/raid1/www/Hosts/bankrupt/TCR_Public/050908.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 8, 2005, Vol. 9, No. 213
Headlines
ADELPHIA COMMS: Exchanges Barbs with Arahova Panel Over Appeals
AES GENER: Fitch Holds BB Rating on $400 Million Senior Notes
ALLIED HOLDINGS: Panel Hires Nelson Mullins as Local Counsel
ALLIED HOLDINGS: Panel Names Faskens Martineau as Canada Counsel
AMERICAN BUSINESS: CCO Mortgage Wants to Continue Foreclosure Move
ANCHOR GLASS: Disputes GGC LLC's Ownership of Molds
ATA AIRLINES: Wants to Sell More Chicago Express Assets for $2.1M
ATC HEALTHCARE: Enters into $8.2 Million Debt-for-Equity Swap
BLUE HERON: Fitch Puts BB Rating on Class E Additional Interest
BONUS STORES: William Kaye Has Until Nov. 14 to Object to Claims
BROKERS INC: Wants Engineering Tectonics to Assess N.C. Property
CANNONDALE CORP: Admin. Claims Bar Date Extended to September 30
CAPITAL ONE: Names Pierre Leroy to Board of Directors
CARMIKE CINEMAS: S&P Revises Credit Rating's Outlook to Negative
CATHAY GENERAL: Has Right to Buy 41% of Great Eastern Bank's Stock
CCH I: S&P Junks Proposed $3.525 Billion Senior Secured Notes
CELLSTAR CORP: Grant Thornton Expresses Going Concern Doubt
CELLSTAR CORP: Has Until Oct. 18 to File Financial Statements
CENTURY/ML CABLE: Bankr. Court Confirms Plan of Reorganization
COLLINS & AIKMAN: Committee Insists on Hiring A&M & Chanin Capital
COLLINS & AIKMAN: Wants to Walk Away from Three Burdensome Leases
COLONIAL EXETER: Wants Court to Dismiss Chapter 11 Case
COMDIAL CORP: Court Approves $20 Million Purchase by Vertical
CRYSTAL QUALITY: Case Summary & 20 Largest Unsecured Creditors
D & K STORES: Gets Court Approval to Reject Five Burdensome Leases
DAVID WESTERLUND: Case Summary & 20 Largest Unsecured Creditors
DEL MONTE: Earns $16.2 Million of Net Income in First Quarter
DELTA AIR: Registers 25 Million Common Shares Under Savings Plan
DELTA AIR: Swaps Preferred Stock & Dividends with Common Shares
DIRECT INSITE: Registers 1,080,005 Common Shares for Resale
DRESSER INC: KPS Special Inks Pact to Buy Instruments Division
ENRON CORP: WestLB Holds $539 Million Allowed Unsecured Claim
ENRON CORP: Penske Logistics Holds $311,903 Allowed Admin. Claim
ENTRAVISION COMMS: S&P Rates Planned $650M Sr. Sec. Facility at B+
EXIDE TECHNOLOGIES: Names Phillip Damaska as VP & Corp. Controller
FEDERAL-MOGUL: FM Products Unit Inks Amended Montebello Lease
FORD MOTOR: Reviewing Multi-Billion Bids for Sale of Hertz Unit
FRONTIER INSURANCE: Court OKs $1M Sale of NY Property to Vanguard
FRONTIER INSURANCE: Gets Court OK to Hire Belgard Realty as Broker
GERDAU S.A.: Fitch Puts BB- Rating on Proposed $300MM Bond Issue
GLYCOGENESYS INC: Registers 755,742 Common Shares for Resale
GT BRANDS: Wants Until Jan. 9 to Make Lease-Related Decisions
HEALTHSOUTH CORP: Jon F. Hanson to Replace Robert May as Chairman
HONEY CREEK: Section 341(a) Meeting Slated for September 28
HONEY CREEK: Creditors Must File Proofs of Claim by December 27
INDUSTRIAL ENTERPRISES: Securities Trading Transferred to OTCBB
INTERSTATE BAKERIES: Names Kent Magill as Gen. Counsel & Secretary
JAMES SANCHEZ: Case Summary & 13 Largest Unsecured Creditors
KAISER ALUMINUM: Court May Approve Disclosure Statement This Week
KAISER ALUMINUM: Trustees to Govern Asbestos Allocation Procedures
KERASOTES SHOWPLACE: S&P Places B Corporate Credit Rating on Watch
KMART CORP: G. Carbajo Asks Court to Deem Claim as Timely Filed
KNOLL INC: Inks Commitment Letter for $450 Million Credit Facility
LOEWS CINEPLEX: S&P Revises Outlook on B Rating to Negative
MARQUEE HOLDINGS: S&P Revises Credit Ratings' Outlook to Negative
MCI INC: Board of Directors Approves Broad-Based Retention Program
METRIS MASTER: Fitch Places BB+ Rating on Class D Secured Notes
MIRANT CORP: Asks Court to Approve Consent Order with NY DEC
MIRANT CORP: Gets Court Okay to Expand Scope of Hiscock's Services
MONTROSE WHOLESALE: Case Summary & 7 Largest Unsecured Creditors
MOSAIC GROUP: Court Converts Chapter 11 Cases to Chapter 7
MOSAIC GROUP: Section 341(a) Meeting Slated for October 24
MYSTICAL FORTUNE: Case Summary & 35 Largest Unsecured Creditors
NEW WORLD: PBGC Wants Court to Disapprove Disclosure Statement
OMNI FACILITY: Delta Air Wants Stay Lifted to Sue Maintech Unit
ORGANIZED LIVING: Retains Burkhardt & Co. to Prepare Tax Returns
PROTOCOL SERVICES: Taps Murray Devine as Valuation Professionals
QUIGLEY CO: Disclosure Statement Hearing Set for Sept. 28
RAEBECK CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
RELIANCE GROUP: Disclosure Statement Hearing Set for September 21
RELIANCE GROUP: Committee Hires Gage Spencer as Special Counsel
RESTAURANT CO: S&P Lowers Corporate Credit Rating to B from B+
RHODES INC: Employs DJM Asset to Sell 16 Properties in Five States
SAINT VINCENTS: Asks Court to OK Brokerage Deal with Massey Knakal
SAINT VINCENTS: Wants to Lease Cherry Creek's Medical Equipment
SAINT VINCENTS: Wants to Continue SSI Surgical's Service Agreement
SEARS HOLDINGS: J.P. Morgan to Buy CDN Unit's 10M Credit Accounts
STELCO INC: Ontario Court Extends CCAA Stay to September 23
STELCO INC: Court Names Hon. Coulter Osborne as Special Officer
TELECOM ARGENTINA: Successful Restructuring Cues Fitch's Upgrade
TERAFORCE TECHNOLOGY: U.S. Trustee Picks 4-Member Creditors Panel
TERAFORCE TECHNOLOGY: Committee Wants Locke Liddell as Counsel
TERAFORCE TECH: Court Okays Use of Bean Group's Cash Collateral
TOWER AUTOMOTIVE: Says Federal Insurance Must Pay Defense Costs
TOWER AUTOMOTIVE: Court Okays Stipulation on Setoff with Visteon
TOWER AUTOMOTIVE: Appoints David DiRita as Senior Vice President
TRM CORP: Registers & Distributes 715K Common Shares to Employees
TRM CORP: Buying Travelex UK's ATM Business for EUR43.4 Million
TRM CORP: S&P Places B+ Corporate Credit Rating on Negative Watch
TRUMP HOTELS: Treasury Department Files Claim for $41.8 Million
TRUMP HOTELS: Objects to 28 Claims Filed by Non-Debtor Affiliates
TRUMP HOTELS: James Clancy Asks Court to Extend Claims Bar Date
UAL CORP: Files Reorganization Plan & Disclosure Statement in Ill.
UAL CORP: Reports Preliminary August 2005 Traffic Results
UNITED HOSPITAL: Volvo Finance Wants to Repossess 2002 S60 Vehicle
US MINERAL: Asbestos Panel Wants McCarter Settlement Pact Approved
VILLAS AT HACIENDA: Selling Assets to Wells Property for $27.1MM
WALTER INDUSTRIES: HSR Waiting Period on Mueller Purchase Expires
WATTSHEALTH FOUNDATION: Employs McDermott Will as Special Counsel
WATTSHEALTH: Wants to Continue Hiring Ordinary Course Profs.
*********
ADELPHIA COMMS: Exchanges Barbs with Arahova Panel Over Appeals
---------------------------------------------------------------
Adelphia Communications and its debtor-affiliates objected to the
request of the Ad Hoc Committee of Arahova Noteholders, as holders
of more than $550 million in senior notes issued by Arahova
Communications, Inc., for leave to file appeals to the U.S.
District Court for the Southern District of New York regarding:
1. Order denying the Arahova Committee's motion to strike the
ACOM Debtors' 2005 Amended Schedules;
2. Order denying the Arahova Committee's motion to prosecute
intercompany claims and causes of action;
3. Order denying the Arahova Committee's motion to compel or
to strike the Debtors' factual assertions; and
4. Order approving the Debtors' proposed Resolution
Procedures.
Brian E. O'Connor, Esq., at Willkie Farr & Gallagher, in New York,
relates that these four Bankruptcy Court Orders, relate to the
Resolution Process to resolve inter-creditor disputes as an
adjunct to the confirmation process.
The ACOM Debtors believe that the Orders are all interlocutory in
nature. The Debtors assert that a grant of leave to appeal from
the Orders would violate the long-standing policies of avoidance
of piecemeal litigation and postponement of appellate review
until after the entry of a final order.
Therefore, the ACOM Debtors ask the U.S. Bankruptcy Court for the
Southern District of New York to deny the Arahova Committee's
request.
According to O'Connor, the issues to be determined at the decision
stages of the Resolution Process are core matters within the
Bankruptcy Court's special expertise. If the Bankruptcy Court
does make substantive determinations at the conclusion of the
Process that are adverse to the Arahova Committee, the Arahova
Committee would still be able to appeal from those determinations
and seek review of the Order at the same time.
Granting the Arahova Committee leave to appeal now will neither
materially advance the date of trial of the issues that are
subject of the Order in Aid of Confirmation nor lessen the length
of the trial, Mr. O'Connor points out. If the Court grants
leave, reverses the Order and approves a process proposed by the
Arahova Committee, there would still be no material differences
in the trial schedule established in the Order. Thus, the ACOM
Debtors conclude, there is no principled reason why the Court
should permit an interlocutory appeal now.
Mr. O'Connor notes that a party may still seek appeal from a
Bankruptcy Court's interlocutory order under the collateral order
doctrine and Section 158(a)(3) of the Judiciary Code. However,
Mr. O'Connor contends, none of the Orders is properly reviewable
under either of these standards.
The Orders are not reviewable under the Collateral Order Doctrine
because each does not conclusively determine a disputed question,
Mr. O'Connor explains. Moreover, he adds, the Orders will be
fully reviewable upon final judgment.
The Orders are not also reviewable under Section 158(a)(3)
because each does not involve a controlling question of law and
immediate appeal will not materially advance the ultimate
termination of the litigation.
Arahova Committee Talks Back
The Arahova Committee says that the objecting parties'
contentions that the Orders are "purely procedural" and "resolve
no substantive issues of law of any kind" are wrong.
Douglas P. Baumstein, Esq., at White & Case LLP, in New York,
points out that the Order approving the Resolution Procedures
resolves a number of crucial substantive legal issues, including:
-- whether, consistent with black-letter bankruptcy law, each
of the ACOM Debtors is required to protect the assets of
its estate and the interests of its constituencies by, at a
minimum, assisting in the prosecution of claims by and
against it;
-- whether each Debtor must be represented in its own
bankruptcy case by independent counsel in respect of the
inter-Debtor dispute issues;
-- whether it is improper to have the interests of each
individual Debtor estate or group of Debtor estates
represented solely, if at all, by ad hoc creditor groups
lacking access to all relevant materials and an independent
member of management; and
-- whether it is a violation of the Bankruptcy Code and Rules:
(i) not to require that related Debtors file claims or
adversary proceedings against affiliated Debtors
before obtaining right to payment, thereby giving
each Debtor notice of the claim, basis for it and an
opportunity to be heard;
(ii) to create a single omnibus hearing to resolve all
disputed issues among all estates; and
(iii) by not resolving issues concerning the Amended
Schedules, to leave open fundamental questions as to
the burden of proof that each Debtor bears in
proving or defending claims concerning its estate.
"One cannot seriously contend that these 'procedural' issues do
not have significant substantive repercussions," Mr. Baumstein
says.
The Arahova Committee notes that the oppositions fail to cite any
authority showing that the Orders, and their resolution of
substantive issues, is permissible under the Bankruptcy Code.
"Having failed to provide any substantive support for the Orders,
the oppositions ultimately rely heavily on the contention that
any errors by the Bankruptcy Court can be resolved at the end of
the resolution process," Mr. Baumstein states. The Arahova
Committee believes that the oppositions, in advancing this
argument, are contradictory.
The whole point of the Resolution Process is to resolve the
issues fully and finally. If there are errors, Mr. Baumstein
says, they should be fixed now. If not, the Arahova Committee
expects that a reversal later will result in either of two
outcomes:
-- the sale will be put on hold for sufficient time to
conduct the resolution in an orderly fashion; or
-- the sale will close before the parties can exercise
their appellate rights.
"It simply makes sense . . . to resolve such substantial issues
now rather than risk having them be swept under foot in the
stampede to conclude the Time Warner/Comcast Sale," Mr. Baumstein
maintains.
The Arahova Committee insists that it should be granted leave to
appeal the Orders because:
a. under the flexible standard adopted by the Bankrupt Court,
the District Courts are advised to take a common sense
approach to granting appeals;
b. the Orders are Collateral Orders appropriate for immediate
review; and
c. the Orders are appealable pursuant to Section 1292(b) of
the Judiciary Code.
The Arahova Committee further asserts that its appeal must be
reviewed as soon as possible.
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.
104; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AES GENER: Fitch Holds BB Rating on $400 Million Senior Notes
-------------------------------------------------------------
Fitch Ratings has affirmed the international senior unsecured
local and foreign currency ratings of AES Gener S.A. and the
US$400 million senior notes due 2014 at 'BB'. The Rating Outlook
for these ratings remains Stable.
The ratings reflect the successful financial strategy implemented
by the company and subsidiaries during 2004, which resulted in an
improved capital structure and increased financial flexibility,
consistent with Fitch's expectations. In 2005, Gener has
continued to optimize its financial performance, improving
liquidity. The ratings of Gener are also supported by its
position as the largest thermal generator in Chile, its operating
strategy to optimize contract electricity sales, diversify
operations, a constructive regulatory environment, and experienced
management. The rating also considers the current exposure to
natural gas supply availability from Argentina, variations in
hydrology, commodity price risks, and currency risks
During 2004, Gener focused on strengthening its financial profile,
reducing debt and improving liquidity. The company refinanced
US$700 million of debt under more favorable terms and reduced
total debt by US$300 million. In addition to its
recapitalization, Gener also renegotiated US$151 million of
consolidated debt associated with the TermoAndes and InterAndes
projects to extend maturities to 2010, improving the amortization
schedule and reducing debt by US$62 million. Chivor, Gener's
Colombian subsidiary also successfully refinanced US$260 million
debt extending debt maturities up to 2014.
During the first half of 2005, Gener handled the impact of the
natural gas curtailments - which affected gas-fueled
thermoelectric plants in Chile, including Gener's subsidiary
Electrica Santiago owner of the 370 MW natural gas and diesel
combined cycle in the Central Interconnected System, Nueva Renca -
by implementing natural gas swaps agreements with Argentinean
generators and natural gas transfer agreements with other Chilean
generators.
In addition, Nueva Renca's dual-fuel capability allowed the plant
to continue operating even during the most severe curtailments by
switching from gas to diesel oil without removing the plant from
service. The effect of the gas restrictions in the SIC was
counteracted by an improvement in the operating results in the two
other systems in which it is present, the Northern Interconnected
System in Chile and Colombia.
AES Gener reported EBITDA -to-interest of 3.2 times for the
12 month period ended in June 2005, compared to 2.7x for the same
period ended June 2004. The ratios were constrained by lower
natural gas availability to the SIC, the SIC's drier hydrology in
the first half and the evolution of fuel prices which resulted in
high electricity spot prices, combined with its current
contractual position. In the second half, Fitch expects the
company to benefit from an increase in node prices related to a
recent approved electricity law, improved natural gas availability
and better hydrology as a result of the rainfall in the SIC
recorded between June and August of this year. The company has
lowered its contractual exposure thereby limiting the financial
impact of future natural gas restrictions.
Gener is the second-largest electricity-generation group in Chile
in terms of operating revenue and generating capacity with an
installed capacity of 2,428 MW, composed of 2,157 MW of thermal
and 271 MW hydro generating capacity. The company currently
participates in electricity generation in Colombia (1,000 MW),
Argentina (642.8 MW)and the Dominican Republic (a 25%
participation in a 586.5 MW thermo generation plant), as well as
natural gas transportation in Chile and Argentina. The company is
98.79% owned by AES.
AES Gener's securities are traded in the United States and are
registered in the Securities and Exchange Commission. SEC filings
on the company are available for free at
http://ResearchArchives.com/t/s?164
ALLIED HOLDINGS: Panel Hires Nelson Mullins as Local Counsel
------------------------------------------------------------
The Official Committee of Unsecured Creditors of Allied Holdings,
Inc., and its debtor affiliates tells the Hon. W. Homer Drake of
the U.S. Bankruptcy Court for the Northern District of Georgia
that its lead counsel, Bingham McCutchen LLP, does not have
offices in the Atlanta, Georgia, area.
For that reason, the Committee decided to hire Nelson Mullins
Riley & Scarborough, LLP, to:
(a) act as its local co-counsel and assist Bingham in the
preparation and filing of pleadings, and provide advice as
to local rules, customs, and practices in the Northern
District of Georgia;
(b) assist it in investigating and analyzing the acts,
conduct, assets, liabilities, and financial condition of
the Debtors, the operations of the Debtors' businesses and
the desirability of its continuance;
(c) participate in the formulation of one or more plans of
reorganization, advise the Committee as to the feasibility
of one or more Chapter 11 plans of reorganization, and
assist the Committee in advising unsecured creditors of
its determinations as to any plan formulated;
(d) consult, discuss, and negotiate with representatives of
Debtors and other interested parties concerning
administration of the Cases and provisions of one or more
plans of reorganization;
(e) investigate, analyze, and evaluate potential claims of
the Debtors' estates, including claims for recovery of
avoidable transfers under the Bankruptcy Code;
(f) investigate, analyze, and evaluate the Debtors' requests
to obtain credit or incur debt;
(g) advise on the desirability of proposed sales of assets
of the Debtors and distributions of its proceeds;
(h) represent the Committee at any hearings or conferences
with regard to administration of the case and prepare and
file appropriate pleadings and papers in its connection;
(i) prepare and file motions, complaints, applications, and
other pleadings and papers as may be appropriate or
required to represent the Committee; and
(j) represent and assist with regard to any and all other
matters relating to administration of the Cases,
disposition of assets, and protection of the rights and
position of the unsecured creditors and the estates.
Mr. Desai relates that in the months prior to the Petition Date,
Nelson Mullins informally represented an ad hoc committee of
bondholders that was formed to assist the Debtors in obtaining
refinancing for existing debt or to restructure the Debtors'
existing debt. Thus, the Committee believes that Nelson Mullins
has gained a general knowledge of the Debtors and their finance
structure, which would prove valuable to the Committee.
Mr. Desai assures the Court that hiring Nelson Mullins will not
result in a duplication of effort, though the Committee may seek
advice from both the firm and Bingham on certain issues.
Nelson Mullins' current hourly rates are:
Attorneys $175 - $1,000
Paralegals/project assistants $100 - $350
Richard B. Herzog, Jr., Esq., is the firm's lead counsel with
primary responsibility to represent the Committee. His current
standard hourly rate is $475.
Mr. Herzog tells the Court that the firm does not presently
represent any other entity having an interest adverse to the
Committee in connection with the Debtors' cases. Mr. Herzog
assures the Court that the firm is a "disinterested person" as
defined in Section 101(14) of the Bankruptcy Code.
Nelson Mullins Riley & Scarborough LLP --
http://www.nelsonmullins.com/-- has more than 350 attorneys
practicing from offices in Atlanta, Charleston, Charlotte,
Columbia, Greenville, Myrtle Beach, Raleigh, Washington D.C. and
Winston-Salem.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Panel Names Faskens Martineau as Canada Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Allied Holdings,
Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for
the Northern District of Georgia for permission to retain Faskens
Martineau DuMoulin, LLP, as special counsel to represent it in all
matters affecting the Debtors or their property and assets in
Canada, nunc pro tunc to August 16, 2005.
According to Anand Desai, a partner at Eton Park Capital
Management, L.P., and chair of the Official Committee of Unsecured
Creditors, Faskens is particularly well suited for the type of
representation required by the Committee. Faskens has both a
national and international practice, with more than 580 lawyers in
eight offices in British Columbia, Alberta, Ontario, Quebec,
United States, England and South Africa and has experience in
insolvency and restructuring and banking and finance matters,
including cross-border proceedings and transactions.
Mr. Desai relates that Faskens is expected to:
a. represent the Committee at Canadian hearings and any
other related proceedings;
b. assist the Committee and its United States professional
advisors in analyzing the claims of the Debtors' creditors
from a Canadian perspective and, if required, in
negotiating with the creditors;
c. assist with the Committee's investigation of the assets,
liabilities, and financial condition of the Debtors in
Canada and of the operations of the Debtors' Canadian
businesses;
d. assist the U.S. Advisors from a Canadian perspective in
their analysis of, and negotiations with, the Debtors or
any third party concerning matters related to, among other
things, formulating the terms of a plan or plans of
reorganization for the Debtors;
e. assist and advise the U.S. Advisors with respect to
any matters that they may request involving issues of
Canadian law or practice;
f. review and analyze all pleadings, orders, statements
of operations, schedules, and other legal documents in the
Canadian proceedings or any other proceedings in Canada
relating to the Debtors or their property, assets or
businesses;
g. prepare on behalf of the Committee any pleadings, orders,
reports and other legal documents as may be necessary in
furtherance of the Committee's interests and objectives
regarding Canadian matters; and
h. perform all other legal services as described by the
Committee and its U.S. Advisors, which may be necessary and
proper for the Committee to discharge its duties in the
Debtors' Chapter 11 proceedings.
Faskens' hourly fees in Canadian currency are:
Designation Hourly Rate
----------- -----------
Partners C$400 - C$800
Associates C$285 - C$490
Students C$175
Paralegals C$55 - C$260
Mr. Desai informs the Court that Faskens has been asked to conduct
a review of security held by certain creditors of the Debtors in
relation to security registrations made in or property and assets
of the Debtors situated in Canada. "Where possible, Faskens will
conduct this review using its own professionals," Mr. Desai says.
Mr. Desai further tells the Court that in Canadian provinces where
Faskens does not have offices -- Newfoundland, Prince Edward
Island, New Brunswick, Manitoba and Saskatchewan -- Faskens is
retaining local agents to assist with the work and will include
the accounts of the agents as a disbursement within the Faskens
billing statements.
Sheryl E. Seigel, Esq., a partner of the firm, assures the Court
that Faskens is a "disinterested person" as that phrase is defined
in Section 101(14) of the Bankruptcy Code, and does not hold or
represent any interest adverse to the Debtors' estates.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMERICAN BUSINESS: CCO Mortgage Wants to Continue Foreclosure Move
------------------------------------------------------------------
On October 26, 2001, Gabriel Mazzeo, Jr., executed and delivered
an indenture of mortgage for $48,163 to Investors Savings and Loan
Association. The Mazzeo Mortgage created a lien on a property
located at 859 Willow Street, in Talahassee, Florida. Mr. Mazzeo
subsequently executed a Warranty Deed to Dirk A. Wonsey.
On May 16, 2002, Mr. Wonsey then executed a mortgage to Home
American Credit, Inc. -- doing business as Upland Mortgage.
The Debtors have no ownership interest in the Florida Property,
and their lien is subordinate to CCO Mortgage, formerly known as
Charter One Mortgage Corp.
At present, Mr. Wonsey is contractually due for the June 1, 2004,
payment and a foreclosure proceeding is pending. The payoff on
the subject first mortgage is $42,161.
Kristi J. Doughty, Esq., at Whittington & Aulgur, in Odessa,
Delaware, says that taking into account Home American's junior
lien for $55,000, there appears to be no equity in the Property.
"Any potential equity would not enure to the benefit of the
Debtors' Estate since the Debtors merely hold a second lien
position."
Ms. Doughty relates that the continuation of the Debtors'
automatic stay will work real and irreparable harm to CCO
Mortgage's pending foreclosure proceeding against Mr. Wonsey.
Thus, CCO Mortgage asks Judge Walrath to lift the automatic stay.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203),
and the Bankruptcy Court converted the cases to a chapter 7
liquidation on May 17, 2005. Bonnie Glantz Fatell, Esq., at Blank
Rome LLP represents the Debtors. When the Company filed for
protection from its creditors, it listed $1,083,396,000 in total
assets and $1,071,537,000 in total debts. (American Business
Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ANCHOR GLASS: Disputes GGC LLC's Ownership of Molds
---------------------------------------------------
Anchor Glass Container Corp. disputes the property description set
by GGC LLC, fka as Glenshaw Glass Company, in its request to the
U.S. Bankruptcy Court for the Western District of Pennsylvania to
compel the Debtor to return some molds that it allegedly owns.
Specifically, Anchor Glass notes that the list provided by GGC
includes a mold described as 83238, a 32 oz. Mississippi Mud Jug
mold. Anchor asserts that the mold belongs neither to Anchor nor
GGC, but to a third party. Additionally, Anchor asserts that the
mold described as 925KN, a 759mL Liquor bottle mold, is no longer
in Anchor's possession as it was scrapped after it was rendered
unusable.
Kathleen S. McLeroy, Esq., at Carlton Fields PA, in Tampa,
Florida, asserts that GGC and Anchor exchanged molds on a regular
basis. Neither party expected the molds to be returned. Anchor
expended substantial funds modifying the molds. Anchor's
modifications to the molds have substantially increased the value
of the molds.
Ms. McLeroy notes that the molds now exceed the value of the molds
lent by GGC.
Ms. McLeroy believes that GGC's interest in the molds, if any, is
adequately protected by virtue of the fact that GGC holds property
belonging to Anchor, which exceeds the value of the property
sought from Anchor.
Ms. McLeroy admits that the molds in Anchor's possession are vital
to Anchor's operations at this delicate period and are necessary
for the Debtor's effective reorganization.
Ms. McLeroy discloses that Anchor Glass intends to establish the
value of the property by expert testimony or appraisal.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ATA AIRLINES: Wants to Sell More Chicago Express Assets for $2.1M
-----------------------------------------------------------------
Following the consummation of the sale of certain assets of
Chicago Express Airlines, Inc., now known as C8 Airlines, Inc.,
ATA Airlines, Inc., and its debtor-affiliates have continued
negotiations with CSC Investment Group and Colgan Air, Inc., for
the sale of additional assets of Chicago Express and the Saab
aircraft of ATA Airlines, Inc.
The Debtors and CSC executed a purchase agreement for the
Additional Assets in August 2005.
Colgan is not be a party to the Purchase Agreement but will be
required to deliver to ATA and Chicago Express representations,
warranties and indemnities similar to those to be delivered by CSC
under the Agreement.
The salient terms of the Asset Purchase Agreement are:
Assets to be Chicago Express will sell its General
Purchased: Electric CT7-9B aircraft engine to CSC, free
and clear of liens and encumbrances.
ATA Airlines will sell its two Saab 340B
Aircraft with tail numbers N309CE and N311CE,
including four General Electric CT7-9B
engines and four Hamilton Standard 14RF-19
propellers, to Colgan Air, Inc., free and
clear of all liens and encumbrances, other
than the security interest and lien in favor
of ATA created by the Chattel Mortgage.
Earnest Money CSC will deposit $450,000 in the trust
Deposit: account of Baker & Daniels LLP.
Purchase Price: During Closing, CSC and Colgan will pay
$2.1 million for the Saab Assets under these
terms:
(i) $400,000 will be withdrawn from the
Earnest Money Deposit and released to
ATA Airlines; and
(ii) Colgan will issue a promissory note
with principal amount of $1.7 million,
with interest at 8% before the
maturity date, and 12% after the
maturity date.
CSC will pay $250,000 for the CEA Engine,
payable under these terms:
(a) $50,000 from the Earnest Money Deposit
will be withdrawn and released to
Chicago Express; and
(b) CSC will pay $200,000 in immediately
available funds to Chicago Express.
Indemnification: The Debtors will indemnify CSC for 12 months
after the Closing Date for any liability,
claim, loss, damage or expense incurred or
suffered by CSC resulting from any breach of
any representation or covenants or any
failure to perform any covenant or agreement
under the Agreements.
CSC will indemnify each of the Debtors in
respect of any and all any liability, claim,
loss, damage or expense incurred or suffered
by either of the Debtors resulting from,
relating to or constituting any breach of
representation or warranty, any failure to
perform any covenant or agreement or any
sales tax payable by CSC or Colgan under the
Agreements.
Closing The consummation of the Transactions is
Conditions: subject to the satisfaction of, among others,
these conditions:
(1) ATA Airlines and Colgan execute a
Security Agreement and Chattel Mortgage
under which a first priority security
interest under the Saab Assets will be
created in favor of ATA; and
(2) ATA Airlines obtains from General
Electric Engine Services written
confirmation that the Saab Engines will
be accepted for enrollment by Colgan in
the GE ECMP maintenance program; and
(3) The Debtors obtain Court-approval of the
proposed Transactions.
No Warranties: CSC is acquiring the Chicago Express Assets
and Colgan is acquiring the Saab Assets "As
Is" and "where is," without warranty,
express or implied, other than as set forth
expressly in the Agreement.
Pursuant to Section 363(b)(1) of the Bankruptcy Code, ATA
Airlines and Chicago Express seek the U.S. Bankruptcy Court for
the Southern District of Indiana's permission to execute the Asset
Purchase Agreement and to take all actions contemplated under the
Agreement.
Jeffrey C. Nelson, Esq., at Baker & Daniels LLP, contends that the
sale of the Assets will provide the estates of ATA Airlines and
Chicago Express with fair and reasonable consideration.
