/raid1/www/Hosts/bankrupt/TCR_Public/050712.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, July 12, 2005, Vol. 9, No. 163
Headlines
ACCESS CARDIOSYSTEMS: Exclusive Periods Extended Until Sept. 15
ACCESS CARDIOSYSTEMS: General Claims Bar Date is on July 29
ACCURIDE CANADA: Moody's Lifts Senior Secured Debt Ratings to B1
ACCURIDE CORP: Moody's Lifts Sr. Subordinated Debt Rating to B3
ACE AVIATION: Completes CDN$250 Million Aeroplan Income Fund IPO
ACS INC: Voluntary Chapter 11 Case Summary
ADELPHIA COMMS: Complaint vs. Some Rigas Family Members Dismissed
ADVANSTAR COMMS: Retains CSFB to Explore Possible Asset Sale
ALLEGHENY ENERGY: Debt Reduction Cues Fitch to Lift Rating to B+
ALLIANCE ATLANTIS: Asks Nasdaq to Delist Class B Common Shares
ALLIANCE ONE: Completes Full Redemption of Convertible Sub. Notes
ATA AIRLINES: Gets Court Nod to Reject BCC Aircraft Lease
ATA AIRLINES: Four Parties Respond to Debtors' Claims Objections
AXEDA SYSTEMS: Nasdaq Halts Common Stock Trading
BIOTIME INC: AMEX to Proceed with Stock Delisting on Friday
BOISE CASCADE: S&P Rates $1.32 Billion Revolving Loan at BB
BOMBARDIER RECREATIONAL: Debt Reduction Cues S&P to Lift Rating
CATHOLIC CHURCH: Court Confirms Tucson's Third Amended Plan
CATHOLIC CHURCH: Spokane Committee Wants Property Use Restricted
CENTRAL EUROPEAN: S&P Rates New $373 Million Sr. Sec. Notes at B-
CENTURY/ML CABLE: Wants to Employ PwC as Accountants
CITGO PETROLEUM: Moody's Assigns Ba1 Corporate Family Rating
CITIGROUP MORTGAGE: Fitch Places BB+ Rating on $9.28 Mil. Certs.
CLARK INDUSTRIAL: Voluntary Chapter 11 Case Summary
CONNEXION INC: Judge Milton Converts Case to Chapter 7 Proceeding
CONSOL ENERGY: Selling CNX Gas' 18.5% Stock via Private Placement
CONSOL ENERGY: CNX Gas Interest Sale Prompts S&P's Positive Watch
DRY ICE: Case Summary & 25 Largest Unsecured Creditors
EAGLEPICHER INC: Names David Treadwell President of Hillsdale Div.
ELWAY INC: Case Summary & 20 Largest Unsecured Creditors
ENRON CORP: Settles Suit on Company Retirement Plans for $356.2MM
FEDERAL-MOGUL: Asbestos Panel & Futures Rep's Estimation Findings
FREDERICK MCNEARY: Hires Segel Goldman as Bankruptcy Counsel
FREDERICK MCNEARY: Files Schedules of Assets & Liabilities
GADZOOKS INC: Committee Wants Deloitte as Financial Advisor
GOLDEN EAGLE: Substantial Losses Spur Going Concern Doubt
GRAPHIC PRESS: Voluntary Chapter 11 Case Summary
GREAT OUTDOORS: Voluntary Chapter 11 Case Summary
GT BRANDS: Case Summary & 30 Largest Unsecured Creditors
HIP INTERACTIVE: Court Appoints Ernst & Young as Interim Receiver
JARDEN CORP: 3 Executive Officers Adopt Stock Trading Plans
HAMACA HOLDING: Moody's Rates Senior Secured Debt at Ba3
HOLLINGER INC: Court Confirms Board of Directors' Realignment
IMPATH INC: Emerging from Bankruptcy Protection on July 22
INSIGHT MIDWEST: S&P Rates $1.1 Billion Term Loan at BB-
INTEGRATED ALARM: Nasdaq Resumes Common Stock Listing
INTEGRATED ALARM: Moody's Confirms $125 Million Notes' B3 Rating
INTEGRATED ALARM: Financials Filing Prompts S&P to Remove Watch
INTELIDATA TECH: Sets Aug. 18 to Vote on $20 Mil. Corillian Deal
INTERLINE BRANDS: Acquires Copperfield in $70 Million Deal
KIMBERLY OREGON: Ch. 11 Case Jointly Administered with Kori Air
KMART CORP: Files Response to FLOORgraphics' Objection Under Seal
KOEN BOOK: Case Summary & 20 Largest Unsecured Creditors
LAIDLAW INT'L: Affiliate Settles Tax Issues with IRS
LIBERTY MEDIA: Discovery Holding's Shares Trades in OTCBB
LITHIUM TECHNOLOGY: Recurring Losses Trigger Going Concern Doubt
MEDIA GROUP: Brings-In Dodson Parker as Litigation Counsel
MERIDIAN AUTOMOTIVE: Creditors Meeting Rescheduled to July 18
MIRANT CORP: Appeals Kern Adversary Case Dismissal Order
NAPIER ENVIRONMENTAL: Court Approves Further Amended BIA Proposal
NATIONAL HEALTH: Strong Liquidity Prompts S&P to Lift Ratings
NAVIGATOR GAS: Wants to Expand Leaf Saltzman's Scope of Retention
NEWKIRK MASTER: S&P Rates Proposed $760 Million Loan at BB+
NORTH ATLANTIC: Moody's Junks $200 Million 9-1/4% Global Notes
NORTHEAST GENERATION: S&P Holds BB+ Rating on $357.5 Million Bonds
OCWEN FINANCIAL: Good Financial Profile Cues S&P to Hold Ratings
OMNE STAFFING: Thelen Reid to Investigate Insurance-Related Claims
OWENS CORNING: Files 2004 Hourly Workers Savings Plan Report
PARMALAT: Brazilian Units Have Until Aug. 29 to File Plan
PEGASUS SATELLITE: PricewaterhouseCoopers Wants Legal Fees Paid
PEGASUS SATELLITE: Akin Gump Wants $3.62MM Compensation Fee Okayed
PHARMACEUTICAL FORMULATIONS: Files Chapter 11 Petition in Delaware
PHARMACEUTICAL FORMULATIONS: Case Summary & 20 Largest Creditors
R & V REALTY: Case Summary & 22 Largest Unsecured Creditors
RAMP CORP: U.S. Trustee Appoints 7-Member Creditors' Committee
ROBERT E LEE: Case Summary & 20 Largest Unsecured Creditors
SAINT VINCENTS: Wants McDermott Will as General Counsel
SAINT VINCENTS: Wants to Pay $16 Million Critical Vendor Claims
SCARLET'S CASINO: Case Summary & 20 Largest Unsecured Creditors
SEGA GAMEWORKS: Has Until August 1 to File Plan of Reorganization
SINGING MACHINE: Going Concern Doubt & Bankruptcy Warning in 10-K
SOLUTIA INC: Has Until Nov. 8 to Remove State Court Actions
SOUTH DAKOTA: Metabank Forecloses on Dan Nelson's Inventory
SOUTH DAKOTA: Metabank Wants Dan Nelson Case Converted to Ch. 7
STELCO INC: Workers Welcome Government Support in Restructuring
STERLING FINANCIAL: Subsidiary Converted to State-Chartered Bank
TECHNICAL OLYMPIC: S&P Holds Low-B Ratings on $810 Million Notes
THOMAS HERRING: Case Summary & 20 Largest Unsecured Creditors
TRIM TRENDS: Creditors Committee Taps McDonald Hopkins as Counsel
TRIM TRENDS: Wants to Hire Giuliani Capital as Investment Bankers
TRUMP HOTELS: Sells World's Fair Site for $12.5 Million to Robino
TRUMP HOTELS: Wants Approval for World's Fair Site Bid Protocol
TRUMP HOTELS: Robino Stortini Wants $360,000 as Break-Up Fee
UNITED RENTALS: 10-K Filing Delay May Spur Fitch's Negative Watch
USINTERNETWORKING: Court Formally Closes Chapter 11 Cases
WINN-DIXIE: TRM Corp. Wants to Get Funds From Trust
WINN-DIXIE: Wants to Settle Trade Vendors' Reclamation Claims
WINN-DIXIE: Willie McCrae Wants Stay Lifted to Liquidate Claim
WSNET HOLDINGS: Court Confirms Chapter 11 Plan of Liquidation
* Chadbourne & Parke LLP Establishes Kazakhstan Office
* Proskauer Rose Expands Paris Office with Six New Partners
* Large Companies with Insolvent Balance Sheets
*********
ACCESS CARDIOSYSTEMS: Exclusive Periods Extended Until Sept. 15
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts gave
Access Cardiosystems, Inc., an extension until Sept. 15, 2005, of
the time within which it alone can file a chapter 11 plan. The
Debtor has until Nov. 14, 2005, to solicit acceptances of that
plan from its creditors.
The Debtor explains that it develops and markets a novel,
inexpensive and portable automated external defibrillators. In
mid-October 2004, the Debtor learned of a potential problem with
those portable automated external defibrillators that required a
recall pursuant to U.S. Food and Drug Administration regulations.
The Debtor relates that it is currently involved in two lawsuits
pending before the Bankruptcy Court:
(1) Access Cardiosystems vs. Randall Fincke (former director
and shareholder); and
(2) Koninklijke Philips Electronics N.V. and Philips
Electronics North America Corporation vs. Access
Cardiosystems
The Debtor gave the Court three reasons in support of the
extension:
a) it is making good faith progress towards a plan of
reorganization, but the terms of any proposed plan are not
ripe for determination due to the unresolved issues
surrounding the litigation with Mr. Fincke and Philips
Electronics and the redesign of the automated external
defibrillators;
b) the extent of claims asserted against its estate is unclear
and any proposed chapter 11 plan at this time may be greatly
impacted by the existence of any other significant claims
asserted against the Debtor for which it is unaware; and
c) the plan exclusivity extension is not meant as a negotiating
tactic to pressure its creditors into accepting an
unacceptable plan.
Headquartered in Concord, Massachusetts, Access CardioSystems,
Inc. -- http://www.accesscardiosystems.com/-- sells medical
supplies. The Company filed for chapter 11 protection on Feb. 18,
2005 (Bankr. D. Mass. Case No. 05-40809). Jeffrey D. Sternklar,
Esq., at Duane Morris LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and debts of $1 million to $10
million.
ACCESS CARDIOSYSTEMS: General Claims Bar Date is on July 29
-----------------------------------------------------------
The United States Bankruptcy Court for District of Massachusetts
set July 29, 2005, as the deadline for all creditors owed money by
Access CardioSystems, Inc., on account of claims arising prior to
Feb. 18, 2005, to file their proofs of claim.
Creditors must file written proofs of claim on or before the
July 29 Claims Bar Date, and those forms must be delivered only to
the Debtor's claims agent:
Access CardioSystems Inc. Claims Processing
C/o Kurtzman Carson Consultants, LLC
12910 Culver Boulevard, Suite 1
Los Angeles, California 90066
Headquartered in Concord, Massachusetts, Access CardioSystems,
Inc. -- http://www.accesscardiosystems.com/-- sells medical
supplies. The Company filed for chapter 11 protection on Feb. 18,
2005 (Bankr. D. Mass. Case No. 05-40809). Jeffrey D. Sternklar,
Esq., at Duane Morris LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets and debts of $1 million to
$10 million.
ACCURIDE CANADA: Moody's Lifts Senior Secured Debt Ratings to B1
----------------------------------------------------------------
Moody's Investors Service has upgraded the corporate family
(previously called senior implied) and senior secured debt ratings
of Accuride Corporation and Accuride Canada Inc. to B1 from B2,
and Accuride's senior subordinated debt to B3 from Caa1. At the
same time the rating outlook was revised to stable from positive.
The actions follow the company's receipt of approximately $93
million from its IPO in April of 2005, and the application of
these proceeds to reduce outstandings under its bank term loan.
Accuride's performance to date is slightly ahead of expectations,
and strong demand for heavy duty trucks and trailers should
continue through 2005 and into 2006. As a result, the company's
leverage statistics have improved with coverage ratios anticipated
to strengthen as the year progresses.
However, the markets Accuride serves remain cyclical with the
impact of new emission regulations in 2007 potentially pulling
demand forward into 2006 at the expense of 2007 volumes. Accuride
continues to be controlled by Kohlberg Kravis Roberts & Company
("KKR" with 38%) and Trimaran Capital ("Trimaran" with 17%) whose
respective funds have been invested in the company and its
predecessors for several years. The ratings incorporate
expectations that any exit strategy by KKR or Trimaran would be
accomplished through a secondary offering of shares and/or that
any re-capitalization route would involve a refinancing of
existing indebtedness.
The change in outlook reflects the reduced leverage and expected
healthy performance over the next 18 months, but is mitigated by
uncertainties with 2007 and beyond and ongoing dependence upon a
narrow list of customers.
These ratings were affected:
Accuride Corporation:
* Corporate Family to B1 from B2
* Senior Secured to B1 from B2
* Senior Subordinated to B3 from Caa1
Accuride Canada Inc.:
* Guaranteed Senior secured revolving credit, B1
(guarantors are Accuride Corporation and its material U.S.
subsidiaries)
Moody's previous ratings were assigned in January at the time that
Accuride completed its acquisition of Transportation Technologies
Industries, Inc. The acquisition closed at the end of January.
Accuride issued $275 million of senior subordinated notes compared
to an assumed $190 million at the time of the rating.
However, the bank term loan was reduced to $550 million from the
initial assumption of $615 million. At the end of the first
quarter of 2005, the term loan balance was $541 million. On a pro
forma basis at March 2005 following the application of the IPO
proceeds of $93 million, the term loan balance would be
approximately $448 million, and total balance sheet debt would be
$748 million, or approximately 10% lower than the pro forma total
at the end of 2004. Accuride also increased its guidance for full
year 2005 adjusted EBITDA to $205 million, or roughly 33% above
pro forma combined Accuride & TTI results for 2004.
Should Accuride stay on-course to achieve this higher level of
EBITDA, prospective total leverage would decline below 4 times and
senior secured leverage would be closer to 2.5 times. Moody's
press release of January 18 had listed threshold developments for
positive rating actions of 4 times (total leverage) and 3 times
(senior leverage).
In addition threshold EBIT margins in the high single digits were
listed. Accuride's first quarter 2005 results included an EBIT
margin of 11%. Continued strong demand for commercial and heavy-
duty vehicles is expected for the balance of the year and into
2006 with the company's performance metrics similarly expected to
improve over the balance of the year. Free cash flow to adjusted
debt should exceed 5% with EBIT return on assets approaching
percentages in the low teens.
Favorable industry conditions should continue into 2006 as a
result of a strong economy, higher level of truck miles driven,
demographics of the current North American vehicle fleet arguing
for ongoing replacement demand, and new emission regulations
coming into effect in 2007 which may pull some demand forward into
the earlier year.
However, the production of new medium-to-heavy duty commercial
vehicles remains highly cyclical with some uncertainty associated
with 2007 production volumes. Accuride also continues with a
large concentration of its revenues from a limited number of
customers who are focused on the North American market. General
economic conditions, interest rates and the impact of higher fuel
prices on fleet operator's cash flows will also influence new
vehicle demand. Following the merger with TTI, Accuride's
revenues will benefit from a higher level from the aftermarket
segment, which is viewed as more stable than demand for original
equipment. The company also continues with a strong competitive
position across several product lines.
The indenture for the company's subordinated notes include
restricted payments provisions which limit, subject to the terms
of that document, the purchase, redemption, defeasement,
acquisition or retirement of defined equity interests of Accuride.
In addition, change in control provisions in both the bank and
subordinated note documentation, and leverage limitations within
the bank credit agreement make it more likely that an exit
strategy of KKR or Trimaran would involve a secondary share
offering than a re-leveraging of the company which would not
refinance current debt holders.
As a result, and consistent with metrics in Moody's Auto Supplier
Methodology, Accuride's corporate family rating has been raised
one level to B1. The higher corporate family ratings incorporate
the reduced leverage, healthy outlook for the company's results
over the next 18 months as a result of industry conditions, but
also recognize the continuing cyclicality and uncertainties for
2007. Senior secured obligations will continue to represent more
than 60% of the debt capital structure on a pro forma basis.
Accordingly, senior secured debt has been kept level with the
corporate family rating. Subordinated notes have been maintained
two notches below the B1 corporate family rating in recognition of
their junior claims and prospective lower recovery rates at this
rating level.
Factors that could lead to higher ratings include:
* total leverage sustained through the cycle at
3 times (total);
* with senior leverage below 2 times;
* EBIT/Interest coverage consistently above 3 times; and
* positive free cash flow to total debt at or above 6%.
Factors that could lead to lower ratings include:
* leverage reverting above 4 times; and
* EBIT margins retreating to below 8%.
Accuride Corporation, headquartered in Evansville, Ind., is a
diversified manufacturer and supplier of commercial vehicle
components in North America with pro forma revenues of
approximately $1 billion. Principal products include:
* commercial vehicle wheels,
* wheel-end components and assemblies,
* truck body and chassis parts,
* seating assemblies, and
* other commercial vehicle components.
ACCURIDE CORP: Moody's Lifts Sr. Subordinated Debt Rating to B3
---------------------------------------------------------------
Moody's Investors Service has upgraded the corporate family
(previously called senior implied) and senior secured debt ratings
of Accuride Corporation and Accuride Canada Inc. to B1 from B2,
and Accuride's senior subordinated debt to B3 from Caa1. At the
same time the rating outlook was revised to stable from positive.
The actions follow the company's receipt of approximately $93
million from its IPO in April of 2005, and the application of
these proceeds to reduce outstandings under its bank term loan.
Accuride's performance to date is slightly ahead of expectations,
and strong demand for heavy duty trucks and trailers should
continue through 2005 and into 2006. As a result, the company's
leverage statistics have improved with coverage ratios anticipated
to strengthen as the year progresses.
However, the markets Accuride serves remain cyclical with the
impact of new emission regulations in 2007 potentially pulling
demand forward into 2006 at the expense of 2007 volumes. Accuride
continues to be controlled by Kohlberg Kravis Roberts & Company
("KKR" with 38%) and Trimaran Capital ("Trimaran" with 17%) whose
respective funds have been invested in the company and its
predecessors for several years. The ratings incorporate
expectations that any exit strategy by KKR or Trimaran would be
accomplished through a secondary offering of shares and/or that
any re-capitalization route would involve a refinancing of
existing indebtedness.
The change in outlook reflects the reduced leverage and expected
healthy performance over the next 18 months, but is mitigated by
uncertainties with 2007 and beyond and ongoing dependence upon a
narrow list of customers.
These ratings were affected:
Accuride Corporation:
* Corporate Family to B1 from B2
* Senior Secured to B1 from B2
* Senior Subordinated to B3 from Caa1
Accuride Canada Inc.:
* Guaranteed Senior secured revolving credit, B1
(guarantors are Accuride Corporation and its material U.S.
subsidiaries)
Moody's previous ratings were assigned in January at the time that
Accuride completed its acquisition of Transportation Technologies
Industries, Inc. The acquisition closed at the end of January.
Accuride issued $275 million of senior subordinated notes compared
to an assumed $190 million at the time of the rating.
However, the bank term loan was reduced to $550 million from the
initial assumption of $615 million. At the end of the first
quarter of 2005, the term loan balance was $541 million. On a pro
forma basis at March 2005 following the application of the IPO
proceeds of $93 million, the term loan balance would be
approximately $448 million, and total balance sheet debt would be
$748 million, or approximately 10% lower than the pro forma total
at the end of 2004. Accuride also increased its guidance for full
year 2005 adjusted EBITDA to $205 million, or roughly 33% above
pro forma combined Accuride & TTI results for 2004.
Should Accuride stay on-course to achieve this higher level of
EBITDA, prospective total leverage would decline below 4 times and
senior secured leverage would be closer to 2.5 times. Moody's
press release of January 18 had listed threshold developments for
positive rating actions of 4 times (total leverage) and 3 times
(senior leverage).
In addition threshold EBIT margins in the high single digits were
listed. Accuride's first quarter 2005 results included an EBIT
margin of 11%. Continued strong demand for commercial and heavy-
duty vehicles is expected for the balance of the year and into
2006 with the company's performance metrics similarly expected to
improve over the balance of the year. Free cash flow to adjusted
debt should exceed 5% with EBIT return on assets approaching
percentages in the low teens.
Favorable industry conditions should continue into 2006 as a
result of a strong economy, higher level of truck miles driven,
demographics of the current North American vehicle fleet arguing
for ongoing replacement demand, and new emission regulations
coming into effect in 2007 which may pull some demand forward into
the earlier year.
However, the production of new medium-to-heavy duty commercial
vehicles remains highly cyclical with some uncertainty associated
with 2007 production volumes. Accuride also continues with a
large concentration of its revenues from a limited number of
customers who are focused on the North American market. General
economic conditions, interest rates and the impact of higher fuel
prices on fleet operator's cash flows will also influence new
vehicle demand. Following the merger with TTI, Accuride's
revenues will benefit from a higher level from the aftermarket
segment, which is viewed as more stable than demand for original
equipment. The company also continues with a strong competitive
position across several product lines.
The indenture for the company's subordinated notes include
restricted payments provisions which limit, subject to the terms
of that document, the purchase, redemption, defeasement,
acquisition or retirement of defined equity interests of Accuride.
In addition, change in control provisions in both the bank and
subordinated note documentation, and leverage limitations within
the bank credit agreement make it more likely that an exit
strategy of KKR or Trimaran would involve a secondary share
offering than a re-leveraging of the company which would not
refinance current debt holders.
As a result, and consistent with metrics in Moody's Auto Supplier
Methodology, Accuride's corporate family rating has been raised
one level to B1. The higher corporate family ratings incorporate
the reduced leverage, healthy outlook for the company's results
over the next 18 months as a result of industry conditions, but
also recognize the continuing cyclicality and uncertainties for
2007. Senior secured obligations will continue to represent more
than 60% of the debt capital structure on a pro forma basis.
Accordingly, senior secured debt has been kept level with the
corporate family rating. Subordinated notes have been maintained
two notches below the B1 corporate family rating in recognition of
their junior claims and prospective lower recovery rates at this
rating level.
Factors that could lead to higher ratings include:
* total leverage sustained through the cycle at
3 times (total);
* with senior leverage below 2 times;
* EBIT/Interest coverage consistently above 3 times; and
* positive free cash flow to total debt at or above 6%.
Factors that could lead to lower ratings include:
* leverage reverting above 4 times; and
* EBIT margins retreating to below 8%.
Accuride Corporation, headquartered in Evansville, Ind., is a
diversified manufacturer and supplier of commercial vehicle
components in North America with pro forma revenues of
approximately $1 billion. Principal products include:
* commercial vehicle wheels,
* wheel-end components and assemblies,
* truck body and chassis parts,
* seating assemblies, and
* other commercial vehicle components.
ACE AVIATION: Completes CDN$250 Million Aeroplan Income Fund IPO
----------------------------------------------------------------
ACE Aviation Holdings, Inc., and Aeroplan Limited Partnership
reported that Aeroplan Income Fund successfully completed its
initial public offering of 25 million units at a price of $10.00
per unit for gross proceeds of $250 million. The Fund's units
trade on the Toronto Stock Exchange under the symbol AER.UN.
The Fund is acquiring a 12.5% (14.4 % assuming full exercise of
the overallotment option) ownership interest in the Aeroplan LP.
Aeroplan LP will retain approximately $100 million of the net
proceeds of the offering to partially fund a reserve for Aeroplan
Mile redemptions and for certain capital expenditures, and will
distribute the balance of the net proceeds to ACE in the amount of
approximately $125 million ($160 million assuming full exercise of
the overallotment option). ACE will use the proceeds for general
corporate purposes.
The Fund has granted to the underwriters an option to purchase up
to an additional 3.75 million units at the offering price for a
period expiring 30 days following the closing to cover
overallotments, if any, and for market stabilization purposes.
Distributions will be paid monthly. The first distribution is
expected to be paid on or before August 15, 2005 to Unitholders of
record on July 29, 2005.
The offering was underwritten by a syndicate co-led by RBC Capital
Markets, sole bookrunner, CIBC World Markets and Genuity Capital
Markets.
In connection with the offering, Aeroplan LP also reported the
successful completion of $475 million senior secured syndicated
credit facilities. Approximately $300 million of this will be
used to fund the balance of the reserve for Aeroplan Mile
redemptions. RBC Capital Markets acted as lead arranger, sole
bookrunner and administrative agent.
The securities offered have not been, and will not be, 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 any applicable exemption from the registration
requirement of such Act.
About Aeroplan Income Fund
The Fund is an unincorporated, open-ended trust established under
the laws of the Province of Ontario, created to indirectly acquire
an interest in the outstanding limited partnership units of
Aeroplan LP. After completion of the Offering, ACE will continue
to hold the remaining 87.5% (85.6 % assuming full exercise of the
overallotment option) of the outstanding LP Units.
About Aeroplan
Aeroplan -- http://www.aeroplan.com/-- is Canada's premier
loyalty marketing company, with approximately 5 million active
members. Aeroplan benefits from its unique strategic relationship
with Air Canada, in addition to its contractual arrangements with
leading financial and commercial partners.
Aeroplan provides its commercial partners with loyalty marketing
services to attract and retain customers and stimulate demand for
these partners' products and services. The Aeroplan Program
offers its approximately 5 million active members the ability to
accumulate Aeroplan Miles through a network of more than 60
commercial partners, representing more than 100 brands, in the
financial, retail and travel sectors and redeem those miles for
rewards, including airline seats to more than 700 destinations
worldwide, other travel rewards such as hotel rooms and car
rentals, selected electronics merchandise and a diversified
selection of experiential and specialty rewards. Aeroplan was
founded in 1984 by Air Canada, Canada's largest domestic and
international full-service airline, to manage the airline's
frequent flyer program.
Together with its partners, Aeroplan develops and executes
innovative and appealing member-targeted marketing programs
designed to engage the loyalty of this affluent segment of
Canadian consumers.
About Ace Aviation Holdings
ACE Aviation is the parent holding company of Air Canada and ACE's
other subsidiaries. Air Canada is Canada's largest domestic and
international full-service airline and the largest provider of
scheduled passenger services in the domestic market, the
transborder market and each of the Canada-Europe, Canada-Pacific,
Canada-Caribbean/Central America and Canada-South America markets.
Air Canada is a founding member of the Star Alliance network, the
world's largest airline alliance group.
In addition, the Corporation owns Jazz Air LP, Aeroplan LP and
Destina.ca, which is an on-line travel site. The Corporation also
provides Technical Services through ACTS LP, Cargo Services
through AC Cargo LP and Air Canada, Groundhandling Services
through ACGHS LP and Air Canada and tour operator services and
leisure vacation packages through Touram LP.
* * *
As reported in the Troubled Company Reporter on Oct. 5, 2004,
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Montreal, Quebec-based ACE Aviation
Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P
says the outlook is stable.
ACS INC: Voluntary Chapter 11 Case Summary
------------------------------------------
Debtor: ACS Inc.
dba ACS Business World
P.O. Box 488
Lewistown, Pennsylvania 17044
Bankruptcy Case No.: 05-04504
Type of Business: The Debtor sells office supplies and office
furniture. ACS also offers software services.
Chapter 11 Petition Date: July 7, 2005
Court: Middle District of Pennsylvania (Harrisburg)
Judge: Mary D. France
Debtor's Counsel: Robert E. Chernicoff, Esq.
Cunningham & Chernicoff PC
2320 North Second Street
P.O. Box 60457
Harrisburg, Pennsylvania 17106-0457
Tel: (717) 238-6570
Fax: (717) 238-4809
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
ADELPHIA COMMS: Complaint vs. Some Rigas Family Members Dismissed
-----------------------------------------------------------------
In April 2005, Adelphia Communications Corporation and its debtor-
affiliates entered into interrelated settlement agreements with
the Rigas Family, the U.S. Department of Justice and U.S.
Securities and Exchange Commission.
Under the Rigas-ACOM Settlement, the "Rigas Family" is defined as
John J. Rigas, Doris Rigas, Michael J. Rigas, Timothy J. Rigas,
James P. Rigas, Ellen Rigas Venetis and other individuals and
entities. The Rigas-ACOM Settlement defines the "Excluded
Parties" as John J. Rigas, Timothy J. Rigas and Michael J. Rigas,
provided that Michael will cease to be an Excluded Party at the
time all currently pending criminal proceedings against him are
resolved without a felony conviction on a charge involving fraud
or false statements.
The Rigas-ACOM Settlement requires the dismissal of the claims in
the Adversary Proceeding against the Rigas Family (excluding the
Excluded Parties) and Peter L. Venetis immediately after the
Forfeiture Date.
In May 2005:
-- Judge Sand of the U.S. District Court for the Southern
District of New York approved the agreement between the
U.S. Government;
-- Judge Castel of the U.S. District Court for the Southern
District of New York approved the SEC-ACOM Settlement; and
-- Judge Gerber approved the Rigas-ACOM Settlement, DoJ-ACOM
Settlement and the SEC-ACOM Settlement.
On June 8, 2005, Judge Sand entered a consent order of
forfeiture. On the same day, ACOM received notice from the Rigas
Family that the Forfeiture Date is on June 8, 2005.
Accordingly, pursuant to Rule 41(a)(1) of the Federal Rules of
Civil Procedure and Rule 7041 of the Federal Rules of Bankruptcy
Procedure, the Adversary Action is dismissed, with prejudice, as
against the Rigas Family, other than the Excluded Parties, and
Peter L. Venetis.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
99; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADVANSTAR COMMS: Retains CSFB to Explore Possible Asset Sale
------------------------------------------------------------
Advanstar Communications Inc. is exploring strategic alternatives,
including a possible sale of the Company. The Company has
retained the investment banking group at Credit Suisse First
Boston to assist in this effort.
"The progress we have made in executing our market focused
strategy, including the Questex transaction and the expansion of
our businesses in our key markets has exceeded our expectations,"
Joe Loggia, President and CEO of Advanstar, said. "The
combination of our improved financial performance, strong growth
prospects and an active M&A market, have resulted in increased
interest in Advanstar within the investment community."
The Company cautions that there can be no assurance that the
exploration of strategic alternatives will lead to a transaction.
Advanstar undertakes no obligation to make any further
announcement regarding its consideration of strategic
alternatives.
Advanstar Communications Inc. -- http://www.advanstar.com/-- is a
leading worldwide media company providing integrated marketing
solutions for the Fashion, Life Sciences and Powerports
industries. Advanstar serves business professionals and consumers
in these industries with its portfolio of 55 expositions and
conferences, 55 publications and directories, 75 electronic
publications and Web sites, as well as educational and direct
marketing products and services. Market leading brands and a
commitment to delivering innovative, quality products and services
enables Advanstar to "Connect Our Customers With Theirs."
Advanstar has roughly 1,000 employees and currently operates from
multiple offices in North America and Europe.
* * *
As reported in the Troubled Company Reporter on Apr. 8, 2005,
Standard & Poor's Ratings Services revised its outlook on
Advanstar Communications Inc. to negative from stable. At the
same time, Standard & Poor's affirmed its existing ratings on the
company, including its 'B' corporate credit rating. The Duluth,
Minnesota-based business-to-business media firm, which is analyzed
on a consolidated basis with its parent company, Advanstar Inc.,
had $753 million in consolidated debt on Dec. 31, 2004.
ALLEGHENY ENERGY: Debt Reduction Cues Fitch to Lift Rating to B+
----------------------------------------------------------------
Fitch Ratings has upgraded the senior unsecured rating of
Allegheny Energy Supply Company, LLC to 'B+' from 'B-' because of
debt reduction, lower business risks due to the sale or wind-down
of higher risk non-regulated activities, and improvements in
financial reporting and controls.
The improvement in corporate liquidity and the stabilization of
the company and sector have materially reduced the probability of
default. The Rating Outlook remains Positive. In addition to the
reduction of indebtedness, AE Supply has lowered the carrying
costs on its remaining $2.57 billion of debt through active
refinancing efforts.
The transition to market-based rates for certain Maryland
commercial and industrial customers will result in pretax earnings
growth of approximately $50 million per year beginning this year.
In addition, several annual generation increases rates included in
the West Penn Power affiliate supply contract will cumulatively
increase operating income by $50 million, $100 million, and $150
million in 2006, 2007, and 2008, respectively. Fitch projects
funds from operations to cover interest expense by nearly 2.0
times (x) and a reduction of the debt/EBITDA (operating income
plus depreciation) ratio to less than 6x in 2005, with
improvements anticipated as higher contract generation rates take
effect and more generation transitions to market-based rates.
While there has been clear recovery in credit quality, AE Supply
remains highly leveraged and there is a long road ahead to
restoration of an investment-grade credit rating. The Positive
Rating Outlook incorporates Fitch's expectation of future leverage
reduction using proceeds from additional asset sales (e.g.
Wheatland and Gleason) and increasing cash flow from operations
through additional reductions of operations and maintenance
expenses, controlling the growth of fuel costs, improving plant
availability, and the increases in generation revenue. Leverage
reduction is the primary driver for future rating upgrades. Risks
to future improvement of cash flow generation and leverage
reduction include; adverse developments relating to emissions
compliance costs; litigation; fuel or operations and maintenance
expenses; and weaker-than-anticipated plant operating performance
or regulatory decisions.
The senior unsecured rating of Allegheny Generating Company has
also been raised to 'B+', with a Positive Outlook. The rating
upgrade primarily reflects the improvement in AE Supply's credit
quality and also considers AGC's strong cash flow coverage of
interest expense and steady cash flow anticipated from its 40%
ownership interest in the Bath County pumped storage hydro plant.
While AGC is conservatively capitalized, its rating is limited to
the level of AE Supply's rating because of significant business
linkages. AE Supply owns a majority of AGC (77.03%), and most of
the Bath County plant capacity is committed to AE Supply.
These ratings are upgraded, with a Positive Rating Outlook by
Fitch:
Allegheny Energy Supply Company LLC
-- Senior secured debt to 'BB' from 'BB-';
-- Senior unsecured notes to 'B+' from 'B-'.
Allegheny Generating Company
-- Senior unsecured debentures to 'B+' from 'B-'.
ALLIANCE ATLANTIS: Asks Nasdaq to Delist Class B Common Shares
--------------------------------------------------------------
Alliance Atlantis Communications Inc. asked the Nasdaq Stock
Market to delist its Class B common shares effective at the close
of business last July 7, 2005. These shares trade under the
symbol AACB.
"Given the very low volume of trading in our Class B common shares
on Nasdaq, and the ongoing listing and administrative costs, it
was determined that this listing was no longer cost-effective,"
said David Lazzarato, Executive Vice President and Chief Financial
Officer.
As a registrant under the Securities Exchange Act of 1934, the
Company will continue to have ongoing United States securities
obligations, including those related to Sarbanes-Oxley.
The Company's Class B common shares will continue to be listed and
trade on the Toronto Stock Exchange; trading symbol AAC.NV.B.
Alliance Atlantis Communications Inc. --
http://www.allianceatlantis.com/-- is a leading specialty
broadcaster. The Company also co-produces and distributes a
limited number of television programs in Canada and
internationally, including the hit CSI franchise, and holds a 51%
limited partnership interest in Motion Picture Distribution LP,
Canada's leading motion picture distribution business. The
Company's common shares are listed on the Toronto Stock Exchange -
trading symbols AAC.A, AAC.NV.B and on NASDAQ - trading symbol
AACB.
* * *
As reported in the Troubled Company Reporter on April 25, 2005,
Moody's Investors Service withdrew the senior subordinated debt
rating for Alliance Atlantis Communications Inc. as the company
redeemed that class of debt pursuant to a call option on
December 21, 2004. The senior subordinated notes were refinanced
with proceeds from a new senior secured credit facility arranged
by Merrill Lynch & Co., RBC Capital Markets and TD Securities.
Moody's rates the new loan facility at Ba2 and Standard & Poors'
Ratings Services rates it at BB.
ALLIANCE ONE: Completes Full Redemption of Convertible Sub. Notes
-----------------------------------------------------------------
Alliance One International, Inc. (NYSE: AOI), formerly known as
DIMON Incorporated, completed its previously announced full
redemption of its 6-1/4% Convertible Subordinated Debentures due
March 31, 2007, in accordance with the terms of the Indenture
dated as of April 1, 1997, between DIMON and LaSalle Bank National
Association (formerly known as LaSalle National Bank), as Trustee.
The Debentures were redeemed at a redemption price of 101.25% of
the principal amount thereof, plus accrued and unpaid interest to
July 8, 2005, which resulted in an aggregate redemption price of
approximately $73.5 million, including approximately
$101.8 billion of accrued interest.
On July 8, 2005, interest on the Debentures ceased to accrue, and
the only remaining right of holders of the Debentures is to
receive payment of the redemption price upon surrender of the
Debentures to the Trustee. Holders of the Debentures received by
mail or electronic notice a Notice of Full Redemption setting
forth the redemption procedures. The Debentures should be
presented to the Trustee, as paying agent for the redemption, at
the office of the Trustee as set forth below:
LaSalle Bank National Association
135 South LaSalle Street
Suite 1960
Chicago, Illinois 60603
Holders of the Debentures should contact the Trustee, LaSalle Bank
National Association, at (312) 904-2970 for additional information
concerning the redemption of the Debentures.
Alliance One -- http://www.aointl.com/-- is a leading independent
leaf tobacco merchant. It selects, purchases, processes, stores,
packs and ships tobacco grown in over 45 countries, and serves the
world's large multinational cigarette manufacturers in over 90
countries.
* * *
As reported in the Troubled Company Reporter on May 13, 2005,
Standard & Poor's Ratings Services assigned its 'B' rating to
Alliance One International Inc.'s 12.75% senior subordinated notes
due November 2012. At the same time, Standard & Poor's affirmed
its 'BB-' corporate credit and bank loan ratings on Alliance One
and Intabex Netherlands B.V.
In addition, Standard & Poor's affirmed its 'B' rating on Alliance
One's $315 million 11% senior notes due May 2012. The senior note
transaction was downsized to $315 million from the originally
proposed $450 million that was rated on May 3, 2005. Also, the
maturity date was shortened by one year. The senior note issue is
two notches below the corporate credit rating because of the
amount of priority obligations and secured debt ahead of the
senior unsecured debt issue. Furthermore, Alliance One is both a
holding company and directly owns certain U.S. operating assets of
the merged companies.
S&P said the outlook is negative. Pro forma for the refinancing,
total rated debt on Danville, Virginia-based Alliance One is about
$1.1 billion.
