T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 6, 2005, Vol. 9, No. 237 Headlines ACURA PHARMA: Issues 225,689 Shares to Pay Interest on Sec. Notes ADELPHIA COMMS: Sells 117 Vehicles & Real Property for $1,049,000 ALLIED HOLDINGS: Hires Deloitte Tax to Provide Tax Services ALLIED HOLDINGS: Taps KPMG as Auditor and Accounting Consultants ANCHOR GLASS: Acme Opposes $6.7 Mil. Payment to Critical Vendors ANCHOR GLASS: U.S. Trustee Objects to Houlihan Lokey's Retention ANCHOR GLASS: Wants Jones Day as Special Counsel AQUILA INC.: Fitch Revises Rating Outlook to Positive from Stable ATA AIRLINES: Court Okays Settlement Agreement with John Hancock BIOAMERICA INC: Auditor Raises Going Concern Doubt BOYDS COLLECTION: Lenders Waive Credit Facility Defaults BROOKLYN HOSPITAL: Court Okays Bankruptcy Services as Claims Agent BROOKLYN HOSPITAL: Wants J.H. Cohn as Accountant & Fin'l Advisor BROOKLYN HOSPITAL: Can Use $1MM+ HUD & DASNY Cash Collateral CABOODLES LLC: Case Summary & 20 Largest Unsecured Creditors CAROLINA TOBACCO: Bell Dewar Approved as Special Counsel CAROLINA TOBACCO: Perkins & Company Approved as Accountants CHESAPEAKE ENERGY: Fitch Affirms BB Rating on Sr. Unsecured Debt CLEARLY CANADIAN: Brent Lokash Replaces Douglas Mason as President COMPOSITE TECHNOLOGY: Court Moves Confirmation Hearing to Oct. 17 COTT CORP: Realigning Management in North American Operations CWMBS INC.: Fitch Assigns BB Rating on $790,000 Class B Certs. CWMBS INC.: Fitch Places Low-B Ratings on Two Certificate Classes DELAWARE AUTO: Case Summary & 18 Largest Unsecured Creditors DEX MEDIA: Moody's Reviews Low-B Corporate Family & Debt Ratings DIXIE GROUP: S&P Affirms Subordinated Debt Rating at B- DOBSON COMMUNICATIONS: Reduces Outstanding Preferred Stock DRUGMAX INC: Completes $51.1 Million Private Equity Placement ENRON CORP: Inks Pact Allowing Coyote Claims for $90 Million ENRON CORP: Wants Court to Okay JPMorgan Bilat L/C Agreement ENTERGY NEW ORLEANS: Has More Time to File Schedules & Statements ENTERGY NEW ORLEANS: SEC Okays $200 Mil. Loan from Entergy Corp. ENTERGY NEW ORLEANS: Boutte & West Elected to Board of Directors EXAM USA: McKennon Wilson Expresses Going Concern Doubt EXIDE TECH: James & Jason Grosfeld Report 5.8% Equity Stake FINLAY ENTERPRISES: S&P Puts B+ Corporate Credit Rating on Watch FREDERICK MCNEARY: APC Partners Wants Trustee or Examiner Named GALAXY NUTRITIONAL: Completes Bridge Financing Transactions GEORGIA-PACIFIC: Discloses Restructuring & Cost-Cutting Plans GRAPHIC PACKAGING: S&P Revises Outlook to Negative from Stable HARTCOURT COMPANIES: Kabani & Company Raises Going Concern Doubt HASIM RAHMAN: Case Summary & 20 Largest Unsecured Creditors HEATING OIL: Obtains Recognition Order Under Canadian CCAA HORIZON LINES: S&P Assigns Single B Corporate Credit Rating INDYMAC HOME: Fitch Rates $7 Million Class M Certificates at BB+ INFORMATION ARCHITECTS: Posts $191K Loss in Quarter Ended June 30 INSYNQ INC: Weinberg & Company Expresses Going Concern Doubt INTERMET CORP: Stanfield and R2 Select Five Board Members INTERSTATE BAKERIES: Wants Court OK on Fishlowitz Class Settlement INTERSTATE BAKERIES: Wants to Reject HP System Support Agreement INTRAWEST: Selling 44.5% Interest in Mammoth Mountain to Starwood KAISER ALUMINUM: Resolves Dispute Over Washington Tax Claims KMART CORP: Asks Court to Reject Ms. Austin's Motion for Contempt KOMFORTCARE HEALTH: Case Summary & 5 Largest Unsecured Creditors MATERIAL SCIENCES: Can't File 2nd Quarter 2006 Financials on Time MIRANT CORP: Arkansas Electric Completes $85 Million Purchase MIRANT CORP: Court Okays $2-Mil. Sale of Generators to Belyea Co. MIRANT CORP: Court Sets October 20 as Newco's Claims Bar Date NORTHWEST AIRLINES: Hires Simpson Thacher as Corporate Counsel NORTHWEST AIRLINES: Taps Curtis Mallet-Prevost as Special Counsel NRG ENERGY: Moody's Affirms Low-B Corporate Family & Debt Ratings NORTHWEST AIRLINES: Wants Dorsey & Whitney as ERISA Counsel PINNACLE ENTERTAINMENT: Wants to Amend Credit Agreement Covenants PINNACLE ENTERTAINMENT: Moody's Affirms Junk Sr. Sub. Debt Ratings PLACER DOME: Bema Gold Issues Notice of Default on Chilean Project PORTRAIT CORP: Posts $19 Million Net Loss for Period Ended July 31 PRESTWICK CHASE: APC Partners Wants Trustee or Examiner Appointed R. H. DONNELLEY: Moody's Places Low-B Debt Ratings on Review RAILAMERICA INC: Completes $77.5 Million Railroad Acquisitions RESI FINANCE: S&P Rates $5.427 Million Class B11 Security at B- RESORTS INT'L: S&P Lowers Corporate Credit Rating to B from B+ RIO DEV: Voluntary Chapter 11 Case Summary RITE AID: New Credit Agreement Imposes Fixed Charge Coverage Test RITE AID: Reports $1.6-Mil. Net loss for Quarter Ending Aug. 27 ROBEWORKS INC: Names Todd Davis Chairman of the Board ROCK-TENN COMPANY: Closes Marshville Folding Carton Facility ROUNDY'S SUPERMARKETS: Buying Back 8-7/8% Notes in Tender Offer SAINT VINCENTS: Panel Retains Houlihan Lokey as Financial Advisor SAKS INC: Earns $16.2 Million of Net Income in First Quarter 2005 SHAW GROUP: Credit Facility Increased to $550 Million SKYWAY COMMS: SEC and FBI Investigations Underway STELCO INC: Court Extends Stay Period & Authorizes Agreements TENET HEALTHCARE: Selling Two Facilities to Karykeion for $3 Mil. TOWER AUTOMOTIVE: Balance Sheet Upside-Down by $225.6M at Mar. 31 TOWER AUTOMOTIVE: Equity Deficit Tripled to $366.55M in Six