Mr. Nelson relates that, since no later than March 2005, the
Debtors and their advisors have undertaken significant efforts to
market the assets of Chicago Express and ATA necessary to Chicago
Express' previous operations, including the CEA Engine and the
Saab Assets.
The consideration to be received by the Debtors pursuant to the
Agreement represents the highest and best existing offer for the
CEA Engine and the Saab Assets, Mr. Nelson asserts.
A full-text copy of the Asset Purchase Agreement and the related
Agreements between the Parties is available at no charge at:
http://bankrupt.com/misc/csc_colg_APA_2808.pdf
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. 33; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATC HEALTHCARE: Enters into $8.2 Million Debt-for-Equity Swap
-------------------------------------------------------------
ATC Healthcare, Inc., (AMEX:AHN) restructured $8.2 million in debt
into equity, through the issuance of shares of Series B
Convertible Preferred Stock of the Company.
In connection with the issuance of the shares, the remainder of
the debt the Company issued to acquire AllCare, which the Company
sold this past April, was retired. The Series B Convertible
Preferred Stock, which is junior to the Company's Series A
Preferred Stock, accrues dividends at a rate of 5% per annum and
has a liquidation preference of $8.2 million plus unpaid
cumulative dividends. It is convertible into the Company's Common
Stock at the holder's option at a conversion price of $0.90 per
share. As a result of this transaction, the company's Balance
Sheet will show stockholder equity in excess of $2 million.
"I'm pleased that the company has been able to significantly
strengthen its balance sheet," said David Savitsky, Chief
Executive Officer. "We have been on an improving track in sales
and operating income and can now also demonstrate healthier
financials as well. Our strategic plan for ATC's growth and
profitability are well under way."
ATC Healthcare, Inc. -- http://www.atchealthcare.com/-- is a
national leader in medical staffing personnel to hospitals,
nursing homes, clinics, and other health care facilities with 51
locations and conducts business in 31 states. ATC provides
supplemental staffing, outsourcing and human resources solutions
to hospitals, nursing homes, medical and research facilities and
industry. Drawing from a pool of over 15,000 healthcare
professionals spanning more than 50 specialties, the Company
supplies both clinical and non-clinical personnel for short-term,
long-term, and "traveling" contract assignments.
At May 31, 2005, ATC Healthcare, Inc.'s balance sheet showed a
$5,992,000 stockholders' deficit, compared to a $5,186,000 deficit
at Feb. 28, 2005.
BLUE HERON: Fitch Puts BB Rating on Class E Additional Interest
---------------------------------------------------------------
Fitch Ratings has assigned new ratings to all classes of notes
issued by Blue Heron Funding III, Ltd., following the Amended and
Restated Indenture entered into by Blue Heron III on Sept. 2,
2005. The amendment converted the class A short-term funding
notes to term notes maturing in 2047.
These ratings have been withdrawn by Fitch:
-- $910,000,000 class A notes rated 'F1+';
-- $85,000,000 class B notes rated 'A-' (principal only);
-- $5,000,000 certificates rated 'AAA' (principal only).
These ratings have been assigned by Fitch:
-- $890,000,000 class A notes, due 2047 'AAA';
-- $20,000,000 class B notes, final maturity 2047 'AAA';
-- $25,000,000 class C notes, final maturity 2047 'AAA';
-- $25,000,000 class D notes, final maturity 2047 'A-';
-- $35,000,000 class E notes, final maturity 2047 'BBB-';
-- $35,000,000 class E additional interest, final maturity
2047 'BB' (interest only);
-- $5,000,000 certificates, final maturity 2047 'AAA'
(principal only).
The rating on the classes A, B, and C notes address the timely
payment of interest and the ultimate repayment of principal by the
stated maturity date. The ratings on the class D notes addresses
the ultimate repayment of principal and the ultimate payment of
interest by the stated maturity date. The ratings on the class E
notes address the ultimate repayment of principal and the ultimate
payment of interest at a rate equal to LIBOR by the stated
maturity date. The rating on the class E additional interest
addresses the ultimate payment of class E interest at a rate equal
to 1.8% per annum and the ratings on the certificates address the
ultimate repayment of principal only by the stated maturity date.
The ratings are based on the quality and mixture of portfolio
assets (including principal protection assets supporting the
certificates) and credit enhancement through excess spread and
subordination and collateral coverage, as well as the strength and
experience of WestLB, as asset manager. The portfolio parameter
and eligibility criteria are not being amended. The current
weighted average rating factor is 1.77 as of July 22, 2005 versus
a trigger limit of 2.33.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR Model, see 'Global Rating Criteria for Collateralized Debt
Obligations,' dated Sept. 13, 2004, also available on the Fitch
web site at http://www.fitchratings.com/
BONUS STORES: William Kaye Has Until Nov. 14 to Object to Claims
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
William Kaye -- the Liquidating Agent appointed to administer the
confirmed chapter 11 Plan of Bonus Stores, Inc. -- until
Nov. 14, 2005, to object to proofs of claim filed against the
Debtor's estate.
The Court confirmed the Debtor's First Amended Liquidating Plan
of Reorganization on Sept. 1, 2004, and the Plan took effect on
Sept. 20, 2004. Pursuant to the Plan, the Liquidating Agent is
vested with the authority to object and settle claims on the
Debtor's behalf.
Mr. Kaye told the Bankruptcy Court that an extension to the claims
objection deadline will allow him to reconcile the Bankruptcy
Court's orders, review any remaining claims and file additional
objections.
Mr. Kaye reported that he has made substantial progress at each of
the omnibus hearings held on the claims objections and has
presented orders disposing of a substantial number of claims at
each of these hearings. He said he expects to complete the claims
objection process within the extended period.
Headquartered in Columbia, Mississippi, Bonus Stores, Inc.,
operated a chain of over 360 stores in 13 Southeastern states
offering everyday deep discount prices on basic everyday items.
The Company filed for chapter 11 protection on July 25, 2003
(Bankr. Del. Case No. 03-12284). Joel A. Waite, Esq., at Young
Conaway Stargatt & Taylor, LLP represents the Debtor. When the
Company filed for protection from its creditors, it estimated
assets and debts of more than $100 million. Bonus Stores, Inc.
(fka Bill's Dollar Stores) declared its First Amended Liquidating
Chapter 11 Plan effective on September 20, 2004. William Kaye is
the Liquidating Agent under the Debtors' confirmed Plan. Edward
J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP
represents the Liquidating Agent.
BROKERS INC: Wants Engineering Tectonics to Assess N.C. Property
----------------------------------------------------------------
Brokers Incorporated asks the U.S. Bankruptcy Court for the Middle
District of North Carolina, Winston-Salem Division, for authority
to employ Engineering Tectonics P.A. to perform an environmental
assessment of its real property in Guilford County, North
Carolina.
Guilford County Property
The Debtor has entered into a purchase agreement for the Guilford
County property with Sedgefield Development Company, LLC.
Sedgefield Development intends to buy the property for $1,057,000.
During the course of undertaking its due diligence, Sedgefield
Development hired ECS, Ltd., to perform a Phase II Environmental
Assessment of the property.
ECS discovered the presence of low-levels of petroleum-related
environmental contaminants in a large soil pile located on the
property and subsequently recommended the removal of the entire
soil pile. The removal is estimated to cost the Debtor $250,000.
The Debtor contends that the removal of the entire soil pile is
not necessary to bring the property into compliance with
applicable environmental laws and regulations.
Engineering Tectonics will assess the property to isolate any
areas of contamination so the Debtor will be able to target for
removal only the contaminated portions. The Debtor explains that
this procedure will cost less than the remediation proposed by
ECS. Engineering Tectonics estimates the assessment to cost
$12,246.
The Debtor assures the Bankruptcy Court that Engineering Tectonics
holds no interest adverse to its estate and is a "disinterested
person" as that term is defined in section 101(14) of the
Bankruptcy Code.
Headquartered in Thomasville, North Carolina, Brokers
Incorporated, filed for chapter 11 protection on Nov. 22, 2004
(Bankr. M.D. N.C. Case No. 04-53451). Christine L. Myatt, Esq.,
at Nexsen Pruet Adams Kleemeier, PLLC, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed more than $10 million in assets and
more than $1 million in debts.
CANNONDALE CORP: Admin. Claims Bar Date Extended to September 30
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut in
Bridgeport extended, until Sept. 30, 2005, the time within which
administrative claims may be filed in connection with CB
Liquidation Corp.'s chapter 11 case
CB Liquidation is the successor-in-interest to Cannondale
Corporation.
Gregory B. Schiller, Esq., at Zeisler & Zeisler, P.C., explains
that CB Liquidation needs more time to determine all
administrative claims that have accrued against the Debtor's
estate from January 29, 2003, through December 7, 2004, and notify
claimholders of the bar date.
Headquartered in Bethel, Connecticut, Cannondale Corporation
manufactures and distributes high performance bicycles, all-
terrain vehicles, motorcycles and bicycling and motorsports
accessories and equipment. The Company filed for chapter 11
protection on January 29, 2003 (Bankr. Conn. Case No. 03-50117).
James Berman, Esq., at Zeisler & Zeisler, represents the Debtor.
When the Company filed for protection from its creditors, it
listed $114,813,725 in total assets and $105,245,084 in total
debts. On Dec. 7, 2004, the Court confirmed the Debtor's Plan of
Reorganization.
CAPITAL ONE: Names Pierre Leroy to Board of Directors
-----------------------------------------------------
Capital One Financial Corporation (NYSE: COF) disclosed that
Pierre E. Leroy has been appointed to its Board of Directors. Mr.
Leroy will join the Board's Audit and Risk Committee. Mr. Leroy
will join the class of directors whose nominations will be
submitted for election by Capital One stockholders in April 2008.
"I am extremely pleased to welcome Pierre to our Board," said
Richard D. Fairbank, Chairman and Chief Executive Officer of
Capital One. "Pierre has been a senior executive in finance and
manufacturing for more than 20 years and will be a valuable
addition to the Capital One Board and a great resource for our
executive management team."
Mr. Leroy most recently served as President of the Worldwide
Construction & Forestry Division and the Worldwide Parts Division
for Deere & Company, electing to retire after 29 years of service,
including 20 years as an officer of the company. While at Deere,
Mr. Leroy held positions as Treasurer, Chief Financial Officer,
and President of the John Deere Power Systems Division. Mr. Leroy
also serves on the Board of Directors for Fortune Brands, as the
Presiding Director for ACCO Brands, and on the Board of Directors
of the Quad City Symphony Orchestra Association. In early 2005,
Mr. Leroy was named one of the "Seventy-five Most Powerful Blacks
in Corporate America" by Black Enterprise magazine. Mr. Leroy
earned a Bachelor of Arts from the University of Michigan in 1970
and a Masters of Business Administration from the University of
Chicago in 1972. Mr. Leroy is a former Deere & Company senior
executive.
Headquartered in McLean, Virginia, Capital One Financial
Corporation -- http://www.capitalone.com/-- is a financial
holding company whose principal subsidiaries, Capital One Bank,
Capital One, F.S.B. and Capital One Auto Finance, Inc., offer a
variety of consumer lending products. As of June 30, 2005,
Capital One's subsidiaries collectively had 48.9 million accounts
and $83.0 billion in managed loans outstanding. Capital One is a
Fortune 500 company and, through its subsidiaries, is one of the
largest providers of MasterCard and Visa credit cards in the
world. Capital One trades on the New York Stock Exchange under
the symbol "COF" and is included in the S&P 500 index.
* * *
As reported in the Troubled Company Reporter on March 10, 2005,
Fitch Ratings has placed the senior debt, preferred stock, and
individual ratings of Capital One Financial Corp. -- COF -- and
related subsidiaries on Rating Watch Positive. The short-term
ratings of 'F2' are affirmed by Fitch. Hibernia Corp. -- HIB --
and related subsidiaries have been placed on Rating Watch Negative
by Fitch:
-- Long-term 'A-';
-- Short-term 'F1';
-- Individual rating 'B'.
CARMIKE CINEMAS: S&P Revises Credit Rating's Outlook to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services, in light of a steep drop in
movie theater attendance in the current year, revised its outlook
on Carmike Cinemas Inc. (B/Negative/--) to negative from positive.
"Attendance drops are especially damaging to movie exhibitors
because they curtail not only ticket collection revenue but also
high-margin concession sales," said Standard & Poor's credit
analyst Steve Wilkinson. Concession sales can generate 40%-50% of
the gross profit collected from moviegoers despite representing
only 25%-30% of sales.
Movie attendance in the U.S. plunged 17% in the second quarter and
declines have persisted through the end of August, resulting in
sharply lower EBITDA and discretionary cash flow, and strained
credit measures for U.S. theater chains. Although 2004 attendance
levels were strong and moviegoing can fluctuate based on the
appeal of movies in release, it is not clear if recent doldrums
suggest other factors at work. Reduced consumer spending as a
result of high energy costs, economic uncertainty, and consumer
frustration with rising ticket prices and in-theater advertising
may play a role.
Additional factors may include:
* the greater availability of pirated movie downloads;
* increased video on demand of recently released films; and
* a DVD market saturated with both feature films and TV series.
"What is clear is that the current environment has put pressure on
the credit profiles of the rated exhibitors. This is especially
true for companies with limited liquidity or aggressive capital
spending plans," said Mr. Wilkinson.
The outlook on Carmike was revised to negative from positive
because the decline in its second-quarter and year-to-date EBITDA
of 46% and 50%, respectively, were nearly double the declines
experienced by its rated peers, despite its acquisition of 30
theaters with 263 screens from George Kerasotes Corp. on
May 19, 2005. The profit declines partially reflect the
company's industry outperformance in early 2004 and some
acquisition and refinancing expenses, but they also highlight an
increase in corporate expenses and much higher film rental terms
than its peers'.
As a result, Carmike's EBITDA margins have fallen to below average
for the industry and leverage has increased. Also, liquidity has
contracted and relies on borrowing availability on its undrawn
$50 million revolving credit facility. The company's compliance
with its bank covenants was only adequate at second-quarter end
but could become troublesome if operating results remain weak or
if discretionary cash flow deficits do not abate with expected
decreases in spending levels.
CATHAY GENERAL: Has Right to Buy 41% of Great Eastern Bank's Stock
------------------------------------------------------------------
Cathay General Bancorp (Nasdaq: CATY), the holding company for
Cathay Bank, entered into option agreements with shareholders of
Great Eastern Bank for the right to purchase approximately 41% of
the outstanding shares of Great Eastern Bank, a privately held New
York chartered bank. If the Company exercises all of these
options, the value of the transaction would be approximately
$28.4 million.
The Company is currently seeking to acquire up to 100% of the
stock of Great Eastern Bank. Accordingly, the Company has made
regulatory filings to the Federal Reserve Bank of San Francisco
and will shortly file applications with the New York State Banking
Department.
Great Eastern Bank is a commercial bank founded in 1986 and has
five branches in the New York Metropolitan area. Two of its
branches are located in Flushing, and the other branches are
located in Midtown, Chinatown, and Brooklyn. As of Dec. 31, 2004,
Great Eastern Bank had approximately $306.7 million in assets.
"We consider the New York/New Jersey market to be an important
market for us and we plan to continue investing in and growing our
operations and establishing ourselves as the preeminent banking
operation in our community," commented Dunson K. Cheng, Chairman
of the Board, President, and Chief Executive Officer of the
Company. "We believe Great Eastern Bank to be an attractive
franchise and that the possibility of a future combination of our
complementary businesses is strategically compelling for both of
our financial institutions," Mr. Cheng added.
Cathay General Bancorp -- http://www.cathaybank.com/-- is the
holding company for Cathay Bank, a California state-chartered
bank. Founded in 1962, Cathay Bank offers a wide range of
financial services. Cathay Bank currently operates twenty-nine
branches in California, four branches in New York State, one in
Massachusetts, one in Houston, Texas, one in Washington State, and
representative offices in Taipei, Hong Kong, and Shanghai.
* * *
As reported in the Troubled Company Reporter on June 9, 2005,
Fitch Ratings has assigned a 'BB+' long-term rating and a 'B'
short-term rating to Cathay General Bancorp and its bank
subsidiary, Cathay Bank. Fitch said the ratings are placed on
Rating Watch Positive.
CCH I: S&P Junks Proposed $3.525 Billion Senior Secured Notes
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
CCH I, LLC's proposed offering of up to $3.525 billion 11% senior
secured notes due 2015. A 'CCC-' rating was assigned to CCH I
Holdings, LLC's offering of up to $4.262 billion aggregate amount
of various series of senior accreting notes due 2014 and 2015.
CCH I and CIH are indirect subsidiaries of cable TV system
operator Charter Communications Inc. (Charter; CCC+/Negative/B-3).
Issue proceeds will be used to finance Charter Communications
Holdings, LLC's exchange offer for $8.4 billion aggregate amount
of various series of senior notes due between 2009 and 2012. The
new notes will be issued under Rule 144A with registration rights.
"The exchange offers will moderately reduce maturity pressure on
Charter. Nevertheless, even if all of the notes eligible for
exchange are tendered, Charter still will have over $5.3 billion
in debt maturing between 2007 and 2010, excluding any outstanding
amount on the $1.5 billion revolver," said Standard & Poor's
credit analyst Eric Geil.
The 'CCC+' corporate credit rating on Charter Holdings and the
'CCC-' ratings on the 2009-2012 notes being accepted for exchange
remain on CreditWatch, where they were placed with negative
implications on August 25, 2005, following the company's
announcement of the exchange transaction. The exchange offers
expire on September 26, 2005. S&P will view completion of any of
the exchanges as tantamount to a default on the original debt
issue terms because of the discount to par and the maturity
extensions. Upon completion of any exchange transactions, S&P
will lower the corporate credit rating on Charter Holdings to 'SD'
to indicate a selective default, and lower the ratings on the
affected issues to 'D'. On the same day, S&P expects to reassign
the corporate credit rating at 'CCC+' and to reassign a 'CCC-'
rating to any remaining Charter Holdings debt.
CELLSTAR CORP: Grant Thornton Expresses Going Concern Doubt
-----------------------------------------------------------
CellStar Corporation (OTC Pink Sheets: CLST) reported revenues of
$1.3 billion for fiscal 2004 compared to $1.6 billion in fiscal
2003. Revenues in Latin America increased $15.4 million from
fiscal 2003 and were offset by declines in Asia Pacific of
$301.4 million and $89.8 million in the U.S. Revenues declined in
Asia Pacific as a result of market, economic and operational
changes in the region. Revenues in the U.S. declined primarily
due to the Company's decision to discontinue business with Cricket
Communications in 2004.
For the period ended November 30, 2004, the Company reported a
consolidated net loss of $118.1 million, compared to a net loss of
$39.0 million in fiscal 2003. The net loss in 2004 was primarily
due to an operating loss of $76.8 million in the Asia-Pacific
Region, and a $47.4 million increase in the valuation allowance
for deferred income tax assets related to the Company's PRC, Hong
Kong, Taiwan and U.S. operations.
Asia-Pacific Region
The Company decided to exit the Asia-Pacific Region and on
Sept. 2, 2005, sold its PRC and Hong Kong operations to Fine Day
Holdings Limited, a company formed by Mr. A.S. Horng, who was the
Chairman and Chief Executive Officer of CellStar (Asia)
Corporation Limited and effectively the head of the Company's
Asia-Pacific Region, for a total consideration of $12 million,
consisting of $6 million in cash paid at closing and a $6 million
subordinated promissory note maturing Sept. 1, 2008. In
connection with the sale, effective Sept. 2, 2005, Mr. Horng
resigned as an executive officer of the Company and agreed to
terminate his employment agreement. The Company has retained
certain claims against vendors. In approving the sale, the Board
of Directors of the Company had meetings with Company management
and obtained a fairness opinion.
In addition, on Aug. 25, 2005, the Company entered into an
agreement to sell its operations in Taiwan to a former employee of
the operations for nominal consideration. The sale is expected to
close in September 2005. The Taiwan operations had not been
profitable since the fourth quarter of 2002.
For the period ending Nov. 30, 2004, the Company has reduced the
carrying value of the Asia-Pacific Region to its estimated net
realizable value of $21.1 million. The estimated net realizable
value at November 30, 2004, includes the consideration to be
received upon sale, cash transferred to Corporate after Nov. 30,
2004; and estimated losses of $11.2 million from December 1, 2004,
to August 31, 2005, as the operations funded these losses.
Financial Restatements
As a result of the Company's review of certain revenue and
accounts receivable issues in its Asia-Pacific Region, financial
information for certain periods has been restated. The net
after-tax effect to previously issued financial statements is a
$73.3 million loss, all of which relates to the Asia-Pacific
Region.
"Without question, 2004 was a very disappointing year. The issues
in Asia have resulted in millions of dollars of losses, and have
put the entire Company at risk. For CellStar to remain viable, we
had to exit Asia," said Robert Kaiser, Chairman of the Board and
Chief Executive Officer. "It is now time to move forward,
focusing our attention on strengthening and growing our remaining
operations in North America and Latin America."
Liquidity
The Company had a net use of cash in operating activities of
$4.8 million for the year ended November 30, 2004. During fiscal
2003, the Company recorded a net use of cash in operating
activities of $70.8 million. The cash usage in 2003 was primarily
in the Asia-Pacific Region due to an increase in accounts
receivable and to fund losses in the Asia-Pacific Region.
As of Nov. 30, 2004, the Company had borrowed $35.8 million under
its domestic revolving credit facility compared to $19.3 million
at November 30, 2003. The Company also had $55.4 million in loans
to support its China operations compared to $88.5 million at the
end of 2003.
At Nov. 30, 2004, the Company had outstanding $12.4 million of 12%
Senior Subordinated Notes due in January 2007.
Asia Pacific Review
Due to accounting issues related to certain accounts receivable
and revenues in its Asia-Pacific Region, the Company was unable to
timely file its Annual Report on Form 10-K for 2004 and subsequent
Quarterly Reports on Form 10-Q. These issues were reviewed by the
Company and the Audit Committee of the Company's Board of
Directors. Corporate senior management assisted by the internal
auditors performed a review in the PRC of these issues. During
the review process, Corporate senior management kept the Audit
Committee updated on its findings. Independent counsel and
independent forensic accountants assisted the Audit Committee in
its review.
Material Weaknesses
Based on its evaluation, the Company's management identified
10 material weaknesses in its financial reporting as of the end of
its fiscal 2004 period:
-- the recognition of revenue for products that had not been
sold;
-- rebates, price protection and sales concessions provided to
customers but not provided for at the time of sale;
-- recognition of revenue where there was no evidence of a
final arrangement, the price was not fixed or determinable
or collectibility was not reasonably assured;
-- timely and complete reconciliation of accounts;
-- timely processing of value added taxes;
-- communication of Company policies and procedures to
employees;
-- controls over physical stock counts;
-- the application of cash receipts to customer accounts;
-- focus of the internal audit function; and
-- ineffective corporate governance related to oversight of the
Asia-Pacific Region.
A material weakness is a significant deficiency, or combination of
significant deficiencies, which results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected.
These ineffective controls resulted in material adjustments and
restatements to both the annual and interim financial statements
during 2004 and prior years to revenues, cost of sales, bad debt
expense, provision for income taxes, accounts receivable,
inventory, value added tax payable, and deferred income tax
accounts.
Going Concern Doubt
Grant Thornton LLP expressed substantial doubt about Cellstar's
ability to continue as a going concern after it audited the
Company's financial statements for the period ended Nov. 30, 2004.
The auditors point to the Company's:
-- $118.1 million net loss for the 2004 fiscal year;
-- covenant violations on its borrowing arrangements;
-- exit on its Asian operations that constituted a large
percentage of its historical operations; and
-- experiencing restrictions in its business activities with
vendors.
In June 2005, the Company disclosed that it had retained the
services of Raymond James & Associates, Inc., to act as its
investment banking advisor to assist the Company with the
evaluation of its financial and strategic alternatives.
Credit Facilities
The Company has an $85 million Loan and Security Agreement that
expires in November 2006. The Facility is considered a current
liability as the lender has dominion over cash receipts related to
the Company's domestic operations. Also, the Facility contains an
acceleration clause that the lenders could choose to invoke if the
Company were to default.
Funding under the Facility is limited by a borrowing base test,
which is measured weekly on eligible domestic accounts receivable
and inventory. Interest on borrowings under the Facility is at
the London Interbank Offered Rate or at the bank's prime lending
rate, plus an applicable margin.
The Facility is secured by a pledge of 100% of the outstanding
stock of all U.S. subsidiaries and 65% of the outstanding stock of
all first tier foreign subsidiaries as defined by the Facility.
The Facility is further secured by the Company's domestic accounts
receivable, inventory, property, plant and equipment and all other
domestic real property and intangible assets. The Facility
contains, among other provisions, covenants relating to the
maintenance of minimum net worth and certain financial ratios,
dividend payments, additional debt, mergers and acquisitions and
disposition of assets.
If the Company terminates the Facility prior to maturity, the
Company will incur a termination fee. The termination fee was
$1.7 million as of Nov. 30, 2004, and decreases by $850,000 per
year until September 2006 and remain at $425,000 thereafter. As
of Nov. 30, 2004, the Company had borrowed $35.8 million, at an
interest rate of 5.50%, an increase of $16.5 million from
$19.3 million at November 30, 2003. The increase in borrowings
was a result of the Company reducing domestic trade payables in
the second quarter of 2004 and maintaining payables at that level.
Under the Facility, the Company had additional borrowing
availability of $26.4 million at Nov. 30, 2004. At Aug. 26, 2005,
the Company had borrowed $15.1 million and had additional
borrowing availability of $22.1 million. The interest rate was
7.00% on Aug. 26, 2005.
From February 2004 to September 2005, the Company amended the
Facility and obtained waivers that:
-- modified financial covenants;
-- increased borrowing availability under the Facility;
-- extended the maturity date until November 2006; and
-- granted extensions for its failure to:
* file its Annual Report on Form 10-K for the fiscal year
ended Nov. 30, 2004,
* file its Quarterly Reports on Form 10-Q for the
quarters ended Feb. 28, 2005, and May 31, 2005, and
* cause its independent public accountants to deliver a
letter to the trustee pursuant to the Company's
indenture for its Subordinated Notes.
The Company would not have been in compliance with certain
covenants without the waivers or modifications. In addition, the
Company obtained the consent of the lender to sell its Greater
China Operations. The Company will utilize the proceeds to reduce
the borrowings under the Facility. While the Company has received
a waiver for noncompliance with certain financial covenants for
the quarter ended Nov. 30, 2004, the Company expects to be in
violation of similar covenants during 2005.
The Company is working with its lender to modify these covenants
for 2005. While the Company expects to obtain modifications or
waivers for the expected noncompliance with these covenants, there
can be no assurance that those waivers or modifications will be
received.
CellStar Corporation -- http://www.cellstar.com/-- provides
value-added logistics services to the wireless communications
industry, with operations in the North American and Latin American
regions. CellStar facilitates the effective and efficient
distribution of handsets, related accessories and other wireless
products from leading manufacturers to network operators, agents,
resellers, dealers and retailers. CellStar also provides
activation services in some of its markets that generate new
subscribers for wireless carriers.
CELLSTAR CORP: Has Until Oct. 18 to File Financial Statements
-------------------------------------------------------------
CellStar Corporation (OTC Pink Sheets: CLST) said it expects to
file its Quarterly Report on Form 10-Q for the first, second and
third quarters of 2005 on or before Oct. 11, 2005, at which time,
the Company will be current with its SEC filings. The Company has
received a waiver from its lenders extending the filing date for
the first and second quarters of 2005 to Oct. 18, 2005.
By the end of September 2005, the Company expects to have
completed the exit of its operations in the Asia-Pacific Region.
Therefore, when the Company files its Quarterly Reports for the
first three quarters of 2005 on or before Oct. 11, 2005, the Asia-
Pacific Region will be reported as discontinued operations.
The Company's North America Region is expected to report revenues
of approximately $206 million with operating results around break-
even in the first half of 2005 compared to revenues of
$211 million and operating income of $1.6 million in the first
half of 2004.
The Company's Latin America Region is expected to report revenues
of approximately $280 million and operating income of
approximately $5 million in the first half of 2005 compared to
revenues of $175 million and operating income of $3.3 million in
the first half of 2004. Revenues in Mexico are expected to be up
$41.0 million and revenues in the Company's Miami operation are
expected to be up $82 million compared to the first half of 2004.
The Company will schedule a Conference Call in October to discuss
the financial results for the first three quarters of 2005
following the filing of the Quarterly Reports on Form 10-Q.
CellStar Corporation -- http://www.cellstar.com/-- provides
value-added logistics services to the wireless communications
industry, with operations in the North American and Latin American
regions. CellStar facilitates the effective and efficient
distribution of handsets, related accessories and other wireless
products from leading manufacturers to network operators, agents,
resellers, dealers and retailers. CellStar also provides
activation services in some of its markets that generate new
subscribers for wireless carriers.
CENTURY/ML CABLE: Bankr. Court Confirms Plan of Reorganization
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
confirmed Century/ML Cable Venture's Plan of Reorganization
yesterday.
The Honorable Robert E. Gerber determined that the Plan satisfies
the 13 standards for confirmation as required by Section 1129(a)
of the Bankruptcy Code. No votes rejecting the Plan were
received.
About the Plan
The Plan will implement the sale of the ownership of ML Media and
Century Communications to San Juan Cable, LLC, for $520 million,
pursuant to an Interest Acquisition Agreement dated June 3, 2005.
MidOcean Partners LP, Crestview Capital Partners, LP, and other
investors will be members as of the closing date of the
transaction.
The Plan provides that all allowed third-party claims will either
be paid in full or assumed by the Purchaser under the terms set
forth in the Interest Acquisition Agreement. Upon the effective
date of the Plan, cash sufficient to pay all allowed claims in all
Classes in full will be placed in the Plan Funding Reserve and
then distributed to creditors in accordance with the terms of the
Plan.
The sole equity interest holders, ML Media and Century, are
impaired under the Plan. These creditors will receive
distributions after disputed claimholders will get paid. Each
creditor will equally share in whatever's left of the Sellers
Escrow Account and the Plan Funding Reserve of an amount not more
than $70 million.
The cash necessary to fund the Plan will come from:
(i) cash on hand in the Debtor's accounts;
(ii) cash to be generated from operations through the
Effective Date of the Plan; and
(iii) approximately $520 million of sales proceeds to be paid
by the Buyer.