ATA AIRLINES: Gets Court Nod to Reject BCC Aircraft Lease
---------------------------------------------------------
Prior to the Petition Date, ATA Airlines, Inc., entered into one
or more leases with BCC Equipment Leasing Corporation for 12 BCC
757-33N aircraft bearing U.S. Registration Numbers N550TZ,
N551TZ, N552TZ, N553TZ, N554TZ, N555TZ, N556TZ, N557TZ, N558TZ,
N559TZ, N560TZ and N561TZ. The ownership of the Aircraft was
structured as enhanced equipment trust certificates with BCC as
owner-participant and Wells Fargo Bank Northwest, N.A. as owner-
trustee.
Pursuant to a December 29, 2004 Letter Agreement between the
parties, ATA has used the aircraft postpetition in exchange for
monthly payments per aircraft. The parties signed the Agreement
to allow them sufficient time to:
(i) negotiate new or amended leases for the Aircraft as are
necessary for the Debtor's reorganization and
(ii) establish return dates and conditions for certain of the
Aircraft.
Jeffrey J. Graham, Esq., at Sommer Barnard Attorneys, PC, in
Indianapolis, Indiana, relates that, in line with ATA Airlines'
goal of maximizing its fleet, the parties have agreed to long-term
leases for certain Aircraft and short-term leases for the Aircraft
that are not deemed necessary for the Airline's reorganization.
Although leasing aircraft may be considered part of the its
"ordinary course" of business, ATA Airlines, out of an abundance
of caution, seeks the U.S. Bankruptcy Court for the Southern
District of Indiana's authority to enter into the Amended Leases
with BCC.
ATA Airlines believes that retention of the Aircraft is essential
to the Debtors' reorganization and for the continuing operational
needs of the Airline.
ATA Airlines also seeks the Court's permission to enter into
related settlement agreements with BCC. The parties have
negotiated a settlement agreement which would, among other things,
establish BCC's deficiency claims under the Leases and the Amended
Leases for retained and returned Aircraft as well as under
intercompany guarantees.
Pursuant to the settlement, the parties agree to the damage claim
associated with certain of the Aircraft and the method for
establishing the amount of BCC's claims with respect to the
remaining Aircraft. The contemplated method calls for the use of
a third-party valuation expert, the services of which will cost
the Debtors less than $20,000. Furthermore, the Debtors will
release claims against BCC and Wells Fargo, which arose prior to
the Settlement.
The information and the financial details in those documents are
confidential and proprietary. The Debtors will file the documents
under seal.
The Official Unsecured Creditors' Committee has been apprised of
the parties' negotiations.
N559TZ Aircraft Lease Rejected
The Court authorizes the rejection of the lease and related
agreements of the aircraft with Tail No. N559TZ, effective:
(1) July 1, 2005; or
(2) the date of actual surrender and return of the rejected
equipment to BCC and Wells Fargo at the agreed-upon
location by the parties.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATA AIRLINES: Four Parties Respond to Debtors' Claims Objections
----------------------------------------------------------------
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, notes that 69 claims were filed asserting damages in
connection with aircraft and engine leases that the Debtors have
rejected. Mr. Nelson argues that the Claims fail to provide
information sufficient for ATA Airlines, Inc. and its debtor-
affiliates to determine the specific basis for or the amount of
each Claim. Each Claim merely outlines certain categories of
damages the claimant seeks to recover and provides an estimate of
the amount. No supporting documentation was also presented for
each claim.
Pursuant to Rule 3001 of the Federal Rules of Bankruptcy
Procedure, the Debtors ask the U.S. Bankruptcy Court for the
Southern District of Indiana to disallow the Claims.
A list of the Disallowed Claims is available at no charge at:
http://bankrupt.com/misc/ata_2287_list_of_claims.pdf
Parties Respond
(a) John Hancock
Thomas N. Eckerle, Esq., in Indianapolis, Indiana, contends that
the Debtors' arguments do not apply on the claim of John Hancock
Leasing Corporation. Because of the voluminous nature of the
lease documents, John Hancock attached a summary of the documents
to each of Claims. Nonetheless, John Hancock offered to make
available and in fact, delivered the copies of relevant documents
requested by the Debtors.
In addition, the leased aircraft and the claims arising from the
rejection of the lease are the subject of a Motion to Compel
pending before the Court. In their recent pleadings relating to
the litigation, the Debtors have argued that:
(a) the Court has not yet ruled as to whether certain of John
Hancock's claims qualify as administrative expense claims
or prepetition, unsecured claims; and
(b) the Debtors are entitled to discovery and an evidentiary
hearing in order to dispute the liquidated value of
John Hancock's claims.
Once the pending issues relating to the leased aircraft and the
status of claims relating to the rejection of the lease are
resolved, Mr. Eckerle says John Hancock will be in a position to
amend its claims to include definitive amounts covering its Lease
Rejection Claim.
(b) FINOVA
Thomas P. Yoder, Esq., at Barrett & McNagny, LLP, in Fort Wayne,
Indiana, relates that the agreements that support the three claims
filed by FINOVA Capital Corporation are in the Debtors'
possession. Notwithstanding, FINOVA's proofs of claim
specifically state that copies of all of relevant documents are
available upon request. No request has ever been made for any
documentation.
Mr. Yoder informs the Court that FINOVA leased to ATA Airlines,
Inc., an aircraft with Tail No. N516AT, two accompanying Rolls-
Royce Engines with Serial Nos. 31397 and 31398, and a spare Engine
with Serial No. 31449, together with accompanying technical
records and data. ATA Holdings Corp. guaranteed ATA Airlines'
obligations under the Lease.
At the time that the Claims were filed, Mr. Yoder says not all
relevant information was yet ascertainable, including but not
limited to the claims relating to the return condition of the
N516 Equipment and the N516 Data, and Engine 31449 and the Engine
31449 Data.
FINOVA is still in the process of further quantifying its claims.
FINOVA estimates Claim No. 1270 filed against ATA Airlines and
Claim No. 1271 filed against ATA Holdings to be at least
$23,167,596 each, calculated as:
A. The damages related to the return condition of the N516
Equipment and the N516 Data aggregating to $1,199,184;
B. An administrative claim for the period from October 26,
2004, through the return of the N516 Equipment and the
N516 Data for all Basic Rent, totaling at least
$3,825,947, and additional amounts for return conditions
attributable to postpetition use and to the failure of
the Debtors to comply with the Rejection Order; and
C. A general unsecured claim pursuant to, among other things,
Section 14 of the Lease for termination damages:
(i) all unpaid Basic Rent as of the Petition Date
together with interest, if any, at the Overdue Rate
on the amount of any such unpaid Basic Rent in
the amount of $47,911, plus
(ii) an amount equal to $37,329,474 over the fair market
sales value as of the Petition Date -- estimated to
be $19,650,000 -- for a total estimated amount of
$17,679,474, plus
(iii) all other amounts due and owing, including but not
limited to attorneys' fees, costs and expenses
arising from the rejection of the N516 Lease,
estimated to be at least $415,080.
Claim No. 1272 filed against ATA Airlines and Claim No. 1273ATA
filed against Holdings are at least $3,113,125 each, calculated
as:
A. an administrative claim for the period from October 26,
2004, through the return of the Engine 31449 and the
Engine 31449 Data for all Basic Rent, totaling at least
$919,014, and additional amounts for the failure of the
Debtors to comply with the Rejection Order; and
B. a general unsecured claim pursuant to, among other things,
Section 14 of the Lease for termination damages as:
(i) all unpaid Basic Rent as of the Petition Date
together with interest, if any, at the Overdue Rate
on the amount of any such unpaid Basic Rent in the
amount of $180,392, plus
(ii) an amount equal to $5,803,719 over the fair
market sales value as of the Petition Date --
estimated to be $3,790,000 -- for a total estimated
amount of $2,013,719.
FINOVA reserves its right to amend the Claims and to further
quantify its damages.
(c) Key Equipment
Key Equipment Finance Inc., asserts six lease rejection damage
claims each against ATA Airlines, Inc., the counter-party to the
lease, and ATA Holdings Corp., the guarantor to ATA Airlines'
obligations.
Key Equipment asserts these claims against ATA Holdings and ATA
Airlines:
Claim Revised
Claim Nos. Amount Amount
---------- ------ ------
1292/1338 $834,864 $842,552
1293/1339 834,864 842,552
1296/1342 1,041,136 1,050,572
1297/1343 7,063,776 7,021,848
1298/1344 2,039,825 1,091,018
1299/1345 2,039,825 868,941
Michael A. Axel, Esq., at Cleveland, Ohio, relates that Key
Equipment attached a copy of the underlying leases and guaranties
to the Claims. Key will produce the additional documents
requested by the Debtors.
(d) US Bancorp
US Bancorp Equipment Finance, Inc., leased to ATA Airlines, Inc.,
seven Saab Model 340B aircraft with Tail Nos. N303CE, N308CE,
N198AE, N203NE, N193AE, N204NE and N202KD, and their associated
engines and propellers. Subsequent to the rejection of the leases
on February 2, 2005, US Bancorp sold all airframes and most of the
engines and propellers.
US Bancorp has not yet amended its claims to account for:
(i) sale proceeds realized upon the sale of the Aircraft, or
(ii) the value of one engine remaining in US Bancorp's
possession.
Although acknowledging that the claims must be reduced, US
Bancorp opposes the disallowance of the claims.
Timothy L. Black, Esq., at Feiwell & Hannoy, PC, in Indianapolis,
Indiana, relates that copies of the leases and the guarantees that
serve as basis for the claims are in the Debtors' possession.
Moreover, the attachment to each of the claims indicated that the
documents would be made available upon request.
Mr. Black argues that the burden shifts to the objecting party to
rebut the claim's prima facie allowability. Moreover, Bare
statements in the absence of evidence are insufficient for the
Debtors to obtain disallowance of US Bancorp's entire claim. In
addition, the need to adjust a claim amount based upon subsequent
mitigation is not grounds to disallow a claim in its entirety.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AXEDA SYSTEMS: Nasdaq Halts Common Stock Trading
------------------------------------------------
Axeda Systems Inc. (OTC: XEDA.PK) reported that its common stock
was delisted from The Nasdaq SmallCap Market effective with the
opening of business on July 7, 2005.
This follows the Company's announcement that a Nasdaq Listing
Qualifications Panel had approved the Company's request for
continued listing of its common stock on The Nasdaq SmallCap
Market, via an exception from Nasdaq's stockholders' equity and
minimum bid price requirements. While the Company was able to
demonstrate compliance with the stockholders' equity requirement
in accordance with the terms of the exception, it failed to
achieve a $1 stock price by June 30, 2005, as required by the
Panel's decision.
The Company's quotation for its common stock now appears in the
"Pink Sheets." The trading symbol for its common stock has
changed from XEDAC to XEDA effective with the removal from NASDAQ.
The Company's common stock may also be quoted in the future on the
OTC Bulletin Board provided a market maker files the necessary
application with the NASD and such application is cleared. The
Company will disclose further trading venue information for its
common stock when such information becomes available.
Axeda Systems Inc. -- http://www.axeda.com/-- is the world's
leading provider of Device Relationship Management (DRM) software
and services. The Company's flagship product, the Axeda(R) DRM
system helps manufacturing and service organizations increase
revenue while lowering costs, by proactively monitoring and
managing devices deployed at customer sites around the world.
Axeda DRM is a highly scalable, field-proven, and comprehensive
remote management solution that leverages its patented Firewall-
Friendly(TM) technology to enable Machine-to-Machine (M2M)
communication by utilizing the public Internet. Axeda customers
include Global 2000 companies in many markets including Medical
Instrument, Enterprise Technology, Office and Print Production
Systems, and Industrial and Building Automation industries. Axeda
has sales and service offices in the U.S. and Europe, and
distribution partners worldwide.
* * *
Going Concern Doubt
KPMG LLP raised substantial doubt about Axeda Systems Inc.'s
ability to continue as a going concern after it audited the
Company's Annual Report for the fiscal year ended Dec. 31, 2004,
filed with the Securities and Exchange Commission. KPMG stated
that the Company's recurring losses from operations and negative
cash flows from operations since inception, triggered the going
concern opinion.
"Management has developed and begun to implement a plan to address
these issues and allow the Company to continue as a going concern
through at least the end of 2005," the Company said in its Annual
Report. "This plan includes fundraising from new and current
investors, continued cost-cutting, and stabilizing and growing our
revenue streams. Although we believe the plan will be realized,
there is no assurance that these events will occur."
BIOTIME INC: AMEX to Proceed with Stock Delisting on Friday
-----------------------------------------------------------
During April 2005, BioTime, Inc. (AMEX:BTX) received a notice from
the staff of the American Stock Exchange indicating that BioTime
did not meet certain of the Exchange's continued listing standards
as set forth in Section 1003(a)(iii) of the AMEX Company Guide in
that the Company has shareholders' equity of less than $6,000,000
and has incurred losses during the last five fiscal years.
Accordingly, the staff of the Exchange determined to proceed with
the filing of an application to the Securities and Exchange
Commission under Securities Exchange Act Rule 12d-2 to delist
BioTime common shares and warrants from the Exchange.
BioTime appealed this determination to the Exchange's Committee on
Securities. However, the Committee on Securities has determined
to uphold the Exchange's staff determination and to proceed with
the delisting of BioTime common shares and warrants.
BioTime shares and warrants will not be listed or traded on the
AMEX after July 14, 2005, but will be eligible for quotation on
the OTC Bulletin Board maintained by the National Association of
Securities Dealers, Inc. BioTime will announce the new trading
symbols for its common shares and warrants as soon as practicable.
BioTime Inc. -- http://www.biotimeinc.com/-- headquartered in
Berkeley, California, develops blood plasma volume expanders,
blood replacement solutions for hypothermic (low temperature)
surgery, organ preservation solutions and technology for use in
surgery, emergency trauma treatment and other applications.
BioTime's lead product Hextend is manufactured and distributed in
the U.S. and Canada by Hospira, Inc., and in South Korea by CJ
Corp. under exclusive licensing agreements.
At Mar. 31, 2005, BioTime Inc.'s balance sheet showed a $321,420
stockholders' deficit, compared to a $344,770 positive equity at
Dec. 31, 2004.
BOISE CASCADE: S&P Rates $1.32 Billion Revolving Loan at BB
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating and its '2' recovery rating to the $1.32 billion revolving
credit and term loan facility of Boise Cascade LLC (Boise)
(BB/Stable/--). These ratings reflect an expectation of
substantial (80%-100%) recovery of principal in the event of
payment default. All ratings, including the company's corporate
credit rating, were affirmed. The outlook is stable.
Boise, Idaho-based Boise recently amended and restated its
existing credit agreement to increase the revolving credit
facility, which matures in 2010, to $475 million from $350
million. In addition, a new $840 million term loan D was added to
replace term loan B, which had $918 million outstanding at
March 31, 2005. The new term loan matures in 2011.
Boise is the third-largest full-line wholesale building products
distributor in the U.S.
"Favorable near-term prospects for paper and wood products markets
should allow Boise to generate free cash flow for debt reduction
during the next year and modestly improve its aggressive capital
structure. In addition, its diverse product mix and growing
valued-added portfolio should enable it to weather cyclical
downturns, limiting downside ratings risk," said Standard & Poor's
credit analyst Pamela Rice. "Still, demand for the company's
primary paper and wood products could be subject to permanent
declines over the intermediate term. If so, it could be difficult
for Boise to strengthen its financial profile to a level that
would support higher ratings. Concurrent downturns in the
company's products or any debt-financed shareholder value
initiatives could lead to a negative outlook."
The borrowers under the facility are Boise and Boise Land & Timber
Corp., which guarantee each other's debt, although Boise Timber is
not expected to draw on the facility. Also, parent holding
companies, Boise Cascade Co. and Boise Land & Timber Holdings
Corp. and their subsidiaries jointly and severally guarantee the
facilities on a senior secured basis.
The collateral supporting borrowings under the facilities includes
perfected first-priority pledges of the borrowers' equity and the
equity interests held by the borrowers and the other guarantors
(65% of the equity of first-tier foreign subsidiaries) and
perfected first-priority security interests in substantially all
of the borrowers' and guarantors' assets.
The term loan has modest amortization until its final year when
the remaining balance becomes due in two equal installments.
Lenders benefit from an excess cash flow sweep that starts at 50%
and reduces to 25% when the leverage ratio falls to 3.5 to 1, and
to zero when the leverage ratio reaches 3.0 to 1. Financial
covenants include an interest expense coverage ratio that
increases in several steps to 2.75x after Dec. 31, 2010, from
1.875x currently, and a leverage ratio that decreases in several
steps to 3.75x after Dec. 31, 2010, from 7.5x currently. The
credit agreement also requires interest-rate protection on long-
term debt for a period of at least three years.
Boise participates in cyclical markets and during 2004 exited a
lengthy period of low paper demand and prices. Although wood
product prices have been high for more than a year, overcapacity
caused them to be depressed for a few years before that, despite
the lengthy housing boom that kept building products demand high
throughout this period. In constructing its prospective default
scenario, Standard & Poor's factors in its assessment that rising
interest rates will eventually put a crimp in housing demand.
With no end to overcapacity in sight, the combination of lower
demand and weak pricing will severely reduce revenues. At the
same time, economic softening, coupled with further progress
toward the "paperless society," would weigh on white paper
profitability. The resulting revenue and margin squeeze could
reduce EBITDA (a fall in the area of 50% is possible) to the point
where debt service and maintenance capital spending could no
longer be maintained.
Even in this harsh environment Boise would maintain viable
prospects for reorganization because of its strong positions in
certain market segments and value-added product mix.
BOMBARDIER RECREATIONAL: Debt Reduction Cues S&P to Lift Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
recreational product manufacturer Bombardier Recreational Products
Inc., including its long-term corporate credit rating, to 'BB-'
from 'B+'. At the same time, the ratings were removed from
CreditWatch where they were placed with positive implications Feb.
16, 2005. The ratings upgrade reflects material reductions in
leverage over the past year. The outlook is now stable.
BRP's progress has exceeded expectations that were factored into
the initial rating. "BRP has significantly improved its working
capital management allowing for significant debt reduction," said
Standard & Poor's credit analyst Kenton Freitag.
Market share for its key products has increased, despite efforts
to reduce the number of models to improve manufacturing
efficiency. Furthermore, the company has maintained margins in
the past year despite the appreciation of the Canadian dollar and
Euro, in which a majority of the company's manufacturing costs are
denominated, while the majority of revenues are in U.S. dollars.
The company continues to face pressure from adverse currency
movements, but it has intensified its efforts to increase
productivity. BRP also continues to migrate its suppliers to U.S.
dollar-denominated contracts that will increase the company's
natural hedge position.
The ratings on Montreal, Quebec-based BRP reflect the strong
competition in the recreational products markets, and the volatile
demand for the primary products. These factors are partially
offset by BRP's market knowledge, the company's well established
dealer network and brand names, and the stable margins and
revenues gained from the parts and accessories component of this
business.
The competitive environment in the recreational product industry
is challenging and demand is cyclical. BRP competes against well-
established U.S.- and Japan-based competitors and continuous
investment in new programs is required to maintain market share.
Nevertheless, BRP's long history in the snowmobile and personal
watercraft markets and strong customer loyalty to its brands has
facilitated the company's leading development in new products.
This, combined with the company's expansive dealership base, has
been key to maintaining market share, which has allowed for
maintenance of leading market positions.
BRP is a manufacturer of motorized recreational products. BRP
manufactures snowmobiles under the Ski-Doo and Lynx brands;
watercraft under the Sea-Doo brand name; Rotax engines;
Bombardier-branded all terrain vehicles; outboard motors under the
Evinrude and Johnson brand names; and sport boats. Fiscal 2005
sales were C$2.4 billion. It is privately owned by a group
consisting of Bain Capital, Caisse de D,p"t et Placement du
Qu,bec, and the Bombardier family.
The stable outlook reflects that the company efforts to reduce
costs should allow for stable margins and free cash generation,
despite pressures from the appreciation of the Canadian dollar.
The outlook could be revised to negative if the Canadian dollar
further appreciated to the extent that it would cause material
declines in operating margins. Conversely, the outlook could be
changed to positive if the company continued to reduce leverage
and demonstrates a sustained improvement in margins.
CATHOLIC CHURCH: Court Confirms Tucson's Third Amended Plan
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona confirmed
the Roman Catholic Church of the Diocese of Tucson's Third Amended
Plan on July 11, 2005.
On May 25, 2005, the Diocese of Tucson delivered to the U.S.
Bankruptcy Court for the District of Arizona a third amendment to
its plan of reorganization and disclosure statement. The Court
approved Tucson's amended Disclosure Statement on July 1, 2005.
Under the plan approved by the Honorable James Marlar, the diocese
agreed to make available $22.2 million for settlements in claims
of sex abuse by priests and church workers. A total of 77 claims
asserting sexual abuse by priests in the diocese have been
approved or are pending, while 27 claims have been disallowed.
The pool to pay abuse victims' claims includes $14.8 million from
insurers. Parishes will contribute $2 million; the diocese will
provide $5.58 million of the settlement amount -- all but $300,000
of that coming from a May auction of real estate holdings.
Classification & Treatment of Claims
The Plan reclassifies Class 1 Priority Employee Unsecured Claims
as unimpaired. Class 2 Prepetition Property Tax Secured Claims is
revised to Prepetition Date Secured Tax Claims and Class 7 Parish
Claims is revised to Parish Loan Claims.
Tucson's estimate of the Allowed Class 7 Claims is lowered to
$4,700,000 from $6,962,867.
Treatment of Tort Claims Under Settlement Trust
Pursuant to the Plan, the Special Arbitrator will consider each
Tort Claim of a Settling Tort Claimant. The Special Arbitrator
will Allow or Disallow the Claim. If the Tort Claim is Allowed,
the Special Arbitrator will classify each Claim as a Relationship
Tort Claim, a Tier One Claim, a Tier Two Claim, a California Tier
Claim, a Tier Three Claim or a Tier Four Claim. If a Tort Claim
is Disallowed, the Tort Claim will not be placed in a Tier and the
Tort Claimant will take nothing under the Plan.
Settling Tort Claimants with Allowed Tort Claims will receive at
least the Initial Distribution Amounts for their Tiers:
Initial
Distribution Amount
-------------------
Tier One $100,000
Tier Two 200,000
California Tier 300,000
Tier Three 425,000
Tier Four 600,000
Relationship Tort Claimant
A Relationship Tort Claimant will receive 5% of the direct
victim's Initial Distribution Amount. No distribution will be
made to a Relationship Tort Claimant until the Tort Claim of the
son or daughter or spouse has been Allowed. If the Claim of the
direct Tort Claimant is Disallowed, the Claim of the Relationship
Tort Claimant will also be Disallowed and the Relationship Tort
Claimant will receive nothing under the Plan.
If the Claim of the Tort Claimant is Allowed, the Relationship
Tort Claimant will receive the Relationship Tort Claim
Distribution Amount, provided that if there is more than one son
or daughter who is a Tort Claimant with an Allowed Tort Claim, the
Determination and Treatment of Unknown Tort Claims Relationship
Tort Claim Distribution Amount will be limited to the highest
Initial Distribution amount for a son or daughter regardless of
how many children are Tort Claimants with Allowed Tort Claims.
In addition, there will be only one Relationship Tort Claim
Distribution Amount per family so that if two parents filed
Relationship Tort Claims, regardless of whether they are married
at the time of Allowance and payment, only one payment will be
made and the parents can determine how the Relationship Tort
Claim Distribution Amount will be split.
Treatment of Tort Claims Under Litigation Trust
Tort Claims of Non-Settling Tort Claimants will be determined by
the Bankruptcy Court, a jury or the District Court -- depending on
the rights asserted or waived by a Non-Settling Tort Claimant.
Recovery will be limited to the lesser of:
(i) the judgment;
(ii) $425,000; or
(iii) a Pro Rata share of the amount allocated to the Litigation
Trust.
Any jury trial or Court trial of a Non-Settling Tort Claimant will
be held in the U.S. District Court for the District of Arizona,
Tucson Division, or in the Bankruptcy Court. Any objection to a
Non-Settling Tort Claimant's Claim prior to the Confirmation Date
will constitute commencement of the action to determine the
Allowance or Disallowance of the Tort Claim.
Litigation Trust Funding
If any Tort Claimants opt into the Litigation Trust, the
Litigation Trust will be funded with 10% of the Initial
Contribution, which is $15,700,000, to be paid to the Trustee from
the Settlement Trust after the Effective Date, unless the Court
determines that a lesser amount is sufficient to fund the
Litigation Trust. The Court will determine the final allocation
of the transferred Cash and Assets between the Settlement Trust
and the Litigation Trust, if necessary, as part of the
confirmation process.
If few Tort Claimants opt into the Litigation Trust, the Diocese
and the Tort Committee will request that a lesser amount be used
to fund the Litigation Trust. In all events, there is a
limitation on the recovery amount a Non-Settling Tort Claimant can
receive regardless of the amount of the judgment entered in any
litigation regarding the Tort Claim.
If a Tort Claim is Disallowed, the Tort Claim will not be placed
in a Tier and the Tort Claimant will take nothing under the Plan.
A full-text copy of Tucson's Third Amended Disclosure Statement
showing the changes is available for free at:
http://ResearchArchives.com/t/s?61
A full-text copy of Tucson's Third Amended Reorganization Plan
showing the changes is available for free at:
http://ResearchArchives.com/t/s?62
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese.
CATHOLIC CHURCH: Spokane Committee Wants Property Use Restricted
----------------------------------------------------------------
Schedules A and B filed by the Diocese of Spokane list total
assets of $11,000,000. There is no dispute that these assets are
property of the Diocese's estate, Joseph E. Shickich, Jr., Esq.,
at Riddell Williams P.S., in Seattle, Washington, tells the U.S.
Bankruptcy Court for the Eastern District of Washington. However,
the Court and all parties-in-interest are concerned that
administrative expenses are rapidly diminishing the Undisputed
Estate Property, Mr. Shickich says.
The Diocese has also expressed this concern, especially about the
duplication of Committee expenses as set forth in its request to
disband the Tort Litigants Committee, as well as in its objection
to the intervention of the Tort Claimants Committee in the
substantive consolidation adversary proceeding filed by the
Litigants Committee. The parishes have also expressed the same
concern.
For this reason, the Tort Committee asks the Court to restrict the
Diocese from using estate property.
Disputed Personal Property
According to Mr. Shickich, there are other properties to which the
Estate holds title. For instance, the deeds to real property
located at 32 parishes convey the property to the "Catholic
Bishop of Spokane" as the grantee without any limitation or
restriction. This disputed property is the subject of the
Adversary Proceeding, and is the property occupied by the
Parishes.
Spokane disclaims ownership of the Disputed Estate Property.
The Diocese asserts that it has no interest in the Property but,
in some cases, holds mere legal title. In addition, certain of
the property is subject to a restriction imposed by the donor or
grantor. Some of the properties are subject to Canon Law, First
Amendment protections, Washington State protections, Washington's
Law on Corporation Sole, the Religious Freedom Restoration Act,
the Church Autonomy Doctrine, Charitable Trust Law, Washington
Trust Law, rights and restrictions imposed by donors, and other
applicable non-bankruptcy laws.
The Parishes support Spokane's assertion and state that under
civil or Canon Law, the Disputed Estate Property is not property
of the Diocese's Estate.
But Mr. Shickich points out that under Section 1107(a) of the
Bankruptcy Code, the Diocese, as debtor-in-possession, has the
functions and fiduciary duties of a Chapter 11 trustee. The
Diocese is the trustee of its own estate and therefore stands in a
fiduciary relationship to its creditors. The Diocese is required
to maximize the quality of the Estate, and avoid conduct contrary
to the rights of those whose interests it is required to protect.
Instead of fulfilling its fiduciary duty of loyalty to its
creditors, Mr. Shickich says the Diocese is taking the lead role
in minimizing the Estate by disclaiming property to which it holds
title. Spokane is using the Diocese's personnel and attorneys to
advance a position contrary to the interests of the creditors of
the Estate. Furthermore, the Diocese expects to use the
Undisputed Estate Property to cover its expenses in the Adversary
Proceeding with no corresponding benefit conferred on the Estate
if the Diocese prevails.
"The Diocese is not conserving and protecting the Disputed Estate
Property but instead is taking a position contrary to the one that
would be taken by a trustee in fulfillment of his fiduciary duty
of loyalty," Mr. Shickich says. A trustee would defend title, not
disclaim it.
The Tort Committee tells Judge Williams that the Parishes have
answered and raised affirmative defenses identical to that of
Spokane in the Adversary Proceeding, and are able to advance these
arguments without duplication or help from the Diocese. Since the
Parishes will be the beneficiaries of any ruling that the Disputed
Estate Property is not property of the Estate, and the Diocese's
Estate and its creditors will be the losers, the Parishes are the
ones who should properly bear the cost and advance the arguments,
not Spokane. Besides, Mr. Shickich continues, the Parishes are
represented by highly experienced and nationally recognized
counsel.
Not in the Ordinary Course
Section 108 coupled with Section 363(b)(1) permits Spokane to
operate its business and use Undisputed Estate Property in the
ordinary course of business.
Mr. Shickich, however, insists that Spokane's disclaiming the
Disputed Estate Property is in contravention of its fiduciary duty
of loyalty and is not in the ordinary course of the Diocese's
business. Accordingly, the Diocese cannot put Undisputed Estate
Property towards this end without notice, hearing and the Court's
permission. The Tort Committee also believes the Court's
permission must be withheld since this end confers no benefit on
the Estate.
The Tort Committee wants the Court to restrict the Diocese's
operation of its business to prohibit any effort or assistance by
Diocese personnel or counsel, or any expenditure by the Diocese of
Undisputed Estate Property, in disclaiming the Disputed Estate
Property. The Diocese should be restricted from litigating its
affirmative defenses in the Section 541 Adversary Proceedings, the
Tort Committee adds. Its role should be nominal and for the sole
purposes of responding to discovery. Moreover, any defense to the
Adversary Proceedings should be mounted by the Parishes alone.
Tort Litigants and FCR Agree
"The Diocese has a clear conflict of interest in its dual role as
a fiduciary to the creditors of the estate and trustee to the
alleged trusts described in its pleadings filed in the [Adversary
Proceedings]," James Stang, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub PC, in Los Angeles, California, informs
Judge Williams.
Mr. Stang insists that the professionals should recover their fees
and costs from the Parishes who are the beneficiaries of the
alleged trust. If the Court determines that a trust does exist,
the fees and expenses should be paid from the property of the
trust. But if the Court declares that a trust does not exist, the
parishioners nonetheless may be liable for the Diocese's fees and
expenses.
"The Diocese's conflict is irreconcilable," Mr. Stang maintains.
Spokane should never have undertaken the representation of the
interests adverse to the creditors. But having done do, the
creditors should not bear the financial burden.
Gayle E. Bush, Legal Representative for Future Tort Claimants,
also believes that assets of the estate are being expended for an
inappropriate purpose. This is not a problem simply to be solved
by denying compensation to counsel for legal services not directed
toward the estate's benefit, Mr. Bush says. The creditors deserve
more from the Diocese who has elected the Bankruptcy Code as its
avenue for resolving matters.
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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CENTRAL EUROPEAN: S&P Rates New $373 Million Sr. Sec. Notes at B-
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Central European Distribution
Corporation, a leading distributor of alcoholic beverages in
Poland. The outlook is stable.
At the same time, Standard & Poor's assigned its 'B-' long-term
debt rating to the proposed EUR310 million ($373 million) senior
secured notes due 2012 to be issued by U.S.-based holding company
CEDC. Proceeds from the notes will be used to fund the cash
portion of the acquisition of 100% of Bols, Poland's third-largest
vodka producer, and to partially fund the acquisition of a 61%
stake in Bialystok, Poland's second-largest vodka producer. The
issue is guaranteed by certain of CEDC's principal operating
subsidiaries on a senior secured basis. It will, however, become
structurally subordinated upon completion of the pending
acquisitions.
All ratings are subject to satisfactory final bond documentation
and to the successful completion of the proposed financing.
"The corporate credit rating reflects CEDC's acquisitive growth
strategy and forecast high leverage upon completion of at least
one of the two pending acquisitions," said Standard & Poor's
credit analyst Benedetta Rospigliosi.
It also reflects:
* the group's participation in the highly competitive and
fragmented -- but consolidating -- Polish alcoholic-beverage
distribution industry;
* exposure to the mature vodka market, given the group's
limited geographic and product diversity;
* the risk of losing distribution contracts; and
* the challenges of integrating new businesses.
These negative rating factors are partially mitigated by the
group's already established nationwide distribution network in
Poland and enhanced cash flow generation following CEDC's vertical
integration into vodka production.
"We expect CEDC to be able to generate positive discretionary cash
flows following the completion of either one or both of the
proposed transactions," said Ms. Rospigliosi. "This should lead
to a gradual reduction of acquisition debt under both scenarios."
Standard & Poor's also believes that a forecast deterioration in
CEDC's financial profile from the success of both acquisitions
would offset the resulting enhanced business risk profile, thus
leaving the rating unchanged at the current level upon completion
of the second acquisition.
"Importantly, the stable outlook also assumes the successful
placement of the proposed notes to fund at least the Bols
acquisition," added Ms. Rospigliosi. "Conversely, given the lower
credit quality of CEDC's existing distribution business, the
rating could be lowered if neither acquisition takes place."
CENTURY/ML CABLE: Wants to Employ PwC as Accountants
----------------------------------------------------
As previously reported, Century/ML Cable Venture successfully
negotiated a sale of its cable business and executed an Interest
Acquisition Agreement with San Juan Cable, LLC.
With the publicized prepetition accounting improprieties of
Adelphia Communications Corporation, Century's parent company,
San Juan Cable has insisted, as a condition to the Sale
Transaction, that certain of Century/ML's financial statements be
audited by an independent accountant.
Thus, pursuant to the Interest Acquisition Agreement, Century/ML
is required to employ an independent accountant to audit its
consolidated financial statements and to provide a report in
connection with the audit. Century/ML may also be entitled to a
substantial tax refund if it can prepare and submit audited tax
returns in Puerto Rico prior to the expiration of a certain
statute of limitations on July 14, 2005.
Century/ML seeks the U.S. Bankruptcy Court for the Southern
District of New York's permission to employ PricewaterhouseCoopers
LLP as its independent accountant, nunc pro tunc to Jan. 1, 2005,
to perform necessary auditing services in connection with the Sale
Transaction and with the filing of tax returns in Puerto Rico.
PwC currently serves as auditor and financial advisor to ACOM and
the other debtors. Therefore, Century/ML believes that the
firm's forensic accounting experience with the ACOM Debtors will
ensure a more timely and accurate performance of the services
required for the Sale Transaction.
Specifically, PwC will:
a. audit Century/ML's consolidated financial statements at
December 31, 2004, 2003, 2002, 2001 and 2000 and for each
of the years then ended, which will include:
-- examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements;
-- assessing accounting principles used and significant
estimates made by management; and
-- evaluating the overall financial statement
presentation;
b. inform members of the Management Board, prior to the
issuance of any audit report, if feasible, of other matters
related to the conduct of the audit, including:
-- any disagreements with management about matters that
could be significant to Century/ML's consolidated
financial statements or PwC's report thereon;
-- any serious difficulties encountered in performing
the audit;
-- information relating to PwC's independence with
respect to Century/ML and its wholly owned
subsidiary, Century/ML Cable Corp.; and
-- other matters related to Century/ML and Cable Corp.'s
financial statements including its accounting
policies and practices;
c. ensure that members of the Management Board receive copies
of certain written communications between PwC and
management, including management representation letters and
written communications on accounting, auditing, internal
control or operational matters; and
d. assist in the preparation of audited financial statements
necessary for the filing of tax returns with the Puerto
Rico tax authorities.
PwC professionals are paid at these hourly rates:
National Consulting Partner $875 - $950
Partner $710 - $860
Director/Senior Manager $550 - $750
Manager $415 - $575
Senior Associate $300 - $410
Associate $195 - $280
Administrative Assistant $90
As of June 29, 2005, PwC has incurred fees of around $100,000
from Century/ML's partner Century Communications Corp. relating
to work on Century/ML's 2004 audit and for negotiations and
meetings in connection with the terms and scope of PwC's
retention by Century/ML.
Century asks the Court that some or all of the PwC fees paid (or
to be paid) for Century/ML's benefit, be reimbursed to Century.
Century, ML Media Partners, LP, and counsel to the Joint Venture
will review the firm's time and expense records relating to the
work to determine if it is appropriate for any portion of the
fees and expenses to be reimbursed by Century/ML to Century.
Thomas W. Garrett, a partner at PwC, attests that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code, as modified by Section 1107(b). Based on
the results of the firm's relationship search, PwC neither holds
nor represents an interest adverse to the Debtor within the
meaning of Section 327(a), Mr. Garret adds.
Century Communications Corporation filed for Chapter 11 protection
on June 10, 2002. Century's case has been jointly administered to
proceedings of Adelphia Communications Corporation. Century
operates cable television services in Colorado, California and
Puerto Rico. CENTURY is an indirect wholly owned subsidiary of
ACOM and an affiliate of Adelphia Business Solutions, Inc.
Lawyers at Willkie, Farr & Gallagher represent CENTURY.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
99; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CITGO PETROLEUM: Moody's Assigns Ba1 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service published the results of an examination
of corporate sector ratings in North, Central, and South America
in light of the introduction of its new rating methodology for
government-related issuers.
In April 2005, Moody's published a Rating Methodology report
entitled "The Application of Joint-Default Analysis to Government-
Related Issuers". The new methodology formally disaggregates the
ratings of GRIs into four components:
1) an assessment of the GRI's baseline credit risk;
2) the default risk of the supporting government;
3) the default dependence between the GRI and the government;
and
4) the expected level of support from the government.
Below is a list of all corporate GRIs in the Americas affected by
the new rating methodology, including the rating changes resulting
from the application of the methodology.
For a detailed discussion of how Moody's evaluates corporate GRIs
in practice, please refer to Moody's Special Comment entitled
"Rating Government-Related Issuers in Americas Corporate Finance".
As previously indicated, in addition to the ratings assigned to
issuers and debt securities, Moody's has also published ranges of
methodology inputs for each GRI, as:
-- Baseline credit assessment, on a scale of 1 (lowest credit
risk) to 6 (highest credit risk)
-- Local currency bond rating of the supporting government (as
published by Moody's)
-- Dependence, expressed as low, medium or high
-- Support, expressed as low, medium or high
These list outlines ratings affirmed or upgraded following the
application of the GRI rating methodology. The rated entity is
listed with the rated class of debt, and the final rating outcome
and rating outlook.