Months TUPPERWARE CORP: Moody's Rates $975 Million Facilities at Ba2 TW INC: Panel Wants Until Nov. 28 to Object to Certain Claims TW INC: Debtor Wants Until November 28 to Object to Claims UAL CORP: Court OKs Settlement Pact Among Trustees & Debt Holders UAL CORP: Court Sets Tentative Plan Confirmation-Related Schedule WATTSHEALTH FOUNDATION: FTI Approved as Panel's Financial Advisor WATTSHEALTH FOUNDATION: Wants More Time to File Chapter 11 Plan WINCHESTER MUSICAL: Case Summary & 20 Largest Unsecured Creditors WHITEHALL JEWELLERS: Prentice Capital Extends $30 Mil. Bridge Loan WHITING PETROLEUM: Completes $459 Million Property Acquisition WORLD WIDE: Case Summary & 20 Largest Unsecured Creditors W.R. GRACE: Court Approved Single-Site Catalyst Purchase Pact * IP Litigator Robert Gilbert Joins Sheppard Mullin in New York ********* ACURA PHARMA: Issues 225,689 Shares to Pay Interest on Sec. Notes ----------------------------------------------------------------- Acura Pharmaceuticals, Inc., issued 225,689 shares of its Common Stock, $.01 par value per share to the holders of certain Secured Promissory Notes in the principal amount of $5 million, dated as of December 20, 2002. The issuance of Common Stock represents accrued and unpaid interest on the Note for the quarter ended September 30, 2005. Peter A. Clemens, Acura Pharmaceuticals, Inc.'s Senior Vice President & Chief Financial Officer, informed the Securities and Exchange Commission in a regulatory filing on September 30, 2005, that the Company issued the Common Stock in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended and Regulation D promulgated under the Securities Act of 1933. At the time of acquisition of the Note, the Noteholders represented to the Company that each of such Noteholders was an accredited investor as defined in Rule 501(a) of the Securities Act of 1933 and that the Note and any securities issued pursuant thereto were being acquired for investment purposes. Acura Pharmaceuticals, Inc. -- http://www.acurapharm.com/-- together with its subsidiaries, is an emerging pharmaceutical technology development company specializing in proprietary opioid abuse deterrent formulation technology. At June 30, 2005, Acura Pharmaceuticals' balance sheet showed a $3,569,000 stockholders' deficit, compared to a $1,085,000 deficit at Dec. 31, 2004. ADELPHIA COMMS: Sells 117 Vehicles & Real Property for $1,049,000 ----------------------------------------------------------------- Pursuant to an excess assets sale procedures approved by the U.S. Bankruptcy Court for the Southern District of New York, Adelphia Communications Corporation inform Judge Gerber that they will sell these properties for $1,049,000: 1. Property: 25 vehicles Purchaser: State Line Auto Auction Agent: none Amount: $18,000 Deposit: none Appraised Value: No appraisal was conducted 2. Property: 28 vehicles Purchaser: Corporate Fleet Management Agent: none Amount: $38,000 Deposit: none Appraised Value: No appraisal was conducted 3. Property: 64 vehicles Purchaser: State Line Auto Auction Agent: none Amount: $63,000 Deposit: none Appraised Value: No appraisal was conducted 4. Property: Real property situated at lot 171 in the Long Cove development, in Hilton Head, SC Purchaser: Charles Carroll Agent: Charter One Realty Company Amount: $930,000 Deposit: $50,000 Appraised Value: $800,000 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. 107; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Hires Deloitte Tax to Provide Tax Services ----------------------------------------------------------- Before commencing their Chapter 11 cases, Allied Holdings, Inc., and its debtor-affiliates employed Deloitte Tax LLP to provide tax services. By virtue of its prior engagement, Harris B. Winsberg, Esq., at Troutman Sanders LLP, says Deloitte Tax has developed a great deal of institutional knowledge regarding the Debtors' operations, practices, data systems, and procedures. Deloitte Tax has become familiar with the books, records, financial information and other data maintained by the Debtors and is qualified to continue to provide services to the Debtors. Retaining Deloitte Tax, according to Mr. Winsberg, is the most efficient and cost effective manner in which the Debtors may obtain the requisite services. In this regard, the Debtors seek the Court's permission to continue their engagement of Deloitte Tax. Deloitte Tax will continue to provide tax services to the Debtors postpetition, including: -- transfer pricing consulting services with respect to seeking a bilateral advance pricing agreement for transactions between Allied Holdings, Inc., and Allied Systems Canada Company; -- tax compliance services, like preparing U.S. federal income and excise tax returns, along with quarterly estimates and extensions, Federal Form 1118, 8865, 5471, Canadian federal and provincial filings and Form NR4, state and local tax returns, state franchise tax returns; reviewing annual reports not prepared by the Debtors' legal department; and preparing quarterly estimates and extensions; -- tax provision services, including assisting the Debtors with the annual accounting for income taxes in accordance with FAS 109 for the U.S. portion of the provision; with quarterly income tax reporting requirements; in data collection for use in the Debtors' preparation of certain tax provision, deferred taxes