Workers' Compensation Bond; (d) Upon making the Bond Settlement Payment, the Workers' Compensation Bond will be deemed exonerated and the Claim will be deemed withdrawn with prejudice, without the need for any further action by the Court or RLI Insurance, and the Trust will be released from all liabilities with respect to the Claim, the Bond and any other liabilities included in the Claim. Upon receipt of the Bond Payment, the NCSIGA will return the Workers' Compensation Bond to RLI Insurance. The remaining $50,000 available from the draw of the Letter of Credit will be divided evenly between RLI Insurance and the Trust; (e) The Trust will pay the previously agreed-upon claims settlements regarding the Gladys Meadows and Robert Strong workers' compensation claims. In exchange for the claim settlements, the NCSIGA will release the Trust from any further liability for the Debtors' North Carolina workers' compensation claims incurred during the period of self- insurance, and claims-related expenses. The NCSIGA will reimburse the Trust for its payment of the settlements regarding the Gladys Meadows and Robert Strong workers' compensation claims; (f) The NCSIGA will assume complete and total responsibility for the Debtors' North Carolina workers' compensation program during the Self-Insurance Period. The NCSIGA reserves the right to seek reimbursement pursuant to existing insurance contracts and reinsurance contracts with Insuratex covering the Debtors' workers' compensation claims incurred during the periods any policies were in force. The Trust will assign to the NCSIGA any and all necessary rights and power of attorney including but not limited to any excess workers' compensation policies and any other insurance or reinsurance, if applicable, with respect to the Self Insurance Period; (g) The Trust will maintain any existing medical and personnel records related to the Workers' Compensation Claims until December 31, 2005. After that date, the records will become the complete and total responsibility of the NCSIGA unless the custody and control of the records will be extended by subsequent agreement between the Trust and the NCSIGA; and (h) Any funds received by the NCSIGA pursuant to the Stipulation will be used for the payment of the covered claims and claims-related expenses incurred by the NCSIGA arising out of the Debtors' insolvency and the Workers' Compensation Claims. However, after a period of not less than five years, if all known Covered Claims against the Debtors have been discharged, any remaining funds will be available to the NCSIGA for use in accordance with its statutory purpose. Headquartered in Greensboro, North Carolina, Burlington Industries, Inc. -- http://www.burlington-ind.com/-- was one of the world's largest and most diversified manufacturers of soft goods for apparel and interior furnishings. The Company filed for chapter 11 protection in November 15, 2001 (Bankr. Del. Case No. 01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, and David G. Heiman, Esq., at Jones Day, represent the Debtors. WL Ross & Co. LLC purchased Burlington Industries and then sold the Lees Carpets business to Mohawk Industries, Inc. Combining Burlington with Cone Mills, WL Ross created International Textile Group. Burlington's chapter 11 Plan confirmed on October 30, 2003, was declared effective on Nov. 10, 2003. (Burlington Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) CALPINE CORP: Will Host First Quarter Earnings Call on May 2 ------------------------------------------------------------ Calpine Corporation (NYSE: CPN) plans to announce its first quarter 2005 financial results on Thursday, May 5, 2005, before the market opens. The company has scheduled a conference call to discuss the results at 8:30 a.m. Pacific Daylight Time on that day. Interested parties may access the teleconference via a web cast on Calpine's Investor Relations page -- http://www.calpine.com/-- or by dialing 1-888-603-6685 (1-706-634-1265 for international callers) at least five minutes before the start of the call. The call will be open to the public and media in a listen-only mode by telephone and web broadcast. A replay and transcript of the conference call will be available for 30 days on Calpine's Investor Relations page at http://www.calpine.com/ About the Company A major power company, Calpine Corporation supplies customers and communities with electricity from clean, efficient, natural gas- fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information, visit http://www.calpine.com/ * * * As reported in the Troubled Company Reporter on Oct. 13, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to Calpine Corp.'s (B/Negative/--) $736 million unsecured convertible notes due 2014. The rating on the notes is the same as Calpine's existing unsecured debt and two notches lower than the corporate credit rating. S&P said the outlook is negative. CATHOLIC CHURCH: Spokane Gets Court Snub to Split Litigants Board ----------------------------------------------------------------- As previously reported, the Official Tort Claimants' Committee argued that it is wrong for the Diocese of Spokane to seek the disbandment of the Tort Litigants Committee and force its members onto the Tort Claimants' Committee even though both Committees and, apparently, the U.S. Trustee agree that the interests of the constituents of both Committees are adverse. George E. Frasier, Esq., at Riddell Williams P.S., in Seattle, Washington, notes that although the Diocese attempts to cast its request to disband as directed to adequate representation, Spokane's arguments are directed almost exclusively to its concerns about the cost of two committees. Mr. Frasier explains that the Tort Claimants' Committee also is concerned about the costs of the case and is working diligently to control them. However, two committees are necessary because of significant adversity between the interests of their constituents. Mr. Frasier asserts that the U.S. Bankruptcy Court for the Eastern District of Washington lacks authority to review the decision of the U.S. Trustee to remove Tort Litigants from the Tort Claimants' Committee and appoint an Official Tort Litigants' Committee. Mr. Frasier notes that decisions of other courts indicating that bankruptcy courts have the authority to review the decisions of the U.S. Trustee are distinguishable or incorrectly decided. "Two committees representing the same class of creditors, regardless of any disagreement among the members, does not justify threatening the [Diocese of Spokane's] ability to reorganize," Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller LLP, in Spokane, Washington, asserts. If the U.S. Bankruptcy Court for the Eastern District of Washington has the authority to determine whether an additional committee is necessary to assure adequate protection, Mr. Paukert says, then the Court also has the authority to disband a committee if doing so will not detract from adequate representation of creditors. Besides, Mr. Paukert continues, the Diocese does not seek to remove any particular creditor from participating as a representative of a committee. It only seeks to remove duplicative attorney's fees and costs associated with the appointment of two committees. Mr. Paukert points out that the Court has an inherent obligation to monitor the Diocese's estate and serve the public interest by ensuring that bankruptcy costs do not threaten the integrity of the bankruptcy process. Under the fee rates proposed by both of the Committees' counsel, fees will approach $1,000 per hour. Mr. Paukert maintains that fees of this magnitude will threaten the Diocese's ability to reorganize. * * * For the reasons stated in open court, Judge Williams denies the Diocese of Spokane's request to disband the Tort Litigants Committee. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Litigants Wants to Retain Traxi LLC ------------------------------------------------------------ The Committee of Tort Litigants in the Diocese of Spokane's Chapter 11 case seeks the U.S. Bankruptcy Court for the Eastern District of Washington's authority to retain Traxi LLC as its financial advisor effective as of March 30, 2005. Richard Frizzell, Chairman of the Litigants Committee, notes that the Diocese's case raises complex financial issues that must be resolved as part of its reorganization. This includes, Mr. Frizzell says, a determination of: -- the scope and value of the property of the estate, -- the financial relationship of the Diocese and parishes, schools and affiliated Catholic institutions, -- the procedure for filing, allowing and quantifying claims, including personal injury claims against the estate, and -- the financial ability of the Diocese to confirm a feasible reorganization plan. The members of the Litigants Committee also require assistance in analyzing the finances of the Diocese and its related entities, Mr. Frizzell relates. According to Mr. Frizzell, Traxi is a special situation advisory firm in the areas of corporate finance, restructuring, transaction and support, and asset recovery. Traxi's accomplished professionals have diverse backgrounds in restructuring, investment and commercial banking, public accounting, financial operations and law, in a broad range of industries, nonprofit corporations, financial services and real estate. With involvement in over 300 cases, Traxi professionals have extensive experience advising creditors' committees, debtors, creditors, trustees and others, in a wide variety of bankruptcy cases. As the Litigants Committee's financial advisor, Traxi will: (a) review all financial information prepared by the Diocese, affiliated entities or their consultants as requested by the Litigants Committee, including a review of the Diocese's and the Affiliated Entities' financial statements as of the Petition Date, showing in detail all assets and liabilities; (b) monitor the Diocese's and the Affiliated Entities' activities regarding cash expenditures, collections, asset sales and projected cash requirements; (c) attend meetings including the Litigants Committee, the Diocese, the Affiliated Entities, creditors, their attorneys and consultants, federal and state authorities, if required; (d) review the Diocese's and the Affiliated Entities' periodic operating and cash flow statements; (e) review the Diocese's and the Affiliated Entities' books and records, related party transactions, potential preferences, fraudulent conveyances, and other potential prepetition investigations; (f) conduct any investigation that may be undertaken with respect to the prepetition acts, conduct, property, liabilities and financial condition of the Diocese, the Affiliated Entities, their management, creditors including the operation of its non-religious business and, as appropriate, avoidance actions; (g) review any business plans prepared by the Diocese, the Affiliated Entities or their consultants; (h) review and analyze proposed transactions for which the Diocese or the Affiliated Entities seek Court approval; (i) assist the Litigants Committee in developing, evaluating, structuring, and negotiating the terms and conditions of all potential plans of reorganization; (j) provide expert testimony on the results of its findings; (k) analyze the potential financing or divestitures of the Diocese's assets; (l) assist the Litigants Committee in developing alternative plans if necessary; (m) provide valuation services; and (n) provide the Litigants Committee with other and further financial advisory services with respect to the Diocese and the Affiliated Entities, including valuation, general restructuring and advice with respect to financial, business and economic issues as may arise during the course of the restructuring as requested by the Litigants Committee. The Diocese, in turn, will pay Traxi professionals a fixed rate of $250 per hour. To the extent Traxi provides investment banking services related to securing capital, Traxi reserves the right to seek additional compensation upon application to the Court. Perry M. Mandarino, a Senior Managing Director at Traxi, assures Judge Williams that Traxi is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code as modified by Section 1107. The firm also does not hold any interest adverse to the Debtor's estate, Mr. Mandarino adds. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELLNET TECHNOLOGY: S&P Junks $100 Million Senior Secured Facility ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Atlanta, Georgia-based Cellnet Technology Inc. The outlook is stable. At the same time, Standard & Poor's assigned a 'B-' senior secured bank loan rating and '3' recovery rating to the company's $250 million seven-year first-lien senior secured bank facility and $30 million revolving credit facility. The bank loan and recovery ratings indicate our expectation of a meaningful (50%-80%) recovery of principal in the event of a payment default. A 'CCC' rating and '5' recovery rating were assigned to the company's $100 million eight-year second-lien senior secured bank facility, indicating the expectation of a negligible (0%-25%) recovery of principal in the event of a payment default. "We expect Cellnet to limit capital expenditures and dividend outflow. For the rating, we expect the company to maintain a minimum cash balance of $25 million on balance sheet. Acquisitions are not factored in the rating," said Standard & Poor's credit analyst Paul Kurias. "Upside potential is constrained by high leverage and low cash flow generation. Downside potential is limited by the strength of contractual terms and Cellnet's operating performance, which are likely to result in steady revenue and earnings growth from existing contracts." Cellnet provides AMR services to water, gas and electric utilities through a proprietary fixed network, which the company designs and manages. It is a leader in the niche fixed-AMR market. The company has long-term contracts with its 18 utility customers in 11 U.S. metropolitan areas. The company reads meters of about 10 million end consumers of water, gas, and electricity who are customers of the 18 utilities Cellnet services. In addition, the company sells AMR network components to its customers. In July 2004, GTCR Golder Rauner LLC acquired privately held Cellnet. The borrowers are Cellnet Technology Inc. a domestic company, and its unrated domestic subsidiaries. Guarantors include all domestic subsidiaries of the borrowers. The $30 million revolving credit facility and $250 million term loan are secured by first-priority perfected liens in all of Cellnet's domestic tangible and intangible assets and some assets of the subsidiary borrowers. COMM 2001: Fitch Upgrades Three Low-B 2001-J1 Mortgage Certs. -------------------------------------------------------------- Fitch Ratings-New York-April 19, 2005 Fitch Ratings upgrades the following classes of COMM 2001-J1 commercial mortgage pass-through certificates: -- $46.6 million class B to 'AAA' from 'AA+'; -- $46.6 million class C to 'AA+' from 'A+'; -- $15.5 million class D to 'AA' from 'A'; -- $31.1 million class E to 'A+' from 'A-'; -- $23.3 million class F to 'BBB+' from 'BBB-'; -- $13.6 million class G to 'BBB' from 'BB'; -- $13.6 million class H to 'BBB-' from 'B'; -- $11.7 million class J to 'BB+' from 'B-'. These classes are affirmed: -- $1.1 million class A-1 at 'AAA'; -- $4.2 million class A-1F at 'AAA'; -- $236.7 million class A-2 at 'AAA'; -- $177 million class A-2F at 'AAA'; -- Interest-only classes X, X-GB, X-USB, X-GT at 'AAA'; -- $4.8 million class P at 'BBB-'; -- $6.7 million class M at 'AA'. The upgrades reflect the repayment of the Thayer Hotel Portfolio loan and resulting improved credit enhancements to the classes. As of the April 18, 2005 distribution date, the collateral balance has been reduced by 20.7% to $630.7 million from $795.3 million at issuance. The certificates are collateralized by 10 fixed-rate loans secured by 12 commercial properties. Nine of the 10 loans, or approximately 91.6%, have investment grade credit assessments. Seven of the loans (82.9%) are collateralized by office properties. As part of its review, Fitch analyzed the performance of each loan and the underlying collateral. Fitch compared each loan's debt service coverage ratio at year-end December 2004 to the DSCR at year-end 2003 and the DSCR at issuance. DSCRs are based on Fitch adjusted net cash flow and a stressed debt service based on the current loan balance and a Fitch hypothetical mortgage constant. Two office loans are performing significantly above issuance levels: * Graybar Building (19.0%) and * Golden Triangle Portfolio (11.8%). Graybar Building is secured by a 1.3 million-square foot building located adjacent to the Grand Central Terminal in New York City. Occupancy has improved to 95% as of Dec. 31, 2004, compared to 91% as of Dec. 31, 2003, and 96% at issuance. DSCR for year-end 2004 has increased to 1.79 times, from 1.34x at issuance. Golden Triangle Portfolio is secured by four office buildings in the central business district of Washington, D.C. Although occupancy has decreased to 90% as of December 2004, from 97.9% at issuance, the Washington, D.C. market is strong and the average rents in the building are below market. As of year-end 2004, NCF increased 27.9% since issuance, and the DSCR increased to 1.90x from 1.43x at issuance. The Plaza at La Jolla (12.1%) is secured by five Class A office buildings containing 633,000 square feet, and is located in the San Diego MSA (metropolitan statistical area). After adjusting for market vacancy and above-market rents, the DSCR for year-end 2004 was 1.43x compared to 1.31x at issuance. The property has significant lease rollover risk in 2005 (25.8%) and 2006 (18.7%). In addition, the average rents in place are approximately 15% above market. The property is 85.5% leased as of Feb. 28, 2005, compared to 98.4% at issuance. The sponsor, Equity Office Properties, is an experienced owner and manager of office properties. Fitch will closely monitor the leasing status. The U.S. Bancorp loan (16.7%) is secured by an office tower and plaza containing 1.1 million square feet located in Portland, Oregon. Occupancy has decreased to 91.3% as of Dec. 31, 2004, from 94.6% at issuance. Decreased occupancy and increased expenses have resulted in NCF decreasing approximately 7.8% since issuance. The DSCR for U.S. Bancorp decreased to 1.38x as of year-end 2004 from 1.43 at issuance. The 28 and 40 West 23rd Street loan (9.0%) is secured by two connected office buildings in New York City. The property has benefited from the recent addition of two tenants: * Home Depot (21.7% of net rentable area) and * Zoo York (45.6%). Home Depot opened in August 2003 and has a lease expiry in 2024. Zoo York, a skate apparel and supply company, has a lease that commenced in June 2004 and expires in 2014. The property is currently 100% occupied as of December 2004. Based on leases in place and an adjustment for market vacancy, the year-end 2004 DSCR is 1.53x compared to 1.52x at issuance. The 165 Market Halsey loan (8.4%) is secured by a 16-story telecom carrier hotel located in downtown Newark, New Jersey. The property is configured specifically for telecommunications and technology based tenants. The occupancy is 87% as of year-end 2004 compared to 83% at year-end 2003 and 90% at issuance. The Fitch stressed DSCR is stable at 1.37x as of year-end December 2004 compared to 1.35x at issuance. Two tenants in occupancy, MCI (9.6% of net rentable area) and Qwest Communications (23.6%), have financial operating concerns. However, both tenants are current on their rent. The leases expire in 2013 and 2014, respectively. Pennsylvania Plaza (5.9%) is a 12-story office building that is part of a mixed-use development in downtown Washington, D.C. Occupancy has increased slightly to 98.6% as of Jan. 19, 2005, from 95% at issuance. As of year-end 2004, the DSCR for Pennsylvania Plaza has increased slightly to 1.41x from 1.36x at issuance. Boise Towne Square (11.9%) is secured by a 1.2 million-square foot regional mall in Boise, Idaho. Occupancy is stable at 95.2% as of Sept. 30, 2004 compared to 95% at issuance. In-line occupancy for the same period was 85.3%. Year-end 2004 NCF has increased 8.6% since issuance due to slightly higher occupancy and higher rental rates. The mall is managed by General Growth Properties. The Hotel Adolphus (5.1%) consists of a full-service hotel in downtown Dallas containing 428 guest rooms. The Hotel Adolphus is leased to an entity unaffiliated with the borrower under a net lease. All of the Adolphus monetary obligations under the lease are guaranteed by Metropolitan Life Insurance Company, which has a financial strength rating of 'AA' from Fitch. COTT CORPORATION: Will Release First Quarter Financials Today ------------------------------------------------------------- Cott Corporation (NYSE: COT; TSX: BCB) will release its first quarter financial results before the markets open today, April 21, 2005. John K. Sheppard, president and chief executive officer, and Raymond P. Silcock, executive vice president and chief financial officer, will host a conference call with analysts at 1 p.m. ET to discuss the results. In addition, the Company announced that its Annual General Meeting of Shareholders will also be held today, April 21, 2005 at 8:30 a.m. ET in Toronto. Details of these events are: Cott Corporation Annual General Meeting April 21, 2005 - 8:30 a.m. ET Glenn Gould Studio, Canadian Broadcasting Centre 250 Front St. West, Toronto, Ontario RSVP - Cott Investor Relations - (800) 793-5662 Cott Corporation First Quarter Earnings Conference Call April 21, 2005 - 1 p.m. ET North America: (800) 796-7558 International: (416) 640-1907 This is a live, listen-only dial-in telephone line. To access a live audio-video stream of the Annual General Meeting and a live audio stream of the Q1 conference call on April 21, 2005, visit Cott's website at http://www.cott.com/at least 15 minutes early to register, download, and install any necessary audio/video software. For those who are unable to access the live broadcasts, a replay will be available at Cott's website following these events until May 21, 2005. Cott Corporation is the world's largest retailer brand soft drink supplier, with the leading take home carbonated soft drink market shares in this segment in its core markets of the United States, Canada and the United Kingdom. * * * As reported in the Troubled Company Reporter on Sept. 2, 2004, Standard & Poor's Rating Services revised its outlook for Cott Corp. to positive from stable. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit and 'B+' subordinated debt ratings on Toronto, Ontario-based Cott Corp. Total debt outstanding was about US$362 million at July 3, 2004. As reported in the Troubled Company Reporter on Aug. 23, 2004, Moody's Investors Service upgraded the ratings for Cott Corporation recognizing the company's strong and consistent financial and operating performance throughout the recent past and affirming Moody's expectation of continued success over the ratings horizon. CRYOPAK IND: Closes 2nd Tranche of Private Debenture Placement -------------------------------------------------------------- Cryopak Industries Inc. (TSX VENTURE:CYK) completed the closing of the second tranche of its previously announced private placement and has raised gross proceeds of C$360,000. Under the private placement, Cryopak has issued Secured Subordinate Convertible Debentures with a total principal amount of C$1,644,000. The Debentures and common shares issuable upon their conversion are subject to a four-month hold period, which will expire on August 7, 2005. A C$3,900 finder's fee was paid in connection with the private placement. With facilities in Vancouver and Montreal, Cryopak -- http://www.cryopak.com/-- provides temperature-controlling products and solutions. The Company's clients include some of North America's leading retailers and consumer goods companies, as well as global pharmaceutical companies. In its retail business, the Company develops, manufactures and sells reusable ice substitutes, flexible hot and cold compresses, reusable gel ice and instant hot and cold packs. These products are marketed under such popular brand names as Ice-Pak(TM), Flexible Ice(TM) Blanket, Simply Cozy(R), and Flex Pak(TM). In its pharmaceutical business, the Company engineers solutions and supply products that help our customers safely transport their temperature sensitive pharmaceuticals. Over the past few years the Company has evolved into a recognized player in this growing segment as we assist customers in optimizing their cold chain processes. The Company's shares are listed on the TSX Venture Exchange under the symbol CII. Going Concern Doubt During the six months ended September 30, 2004, Cryopak Industries incurred a loss of $516,819. During the three-year period ended March 31, 2004, the Company incurred losses topping $5 million, and during the year ended March 31, 2004, the Company reported negative cash flows from operations of $297,883. As at September 30, 2004, the deficit is $7,009,847 and the working capital deficiency is $4,541,266. The Company continues to be in default on the repayment of the principal and accrued interest of the convertible loan, which was due on June 7, 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As of Dec. 31, 2004, Cryopak's balance sheet shows a 1:2 liquidity ratio, with $3.4 million in current assets available to pay $6.9 million in current liabilities. Cryopak's shareholder equity erodes as losses continue. At Dec. 31, 2004, shareholder equity stood at $2,907,944, down from $3,767,596 at March 31, 2004. D & K STORES: Wants to Hire Broege Neumann as Bankruptcy Counsel ---------------------------------------------------------------- D & K Stores, Inc., asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Broege, Neumann, Fischer & Shaver, LLC, as its general bankruptcy counsel. Broege Neumann is expected to: a) provide legal advice to the Debtor in its duties, responsibilities and obligations as a debtor-in-possession in the continued operation and management of its business and property; b) assist in negotiating with the Debtor's creditors and other parties in interest, and appear Debtor before the Bankruptcy Court to protect the Debtor's interests; and c) perform all other legal services that are necessary in the Debtor's chapter 11 cases. Timothy P. Neumann, Esq., a Member at Broege Neumann, is the lead attorney for the Debtor. Mr. Neumann charges $375 per hour for his services. Mr. Neumann reports Broege Neumann's professionals bill: Professionals Designation Hourly Rate ------------- ----------- ----------- Peter J. Broege Counsel $325 David E. Shaver Counsel $290 Barbara J. Tassillo Paralegal $85 Patricia Maxson Paralegal $85 Broege Neumann assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed for chapter 11 protection on April 8, 2005 (Bankr. D. N.J. Case No. 05-21445). When the Debtor filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. D & K STORES: Section 341(a) Meeting Slated for May 5 ----------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of D & K Stores, Inc.'s creditors at 12:00 p.m., on May 5, 2005, at the Clarkson S. Fisher Federal Courthouse, Room 129, 402 East State St., Trenton, New Jersey 08608-1507. 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 Eatontown, New Jersey, D & K Stores, Inc., filed for chapter 11 protection on April 8, 2005 (Bankr. D. N.J. Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts from $10 million to $50 million. DELAFIELD 246 CORP: Disclosure Statement Hearing Set for May 19 --------------------------------------------------------------- The Honorable Stan Bernstein of the U.S. Bankruptcy Court for the Eastern District of New York will convene a hearing at 10:30 a.m., on May 19, 2005, to consider the adequacy of the Disclosure Statement explaining the Plan of Reorganization filed by Delafield 246 Corporation. The Debtor filed its Disclosure Statement and Plan on March 29, 2005. The Debtor contemplates that the Plan will be financed by three options: a) the pre-confirmation sale of 1 or more of the 24 lots owned by the Debtor pursuant to Section 363(f) of the Bankruptcy Code; b) the post-confirmation sale of 1 or more of the 24 lots owned by the Debtor; and c) alternatively monies borrowed by the Debtor secured by its real property or by a combination of the three options. The Plan contemplates the appointment of a Disbursing Agent who will distribute all Cash or other property under the Plan. The Disbursing Agent has the authority to liquidate any non-cash assets he receives from the Debtor's estate and allocate the proceeds for distribution to creditors. The Plan groups claims and interests into six classes. Unimpaired Claims consist of: a) Allowed Priority Claims will be paid in full, in Cash, on the Effective Date, or on the Initial Distribution Date; b) New York City Secured Tax Claims will be paid in full on the Initial Distribution Date, and those Claims will retain their statutory lien until they are fully paid; c) Homeowners Association Allowed Secured Claims are disputed by the Debtor, and in its sole discretion, will either: (i) pay 100% of the amount of those Claims; or (ii) term out the indebtedness under the Claims and pay a sum equal to 10% of the amount of those Claims on the Initial Distribution Date, execute a Homeowners Association Note made payable in an aggregate amount equal to the amount of those Claims, less a sum equal to 10%, with the balance becoming the principal indebtedness under the Note; and d) Allowed Interests will retain their equity and current stock ownership in the Debtor, but they will not receive any distribution under the Plan. Impaired claims consist of: a) General Unsecured Claims will be paid, without interest, 50% of the amount of those Claims on the Initial Distribution Date, and the remaining 50% on the first anniversary of the Initial Distribution Date; and b) Insider Claims are subordinated to all debt payments under the Plan, and will be paid in full upon completion of payments to all non-insider creditors or the creation of sufficient escrows to pay all claims that are subject to contest and have not been resolved as of the Plan's confirmation. Full text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050418023400 -- and -- http://www.researcharchives.com/bin/download?id=050418022135 Headquartered in Plainview, New York, Delafield 246 Corporation is a real estate investor and developer. The Company filed for chapter 11 protection on November 29, 2004 (Bankr. E.D.N.Y. Case No. 04-87515). Daniel A Zimmerman, Esq., at the Law Offices of Steven Cohn PC, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $13,000,000 in assets and $9,001,200 in debts. DPL INC.: 10-K Filing Prompts S&P to Lift Rating to BB ------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit ratings on DPL Inc. and its regulated subsidiary, Dayton Power & Light Company to 'BB' from 'BB-'. Standard & Poor's also affirmed its 'BBB-' rating on DP&L's first mortgage bonds. All the ratings were removed from CreditWatch with positive implications where they were placed on Feb. 14, 2005 following the company's announcement of its proposed asset sale of its investment portfolio. The outlook is positive. Dayton, Ohio-based DPL had about $2.1 billion of debt outstanding as of Dec. 31, 2004. The rating action follows the company's filing with the SEC of its audited financial statements 2004 Form 10-K with relatively minimal and immaterial restatements, and the recent completion of the sale of a significant portion of DPL's investment portfolio for net cash proceeds of about $520 million. "The sale of a sizable portion of its higher-risk investment portfolio, combined with the fact the company plans to use such cash proceeds toward debt reduction, bolsters DPL's overall creditworthiness by enhancing its business profile and should further improve its financial profile," said Standard & Poor's credit analyst Brian Janiak. "Nevertheless, the rating on DPL reflects the company's high debt leverage, weak cash flow coverage measures, adequate liquidity, and average consolidated business risk profile," said Mr. Janiak. Standard & Poor's also said that future upward momentum for DPL's credit ratings will be strongly correlated with the actual timing of the sale of its remaining interest of its investment portfolio assets and management's ultimate use of cash proceeds toward the balancing of debt reduction and reinvestment needs in its core operations. ELANTIC TELECOM: Confirmed Plan Delivers 62% to Unsecured Class --------------------------------------------------------------- Elantic Telecom, Inc.'s plan of reorganization to exit the Chapter 11 bankruptcy process was approved by the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. In conjunction with its reorganization plan, an auction for the equity of ETI was held on Monday, April 11, 2005. There were two bidders at the auction, the existing Equity investors and Telcove, Inc. The winning bid from Equity provides for a 62% pay-out to the General Unsecured Creditors as part of ETI's plan of reorganization. Brett R. Lindsey, President of ETI, said "We are very pleased to complete this process and are excited to return 100% of our focus back to our customers and the future growth of Elantic." The bankruptcy process provided ETI the ability to substantially reduce certain short-term and long-term liabilities, reign in network costs and move quickly towards positive cash flow. ETI will continue to operate with the support of Cavalier Telephone, Inc., under the management agreement executed last year when ETI completed the merger with Dominion Telecom, Inc. Brad A. Evans, Chairman and CEO of Cavalier Telephone, said "We look forward to our continued relationship with Elantic from both a customer and vendor perspective." Headquartered in Richmond, Virginia, Elantic Telecom, Inc. -- http://www.elantictelecom.com/-- provides wholesale fiber bandwidth and carrier services to long-distance, international wireless carriers and competitive local exchange carriers across its fiber optic network. The Company filed for chapter 11 protection on July 19, 2004 (Bankr. E.D. Va. Case No. 04-36897). Lynn L. Tavenner, Esq., and Paula S. Beran, Esq., at Tavenner & Beran, PLC, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors is represented by Danielle M. Varnell, Esq., and David Neier, Esq., at Winston & Strawn. When the Company filed for protection from its creditors, it listed $19,844,000 in total assets and $24,372,000 in total debts. ELLIOTT POPHAM: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Elliott Popham Pontiac, Oldsmobile, Buick, & GMC Trucks, Inc. 1225 East College Street Pulaski, Tennessee 38478 Bankruptcy Case No.: 05-04048 Type of Business: The Debtor is a car retailer. The Debtor also repairs and services cars and trucks. See: http://www.epopham.com/ Chapter 11 Petition Date: April 4, 2005 Court: Middle District of Tennessee (Columbia) Judge: Marian F. Harrison Debtor's Counsel: Barbara Dale Holmes, Esq. David Phillip Canas, Esq. Harwell Howard Hyne Gabbert & Manner, P.C. 315 Deaderick Street, Suite 1800 Nashville, Tennessee 37238 Tel: (615) 256-0500 Fax: (615) 251-1058 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pulaski Publishing $35,443 308 West College Street Pulaski, TN 38478 Democrat Union $22,629 P.O. Box 685 Lawrenceburg, TN 38464 Regions Interstate Billing Service $7,104 Department 1265 P.O. Box 2153 Birmingham, AL 35287-1265 Johnson Industries/United $5,503 P.O. Box 403137 Atlanta, GA 30384-3137 Middle TN Council $5,000 P.O. Box 150409 Nashville, TN 37215-0409 Lawrence County Advocate Inc. $3,523 P.O. Box 308 121 North Military Avenue Lawrenceburg, TN 38464 Your Community Shopper $3,510 P.O. Box 249 Ardmore, TN 38449 Fidelity & Deposit Co. of Maryland $3,326 Flood Insurance Processing Center P.O. Box 75107 Baltimore, MD 21275-5107 Benicorp Insurance Company $3,248 7702 Woodland Drive, Suite 200 Indianapolis, IN 46278 Sharp Motor Company $3,172 P.O. Box 245 Pulaski, TN 38478 Columbia Neon Company Inc. $3,055 102 Nashville Highway Columbia, TN 38402 WWLX $2,858 P.O. Box 156 Lawrenceburg, TN 38464 Advance Auto Parts $2,524 918 West College Street Pulaski, TN 38478 Aramark Uniform Services Inc. $2,487 P.O. Box 429 Shelbyville, TN 37162-0429 Pulaski Electric Water & Gas $2,409 P.O. Box 368 Pulaski, TN 38478 Lewisburg Tribune $2,392 P.O. Box 2667 121 1st Avenue South Lewisburg, TN 37091 Enterprise Rent A Car Company of Tennessee $2,236 284 Mallory Station Road Franklin, TN 37067-8244 Ken Smith Auto Parts Inc. $1,815 P.O. Box 440271 Nashville, TN 37244-0271 Hayes Chrysler $1,775 P.O. Box 745 Lawrenceville, GA 30046 ADP Automotive Retail Group $1,570 P.O. Box 88921 Chicago, IL 60695-1921 EURO GLOBAL: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Euro Global Investments LLC 4669 West Irlo Bronson Highway Kissimmee, Florida 34746 Bankruptcy Case No.: 05-04336 Chapter 11 Petition Date: April 20, 2005 Court: Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: David R. McFarlin, Esq. Wolff, Hill, McFarlin & Herron, P.A. 1851 West Colonial Drive Orlando, Florida 32804 Tel: (407) 648-0058 Fax: (407) 648-0681 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Community Bank of Florida $2,759,839 28801 Southwest 157th Avenue Homestead, FL 33033 Patsy Hoffner Personal property $71,726 Tax Collector taxes P.O. Box 422105 Kissimmee, FL 34742 Choice Hotels International Franchise agreement $17,678 10750 Columbia Pike Silver Spring, MD 20901 Rapco Supply $4,922 Florida Star Linen & $2,796 Hospitality Supply Choice Hotel International Travel agent $1,506 commission Teco Peoples Gas $598 Massey Services $542 Ecolab $462 S&D Coffee Inc. $264 Florida Laundry Systems $140 Preven Tech $134 Nextel Communications $123 Executive Coffee Services $111 VarTech Solutions $58 EaSy Choice Reward Program $35 Culligan of Florida Inc. $25 Central Florida Pools $15 by Design EXIDE TECHNOLOGIES: Board Appoints Jerome York as Director ---------------------------------------------------------- The Board of Directors of Exide Technologies (NASDAQ: XIDE) elected Jerome B. York, 66, as Director. His appointment follows an earlier announcement by the Company, in its Form 8-K filed with the U.S. Securities and Exchange Commission on March 3, 2005, that the Board had voted to expand its membership by two Directors to a total of nine. Mr. York will serve on the Company's Nominating and Corporate Governance Committee. "Jerry York brings an obvious wealth of experience, and we are pleased to welcome him to the Board," said Exide Chairman of the Board John P. Reilly. Mr. York is Chief Executive Officer of Harwinton Capital Corporation, a private investment company he founded in 2000. From 2000 until 2003, he was Chairman, President and Chief Executive Officer of MicroWarehouse Inc. Earlier, Mr. York served as Vice Chairman of Tracinda Corporation and as Senior Vice President and Chief Financial Officer of IBM Corporation. Prior to joining IBM, he was Executive Vice President-Finance and Chief Financial Officer of Chrysler Corporation. Mr. York currently serves on the Board of Directors of Apple Computer Inc. and Tyco International Ltd. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on March 22, 2005, Standard & Poor's Ratings Services assigned its 'B' rating to Exide Technologies' $290 million senior secured notes due 2013 and its 'B-' rating to the company's $60 million floating rate convertible senior subordinated notes due 2013, both to be issued under Rule 144A with registration rights. At the same time the 'B+' corporate credit rating on the company was affirmed, and the 'B' rating on its proposed $350 million senior notes was withdrawn. Lawrenceville, N.J.-based Exide, a global manufacturer of transportation and industrial batteries, has debt, including the present value of operating leases, of about $750 million. The rating outlook is negative. Exide replaced its proposed senior notes offering with the senior secured notes and convertible notes. Proceeds from the new debt issues will be used to reduce bank debt and for general corporate purposes. Security for the senior secured notes is provided by a junior lien on the assets that secured Exide's senior credit facility, including the bulk of its domestic assets and 65% of the stock of its foreign subsidiaries. "We expect earnings and cash flow improvements, provided the costs of lead remain fairly stable or decline and restructuring actions are effective," said Standard & Poor's credit analyst Martin King, "which should allow debt leverage to decline and cash flow coverage to improve over the next few years. EXIDE TECH: Wants Court to Approve Amended BTM Settlement Pact -------------------------------------------------------------- On March 15, 1996, Exide Technologies Inc. and its debtor- affiliates and BTM Capital Corporation, formerly known as BOT Financial Corporation, entered into: (a) a Master Loan and Security Agreement; (b) Loan Schedule No. One to the Loan Agreement, including Schedule A, which lists the equipment that was financed pursuant to the Loan Schedule; and (c) a Continuing Corporate Guaranty. The Debtors executed in BTM's favor a $7,137,047 Promissory Note for amounts advanced by BTM pursuant to the Agreement, the Loan Schedule and the Supplemental Security Agreement relating to the Schedule. The Debtors asserted, and BTM acknowledges, that the Loan Documents reflect secured financing transactions and not "true leases." On July 8, 2002, BTM asked the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay or compel the Debtors to grant adequate protection relating to the Equipment. Two months later, BTM re-noticed the Motion for the October 23, 2002 omnibus hearing. The Debtors objected to BTM's request and contended that BTM was not entitled to relief from the automatic stay nor to adequate protection payments. Subsequently, the parties entered into a stipulation wherein the Debtors agreed to make adequate protection payments to BTM under Section 361 and 363(e) of the Bankruptcy Code for $25,000 per month commencing as of October 1, 2002, and continuing until the Termination Date. On March 3, 2003, BTM filed a proof of claim in the Debtors' Chapter 11 cases asserting a secured claim for $1,657,202. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, relates that the Debtors and BTM reached an agreement regarding the Proof of Claim and the Original Stipulation. By this motion, the Debtors seek the Court's authority to enter into a new Stipulation and Agreed Order. The parties agree that: (a) The Loan Documents reflect secured financing transactions and are not "true leases"; (b) The Original Stipulation is deemed terminated as of October 31, 2004, and the Amendment will take effect retroactively as of November 1, 2004, each on the occurrence of the Amendment Effective Date; and (c) BTM is granted an allowed, secured claim in Class P2 Other Secured Claims, as of November 1, 2004, for $1,075,590. Under the Amendment, Mr. O'Neill says that Exide has been able to reduce its monthly payments to BTM by as much as 75% and extend the maturity of the loan over three years beyond the original expiration date. "As a result, the Reorganized Debtors can preserve liquidity for business operations." Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on March 22, 2005, Standard & Poor's Ratings Services assigned its 'B' rating to Exide Technologies' $290 million senior secured notes due 2013 and its 'B-' rating to the company's $60 million floating rate convertible senior subordinated notes due 2013, both to be issued under Rule 144A with registration rights. At the same time the 'B+' corporate credit rating on the company was affirmed, and the 'B' rating on its proposed $350 million senior notes was withdrawn. Lawrenceville, N.J.-based Exide, a global manufacturer of transportation and industrial batteries, has debt, including the present value of operating leases, of about $750 million. S&P said the rating outlook is negative. Exide replaced its proposed senior notes offering with the senior secured notes and convertible notes. Proceeds from the new debt issues will be used to reduce bank debt and for general corporate purposes. Security for the senior secured notes is provided by a junior lien on the assets that secured Exide's senior credit facility, including the bulk of its domestic assets and 65% of the stock of its foreign subsidiaries. "We expect earnings and cash flow improvements, provided the costs of lead remain fairly stable or decline and restructuring actions are effective," said Standard & Poor's credit analyst Martin King, "which should allow debt leverage to decline and cash flow coverage to improve over the next few years. FIBERMARK INC: Court Directs U.S. Trustee to Appoint Examiner ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Vermont directed the U.S. Trustee to appoint an independent examiner in FiberMark, Inc.'s (OTC Bulletin Board: FMKIQ) chapter 11 case to investigate, over the next 45 days, intercreditor disputes and associated issues. The Court set a $200,000 spending cap on the examination process, ordered the Examiner to submit written findings by June 8, and set a status conference for June 15 to review the case and the Examiner's report and recommendations. Plan Filing Procedure In another order, the Court established procedures, designed to maintain an orderly plan process, which limit the filing of competing plans of reorganization. The Court held that: (a) during the Examiner's investigation period, only the company is authorized to file a plan, provided that the company has the unanimous support of the Creditors' Committee; and (b) after the Examiner's investigation period, the company is authorized to file a plan with or without such support, as may other parties. FiberMark said that if it is unable to obtain the unanimous support of the Creditors' Committee within the Examiner's investigation period, the company intends to proceed with the filing of a plan. Any proposed disclosure statements and plans of reorganization must be filed no later than August 8. 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., and 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 their creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FRIEDMAN'S: Secures Plan Filing Extension & CEO Incentive Pay ------------------------------------------------------------- As previously reported, Friedman's Inc. and its debtor-affiliates sought an extension of their exclusive period to file and solicit acceptances of a plan of reorganization. Friedman's wants to focus its attention on running its business right now. Friedman's also needs to see the results of the 2005 holiday season before it can formulate a viable plan. Friedman's also asked the Bankruptcy Court to approve a compensation scheme of the Company's top brass. The Debtors propose a $750,000 bonus plus stock options for CEO Sam Cusano if Friedman's exceeds this year's earning expectations by 170%. The Honorable Lamar W. Davis of the U.S. Bankruptcy Court for the Southern District of Georgia approved the requests. The Court gave Friedman's until February 28, 2006 to file a chapter 11 plan. During this period, only Friedman's can file a chapter 11 plan with the Bankruptcy Court without interference from creditors. Judge Davis also approved the new executive compensation program for Mr. Cusano and scores of other executives. Trade magazine Jewelers Circular Keystone reports that Judge Davis found if he didn't approve the compensation program, it's highly likely Friedman's 83 upper-level managers wouldn't stay long enough to see the company through chapter 11. Judge Davis understands Friedman's has more than enough on its plate right now. The company is under investigation in more than 20 states. Friedman's also looking for additional financing, closing more than 140 stores and restoring vendors' confidence after payment defaults last year, JCK relates. Headquartered in Savannah, Georgia, Friedman's Inc. -- http://www.friedmans.com/-- is the parent company of a group of companies that operate fine jewelry stores located in strip centers and regional malls in the southeastern United States. The Company and its affiliates filed for chapter 11 protection on Jan. 14, 2005 (Bankr. S.D. Ga. Case No. 05-40129). John W. Butler, Jr., Esq., George N. Panagakis, Esq., Timothy P. Olson, Esq., and Alexa N. Paliwal, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $395,897,000 in total assets and $215,751,000 in total debts. GINGISS GROUP: Court Converts Ch. 11 Cases to Ch. 7 Liquidation --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware converted The Gingiss Group and its debtor-affiliates' chapter 11 cases to a chapter 7 liquidation proceeding at the Debtors' behest. The Debtors believe that it is most efficient to continue their cases under a chapter 7 liquidation proceeding. The Debtors said they have insufficient funds to provide meaningful distribution to creditors even after they liquidate most of their assets. The Debtors sold substantially all of their assets to After Hours Formalwear, Inc., a May Department Stores Company affiliate, for $32 million. The Debtors also sold their Hawaiian businesses as well as other smaller assets. The Court also approved settlements, which translated to an additional $950,000 proceeds to the Debtors' estates. Chapter 7 Trustee Appointed The Court appoints Alfred T. Giuliano as the Debtors' Chapter 7 Trustee. Mr. Giuliano will administer the distribution of the Debtors' assets to their creditors. Headquartered in Addison, Illinois, The Gingiss Group, Inc., a national men's formal wear rental and retail company, filed for chapter 11 protection on November 3, 2003 (Bankr. Del. Case No. 03-13364). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represent the Debtors in their restructuring efforts. The Debtors listed debts of over $50 million in their petition. H. LIEBLICH: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: H. Lieblich & Company, Inc. 149 East Kingsbridge Road Mount Vernon, New York 10550 Bankruptcy Case No.: 05-22732 Type of Business: The Debtor is a mechanical contractor. Chapter 11 Petition Date: April 20, 2005 Court: Southern District of New York (White Plains) Debtor's Counsel: Lawrence F. Morrison, Esq. 220 East 72nd Street New York, New York 10021 Tel: (212) 861-1224 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. HEALTHSOUTH: Joel Gordon Resigns as Director & Chairman Emeritus ---------------------------------------------------------------- Joel C. Gordon has voluntarily resigned from HealthSouth Corporation's (OTC Pink Sheets: HLSH) Board of Directors and as Chairman Emeritus effective May 10, 2005. "Joel Gordon has gone above and beyond the call of duty in his years of service and dedication to HealthSouth," said Robert P. May, Chairman of HealthSouth's Board of Directors. "After the very serious events of 2003, Joel courageously stepped in as Interim Chairman of the Board and was invaluable in turning the company around. His leadership, industry knowledge and determination brought us through some very difficult times and into what we believe will be a very successful future." "On behalf of the current management team and HealthSouth's more than 41,000 employees, we would like to thank Joel for his dedication, service, and leadership," HealthSouth President and CEO Jay Grinney added. "Personally, I am grateful for the insight and personal wisdom Joel provided to me as I assumed my role at HealthSouth. We will certainly miss him and wish him well in all his future endeavors." "I am pleased to have served as Interim Chairman and Board member as the company met a number of challenges in the last several years and as the Board selected Jay Grinney as the Company's CEO," said Gordon. "As a Board member, I recognize that I have reached the retirement age mandated by the company's Corporate Governance Guidelines. I have reflected on the accomplishments of the current management team over the last year and personally have complete confidence in their ability to lead HealthSouth through the challenges ahead to better financial and operational health." About the Company HealthSouth is one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. HealthSouth can be found on the Web at http://www.healthsouth.com/ * * * Notice of Late Filing HealthSouth filed a Form 12b-25 with the Securities and Exchange Commission saying that it will not be filing its 2004 Form 10-K on time due to the company's ongoing accounting reconstruction and restatement efforts. The company is currently targeting the filing of its 2004 Form 10-K in the fourth quarter of 2005. The company says it plans to file a comprehensive Form 10-K for the years ended Dec. 31, 2000, through Dec. 31, 2003, by the middle of the second quarter 2005. This comprehensive Form 10-K will contain restated financial statements for periods which previously had been reported and initial financial statements for the other periods covered by the report. "Our external auditor is now auditing these documents and is taking steps to ensure a thorough review," said HealthSouth CFO John Workman. "We have been working extensively with external resources to ensure that our accounting records are reconstructed thoroughly and our financial statements and other disclosures are prepared properly. This process has consumed more than 500 man- years of external labor resources and required millions of lines of adjusting journal entries. It is our intention to not rush a process of this importance to reach an earlier, self-imposed deadline." HOLLINGER INC: Prices Retractable Common Shares at $5.32 Per Share ------------------------------------------------------------------ Hollinger Inc. (TSX:HLG.C)(TSX:HLG.PR.B) discloses the retraction price of the retractable common shares of the Corporation as of April 20, 2005 will be $5.32 per share. Hollinger's principal asset is its 17% equity and 67% voting interest in Hollinger International Inc., which is a newspaper publisher, the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments. Hollinger also owns a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. HOLLINGER INT'L: Delaware Court Affirms Canadian Court's Decision ----------------------------------------------------------------- Hollinger International Inc. (NYSE: HLR) welcomed the Delaware Supreme Court's decision to reject Conrad Black and Hollinger Inc.'s appeal of the Delaware Court of Chancery's decision of February 26, 2004. The Delaware Supreme Court affirmed the findings and rulings of Vice Chancellor Strine in that case, including that: * Appellant Black breached fiduciary duty and violated material provisions of the Restructuring Proposal Agreement; * ByLaw Amendments introduced by Appellants were legally ineffective because they had been adopted for an inequitable purpose; and * the Company's Rights Plan was legally valid. In April 19's ruling, the Supreme Court also rejected Appellant Hollinger Inc.'s claim that "(i) it was not a party to or bound by the Restructuring Proposal Agreement; (ii) it had no fiduciary or contractual duty to support the Strategic Process; and (iii) and even if Inc. had such a duty, there is no evidence to support a conclusion that Inc. breached any contractual of fiduciary obligation." Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. * * * As reported in the Troubled Company Reporter on August 6, 2004, Moody's Investors Service changed the rating outlook on Hollinger International Publishing, Inc., to positive from stable and has withdrawn other ratings. Ratings withdrawn: * $45 million Senior Secured Revolving Credit Facility, due 2008 -- Ba2 * $210 million Term Loan "B", due 2009 -- Ba2 * $300 million of 9% Senior Unsecured Notes, due 2010 -- B2 Ratings confirmed: * Senior Implied rating -- Ba3 * Issuer rating -- B2 Moody's says the outlook is changed to positive. HOLLYWOOD CASINOS: Judge Callaway Halts Filing of Competing Plan ---------------------------------------------------------------- The Honorable Stephen V. Callaway of the U.S. Bankruptcy Court for the Western District of Louisiana doesn't want Hollywood Casino Shreveport's creditors to put a competing plan of reorganization on the table, Cristina Rodriguez at Gannett reports. The Debtor's plan, if confirmed, will allow Eldorado Resorts LLC to acquire the financially troubled property in June. The competing plan proposes to sell the casino to Black Diamond Capital Management -- a major Hollywood bondholder. Black Diamond says Hollywood didn't exercise good judgment in choosing a buyer, Ms. Rodriguez relates. "They've done what they're supposed to do, they've done it in a timely fashion, they're pursuing the plan and the disclosure statement that were filed before the (bankruptcy started)," Ms. Ms. Rodriguez quotes Judge Callaway as saying from the bench at a recent hearing. "The fact (that Hollywood) made its bed with that group of creditors only demonstrates it has a level of intelligence that exceeds some here," Judge Callaway continued. "They did what they had to do -- go to the largest group of creditors and see what they wanted." * * * As previously reported, HCS I, Inc., the managing partner of Hollywood Casino, entered into an Investment Agreement with Eldorado providing for the acqquisition of the casino by Eldorado. The Agreement also contemplates a financial restructuring of HCS that will significantly reduce outstanding secured debt obligations and annual cash interest payments, while rationalizing its capital structure. Under the proposed restructuring, holders of the Company's existing secured notes are to receive $140 million of new first mortgage notes, $20 million of PIK Preferred Equity Securities, a 25% non-voting equity interest in the reorganized company, and cash in an amount to be determined, in exchange for existing secured notes in the principal face amount of $189 million plus accrued interest. About Eldorado Resorts Eldorado Resorts LLC owns and operates the Eldorado Hotel & Casino in Reno, Nevada, and is a joint venture partner with Mandalay Resort Group in the Silver Legacy Resort Casino, also located in Reno. The Eldorado Hotel & Casino, had net operating revenues of $133,000,000 in 2003, has over 84,000 square feet of gaming space, including over 1,800 slot machines and approximately 75 table games, 817 guest rooms, 12,000 square feet of convention space and is renowned for its eight restaurants. The Silver Legacy Resort Casino had 2003 net operating revenues of $152,000,000. The Silver Legacy has over 87,000 square feet of gaming space, including over 2,000 slot machines and 80 table games, 1,170 guest rooms, 90,000 square feet of exhibit and convention space, and operates six distinctive restaurants. Headquartered in Shreveport, Louisiana, Hollywood Casino Shreveport operates a casino hotel and resort featuring riverboat gambling. Its creditors led by Black Diamond Capital Management filed an involuntary chapter 11 protection on September 10, 2004 (Bankr. W.D. La. Case No. 04-13259). Robert W. Raley, Esq. at 290 Benton Road Spur, Bossier City, LA 71111 and Timothy W. Wilhite, Esq. at Downer, Hammond & Wilhite, LLC, represent the petitioners in their involuntary petition against the Debtor. The Company owed $34,958,113 to the petitioners. IAP WORLDWIDE: S&P Puts Low-B Ratings on Three Bank Loans --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to IAP Worldwide Services Inc. At the same time, Standard & Poor's assigned 'B+' senior secured bank loan rating and '3' recovery rating to the company's $255 million senior secured six-year first-lien term loan and $75 million revolving credit facility, indicating S&P's expectation of a meaningful (50%-80%) recovery of principal in the event of a payment default. In addition, Standard & Poor's assigned its 'B-' rating and '5' recovery rating to the company's $105 million seven-year second- lien senior secured bank facility, indicating the expectation of a negligible (0-25%) recovery of principal in the event of a payment default. The outlook is stable. The ratings on Irmo, South Carolina-based IAP reflect: (1) the company's aggressively leveraged balance sheet, (2) revenue concentration from a few large contracts, and (3) the less-predictable nature of contingency operations, which contribute the majority of revenues and profits. These weaknesses are partly mitigated by: (1) low fixed-capital intensity of operations, (2) good performance and re-bidding record on contracts, and (3) favorable industry growth trends in facilities management and technical services segments. The rating factors in a modest amount of integration challenges in conjunction with IAP's acquisition of Johnson Controls World Services Inc. IAP provides: (1) facilities management, (2) contingency support, and (3) technical services, mainly to the U.S. military but also to civilian agencies. IAP's largest revenue segment was contingency support, at 57% 2004 pro forma revenues, including: (1) power generation, (2) air traffic control, and (3) transport operations in the U.S. and in war theaters overseas. Other revenue segments consist of: (1) facilities management (31%), which includes maintaining U.S. military bases in the U.S. and overseas, and (2) technical services (12%). IAP revenues are largely concentrated in the U.S., where about one-half of 2004 pro forma revenues were generated, and in Kuwait and Iraq (36%). Unrated Cerberus Capital Management L.P. (Cerberus), a private investment firm, has a 74% ownership of IAP. The original founders of IAP own the balance. IAP's revenues and margins are dependent on the size of high-margin contingency operations undertaken and, to a lesser extent, by shares in the outsourced portion of the operations and maintenance piece of the overall U.S. defense budget. Contingency operations are short term and less predictable in nature relative to facility management and technical services operations segments, which are likely to benefit from the growing trend to outsourcing. In all business segments, IAP is likely to benefit from its strong contract re-bid record, which lowers the risks present in the high concentration of revenues from a few large contracts, some of which are scheduled for re-bidding in 2005. S&P has factored into its ratings the assumption that IAP will continue to win projects in the re-bidding process. IAP's strong contract re-bid record arises from its high level of contract performance and high switching costs to customers. Other business strengths include: (1) low fixed- and working-capital intensity, which result in higher cash flow generation, and (2) IAP's largely variable cost structure. The financial profile is vulnerable. The company's total debt to EBITDA pro forma for the transaction is high at 4.5x. EBITDA to interest expense is modest at 2.9x for fiscal 2004. S&P view's the owners as having very aggressive financial policies, which constrain credit quality. Historical financial statements are only partially audited. S&P expects future excess cash flow to be used to pay down debt and for niche acquisitions. We expect total debt to EBITDA to average 3.5x-4.0x and for funds flow from operations to total debt to average about 10%. INTERSTATE BAKERIES: Delays Filing of Annual & Quarterly Reports ---------------------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ.PK) delays the filing of its Fiscal 2004 Form 10-K, and fiscal 2005 Form 10-Qs with the Securities and Exchange Commission. The Company is continuing its review of the proper accounting treatment for a defined benefit pension plan to which it contributes, newly discovered issues with respect to the setting of the Company's workers' compensation and auto/general liability reserves and an unrelated charge related to obsolete and abandoned capital assets. The Company said it does not expect to file its Annual Report for the fiscal year ended May 29, 2004, until its assessment of these issues is complete and its independent auditors complete their audit of the Company's financial statements for the fiscal year ended May 28, 2005, which is not expected to be completed prior to August of 2005. IBC remains uncertain when it will file Quarterly Reports for the quarters ended August 21, 2004; November 13, 2004 and March 5, 2005 and amended Quarterly Reports for the quarters ended November 15, 2003 and March 6, 2004. Possible Restatements IBC said its preliminary unaudited financial information, and prior period financial statements may require correction or restatement depending on the results of the Company's ongoing review. As previously disclosed, IBC has been reviewing the historical accounting treatment of a defined benefit pension plan to which it contributes on behalf of approximately 900 of its approximately 32,000 employees. As a result of a re-examination of the manner in which IBC has historically accounted for the plan, a preliminary determination has been made that the plan should have been accounted for by IBC as a single-employer pension plan. IBC has always accounted for the plan as a multi-employer pension plan. However, the plan is neither a multi-employer pension plan nor a typical single-employer pension plan. Instead, the plan is a unique type of pension plan to which multiple unaffiliated employers make contributions. Prior to the date that IBC became a contributing employer in 1989, the plan was granted a "grandfather" exemption by the federal regulatory agencies responsible for regulating pension plans, which permits the plan to treat itself as an aggregate of single-employer pension plans. As part of this "grandfather" exemption, federal regulatory agencies have not required the plan to regularly report the type of information necessary to allow IBC to account for it as a typical single-employer defined benefit plan. IBC is attempting to obtain the necessary information from the plan to assess the impact of the change in accounting treatment on the Company's financial statements. To date, IBC has not been able to obtain information deemed reliable and accurate by IBC that would enable it to account for the plan as a single-employer plan due to, among other things, a lack of historical data available to the plan. While there can be no assurance when, and if, the Company will be able to obtain this information, IBC believes that its earnings and equity will be negatively impacted as a result of the change in accounting treatment and additional assets and/or liabilities will be reflected in its monthly consolidated operating reports filed with the bankruptcy court, its preliminary unaudited financial information for its fiscal 2005 first quarter and 2004 fiscal year and, potentially, other prior periods. While IBC cannot predict with accuracy the amount of any impact on earnings, any potential net liability that is expected or any potential reduction in equity, any such earnings impact, net liability or reduction in equity could be significant and could adversely affect the Company's financial condition and results of operations. Also, as a result of an ongoing internal review, IBC has determined that it understated certain estimated liabilities in connection with setting the proper accrual for workers' compensation and auto/general liability reserves for the fiscal year ended May 29, 2004, and the fiscal 2005 first quarter. Based on the Company's review to date, IBC estimates that it may have to increase its current reserves for workers' compensation and auto/general liability by approximately $5 million, some of which may be related to prior periods, in addition to the previously announced approximately $40 million increase to workers' compensation reserves. Any increase in reserves will result in a corresponding charge to pre-tax income. IBC also will incur a non-cash charge of approximately $8 million to pre-tax income in fiscal 2005 related to the book value of its capital assets, resulting primarily from obsolete and abandoned equipment identified as a result of its annual capital asset inventory process. The Company is working to determine whether any portion of this non-cash charge should be taken in prior periods. Sarbanes-Oxley Act IBC expects that management's annual report on internal control over financial reporting, to be included in its fiscal 2005 Form 10-K, as required by Section 404 of the Sarbanes-Oxley Act, will likely not be completed at the time the fiscal 2005 Form 10-K is filed. It is likely that even a preliminary report on internal controls will identify significant deficiencies and potentially material weaknesses in internal controls, particularly in the areas of: -- the Company's newly implemented financial reporting system; -- the proper accounting for the defined benefit pension; -- the setting of its workers' compensation and auto/general liability reserves; -- the maintenance of proper capital asset accounts; and -- its ability to prepare accurate and timely financial statements. As it completes its assessment, management may identify additional control deficiencies that result in material weaknesses. In the event that IBC identifies material weaknesses, management's assessment will conclude that the Company's internal control over financial reporting is ineffective. IBC remains uncertain when it will file Quarterly Reports for the quarters ended August 21, 2004, November 13, 2004 and March 5, 2005 and amended Quarterly Reports for the quarters ended November 15, 2003 and March 6, 2004. As previously disclosed, IBC expects that its fiscal 2005 reports would reflect significant asset impairment charges recognized as the result of its bankruptcy filing and its fiscal 2005 financial performance as well as the impact of the change in accounting treatment for the defined benefit pension plan and the issues discussed above. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. INTERSTATE BAKERIES: Teamsters Want Until May 21 to File Claim -------------------------------------------------------------- The Trustees of Teamsters Local Union Nos. 443, 493 and 677 Health Services & Insurance Plan ask the U.S. Bankruptcy Court for the Eastern District of Missouri to extend the time to file Proofs of Claim in Interstate Bakeries Corporation and its debtor- affiliates' Chapter 11 cases to May 21, 2005. The Teamsters Unions need to complete the audit of the Debtors' payroll records and determine the extent of contributions due and owing to them, Gregory S. Campora, Esq., at Robert, Cheverie & Associates, P.C., in East Hartford, Connecticut, says. The Teamsters Unions believe that the extension is permissible under "excusable neglect," pursuant to Rule 9006(b) of the Federal Rules of Bankruptcy Procedure. According to Mr. Campora, the Debtors and the Teamsters Unions are parties to Collective Bargaining Agreements that require the Debtors to pay fringe benefit contributions to the Teamsters Unions on behalf of the Debtors' employees who are covered by the Collective Bargaining Agreements. The Teamsters Unions, Mr. Campora explains, did not file Proofs of their Claim on or before the March 21, 2005, General Claims Bar Date in the Debtors' cases because they had no knowledge that there were any contributions owed. Furthermore, as a result of a routine audit of the Debtors' payroll records, Mr. Campora notes that the Debtors may have failed to make contributions, as required pursuant to the Collective Bargaining Agreements. Consequently, Mr. Campora relates, the audit has not been finalized due to: (a) the complexity of the issues raised in the audit; (b) the difficulty in traveling between Biddeford, Maine, and the central Connecticut area; and (c) the difficulty in scheduling time for the Teamsters Unions' auditors to have access to the Debtors' payroll records. Debtors Object Bankruptcy Rule 9006(b)(1) permits a claimant to seek authority to enlarge the time to file a proof of claim. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, contends that the rule requires a claimant not only to show cause, but also to show "excusable neglect," if the claimant requests the enlargement of time after the specified period has expired. Mr. Ivester asserts that the Teamsters Unions fail to: (1) provide information as to when the routine audit occurred, when they discovered that a claim might exist, or why they waited for an audit to determine whether they had a claim against the Debtors when they could easily have filed a claim for an unknown amount dependent on the outcome of the audit; (2) admit that they were neglectful in any way, without which, there is no conduct for the Court to evaluate and determine whether it should be deemed "excusable" or not; (3) allege that they had insufficient notice of the Bar Date; (4) provide a valid excuse as to why their Motions were not filed prior to the Bar Date when they could have easily filed a contingent or precautionary claim; and (5) meet their burden in establishing that the equities weigh towards the Court finding that their neglect was excusable. "Even if the court were to find neglect, it was not excusable," Mr. Ivester says. "The Plan Claimants apparently had notice of the Bar Date and yet took no actions to preserve their rights." Since the Teamsters Unions have not presented sufficient facts to establish that their failure to file a timely proof of claim was due to "excusable neglect," the Debtors ask the Court to deny the Teamsters Unions' requests. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) IPSCO INC: Hosting First Quarter Webcast on Tuesday --------------------------------------------------- IPSCO Inc. (NYSE: IPS) invites you to listen to the live webcast of its 2005 first quarter conference call at 10:00 AM EDT on Tuesday, April 26, 2005. During the call, IPSCO President and CEO, David Sutherland and Senior Vice President and Chief Financial Officer, Vicki Avril will discuss IPSCO Inc.'s quarterly results. Persons wishing to listen to the webcast may access it through the Company's website at http://www.ipsco.com/The conference call, including the question and answer portion, will also be archived on IPSCO's web site for three months. About the Company IPSCO operates steel mills at three locations and pipe mills at six locations in Canada and the United States. As a low cost North American steel producer, IPSCO has a combined annual steel making capacity of 3,500,000 tons and provides further processing at its five cut-to-length lines located in both the U.S. and Canada. The Company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Moody's Investors Service upgraded its senior implied rating for IPSCO, Inc., to Ba2. The upgrade reflects IPSCO's much-stronger financial performance in response to improved market conditions for discrete plate, coil and tubular products, and its much improved capitalization. In consideration of IPSCO's strong credit metrics, low cost position, ability to further reduce leverage as debt matures over the next two years, and the very favorable near-term outlooks for its primary products, plate and energy tubulars, Moody's changed IPSCO's rating outlook to positive. These ratings were upgraded: * $200 million of 8.75% guaranteed senior unsecured notes due 2013 -- to Ba2 from Ba3, * senior implied rating -- to Ba2 from Ba3, and * senior unsecured issuer rating -- to Ba3 from B1. As reported in the Troubled Company Reporter on February 26, 2004, Standard & Poor's Ratings Services lowered its ratings on steel producer IPSCO Inc., including the long-term corporate credit rating, which was lowered to 'BB' from 'BB+'. At the same time, Standard & Poor's lowered its rating on the company's 5.5% cumulative redeemable first preferred shares to 'B' from 'B+'. The downgrade affects about US$425 million in unsecured debt. S&P says the outlook is stable. JAMIE A. HAWLEY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Jamie A. Hawley 5721 Northbrook Drive Plano, Texas 75093 Bankruptcy Case No.: 05-34398 Chapter 11 Petition Date: April 19, 2005 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtor's Counsel: Howard Marc Spector, Esq. Howard Marc Spector, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (214) 365-5377 Fax: (214) 237-3380 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. KAISER ALUMINUM: Senior Noteholders Argue Notes Are Indeed Senior ----------------------------------------------------------------- Deutsche Bank Trust Company, National Association, serves as the successor indenture trustee under the indenture relating to certain 9-7/8% Senior Notes due 2002 issued by Kaiser Aluminum & Chemical Corporation. In the month that has elapsed since Deutsche Bank succeeded U.S. Bank as trustee, Deutsche Bank has concerned itself primarily with analyzing the priority disputes among the holders of the 9-7/8% Senior Notes, the 10-7/8% Senior Notes, and the 12-3/4% Senior Subordinated Notes issued by KACC -- the "Junior Notes." Carl N. Kunz, III, Esq., at Morris, James Hitchens & Williams LLP, in Wilmington, Delaware, states that the priority disputes encompass two key issues: (1) Whether the subsidiary upstream guarantees of the Senior Notes constitute "Senior Indebtedness" under the indenture for the Junior Notes and, therefore, whether the Senior Notes are senior to the Junior Notes at the subsidiary level; and (2) If not, whether the 9-7/8% Senior Notes qualify as "Senior Indebtedness" under the Junior Note Indenture because proceeds of the 9-7/8% Senior Notes were used to refinance or replace a senior credit facility, such that, at the subsidiary level, the 9-7/8% Senior Notes are senior to the Junior Notes and the 10-7/8% Senior Notes. According to Mr. Kunz, if both classes of Junior and Senior Noteholders vote in favor of the Liquidation Plans, the Liquidation Plans will implement a settlement of the priority disputes pursuant to which the Junior Noteholders will receive $8.0 million under each Liquidation Plan. If, on the other hand, either class of Junior or Senior Noteholders vote against either of the Liquidation Plans, the Liquidation Plans provide that the Court will decide that priority disputes in the context of confirmation of the Liquidation Plans. Deutsche Bank assumes that either the Junior or Senior Noteholders will vote to reject at least one of the Liquidation Plans and the Court, therefore, will be required to determine, at least, the First Issue. The First Issue has been the subject of extensive briefing by the parties involved in the priority disputes. Mr. Kunz says that if the Court determines the upstream guarantees of the Subsidiary Guarantors do not constitute "Senior Indebtedness" under the Junior Note Indenture, as asserted by Law Debenture Trust Company of New York and Liverpool Limited Partnership, the Court will then have to decide the Second Issue. With respect to the Second Issue and in support of the related arguments advanced by Liverpool, Deutsche Bank urges the Court to find that, to the extent that proceeds of the 9-7/8% Senior Notes were used to replace, restructure or otherwise refinance part of the senior credit facility, the 9-7/8% Senior Notes -- and all related interest and fees -- constitute "Senior Indebtedness." In December 1989, KACC entered into a credit agreement with certain financial institutions, which included a $350 million revolving credit facility and a five-year term loan. Subsidiaries of KACC, including those that guaranteed the Junior Notes and the Senior Notes -- including Alpart Jamaica, Inc., Kaiser Jamaica Corporation, Kaiser Alumina Australia Corporation, and Kaiser Finance Corporation -- guaranteed KACC's obligations under the 1989 Credit Agreement. In February 1993, KACC issued $400 million in principal amount of the Junior Notes. The Subsidiary Guarantors guaranteed the Junior Notes at that time. The Junior Notes were junior to the 1989 Credit Agreement at the KACC level and the Junior Note Guarantees were junior to the 1989 Credit Agreement Subsidiary Guarantees. In February 1994, the Debtors completed a comprehensive refinancing plan to, among other things, refinance the 1989 Credit Agreement and the Subsidiary Guarantors' guarantee of the 1989 Credit Agreement, which would mature in 1994. In connection with the 1994 Refinancing, (i) KACC replaced the 1989 Credit Agreement with the 1994 Credit Agreement, (ii) KACC issued the 9-7/8% Senior Notes, as to which Deutsche Bank is indenture trustee, and (iii) the Subsidiary Guarantors guaranteed both the 1994 Credit Agreement and the 9-7/8% Senior Notes. After the 1994 Refinancing, in 1996, KACC issued the 10-7/8% Senior Notes and the Subsidiary Guarantors issued guarantees on the 10-7/8% Senior Notes. "Senior Indebtedness" Includes Debt Related to 1989 Senior Credit Agreement Mr. Kunz states that there is no dispute that the Junior Notes are subordinated to 9-7/8% Senior Notes at the parent KACC level. Law Debenture argues that the Junior Notes are not subordinate to the 9-7/8% Senior Notes -- or, for that matter, the 10-7/8% Notes -- at the Subsidiary Guarantors level because the guarantees of the Senior Notes do not constitute "Senior Indebtedness" pursuant to the Junior Note Indenture. However, Mr. Kunz points out, Law Debenture did not address certain provisions of the definition of "Senior Indebtedness" that provide for the seniority of obligations incurred by the Subsidiary Guarantors to replace, restructure, or otherwise refinance the 1989 Credit Agreement. Mr. Kunz tells the Court that pursuant to Section 16.02 of the Junior Note Indenture, the Subsidiary Guarantors' guarantees of the Junior Notes are subordinate to all debt that constitutes Senior Indebtedness of the Subsidiary Guarantors. Therefore, if the Subsidiary Guarantors' guarantees of the 9-7/8% Notes constitute "Senior Indebtedness" of the Subsidiary Guarantors, then the 9-7/8% Note Guarantees have priority over the Junior Note Guarantees. Use of 9-7/8% Notes Proceeds to Refinance or Replace the 1989 Credit Agreement Mr. Kunz relates that the issuance of the 9-7/8% Senior Notes by KACC allowed the Debtors to refinance their obligations under the 1989 Credit Agreement. The refinancing resulted in the Debtors owing $100 million less under the "1994 Credit Facility" than they did under the 1989 Credit Facility. The 9-7/8% Note Guarantees constitute, therefore, "Senior Indebtedness" under the Junior Note Indenture to the extent the proceeds of the 9-7/8% Senior Notes were used to replace, restructure or otherwise refinance the 1989 Credit Facility. Pursuant to the Junior Note Indenture, then, the Junior Note Guarantees are subordinate to the 9-7/8% Note Guarantees. If the Court rules that the subsidiary upstream guarantees of the Senior Notes do not constitute "Senior Indebtedness" under the Junior Note Indenture, Deutsche Bank asks Judge Fitzgerald to find that the 9-7/8% Senior Notes constitute "Senior Indebtedness" of the Liquidating Debtors because the proceeds of those 9-7/8% Senior Notes were used to replace, restructure, or otherwise refinance the 1989 Credit Agreement. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) KRAMONT REALTY: Centro Watt Merger Prompts Moody's to Hold Ratings ------------------------------------------------------------------ Moody's announced that the ratings of Kramont Realty Trust have been confirmed with a stable outlook, and will be subsequently withdrawn. Moody's placed Kramont's B3 preferred stock rating on review for upgrade following the REIT's announcement in mid- December 2004 that it had agreed to merge into Centro Watt America REIT III LLC, an affiliate of Melbourne, Australia-based Centro Properties Limited (ASX: CNP), a property trust. A shareholders vote on April 14, 2005 approved the merger. As part of the merger, Kramont's Series E preferred shareholders are receiving a US$25 liquidation preference payout, plus accrued and unpaid dividends, per preferred share. The REIT's Series B-1 convertible stockholders had the option to convert their shares into Kramont common stock. Any remaining B-1 preferred shares upon merger closing are receiving preferred shares in the new entity, which will simultaneously be liquidated at a price of US$25, plus accrued and unpaid dividends, per preferred share. In sum, all of Kramont's rated preferred stock is being liquidated. The following ratings have been confirmed and will be withdrawn: Kramont Realty Trust (1) Series B-1 and Series E Preferred Shares at B3; (2) preferred stock shelf at (P)B3; and (3)unsecured debt shelf at (P)B1. Kramont Realty Trust [NYSE: KRT], headquartered in Plymouth Meeting, Pennsylvania, USA, was a real estate investment trust (REIT) specializing in the acquisition, leasing, development and management of neighborhood and community shopping centers. At December 31, 2004, Kramont had assets of US$858 million and equity of US$270 million. Centro Properties Group is an Australian listed property organization that currently manages a retail property portfolio of approximately A$5.2 billion with 130 shopping centers in Australia. With its joint venture partner Watt Commercial properties, Centro owns and manages 17 retail properties in the USA totaling 3.9 million square feet. LAIDLAW INT'L: Writes Off $127 Million of Deferred Tax Assets ------------------------------------------------------------- During the second quarter of fiscal 2005, Laidlaw International, Inc., wrote off $127 million of deferred tax assets against its $305 million valuation allowance for carryforwards that will be used as part of a recent settlement with the Internal Revenue Service and for carryforwards which management believes will not likely be available for use against future income. Laidlaw Senior Vice-President and Chief Financial Officer Douglas A. Carty says the remaining $178 million of valuation allowance was reversed in its entirety as recent historical and current projected results reflect a level of income that supports a conclusion that it is more likely than not that Laidlaw will fully recover the remaining surviving carryforwards. "The results of the Company considered the sale of the healthcare segments and the retirement of the Term B debt and reduction in related interest costs," Mr. Carty says. As required under fresh start accounting rules, the reversal first eliminated all remaining goodwill established at fresh start, with the balance reducing other intangibles established in conjunction with fresh start accounting. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc. -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure. As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International, Inc., on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt. LARRY BJURLIN: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Larry Bjurlin 4120 East Sunnyside Drive Phoenix, Arizona 85028 Bankruptcy Case No.: 05-06793 Chapter 11 Petition Date: April 20, 2005 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: D. Lamar Hawkins, Esq. Hebert Schenk P.C. 4742 North 24th Street, Suite 100 Phoenix, Arizona 85016 Tel: (602) 248-8203 Fax: (602) 248-8840 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. LEWIS UNIVERSITY: Moody's Holds Ba1 Rating on $27 Million Bonds --------------------------------------------------------------- Moody's Investors Service affirmed Lewis University's Ba1 long- term debt rating, with a continued stable rating outlook. This action affects $27 million of outstanding debt - specifically the Series 1994 and the Series 1996 Revenue Bonds - issued through the Illinois Educational Facilities Authority. The rating affirmation reflects the University's: Strengths (1) Sound market position, in a demographically strong area outside of Chicago and with increased management focus on enhancing its core undergraduate market position, reflected in ongoing enrollment growth (26% over the past five years to 3,642 full-time equivalent students), as well as improved undergraduate selectivity (67% in 2004 compared to 70% in 2000), and growth in net tuition (up 6% since 2002) (2) Modest operating performance, with essentially breakeven operations, as calculated by Moodys, although performance rose signficantly to a 1.6% operating surplus in FY 2004. This reflects the University's controlled expense growth, substantially grown tuition revenue and conservative budget assumptions, including budgeting for depreciation and for zero appreciation of equity investments and, for the current fiscal year (FY 2005), no dividend and interest income. (3) Good debt service coverage, with three-year average debt service coverage of 1.6 times in FY 2004. Challenges (1) Continued slim liquid financial resource base, with unrestricted and expendable resources totaling $2.5 million and $6.1 million, respectively, for FY 2004 out of total financial resources of $24.6 million.* Management reports that an additional $1.4 million of temporarily restricted investments could be reclassified as unrestricted. Much of the increase in financial resources was due to an unrealized gain on land that is recognized by the University as investments. The University owns a total of 376 acres. The 139 acre core campus is carried at historical cost and as a capital asset. Adjacent vacant land (237 acres) is carried as an investment. (2) High debt levels relative to resources, with unrestricted and expendable resources providing 0.05 times and 0.13 times, respectively, of total outstanding debt. The University continues to incorporate a high level of bank borrowing in their debt structure. Recent Developments/Results: Lewis University's thin unrestricted liquidity has been driven by a combination of management's decision to continue to invest in property around campus, as well as investment losses in previous years. Although the audited statements report the land as investments (representing $15.6 million of the total $37.9 million reported in the audited results), Moody's reclassifies the land as a permanent net asset, reflecting the longer-term intent of the University to develop the land and the relatively illiquid nature of the investment. If any part of the land is developed for the University's own purposes, it will be reclassified as capital assets. Moody's believe that the land held in the University's investments is ultimately worth at least as much as its reported value, which was recently increased in carrying value due to an appraisal, and that it could be liquidated within a three-year time frame if the need arose. Although unsecured, the University has utilized bank lines for cash flow borrowing. It recently renewed its operating three year revolving line of credit and obtained a new construction line to provide funds to construct a student resident hall. The agreements for the lines incorporate the same covenants as the University's 1994 and 1996 bond indentures, including a debt service coverage test. Moody's believes the use of nearly $7.4 million in average operating line of credit borrowing (nearly $10 million at fiscal year end) on its $15 million operating line, which expires periodically, introduces additional risk for the University compared to long-term financing. Legal Security: The Series 1994 and Series 1996 Bonds are unsecured general obligations of the University, and have general covenants related to current debt level outstanding and maximum annual debt service. The bank facilities are also unsecured and have incorporated the same covenants, as well as a cross default to debt and a material adverse change (MAC) clause for non-funding. Debt Related Derivative Instruments: None Outlook The stable outlook reflects Moody's belief that the University's balanced operating performance and continued enrollment growth provide stability for the limited resource base of the University. What Could Change the Rating - UP (1) Substantial increase in liquid financial resources contributing to increased expendable financial resources, coupled with a reduced reliance on external bank lines; and (2) improved operating performance providing greater surplus to net assets. What Could Change the Rating - DOWN (1) Decline in liquidity and total financial resources, (2) operating deficits, and (3) unexpected declines in enrollment. Key Indicators (FY 2004 financial statements, Fall 2004 enrollment): (1) Total Enrollment: 3,642 full-time equivalent students (2) Total Financial Resources: $24.56 million (3) Total Pro-Forma Direct Debt (including additional $8.9 million revolving construction line of credit yet to be drawn): $46.8 million (4) Unrestricted Resources to Pro-Forma Debt: 0.05 times* (5) Expendable Resources to Pro-Forma Debt: 0.13 times* (6) Total Cash and Investments to Pro-Forma Debt: 0.54 times (7) Expendable Resources to Operations: 0.11 times* (8) Average Operating Margin: -0.1% * Unrestricted and expendable resources exclude $15.6 million in land holdings reported as unrestricted investments, categorized by Moody's as permanent net asset and part of total financial resources in FY2004. In FY2003, these land holdings were categorized as expendable net assets by Moody's. Prior to FY2001, these land investment holdings were categorized by Moody's as unrestricted. Moody's treatment of these holdings as a permanently restricted resource reflects our belief that the land is not a near-term source of liquidity for the University, but may be a source of income over the long-term, similar to a permanent endowment. LYONDELL CHEMICAL: Good Performance Prompts S&P to Lift Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Lyondell Chemical Co. and its 100%-owned affiliates, Equistar Chemicals L.P. and Millennium Chemicals Inc., and simultaneously removed the ratings from CreditWatch, where they were placed with positive implications on Feb. 4, 2005. "The rating actions, including the upgrade of the corporate credit ratings to 'BB-' from 'B+', reflect favorable operating prospects over the intermediate term, and the strong expectation that management will continue to prioritize debt reduction as the chemicals cycle gradually improves," said Standard & Poor's credit analyst Kyle Loughlin. Houston, Texas-based Lyondell Chemical has more than $7.5 billion in debt outstanding (including a pro-rata portion of 58.75% of Lyondell-CITGO Refining L.P.'s debt but excluding more than $1.5 billion of tax-adjusted unfunded post-retirement benefit obligations and other adjustments to capitalize operating leases and accounts receivable sales). The outlook is positive. The ratings on Lyondell Chemical reflect: (1) an improving but still-aggressive capital structure stemming from its 1998 acquisition of ARCO Chemical Co., which overshadows the company's satisfactory business profile derived from leading positions in several commodity chemical product categories, and (2) financial policies that support restoration of the financial profile. Standard & Poor's expects that the business environment will support a gradual trend of improvement in Lyondell's highly leveraged financial profile. Lyondell's debt reduction plans, together with a recovery within its key business units, could support a slightly higher rating so long as economic conditions remain favorable and the company is able to substantially strengthen operating results for 2005. To achieve higher ratings, considerable progress will have to be made toward the company's debt reduction goals in advance of the next industry downturn. Adverse developments, with respect to raw-material price trends, MTBE market dynamics, or Lyondell-CITGO's ability to continue to provide cash distributions to Lyondell will remain risks given Lyondell's still-significant debt burden, but should be manageable with prudent liquidity management. MAGSTAR TECHNOLOGIES: Equity Deficit Narrows to $4.9M at Dec. 31 ---------------------------------------------------------------- MagStar Technologies, Inc. had a $3,039,095 working capital deficit at December 31, 2004, compared to a $6,993,750 working capital deficit at December 31, 2003. The current ratio was 0.37 at December 31, 2004, compared to 0.21 at December 31, 2003. The decrease in the working capital deficit and the increase in the current ratio are primarily due to a decrease in senior debt. The Company had negative cash flows from operations of $161,982 for the year ended December 31, 2004, compared to negative cash flows from operations of $1,724,766 for the year ended December 31, 2003. The Company's ability to meet its continuing cash requirements in the future is dependent on achieving adequate sales and margins from its manufacturing operations. In 2004, the Company had a $213,317 net loss compared to a $545,163 net income for 2003. Had the Company not recorded $1,205,000 other income in 2003, it would have recorded a net loss of $659,837 in 2003. Generally, the Company does not pay regular income taxes because of the availability of its net operating loss carry forwards. The Company does not expect capital needs in 2005 to exceed the capacity of its asset based line of credit as allowable receivables and inventory borrowings are expected to cover operating requirements. While the asset based line of credit expires in June 2005, the Company believes it will be able to replace this facility. In addition, borrowing agreements with the Company's major shareholder are expected to remain in place. The Company believes that cash from operations, renewal of and advances from its credit facility and borrowings from its major shareholder will provide enough liquidity for the next 12 months of operations. Management's plans and objectives to improve the financial condition of the Company are based on a strategy to become a technology leader in centrifuge and conveyor design and production by being a product focused company, growing sales, reducing debt, and accumulating cash. MagStar Technologies is a prototype developer and manufacturer of centrifuges, conveyors, medical devices, spindles, and sub assemblies. Its technical abilities in design, process, and manufacturing specialize in the "concept-to-production" process designed to result in short manufacturing cycles, high performance, and cost effective products such as electro- mechanical assemblies and devices for over two dozen medical, magnetic, motion control, factory and laboratory automation and industrial original equipment manufacturers -- OEMs. The Company strives for a unique identity as it emphasizes its design and manufacturing engineering capabilities, partnering with customers, providing engineering solutions and machining, manufacturing, and assembly services for efficiently manufactured, long life assemblies. As of Dec. 31, 2004, MagStar Technologies' equity deficit narrowed to $4,907,477 from a $9,033,914 equity deficit at Dec. 31, 2003. MASSMUTUAL HIGH: Fitch Ups Fixed-Rate Secured Sub. Notes to BB -------------------------------------------------------------- Fitch Ratings has taken rating actions on MassMutual High Yield Partners II L.L.C. This security has been upgraded: -- Fixed-rate secured subordinated notes upgraded to 'BB' from 'B'; Additionally, these securities have paid-in-full to date: -- Floating-rate senior secured notes; -- Fixed-rate senior secured notes; -- Floating-rate secured subordinated notes. MassMutual High Yield Partners II L.L.C. -- HYP II -- is a collateralized debt obligation -- CDO -- managed by Babson Capital Management L.L.C. HYP II was established in September 1996 to issue debt and equity securities and invest the proceeds in high yield bank loans, publicly tradable high-yield securities, privately placed high-yield securities, and 'special situation' investments such as distressed debt and public and private equities. HYP II was refinanced in June 1998. HYP II is a hybrid between a cash flow and market value structure. As such, it provides noteholders with a combination of structural protections typically not found together in one transaction, such as quarterly valuations of the portfolio investments, over-collateralization tests, liquidity tests, interest coverage tests, cash flow coverage tests and weighted average rating restrictions. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. Overall, in view of the current credit environment and substantial recoveries regarding illiquid assets, HYP II has significantly improved since the last review in June 2003. Per the March 2005 trustee report, HYP II is passing all of its quarterly financial covenants. The current liquid asset coverage ratio and the collateral coverage ratio have increased from 3.08 and 1.12 to 9.36 and 1.80, respectively. In addition, the projected total interest coverage ratio and the cash interest coverage ratio increased from 1.47 and 1.42 to 2.71 and 2.17, respectively. Also since the last review, defaulted assets have decreased from approximately $75 million to approximately $14 million. As a result of this analysis, Fitch has determined that the current ratings assigned to the fixed-rate secured subordinated notes do not reflect the overall improved status of HYP II. Fitch will continue to monitor and review this transaction for future rating adjustments, as needed. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ METROPOLITAN MORTGAGE: Files Amended Chapter 11 Plan in Washington ------------------------------------------------------------------ Metropolitan Mortgage & Securities Co., Inc., and its debtor-affiliate, Summit Securities, Inc., filed its First Amended Disclosure Statement and First Amended Joint Plan of Reorganization with the with the U.S. Bankruptcy Court for the Eastern District of Washington on April 1, 2005. The Amended Plan's main focus is to maximize the percentage recovery by Debt Security holders and other general unsecured creditors from the limited pool of the Debtors' remaining assets. The Plan provides for the establishment of two trusts: -- the Metropolitan Creditors' Trust, whose sole beneficiaries are certain general unsecured creditors of Metropolitan, and -- the Summit Creditors' Trust, whose sole beneficiaries are certain general unsecured creditors of Summit. The Plan contemplates the appointment of a single, independent Trustee for the administration of the two Creditors' Trusts, but subject to the advice and consultation of two advisory groups of beneficiaries, one group comprised of up to ten members designated by the Metropolitan Creditors' Committee, and one group comprised of up to ten members designated by the Summit Creditors' Committee. Under the Plan, Metropolitan Mortgage and Summit Securities have their respective groups of claims and interests. There are nine classes of claims and interests for both Metropolitan and Summit respectively. Metropolitan Claims and Interests Unimpaired Claims consist of: a) Other Priority Unsecured Claims have mostly been paid in the Metropolitan's ordinary course of business, and any valid unpaid claims will be paid in full, in cash or in some other mutually agreeable compensation arrangement between Metropolitan and the claims holder; and b) Secured Claims will be paid in full in cash, or they will receive the proceeds from the Debtors' property securing the those holders' allowed Secured Claims to the extent of the value of those holders' interest in the property. Impaired Claims consist of: a) General Unsecured Claims and Intercompany Affiliate Claims will receive their respective Pro Rata beneficial interest in the Metropolitan Creditors' Trust; b) Subordinated Debentures Securities Claims will not receive any property on account of those Claims, and Preferred Stock Interests will not receive any property on account of those Interests; c) Subordinated Preferred Stock Securities Claims will not receive any property on account of those Claims; d) Metropolitan Common Stock Interests will be cancelled under the Plan and will not receive any property on account of those Interests, and Intercompany Claims will be eliminated under the Plan. Summit Claims and Interests Unimpaired Claims consist of: a) Other Priority Unsecured Claims have mostly been paid in the Summit's ordinary course of business, and any valid unpaid claims will be paid in full, in cash or in some other mutually agreeable compensation arrangement between Metropolitan and the claims holder; and b) Secured Claims will be paid in full in cash, or they will receive the proceeds from the Debtors' property securing the those holders' allowed Secured Claims to the extent of the value of those holders' interest in the property. Impaired Claims consist of: a) General Unsecured Claims and Intercompany Affiliate Claims will receive their respective Pro Rata beneficial interest in the Summit Creditors' Trust; b) Subordinated Debentures Securities Claims will not receive any property on account of those Claims, and Preferred Stock Interests will not receive any property on account of those Interests; c) Subordinated Preferred Stock Securities Claims will not receive any distribution or property on account of those Claims; and d) Common Stock Interests will be cancelled under the Plan and will not receive any property on account of those Interests, and Intercompany Claims will be eliminated under the Plan. Full text copies of the Amended Disclosure Statement and Amended Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050420024849 -- and -- http://www.researcharchives.com/bin/download?id=050420024202 Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. Metropolitan filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04- 00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed total assets of $420,815,186 and total debts of $415,252,120. METROPOLITAN MORTGAGE: Plans to Sell Hawaii Lots to Generate Cash ----------------------------------------------------------------- Metropolitan Mortgage & Securities Inc. owns beachfront property 45 minutes away from Honolulu, Hawaii. The company wants to sell the prime lots to the highest bidder to generate cash to pay creditors. Metropolitan expects to get at least $12 million from the sale after satisfying notes and other contingencies, the Associated Press reports. The AP reports that the company already has offers topping $18 million for the beachfront lots. The AP adds that the lots were purchased by the company's founder, C. Paul Sandifur, Sr., for $17 million. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. It filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04-00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., of Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., of Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed assets of $420,815,186 and debts of $415,252,120. As reported in the Troubled Company Reporter on Sept. 24, 2004, Metropolitan Mortgage & Securities Co., Inc., and its debtor-affiliate Summit Securities, Inc., filed a Joint Plan of Reorganization that would form the Metropolitan Creditors' Trust to convert assets to cash, resolve creditors' claims, and make distributions to creditors. METROPOLITAN MORTGAGE: Taps Fulcrum Financial as Consultants ------------------------------------------------------------ Metropolitan Mortgage & Securities Co., Inc., and its debtor-affiliate ask the U.S. Bankruptcy Court for the Eastern District of Washington for permission to employ Fulcrum Financial Inquiry LLP as their consultants. Fulcrum Financial is expected to: a) investigate all possible claims that are held by the bankruptcy estates of Metropolitan Mortgage and Summit Securities, Inc.; b) provide expert witness testimony to the Debtors and evaluate the various contentions raised by the Chapter 11 Examiner in the Debtors' bankruptcy cases; and c) provide all other accounting, financial, and valuation analysis services that are appropriate and necessary in the Debtors' chapter 11 cases. David Nolte, C.P.A., and Paul A. Quintiliani, are the lead professionals at Fulcrum Financial performing services to the Debtors. Mr. Nolte charges $450 per hour for his services, while Mr. Quintiliani charges $375 per hour. Mr. Nolte reports Fulcrum Financial's professionals bill: Designation Hourly Rate ----------- ----------- Principals $450 Managers $235 - $375 Consultants $125 - $225 Paraprofessionals $85 Fulcrum Financial assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Spokane, Washington, Metropolitan Mortgage & Securities Co., Inc., owns insurance businesses. Metropolitan filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04- 00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B. Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh represent the Debtors in their restructuring efforts. When Metropolitan Mortgage filed for chapter 11 protection, it listed total assets of $420,815,186 and total debts of $415,252,120. MIRANT CORP: MAGi Bondholders Says Plan is Unconfirmable -------------------------------------------------------- The Ad Hoc Committee of Bondholders of Mirant Americas Generation, LLC, contends that Mirant Corporation and its debtor-affiliates' Amended Disclosure Statement describes a plan of reorganization that manifestly is not confirmable. Moreover, even assuming the Plan was confirmable, the Ad Hoc Committee asserts that the Amended Disclosure Statement does not contain information sufficient to permit creditors to make an informed decision regarding the Plan. For these reasons, the Ad Hoc MAGi Committee asks the Court to deny approval of the Amended Disclosure Statement. The Ad Hoc MAGi Committee consists of: 1. D.E. Shaw Laminar Portfolios, L.L.C., 2. John A. Levin & Co., 3. Halcyon Asset Management LLC, 4. Longacre Management, LLC, 5. Davidson Kempner Capital Management, LLC, 6. Satellite Asset Management, L.P., and 7. Trilogy Capital LLC. The members of the Ad Hoc MAGi Committee hold 8.3% Senior Notes due 2011, 8.5% Senior Notes due 2021, and 9.125% Senior Notes due 2031, which were issued pursuant to supplemental indentures to the Indenture dated as of May 1, 2001, between MAGi and Bankers Trust Company, as Indenture Trustee. Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, explains that, although the Debtors' Plan treats the holders of the Long-Term Notes issued by MAGi as unimpaired, the Plan substantially impairs the Long-term Noteholders in a number of fundamental ways. The creation of a new intermediate holding company directly under MAGi, which would directly or indirectly own 100% of the equity interests in the current operating subsidiaries of MAGi, would significantly impair the Long-term Noteholders' legal, equitable, and contractual rights. The Long- term Notes would become structurally subordinated to more than $2 billion of new debt at New MAG HoldCo. Under the Indentures, the Long-term Notes are pari passu with MAGi's unsecured notes maturing in 2006 and 2008, and MAGi's bank debt. Under the Plan, however, the Long-term Notes would be structurally subordinated to approximately $1.32 billion of New MAG HoldCo Notes and at least $750 million of Exit Financing Debt. In any future bankruptcy, the Long-term Noteholders, who would have the status of mere equity participants in New MAG HoldCo, could draw on New MAG HoldCo's assets only after the claims of New MAG HoldCo's creditors -- comprising more than $2 billion of note and bank debt -- were fully satisfied. Thus, the MAGi Committee says, the creation of New MAG HoldCo and its issuance of new debt would force the Long-term Noteholders to assume the very real risk that they would receive, at best, only equity in a future distress situation. Reorganized Mirant could also adopt an opportunistic reading of the debt service coverage ratio test in Section 111 of the Supplemental Indentures. Section 111 provides in pertinent part: "The Company shall not incur any Indebtedness for borrowed money . . . unless on a Pro Forma Basis for the debt incurrence . . . based on projections prepared by the Company on a reasonable basis, the projected Senior Debt Service Coverage Ratio . . . is projected to be greater than or equal to 2.5 to 1. . . ." Should New Mirant argue that the debt service coverage ratio applies only to debt incurred directly by MAGi -- and not to debt of its subsidiaries -- Mr. Cantor points out that the $2 billion of new debt issued by New MAG HoldCo would not be factored into the calculation of the Debt Service Coverage Ratio. As a result, New Mirant could argue that MAGi has additional debt capacity. This reading would circumvent Section 111, Mr. Cantor says, which was intended to place an upper limit on the aggregate debt of MAGi and its subsidiaries. Given that the Debtors have failed to provide any support for the creation of New MAG HoldCo, Mr. Cantor remarks, one can only assume that New Mirant intends to use the New MAG HoldCo structure as a means of leveraging the overall MAGi enterprise far beyond the debt load bargained for by the Long-term Noteholders when they agreed to become creditors of MAGi. Mr. Cantor also contends that the Plan proposes to implement a highly unusual partial and temporary substantive consolidation of the Debtors that neither is justified by the facts nor permissible under applicable law. Mr. Cantor asserts that the Amended Disclosure Statement must establish the required factual or legal predicates for the troubling features of the Plan, including: -- the alleged unimpairment and proposed reinstatement of the Long-term Noteholders, -- the failure to specify whether postpetition interest will be paid, -- the creation of the new intermediate holding company structure, -- the partial and temporary substantive consolidation of the Debtors, -- the releases and permanent injunction, and -- the cancellation of MAGi's intercompany claims. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors 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. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Wrightsville Sale Hearing Scheduled on May 25 ---------------------------------------------------------- A hearing to consider Mirant Corporation and its debtor- affiliates' proposed sale of the 548 megawatt gas-fired combined cycle power generating facility located in Wrightsville, Arkansas, to Arkansas Electric Cooperative Corporation will be held on at 10:30 a.m., Prevailing Central Time, on May 25, 2005. The Sale Hearing will be held before Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas. Mirant Corporation, Mirant Wrightsville Management, Inc., and Mirant Wrightsville Investment, Inc., are parties to a joint development venture with Kinder Morgan Power Company. The parties agreed to construct and operate a nominal 548 megawatt gas-fired combined cycle power generating facility located in Wrightsville, Arkansas. The development, construction and operation of the Facility were organized through Wrightsville Power Facility, LLC, while funding for the Facility was organized through Wrightsville Development Funding LLC. Wrightsville Management and Wrightsville Investment own a 51% interest in both WPF and WDF, while Kinder owns a 49% interest in each entity. Mirant Americas, Inc. owns 100% of the common stock of each of Wrightsville Management and Wrightsville Investment. $85,000,000 Deal with AECC In October 2004, the Mirant Investment Committee, a committee comprised of the Company's senior management, granted the Debtors permission to enter into a letter of intent with Arkansas Electric Cooperative Corporation to negotiate a definitive agreement on an exclusive basis. On October 15, 2004, the parties executed the LOI. After extensive negotiations, the parties entered into an Asset Purchase and Sale Agreement, with a purchase price of $85,000,000 for the Assets. AECC will assume certain liabilities arising out of the ownership or operation of the Facility, excluding real and personal property taxes for any period prior to January 1, 2006. The Sale Agreement supersedes and replaces the LOI in its entirety. Any objections Wrightsville Asset Sale must be received no later than 4:00 p.m., Prevailing Central Time, on may 18, 2005. The Court directs the Debtors to file and serve, not later than May 5, 2005: (a) a schedule identifying the (i) contracts to be assumed and assigned, (ii) permits and easements to be assigned, and (iii) corresponding cure amounts for the Assumed Contracts, if any, under the asset purchase and sale agreement among Wrightsville Power Facility, LLC, Mirant Wrightsville Management, Inc., Mirant Wrightsville Investment, Inc., and Wrightsville Development Funding, LLC, on one hand, and AECC, on the other hand; and (b) provide notice to the non-Debtor parties to the Assumed Contracts and Permits and Easements with an opportunity to object to (i) the assumption or assignment, (ii) the Cure Amount relating to the Assumed Contracts, or (iii) both. Moreover, the Debtors will provide notice of the Sale Hearing and the auction for the sale of the Wrightsville Assets to be published once in The New York Times (National Edition) and in the Arkansas Democrat-Gazette. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors 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. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Puts Low-B Ratings on Three Mortgage Certs. ----------------------------------------------------------------- Fitch Ratings-New York-April 19, 2005 Fitch Ratings places Morgan Stanley Dean Witter Capital I Inc., commercial mortgage pass-through certificates series, 2001-Top 1 on Rating Watch Negative: -- $5.7 million class K 'B+'; -- $6.6 million class L 'B'; -- $3.1 million class M 'B-'. The classes are placed on Rating Watch Negative due to the recent transfer of the third largest loan into special servicing and an increase in Fitch's loss expectation for loans currently in special servicing. The third largest loan (4.21%) is an office property located in San Jose, Calif. The loan transferred to the special servicer in February 2005 due to monetary default. The special servicer has filed notice of default and is attempting negotiate a possible Deed In Lieu with the borrower. Updated appraisal and environment reports have been ordered. There are two additional delinquent loans (1.21%) with the special servicer as well as two real estate owned -- REO -- properties (1.61%). The classes will remain on Rating Watch Negative until the disposition plan of the third largest loan is known or losses become imminent from the sale of the REO properties. NATIONAL ENERGY: Court Confirms ET Debtors' First Amended Plan -------------------------------------------------------------- On April 19, 2005, the Hon. Paul Mannes of the U.S. Bankruptcy Court for the District of Maryland confirmed the First Amended Plan of Liquidation for NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures pursuant to Section 1129 of the Bankruptcy Code. The Liquidating Debtors are authorized, but not directed, to reorganize, merge, convert, or dissolve entities and businesses that the Liquidating Debtors deem necessary or appropriate to effectuate their liquidation. The Liquidating Debtors are empowered to execute, deliver, file or record contracts, instruments, releases, and other agreements or documents and take all actions and perform all acts, including expending funds, reasonably necessary or appropriate to consummate, effectuate, implement, and further evidence the terms and conditions of the Liquidation Plan. In the event the Liquidation Plan becomes effective: (a) The Liquidating Debtors will retain, and confirmation of the Liquidation Plan will vest in the Liquidating Debtors, all property of their estates except any property of their estates that is abandoned or transferred to any other entity, as permitted under the Bankruptcy Code on or before the Effective Date; and (b) title to all non-excepted property will vest in the Liquidating Debtors, absolutely, unconditionally, indefeasibly and forever, on the Effective Date, free and clear of all Claims, all Liens securing Claims and all Interests -- except to the extent that those -- Claims, Liens, Charges, Encumbrances and Interests have been reinstated, or as otherwise expressly provided for in the Confirmed Plan. The Liquidating ET Debtors will not be liable or responsible for any Claim against or any obligation of the Liquidating Debtors or their estates except as expressly assumed under the Confirmed Plan. Pursuant to the Confirmed Plan, the distributions and rights will be in complete satisfaction, discharge and release, effective as of the Effective Date, of all Claims against and Interests in the Liquidating Debtors -- except those Liens, if any, which are preserved pursuant to the Confirmed Plan -- on any property of the Liquidating Debtors or their estates. Executory Contracts and Unexpired Leases In the event the Effective Date does not occur, the deadline by which the Liquidating Debtors may assume, assume and assign, or reject any executory contracts or unexpired leases -- including non-residential real property leases -- will be governed by any extant orders of the Bankruptcy Court as if no confirmation of a plan has occurred in the ET Debtors' Chapter 11 cases. The Liquidating Debtors will pay the cure amounts related to the Assumed Contracts pursuant to the procedures specifically set under the Confirmed Plan. The Liquidating Debtors will enjoy all of the rights and benefits under the Assumed Contracts without the necessity of obtaining any non-debtor party's consent to the assumption of any Contract. Notwithstanding any change- in-control, default or termination right under any Assumed Contract, the Assumed Contracts will not be in default and may not be terminated as a result of any change-in-control resulting from consummation of the Confirmed Plan. If a dispute arises between the Liquidating Debtors and any non- debtor party to an executory contract or unexpired lease in connection with the assumption of the contract or lease, including disputes as to whether cure amounts should be paid in respect thereof, whether that contract or lease is an executory contract, or has been terminated or expired, the Liquidating Debtors will be entitled to reject that contract or lease by notice to the non-debtor party without further order of the Bankruptcy Court until 30 days following entry of a Final Order establishing the cure amount. In the event that the rejection of an executory contract or unexpired lease by the Liquidating Debtors pursuant to the Confirmed Plan results in damages to the non-debtor party or parties to such contract or lease, that party will have 30 days after the Effective Date to file a proof of claim for damages. If the party fails to file a proof of claim within the 30 days, then the party will be forever barred from filing a claim or sharing in the Distributions under the Plan. Avoidance Actions Nothing in the Confirmed Plan will be construed to impair Energy Services Ventures' rights in any Avoidance Actions against NEGT Energy Trading - Power, L.P. or Power Services Company. Claims Objection Deadline Subject to further Court order, objections to Claims or Interests may be filed by the Liquidating Debtors or any other appropriate party-in-interest on or before 120 days after the later of: (a) the Effective Date; or (b) the date a Claim or Interest is filed with the Court and served on counsel for the Liquidating Debtors. A Claim may not be filed after the Confirmation Date without the prior authorization of the Court. A Claim may be amended after the Confirmation Date solely to decrease the amount of the Claim. The confirmation of the Plan -- subject to the occurrence of the Effective Date -- will: (a) discharge the Liquidating Debtors from: -- any debt or liability that arose before the Confirmation Date, or which might at any time on or after the Confirmation Date arise out of or relate, directly or indirectly, to any pre-Confirmation Date acts or omissions, any debt of the kind specified in Section 502(g), (h), or (i); -- all Claims treated in the Plan; -- all contingent and unliquidated liabilities of every type and description, to the fullest extent discharge of the liabilities is permitted under the Bankruptcy Code; and -- all other Claims against the Liquidating Debtors that were outstanding, accrued or existing, or might reasonably have been asserted, on the Confirmation Date, in each instance whether or not the Claim is filed or deemed filed, whether or not the Claim is Allowed, and whether or not the holder of the Claim has voted on the Plan; and (b) terminate all Interests in the Liquidating Debtors and all rights and Interests and Claims of the holders of all Claims against and Interests in the Liquidating Debtors. Plan Effective Date The Effective Date will occur on a date mutually acceptable to the Liquidating Debtors and the ET Committee, but no event later than the first Business Day that is at least 30 days after the Confirmation Date. The United States Trustee's Confirmation Objection has been resolved. The remaining Objections, to the extent not withdrawn, are overruled. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHERN OFFSHORE LIMITED: Section 304 Petition Summary ------------------------------------------------------- Petitioner: Michael W. Morrison Philip W. Wallace Joint Provisional Liquidators Debtor: Northern Offshore Limited Crown House 4 Par-La-Ville Road Hamilton, HM08 Bermuda Case No.: 05-41451 Type of Business: The Debtor serves as a holding company for a group of 15 wholly owned subsidiaries that operate offshore oil and gas drilling and production vessels in various regions of the world, including the North Sea and Southeast Asia. The Debtor filed this case in order to implement a consensual restructuring of the Debtor's existing debt obligations in the U.S., the bulk of which are governed under New York Law. Existing shareholders will retain up to 2% of the restructured share capital of the Debtor and holders of the Existing Notes will receive the remaining 98%. Section 304 Petition Date: April 18, 2005 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Petitioner's Counsel: Martin N. Flics, Esq. Linklaters 1345 Avenue of the Americas, 19 Floor New York, New York 10105 Tel: (212) 424-9000 Fax: (212) 424-9100 Financial Condition as of December 31, 2004: Total Assets: $78,860,000 Total Debts: $195,245,000 PILLOWTEX CORP: Committee Probes Executives' Links to Oaktree ------------------------------------------------------------- Elio Battista, Jr., Esq., at Blank Rome LLP, in Wilmington, Delaware, relates that Pillowtex Corporation and its debtor- affiliates have made statements in numerous public filings, including pleadings filed with the Court, that call into question a number of issues relating to the conduct of the Debtors' officers and directors and the management of the Debtors' business before the Petition Date. According to Mr. Battista, these issues include, without limitation: (a) the Debtors' relationship to Oaktree Capital Management LLC and whether certain of the Debtors' officers, directors and managers, who were at the same time acting as officers, directors and managers of Oaktree, advanced their own pecuniary interests in the management of the Debtors' business to the detriment of the Debtors' other creditors; (b) whether certain acts and omissions and the timing of the acts with respect to the liquidation and sale of the Debtors' businesses significantly diminished the potential value to be realized from the Debtors' assets; (c) whether certain acts and omissions relating to the Debtors' issuance of the WARN Act notices exposed the Debtors to millions of dollars of employee claims for severance and claims under the WARN Act to the detriment of the Debtors' estates; (d) whether David A. Perdue received supplemental benefits in exchange for little or no consideration during his brief tenure as Chief Executive Officer of the Debtors, and negotiated the additional benefits while simultaneously negotiating for a CEO position with Dollar General Corporation; (e) whether the Debtors' trade allowances and sales incentive programs were improperly supervised and whether the failures resulted in a significant deterioration in the collectability of the Debtors' customer accounts; and (f) whether the Debtors failed to establish an adequate internal control structure for their financial reporting and whether the recording and accrual of the Debtors' customer sales were improperly managed. To insure that the Debtors' creditors receive the highest return, the Official Committee of Unsecured Creditors seeks to investigate the actions taken by the Debtors' officers and directors after the Debtors' emergence from the first bankruptcy proceeding in May 2002. As only 12 months separated the Debtors' emergence from their first bankruptcy proceeding to the filing of their second petition, Mr. Battista says, certain conduct of the Debtors' officers and directors immediately prior to the July 30, 2003, Petition Date may have resulted in a substantial diminution in the value of the Debtors' business operations, either as a result of the exposure to significant claims of liability or erosion of asset values. Mr. Battista relates that the Committee also has become aware of certain transactions involving the Debtors' senior management and certain directors that occurred prior to July 30, 2003. "This requires further examination, including the supplemental benefits granted to David Perdue and the relationship between the Debtors and Oaktree as a controlling shareholder with certain of its officers serving on the Debtors' board of directors." In addition, Mr. Battista continues, the failure by the Debtors' management to properly monitor the Debtors' sales incentive programs and properly supervise the Debtors' accrual of customer sales and sales-related expenses may have significantly undermined the value of the Debtors' receivables. Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, the Committee seeks the Court's authority to conduct examinations of: (a) the Debtors; (b) certain current and former officers, directors, executives, managers and employees of the Debtors, including, without limitation: -- Scott Graves, -- Kenneth Liang, -- Bradley Dietz, -- Michael Harmon, -- Scott Shimizu, -- Eric Blough, -- John Sterling, -- John Wahoski, -- David Perdue, -- Donald Mallo, -- Michael Ganaway, -- James Seery, and -- James Fogarty; (c) Oaktree; (d) certain current and former officers, directors, executives, managers and employees of Oaktree, including, without limitation, Messrs. Graves and Liang; and (e) any and all other parties involved in, or with relevant knowledge of, any of the matters including, without limitation, any professionals who may have advised or provided services to the Debtors. Bankruptcy Rule 2004 provides that, upon the motion of any party- in-interest, the Court may order the examination of any person relative to the acts, conduct or property of the Debtor, or any matter that may affect the administration of the Debtor's estate. Mr. Battista also reminds the Court that under Section 1103 of the Bankruptcy Code, the Committee has a duty to investigate, among other things, the acts, conduct, assets, liabilities and business operations of the Debtors, as well as all other matters relevant to the Debtors' bankruptcy cases. To properly conduct this investigation, the Committee requires considerable information from various parties. Besides, Mr. Battista says, it is necessary and appropriate for the Committee to conduct Rule 2004 examinations to insure that the Debtors' creditors receive the highest distribution possible. Discovery Conducted by the Committee Prior to April 1, 2005, the Debtors have provided the Committee with certain documentation on a consensual basis. However, Mr. Battista says, this consensually delivered documentation is only a small fraction of the documents and information required by the Committee and contains multiple redactions. Additionally, the Committee contacted the Debtors' counsel, Debevoise & Plimpton LLP, to obtain contact information for the Discoverable Parties and their counsel to arrange for a mutually agreeable time for examinations and productions of documentation. Upon learning of the Committee's proposed examination, the Debtors notified the carrier for their D&O insurance to arrange for the defense of the Discoverable Parties. Mr. Battista relates that the Debtors' D&O Insurance carrier is presently determining the appropriate counsel to be retained on behalf of the Discoverable Parties. The Committee seeks the Court's authority to serve on each of the Discoverable Parties, subpoenas requiring: (a) the production of documents relating to the applicable areas of investigation; and (b) the appearance of the Discoverable Parties who have personal knowledge and information relating to the applicable issues for examination. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold 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), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) PROTECTION ONE: Fitch Upgrades 2 Junk Ratings; Puts B+ on New Debt ------------------------------------------------------------------ Fitch Ratings has assigned a 'B+' rating to Protection One's -- POI -- new $275 million senior secured credit facility consisting of: -- Undrawn $25 million revolver due 2010; -- $250 million senior secured term loan due 2011. Fitch has also upgraded and removed Protection One from Rating Watch Positive: -- Senior unsecured debt to 'B-' from 'CC'; -- Senior subordinated notes to 'CCC+' from 'C'. The bank facility and notes were issued by Protection One Alarm Monitoring, Inc., the company's wholly-owned subsidiary. .The rating actions conclude Fitch's review of POI, which was placed on Rating Watch Positive on Nov. 18, 2004. The Rating Outlook is Stable. The rating upgrades reflect POI's improved liquidity and maturity schedule, simplified capital structure, and management's ability to reduce costs while stabilizing revenue and improving the credit quality of the alarm customer portfolio. Fitch also recognizes POI's recurring revenue stream from alarm/monitoring services, large customer base and declining attrition levels, which declined to 7.8% in 2004 from 9% in 2003 and 11.2% in 2002. Rating concerns center POI's relatively small size, necessary capital requirements to acquire customers (limiting any free cash flow), and competition from larger, better capitalized companies. Proceeds from the bank facility will be used to refinance the existing credit facility maturing August 2005, of which $78 million was outstanding as of Dec. 31, 2004, and to retire all of POI's 7.375% senior unsecured notes due August 2005 in the amount of $164.3 million. The bank credit facility contains certain financial covenants including limitations to leverage and customer acquisitions costs, and minimum interest coverage levels. The facility will be secured by a first priority security interest in all of POI's present and future tangible and intangible assets, and all of the capital stock of the company and each of its direct and indirect subsidiaries. Pro-forma for the refinancing, total debt is estimated to be approximately $360 million, consisting of the aforementioned $250 million term loan and the $110.3 million of 8.125% senior subordinated notes due January 2009. Fitch estimates pro-forma leverage, as measured by total debt-to-EBITDA, is 4.1 times compared to 5.8x in 2004 and 6.2x in 2003. Interest coverage is estimated to be in excess of 3.0x. Pro-forma liquidity is expected to consist of the $25 million undrawn revolving credit facility and approximately $12 million of cash. On Feb. 8, 2005, POI completed its previously announced restructuring with Quadrangle Group, the company's largest creditor at the time and its majority equity holder, which reduced POI's credit facility by $120 million to $81 million in exchange for 16 million shares of the company's common stock (on a post- reverse basis). As a result of this transaction, Quadrangle owns 97% of POI's outstanding common stock. POI further reduced its credit facility to $78 million with a $3 million cash payment. Also, on March 11, 2005, POI announced that it repurchased the outstanding principal and accrued interest on its 13.625% senior subordinated discount notes of $30.3 million. Following this transaction, POI's debt balance was reduced to about $353 million, down from $506 million as of Dec. 31, 2004 and $547 million as of Sept. 30, 2004. POI is a provider of security monitoring services, including electronic monitoring and maintenance of alarm systems. Revenues are generated primarily from recurring monthly revenues for monitoring and maintaining the alarm systems that are installed in customers' homes and businesses. POI provides services to residential, commercial and wholesale customers. For 2004, total revenue was $269.3 million compared to $277.1 million in 2003 due to the decline in the customer base. POI had a net decrease of retail and wholesale customers of 12,888 in 2004, compared to a net decrease of 31,295 customers in 2003. The average retail and wholesale customer base was 706,047 for 2004 compared to 728,139 for 2003, while Network Multifamily was essentially flat at 333,170 customers in 2004. EBITDA was $87.8 million (excluding change in control and reorganization costs expenses of $27.8 million) compared to $88.7 million last year, partially reflecting management's cost controls. The company's customer attrition rate during 2004 declined to 7.8% from 9% in 2003 and 11.2% in 2002, reflecting mostly the improved performance and lower attrition levels for residential customers. The customer attrition rate for the company's Network Multifamily reporting unit was 6.4%, up from 5.8% in 2003. QUAKER FABRIC: BofA Provides 5-Year $70 Million Senior Bank Loan ---------------------------------------------------------------- Quaker Fabric Corporation (NASDAQ Symbol: QFAB) executed a commitment letter, subject to certain conditions, from Bank of America, N.A., which would provide Quaker with a five year, $70 million secured senior credit facility. "We have enjoyed the benefit of an excellent working relationship with Bank of America and its predecessors for many years now and are pleased by their decision to issue this commitment letter to us," commented Larry A. Liebenow, Quaker's President and CEO. "This is a welcome and very significant milestone in our efforts to put new financing arrangements in place consistent with Quaker's current needs. Consummation of this transaction will allow us to repay our outstanding indebtedness to the Prudential in full and is intended to provide us with the capital needed to pursue the execution of our corporate strategy over the next several years. We look forward to working with the bank to bring this financing to a successful conclusion as quickly as the required due diligence and documentation processes permit," added Paul J. Kelly, Quaker's Vice President and CFO. About the Company Quaker Fabric Corporation is a leading manufacturer of woven upholstery fabrics for furniture markets in the United States and abroad, and the largest producer of Jacquard upholstery fabric in the world. For the year ended January 1, 2005, the Company had net sales of $289.1 million, a net loss of ($2.0 million,) and diluted and basic losses per share of ($0.12). * * * As reported in the Troubled Company Reporter on March 29, 2005, Quaker Fabric Corporation of Fall River, Quaker Textile Corporation, and Quaker Fabric Mexico, S.A. de C.V., as Borrowers, and Quaker Fabric Corporation, the Borrowers' Parent Company Guarantor, entered into a Forbearance and Amendment to the Second Amended and Restated Credit Agreement dated as of Feb. 14, 2002, with Fleet National Bank on March 11, 2005. Banks Agree to Waive Default Under the Bank Forbearance Agreement, the Borrowers and Quaker Fabric Corporation acknowledged that in the absence of a waiver from the Bank, they would be in breach of both the debt service coverage ratio covenant and the profitable operations covenant in the Credit Agreement for the last quarter of 2004 and possibly in violation of those covenants and the leverage ratio and senior debt ratio covenants for each of the first and second quarters of 2005 and that these breaches would constitute Events of Default, as defined in the Credit Agreement. In the Bank Forbearance Agreement, the Bank agreed to waive the Specified Bank Defaults through the period ending July 15, 2005, subject to certain conditions including the Bank's receipt of fully executed copies of a similar waiver from Pruco Life Insurance Company and The Prudential Insurance Company of America, holding $45 million of Senior Notes due October 2005 and 2007, with respect to the fixed charge coverage ratio, senior debt ratio and the total debt ratio set forth in the Note Agreements. In the Bank Forbearance Agreement, the Borrowers and the Company agreed that they will repay all amounts outstanding, and cash collateralize all letters of credit issued, under the Credit Agreement on July 16, 2005, and that at such time the Bank will have all of its rights and remedies under and in respect of the Credit Agreement and applicable law, including those arising by virtue of the occurrence of the Specified Bank Defaults. The parties previously had entered into waivers on December 20, 2004, February 28, 2005, and March 4, 2005, with respect to the debt service coverage ratio covenant and the profitable operations covenant in the Credit Agreement and including a reduction in the Bank's Commitment to $20,000,000. RCN CORP: Bankruptcy Court Lifts Injunction in ERISA Litigation --------------------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York rules that Debra K. Craig and all other similarly situated parties may name the Reorganized Debtor, RCN Corporation, as a nominal defendant in the pending consolidated action captioned In re RCN Corporation ERISA Litigation, No. 04-cv-5068 (SRC)(D.N.J.). Ms. Craig, et al., may enforce any judgment obtained against RCN Corp. solely against any applicable insurance companies and only up to limits of any applicable insurance coverage, to the extent the coverage is available. Nothing will prevent Ms. Craig, et al., from pursuing litigation claims against current or former directors, officers, employees, partners, members, or managers of RCN Corp., or any other Reorganized Debtor; and collecting in full any judgment the parties may obtain against RCN Corp. and other Reorganized Debtors. Ms. Craig has waived her right to further appeal the denial of leave to file a late proof of claim pending at In re RCN Corporation, No. 04-cv-10063 (DC) (S.D.N.Y.). Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect on December 21, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. RELIANCE GROUP: Court Approves Minor Correction to RFSC Plan ------------------------------------------------------------ The Official Unsecured Creditors' Committee asks the Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to approve the proposed correction to the First Amended Plan of Reorganization of Reliance Financial Services Corporation. The Committee seeks "to correct an inadvertent minor error," within Section 12.3 of the RFSC Plan, says Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, in New York City. According to Mr. Gulkowitz, Section 12.3, as currently drafted, is inconsistent with the terms of the Confirmation Order and with other related provisions of the RFSC Plan. Section 12.3 establishes December 31, 2004, as the deadline for all conditions for the RFSC Plan's Effective Date to be satisfied or waived. Due to uncontrollable delays, the entire confirmation process was concluded almost a month later than anticipated. Section 12.3 of the RFSC Plan was never amended to reflect that delay. To remedy this situation, the Committee asks the Court to deem all references to "December 31, 2004" in Section 12.3 of the RFSC Plan to mean "December 31, 2005." Mr. Gulkowitz notes that the RFSC Plan and the Confirmation Order permit modifications to the Plan prior to consummation. In fact, Mr. Gulkowitz says, the proposed modification falls squarely within the types of changes permitted by the Confirmation Order. The correction will resolve an inadvertent inconsistency to avoid any potential uncertainty and carry out the provisions of the Bankruptcy Code, Mr. Gulkowitz asserts. Brian E. Goldberg, Esq., at Orrick, Herrington & Sutcliffe, in New York City, assures the Court that the proposed "small change will have no adverse impact on the parties-in-interest to the case." The documents for consummation of the Plan have been delivered into escrow and the parties have taken other steps necessary to consummate the RFSC Plan, Mr. Goldberg adds. * * * After a hearing, Judge Gonzalez grants the Creditors' Committee's request. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) RIVERSTONE INSURANCE: Section 304 Petition Summary -------------------------------------------------- Petitioner: Catherine Geraldine Regan Foreign Representative Debtors: RiverStone Insurance (UK) Limited aka Dai-Tokyo Insurance Company (UK) Limited 161-163 Preston Road Brighton, East Sussex BN1 6AU -- and -- Sphere Drake Insurance Limited fka Odyssey Re (London) Limited Park Gate, 161-163 Preston Road Brighton, East Sussex BN1 6AU Case Nos.: 05-12678 and 05-12681 Type of Business: RiverStone Insurance (UK) Limited carry out and effect contracts of insurance in the U.K. Sphere Drake Insurance Limited's business comprises policies, reinsurance, liabilities and assets that are supported by U.S. law. The U.K. Scheme provides for the transfer of the policies, reinsurance, assets and liabilities of 13 companies, including Sphere Drake, to RiverStone. The High Court of England and Wales, in London, England, sanctioned the U.K. Scheme on December 15, 2004, and the plan took effect on December 31, 2004. Section 304 Petition Date: April 19, 2005 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Petitioners' Counsel: Dina Gielchinsky, Esq. Lovells 900 Third Avenue, 16 Floor New York, New York 10022 Tel: (212) 909-0600 Fax: (212) 909 0666 No financial data was delivered to the U.S. Bankruptcy Court with the Sec. 304 Petition. Sphere Drake Insurance Limited provided the U.S. Bankruptcy Court with a list of U.S. parties-in-interest. A copy of that list is available for a fee at: http://www.researcharchives.com/bin/download?id=050420025337 SHAW COMMS: Buys Back 4.35 Million Class B Shares for Cancellation ------------------------------------------------------------------ Shaw Communications Inc. (TSX:SJR.NV.B) (NYSE:SJR) recently repurchased a total of 4,350,000 Class B Non-Voting Participating Shares for cancellation pursuant to its normal course issuer bid. These repurchases are consistent with the Company's intention to place a greater priority on repurchasing shares over the next 12-month period. The recent number of shares repurchased represents under 2.0% of the Class B Non-Voting Participating Shares outstanding, and this brings the fiscal year-to-date total to 5,484,600 Class B Non- Voting Participating Shares that are to be cancelled under the Company's normal course issuer bid. Dependent upon market conditions, the Company may repurchase additional shares in accordance with the applicable rules of the Toronto Stock Exchange. Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone and satellite direct-to-home services to approximately 3.0 million customers. Shaw is traded on the Toronto and New York stock exchanges and is a member of the S&P/TSX 60 index (Symbol: TSX - SJR.NV.B, NYSE - SJR). * * * As reported in the Troubled Company Reporter on March 7, 2005, Standard & Poor's Ratings Services revised its outlook to positive from stable on Calgary, Alberta-based Shaw Communications Inc., Western Canada's largest cable operator. At the same time, Standard & Poor's affirmed its 'BB+' long-term corporate credit and senior unsecured debt ratings, and its 'B+' preferred stock rating. "The revised outlook reflects expectations for continued improvement in Shaw's financial risk profile. Shaw has reduced debt by almost C$600 million in the past two years, and has demonstrated modest EBITDA growth," said Standard & Poor's credit analyst Joe Morin. The company's operating performance should continue to show modest improvements for the foreseeable future, which will support further debt reduction from free operating cash flow. SOVEREIGN BANCORP: Fitch Affirms Ratings & Revises Outlook to Pos. ------------------------------------------------------------------ Fitch Ratings has affirmed the ratings of Sovereign Bancorp (SOV; long-term/short-term 'BBB-/F3') and its bank subsidiary, Sovereign Bank (long-term/short-term 'BBB/F2'). At the same time, Fitch has revised both SOV and Sovereign Bank's Rating Outlook to Positive from Stable. The revision in the Rating Outlook is supported by SOV's consistent earnings performance, sound and improved asset quality, and the company's profitable franchise expansion. The revision also reflects SOV's improved financial flexibility associated with a decline in the parent company's borrowing cost and a reduction in double leverage. That said, while improved, the company's profile still exhibits a significant level of parent company debt and a relatively modest level of tangible equity. Ratings affirmed by Fitch and Rating Outlook revised to Positive from Stable: Sovereign Bancorp, Inc. -- Short-term 'F3'; -- Long-term senior 'BBB-'; -- Subordinated debt 'BB+' -- Individual 'C'; -- Support '5'. Sovereign Bank -- Short-term 'F2'. -- Long-term Senior 'BBB'; -- Subordinated Debt 'BBB-' -- Long-term Deposits 'BBB+'; -- Short-term deposit 'F2'; -- Individual 'B/C'; -- Support '4'. Ratings Affirmed: Sovereign Capital Trust I -- Preferred Stock 'BB'. Sovereign Capital Trust IV -- Preferred Stock 'BB'. ML Capital Trust I -- Preferred Stock 'BB'. Sovereign Real Estate Investment Trust -- Preferred Stock 'BB+'. STEAKHOUSE PARTNERS: Auditors Raises Going Concern Doubt -------------------------------------------------------- Steakhouse Partners Inc.'s 2004 annual report contains Mayer, Hoffman, McCann P.C.'s Auditors Report doubting the company's ability to continue as a going concern. The Company has been unable to earn a profit during any year. The Company's working capital deficit was $9.5 million and the company balance sheet shows a 0.2:1 current ratio at Dec. 28, 2004. The Company says that the success of its business depends on its ability to expand the number of its restaurants, either by developing or acquiring additional restaurants. Its success also depends on its ability to operate and manage successfully its growing operations. The ability to expand successfully will depend upon a number of factors, including: * the availability and cost of suitable restaurant locations for development; * the availability of restaurant acquisition opportunities; * the hiring, training, and retention of additional management and restaurant personnel; * the availability of adequate financing; * the continued development and implementation of management information systems; * competitive factors; and * general economic and business conditions. Some of these factors, the Company says, are not in its control, while others must be diligently pursued. Steakhouse Partners, Inc. owns and operates 25 steakhouse full- service restaurants located in 8 states. The restaurants specialize in complete steak and prime rib meals, and also offer fresh fish and other lunch and dinner dishes. The Company serves approximately 3 million meals annually and operates principally under the brand names of Hungry Hunter, Hunter Steakhouse, Mountain Jack's and Carvers. Steakhouse Partners filed for Chapter 11 protection on February 15, 2002 (Bankr. C.D. Calif. (Riverside Div.) Case No. 02-12648). The Company emerged from bankruptcy on December 31, 2003, pursuant to a plan of reorganization. As a result of the Plan of Reorganization, all shares of the Company's common stock, preferred stock, stock options and warrants outstanding as of December 31, 2003 were cancelled and no longer exist. On March 22, 2004, 4,500,000 shares of the Company's "new" common stock were issued in connection with the Company's emergence from bankruptcy. As of the date hereof, the only validly issued and outstanding shares of the Company's common stock are those, which have been issued by the Company since March 22, 2004 and trade under the symbol "STKP.PK". STELCO INC: Councilman Supports Tricap's Appointment as Advisor --------------------------------------------------------------- The United Steelworkers is pleased with a motion passed Tuesday by the Planning and Economic Development Committee of Hamilton City Council urging Stelco Inc. to consent to the Steelworkers' appointment of Tricap Management Limited as a financial advisor for the purpose of recapitalizing Stelco. "This is a major show of support for the union's efforts toward saving the company and protecting the future of employees and retirees," said Scott Duvall, president of the Steelworkers' Local 5328 (Stelwire). "We hope that City Council as a whole will endorse its economic development committee's motion when it meets on April 27th." The motion calls on Stelco to cooperate with the union and Tricap, including providing access to Stelco's books, records, data, management and professional advisers. As well, the motion calls on the company to reconsider its initial rejection of the letter of intent signed last week by the union and Tricap, Brascan Corporation's (NYSE/TSX: BNN) restructuring fund. The letter outlines a C$1.35 billion plan to recapitalize Stelco Inc., and remove the Company from protection under the Companies' Creditors Arrangement Act -- CCAA. Tricap will provide advisory services and, as required, financial assistance to the union in the development, negotiation and implementation of a plan of arrangement that is acceptable to the Steelworkers and removes Stelco from CCAA protection. "We want to thank City Councillor Terry Whitehead for bringing forward this motion," said Bill Ferguson, president of Local 8782 (Stelco, Lake Erie). It's clear that the future of this company and of its active and retired employees is of great public interest." Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. STRUCTURED ASSET: Fitch Junks Class 3-B-4 1992-2 Mortgage Issues ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Structured Asset Mortgage Investments Inc. issues: Series 1999-1 Group 2 -- Class 2A affirmed at 'AAA'; -- Class 2B-1 affirmed at 'AAA'; -- Class 2B-2 upgraded to 'AA' from 'A'; -- Class 2B-3 upgraded to 'BBB+' from 'BBB'; -- Class 2B-4 downgraded to 'B' from 'BB'; -- Class 2B-5 downgraded to 'CC' from 'CCC'; Series 1999-2 Group 3 -- Class 3A affirmed at 'AAA'; -- Class 3-B-1 affirmed at 'AA+'; -- Class 3-B-2 affirmed at 'A+'; -- Class 3-B-3 downgraded to 'BB' from 'BBB'; -- Class 3-B-4 downgraded to 'CCC' from 'B'; -- Class 3-B-5 remains at 'C'; Series 2000-1 Group 2 -- Class II-A-1 affirmed at 'AAA'; -- Class II-B-1 affirmed at 'AAA'; -- Class II-B-2 upgraded to 'AAA' from 'AA+'; -- Class II-B-3 upgraded to 'AA-'from 'A+'; -- Class II-B-4 affirmed at 'BBB+'; -- Class II-B-5 downgraded to 'B+' from 'BB+'. The upgrades, affecting approximately $1.2 million of outstanding certificates, are being taken as a result of increased levels of credit support, in relation to collateral performance. The affirmations, affecting approximately $20 million of outstanding certificates, are due to credit enhancement levels consistent with consistent with future loss expectations in relation to collateral performance. The downgrades, affecting approximately $1.4 million of the outstanding certificates, reflect the deterioration of credit enhancement relative to consistent or rising monthly losses, in addition to an upward trend in delinquencies. As of the March 25, 2005 distribution date series 1999-1 Group 2 has a pool factor of approximately 8%. Twelve percent of that remaining collateral is more than 90 days delinquent (inclusive of REO, Foreclosure and Bankruptcy), accelerating the credit risk to the 2B-4 and 2B-5 classes, which are currently only benefiting from 1.49% and 3.47% credit enhancement, (originally 0.5% and 0.9%), respectively, in the form of subordination. For the series 1999-2 Group 3, as of March 25, 2005, there was 11% of the original collateral remaining. Of the remaining collateral, approximately 17% is more than 90 days delinquent, increasing the credit risk for the 3B-3 and 3B-4 subordinate classes. As of the March 25, 2005, distribution date, series 2000-1 Group 2 has a remaining pool factor of 3%. Approximately 4% of the remaining collateral is in FC. Class 3B-5 currently has only 2.4% credit enhancement, in the form of subordination. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ Fitch will continue to monitor these deals. TEKNI-PLEX: Amending Solicitation to Show Increased Indebtedness ---------------------------------------------------------------- Tekni-Plex, Inc., is revising the terms of the consent solicitation launched on March 15, 2005, in respect of a proposed amendment to the indenture dated as of June 21, 2000, among the Company, certain Subsidiary guarantors and HSBC Bank USA, National Association, as trustee, relating to its 12-3/4% Senior Subordinated Notes Due 2010. As previously announced, the expiration date of the consent solicitation has been extended to 5:00 p.m., New York City time, on April 18, 2005. In the consent solicitation launched on March 15, 2005, the Company requested an increase in the amount of indebtedness it could have outstanding at any one time under the Indenture by $125 million. Through the revised consent solicitation, the Company is now requesting an increase in the amount of indebtedness it can have outstanding at any one time under the Indenture by an amount (not to exceed $90 million at any one time outstanding) equal to 150% of the aggregate net cash proceeds received after April 1, 2005, from the issuance of, or equity contribution with respect to, the Company's capital stock. In addition, the revised amendment of the Indenture would add a covenant that limits the type of acquisitions the Company and certain of its subsidiaries can make. The Company is also increasing the consent fee it will pay to holders of the Notes that have delivered valid consents from $5.00 to $20.00 per $1,000 principal amount of Notes. Tekni-Plex is based in Coppell, Texas. The Company's balance sheet dated Dec. 31, 2004, shows $728 million in assets and a $114 million shareholder deficit. * * * As reported in the Troubled Company Reporter on Feb. 21, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Tekni-Plex, Inc., to 'CCC+' from 'B-', and placed the rating on CreditWatch with negative implications. Other ratings were also lowered and placed on CreditWatch with negative implications. This follows the company's disappointing operating results for the second quarter of fiscal 2005, strained liquidity, and violation of financial covenants under its credit agreement for the period ended Dec. 31, 2004. "The CreditWatch placement reflects heightened concerns regarding the company's ability to preserve access to its credit facility, its strained liquidity given its upcoming interest payments, and deterioration in the company's already stretched and highly leveraged financial profile," said Standard & Poor's credit analyst Liley Mehta. TELESYSTEM INT'L: Sets May 19 Meeting to Okay Sale to Vodafone -------------------------------------------------------------- Telesystem International Wireless Inc. (TSX:TIW)(NASDAQ:TIWI) obtained an interim court order authorizing it to hold a Special Meeting of shareholders on May 19, 2005 to approve a Plan of Arrangement. The record date for the Special Meeting has been set at April 18, 2005. As announced on March 15, 2005, the Company is seeking approval for a Plan of Arrangement for the sale of its indirect interest in ClearWave N.V. to Vodafone International Holdings B.V. for approximately US$3.5 billion (subject to adjustments) and the assumption of net debt of approximately US$950 million (as at December 31, 2004). After execution of the sale, the Company will proceed with a court-supervised plan for the distribution of the net proceeds from the sale along with other net cash held to TIW' shareholders. Pursuant to the Interim Order, the Arrangement must be approved by at least two-thirds of the votes cast by the shareholders, present or voting by proxy, at the Special Meeting. Each shareholder will be entitled to one vote per Common Share held for the purpose of voting upon the Arrangement. The formal notice of special meeting and the information circular of TIW contain a detailed description of the proposed Arrangement and outline the actions to be taken at the special meeting of shareholders. These materials will be available shortly by accessing: * TIW's web site http://www.tiw.ca/ * SEDAR http://www.sedar.com/ -- or -- * EDGAR http://www.sec.gov/ Telesystem International Wireless Inc. (B+/Watch Pos/--) -- http://www.tiw.com/-- is a leading provider of wireless voice, data and short messaging services in Central and Eastern Europe with over 6.1 million subscribers. TIW operates in Romania through MobiFon S.A. under the brand name Connex and in the Czech Republic through Oskar Mobil a.s. under the brand name Oskar. * * * As reported in the Troubled Company Reporter on Mar. 18, 2005, Standard & Poor's Ratings Services placed its ratings on MobiFon Holdings B.V. and parent Telesystem International Wireless, Inc. (Corp. Credit B+) on CreditWatch with positive implications following the announced definitive agreement between TIW and U.K.'s Vodafone Group PLC (A/Stable/A-1), whereby Vodafone will purchase TIW's 79% ownership interest in MobiFon a.s. (79%-owned subsidiary of MobiFon Holdings) through interim holding company Clearwave N.V. The CreditWatch placement also reflects the improving standalone credit profile of MobiFon. TEXAS BOOT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Texas Boot, Inc. aka Boot Country aka Boot Factory aka Acme Boot Retail 311 Plus Park Blvd., Suite 200 Nashville, Tennessee 37217 Bankruptcy Case No.: 05-04873 Type of Business: The Debtor is a boot manufacturer and retailer. Chapter 11 Petition Date: April 20, 2005 Court: Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: James R. Kelley, Esq. Neal & Harwell 150 4th Avenue North, Suite 2000 Nashville, Tennessee 37219 Tel: (615) 244-1713 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 ------ --------------- ------------ Genesco, Inc. Contract asset $498,659 P.O. Box 731 purchase Nashville, TN 37202 Day Leather Corporation Trade material $347,968 P.O. Box 1131 Addison, IL 60101 Nine West Boot Corporation Contract asset $236,326 125 Westchester Avenue purchase White Plains, NY 10601 Motrex Corporation Trade-material $154,379 Porto Trading SA Trade-material $133,064 Solo-tech Trade-material $122,071 Finklestein, Sidney, Lease of real $106,486 Mildred & Max property National City Bank Overdraft of bank $97,853 Account Brockton Leather Comapny Trade-material $97,773 Maxey Sales, Inc. Trade-material $97,434 North East Marketing, Inc. Trade-material $97,704 Edsim Leather Trade-material $89,983 Tabcomp Trust Insurance workmens $83,459 Comp Arvind Footwears PVT Ltd. Trade-material $81,166 United Parcel Service Trade-material $67,327 Lebanon Warehouse Company Lease of real $62,940 Property Swiss Log Trade-software $55,509 Support Lattimore Black Morgan & Trade-professional $48,956 Cain, PC service Gutmann Leather Co., Inc. Trade-material $46,216 U.S. Trustee Bankruptcy fee $46,000 TFM S.A.: Places $460 Million of 9-3/8% Senior Notes Due 2012 ------------------------------------------------------------- TFM, S.A. de C.V., a subsidiary of Kansas City Southern (NYSE: KSU), placed US$460 million in aggregate principal amount of its 9-3/8% Senior Notes due 2012. The Notes have not been registered under the United States Securities Act of 1933, as amended, and were offered only to qualified institutional buyers under Rule 144A and outside the United States in compliance with Regulation S. TFM will be required pursuant to a registration rights agreement to file an exchange offer registration statement with the Securities and Exchange Commission with respect to an offer to exchange the Notes. TFM will apply the net proceeds of the sale of the Notes to refinance existing indebtedness through the repurchase of its outstanding 11.75% Senior Discount Debentures due 2009. The Notes have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. About the Company TFM, S.A. de C.V., based on Mexico City, Mexico, owns the concession to operate Mexico's northeast railway. TFM, S.A. de C.V. is owned by Grupo TFM and the Government of Mexico. Grupo TFM is owned by Kansas City Southern. Kansas City Southern, based in Kansas City, Missouri owns and operates several railroads including Kansas City Southern Railway, a Class I U.S. railroad. * * * As reported in the Troubled Company Reporter on Apr. 15, 2005, Moody's Investors Service assigned a B2 rating to $460 million of new senior unsecured notes expected to be issued by TFM, S.A. de C.V. to fund the tender for its existing 11.75% Notes. Moody's also affirmed the ratings on TFM's other rated debt. Moody's said the rating outlook is negative. THYSSENKRUPP BUDD: Budcan Buys 91.5% of Minority Common Shares -------------------------------------------------------------- Budcan Holdings Inc., a subsidiary of ThyssenKrupp Budd Company, successfully completed its offer for all of the common shares of ThyssenKrupp Budd Canada Inc. (TSX: BUD) that it does not already own at a price of Cdn. $9.00 per common share in cash. At the expiry of the offer, more than 783,732 common shares of Budd Canada, or approximately 91.5% of the more than 856,000 minority common shares outstanding, were validly deposited to the offer and not withdrawn. Budcan Holdings has taken up and paid for the common shares deposited. As more than 90% of the common shares of Budd Canada not owned by Budcan Holdings and its affiliates at the commencement of the offer have been acquired, Budcan Holdings will effect a compulsory acquisition of the remaining shares not deposited to the offer, as described in its offer and circular. Budcan Holdings intends to apply to the Toronto Stock Exchange to de-list Budd Canada's common shares from the exchange. ThyssenKrupp Budd Canada Inc. is an automotive manufacturer specializing in the production of light truck and sport utility vehicle frames and chassis components. The Corporation reported a net loss in the first quarter of fiscal 2005 of $7,552 resulting in further deterioration to its financial position. While cash flow was slightly positive in the first quarter of fiscal 2005, shareholder's deficit continued to increase. The Corporation continues to be dependent on debt financing provided by ThyssenKrupp Finance Canada, Inc., an affiliated corporation. Sales continued to decline due to the mentioned market conditions. The Corporation continued its efforts to reduce manpower in line with production levels and to implement other cost reduction initiatives. As at December 30, 2004, borrowing against the TKFC line of credit totaled $203,228, down from $214,227 as at Sept. 30, 2004 due to a positive cash flow from operations in the first quarter. TKFC has agreed to increase the line of credit through March 31, 2006 to $310,000 from its previous limit of $250,000. This line of credit will continue to provide financing to the Corporation up to the specified borrowing limit of $310,000 until March 31, 2006, provided that the Corporation continues to be part of the ThyssenKrupp group. TKFC has waived its right to call all advances made under this line of credit through March 31, 2006. The Corporation's ability to continue as a going concern is uncertain. The Corporation has incurred significant losses in the past four years, and continuing into the first quarter of this fiscal year. While the Corporation did not have to rely on non- operational sources of financing from TKFC to fund operations in the first quarter of fiscal 2005, the Corporation does have significant financial obligations arising in fiscal years 2005 and 2006. These include the repayment of bank loans of $58,000 in 2005 and $38,000 in 2006 and estimated contributions to the employees' defined benefit pension plans of $24,917 per year in fiscal years 2005 through 2008. The deferred pension costs, which fluctuated in each reporting period, were attributable to the actuarial and accounting timing differences. TRANSMETA CORP: Increases First Quarter Cash Guidance to $42 Mil. ----------------------------------------------------------------- Transmeta Corporation (NASDAQ:TMTA) disclosed continuing progress on its new business model, including a better than expected cash position as of March 31, 2005. Transmeta now expects to report $42 million in cash, cash equivalents and short-term investments at