Ratings Affirmed With No Change In Rating Outlook
Administracion Nacional de Combustibles:
* Issuer Rating (foreign currency) -- B3, Stable Outlook
Aeroports de Montreal:
* Senior Secured (domestic currency) -- A2, Stable
Air Jamaica:
* Backed Senior Unsecured (foreign currency), B1, Stable
Autopista Monterrey Cadereyta:
* Senior Secured (foreign currency) - Baa3, Stable
Brilliant Power Corporation:
* Senior Secured (domestic currency) -- A1, Stable
British Columbia Hydro & Power Authority:
* Backed Senior Unsecured (domestic currency) -- Aa1, Stable
Companhia Energetica de Minas Gerais:
* Senior Unsecured (domestic currency) B1, Stable
Companhia Paranense de Energia:
* Corporate Family Rating (domestic currency, Ba3, Stable
* Senior Secured (domestic currency) -- Ba2, Stable
* Senior Unsecured (domestic currency) -- Ba3, Stable
Deer Park Refining Ltd. Partnership:
* Senior Unsecured (domestic currency), A2, Stable
* Backed Senior Unsecured (domestic currency) -- A2, Stable
Edmonton Regional Airports Authority:
* Senior Secured (domestic currency), A1, Negative
Greater Toronto Airports Authority:
* Senior Secured (domestic currency), A2, Stable
Hovensa LLC:
* Senior Secured (domestic currency), Baa3, Stable
HQI Transelec S.A.:
* Senior Unsecured (foreign currency), Baa1, Stable
Hydro-Quebec:
* Backed Senior Unsecured (domestic currency), A1, Stable
Manitoba Hydro Electric Board:
* Backed Commercial Paper (foreign currency), P1, Stable
Merey Sweeny L.P.:
* Senior Unsecured (domestic currency), Baa3, Stable
Motiva Enterprises LLC:
* Senior Unsecured (domestic currency), A2, Stable
NAV CANADA:
* Senior Secured (domestic currency), Aa3, Stable
New Brunswick Power Corporation:
* Backed Senior Unsecured (domestic currency), Aa3, Stable
Ontario Electricity Financial Corporation:
* Backed Senior Unsecured (domestic currency), Aa2, Stable
Ontario Power Authority:
* Issuer Rating (domestic currency), Aa2, Stable
Ottawa Macdonald-Cartier International Airport Authority:
* Senior Secured (domestic currency), A1, Stable
Pemex Project Funding Master Trust:
* Backed Senior Unsecured (foreign currency), Baa1, Stable
Petrobras Energia S.A.:
* Corporate Family Rating (foreign currency), B3, Stable
Petrobras International Finance Co.:
* Backed Senior Unsecured (foreign currency), Ba1, Positive
Petroleo Brasileiro S.A.:
* Senior Unsecured (foreign currency), Ba1, Positive
* Corporate Family Rating (foreign currency), B1, Positive
Petroleos de Venezuela, S.A.:
* Issuer Rating (domestic currency), B1, Developing
* Issuer Rating (foreign currency), B2, Stable
* Corporate Family Rating (foreign currency), B2, Stable
Petroleos Mexicanos:
* Senior Unsecured (domestic and foreign currency), Baa1,
Stable
* Corporate Family Rating (foreign currency), Baa1, Stable
* Issuer Rating (domestic and foreign currency), Baa1, Stable
Petroleum Company of Trinidad & Tobago:
* Issuer Rating (foreign currency), Baa3, Stable
Tennessee Valley Authority:
* Senior Unsecured (domestic currency), Aaa, Stable
TFM S.A. de C.V.:
* Backed Senior Unsecured (foreign currency), B2, Negative
* Senior Unsecured (foreign currency), B2, Negative
* Corporate Family Rating (foreign currency), B2, Negative
Winnipeg Airports Authority Inc.:
* Senior Secured (domestic currency), (P)A1, Stable Outlook
Ratings Affirmed With Change In Outlook
:Companhia de Saneamento de Parana:
* Senior Unsecured (domestic currency) B1, Positive Outlook
Petroleos de Venezuela S.A.:
* Issuer Rating (domestic currency), B1, Developing Outlook
Ratings Upgraded (New Ratings Listed)
Aruba Airport Authority:
* Senior Unsecured (foreign currency), Baa3, Stable Outlook
Cerro Negro Finance Limited:
* Backed Senior Secured (foreign currency), Ba3, Stable
CITGO Petroleum Corporation:
* Corporate Family Rating (domestic currency), Ba1, Stable
* Senior Unsecured (domestic currency), Ba1, Stable
Companhia Vale do Rio Doce:
* Senior Unsecured Shelf Registration (foreign currency,
(P)Baa3, Stable
* Issuer Rating (domestic currency), Baa1, Stable
Corporacion Nacional del Cobre de Chile:
* Senior Unsecured (foreign currency), Aa3, Stable
Empresa Nacional del Petroleo, S.A.:
* Senior Unsecured (foreign currency), A2, Stable
Fertinitro Finance Inc.:
* Backed Senior Secured (foreign currency), B3, Stable
Hamaca Holding LLC:
* Senior Secured (foreign currency), Ba3, Stable
Hydro One Inc.:
* Senior Unsecured (domestic currency), Aa3, Stable
Petrobras Energia S.A.:
* Senior Unsecured (foreign currency), Ba2, Stable
PetroZuata Finance Inc.:
* Backed Senior Secured (foreign currency), Ba3, Stable
Petroleo Brasileiro (Petrobras) S.A.:
* Senior Unsecured (domestic currency), A2, Stable
* Issuer Rating (domestic currency), A2, Stable
* Phoenix Park Gas Processor Ltd.:
* Senior Secured (foreign currency), A3, Stable
Sincrudos de Orient:
* Senior Secured (foreign currency), Ba3, Stable
Vale Overseas Ltd.:
* Backed Senior Unsecured (foreign currency), Baa3, Stable
Outlook
Rating Under Review - Possible Upgrade
Furnas Centrais Eletricas S.A.:
* Issuer Rating (domestic currency), Ba2
Rating Continuing Under Review -- Direction Uncertain
Companhia de Energetica de Brasilia:
* Senior Unsecured (domestic currency), Ba3
Rating Assigned
Air Jamaica:
* Corporate Family Rating (domestic currency), B2, Stable
Outlook
CITIGROUP MORTGAGE: Fitch Places BB+ Rating on $9.28 Mil. Certs.
----------------------------------------------------------------
Fitch Ratings has rated the Citigroup Mortgage Loan Trust Inc.,
asset-backed pass-through certificates, series 2005-OPT3, which
closed on July 7, 2005:
-- $722.24 million classes A-1A through A-1D 'AAA';
-- $41.28 million class M1 'AA+';
-- $29.69 million class M2 'AA';
-- $17.63 million class M3 'AA';
-- $16.70 million class M4 'A+';
-- $15.31 million class M5 'A';
-- $13.92 million class M6 'A';
-- $12.99 million class M7 'A-';
-- $11.13 million class M8 'BBB+';
-- $7.42 million class M9 'BBB';
-- $6.03 million class M10 'BBB-';
-- $9.28 million class M11 'BB+'.
The 'AAA' rating on the senior certificates reflects the 22.15%
total credit enhancement provided by the 4.45% class M1, the 3.20%
class M2, the 1.90% class M3, the 1.80% class M4, the 1.65% class
M5, the 1.50% class M6, the 1.40% class M7, the 1.20% class M8,
the 0.80% M9, the 0.65% privately offered class M10, the 1.00%
privately offered class M11, and the initial and target
overcollateralization of 2.60%. All certificates have the benefit
of monthly excess cash flow to absorb losses. In addition, the
ratings reflect the quality of the loans and the integrity of the
transaction's legal structure as well as the capabilities of
Option One Mortgage Corp. as servicer and Deutsche Bank National
Trust Company, as trustee.
The certificates are supported by one collateral group consisting
of both conforming and nonconforming loans. The mortgage pool
consists of first and second liens adjustable-rate and fixed-rate,
mortgage loans that have a cut-off date pool balance of
$976,193,643. Approximately 16.34% of the mortgage loans are
fixed-rate mortgage loans and 83.66% are adjustable-rate mortgage
loans. The weighted average current loan rate is approximately
7.322%. The weighted average remaining term to maturity is 355
months. The average principal balance of the loans equals
$184,118. The weighted average original loan-to-value ratio is
81.92%. The properties are primarily located in California
(22.01%), New York (9.85%), and Florida (8.97%).
For federal income tax purposes, multiple real estate mortgage
investment conduit elections will be made with respect to the
trust estate.
Option One was incorporated in 1992 and began originating and
servicing subprime loans in February 1993. Option One is a
subsidiary of Block Financial, which is in turn a subsidiary of H
& R Block, Inc.
CLARK INDUSTRIAL: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Clark Industrial Insulation, Inc.
11599 Stonegate Drive
Chardon, Ohio 44024
Bankruptcy Case No.: 05-19883
Type of Business: The Debtor is an insulation contractor and an
insulation materials dealer.
Chapter 11 Petition Date: July 7, 2005
Court: Northern District of Ohio (Cleveland)
Judge: Arthur I. Harris
Debtor's Counsel: Mary K. Whitmer, Esq.
Kohrman Jackson & Krantz P.L.L.
1375 East 9th Street, 20th Floor
Cleveland, Ohio 44114
Tel: (216) 736-7255
Fax: (216) 621-6536
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
CONNEXION INC: Judge Milton Converts Case to Chapter 7 Proceeding
-----------------------------------------------------------------
The Honorable Dennis E. Milton of the U.S. Bankruptcy Court for
the Eastern District of New York approved Connexion, Inc., and its
debtor-affiliates' request to convert their chapter 11 bankruptcy
cases to chapter 7 liquidation proceedings. Judge Milton approved
the Debtors' request on July 8, 2005.
The Debtors filed for chapter 11 protection on July 6, 2005. The
next day, they filed a request with the Court to convert their
chapter 11 cases to chapter 7 proceedings.
Judge Milton concludes that Connexion, Inc., and each of its
debtor-affiliates meet the eligibility requirements to be a debtor
under chapter 7 pursuant to Section 109 and Section 1112(a) of the
Bankruptcy Code.
Judge Milton approved the U.S. Trustee's appointment of Lori Lapin
Jones as the Interim Chapter 7 Trustee for the Debtors' estates.
Headquartered in Conshohocken, Pennsylvania, Connexion, Inc., and
its debtor-affiliates filed for chapter 11 protection on July 6,
2005 (Bankr. E.D.N.Y. Case No. 05-20954 ). The Court converted
the Debtors' chapter 11 cases to chapter 7 liquidation proceedings
on July 8, 2005. Steven Wilamowsky, Esq., at Willkie Farr &
Gallagher LLP, represents the Debtors. When the Debtors filed for
chapter 11 protection, they listed estimated assets of $10 million
to $50 million and estimated debts of $50 million to $100 million.
CONSOL ENERGY: Selling CNX Gas' 18.5% Stock via Private Placement
-----------------------------------------------------------------
CONSOL Energy Inc. (NYSE: CNX), a producer of coalbed methane and
high-Btu bituminous coal, has created CNX Gas Corporation as a
wholly owned subsidiary. CNX Gas will own, operate and conduct
CONSOL Energy's gas business as a separate entity. In connection
with the creation of the new company, CNX Gas intends to sell
approximately 18.5% of CNX Gas' outstanding common stock in a
private transaction.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offer, solicitation or sale is unlawful.
Any securities sold in the private transaction will not be
registered under the Securities Act of 1933 or under any state
securities laws, and may not be offered or sold in the United
States absent such registration or an exemption from the
registration requirements of the Securities Act of 1933 and
applicable state securities laws.
CONSOL Energy Inc. is one of the largest U.S. producers of coalbed
methane. In addition, CONSOL Energy is the largest producer of
high-Btu bituminous coal in the United States. CONSOL Energy has
17 bituminous coal mining complexes in six states.
CONSOL ENERGY: CNX Gas Interest Sale Prompts S&P's Positive Watch
-----------------------------------------------------------------
Standard & Poor's Rating Services placed its 'BB-' corporate
credit and its other ratings on Consol Energy Inc. on CreditWatch
with positive implications. The action followed the company's
announcement that it intends to sell up to an 18.5% interest in
CNX Gas Corp., a newly created subsidiary that will own, operate
and conduct Consol's gas business.
"Although the amount and use of proceeds is uncertain, the
CreditWatch placement also reflects company's successful efforts
to increase coal production, the resumption of operations at its
Buchanan mine, and the expectation of continued strong coal
markets," said Standard & Poor's credit analyst Dominick D'Ascoli.
In resolving the CreditWatch, Standard & Poor's will evaluate
these factors as well as assess the impact of the sale on Consol's
financial profile. Consol is based in Pittsburgh, Pennsylvania.
DRY ICE: Case Summary & 25 Largest Unsecured Creditors
------------------------------------------------------
Debtor: Dry Ice, Inc.
1867 Craig Road
St. Louis, Missouri 63146
Bankruptcy Case No.: 05-49452
Type of Business: The Debtor offers decorating & designing
services.
Chapter 11 Petition Date: July 10, 2005
Court: Eastern District of Missouri (St. Louis)
Judge: Barry S. Schermer
Debtor's Counsel: Cullen K. Kuhn, Esq.
David M. Unseth, Esq.
Gregory D. Willard, Esq.
Bryan Cave
One metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Tel: (314) 259-2000
Total Assets: $8,388,767
Total Debts: $6,859,962
Debtor's 25 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Accessories To Go Trade debt $180,072
110 E. 9th St, A-1023
Los Angeles, CA 90079
Beehive Trade debt $94,583
1901 N. Service Rd. E.
Ruston, LA 72170
Lucky Design Trade debt $93,288
13051 Saticoy St. #A
North Hollywood, CA 91605
Financo, Inc. Management fees and $72,060
expenses
Ann's Trading Co., Inc. Trade debt $71,666
Transocean Enterprises Trade debt $66,916
S. Walter Packaging Corp. Trade debt $62,218
Comfort Research LLC Trade debt $52,502
Morrison Cohen LLP Trade debt $51,015
Freight Watchers, Inc. Trade debt $50,924
Retail Process Engineering Trade debt $50,591
Nuvo Accessories Trade debt $48,572
MZ Berger & Co. Trade debt $41,293
Acme Accessories Trade debt $39,765
LA Splash Trade debt $39,739
Babine Lake Corporation Trade debt $38,921
Group 360 Communications Trade debt $38,891
Blackjack, Inc. Trade debt $37,657
Heartland Business Credit Lease obligations $36,427
Sunstar Industries, Inc. Trade debt $36,209
Upper Canada Soap & Candle Trade debt $35,404
Schroeder & Tremayne, Inc. Trade debt $34,341
Present Time, Inc. Trade debt $32,780
Lumisource Trade debt $31,504
Toy Investments, Inc. Trade debt $31,107
EAGLEPICHER INC: Names David Treadwell President of Hillsdale Div.
------------------------------------------------------------------
EaglePicher, Inc.'s president and Chief Executive Officer, Bert
Iedema, disclosed the appointment of David L. Treadwell as
president of the Company's Hillsdale Division.
Mr. Treadwell will oversee all operations of the manufacturer that
supplies precision machined components and assemblies, including
noise/vibration/harshness (NVH) components, knuckles/corner
systems and pump components, to automakers and Tier 1 suppliers
worldwide. From headquarters in Inkster, Mich., the division
operates facilities in the U.S. and Mexico.
"I look forward to working with the Hillsdale Division," said Mr.
Treadwell. "The company's solid manufacturing capabilities
provide an excellent foundation for this transition."
Prior to joining EaglePicher, Mr. Treadwell led the restructuring
of Oxford Automotive as CEO. He also held the CEO position with
Prechter Holdings, which included specialty vehicle supplier ASC
Inc.
"We are fortunate to have someone of David's capabilities at
EaglePicher," said Mr. Iedema. "He will assist greatly with our
reorganization efforts at Hillsdale Division." EaglePicher filed
for reorganization under Chapter 11 in April.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated --
http://www.eaglepicher.com/-- is a diversified manufacturer and
marketer of innovative advanced technology and industrial products
for space, defense, automotive, filtration, pharmaceutical,
environmental and commercial applications worldwide. The company
along with its affiliates and parent company, EaglePicher
Holdings, Inc., filed for chapter 11 protection on April 11, 2005
(Bankr. S.D. Ohio Case No. 05-12601). Stephen D. Lerner, Esq., at
Squire, Sanders & Dempsey L.L.P., represents the Company. When
the Debtors filed for protection from their creditors, they listed
$535 million in consolidated assets and $730 million in
consolidated debts.
ELWAY INC: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Elway Inc.
dba Elway Lithorgraph
22570 Glenn Drive
Sterling, Virginia 20164
Bankruptcy Case No.: 05-12575
Type of Business: The Debtor is a full service sheet-fed
commercial printer.
See http://elwaylithograph.com/
Chapter 11 Petition Date: July 8, 2005
Court: Eastern District of Virginia (Alexandria)
Debtor's Counsel: Thomas P. Gorman, Esq.
Tyler, Bartl, Gorman & Ramsdell, P.L.C.
700 South Washington Street, Suite 216
Alexandria, Virginia 22314
Tel: (703) 549-5010
Fax: (703) 549-5011
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
------ --------------- ------------
GE Capital Value of security: $850,000
P.O. Box 640387 $750,000
Pittsburgh, PA 152640387
Elliott, Steve & Gloria Personal Loans $307,000
[Address not provided]
Small Business Administration $245,893
P.O. Box 740192
Atlanta, GA 303740192
Glo & El LLC Rent $117,600
43815 Timber Square #208
Leesburg, VA 20176
US Bancorp $75,000
7659 Southwest Mohawk Street
P.O. Box 2177
Tualatin, OR 970629190
XPEDX $61,122
P.O. Box 371083
Pittsburgh, PA 152507083
Frank Parson Paper $44,983
P.O. Box 64346
Baltimore, MD 212644346
Lasership Inc. $31,060
P.O. Box 406420
Atlanta, GA 303846420
Creocitex America Inc. $25,344
P.O. Box 50615
Woburn, MA 01815
RIS Paper Co. $23,706
Collington Commerce Center
350 Prince George's Boulevard
Upper Marlboro, MD 20774
Central Lewmar South $19,400
7751 Waterloo Road
Jessup, MD 20794
Enovation Graphic $16,823
Services, Inc.
P.O. Box 200308
Pittsburgh, PA 152510308
Lindenmyer Munroe $15,220
1879 Lamonte Avenue
Odenton, MD 211130180
Graphic Arts Benefits Corp. Health insurance $6,842
6411 Ivy Lane, Suite 700
Greenbelt, MD 20770
Kohl & Madden Printing Ink $5,715
P.O. Box 18090
Newark, NJ 071918090
EFI Inc. $5,620
File # 30469
P.O. Box 60000
San Francisco, CA 94160
County of Loudoun $4,992
Office of the Treasure
P.O. Box 347
Leesburg, VA 22075
Washington Intelligence $4,945
Bureau
4128 Pepsi Place
Chantilly, VA 20151
Atlantic Graphic Systems $4,707
9687-B Gerwig Lane
Columbia, MD 21046
Artisan II $4,694
4311 Wheeler Avenue
Alexandria, VA 22304
ENRON CORP: Settles Suit on Company Retirement Plans for $356.2MM
-----------------------------------------------------------------
Enron Corp. reached agreements to settle a governmental action and
related class action lawsuit currently pending against the company
and certain of its former officers, Northern Trust Company and
Arthur Anderson. Under the proposed settlement, the United States
Department of Labor and the class action plaintiffs will have a
shared allowed general unsecured claim of $356.2 million and
receive distribution pursuant to Enron's Chapter 11 Plan. Funds
above the settlement amount held in reserve by Enron on account of
these claims can now be released for distribution to creditors.
The agreement applies to Pamela A. Tittle, et al. v. Enron Corp.,
et al. (the Tittle Action) and Elaine L. Chao v. Enron Corp., et
al. (the DOL Action). The cases were brought on behalf of the DOL
and former and current Enron employees who allege certain breaches
of fiduciary duty by the company and related parties with respect
to the management of Enron's retirement plans. The cases were
consolidated in the U.S. District Court for the Southern District
of Texas.
In connection with these settlements, Enron will move forward with
a standard termination of these plans, which requires it to:
-- fully fund the pension plans;
-- establish an orderly process to distribute the value of
benefits from each plan to its participants; and
-- pay all benefits earned under these plans;
all in accordance with a process overseen by the Pension Benefit
Guaranty Corporation. Once those actions have been taken, the
PBGC has agreed to withdraw its action to involuntarily terminate
Enron's Cash Balance Plan, as well as the pension plans for Enron
subsidiaries Enron Facility Services, Garden State Paper Company
and San Juan Gas Company.
"We are extremely pleased to have resolved another issue in the
bankruptcy proceedings and removed a significant hurdle in the
termination of Enron's pension plans," said Stephen Cooper,
Enron's interim CEO and chief restructuring officer. "These
settlements remove more than seven billion dollars of claims
against the Enron estate and will accelerate distributions to all
other creditors."
Mr. Cooper added, "Everyone benefits from a standard termination
of the plans -- participants win by having their benefits secured
or paid under the plans, the PBGC benefits because it is not
required to take over and administer the plans, and the estate and
its creditors benefit because a standard termination represents
the most cost-effective method of terminating the plans."
Administrative Committee Appointment
Enron has also reached an agreement with the DOL that required the
appointment of an administrative committee to oversee the
retirement plans. The committee is required to retain independent
fiduciaries that will select an annuity provider for the plans and
oversee the enforcement of the class action settlement agreement.
The committee and its independent fiduciaries will replace State
Street Bank & Trust Company.
The proposed settlement remains subject to approval by the
Bankruptcy Court for the Southern District of New York and the
U.S. District Court for the Southern District of Texas. Attorneys
for the class will address terms for distribution of the
settlement fund to class members.
The above settlement is separate and apart from the previously
announced settlements involving proceeds from director and officer
liability insurers, and those settlements in shareholder actions
in the consolidated Newby litigation involving Citibank and J.P.
Morgan Chase.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts.
FEDERAL-MOGUL: Asbestos Panel & Futures Rep's Estimation Findings
-----------------------------------------------------------------
The Official Committee of Asbestos Personal Injury Claimants and
the Official Representative for Future Asbestos Personal Injury
Claimants presented their proposed findings in connection with the
estimation of the asbestos personal injury claims in the chapter
11 cases of Federal-Mogul Corporation and its debtor-affiliates.
An estimate that takes as a major component Turner & Newall's
"budget" is not an estimate of the company's asbestos liability;
it is rather a measure of its financial ability to pay claims,
which is not relevant to an estimate of its aggregate asbestos
liability, Elihu Inselbuch, Esq., at Caplin & Drysdale,
Chartered, tells the Court. "If lowering the budget could lower
the consequent liability as Dr. [Robin] Cantor apparently
believes, no company's liability would ever exceed its assets and
there would never be a need for the resort to bankruptcy."
In their 60-page Proposed Findings of Fact and Conclusions of
Law, the Official Committee of Asbestos Claimants and Eric D.
Green, as the legal representative for future asbestos-related
personal injury claimants, assert that the Court should find Dr.
Mark Peterson as a more credible witness than Dr. Cantor. "His
extensive experience and methodology are more persuasive and his
estimation is likely to be the most accurate. Moreover, Dr.
Peterson's methodology has been applied and accepted in several
legal proceedings involving debtors that, like T&N, faced many
tens of thousands of asbestos personal injury claims."
Given that mathematical precision is impossible, Mr. Inselbuch
contends that the Court should agree with Dr. Peterson's estimate
of T&N's asbestos liability and should conclude that T&N's
asbestos liability is likely to be $11 billion in the United
States and $400 million in the United Kingdom.
A full-text copy of the Asbestos Claimants Committee and the
Futures Representative's Proposed Findings of Facts and
Conclusions of Law is available at no cost at:
http://bankrupt.com/misc/ACC&FuturesRepFindings&Conclusions.pdf
Governing Legal Standard
Section 502(c)(1) of the Bankruptcy Code provides that "[t]here
shall be estimated for purpose of allowance under this section
. . . any contingent or unliquidated claim, the fixing or
liquidation of which, as the case may be, would unduly delay the
administration of the case."
Mr. Inselbuch asserts that the estimation provision allows or
requires the Court to conduct an estimation process for
unliquidated claims for which the conduct of an adjudicatory
allowance process under Section 502(b) would be impractical under
the circumstances or would significantly and unnecessarily delay
the case.
Mr. Inselbuch maintains that the purpose of estimating Federal-
Mogul's asbestos personal injury claims under Section 502(c) of
the Bankruptcy Code, as it is in all asbestos Chapter 11 cases,
is to enable the Court to arrive at a reasonable approximation of
the value of asbestos personal injury claims, so as to allow the
Court to proceed to plan confirmation.
Estimation Should be Based on T&N's Claims
Resolution History, Adjusted for Trends
"Estimation is not an exact science," Mr. Inselbuch contends.
"Rather, estimation, by definition, is an approximation and
necessarily involves comparing a known or established quantum of
data to the thing being estimated."
"The only logical 'quantum of data' from which to estimate the
'probable value' of T&N's asbestos liability," Mr. Inselbuch
continues, "is from its extensive history of dealing with similar
asbestos personal injury cases in the tort system, taking into
account past and future trends." Numerous courts in estimating
mass tort and asbestos claims have relied on estimates that
include trend adjustments to the debtor's pre-petition claims
experience in the state court system, Mr. Inselbuch notes.
In a mass tort case like Federal-Mogul's, with tens of thousands
of pending claims and a need to account for future asbestos
personal injury claims, the only practical course is for
estimation to be based on T&N's extensive claims history adjusted
for historical and future trends, Mr. Inselbuch says.
State Law Governs the Validity
and Amount of a Claim
Citing Raleigh v. Ill. Dept. of Revenue, 530 U.S. 15, 20 (2000),
Mr. Inselbuch explains that it is a basic principle of bankruptcy
law that, for bankruptcy purposes, state law governs the validity
and amount of a claim. "In Raleigh, the U.S. Supreme Court held
that creditors' entitlements in bankruptcy arise from the
underlying substantive law creating the debtor's obligation,
subject to any qualifying or contrary provisions of the
Bankruptcy Code."
The Court of Appeals for the Third Circuit in In re Mevertech
Corp., 831 F.2d 410, 417-18 (3d Cir. 1987) also has recognized
that the existence and validity of claims in bankruptcy are
dependent on state law, Mr. Inselbuch notes. The Third Circuit
made clear that state law is to be followed in claims estimation
proceedings.
Court's Task
In estimating personal injury claims under Section 502(c), courts
have attempted to predict how the case would turn out if it was
litigated to conclusion in the forum in which it was pending
prior to bankruptcy, using the best evidence available to it. To
apply state law in T&N's estimation proceeding, Mr. Inselbuch
says, it follows that the Court must seek to measure the present
and future asbestos personal injury liabilities that T&N would
face under the tort laws of the various states as they actually
exist and as if T&N were not in bankruptcy but still in the state
court tort system.
T&N's Future Asbestos Injury Liabilities
Must Be Discounted Using
a "Risk-Free" Rate of Return
Discounting is the process by which courts take into account the
time value of money, Mr. Inselbuch explains. "Both legal and
financial principles demonstrate that the correct rate to employ
in calculating the net present value of what T&N will have to pay
to resolve its total present and future asbestos personal injury
liabilities is the 'risk-free' discount rate. A non 'risk-free'
rate is the rate at which a commercial enterprise like T&N could
raise capital -- a rate that implies acceptance of a degree of
risk to creditors that has no place in the estimation
calculation."
In tort cases, courts, including the United States Supreme Court,
favor a discount rate that would be earned on the "best and
safest investments." Mr. Inselbuch notes that the District Court
has, in a bankruptcy context, explicitly adopted the same "risk-
free" standard and use of the Treasury Bond rate.
According to Mr. Inselbuch, this principle that a "risk-free"
discount rate is the appropriate measure of the present value in
a tort context has been applied to the specific question of
estimation of future asbestos personal injury liabilities under
Section 502(c) in In re Eagle-Picher Indus., 189 BR. 681, 692.
"In adopting a 6 percent discount rate," Mr. Inselbuch says, "the
Eagle-Picher court rejected a [9.5 to 11.5%] rate proffered by an
expert called by other creditors, who based his rate on his view
of where the asbestos liability stood in terms of priority within
the debtor company's capital structure. The court found this
expert's rate to be 'excessive' and his methodology 'unsound'."
Mr. Inselbuch points out that Dr. Cantor and Dr. Peterson in
Federal-Mogul's case used a risk-free discount rate -- Dr.
Peterson used 5.02% while Dr. Cantor used 5.5%. "The difference
between the two is not significant."
U.K. Courts Will Apply
U.S. Substantive Law to U.S. Claims
Under Rule 9017 of the Federal Rules of Bankruptcy Procedure,
Rule 44.1 of the Federal Rules of Civil Procedure applies to
cases under the Bankruptcy Code that involves determination of
foreign law. Rule 44.1 states that "the court, in determining
foreign law, may consider any relevant material or source,
including testimony, whether or not submitted by a party or
admissible under the Federal Rules of Evidence."
Mr. Inselbuch notes that Rule 44.1 gives courts broad authority
to conduct their own research to interpret foreign law, which
allows courts to rely on materials like submissions from the
parties and expert witnesses, as well as material that could be
inadmissible at trial. Additionally, the Court under Rule 44.1
may analyze the legal questions presented, just as it would
analyze unsettled questions of U.S. law, with -- in the case of
foreign law -- the assistance of expert testimony on the trends
in that law.
To determine which law will govern the valuation of claims in the
Debtors' parallel insolvency proceedings in the United Kingdom,
Mr. Inselbuch contends that the evidence and analyses concerning
the English choice of law principles must be applied to the
claims. For U.S. asbestos personal injury claims against T&N,
Mr. Inselbuch believes it most likely that the English courts
will ultimately apply U.S. law to determine both T&N's liability
and quantification of damages.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's
largest automotive parts companies with worldwide revenue of
some US$6 billion. The Company filed for chapter 11 protection
on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
US$10.15 billion in assets and US$8.86 billion in liabilities.
At Dec. 31, 2004, Federal-Mogul's balance sheet showed a
US$1.925 billion stockholders' deficit. At Mar. 31, 2005,
Federal-Mogul's balance sheet showed a US$2.048 billion
stockholders' deficit, compared to a US$1.926 billion deficit at
Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner &
Newall, is based at Dudley Hill, Bradford. (Federal-Mogul
Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FREDERICK MCNEARY: Hires Segel Goldman as Bankruptcy Counsel
------------------------------------------------------------
Frederick J. McNeary, Sr., sought and obtained permission from the
U.S. Bankruptcy Court for the Northern District of New York,
Albany Division, to employ Segel, Goldman, Mazzotta & Siegel,
P.C., as his bankruptcy counsel.
Segel Goldman will:
(a) give legal advice with respect to Mr. McNeary's rights,
powers and duties as debtor-in-possession in the continued
operation of his business and administration of his estate;
(b) prepare on behalf of the Debtor any necessary schedules,
statements, applications, answers, orders, reports,
documents, disclosure statement, plan and other legal
papers necessary for the proper administration of the
estate;
(c) negotiate and represent Debtor in regard to the business
affairs of Debtor, any sale of assets or other aspects of
Debtor's business including the preparation of proposals,
contracts and other documentation necessary to administer
the estate, formulate and implement a Chapter 11 Plan with
the Debtor; and
(d) perform all other legal services for Debtor which may be
necessary or proper.
Howard M. Daffner, Esq., at Segel, Goldman, Mazzotta & Siegel,
P.C., discloses that his firm has receive an initial retainer of
$4,000. With the Court's approval of the engagement, the Debtor
will pay an additional $20,000 retainer. The current hourly rates
of professionals who will work in the engagement are:
Designation Hourly Rate
----------- -----------
Senior Attorneys $220
Associate Attorneys $185
Paralegals $140
The Debtor believes that Segel, Goldman, Mazzotta & Siegel, P.C.,
is disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Headquartered in Saratoga Springs, New York, Frederick J. McNeary,
Sr., is a real estate developer and broker. He is also a
shareholder of bankrupt Prestwick Chase, Inc., which filed for
chapter 11 protection on March 11, 2005 (Bankr. N.D.N.Y. Case No.
05-11456). Mr. McNeary filed for chapter 11 protection on April
29, 2005 (Bankr. N.D.N.Y. Case No. 05-13007). Howard M. Daffner,
Esq., at Segel, Goldman, Mazzotta & Siegel, P.C., represents the
Debtor. When Mr. McNeary filed for protection from his creditors,
he estimated less than $50,000 in assets and listed $10 million to
$50 million in debts.
FREDERICK MCNEARY: Files Schedules of Assets & Liabilities
----------------------------------------------------------
Frederick J. McNeary, Sr., filed his Schedules of Assets and
Liabilities with the U.S. Bankruptcy Court for the Northern
District of New York, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $4,100,000
B. Personal Property $ 297,905
C. Property Claimed as
Exempt
D. Creditors Holding $ 2,616,262
Secured Claims
E. Creditors Holding
Unsecured Prioty
Claims
F. Creditors Holding $18,278,729
Unsecured Nonprioty
Claims
---------- -----------
Total $4,397,905 $20,894,992
Headquartered in Saratoga Springs, New York, Frederick J. McNeary,
Sr., is a real estate developer and broker. He is also a
shareholder of bankrupt Prestwick Chase, Inc., which filed for
chapter 11 protection on March 11, 2005 (Bankr. N.D.N.Y. Case No.
05-11456). Mr. McNeary filed for chapter 11 protection on April
29, 2005 (Bankr. N.D.N.Y. Case No. 05-13007). Howard M. Daffner,
Esq., at Segel, Goldman, Mazzotta & Siegel, P.C., represents the
Debtor. When Mr. McNeary filed for protection from his creditors,
he estimated less than $50,000 in assets and listed $10 million to
$50 million in debts.
GADZOOKS INC: Committee Wants Deloitte as Financial Advisor
-----------------------------------------------------------
The Official Committee of Unsecured Creditors of Gadzooks, Inc.,
asks the U.S. Bankruptcy Court for the Northern District of Texas
for authority to employ Deloitte Financial Advisory Services LLP
as reorganization consultant and financial advisor, nunc pro tunc
to May 29, 2005.
Deloitte Financial will:
a) assist the Committee in connection with assessing the
Debtor's cash and liquidity requirements, as well as its
future financing requirements;
b) assist the Committee in connection with monitoring the
Debtor's financial position and operating performance,
including its Statements of Financial Affairs and
Supporting Schedules, monthly operating reports, and other
periodic reports;
c) assist the Committee in connection with evaluating the
Debtor's business and operation, including financial plans,
management retention, business outlook, etc;
d) assist the Committee in connection with evaluating the
Debtor's current operations, executory contracts, capital
expenditures, and cost reduction opportunities;
e) assist the Committee in connection with evaluating the
Debtor's business configuration and operational
alternatives;
f) assist the Committee in connection with evaluating
restructuring-related alternatives, including tax
implications;
g) assist the Committee in connection with restructuring-
related negotiations and negotiations concerning plans of
reorganization;
h) advise the Committee concerning the Debtor's Claims;
i) attend and participate in appearances before the United
States Bankruptcy Court;
j) assist the Committee, where appropriate and as may be
agreed to by Deloitte FAS, in reviewing the books and
records of the Debtor for related party transactions and
unenforceable claims; and
k) provide other related services as requested by the
Committee or its counsel and as agreed to by Deloitte FAS.
The hourly rates for Deloitte Financial's senior management
primarily responsible for the engagement are:
Professional Designation Hourly Rate
------------ ----------- -----------
Camille Stovall Principal $480
John Little Principal $440
Michael Gish Manager $360
From time to time, other professionals from Deloitte Financial
will provide additional services for the Committee. The Firm has
agreed to charge only 80% of its standard hourly rates for these
services. The undiscounted hourly rates are:
Professional Hourly Rate
------------ -----------
Partner/Principal/Director $600 to $650
Senior Manager/Managing Director 350 to 575
Manager 300 to 450
Senior Consultant 250 to 350
Consultant 180 to 275
Paraprofessional 75 t0 125
To the best of the Committee's knowledge, Deloitte Financial does
not hold any interest adverse to the Debtor or its estate.
About Deloitte Financial
Deloitte Financial Advisory Services LLP provides comprehensive
financial, economic and strategic advice for clients in four
separate but integrated transaction-oriented service lines:
Forensic & Dispute Services; Reorganization Services; Valuation
and Corporate Finance. The functional expertise, deep industry
knowledge and unique skill sets of its 800 professionals across
the U.S., combined with the unparalleled resources of the Deloitte
& Touche USA LLP network, enable the firm to solve its clients'
complex business problems.
Headquartered in Carrollton, Texas, Gadzooks, Inc. --
http://www.gadzooks.com/-- is a mall-based specialty retailer
selling casual clothing, accessories and shoes for 16 to 22-year
old females. The Company now operates 243 stores in 40 states.
The Company filed for chapter 11 protection on February 3, 2004
(Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and
Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP,
represent the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed
$84,570,641 in total assets and $42,519,551 in total debts.
GOLDEN EAGLE: Substantial Losses Spur Going Concern Doubt
---------------------------------------------------------
Gordon, Hughes & Banks, LLP, expressed substantial doubt about
Golden Eagle International Inc.'s ability to continue as a going
concern after it audited the Company's financial statements for
the year ended Dec. 31, 2004. The auditing firm points to the
Company's working capital deficit and substantial losses.
The Company presently has no mineral production and requires
significant additional financing to satisfy its outstanding
obligations and resume and expand mining production. In addition,
the Company's ability to conduct operations remains subject to
other risks, including operating in isolated regions of Bolivia
and the concentration of operations in a single undeveloped area.
Unless the Company successfully obtains suitable significant
additional financing and can resume and expand its production,
there is substantial doubt about the Company's ability to continue
as a going concern.
Historically, the Company has financed its capital requirements
through the sale of its gold production (which ceased in May 2004)
and through short-term loans from affiliates and occasionally from
non-affiliates, as well as from private placement of its
securities to accredited investors.