and supporting schedules; and in tax rate and cash flow estimates, provision to return reconciliation, and database maintenance of temporary differences; -- tax consulting services, including assisting the Debtors with recognizing tax issues and performing related research and documentation related to federal, state or local tax issues; -- tax audits and notices services, including assisting the Debtors with coordination of federal, state, and local income tax audits and notices; and -- multi-state sales & use tax consulting services, including reviewing and analyzing the Debtors' business activities to address potential multi-state sales and use tax liabilities; and assisting the Debtors in identifying and quantifying the exposure in the jurisdictions. Ann M. Scheuerman, a partner at Deloitte Tax, assures the Court that the partners and professionals at Deloitte Tax do not have any connection with the Debtors or any party-in-interest in the bankruptcy cases. Deloitte Tax does not hold or represent any interest adverse to the Debtors or their estates with respect to the matters on which it is being employed. Deloitte Tax is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). The Debtors will pay Deloitte Tax for Tax Compliance Services and Tax Provision Services at a fixed-fee of $187,500 for tax services to be provided through December 31, 2005. Ms. Scheuerman informs the Court that Deloitte Tax will subcontract a portion of the Tax Compliance Services to its indirect wholly owned subsidiary, Deloitte Tax India Private Limited. Deloitte Tax's remaining services will be billed at its standard hourly rates, and Deloitte Tax will be reimbursed for reasonable and necessary expenses. Deloitte Tax's present professional service fee rates range from $185 to $425 per hour. Ms. Scheuerman discloses that Deloitte Tax has not received a retainer from the Debtors. Deloitte & Touche, an affiliate of Deloitte Tax, provided accounting and auditing services to the Debtors. Ms. Scheuerman says Deloitte & Touche was paid $172,411 for audit and accounting services, and Deloitte Tax was paid $1,045,007 for tax services, in both cases, within 90 days before the Petition Date. As of the Petition Date, Ms. Scheuerman discloses that (i) Deloitte Tax was owed $12,499 by the Debtors in respect of prepetition services, and (ii) Deloitte & Touche was owed $171,884 by the Debtors in respect of prepetition services. Deloitte Tax will not seek recovery of the amounts. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Taps KPMG as Auditor and Accounting Consultants ---------------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia for authority to employ KPMG, LLP, as their auditors and accounting advisors effective as of the Petition Date. The Debtors selected KPMG because of the firm's extensive and diverse experience, knowledge and reputation in restructuring and related fields, as well as an understanding of the issues involved in their Chapter 11 cases necessary to provide audit and accounting advisory services in reorganization proceedings. As auditors and accountants, KPMG will: a) review their quarterly financial statements; b) audit their annual consolidated financial statements; c) read and comment on their documents required to be filed with the Securities and Exchange Commission; d) audit financial statements of their Employee Benefit Plans as required by the Employee Retirement Income Security Act; e) provide assistance in documenting the Company's Internal Control Over Financial Reporting in accordance with management's responsibilities under Section 404 of the Sarbanes-Oxley Act including planning and scoping advice, internal control framework gap analysis, and gap analysis comparisons to control reference sources; f) audit management's assessment of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and in compliance with the rules and regulations of the Securities and Exchange Commission; g) analyze accounting issues and advice their management regarding the proper accounting treatment of events; h) assist in the implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles, including, but not limited to, Statement of Position 90-7; i) assist in the preparation and review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee including monthly operating reports; j) assist in preparing documents necessary for confirmation, including, but not limited to, financial and other information contained in the plan of reorganization and disclosure statement; k) advice and assist them regarding tax compliance or planning issues, including, but not limited to, assistance in estimating net operating loss carry-forwards, international taxes, and state and local taxes, as well as any requested general tax services; l) investigate services and testimony regarding avoidance actions or other matters; and m) assist them with other functions in their business and reorganization. KPMG may also render additional related support deemed appropriate and necessary, at the Debtors' request. Joseph W. Reid, a Certified Public Accountant and a member of the firm, tells the Court that the partners and professionals at KPMG do not have any connection with the Debtors, their creditors, or any other party in interest, or their respective attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee. "KPMG is a 'disinterested person' as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code," Mr. Reid notes. Mr. Reid further states that KPMG has not received a retainer from the Debtors. However, Mr. Reid discloses that the Debtors made payments to the firm totaling $844,185 on account of prepetition services. KPMG's standard professional rates range from $225 to $780 per hour. The Debtors and KPMG have agreed that the firm will be compensated for services at between 50% and 75% of its standard hourly rates, based on a determination of its specific nature of services. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Acme Opposes $6.7 Mil. Payment to Critical Vendors ---------------------------------------------------------------- As reported in the Troubled Company Reporter, Anchor Glass Container Corporation asked the U.S. Bankruptcy Court for the Middle District of Florida for authority to pay approximately $6.7 million in critical vendor claims. The Debtor wants to pay these claims: Critical Vendor Prepetition Claim --------------- ----------------- Acme Packaging $166,398 Arkema Chemicals 137,521 Arkhola Sand & Gravel Company 86,478 Bostik 89,413 Buske 1,505,799 The Calumite Company 85,279 Carthage Crushed Limestone 44,435 Cornerstone Environmental 34,462 FMC Corporation 283,574 Franklin Industrial Minerals 22,812 Heye International 380,669 Modern Transportation Inc 409,213 Nutmeg (Hudson Baylor Corporation) 166,750 OCI Chemical Corporation 954,939 O-N Minerals (Chemstone) 113,285 Prior Chemical Corporation 45,605 Rogers Group 7,386 Shamokin Filler Company 6,782 Strategic Materials Inc 124,287 TC Transport Inc 60,756 Ultra Logistics 945,213 Unimin Corporation 974,162 Walpole Inc 32,867 ---------- TOTAL $6,678,085 Acme Packaging, a division of Illinois Tool Works, Inc., argues that the relief the Debtor seeks is beyond the Court's power. Although the Debtor attempts to rely on Sections 105(a) and 363(b)(1) of the Bankruptcy Code and the so-called "doctrine of necessity," the Court's power does not allow the payment of unsecured non-priority claims before the confirmation of a chapter 11 plan, Dennis J. LeVine, Esq., at Dennis LeVine & Associates PA, in Tampa, Florida, asserts. Mr. LeVine contends that even if the Court determines that its equitable powers allow it to authorize the payment of prepetition claims under certain extreme circumstances, the Debtor has fallen woefully short of establishing an evidentiary basis for relief. In addition, Mr. LeVine says, the Debtor does not articulate the basis for utilizing Section 363(b)(1) to authorize critical vendor payments. Despite the Debtor's contention, neither Section 105(a) nor Section 363(b)(1) provides a statutory basis to reincarnate the doctrine of necessity as a means of authorizing the selective pre-plan payment of certain general unsecured claims. Section 105(a) is limited to the implementation of specific provisions of the Bankruptcy Code, and thus, may not be used on an ad hoc basis to further a debtor's rehabilitation in chapter 11. Acme also notes that the Debtor has not proved that: -- the payments are necessary to the reorganization process; -- the so-called critical vendors have refused to do business with the Debtor; or -- Acme, as a general unsecured creditor, is at least as well off as it would be without the requested relief. Indeed, Mr. LeVine says, the Debtors' request is nothing more than a motion of convenience for the Debtor that is based purely on speculative consequences. Mr. LeVine insists that the payment of essential trade creditors clearly falls within the scope of the Debtor's ordinary course of business. For this reason, he says, there is no need for the Debtor to seek authority to transact business with its trade creditors postpetition. The Debtor did not explain why each of the 23 designated critical vendors is entitled to that status, Mr. LeVine points out. Acme does not know what each of the vendors provides to the Debtor, nor does it know which of the vendors, if any, have stopped shipping to the Debtor. The Debtor also makes little attempt to explain how the payment of critical vendor claims is the better alternative for the "non- critical" unsecured creditors, Mr. LeVine adds. Although the Debtor attempts to make the amount seem minimal by arguing that it represents less than 1% of the Debtor's total liabilities, Mr. LeVine notes, the more interesting and telling percentage would be the percentage of unsecured trade debt. Accordingly, Acme asks the Court to deny the Debtor's request regardless of the number of "critical" vendors to be paid and regardless of the amounts to be paid to the vendors. Arkema Claim Mark J. Bernet, Esq., at Buchanan Ingersoll PC, in Tampa, Florida, asserts that the Debtor has wrongfully stated its amount of obligation to Arkema, Inc. The Debtor, he says, listed $181,530 when in actuality the prepetition obligation is $205,963. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: U.S. Trustee Objects to Houlihan Lokey's Retention ---------------------------------------------------------------- Felicia S. Turner, the United States Trustee for Region 21, objects to the terms outlined by Anchor Glass Container Corporation for the retention of Houlihan Lokey Howard & Zukin Capital as its financial advisor. As reported in the Troubled Company Reporter, the Debtor offered Houlihan Lokey this compensation package: (A) Monthly Fee: $150,000 per month for six months; and $125,000 per month thereafter The Monthly Fee will be payable for a minimum of three Months. After the first six months, 50% of the Monthly Fees actually paid will be credited against the Restructuring Transaction Fee or the M&A Transaction Fee. (B) Transaction Fees to be paid on the closing of a Transaction: * Restructuring Transaction Fee equal to the lesser of: $3,250,000; or 0.75% of the face amount of outstanding Company Obligations that are restructured, modified, amended, forgiven or otherwise compromised. * M&A Transaction Fee equal to the lesser of: $3,250,000; or 1% of Aggregate Gross Consideration. However, if an M&A Transaction is consummated as part of a Restructuring Transaction, Houlihan Lokey will be entitled to the greater of the M&A Transaction Fee or the Restructuring Transaction Fee, but not both. * Financing Transaction Fee equal to the sum of: 1% of all senior secured notes and bank debt raised or committed; 2% of the aggregate principal amount of all second lien or junior secured debt financing raised or committed; 3% of all unsecured, non- senior and subordinate debt raised or committed; and 5% of all equity of equity equivalents raised. The fees will be paid immediately out of the proceeds of the placement. However, no Financing Transaction Fee will be payable on amounts raised either: (i) as part of a DIP financing facility under Chapter 11; or (ii) from Cerberus Capital Management, L.P. or any Cerberus affiliates or in connection with a Cerberus-sponsored transaction other than to the extent requested by the Debtor or the Special Committee. * Fairness Opinion Fee: The fees will be market fees mutually agreed upon by Houlihan Lokey and the Debtor. U.S. Trustee Objects Felicia S. Turner, the United States Trustee for Region 21, observes that: 1. The agreement provides for payment of fees before the application, notice and hearing on the fees. The Bankruptcy Code and Bankruptcy Rules generally envision that fees will not be paid before a separate application for compensation and Court approval. 2. The agreement appears to provide that Houlihan Lokey need not provide time records. Benjamin E. Lambers, Esq., trial attorney for the U.S. Trustee, in Tampa, Florida, makes it clear that Ms. Turner does not generally oppose the concept of negotiating a monthly fee. However, Mr. Lambers asserts, any monthly fee should be subject to court review for reasonableness. The U.S. Trustee believes that requiring Houlihan Lokey to file monthly time records will: -- provide the U.S. Trustee, the Official Committee of Unsecured Creditors, the Debtor and the Court with helpful information in evaluating Houlihan Lokey's fee application; and -- protect the estate against a fee request that proves improvident within the meaning of Section 328(a) of the Bankruptcy Code. The U.S. Trustee also finds the indemnification agreement to be overly broad. In general, Mr. Lambers says, the agreement indemnifies except when it is "financially judicially determined to have resulted primarily from the willful misconduct or gross negligence of Houlihan Lokey." Further exception should be made where there is a finding of bad faith, self-dealing, or breach of fiduciary duty or where Houlihan Lokey's services or actions contributed to the damage, Mr. Lambers asserts. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Wants Jones Day as Special Counsel ------------------------------------------------ Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida for permission to employ Jones Day as its special counsel, nunc pro tunc to Aug. 8, 2005. Jones Day is one of the largest law firms in the United States, with national and international practice, and has experience in virtually all aspects of the law, Anchor notes. In particular, Jones Day has substantial corporate governance, securities, finance and litigation expertise. The Debtor wants to employ Jones Day to represent it in connection with its review of approximately $4,500,000 of customer payments in June 2003 that had not been accounted for properly, as well as other payments. On July 21, 2005, the Audit Committee of the Debtor's Board of Directors retained Jones Day pursuant to the terms of an engagement letter. The firm was retained to advise the Audit Committee with respect to its investigation into the accounting of the Customer Payments. Anchor relates that in the short period of time since its retention, Jones Day has gained initial familiarity with the Debtor's businesses and financial affairs and has met numerous times with the Audit Committee regarding its ongoing investigation. The Debtor seeks to employ Jones Day pursuant to the terms of the Engagement Letter. Anchor anticipates that Jones Day will render legal services relating to its review of the accounting for the Customer Payments as needed throughout the course of the bankruptcy case, including corporate governance, finance, securities and litigation assistance and advice. For its legal services, Jones Day will be paid based on its hourly rates and will be reimbursed of actual and necessary out-of-pocket expenses. The current hourly rates of the firm's partners currently expected to have primary responsibility for providing services to the Audit Committee are: Adrian Wager-Zito $525 Richard H. Deane, Jr. $515 Kevyn D. Orr $485 Lisa