At present, the Debtor estimates that the aggregate total of all
allowed and disputed claims is approximately $415 million -- less
than the sales proceeds to be received under the Acquisition
Agreement. This amount is comprised of:
* ML Media's $370 million claim;
* Adelphia's $30 million claim;
* Highland Holdings' $10 million claim;
* Daniels' $1.7 million claim; and
* the balance of administrative and other claims.
A full-text copy of Century/ML Cable Venture's Plan of
Reorganization is available at no charge at:
http://ResearchArchives.com/t/s?b6
A full-text copy of Century/ML Cable Venture's Disclosure
Statement is available at no charge at:
http://ResearchArchives.com/t/s?b7
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.
COLLINS & AIKMAN: Committee Insists on Hiring A&M & Chanin Capital
------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Collins & Aikman
Corporation and its debtor-affiliates asks the U.S. Bankruptcy
Court for the Eastern District of Michigan to overrule the
objections presented by JPMorgan Chase Bank, NA, against the
retention of Alvarez & Marsal and Chanin Capital Partners as its
financial advisor. The Committee says JPMorgan's objections lack
merit.
Paula S. Osborne, Esq., at Butzel Long, in Bloomfield Hills,
Michigan, explains that the Committee decided that it needed the
immediate services of both a sophisticated operations firm with a
substantial domestic and international operational turnaround
background and an investment banking firm with significant
capital market experience. "The entire expense to the Debtors'
estates as a result of the Committee's determinations to retain
A&M and Chanin [Capital Partners] will be borne by unsecured
creditors and that very constituency's fiduciary representative
is entitled to the best professional representation needed to
acquit its responsibilities," Ms. Osborne relates.
According to Ms. Osborne, the advisory services to be provided by
A&M and Chanin are discreet and independent from each other and
ultimately will be complementary in assisting the Committee in
analyzing the Debtors' business operations, financial results and
reorganization efforts. Ms. Osborne relates that A&M brings
significant operational turnaround experience and industry
knowledge to the analysis of the Debtors' numerous contracts and
plants. Chanin, Ms. Osborne continues, will provide the
Committee with valuation analyses and related financial advisory
services to assist the Committee in formulating a solution to the
Debtors' insolvency and balance sheet.
Ms. Osborne tells Judge Rhodes that A&M and Chanin agreed to:
(i) reduce their customary monthly fees; and
(ii) defer consideration of any success fee until a success
story can be written for the Debtors.
General Motors Corporation also joins in JPMorgan's objection to
the Committee's retention of Alvarez & Marsal and asks the
Bankruptcy Court to deny the Committee's request.
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Wants to Walk Away from Three Burdensome Leases
-----------------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Eastern District
of Michigan to reject three unexpired real property leases. The
Debtors also ask the Bankruptcy Court to set the rejection
effective date on the date an order is entered approving their
Rejection Motion.
The Debtors say that these leases are no longer integral to their
ongoing business operations and present burdensome contingent
liabilities:
Lessor Lease
------ -----
ADS Logistics Sublease in O'Fallon, Missouri
expiring 06/30/2007
Becker Ventures Lease in O'Fallon, Missouri
expiring 12/01/2021
Product Solutions, Inc. Lease in Athens, Tennessee
expiring 02/28/2007
Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York,
explains that for the Lease in O'Fallon, Missouri, expiring
December 1, 2021, the Debtors have vacated the premises and are
using the property for storage of idle assets. The sublease
under that Lease also is being rejected contemporaneously. For
the Lease in Athens, Tennessee, expiring on February 28, 2007,
the Debtors believe the lease obligation under that lease
agreement is substantially in excess of the market price.
According to Mr. Carmel, the Debtors expect to save $37,500 per
month in expenses if the Leases are rejected. Mr. Carmel adds
that the Rejected Leases may present contingent obligations that
should be terminated to avoid future uncertainty.
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLONIAL EXETER: Wants Court to Dismiss Chapter 11 Case
-------------------------------------------------------
Colonial Exeter, LLC, asks the U.S. Bankruptcy Court for the
District of Arizona to dismiss its chapter 11 proceeding without
prejudice.
The Debtor tells the Court that:
(1) there is no pending motion to convert the case to a
chapter 7 liquidation;
(2) on Jan. 13, 2005, the Court lifted the automatic stay
allowing a lender to take action against a real property
which was the Debtor's only asset;
(3) most of the debts were secured by the assets subject to
the real property; and
(4) moving forward with a disclosure statement and plan is
moot.
The Debtor also tells the Court that as condition to dismissal, it
will pay any fees owed to the U.S. Trustee.
Headquartered in Phoenix, Arizona, Colonial Exeter filed for
chapter 11 protection on August 17, 2004 (Bankr. Ariz. Case No.
04-14545). Dennis J. Wortman, Esq., represents the Debtor. When
the Debtor filed for protection from its creditors, it listed
estimated assets and debts of $10 million to $50 million.
COMDIAL CORP: Court Approves $20 Million Purchase by Vertical
-------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved an Asset Purchase Agreement between Comdial Corporation,
Vertical Communications (ASFT.OB), and Vertical Communications
Acquisition Corporation, a direct wholly owned subsidiary of
Vertical.
The terms of the deal as filed with the United States Bankruptcy
Court for the State of Delaware include consideration paid to
creditors and assumed liabilities of approximately $20 million.
Vertical is obligated to close the transaction by Sept. 28, 2005,
which will require the company to obtain additional capital, most
likely in the form of a combination of additional lender financing
and a private issuance of the company's common or preferred stock,
on or before this date.
"Vertical's vision is to help customers transform phone systems
and voice applications from expense items and 'infrastructure' to
business intelligence weapons that help organizations deliver
exceptional customer service, dramatically reduce communications
costs and significantly improve the operational efficiency of
their businesses," said Bill Tauscher, Chairman and CEO of
Vertical Communications. "We are acquiring Comdial because they
have excellent products, a loyal, established channel and a team
of telephony experts that will add value to our company,
accelerate our growth and help us realize this vision faster on
behalf of our customers."
The combination of Vertical and Comdial will create a significant
player within the IP-PBX space, with the momentum to make a
greater impact on the IP telephony market. With reported revenues
of $39.58 million for the 12 months ended Dec. 31, 2004, the
addition of Comdial approximately doubles the size of Vertical
from a revenue perspective. Since its inception in 1982, Comdial
has delivered digital and IP-PBX phone systems to approximately
400,000 small and medium-sized business customers, representing
more than $1 billion in installed systems. In 2004 alone, the
company shipped 278,900 total PBX/IP-PBX lines. Comdial sells to
SMB customers through an active channel of value-added resellers
and systems integrators, and today has more than 800 authorized
dealers in the US.
Vertical believes that dealers and customers will benefit from the
company's larger combined research and development spend, which
will accelerate the development and delivery of next-generation
products. They will also benefit from a larger consolidated
marketing spend, which will allow the company to launch more
robust awareness and demand generation programs designed to raise
the company's profile, increase the number of deals the company
participates in, and improve the company's win rate. In addition,
the company believes that the combined Vertical and Comdial
product set will create a more complete end-to-end product
offering for customers.
Vertical Communications, Inc. -- http://www.vertical.com/-- is a
leading provider of next-generation IP-based voice and data
communications systems for business. Vertical combines voice and
data technologies with business process understanding to deliver
integrated IP-PBX and application solutions that enhance customer
service and business productivity. Vertical's customers are
leading companies of all sizes - from small to large and
distributed - and include CVS/pharmacy, Household International
and Apria Healthcare. Vertical is headquartered in Cambridge,
Mass. and delivers its solutions through a worldwide network of
systems integrators, resellers and distributors.
Headquartered in Sarasota, Florida, Comdial Corporation --
http://www.comdial.com/-- and its affiliates develop and market
sophisticated communications products and advanced phone systems
for small and medium-sized enterprises. The Company and its
debtor-affiliates filed for chapter 11 protection on May 26, 2005
(Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and
John Henry Knight, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
total assets of $30,379,000 and total debts of $35,420,000.
CRYSTAL QUALITY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Crystal Quality Homes, Inc.
fka Crown Management Systems, Inc.
33735 Royalton Road
Columbia Station, Ohio 44028
Bankruptcy Case No.: 05-23595
Type of Business: The Debtor is a real estate developer.
Chapter 11 Petition Date: September 6, 2005
Court: Northern District of Ohio (Cleveland)
Judge: Arthur I. Harris
Debtor's Counsel: James L. Major, Esq.
Major & Associates
3505 East Royalton Road, Suite 165
Broadview Heights, Ohio 44147
Tel: (440) 746-3700
Fax: (440) 746-0961
Total Assets: $2,561,230
Total Debts: $2,672,381
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
84 Lumber Trade debt $144,133
1019 Route 519
Eighty Four, PA 15330-2813
Artistic Carpet Warehouse Trade debt $64,535
8109 Brookpark Road
Parma, OH 44129
RCW Construction, Inc. Trade debt $50,461
18294 Indian Hollow Road
Grafton, OH 44044
Carter Lumber Trade debt $49,571
K & L Excavation, Ltd. Trade debt $47,150
Lenwood Drywall, Inc. Trade debt $42,653
R & D Electric Trade debt $39,589
Atlas Concrete Walls, Inc. Trade debt $38,655
Piper Plumbing, Inc. Trade debt $36,837
Morris Masonry, Inc. Trade debt $36,168
Nieman Excavating Co., LLC Trade debt $35,785
Hrusch Excavating Trade debt $32,162
First Merit Bankcard Center Trade debt $30,946
MBNA Line of credit $30,074
Del Lumber Company Trade debt $26,886
Harold Archer & Sons, Inc. Trade debt $25,119
Wolff Bros Supply, Inc. Trade debt $23,000
MPW Construction Services Trade debt $21,111
Social Security Social security $20,359
withholdings
Internal Revenue Service Federal tax $19,778
withholdings
D & K STORES: Gets Court Approval to Reject Five Burdensome Leases
------------------------------------------------------------------
D & K Stores, Inc., sought and obtained authority from the
Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for the
District of New Jersey to reject five unexpired nonresidential
real property leases:
Store Location Lessor Lease
Number Expiration
------ -------- ------ ----------
091 1840 Heights Plaza Heights Associates 2/28/08
Shopping Center U.S. Steel Tower
Natrona Heights 600 Grant Street
Pennsylvania 15065 44th Floor
Pittsburgh, PA 15219
135 College Hills GMS Management Co., Inc. 7/31/07
Shopping Center c/o National City Bank
1835 Beall Avenue P.O. Box 73914-N
Wooster, OH 44691 Cleveland, OH 44193-1152
733 Store #8 & 9 Indian Head Plaza 1/31/07
Indian Head Associates
1334 Lakewood Road c/o JK Management LLC
Toms River, NJ 08755 1051 Bloomfield Avenue
Clifton, NJ 07012
755 Lakewood Shopping Lakewood Plaza 9 1/31/07
Center Associates, LP
1700 Madison Avenue Kramont Operating
Lakewood, NJ 08701 Partnership, LP
P.O. Box 978
Plymouth Plaza, Suite 20
Plymouth Meeting, PA 19462
1002 Bay Harbor Plaza Stop & Shop 10/31/05
55 Brick Boulevard 1385 Hancock Street
Brick, NJ 08723-7930 10th Floor
Quincy, MA 02169
Timothy P. Neumann, Esq., at Broege, Neumann, Fischer & Shaver,
LLC, told the Court that the Leases have no more value to the
estate and should be rejected to unburden the Debtor from
administrative rent.
Any property left behind in the store premises will be deemed
abandoned and that the lessors are free to dispose them.
Headquartered in Eatontown, New Jersey, D & K Stores, Inc., filed
for chapter 11 protection on April 8, 2005 (Bankr. D. N.J.
Case No. 05-21445). Timothy P. Neumann, Esq., at Broege, Neumann,
Fischer & Shaver, LLC, represents the Debtor. When the Debtor
filed for protection from its creditors, it estimated assets and
debts from $10 million to $50 million.
DAVID WESTERLUND: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: David Allen & Mable Jeane Westerlund
fdba D&M Coastal Property Management
P.O. Box 7348
Hilton Head, South Carolina 29928
Bankruptcy Case No.: 05-10097
Type of Business: The Debtor owns D&M Coastal Property Management
and LBW Enterprises, Inc. These companies
operate as real estate developers.
Chapter 11 Petition Date: September 6, 2005
Court: District of South Carolina (Charleston)
Judge: Wm. Thurmond Bishop
Debtor's Counsel: Kevin Campbell, Esq.
Campbell Law Firm, P.A.
P.O. Box 684
890 Jonnie Dodds Boulevard
Mt. Pleasant, South Carolina 29465
Tel: (843) 884-6874
Total Assets: $1,159,443
Total Debts: $2,454,305
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Sea Side Two $310,846
c/o William Bowen, Esq.
P.O. Box 6128
Hilton Head, SC 29938
Sea Side One $229,930
c/o William Bowen, Esq.
P.O. Box 61287
Hilton Head, SC 29938
Schooner Court 30&31 $138,000
c/o John Bowen, Esq.
P.O. Box 21119
Hilton Head, SC 29905
Abbington $104,362
Myrtle Edwards $89,105
Stoney Creek A&B $88,000
Racquet Club $69,321
Plantation Club #20 $63,407
Port Villas $57,218
American General Insurance $54,726
Mike Owens $51,156
Harbourwood $49,396
Plantation Club #19 $28,306
Amex $27,296
Mike Owens $25,000
Mike Edward $22,700
Texaco Credit Card $22,442
Mike Owens $20,395
APAB $20,174
Randy Vitek $19,000
DEL MONTE: Earns $16.2 Million of Net Income in First Quarter
-------------------------------------------------------------
Del Monte Foods Company reported a $16.3 million income from
continuing operations for the first quarter ended July 31, 2005,
compared to an $8.6 million income from continuing operations for
the prior year period. First quarter fiscal 2005 results included
$8.6 million of integration expense.
The Company reports a $16.2 million net income for the first
quarter 2005, compared to an $8.5 million net income for the same
period in 2004.
First quarter net sales increased 7.2% from the prior year period
to $671.1 million. The increase in net sales was driven primarily
by increased pricing across the businesses and volume growth from
existing and new products partially offset by volume loss
associated with price increases (elasticity). Sales increased
across each of Del Monte Foods' operating segments.
"We are pleased with the quarter's results in both our Consumer
and Pet businesses," said Richard G. Wolford, Chairman and CEO of
Del Monte Foods. "Our strong brands have enabled the successful
pricing actions taken over the last several quarters as
inflationary cost pressures persisted and fish costs increased.
As well, our aggressive supply chain cost reduction program
continues to deliver savings - this will be particularly important
as oil prices have continued to rise. Looking forward, we are
making progress on Project Brand which is sharpening our business
focus and accelerating the orientation of our business around our
leading brands."
Share Repurchase
On June 30, 2005, the Company said it has purchased approximately
12 million shares of the Company's common stock from Goldman Sachs
International in a private transaction in connection with an
accelerated stock buyback arrangement. The shares were
repurchased for an upfront payment of approximately $125 million,
subject to a price adjustment provision and excluding commission.
The upfront payment was funded with the Company's cash balances.
The ASB enabled Del Monte to purchase the shares immediately and
Goldman Sachs is expected to purchase an equivalent amount of
shares in the open-market over time. The program is expected to
be completed within approximately sixteen months of the initial
purchase from Goldman Sachs. At the end of the program, the
Company will receive or pay a price adjustment generally based on
the volume weighted average price of shares traded during the
purchase period. Approximately half of the shares purchased in
connection with the ASB are subject to a collar, a contract that
sets a minimum and maximum price for purposes of calculating the
price adjustment. Goldman Sachs has agreed that its purchases of
the Company's common stock in the open market in connection with
the ASB will be accomplished in accordance with the Rule 10b-18
volume and timing guidelines applicable to the Company. The
repurchased shares are being held in treasury.
Outlook
For fiscal 2006, the Company reiterated that it expects sales
growth of approximately 1% to 3% over fiscal 2005 net sales of
$3.18 billion. The Company expects cash provided by operating
activities, less cash used in investing activities, of
approximately $190 to $200 million.
Fiscal 2006 net sales growth is expected to be driven by pricing
actions the Company has taken and improved volume from new
products. During the fourth quarter fiscal 2005, the Company
announced additional pricing actions, primarily in Consumer
Products, which combined with cost savings initiatives, will help
offset the effect of continued higher costs. Earnings performance
is expected to be driven by improved gross margin, lower interest
expense and lower integration expense, partially offset by higher
employee-related expenses and higher fuel-related customer
delivery costs. The Company intends to carefully monitor the
continuing escalation in oil and natural gas prices, which today
are higher than the Company's initial expectations for the full
year.
For the fiscal 2006 second quarter, the Company expects sales to
be approximately flat to up 2% versus net sales of $846.6 million
in the second quarter of fiscal 2005.
Del Monte Foods Company -- http://www.delmonte.com/-- is one of
the country's largest and most well known producers, distributors
and marketers of premium quality, branded and private label food
and pet products for the U.S. retail market, generating over $3
billion in net sales in fiscal 2005. With a powerful portfolio of
brands including Del Monte(R), Contadina(R), StarKist(R), S&W(R),
Nature's Goodness(TM), College Inn(R), 9Lives(R), Kibbles 'n
Bits(R), Pup-Peroni(R), Snausages(R), Pounce(R) and Meaty Bone(R),
Del Monte products are found in nine out of ten American
households.
* * *
The Company's 6-3/4% senior subordinated notes due 2015 and 8-5/8%
senior subordinated notes due 2012 carry Moody's Investors
Service's B2 rating, Standard & Poor's B rating, and Fitch's BB-
rating.
DELTA AIR: Registers 25 Million Common Shares Under Savings Plan
----------------------------------------------------------------
Delta Air Lines filed a Registration Statement with the Securities
and Exchange Commission to register 25 million shares of common
stock for distribution to its employees under the Delta Family-
Care Savings Plan.
The Delta Family-Care Savings Plan is a qualified defined
contribution retirement plan, which includes an employee stock
ownership plan feature.
Each share of Common Stock to be issued under the Plan includes
one-half of a preferred stock purchase right. Each whole Right,
when exercisable, would entitle its registered holder to purchase
one 1/100 of a share of Series D Junior Participating Preferred
Stock of registrant at an exercise price of $300, subject to
adjustment in certain circumstances. The Rights will expire at
the close of business on November 4, 2006, unless earlier
exchanged or redeemed.
First Chicago Trust Company of New York, is the Rights Agent.
The Company valued its share of common stock at $1.08, bringing
the total value of the registered shares at $27 million.
The Company's share price plunged from around the $4.00 level in
late June to hover around the $1.00 level in the past week.
Delta Air Lines -- http://delta.com/-- is the world's second-
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 490
destinations in 85 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam and
other partners. Delta is a founding member of SkyTeam, a
global airline alliance that provides customers with extensive
worldwide destinations, flights and services.
At June 30, 2005, Delta Air's balance sheet showed a $6.9
billion stockholders' deficit, compared to a $5.8 billion deficit
at Dec. 31, 2004. Delta reported a $382 million net loss for the
June 2005 quarter, compared to a net loss of $2.0 billion in
the prior year quarter. Delta's operating loss for the June 2005
quarter was $129 million.
* * *
As reported in the Troubled Company Reporter on Aug. 18, 2005,
Standard & Poor's Ratings Services placed its ratings on Delta Air
Lines Inc. (CC/Watch Neg/--) on CreditWatch with negative
implications, reflecting a very high risk of near-term bankruptcy.
Ratings, which were lowered to current levels Sept. 16, 2004,
already reflect a high likelihood of default. Atlanta, Georgia-
based Delta has about $21 billion of lease-adjusted debt.
DELTA AIR: Swaps Preferred Stock & Dividends with Common Shares
---------------------------------------------------------------
Leslie P. Klemperer, Delta Air Lines's Secretary, informed the
Securities and Exchange Commission that the Company redeemed
shares of its Series B ESOP Convertible Preferred Stock under the
Delta Family-Care Savings Plan:
(1) to provide for distributions of the accounts of Plan
participants who terminate employment with Delta and
request a distribution; and
(2) to implement annual diversification elections by Plan
participants who are at least age 55 and have participated
in the Plan for at least 10 years.
In these circumstances, shares of Preferred Stock are redeemable
at a price equal to the greater of:
-- $72 per share; or
-- the fair value of the shares of Delta common stock issuable
upon conversion of the Preferred Stock (1.7155 shares of
Common Stock for each share of Preferred Stock) to be
redeemed, plus, in either case, accrued and unpaid
dividends on the shares of Preferred Stock to be redeemed.
From August 25 through August 31, 2005, Delta issued 4,527,564
shares of Common Stock in exchange for 69,041.275 shares of
Preferred Stock and $646,340.97 of accrued and unpaid dividends.
The Delta Family-Care Savings Plan is a qualified defined
contribution retirement plan, which includes an employee stock
ownership plan feature.
Delta Air Lines -- http://delta.com/-- is the world's second-
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 490
destinations in 85 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam and
other partners. Delta is a founding member of SkyTeam, a
global airline alliance that provides customers with extensive
worldwide destinations, flights and services.
At June 30, 2005, Delta Air's balance sheet showed a $6.9
billion stockholders' deficit, compared to a $5.8 billion deficit
at Dec. 31, 2004. Delta reported a $382 million net loss for the
June 2005 quarter, compared to a net loss of $2.0 billion in
the prior year quarter. Delta's operating loss for the June 2005
quarter was $129 million.
* * *
As reported in the Troubled Company Reporter on Aug. 18, 2005,
Standard & Poor's Ratings Services placed its ratings on Delta Air
Lines Inc. (CC/Watch Neg/--) on CreditWatch with negative
implications, reflecting a very high risk of near-term bankruptcy.
Ratings, which were lowered to current levels Sept. 16, 2004,
already reflect a high likelihood of default. Atlanta, Georgia-
based Delta has about $21 billion of lease-adjusted debt.
DIRECT INSITE: Registers 1,080,005 Common Shares for Resale
-----------------------------------------------------------
Direct Insite Corp. filed a Registration Statement with the
Securities and Exchange Commission to allow the resale of
1,080,005 shares of common stock, which include:
* up to 80,005 shares which are issuable as interest in lieu of
cash on the Company's March 29, 2005, Senior Subordinated
Secured Notes;
* up to 750,000 shares which are issuable upon the exercise of
the Company's common stock purchase warrants dated March 29,
2005;
* up to 250,000 shares are issuable upon the exercise of the
Company's common stock purchase warrants dated July 12, 2005.
The Selling Shareholders are:
Selling Shareholders Number of Shares
-------------------- ----------------
Sigma Opportunity Fund, LLC 719,338
Metropolitan Venture Partners II, L.P. 110,667
Tall Oaks Group LLC 250,187
Metropolitan Venture owns 1,612,631 shares, which represent 24.8%
of the Company's total outstanding shares. If Metropolitan
Venture will sell 110,667 shares, it will be left with a 20.1%
equity stake comprising of 1,501,964 common shares.
Tall Oaks currently owns 1,093,187 shares. If Tall Oaks will sell
250,000 shares, it will be left with a 12.5% equity stake
comprising of 843,187 shares.
Sigma Opportunity holds 719,338 shares.
The Company's common stock is currently quoted and traded on the
OTC Bulletin Board, an NASD-sponsored and operated inter-dealer
automated quotation system for equity securities not included in
the Nasdaq Stock Market or national exchange, under the symbol
"DIRI.OB." For the past two months, share price fluctuated from
$0.57 to $0.80.
The average daily volume of trading in the Company's common stock
for the three-month period ended August 17, 2005, was 2,155
shares. Of the 48 trading days for the past two months, the
Company's shares only traded for a total of 16 days.
A full-text copy of the Registration Statement is available for
free at http://ResearchArchives.com/t/s?163
Headquartered in Bohemia, New York, Direct Insite Corp. --
http://www.directinsite.com/-- employs a staff of 54. The
Company's IOL solution is deployed in North and South America,
Europe, Middle East, Africa and Asia-Pacific geographic areas.
As of June 30, 2005, Direct Insite's equity deficit widened to
$3,033,000 from a $2,537,000 deficit at Dec. 31, 2004.
DRESSER INC: KPS Special Inks Pact to Buy Instruments Division
--------------------------------------------------------------
Dresser, Inc., agreed to sell the assets of its worldwide Dresser
Instruments business to Ashcroft Holdings, Inc., an affiliate of
KPS Special Situations Fund II, L.P., in a cash transaction.
The sale is expected to close in the fourth quarter of 2005. The
company said this transaction, combined with the previously
announced sale of its On/Off Valve division, will enable it to pay
down approximately $250 million of debt.
Dresser said it was selling the division, which represents less
than six percent of its annual revenue, because it was not part of
its core business of supplying highly engineered equipment and
services to the energy industry.
KPS Special Situations Fund II signed an agreement to buy
substantially all of the assets of the Dresser Instruments
Division of Dresser, Inc. KPS will acquire the assets through a
newly formed company, Ashcroft Holdings, Inc., for an undisclosed
sum.
Dresser's Instruments division manufactures a variety of pressure
gauges, transducers, transmitters, pressure and temperature
switches and other devices used in a wide variety of applications
and industries. Its products include the Ashcroft(R), Ebro(R),
Heise(R), Weksler(R) and Willy(TM) brands. Dresser's Instruments
business employs approximately 1,060 worldwide, including 450 in
Stratford, Conn., where it has its worldwide headquarters and a
manufacturing facility. It also has operations in Brazil,
Germany, Canada, Mexico and Singapore and joint ventures in Saudi
Arabia and Venezuela.
KPS Special Situations Funds -- http://www.kpsfund.com/-- are a
family of private equity funds with over $600 million of committed
capital focused on constructive investing in restructurings,
turnarounds and other special situations. KPS has created new
companies to purchase operating assets out of bankruptcy;
established stand-alone entities to operate divested assets; and
recapitalized highly leveraged public and private companies. The
KPS investment strategy targets companies with strong franchises
that are experiencing operating and financial problems. KPS
invests its capital concurrently with a turnaround plan predicated
on cost reduction, capital investment, and capital availability.
Typically, the KPS turnaround plan is accompanied by a financial
restructuring of the company's liabilities.
Headquartered in Dallas, Texas, Dresser, Inc. --
http://www.dresser.com/-- is a worldwide leader in the design,
manufacture and marketing of highly engineered equipment and
services sold primarily to customers in the flow control,
measurement systems, and compression and power systems segments of
the energy industry. Dresser has a comprehensive global presence,
with over 8,500 employees and a sales presence in over 100
countries worldwide.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Addison, Texas-based Dresser Inc. to 'B+' from 'BB-'.
The company remains on CreditWatch with negative implications.
The ratings downgrade reflects weak credit measures and debt
leverage that remain elevated for the current ratings level.
ENRON CORP: WestLB Holds $539 Million Allowed Unsecured Claim
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved a settlement agreement between Enron Corporation and its
debtor-affiliates, and WestLB A.G, formerly known as Westdeutsche
Landesbank Girozentrale.
Prior to the Debtors' bankruptcy petition date, EPC Estate
Services, Inc., formerly known as National Energy Production
Company, and NEPCO Power Procurement Company, entered into various
contracts for the procurement and construction for the "Quachita
Project" and the "McAdams Project." Enron Corp. guaranteed
NEPCO's and NEPCO Power's performance under the Contracts.
To pay for its subsidiaries obligations' under the Contracts,
Enron entered into a Master Letter of Credit and Reimbursement
Agreement, dated as of July 13, 2000, with WestLB A.G, formerly
known as Westdeutsche Landesbank Girozentrale.
Pursuant to the Agreement, WestLB issued and, subsequently paid
for, letters of credit for the account of Enron in favor of the
developers to two projects -- TPS McAdams and Ouachita Power, LLC:
Date Issued Amount Beneficiary
----------- ------ -----------
8/04/2000 $16,146,750 Ouachita
8/14/2001 $23,332,908 McAdams
WestLB filed Claims against the Debtors concerning the L/Cs:
Claim No. Debtor Letter of Credit
--------- ------ ----------------
9217 Enron McAdams L/C
22168 NEPCO Power McAdams L/C
22169 NEPCO McAdams L/C
9218 Enron Ouachita L/C
22170 NEPCO Ouachita L/C
The Claims allege that:
(i) the Debtors are liable to reimburse WestLB for the amounts
paid under the L/Cs, plus fees and interest under the
Reimbursement Agreement;
(ii) NEPCO and NEPCO Power failed to use payments made to them
by McAdams and Ouachita to pay subcontractors and
suppliers to the Projects -- instead, they transferred all
amounts received to Enron, which was not paying NEPCO and
NEPCO Power's debts when due;
(iii) The amounts paid under the L/Cs were not used to replace
funds that should have been paid to the subcontractors and
suppliers under the Projects; and
(iv) WestLB is subrogated to the rights of McAdams, Ouachita,
NEPCO and NEPCO Power, and the corresponding
subcontractors and suppliers to the Projects.
To resolve their disputes, the Reorganized Debtors and WestLB
agree that:
(1) The McAdams Enron Claim will be reduced and allowed as a
Class 4 general unsecured claim for $523,332,908;
(2) The Ouachita Enron Claim will be reduced and allowed as a
Class 4 general unsecured claim for $16,146,750;
(3) WestLB will be entitled to a single satisfaction of
the Allowed Claims;
(4) WestLB waives and withdraws with prejudice the WestLB
McAdams NEPCO Claim, the McAdams NEPCO Power Claim and the
Ouachita NEPCO Claim;
(5) Neither party admits fault or liability of any sort;
(6) The District Court Litigation and the Swept Funds
Litigation will be dismissed with prejudice and without
the assessment of costs against any party to those
proceedings; and
(7) The parties release each other from claims in connection
the Allowed Claims, the Withdrawn Claims, the Swept Funds
Litigation, the District Court Litigation, the Agreements,
the Guarantees, the Projects and the L/Cs.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- 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. (Enron Bankruptcy News, Issue No.
153; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Penske Logistics Holds $311,903 Allowed Admin. Claim
----------------------------------------------------------------
On Oct. 4, 2002, Penske Logistics LLC filed General Unsecured
Claim No. 7301 against Garden State Paper Company, LLC, for
$781,697. On December 2, 2004, at the request of Enron
Corporation and its debtor-affiliates, the U.S. Bankruptcy Court
for the Southern District of New York allowed the Claim.
On November 14, 2003, GSPC commenced an avoidance action against
Penske to recover $1,208,607 in prepetition transfers.