During the first quarter of 2005, the Company raised $131,000 from
the sale of 5,290,000 shares of its common stock to accredited
investors pursuant to exemptions from the securities registration
requirements. The Company cannot offer any assurance that it will
continue to be successful in being able to finance any significant
part of its operations from third parties. The Company's ability
to finance its operations will, in the end, be dependent on its
ability to generate additional positive cash flow from operations
in amounts sufficient to support all of its financial obligations,
of which there can be no assurance.
Polion Agreement
In an effort to obtain a significant amount of financing, the
Company entered into an agreement with Polion do Brasil, S.A., a
Brazilian investment group that had agreed to purchase 3,500,000
shares of its Series A convertible stock. The Company expected to
commence receiving $350,000 per month for ten months from Polion
commencing not later than April 1, 2005. The Company has not
received any payments from Polion, and this failure has created
additional liquidity problems for the Company. At this time,
Polion continues to inform the Company that they intend to invest
in the Company, but Golden Eagle considers the agreement to have
expired and are not relying the receipt of any funds from Polion.
The Company will continue to work with Polion to enter into a new
funding agreement but can offer no assurances that the Company
will be able to do so or, if able to enter into a new agreement,
that Polion will advance funds in accordance with its agreement.
The Company is also working to develop new grant and funding
sources, which may include funding from the US Trade Development
Agency, the Export Import Bank, the Overseas Private Investment
Corporation and the Andean Development Fund. In August 2004, the
Company applied for debt financing for its Buen Futuro project
with the Andean Development Corporation located in Caracas,
Venezuela, which has expressed a strong interest in financing
projects in Bolivia. The Company is continuing its financing
efforts with government and private lenders in the U.S. and Canada
as well. While the Company cannot assure that any potential
financing source will provide financing for its Buen Futuro
project, it is optimistic about the prospects for that financing.
Headquartered in Salt Lake City, Utah, with offices in La Paz and
Santa Cruz, Bolivia, Golden Eagle owns 186,400 acres (291 sq.
miles) of mining concessions in Bolivia that contain gold and
gold/copper deposits. The company is currently focusing its
efforts on developing its mining rights on its Buen Futuro project
within its 136,500 acres (213 square miles) in eastern Bolivia's
Precambrian Shield.
GRAPHIC PRESS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Graphic Press, Inc.
6040 A. Northbelt Drive
Norcross, Georgia 30071
Bankruptcy Case No.: 05-72600
Type of Business: The Debtor is a printing company.
See http://www.graphicpress.com/
Chapter 11 Petition Date: July 11, 2005
Court: Northern District of Georgia (Atlanta)
Debtor's Counsel: Matthew A. Schuh, Esq.
Morris, Schneider & Prior, LLC
1587 Northeast Expressway
Atlanta, Georgia 30329
Tel: (770) 234-9181 ext 1539
Fax: (770) 216-4059
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
GREAT OUTDOORS: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: The Great Outdoors Land Company, LLC
612 North Washington Street
Rutherfordton, North Carolina 28139
Bankruptcy Case No.: 05-40773
Type of Business: The Debtor is a land developer.
Chapter 11 Petition Date: July 7, 2005
Court: Western District of North Carolina (Shelby)
Judge: Marvin R. Wooten
Debtor's Counsel: Langdon M. Cooper, Esq.
Mullen Holland & Cooper, P.A.
P.O. Box 488
Gastonia, North Carolina 28053-0488
Tel: (704) 864-6751
Fax: (704) 861-8394
Total Assets: $2,337,462
Total Debts: $678,855
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
GT BRANDS: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------
Lead Debtor: GT Brands Holdings LLC
16 East 40th Street
New York, New York 10016
Tel: (212) 951-3000
Bankruptcy Case No.: 05-15167
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
GT Brands LLC 05-15168
GT Merchandising & Licensing LLC 05-15169
GymTime LLC 05-15171
BSBP Productions LLC 05-15172
GoodTimes Entertainment LLC 05-15173
Tessro LLC 05-15174
Type of Business: The Debtors are suppliers of home video titles
to mass retailers. The Debtors also develop and
market branded consumer, lifestyle and
entertainment products.
Chapter 11 Petition Date: July 11, 2005
Court: Southern District of New York (Manhattan)
Debtors' Counsel: Brian W. Harvey, Esq.
Goodwin Procter LLP
599 Lexington Avenue
New York, New York 10019
Tel: (212) 813-8829
Fax: (212) 355-3333
Debtors' Special
Corporate
Counsel: Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, NY 10005
Debtors'
Financial
Advisors: Peter J. Solomon Company, LP
520 Madison Avenue
New York, NY 10022
-- and --
Getzler Henrich & Associates LLC
295 Madison Avenue
New York, NY 10017
Debtors' Claims
Agent: Bankruptcy Services, LLC
757 Third Avenue, Third Floor
New York, NY 10017
Estimated Assets Estimated Debts
---------------- ---------------
GT Brands Holdings LLC $50 Million to More than
$100 Million $100 Million
GT Brands LLC $50 Million to More than
$100 Million $100 Million
GT Merchandising & $50 Million to More than
Licensing LLC $100 Million $100 Million
GymTime LLC $50 Million to More than
$100 Million $100 Million
BSBP Productions LLC $50 Million to More than
$100 Million $100 Million
GoodTimes Entertainment LLC $50 Million to More than
$100 Million $100 Million
Tessro LLC $50 Million to More than
$100 Million $100 Million
Debtors' 30 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Stanley Cayre, et al. $79,447,000
The Cayre Group
1407 Broadway, 41st Floor
New York, NY 10018
Attn: Stanley Cayre
Tel: (212) 789-7292
BG Star Productions $2,484,000
31111 Agoura Road, Suite 250
Westlake Village, CA 91361
Attn: Bill Sobel
Fax: (310) 274-6185
One Partner, LLC $2,070,000
132 Via Mariposa
Palm Beach Gardens, FL 33418
Attn: Andy Greenberg
Tel: (561) 630-8126
St. Nicholas Music Inc. $1,834,000
1619 Broadway, Suite 601
New York, NY 10019
Fax: (212) 582-1097
Walk Aerobics, Inc. $1,580,000
107 Chapin Road
New Castle, PA 16105
Attn: Leslie Sansone
Tel: (724) 658-1400
Fax: (724) 658-0350
16 East 40th Street $1,456,000
213 West 35th Street, #5 West
New York, NY 10001
Attn: Quartz Realty
Tel: (212) 239-1209
Cabot Acquisition Corporation $1,400,000
100 East Pratt Street
Baltimore, MD 21202
Attn: Edward Brickley
Tel: (410) 347-0654
Classic Media $1,117,000
860 Broadway, 6th Floor
New York, NY 10003
Attn: Harold Lee
Fax: (212) 659-1958
United Parcel Services $1,099,000
AC # 086-054
P.O. Box 660586
Attn: Maureen
C/S Department
Tel: (201) 319-6186
Sonopress $827,000
108 Monticello Road
Weaverville, NC 28287
Attn: Sonya Coates
Tel: (828) 658-6507
Oracle Corporation $782,000
P.O. Box 71028
Chicago, IL 60694-1028
Attn: Bob Laughlin
Tel: (908) 229-2562
Richard Simmons, Inc. $778,000
8899 Beverly Boulevard, Suite 506
Los Angeles, CA 90048
Attn: Michael Catalano
Tel: (310) 207-7992
Fax: (310) 860-1255
Client Logic $744,000
3102 West End Avenue, # 900
Nashville, TN 37203
Attn: Veronica Hampton
Tel: (615) 301-7255
Infodisc Technology $590,000
3535 Hayden Avenue
Culver City, CA 90232
Attn: Paul Westphal
Tel: (310) 280-1230
David Tanzer $548,000
12A Cooper Road
Scarsdale, NY 10583
Attn: David Tanzer
Tel: (914) 723-2835
Gibson, Dunn & Crutcher LLP $525,000
200 Park Avenue
New York, NY 10166-0193
Attn: Janet Vance
Tel: 213-229-7528
Robert L. May Co., LLC $459,000
910 Railroad Avenue
Novato, CA 94945
Attn: David Marks
Fax: (212) 582-1097
Allied Communications Corporation $311,000
796 South Military Trail
Deerfield, FL 33442
Attn: Mark Kravetz
Destiny Worldwide $283,000
617 Sunset Point Drive
Rock Hill, SC 29732
Attn: Bill Hillman
Fax: (803) 980-2610
ALI Entertainment Corporation $225,000
3601 Holoboro Drive
Los Angeles, CA 90027
Tel: (310) 440-0440
Karen Gross $224,000
425 E 58th Street, 12G
New York, NY 10022-2399
Attn: Karen Gross
Tel: (212) 223-2588
Gerard Love $205,000
Dylan Durango Consulting LLC $205,000
Thinkfilms - Julius Caesar $202,000
Stanley Jacobs Productions $198,000
Norann Entertainment $180,000
Akin Gump Strauss Hauer & Feld LLP $175,000
Mulberry Square Releasing $171,000
Garden State Nutritionals $167,000
Caseth Logistics $144,000
HIP INTERACTIVE: Court Appoints Ernst & Young as Interim Receiver
-----------------------------------------------------------------
Hip Interactive Corp. (TSX:HP) disclosed that its discussions with
a third party to provide emergency interim financing relief were
unsuccessful. The Company said it no longer has sufficient cash
available to it to pay its liabilities as they become due.
The Company previously disclosed that its liquidity issues have
not been resolved and that it is currently in default under the
terms of its secured loan facility with Congress Financial
Corporation (Canada).
Court Appoints Receiver
Pursuant to an application by Congress Financial Corporation
(Canada) under Section 47(1) of the Bankruptcy and Insolvency Act,
the Ontario Superior Court of Justice appointed Ernst & Young Inc.
as interim receiver over Hip Interactive Corp. and certain of its
subsidiaries.
The Company and its subsidiaries will continue to carry on
operations during the receivership period under the oversight of
the interim receiver. It is expected that the interim receiver
will undertake the orderly liquidation of the Company and its
subsidiaries under receivership in the interests of their
creditors. At this time, it is not clear the level of recovery
that the Company's unsecured creditors will realize; although it
is not expected that the Company's shareholders will receive any
proceeds of such liquidation. As a result of the appointment of
the interim receiver, the directors of Hip Interactive Corp. have
resigned.
Executives Resign
The Company reports that George Armoyan has resigned as a director
of the Company and Mark Steinman, the Company's Chief Financial
Officer, has resigned as an employee and officer of the Company.
Mr. Arindra Singh, the Company's Chief Executive Officer, has
assumed the duties of Mr. Steinman on an interim basis.
Management Cease Trade Order
The Canadian securities administrators have issued a Management
Cease Trade Order prohibiting directors, officers and insiders of
Hip Interactive from trading their/its securities of Hip
Interactive Corp. The order came as a result of the Company's
failure to file its annual financial statements for the fiscal
year ended March 31, 2005, as required by June 30, 2005.
The issuance of this type of cease trade order does not affect the
ability of persons who have not been directors, officers or
insiders of Hip Interactive to trade their securities.
The Toronto Stock Exchange has advised Hip Interactive Corp. that
it will hold a hearing on July 14, 2005 to consider whether the
Company continues to meet the TSX listing requirements.
Hip Interactive -- http://www.hipinteractive.com/-- is a provider
of electronic entertainment products, including PC and video
games, movies, video arcade games, and proprietary games branded
as Hip Games(TM), and accessories branded as Hip Gear(TM).
JARDEN CORP: 3 Executive Officers Adopt Stock Trading Plans
-----------------------------------------------------------
Jarden Corporation (NYSE: JAH) disclosed that three executive
officers:
-- Martin E. Franklin, Chairman and Chief Executive Officer,
-- Ian G.H. Ashken, Vice Chairman and Chief Financial Officer,
and
-- James E. Lillie, President and Chief Operating Officer,
adopted stock trading plans in accordance with guidelines
specified by the Securities and Exchange Commission's Rule 10b5-1
under the Securities Exchange Act of 1934 as part of their
individual long-term strategies for asset diversification and
liquidity.
In a continuation of programs started in November 2002, and
following the public disclosure of the Holmes transaction and
preview of second quarter operating results, Messrs. Franklin and
Ashken entered into new 10b5-1 programs for the period from July
2005 through October 2006. The programs are structured in
substantially the same manner as their previous programs, although
the typical number of shares being sold on a quarterly basis has
been reduced by 33% from the previous program. Mr. Franklin's
plan provides for the sale of 54,000 shares each quarter, except
for the initial sale which will be 80,000 shares. Mr. Ashken's
plan provides for the sale of 21,000 shares each quarter, except
for the initial sale which will be 90,000 shares. Mr. Lillie also
filed his first 10b5-1 program for the period from July 2005
through October 2006, which provides for the sale of 5,000 shares
each quarter, except for the initial sale which will be 10,000
shares.
A Rule 10b5-1 plan is designed to enable an executive to avoid any
real or perceived conflict of interest while diversifying holdings
in connection with the trading of company securities. The plan is
established at a time when the executive does not have material
inside information. Once a written plan is executed, the
executive does not retain or exercise any discretion over shares
traded under the plan. The broker administering the plan is
authorized to trade company securities in volumes and at times
determined independently by the broker subject to the limitations
set forth in the plan.
Headquartered in Rye, New York, Jarden Corporation is a global
provider of market branded consumer products used in and around
the home marketed under well-known brands including:
* Ball(R) Bee(R),
* Bicycle(R),
* Campingaz(R),
* Coleman(R),
* Crawford(R),
* Diamond(R),
* First Alert(R),
* FoodSaver(R),
* Forster(R),
* Health o meter(R),
* Hoyle(R),
* Kerr(R),
* Lehigh(R),
* Leslie-Locke(R),
* Loew-Cornell(R),
* Mr. Coffee(R),
* Oster(R),
* Sunbeam(R), and
* VillaWare(R).
Jarden operates through four business segments:
* Branded Consumables,
* Consumer Solutions,
* Outdoor Solutions, and
* Other.
* * *
As reported in the Troubled Company Reporter on July 4, 2005,
Moody's Investors Service affirmed the ratings of Jarden
Corporation and The Holmes Group following the announcement of the
proposed acquisition of The Holmes Group by Jarden Corporation.
At the same time, Moody's assigned a (P)B1 rating to Jarden's
proposed $350 million tack-on to its senior secured term loan
which will partially fund the acquisition.
The rating affirmation of Jarden reflects:
* the company's moderate operating margins,
* niche brands, and
* moderate leverage.
The ratings are constrained by:
* potential integration risk that has resulted from the
company's recent large acquisitions;
* limited opportunities for organic growth;
* the increasing exposure to the highly competitive home
appliance sector; and
* the possibility of additional debt financed acquisitions.
HAMACA HOLDING: Moody's Rates Senior Secured Debt at Ba3
--------------------------------------------------------
Moody's Investors Service published the results of an examination
of corporate sector ratings in North, Central, and South America
in light of the introduction of its new rating methodology for
government-related issuers.
In April 2005, Moody's published a Rating Methodology report
entitled "The Application of Joint-Default Analysis to Government-
Related Issuers". The new methodology formally disaggregates the
ratings of GRIs into four components:
1) an assessment of the GRI's baseline credit risk;
2) the default risk of the supporting government;
3) the default dependence between the GRI and the government;
and
4) the expected level of support from the government.
Below is a list of all corporate GRIs in the Americas affected by
the new rating methodology, including the rating changes resulting
from the application of the methodology.
For a detailed discussion of how Moody's evaluates corporate GRIs
in practice, please refer to Moody's Special Comment entitled
"Rating Government-Related Issuers in Americas Corporate Finance".
As previously indicated, in addition to the ratings assigned to
issuers and debt securities, Moody's has also published ranges of
methodology inputs for each GRI, as:
-- Baseline credit assessment, on a scale of 1 (lowest credit
risk) to 6 (highest credit risk)
-- Local currency bond rating of the supporting government (as
published by Moody's)
-- Dependence, expressed as low, medium or high
-- Support, expressed as low, medium or high
These list outlines ratings affirmed or upgraded following the
application of the GRI rating methodology. The rated entity is
listed with the rated class of debt, and the final rating outcome
and rating outlook.
Ratings Affirmed With No Change In Rating Outlook
Administracion Nacional de Combustibles:
* Issuer Rating (foreign currency) -- B3, Stable Outlook
Aeroports de Montreal:
* Senior Secured (domestic currency) -- A2, Stable
Air Jamaica:
* Backed Senior Unsecured (foreign currency), B1, Stable
Autopista Monterrey Cadereyta:
* Senior Secured (foreign currency) - Baa3, Stable
Brilliant Power Corporation:
* Senior Secured (domestic currency) -- A1, Stable
British Columbia Hydro & Power Authority:
* Backed Senior Unsecured (domestic currency) -- Aa1, Stable
Companhia Energetica de Minas Gerais:
* Senior Unsecured (domestic currency) B1, Stable
Companhia Paranense de Energia:
* Corporate Family Rating (domestic currency, Ba3, Stable
* Senior Secured (domestic currency) -- Ba2, Stable
* Senior Unsecured (domestic currency) -- Ba3, Stable
Deer Park Refining Ltd. Partnership:
* Senior Unsecured (domestic currency), A2, Stable
* Backed Senior Unsecured (domestic currency) -- A2, Stable
Edmonton Regional Airports Authority:
* Senior Secured (domestic currency), A1, Negative
Greater Toronto Airports Authority:
* Senior Secured (domestic currency), A2, Stable
Hovensa LLC:
* Senior Secured (domestic currency), Baa3, Stable
HQI Transelec S.A.:
* Senior Unsecured (foreign currency), Baa1, Stable
Hydro-Quebec:
* Backed Senior Unsecured (domestic currency), A1, Stable
Manitoba Hydro Electric Board:
* Backed Commercial Paper (foreign currency), P1, Stable
Merey Sweeny L.P.:
* Senior Unsecured (domestic currency), Baa3, Stable
Motiva Enterprises LLC:
* Senior Unsecured (domestic currency), A2, Stable
NAV CANADA:
* Senior Secured (domestic currency), Aa3, Stable
New Brunswick Power Corporation:
* Backed Senior Unsecured (domestic currency), Aa3, Stable
Ontario Electricity Financial Corporation:
* Backed Senior Unsecured (domestic currency), Aa2, Stable
Ontario Power Authority:
* Issuer Rating (domestic currency), Aa2, Stable
Ottawa Macdonald-Cartier International Airport Authority:
* Senior Secured (domestic currency), A1, Stable
Pemex Project Funding Master Trust:
* Backed Senior Unsecured (foreign currency), Baa1, Stable
Petrobras Energia S.A.:
* Corporate Family Rating (foreign currency), B3, Stable
Petrobras International Finance Co.:
* Backed Senior Unsecured (foreign currency), Ba1, Positive
Petroleo Brasileiro S.A.:
* Senior Unsecured (foreign currency), Ba1, Positive
* Corporate Family Rating (foreign currency), B1, Positive
Petroleos de Venezuela, S.A.:
* Issuer Rating (domestic currency), B1, Developing
* Issuer Rating (foreign currency), B2, Stable
* Corporate Family Rating (foreign currency), B2, Stable
Petroleos Mexicanos:
* Senior Unsecured (domestic and foreign currency), Baa1,
Stable
* Corporate Family Rating (foreign currency), Baa1, Stable
* Issuer Rating (domestic and foreign currency), Baa1, Stable
Petroleum Company of Trinidad & Tobago:
* Issuer Rating (foreign currency), Baa3, Stable
Tennessee Valley Authority:
* Senior Unsecured (domestic currency), Aaa, Stable
TFM S.A. de C.V.:
* Backed Senior Unsecured (foreign currency), B2, Negative
* Senior Unsecured (foreign currency), B2, Negative
* Corporate Family Rating (foreign currency), B2, Negative
Winnipeg Airports Authority Inc.:
* Senior Secured (domestic currency), (P)A1, Stable Outlook
Ratings Affirmed With Change In Outlook
Companhia de Saneamento de Parana:
* Senior Unsecured (domestic currency) B1, Positive Outlook
Petroleos de Venezuela S.A.:
* Issuer Rating (domestic currency), B1, Developing Outlook
Ratings Upgraded (New Ratings Listed)
Aruba Airport Authority:
* Senior Unsecured (foreign currency), Baa3, Stable Outlook
Cerro Negro Finance Limited:
* Backed Senior Secured (foreign currency), Ba3, Stable
CITGO Petroleum Corporation:
* Corporate Family Rating (domestic currency), Ba1, Stable
* Senior Unsecured (domestic currency), Ba1, Stable
Companhia Vale do Rio Doce:
* Senior Unsecured Shelf Registration (foreign currency,
(P)Baa3, Stable
* Issuer Rating (domestic currency), Baa1, Stable
Corporacion Nacional del Cobre de Chile:
* Senior Unsecured (foreign currency), Aa3, Stable
Empresa Nacional del Petroleo, S.A.:
* Senior Unsecured (foreign currency), A2, Stable
Fertinitro Finance Inc.:
* Backed Senior Secured (foreign currency), B3, Stable
Hamaca Holding LLC:
* Senior Secured (foreign currency), Ba3, Stable
Hydro One Inc.:
* Senior Unsecured (domestic currency), Aa3, Stable
Petrobras Energia S.A.:
* Senior Unsecured (foreign currency), Ba2, Stable
PetroZuata Finance Inc.:
* Backed Senior Secured (foreign currency), Ba3, Stable
Petroleo Brasileiro (Petrobras) S.A.:
* Senior Unsecured (domestic currency), A2, Stable
* Issuer Rating (domestic currency), A2, Stable
* Phoenix Park Gas Processor Ltd.:
* Senior Secured (foreign currency), A3, Stable
Sincrudos de Orient:
* Senior Secured (foreign currency), Ba3, Stable
Vale Overseas Ltd.:
* Backed Senior Unsecured (foreign currency), Baa3, Stable
Outlook
Rating Under Review - Possible Upgrade
Furnas Centrais Eletricas S.A.:
* Issuer Rating (domestic currency), Ba2
Rating Continuing Under Review -- Direction Uncertain
Companhia de Energetica de Brasilia:
* Senior Unsecured (domestic currency), Ba3
Rating Assigned
Air Jamaica:
* Corporate Family Rating (domestic currency), B2, Stable
Outlook
HOLLINGER INC: Court Confirms Board of Directors' Realignment
-------------------------------------------------------------
The Hon. Colin Campbell of the Ontario Superior Court of Justice
approved, on July 8, 2005, a consent Order affecting the
realignment of the Board of Directors of Hollinger Inc. For some
time, the Board of Hollinger and in particular its Chairman,
Gordon W. Walker, QC, have been involved in discussions with
various shareholder groups in order to achieve a satisfactory
balance of representation on the Board. That has now been
achieved and Mr. Justice Campbell has confirmed it.
The new Board will increase from the current four to a total of
seven members. Five new members will be added to the Board and
two existing members will retire as a result of this
restructuring. Currently the Board of Hollinger Inc. is composed
of:
-- Paul A. Carroll, QC, President & CEO,
-- Robert J. Metcalfe, Executive Vice President and COO,
-- Allan Wakefield, and
-- Gordon W. Walker.
Messrs. Carroll and Walker have signaled their intention to stand
down from the Board in order to give effect to the restructuring.
The five new members coming onto the Board will be endorsed by
Judge Campbell in the coming week and then will be elected to the
Board. Their names will be identified early in the coming week.
Each is a significant business person and well suited to the
appointment.
Gordon Walker stated "as independent Board members, we can be
satisfied that we have achieved a number of important milestones
in the course of Hollinger's affairs, and we leave the Board in
substantially better condition than when we were first appointed.
It is financially secure, substantially improved in corporate
governance and has made substantial headway in resolving matters
with its subsidiary, Hollinger International Inc., and with
various regulatory authorities, such as the SEC, the OSC, and the
US Department of Justice."
Paul Carroll added "the Judge put us in the position of running
the company for several months when he made his decision last
November and we are satisfied that we have complied well with the
mandate he gave us. As recently as June 8th, Justice Campbell was
laudatory of our efforts, and we believe it is fair to say that he
has offered no criticism of our work, in spite of a number of
attempts by others to convince him otherwise."
The resolution of the outstanding matters, which will see the
termination of litigation launched by shareholder groups,
including the current Catalyst motions, will be quite significant
to the company and will result in substantial savings in
litigation costs.
Hollinger's principal asset is its 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, Ontario.
* * *
Litigation Risks
Hollinger, Inc., faces various court cases and investigations:
(1) a consolidated class action complaint filed in Chicago,
Illinois;
(2) a class action lawsuit that was filed in the Saskatchewan
Court of Queen's Bench on September 7, 2004;
(3) a US$425,000,000 fraud and damage suit filed in the State
of Illinois by International;
(4) a lawsuit seeking enforcement of a November 15, 2003,
restructuring proposal to uphold a Shareholders' Rights
Plan, a declaration that corporate by-laws were invalid and
to prevent the closing of a certain transaction;
(5) a lawsuit filed by International seeking injunctive relief
for the return of documents of which it claims ownership;
(6) a US$5,000,000 damage action commenced by a lessor of an
aircraft lease, in which Hollinger was the guarantor;
(7) an action commenced by the United States Securities and
Exchange Commission on November 15, 2004, seeking
injunctive, monetary and other equitable relief; and
(8) investigation by the enforcement division of the OSC.
Court-Ordered Inspection
On September 3, 2004, Mr. Justice Colin Campbell of the Ontario
Superior Court of Justice ordered the appointment of an Inspector
of the affairs of Hollinger pursuant to section 229 of the CBCA
upon the application of Catalyst Fund General Partner I Inc. The
Order broadly requires an investigation into the affairs of
Hollinger and, specifically, into related party transaction and
non-competition payments for the period January 1, 1997, to the
present. It is estimated that the Inspector's future costs will
average $1,000,000 per month. The remaining duration of the
Inspection is uncertain though it is presently anticipated to
continue for at least an additional 4 months.
Litigation Costs
Hollinger has incurred legal expense in the defense of various
actions brought against it and others in both the United States
and Canada. Hollinger has in turn advanced a claim against its
directors' and officers' liability insurers asserting that, under
the terms and conditions of the policy of insurance, these
insurers are required to indemnify Hollinger in respect of this
legal expense incurred in connection with some of the actions
brought against Hollinger. The claims made total approximately
$3,700,000. However, the actual amount of recovery is not
determinable at the present time.
Default
As reported in the Troubled Company Reporter on Apr. 25, 2005,
Hollinger is in default under the terms of the indentures
governing Hollinger's US$78 million principal amount of 11.875%
Senior Secured Notes due 2011 and US$15 million 11.875% Second
Priority Secured Notes due 2011 due to Ontario Superior Court of
Justice's appointment of RSM Richter Inc. as receiver of all of
The Ravelston Corporation Limited's and Ravelston Management
Inc.'s assets (except for certain shares held directly or
indirectly by them, including shares of Hollinger Inc. and RMI).
IMPATH INC: Emerging from Bankruptcy Protection on July 22
----------------------------------------------------------
IMPATH Inc. and its debtor-affiliates' (OTC: IMPHQ) Third Amended
Joint Plan of Liquidation under chapter 11 of the U.S. Bankruptcy
Code will take effect on July 22, 2005. The U.S. Bankruptcy Court
for the Southern District of New York confirmed the Debtors' Plan
on March 22, 2005.
Pursuant to the Plan, the IMPATH Bankruptcy Liquidating Trust will
be established on the Effective Date and Anthony H.N. Schnelling
will become the trustee of the Liquidating Trust. The record date
under the Plan to determine holders of record of IMPATH Inc.'s
common stock is July 15, 2005.
On the Effective Date, the Record Date Holders shall be deemed to
have converted their shares of common stock on a one-for-one basis
to beneficial interests in the Liquidating Trust to be designated
as IMPATH Bankruptcy Liquidating Trust, Class A Beneficial
Interests. The Class A Beneficial Interests will be distributed
by the American Stock Transfer and Trust Company to Record Date
Holders as soon as practical on or after the Effective Date. On
July 22, the common stock of IMPATH Inc. will be cancelled.
As provided in the Plan, the Trustee will make an initial cash
distribution to holders of Class A Beneficial Interests as soon
after the Effective Date as is practicable. This cash
distribution and subsequent cash distributions, which under the
Plan are to be made at least annually (provided there is
sufficient available cash to make such distributions), will be
made from available cash on hand and future cash receipts obtained
through tax refunds and any proceeds received from litigation, if
any, subject to appropriate reserves as provided in the Plan. The
initial cash distribution and subsequent cash distributions will
be announced by the Trustee, and will be made to holders of record
of Beneficial Interests as of the record date for each
distribution, which will be five business days prior to each cash
distribution date.
Copies of the Plan and the Liquidating Trust Agreement can be
obtained by accessing http://www.bridgeassociatesllc.com/and
clicking on the link relating to the Impath Bankruptcy Liquidating
Trust. This information will be available on the Web site after
July 11, 2005.
Headquartered in New York, New York, Impath Inc., together with
its subsidiaries, is in the business of improving outcomes for
cancer patients by providing patient-specific diagnostic and
prognostic services to pathologists and oncologists, providing
products and services to biotechnology and pharmaceutical
companies, and licensing software to hospitals, laboratories, and
academic medical centers. The Company and its affiliates filed
for chapter 11 protection on Sept. 28, 2003 (Bankr. S.D.N.Y. Case
No. 03-16113). George A. Davis, Esq., at Weil, Gotshal & Manges,
LLP represents the Debtors in their restructuring efforts. When
the Company filed for protection from its creditors, it listed
$192,883,742 in total assets and $127,335,423 in total debts.
INSIGHT MIDWEST: S&P Rates $1.1 Billion Term Loan at BB-
--------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on New York
City, New York-based cable TV operator Insight Midwest L.P. to
stable from negative. At the same time, Standard & Poor's
affirmed its ratings on Insight Midwest, including the 'BB-'
corporate credit rating. Standard & Poor's also assigned its 'BB-'
rating to intermediate holding company Insight Midwest Holdings
LLC's new $1.108 billion term loan C due December 2009. Proceeds
from the new bank loan will be used to repay the previous term
loan B facility.
"The outlook was revised to stable to reflect the company's
receipt of looser financial covenants under accompanying bank loan
amendments," said Standard & Poor's credit analyst Catherine
Cosentino. "We had been concerned that the company could be out
of compliance with the borrower total debt to EBITDA limitation in
the latter half of 2006, when the maximum allowed leverage reduced
to 3.25x," she continued. Under bank amendments, this threshold
has been reset to 4.5x through mid-2006, and drops to only 4.25x
through June 2007. This provides the company some near-term
cushion to weather potential downturns in the business.
The ratings on Insight Midwest reflect the company's high leverage
and increasingly challenged business prospects. The business is
considered to be increasingly vulnerable to competitors. Insight
Midwest has experienced heightened business risk over the past 12
to 15 months, as exemplified by its continued loss of basic
subscribers, largely because of competitive factors that are not
expected to abate over the next few years. The company had very
limited success in deploying and managing telephony operations
under a joint provisioning arrangement with Comcast's telephony
partnership, and its ability to aggressively increase this
business on its own is highly uncertain.
While telephony is offered in four markets, and is being rolled
out in the company's remaining 10 markets in 2005, it is not
expected to provide a meaningful contribution to the company's
overall revenue and/or operating cash flows in 2005. Until
telephony is available to most subscribers, the company will be at
a disadvantage relative to SBC's current triple-play offer.
INTEGRATED ALARM: Nasdaq Resumes Common Stock Listing
-----------------------------------------------------
Integrated Alarm Services Group, Inc. (Nasdaq: IASGE) received
notification that the NASDAQ Listing Qualifications Panel has
determined that the Company meets all requirements for continued
listing on The NASDAQ Stock Market.
Accordingly, NASDAQ advised that the hearing file has been closed
and that effective with the open of business on Thursday, July 7,
2005, the fifth character "E" will be removed from the Company's
trading symbol and Integrated Alarm's symbol will revert back to
"IASG."
On June 13, 2005, IASG filed with the Securities and Exchange
Commission a Form 10-K for fiscal 2004 and on June 27, 2005 the
Company filed its quarterly report on Form 10-Q for the first
quarter of fiscal 2005.
IASG also announced the date of August 16, 2005 for its annual
meeting of shareholders. This date is a change from a previously
announced meeting date due to scheduling conflicts. The annual
report and proxy are expected to be mailed in mid July and the
details of the meeting will be provided in the proxy.
Integrated Alarm Services Group -- http://www.iasg.us/-- provides
total integrated solutions to independent security alarm dealers
located throughout the United States to assist them in serving the
residential and commercial security alarm market. IASG's services
include alarm contract financing including the purchase of dealer
alarm contracts for its own portfolio and providing loans to
dealers collateralized by alarm contracts. IASG, with 5,600
independent dealer relationships, is also the largest wholesale
provider of alarm contract monitoring and servicing.
INTEGRATED ALARM: Moody's Confirms $125 Million Notes' B3 Rating
----------------------------------------------------------------
Moody's Investors Service confirmed the credit ratings of
Integrated Alarm Services Group, Inc., and changed the outlook to
negative, concluding a review of the company's ratings for
possible downgrade initiated on March 30, 2005.
Moody's took these rating actions:
* Confirmed $125 million 12% senior secured second lien notes
due 2011, rated B3
* Confirmed corporate family rating (formerly known as senior
implied rating), rated B3
* Affirmed speculative grade liquidity rating, rated SGL-4
The ratings outlook is negative.
The confirmation of IASG's credit ratings reflects the recent
filing of required financial reports with the Securities and
Exchange Commission which eliminated the associated near term
default risks related to the senior secured notes and the
company's revolving credit facility (not rated by Moody's).
In March 2005, IASG failed to file with the Securities and
Exchange Commission and furnish to its note holders its Annual
Report on Form 10-K for the year ended December 31, 2004. In
April 2005, the trustee under the notes indenture sent to the
company a notice of default and in May 2005 the company received a
waiver of default through June 2005. The company's filing of its
report on Form 10-K for the year ended December 31, 2004 and Form
10-Q for the first quarter of 2005 made this waiver permanent.
The negative outlook reflects weaker than expected financial
performance over the last two quarters and the identification of
numerous material weaknesses in internal controls at the company.
The company closed on its acquisition of National Alarm Computer
Center, Inc. in November 2004 but expected improvements in
profitability have not yet materialized. Operating income (loss)
was ($4.4) million in the fourth quarter of 2004 and $.8 million
in the first quarter of 2005. Profitability was negatively
impacted by the significant costs of completing the company's
Section 404 internal control assessment and severance and closing
costs related to the NACC acquisition. Profitability in future
quarters will be impacted by additional personnel hired to help
remediate internal control deficiencies identified by the company.
IASG identified in its Form 10-K for the year ended December 31,
2004 numerous material weaknesses in company-level internal
controls. The evaluation concluded that the company did not have
an effective control environment, did not maintain effective
controls over the financial reporting process and did not maintain
effective financial controls over the monitoring of its accounting
functions at the divisional level. These were considered
"Category B" weaknesses pursuant to the framework outlined in
Moody's October 2004 Special Comment "Section 404 Reports on
Internal Control: Impact on Ratings Will Depend on Nature of
Material Weaknesses Reported". IASG outlined a remediation plan
to address the material weaknesses which includes:
* hiring of additional personnel;
* improvements to the organizational structure;
* enhanced formalized company-wide monitoring activities;
* training; and
* improved systems and processes.
Moody's will continue to evaluate the company's progress in
remediating the internal control deficiencies.
The ratings continue to reflect:
* significant leverage relative to the company's modest revenue
base;
* larger and better capitalized competitors;
* intense competition to secure relationships with dealers and
acquire alarm monitoring contracts;
* significant industry attrition rates of residential and
commercial subscribers; and
* financial and operational risks related to the company's
acquisition strategy.
The success of the company's acquisition strategy will depend on:
* such factors as purchase multiples;
* the quality of assets purchased;
* attrition rates; and
* management's ability to integrate acquisitions.
Positive factors reflected by the ratings include:
* the company's strong position in the business of monitoring
alarm systems on behalf of dealers;
* recurring revenue streams from the company's dealer and
retail alarm contract portfolio;
* potential margin expansion from increases in the company's
portfolio of alarm monitoring contracts; and
* limited capital expenditure requirements.
The ratings outlook could be changed to stable if total debt to
EBITDA drops below five times on a sustainable basis and the
company remediates identified internal control weaknesses.
The ratings could be downgraded if profit margins remain depressed
and liquidity levels decline significantly. An inability to
remediate internal control weaknesses in a timely manner could
also result in a ratings downgrade.
The affirmation of the SGL-4 rating reflects the company's weak
liquidity profile over the next twelve months. The company has
significant projected cash needs including amounts required for
projected alarm monitoring contract acquisitions, required debt
amortization and capital expenditures. Although the company had
balance sheet cash of about $27 million at March 31, 2005, cash
needs are expected to exceed cash on hand and free cash flows from
operations in the next twelve months. If the company completes
expected contract acquisitions and does not obtain additional
financing, the company may need to rely heavily on its $30 million
revolving credit facility. Liquidity could be constrained if the
integration of acquisitions is not completed successfully and in a
timely manner or the company is required to fund certain loan
commitments assumed in connection with the NACC acquisition.
The SGL-4 rating also reflects the liquidity risks in the event
retail attrition rates increase significantly. If weighted
average retail attrition rates for the trailing three quarters
increase to 18%, the company will be required by the terms of the
indenture to make an offer to purchase 10% of the secured notes at
par. The indenture, however, limits the purchase of retail
contracts to a maximum of $2 million per quarter if retail
attrition exceeds 18% for the latest one or weighted average of
the last three fiscal quarters. The retail attrition rate for the
four quarters ending March 31, 2005 was about 11%.
IASG's $30 million revolving credit facility is subject to a
borrowing base calculation and contains a minimum fixed charge
coverage covenant. IASG currently has full availability under its
$30 million revolving credit facility and is expected to have
ample cushion under the fixed charge coverage covenant over the
next twelve months.
The SGL rating will be sensitive to:
* the timing and amount of contract acquisitions;
* attrition rates; and
* the company's ability to grow free cash flow from operations.
Headquartered in Albany, New York, IASG is a provider of alarm
monitoring services. Revenue for the LTM period ended March 31,
2005 was approximately $87 million.
INTEGRATED ALARM: Financials Filing Prompts S&P to Remove Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating and 'B-' second lien senior secured debt rating on
Albany, New York-based Integrated Alarm Services Group Inc.
The ratings were removed from CreditWatch, where they were placed
on May 2, 2005, following a delay in the filing of the company's
2004 annual report and March 2005 quarterly report. IASG recently
filed both reports in compliance with previous waivers, and
Standard & Poor's does not anticipate any delays in future
filings. The outlook is negative.