A. Stater $450 On August 4, 2005, the Debtor provided a $30,000 retainer to Jones Day in conjunction with its representation of the Audit Committee relating to the investigation into the Customer Payments. The following day, $28,535 of the retainer was applied for services rendered through August 3, 2005. As of the Petition Date, $1,465 remains unapplied. Those payments constitute all payments to Jones Day during the year immediately preceding the Petition Date on account of fees and expenses incurred by Jones Day on matters relating to the Audit Committee's investigation. The source of the Retainer and the Prepetition Payments made by the Debtor was its operating cash. Lisa A. Stater, Esq., a member of Jones Day, assures the Court that the firm has no connection with the Debtor, its creditors, the U.S. Trustee or in any other interested parties or their attorneys and accountants except: (a) Before the Petition Date, Jones Day performed legal services for the Audit Committee. The Debtor owes Jones Day approximately $2,685 in fees and $1,035 in expenses relating to services performed. (b) Jones Day previously represented the Debtor in corporate matters through December 2002. (c) In matters unrelated to the Debtor's bankruptcy case, the firm currently represents or formerly represented some of the Debtor's secured lenders, major noteholders. In particular, Jones Day currently represents: (i) The Bank of New York, Inc.; (ii) Credit Suisse First Boston Corporation; (iii) Deutsche Bank AG; and (iv) Wachovia Bank, NA. Jones Day does not and will not represent them in matters relating to the Audit Committee or the Debtor. (d) In matters unrelated to the Debtor's Chapter 11 case, Jones Day has worked with some of the Debtor's other professionals. If Jones Day discovers additional information that requires disclosure, Ms. Stater tells the Court that the firm will file a supplemental disclosure. Neither Jones Day nor any partner or associate holds or represents any interest adverse to the Audit Committee, the Debtor or its estate in the matters for which Jones Day is proposed to be retained, Ms. Stater says. Accordingly, Jones Day is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) AQUILA INC.: Fitch Revises Rating Outlook to Positive from Stable ----------------------------------------------------------------- Fitch Ratings has revised the Rating Outlook of Aquila, Inc., to Positive from Stable. At this time, ILA's senior unsecured rating remains 'B-'. Approximately $2.3 billion of debt is affected. The Positive Rating Outlook reflects Fitch's expectation that ILA's consolidated credit measures will gradually improve through 2006 due to improved utility operating margins, debt reduction using the proceeds of planned asset sales, and the wind-down of the Elwood tolling agreement and Illinois peaking plants. Recently, ILA announced agreements to sell four of its regulated utility subsidiaries, including Michigan Gas, Minnesota Gas, Missouri Gas, and Kansas Electric, to various buyers for approximately $896.7 million. The average sale multiple of approximately 10-11 times (x) projected 2005 EBITDA exceeded Fitch's internal projections and allows ILA to reduce its leverage. Fitch expects at least $700 million of sale proceeds will be used to reduce outstanding debt, including callable debt of approximately $564 million and higher coupon debt. Despite the absence of contributions from divested operations, representing approximately 30% of consolidated 2004 EBITDA, Fitch projects ILA's EBITDA-to-interest ratio will improve to greater than 1x by year-end 2006 from 0.6x for the 12-month period ending June 30, 2005, and the ratio of debt-to-EBITDA will decline to greater than 5x by year-end 2006 from 15.4x for the 12-month period ending June 30, 2005, excluding debt equivalents. The sales are subject to normal regulatory reviews and approvals with closings expected within the next 6-12 months. A significant reduction in leverage would likely result in a rating upgrade. Going forward, ILA will continue to focus on its six remaining utility businesses, consisting of electric utilities in Missouri and Colorado and gas utilities in Kansas, Colorado, Nebraska, and Iowa. These utilities benefit from stable cash flows, low business risk profiles, and above-average customer growth in Colorado and Missouri. However, internal cash flow has been and is expected to continue to be insufficient to fund capital expenditures and other operating needs. The Positive Rating Outlook includes Fitch's expectation of a reasonably favorable outcome in the Missouri electric rate case proceeding, which should provide the company with a mechanism for more timely recovery of fuel and purchase power costs and government-mandated environmental compliance costs. Fitch believes ILA has sufficient short-term liquidity to fund increased working capital requirements from higher commodity prices during the upcoming winter peak season. ILA had approximately $260 million available through two credit facilities totaling $290 million, $150 million available under the accounts receivable facility, and $171 million in cash and equivalents on hand as of June 30, 2005. There are no significant near-term debt maturities. In addition to high leverage and negative free cash flow from utility operations, rating concerns include the continued cash flow drags