On January 5, 2005, Penske asked Court to allow its $447,347
administrative expense claim for services rendered to GSPC. GSPC
objected.
To avoid the cost, uncertainty and delay attendant to litigation,
the parties agree that:
(1) Notwithstanding the Allowance Order, Penske will be deemed
to have waived and withdrawn with prejudice Claim No.
7301;
(2) The Administrative Claim will be reduced and allowed for
$311,903, which will be paid with immediately available
funds on or before September 30, 2005; and
(3) The Avoidance Action will be deemed dismissed with
prejudice pursuant to Rule 7041(a)(1) of the Federal Rules
of Bankruptcy Procedure.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- 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. (Enron Bankruptcy News, Issue No.
157; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENTRAVISION COMMS: S&P Rates Planned $650M Sr. Sec. Facility at B+
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating and a
recovery rating of '3' to Entravision Communications Corp.'s
proposed $650 million senior secured credit facility.
"The ratings indicate expectations for a meaningful (50%-80%)
recovery of principal in the event of a payment default," said
Standard & Poor's credit analyst Alyse Michaelson Kelly.
Borrowings under the proposed credit agreement will be used to
refinance Entravision's existing bank borrowings and subordinated
notes.
At the same time, Standard & Poor's affirmed its ratings,
including its 'B+' corporate credit rating, on Entravision. The
outlook is stable. The Santa Monica, California-based Spanish-
language media company had approximately $481 million in debt at
June 30, 2005.
The proposed refinancing extends the company's debt maturities and
results in a $25 million increase in debt. Pro forma debt to
EBITDA was around 6x at June 30, 2005, compared with the reported
ratio of 5.6x.
The rating on Entravision reflects:
* its high leverage;
* lower EBITDA margin compared with peers;
* intensifying Spanish-language media competition; and
* the potential for debt-financed acquisitions or share
repurchases that could weigh on its credit profile.
These factors are only partially offset by:
* Entravision's long-term strategic relationship with
shareholder Univision Communications Inc.;
* broadcasting's good margin potential and discretionary cash
flow generating capabilities; and
* resilient station asset values.
Entravision reaches about 75% of the U.S. Hispanic population
through its Spanish-language TV and radio stations and outdoor
advertising displays. The majority of total broadcast cash flow
is derived from the TV segment, which has a strong broadcast cash
flow margin above 40%. Entravision is the largest affiliate group
of both the Univision Network and Univision's Telefutura Network.
Entravision's TV and radio revenues are expected to continue
growing faster than the overall television and radio sectors
because of favorable Spanish-language population and advertising
trends, and the good competitive position of its assets.
Entravision's reported debt to EBITDA ratio was 5.6x at
June 30, 2005, compared with around 6x at year-end 2004 and more
than 7x (including preferred stock) in 2003. Credit profile
improvement has benefited from EBITDA growth. EBITDA coverage of
cash interest expense was 3.1x for the 12 months ended June 30,
2005. The company's overall EBITDA margin is around 31%, somewhat
below efficient broadcasters with margins in the 40%-50% range,
because of its lower-margin outdoor advertising business and
ownership of a number of developing stations.
EXIDE TECHNOLOGIES: Names Phillip Damaska as VP & Corp. Controller
------------------------------------------------------------------
Exide Technologies (NASDAQ: XIDE) has appointed Phillip Damaska as
Vice President and Corporate Controller, effective immediately.
He joined Exide in January 2005 as Vice President for Finance.
Mr. Damaska, 50, succeeds Ian Harvie, who has elected not to
relocate from New Jersey to the Company's executive offices in
Alpharetta, Georgia. Mr. Harvie has agreed to remain with the
Company for a short period of time to complete certain projects.
"I would like to congratulate Phil as he takes on additional
responsibilities," said J. Timothy Gargaro, Executive Vice
President and Chief Financial Officer. "I am confident that his
proven track record will help drive the improvements in our
systems, processes and controls, which we need to build a
successful business.
"On behalf of the Board and the senior leadership team, I would
also like to thank Ian for the financial leadership and support he
has provided to the Company since joining Exide a little more than
three years ago," Mr. Gargaro said. "His work ethic and financial
acumen will be missed, and we wish him well in his future
endeavors."
Before joining Exide, Mr. Damaska spent eight years with
Freudenberg-NOK. His most recent assignment there was as
President of Corteco, an automotive and industrial seal supplier
that is part of the partnership's global group of companies.
Other leadership positions in that organization included Vice
President and General Manager of Latin American Operations and
Corporate Controller. Earlier, Mr. Damaska was Group Controller
for AlliedSignal's Automotive Aftermarket Division and Director of
Operations and Financial Analysis for AlliedSignal Automotive.
Mr. Damaska holds a bachelor's degree in accounting from Albion
College and an MBA from the University of Detroit. He is a
Certified Public Accountant in the state of Michigan.
Headquartered in Princeton, New Jersey, Exide Technologies --
http://www.exide.com/-- is the worldwide leading manufacturer and
distributor of lead acid batteries and other related electrical
energy storage products. The Company filed for chapter 11
protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125).
Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland &
Ellis, represent the Debtors in their restructuring efforts.
Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On
April 14, 2002, the Debtors listed $2,073,238,000 in assets and
$2,524,448,000 in debts.
* * *
As reported in the Troubled Company Reporter on July 8, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Exide Technologies to 'CCC+' from 'B-', and removed the
rating from CreditWatch with negative implications, where it was
placed on May 17, 2005.
"The rating action reflects Exide's weak earnings and cash flow,
which have resulted in very high debt leverage, thin liquidity,
and poor credit statistics," said Standard & Poor's credit analyst
Martin King. Lawrenceville, New Jersey-based Exide, a
manufacturer of automotive and industrial batteries, has total
debt of about $740 million, and underfunded postemployment benefit
liabilities of $380 million.
FEDERAL-MOGUL: FM Products Unit Inks Amended Montebello Lease
-------------------------------------------------------------
In October 1998, Federal-Mogul Corporation acquired Moog
Automotive Company, the assignee of a lease agreement relating to
a warehouse and distribution center in Montebello, California.
MAC subsequently assigned its interest under the Montebello Lease
to Federal-Mogul Products, Inc.
FM Products has used the Montebello Facility as a warehouse and
distribution center for several years, under a lease that
currently runs through January 31, 2006. The Montebello Lease is
renewable for an additional five-year term at existing market
rental rates.
Because FM Products needed a facility to serve as a warehouse and
distribution center in that region for its products, it examined
potential locations that might serve a purpose after January 31,
2006. The three main alternatives were:
(1) a location within the Los Angeles metropolitan area;
(2) remaining at the Montebello Facility; or
(3) finding another location within the region but outside the
metropolitan area.
FM Products decided to exercise the Montebello Lease's five-year
option, after the other choices proved to be more costly.
Montebello Restated Lease
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub P.C., in Wilmington, Delaware, informs the Court that
FM Products and ProLogis California I LLC, as the Landlord of the
Montebello Facility, have agreed to an amendment of the
Montebello Lease that incorporates all of the original terms and
extends it until 2011.
Under the Montebello Restated Lease, FM Products will pay
ProLogis:
Monthly Base Rent Period
----------------- -------------------
$51,372 02/01/06 - 03/31/06
$102,744 04/01/06 - 09/30/08
$111,131 10/01/08 - 03/31/11
FM Products may also opt to extend the lease until March 31, 2016.
Accordingly, the Debtors sought and obtained the Court's
permission for FM Products to enter into the Montebello Restated
Lease with ProLogis.
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 Oct. 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 Nos. 90 & 91;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
FORD MOTOR: Reviewing Multi-Billion Bids for Sale of Hertz Unit
---------------------------------------------------------------
Ford Motor Co. is reviewing bids for the sale of its Hertz Corp.
subsidiary, The Deal reports.
The bidders:
(1) The Carlyle Group, Clayton, Dubilier & Rice Inc. and
Merrill Lynch Global Private Equity;
(2) Bain Capital Partners LLC, Blackstone Group LP, Texas
Pacific Group and Thomas H. Lee Partners LP,
turned in their offers last month. The proposals were reportedly
around $10 billion or higher including debt.
Hertz has around $6 billion of unsecured, medium-term and
long-term debt, and about $1 billion of secured debt.
Regulatory disclosures reveal that as of Dec. 31, 2004, Hertz had
$297.6 million of asset-backed commercial paper and $600 million
of asset-backed medium-term notes outstanding.
Ford Motor provides most of the cars Hertz rents and Ford also
repurchases some of Hertz's cars.
Ford Motor Company, a global automotive industry leader based in
Dearborn, Michigan, manufactures and distributes automobiles in
200 markets across six continents. With more than 324,000
employees worldwide, the company's core and affiliated automotive
brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln,
Mazda, Mercury and Volvo. Its automotive-related services include
Ford Motor Credit Company and The Hertz Corporation.
* * *
As reported in the Troubled Company Reporter on Aug. 25, 2005,
Moody's Investors Service lowered the ratings of Ford Motor
Company, senior unsecured to Ba1 from Baa3, and assigned a Ba1
Corporate Family Rating and an SGL-1 speculative grade liquidity
rating. Moody's also lowered the ratings of Ford Motor Credit
Company, senior unsecured to Baa3 from Baa2, and short-term rating
to Prime-3 from Prime-2. The rating outlook for both companies is
negative.
As reported in the Troubled Company Reporter on July 22, 2005,
Fitch Ratings has downgraded the senior unsecured debt of Ford,
Ford Credit and various affiliates to 'BBB-' from 'BBB'. Ratings
on the Capital Trust II securities have been downgraded to 'BB'
from 'BB+'. Fitch has also affirmed the 'F2' commercial paper
ratings. Additionally, Fitch has lowered the ratings of Hertz
have to 'BBB-' from 'BBB' and remain on Rating Watch Evolving.
FRONTIER INSURANCE: Court OKs $1M Sale of NY Property to Vanguard
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved Frontier Insurance Group, Inc.'s sale of a non-
residential real property located at 217 Broadway in Monticello,
New York, to Vanguard Investors, Ltd., for $1 million.
As previously reported in the Troubled Company Reporter on
Aug. 12, 2005, according to Frontier Insurance, the sale of the
property is a critical element of its reorganization. A fraction
of the sale proceeds will be used to fund the Debtor's chapter 11
administrative expenses and a chapter 11 plan. Also, part of the
proceeds from the sale will be distributed to Frontier's
creditors.
The sale is expected to close by October 21.
Headquartered in Rock Hill, New York, Frontier Insurance Group,
Inc., is an insurance holding company, which through its
subsidiaries, is a national underwriter and creator of specialty
insurance products serving the needs of insureds in niche markets.
The Company filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-36877). Matthew H. Charity, Esq., at
Baker & Hostetler, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $13,670,000 and total debts of
$250,210,000.
FRONTIER INSURANCE: Gets Court OK to Hire Belgard Realty as Broker
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved Frontier Insurance Group, Inc.'s employment of Belgard
Realty as its real estate broker.
As previously reported in the Troubled Company Reporter on
Aug. 12, 2005, the Debtor retained Belgard to market the
non-residential real property located at 217 Broadway, in
Monticello, New York. Belgard found a potential buyer, Vanguard
Investors, Ltd. Vanguard offered $1 million for the property.
The Court approved the sale transaction with Vanguard.
Belgard will receive a commission equal to 6% of the gross
purchase price of the property plus 10% of any proceeds over
$1 million.
Headquartered in Rock Hill, New York, Frontier Insurance Group,
Inc., is an insurance holding company, which through its
subsidiaries, is a national underwriter and creator of specialty
insurance products serving the needs of insureds in niche markets.
The Company filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-36877). Matthew H. Charity, Esq., at
Baker & Hostetler, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $13,670,000 and total debts of
$250,210,000.
GERDAU S.A.: Fitch Puts BB- Rating on Proposed $300MM Bond Issue
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' foreign currency rating to the
proposed US$300 million senior unsecured perpetual bond issuance
by Gerdau S.A. Fitch has also assigned to Gerdau a 'BB-' foreign
currency rating. Gerdau's foreign currency rating is constrained
at the current level due to the 'BB-' foreign currency rating of
Brazil. The Rating Outlook is Stable.
Gerdau's rating reflects the group's consolidated financial
profile characterized by low leverage and strong liquidity, as
well as the favorable business positions and strong financial
profiles of its main steel production subsidiaries, Gerdau
Acominas S.A., Gerdau Acos Longos S.A. and Gerdau Ameristeel
Corporation.
The perpetual bonds have no fixed maturity date but will become
callable in whole on a quarterly basis after five years. The
bonds are unconditionally and irrevocably, jointly and severally
guaranteed by Gerdau's four majority-owned Brazilian operating
subsidiaries: Gerdau Acominas S.A., Gerdau Acos Longos S.A.,
Gerdau Acos Especiais S.A. and Gerdau Comercial de Acos S.A.,
collectively the Guarantors. Proceeds of the offering are
expected to be used for general corporate purposes including
primarily the funding of acquisitions outside of North America and
the repayment of short-term debt.
Acos Longos is the dominant player in the long steel products
market in Brazil with a market share of about 50%, while Acominas
is a leading exporter of billets, bloom and slabs. Both companies
benefit from a relatively competitive cost structure as a result
of vertical integration and access to low-cost raw materials and
labor. The rating also considers the concentrated nature of the
Brazilian steel industry, which limits competition based solely
upon price. Barriers to entry include the logistical challenges
of transporting steel to Brazil and within the country, as foreign
steel producers have limited access to efficient distribution
networks. Gerdau's ratings factor in the stand-alone credit
strength of both these key Brazilian operating subsidiaries, which
were created on July 29, 2005 when the former Gerdau Acominas S.A.
was split up into the four Guarantors mentioned above
Ameristeel, Gerdau's North American operations, also has a low
leveraged financial profile. The company has made many strategic
acquisitions such that it now holds the second leading position in
the North American long products market. Ameristeel has been a
key participant in the consolidation of the North American steel
industry which has recently restructured itself to become a less
fragmented and more competitive. Although Gerdau's perpetual bond
does not have a guarantee by Ameristeel, Gerdau stands to benefit
from potential future dividends to be received from Ameristeel.
In 2004, Gerdau enjoyed its strongest performance ever, generating
consolidated net revenues of US$7.0 billion and operating EBITDA
of US$1.9 billion. Compared with the prior year, revenues and
operating EBITDA increased 53% and 116%, respectively, mainly due
to the increase in the spread between steel prices and scrap
prices and the recovery of demand both in Brazil and worldwide.
With total consolidated debt of about US$2.5 billion and cash of
US$1.1 billion at June 30, 2005, Gerdau's leverage, as measured by
net debt to operating EBITDA, decreased to 0.7 times (x) from 2.2x
in 2003, and the ratio of total debt to operating EBITDA decreased
to 1.2x from 2.5x. About 64% of the company's consolidated debt
was held at companies in Brazil and about 22% was at Ameristeel.
Although Gerdau is a geographically well diversified, with 54% of
its total production capacity outside Brazil, approximately 67% of
consolidated operating EBITDA was generated by the company's
Brazilian operations in 2004. This exposure, as well as the
overall risk of the cyclical steel industry, is factored into
Gerdau's ratings and the credit assessment of its operating
subsidiaries.
Headquartered in Porto Alegre, Brazil, Gerdau is a holding company
for the group's steel production facilities in North and South
America. The Gerdau companies operate mini-mill and integrated-
steel facilities in Brazil, Argentina, Canada, Chile, the United
States and Uruguay and have a crude steel production capacity of
16.4 million tons. Gerdau owns 89.3% of its Brazilian operating
companies, which consist primarily of the Acominas and Acos Longos
and have a combined production capacity of about 7.6 million tons
of crude steel. In North America, Gerdau owns 66.5% of Ameristeel
which ranks as the second-largest producer of long-steel products
with an annual production capacity of 8.3 million tons.
A full copy of Fitch's Credit Analysis report about Gerdau can be
found within FitchResearch, Fitch's subscription-based web site,
located at http://www.fitchratings.com/or by contacting Products
& Services at +1-212-908-0800.
Gerdau's securities are traded in the United States and are
registered in the Securities and Exchange Commission. SEC filings
on the company are available for free at
http://ResearchArchives.com/t/s?165
GLYCOGENESYS INC: Registers 755,742 Common Shares for Resale
------------------------------------------------------------
GlycoGenesys, Inc., filed a Registration Statement with the
Securities and Exchange Commission to allow the resale of 755,742
shares of common stock held by these shareholders:
Selling Shareholders Number of Shares
-------------------- ----------------
Eugene A. Cloutier 377,871
James J. Cloutier 377,871
The Company's share price traded between $0.97 and $1.20 the past
month. It reached the $2.00 level late June.
About GlycoGenesys, Inc.
GlycoGenesys, Inc. -- http://www.glycogenesys.com/-- is a
biotechnology company focused on carbohydrate-based drug
development. The Company currently is conducting a Phase I dose
escalation trial of GCS-100LE, a unique compound to treat cancer,
in patients with solid tumors at Sharp Memorial Hospital, Clinical
Oncology Research in San Diego, California and the Arizona Cancer
Center at Tucson and at Scottsdale, Arizona. In addition, the
Company is conducting a Phase I/II dose escalation trial of GCS-
100LE in multiple myeloma at the Dana-Farber Cancer Institute in
Boston, Massachusetts. Further clinical trials are planned for
2005. The Company's headquarters are located in Boston,
Massachusetts with a laboratory in Cambridge, Massachusetts.
* * *
Going Concern Doubt
Deloitte & Touche LLP said in its March 29, 2005, report that
there is substantial doubt in the Company's ability to continue as
a going concern pointing to:
* the Company's recurring losses from operations,
* $94.5 million accumulated deficit as of Dec. 31, 2004, and
* the Company's expectation that it will incur substantial
additional operating costs for the foreseeable future,
including costs related to ongoing research and development
activities, preclinical studies and clinical trials.
The Company received a similar opinion from its independent
auditors for the past four years.
The Company incurred a $4,592,482 net loss for the six-month ended
June 30, 2005.
GT BRANDS: Wants Until Jan. 9 to Make Lease-Related Decisions
-------------------------------------------------------------
GT Brands Holdings LLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to extend,
until Jan. 9, 2006, the period within which they can elect to
assume, assume and assign, or reject their unexpired
nonresidential real property leases.
The Debtors are parties to three unexpired nonresidential real
property leases relating to their headquarter offices in New York
City, their warehouse and distribution facility in Jersey City,
New Jersey, and a fitness facility in Columbia, South Carolina,
related to their Firm line of fitness DVDs, videos and related
products.
The Debtors remind that Court that it approved the sale of
substantially all of their assets to Gaiam Inc. on Aug. 31, 2005.
The sale transaction is expected to close by Sept. 31, 2005.
The Debtors give the Court four reasons in support of the
extension:
1) The unexpired leases are valuable assets of their estates
and integral to their business operations. The Debtors need
to continue their business operations through the closing of
the sale transaction so they will be able to satisfy the
material contractual conditions under the Asset Purchase
Agreement;
2) The Debtors have been unable to make reasoned decisions as
to whether to assume or reject the leases within the 60-day
period after their bankruptcy petition date specified in
Sec. 365(d)(4) of the Bankruptcy Code because they were
preoccupied with the operation of their businesses and were
busy addressing creditor issues and concerns;
3) The requested extension will avert the statutory forfeiture
of valuable assets, promote their ability to maximize the
value of their chapter 11 estates and avoid the incurrence
of needless administrative expenses by minimizing the
likelihood of inadvertent rejections of valuable leases or
premature assumption of other leases; and
4) They are current on all their postpetition rent obligations
under each unexpired lease pursuant to Sec. 365(d)(3) of
the Bankruptcy Code.
The Court will convene a hearing at 2:30 p.m., on Sept. 12, 2005,
to consider the Debtors' request.
Headquartered in New York, New York, GT Brands Holdings LLC,
supplies home video titles to mass retailers. The Debtors also
develop and market branded consumer, lifestyle and entertainment
products. The Company and its affiliates filed for chapter 11
protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167).
Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they listed total assets of
$79 million and total debts of $212 million.
HEALTHSOUTH CORP: Jon F. Hanson to Replace Robert May as Chairman
-----------------------------------------------------------------
Robert P. May has notified HealthSouth Corporation (OTC Pink
Sheets: HLSH) of his intention to resign as a Director and as
Chairman of the Board, effective Oct. 1, 2005. Current Director
Jon F. Hanson has been elected to replace Mr. May as Chairman of
the Board upon his resignation.
"With the help and support of HealthSouth's thousands of dedicated
employees and my fellow board members, I am proud to have been
part of the team that has contributed to the current success of
HealthSouth," said Mr. May. "Over the course of the last three
years, I have achieved a wide variety of the business and personal
goals I had established for HealthSouth and for me. Now, due to
increasing professional and personal opportunities and
obligations, I feel this is the right time for me to turn over my
responsibilities to HealthSouth's new leadership team. I have
great confidence in HealthSouth's future and wish my fellow
directors and HealthSouth's employees every success as they move
forward."
Mr. Hanson added, "It has been both an honor and a pleasure to
have served alongside Bob, who answered our Board's call for him
to step in as Interim CEO when HealthSouth was facing enormous
challenges. His leadership, courage and commitment impressed all
who crossed his path and he did much to help reshape the new
HealthSouth. We wish him well in his future endeavors."
"On behalf of HealthSouth's employees and management team, I would
like to thank Bob for his dedication to the Company," said
HealthSouth President and CEO Jay Grinney. "We have benefited
from his leadership and perspective, and are a better company for
his involvement."
HealthSouth Corporation -- http://www.healthsouth.com/-- is one
of the nation's largest providers of outpatient surgery,
diagnostic imaging and rehabilitative healthcare services,
operating facilities nationwide.
At Dec. 31, 2003, HealthSouth Corporation's balance sheet showed a
$963,837,000 stockholders' deficit, compared to a $528,759,000
deficit at Dec. 31, 2002.
HONEY CREEK: Section 341(a) Meeting Slated for September 28
-----------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of Honey
Creek Kiwi LLC's creditors at 2:00 p.m., on Sept. 28, 2005, at the
Office of the U.S. Trustee, located at 1100 Commerce St., Room 976
in Dallas, Texas.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC, filed for
chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case
No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C.,
in Dallas Texas, represents the Debtor in its chapter 11 case.
When the Debtor filed for protection from its creditors, it
reported $10 million to $50 million in estimated assets and debts.
HONEY CREEK: Creditors Must File Proofs of Claim by December 27
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas, set
December 27, 2005, as the deadline for all creditors owed money
by Honey Creek Kiwi LLC, on account of claims arising prior to
August 24, 2005, to file formal written proofs of claim.
Creditors must deliver their claim forms to:
Tawana C. Marshall
Clerk of the Bankruptcy Court
Northern District of Texas
1100 Commerce Street, Room 1254
Dallas, Texas 75242
Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC, filed for
chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case
No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C.,
in Dallas Texas, represents the Debtor in its chapter 11 case.
When the Debtor filed for protection from its creditors, it
reported $10 million to $50 million in estimated assets and debts.
INDUSTRIAL ENTERPRISES: Securities Trading Transferred to OTCBB
---------------------------------------------------------------
The National Association of Securities Dealers approved Industrial
Enterprises of America, Inc.'s (OTCBB: ILNP) securities for
trading on the Over-the-Counter Bulletin Board (OTCBB).
Effective Aug. 29, 2005, the Company's shares begun trading on the
Over-the-Counter Bulletin Board under ticker symbol "ILNP".
"The approval to trade on the Bulletin Board is the first step in
our plan to attract new institutional investors and to increase
the marketability of our securities," Crawford Shaw, Chief
Executive Officer of Industrial Enterprises of America, said.
"Our status as a fully reporting company qualified us for
expedited listing on the Bulletin Board, which offers increased
liquidity, easier access to stock quotes, and more market
transparency. We believe that our recent corporate actions
combined with the initial success of the Unifide acquisition have
positioned the Company to achieve solid earnings in the current
fiscal year and deliver long term shareholder value."
The OTCBB is a regulated quotation service that displays real-time
quotes, last-sale prices, and volume information in Over-the-
Counter equity securities. OTCBB securities include national,
regional, and foreign equity issues, warrants, units, American
Depositary Receipts (ADRs), and Direct Participation Programs
(DPPs). The OTCBB provides access to more than 3,600 securities
and includes more than 330 participating Market Makers.
Industrial Enterprises of America, Inc. --
http://www.TheOtherGas.com/-- is one of the largest worldwide
providers of refrigerant gases, specializing in converting the
hydroflurocarbon gases, R134a and R152a, into branded and private
label refrigerant and propellant products. The Company's main
product, the "gas duster" is used in a variety of industries
including consumer electronics, medical, and the automotive
aftermarket. The Company is headquartered in Houston, Texas, with
manufacturing and packaging facilities in New Jersey.
* * *
Going Concern Doubt
Beckstead and Watts, LLP, had expressed substantial doubt about
Industrial Enterprises' ability to continue as a going concern
after it audited the Company's financial statements for the fiscal
year ended June 30, 2005. The auditors point to the Company's
sustained net losses and stockholders' deficit.
At March 31, 2005, Industrial Enterprises' total liabilities
exceed its total assets by $1,681,900.
INTERSTATE BAKERIES: Names Kent Magill as Gen. Counsel & Secretary
------------------------------------------------------------------
Ronald B. Hutchison, the Executive Vice President and Chief
Financial Officer of Interstate Bakeries, reports that the
Company has promoted Kent B. Magill as its Executive Vice
President, General Counsel and Corporate Secretary.
As a result, Mr. Magill's annual base salary has been increased
to $265,000 from $229,984.
Mr. Magill's salary increase was approved on August 23, 2005.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
JAMES SANCHEZ: Case Summary & 13 Largest Unsecured Creditors
------------------------------------------------------------
Debtors: James Leon Sanchez, Sr. & Francesca C. Sanchez
P. O. Box 685
Orange, Texas 77631
Bankruptcy Case No.: 05-11408
Type of Business: The Debtors own Total Compassionate Care, Inc.
(Bankr. E.D. Tex. Case No. 05-11064). Total
Compassionate Care filed for chapter 11
protection on July 6, 2005, and its case is
pending before the Hon. Bill Parker.
Chapter 11 Petition Date: September 6, 2005
Court: Eastern District of Texas (Beaumont)
Debtors' Counsel: Floyd A. Landrey, Esq.
Moore Landrey, L.L.P.
390 Park Street, Suite 500
Beaumont, Texas 77701
Tel: (409) 835-3891
Fax: (409) 835-2707
Total Assets: $1,019,060
Total Debts: $3,128,674
Debtors' 13 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hibernia Bank Trade Debt $31,866
225 Baronne Street,
11th Floor
New Orleans, LA 70112
Capital One Trade Debt $13,629
P.O. Box 65007
Dallas, TX 75265-0004
MBNA America Trade Debt $12,794
P.O. Box 15137
Wilmington, DE 19886-5137
Chase Trade Debt $12,578
AT&T Universal Card Trade Debt $11,057
Chase Trade Debt $10,527
David O. Olson Trade Debt $6,852
Bank of America Trade Debt $3,918
Bank of America Trade Debt $3,476
Bank of America Trade Debt $3,120
American Express Optima Trade Debt $2,708
Hibernia Bank Trade Debt $2,519
GE Money Bank Trade Debt $1,871
KAISER ALUMINUM: Court May Approve Disclosure Statement This Week
-----------------------------------------------------------------
Judge Fitzgerald has indicated that she would sign off the
disclosure statement explaining Kaiser Aluminum Corporation and
its debtor-affiliates' amended plan of reorganization within the
week, according to Dow Jones Newswires.
The U.S. Bankruptcy Court for the District of Delaware deferred
approval of the Disclosure Statement at the hearing on Sept. 1,
2005, upon consideration of an objection by the U.S. Environmental
Protection Agency.
The EPA had argued that the Disclosure Statement fails to
adequately explain how the Plan will provide for compliance with
environmental law with respect to certain contaminated properties
owned by Kaiser Aluminum Chemical Corporation.
Judge Fitzgerald said she expects to approve the Remaining
Debtors' Plan and Disclosure Statement "once the finishing touches
are put on plan documents," Dow Jones Newswires reports.
On Sept. 7, the Debtors filed a revised plan and disclosure
statement to incorporate the Court's orders at the hearing.
A black-lined copy of the Second Amended Disclosure Statement is
available for free at http://researcharchives.com/t/s?169
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 77; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KAISER ALUMINUM: Trustees to Govern Asbestos Allocation Procedures
------------------------------------------------------------------
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A.,
in Wilmington, Delaware, tells Judge Fitzgerald that the
individuals confirmed by the U.S. Bankruptcy Court for the
District of Delaware to serve as the trustees of the Asbestos PI
Trust will implement and administer the "Asbestos Distribution
Procedures," which have been adopted after negotiations among
Kaiser Aluminum Corporation, its debtor-affiliates, the Official
Representative for Future Asbestos Claimants, and the Official
Committee of Asbestos Personal Injury Claimants.
Asbestos Distribution Procedures
Mr. DeFranceschi relates that the Asbestos PI Trust's goal is to
treat all claimants similarly and equitably. The Asbestos
Distribution Procedures further that goal by outlining procedures
for processing and paying the Debtors' several shares of the
unpaid portion of the liquidated value of Asbestos Personal
Injury Claims generally on an impartial, first-in, first-out
basis, with the intention of paying all claimants over time as
equivalent a share as possible of their Claims value.
To that end, the Asbestos Distribution Procedures establish a
schedule of eight asbestos-related diseases, seven of which have:
-- presumptive medical and exposure requirements,
-- specific liquidated values,
-- anticipated average values, and
-- caps on their liquidated values.
Mr. DeFranceschi explains that these requirements and values have
all been selected and derived with the intention of achieving a
fair allocation of certain personal injury trust assets allocated
to the Asbestos PI Trust as among claimants suffering from
different disease processes in light of the best available
information and taking into consideration the Debtors' history of
settling claims and the rights claimants would have in the tort
system absent the reorganization cases.
The PI Trust Assets consist of:
* certain PI Insurance Assets;
* 100 shares of Reorganized Kaiser Trading's common stock,
constituting 100% of the outstanding equity interest of that
company;
* cash equal to $13,000,000; and
* 75% of the KFC Claim to be transferred to the PI Trusts in
accordance with Section 4.2.f of Intercompany Claims
Settlement.