"The ratings reflect IASG's modest size and market position within
the highly competitive U.S. security alarm industry, and its
reliance on debt to expand its business," said Standard & Poor's
credit analyst Ben Bubeck. "These partly are offset by a largely
recurring revenue base and favorable industry growth trends," he
continued.
IASG provides services to independent security alarm dealers,
including wholesale alarm monitoring and financing solutions. The
company also has an owned portfolio of alarm contracts developed
through both acquisitions and organic account generation. IASG
had approximately $135 million in pro forma operating lease-
adjusted debt as of March 2005.
With a revenue base of about $100 million, IASG holds a modest
market position in the competitive and fragmented U.S. security
alarm industry. A strong housing market, aging population, and
increase in two-career families drive moderate growth prospects
for this industry. IASG purchases security contracts from
independent dealers, which generates a predictable recurring
revenue stream while minimizing operating expenses by outsourcing
much of the services associated with the sale, maintenance, and
installation of security systems. Since these contract purchases
are reflected on the cash flow statement as cash flows from
investing, reported operating margins for this business model are
quite strong. However, customer attrition typically is in the
low-teens percentage range, which mandates significant customer
acquisitions to maintain operating cash flow. Therefore, Standard
& Poor's will focus more on cash flow generation as a driver of
IASG's financial profile.
INTELIDATA TECH: Sets Aug. 18 to Vote on $20 Mil. Corillian Deal
----------------------------------------------------------------
InteliData Technologies Corporation (Nasdaq:INTD) has set Aug. 18,
2005, as the date of its 2005 annual meeting to vote on, among
other things, a proposal to approve and adopt an agreement and
plan of merger with Corillian.
Pursuant to the merger agreement, Corillian will acquire
InteliData in a cash and stock transaction for an aggregate
purchase price of approximately $20 million or approximately
$0.0841 and 0.0956 shares of Corillian common stock per share of
InteliData common stock. The specific dollar value of the stock
consideration that InteliData stockholders will receive will
depend on the market value of Corillian common stock at the time
of the merger. The annual meeting will be held at 9:00 a.m.,
Reston, Virginia time, at the principal offices of InteliData
located at 11600 Sunrise Valley Drive, Reston, Virginia.
Shareholders of record at the close of business on June 27, 2005,
are entitled to notice of and to vote on the merger proposal at
the annual meeting.
A more detailed description of the merger proposal will be
included in the definitive proxy statement/prospectus that
InteliData and Corillian will mail to InteliData's shareholders in
connection with the merger. It is anticipated that the proposed
merger would be completed promptly after the annual meeting
assuming approval of the merger proposal by InteliData
shareholders and the satisfaction or waiver of customary closing
conditions. The InteliData Board of Directors has unanimously
approved and adopted the merger proposal and recommended approval
and adoption of the merger proposal by its shareholders.
With over a decade of experience, InteliData Technologies
Corporation -- http://www.InteliData.com/-- provides online
banking and electronic bill payment and presentment technologies
and services to leading banks, credit unions, financial
institution processors and credit card issuers. The Company
develops and markets software products that offer proven
scalability, flexibility and security in supplying real-time,
Internet-based banking services to its customers.
* * *
Going Concern Doubt
Cash and cash equivalents as of March 31, 2005, totaled
$1,253,000, compared to $3,223,000 as of year-end 2004. Because
the Company has recurring losses from operations and is
experiencing difficulty in generating cash flow, there is
substantial doubt about its ability to continue as a going
concern.
INTERLINE BRANDS: Acquires Copperfield in $70 Million Deal
----------------------------------------------------------
Interline Brands, Inc. (NYSE: IBI), a national distributor and
direct marketer of maintenance, repair and operations products,
acquired Copperfield (CCS Enterprises, Inc.), a national
distributor and direct marketer of specialty ventilation and
chimney maintenance products. Copperfield is headquartered in
Fairfield, Iowa. Copperfield's annual sales for their fiscal year
ending November 2004 were $41 million.
Interline funded the $70 million transaction with borrowings under
its existing senior credit facility, including a new $50 million
term loan. The Company expects the acquisition to be accretive to
earnings in 2005.
"The acquisition of Copperfield fits well with our strategy of
acquiring businesses with leadership positions in residential
repair markets. We were attracted to Copperfield because of its
strong catalog brand, national distribution coverage and EBITDA
margins exceeding 20%," said Michael Grebe, President and Chief
Executive Officer of Interline Brands. "We were able to acquire
Copperfield at an attractive price, and believe the acquisition
offers numerous ways to grow sales and improve profitability."
"Copperfield's strengths in direct marketing and multi-channel
sales fit extremely well with our operations and our culture.
This acquisition enables us to continue to expand our HVAC
business, and provides purchasing leverage and sourcing
opportunities. Our goal is to utilize the existing Interline
Brands infrastructure to improve operations, to expand our
addressable market, and to cross sell items to Copperfield's
customer base from the expansive Interline product offering,"
added Grebe. "We are very pleased to have the Copperfield
management team join Interline Brands."
Founded in 1979, Copperfield has successfully followed a strategy
of providing superior customer service to a broad range of
specialty contractors and other distributors, through its skilled
sales and service staff, a comprehensive catalog and an extensive
product offering. Copperfield operates 6 distribution centers
throughout the United States and employs over 125 associates. The
company offers more than 5,000 brand name and private label repair
and replacement items including chimney replacement and relining
products, specialty ventilation components, hearth products and
gas and electrical appliances.
Interline Brands, Inc., is a leading national distributor and
direct marketer with headquarters in Jacksonville, Florida.
Interline provides maintenance, repair and operations (MRO)
products to approximately 150,000 professional contractors,
facilities maintenance professionals, hardware stores, and other
customers across North America and Central America.
* * *
Interline Brands' 11-1/2% senior subordinated notes due 2011 carry
Moody's Investors Service and Standard & Poor's single-B ratings.
KIMBERLY OREGON: Ch. 11 Case Jointly Administered with Kori Air
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of California
allowed the joint administration of the chapter 11 cases of
Kimberly Oregon Realty, Inc., and its subsidiary, Kori Air, Inc.
The Debtors asked for the joint administration of their cases to
permit a coordinated judicial review and allow them to deal with
their "common creditor," First National Bank, San Diego. The
Debtors explained that their reorganization efforts are tied to
one objective -- reinstate the arrears owed to First National or
find a way to pay their loan.
The First National Bank Debt
Kori Air, wholly owned by Kimberly Oregon, was created for the
sole purpose of acquiring a jet airliner from the British Air
Corporation.
Kori Air partially financed the $3 million purchase through a loan
from First National. As collateral for the loan, Kimberly Oregon
pledged the BAC 1-11 aircraft and a residential real property
located at Rancho Santa Fe in California.
First National subsequently commenced a non-judicial foreclosure
on Kimberly Oregon's Rancho Santa Fe property after Kori Air
defaulted on its loan. Kori Air filed for bankruptcy protection
on March 14, 2005, and moved to stop First National from taking
its property by filing an adversary complaint seeking injunctive
relief against the foreclosure.
Kori Air explained to the Court that the foreclosure should be
stopped because the assets that First National is trying to seize
are a crucial part of its reorganization plans and efforts. When
the Court denied Kori Air's request for a temporary restraining
order, Kimberly Oregon said it had no choice but to file for
bankruptcy.
About Kimberly Oregon and Kori Air
Headquartered in Rancho Santa Fe, California, Kimberly Oregon
Realty, Inc., filed for chapter 11 protection on Mar. 22, 2005
(Bankr. S.D. Calif. Case No. 05-02313). Its debtor-affiliate,
Kori Air, Inc., filed for chapter 11 protection on Mar. 14, 2005
(Bankr. S.D. Calif. Case No. 05-02313). Thomas B. Gorrill, Esq.,
serves as the Debtors' counsel. When Kimberly Oregon filed for
protection from its creditors, it listed $17,649,818 in assets and
$5,313,160 in debts. Kori Air listed $4,700,000 in assets and
$1,585,400 in debts.
KMART CORP: Files Response to FLOORgraphics' Objection Under Seal
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on May 12,
2005, Kmart Corporation asked the U.S. Bankruptcy Court for the
Northern District of Illinois for a summary judgment limiting
FLOORgraphics' damages to the time period ending March 17, 2002.
Kmart wants the Court to declare that FLOORgraphics' claim is
disposed of in its entirety because there are no damages to
measure.
FLOORgraphics, Inc., supplies floor advertising to Kmart stores
under a March 18, 1998 Retail Advertising License Agreement with
Kmart Corporation. The Agreement was subsequently modified by two
written Addenda dated March 20, 2000, and August 28, 2000. Both
Addenda expressly incorporated the terms and conditions of the
Agreement, and ultimately extended the contract term to March 17,
2002.
Kmart rejected the Contract in bankruptcy, thereby creating a
breach of contract as of January 21, 2002.
FLOORgraphics alleges that a letter dated March 24, 1998, created
an automatic renewal provision, entitling it to enforce the
Contract as long as Kmart uses floor advertising in its stores.
FLOORgraphics asserts damages for Kmart's breach extending to
perpetuity, estimated at $59 million.
FLOORgraphics Objects
FLOORgraphics, Inc., asks the Court to deny Kmart's request
because it ignores the numerous genuine issues of material fact
associated with the formation and performance of the March 18,
1998 Retail Advertising License Agreement to include annual
renewal provisions.
According to J. Mark Fisher, Esq., at Schiff Hardin LLP, in
Chicago, Illinois, substantially all of the negotiations of the
terms of the Agreement occurred between George Rebh,
FLOORgraphics' Executive Vice President, and Ken Kramer, Kmart's
Divisional Vice President of Merchandise Presentation. Mr.
Fisher relates that Mr. Rebh wanted automatic renewal, but Mr.
Kramer was unwilling to give up Kmart's flexibility to terminate
floor advertising altogether. Consequently, the parties agreed on
a compromise procedure whereby they would meet nine months before
the expiration date to discuss continuation of the floor decal
program and FLOORgraphics' performance thereunder. They agreed
that, so long as Kmart decided to continue to permit floor
advertising, it would renew the Agreement yearly and not permit
floor advertising with anyone else.
FLOORgraphics undertook the obligation, solely at Kmart's
discretion to continue floor advertising in its stores, to
continue to offer the Program for each renewal year. "Kmart
waived the right, if it elected to continue permitting floor
advertising, to let the Agreement expire or to appoint another
floor advertising company," Mr. Fisher says.
However, Messrs. Rebh and Kramer recognized soon after the
Agreement was executed that it needed to be clarified to fully
state the Compromise. Mr. Rebh informed Mr. Kramer that
FLOORgraphics could not raise the necessary investment unless the
Compromise was fully expressed in writing. Mr. Kramer agreed that
clarification was necessary.
With the informed approval of Gary Ruffing, Mr. Kramer's superior
and Kmart's Vice President of Merchandise Presentation, Mr.
Kramer wrote the March 24, 1998 letter agreement stating that "If
FLOORgraphics is not in default of the contract and we want to
continue to have floor advertising in our stores, we will extend
your contract year to year and not do floor advertising with
someone else."
Mr. Rebh countersigned the Kramer Letter.
In reliance upon the Kramer Letter as part of the Agreement,
FLOORgraphics issued preferred stock and gave up substantial
ownership and control of FLOORgraphics to investors to raise the
funds necessary to perform under the parties' agreement and pay
the guaranteed annual minimum payments.
Mr. Fisher asserts that Mr. Rebh, who prepared the two later
addenda dated March 20, 2000, and August 28, 2000, believed that
the word "Agreement," as used in the addenda, included the entire
Agreement among the parties, including the Kramer Letter. Mr.
Fisher explains that this was consistent with the informal way
that the Program was administered, with oral waivers of the
written terms. The renewals also followed the Compromise
procedure agreed to by the parties and set forth in the Kramer
Letter, because Messrs. Rebh and Kramer discussed the merits and
extension of floor advertising, not competitors' contemporaneous
offers to replace FLOORgraphics at a far higher payment to Kmart.
Mr. Fisher insists that Kmart breached the Agreement prior to the
last stated expiration date of March 17, 2002. Mr. Fisher says
Mr. Kramer's successor did not conduct the renewal meeting in
June 2001. Instead, he entered into a new agreement to replace
FLOORgraphics with News America In-Store Marketing Services,
Inc., in July 2001. Even though FLOORgraphics' decals remained in
Kmart stores through June 2002, FLOORgraphics was damaged because
Kmart shared the Agreement with NAMIS in violation of its
confidentiality provisions and NAMIS contacted national producers
of consumer package goods during the remaining term of the
Agreement, to obtain concurrent placements in Kmart stores and
contacted other retailers to impede FLOORgraphics' marketing
efforts.
Mr. Fisher tells the Court that genuine issues of material fact
include whether:
(a) the Kramer Letter was a new agreement or merely a
subsequent clarification to conform the Agreement to
reflect the parties' original agreement;
(b) Mr. Kramer had actual or apparent authority to execute the
Kramer Letter;
(c) the Kramer Letter complied with the Agreement provisions
with respect to modifying the documentation of the
parties' Agreement;
(d) FLOORgraphics reasonably relied on the promises contained
in the Kramer Letter to its detriment by issuing
securities and giving up control of FLOORgraphics to
investors who financed the Program and the payments;
(e) the references to the "Agreement" being renewed by two
addenda refereed to the entire Agreement of the parties,
including the terms of the Kramer Letter;
(f) the parties to the addenda intended them to be integrated
documents;
(g) the predominant financial purpose of the Agreement was the
sale of goods;
(h) the Kramer Letter contained Kmart's waiver of the right,
so long as it continued to permit floor advertising, to
let the Agreement expire or to do floor advertising with
another firm and whether FLOORgraphics' reliance on that
waiver barred retraction by Kmart; and
(i) FLOORgraphics gave consideration for the Kramer Letter, to
the extent it was a subsequent agreement, by giving up its
right to terminate the Program and agreeing that it would
perform during a renewal year if Kmart elected to continue
floor advertising in its stores.
Mr. Fisher notes that the Bankruptcy Court confirmed prior
repudiations of the Agreement by granting Kmart's request to
reject the Agreement. Since, as a matter of black letter
bankruptcy law, Kmart's rejection of the Agreement constitutes a
breach under Section 365(g) of the Bankruptcy Code, Mr. Fisher
contends that Kmart's liability for contract rejection damages has
been established; and the only question is the extent of
FLOORgraphics' damages.
Kmart Files Response Under Seal
Kmart sought and obtained the Court's approval to file its reply
to FLOORgraphics' response as "restricted documents" within the
meaning of Rule 5005-4 of the Local Bankruptcy Rule. The Clerk of
the Court will restrict access to the documents.
Judge Sonderby rules that these parties will have access to the
Kmart Documents without further Court order:
* William J. Barrett or Mark R. Mackowiak of Barack Ferrazzano
Kirschbaum Perlman & Nagelberg, LLP;
* Patrick M. McCarthy, James H. Geary, or Cara Heflin of
Howard & Howard Attorneys, P.C.; and
* J. Mark Fisher, Michael Yetnikoff, or Patricia J. Fokuo of
Schiff Hardin LLP.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues. The
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired on Jan. 27, without complaint by the Department of
Justice. (Kmart Bankruptcy News, Issue No. 97; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KOEN BOOK: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Koen Book Distributors, Inc.
10 Twosome Drive
P.O. Box 600
Moorestown, New Jersey 08057
Bankruptcy Case No.: 05-32376
Type of Business: The Debtor is book wholesaler specializing in
bestsellers and independent press titles. The
Debtor has an on-line store.
See http://www.koen.com/
Chapter 11 Petition Date: July 11, 2005
Court: District of New Jersey (Camden)
Debtor's Counsel: Aris J. Karalis, Esq.
Ciardi, Maschmeyer & Karalis, P.C.
413 Route 70 East, Suite 300
Cherry Hill, New Jersey 08034
Tel: (856) 428-8400
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Random House, Inc. $2,835,548
400 Hahn Road
Westminster, MD 21157
Harper Collins Publishers $2,621,241
1000 Keystone Industrial Park
Scranton, PA 18512
Penguin Group (USA), Inc. $1,554,133
200 Old Tappan Road
Old Tappan, NJ 07675
Simon Schuster $1,501,003
100 Front Street
Riverside, NJ 08075
Time Warner Book Group $1,436,335
3 Center Plaza, Third Floor
Boston, MA 02108
Von Holtzbrinck Publishing Services $976,202
16365 James Madison Highway
Gordonsville, VA 22942
Publishers Group West, Inc. $434,031
1700 Fourth Street
Berkeley, CA 94710
Ryland Peters & Small $328,602
519 Broadway, Fifth Floor
New York, NY 10012
Chronicle Books $322,679
85 Second Street, Sixth Floor
San Francisco, CA 94105
WW Norton & Company, Inc. $308,182
500 Fifth Avenue
New York, NY 10110
Houghton Mifflin Company $297,263
181 Ballardvale Street
P.O. Box 7050
Wilmington, MA 01887
National Book Network $236,637
15200 NBN Way, Building B
Blue Ridge Summit, PA 17214
John Wiley & Sons $185,474
Diamond Comic Distributors, Inc. $164,393
Harcourt Education $156,132
MQ Publications, Ltd. $149,915
Workman Publishing Company $133,295
Consortium Book Sales & Distribution $123,294
The Haworth Press, Inc. $92,163
Oxford University Press $82,720
LAIDLAW INT'L: Affiliate Settles Tax Issues with IRS
----------------------------------------------------
As previously reported, Laidlaw Transportation, Inc., objected to
the claim filed by the Internal Revenue Service and asserted a
claim for a tax refund for the income tax year ending August 31,
1997, based on the Claimed Capital Loss Carryover.
To resolve their dispute and terminate the controversy between
them, LTI and the IRS agree that:
(1) For purposes of computing the correct amount of LTI's
Claimed Capital Loss Carryover, LTI realized a $88,129,094
long-term capital loss during the tax year ending
August 31, 1996, as a result of the sale of 30,813,218
shares of the common stock of ADT, Ltd. LTI did not
realize any capital gain as a result of the sale of those
shares. The amount of the Agreed ADT Capital Loss was
computed under a "50/50 Settlement:"
Amended Claimed ADT Capital Loss
for FY 08/31/96 $248,439,616
ADT Capital Gain for
FY 08/31/96 per audit 72,081,445
------------
Total Basis Adjustments $320,521,061
50/50 Settlement 50%
------------
Basis Adjustments Allowed $160,260,531
Then, the amount of the Basis Adjustments Allowed --
$160,260,531 -- and the amount of Additional ADT Error Per
Audit -- $49,181 -- were subtracted from the $248,439,616
Amended Claimed ADT Capital Loss for Fiscal Year ending
August 31, 1996, to arrive at the Agreed ADT Capital Loss.
(2) The income tax and related computations take into account
the Agreed ADT Capital Loss and have been agreed to be the
correct computations for LTI's income tax years ending
August 31, 1996, and August 31, 1997. The computations
will conclusively bind both LTI and the IRS, except that:
-- the computations do not account for, and are subject
to, net operating loss carrybacks, if any, originating
from the income tax years ending after August 31, 2000;
-- the computations are subject to the application, if
any, of the global interest netting rules under
26 U.S.C. Section 6621(d); and
-- the defenses, if any, of the IRS to claims based on
those computations will not be prejudiced.
For reference, a full-text copy of the Computations can be
accessed free at:
http://bankrupt.com/misc/laidlaw_incometax_Computations.pdf
(3) In accordance with the Computations and for purposes of
regular income taxes, these amounts of net operating
losses are available under 26, U.S.C. Section 172 to LTI
for carryforward from the three tax years:
Amount of Net Operating Loss
Tax Year Ending Available for Carryforward
--------------- ----------------------------
August 31, 1998 $6,806,298
August 31, 1999 $145,331,903
August 31, 2000 $4,484,775
(4) For purposes of alternative minimum tax, these amounts
of net operating losses are available under 26 U.S.C.
Section 56 to LTI for carryforward from the three tax
years:
Amount of Net Operating Loss
Tax Year Ending Available for Carryforward
--------------- ----------------------------
August 31, 1998 $5,256,199
August 31, 1999 $118,681,384
August 31, 2000 $5,557,103
(5) The IRS, as creditor, holds an allowed proof of claim
under Section 502 of the Bankruptcy Code against LTI for
$423,304 for interest, calculated as of June 28, 2001, for
the income tax year ending August 31, 1997, in accordance
with the Computations.
In the Court-approved stipulation, the Parties also agree that
the final judgment will not prejudice LTI's rights to claim the
application of the global interest netting rules under 26 U.S.C.
Section 6621(d), and the defenses of the United States to the
claim for the application of the global interest netting rules.
The final judgment will also not prejudice the set-off rights of
the United States.
Moreover, the Stipulation provides that LTI's claim and action
for refund of taxes for the income tax year ending August 31,
1997, asserted in the Adversary Proceeding will be dismissed with
prejudice, but the judgment will not prejudice any rights of LTI
to file or pursue a claim for refund and to file an action for a
refund for the income tax year ending August 31, 1997, based on
net operating loss carrybacks originating from income tax years
ending after August 31, 2000, and the application of any global
interest netting rules to LTI. However, the defenses of the
United States to the claims and actions will not be prejudiced.
Each party agreed to bear its own costs of litigation.
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 June 6, 2005,
Moody's Investors Service has upgraded the ratings of Laidlaw
International Inc. senior implied to Ba2 from B1. In a related
action, Moody's assigned Ba2 ratings to the company's proposed
$300 million Term Loan and $300 million Revolving Credit facility.
Moody's said the rating outlook is stable. This completes the
ratings review opened on December 22, 2004.
LIBERTY MEDIA: Discovery Holding's Shares Trades in OTCBB
---------------------------------------------------------
Liberty Media Corporation (NYSE: L, LMC.B) has been advised by
Nasdaq that "when-issued" trading for Discovery Holding Company
will begin on July 8, 2005. Shares of DHC's Series A common stock
will trade on the OTC Bulletin Board under the symbols "DCHAV"
beginning on July 8, 2005 through July 20, 2005. At present,
there are no plans for DHC's Series B common stock to trade on a
when-issued basis. Beginning on July 21, 2005, DHC Series A and
Series B shares will begin regular way trading on the Nasdaq
National Market under the symbols "DISCA" and "DISCB."
Liberty Media common stock will not trade ex-dividend until the
July 21, 2005 distribution date. As a result, any record holder
of Liberty Media common stock that sells its shares after the
July 15, 2005, record date and before the date of distribution
will also be selling its right to receive shares of DHC common
stock in the spin off.
Following the spin off, Liberty Media will cease to have any
ownership interest in DHC, and DHC will become an independent
publicly traded company.
DHC is a holding company owning a 100% ownership interest in
Ascent Media Group, Inc. and a 50% ownership interest in Discovery
Communications, Inc.
Liberty Media Corporation (NYSE: L, LMC.B) is a holding company
owning interests in a broad range of electronic retailing, media,
communications and entertainment businesses classified in three
groups; Interactive, Networks and Tech/Ventures. Our businesses
include some of the world's most recognized and respected brands
and companies, including QVC, Encore, Starz, Discovery,
IAC/InterActiveCorp, and News Corporation.
* * *
As reported in the Troubled Company Reporter on March 17, 2005,
Standard & Poor's Ratings Services lowered its rating on Liberty
Media Corporation's senior unsecured debt to 'BB+' from 'BBB-',
based on the company's plan to spin off to shareholders its 50%
stake in Discovery Communications Inc. and its 100% ownership of
Ascent Media Group Inc., without a commensurate reduction in
debt.
Ratings have been removed from CreditWatch, where they were placed
with negative implications on Jan. 21, 2005. At the same time,
Standard & Poor's lowered its other ratings on the company,
including its corporate credit rating, to 'BB+' from 'BBB-'. The
outlook is stable. Total principal value debt as of Dec. 31, 2004,
was $10.9 billion.
"With this transaction, Liberty and creditors lose a stable,
high-quality, high-growth asset, on the heels of the spin-off in
2004 of the company's international cable TV and related assets,
into which Liberty had transferred significant cash and other
investments," said Standard & Poor's credit analyst Heather M.
Goodchild.
LITHIUM TECHNOLOGY: Recurring Losses Trigger Going Concern Doubt
----------------------------------------------------------------
BDO Siedman, LLP, expressed substantial doubt about Lithium
Technology Corporation's ability to continue as a going concern
after it audited the Company's financial statements for the year
ended Dec. 31, 2004. The auditing firm points to the Company's
recurring losses and net capital deficiency.
The Company operations have been financed primarily through the
use of proceeds from equity financings, loans, including loans
from Arch Hill Capital, Arch Hill Ventures and other related
parties, loans from silent partners and bank borrowings secured by
assets. The Company recently entered into a number of financing
transactions and are continuing to seek other financing
initiatives to meet its working capital needs and to complete its
product commercialization process. That capital is expected to
come from the sale of securities, including the sale of common
stock under a Standby Equity Distribution Agreement.
At March 31, 2005, the Company's cash and cash equivalents were
$1,711,000. Total liabilities at March 31, 2005, were
$25,938,000, consisting of current liabilities in the aggregate
amount of $6,958,000 and long-term liabilities in the amount of
$18,980,000. At March 31, 2005, assets included, in addition to
cash and cash equivalents, accounts receivable of $74,000,
inventories of $103,000, $7,000 due from related parties, prepaid
expenses and other current assets of $610,000, property and
equipment, net, of $6,060,000, net intangibles of $8,183,000, and
other assets of $530,000. As of March 31, 2005, Lithium
Technology's working capital deficit was $4,453,000, as compared
to $3,773,000 at March 31, 2004. Management expects the Company
to incur substantial operating losses as it continues its
commercialization efforts.
Since inception, Lithium Technology has incurred substantial
operating losses and expects to incur additional operating losses
over the next several years. As of March 31, 2005, it had an
accumulated deficit of approximately $61.6 million.
Lithium Technology will need to raise additional capital to meet
its working capital needs and to complete its product
commercialization process. The Company is depending on that
capital coming from the sale of securities, including the sale of
common stock under the Standby Equity Distribution Agreement.
Again, no assurances can be given that the financing will be
available in sufficient amounts, or at all. Continuation of the
Company's operations in 2005 is dependent upon obtaining such
further financing.
Convertible Debentures
In January 2004, the Company sold $2,000,000 of its 10%
Convertible Debentures Due 2006 with attached warrants to purchase
up to 1,000,000 shares of its common stock in a private placement
to an investment group. The proceeds of the financing were used
for working capital.
Arch Hill Agreements
In April 2004, the Company exchanged approximately $32.9 million
of debt owed to Arch Hill Capital and Arch Hill Ventures for its
debt and equity securities. Arch Hill Capital exchanged
approximately $9.7 million of indebtedness loaned to the Company
for $3 million of convertible debentures, warrants to purchase up
to 1,500,000 shares of Lithium's common stock exercisable at $2.00
per share and 6,069,697 shares of its common stock and Arch Hill
Ventures exchanged approximately $23.2 million of indebtedness
loaned to GAIA for 21,001,453 shares of Lithium's common stock.
From August 2004 through January 2005 in a private placement, the
Company issued $6,062,000 of its A Units, $4,357,000 for cash and
$1,705,000 in exchange for outstanding debt, and issued $1,840,000
of its B Units in exchange for outstanding debt. The outstanding
debt in each case was held by Arch Hill Capital. The cash
proceeds of the financing were used for working capital.
Cornell Capital Agreements
On March 11, 2005, the Company entered into a standby equity
distribution agreement with Cornell Capital Partners, LP pursuant
to which the Company may, at its discretion, periodically sell to
Cornell Capital shares of its common stock for a total purchase
price of up to $15,000,000. For each share of common stock
purchased under the standby equity distribution agreement, Cornell
Capital will pay the Company 98% of the lowest volume weighted
average price of Lithium's common stock as quoted by on the Over-
the-Counter Bulletin Board or other principal market on which its
common stock is traded for the five days immediately following the
date the Company delivers a notice requiring Cornell Capital to
purchase its shares under the standby equity distribution
agreement.
Cornell Capital Partner's obligation to purchase shares of
Lithium's common stock under the standby equity distribution
agreement is subject to certain conditions, including Lithium
obtaining an effective registration statement for shares of common
stock sold under the standby equity distribution agreement and is
limited to $200,000 per weekly advance and $800,000 per 30 days.
The Company expects to file its registration statement during the
latter part of the second fiscal quarter of 2005.
Debenture Purchase
On March 11, 2005, the Company entered into a Debenture Purchase
Agreement with an investor, pursuant to which the Company issued
debentures in the principal amount of $2,500,000. The debentures
accrue interest at 12% per year and are repayable in 10 equal
monthly installments with accrued interest commencing July 15,
2005, and ending April 15, 2006. The cash proceeds of the
financing were used for working capital.
Lithium Technology Corporation produces unique large-format
rechargeable batteries under the GAIA brand name and trademark.
The Company supplies a variety of military, transportation and
back-up power customers in the U.S. and Europe from its two
operating locations in Plymouth Meeting, Pennsylvania and
Nordhausen, Germany.
At Mar. 31, 2005, Lithium Technology Corporation's balance sheet
showed an $8,660,000 stockholders' deficit, compared to a
$5,968,000 deficit at Dec. 31, 2004.
MEDIA GROUP: Brings-In Dodson Parker as Litigation Counsel
----------------------------------------------------------
The Media Group, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Connecticut, Bridgepoint
Division, for authority to retain Dodson, Parker & Behm, P.C., as
their special counsel.
The Debtors want Donald Capparella, Esq., at Dodson Parker, to
represent them in a pending lawsuit in the Appellate Court for the
State of Tennessee, Middle Division, Nashville [American
Industries Services, Inc. v. Herman S. Howard, Case No. 2003-
01656].
Mr. Capparella will bill the Debtors at his current hourly rate of
$250. The Debtors paid Dodson Parker a $2,500 retainer.
To the best of the Debtors' knowledge, Mr. Capparella and his Firm
do not hold any interest materially adverse to the Debtors and
their estates.
Headquartered in Stamford, Connecticut, The Media Group Inc.,
distributes and markets automotive additives and general
merchandise. The Company filed for chapter 11 protection on
July 9, 2004 (Bankr. D. Conn. Case No. 04-50845). Douglas S.
Skalka, Esq., at Neubert Pepe and Monteith, represents the Debtors
in their restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $10,915,723 in total
assets and $14,743,552 in total debts.
MERIDIAN AUTOMOTIVE: Creditors Meeting Rescheduled to July 18
-------------------------------------------------------------
The United States Trustee for Region 3, Kelly Beaudin Stapleton,
reschedules the first meeting of Meridian Automotive Systems,
Inc., and its debtor-affiliates' creditors required under Section
341(a) of the Bankruptcy Code, at 2:00 p.m. on July 18, 2005, at
J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, in
Wilmington, Delaware.
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 officer of the
Debtors under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed
for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case
Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MIRANT CORP: Appeals Kern Adversary Case Dismissal Order
--------------------------------------------------------
Mirant Corporation and Mirant Americas Energy Marketing, LP, took
an appeal from Judge Lynn's Order granting Kern River Gas
Transmission Company's motion to dismiss Mirant Corporation and
its debtor-affiliates' adversary complaint, to the United States
District Court for the Northern District of Texas.
As reported in the Troubled Company Reporter on July 6, 2005,
Judge Lynn of the U.S. Bankruptcy Court for the Northern District
of Texas ruled that the $5 million of payments sought by the
Debtors cannot be recovered under Sections 549(a), 550(a), 105(a)
and 503 of the Bankruptcy Code. The Court therefore dismisses the
Debtors' complaint in its entirety, with prejudice.
The Official Committee of Unsecured Creditors of Mirant
Corporation filed a separate notice of appeal. The Mirant
Committee wants the District Court to address three issues:
1. Did the Bankruptcy Court err in dismissing Mirant
Corporation and Mirant Americas Energy Marketing, LP's
Adversary Complaint?
2. Did the Bankruptcy Court err in ruling that a payment made
in the ordinary course pursuant to the terms of an
unassumed and unrejected contract is non-recoverable under
Sections 549, 550, 105 and 503 of the Bankruptcy Code?
3. Once a prepetition contract is rejected, is a creditor
limited to recovery on an administrative claim only to the
extent the creditor provided benefit to the bankruptcy
estate postpetition?
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. 69; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
NAPIER ENVIRONMENTAL: Court Approves Further Amended BIA Proposal
-----------------------------------------------------------------
Napier Environmental Technologies Inc. (TSX:NIR) received B.C.
Supreme Court approval of its Further Amended Proposal under the
Bankruptcy and Insolvency Act.
The approval follows a vote of unsecured creditors in favor of the
Further Amended Proposal involving a committed offer of financing
from 6408753 Canada Corporation and 6408788 Canada Corp. 6408753
and 6408788 are affiliates of I.C.T.C. Holdings Corporation, a BC-
based company in the business of manufacturing and distributing
equipment for the paint and coatings industry.
Napier has agreed to financing arrangements with 6408753/6408788
that provide it with secured loans to fund payments to company
creditors under the Further Amended Proposal. These financing
arrangements also contemplate the issuance of warrants for the
purchase of an aggregate 60% of the common share capital of the
Company at an exercise price of $0.01 per common share.
Napier is currently operating under the protection of the
Bankruptcy and Insolvency Act. The Company cautions that it is
not in a position to provide any assurance that shareholders will
receive any value under the Further Amended Proposal.
Napier develops and manufactures highly effective, safe and
environmentally advantaged surface preparation products for
stripping paints and coatings, as well as a complete line of wood
restoration products. Napier's products are protected by a
portfolio of patents and trademarks, including 'Bio-wash and
RemovALL'.
NATIONAL HEALTH: Strong Liquidity Prompts S&P to Lift Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
senior unsecured debt ratings on National Health Investors Inc. to
'BB' from 'BB-'. The outlook is stable.
"National Health's credit profile has benefited over the past few
years from the company's working through nearly all of its
troubled investments, while reducing debt levels," explained
Standard & Poor's credit analyst George Skoufis. "Strong
liquidity and a cleaner portfolio have positioned National Health
to pursue investment opportunities once again. The company's
financial profile is characterized by a very strong cash position,
below-average leverage, strong debt protection measures, and very
manageable debt maturities." At the same time, Mr. Skoufis added,
"Offsetting credit considerations include a smaller overall
portfolio, meaningful tenant concentration, and an external
advisory structure."
A stable pool of assets and modest rollover of leases and mortgage
loans, combined with conservative leverage, will continue to
support debt service requirements. Further improvement to current
ratings would be driven by the prudent pursuit of acquisitions,
while maintaining a sound financial profile.
NAVIGATOR GAS: Wants to Expand Leaf Saltzman's Scope of Retention
-----------------------------------------------------------------
Navigator Gas Transport PLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to expand
the scope of Leaf, Saltzman, Manganelli, Pfiel & Tendler, LLP's
retention as their auditors.
The Debtors explain that they are required by various federal
agencies to complete audited financial statements for the year
ended December 31, 2004, thus, they seek to retain Leaf Saltzman
to include the 2004 Audit because of its experience and ability to
perform the services needed.
The Debtors will compensate Leaf Saltzman at a flat rate of
$60,000 plus actual and necessary expenses incurred in connection
with performances of the 2004 Audit. The Firm will also receive
reimbursement for travel and other out-of-pocket expenses.
Albert Manganelli, a partner at Leaf Saltzman, assures the Court
of his Firm's "disinterestedness" as that term is defined in
Section 101(14) of the Bankruptcy Code.
Navigator Gas Transport PLC's business consists of the transport
by sea of liquefied petroleum gases and petrochemical gases
between ports throughout the world. The Company filed for
chapter 11 protection on January 27, 2003 (Bankr. S.D.N.Y. Case
No. 03-10471). Adam L. Shiff, Esq., at Kasowitz, Benson,
Torres & Friedman LLP, represents the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $197,243,082 in assets and
$384,314,744 in liabilities.
NEWKIRK MASTER: S&P Rates Proposed $760 Million Loan at BB+
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' corporate
credit rating to Newkirk Master Ltd. Partnership. Standard &
Poor's also assigned a preliminary 'BB+' rating to Newkirk's
proposed $760 million secured term loan facility. At the same
time, a recovery rating of '1' is assigned to this facility. The
facility is expected to close in late July 2005. The outlook is
stable.
"The ratings reflect a relatively short operating history as a
consolidated entity, a complex operating structure, and a highly
leveraged and somewhat inflexible balance sheet," said Standard &
Poor's credit analyst James Fielding. "Despite these concerns,
Newkirk's credit profile has improved materially in recent years,
benefiting from the solid and predictable operating
characteristics exhibited by the company's diversified triple-net
leased commercial real estate portfolio and a rapidly amortizing
debt profile." Mr. Fielding added, "The new facility will further
enhance Newkirk's credit profile by lowering Newkirk's overall
cost of capital while providing the funds to refinance a $435
million credit facility and $284 million of mortgage debt.
Importantly, the proposed facility is expected to amortize at a
pace similar to that of the existing facility."
The good credit quality of the tenant base and the in-place NNN
leases should provide ongoing support to the low but very stable
debt service coverage. Historically, the partnership has largely
outperformed original credit metric projections, highlighting the
benefits of amortization covenants and the attractive cost basis
position of the portfolio.
NORTH ATLANTIC: Moody's Junks $200 Million 9-1/4% Global Notes
--------------------------------------------------------------
Moody's Investor Service confirmed the corporate family rating of
North Atlantic Trading Company, Inc. but downgraded the ratings of
the senior notes of NATC and of North Atlantic Holding Company.
The actions conclude the review for downgrade initiated on
Jan. 24, 2005. The outlook is negative.
Rating confirmed:
North Atlantic Trading Company:
* B3 for corporate family rating (previously known as senior
implied)
Ratings downgraded:
North Atlantic Trading Company:
* $200 million 9-1/4% global notes due 2012, to Caa1 from B3
North Atlantic Holding Company:
* $75 million senior notes ($97 million principal amount at
maturity) due 2014, to Ca from Caa3
On January 24, 2005, Moody's placed the ratings of NATC and NAHC
under review for possible downgrade, following the company's
disclosure in its financial statements that it should not be able
to meet the fixed charge coverage covenant under its credit
agreement for the first and second quarters of 2005 and would need
a waiver or amendment from the bank group.