the close of its first fiscal quarter ended March 31, 2005 compared with the prior guidance of approximately $38 million. "From a cash perspective, we started the second quarter in a solid financial position and we are on track to reduce our negative quarterly cash flow run rate to $5 million or less by the end of the third quarter," said Mark R. Kent, Chief Financial Officer. "As we stated on March 31st, we believe that our ongoing efforts on licensing and strategic collaborations, combined with careful expense management, provide us with sufficient liquidity to successfully execute on our growth strategies." "We feel confident that the strategic direction and the steps we have already taken are creating positive results," commented Arthur L. Swift, President and CEO, Transmeta Corporation. "Our relationship with Sony is progressing well, and we already have our teams engaging on Sony's programs. We are optimistic about our Sony alliance, and we look forward to providing an update on this and other elements of our new business model when we announce our first quarter 2005 financial results in the first half of May." About Transmeta Corporation Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, Transmeta first became known for designing, developing and selling its highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We also develop advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices. To learn more about Transmeta, visit http://www.transmeta.com/ * * * Going Concern Doubt "[T]he Company's recurring losses from operations raise substantial doubt about its ability to continue as a going concern," ERNST & YOUNG LLP says in its audit report dated March 25, 2005, addressed to the company's Board of Directors and Stockholders. At Dec. 31, 2004, the Company had $53.7 million in cash, cash equivalents and short-term investments compared to $120.8 million and $129.5 million at December 31, 2003 and December 31, 2002, respectively. The Company believes that its existing cash and cash equivalents and short-term investment balances and cash from operations would not be sufficient to fund its operations. TRUMP ENTERTAINMENT'S: Moody's Junk $1.25B Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B2 to Trump Entertainment Resorts Holdings, L.P.'s -- Trump Entertainment -- proposed $500 million senior secured bank credit facility consisting of: -- a $200 million revolver due 2010, -- a $150 million funded term loan due 2012, and -- a $150 million delayed draw term loan due 2012. Moody's also assigned a Caa1 rating to the company's $1.25 billion 8.5% second lien senior secured notes due 2015, as well as a B3 senior implied rating, Caa3 long-term issuer rating, and SGL-3 speculative grade liquidity rating. The ratings outlook is stable. The proposed notes along with the bank facility and a $55 million cash investment from Donald Trump (Chairman), will comprise most of the exit financing, as currently planned, supporting the company's anticipated emergence from Chapter 11 bankruptcy in May 2005. Trump Entertainment will own the assets that were formerly held by Trump Atlantic City and Trump Casino Holdings. The B3 senior implied rating reflects Trump Entertainment's high pro forma leverage -- pro forma debt as a multiple of FYE Dec. 31, 2004 EBITDA is about 6.4 times - and the need to invest significantly in deferred capital expenditures. The company's Atlantic City casinos, which are in need of both maintenance and upgrade type capital investment, are currently competing with new and improved properties in that market, most notably the Borgata, which has grown largely at the expense of Atlantic City's other casino properties. The B3 senior implied rating also incorporates the potential for longer-term competition from neighboring jurisdictions including Pennsylvania, Delaware, Maryland and New York. Positive ratings consideration is given to Trump Entertainment's lower interest costs and improved liquidity following its emergence from bankruptcy. High debt coupons and limited access to capital were two key reasons for the company's past financial difficulties. The company's annual interest costs going forward are expected to be about half of what they were prior to bankruptcy, and will free up about $100 million of cash flow that can be used along with availability under the new revolver and term loan facilities, to upgrade the properties and product. Almost all of the revolver will be undrawn at closing. The Caa1 second lien note rating acknowledges that the notes rank behind Trump Entertainment's senior secured bank debt, which has a first priority security interest on all property and assets of Trump Resorts. The Caa1 rating also acknowledges that, unlike the secured bank debt, the second lien notes will not have a security interest in Trump Indiana, Inc. The second lien note indenture, however, does include a negative pledge provision. Trump Entertainment's Indiana riverboat casino is considerably smaller than its other wholly-owned casino properties in terms of its net revenue and EBITDA contribution (about 12% and 14%, respectively), however, it is currently the most profitable in terms of EBITDA margins and return on invested capital. As a result of the notes second lien status, and lower overall direct collateral value available to it, second lien note holders would likely suffer a disproportionate amount of loss in a distressed recover scenario. The one-notch rating differential between Trump Entertainment's B2 senior secured bank loan rating and B3 senior implied rating reflects the superior recovery profile of the credit facility relative to other debt obligations in the company's capital structure. Moody's decision to assign a higher rating to the senior secured credit facilities was based on an analysis of distressed asset and enterprise values and the determination that senior secured lenders would be adequately protected under distressed circumstances. The stable ratings outlook anticipates that Trump Entertainment will emerge from bankruptcy as currently planned. On March 28, 2005, the company announced that it had reached a resolution with equity holders to support its recapitalization plan. On April 5, 2005, the recapitalization plan was approved by the U.S. Bankruptcy Court. A completed restructuring is expected in May 2005. Ratings upside at this time is limited given the considerable deferred capital expenditure requirement and the uncertainty regarding the timing and degree of any cash flow improvement related to this investment. The ratings could be lowered in the near-term if capital expenditure plans do not proceed as expected, or if operating results and liquidity deteriorate. The company's ability to maintain its current rating over the longer-tem requires operating improvements along with leverage reduction. Separately, Trump Entertainment's ratings, like the ratings of other gaming companies, could be affected either positively or negatively by ongoing activities related to more aggressive expansion/diversification efforts. The SGL-3 speculative grade liquidity rating considers that Trump Entertainment is expected to generate slightly positive cash flow after interest and maintenance capital expenditures over the 12- month period immediately following the company's emergence from bankruptcy. The SGL-3 also considers that the company, post- bankruptcy, will have liquidity in the form of a $200 million revolver and $150 million delayed draw term loan along with about $80 million of unrestricted cash. Additionally, there will be no material debt maturities over the near and intermediate term. The SGL-3 acknowledges that all of the company's assets will be fully encumbered. The following new ratings were assigned: (1) Senior implied rating -- B3; (2) $200 million senior secured revolver due 2010 -- B2; (3) $150 million senior secured term loan due 2012 -- B2; (4) $150 million senior secured delayed draw term loan due 2012 -- B2; (5) $1.25 billion second lien notes due 2015 -- Caa1; (6) Long-term issuer rating -- Caa3; (7) Speculative grade liquidity rating -- SGL-3; and (8) Stable ratings outlook Trump Entertainment Resorts Holdings, L.P. is the reorganized entity that will own the: (1) Trump Taj Mahal Casino Resort, (2) Trump Plaza Hotel and Casino, (3) Trump Marina Hotel Casino, and (4) Trump Casino Hotel. UAL CORP: Court Denies Appointment of Section 1113 Representative ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois correctly denied the United Retired Pilots Benefit Protection Association's request for the appointment of an authorized Section 1113 representative, Marc Kieselstein, Esq., at Kirkland & Ellis, says. The Bankruptcy Code does not authorize an appointment or require the Debtors to negotiate with retired pilots to reject a collective bargaining agreement. The URPBPA's request, under all circumstances, is moot. Either the Debtors will consensually agree with the Air Line Pilots Association to modify their collective bargaining agreement, or there will be no agreement and the Debtors will move forward with the Section 1113 rejection motion. As a result, even if the Bankruptcy Court authorized the appointment of a Section 1113 representative for the retired pilots, there is nothing for that individual to do. As a result, Mr. Kieselstein says there is no use having the District Court decide if the Bankruptcy Court erred in refusing to appoint an authorized representative for the URPBPA. Any ruling on the merits of URPBPA's appeal will be irrelevant and a waste of judicial resources. Therefore, URPBPA's appeal should be dismissed. URPBPA Responds The Debtors are obligated to pay vested pension benefits to the retired pilots. These obligations survive the expiration of the Debtors' collective bargaining agreements with the ALPA. As a result, the Bankruptcy Court compromised those obligations to URPBPA when it refused to appoint an authorized representative, Frank Cummings, Esq., at LeBoeuf, Lamb, Greene & MacRae, in Washington, D.C., asserts. According to Mr. Cummings, the Debtors' request to dismiss the Appeal should be stricken because it fails to raise an argument that could not have been asserted in its previous response brief. The Debtors' argument that the appeal is moot is "absurd." The issue will be moot only when there is no possibility that a court could provide a party with relief. When there is a possible remedy that can be awarded to a party, the case cannot be moot. URPBPA does not seek answers to hypothetical or abstract questions, Mr. Cummings states. URPBPA seeks to prevent the Debtors from unilaterally terminating pension benefits that retired pilots earned through years of hard work. The Bankruptcy Court denied URPBPA the opportunity to protect these pension benefits. The Debtors did not have this right simply because they are reorganizing. The District Court has the ability to overturn the Bankruptcy Court's December 14, 2004 order, Mr. Cummings maintains, to remand the case with instructions to appoint a representative for the retired pilots and to void any agreement between the Debtors and the ALPA that affects the vested pension rights of the retired pilots. Therefore, the Debtors' request to dismiss must be denied. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir 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 Debtors 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORPORATION: Paying Amendment Fees to Club DIP Lenders ---------------------------------------------------------- Given the challenging industry environment and the pace of the restructuring, UAL Corporation and its debtor-affiliates want to amend the Club DIP Facility to ensure operational and financial flexibility. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, relates that the Eleventh Amendment to the Club DIP Facility provides for several changes, including: 1) the Club DIP Lenders' waiver of: (a) Events of Default due to the Debtors' failure to timely notify the Club DIP Lenders with notice of the Pension Benefit Guaranty Corporation's efforts to involuntarily terminate the UAL Pilot's Plan; and (b) any technical default arising from the Debtors' continuance of the Eurodollar Loan when the Events of Default existed; 2) the Club DIP Lenders' consent to amend the Security and Pledge Agreement so the Debtors may update schedules for intercompany transactions and amend the Aircraft Mortgage to provide the Debtors with more flexibility in leasing or subleasing Spare Engines on a short-term basis to repair customers or third party air carriers; 3) modifications to amend or add new definitions to the Credit Agreement, including removal of the April 30, 2005 deadline for replacing the Air Wisconsin capacity from the EBITDAR definition; 4) modification of the Credit Agreement to require that the Debtors provide an updated business plan to the Club DIP Lenders by July 31, 2005; 5) modification to the Credit Agreement so the Debtors may finance their insurance premiums by allowing the associated Indebtedness and Liens not to exceed $20,000,000 at any one time outstanding rather than an outright ceiling of $20,000,000; and 6) modification of the Credit Agreement so the Debtors' failure to pay minimum funding contributions to the PBGC on July 15, 2005, and September 15, 2005, will not constitute an Event of Default. For entering into the Eleventh Amendment, the Debtors will pay JPMorgan Chase Bank and Citicorp USA, each a co-administrative agent, a structuring fee of $250,000. The Eleventh Amendment provides the Debtors with financial benefits, protections, consents and waivers, Mr. Sprayregen tells Judge Wedoff. Failure to pay the Eleventh Amendment Fees will preclude the Debtors from obtaining the benefits and will leave the Debtors in default of the Club DIP Facility's notification covenants. Without the Eleventh Amendment, the Club DIP Lenders will be within their rights to hold the Debtors in default, terminate their financing commitment, foreclose on critical assets and declare the loan due and payable immediately. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/--through UnitedAir 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 Debtors 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants to Enter Into Transition Pact with Air Wisconsin ---------------------------------------------------------------- UAL Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Northern District of Illinois' authority to: a) enter into a Transition Agreement with Air Wisconsin Airlines Corporation; b) settle and resolve claims with Air Wisconsin; c) grant mutual general releases with Air Wisconsin; d) assume the Amended United Express and ground handling agreements; and f) file the Term Sheet, Transition Agreement and related documents under seal. The Debtors also ask Judge Wedoff to dismiss or deny with prejudice the Committee's request to access the Additional Payments. The Debtors have determined that assumption of the UAX Agreement with Air Wisconsin was not in the best interests of the estates. Due to the protracted deterioration in the regional aircraft industry, the Debtors could realize substantial cost savings by transitioning to new carriers and rationalizing their regional jet fleet. However, the UAX Agreement with Air Wisconsin did not provide for a phased transition in the event of termination. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, explains that termination would entail a "knife-edge separation," whereby Air Wisconsin would cease flying for the Debtors at midnight of the termination date with replacement carriers absorbing the capacity at 12:01 a.m. This would possibly cause significant operational and logistical problems with grave economic consequences. In addition, rejection of the UAX Agreement would result in a substantial rejection damages claim by Air Wisconsin. As a result, the Debtors sought to negotiate a resolution to the issues with Air Wisconsin in lieu of a termination or rejection of the UAX Agreement. The Debtors and Air Wisconsin negotiated a Term Sheet which will form the basis for a Transition Agreement that will gradually, and in controlled fashion, phase out Air Wisconsin's services over a one-year period. The Term Sheet provides for: a) the amendment of the UAX Agreement to provide for a gradual separation of the parties over one year; b) the amendment to the ground handling agreement to continue ground handling services at certain airports; c) millions of dollars in savings for the Debtors due to relief from the Additional Payment Provision, rate reductions and rebates for certain services; d) an orderly phased transition of flight and ground operations by Air Wisconsin; and e) the settlement of claims between the parties and the exchange of mutual general releases. Mr. Sprayregen informs the Court that the proposed transition will provide the Debtors with flexibility to improve their fleet mix and reduce their fleet count. It will also obviate the filing of a potentially large rejection damages claim by Air Wisconsin. The Debtors will not have to make any more Additional Payments. Any Additional Payments made 49 days prior to April 6, 2005, will be refunded by Air Wisconsin. This provision alone will allow the Debtors to immediately realize millions of dollars in cash savings that would not occur under the UAX Agreement. The Debtors request authority to file the documents under seal. Otherwise, the Debtors' competitors could utilize the information to their advantage. The terms and conditions are confidential and if disclosed, could adversely affect the Debtors' business. * * * CHICAGO, Illinois -- April 7, 2005 -- United Airlines announced that it has reached a tentative agreement with Air Wisconsin Airlines (AWAC) on flying and ground-handling transition plans. The agreement is subject to approval by the U.S. Bankruptcy Court and is expected to be heard during the regularly scheduled Omnibus hearing on April 22. After evaluating bids received as part of the request for proposal (RFP) issued in November 2004, United will have a new group of regional air carriers take over all United Express flying currently operated by AWAC out of Washington Dulles, Chicago O'Hare International and Denver International Airports. AWAC will continue to perform ground handling for United Express at a number of stations. "This tentative agreement represents an important step toward reducing costs for a significant portion of our United Express flying and ground handling, while ensuring a safe, customer-friendly transition," said Sean Donohue, vice president- United Express and Ted. "We're very pleased to have reached market-competitive rates with AWAC for ground handling at a number of locations they currently serve, keeping a valued, long- standing partner on board with us." As the company previously announced, the carriers that will take over United Express flying include SkyWest and GoJet (a subsidiary of Trans States). United currently is in discussions with other carriers and may continue to award additional flying and ground-handling through the RFP process. "The United Express product and reliability continue to improve, and our new agreements ensure we will continue to provide superior service and competitive fares to our customers," Donohue said. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through UnitedAir 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 Debtors 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Discusses Merger with America West ---------------------------------------------- US Airways Group Inc. and America West disclosed their intentions for a possible merger. The combined company is expected to create a national low-cost airline that can compete with discount rivals, US Airways Chairman David Bronner told a reporter for the Associated Press. "A lot of things will happen in the U.S. airline industry in the next 12 to 18 months," Mr. Bronner told the AP. "We'll do whatever we need to survive." US Airways discussed merger transactions with several other rival carriers. Talks with America West progressed the farthest. America West is considered an ideal partner because its flights are focused in the West Coast and it offers low airfares, the AP relates. "What (US) Airways is looking for, and this doesn't mean this will go through, but it's looking to be able to expand its network - meaning that it's very big in the East and has very little on the West Coast," Mr. Bronner told the AP. The US Airways-America West talks are dubbed "Project Barbell" in reference to the fact that US Airways' routes are concentrated on the East Coast and America West serves mostly the West, the AP relates. Each carrier offers transcontinental flights, but not many compared to their larger competitors. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. USGEN NEW ENGLAND: Bankruptcy Court Sets Solicitation Procedures ---------------------------------------------------------------- At USGen New England, Inc.'s behest, the U.S. Bankruptcy Court for the District of Maryland approves a set of uniform noticing, balloting, voting and tabulation procedures to be used in connection with asking creditors to vote to accept the Debtor's Second Amended Plan of Liquidation. Holders of General Unsecured Claims in Class 3 and Interests in Class 4 are impaired and are entitled to vote on Plan. Eligible Voters will receive a solicitation package containing: (a) notice of the hearing to consider confirmation of the Plan and related matters, setting forth: (i) the time fixed for submitting Plan votes; (ii) the time fixed for filing objections to confirmation of the Plan; and (iii) the date and time of the Confirmation Hearing; (b) a copy of the Disclosure Statement approved by the Bankruptcy Court; and (c) a ballot with instructions, in substantially the form approved by the Bankruptcy Court. The Claims in Classes 1 and 2 are not impaired under the Plan. The holders of these Claims, therefore, are conclusively presumed to have accepted the Plan and are not entitled to vote on the Plan. In lieu of a solicitation package, they will receive a notice which identifies: (a) the Unimpaired Classes; (b) the date and time of the Confirmation Hearing; and (c) the deadline and procedures for filing objections to the Plan. The Unimpaired Creditor Notice will further provide that holders of Claims in the Unimpaired Classes may receive a copy of the Plan and Disclosure Statement upon written request to Bankruptcy Services, LLC, USGen's Balloting Agent. HSBC Bank USA, National Association, as lease indenture trustee and pass through trustee, is authorized to vote on the Plan upon direction from the holders of the 7.459% Pass Through Certificates, series 1998-A and the 8.270% Pass Through Certificates, series 1998-B, holding a majority in principal amount of each series of Bear Swamp Certificates. USGen will mail to the Bear Swamp Certificateholders a package containing: (a) notice of the Confirmation Hearing and related matters, setting forth: (i) the time fixed for providing a direction letter to the Trustee; (ii) the time fixed for filing objections to confirmation of the Plan; (iii) the date and time of the Confirmation Hearing; and (iv) the date by which Certificateholders must be holding Bear Swamp Certificates to be entitled to provide the direction letter to the Trustee; (b) a copy of the Disclosure Statement approved by the Court; and (c) a direction letter approved by the Court for solicitation purposes only, directing the Trustee to vote its claim for the benefit of the Bear Swamp Certificateholders. National Energy & Gas Transmission, Inc., USGen's indirect parent as of the Petition Date, is the sole member of Class 4. NEG is authorized to act on behalf of all of its subsidiaries with a direct or indirect Interest in USGen. The Court sets March 1, 2005, as record date for determining which: * Bear Swamp Certificateholders are entitled to direct the Trustee; and * creditors and interest holders are entitled (a) to vote to accept or reject the Plan, and (b) to receive the Unimpaired Creditor Notice or the Notice to holders of contingent, unliquidated or disputed Claims. Plan votes must be returned to the Balloting Agent by May 2, 2005, at 4:00 p.m. (prevailing Eastern Time). USGen may extend the Voting Deadline, with the consent of the Official Committee of Unsecured Creditors. The direction letters must be returned to the Trustee by either (x) first class mail, postage prepaid or (y) overnight mail, by April 25, 2005. The Trustee will not consider any direction received after April 25. USGen will tabulate Plan votes using this procedure: -- Each holder is entitled to vote in the amount set forth in USGen's Schedules of Assets and Liabilities, to the extent the Claim is scheduled in an amount greater than $0 and is not scheduled as contingent, unliquidated or disputed; -- To the extent a proof of claim has been timely filed for a liquidated, non-contingent Claim in an amount greater than $0, then the holder will be entitled to vote in the amount specified in the Claim unless the Claim is the subject of a pending objection, in which case the Claim will be treated as a Disputed Claim for voting purposes, unless otherwise ordered by the Bankruptcy Court; -- To the extent a proof of claim has been timely filed in an amount greater than $0 for a Claim that is scheduled as contingent, unliquidated or disputed, then the holder will be entitled to vote in the amount specified in the claim unless the claim is the subject of a pending objection, in which case the Claim will be treated as a Disputed Claim for voting purposes, unless otherwise ordered by the Bankruptcy Court; -- If a Claim is, by its terms, contingent or unliquidated, the holder will be entitled, solely for voting purposes, to vote the Claim in an amount equal to $1 and one vote, subject to the filing of an objection by the holder; -- If a Claim has been resolved or fixed by the Plan or pursuant to a Court Order, the holder will be entitled to vote in the amount specified in the Plan or the Order; and -- In the event a Claim is a Disputed Claim, for which there has been no ruling by the Bankruptcy Court as of the Voting Deadline, the disputed portion of the Claim will not be counted for voting purposes and the related ballot, if any, will not be counted, except to the extent and in the manner indicated in USGen's objection -- any non-disputed portion of the Claim may be voted -- or unless otherwise ordered by the Court. A party holding a contingent or unliquidated Claim wishing to challenge its "one dollar, one vote" valuation, or any holder of a Claim which seeks to have its Claim allowed for voting purposes in an amount different from that which is set forth in USGen's Schedules, the Plan, the Disclosure Statement, must file a motion for a hearing on allowance of the Claim for voting purposes pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure by April 15, 2005. The Court will hold a hearing on April 27, 2005, at 10:30 a.m. (prevailing Eastern Time), to consider the Rule 3018(a) Motions, any objections to the Disputed Claims and any responses thereto. USGen has published a notice of the Confirmation Hearing and the related procedures and deadlines in the national edition of The Wall Street Journal and The Washington Post. Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731. (PG&E National Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARTEC TELECOM: Has Until June 1 to File Plan of Reorganization --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas extended the period within which Vartec Telecom, Inc., and its debtor-affiliates have the exclusive right to file a chapter 11 plan to June 1, 2005. The Court also extends the Debtors' exclusive solicitation period to August 1, 2005. The Debtors want more time to, among other things, negotiate a global settlement of claims asserted by independent representatives and develop a well-vetted business plan. Once those tasks are completed, the Debtors will have the information and time needed to analyze the likely distribution to their unsecured creditors and formulate a feasible, and hopefully consensual, plan. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VITAL LIVING: Losses & Deficit Prompt Going Concern Doubt --------------------------------------------------------- Vital Living Inc. (OTCBB:VTLV) reported its financial results for the fiscal year ended Dec. 31, 2004. For the fiscal year ended Dec. 31, 2004, compared with the fiscal year ended Dec. 31, 2003: -- Revenues from continuing operations increased 736% to $4.2 million from $498,000; -- Net losses from continuing operations decreased to $26 million from $27.2 million; -- Losses from discontinued operations in 2004 were $2.8 million, which was partially offset by a $597,000 gain on disposals, compared with losses from discontinued operations in 2003 of $729,000; -- Net loss available to common stockholders was $28.6 million, or $0.44 basic and diluted loss per share, compared with $30.2 million or $0.94 basic and diluted loss per share. The company further reported that its combined cost-cutting efforts and corporate restructuring initiatives, launched in the middle of 2004, should result in the company achieving improved net cash flow from core operations in the first quarter of 2005. "We believe our decision last year to redefine Vital Living as a highly differentiated, health-oriented company focused on marketing a proprietary mix of nutritional supplements and nutraceutical products is meeting with success," noted Stuart A. Benson, chief executive officer of Vital Living. "In addition, we have succeeded in consolidating all of our operations in Phoenix, outsourced our distribution and fulfillment functions to capable third-party providers, and focused on growing our business intelligently and profitably. We look forward to a more successful 2005," concluded Mr. Benson. Going Concern Doubt Epstein Weber & Conover PLC raised substantial doubt about Vital Living's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The Company has suffered recurring losses from operations, has a working capital deficit, and is dependent on funding sources from other than operations. Since inception, the Company has been required to raise additional capital by the issuance of both equity and debt instruments. "There are no commitments from funding sources, debt or equity, in the event that cash flows are not sufficient to fund ongoing operations or other cash commitments when they come due," the Company said in its Annual Report. About the Company Headquartered in Phoenix, Vital Living develops or licenses nutraceuticals and markets them for distribution through physicians, medical groups, chiropractic offices and retail outlets. Vital Living develops and tests its nutraceuticals in collaboration with leading medical experts in the nutraceuticals field and has designed them to be incorporated by physicians into a standard physician-patient program in which patients supplement doctor-prescribed pharmaceuticals with its nutraceuticals. Vital Living is developing unique, safe and naturally derived nutritional products, utilizing advanced drug-delivery technologies, including the Geomatrix(TM) technology through its affiliation with SkyePharma PLC. The Geomatrix(TM) technology has been provided exclusively for Vital Living's pharmaceutical development in China and the development of nutraceuticals on a global basis. WV FIBER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: WV Fiber, LLC 315 Wilhagan Road Nashville, Tennessee 37217 Bankruptcy Case No.: 05-04639 Type of Business: The Debtor is a wholly owned subsidiary of Nashville, Tennessee-based Wilhagan Ventures. The company provides national and international communications services, as well as hosting, collocation and other professional services. See http://www.wvfiber.com/ Chapter 11 Petition Date: April 15, 2005 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine Debtor's Counsel: Robin Bicket White, Esq. MGLAW PLLC 120 30th Avenue North Suite 1000 Nashville, Tennessee 37203 Tel: (615) 846-8000 Fax: (615) 846-9000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peter Marcum $878,474 [ Managing Director, WV Fiber CEO, Wilhagan Ventures 315 Wilhagan Road Nashville, Tennessee 37217 ] Thomas Lunn $246,077 [ Managing Director, WV Fiber CFO, WV Fiber & Wilhagan Ventures 315 Wilhagan Road Nashville, Tennessee 37217 ] Progress Telecom $187,924 P.O. Box 101534 Atlanta, GA 30392-1534 Global Crossing $154,117 P.O. Box 741276 Cincinnati, OH 45274-1276 Switch & Data $141,903 1715 Westshore Drive North, Suite 650 Tampa, FL 33713 Abovenet Communications Inc. $120,041 P.O. Box 7247-6887 Philadelphia, PA 19170-6887 Telia Sonera International Center $114,425 2201 Cooperative Way, Suite 302 Herndon, VA 20171 Broadwing Communications $110,693 P.O. Box 790036 St. Louis, MO 63179-0036 Equinix Inc. $107,125 14005 Live Oak Avenue Lock Box 22310 Irwindale, CA 91706-1300 Telcove - NSVL $107,020 P.O. Box 932557 Atlanta, GA 31193-2557 JKRM INVESTMENTS, LLC $52,972 [Address not provided] Beyond The Network $48,511 P.O. Box 75056 Baltimore, MD 21275 Cogent $47,443 P.O. Box 791087 Baltimore, MD 21279 Universal Access $34,701 233 Wacker Drive South, Suite 600 Chicago, IL 60606 Avici Systems Inc. $30,000 101 Billerica Avenue North Billerica, MA 01862-1256 Onfiber $28,761 Dept. Chi7035 Palatine, IL 60055-7035 Packet Exchange Ltd. $28,761 11 Curtain Road London EC2A 3LT England UNS LLC $25,680 56 Marietta Road 4th Floor, Suite 200 Atlanta, GA 30303 NAP Of America $25,252 2601 Bayshore Drive South, 9th Floor Miami, FL 33133 Fred Filsoof $25,000 [Address not provided] XL-CARE AGENCY: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: XL-Care Agency, Inc. 65-12 Myrtle Avenue Glendale, New York 11385 Bankruptcy Case No.: 05-15960 Type of Business: The Debtor is a healthcare services provider. Chapter 11 Petition Date: April 19, 2005 Court: Eastern District of New York (Brooklyn) Judge: Dennis E. Milton Debtor's Counsel: Yann Geron, Esq. Fox Rothschild LLP 13 East 37th Street, Suite 800 New York, New York 10016 Tel: (212) 682-7575 Fax: (212) 682-4218 Financial Condition as of March 31, 2005: Total Assets: $1,661,640 Total Debts: $3,060,529 Debtor's 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Employment Tax $2,624,676 10 MetroTech Center Obligations 625 Fulton Street Brooklyn, NY 11201 New York State Employment Tax $351,494 Department of Taxation & Finance Obligations Bankruptcy Section P.O. Box 5300 Albany, NY 12205-0300 New York State Unemployment $43,520 Department of Labor Insurance Unemployment Division Obligation W.A. Harriman Campus Building 12, Room 256 Albany, NY 12240 Thomas Schneider Payment of $40,839 573 Plainview Road Attorney Plainview, NY 11803 Retainer * Many Bankruptcy Code Amendments Take Effect October 17 -------------------------------------------------------- After eight years of bankruptcy reform talks in four Congresses, President Bush signed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, into law yesterday, April 20, 2005, at a White House signing ceremony. A sign saying "BANKRUPTCY REFORM Strengthening Our Economy" and embellished with the Presidential Seal hung from the front edge of the table at which the President sat when he affixed his signature to the document. The signing followed a five-minute speech thanking key legislators for their work and stressing personality responsibility. Most of the amendments to the Bankruptcy Code apply to cases commenced 180 days after the date of enactment. With rare exception, the amendments do not apply to cases filed before the Oct. 17, 2005, effective date. Davis Polk & Wardwell has prepared a blacklined copy of the Bankruptcy Code that highlights most of the changes contained in S. 256. A copy of Davis Polk's blacklined version of the Bankruptcy Code is available at no charge at: http://www.dpw.com/practice/code.blackline.pdf Press coverage about the new law focuss on means testing and requiring individual consumer debtors to repay a portion of what they owe. President Bush calls those changes to the Bankruptcy Code "commonsense reforms will make the system stronger and better so that more Americans -- especially lower-income Americans -- have greater access to credit." The satirical crew at http://www.whitehouse.org/posted a transcript of a fictitious address by President Bush at the Association of Credit & Collections Annual Conference under a headline proclaiming "Bankruptcy Reform: President Bush Proudly Announces the Long- Overdue Conscription of Lazy, Good-For-Nothing Sick People into Eternal Corporate Slavery." The key amendments affecting businesses covered in the Troubled Company Reporter are: Code Section Brief Summary of Code Section Change ------------ ------------------------------------ Sec. 101(14) Definition of a disinterested person no longer includes investment bankers for outstanding securities. Sec. 101(22) Definition of a financial institution now includes big derivatives players. Sec. 101(23) Definition of a foreign proceeding now includes proceedings before administrative tribunals and liquidation proceedings. Sec. 101(24) Definition of a foreign representative is broader. Sec. 101(25) Definition of a forward contract is expanded. Sec. 101(27A) Health care business is now a defined term. Sec. 101(38A) Master netting agreement is now a defined term. Sec. 101(38B) Master netting agreement participant is now a defined term. Sec. 101(40A) Patient is now a defined term. Sec. 101(40B) Patient records is now a defined term. Sec. 101(41A) Personally identifiable information is now a defined term. Sec. 101(46) Definition of a repo participant is expanded to include all pre-petition repurchase contract counterparties. Sec. 101(47) Definition of repurchase agreement is expanded, but excludes repurchase obligations under a participation in a commercial mortgage loan. Sec. 101(48A) Securities self regulatory organization is the new defined term that refers to the stock exchanges. Sec. 101(51D) Small business debtor is now defined as owing less than $2 million to non- insider creditors. Sec. 101(53B) Swap agreement has an expanded definition. Sec. 101(54) Definition of a transfer now includes the grant of a prepetition lien. Sec. 104 Dollar amounts are periodically adjusted automatically to reflect changes in the Consumer Price Index. Sec. 304 Abrogated by new Chapter 15. Sec. 308 New provision for financial reporting in bankruptcy by small business debtors. Sec. 330(a)(3) Board certified professionals can argue they should collect higher fees. Sec. 332 A new Consumer Privacy Ombudsman is created. Sec. 332 A new Patient Care Ombudsman is created. Sec. 350 Special provision for disposing of patient records. Sec. 341(e) Meetings of creditors can be abrogated in prepackaged chapter 11 cases. Sec. 362(b)(25) The automatic stay does not stop the stock exchanges from delisting securities or continuing any investigation. Sec. 362(b)(26) The automatic stay does not stop the setoff of tax refunds. Sec. 362(b)(27) The automatic stay does not stop setoffs under master netting agreements. Sec. 362(b)(28) The automatic stay does not stop Medicare from kicking a provider out of the program. Sec. 362(d)(3) Single asset real estate debtors pay postpetition interest at non-default contract rate. Sec. 363(b)(1) New special rule if asset sale includes sale of personally identifiable information, requiring a conversation with the Sec. 322 Consumer Privacy Ombudsman. Sec. 363(d)(1) New rule governing the sale of property by a non-profit entity. Sec. 365(b)(1)(A) Non-monetary defaults that are impossible to cure don't prohibit assumption of an executory contract or unexpired lease. Sec. 365(d)(4) New initial 120-day lease-decision period can be extended once by 90 days for cause and only beyond 210 days with landlord's consent. Sec. 365(p) Stay is automatically terminated for personal property leases that are rejected or not timely assumed. Sec. 366 Entitlement to administrative expense priority does not constitute adequate assurance of future payment to utilities, but anybody can argue for something very small. Sec. 503(b)(7) Administrative priority accorded to two years' rent on account of a lease assumed under Sec. 365 and then rejected. Sec. 503(b)(8) Administrative priority accorded to costs of closing a health care business. Sec. 503(b)(9) Administrative priority accorded to goods received by the Debtor within 20 days before the Petition Date that are sold in the ordinary course of business. Sec. 503(c) New limitation on KERP Payments to senior executives. Sec. 507(a)(1) Chapter 7 Trustee expenses take highest priority. Sec. 507(a)(4) Cap on priority for Employee Claims raised to $10,000 and lookback period extended to 180 days. Sec. 507(a)(4) Cap on priority for Employee Benefit Plan Contribution Claims raised to $10,000. Sec. 507(a)(4) Cap on priority for claims of U.S. farmers and fishermen reduced to $4,000. Sec. 507(a)(7) Cap on priority for Consumer Deposit Claims reduced to $1,800. Sec. 507(8)(B) Priority for Property Tax Claims looks to the date the tax was incurred rather than assessed. Sec. 508(a) Provision limiting distributions in a U.S. case on account of recoveries in a foreign proceeding is stricken. Sec. 511 Interest payable on tax claims is determined based on applicable nonbankruptcy law at the rate in effect as of the calendar month in which a plan is confirmed. Sec. 521(a)(7) Debtor has to continue performing any ERISA Plan Administrator functions. Sec. 521(j) Taxing authorities can move to dismiss or convert if post-petition tax returns aren't timely filed. Sec. 546(g)* Redesignated as Sec. 546(h). Sec. 546(i) Warehouseman's liens have greater protection. Sec. 547(c)(2) Payment received on account of a debt incurred in the ordinary course of business or within ordinary business terms isn't a preference. Sec. 547(c)(9) Preference claim can't be pursued if transfer was for less than $5,000. Sec. 547(e)(2) 10 day period for perfection of refinancing transactions stretched to 30 days. Sec. 548(a)(1) Reachback period for fraudulent transfers to insiders extended to two years. Sec. 548(e) New provision extending reachback period to 10 years for transfers to self-settled trusts. Sec. 562 New set of rules concerning timing of damage measurement in connection with derivative instruments. Sec. 555 In addition to liquidation, securities contracts can also be terminated and accelerated to speed settlement. Sec. 555 In addition to liquidation, commodities contracts and forward contracts can also be terminated and accelerated to speed settlement. Sec. 559 In addition to liquidation, repurchase agreements can also be terminated and accelerated to speed settlement. Sec. 560 In addition to liquidation, swap agreements can also be terminated and accelerated to speed settlement. Sec. 561 New provision allowing contractual right to terminate, liquidate, accelerate, or offset master netting agreements and across contracts. Sec. 704(a)(11) Trustee (or DIP) has to continue performing any ERISA Plan Administrator functions. Sec. 901 Provisions in Secs. 555 through 562 dealing with financial contracts now apply in municipal cases. Sec. 1102(a) The Court can direct the U.S. Trustee to alter the composition of an official committee. Sec. 1102(b) An official committee shall provide its constituency with access to information. Sec. 1104(a)(3) New provision says Court can appoint a trustee or examiner if there's case to dismiss by Court thinks this is a better idea. Sec. 1104(b) U.S. Trustee must file report of any election of a chapter 11 trustee, and an elected trustee displaces an appointed trustee, and Court resolves any dispute in the election process. Sec. 1104(e) U.S. Trustee shall move for an examiner or trustee if there are reasonable grounds to suspect bad people doing bad things control the Debtor. Sec. 1112 Expanded grounds for dismissal or conversion of a chapter 11 case or appointment of a trustee, and Court needs to explain why no conversion or dismissal if not granted. Sec. 1114 Bankruptcy court can restore retiree benefit plans modified within 180 days prior to the Petition Date. Sec. 1114(d) Court may order appointment of a Retirees' Committee, and U.S. Trustee will appoint the Committee. Sec. 1116 New provision for increased initial financial disclosure by small business debtors. Sec. 1121 Without any exception, Debtor's exclusive plan proposal period is capped at 18 months, and Debtor's exclusive solicitation period is capped at 20 months. Sec. 1121(e) Small business debtor election is abrogated; small business case is now a defined term under Sec. 101(51D). Sec. 1121(e) Plan and disclosure statement in a small business case must be filed within 300 days, and plan should be confirmed within 45 days after plan is filed. Sec. 1125 Court will now consider the complexity of the case, the benefit of additional information to creditors and other parties in interest, and the cost of providing additional information in reviewing the adequacy of a disclosure statement. Sec. 1125(g) Postpetition solicitation of votes on a prepackaged plan is permitted. Sec. 1129(a)(9) Priority Tax Claims must be paid in regular cash installments by the fifth anniversary of the Petition Date. Sec. 1129(a)(14) New confirmation requirement concerning payment of domestic support obligations. Sec. 1129(a)(15) New confirmation requirement for minimum payment by individuals in chapter 11. Sec. 1129(a)(16) New confirmation requirement concerning transfers of property by non-profit entities. Sec. 1141(d) No discharge for a corporation for taxes based on a fraudulent return or when the debtor "willfully attempted in any manner to evade or to defeat such tax or such customs duty." Chapter 15 New Chapter, entitled ANCILLARY AND OTHER CROSS-BORDER CASES, incorporates the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law (UNCITRAL) at its Thirtieth Session on May 12-30, 1997. The Model Law encourages cooperation between the United States and foreign countries in transnational insolvency cases. 28 USC Sec. 158(d) With the consent of the parties to an appeal from a bankruptcy court order, appeal can go directly to the circuit court of appeals. Act Sec. 419 New forms will be promulgated to provide more information about the value, operations, and profitability of any closely held corporation, partnership, or other entity in which the debtor holds a substantial or controlling interest. Act Sec. 433 A new standard form disclosure statement can be used for small businesses. Act Sec. 443 Study of small business cases will be coming in two years. Act Sec. 601 Amends chapter 6 of title 28 to require the clerk for each district to collect more statistical data in a standardized format, report it to the Administrative Office, and make it available to the public. First annual report to the Congress is due by July 1, 2008. * Keen Realty Says New Bankruptcy Law Has a Surprise for Retailers ------------------------------------------------------------------ On April 14, the House of Representatives passed S.256, known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, sending the bill to President Bush, who is expected to sign this week. This law was heavily promoted by the retail industry in order to improve the legal rights of retailers against defaulting consumers. What the retail industry may not have realized is that their landlords were also heavily promoting this legislation - although a different provision. The landlords succeeded in amending the existing Bankruptcy Code in order to severely restrict the flexibility of retailers who enter bankruptcy and to shift value away from the retailer towards its landlords. In particular, the law imposes a rigid seven month deadline on the retail-debtor to decide which leases to keep and which leases to jettison. "As a result, retailers who are facing bankruptcy will now want to seek the counsel of a real estate expert, such as Keen Realty, LLC, as soon as possible," Keen says. The Bankruptcy Code has provided and continues to provide tenants with a very powerful right: the right to "reject" a lease under Sec. 365(a) of the Bankruptcy Code. "Rejection" is the statutory right to breach a lease. Retailers use this power to exit under- performing or overly expensive leases or to close their stores as part of a liquidation. When a lease is rejected, the landlord receives a damage claim against the debtor, which is paid at the end of the bankruptcy proceeding in bankruptcy dollars (i.e., cents on the dollar). For the benefit of other creditors -- to prevent their claims from being diluted by landlords' damages claims -- Sec. 502(b)(6) of the Bankruptcy Code caps the landlord's rejection claim at three years rent Sec. 365(d)(1) of the Bankruptcy Code specifically grants tenants 60 days to "assume or reject" a lease, with the opportunity to extend that deadline. Bankruptcy Courts routinely extend the 60 day deadline in order to give the retail-debtor time to evaluate its business, business plan, store performance and even to evaluate its sales through a Christmas season. "I have worked with hundreds of retailers and have seen how important it is for a retailer in bankruptcy to have time to evaluate store performance before electing to assume or reject a lease. This new law really puts retailers under the gun. Seven months sounds like a long time but it's not, especially if it doesn't include the Christmas selling season," says Harold Bordwin, President and CEO of Keen Realty, LLC. Mr. Bordwin was previously called upon by Congress to testify about the impact of this provision. Harold Bordwin also sees other implications from this new law. "There are at least two far reaching implications of forcing retailers to make the assumption/rejection decision within seven months." "First, upon assumption of a lease the tenant is required to "cure" all defaults. Curing defaults means paying the landlord, in full, for any unpaid back rent and other charges. Why should landlords be paid these claims in full while all other unsecured creditors have to wait until the end of the proceeding to be paid, at which time they will be in "bankruptcy dollars" (i.e., cents on the dollar). Paying the landlords' cure claims in full only seven months into a bankruptcy is not only unfair to other creditors but it may also create a liquidity crisis and undermine the viability of the retailer's business." "Second, in the event that the tenant-debtor later rejects an assumed lease, the landlord's position as a creditor is significantly enhanced, to the detriment of other creditors. The lessor will have an administrative expense claim (which is a higher priority claim than the claim of other general unsecured creditors) for two years rent. That claim gets paid in full before other creditors get paid in bankruptcy dollars. The lessor's remaining damage claim will be treated as a general unsecured claim and capped at three years rent." By changing the time frame for retail-debtor's to assume or reject leases, Congress is likely creating a host of unintended consequences. One of those consequences, according to Mr. Bordwin, is likely to include the "increasing likelihood that retailers in bankruptcy will liquidate rather than reorganize." According to Mr. Bordwin, "creditors' committees are unlikely to be willing to take the risk of allowing a retailer to assume its leases. Rather than allowing the retailer to cure lease defaults and convert the remaining lease obligations to a higher priority, creditors' committees will be more likely to force a tenant to "reject" the lease and liquidate. As a result the retail industry will see a significant rise in the number of liquidations rather than reorganizations. For 23 years, Keen Consultants, LLC has been maximizing the value of its client's assets by providing strategic real estate planning, by executing real estate and business transactions, and by providing a range of related valuation and analysis services. In particular, Keen Realty assists retailers to restructure their real estate and lease portfolios - maximizing the value of real estate and leases while minimizing landlord liabilities. Keen Consultants has handled almost 300 million square feet of owned and leased retail properties, repositioned over 16,000 stores across the country and completed over $1.3 billion in transactions in the past 6 years. Companies that the firm has advised include: (A) retailers operating strip center and free standing stores like Frank's Nursery & Crafts, Penn Traffic Supermarkets, Service Merchandise Company, Breuner's Home Furnishings and Krispy Kreme; (B) Mall based retailers like Eddie Bauer, Samuels Jewelers, Country Road Clothing, Edison Bros. Northern Reflections and Rodier Paris; and (C) Outlet store retailers like FILA, Calvin Klein, Authentic Fitness/Speedo and Pillowtex. * National Retail Federation Applauds Bankruptcy Code Amendments ---------------------------------------------------------------- The National Retail Federation welcomes the signing of long- awaited bankruptcy reform legislation, and applauded the President for signing it into law yesterday afternoon at the White House. "The last time the United States comprehensively updated personal bankruptcy laws was the year John Paul II became Pope, Annie Hall won Best Picture and Sony introduced the Walkman," NRF Senior Vice President and General Counsel Mallory Duncan said. "Annual bankruptcy filings have increased nine-fold since then, and bankruptcy has gone from a stigma to a financial planning tool for many. Every one of those filings means more bad debt that gets passed on to consumers, and consumers are tired of picking up the tab. Many bankruptcies are legitimate but too many are being filed by people who could afford to pay but choose not to. This bill will return bankruptcy to being the safety net it was meant to be." "In 1978, fewer than one person in a thousand filed for bankruptcy," Duncan said. "Last year, more than six times as many chose to file. If left unchanged, the old bankruptcy law would have broken us all. No safety net can survive when millions jump into it without true cause." "This affects more than just big credit card companies and banks," Duncan said. "There are thousands of small Main Street retailers selling merchandise on store credit who can't afford not to get paid. Whether it's a Mom and Pop store or a national chain, retailers who get left holding bad debt are forced to pass that cost on to their customers and everyone ends up paying more." S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, was sponsored by Senate Finance Committee Chairman Charles Grassley, R-Iowa. The legislation requires individuals who can afford to repay a significant part of their debt to do so under Chapter 13 rather than having all debts erased under Chapter 7. The option of Chapter 7 would still be preserved, however, for those who truly need it. NRF has led retailers' support for bankruptcy reform legislation for close to a decade. There were 1.56 million consumer bankruptcy filings in 2004 -- roughly twice the 780,455 of 1994 -- and retailers who offer store credit or proprietary credit cards bear a large share of the increasing volume of bad debt. The last comprehensive bankruptcy update was the Bankruptcy Reform Act of 1978. Personal bankruptcies totaled 172,423 that year, according to the U.S. Administrative Office of the Courts. That amounted to one filing for every 1,291 U.S. residents in 1978 compared with one in 334 in 1994 and one in 189 in 2004. U.S. population was 222.6 million in 1978, 260.3 million in 1994 and 295.9 million in 2004. While total bankruptcy filings in 2004 were approximately nine times the 1978 level, the increase in the per capita rate of filing was six-fold because bankruptcy filings increased much more rapidly than population. The National Retail Federation -- http://www.nrf.com/-- is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 23 million employees -- about one in five American workers -- and 2004 sales of $4.1 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. ********* 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. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. 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 ***