Disease Levels, Scheduled Values and Medical Criteria
The Asbestos Disease Levels, Asbestos Scheduled Values and
Asbestos Medical/Exposure Criteria will apply to all asbestos
trust voting claims filed with the Asbestos PI Trust on or before
the date that the Asbestos PI Trust first makes available the
Claim forms and other Claims materials required to file a Claim
with the Asbestos PI Trust. With the consent of the Asbestos PI
Trust Advisory Committee established pursuant to the Plan of
Reorganization and the Asbestos PI Trust Agreement, the Futures
Representative, the Asbestos PI Trustees may:
(a) add to, change or eliminate Asbestos Disease Levels,
Asbestos Scheduled Values or Asbestos Medical/Exposure
Criteria;
(b) develop subcategories of Asbestos Disease Levels, Asbestos
Scheduled Values or Asbestos Medical/Exposure Criteria; or
(c) determine that a novel or exceptional Asbestos Personal
Injury Claim is compensable even though it does not meet
the Asbestos Medical/Exposure Criteria for any of the
then-current Asbestos Disease Levels.
The Amended Plan tabulates the eight Asbestos Disease Levels
covered by the Asbestos Distribution Procedures, together with the
Asbestos Medical/Exposure Criteria for each and the Asbestos
Scheduled Values for the seven Asbestos Disease Levels eligible
for expedited review:
Disease Level Scheduled Value Medical/Exposure Criteria
------------- --------------- -------------------------
Level VIII $70,000 Diagnosis of mesothelioma
(Mesothelioma) and credible evidence of
"Kaiser Exposure"
Level VII $27,500 * Diagnosis of a primary
(Lung Cancer 1) lung cancer, plus evidence
of an Underlying Bilateral
Asbestos-Related Non-
malignant Disease;
* six months of Kaiser
Exposure before Dec. 31,
1982;
* significant occupational
exposure to asbestos; and
* supporting medical
documentation establishing
asbestos exposure as a
contributing factor in
causing the lung cancer in
question.
Level VI None * Diagnosis of a primary
(Lung Cancer 2) lung cancer;
* Kaiser Exposure prior to
December 31, 1982; and
* supporting medical
documentation.
Level VI Claims are claims
that do not meet the more
stringent medical and
exposure requirements. All
Level VI Claims will be
individually evaluated. The
estimated likely average of
the individual evaluation
awards for those Claims is
$7,000, with those awards
capped at $20,000, unless
the Claim qualifies for
Extraordinary Asbestos Claim
treatment.
Level VI Claims that show no
evidence of either an
underlying Bilateral Asbestos
Related Non-malignant Disease
or Significant Occupational
Exposure may be individually
evaluated, although it is not
expected that those Claims
will be treated as having any
significant value, especially
if the claimant is also a
smoker.
Level V $13,800 * Diagnosis of a primary
(Other Cancer) colo-rectal, laryngeal,
esophageal, pharyngeal or
stomach cancer, plus
evidence of an underlying
Bilateral Asbestos-Related
Non-malignant Disease;
* six months of Kaiser
Exposure;
* Significant Occupational
Exposure to asbestos; and
* supporting medical
documentation.
Level IV $20,750 * Diagnosis of asbestosis
(Severe Asbestosis) with ILO of 2/1 on the
International Labour
Organization scale or
greater or asbestosis
determined by pathological
evidence of asbestos, plus:
-- total lung capacity less
than 65%; or
-- forced vital capacity
less than 65%, and ratio
of forced expiratory
volume in the first
second of forced
expiration to FVC greater
than 65%;
* six months of Kaiser
Exposure before
December 31, 1982;
* Significant Occupational
Exposure to asbestos; and
* supporting medical
documentation establishing
asbestos exposure as a
contributing factor in
causing the pulmonary
disease in question.
Level III $4,850 * Diagnosis of Bilateral
(Asbestosis/Pleural Asbestos-Related Non-
Disease) malignant Disease, plus TLC
less than 80% or FVC less
than 80% and FEV1/FVC ratio
greater than or equal to
65%;
* six months of Kaiser
Exposure prior to
December 31, 1982;
* Significant Occupational
Exposure to asbestos; and
* supporting medical
documentation.
Level II $700 * Diagnosis of a Bilateral
(Asbestosis/Pleural Asbestos-Related Non-
Disease) malignant Disease;
* six months of Kaiser
Exposure prior to
December 31, 1982; and
* five years cumulative
occupational exposure to
asbestos.
Level I (Other $200 * Diagnosis of a Bilateral
Asbestos Disease - Asbestos-Related Non-
Cash Discount Payment) malignant Disease or an
asbestos-related malignancy
other than mesothelioma;
and
* Kaiser Exposure prior to
December 31, 1982.
Claims Liquidation Procedures
The Amended Plan provides that the Asbestos Personal Injury
Claims will be processed based on their place on a FIFO processing
queue to be established pursuant to the Asbestos Distribution
Procedures. The Asbestos PI Trust will take all reasonable steps
to resolve the Asbestos PI Claims as efficiently and expeditiously
as possible at each stage of Claims processing and arbitration.
To that end, the Asbestos PI Trust, in its sole discretion, may
conduct settlement discussions with claimants' representatives
with respect to more than one Claim at a time, provided that the
claimants' positions in the Asbestos FIFO Processing Queue are
maintained and each Claim is individually evaluated pursuant to
the valuation factors set forth in the Asbestos Distribution
Procedures.
The Asbestos PI Trust will also make every effort to resolve each
year at least that number of Asbestos PI Claims required to
exhaust the maximum annual payment and the maximum available
payment for certain asbestos claims under the Asbestos
Distribution Procedures.
Asbestos Individual Review Process
The Asbestos PI Trust's process for Asbestos Individual Review
provides a claimant with an opportunity for individual
consideration and evaluation of an Asbestos PI Claim that fails to
meet the presumptive Asbestos Medical/Exposure Criteria for any of
those Asbestos Disease Levels from I to VIII.
The Asbestos PI Trust will either deny the Claim or, if the
Asbestos PI Trust is satisfied that the claimant has presented a
Claim that would be cognizable and valid in the tort system, the
Asbestos PI Trust can offer the claimant a liquidated value amount
up to the Asbestos Scheduled Value for that Asbestos Disease
Level, unless the Claim qualifies as an "Extraordinary Asbestos
Claim," in which case its liquidated value cannot exceed the
maximum value for that Claim under the Asbestos Distribution
Procedures.
Valuation Factors for Asbestos Individual Review
The Asbestos PI Trust will liquidate the value of each Asbestos
PI Claim that undergoes Asbestos Individual Review based on the
historic liquidated values of other similarly situated claims in
the tort system for the same Asbestos Disease Level. The
Asbestos PI Trust will take into consideration all of the factors
affecting the severity of damages and values within the tort
system, including:
(a) the degree to which the characteristics of a Claim differ
from the presumptive Asbestos Medical/Exposure Criteria
for the Asbestos Disease Level in question;
(b) factors like the claimant's age, disability, employment
status, disruption of household, family or recreational
activities, dependencies, special damages and pain and
suffering;
(c) evidence that the claimant's damages were caused by
asbestos exposure, including exposure to an asbestos
containing product for which the Debtors have legal
responsibility prior to December 31, 1982;
(d) the industry of exposure; and
(e) settlements, verdicts and the claimant's and other law
firms' experience in the claimant's jurisdiction for
similarly situated claims.
Scheduled, Average and Maximum Values
The Asbestos Scheduled Values, Asbestos Average Values and
Asbestos Maximum Values for the Asbestos Disease Levels
compensable under the Asbestos Distribution Procedures are:
Disease Level Scheduled Value Average Value Maximum Value
------------- --------------- ------------- -------------
Level VIII $70,000 $104,000 $380,000
Level VII 27,500 33,000 85,000
Level VI None 7,000 20,000
Level V 13,800 17,300 40,000
Level IV 20,750 22,000 55,000
Level III 4,850 None None
Level II 700 None None
Level I 200 None None
A full-text copy of the Asbestos Distribution Procedures is
available for free at:
http://bankrupt.com/misc/Asbestos_Distribution_Procedures.pdf
Reorganized KAC
On or prior to the Effective Date, new entities will be formed:
(1) New Kaiser Intermediate Holdco -- a new Delaware
corporation owned by KAC, to function as an intermediate
holding company;
(2) New Kaiser FP LLC -- a new Delaware limited liability
company, initially owned by KACC, to hold the assets
associated with its flat-rolled products and engineered
products units; and
(3) New Kaiser Remainder LLC -- a new Delaware limited
liability company, owned by New Kaiser Intermediate
Holdco, to succeed to the remaining assets and liabilities
of KACC.
On the Effective Date, Texada Mines Ltd. (Canada), Kaiser
Aluminum & Chemical Investment Limited (Canada) and KACOCL will be
amalgamated to form a new Ontario corporation -- New Kaiser Canada
-- 100% of the issued and outstanding shares of capital stock of
which will be held by KACC.
KACC will transfer the assets associated with the flat-rolled
products and engineered products units and all ownership interest
in Kaiser Bellwood Corporation to New Kaiser FP LLC in exchange
for 100% of the issued and outstanding membership interests of
New Kaiser FP LLC. Kaiser Bellwood Corporation will be merged
with and into New Kaiser FP LLC.
Following the transactions, KACC will transfer all direct and
indirect ownership interests in Anglesey, Trochus, Kaiser
Aluminium International, Inc., New Kaiser Canada and New Kaiser
FP LLC to New Kaiser Intermediate Holdco. KACC will merge with
and into New Kaiser Remainder LLC, with New Kaiser Remainder LLC
as the surviving entity.
Reorganized KAC will own directly 100% of the issued and
outstanding shares of capital stock of New Kaiser Intermediate
Holdco.
New Kaiser Intermediate Holdco will own Anglesey, Trochus, Kaiser
Aluminium International, Inc. and New Kaiser Canada, and 100% of
the issued and outstanding membership interests of each of New
Kaiser FP LLC and New Kaiser Remainder LLC.
New Kaiser Canada will hold the London, Ontario production
facility, and New Kaiser FP LLC will hold all other production
facilities used by the fabricated products business unit.
New Kaiser Remainder LLC, as the successor by merger to KACC, will
hold various non-operating properties.
Reorganized KAC to Give Funding to New Kaiser
Reorganized Kaiser Aluminum Corporation and New Kaiser Remainder
LLC are anticipated to enter into a funding agreement pursuant to
which Reorganized KAC will, at New Kaiser's request, advance to
New Kaiser cash necessary to enable it to pay any environmental
and maintenance costs in connection with specified properties,
equal to those advances not to exceed the sum of:
(i) 125% of an amount to be determined by the Debtors based on
the net present value of estimated environmental and
maintenance costs of those properties offset by the net
present value of estimated rental and other income and
sale proceeds, all estimated as of the Effective Date; and
(ii) any rental or other income or sale proceeds transferred by
it to Reorganized KAC after the Effective Date.
Mr. DeFranceschi notes that the Debtors intend that New Kaiser
should not be required to incur legal fees and or other expenses
associated with the interpretation, enforcement or defense of New
Kaiser's rights under the funding agreement by litigation or
otherwise because the cost and expense would substantially detract
from the benefits intended to be extended to New Kaiser.
Accordingly, if it should appear to New Kaiser that Reorganized
KAC has failed to comply with any of its obligations under the
funding agreement or in the event that the Reorganized KAC
threatens to take any action to declare the funding agreement void
or unenforceable, or institutes any litigation designed to deny
New Kaiser the benefits to be provided, New Kaiser would be
authorized from time to time to retain counsel of New Kaiser, at
the Reorganized KAC's expense.
The Debtors will disclose the maximum amount of that funding
obligation at least 15 days prior to the deadline for filing
objections to confirmation of the Plan. Nevertheless, the
Debtors anticipate providing up to $2.6 million.
The Debtors' management believes that, based on its forecasts of
expenses and receipts of New Kaiser, amounts available to New
Kaiser under the funding agreement, together with rental and other
income and sale proceeds, will provide New Kaiser with sufficient
liquidity for the reasonably foreseeable future to satisfy its
obligations, including environmental and maintenance costs
associated with the properties it owns.
As previously reported in the Troubled Company Reporter on
August 29, 2005, Kaiser Aluminum Corporation, together with Kaiser
Aluminum & Chemical Corporation and 19 of their subsidiaries,
filed an amended Joint Plan of Reorganization and an accompanying
Disclosure Statement explaining the Amended Plan in the Court on
Aug. 24, 2005.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on
February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold
off a number of its commodity businesses during course of its
cases. Corinne Ball, Esq., at Jones Day, represents the Debtors
in their restructuring efforts. On June 30, 2004, the Debtors
listed $1.619 billion in assets and $3.396 billion in debts.
(Kaiser Bankruptcy News, Issue No. 77; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KERASOTES SHOWPLACE: S&P Places B Corporate Credit Rating on Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services, in light of a steep drop in
movie theater attendance in the current year, placed its ratings
on Kerasotes Showplace Theatres LLC and its parent company,
Kerasotes Showplace Theatres Holdings LLC (B/Watch Neg/--), on
CreditWatch with negative implications.
"Attendance drops are especially damaging to movie exhibitors
because they curtail not only ticket collection revenue but also
high-margin concession sales," said Standard & Poor's credit
analyst Steve Wilkinson. Concession sales can generate 40%-50% of
the gross profit collected from moviegoers despite representing
only 25%-30% of sales.
Movie attendance in the U.S. plunged 17% in the second quarter and
declines have persisted through the end of August, resulting in
sharply lower EBITDA and discretionary cash flow, and strained
credit measures for U.S. theater chains. Although 2004 attendance
levels were strong and moviegoing can fluctuate based on the
appeal of movies in release, it is not clear if recent doldrums
suggest other factors at work. Reduced consumer spending as a
result of high energy costs, economic uncertainty, and consumer
frustration with rising ticket prices and in-theater advertising
may play a role.
Additional factors may include:
* the greater availability of pirated movie downloads;
* increased video on demand of recently released films; and
* a DVD market saturated with both feature films and TV series.
"What is clear is that the current environment has put pressure on
the credit profiles of the rated exhibitors. This is especially
true for companies with limited liquidity or aggressive capital
spending plans," said Mr. Wilkinson.
The negative CreditWatch listing for Kerasotes reflects concern
about its liquidity in light of its very thin margin of compliance
with its bank financial covenants at second-quarter end, and the
need to maintain substantial borrowing availability to fund its
aggressive theater upgrade and expansion program. Resolution of
the CreditWatch listing will follow a review of the company's
ability to improve its compliance with its bank covenants and
secure sufficient liquidity to fund its capital spending plans.
KMART CORP: G. Carbajo Asks Court to Deem Claim as Timely Filed
---------------------------------------------------------------
Georgina Carbajo relates that on August 15, 1999, she sustained
personal injuries while shopping at a Big-K, located at 14091 SW
88th Street, in Miami, Florida. Ms. Carbajo has been seeking
medical treatment for her ailments.
Alan S. Farnell, Esq., in Chicago, Illinois, tells the U.S.
Bankruptcy Court for the Northern District of Illinois that
Ms. Carbajo made numerous demands to Kmart Corporation, which
demands were all rejected and ignored.
On August 11, 2003, Ms. Carbajo filed a lawsuit in Miami-Dade
County. In response, Kmart notified her of the Bar Date for the
first time, and demanded that she dismiss her lawsuit.
During negotiations between the parties, Kmart acknowledged that
it did not serve a proof of claim form to Ms. Carbajo, and that it
would allow Ms. Carbajo to proceed with her suit and file a claim
form after the Bar Date.
Ms. Carbajo then made numerous requests for Kmart to deliver the
claim form. However, Ms. Carbajo has never received the form from
Kmart's representatives.
Therefore, Ms. Carbajo asks the Court to:
(i) extend the Bar Date so that she could file her claim, and
(ii) deem the claim timely filed.
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. 101; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KNOLL INC: Inks Commitment Letter for $450 Million Credit Facility
------------------------------------------------------------------
Knoll, Inc. (NYSE: KNL), entered into a fully underwritten
commitment letter with UBS Loan Finance LLC, UBS Securities LLC,
Bank of America N.A. and Banc of America Securities LLC, which
provides for a $450 million credit facility, a portion of which
would be used to repay the indebtedness under Knoll's existing
credit facilities. The closing of the refinancing is subject to
the satisfaction of various conditions.
Under the new credit facilities:
(i) the new term loan would mature in seven years,
(ii) the new revolving credit agreement would expire in five
years,
(iii) interest rates would be lower as compared to the existing
Knoll credit facilities,
(iv) financial covenants would be reset, and
(v) although the new credit facilities continue to impose
restrictions on Knoll's ability to pay dividends, Knoll
would be permitted to pay dividends in greater amounts
than under its existing credit facilities.
Headquartered in East Greenville, Pennsylvania, Knoll Inc.,
designs and manufactures branded office furniture products and
textiles, and serves clients worldwide.
* * *
As reported in the Troubled Company Reporter on Aug. 20, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
and bank loan ratings on office furniture manufacturer Knoll Inc.
to 'BB-' from 'BB', following Knoll's proposal of a debt
refinancing and a shareholder dividend.
At the same time, a 'BB-' senior secured bank loan rating and a
recovery rating of '4' were assigned to the proposed $500 million
bank facility that is part of the refinancing.
The 'BB-' bank loan rating is the same as Knoll's corporate credit
rating; this and the '4' recovery rating indicate that lenders can
expect marginal (25%-50%) recovery of principal in the event of a
default.
S&P said the outlook is stable.
As reported in the Troubled Company Reporter on Aug. 20, 2004,
Moody's Investors Service downgraded Knoll, Inc.'s senior implied
rating to Ba3 and senior unsecured issuer rating to B1 and rated
the company's new senior secured bank facilities Ba3 following the
company's announcement of a leveraged recapitalization. The
outlook remains stable. The downgrade reflects Knoll's increased
leverage and reduced interest coverage following the company's
decision to pay a dividend to shareholders in the context of
uncertainty as to the extent of the recovery in the commercial
furniture business.
Ratings assigned:
* $75 million revolving credit facility due 2009, Ba3; and
* $425 million senior secured term loan due 2011, Ba3.
Ratings downgraded:
* Senior implied rating, Ba2 to Ba3; and
* Senior unsecured issuer rating, Ba3 to B1.
LOEWS CINEPLEX: S&P Revises Outlook on B Rating to Negative
-----------------------------------------------------------
Standard & Poor's Ratings Services, in light of a steep drop in
movie theater attendance in the current year, revised its outlook
on Loews Cineplex Entertainment Corp. (B/Negative/--) to negative
from positive.
"Attendance drops are especially damaging to movie exhibitors
because they curtail not only ticket collection revenue but also
high-margin concession sales," said Standard & Poor's credit
analyst Steve Wilkinson. Concession sales can generate 40%-50% of
the gross profit collected from moviegoers despite representing
only 25%-30% of sales.
Movie attendance in the U.S. plunged 17% in the second quarter and
declines have persisted through the end of August, resulting in
sharply lower EBITDA and discretionary cash flow, and strained
credit measures for U.S. theater chains. Although 2004 attendance
levels were strong and moviegoing can fluctuate based on the
appeal of movies in release, it is not clear if recent doldrums
suggest other factors at work. Reduced consumer spending as a
result of high energy costs, economic uncertainty, and consumer
frustration with rising ticket prices and in-theater advertising
may play a role.
Additional factors may include:
* the greater availability of pirated movie downloads;
* increased video on demand of recently released films; and
* a DVD market saturated with both feature films and TV series.
"What is clear is that the current environment has put pressure on
the credit profiles of the rated exhibitors. This is especially
true for companies with limited liquidity or aggressive capital
spending plans," said Mr. Wilkinson.
The revision in the outlook on Loews Cineplex to negative from
positive reflects:
* an increase in leverage;
* weak discretionary cash flow; and
* the reduced likelihood that the company will be able to
sufficiently reduce its leverage in the near term to warrant
an upgrade.
The company's discretionary cash flow, though positive since its
sale and recapitalization on August 1, 2004, has been thinner than
expected. The company's cushion of compliance with its bank
covenants was reasonable at second-quarter end, but this could
narrow if operating performance does not stabilize or improve.
MARQUEE HOLDINGS: S&P Revises Credit Ratings' Outlook to Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on AMC
Entertainment Inc. (B/Negative/--) and its parent company,
Marquee Holdings Inc. (B/Negative/--), to negative from positive,
in light of a steep drop in movie theater attendance in the
current year.
"Attendance drops are especially damaging to movie exhibitors
because they curtail not only ticket collection revenue but also
high-margin concession sales," said Standard & Poor's credit
analyst Steve Wilkinson. Concession sales can generate 40%-50% of
the gross profit collected from moviegoers despite representing
only 25%-30% of sales.
Movie attendance in the U.S. plunged 17% in the second quarter and
declines have persisted through the end of August, resulting in
sharply lower EBITDA and discretionary cash flow, and strained
credit measures for U.S. theater chains. Although 2004 attendance
levels were strong and moviegoing can fluctuate based on the
appeal of movies in release, it is not clear if recent doldrums
suggest other factors at work. Reduced consumer spending as a
result of high energy costs, economic uncertainty, and consumer
frustration with rising ticket prices and in-theater advertising
may play a role.
Additional factors may include:
* the greater availability of pirated movie downloads;
* increased video on demand of recently released films; and
* a DVD market saturated with both feature films and TV series.
"What is clear is that the current environment has put pressure on
the credit profiles of the rated exhibitors. This is especially
true for companies with limited liquidity or aggressive capital
spending plans," said Mr. Wilkinson.
The outlook on AMC Entertainment and Marquee Holdings, analyzed on
a consolidated basis, was revised to negative from positive
because of:
* rising leverage;
* poor discretionary cash flow; and
* a narrowing of its cushion of compliance with bank covenants.
The company's potential for an upgrade had been predicated on
reducing leverage while maintaining good profitability and
discretionary cash flow. AMC's ability to achieve these
objectives has been impaired by the challenging industry operating
environment.
Liquidity stems from cash balances of $128 million on June 30, but
the company's margin of covenant compliance on its undrawn
$175 million revolving credit facility has narrowed significantly
and could put pressure on the rating if it does not improve.
MCI INC: Board of Directors Approves Broad-Based Retention Program
------------------------------------------------------------------
In a filing with the Securities and Exchange Commission, Michael
D. Capellas, chief executive officer of MCI, Inc., reports that
that on April 15, 2005, MCI's board of directors approved the
adoption of a broad-based retention program to help ensure the
retention of key employees.
All employees, other than Mr. Capellas and members of MCI's
executive leadership team, will be eligible to participate in the
retention program. Among the members of MCI's executive
leadership team are:
* Robert T. Blakely;
* Jonathan Crane;
* Wayne Huyard; and
* Anastasia Kelly.
A $118.5 million aggregate amount will be made available for
retention awards. Retention awards will be paid in cash, with a
maximum award of $300,000 per individual. Generally, payments
will be made into three separate installments.
Earlier payments will be subject to a clawback obligation, which
will, with respect to any recipient of a retention award, be
triggered by an employee's voluntary termination of employment or
termination for "cause."
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services placed its ratings of Ashburn,
Virginia-based MCI Corp., including the 'B+' corporate credit
rating, on CreditWatch with positive implications. The action
affects approximately $6 billion of MCI debt.
METRIS MASTER: Fitch Places BB+ Rating on Class D Secured Notes
---------------------------------------------------------------
Fitch Ratings has issued a research report outlining its rating
analysis for the Metris Master Trust, series 2005-1 transaction.
Series 2005-1, a $544.35 million credit card transaction, is rated
by Fitch:
-- class A floating-rate asset-backed securities 'AAA';
-- class M floating-rate asset-backed securities 'AA';
-- class B floating-rate asset-backed securities 'A';
-- class C floating-rate secured notes 'BBB';
-- class D floating-rate secured notes 'BB+'.
The ratings are based on the underlying quality of the receivables
pool, available credit enhancement, Direct Merchants Credit Card
Bank's underwriting and servicing capabilities, and the
transaction's legal and cash flow structures.
MIRANT CORP: Asks Court to Approve Consent Order with NY DEC
------------------------------------------------------------
Mirant Corporation and its affiliated debtors, including Mirant
NY-Gen, LLC, ask the Court to:
a. approve a Remediation Consent Order entered into between
Mirant NY-Gen and the New York State Department of
Environmental Conservation; and
b. permit them to enter into a related Reimbursement
Consent Order that will govern certain penalties and cost
reimbursements to the DEC, and an environmental audit.
Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida,
relates that the Consent Orders are products of the discussions
between Mirant NY-Gen and the DEC to resolve the environmental
concerns discovered at the Company's electric power generation
station in Hillburn, New York.
Mirant NY-Gen discovered a potential leaking underground pipeline
at the Facility in December 2003. The underground line was used
for supplying kerosene fuel to the turbine. After discovering
the potential leak, the line was removed from service and plans
were undertaken to excavate and sample portions of the line to
determine the extent of any line damage and any possible soil
contamination. In the Summer of 2004, soil contamination was
discovered and a subsequent testing of portions of the line
revealed a small hole in the pipeline.
On May 19, 2005, the DEC served a Notice of Hearing and Complaint
seeking an order from the DEC Commissioner to require the Debtors
to:
-- investigate the Discharge and remediate the Site;
-- pay all of DEC's past and future response costs; and
-- pay DEC a $100,000 civil penalty.
Remediation Consent Order
The Remediation Consent Order provides for the parties' action
plans in cleaning up and removing the Discharge. The pertinent
terms and conditions are:
(a) Mirant NY-Gen will commence certain actions set forth in:
1) a Remedial Action Work Plan, dated April 26, 2005, and
a Revised Supplemental Remedial Action Work Plan, dated
May 5, 2005; and
2) a Draft Remediation Alternative Pilot Test Report,
dated June 13, 2005, and a Hillburn Remedial
Alternatives Pilot Test Report, dated June 20, 2005.
Generally, Mirant NY-Gen will:
-- determine the extent of the impact of the Discharge
on the groundwater at and in the area surrounding
the Site; and
-- design, install, and pilot test equipment to
remediate impacted soil and groundwater; and
(b) In the event the Court approves the Debtors' request,
Mirant NY-Gen will submit a schedule of construction and a
schedule of remedial goals to DEC relating to the Site.
Mr. Schauer relates that as of August 22, 2005, the Debtors have
spent $236,024 in connection with the cleanup and removal of the
Discharge. The Debtors estimate that the total cost of the
cleanup and removal of the Discharge under the Remediation
Consent Order, the Action Work Plan and the Pilot Test Report,
will be $1.2 million to be completed in 2015.
Reimbursement Consent Order
The Debtors and the DEC are still negotiating the final terms of
the Reimbursement Consent Order.
The tentative terms of the Reimbursement Consent Order provides
that Mirant NY-Gen will:
(a) pay a $50,000 penalty within 10 days of the execution of
the Reimbursement Consent Order;
(b) reimburse the DEC for costs to date and future costs
incurred in connection with the Discharge, which should
not exceed $20,000; and
(c) pay costs associated with an independent, third-party
environmental audit of the Facility, and to make any
necessary corrective actions for violations that are
discovered in the course of the third-party audit, as well
as report the audit findings to the DEC.
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. 75; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Gets Court Okay to Expand Scope of Hiscock's Services
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas gave
Mirant Corporation and its debtor-affiliates permission to
expand the scope of Hiscock & Barclay LLP's duties to include
assisting them in certain environmental and regulatory work in the
State of New York.
On April 26, 2004, the Court authorized the employment of Hiscock
& Barclay as special counsel for the Debtors as of March 3, 2004,
to provide legal services, including providing advice with respect
to real property tax issues involving some of the Debtors'
generating plants.
Specifically, the Debtors wanted Hiscock & Barclay to represent
them in an enforcement action by the New York State Department of
Environmental Conservation relating to:
(1) the cleanup of a petroleum spill at the Hillburn facility;
(2) all outstanding issues involving the Lovett Coal Ash
Management facility in Stony Point, New York;
(3) any issues associated with the Swinging Bridge dam
collapse; and
(4) any additional environmental or regulatory work, including
any associated litigation, in New York for which the
Debtors may require legal counsel.
The Debtors will pay and reimburse Hiscock & Barclay for any fees
and expenses incurred in providing the Additional Services.
Lawrence A. Zimmerman, Esq., a partner at Hiscock & Barclay,
reassures the Court that the firm continues to:
-- represent no interest adverse to the Debtors or their
estates; and
-- be a "disinterested person" under Section 101(14) of the
Bankruptcy Code.
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. 74; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MONTROSE WHOLESALE: Case Summary & 7 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Montrose Wholesale Candy & Sundries, Inc.
4419 West Montrose
Chicago, Illinois 60641
Bankruptcy Case No.: 05-35936
Type of Business: The Debtor is a wholesaler of dry goods.
Chapter 11 Petition Date: September 7, 2005
Court: Northern District of Illinois (Chicago)
Judge: Pamela S. Hollis
Debtor's Counsel: James C. Truax, Esq.
James C. Truax & Associates
100 West Monroe Street, Suite 2001
Chicago, Illinois 60603
Tel: (312) 236-4244
Fax: (312) 236-4274
Total Assets: $58,600
Total Debts: $3,928,707
Debtor's 7 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Chambers & Owen, Inc. $2,518,066
P.O. Box 1489
Jansville, WI 53547-1489
Tel: (800) 236-3338
Lorillard Tobacco Co. $500,000
c/o Greenberg, Traurig P.C.
77 West Wacker Drive, #2500
Chicago, IL 60601
Tel: (312) 456-8400
Fleming Companies, Inc. $429,497
c/o Elias, Meginnes, Riffle PC
416 Main Street, #1400
Peoria, IL 61602
Tel: (309) 637-6000
McLane Company, Inc. $345,175
c/o Teller, Levit & Silvertrust
11 East Adams Street, #800
Chicago, IL 60603
Tel: (312) 922-3030
City Sale $95,529
P.O. Box 9038
Highland, IN 46322-9038
Best Value Dist., Inc. $25,440
c/o Tenny & Bentley LLC
111 West Washington Street, #1900
Chicago, IL 60601
Ford Credit Vehicle Lease $15,000
P.O. Box 219825
Kansas City, MO 64121-9825
MOSAIC GROUP: Court Converts Chapter 11 Cases to Chapter 7
----------------------------------------------------------
The Hon. Harlin DeWayne Hale of the U.S. Bankruptcy Court for the
Northern District of Texas converted Mosaic Group Inc. and its
debtor affiliates' chapter 11 cases to chapter 7 liquidation
proceedings. Judge Hale signed the order on August 31, 2005.