Confirmation of the corporate family rating reflects the
elimination of uncertainty regarding the company's liquidity
thanks to the June 16, 2005 refinancing of the bank credit
facilities. The new facilities include a $30 million term loan
and a $55 million revolving credit (unrated), both maturing on
June 30, 2010. Proceeds from the term loan were applied to
repayment of the existing bank facility and to the build-up of a
cash position. At closing, the new revolving credit was unused.
Refinancing of the existing credit facilities brings covenant
relief and substantial availability of liquidity to the company.
The downgrade of the NATC and NAHC senior notes reflects a
deterioration in the expected recovery for these two bonds in case
of default. This deterioration is due to the increase in bank
facility, which remains fully secured by all assets, from $50
million at the end of December 2004 to $85 million for the new
bank facility.
The rating outlook is negative due to the company's continuing
negative free cash flow, which was at $(4) million for the last 12
months at the end of the first quarter of 2005. While the make-
your-own segment continues to perform adequately, the company's
operating performance is affected:
* by an inability to grow revenue in the looseleaf chewing
tobacco segment, where price increases of 5 to 6% a year just
offset consumption declines;
* by the existence of counterfeit cigarette papers bearing the
ZigZag trademark which weaken the company's own sales under
license; and
* by development costs related to the launch of ZigZag premium
cigarettes, which amounted to $5 million in 2004.
Also, the acquisition of Stoker in 2003 has not yet led to
expected synergy-related cost reductions.
Following recent management changes and the hiring of a turnaround
firm, the company's plans to move into a sustained positive free
cash flow position remain undefined. The success of such future
plans will be made harder to achieve by NAHC's very high leverage
(10 times EBITDA for the last 12 months ended March 31, 2005, on a
consolidated basis). Inability of the company to demonstrate a
return to positive free cash flow in the coming two quarters would
bring pressure on the ratings.
The ratings reflect:
* the company's strong brand name in the make-your-own segment;
* the traditional ability of NATC to increase prices in its
smokeless tobacco segment; and
* the strengthened liquidity brought by the recent credit
facility refinancing.
The ratings also take into consideration:
* NATC's high leverage driven in part by the acquisition of
Stoker;
* the early cash uses expected from the launch of a new
cigarette under the Zig-Zag brand; and
* declining volumes in the smokeless tobacco segment.
North Atlantic Trading Company, Inc. is a holding company which
owns National Tobacco Company, L.P. and North Atlantic Operating
Company, Inc.
National Tobacco Company is the third largest manufacturer and
marketer of loose leaf chewing tobacco in the United States, and
the largest importer and distributor in the United States of
premium cigarette papers and related products.
NORTHEAST GENERATION: S&P Holds BB+ Rating on $357.5 Million Bonds
------------------------------------------------------------------
Standard & Poor's Ratings Services' affirmed its 'BB+' rating on
Northeast Generation Co.'s $357.5 million senior secured bonds.
The rating reflects the near-term expiration of the current Select
Energy Inc. contract and the potential that Select may not extend
the contract on terms favorable to the NGC bondholders. Under a
merchant case scenario where natural gas prices remain low ($3.75
per million Btu), NGC's debt service coverage ratio could fall to
1x. The outlook is negative.
NGC, an indirect, wholly owned subsidiary of Northeast Utilities,
owns, operates, and maintains a portfolio of 1,296 MW of
generation assets and firm capacity in the New England region.
While Standard & Poor's rates the NU companies on a consolidated
basis, NGC has been somewhat separated from the consolidation,
because it has nonrecourse debt and could, in the future,
represent an asset that does not have strategic value to NU,
depending on the company's long-term strategy.
Currently, Standard & Poor's believes that NGC represents an
important asset for Select to support its other unregulated
activities. In addition, once locational installed capacity is
implemented in New England (expected January 2006), it could mean
an improvement in cash flow for NGC and Select as the pumped
storage unit would be able to capture these higher capacity values
in the short term. Standard & Poor's believes NU will support the
asset in the short term, at least until the contract matures, and
has therefore not totally delinked the ratings.
"The negative outlook reflects the near-term expiration of the
Select contract and the potential that Select may not extend the
contract on favorable terms and conditions," said Standard &
Poor's credit analyst Arleen Spangler. "The potential for an
upgrade is limited by the uncertain dynamics of the electricity
markets in New England and the ultimate strategic importance of
this asset to Northeast Utilities," she continued. If LICAP is
not implemented in New England and Select does not extend the
contract, a downgrade could occur. Because NGC does not meet
Standard & Poor's special-purpose entity, bankruptcy-remote
criteria, its rating will also be tied to the rating on NU.
OCWEN FINANCIAL: Good Financial Profile Cues S&P to Hold Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew all its ratings on
OCWEN Federal Bank FSB. This action was taken in response to the
completion of the sale of the bank's deposits and branch to
unrated Marathon Bank of New York. At the same time, Standard &
Poor's affirmed its ratings on OCWEN Financial Corp. and its
remaining subsidiary, Ocwen Capital Trust I, including the 'B-'
long-term counterparty credit rating on OCWEN Financial Corp. The
outlook is stable.
The sale of the deposit franchise was part of OCWEN's announced
plan to "debank," which included turning in its thrift charter,
and continuing its servicing and related operations as a
wholesale-funded company. There is some concern about
management's lack of a track record operating on a primarily
wholesale-funded basis with a substantially encumbered balance
sheet. The loss of direct bank regulator oversight is also a
concern; however, this is offset some by the debt-issuing holding
company's improved access to the resources of the operating
company through the elimination of the regulator's depositor
preference.
"While the loss of insured deposits increases funding and
liquidity risk by making the firm reliant on wholesale funding and
securitizations, management has an adequate funding plan that
takes advantage of the current low leverage and existing unsecured
debt," said Standard & Poor's credit analyst Robert B. Hoban, Jr.
The ratings on OCWEN Financial Corp. continue to incorporate its
improved financial profile as the result of the disposition of
almost all noncore assets, better leverage, improved but still
lagging profitability, and the risks of the continued shift in
business strategy and structure.
OCWEN is a $1.2 billion company headquartered in West Palm Beach,
Florida whose core business is the servicing of subprime loans,
including the rehabilitation of underperforming and nonperforming
mortgage loans, and ancillary business related to this industry.
It conducts business out of an unrated operating company, which is
fully licensed in all 50 states, Puerto Rico, and D.C.
The core servicing business involves the purchase of mortgage
servicing rights in a competitive bidding process; therefore, cost
efficiency is key to profitability and OCWEN has moved more than
50% of its workforce to India to keep its costs among the lowest
in the business. The servicing business has been challenged by
the low interest rate environment and very high loan prepayment
speeds, which increase amortization of MSRs and decrease interest
income earned on the float. Despite these challenges, the
servicing and related businesses remain profitable and are well
positioned to take advantage of rising interest rates.
OCWEN's current strategy of focusing on fee-based businesses to
leverage its servicing and other capabilities came after it had
encountered serious difficulties and suffered through a lengthy
and costly exit from other asset-intensive businesses. The
disposition of these assets has all but eliminated their impact on
profitability, but expenses associated with marketing the still-
unprofitable mortgage technology infrastructure products continue
to be a drag on earnings.
OCWEN's management has historically been very opportunistic in
reaching for new business both inside and outside of the mortgage
industry. As with most opportunistic business strategies, some
endeavors have proven beneficial while others have proven quite
costly. Standard & Poor's believes this approach adds volatility
to results and an element of distraction to management.
The stable outlook assumes the successful implementation and
operation of management's funding and liquidity plan. Should the
bank have funding problems or increase leverage faster than
expected, the rating could be negatively affected. Financial
performance, while improved, is still weak, and would have to be
maintained at a higher run rate for improvement in the rating.
OMNE STAFFING: Thelen Reid to Investigate Insurance-Related Claims
------------------------------------------------------------------
The Honorable Rosemary Gambardella of the U.S. Bankruptcy Court
for the District of New Jersey gave Charles M. Forman, the chapter
11 trustee appointed in Omne Staffing Inc.'s chapter 11 cases,
permission to expand the scope of Thelen Reid & Priest LLP's
retention as special counsel for all insurance related matters.
The Chapter 11 Trustee originally sought and obtained approval
from the Court to engage Thelen Reid's services in an action
against Wachovia Insurance Services, Inc. The action, filed in
the U.S. District Court for the Eastern District of California,
asserted third party beneficiary claims by MV Transportation,
Inc., against the insurance company for negligent procurement of
insurance.
Since the non-debtor parties to the California litigation have
agreed to a settlement, the trustee wants to expand the scope of
Thelen Reid's retention to include the investigation and
prosecution of potential claims against Wachovia Insurance
Services, Inc., in any forum of appropriate jurisdiction.
The Trustee further wants Thelen Reid's services on probable
litigation that could arise from various insurance related actions
for which stay relief has been granted that relate to the scope of
insurance coverage under the Debtors' insurance policies issued by
American Protection Insurance Company and other carriers.
As reported in the Troubled Company Reporter on May 25, 2005,
Thelen Reid bills these hourly rates:
Designation Rate
----------- ----
Partners $300 to $685
Counsel $320 to $600
Associates $210 to $460
Legal Assistants $95 to $230
In addition, Thelen Reid's attorneys who are likely to work on the
Debtors' cases charge these hourly rates:
Thelen Reid & Priest LLP, New York Office
Attorney Rate
-------- ----
Daniel A. Lowenthal, Esq., Partner $565
Susan Kane, Esq. senior associate $395
Allison L. Schrader, Esq., junior associate $275
Thelen Reid & Priest LLP, California Office
Attorney Rate
-------- ----
Richard A. Lapping, Esq., Partner $490
Louis J. Cisz, Esq., partner $450
James T. Hendrick, Esq., partner $425
James A. Riddle, Esq., partner $425
Adam Brezine, Esq., senior associate $395
John A. Chatowski, Esq., senior associate $395
Aaron T. Knapp, Esq., junior associate $280
Juanita Mantz, Esq., junior associate $195
Headquartered in Cranford, New Jersey, Omne Staffing, Inc., filed
for chapter 11 protection on April 9, 2004 (Bankr. D. N.J. Case
No. 04-22316). John K. Sherwood, Esq., at Lowenstein Sandler
represents the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
both estimated debts and assets of over $10 million.
OWENS CORNING: Files 2004 Hourly Workers Savings Plan Report
------------------------------------------------------------
On June 17, 2005, Owens Corning filed with the Securities and
Exchange Commission an Annual Report on the Company's Savings and
Security Plan for the fiscal year ended December 31, 2004.
The Owens Corning Savings and Security Plan is sponsored by
Fidelity Management Trust Company, which also acts as its
trustee. Therefore, transactions under the Plan qualify as
permitted party-in-interest transactions.
The Plan principally benefits designated groups of hourly
employees of Owens Corning and certain subsidiaries. An eligible
employee may elect to enroll in the Plan at any time.
Administrative expenses of the Plan are charged to the Plan and
include professional fees, accounting and other administrative
expenses.
The Plan does not currently permit new investments in Company
stock, but allows participants to elect to transfer amounts
currently invested in Company stock to any other investment fund.
Plan investment elections are shares of mutual funds managed by
Fidelity Investments and Company stock.
Beginning January 31, 2003, participants could elect to
contribute from 1% to 50% of their base pay to the Plan. Prior
to January 31, 2003, participants could elect to contribute from
1% to 30% of their base pay to the Plan.
Participants may designate all or a portion of their
contributions as deferred income up to the maximum allowed by
federal law, pursuant to Section 401(k) of the Internal Revenue
Code. These contributions are not subject to federal income tax
until the amounts are distributed to the participants. The Plan
requires remittance of participant contributions to the Trustee
when deducted from participants' paychecks.
The Plan may provide a retirement contribution equal to a
specified percentage of eligible pay for participants who work at
a plant or business unit where a defined benefit pension plan is
not available. Company contributions relating to the retirement
contribution are invested according to the participant's
elections at the time of contribution. The Company matches 100%
of participants' contributions up to 5% of eligible compensation
at most locations. At most remaining locations, the Company
matches 50% of all participants' contributions up to 5% of
eligible compensation. The Company may match participant
contributions at various negotiated rates at certain locations.
PricewaterhouseCoopers LLP audited Owens Corning's Savings and
Security Plan report.
A full-text copy of the Annual Report is available for free at:
http://www.sec.gov/Archives/edgar/data/75234/000119312505127135/d11k.htm
Owens Corning
Savings and Security Plan
Statements of Net Assets Available for Benefits
December 31,
-------------------------
2004 2003
-------------------------
Assets:
Investments:
Mutual funds:
Fidelity Retirement Money
Market Portfolio $38,481,769 $34,577,058
Fidelity Low-Priced Stock Fund 22,769,515 17,402,839
Fidelity Blue Chip Growth Fund 9,419,676 7,977,525
Fidelity Puritan Fund 9,050,468 8,784,717
Spartan U.S. Equity Index Fund 8,747,512 7,149,652
Fidelity Growth & Income
Portfolio 6,025,147 5,020,416
Fidelity Diversified
International Fund 5,436,542 3,567,476
Fidelity Growth Companies 4,619,939 3,050,202
Fidelity Aggressive Growth Fund 2,763,719 2,969,903
Fidelity Investment Grade
Bond Fund 2,484,759 2,319,050
Fidelity Freedom 2020 1,229,017 833,297
Fidelity U.S. Bond Index 1,140,720 921,132
Fidelity Freedom 2010 1,029,820 685,408
Fidelity Freedom 2030 826,581 420,648
Spartan Extended Market Index 462,557 211,227
Fidelity Freedom 2040 455,904 290,439
Fidelity Freedom Income 343,418 181,825
Fidelity Freedom 2000 306,998 165,372
----------- -----------
Total mutual funds 115,594,061 96,528,186
Company common stock 3,178,331 361,663
Loans to participants 6,117,652 5,009,505
----------- -----------
Total investments 124,890,044 101,899,354
----------- -----------
Due from Owens Corning 175,467 104,381
Other receivables 27,534 -
----------- -----------
Total assets 125,093,045 102,003,735
Liabilities:
Due to participants 20,563 -
----------- -----------
Net assets available for benefits $125,072,482 $102,003,735
=========== ===========
Owens Corning
Savings and Security Plan
Statements of Changes in Net Assets Available for Benefits
For the years ended
December 31,
-------------------------
2004 2003
-------------------------
Investment income (loss):
Dividends $2,723,901 $1,325,475
Interest on loans to participants 256,034 253,850
Realized loss on disposition of
investments (4,698,825) (6,531,446)
Unrealized appreciation of
investments 14,379,255 19,123,249
----------- -----------
12,660,365 14,171,128
Contributions:
Participants 13,465,065 13,040,418
Owens Corning 7,907,550 6,428,420
Transfers in 501,477 335,656
----------- -----------
21,874,092 19,804,494
Deductions:
Distributions to participants (10,030,568) (13,281,669)
Transfers out (1,244,742) (4,308,099)
Administrative expenses and other (190,400) (200,371)
----------- -----------
(11,465,710) (17,790,139)
Net increase 23,068,747 16,185,483
----------- -----------
Net assets available for benefits:
Beginning of period 102,003,735 85,818,252
----------- -----------
End of period $125,072,482 $102,003,735
=========== ===========
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At Sept.
30, 2004, the Company's balance sheet shows $7.5 billion in assets
and a $4.2 billion stockholders' deficit. The company reported
$132 million of net income in the nine-month period ending
Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 111;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT: Brazilian Units Have Until Aug. 29 to File Plan
---------------------------------------------------------
Bloomberg News reports that Parmalat Finanziaria S.p.A.'s
Brazilian units -- Parmalat Brasil Industria de Alimentos SA and
Parmalat Administracao e Participacoes do Brasil Ltda. -- filed
for bankruptcy protection on June 24, 2005, under Brazil's new
bankruptcy law.
The filing came after Parmalat Brasil's creditors denied the
extension of the BRL800 million payment deadline for the
company's debt. Parmalat Alimentos has 697 million reais of debt
while Parmalat Participacoes has 1.5 billion reais of debt, the
newspaper Valor Economico said.
Parmalat Brasil first filed for bankruptcy protection in 2004
under the old Brazilian bankruptcy law. Valor says Parmalat
Brasil filed for bankruptcy again to take advantage of the New
Bankruptcy and Restructuring Law of Brazil, which became
effective on June 9, 2005.
Under the NBRL, debtors are permitted to remain in possession and
control of their businesses and properties. In addition, as part
of the judicial reorganization under the NBRL, most creditors are
effectively prohibited from enforcing claims against the Debtors.
A full-text copy of the NBRL is available for free at:
http://bankrupt.com/misc/nbrl.pdf
A judge in Sao Paulo has required Parmalat Brasil to file a Plan
of Reorganization by August 29, 2005.
According to the Brazilian Bankruptcy Court, the company must
devise a business plan including methods and timetables for
paying creditors, and have it approved by the bankruptcy judge
and Parmalat Brasil's creditor representatives.
Headquartered in Wallington, New Jersey, Parmalat U.S.A.
Corporation -- http://www.parmalatusa.com/-- generates more
than EUR7 billion in annual revenue. The Parmalat Group's 40-
some brand product line includes milk, yogurt, cheese, butter,
cakes and cookies, breads, pizza, snack foods and vegetable
sauces, soups and juices. The company employs over 36,000
workers in 139 plants located in 31 countries on six continents.
It filed for chapter 11 protection on February 24, 2004 (Bankr.
S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L.
Goldstein, Esq., at Weil Gotshal & Manges LLP represent the
Debtors in their restructuring efforts. When the U.S. Debtors
filed for bankruptcy protection, they reported more than $200
million in assets and debt. The Bankruptcy Court confirmed the
U.S. Debtors' Plan of Reorganization on March 7, 2005.
(Parmalat Bankruptcy News, Issue Nos. 57; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PEGASUS SATELLITE: PricewaterhouseCoopers Wants Legal Fees Paid
---------------------------------------------------------------
Pegasus Satellite Communications, Inc., and its debtor-affiliates
employed PricewaterhouseCoopers, LLP, as their accountants and
auditors, effective as of the Petition Date.
William H. Molloie, a member of the firm, relates that PwC worked
2,343.5 hours on the Debtors' Chapter 11 cases from June 2, 2004,
through December 31, 2004:
Project Category Hours Fees
---------------- ----- ----
Audit Services - Quarterly Financial Statements 895.6 $86,667
Sarbanes-Oxley Section 404 Advisory Services 1,028.5 287,404
Consulting Services 254.9 116,421
Bankruptcy Consulting 76.5 26,793
Bankruptcy Applications and Other Court Filings 13.5 4,099
Monthly and Interim Fee Applications 74.5 17,998
------- ------
Total Hours and Fees 2,343.5 $539,381
======= ========
Furthermore, PwC incurred $8,863 in expenses during the
Application Period:
Expense Amount
------- ------
Hotel $3,856
Public Transportation 2,835
Mileage 549
Meals 1,623
Accordingly, PwC asks the U.S. Bankruptcy Court for the District
of Maine to approve the fees and expenses it incurred during the
Application Period. PwC also asks the Court to direct the Debtors
to pay the unpaid amount of the approved fees and expenses
totaling $376,585.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on
June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and
Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and
Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,
Shur, Sawyer & Nelson, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue
No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PEGASUS SATELLITE: Akin Gump Wants $3.62MM Compensation Fee Okayed
------------------------------------------------------------------
Akin Gump Strauss Hauer & Feld, LLP, as co-counsel to the
Official Committee of Unsecured Creditors, has rendered these
services to the Committee from June 2, 2004, through May 5, 2005:
Service Description Hours Amount
------------------- ----- ------
General Case Administration 304.05 $134,090
Interim Fee Applications 140.80 38,700
Analysis of other Fee Applications 41.20 12,137
Pegasus Satellite Communications, 8.40 3,385
Inc.'s SOFAs & Schedules Review
Retention of Professionals 149.10 59,188
Creditor Committee Meetings 159.30 87,330
Court Hearings 158.20 80,303
Financial Reports and Analysis 0.90 383
DIP/Cash Collateral/Exit Financing 489.90 198,235
Executory Contracts 263.30 87,981
Claims Analysis/Objections 20.90 9,565
Prepetition Transactions Analysis 224.05 66,599
Secured Claims Analysis 608.40 276,726
Lift Stay Litigation 2.70 648
General Adversary Proceedings 500.90 219,026
Tax Issues 1,250.30 554,653
Labor/Employee Issues 146.20 68,360
Real Estate Issues/Leases 19.80 7,069
Exclusivity 32.40 13,854
Plan & Disclosure Statement 530.05 251,459
Asset/Stock Transactions 2,434.70 1,151,984
Travel 86.10 44,768
FCC Matters 327.30 117,029
DirecTV Litigation 308.40 139,391
In addition, Akin Gump reports that it incurred actual out-of-
pocket expenses totaling $168,726 in connection with its
professional services to the Committee.
Accordingly, Akin Gump asks the U.S. Bankruptcy Court for the
District of Maine to allow of $3,622,857 as compensation for
professional services rendered, and $168,726 for reimbursement of
expenses incurred.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Maine Case No. 04-20889) on
June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and
Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and
Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,
Shur, Sawyer & Nelson, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue
No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PHARMACEUTICAL FORMULATIONS: Files Chapter 11 Petition in Delaware
------------------------------------------------------------------
Pharmaceutical Formulations, Inc. (OTC Bulletin Board: PHFR) filed
a voluntary chapter 11 petition in the U.S. Bankruptcy Court for
the District of Delaware in order to consummate a sale of
substantially all of its assets to Leiner Health Products, L.L.C.
The Company's wholly owned subsidiary, Konsyl Pharmaceuticals
Inc., is not part of the sale or the chapter 11 filing.
The sale to Leiner will be conducted under Section 363 of the
Bankruptcy Code, pursuant to which the assets will be sold free
and clear of all liens, claims and encumbrances. The Agreement
provides for a purchase price of $23,000,000 plus the assumption
of certain trade payables (adjusted to reflect a working capital
at closing of $10,785,000), subject to higher and better offers,
and requires that the sale to Leiner be completed by Sept. 23,
2005. Following the sale, it is anticipated that the Company's
Edison, New Jersey facility will be closed.
"We are excited about the opportunity to grow our market share and
increase our scale in the store brand over-the counter market,"
Leiner Health Products President Gale Bensussen said. "Leiner is
dedicated to bringing world- class service and high quality
products to the customers served by PFI. Execution of the
agreement brings with it the opportunity to broaden our customer
base, expand our OTC product offerings, and increase our
manufacturing scale, all of which strengthens Leiner's ability to
help grow the store brand share of the OTC market for the nation's
leading retailers."
DIP Financing
In connection with the filing of its Chapter 11 petition, the
Company has filed a motion with the Bankruptcy Court seeking
approval of its agreement with The CIT Group/Business Credit,
Inc., to provide debtor-in-possession financing under a revolving
credit facility in the aggregate amount of $14 million.
"The CIT financing will provide PFI with sufficient capital to
meet its operating needs and will enable PFI to consummate a sale
of substantially all of its assets, which will maximize value for
PFI and its creditors," stated Dr. James Ingram, PFI's Chief
Executive Officer and Acting-President.
The Company also will file motions with the Bankruptcy Court
seeking authority to honor its obligations to employees, customers
and others in the normal course of business. In that regard,
Leiner and the Company will work together to ensure that there
will not be any interruption in service to PFI's customers and
that it will be business as usual from the customers' point of
view during the period before the finalization of the transaction
as Leiner takes over production at its locations after the
transactions closes. Both Leiner and the Company believe this
fundamental to ensuring that Leiner or any other purchaser of the
assets will maintain the business.
It is presently anticipated, based upon the terms of the Leiner
sale, that there will not be any significant payments to PFI's
stockholders.
Headquartered in Edison, New Jersey, Pharmaceutical Formulations,
Inc. -- http://www.pfiotc.com/-- is a publicly traded private
label manufacturer and distributor of nonprescription over-the-
counter solid dose generic pharmaceutical products in the United
States. The Company filed for chapter 11 protection on July 11,
2005 (Bankr. Del. Case No. 05-11910). Matthew Barry Lunn, Esq.,
and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor
LLP, represent the Debtor in its chapter 11 proceeding. As of
Apr. 30, 2005, the Debtor reported $40,860,000 in total assets and
$44,195,000 in total debts.
PHARMACEUTICAL FORMULATIONS: Case Summary & 20 Largest Creditors
----------------------------------------------------------------
Debtor: Pharmaceutical Formulations, Inc.
aka Private Formulations, Inc.
aka Pharmacontrol
460 Plainfield Avenue
Edison, New Jersey 08818
Bankruptcy Case No.: 05-11910
Type of Business: The Debtor is a private label manufacturer and
distributor of non-prescription solid dose
pharmaceutical products in the United States.
See http://www.pfiotc.com/
Chapter 11 Petition Date: July 11, 2005
Court: District of Delaware
Judge: Mary F. Walrath
Debtor's Counsel: Matthew Barry Lunn, Esq.
Michael R. Nestor, Esq.
Young Conaway Stargatt & Taylor LLP
The Brandywine Building, 17th Floor
1000 West Street
P.O. Box 391
Wilmington, Delaware 19899
Tel: (302) 571-6600
Debtor's Special
Corporate &
Transaction
Counsel: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Debtor's
Financial
Advisor: SSG Capital Advisors, L.P.
Financial Condition as of April 30, 2005:
Total Assets: $40,860,000
Total Debts: $44,195,000
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Albemarle Corporation Trade $1,764,932
P.O. Box 281365
Atlanta, GA 30384-1365
Attn: Chris Senft
Tel: (704) 365-9866
Fax: (225) 388-7355
Innovative Folding Carton Co. Trade $733,300
901 Durham Avenue
South Plainfield, NJ 07080
Attn: Phil Naidrich
Tel: (908) 757-6000
Fax: (908) 757-6464
Colorcon P R Inc. Trade $294,975
LBX 2685
P.O. Box 8500
Philadelphia, PA 19178-2685
Tel: (215) 699-7733
Fax: (215) 661-2605
Capsugel Trade $289,020
P.O. Box 640091
Pittsburgh, PA 15264
Attn: Dilek Akpinar
Tel: (973) 540-3096
Fax: (610) 521-7200
Penn Bottle & Supply Company Trade $286,212
W502089
P.O. Box 7777
Philadelphia, PA 19175-2089
Tel: (610) 521-6000
Fax: (610) 521-7200
Time-Cap Labs, Inc. Trade $233,684
7 Michael Avenue
Farmingdale, NY 11735
Tel: (631) 753-9090
Fax: (631) 753-2220
460 Plainfield Avenue Lease $220,074
Associates, L.P.
c/o Broadway Management
80 Broad Street, 2nd Floor
New York, NY 10004
Attn: Brooke Cladek
Tel: (973) 773-0900
United Teamster Fund Contract $206,250
[Address Not Provided]
Attn: Joe Byers
Tel: (201-757-0630
Biddle Sawyer Corporation Contract $161,513
Schilling Marketing & Trade $159,815
Associates, Inc.
Blanver U.S.A. Trade $157,590
PSE&G Utility $153,994
Curry Sales Inc. Trade $124,899
Weber Display and Packaging Trade $124,368
Jilin Pharmaceutical (USA) Inc. Trade $109,110
Step 3 Consulting Trade $83,340
Novartis Nutrition Trade $76,844
Barrington Chemical Corporation Trade $60,680
Carecam International Trade $57,454
John Bradley & Sales Trade $56,149
R & V REALTY: Case Summary & 22 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: R & V Realty, LLC
90 Community Drive
Sanford, Maine 04073
Bankruptcy Case No.: 05-21224
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
R & V Industries, Inc. 05-21225
Chapter 11 Petition Date: July 8, 2005
Court: District of Maine (Portland)
Debtor's Counsel: Robert J. Keach, Esq.
Bernstein, Shur, Sawyer & Nelson
100 Middle Street, 6th Floor
P.O. Box 9729
Portland, Maine 04104-5029
Tel: (207) 774-1200
Estimated Assets Estimated Debts
---------------- ---------------
R & V Realty, LLC $1 Million to $1 Million to
$10 Million $10 Million
R & V Industries, Inc. $1 Million to $1 Million to
$10 Million $10 Million
A. R & V Realty, LLC's 3 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Coastal Enterprises, Inc. 2001 Possible Unknown
36 Water Street Deficiency
P.O. Box 258
Wiscasset, ME 04578
Finance Authority of Maine 2001 Possible Unknown
5 Community Drive Deficiency
P.O. Box 949
Augusta, ME 04332
Small Business 2001 Possible Unknown
Administration
Maine District Office
Edmund S. Muskie Federal
Building, Room 512
Augusta, ME 04330
B. R & V Industries, Inc.'s 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Constellation New Energy Utilities $164,605
800 Boylston Street
28th Floor
Boston, MA 02199
Central Maine Power Utilities $38,129
P.O. Box 1084
Augusta, ME 04332-1084
American Express Trade debt $23,800
Address not provided
Hester Tag & Label Trade debt $15,910
International Paper Trade debt $14,777
Aetna Trade debt $14,088
Estee Trade debt $9,117
Triple P Packaging & Paper Trade debt $6,325
Lambert, Coffin, Rudman, Trade debt $5,736
Hochman
United Parcel Service Trade debt $5,735
Conair Franklin Trade debt $4,178
Huntsman Chemical Corp. Trade debt $3,386
Yellow Transportation, Inc. Trade debt $3,381
L & M Optical Trade debt $2,898
Sanford Sewer District Utilities $2,853
Estee Innovative & Trade debt $2,666
Warehousing
New England Motor Freight Trade debt $2,135
One Way Solutions Trade debt $2,028
RMH Properties Trade debt $2,026
RAMP CORP: U.S. Trustee Appoints 7-Member Creditors' Committee
--------------------------------------------------------------
The United States Trustee for Region 2 appointed seven creditors
to serve on an Official Committee of Unsecured Creditors in Ramp
Corporation's chapter 11 case:
1. Double U Master Fund LP
Attn: Isaac Winehouse
B&W Equities, LLC
4424 16th Avenue
Brooklyn, New York 11204
Phone: (718) 972-6800, Fax: (718) 972-6803
2. Harborview Master Fund LP
c/o Harborview Advisors
Attn: David Stefansky
850 Third Avenue
Suite 1801
New York, New York 10022
Phone: (646) 218-1400, Fax: (646) 218-1401
3. Stephen Pacicco
2 Eastbrook Road
Harrington Park, NJ 07640
4. Gary Schwartz
971 Windward Way
Westin, FL 33327
Phone: (954) 385-0811
5. Olive Cox Sleeper Trust
Attn: Peter B. Hirshfield
1035 Park Avenue
Suite 7-B
New York, New York 10028-0912
Phone: (646) 827-9362
6. Mathe, Inc.
Attn: Mark Hicke
1259 Route 46 East
Building #1
Parsippany, NJ 07054
Phone: (973) 334-1700 Ext. 100
7. Xand Corporation
Attn: Lee S. Weinstein
11 Skyline Drive
Hawthorne, NY 10532
Phone: (914) 592-8282, Fax: (914) 592-3482
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the chapter 11 cases to a liquidation
proceeding.
Ramp Corporation -- http://www.Ramp.com/-- through its wholly
owned HealthRamp subsidiary, develops and markets the CareGiver
and CarePoint suite of technologies. CareGiver enables long term
care facility staff to easily place orders for drugs, treatments
and supplies from a wireless handheld PDA or desktop web browser.
CarePoint enables electronic prescribing, lab orders and results,
Internet-based communication, data integration, and transaction
processing over a handheld device or browser, at the point-of-
care. HealthRamp's products enable communication of value-added
healthcare information among physician offices, pharmacies,
hospitals, pharmacy benefit managers, health management
organizations, pharmaceutical companies and health insurance
companies. The Company filed for chapter 11 protection on June 2,
2005 (Bankr. S.D.N.Y. Case No. 05-14006). Howard Karasik, Esq.,
at Sherman, Citron & Karasik, P.C., represents the Debtor in its
restructuring efforts. As of May 31, 2005, the Debtor reported $6
million in total assets and $13 million in total debts.
ROBERT E LEE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Robert E Lee Investors LLC
fdba Robert E Lee Retirement Inn
dba Robert E Lee Healthplex
201 East Elm Street
New Albany, Indiana 47150
Bankruptcy Case No.: 05-92641
Type of Business: The Debtor operates a nursing home.
Chapter 11 Petition Date: July 8, 2005
Court: Southern District of Indiana (New Albany)
Judge: Basil H. Lorch III
Debtor's Counsel: David M. Cantor, Esq.
Seiller & Handmaker, LLP
462 South 4th Avenue, Suite 2200
Louisville, Kentucky 40202
Tel: (502) 584-7400
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
------ --------------- ------------
Lancaster Pollard Mortgage Value of security: $4,350,000
Co. $2,500,000
65 East State St, Suite 2000
Columbus, OH 43215
Fourth Street Solutions Inc $284,663
Attn: Joan M Dugan
President
215 Southeast 4th Street
Evansville, IN 47713
Healthcare Therapy Svcs Inc $201,486
c/o Barry Chatham
Park 31 S 5214 S East St.
Building D, Suite 1
Indianapolis, IN 46227
Healthcare Ther Svcs Inc $108,325
Associated Med Products $60,620
Pharmstat Pharmacy $45,863
Kentuckiana Nursing Service $35,482
Upton Pry Inc $35,456
US Foodservice Inc. $33,607
Medical Staffing Network $23,872
Herrion Associates Con Inc $19,959
Crestmark Financial Corp. $17,548
Sage Health Service of $13,438
Indiana Inc
Paragon Financial Group $11,189
Centers for Medicare & $11,050
Medicaid Services
Skin Care Management $10,828
Autumn Healthcare Inc. $9,676
Norton Hospital $7,021
Monroe Shine Co Inc $6,860
Cancer Care Center Inc. $4,659
SAINT VINCENTS: Wants McDermott Will as General Counsel
------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates ask the U.S. Bankruptcy Court for the Southern
District of New York for authority to employ McDermott Will &
Emery LLP as their bankruptcy and general corporate counsel, nunc
pro tunc to July 5, 2005.
McDermott has substantial experience and expertise in Chapter 11
cases involving business entities and other fields that may be
required by the Debtors in their cases. The firm has represented
numerous debtors, creditors, purchasers, and other parties-in-
interest before courts in the Second Circuit and in numerous
other jurisdictions throughout the country.
Since July 2004, attorneys from McDermott's bankruptcy and
financial restructuring practice became extensively involved in
the Debtors' representation, including Stephen B. Selbst, a
partner at McDermott's New York office. Mr. Selbst has advised
the Debtors with respect to their cases and assisted the Debtors
in the preparation of their chapter 11 petitions.
Pursuant to the parties' Engagement Agreement, dated July 4,
2005, McDermott will:
(a) advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued operation of
their businesses;
(b) advise the Debtors with respect to all general bankruptcy
matters;
(c) prepare on the Debtors' behalf all necessary motions,
applications, answers, orders, reports, and papers in
connection with the administration of their estates;
(d) represent the Debtors at all critical hearings on matters
relating to their affairs and interests as debtors-in-
possession before the Court, any Appellate Courts, the
United States Supreme Court, and protect the interests of
the Debtors;
(e) prosecute and defend litigated matters that may arise
during the Chapter 11 Cases, including matters as may be
necessary for the protection of the Debtors' rights, the
preservation of estate assets, or the Debtors' successful
reorganization;
(f) prepare and file a disclosure statement and negotiate,
present and implement a plan of reorganization;
(g) negotiate appropriate transactions and prepare any related
necessary documentation;
(h) represent the Debtors on matters relating to the
assumption or rejection of executory contracts and
unexpired leases;
(i) advise the Debtors with respect to general corporate,
securities, real estate, litigation, environmental, labor,
regulatory, tax, healthcare and other legal matters which
may arise during the pendency of their Cases; and
(j) perform all other legal services that are necessary for
the efficient and economic administration of the Cases.
The Debtors will make monthly payments for actual hours incurred
by McDermott personnel. The Firm's current hourly rate schedule
is:
Partner Fees
------- ----
William P. Smith $675
Stephen B. Selbst 660
David D. Cleary 595
Peter A. Clark 555
Cathy Z. Scheineson 510
James M. Sullivan 475
Nathan F. Coco 470
Associate
---------
David Ivill $425
Mohsin N. Khambati 395
Miles W. Hughes 395
Nava Hazan 390
Gary O. Ravert 390
Jason DeJonker 355
Abby M. Beal 270
Thomas J. Augspurger 255
June Y. Kim 235
Paralegal
---------
Regina Walker $200
Eugene Fleischer 160
Project Assistant
-----------------
Jason Nettum $130
The Debtors will also reimburse McDermott for actual and
necessary expenses incurred in the ordinary course of the
representation.
Mr. Selbst discloses that during the twelve months prior to the
Petition Date, McDermott received $2,761,349 in cash payments for
services rendered and costs incurred. McDermott agrees not hold
any funds of the Debtors in excess of amounts owed for
prepetition legal fees and expenses. McDermott estimates that it
will be owed $100,000 as of the Petition Date. It has agreed to
waive this prepetition claim against the Debtors.
Mr. Selbst assures the Court that McDermott does not represent
and generally has not represented any entity, other than the
Debtors, in matters related to their Chapter 11 cases. McDermott
has no present connections with the U.S. Trustee.
Mr. Selbst discloses that the Firm has represented a number of
interested parties in matters unrelated to the Debtors' Chapter
11 cases.
McDermott is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code, as modified by Section
1107.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 02; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SAINT VINCENTS: Wants to Pay $16 Million Critical Vendor Claims
--------------------------------------------------------------
Timothy Weis, Chief Financial Officer of Saint Vincents Catholic
Medical Centers of New York, relates that the Debtors' viability
as healthcare providers is dependant on their uninterrupted access
to the goods and services provided by their Critical Vendors, as
is the health and safety of their patients and residents.
The Critical Vendors include suppliers of over-the-counter and
prescription medicines, medical supplies, and equipment, food and
beverage supplies and sanitary items. Certain of the Debtors'
Critical Vendors are either the sole source of critical supplies
and medications, or even if alternative sources were available,
the transition process to the alternate sources would likely
result in a lengthy disruption of essential inventory.
The ongoing support of the Debtors' Critical Vendors is vital to
the Debtors' reorganization process, Mr. Weis asserts.
The Debtors propose to pay Critical Vendor Claims. The Debtors
estimate that they will need $16,200,000 to pay the Claims.
Mr. Weis assures the Court payment of the Claims will not create
an imbalance of the Debtors' cash flows because the majority of
these obligations have customary payment terms and will not be
payable in a lump-sum. Cash maintained by the Debtors, together
with cash generated in the ordinary course of their business,
will provide more than sufficient liquidity for the payment of
the Claims in the ordinary course of business.