from the Elwood tolling agreement ($37 million per year) and the Midwest peaking plants, as well as the near-term financial impact of recent Powder River Basin coal supply disruptions that forced ILA to buy replacement coal in a higher priced spot market. ILA is a regulated electric and gas utility serving more than 460,000 electric and 900,000 natural gas customers in seven Midwestern states. Aquila, Inc. -- Senior unsecured debt 'B-'; -- Outlook Positive. ATA AIRLINES: Court Okays Settlement Agreement with John Hancock ---------------------------------------------------------------- ATA Airlines, Inc., and John Hancock Leasing Corporation have reached a settlement agreement that would resolve disputes in connection with their August 15, 1997 Lease. The Settlement fully resolves all existing claims by John Hancock against the Debtors, with the exception of certain non-priority unsecured claims based on the lease-related documents and the January 2005 order authorizing the Debtors to reject the Lease. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the U.S. Bankruptcy Court for the Southern District of Indiana to approve the Settlement. Absent the Settlement, the Debtors will be compelled to expend resources and incur unnecessary expenses in further litigating their disputes with John Hancock, Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, tells the Court. Pursuant to Section 107(b) of the Bankruptcy Code, the Debtors have sought and obtained the Court's permission to file the Settlement under seal. * * * The Court approved the settlement agreement between ATA Airlines and John Hancock Leasing Corporation. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) BIOAMERICA INC: Auditor Raises Going Concern Doubt -------------------------------------------------- PKF, CPA's, of San Diego, California, expressed substantial doubt about Bioamerica, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended May 31, 2005. The auditing firm points to the Company's recurring losses and significant working capital deficiency. In its Form 10-K for the fiscal year ended May 31, 2005, submitted to the Securities and Exchange Commission, the Company reports a consolidated net income was $162,259 for the year ended May 31, 2005. Its subsidiary, Lancer Orthodontics, Inc., reported a net loss of $291,544 in Fiscal 2005. The Company had a loss from continuing operations of $21,464 and the discontinued operation had a gain of $183,723. The Company's loss of $21,464 includes its ownership percentage share of Lancer's loss ($71,583). Without the Lancer loss, The Company would have recognized a gain before discontinued operations of $50,919. The net income of $162,259 is a result of Biomerica's gain of $50,919 less its percentage of Lancer's loss of $71,583, plus the gain from the discontinued operation of $183,723 and less $800 in income taxes. Liquidity Concerns The Company has operating and liquidity concerns due to historically reporting net losses and negative cash flows from operations. The Company's shareholder's line of credit expired on September 13, 2003 and was not renewed. The unpaid principal and interest was converted into a note payable bearing interest at 8% and payable September 1, 2004. The due date on this note was extended until September 1, 2005 and subsequent to fiscal year end May 31, 2005, has been extended until September 1, 2006 at the same terms. Minimum payments of $4,000 per month plus an additional $3,500 per month, depending on quarterly results of the Company, are being made. About Biomerica Biomerica, Inc., -- http://www.biomerica.com/-- is a global medical technology company, based in Newport Beach, California. The Company's diagnostics division manufactures and markets advanced diagnostic products used at home, in hospitals and in physicians' offices for the early detection of medical conditions and diseases. Its existing medical device business is conducted through two companies: 1) Biomerica, Inc., engaged in the human diagnostic products market; and 2) Lancer Orthodontics, Inc., engaged in the orthodontic products market. As of May 31, 2005, Biomerica's direct ownership percentage of Lancer was 23.41%. Subsequent to May 31, 2005, Lancer privately placed some of its common stock, which reduced Biomerica's ownership to the current 23.41% stake. BOYDS COLLECTION: Lenders Waive Credit Facility Defaults -------------------------------------------------------- The Boyds Collection Ltd. (NYSE:FOB) entered into a waiver agreement in connection with the Credit Agreement dated as of Feb. 23, 2005, as amended, with D.E. Shaw Laminar Portfolios, L.L.C. and Bank of America, N.A., and Bank of America, N.A., as initial L/C Issuer and administrative agent. D.E. Shaw Laminar Portfolios, L.L.C. became a Lender under the Credit Agreement pursuant to assignment agreements. The Company confirmed that events of default have occurred under the Credit Agreement and are continuing, or will occur at some time in the future as a result of the Company's inability to comply with the financial covenants of the Credit Agreement. The Waiver provides for, among other things, the Lenders' temporary forbearance from exercising remedies on account of such Existing Defaults. No separate cash consideration was paid by the Company to the Lenders in consideration for the Waiver. However, pursuant to the terms