Judge Hale also ordered that:
(a) the case remain jointly administered under Case No.
02-81440; and
(b) the chapter 11 Trustee is authorized and directed to pay
all chapter 11 fees and expenses prior to the turnover of
any funds of the Debtors' estate to the Chapter 7 Trustee.
On June 24, 2005, Jeffrey H. Mims, the Chapter 11 Trustee, asked
the Court to convert the Debtors' cases to chapter 7.
The Trustee disclosed that prior to his appointment, virtually all
of the Debtors' business assets were sold in a court-approved
sale. The Trustee also reminded the Court that he, along with
applicable professionals, had already completed certain activities
relating to the Debtors' chapter 11 proceedings.
The Trustee told the Court that except for causes of action, tax
refunds and other similar assets, the Debtors do not have any
meaningful assets. The Trustee also disclosed that the Debtors
have not retained any employees, operation or on-going business
activities since July 3, 2003.
The Trustee told the Court that after performing his duties under
chapter 11, he does not believe there is any reorganizable entity
that can arise from the cases and any plan of reorganization would
be meritless. The Debtors' bankruptcy cases are administratively
insolvent, the Trustee said.
These and other reasons have led him to believe that a chapter 7
liquidation would be more cost-effective.
According to the Trustee, lenders have provided a $455,0000
holdback, from which the Trustee can pay certain unpaid
professional and related administrative claims. The Lenders have
also allowed the use of certain amounts of their cash collateral
to pay professionals during the pendency of the Debtors' Chapter 7
cases, the Trustee said.
Headquartered in Irving, Texas, Mosaic Group (US) Inc., --
http://www.mosaic.com/-- a world-leading provider of results-
driven, measurable marketing solutions for global brands, filed
for chapter 11 relief on Dec. 17, 2002 (Bankr. N.D. Tex. Case No.
02-81440). Charles R. Gibbs, Esq., David H. Botter, Esq., and
Kevin D. Rice, Esq., at Akin, Gump, Strauss, Hauer & Feld,
represent the Debtors. When the Company filed for protection from
its creditors, it estimated debts and assets of over $100 million
each. Mosaic Group, Inc., also sought and obtained protection
under the Companies' Creditors Arrangement Act in Canada. On
June 15, 2004, Jeffrey H. Mims was appointed as Chapter 11 Trustee
for the Debtors' estate. The case was converted to a chapter 7
liquidation on Aug. 31, 2005.
MOSAIC GROUP: Section 341(a) Meeting Slated for October 24
----------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of Mosaic
Group Inc. and its debtor-affiliate's creditors at 8:30 a.m., on
October 24, 2005, at the Office of the U.S. Trustee, 1100 Commerce
Street, Room 524 in Dallas, Texas. This will be the meeting of
creditors after the conversion of the case to a chapter 7
liquidation.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Irving, Texas, Mosaic Group (US) Inc., --
http://www.mosaic.com/-- a world-leading provider of results-
driven, measurable marketing solutions for global brands, filed
for chapter 11 relief on Dec. 17, 2002 (Bankr. N.D. Tex. Case No.
02-81440). Charles R. Gibbs, Esq., David H. Botter, Esq., and
Kevin D. Rice, Esq., at Akin, Gump, Strauss, Hauer & Feld,
represent the Debtors. When the Company filed for protection from
its creditors, it estimated debts and assets of over $100 million
each. Mosaic Group, Inc., also sought and obtained protection
under the Companies' Creditors Arrangement Act in Canada. On
June 15, 2004, Jeffrey H. Mims was appointed as Chapter 11 Trustee
for the Debtors' estate. The case was converted to a chapter 7
liquidation on Aug. 31, 2005.
MYSTICAL FORTUNE: Case Summary & 35 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Mystical Fortune Inc.
92-19 Guy Brewer Boulevard
Jamaica, New York 11432
Bankruptcy Case No.: 05-24603
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Splash Enterprises, Inc. 05-24619
Spiritual Creations, Inc. 05-24626
Randy Brisman 05-24639
Chapter 11 Petition Date: September 7, 2005
Court: Eastern District of New York (Brooklyn)
Judge: Dennis E. Milton
Debtors' Counsel: Joel M. Shafferman, Esq.
Solomon Pearl Blum Heymann & Stich, LLP
40 Wall Street, 35th Floor
New York, New York 10005
Tel: (212) 267-7600
Fax: (212) 267-2030
Estimated Assets Estimated Debts
---------------- ---------------
Mystical Fortune Inc. Less than $50,000 $50,000 to $100,000
Splash Enterprises, Inc. Less than $50,000 Less than $50,000
Spiritual Creations, Inc. Less than $50,000 Less than $50,000
Randy Brisman $1 Million to $100,000 to
$10 Million $500,000
A. Mystical Fortune Inc.'s 10 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Abstract Perfumes Trade Debt $3,580
45 Groison Avenue
Oakland, NJ 07436
Ace Bottle Co. Trade Debt $4,007
4581 Park Avenue
Bronx, NY 10458
Callohan Co. Trade Debt $2,881
200 Industrial Avenue
Ridgefield Park, NJ 07660
Condal Distributors, Inc. Trade Debt $15,888
531 Dupont Street
Bronx, NY 10474
Internal Revenue Service $15,118
Department of the Treasur
Andover, MA 05501
New High Glass Trade Debt $8,980
12713 SW 125th Avenue
Miami, FL 33186
New York City Unknown
Department of Law
100 Church Street
New York, NY 10007
New York City Unknown
Department of Taxation & Finance
345 Adams Street, 10th Fl
Brooklyn, NY 11201-3714
New York State $2,403
Department of Taxation & Finance
Building 9, Room 205
Albany, NY 12227
Warren J. Bronsick Unknown
10 Delbarton Drive
Short Hills, NJ 07078
B. Consolidated List of 5 Largest Unsecured Creditors of:
-- Splash Enterprises, Inc., and
-- Spiritual Creations, Inc.
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Unknown
Department of the Treasurer
Andover, MA 05501
New York City Unknown
Department of Law
100 Church Street
New York, NY 10007
New York City Unknown
Department of Taxation & Finance
345 Adams Street, 10th Fl
Brooklyn, NY 11201-3714
New York State Unknown
Department of Taxation & Finance
Building 9, Room 205
Albany, NY 12227
Warren J. Bronsnick Unknown
10 Delbarton Drive
Short Hills, NJ 07078
C. Randy Brisman's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sam and Judith Bols $100,000
3438 4th Street
Oceanside, NY 11572
Citi Platinum Select Card $13,539
P.O. Box 6500
Sioux Falls, SD 57117
Chase $11,898
P.O. Box 15153
Wilmington, DE 19886-5153
GE Money Bank $3,078
P.O. Box 960061
Orlando, FL 32896-0061
HFC $2,662
182 Sunrise Highway
Rockville Centre, NY 11570
Baldwin Dental Arts $1,687
1700 Grand Avenue
Baldwin, NY 11510
St. Francis Hospital $1,650
P.P. Box 1034
Port Washington, NY 11050
Ed Friedman, Esq. $1,000
26 Court Street, Suite 11903
Brooklyn, NY 11242
Capital One $650
P.O. Box 70884
Charlotte, NC 28272-0884
Rhermatology Consultants $462
1157 Broadway
Hewlett, NY 11557
Capital One $400
P.O. Box 70884
Charlotte, NC 28272-0884
Nassau Emergency Med PC $396
P.O. Box 1470
Port Washington, NY 11050
Capital One $333
P.O. Box 70884
Charlotte, NC 28272-0884
Animal ER $210
2233 Broadhollow Road
Farmingdale, NY 11735
Avenue $200
P.O. Box 182273
World Fin Network National
Columbus, OH 43218-2373
Enzo Clinical Lab $197
P.O. Box 9084
Farmingdale, NY 11735-9054
John Fantasia $125
27005
76th Avenue
New Hyde Park, NY 11040
Dr. Richard Ferstenberg $60
P.O. Box 2010
New Hyde Park, NY 11040
St. Francis Hospital EKG $60
P.O. Box 1034
Port Washington, NY 11050
GMAC Unknown
P.O. Box 4019
Rocky Hill, CT 06067-4019
NEW WORLD: PBGC Wants Court to Disapprove Disclosure Statement
--------------------------------------------------------------
The Pension Benefit Guaranty Corporation asks the U.S. Bankruptcy
Court Middle District of Pennsylvania to deny approval of the
Disclosure Statement filed by New World Pasta Company and its
debtor-affiliates, and order the Debtors to amend that Disclosure
Statement.
The Debtors filed their Disclosure Statement and Plan of
Reorganization on July 15, 2005.
PBGC explains that New World Pasta is a contributing sponsor of:
-- the New World Pasta Company St. Louis Plant Retirement Plan,
-- the New World Pasta Company Louisville Plant Retirement
Plan, and
-- the New World Pasta Company Omaha Plant Retirement Plan.
Those three Pension Plans are covered by Title IV of the Employee
Retirement and Income Security Act of 1974 and 29 U.S.C. Sections
1301(a)(1) and 1002(16). The other debtor-affiliates are members
of New World's controlled group within the meaning of 29 U.S.C.
Section 1301(a)(14).
Objections to the Disclosure Statement
The PBGC objects to the Disclosure Statement on that grounds that
it fails to provide adequate information as required by 11 U.S.C.
Section 1125.
PBGC says that the Disclosure Statement:
1) should provide a more detailed description of the three
Pension Plans, including an explanation of the requirement
to fund those Plans;
2) should provide a more detailed information regarding the
collective bargaining, including whether the cessation of
contributions to the Omaha Plan gives rise to a breach of
any of the collective bargaining agreements in light of the
fact that the Debtors have continued contributing to the
Louisville and St. Louis Plans;
3) should discuss the contingency that the Louisville and St.
Louis Plans might be terminated and the magnitude of PBGC's
claims for liability for that case;
4) should state, as provided by ERISA, the Debtors and each
member of the Debtors' controlled group are jointly and
severally liable for any Unfunded Benefit Liabilities, for
any due and unpaid contributions to the Pension Plans and
for any unpaid premiums;
5) improperly states that the Pension Plans will be treated as
executory contracts to be assumed or rejected prior to
confirmation of a chapter 11 Plan in accordance with Section
365(a) of the Bankruptcy Code, but pension plans that are
covered by Title IV of ERISA may not be treated as executory
contracts and rejected under the Bankruptcy Code;
6) broadly or unclearly provides that should any of the
Pension Plans continue, the reorganized entity and any
members of its controlled group will remain responsible for
Minimum Funding Obligations and Premiums; and
7) states that the Debtors will continue to fund the Louisville
and St. Louis Plans. The Disclosure Statement is deficient
in explaining the Debtors' legal obligations with respect to
Pension Plan continuation.
Bankruptcy Court records show that it has yet to schedule a
hearing to consider the PBCG's request.
Relevant Laws
Title 26 of the U.S. Code is the United States Internal Revenue
Code. Title 29 of the U.S. Code is the United States Labor Code.
The Employee Retirement Income Security Act of 1974 (ERISA) is a
federal law that sets minimum standards for pension plans in
private industry. ERISA does not require any employer to
establish a pension plan. It only requires that those who
establish plans must meet certain minimum standards. ERISA
generally does not specify how much money a participant in a
pension plan must be paid as a benefit.
About PBGC
The Pension Benefit Guaranty Corporation is a federal corporation
created by the Employee Retirement Income Security Act of 1974 and
currently protects the pensions of 44.4 million American workers
and retirees in 31,200 private single-employer and multi-employer
defined benefit pension plans. The PBGC receives no funds from
general tax revenues. Operations are financed by insurance
premiums set by Congress and paid by sponsors of defined benefit
plans, investment income, assets from pension plans trusteed by
the PBGC, and recoveries from the companies formerly responsible
for the plans.
About New World
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq.,
at Fried, Frank, Harris, Shriver & Jacobson LLP, represent the
Creditors' Committee. In its latest Form 10-Q for the period
ended June 29, 2002, New World Pasta reported $445,579,000 in
total assets and $451,816,000 in total liabilities.
OMNI FACILITY: Delta Air Wants Stay Lifted to Sue Maintech Unit
---------------------------------------------------------------
Delta Air lines, Inc., asks the U.S. Bankruptcy Court for the
Southern District of New York to lift the automatic stay so it can
pursue a third-party action against Maintech Corporation, one of
the Debtors in the jointly administered chapter 11 proceedings of
Omni Facility Services, Inc., and its affiliates, in the Supreme
Court of the State of New York.
Delta, along with the Port Authority of New York and New Jersey,
is a defendant in a personal injury suit filed by Beatrice
Hairston in the New York Supreme Court. Ms. Hairston filed the
suit to recover damages for personal injuries she allegedly
suffered when she slipped and fell on ice at an outside walkway at
LaGuardia Airport in January 2003.
Delta tells the Bankruptcy Court that it had a standing service
agreement with Maintech at the time of Ms. Hairston's accident.
Under the service agreement, Maintech provided a number of
services at LaGuardia including the removal of snow and ice in the
terminal sidewalk and concrete medians.
To insure itself from probable personal injury claims, Maintech
maintained a Commercial General Liability Insurance. The
liability insurance, from Zurich North America, provides indemnity
for bodily injury and property damage, on an occurrence basis, for
an amount of not less than $15 million combined single limit. The
insurance names Delta as an additional insured to the extent of
Maintech's indemnity obligations under the service agreement.
Delta says that a third-party action will allow it to pursue its
claim against Maintech to the extent of the insurance coverage.
According to Delta, the nature and amount of damages sought by Ms.
Hairston are within the coverage provisions and limits of the
insurance policy issued by Zurich.
Delta assures the Bankruptcy Court that, regardless of the outcome
of the third-party action, the Debtors will not be negatively
impacted since its seeks recovery only from Maintech's insurer.
Headquartered in South Plainfield, New Jersey, Omni Facility
Services, Inc. -- http://www.omnifacility.com/-- provides
architectural, janitorial, landscaping, and electrical services.
The Company filed for chapter 11 protection on June 9, 2004
(Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at
Togut, Segal & Segal LLP, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $80,334,886 in total assets and
$100,285,820 in total debts.
ORGANIZED LIVING: Retains Burkhardt & Co. to Prepare Tax Returns
----------------------------------------------------------------
Organized Living Inc. sought and obtained permission from the U.S.
Bankruptcy Court for the Southern District of Ohio to employ
Burkhardt & Co. to prepare its federal tax returns with supporting
schedules.
Burkhardt & Co. will also prepare the Debtor's state income tax
returns for:
* Alabama
* Arizona
* California
* Colorado
* Florida
* Kansas
* Michigan
* Minnesota
* Missouri
* New Jersey
* New York
* North Carolina
* Ohio
* Pennsylvania
* Virginia
The Debtor discloses that the Firm's professional's bill:
Designation Hourly Rate
----------- -----------
Partners $180 - $200
Managers $130 - $150
Staff $60 - $85
To the best of the Debtor's knowledge, the Firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Westerville, Ohio, Organized Living, Inc., --
http://www.organizedliving.com/-- is an innovative retailer of
storage and organization products for the home and office with
stores throughout the U.S. The Company filed for chapter 11
protection on May 4, 2005 (Bankr. S.D. Ohio Case No. 05-57620).
Tim Robinson, Esq., at Squire Sanders & Dempsey, represents the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it estimated assets and debts of
$10 million to $50 million.
PROTOCOL SERVICES: Taps Murray Devine as Valuation Professionals
----------------------------------------------------------------
Protocol Services, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of California for
authority to employ Murray, Devine & Co., Inc., as their valuation
expert.
Murray Devine is a full-service valuation firm specializing in
financial opinions, business enterprise and securities valuations,
asset appraisals and advisory services.
Pursuant to an engagement agreement, Murray is expected to
provide:
a) business enterprise valuation of the Debtors and their
non-debtor affiliates;
b) related consulting in connection with the valuation; and
c) expert witness services.
Francis X. Devine, executive vice president of Murray, discloses
that his Firm will charge a $50,000 one-time fee.
To the best of the Debtors' knowledge, Murray Devine is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Deerfield, Illinois, Protocol Services, Inc.,
and its subsidiaries offer agency services, database development
and management, data analysis, direct mail printing and
lettershops, e-marketing, media replication, and inbound and
outbound teleservices. Protocol has offices and operations in
California, Colorado, Illinois, Louisiana, Florida, Michigan,
North Carolina, New York, Massachusetts, Connecticut and Canada
and employs over 4,000 individuals. The Company and its
affiliates -- Protocol Communications, Inc., Canicom, Inc., Media
Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11
protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782
through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey
K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
more than $100 million in assets and debts.
QUIGLEY CO: Disclosure Statement Hearing Set for Sept. 28
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing at 2:30 p.m., on Sept. 28, 2005, to
consider approval of the First Amended Disclosure Statement
explaining the First Amended Plan of Reorganization filed by
Quigley Company, Inc.
The Debtor filed its Amended Disclosure Statement and Amended Plan
on Aug. 17, 2005.
Summary of the Amended Plan
The Amended Plan resolves Quigley's liability for all asbestos
personal injury claims by channeling them to the Asbestos PI Trust
to be established on the plan's effective date. In exchange for
the consideration to be contributed by Pfizer, Inc., and Quigley
to the Asbestos PI Trust, the Asbestos PI Trust will assume and be
responsible for all liability for Asbestos PI Claims and certain
other obligations associated with the Quigley Transferred
Insurance Rights and the Insurance Relinquishment Agreement.
All Asbestos PI Claims will be determined and paid pursuant to the
terms, provisions, and procedures of the Asbestos PI Trust, the
Asbestos PI Trust Distribution Procedures, and the Asbestos PI
Trust Agreement. In addition, holders of Asbestos PI Claims
will be permanently enjoined from pursuing their Asbestos PI
Claims against Reorganized Quigley and certain other parties,
including Pfizer.
Treatment of Claims and Interests
Pfizer, as the sole holder of Senior Secured Claims, will receive
49% of its claims in cash. Pfizer has agreed to forgive $30
million of the Allowed Senior Secured Claim, as part of its
contribution to the Asbestos PI Trust.
Holders of unsecured claims, totaling approximately $33.4 million,
will recover 13% of their claims
Asbestos PI Claims will be channeled and assumed by the Asbestos
PI Trust, which will be funded by contributions from Quigley and
Pfizer.
Pfizer will initially retain its Equity Interest in the Company.
On the Stock Transfer Date, Pfizer, as the sole holder of the
Equity Interests, will transfer the common stock of Reorganized
Quigley to the Asbestos PI Trust.
A full-text copy of the Amended Disclosure Statement and Amended
Plan is available for a fee at:
http://www.researcharchives.com/bin/download?id=050907025240
Objections to the Amended Disclosure Statement, if any, must be
filed and served by Sept. 15, 2005.
Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary
of Pfizer, Inc., which used to produce and market a broad range of
refractories and related products to customers in the iron, steel,
glass and other industries. The Company filed for chapter 11
protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to
resolve legacy asbestos-related liability. When the Debtor filed
for protection from its creditors, it listed $155,187,000 in total
assets and $141,933,000 in total debts. Michael L. Cook, Esq., at
Schulte Roth & Zabel LLP, represents the Company in its
restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal
serves as the Futures Representative.
RAEBECK CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Raebeck Construction Corporation
59 Englewood Avenue
Staten Island, New York 10309-1801
Bankruptcy Case No.: 05-24652
Type of Business: The Debtor is a contractor.
Chapter 11 Petition Date: September 7, 2005
Court: Eastern District of New York (Brooklyn)
Debtor's Counsel: Avrum J. Rosen, Esq.
38 New Street
Huntington, New York 11743
Tel: (631) 423-8527
Fax: (631) 423-4536
Total Assets: $4,175,000
Total Debts: $5,310,527
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Tax $1,082,749
Special Procedures Function Value of Collateral:
P.O. Box 60 $722,000
Brooklyn, NY 11201
Bank Of America Bank loan $512,338
P.O. Box 15480
Wilmington, DE 19850-5480
Pavers & Road Builders $400,000
Combined Benefit
136-25 37th Avenue
Flushing, NY 11354
Seville Central Mix Corp. $279,404
157 Albany Avenue
Freeport, NY 11520
T. Mina Supply $170,686
P.O. Box 4157
College Point, NY 11356
ROBE Industries $150,000
45 East Main Street
Freehold, NJ 07728
Tilcon New York, Inc. $130,477
P.O. Box 34550
Newark, NJ 07189-4550
Excavators Union Local 731 $120,377
Benefits Fund
34-11/19 35th Avenue
Astoria, NY 11106
Caterpillar Financial Services Value of Collateral: $115,000
2120 West End Avenue $145,000
Nashville, TN 37203
R.N.R. Developers LLC $110,000
59 Englewood Avenue
Staten Island, NY 10309
Caterpillar Financial Services Value of Collateral: $106,375
P.O. Box 13834 $50,000
Newark, NJ 07188-0834
Fleet Trucking Inc. $105,304
457 Blake Avenue
Brooklyn, NY 11212
Vital Sign Source Ltd. $103,761
20 Greenleaf Drive
Huntington, NY 11743
A. Russo Wrecking, Inc. $82,738
67 East Avenue
Lawrence, NY 11554
New York State Tax $74,585
Department Of Taxation
Queens District Office
80-02 Kew Gardens Road
Kew Gardens, NY 11415
East Jordan Iron Works, Inc. $73,400
Department 59601
P.O. Box 67000
Detroit, MI 48206-0700
Allied NA $66,710
390 North Broadway
Jericho, NY 11753
A&R Concrete $66,370
7 Ruscitti Road
New Windsor, NY 12553
New York District Council $56,593
Carpenters Federations
395 Hudson Street
New York, NY 10014
Sisters Interstate Trucking Co. $52,534
195 Sprain Road
Scarsdale, NY 10583
RELIANCE GROUP: Disclosure Statement Hearing Set for September 21
-----------------------------------------------------------------
The Hon. Arthur Gonzalez for the U.S. Bankruptcy Court for the
Southern District of New York set the hearing to consider approval
of the Disclosure Statement filed in Reliance Group Holdings,
Inc.'s chapter 11 case for Sept. 21, 2005, at 10:00 a.m., Eastern
Time. The Official Unsecured Creditors' Committee has provided
notice to parties-in-interest. All objections must be received by
Sept. 20, 2005, before 4:00 p.m., Eastern Time.
The Official Committee of Unsecured Creditors filed the Plan of
Reorganization and an accompanying Disclosure Statement explaining
the Plan on Aug. 18, 2005.
The Creditors' Committee represents the Debtor's general unsecured
creditors, which hold an estimated $600 million in claims. These
claims principally include:
-- the claims of creditors holdings notes issued under certain
senior and subordinated bond indentures;
-- the claims of the Pension Benefit Guaranty Corporation; and
-- the claims of certain of the Debtor's directors, officers,
and employees.
About the Plan
The Plan is the result of extensive negotiations among the Debtor,
the Creditors' Committee, the Bank Committee, the PBGC, and the
Liquidator.
The Plan calls for RGH's liquidation, which will be principally
implemented through a Liquidating Trust. The Plan distributes the
Debtor's remaining assets to its general unsecured creditors
through the Liquidating Trust, which will receive all of the
Debtor's assets. The assets to be distributed include cash,
certain tax-related assets, and a portion of the recoveries from
certain lawsuits. The Committee said that these distributions,
spread over all of the claims, provide less than full recovery to
general unsecured creditors.
A full-text copy of the Creditors' Committee's Liquidating Plan of
Reorganization for RGH is available for a fee at
http://ResearchArchives.com/t/s?f7
A full-text copy of the Disclosure Statement accompanying the Plan
is available for a fee at http://ResearchArchives.com/t/s?f8
A full-text copy of the Liquidating Trust Agreement is available
for a fee at http://ResearchArchives.com/t/s?fb
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RELIANCE GROUP: Committee Hires Gage Spencer as Special Counsel
--------------------------------------------------------------
The Official Unsecured Creditors' Committee seeks the U.S.
Bankruptcy Court for the Southern District of New York's authority
to retain Gage, Spencer & Fleming, LLP, as its special litigation
counsel, nunc pro tunc to Aug. 25, 2005.
Arnold Gulkowitz, Esq., at Orrick, Herrington & Sutcliffe, in New
York City, says Gage Spencer will investigate, commence and
prosecute Reliance Group Holdings' causes of action, which
involve prepetition interactions by certain of RGH's financial
advisors and related parties. The Causes of Action have not been
resolved by prior litigation or settlement and have the potential
for recovery for creditors of the estate.
Gage Spencer is a law firm devoted to the litigation of complex
civil and criminal matters. The firm's practice emphasizes
securities, accounting, employment and white-collar criminal
litigation. Gage Spencer has tried a wide variety of criminal
offenses, including securities, financial fraud, racketeering and
tax offenses, and is experienced in the use of private
investigators and coordinating civil litigation with state and
federal prosecutors and regulatory agencies.
The Creditors' Committee interviewed and conferred with other law
firms to ensure that Gage Spencer was the best choice for the
engagement, Mr. Gulkowitz explains.
Gage Spencer will be paid based on an agreed reduced fee
arrangement. Pursuant to the contingency aspect of the fee
arrangement, Gage Spencer will be paid only 60% of its fees
unless money is recovered, plus 100% of actual expenses. This
arrangement, Mr. Gulkowitz says, provides Gage Spencer with the
incentive to maximize the dollar amount of recovery, which will
financially benefit the estates.
The firm's hourly rates before discounts are:
G. Robert Gage, Jr. $525
William B. Fleming $425
Laura M. Rizzo $265
Associates $325 - $195
Legal Assistants $100 - $60
The Creditors' Committee has provided Gage Spencer with a
$100,000 retainer, which will be applied against time charges and
disbursements. Any balance remaining upon termination will be
refunded. Gage Spencer may retain a forensic accountant or other
expert to assist in the case and to serve as an expert witness at
trial. The Creditors' Committee is responsible for retaining and
paying any local or specialty counsel.
RGH will first use the funds from any recovery to pay Gage
Spencer the difference between 60% of normal hourly rates and
100% of normal hourly rates from the retention date until the
date of payments, plus any unpaid disbursements. If the recovery
exceeds the discrepancy between 60% and 100% of hourly rates, a
percentage of the excess will be paid to the firm equal to:
-- 15% of the next $1,000,000;
-- 12.5% of the next $4,000,000; and
-- 10% of any amount over $5,000,000.
Gage Spencer will cap its fees at $1,000,000 if there is no
recovery.
Mr. Gulkowitz tells Judge Gonzalez that these terms are fair and
beneficial to the estate, as the Creditors' Committee is
retaining Gage Spencer on a win/win basis. If matters are
successfully resolved, Gage Spencer will receive full payment for
its services and has the potential to receive a premium. If
matters are unsuccessfully resolved, Gage Spencer will only
receive 60% of normal hourly rates, subject to the $1,000,000 cap
that will limit the loss to the estates and creditors.
G. Robert Gage, Jr., a member of the firm, assures the Court that
Gage Spencer is "disinterested" as defined in Sections 101(14)
and 101(31) of the Bankruptcy Code, and as modified by Section
1103. Gage Spencer does not represent or hold any interest
adverse to RGH or its estate.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RESTAURANT CO: S&P Lowers Corporate Credit Rating to B from B+
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Memphis, Tennessee-based The Restaurant Co. to 'B' from
'B+'. The outlook is negative.
"The downgrade is based on increased leverage and weaker credit
protection measures," said Standard & Poor's credit analyst Kristi
Broderick.
At the same time, Standard & Poor's assigned its 'BB-' rating to
the company's proposed $25 million senior secured revolving credit
facility, with a recovery rating of '1', and its 'B' rating to the
proposed $190 million senior unsecured notes due 2013, the same
level as the corporate credit rating.
Proceeds from the notes will be used to partly fund the
acquisition of The Restaurant Co. by Castle Harlan, a private
equity firm. Pro forma for the transaction, the company will have
about $190 million of funded debt outstanding. The ratings are
based on preliminary terms and conditions, and are subject to
review once final documentation is received. The Restaurant Co.
is the operator and franchiser of about 483 family dining
restaurant units under the Perkins name.
The ratings on The Restaurant Co. reflect:
* the company's participation in the highly competitive
restaurant industry;
* weak credit protection measures; and
* highly leveraged capital structure.
With 483 units (331 franchised) under the Perkins banner in 34
states and five Canadian provinces, the company has a relatively
small market share in the family dining sector of the highly
competitive restaurant industry. Moreover, the family dining
sector has underperformed the overall industry and has weaker
growth prospects in the face of competition from restaurants in
the casual, fast casual, and quick-service sectors.
RHODES INC: Employs DJM Asset to Sell 16 Properties in Five States
------------------------------------------------------------------
Rhodes, Inc., has authorized DJM Asset Management of Melville, New
York, to market and dispose of 16 of the company's owned and
leased properties throughout Illinois, Indiana, Kentucky, Missouri
and Georgia.
The company operated in these markets as both Rhodes Furniture and
as John M. Smyth's Homemakers Furniture. On Nov. 4, 2004, Rhodes
filed a voluntary petition for relief under Chapter 11 of the
bankruptcy code in the U.S. Bankruptcy Court for the Northern
District of Georgia, Atlanta division.
As part of the closing of Rhodes mid-west retail operations, they
will be selling their warehouse facilities located in Louisville,
Ky. and Hazelwood, Mo.
The Louisville, Ky., facility is a 112,804/sf building which sits
on 8.57 acres of land and the Hazelwood, Mo. facility is a
164,000/sf building which sits on 9.16 acres of land. Both of the
properties are multipurpose facilities with Office, Finished
Showroom, Warehouse and Distribution spaces. In addition, they
will sell their regional distribution warehouse located at 3380
Florence Road in Powder Springs, Ga. This facility is a
376,427/sf building, which sits on 15.38 acres of land.
"We expect there to be strong interest in this group of retail
store closings, especially Joliet, Ill. and other Chicagoland
markets which are very difficult to penetrate," stated Andy
Graiser, Co-CEO of DJM. "We expect quite a number of interested
parties to submit offers to purchase leases."
"The properties being marketed, owned and leased, represent an
excellent opportunity for both users and investors to acquire some
highly sought after real estate," said James Avallone, Managing
Director of DJM.