Pursuant to Sections 105, 363 and 364 of the Bankruptcy Code, the
Debtors ask the Court to:
(1) authorize them to make payments to the Critical Vendors on
the conditions that:
(a) the claim is paid in cash or via wire transfer,
(b) by accepting payment, the Critical Vendor agrees to
maintain or reinstate customary trade terms during
the pendency of the chapter 11 cases, and
(c) the Debtors mail a copy of the Order to each
Critical Vendor to which any payment permitted is
made;
(2) order that a Critical Vendor's acceptance of payment is
deemed to be acceptance of the terms of the Order, and if
the Critical Vendor thereafter does not provide the
Debtors with customary trade terms during the pendency of
their cases, then any payments of prepetition claims made
after the Petition Date may be deemed to be unauthorized
postpetition transfers and therefore recoverable by the
Debtors; and
(3) authorize them to obtain written verification of trade
terms to be supplied by the Critical Vendors before
issuing payment.
The transactions proposed by the Debtors should not be construed:
(i) to limit, or in any way affect, the Debtors' ability to
contest any invoice of a Critical Vendor on any grounds;
and
(ii) as an assumption or rejection of any executory contract or
unexpired lease between any of the Debtors and any of the
Critical Vendors.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 02; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
SCARLET'S CASINO: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Scarlet's Casino, Inc.
dba Scarlet's Casino
130 Main Street
Central City, Colorado 80427
Bankruptcy Case No.: 05-26933
Type of Business: The Debtor operates a casino.
Chapter 11 Petition Date: July 8, 2005
Court: District of Colorado (Denver)
Judge: Elizabeth E. Brown
Debtor's Counsel: Lee M. Kutner, Esq.
Kutner Miller, P.C.
Suite 500, 303 East 17th Avenue
Denver, Colorado 80203
Tel: (303) 832-2400
Fax: (303) 832-1510
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
------ --------------- ------------
International Gaming Trade debt $396,222
Technology
Department 7866
Los Angeles, CA 90088-7866
Mountain Gaming Distributors Trade debt $67,099
1653 Vine Street
Denver, CO 80206
Nobel/Sysco Food Services Co Trade debt $66,555
1101 West 48th Avenue
P.O. Box 5566
Denver, CO 80217
Fireman's Fund Insurance $65,714
G.A. Wright Marketing Inc. Trade debt $51,692
City of Central Treasurer $47,697
Aristocrat Technologies Inc $35,000
Osborne Coinage Company Trade debt $26,376
Xcel Energy Trade debt $24,748
Colorado Gambler, Inc. Trade debt $22,096
Black Hawk/Central City Trade debt $19,838
Sanitation
Business Network Consulting Trade debt $19,422
New World Millworks, Inc. Trade debt $18,692
Budget Blinds of Denver Trade debt $18,528
PIP Printing Trade debt $16,133
Kumer & Associates, Inc. Services $16,000
Pizzazz Promotions Trade debt $14,817
Greiner Electric, LLC $14,597
Corporate Express, Inc. Trade debt $12,876
Weiser Engineering, Inc. Services $11,022
SEGA GAMEWORKS: Has Until August 1 to File Plan of Reorganization
-----------------------------------------------------------------
The Honorable Sheri Bluebond of the U.S. Bankruptcy Court for the
Central District of California, Los Angeles Division, extended
until August 1, 2005, SEGA Gameworks LLC's exclusive period to
file a chapter 11 plan of reorganization and the disclosure
statement explaining the plan.
If the Debtor cannot file the Plan Documents by then, it must file
a status report by August 31, 2005. If the Debtor can file the
Plan Documents on or before the deadline, the Court will consider
the adequacy of the Disclosure Statement on Sept. 7, 2005.
As reported in the Troubled Company Reporter on Feb. 16, 2005, the
Court approved the sale of substantially all of the Debtor's
assets to SS Entertainment U.S.A., Inc., for $8,126,000. The
Purchased Assets include, among others, intellectual property
rights -- copyrights, domain names, computer software, source code
and the like.
The Debtor was also authorized to disburse the sale proceeds to
Heller EMX, Inc., and Key Corporate Capital, Inc., on account of
the creditors' secured claims.
Headquartered in Glendale, California, SEGA Gameworks LLC --
http://www.gameworks.com/-- operates 16 video arcades in 11 US
states, Canada, Guam, and Kuwait. The Company filed for chapter
11 protection on March 9, 2004 (Bankr. C.D. Calif. Case No.
04-15404). Ron Bender, Esq., at Levene Neale Bender Rankin &
Brill represents the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
both estimated debts and assets of $50 million.
SINGING MACHINE: Going Concern Doubt & Bankruptcy Warning in 10-K
-----------------------------------------------------------------
Berkovits, Lago & Company, LLP, expressed substantial doubt about
The Singing Machine Company, Inc.'s ability to continue as a going
concern after it audited the Company's financial statements for
the fiscal year ended March 31, 2005. The auditors point to the
Company's inability to obtain outside long term financing,
increasing stockholders' deficit and recurring losses from
operations.
The Company's net sales for the fiscal year ended March 31, 2005
decreased to $38.2 million, compared to revenues of $70.5 million
in the fiscal year ended March 31, 2004. The decrease in net
sales was a result of both decreases in unit volume as well as
pricing.
In fiscal year 2005, 64% of Company sales were direct sales, which
represent sales made by International SMC, and 36% were domestic
sales, which represents sales made from Singing Machine's
warehouse in the United States.
The sales decrease occurred in all segments of the Company's
business. Its total hardware sales decreased to $35.9 million, in
fiscal 2005 compared to total hardware sales of $67.7 million in
fiscal 2004. Music sales decreased to $2.3 million, or 6% of net
sales, in fiscal 2005, compared to $2.8 million, or 4% of net
sales, in fiscal 2004. The decrease in music sales was a result
of increased competition.
The Company's net loss was $3.6 million in 2005 compared to a net
loss of $22.7 million in fiscal 2004.
Liquidity & Capital Resources
On March 31, 2005, Singing Machine had cash on hand of $0.6
million in addition to $0.9 million of restricted cash and no bank
overdrafts compared to cash on hand of $0.4 million and restricted
cash of $0.9 million and a bank overdraft of $0.1 million on
March 31, 2004. The increase of cash on hand was primarily due to
increases in cash provided by operating activities, partially
offset by decreases in cash used in investment activities.
As of March 31, 2005, Singing Machine's working capital deficit
was $3.4 million and its current liabilities of $9.6 million
include:
* Amount due to one factory of $0.7 million -- the Company has
worked out the payment plan with the factory to pay off the
balance by the end of this year.
* Customer credit on account of $1.7 million -- the amount of
$0.7 million is due to one customer, of which $0.5 million
credit balance was settled by shipments in June 2005, the
remaining amount might be offset by the products or refund.
* Convertible debentures of $2.4 million -- the debentures
expire in February 2006, the Company might be able to pay
off a portion of the debenture before, or on, the maturity
date.
* Subordinate debt of $0.6 million -- the additional
$0.2 million was converted into common stock in May 2005.
* Hong Kong income tax payable of $2.5 million -- the Company
does not expect the complete tax payment to come due in the
short term. The Company's tax exemption application is
still pending with the Hong Kong tax authority. Even if the
outcome is unfavorable, the Company still has the right to
appeal, which could take more than a year to settle.
* Current liabilities resulted from normal course of the
business of $1.7 million.
Credit Facilities
As of June 15, 2005, Singing Machine's loan balance with Crestmark
Bank was $0.3 million. The Company can borrow up to the lesser of
the $2.5 million, or 70% of the eligible accounts receivable. Per
the agreement the Company is only allowed to factor the sales
originating from the warehouses in the United States. The factor
company determines the eligible receivables based on their own
credit standard, and the accounts' aging. As of June 15, 2005,
there was no availability under the Crestmark facility due to low
sales volume during the slow selling season.
Singing Machine's Hong Kong subsidiary, International SMC, has
access to credit facilities at the Hong Kong Shanghai Bank and
Fortis Bank. The primary purpose of the facilities is to provide
International SMC with access to letters of credit so that it can
purchase inventory for direct shipment of goods into the United
States and international markets. The facilities are secured by a
corporate guarantee from the U.S. parent company and restricted
cash on deposit with the lender. The maximum available credit
under the facilities is $1.5 million. The balance as of March 31,
2005 and 2004 was $0 and $62,282, respectively. The interest rate
is approximate 4% per annum. As of June 15, 2005, the
availability from these facilities was $0.8 million.
As of June 15, 2005, Singing Machine's cash on hand is limited.
Its average monthly operating expenses are approximately $450,000
and it needs approximately $1.4 million to cover operating
expenses during the next three-month period. Its primary expenses
are normal operating costs including salaries, lease payments for
the warehouse space in Compton, California, and other operating
costs.
Bankruptcy Warning
Singing Machine's sources of cash for working capital in the long
term are the same as its sources during the short term. If it
needs additional financing, the Company intends to approach
different financing companies or insiders. However, it cannot
guarantee that its financing plan will succeed. If the Company
needs to obtain additional financing and fails to do so, it may
have a material adverse effect on its ability to meet its
financial obligations and continue its operations.
"If we have a severe shortage of working capital," the Company
said in its Annual Report, "we may not be able to continue our
business operations and may be required to file a petition for
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code or enter
into some other form of liquidation or reorganization proceeding."
The Singing Machine Company, Inc., is engaged in the development,
production, distribution, marketing and sale of consumer karaoke
audio equipment, accessories and music. It contracts for the
manufacture of all electronic equipment products with factories
located in China. It also produces and markets karaoke music,
including compact disks plus graphics, and audiocassette tapes
containing music and lyrics of popular songs for use with karaoke
recording equipment. All of its recordings include two versions
of each song; one track offers music and vocals for practice and
the other track is instrumental only for performance by the
participant. Virtually all of the cassettes sold by the Company
are accompanied by printed lyrics, and its karaoke CD+G's
contain lyrics, which appear on the video screen. The Company
contracts for the reproduction of music recordings with
independent studios.
SOLUTIA INC: Has Until Nov. 8 to Remove State Court Actions
-----------------------------------------------------------
At Solutia Inc. and its debtor-affiliates' request, Judge Beatty
of the U.S. Bankruptcy Court for the Southern District of New York
extends the deadline to file notices of removal of civil actions
and proceedings through and including November 8, 2005.
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
relates that the Debtors are continuing to review their files and
records to determine whether they should remove certain claims or
civil causes of action pending in state or federal courts to
which they might be a party. Because their key personnel and
legal department are assessing the Civil Actions while being
actively involved in their reorganization, the Debtors require
additional time to consider filing notices of removal in the
Civil Actions.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy
News, Issue No. 42; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SOUTH DAKOTA: Metabank Forecloses on Dan Nelson's Inventory
-----------------------------------------------------------
Metabank, a secured creditor owed about $28 million by South
Dakota Acceptance Corporation and Dan Nelson Automotive Group,
Inc., has closed Dan Nelson's dealership locations in Sioux Falls,
Rapid City and in Sioux City, and seized the stores' inventory.
J. Tyler Haahr, Metabank's president, told the Associated Press
that two other Dan Nelson stores in Iowa are locked up. He said
the intent is to sell all locations to other dealers.
Dan Nelson previously sold 75% of his interest in the company to
his minority partner, Christian J. Tapken, for $50 [sic.].
Headquartered in Sioux Falls, South Dakota, South Dakota
Acceptance Corporation dba CNAC, dba Mr. Payroll, dba First
Midwest Fidelity, and Dan Nelson Automotive Group, Inc., filed for
chapter 11 protection on June 20, 2005 (Bankr. D. S. Dak. Case No.
05-40866). When the Debtor filed for protection from its
creditors, it listed $10 million to $50 million in assets and
debts.
SOUTH DAKOTA: Metabank Wants Dan Nelson Case Converted to Ch. 7
---------------------------------------------------------------
Metabank asks the U.S. Bankruptcy Court for the District of South
Dakota, Southern Division, to convert the chapter 11 case of Dan
Nelson Automotive Group, Inc., into a chapter 7 liquidation
proceeding.
Dan Nelson Automotive owes Metabank approximately $28 million on
account of multiple loans to operate the Debtor's new and used car
business. The terms of the Debtor's indebtedness to the bank are
governed by an Amended and Restated Loan and Security Agreement
dated October 1, 2004.
The loans are guaranteed by a security interest in all of Dan
Nelson's personal property including its new and used motor
vehicles. Daniel A. Nelson and Christian J. Tapken, the principal
owners of the company, added their personal guaranties to the
loans.
Under the loan agreement, the Debtor is obliged to remit the sale
proceeds of its new car lines to Metabank. The Bank tells the
Court it discovered substantial deliquencies and out of trust
sales which the Debtor failed and refused to provide information.
Metabank reminds the Court that it allowed the Debtor access to
$279,156 cash collateral to fund its postpetition operations. The
Debtor again asked the Bank to use $670,000 cash collateral.
Metabank rejected the second request. The Bank is suspicious that
the Debtor tapped into the cash collateral without approval. The
Bank also found discrepancies between the Debtor's records and
vehicles on hand.
A few days after the Debtor's bankruptcy filing, Dan Nelson sold
his majority stake in the company to his partner for $50 [sic.]
The Bank believes the Debtor can't reorganize without proper
documentation, without Mr. Nelson on board, and while facing a
highly publicized consumer fraud suit commenced by the Iowa
Attorney General. Accordingly, the Bank urges the Court to
convert the case into a chapter 7 liquidation proceeding.
Headquartered in Sioux Falls, South Dakota, South Dakota
Acceptance Corporation dba CNAC, dba Mr. Payroll, dba First
Midwest Fidelity, and Dan Nelson Automotive Group, Inc., filed for
chapter 11 protection on June 20, 2005 (Bankr. D. S. Dak. Case No.
05-40866). When the Debtor filed for protection from its
creditors, it listed $10 million to $50 million in assets and
debts.
STELCO INC: Workers Welcome Government Support in Restructuring
---------------------------------------------------------------
United Steelworkers' National Director Ken Neumann said Friday the
letter received from the Ontario Government's steel industry
adviser could be a real basis for solving Stelco Inc.'s
restructuring for the benefit of everyone.
"We applaud the government's leadership on this issue," said
Neumann. "The goals as stated in the letter from James Arnett - to
ensure that Stelco emerges from protection under the Companies
Creditors Arrangement Act (CCAA) as a long-term viable operation,
and that pension plan deficiencies be addressed to secure the
benefits of current retirees and plan members - are absolutely on
the right path."
Mr. Neumann said the letter echoes what the union has promoted
throughout the lengthy CCAA process and, while falling only
slightly short of fully endorsing the Steelworker/Brascan plan for
refinancing, supports the principles in the plan put forward by
Brascan's financial arm, Tricap Management Ltd.
"We believe this indication of support from the government will go
a long way toward protecting pensioners, workers and the
community, and can be a guide to Stelco emerging from CCAA with
sufficient capitalization," Mr. Neumann said.
Back in April, the United Steelworkers agreed to a letter of
intent with Tricap, which proposed a commitment to arrange or
provide a total of $1.35 billion in new capital comprised of:
- A C$600 million revolving line of credit;
- A C$350 million term loan; and
- An underwriting commitment to backstop C$400 million of
equity-linked securities, to be offered to existing
stakeholders
The Proceeds would be applied as follows:
- C$500 million will be immediately contributed to Stelco's
pension plans;
- Approximately C$100 million will be used to repay existing
Stelco secured indebtedness; and
- C$750 million will be retained within Stelco to fund its
capital expenditure process and for general corporate
purposes.
Tricap also proposed that claims by current unsecured creditors
would be satisfied through the issuance of new equity in a
recapitalized Stelco.
"The next step is to ensure that all stakeholders coalesce around
this show of support by the government and get on with the job of
restructuring for the benefit of all," Mr. Neumann said.
A PDF copy of the Arnett letter can be found on
http://ResearchArchives.com/t/s?60
About USW
The United Steelworkers of America represents more than 850,000
workers in the U.S. and Canada. Headquartered in Pittsburgh,
Penna., it represents employees in the steel, paper, forestry,
rubber, manufacturing, energy, mining, aluminum and service
industries. The Steelworkers' Local 8782 website is:
http://www.uswa8782.com/
About Stelco
Stelco, Inc. -- http://www.stelco.ca/-- 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.
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco Inc.
and certain related entities filed for protection under the
Companies' Creditors Arrangement Act.
STERLING FINANCIAL: Subsidiary Converted to State-Chartered Bank
----------------------------------------------------------------
Sterling Financial Corporation (Nasdaq: STSA) of Spokane,
Washington, received regulatory approval from the Washington State
Department of Financial Institutions to convert Sterling Savings
Bank, its wholly owned subsidiary, from a state-chartered savings
and loan association to a state-chartered commercial bank.
Approval from the Federal Reserve Board to convert Sterling
Financial Corporation to a bank holding company has been received
as well. The charter conversion is effective immediately.
"This marks a milestone in the evolution of Sterling Savings
Bank," Harold Gilkey, Chairman and Chief Executive Officer, said.
"While the thrift charter has served the bank well for several
decades, it limited our bankers' ability to expand corporate and
business banking relationships. The bank charter provides the
opportunity for Sterling Savings Bank to expand these
relationships and better serve our Northwest communities."
Mr. Gilkey went on to further comment, "As the newest bank in the
region and a leader in community banking in the Northwest,
Sterling will continue to have the same great people and to
provide the same great Hometown Helpful(R) service. The good news
for customers is that we will now be able to provide new
opportunities for them as well. We expect that the new charter
will enable us to provide more value-added services to Sterling's
customers, will strengthen the Bank's reputation and will provide
Sterling's bankers with increased lending opportunities and
customer capabilities. Sterling's Board is confident that a
commercial bank charter better exemplifies Sterling Savings Bank's
position as a leader in regional community banking."
Sterling Financial Corporation of Spokane, Washington is a bank
holding company, which owns Sterling Savings Bank. Sterling
Savings Bank is a Washington State-chartered, federally insured
commercial bank, which opened in April 1983 as a stock savings and
loan association. Sterling Savings Bank, based in Spokane,
Washington, has financial service centers throughout Washington,
Oregon, Idaho and Montana. Through Sterling Saving Bank's wholly
owned subsidiaries, Action Mortgage Company and INTERVEST-Mortgage
Investment Company, it operates loan production offices in
Washington, Oregon, Idaho, Montana, Arizona and California.
Sterling Savings Bank's subsidiary Harbor Financial Services
provides non-bank investments, including mutual funds, variable
annuities and tax-deferred annuities and other investment products
through regional representatives throughout Sterling Savings
Bank's branch network.
* * *
As reported in the Troubled Company Reporter on June 22, 2005,
Fitch Ratings has revised the Rating Outlook for Sterling
Financial Corporation and Sterling Savings Bank to Positive from
Stable.
The Outlook change reflects the continued progress that STSA has
made improving both its franchise as well as its balance sheet
structure. Through acquisitions, as well as organic growth, STSA
has created a Pacific Northwest franchise with approximately $7.0
billion in assets and 138 branches in four states. Additionally,
the company has been transforming itself from a thrift to a more
community banking oriented entity and, highlighting this
transformation, has recently applied to change to a Washington
state-chartered commercial bank charter.
An improving level of earnings, strong asset quality, and stable
levels of capitalization are the drivers of Fitch's Outlook
revision. The successful continuation of these trends and the
additional accumulation of capital, specifically tangible common
equity, remains an opportunity for a change in ratings.
These ratings are affirmed by Fitch:
Sterling Financial Corporation
-- Long-term issuer 'BB+';
-- Short-term issuer 'B';
-- Individual rating 'C';
-- Support '5';
-- Outlook to Positive.
Sterling Savings Bank
-- Long-term deposit 'BBB-';
-- Short-term deposit 'F3';
-- Long-term issuer 'BB+';
-- Short-term issuer 'B';
-- Individual 'C';
-- Support '5';
-- Outlook to Positive.
TECHNICAL OLYMPIC: S&P Holds Low-B Ratings on $810 Million Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Technical Olympic USA Inc. and removed it from
CreditWatch, where it was placed with negative implications on
June 10, 2005. The outlook is returned to stable.
Concurrently, the 'B+' rating on the approximately $300 million of
existing senior unsecured notes and the 'B-' rating on the
approximately $510 million of existing senior subordinated notes
also are affirmed and removed from CreditWatch negative.
"The CreditWatch removals acknowledge management's intention to
structure the previously announced Transeastern Properties Inc.
acquisition in a manner that would not stress the ratings assigned
to Technical Olympic," explained Standard & Poor's credit analyst
Tom Taillon. "Furthermore, the terms of the partnership agreement
are expected to limit contingent liabilities, and Technical
Olympic's future capital contributions to the venture should be
minimal. The current ratings balance Technical Olympic's
concentrated ownership and historically below-average financial
profile with an improved management infrastructure and broadening
operating platform."
The stable outlook acknowledges the considerable progress
management has made toward building a scaleable infrastructure
that has positioned the company to more profitably grow its
operating platform. An improvement in the outlook or ratings
would be contingent upon the broadening of Technical Olympic's
equity base, the maintenance of current debt levels (on an
adjusted basis), and demonstrated improvement in key profitability
and coverage measures.
THOMAS HERRING: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Thomas Allen Herring, Sr. & Cathy June Herring
3520 Sherbrook Road
Richmond, Virginia 23235
Bankruptcy Case No.: 05-36126
Chapter 11 Petition Date: July 8, 2005
Court: Eastern District of Virginia (Richmond)
Debtor's Counsel: M. Maxine Cholmondeley, Esq.
Cholmondeley & Associates, P. C.
6767 Forest Hill Avenue, Suite 103
Richmond, Virginia 23225
Tel: (804) 320-4427
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John Carmichael counter claim; $800,000
8119 Crown Colony Parkway motion for judgment
Mechanicsville, VA 23116
Fidelity & Guarnaty, Lawsuit on guaranty $240,591
Insurance, Co.
Wallace Pledger, PLLC
7100 Forest Avenue, Suite 302
Richmond, VA 23226
Thorsen & Scher, P.P.L. Business debt $42,268
3810 Augusta Avenue
Richmond, VA 23230
Marchant, Thurston, Business debt $32,029
Honey, Bla
5600 Grove Avenue
Richmond, VA 23226
Aireco Supply Company Business debt $29,342
P.O. Box 414
Savage, MD 207630414
East Coast Metal Business debt $15,539
Distributors
P.O. Box 651690
Charlotte, NC 282651690
Ron Bradbury 2002 Soft Tail $15,000
[Address not provided] Deuce Harley Davidson
motorcycle. Valued at
$11,250;
1988 Chevy C1500
pickup (need
transmission, cost to
repair around
$2,000
Value of security:
$13,050
Greenheck Business debt $12,775
Bin 145
Milwaukee, WI 532880145
Graybar Business debt $9,064
P.O. Box 403049
Atlanta, GA 303843049
MCV Hospitals Services $7,726
P.O. Box 980462
Richmond, VA 23298
Ford Motor Credit Company Judgment $5,797
National Bankruptcy
Service Center
P.O. Box 537901
Livonia, MI 481537901
City of Richmond Real estate taxes for $5,600
Dept. of Finance, 2004, 2005
Collections
900 East Broad Street
Richmond, VA 23219
Hajoca Corporation Business debt $5,247
P.O. Box 7777W9470
Philadelphia, PA 19175
Virginia Child Support Child support $4,200
Enforce
730 East Broad Street
Richmond, VA 23219
Chippenham/JWillis Hospital Services/judgment $4,000
Central Business Office
P.O. Box 13620
Richmond, VA 23225
Leona L. Miller Law suit $3,000
4701 Otterdale Road
Moseley, VA 23120
Virginia Physicians Services/jusgment $2,096
for Women
P.O. Box 6829
Richmond, VA 23230
Pleasants Hardware Services $1,963
P.O. Box 5327
Richmond, VA 23220
ADT Security Services Services $1,955
P.O. Box 551200
Jacksonville, FL 32255
Berry Secota & Associates Business debt $1,955
P.O. Box 1008
Arlington Heights, IL 60006
TRIM TRENDS: Creditors Committee Taps McDonald Hopkins as Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Trim Trends
Company, LLC, and its debtor-affiliates asks the U.S. Bankruptcy
Court for the Eastern District of Michigan, for permission to
employ McDonald Hopkins Co., LPA, as its counsel.
McDonald Hopkins will:
a) monitor the Debtors' chapter 11 cases and legal activities
and advise the Committee on the legal ramifications of those
actions;
b) advise the Committee of its duties and obligations in the
Debtors' chapter 11 cases;
c) execute the Committee's decisions by filing motions,
objections and other documents with the Bankruptcy Court and
appear before the Court on all matters in the Debtors'
chapter 11 cases that are relevant to the interests of
unsecured creditors;
d) negotiate on behalf of the Committee the terms of any
proposed chapter 11 plan and assist in the confirmation of
that plan; and
e) perform all other legal services to the Committee that are
necessary and appropriate in the Debtors' chapter 11 cases.
Jean Robertson, Esq., a Shareholder at McDonald Hopkins, is the
lead attorney for the Committee. Ms. Robertson charges $360 per
hour for her services.
Ms. Robertson reports McDonald Hopkins' professionals bill:
Professional Hourly Rate
------------ -----------
Sean D. Malloy $325
Adam D. Marshall $210
Designation Hourly Rate
----------- -----------
Shareholders $245 - $425
Associates $140 - $170
Legal Assistants $85 - $170
Law Clerks $75
Project Assistants $40 - $75
To the best of Committee Chairperson Jess Hines' knowledge,
McDonald Hopkins is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Farmington Hills, Michigan, Trim Trends Company,
LLC -- http://www.trimtrendsco.com/-- manufactures automobile and
light truck component parts for both original equipment
manufacturers and Tier 1 suppliers. The Company and its debtor-
affiliates filed for chapter 11 protection on May 17, 2005 (Bankr.
E.D Mich. Case No. 05-56108). Joseph M. Fischer, Esq., at Carson
Fischer, P.L.C., represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed total assets of $65 million and total
liabilities of $81 million.
TRIM TRENDS: Wants to Hire Giuliani Capital as Investment Bankers
-----------------------------------------------------------------
Trim Trends Company, LLC, and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Michigan, for
permission to employ Giuliani Capital Advisors LLC as their
investment bankers.
Giuliani Capital will:
a) advise the Debtors' management in its preparation of
financial information that may be required their senior
lenders, other debt holders, customers, creditors and other
stakeholders, and coordinate communications with parties-in-
interest and their advisors;
b) advise the Debtors' management in meeting with parties-in-
interest and their respective advisors, including the
Debtors' senior lenders, other debt holders, customers,
creditors and other stakeholders;
c) advise the Debtors in developing their strategy with regard
to Sale Transaction involving a proposed sale of their
stocks or assets, and in negotiations regarding that
Transaction;
d) assist the Debtors in analyzing the financial effects of a
proposed Sales Transaction, in the preparation of a
descriptive memorandum regarding that Transaction, and in
contacting potential buyers selected and approved by the
Debtors for that Transaction;
e) coordinate with the Debtors' legal counsel concerning the
closing of any Sales Transaction; and
f) perform all other investment banking advisory services that
are necessary in the Debtors' chapter 11 cases.
James W. Carter, a Managing Director at Giuliani Capital, will be
paid:
1) a $22,000 Monthly Advisory Fee;
2) a Transaction Fee equal to 1.75% of the Transaction Value of
any completed Sales Transaction of the Debtors' assets or
stock; and
3) an additional Transaction Fee equal to 4% of the aggregate
Transaction Value received by the Debtors or its
shareholders or lenders for the Sales Transactions in excess
of the sum at closing of the senior revolver and senior term
loan plus the outstanding obligations under term loan B,
term loan C, term loan D, Capex line, the General Motors
Deficiency claims and the Harvard Note, after the
consideration of the Transaction Fee.
Giuliani Capital assures the Court that it does not represent any
interest materially adverse to the Debtors or their estates.
Headquartered in Farmington Hills, Michigan, Trim Trends Company,
LLC, -- http://www.trimtrendsco.com/-- manufactures automobile
and light truck component parts for both original equipment
manufacturers and Tier 1 suppliers. The Company and its debtor-
affiliates filed for chapter 11 protection on May 17, 2005 (Bankr.
E.D Mich. Case No. 05-56108). Joseph M. Fischer, Esq., at Carson
Fischer, P.L.C., represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed total assets of $65 million and total
liabilities of $81 million.
TRUMP HOTELS: Sells World's Fair Site for $12.5 Million to Robino
-----------------------------------------------------------------
Trump Plaza Associates, LLC, and the Official Committee of Equity
Security Holders jointly seek authority from the U.S. Bankruptcy
Court for the District of New Jersey to sell the World's Fair Site
in Atlantic City, New Jersey, to Robino Stortini Holdings, LLC,
and its assigns, for $12,500,000 pursuant to a purchase agreement,
subject to higher and better bids.
Pursuant to the Reorganized Debtors' Plan of Reorganization, the
Equity Committee obtained the right to sell the World's Fair Site
pursuant to a motion under Section 363 of the Bankruptcy Code.
The World's Fair Site will be sold according to procedures as are
mutually agreed between the Debtors and the Equity Committee
subject to a negative covenant, which prevents future owners or
any transferee, assignee, occupant or lessee from developing any
gaming activities on the Property.
The Stalking Horse Bidder
Daniel K. Astin, Esq., at The Bayard Firm, in Wilmington,
Delaware, relates that in mid-April, after confirmation of the
Plan, the Equity Committee received an expression of interest in
the World's Fair Site from Robino Stortini, which included:
* a purchase price of several million dollars more than the
$7.5 million valuation previously advanced by the Debtors;
* a period of 90 days for the Equity Committee to "shop" the
World's Fair Site for higher and better offers than Robino
Stortini's offer; and
* a break-up fee for Robino Stortini in the event that the
World's Fair Site was ultimately sold to another bidder.
After consulting with their joint real estate broker, Cushman &
Wakefield of Pennsylvania, Inc., the Equity Committee and the
Debtors negotiated with Robino Stortini for:
-- a decreased break-up fee,
-- an all-cash deposit,
-- an enhanced purchase price, and
-- an extended marketing period.
After agreeing to the additional concessions, Robino Stortini
provided the Equity Committee with a draft version of the
Purchase Agreement that reflected the revised terms of its offer.
The Equity Committee also received indications of interest on the
World's Fair Site from other parties, Mr. Astin states. After
consulting with C&W, the Equity Committee determined that Robino
Stortini's offer was superior to any other indication of interest
that the Equity Committee had received, especially in light of
the Robino Stortini's agreement to increase the purchase price to
$12.5 million.
Accordingly, the Equity Committee informed other interested
parties that they would not be selected as the Stalking Horse
Bidder, but are encouraged to appear at the Auction and bid on
the World's Fair Site.
Purchase Agreement
To ensure that the sale of the World's Fair Site would produce a
gross sale price of at least $12.5 million, the Equity Committee
opted to reach a binding agreement with the Stalking Horse
Bidder.
The Equity Committee is hopeful that C&W's marketing efforts will
generate a great deal of third-party interest in the World's Fair
Site, ultimately resulting in a robust overbid and auction
process. According to Mr. Astin, the Robino Purchase Agreement
will facilitate the overbid process, both by establishing
credibility for overbids well in excess of $12.5 million and by
providing a model for the terms of the offers required by Trump
Plaza (as nominal owner of the property) and the Equity Committee
(as the representative of the economic beneficiaries of the
Sale).
The significant terms of the Purchase Agreement are:
A. Purchase Price
$12,500,000 cash, subject to adjustment for taxes
B. Review Period
The Review Period for conducting due diligence will
terminate prior to the sale hearing.
C. Closing
The closing of the purchase and sale of the World's Fair
Site and payment to Trump Plaza of the Purchase Price will
occur:
a. 15 days after approval of the sale, or if that day is
a Saturday, Sunday or a legal holiday, then the next
day that is not a Saturday, Sunday or legal holiday;
or
b. on another date as may be agreed to in writing by
Trump Plaza and Robino Stortini.
D. Conditions Precedent
The conditions precedent to the Sale are:
a. the Sale Order will have been entered, not have been
stayed or be subject to a motion for stay and have
become final and non-appealable as of the Closing
Date;
b. there will have been no material adverse change since
the end of the Review Period in the matters reviewed
by Robino Stortini during the Review Period, except
to reflect those items approved in writing or
otherwise created by Robino Stortini;
c. all of Robino Stortini's representations and
warranties are true and correct in all material
respects;
d. Trump Plaza has performed all of its material
covenants, agreements and obligations under the
Purchase Agreement and is otherwise not in default;
and
e. Robino Stortini has obtained at its cost the required
title commitment.
The Equity Committee and Trump Plaza believes that the Sale is
the best way to maximize value for the benefit of the non-
affiliated shareholders.
The Equity Committee and Trump Plaza also seek the Court's
authority to sell the World's Fair Site free and clear of liens,
claims, encumbrances and interests.
Mr. Astin tells Judge Wizmur that all parties with an interest in
the Property have consented to the Sale.
The Equity Committee and Trump Plaza believes that the sale of
the World's Fair Site pursuant to the Robino Purchase Agreement
is the best way to maximize value for the benefit of the non-
affiliated shareholders.
Responses
A. Trump Organization
The Trump Organization LLC has repeatedly expressed its
interest to Trump Plaza and the Equity Committee in bidding on
the World's Fair Site, Scott Cargill, Esq., at Lowenstein
Sandler PC, in Roseland, New Jersey, relates. However, Trump
Plaza and the Equity Committee have completely ignored Trump
Organization's interest in the Property, Mr. Cargill says.
Trump Organization expressed its interest in the World's Fair
Site in two separate letters of intent sent to Trump Plaza and
the Equity Committee in May 2005 and in early June 2005.
Trump Organization also made repeated attempts to engage Trump
Plaza and the Equity Committee in discussions regarding its
interest and to establish a dialogue for improving its bid,
with the intent of becoming the stalking horse bidder. "In
fact, Trump [Organization] offered a purchase price
substantially higher than [Robino Stortini's] bid and . . .
offered to accept a break-up fee that was $110,000 lower than
the breakup fee being sought by [Robino]," Mr. Cargill
asserts.
According to Mr. Cargill, the Equity Committee rebuffed Trump
Organization at every turn. "From the start it was apparent
that the Committee was only interested in making [Robino] the
stalking horse bidder. Despite the fact that Trump
[Organization] had clearly submitted a higher and better offer
for the World's Fair Site, the Committee steadfastly pushed to
have its former member's offer become the stalking horse bid."
Robino Stortini was a member of the Equity Committee.
Trump Organization further complains that the proposed
Purchase Agreement provides distinct advantages to Robino that
are not made available to any other bidder.
The Equity Committee, Mr. Cargill says, should not be
permitted to manipulate the Court in a manner that will only
serve to benefit one of its former members. "The Committee
has apparently abandoned its fiduciary duties to its
constituents in favor of [Robino]."
Therefore, Trump Organization asks Judge Wizmur to deny
approval of the Robino Purchase Agreement.
B. NJ Sports Authority
As previously reported, the New Jersey Sports and Exposition
Commission Authority has filed responses on proceedings
related to the World's Fair Site. These proceedings implicate
the NJ Sports Authority's interest because it is a party to:
1. A lease agreement relating to parking under the West
Hall of the historic Atlantic City Convention Center,
which was entered in connection with the development of
a hotel on the World's Fair Site; and
2. An easement agreement pursuant to which an enclosed
loggia was constructed across the front of the East Hall
of the Atlantic Convention Center.
Jay Samuels, Esq., at Windels Marx Lane & Mittendorf, LLP, in
Princeton, New Jersey, points out that the Purchase Agreement
with Robino leaves Trump Plaza the option to include or
exclude the West Hall Parking Lease in the sale of the World's
Fair Site. NJ Sports Authority maintains that the ultimate
buyer cannot acquire rights under the West Hall Parking Lease.
If the buyer seeks to acquire the rights of the Lease, Mr.
Samuels says, it would need to make a specific application
under Section 365 of the Bankruptcy Code, to which the NJ
Sports Authority could in turn respond to have the issues
adjudicated. Even if it is argued that an application to
approve a sale could suffice to effect an assignment and
assumption, Mr. Samuels contends that due process would still
require notice and an opportunity for the NJ Sports Authority
to assert an effective response.
The NJ Sports Authority asks Judge Wizmur to:
a. direct Trump Plaza to give it prompt written notice of
any determination of the Debtor to include the West Hall
Parking Lease in the transaction with the buyer of the
World's Fair Site;
b. direct Trump Plaza to file a motion under Section 365
for approval of any requested assignment and assumption;
and
c. provide that any assignment and assumption will proceed
under the ordinary Rules of Court, and not on short
notice or with any discovery or other constraints,
unless agreed to by the NJ Sports Authority.
The East Hall Easement is included in the Plan's definition of
the World's Fair Site, Mr. Samuel notes. However, Trump Plaza
already terminated the East Hall Easement on January 1, 2001.
The NJ Sports Authority therefore asserts that the Purchase
Agreement must be redefined to exclude that Easement to avoid
future confusion.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005. (Trump Hotels
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
TRUMP HOTELS: Wants Approval for World's Fair Site Bid Protocol
---------------------------------------------------------------
The Official Committee of Equity Security Holders, in
consultation with Trump Plaza Associates, LLC, and real estate
broker, Cushman & Wakefield of Pennsylvania, Inc., and in
negotiations with Robino Stortini Holdings, LLC, has developed
bidding procedures for the sale of the World's Fair Site.
To maximize the return on the sale of the Property, the Equity
Committee and Trump Plaza jointly propose these bidding
procedures:
A. Marketing and Due Diligence
C&W will assume the primary responsibility for marketing the
World's Fair Site and soliciting overbids. Trump Plaza and
the Equity Committee will direct C&W any party who expresses
an interest in the World's Fair Site. C&W will provide the
Equity Committee, with a copy to Trump Plaza, regular written
reports regarding expressions of interest received and the
status of the marketing process.
B. Overbid Deadline
Overbids must be delivered to C&W, with copies to the Equity
Committee and Trump Plaza, and their counsel, by 4:00 p.m.
(Eastern Standard Time) on August 29, 2005, unless extended in
writing by the Equity Committee.