The Warehouse / Showroom and Distribution Facilities that are
available for purchase are located at:
1. 1240 Durrett Lane in Louisville, Ky. (Owned)
2. 5690 Campus Parkway in Hazelwood, Mo. (Owned)
3. 3380 Florence Road in Powder Springs, Ga. (Owned)
4. 135 Elk Trail in Carol Stream, Ill.
The Retail Stores that are available for purchase are located at:
1. 3355 Mall Loop Drive in Joliet, Ill.
2. 404 South State Street in Naperville, Ill.
3. 1013 Butterfield Road in Downers Grove, Ill.
4. 105 Commerce Lane in Fairview Heights, Ill.
5. 8251 Golf Road in Niles, Ill.
6. 1733 East Woodfield Road in Schaumburg, Ill.
7. 912 Anthony Drive in Champaign, Ill.
8. 4900 Shelbyville Road in Louisville, Ky.
9. 748 East Highway 131 in Clarksville, Ind.
10. 3900 Union Road in St. Louis, Mo.
11. 14101 Manchester Road in Ballwin, Mo.
12. 411 Midrivers Mall Drive in St. Peters, Mo.
To obtain additional information on the disposition of these
available properties, please contact James Avallone, DJM Managing
Director, at (631) 752-1100 (x224) or visit the DJM Web site at
http://www.djmasset.com/
Based in Melville, New York, DJM Asset Management, LLC, appraises
properties, disposes of real estate assets, disposes of and/or
mitigates lease liabilities and acquires retail, commercial and
industrial real estate that does not fit into our strategic
partner's long-term goals. Recent clients include Winn-Dixie
Stores, CVS, Avado Brands, Toys 'R Us, Good Guys, Pep Boys,
Circuit City Stores, John Harvard's Brew House and Albertson's.
Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to
offer brand-name residential furniture to middle- and upper-
middle-income customers through 63 stores located in 11 southern
and midwestern states (after disposing 14 stores). The Company
and two of its debtor-affiliates filed for chapter 11 protection
on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K.
Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King &
Spalding represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
estimated less than $50,000 in assets and more than $10 million in
total debts.
SAINT VINCENTS: Asks Court to OK Brokerage Deal with Massey Knakal
------------------------------------------------------------------
Saint Vincents Catholic Medical Centers of New York asks the U.S.
Bankruptcy Court for the Southern District of New York to approve
its Brokerage Agreement with Massey Knakal Realty Services.
On July 13, 2005, Saint Vincents and Massey Knakal finalized the
terms of a brokerage agreement, granting Massey Knakal exclusive
right to sell the Debtors' Parsons Manor Property.
Massey Knakal prepared marketing material and provided detailed
information on Parsons Manor to approximately 7,600 different
parties. The information was also posted on the Broker's Web
site. The Brokers' marketing efforts generated 16 offers,
including Kinchung Lam's $12.5 million offer for the Property.
The Brokerage Agreement between SVCMC and Massey Knakal provides
that:
-- Massey Knakal will receive a commission of either 4% of
the gross sale price if no other broker is involved in the
Sale, or 5% if another broker is involved.
-- In the case that another broker is involved in the Sale,
SVCMC will pay Massey Knakal the full Broker Fee, and
Massey Knakal will pay the Other Broker 50% of the Broker
Fee.
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. 9; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SAINT VINCENTS: Wants to Lease Cherry Creek's Medical Equipment
---------------------------------------------------------------
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 to approve a Master Lease Agreement with
Cherry Creek Capital Partners, LLC.
The terms of the master lease agreement are:
(1) Cherry Creek will lease new medical equipment, worth up to
$4.7 million to SVCMC for a period of 60 months;
(2) At the end of the lease term, SVCMC may:
(a) purchase all, but not less than all, the Equipment for
a price agreed by both parties,
(b) renew the lease for all, but not less than all,
Equipment for 12 months at the rate specified, and
(c) return all, but not less than all, Equipment;
(3) As collateral, SVCMC will provide a security deposit of
35% original equipment cost, to be released upon the
satisfaction of various conditions.
(4) In the event of a default under the Lease, Cherry Creek is
granted relief from the automatic stay of Section 362 of
the Bankruptcy Code to repossess the Equipment.
Stephen B. Selbst, Esq., at McDermott Will & Emery LLP, in New
York, explains that SVCMC needs the Equipment to replace old
equipment, and additional equipment to increase the hospital's
revenue.
Under the Master Lease Agreement, the SVCMC intends to lease for
the benefit of St. Vincents Hospital Staten Island a computed
axial tomographic scanner to replace on of its two scanners.
Based on the Debtor's estimates, this will generate $48,000 in
incremental revenue based on 300 new cases and no incremental
expenses.
SVCMC also intends to lease for the benefit of St. John's
Hospital Queens computed axial tomography scanners. The Debtor
projects $685,000 in incremental revenue based on 2,000 new
cases, with $75,000 in incremental expenses.
St. Vincent's Hospital Manhattan will also replace its fetal
monitoring equipment because the manufacturer no longer services
the outdated equipment. The Hospital will also lease a cardiac
catheterization system for a new cardiac catheterization
laboratory, which it is building. SVCM believes that the new
laboratory will generate increased revenues.
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. 9; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SAINT VINCENTS: Wants to Continue SSI Surgical's Service Agreement
------------------------------------------------------------------
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 to approve a service agreement with SSI
Surgical Services, Inc.
Prior to their bankruptcy petition date, the Debtors tapped SSI to
purchase and make available custom, sterilized surgical and other
equipment used for the Debtors' hospitals.
Due to the critical nature of the services being provided by SSI,
the parties agree that SSI would continue providing postpetition
services on these terms:
(i) SSI will exclusively wash, decontaminate, inspect,
package, sterilize and return reusable surgical instrument
sets for:
-- Mary Immaculate Hospital, in Jamaica, New York,
-- St. John's Queens Hospital, in Elmhurst, New York, and
-- St. Mary's Hospital of Brooklyn, in Brooklyn, New
York.
(ii) Saint Vincent Medical Centers will pay SSI $42 per
operating room tray and $42 per labor delivery tray. The
minimum weekly charge, subject to agreed reconciliations,
will be $12,000;
(iii) SVCMC will pay SSI for cost to replace any products
broken, lost, or damaged at SSI's then current replacement
cost plus 10%;
(iv) At either party' election, the Services may be extended
for one year. In the event of the Agreement is extended
by SSI, SSI reserves the right to amend the pricing
schedule not to exceed 5%; and
(v) All amounts or payments due under the Agreement will
constitute an administrative expense under Section 503(b)
of the Bankruptcy Code.
Mr. Selbst tells the Court that SVCMC paid SSI $48,000 for the
minimum weekly charge for the period July 5, 2005, to July 31,
2005. SVCMC also paid a $48,000 advance payment.
Mr. Selbst informs the Court that the Debtors have made
considerable efforts to look for alternative and replacements to
SSI and have not been able to come up with a practical solution.
Due to the precise nature of instruments provided by SSI,
tailored to the specifications of the physicians practicing at
the Hospitals, no other entity could step in to replace SSI,
should SSI decline to provide the Services.
One alternative that the Debtors have considered, consistent with
industry practice, is to purchase the surgical equipment
themselves and move the Services in-house. However, to do so,
the Debtors estimate that they would incur capital costs in
excess of $4 million. In the meantime, without SSI continuing to
provide the Services, the Hospitals would not be able to function
effectively for any period of time.
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. 9; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SEARS HOLDINGS: J.P. Morgan to Buy CDN Unit's 10M Credit Accounts
-----------------------------------------------------------------
J.P. Morgan Chase & Co. will buy Sears credit card and Sears
MasterCard accounts of Sears Canada Inc., for an undisclosed
amount, The Deal reports.
According to The Deal, the operations include 10 million accounts
and C$2.5 billion ($2.1 billion) in outstanding receivables.
Given that most recent store-branded credit card deals have
commanded a premium to receivables of 15% to 20%, the transaction
is calculated to cost $315 million to $420 million.
Toronto-based Osler, Hoskin & Harcourt LLP, advised J.P. Morgan
Chase on the transaction.
Sears Holding Corp. of Hoffman Estates, Ill., owns 54% of Sears
Canada.
Sears Holdings Corporation -- http://www.searshc.com/-- is the
nation's third largest broadline retailer, with approximately
$55 billion in annual revenues, and with approximately 3,800
full-line and specialty retail stores in the United States and
Canada. Sears Holdings is the leading home appliance retailer as
well as a leader in tools, lawn and garden, home electronics and
automotive repair and maintenance. Key proprietary brands include
Kenmore, Craftsman and DieHard, and a broad apparel offering,
including such well-known labels as Lands' End, Jaclyn Smith and
Joe Boxer, as well as the Apostrophe and Covington brands. It
also has Martha Stewart Everyday products, which are offered
exclusively in the U.S. by Kmart and in Canada by Sears Canada.
(Kmart Bankruptcy News, Issue No. 97; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on March 31, 2005,
Moody's Investors Service affirmed the Ba1 senior implied rating
of Sears Holding Corporation. Moody's said the rating outlook is
stable.
Ratings assigned:
Sears Holdings Corporation
* Senior implied rating at Ba1;
* Senior unsecured issuer rating at Ba1; and
* $4 billion senior secured revolving credit facility
at Baa3.
As reported in the Troubled Company Reporter on March 30, 2005,
Fitch Ratings assigned a 'BB' rating to Sears Holdings senior
unsecured debt, with a negative outlook.
At the same time, Standard & Poor's assigned its 'BB+' corporate
credit rating to Sears Holdings, with a negative outlook.
STELCO INC: Ontario Court Extends CCAA Stay to September 23
-----------------------------------------------------------
The Superior Court of Justice (Ontario) extended the stay period
in Stelco Inc.'s (TSX:STE) Court-supervised restructuring under
the Companies Creditors Arrangement Act to September 23, 2005.
The Court-appointed Monitor, Ernst & Young, had previously
indicated that the Company would seek an extension of the stay
period. The Monitor had recommended that the extension be granted
to maintain stability and to provide a focused environment in
which Stelco's meaningful discussions with certain of its major
stakeholders could continue.
A CCAA Stay bars creditors from commencing or continuing any
action against the Company or a Company director, in his or her
official capacity, on any claim that arose before the CCAA
proceedings were commenced.
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
and certain related entities filed for protection under the
Companies' Creditors Arrangement Act.
STELCO INC: Court Names Hon. Coulter Osborne as Special Officer
---------------------------------------------------------------
The Superior Court of Justice (Ontario) appointed a Special
Officer in Stelco Inc. (TSX:STE) Court-supervised restructuring to
oversee a review of complaints made by two former directors.
The Court appointed the Honourable Coulter Osborne as a Special
Officer of the Court to oversee and assist the special committee
of Stelco's Board that has been appointed to review complaints
made by two directors who resigned on August 31, 2005. The
complaints reflect concerns about effective Board oversight of
recently prepared forecasts that will be important to the
restructuring plan to be filed by the Company.
The Honourable Coulter A. Osborne was appointed to the High Court
of Ontario in 1978 and to the Court of Appeal for Ontario in 1990.
He served as Associate Chief Justice of Ontario between 1999 and
2001. In 2001 he was appointed the Integrity Commissioner for the
Province of Ontario.
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
and certain related entities filed for protection under the
Companies' Creditors Arrangement Act.
TELECOM ARGENTINA: Successful Restructuring Cues Fitch's Upgrade
----------------------------------------------------------------
Fitch Ratings has upgraded the international scale foreign and
local currency rating of Telecom Argentina S.A. to 'B-' from 'DD'
and the national scale rating to 'BBB-(arg)' from 'D(arg)'.
Fitch has also assigned an international foreign currency rating
of 'B-' to two newly issued notes as part of debt restructuring
process consisting of approximately US$885 million 5.5% Series A
step-up notes due 2014 denominated in Euros, Yenes, Argentine
Pesos, and U.S. dollars, and US$999 million 9.0% Series B step-up
notes due 2011.
Fitch has also withdrawn the old notes following the completion of
the debt restructuring. Approximately US$3 billion of debt is
affected. The Rating Outlook is Stable.
The rating actions reflect Telecom's improved capital structure
and debt maturity profile following the successful completion of
its debt restructuring on Aug. 31, 2005. The debt restructuring
process has extended the company's debt maturities, lowered
interest costs, and reduced overall levels of debt. On Aug. 31,
2005, Telecom exchanged approximately US$1.9 billion of new notes
for approximately US$3 billion of debt.
In addition, as part of the terms of the bankruptcy proceeding for
Acuerdo Preventivo Extrajudicial, Telecom prepaid approximately
US$535 million of the new notes with balance sheet cash including
principal payments due up to and including Oct. 15, 2007. The
outstanding balance of the new notes are series 'A' notes are
equivalent to US$750 million, and the series 'B' US$599.5 million.
Telecom's financial profile has clearly improved after the
aforementioned debt restructuring and the company should be able
to successfully meet its debt service obligations going forward.
On a pro forma basis, credit ratios are strong for the rating
category; total debt to EBITDA is expected to be lower than 3.0
times (x), and EBITDA to interest expense should strengthen to
approximately 4.0x from 2.8x at the end of 2004. Total debt
declined to approximately US$1.8 billion from US$3.4 billion at
the end of June 2005. Refinancing risk is expected to remain low
over the medium term as the company uses cash flow from operations
to pay debt over the next few years on an improved maturity
profile.
Telecom's ratings are constrained by significant regulatory and
sovereign related risks. Regulated tariffs have been and continue
to remain frozen since the crisis began in 2002, which limits
revenue flexibility and adds exposure to devaluation and
inflationary risks. Telecom's revenues are peso-denominated,
while its debt is largely foreign currency-denominated.
Over the medium to long term, improvements in Telecom's credit
quality will hinge upon a sustained recovery of the Argentine
economy and telecommunications services demand, in addition to
tariff relief as part of a sustainable regulatory framework for
the fixed-line business. During the first half of 2005, the
company benefited from a partial recovery in demand for
telecommunications services, particularly in the wireless segment.
Consequently, the company increased revenues by 25% during this
period, but EBITDA declined by 1.1% mainly due to a challenging
competitive environment in the wireless business that resulted in
increased advertising, handset subsidies, and sales commission
costs.
Telecom is one of the largest telecommunications providers in
Argentina, with 3.85 million fixed lines in service (47% estimated
market share), 4.2 million wireless subscribers in Argentina, and
252,000 Internet subscribers. Telecom is 55% owned by Nortel
Inversora, which in turn is jointly controlled by Telecom Italia
and Grupo Werthein; 5% owned by employees; and the remainder is
publicly traded.
Telecom's securities are traded in the United States and are
registered in the Securities and Exchange Commission. SEC filings
on the company are available for free at
http://ResearchArchives.com/t/s?166
TERAFORCE TECHNOLOGY: U.S. Trustee Picks 4-Member Creditors Panel
-----------------------------------------------------------------
William T. Neary, the United States Trustee for Region 6, appoints
four creditors to the Official Committee of Unsecured Creditors in
Teraforce Technology Corporation and DNA Computing Solutions,
Inc.'s Chapter 11 cases:
1. Edward C. Gaiennie
S&G Associates, LLC
1970 S. Starpoint Dr.
Houston, TX 77032
Tel No.: 281-821-1110
Fax No.: 281-821-1118
2. S. Kelly Paul
General Accounting Manager
Savage Sports Corporation
100 Springdale Road
Westfield, MA 01085
Tel No.: 413-642-4132
Fax No.: 413-562-7764
3. Gregory Williams
General Counsel
EFW (Ft. Worth)
Legal Department
4700 Marine Creek Parkway
Fort Worth, TX 76136
Tel No.: 817-231-4468
Fax No.: 817-234-6792
4. Jason B. Binford, Esq.
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, TX 7522-3789
Tel No.: 214-651-5626
Fax No.: 214-200-0613
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the chapter 11 cases to a liquidation
proceeding.
Headquartered in Richardson, Texas, Teraforce Technology
Corporation -- http://www.teraforcetechnology.com/-- markets the
products and services of DNA Computing Solutions, Inc. DNA
Computing designs, produces and sells board-level products that
deliver high performance computing capabilities for embedded
applications in the military/aerospace, industrial, and commercial
market sectors. The Company and its affiliate filed for chapter
11 protection on August 3, 2005 (Bankr. N.D. Tex. Case No. 05-
38756). Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
total assets of $4,338,000 and total debts of $14,269,000.
TERAFORCE TECHNOLOGY: Committee Wants Locke Liddell as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of Teraforce
Technology Corporation and DNA Computing Solutions, Inc., asks the
U.S. Bankruptcy Court for the Northern District of Texas for
permission to employ Locke Liddell & Sapp LLP as its counsel
effective Aug. 10, 2005.
Locke Liddell will:
a) consult with the Debtors and representatives of the U.S.
Trustee concerning the administration of the Debtors'
chapter 11 cases and property;
b) investigate the Debtors' acts, conduct, assets, liabilities
and financial affairs and condition, the operation of their
businesses, and any matter relevant to the case;
c) analyze and advise the Committee regarding financing and
cash collateral issues;
d) advise the Committee regarding issues related to conversion
of the Debtors' cases or the appointment of a Chapter 11
Trustee or examiner;
e) advise the Committee regarding bidding and sale processes;
f) advise the Committee regarding any plan proposed in the
Debtors' chapter 11 cases; and
g) perform other services as may be requested by the Committee.
The Committee and Locke Liddell have agreed that the firm will
receive 90% of its normal hourly rates, adjusted from time to
time, as approved by the Court. Doug Skierski, Esq., a Locke
Liddell associate, discloses that he charges $300 per hour for his
services.
Court documents do not disclose the current hourly rates for other
professionals.
The Committee assures the Court that Locke Liddell does not hold
any interest adverse to the Debtors' estate and is a
"disinterested person" as that term is defined by section 101(14)
Bankruptcy Code.
Headquartered in Richardson, Texas, Teraforce Technology
Corporation -- http://www.teraforcetechnology.com/-- markets the
products and services of DNA Computing Solutions, Inc. DNA
Computing designs, produces and sells board-level products that
deliver high performance computing capabilities for embedded
applications in the military/aerospace, industrial, and commercial
market sectors. The Company and its affiliate filed for chapter
11 protection on August 3, 2005 (Bankr. N.D. Tex. Case No. 05-
38756). Davor Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
total assets of $4,338,000 and total debts of $14,269,000.
TERAFORCE TECH: Court Okays Use of Bean Group's Cash Collateral
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas,
Dallas Division, gave Teraforce Technology Corporation and DNA
Computing Solutions, Inc., authority to access the cash collateral
securing their indebtedness to a consortium of lenders led by
Richard E. Bean, as agent.
Mr. Bean, Robert E. Garrison, II, Steven A. Webster, James R.
Hawkins, Peter W. Badger, John H. Styles, and Donald R. Campbell
hold a $2.8 million note against the Debtors' future accounts,
intellectual property rights, and general intangibles, among
others, following the assignment of the Note by Encore Bank.
The Debtors tell the Court that they need immediate access to the
cash collateral to:
-- pay the wages and related benefits of their employees, as
well as insurance obligations related to employees and
premises;
-- pay for the use of their leased premises, as well as
utilities and other incidental obligations;
-- collect outstanding accounts receivable and, to the extent
advisable, manufacture new products to create postpetition
receivables;
-- attend to costs and fees associated with ongoing permit,
trademark, and patent obligations;
-- maximize the value of their assets for a sale on a going
concern basis because, given the technical and highly
complicated nature of their businesses, any third-party
purchaser will need the benefit of the Debtors' employees
to smoothly transition operations.
Proposed Sale
The Debtors are asking Court to approve the sale of substantially
all of DNA's assets to GE Fanuc Automation Corporation's for
$2.9 million, subject to higher and better offers.
The Debtors will use the asset sale proceeds to pay the Encore
Note. The Debtors anticipate a substantial reduction of their
continuing need for cash collateral following a reduced workforce
after the proposed sale.
To adequately protect the interests of their lenders, the Debtors
will grant the Bean Group first priority replacement liens in and
to the postpetition receivables to the extent of the Debtors' use
of the cash collateral and to the extent that the proposed sale
fails to pay the Bean Group in full.
In addition, the Debtors will grant the Bean Group a super-
priority administrative expense claim to the extent of diminution
in value of the cash collateral as a result of their use.
Headquartered in Richardson, Texas, Teraforce Technology
Corporation -- http://www.teraforcetechnology.com/-- markets the
products and services of DNA Computing Solutions, Inc. DNA
Computing -- http://www.dnacomputingsolutions.com/-- designs,
produces and sells board-level products that deliver high
performance computing capabilities for embedded applications in
the military/aerospace, industrial, and commercial market sectors.
The Companies file for chapter 11 protection on Aug. 3, 2005
(Bankr. N.D. Tex. Case Nos. 05-38756 through 05-38757). Davor
Rukavina, Esq., at Munsch, Hardt, Kopf & Harr, PC, represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $4.3 million in
total assets and $14.2 million in total debts.
TOWER AUTOMOTIVE: Says Federal Insurance Must Pay Defense Costs
---------------------------------------------------------------
As previously reported, 11 purported class action lawsuits have
been filed against Tower Automotive Inc. and its debtor-
affiliates' current and former officers, directors and employees
since the Debtors' bankruptcy filing. The Class Action Lawsuits
sought hundreds of millions of dollars in potential damages for a
variety of alleged violations of the Securities and Exchange Act
of 1934 and the Employee Retirement Income Security Act.
The Securities Class Actions are:
Plaintiff Case No. Filing Date
--------- ------------- -----------
George Keritsis, et al. 1:05-cv-01926 02/04/2005
Leland Wayne, et al. 1:05-cv-01934 02/07/2005
Tim Poplin 05-cv-2188 02/16/2005
Robert C. Josepayt, et al. 05-cv-2229 02/17/2005
Nathan F. Brand, et al. 05-cv-03494 04/04/2005
The ERISA Class Actions are:
Plaintiff Case No. Filing Date
--------- ------------- -----------
David Kowalewski, et al. 05-cv-2215 02/17/2005
Forrest Hill, et al. 05-cv-2182 02/17/2005
James McMillion, et al. 05-cv-2762 03/10/2005
Peter Vanderhoof, et al. 05-cv-3637 04/08/2005
Victor Angove, et al. 05-cv-3641 04/08/2005
Gryzelak, et al. 05-cv-3496 04/08/2005
Federal Insurance Company, the Debtors' insurance carrier, has
acknowledged coverage of the Securities Class Actions. Because
the ERISA Class Actions allege ERISA violations, the Debtors
promptly notified Federal and sought access to the insurance
policy to cover defense costs related to the Class Action
Lawsuits.
Federal, however, denied coverage for the ERISA Class Actions.
Subsequently, the Debtors filed a complaint against Federal
seeking, among other things, declaratory relief to establish
Federal's obligations to advance defense costs under Federal
Policy No. 8151-5430. Federal has sought dismissal of the ERISA
Coverage Litigation.
Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York,
clarifies that are not seeking a declaration that insurance
coverage exists for damages that certain of their officers and
directors may or may not eventually incur in lawsuits alleging
violations of ERISA.
The Debtors, however, only seek a declaration that Federal
Insurance Company is obligated to pay the defense costs of their
officers and directors who are named as defendants in the ERISA
Actions.
According to Mr. Cantor, the Securities Based Claim Exclusion
does not bar coverage for the ERISA Actions because it only
applies when non-Plan participants file the claims for which the
insured seeks coverage. However, Plan participants and
beneficiaries filed the ERISA Actions.
Mr. Cantor asserts that Federal's interpretation of the
Securities Based Claim Exclusion would make the Debtors and their
officers' and directors' fiduciary insurance coverage "entirely
contingent on the fortuity of whether any person who is not a
Plan participant or beneficiary happens to so much as threaten to
make a Securities-Based Claim against any Insured."
"Federal would have this Court conclude that each of these
individuals' right to fiduciary coverage hangs on a single thread
that none of the other individuals says anything that would draw
even a letter suggesting a misrepresentation had been made about
the value of [the Debtors'] securities," Mr. Cantor contends.
"Such illusory coverage would be of little or no value to [the
Debtors], or to [their] officers and directors who rely on the
Policy in performing their fiduciary duties under the ERISA
Plan."
Thus, the Debtors ask the Court to direct Federal to pay the
defense costs of all defendants in the ERISA Actions.
Federal Retorts
Dena Copulsky, Esq., at Hogan & Hartson L.L.P., in New York,
asserts that "Federal's motion to dismiss raises an issue that is
both ripe for determination and fundamental to this case: whether
coverage for the ERISA Actions is barred by the Securities-Based
Claims Exclusion."
"If the answer to that question is 'yes' -- and it clearly is --
then there is no coverage, Federal has no duty to defend, and
this entire action should be dismissed," Ms. Copulsky says.
Ms. Copulsky points out that the Securities-Based Claims
Exclusion does not render Coverage under the policy "illusory."
Ms. Copulsky explains that the Policy provides coverage for a
wide range of Claims alleging "any breach of the
responsibilities, obligations or duties imposed by ERISA upon
fiduciaries of the Sponsored Plan in their capacity as such
fiduciaries," or "any negligent act, error or omission in the
Administration of any Plan committed, attempted, or allegedly
committed or attempted by an Insured in the Insured's capacity as
such," or "any other matter claimed against an Insured solely by
reason of the Insured's service as a fiduciary of any Sponsored
Plan."
However, Ms. Copulsky maintains that the ERISA Actions are
different in that they:
(a) arise directly from and are based on the alleged
disclosure or non-disclosure of information relating to
the Debtors' securities or their financial or operational
performance;
(b) are excluded from coverage under this Policy because there
are "other civil proceedings" filed on behalf of non-Plan
participants that make similar claims.
According to Ms. Copulsky, excluding the ERISA Claims also does
not render coverage under the Policy illusory. It simply gives
effect to a plainly written exclusion that limits, but does not
eliminate or even substantially reduce, the coverage potentially
available under the Policy.
Ms. Copulsky disagrees with the Debtors' contention that the
Securities-Based Claims Exclusion only applies when the claims
for which the insured seeks coverage are brought by non-Plan
participants. "That argument is directly contrary to the
language of the Exclusion, which provides that coverage is barred
for any Securities-Based Claim if . . . any other . . . civil or
administrative proceeding against an Insured, seeks or has sought
relief for any purchaser or holder of [Tower] securities . . .
who is not a Plan participant or beneficiary."
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer,
including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda,
Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products
include body structures and assemblies, lower vehicle frames and
structures, chassis modules and systems, and suspension
components. The Company and 25 of its debtor-affiliates filed
voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y.
Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq.,
Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq.,
and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$787,948,000 in total assets and $1,306,949,000 in total
debts. (Tower Automotive Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
TOWER AUTOMOTIVE: Court Okays Stipulation on Setoff with Visteon
----------------------------------------------------------------
As reported in the Troubled Company Reporter on May 17, 2005,
Visteon Corp. asked the U.S. Bankruptcy Court for the
Southern District of New York to lift the automatic stay to effect
a set-off on its prepetition debt with Tower Automotive Inc.
Tower, in turn, asked the Bankruptcy Court not to allow the set-
off unless:
(1) the amounts of the Visteon Prepetition Debt and Debtors'
Prepetition Debt, including any amounts that Visteon has
deducted from the Checks that it had previously asserted
in the Reclamation Claim, are reconciled and fixed by
agreement between the parties or by Court Order; and
(2) Visteon remits a $714,639 payment to the Debtors.
Pursuant to a Court order directing Visteon Corporation and the
Debtors to fix their mutual prepetition claims, the parties
stipulate that:
(1) the Debtors owe Visteon $4,547,264 for component parts
they purchased before they filed for bankruptcy;
(2) Visteon owes the Debtors $582,736 for component parts
purchased before the Petition Date;
(3) the Debtors' Prepetition Debt will be set off against
Visteon's Prepetition Debt, leaving Visteon with two
allowed general unsecured non-priority claims in the
aggregate amount of $3,964,527 in the Debtors' Chapter 11
cases:
(i) a $2,509,403 general unsecured non-priority claim
in Tower Automotive Lansing, LLC's Chapter 11 case;
and
(ii) a $1,455,124 general unsecured non-priority claim
in Tower Automotive Products Company's Chapter 11
case; and
(4) the automatic stay applicable to Visteon in the Debtors'
cases is modified to the extent necessary to permit the
effectuation of the set-off.
Judge Gropper approved the stipulation.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer, including
BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan,
Toyota, Volkswagen and Volvo. Products include body structures
and assemblies, lower vehicle frames and structures, chassis
modules and systems, and suspension components. The Company and
25 of its debtor-affiliates filed voluntary chapter 11 petitions
on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-
10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup
Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq.,
at Kirkland & Ellis, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $787,948,000 in total assets and
$1,306,949,000 in total debts. (Tower Automotive Bankruptcy News,
Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000)
TOWER AUTOMOTIVE: Appoints David DiRita as Senior Vice President
----------------------------------------------------------------
Tower Automotive, Inc., has appointed David M. DiRita as senior
vice president and general counsel. Mr. DiRita will report to
Kathleen Ligocki, the Company's president and CEO.
"With his extensive corporate law background and broad range
of experience in the automotive supplier industry, David will be
a valuable asset to Tower Automotive," said Ligocki. "He will
play a critical role in providing legal counsel on our corporate
strategy and in coordinating legal matters worldwide."
Based at the corporate headquarters in Novi, Michigan,
DiRita will also be in charge of coordinating relationships with
external counsel and implementing processes and systems within
the legal department to create efficiencies.
Most recently, DiRita served as deputy general counsel for
Visteon Corp., which he joined in 2000. Prior to joining
Visteon, he worked at Johnson Controls, Inc. as group general
counsel for North and South America. In these roles, he was
responsible for mergers, acquisitions, divestitures, joint
ventures and corporate governance, as well as a variety of other
commercial activities. Earlier, DiRita practiced corporate law
for Dickinson-Wright in Detroit.
He received a bachelor's degree in business and a juris
doctor from the University of Michigan in Ann Arbor.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer,
including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda,
Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products
include body structures and assemblies, lower vehicle frames and
structures, chassis modules and systems, and suspension
components. The Company and 25 of its debtor-affiliates filed
voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y.
Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq.,
Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq.,
and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$787,948,000 in total assets and $1,306,949,000 in total
debts. (Tower Automotive Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
TRM CORP: Registers & Distributes 715K Common Shares to Employees
-----------------------------------------------------------------
TRM Corporation registered 715,000 shares of common stock with the
Securities and Exchange Commission in a Form S-8 filing.
The Company valued the shares at $15.33 per share, aggregating
$10,960,950. Share price fluctuated between $15.10 and $18.75 the
past month.
The registered shares were distributed to the Company's employees
under the 2005 Omnibus Stock Incentive Plan, 2001 Nonqualified
Stock Option Plan, and the Restated 1996 Stock Incentive Plan.
Without the benefit of registration, shareholders could not offer
or sell the securities by any form of general solicitation or
general advertising. Non-registered shares cannot be resold
through underwriters.
TRM Corp. continues to experience multinational expansion in
its ATM operation and remains among the largest independent ATM
networks in the United Kingdom. Currently employing over 400
people throughout the United States, Canada, and the United
Kingdom, TRM manages over 30,000 locations in deployment,
processing, and maintenance for both ATM and Photocopy services.
* * *
As reported in the Troubled Company Reporter on Oct. 25, 2004,
Moody's Investors Service assigned a B2 rating to the proposed
$150 million senior secured bank credit facilities of TRM
Corporation. The ratings outlook is stable.
These ratings are assigned:
* B2 Senior Secured Bank Credit Facility Rating
* B2 Senior Implied Rating
* Caa1 Issuer Rating
* SGL-2 speculative grade liquidity rating
TRM CORP: Buying Travelex UK's ATM Business for EUR43.4 Million
---------------------------------------------------------------
TRM Corporation (NASDAQ: "TRMM") has agreed to purchase the United
Kingdom-based ATM business of Travelex UK Limited. The business
includes the ATM division of Travelex as well as Travelex ATMs
Limited, a joint venture company with Snax 24 Corporation Limited.
TRM will purchase the business, comprised of over 1,100 primarily
full placement ATM units, for EUR43.4 million (approximately
$78 million). The acquisition is subject to customary closing
conditions, including obtaining financing for the purchase, and,
upon satisfaction of these conditions, is expected to be completed
in the fourth quarter of 2005.
The ATM business that TRM has agreed to acquire provides
convenient, on-site cash access at locations predominately based
around fuel stations and convenience stores such as TotalFinaElf,
Snax 24, Texaco and National Car Parks, as well as other sites
including McDonalds and United Cinemas International. The ATM
portfolio is comprised primarily of long-term customer site
contracts whose locations are averaging approximately 1,000
transactions per month over the last twelve months.
Due to continuing consolidation in the United Kingdom ATM
marketplace, Travelex was pleased to develop and accept this offer
from TRM. The acquisition would increase TRM's presence in the
United Kingdom to over 7,500 ATM and photocopier locations; and
TRM will service all locations through its in-house service
network.
Banc of America Securities LLC served as financial advisor to TRM
in connection with this transaction.
Deutsche Bank served as financial advisor to Travelex and Snax 24
in connection with the transaction.
About Snax24
Snax 24 is a leading operator in the fuel retailing and
convenience store sector. Snax24 is owned by its Chairman, Gerald
Ronson, together with family interest. Gerald Ronson was the
founder of the Heron International property group and Snax 24's
predecessor, Heron Service Stations.
About Travelex
Travelex is the world's largest foreign exchange specialist, with
over 700 retail branches and 15,000 business customers. There are
retail branches at key airport, seaport and rail locations, in
addition to tourist and business centres around the world. Around
40% of the world's airline passengers, over 1.3 billion people,
pass through airports at which the business operates including the
major gateways at London, New York, Hong Kong, Frankfurt and
Sydney. Travelex is the world's largest non-bank provider of
commercial foreign exchange services, providing integrated
solutions for businesses. The Group is also one of the world's
leading providers of outsourced travel money to banks and travel
agencies.
About TRM
TRM Corp. continues to experience multinational expansion in
its ATM operation and remains among the largest independent ATM
networks in the United Kingdom. Currently employing over 400
people throughout the United States, Canada, and the United
Kingdom, TRM manages over 30,000 locations in deployment,
processing, and maintenance for both ATM and Photocopy services.
* * *
As reported in the Troubled Company Reporter on Oct. 25, 2004,
Moody's Investors Service assigned a B2 rating to the proposed
$150 million senior secured bank credit facilities of TRM
Corporation. The ratings outlook is stable.
These ratings are assigned:
* B2 Senior Secured Bank Credit Facility Rating
* B2 Senior Implied Rating
* Caa1 Issuer Rating
* SGL-2 speculative grade liquidity rating
TRM CORP: S&P Places B+ Corporate Credit Rating on Negative Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit and other ratings on Portland, Oregon-based TRM Corporation
on CreditWatch with negative implications following the company's
announcement that it intends to acquire the automated teller
machines business of Travelex UK Ltd. for about $78 million. The
U.K.-based ATMs primarily are located at:
* gas stations,
* convenience stores,
* fast food restaurants, and
* movie theatres.
"The CreditWatch listing reflects uncertainties with respect to
business integration and final financing arrangements," said
Standard & Poor's credit analyst Lucy Patricola. TRM already is
integrating a very large transaction, having more than tripled its
ATM base with the acquisition of eFunds in November 2004. Debt to
EBITDA after that transaction is 4.3x as of June 2005. Using the
company's current run rate of EBITDA, pro forma leverage is about
3x.
Depending on the EBITDA contribution of the Travelex ATMs and
financing arrangements, the acquisition may or may not have an
impact on the rating. If leverage is meaningfully increased, or
if free cash flow is strained because of debt amortization or ATM
refurbishment, the rating might be lowered. If the EBITDA
contribution from Travelex offsets some of the increased debt, or
if the transaction is not fully debt financed such that leverage
is modestly affected, the ratings could be affirmed.
S&P will meet with management to discuss the financing of the
transaction and its impact on the company's financial profile, and
the company's growth strategy in order to determine the final
impact on the rating.
TRUMP HOTELS: Treasury Department Files Claim for $41.8 Million
---------------------------------------------------------------
On January 14, 2005, the U.S. Department of Treasury - Internal
Revenue filed Claim No. 1448 against Trump Indiana, Inc., which
has been amended and superseded from time to time through the
filing of additional proofs of claim, the latest of which was
Claim No. 2251, filed on June 9, 2005, for $41,773,986.
To permit Trump Indiana and the Treasury Department an
opportunity to continue settlement discussions while preserving
their rights, the parties agree to extend the deadline by which
the Debtor is required to file objections to the Tax Claim
through Nov. 22, 2005.
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. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
TRUMP HOTELS: Objects to 28 Claims Filed by Non-Debtor Affiliates
-----------------------------------------------------------------
Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment
Resorts, Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of New Jersey to disallow 28 unliquidated
claims -- Claim Nos. 1856 to 1883 -- filed by Trump Corporation,
Trump Tower Commercial LLC, Flights, Inc., The Trump Equitable
Fifth Avenue Company, Trump Restaurant LLC or any of each of their
direct and indirect non-Debtor affiliates.
Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney &
Carpenter, LLP, in Newark, New Jersey, tells the Court that the
Disputed Claims are claims for payment, indemnification,
contribution or breach of contract arising from:
-- transactions and transfers by and among the Claimants and
certain of the Debtors; or
-- all leases agreements, executory contracts and other
agreements among the Claimants and the Debtors.
The Debtors are limiting their objection solely to the extent
that the Disputed Claims seek recovery other than those expressly
afforded under the confirmed Plan of Reorganization.
The Debtors seek the disallowance on the grounds that:
1. The Disputed Claims are fully satisfied by the treatment
afforded to Donald J. Trump and the assumption by the
Debtors of certain of their executory contracts with the
Claimants pursuant to the Plan;
2. No amounts are due and owing on account of the Disputed
Claims according to the Debtors' books and records;
3. The Disputed Claims lack adequate support or documentation;
and
4. The Disputed Claims are claims for reimbursement or
contribution.
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. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
TRUMP HOTELS: James Clancy Asks Court to Extend Claims Bar Date
---------------------------------------------------------------
James M. Clancy, Esq., at Bafundo, Porter, Borbi & Clancy, LLC,
in New Jersey, relates that on Feb. 4, 2000, 75-year old Edna
Bodner tripped and fell while on the premises of the Trump Plaza
Hotel. A lawsuit relating to the accident was filed in the
Superior Court of New Jersey in February 2002.
According to Mr. Clancy, he represented Ms. Bodner in the New
Jersey litigation since December 2002. Thus, Mr. Clancy says,
the Debtors were well aware of Ms. Bodner's injury claim and his
representation of her. However, he tells the U.S. Bankruptcy
Court for the District of New Jersey, he never received a proof of
claim or a notice of the claims bar date from the Debtors.
Mr. Clancy asks Judge Wizmur to extend the Claims Bar Date for a
sufficient time to allow him to file a claim on behalf of his
client, Ms. Bodner.
"The failure to receive a notice of the Proof of Claim or claim
bar date," Mr. Clancy asserts, "would act as a failure of
appropriate notice of the same, giving the Court a reasonable
basis to extend the date by which we would be allowed to file a
Proof of Claim on behalf of the claimant."
Mr. Clancy reminds the Court that the Debtors' confirmed Second
Amended Plan of Reorganization does not impair the rights of
personal injury claimants against the Debtors. Mr. Clancy
believes that the Debtors, by choosing not to discharge the
interests of personal injury claimants, intended to continue to
defend or resolve their claims once the reorganization is
complete. Thus, he contends, no prejudice will result by the
requested extension.
Mr. Clancy also asserts "excusable neglect" to support the
requested extension.
Mr. Clancy assures Judge Wizmur that late filing of the Claim
will not impact the overall judicial proceedings or the orderly
advancement of the matter through the Bankruptcy Court.
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. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
UAL CORP: Files Reorganization Plan & Disclosure Statement in Ill.
------------------------------------------------------------------
UAL Corporation (OTC Bulletin Board: UALAQ), the holding company
whose primary subsidiary is United Airlines, filed a Plan of
Reorganization and Disclosure Statement with the U.S. Bankruptcy
Court for the Northern District of Illinois.
The joint plan of reorganization includes UAL, United and 26 other
subsidiaries that filed for voluntary Chapter 11 reorganization on
Dec. 9, 2002. United intends to exit from bankruptcy protection
early next year as a much more competitive company with a solid
financial foundation and a continued focus on delivering superior
customer service.
"United has made tremendous progress in our restructuring to
improve performance across the board, in costs, revenue,
operations and service to our customers. Today, we are more
flexible, more efficient and more resilient. As a result, United
is now positioned to compete with the best carriers and confront
the challenges of a volatile industry," said Glenn Tilton,
United's chairman, CEO and president.
The Disclosure Statement includes a historical profile of the
company, a description of distributions to creditors and an
analysis of the plan's feasibility, as well as many of the
technical matters required for the exit process, such as
descriptions of who will be eligible to vote on the Plan and the
voting process itself.
Under the proposed Plan, unsecured creditors generally will
receive distributions of new UAL common stock to settle their
claims. Current holders of UAL common stock, preferred stock and
the 13.25% Trust Originated Preferred Securities would receive no
distribution, and those securities would be canceled upon the
effective date of the Plan. United has made it clear for some
time that the company expected its common stock to be without
value under any plan of reorganization the company might propose.
The filing contemplates a $2.5 billion, all-debt exit financing
package. As previously announced, United has received proposals
with competitive terms and conditions from four different
institutions for exit financing.
"The exit financing proposals we have received are a significant
vote of confidence in the progress we have made over the course of
our restructuring, our business plan and ultimately, United's
future -- and in our ability to manage through a complex industry
environment, including unpredictable fuel costs," said Jake Brace,
United executive vice president and chief financial officer.
"United is a vastly different company today than it was three
years ago. The company has made difficult, but necessary
decisions and used the time well to restructure the fundamental
business," said James J. O'Connor, United's lead director.
"United now takes another significant step forward to formally
begin the process of exiting bankruptcy."
The filing indicates that the Company is exploring the possibility
of a rights offering in which it would offer unsecured creditors
the opportunity to purchase, on a pro rata basis, approximately
$500 million in value of New UAL Common Stock. The proceeds of
any such equity offering would be used to provide the Company with
additional capital for ongoing operational needs and/or to reduce
the amount of the exit financing facility and further
strengthening the Company's capital structure.
A hearing on the adequacy of the Disclosure Statement has been
scheduled to begin on Oct. 11, 2005. Court approval of the
adequacy of the Disclosure Statement will allow UAL to begin
solicitation of votes for confirmation of the Plan of
Reorganization.
Full-text copies of the Debtors' Plan of Reorganization and
Disclosure Statement are available at no charge at
http://www.pd-ual.com/
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UAL CORP: Reports Preliminary August 2005 Traffic Results
---------------------------------------------------------
United Airlines reported its preliminary traffic results for
August 2005. The company reported its highest-ever August
passenger load factor of 84.8 percent, up over August 2004. Total
scheduled revenue passenger miles decreased in August by 4.4
percent on a capacity decrease of 5.6 percent in scheduled
available seat miles compared to the same period in 2004.
2005 2004 YOY
August August Change
Scheduled Service Only:
Revenue Plane Miles 66,126,000 71,747,000 -7.8%
Number Of Departures 47,710 55,917 -14.7%
Revenue Passengers 6,019,000 6,804,000 -11.5%
Revenue Passenger Miles (000):
North America 6,303,425 7,140,413 -11.7%
Pacific 2,372,553 2,095,695 13.2%
Atlantic 1,437,238 1,406,044 2.2%
Latin America 325,006 273,258 18.9%
System 10,438,222 10,915,410 -4.4%
Available Seat Miles (000):
North America 7,427,978 8,611,853 -13.7%
Pacific 2,784,223 2,447,092 13.8%
Atlantic 1,703,599 1,643,112 3.7%
Latin America 389,703 329,955 18.1%
System 12,305,503 13,032,012 -5.6%
Passenger Load Factor (Percent):
North America 84.9 82.9 2.0 Pts
Pacific 85.2 85.6 -0.4 Pts
Atlantic 84.4 85.6 -1.2 Pts
Latin America 83.4 82.8 0.6 Pts
System 84.8 83.8 1.0 Pts
Cargo Ton Miles (000):
Freight 130,971 135,195 -3.1%
Mail 24,796 27,707 -10.5%
System 155,767 162,902 -4.4%
Total System Including Charter
(000):
Revenue Passenger Miles 10,439,355 10,990,371 -5.0%
Available Seat Miles 12,309,429 13,123,989 -6.2%
Revenue Psgr. Km. 16,800,054 17,686,804 -5.0%
Available Seat Km. 19,809,564 21,120,435 -6.2%
Total Revenue Ton Miles 1,199,702 1,261,934 -4.9%
Total Avail. Ton Miles 1,813,082 2,060,921 -12.0%
Total Rev. Ton Km. 1,739,424 1,829,649 -4.9%
Total Avail. Ton Km. 2,647,100 3,008,945 -12.0%
Year To Date Year To Date Yoy
2005 2004 Change
Scheduled Service Only:
Revenue Plane Miles 504,657,000 532,688,000 -5.3%
Number Of Departures 367,790 413,971 -11.2%
Revenue Passengers 44,956,000 47,974,000 -6.3%
Revenue Passenger Miles (000):
North America 46,183,721 49,611,062 -6.9%
Pacific 17,338,172 15,399,418 12.6%
Atlantic 10,622,086 10,219,257 3.9%
Latin America 2,806,484 2,335,076 20.2%
System 76,950,463 77,564,813 -0.8%
Available Seat Miles (000):
North America 56,100,580 63,204,399 -11.2%
Pacific 21,202,846 18,139,600 16.9%
Atlantic 12,867,737 12,391,843 3.8%
Latin America 3,560,317 2,981,991 19.4%
System 93,731,480 96,717,833 -3.1%
Passenger Load Factor (Percent):
North America 82.3 78.5 3.8 Pts
Pacific 81.8 84.9 -3.1 Pts
Atlantic 82.5 82.5 0 Pts
Latin America 78.8 78.3 0.5 Pts
System 82.1 80.2 1.9 Pts
Cargo Ton Miles (000):
Freight 1,073,359 1,008,952 6.4%
Mail 239,240 240,034 -0.3%
System 1,312,599 1,248,986 5.1%
Total System Including Charter
(000):
Revenue Passenger Miles 77,228,510 77,993,435 -1.0%
Available Seat Miles 94,086,327 97,241,812 -3.2%
Revenue Psgr. Km. 124,283,841 125,514,835 -1.0%
Available Seat Km. 151,413,126 156,491,248 -3.2%
Total Revenue Ton Miles 9,035,450 9,048,354 -0.1%
Total Avail. Ton Miles 14,882,500 15,318,205 -2.8%
Total Rev. Ton Km. 13,101,940 13,119,855 -0.1%
Total Avail. Ton Km. 21,728,450 22,364,579 -2.8%
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UNITED HOSPITAL: Volvo Finance Wants to Repossess 2002 S60 Vehicle
------------------------------------------------------------------
Volvo Finance NA asks the Honorable Adlai S. Hardin, Jr., of the
U.S. Bankruptcy Court for the Southern District of New York to:
(a) grant it relief from automatic stay in order to obtain
possession and dispose of its property, pursuant to
Section 362(d)(1) of the U.S. Bankruptcy Code, and
(b) compel New York United Hospital Medical Center to decide
whether to assume, assume and assign or reject an unexpired
personal property lease, pursuant to Section 365(d) of the
U.S. Bankruptcy Code.
Volvo Finance owns a 2002 Volvo S60 vehicle that the Debtor leased
from Big Dee Auto Sales for $497 per month for 36 months.
The Lease was assigned by Big Dee to Volvo Finance.
As of Aug. 4, 2005, the Debtor was in default of the payment
obligations to Volvo Finance under the terms and conditions of the
Lease Agreement:
(a) Net balance due: $22,435.
(b) Postpetition arrears: $497 each for the months of April
2005 through July, 2005, together with applicable late
charges.
Volvo Finance has ascertained that the market value of the vehicle
is $18,550 based on estimated value of the vehicle in average
condition.
Volvo Finance contends that:
(a) the Debtor is in default under the terms and provisions of
the Lease Agreement by failing to make the monthly
payments;
(b) its ownership interests with respect to the vehicle are not
adequately protected under Section 361 of the Bankruptcy
Code;
(c) continued use of vehicle will substantially diminish its
value;
(d) the vehicle is subject to the foreseeable possibility of
injury by way of accident or collision;
(e) the Debtor's continued use of the vehicle without lease
payments to Volvo Finance constitutes the accrual of
administrative priority claim making a strong detriment to
the Debtor's ability to confirm a Plan of Reorganization;
(f) the Debtor has failed to formally assume the lease
agreement under Section 365 of the Bankruptcy Code; and
(g) it is in a more advantageous position to obtain an optimum
price for the sale of the vehicle. This will increase the
possibility of avoiding a deficiency balance, which will
remove it as a potential unsecured claimant in the Debtor's
chapter 11 case.
Martin A. Mooney, Esq., at Deily, Mooney & Glastetter, LLP, in
Albany, New York, represents Volvo Finance NA.
Headquartered in Port Chester, New York, New York United Hospital
Medical Center is a 224-bed, community healthcare provider and a
member of the New York-Presbyterian Healthcare System, serving
several Westchester communities, including Port Chester, Rye,
Mamaroneck, Rye Brook, Purchase, Harrison and Larchmont. The
Company filed for chapter 11 protection on December 17, 2004
(Bankr. S.D.N.Y. Case No. 04-23889). Lawrence M. Handelsman,
Esq., at Stroock & Stroock & Lavan LLP, represents the Debtor.
When the Debtor filed for protection from its creditors, it listed
total assets of $39,000,000 and total debts of $78,000,000.
US MINERAL: Asbestos Panel Wants McCarter Settlement Pact Approved
------------------------------------------------------------------
The Official Committee of Asbestos Bodily Injury and Property
Damage Claimants appointed in United States Mineral Products
Company dba Isolatek International's bankruptcy case asks the U.S.
Bankruptcy Court for the District of Delaware to approve a
Settlement Agreement it inked with:
-- Walter J. Taggart, the Legal Representative for Future
Asbestos Claimants,
-- Anthony R. Calascibetta, the Chapter 11 Trustee of the
Debtor, and
-- McCarter & English, LLP.
McCarter acted as the Debtor's insurance counsel prior to its
bankruptcy filing. McCarter advised the Debtor regarding its
claims against Emar, Inc., an insurance broker and prepared a
complaint on the Debtor's behalf. The complaint was filed in
September 2001, styled as United States Mineral Products Co. v.
Emar Group, Inc., Docket No. L-8774-01, New Jersey Superior Court,
Middlesex County.
The Asbestos Committee objected to McCarter's fee applications
because the Firm:
(a) rendered and billed for services outside the scope of its
retention;
(b) failed to properly disclose material matters. McCarter
intended to be retained to act as Debtor's counsel in the
Emar Litigation. The Firm already had a complaint draft
ready to be filed prior to the commencement of the
bankruptcy case and prior to submission of the retention
application. More than 50% of the Firm's billings are
about the Emar Litigation;
(c) submitted billing entries that are meaningless and do not
permit any evaluation of the services rendered; and
(d) provided lobbying services for the Debtor to the Offices of
the United States Senators for New Jersey, which are also
outside the scope of the Firm's retention.
In the Asbestos Committee's analysis, McCarter billed the Debtor
$1,017,721 in legal fees and $158,688 for expenses. McCarter is
still owed $54,485 for fees held back and has not been paid since
April 2003 as a result of the objections raised and filed.
McCarter has been paid almost $1,000,000 in the period within 90
days before the bankruptcy filing. The Debtor filed an adversary
proceeding to recover preferential payments of $962,953. The
Asbestos Committee recognized that the Firm was rendering services
in the 90 days preference period and some of those allegedly
preferential payments will be subject to defenses.
The Settlement Agreement will resolve disputes among the parties
with respect to the professional fees and costs sought by
McCarter in the Debtor's bankruptcy case for the period between
July 23, 2001, and Oct. 31, 2004.
The proposed Settlement provides:
(a) a reduction of $250,000 for fees owed by the Debtor to
McCarter for the period July 23, 2001, through
Oct. 31, 2004;
(b) that in the event the Emar Litigation results in actual
payment to the Debtor, McCarter will receive an additional:
-- 7.5% of the amount in excess of $8 million to
$9 million, subject to a maximum payment of $50,000, and
-- 15% of the amount in excess of $9 million;
(c) that on the Plan Effective Date, the McCarter Preference
Action will be dismissed. But if it will not happen, then
the Preference Action will continue and McCarter will be
entitled to assert a $250,000 fee waiver as a defensive
offset to any liability.
John J. Preefer, Esq., in New York, and Frederick B. Rosner, Esq.,
at Jaspan Schlesinger Hoffman LLP, in Wilmington, Delaware,
represent the Official Committee of Asbestos Bodily Injury and
Property Damage Claimants.
Headquartered in Stanhope, New Jersey, United States Mineral
Products Company manufactures and sells spray-applied fire
resistive materials, insulation and acoustical products to the
constructions industry in North America, Central America, South
America and the Caribbean. The Company filed for chapter 11
protection on July 23, 2001 (Bankr. D. Del. Case No. 01-2471).
Henry Jon DeWerth-Jaffe, Esq., at Pepper Hamilton LLP, represent
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed total assets of
$23,773,000 and total debts of $13,864,000.
VILLAS AT HACIENDA: Selling Assets to Wells Property for $27.1MM
----------------------------------------------------------------
The Honorable Eileen W. Hollowell of the U.S. Bankruptcy Court for
the District of Arizona approved the sale of Villas at Hacienda
Del Sol, Inc.'s real property to Wells Property Holdings, LLC, for
$27.1 million. The Debtor's property consists of a partially
completed 218-unit apartment complex located in Tucson, Arizona.
Ninety units in 11 buildings had been completed and received
Temporary Certificates of Occupancy. The rest of the apartment
units are in various stages of partial completion.
CBRE Valuation & Advisory Services valued the property at
$20,050,000. The sale is expected to close by December.
Villas owes the U.S. Dept. of Housing and Urban Development more
than $12,000,000. The loan is secured by:
a) a first mortgage, blanket lien on the Debtor's property;
b) a blanket lien on the Debtor's personal property; and
c) an assignment of rents, leases and management agreements.
The property is also encumbered by 11 other secured claims:
Lienholders Amount
----------- ------
Mechanics and Materialman's
of Western Plains Development Corp. $1,669,705
David Dodrill, II, dba D&D Signs 7,313
Labor, Services, Material, 36,093
Machinery Fixtures, Tools of
Eagle Rock Excavating
Labor, Services, Material, 49,200
Machinery Fixtures, Tools of
Blue Star Electric, Inc.
Materialman and Mechanics lien of 83,243
Environmental Earhscapes, Inc.
Mechanic's, Materialman's or 1,250
Professional lien of A-1 Steel Inc.
Laborer & Materialman of M&B 36,660
Mechanical Inc.
Laborer & Materialman of Ron's 105,493
Concrete Construction Inc.
Mechanic's lien of Select Interiors 47,855
Materialman and Mechanics lien of 7,372
Central Valley Specialties, Inc.
Labor, Services, Material, Machinery 10,525
Fixtures and Tools of Lee's Asphalt Inc.
Villas will use the sale proceeds to satisfy its obligations to
the HUD and other creditors.
Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol, Inc.
-- http://www.thevillasathaciendadelsol.com/-- filed for chapter
11 protection on March 28, 2005. (Bankr. D. Ariz. Case No. 05-
01482). Matthew R.K. Waterman, Esq., at Waterman & Waterman, PC,
represents the Debtor. When the Company filed for protection from
its creditors, it estimated assets and liabilities ranging from
$10 million to $50 million.
WALTER INDUSTRIES: HSR Waiting Period on Mueller Purchase Expires
-----------------------------------------------------------------
Walter Industries, Inc. (NYSE: WLT) received an early termination
of the antitrust waiting period under the Hart-Scott-Rodino Act
for the Company's planned acquisition of Mueller Water Products,
Inc.
As reported in the Troubled Company Reporter on June 22, 2005, the
Company entered into a definitive agreement to purchase Mueller
Water for an aggregate value of approximately $1.91 billion. The
consideration will consist of approximately $860 million in cash
and the assumption of approximately $1.05 billion in Mueller debt,
based on Mueller's balance sheet as of April 2, 2005, subject to
adjustments as provided in the agreement. The acquisition
complements the Company's U.S. Pipe subsidiary, creating a major
water infrastructure and piping systems company with leading
business positions, significant scale, and excellent prospects for
growth.
The transaction remains subject to various customary closing
conditions, including the funding of financing. The Company
continues to expect that the transaction will close within the
next several weeks.
Headquartered in Tampa, Florida, Walter Industries, Inc. --
http://www.walterind.com/-- is a diversified company with
revenues of $1.5 billion, excluding Mueller, and employs
approximately 5,100 people. The Company is a leader in affordable
homebuilding, related financing, and water transmission products,
and is a significant producer of high-quality metallurgical coal
for worldwide markets.
* * *
As reported in the Troubled Company Reporter on June 23, 2005,
Moody's Investors Service placed the ratings of Walter Industries,
Inc., on review for possible downgrade. The review was prompted
by Walter's announcement that it has entered into a definitive
agreement to acquire Mueller Water Products.
The affected ratings are:
* Corporate Family Rating (previously called the Senior
Implied), rated Ba2;
* $265 million senior secured revolving credit facility, due
2008, rated Ba2;
* $175 million senior subordinated notes, due 2024, rated B1;
* Issuer Rating, rated Ba3.
WATTSHEALTH FOUNDATION: Employs McDermott Will as Special Counsel
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
gave WATTSHealth Foundation, Inc., permission to employ McDermott
Will & Emery LLP as its special healthcare counsel.
The firm will advise the Debtor on healthcare regulatory, contract
and corporate issues, particularly in connection with the Debtor's
relationship with the Department of Managed Health Care. The Firm
will also assist and represent the Debtor with the healthcare,
corporate and regulatory aspects of any sale of estate assets.
J. Peter Rich, Esq., a Partner at McDermott Will, disclosed that
his Firm received a $250,000 retainer. Mr. Rich charges $580 per
hour for his services.
Mr. Rich reports McDermott Will's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Joel M. Bernstein Partner $585
Timothy P. Blanchard Partner $570
Jane E. Boubelik Partner $510
Dan Chammas Partner $370
Vi T. Pham Associate $290
Annie Lu Associate $255
Esther Chang Associate $235
Nima Rabiee Associate $235
McDermott Will assures the Court that it does not represent any
interest materially adverse to the Debtor or its estate.
Headquartered in Inglewood, California, WATTSHealth Foundation,
Inc., dba UHP Healthcare, provides comprehensive medical and
dental services for Commercial, Medi-Cal and Medicare members in
the Greater Southern California area. The Company filed for
chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No.
05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets and debts of $50 million to $100 million.
WATTSHEALTH: Wants to Continue Hiring Ordinary Course Profs.
------------------------------------------------------------
WATTSHealth Foundation, Inc., asks the U.S. Bankruptcy Court for
the Central District of California for permission to continue to
retain, employ and pay professionals it turns to in the ordinary
course of business without bringing formal employment applications
to the Court.
In the Debtor's everyday operation of its business, it regularly
calls upon non-bankruptcy professionals, including accountants and
attorneys to perform various non-bankruptcy related services. The
continued employment of the Ordinary Course Professionals is
therefore essential to the Debtor's business operations.
The Debtor assures the Court that:
a) no Ordinary Course Professionals will be paid in excess of
$30,000 per month and the financial arrangements with those
Professionals have been and will continue to be negotiated
at arm's-length; and
b) no Ordinary Course Professional will be centrally or
intimately involved in the administration of the Debtor's
chapter 11 case.
Although some of the Ordinary Course Professionals may hold minor
amounts of unsecured claims, the Debtor does not believe that any
of them have an interest adverse to the Debtor, its creditors and
other parties in interest.
Headquartered in Inglewood, California, WATTSHealth Foundation,
Inc., dba UHP Healthcare, provides comprehensive medical and
dental services for Commercial, Medi-Cal and Medicare members in
the Greater Southern California area. The Company filed for
chapter 11 protection on May 31, 2005 (Bankr. C.D. Calif. Case No.
05-22627). Gary E. Klausner, Esq., at Stutman Treister & Glatt
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets and debts of $50 million to $100 million.
*********
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.
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related conferences are encouraged. Send announcements to
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Each Friday's edition of the TCR includes a review about a book of
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available at your local bookstore or through Amazon.com. Go to
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Monthly Operating Reports are summarized in every Saturday edition
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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 Pinili,
Jr., and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
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