C. Qualified Overbids
To be considered as a Qualified Overbid, each Overbid must, at
a minimum:
-- be delivered to C&W by the Overbid Deadline;
-- include the most current audited and latest unaudited
financial statements and financial references of the
potential overbidder and identify the source of funding
for the purchase price, or, if the potential overbidder
is an entity formed to solely acquire the World's Fair
Site, include financials of the equity holders of the
potential overbidder, or other financial disclosures
reasonably acceptable to the Equity Committee;
-- include a full disclosure of the identity of each entity
that will be bidding or participating in connection with
the Overbid, and the entity's principals, as well as
their affiliations, if any, with Trump Plaza, the Equity
Committee and C&W and disclose all connections,
understandings and agreements to insiders, the Official
Committee or Trump Plaza;
-- identify whether the party submitting the Overbid is
represented by a broker and, if so, affirm that the
bidder will be solely responsible for compensating the
broker;
-- include an executed asset purchase agreement, subject to
substantially the same or more favorable terms and
conditions contained in, and marked to show changes
from, the Purchase Agreement with Robino Stortini,
except that the purchase agreement will:
* provide for a purchase price in cash of at least
$12,900,000,
* exclude any contingencies, conditions precedent or
other terms excusing the performance of the bidder
based upon it completing due diligence or obtaining
financing for the Sale, and including only the
representations and warranties as may be approved
by Trump Plaza,
* exclude any provision for any break-up fee,
termination fee, expense reimbursement, or similar
type of payment; and
* include an obligation to be bound by the terms of
the World's Fair Negative Covenant as set forth in
the Debtors' Plan of Reorganization;
-- remain irrevocable until the earlier of:
* the end of the first business day after the closing
of the Sale with the purchaser approved by the
Bankruptcy Court; and
* 60 days after the Sale Hearing; and
-- be accompanied by good funds of not less than
$1,275,000 payable to the order of Trump Plaza via
certified or bank check, or wire transfer.
D. The Auction
If the Equity Committee determines that no Qualified Overbids
have been received, it will not otherwise consider any
Overbids and will not hold an auction.
If the Equity Committee determines that any Qualified
Overbids have been received, the Equity Committee will conduct
an auction for the sale of the Property. The Auction will
take place on September [__], 2005 at [__:__] a.m. (Eastern
Standard Time) at Trump Plaza in Atlantic City, New Jersey.
Only parties that have submitted a Qualified Overbid and
Robino Stortini will be eligible to participate at the
Auction. The bidding will start at the purchase price
stated in the highest or otherwise best Qualified Overbid, as
determined in the Equity Committee's discretion, and will
continue in cash increments of at least $400,000.
Immediately prior to the conclusion of the Auction, the Equity
Committee will:
-- review the Robino Purchase Agreement and the Qualified
Overbids (each as amended or increased at the Auction)
on the basis of their financial and contractual terms;
-- identify the highest or otherwise best offer, based
principally on the cash amount of the offer and those
factors affecting the speed and certainty of
consummating the Sale; and
-- identify the next highest or otherwise best offer after
the Successful Bid.
No bids will be considered after the conclusion of the
Auction.
E. Sale Hearing
Assuming the Auction is held, the Equity Committee and Trump
Plaza will present the Successful Bid to the Court for
approval at a hearing to be held on September [__], 2005 at
[__:__] _.m. If no Auction is held, the Equity Committee and
Trump Plaza will present the Robino Purchase Agreement to the
Court for approval at the Sale Hearing.
The Equity Committee believes that adoption of the Bidding
Procedures will greatly facilitate the solicitation and
evaluation of third-party overbids for the World's Fair Site.
Accordingly, the Equity Committee and Trump Plaza jointly ask the
Court to approve their proposed Bidding Procedures.
U.S. Trustee Responds
Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, believes
that the proposed overbid of $400,000 is too high. A much lower
initial overbid is more likely to encourage additional bidding,
Ms. Stapleton says.
Accordingly, the U.S. Trustee suggests that initial overbid
requirement should be no more than $100,000 and any subsequent
bid be no more than $50,000.
The U.S. Trustee asserts that the playing field is not level for
all potential purchasers in that Robino Stortini Holdings LLC has
provided a $875,000 good faith deposit while other potential
purchasers must provide a $1,275,000 good faith deposit for their
offers to be considered.
"[T]he good faith deposit requirement should be reduced to
$875,000 for all potential purchasers," the U.S. Trustee tells
Judge Wizmur.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005. (Trump Hotels
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
TRUMP HOTELS: Robino Stortini Wants $360,000 as Break-Up Fee
------------------------------------------------------------
Robino Stortini Holdings, LLC, the stalking horse bidder for the
World's Fair Site, seeks protection in the event that it is
outbid during the marketing period of the property.
Daniel K. Astin, Esq., at The Bayard Firm, in Wilmington,
Delaware, explains that the protection, in the form of a Break-Up
Fee, is intended, in part, to compensate Robino Stortini for its
expenses incurred in negotiating a Purchase Agreement and serving
as the Stalking Horse Bidder.
By this motion, the Official Committee of Unsecured Creditors and
Trump Plaza Associates, LLC, seek approval from the U.S.
Bankruptcy Court for the District of New Jersey of a $360,000
Break-Up Fee to Robino Stortini.
The Break-Up Fee will become payable to Robino Stortini only:
-- in the event that one or more Qualified Overbids is
received;
-- if the sale is closed to a bidder other than Robino
Stortini and any of its affiliates, and then only upon the
closing; and
-- provided that Robino Stortini is not in breach of the
Purchase Agreement up to the closing of the Sale to another
bidder.
The Break-Up Fee, which is less than three percent 3% of the
Purchase Price is well within the range of reasonableness, Mr.
Astin contends.
U.S. Trustee Objects
The U.S. Trustee for Region 3 asks the Court not to grant Robino
Stortini the Break-Up fee.
Donald F. MacMaster, trial attorney for the U.S. Trustee, argues
that Robino has not made any significant showing that it incurred
any expenses in connection with its bid.
Mr. MacMaster notes that the motion does not provide evidence of
Robino Stortini's out-of-pocket or opportunity costs in
connection with the preparation of its bid. Robino was also a
member of the Official Committee of Equity Security Holders
throughout the Debtors' Chapter 11 cases, Mr. MacMaster adds.
The Equity Committee retained counsel and a financial advisor who
engaged in extensive discovery with the Debtors concerning the
value of the Debtors' assets, including the World's Fair Site,
Mr. MacMaster reminds Judge Wizmur. "In fact . . . the Committee
bargained for the right to sell the World's Fair Site for the
benefit of equity holders based upon the Committee's belief that
the World's Fair Site had significant value."
The U.S. Trustee believes that Robino Stortini, as a member of
the Equity Committee, had the benefit of all the work done by the
Committee and its professionals in valuing the World's Fair Site.
"The Committee has performed much, if not all, of the due
diligence necessary for Robino to formulate its bid," Mr.
MacMaster asserts.
Even if a break-up fee of some amount is warranted, the U.S.
Trustee contends that the requested Break-Up Fee is too high and
must be reduced. Comparing the proposed Break-Up Fee to the
cases that have analyzed break-up fees, the U.S. Trustee finds
that an almost 3% break-up fee is greater than the normal
break-up fees allowed in relation to the overall sales price.
The proposed Break-Up Fee is around 2.9% of the sales price of
the World's Fair Site.
Trump Organization Doesn't Like It Either
The Trump Organization LLC, which is interested in buying the
World's Fair Site, asks the Court to deny Robino's requested
break-up fee and modify the related sales procedures to remove
all advantages afforded to Robino that are unavailable to
competing bidders.
To the extent that Robino is unwilling to proceed as stalking
horse bidder without break-up fee protections, or without the
unique protections afforded to it by the Purchase Agreement,
Trump Organization continues to stand ready to act as the
stalking horse for the World's Fair Site without any break-up
fee. Moreover, Trump Organization is willing to provide Trump
Plaza and the Equity Committee with a 90-day period to market the
Property.
Alternatively, if the Court determines that under the
circumstances no stalking horse bidder is required, Trump
Organization insists that an auction and sale hearing should
proceed without a stalking horse bidder.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. nka Trump Entertainment Resorts, Inc. --
http://www.thcrrecap.com/-- through its subsidiaries, owns and
operates four properties and manages one property under the Trump
brand name. The Company and its debtor-affiliates filed for
chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No.
04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A.
Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and
Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N.
Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano,
P.A., represent the Debtors in their successful chapter 11
restructuring. When the Debtors filed for protection from their
creditors, they listed more than $500 million in total assets and
more than $1 billion in total debts. The Court confirmed the
Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005,
and the plan took effect on May 20, 2005. (Trump Hotels
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UNITED RENTALS: 10-K Filing Delay May Spur Fitch's Negative Watch
-----------------------------------------------------------------
Fitch Ratings said that the ratings for United Rentals, Inc., and
its principal operating subsidiary, United Rentals (North
America), Inc., may be placed on Rating Watch negative if the
company does not complete its 2004 Report on Form 10-K by Aug. 15,
2005.
URI announced on June 24, 2005, that the lenders under its secured
credit facility have agreed to allow the company until Dec. 31,
2005, to complete its 2004 10-K, as well as Reports on Form 10-Q
for 2005 interim periods, until after the company's 2004 results
are finalized.
A Rating Watch Negative placement would be driven by further
delays in the filing of URI's 2004 10-K beyond the period it is
required to complete the June 30, 2005 10-Q. URI has delayed
finalizing 2004 results to allow time to review matters relating
to the Securities and Exchange inquiry of the company; complete
work on an income tax restatement; complete the evaluation and
testing of internal controls required by Sarbanes-Oxley section
404 (SOX 404); and conduct additional testing of its self
insurance reserves in 2004 and prior periods. The size and scope
of this project may have been more comprehensive than Fitch had
previously anticipated, although the financial effect is not
significantly material.
Additionally, URI would be closer to the one-year time horizon
under which the NYSE allows companies to file financial statements
before considering potentially suspending the company's listing.
If URI's listing is suspended, it could reduce the company's
access to an important source of capital, common equity, and have
negative implications for financial flexibility.
Fitch's current ratings for URI and URNA are:
United Rentals, Inc.
-- Subordinated debt 'B'.
United Rentals (North America), Inc. (Guaranteed by United
Rentals, Inc.)
-- Senior secured debt 'BB';
-- Senior unsecured debt 'BB-';
-- Subordinated debt 'B'.
The Rating Outlook for both URI and URNA is currently Stable.
While Fitch believes that securing a waiver from its bank group to
extend the filing time for URI to complete its 2004 10-K is an
important step in completing its financial statements, it is also
recognized that this waiver does not include all of the company's
lenders. Therefore, URI could be put into default if 25% of the
non-bank lenders, for each issue, choose to do so. However, Fitch
views this as an unlikely scenario given management's
representations that URI's operating performance has trended
upward in 2005 as well as overall improvement in the domestic non-
residential construction sector.
Aside from the SEC investigation, there are two distinct financial
accounting challenges facing URI. During testing of the company's
internal controls, as required by SOX 404, URI determined that the
provision for income taxes was higher than required for the
reporting periods prior to 2004. URI has not finally determined
the ramifications this will have on specific periods, but
estimates the correction of this will result in a decrease in the
provision for income taxes for prior years by a total of
approximately $25 million, with a corresponding increase in net
income. URI expects that it will restate its financial statements
for the years 1999 through 2003 to correct the income tax
provision.
While it is believed that this will not have a material effect on
URI's financial statements prior to 2004, the scope of this
project is extensive given the size of the company's revenue
earning equipment portfolio.
The second area of focus as a result of the testing of the
company's internal controls, as required by adoption of SOX 404,
is URI's self-insurance reserves. URI self-insures itself for
claims of up to $2 million, currently. As such, URI's quarterly
operating expenses include a provision for future insurance
losses. Through nine months 2004, URI increased its reserve for
insurance losses to $68.7 million at Sept. 30, 2004 from $46.2
million at Dec. 31, 2004. In connection with SOX 404, URI will
need to demonstrate, in consultation with outside actuaries, that
its insurance provisions and reserves are appropriate.
Based in Greenwich, CT, URI is the largest equipment rental
company in the world as measured by equipment fleet and rental
revenue.
USINTERNETWORKING: Court Formally Closes Chapter 11 Cases
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland entered a
final decree closing USinternetworking, Inc., and its debtor-
affiliates' chapter 11 cases.
Carol L. Hoshall, Esq., at Whiteford, Taylor & Preston L.L.P., in
Baltimore, Maryland, told the Court that the Debtors' Modified
Second Amended Joint Chapter 11 Plan of Reorganization has been
substantially consummated.
As reported in the Troubled Company Reporter on June 14, 2005, the
Debtors paid $31,534,781 to secured creditors, $1,268,263
less than what's proposed in the Plan. Under the Plan, secured
creditors are to be paid $32,803,044. In September 2003, secured
creditors Fleet, Heller, and Storagetek agreed to an early payout
with reduction of balance of payments. In December 2003,
Compaq/HP agreed to an early payout with reduction of balance of
payments due.
Priority creditors were paid $1,768,871 as proposed in the Plan.
The Debtors paid their unsecured creditors $48,367,766,
$17,769,586 less than what's proposed in the Plan. The Plan
proposed to pay $66,137,352. In September 2003, unsecured
creditors Fleet, Heller, Storagetek agreed to an early payout with
reduction of balance of payments. In December 2003, Compaq/HP
agreed to an early payout with reduction of balance of payments
due.
The Debtors paid $8,254,091 to their professionals:
Professionals Fees Paid
------------- ---------
Accountants $6,933
Attorneys for Debtors 1,945,762
Other professional fees 6,153,396
U.S. Trustee quarterly fees 148,000
The Debtors paid creditors $81,671,418, $19,037,849 less than
what's proposed in the plan. The Plan proposed to pay creditors
$100,709,267. Unsecured creditors recovered 34% of their claims.
Headquartered in Annapolis, Maryland, USinternetworking, Inc., --
http://www.usi.com/-- the largest independent Application Service
Provider (ASP), specializes in managed enterprise solutions and on
demand services for Fortune 1000 companies. USi delivers
application outsourcing, remote management, professional services,
ISV enablement, and eBusiness development and hosting to more than
150 world-class organizations in over 30 countries. The Company
and its affiliates filed for chapter 11 protection on January 7,
2002 (Bankr. D. Md. Lead Case No. 02-50215). Paul M. Nussbaum,
Esq., at Whiteford, Taylor & Preston, represents the Debtors.
Lindsee P. Granfield, Esq., at Cleary, Gottlieb, Steen & Hamilton,
represented the creditors' committee.
A full-text copy of the DEBTORS' MODIFIED SECOND AMENDED JOINT
CHAPTER 11 PLAN OF REORGANIZATION dated May 3, 2002, is available
at no charge at http://researcharchives.com/t/s?1c
A full-text copy of Judge Derby's ORDER CONFIRMING DEBTORS'
MODIFIED SECOND AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION
dated May 7, 2002, and entered on May 8, 2002, is available at no
charge at http://researcharchives.com/t/s?1d
WINN-DIXIE: TRM Corp. Wants to Get Funds From Trust
---------------------------------------------------
Under a Master Location Agreement dated December 11, 2001,
between TRM Corporation and Winn-Dixie Montgomery, TRM agreed to
keep certain copier and related equipment at retail locations
owned and operated by Winn-Dixie Montgomery. Among its other
obligations, Winn-Dixie Montgomery agreed to collect all sums
paid for copies made on the equipment and to hold them in trust
for TRM, periodically remitting the amounts to TRM along with an
accounting.
TRM estimates that as of the February 21, 2005, Winn-Dixie
Montgomery or its related corporate entities held $2,351,57 in
Trust Proceeds for TRM pursuant to the Agreement. The Debtors
generally remit the Trust Proceeds to TRM on a monthly basis.
TRM wants the U.S. Bankruptcy Court for the Middle District of
Florida to find that the sums held in trust pursuant to the
Agreement are not property of the Debtors' bankruptcy estates.
Accordingly, TRM asks the Court to require the Debtors to turn
over all Trust Proceeds.
Debtors Respond
The Debtors point out that TRM wants the Debtors to turn over
prepetition proceeds despite the absence of any language in the
parties' contract creating a trust relationship.
The Debtors ask the Court to strike the Motion because it was
improperly noticed pursuant to the Court's negative notice
procedures set forth in Local Rule 2002-4.
In the alternative, the Debtors ask the Court to set the Motion
for hearing. The Debtors assert that the Motion should be denied
because the sums requested by TRM are not required to be held in
trust or segregated. Thus, there is no basis for a finding that
the sums are not property of the Debtors' estates.
The Debtors contend that TRM is incorrect in its assertion that
the prepetition proceeds generated from the use of the in-store
copy machines are held in trust and do not constitute property of
the Debtors' estates. Although the Agreement requires the
Debtors to collect all sums paid for copies and remit the portion
due to TRM, TRM does not point to any language in the Agreement
that provides that the sums collected are subject to a trust or
must be deposited into a separate account.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
WINN-DIXIE: Wants to Settle Trade Vendors' Reclamation Claims
-------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Middle District of Florida
to enter into a stipulation with trade vendors. The Stipulation
establishes a trade vendor lien program and procedures for the
calculation and treatment of trade vendors' reclamation claims.
Stephen D. Busey, Esq., at Smith Hulsey & Busey, in Jacksonville,
Florida, explains that reclamation generally allows a vendor to
regain possession of certain goods shipped on credit to an
insolvent purchaser where the vendor was unaware of the
purchaser's insolvency. Roughly 480 reclamation claims were sent
to the Debtors.
As previously reported, the Court established reclamation
procedures pursuant to which the Debtors would file a statement
of reclamation setting forth the extent and basis, if any, on
which the Debtors believe a reclamation claim is not factually or
legally valid or the amount that will be considered valid. In
addition, the Statement of Reclamation would identify with
specificity any defenses that are not Specific Reclamation
Defenses that the Debtors choose to reserve, notwithstanding any
payment of the Reconciled Reclamation Claim.
Reclamation vendors who disagree with the Reconciled Reclamation
Claim must indicate the dissent on the Statement of Reclamation
and return to the Debtors the Statement of Reclamation with
documents evidencing their reclamation claim. The Dissenting
Vendors were also entitled to seek documents from the Debtors
relating to their reclamation claim.
The reclamation procedures provided the mechanism pursuant to
which reclamation claims would be resolved, Mr. Busey says.
Based on the Debtors' analysis and conversations with reclamation
vendors, there were several factual and legal issues subject to
dispute. Rather than litigate these factual and legal issues,
the Debtors and the Vendors sought to resolve the Vendors'
reclamation claims and entered into negotiations to reach a
mutually satisfactory resolution. The negotiations resulted in a
program whereby a Vendors' reclamation claim would be resolved
and each reclamation vendor may opt to participate in the program
on the same terms as the Vendors.
The key terms and conditions of the Stipulation are:
(a) the establishment of a reconciliation process, as required
by the Reclamation Order;
(b) Participating Reclamation Vendors will provide favorable
postpetition trade credit, which will be secured by a
junior lien;
(c) an agreement with respect to:
* sufficiency of a reclamation demand;
* calculation of the reclamation window;
* determination of when goods are deemed received by the
Debtors;
* consumption rates in connection with the calculation of
reclamation claims; and
* methodology to calculate setoff;
(d) payment over 9 months of a Participating Vendors' Allowed
Reclamation Claim;
(e) any preference claim arising from transfers made before
February 10, 2005, will be waived against Participating
Vendors. Preference Claims arising from transfers made on
or after February 10, 2005, will be preserved, provided
Winn-Dixie identifies those claims on or before July 15,
2005;
(f) reclamation vendors and non-reclamation vendors may opt
into the Reclamation Settlement Program;
(g) the Debtors waive the Specific Reclamation Defenses,
including the "valueless" defense; and
(h) payment of certain reasonable legal fees of Vendors up to
$300,000.
Committee Responds
The Official Committee of Unsecured Creditors supports the
Stipulation and believes that it represents the best terms
available under the circumstances. The Committee points out that
the Stipulation provides:
-- powerful incentives for both Reclamation Vendors and other
vendors to provide favorable postpetition trade credit
terms to Winn-Dixie and to remain current on their
postpetition payables to the Debtors;
-- a simplified and streamlined process for the equitable
solution of reclamation claims, which should conserve many
working hours; and
-- fair consideration to the estates, including a significant
reduction of the general unsecured portion of the
Reclamation Vendors' claims, for waiving certain of the
estates' claims and defenses.
Importantly, the Committee believes that establishing the program
will allow the Debtors and their advisors to concentrate on their
operational restructuring and reorganization efforts.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
WINN-DIXIE: Willie McCrae Wants Stay Lifted to Liquidate Claim
--------------------------------------------------------------
Willie McCrae has a claim against Winn-Dixie Stores, Inc., and its
debtor-affiliates for violation of Title VII of the Civil Rights
Act of 1964 and the Florida Civil Rights Act.
On May 25, 2004, Mr. McCrae received a Notice of Right to Sue
from the United States Equal Employment Opportunity Commission,
which found "reasonable cause to believe that violations of the
statute(s) occurred."
Mr. McCrae wants to pursue the litigation so that he may
liquidate his claim against the Debtors. Mr. McCrae clarifies
that he does not seek an in personam judgment or relief against
the Debtors.
Accordingly, Mr. McCrae asks the U.S. Bankruptcy Court for the
Middle District of Florida to lift the automatic stay to liquidate
his claim against the Debtors.
* * *
The parties agree to schedule the Motion for final hearing on or
after September 19, 2005, and the continuation of the automatic
stay in effect pending the conclusion of that hearing.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
WSNET HOLDINGS: Court Confirms Chapter 11 Plan of Liquidation
-------------------------------------------------------------
The Honorable Larry E. Kelly of the U.S. Bankruptcy Court for the
Western District of Texas confirmed the chapter 11 plan of
liquidation for WSNet Holdings Inc. and its debtor-affiliates on
July 8, 2005.
CRT Satellite Investors LLC and Digital Satellite Lenders LLC
filed the Liquidation Plan and the Disclosure Statement on
April 19, 2005. Judge Kelly approved the Disclosure Statement on
June 6, 2005.
The Plan Proponents are respondents to a lawsuit commenced by the
Debtor's shareholders in the 200th Judicial District Court of
Travis County, Texas (Case No. GN200604). The Plan Proponents are
also respondents to an adversary proceeding commenced by the
Debtor's chapter 11 Trustee, Joseph D. Martinec.
The Adversary Proceeding seeks to recharacterize the debts owed to
the Plan Proponents' as equity. The Plan Proponents agreed to
subordinate their claims to general unsecured claims. CRT
Satellite asserted a $56,837,167 claim. Digital Satellite filed a
$4,395,521 proof of claim.
Judge Kelly concludes that the Liquidating Plan satisfies the
requirements for confirmation as required under Section 1129(a)
and Section 1129(b) of the Bankruptcy Code.
Terms of the Plan
The Plan Proponents will fund the Plan with $500,000 to pay
administrative claims, allowed priority claims and general
unsecured claims in exchange for:
* settlement and dismissal of the State Court Action;
* settlement and dismissal of the Equitable Subordination
Action; and
* dismissal of the Chapter 11 Trustee's Claims Objection.
The Plan Proponents' counsel, Stephanie S. Rosenberg, Esq., at
Bracewell & Guiliani LLP, in Houston, Texas, tells the Court
that the Debtor owns no meaningful assets, as it is simply a shell
holding company for World Satellite Network, Inc. The Debtor has
never had any operations and merely owns World Satellite's stock.
World Satellite's stock will be cancelled under World Satellite's
liquidation plan.
Administrative claims -- the Chapter 11 Trustee's attorney's fees,
totaling about $442,000 -- will be paid in full out of the Plan
Fund. General unsecured claims, comprised of settlement claims
aggregating around $13,000 plus interest at the prime rate, will
be paid in full on the effective date of the Plan.
Motorola, holding a $10,000,000 subordinated claim, will get
nothing.
Equity interests will be cancelled.
WSNet Holdings, Inc., through its subsidiary World Satellite
Network, Inc., provides satellite TV to cable companies.
Franchise and independent cable companies throughout the country
contract with WSNet to provide the programming, which they later
distribute to individual customers. The company offers nearly 200
channels of programming and serves more than 750,000 customers.
WSNet Holdings and World Satellite filed for chapter 11 protection
on Oct. 21, 2002 (Bankr. W.D. Tex. Case No: 02-14228). J. Maxwell
Tucker, Esq., and Jeff Carruth, Esq., at Winstead, Sechrest &
Minick, P.C., represent the Debtors in their restructuring
efforts.
* Chadbourne & Parke LLP Establishes Kazakhstan Office
------------------------------------------------------
The international law firm of Chadbourne & Parke LLP reported that
it has opened an office in Almaty, Kazakhstan. The office is
being staffed by six attorneys all of whom have been associated
with Coudert Brothers in Kazakhstan.
The Almaty team, led by Kenneth E. Mack, the managing partner of
the office, include associates Victor Mokrousov, Tatiana P.
Muratova, Yerzhan Kumarov, Elshat Seksembayeva and Sergei Vataev.
The establishment of the Almaty office extends Chadbourne's
significant presence in the CIS where it currently has offices in
Moscow, Kyiv and Tashkent, and expands its capabilities in oil and
gas and infrastructure projects.
Kazakhstan is the second largest energy market in the CIS, and has
grown 9% per year for the past three years. It is a major oil
exporting country, with growing reserves and production. As a
result, Kazakhstan is a vital region for many major pipeline and
other infrastructure projects in the CIS, as well as for the
development of other industry sectors.
"With the Kazakhstan energy sector attracting many foreign
companies and with its growing economy, the opening of this new
office is part of our strategic plan to better satisfy the needs
of our clients in the CIS," said Charles K. O'Neill, Chadbourne's
managing partner. "In addition, by bringing on board Ken and his
team who have extensive experience handling matters in the region,
we have expanded our network in the CIS and can offer our clients
increased capabilities."
Mr. Mack, 43, is a partner in Chadbourne & Parke, the affiliated
multinational partnership of Chadbourne & Parke LLP. He has spent
eight years of his career in Kazakhstan and has extensive
experience in the oil and gas, minerals, electric energy and
telecommunications sectors. His work has included negotiating and
drafting production sharing agreements, oilfield asset purchase
contracts, joint venture agreements, and other contracts. Mr.
Mack has been counsel to multinational companies in a variety of
investment disputes with private entities in Russia and
Kazakhstan. He also works on domestic and international corporate
matters. Prior to working at Coudert Brothers, Mr. Mack served as
the managing attorney of Steptoe & Johnson's Almaty office.
Mr. Mack received his B.A. from Hampshire College, an M.A. from
Columbia University, and a J.D. from Northeastern University.
"I am excited and pleased to be joining such a preeminent law firm
with its strong energy and project finance practices," said Mr.
Mack. "Chadbourne has the depth and breadth of experience,
particularly in the CIS to provide a full range of legal services
to client. I look forward to overseeing the Kazakhstan team, and
working with the Firm's international network of attorneys to
provide the highest level of service to our clients."
Ms. Seksembayeva, 47, has more than 20 years experience practicing
law in Kazakhstan, including more than 10 years working with
prominent Western law firms. Her practice focuses on corporate
transactions related to energy, natural resources and
telecommunications in Kazakhstan and other CIS countries, and she
also has extensive experience representing clients on litigation
matters.
Ms. Seksembayeva earned her J.D. from Kazakh State University
School of Law, and Ph.D. from Tashkent State University.
Mr. Mokrousov, 32, advises clients on a broad range of legal
issues with particular emphasis on corporate and energy matters.
He has worked on a number of cross-border transactions involving
mergers and acquisitions in oil and gas, telecommunications and
banking sectors. He also participated in privatization of state
oil companies and drafting of commercial laws for Kazakhstan in
connection with a World Bank project.
Mr. Mokrousov earned his LL.B. from Kazakh State National
University Faculty of Law and his LL.M from the University of
Minnesota Law School. He is a member of the New York Bar.
Mr. Vataev, 38, advises clients on complex project finance
transactions. He advises clients on structuring financial
transactions, including municipal financing and securitization.
Mr. Vataev has advised on insurance law and was involved in
restructuring a major bank in Kazakhstan.
He received his LL.B. from Kazakh National State University and a
LL.M. from the University of Virginia. He is a member of the New
York Bar.
Ms. Muratova, 37, specializes in financial leasing, corporate
finance, telecommunications and banking in Kazakhstan. She has
extensive experience on tax issues pertaining to business in
Kazakhstan and also advises clients on setting up joint ventures
in the oil and gas sector. On behalf of major foreign companies,
Ms. Muratova has successfully conducted numerous negotiations with
various Kazakhstan national companies on corporate, contractual
and licensing issues. She regularly assists major national and
international companies in securities-related matters, project
finance and intellectual property licensing.
Ms. Muratova received a Faculty degree from Almaty University of
Foreign Language and a law degree from Almaty State University.
Mr. Kumarov, 36, represents clients on a wide range of legal and
business issues in Kazakhstan. He has represented numerous
financial institutions on syndicated financings and project
finance transactions, and has counseled both issuers and
underwriters in numerous Eurobond offerings.
He earned his J.D. from Kazakh State Law University and a LL.M.
from Saint Louis University, School of Law.
"Chadbourne has handled significant transactions in Kazakhstan,
especially in the oil and gas sector, since we entered the CIS
market in 1990," noted Laura Brank, managing partner of the Moscow
office. "The opening of the Almaty office will further increase
our capabilities to service our clients in the CIS, as well as
globally on M&A, project finance and other transactional matters."
Chadbourne attorneys have been advising clients doing business in
the CIS for the past 15 years. The Firm's CIS practice with
offices in Russia, Ukraine, Uzbekistan and Kazakhstan represents
clients in large transactions as well as advising on day-to-day
legal issues in a range of areas, including banking, capital
markets and securities, investment funds, mergers and
acquisitions, privatizations, general corporate and tax, joint
ventures, secured/project and trade finance, energy, oil and gas,
telecommunications, real estate and litigation.
About Chadbourne & Parke LLP
Chadbourne & Parke LLP -- http://www.chadbourne.com/-- an
international law firm headquartered in New York City, provides a
full range of legal services, including mergers and acquisitions,
securities, project finance, corporate finance, energy,
telecommunications, commercial and products liability litigation,
securities litigation and regulatory enforcement, white collar
defense, intellectual property, antitrust, domestic and
international tax, reinsurance and insurance, environmental, real
estate, bankruptcy and financial restructuring, employment law and
ERISA, trusts and estates and government contract matters. The
Firm has offices in New York, Washington, D.C., Los Angeles,
Houston, Moscow, Kyiv, Kazakhstan, Warsaw (through a Polish
partnership), Beijing and a multinational partnership, Chadbourne
& Parke, in London.
About Chadbourne & Parke, A Multinational Partnership
In London, the Firm conducts its practice through Chadbourne &
Parke, a multinational partnership employing both English-
qualified solicitors and U.S. lawyers who work closely with other
Chadbourne offices to provide seamless service to international
clients. The London partnership offers a range of legal services
under both English and U.S. law and, in particular, focuses on
project finance, privatization, energy, capital markets, banking,
insurance and reinsurance, securitizations, structured finance,
corporate finance, litigation and products liability.
* Proskauer Rose Expands Paris Office with Six New Partners
-----------------------------------------------------------
Proskauer Rose LLP, an international law firm with over 625
lawyers in the U.S. and Europe, announced a significant expansion
of its Paris office with the addition of six partners from Rambaud
Martel, one of France's largest and most well-regarded law firms.
It is anticipated that they will be joined by approximately ten to
fifteen associates.
Joining as partners are:
-- Christophe Lapp,
-- Jean-Philippe Sorba,
-- Valerie Lafarge-Sarkozy,
-- Emmanuelle Payrau,
-- Philippe Goossens, and
-- Guillaume Kellner.
The six will strengthen Proskauer's flourishing international
litigation and corporate practices, bringing particular experience
in mergers and acquisitions, white collar defense, commercial
litigation, product liability, insurance, and public sector law.
The addition of this new team and its collective experience
working in Continental Europe, the United Kingdom and Africa
demonstrates Proskauer's deep commitment to international markets
and is a significant step in the firm's continuing global
expansion.
"We welcome our new partners and look forward to integrating their
expertise with our firm and practice groups," said Proskauer
Chairman Allen I. Fagin. "Their representation of major multi-
national companies in such industries as pharmaceuticals,
chemicals, telecommunications, construction, and manufacturing
further increases our depth and breadth of experience and will be
an invaluable asset to our firm moving forward."
"This is an exceptionally talented and accomplished group that
adds significant experience to critical areas of practice which
will permit our office to better meet the expectations of our
clients," said Jean-Luc Cuadrado, who heads Proskauer's Paris
office. "We are delighted to welcome them to our partnership."
Christophe Lapp
Mr. Lapp brings over 25 years experience in matters involving
international arbitration, strategic counseling and litigation,
particularly in the construction industry. He has been involved in
the negotiation of contracts and resolution of disputes for
significant projects around the world. Mr. Lapp is also an
experienced advisor to professional service organizations on law
and code issues relating to procurement law, antitrust advice and
public administrative liability. He received his Masters in Law
from Reims University.
Jean-Philippe Sorba
Mr. Sorba has a range of competencies encompassing white collar
defense work, public construction law, negotiations and
litigation, urban planning and renovation, and environmental
regulation. He has a Masters in Law from Toulouse University and a
DES of Construction Law from Poitiers University.
Valerie Lafarge-Sarkozy
Ms. Lafarge-Sarkozy is experienced in precontentious and
contentious civil liability matters in industrial projects. She
also handles product liability matters, especially in the
pharmaceuticals, cosmetics and food industries, and works
extensively in the field of professional liability of banks,
executives, statutory auditors and accountants.
She received her Masters of Business Law from Paris II University.
Emmanuelle Payrau
Ms. Payrau concentrates on insurance litigation related to
construction, engineering, industrial and scientific activities in
addition to liability issues relating to contractors,
manufacturers, directors and officers. She holds a Diploma of High
Political Studies and a Masters of Business Law from Paris
University.
Philippe Goossens
Mr. Goossens concentrates his practice on white collar criminal
affairs and complex litigation. He also represents major
construction companies, statutory auditors and advises on criminal
aspects of economic laws. He holds a Masters of Business Law and
Masters in Judicial Careers from Paris University.
Guillaume Kellner
Mr. Kellner concentrates on corporate law, mergers and
acquisitions and securities law. He has represented a number of
Europe's leading companies in transactional matters. He holds a
Masters of Business Law and DES-DCJE of European Law from
Strasbourg University.
Proskauer's International Strategic Advisor, Erik Scudder, of New
York's Sivin Tobin Associates, is acting as senior advisor to the
firm on its European expansion.
Proskauer Rose -- http://www.proskauer.com/-- founded in 1875, is
one of the largest law firms headquartered in the United States,
providing a wide variety of legal services to clients throughout
the United States and around the world from offices in New York,
Los Angeles, Washington, D.C., Boston, Boca Raton, Newark, New
Orleans and Paris. The firm has wide experience in all areas of
practice important to businesses, including corporate finance,
mergers and acquisitions, general commercial litigation, private
equity and fund formation, patent and intellectual property
litigation and prosecution, labor and employment law, real estate
transactions, bankruptcy and reorganizations and taxation. Its
clients span industries including chemicals, entertainment,
financial services, health care, hospitality, information
technology, insurance, internet, manufacturing, media and
communications, pharmaceuticals, real estate investment, sports,
and transportation.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSA (94) 299 86
Akamai Tech. AKAM (111) 202 75
Alliance Imaging AIQ (54) 608 14
Amazon.com Inc. AMZN (162) 2,472 720
AMR Corp. AMR (697) 29,167 (2,311)
Atherogenics Inc. AGIX (54) 254 235
Biomarin Pharmac BMRN (90) 181 3
Blount International BLT (238) 434 115
Builders Firstso BLDR (9) 709 245
CableVision System CVC (2,035) 11,141 410
CCC Information CCCG (113) 93 12
Centennial Comm CYCL (486) 1,467 124
Choice Hotels CHH (204) 276 (23)
Cincinnati Bell CBB (593) 1,919 (8)
Clorox Co. CLX (346) 3,756 (158)
Compass Minerals CMP (69) 707 139
Conjuchem Inc. CJC (22) 32 28
Delphi Corp. DPH (3,880) 16,998 588
Delta Airlines DAL (6,352) 21,737 (2,968)
Deluxe Corp DLX (150) 1,556 (331)
Denny's Corporation DENN (263) 496 (82)
Domino's Pizza DPZ (526) 450 26
Eagle Hospitality EHP (26) 177 N.A.
Echostar Comm-A DISH (1,830) 6,579 148
Emeritus Corp. ESC (133) 716 (106)
Flow Intl. Corp. FLOW (9) 136 (3)
Foster Wheeler FWLT (520) 2,140 (213)
Freightcar Amer. RAIL (23) 208 8
Graftech International GTI (35) 1,029 265
ICOS Corp ICOS (38) 285 170
IMAX Corp IMAX (40) 235 24
Investools Inc. IED (16) 56 (36)
Isis Pharm. ISIS (104) 176 61
Jorgensen (Earle) JOR (186) 659 186
Knoll Inc. KNL (3) 570 67
Lodgenet Entertainment LNET (72) 287 22
Maytag Corp. MYG (78) 2,954 380
McDermott Int'l MDR (232) 1,450 34
McMoran Exploration MMR (24) 405 143
Nexstar Broadc - A NXST (30) 700 16
Northwest Airline NWAC (3,273) 13,821 (1,204)
NPS Pharm Inc. NPSP (57) 351 261
ON Semiconductor ONNN (363) 1,112 237
Owens Corning OWENQ (8,271) 7,671 1,250
Primedia Inc. PRM (777) 1,883 164
Quality Distrib. QLTY (29) 386 15
Qwest Communication Q (2,564) 24,129 469
Revlon Inc. - A REV (1,065) 1,155 99
RH Donnelley RHD (127) 3,972 (57)
Riviera Holdings RIV (27) 223 5
Rural/Metro Corp. RURL (184) 221 18
SBA Comm. Corp. A SBAC (104) 854 9
Sepracor Inc. SEPR (351) 974 605
St. John Knits Inc. SJKI (52) 213 80
Tivo Inc. TIVO (1) 151 48
US Unwired Inc. UNWR (84) 413 45
Vector Group Ltd. VGR (31) 505 152
Vertex Pharm. VRTX (8) 484 202
Vertrue Inc. VTRU (50) 451 (81)
Viropharma Inc. VPHM (6) 190 58
Warner Music Group WMG (137) 4,742 (506)
WR Grace & Co. GRA (629) 3,464 876
*********
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.
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*** End of Transmission ***