of the Waiver, future interest will accrue at the default rate under the Credit Agreement. The Company remains in discussions with the Lenders regarding a comprehensive plan to modify or otherwise restructure the Company's existing debt obligations. The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- is a leading designer and manufacturer of unique, whimsical and "Folksy With Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company sells its products through a large network of retailers, as well as at Boyds Bear Country(TM) in Gettysburg, Pennsylvania and Pigeon Forge, Tennessee -- "The world's most humongous teddy bear store." Founded in 1979, the Company was acquired by Kohlberg Kravis Roberts & Co. in 1998 and is traded on the NYSE under the symbol FOB. * * * As reported in the Troubled Company Reporter on Sept. 12, 2005, Moody's Investors Service downgraded the debt ratings of The Boyds Collection, Ltd. following the company's release of weak first half 2005 earnings and cash flows. Boyds has been unable to generate sufficient momentum in its new gift item and retail strategies to offset the continued material declines in its traditional higher-margin wholesale business. The company has covered cash shortfalls with increased debt, drawing significantly on its $20 million revolving credit facility, and faces constrained borrowing access and the potential acceleration of its debt obligations over the coming quarters. The rating action reflects the potential for material principal loss, as Boyds may need to seek debt relief in order to continue its attempted turnaround strategies. The outlook remains negative. These ratings were downgraded: * Corporate family rating (formerly called "senior implied rating"), to Caa3 from B3; * $34 million 9% senior subordinated notes due May 15, 2008, downgraded to C from Caa3. BROOKLYN HOSPITAL: Court Okays Bankruptcy Services as Claims Agent ------------------------------------------------------------------ The Honorable Carla E. Craig of the U.S. Bankruptcy Court for the Eastern District of New York, Brooklyn Division, gave The Brooklyn Hospital Center and Caledonian Health Center, Inc., permission to employ Bankruptcy Services LLC as their claims, noticing and balloting agent. BSI will: (a) assist the Debtors in mailing all required notices in the Debtors' bankruptcy cases, including: * notice of the commencement of the Debtors' chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code; * notice of claims bar dates; * notice of objections to claims; * notices of any hearings on the Debtors' disclosure statement and confirmation of the Debtors' chapter 11 plan; and * other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for the orderly administration of the Debtors' bankruptcy cases; (b) within ten business days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: * a copy of the notice served; * a list of persons to whom the notice was served, along with their addresses; and * the date and manner of service; (c) receive, examine, and maintain copies of all proofs of claim and proofs of interest filed in the Debtors' bankruptcy cases; (d) maintain official claims registers in each of the Debtors' chapter 11 cases by docketing all proofs of claim and proofs of interest in the applicable claims database that includes the following information for each claim or interest asserted: * the name and address of the claimant or interest holder and any agent; * the date the proof of claim or proof of interest was received by BSI; * the claim number assigned to the proof of claim or proof of interest; * the asserted amount and classification of the claim; and * the applicable Debtor against which the claim or interest is asserted; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office to do so on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available upon request to the Clerk's Office or any party-in-interest; (h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in the Debtors' bankruptcy cases without charge during regular business hours; (i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfers as required by Bankruptcy Rule 3001(e); (j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders, and other requirements; (k) promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; (l) provide other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors; (m) oversee the distribution of the applicable solicitation material to each holder of a claim against or interest in the Debtors; (n) respond to mechanical and technical distribution and solicitation inquiries; (o) receive, review, and tabulate the ballots cast, and make determinations with respect to each ballot as to its timeliness, compliance with the Bankruptcy Code, Bankruptcy Rules and procedures ordered by this Court subject, if necessary, to review and ultimate determination by the Court; (p) certify the results of the balloting to the Court; and (q) perform other related plan-solicitation services as may be necessary. Ron Jacobs, President of Bankruptcy Services LLC, discloses that the Firm received a $10,000 retainer. The current hourly rates of professionals to be engaged are: Designation/Work Hourly Rate ---------------- ----------- Senior Mangers/On-Site Consultants $225 Other Senior Consultants $185 Programmer $130 to $160 Associate $135 Data Entry/Clerical $40 to $60 Schedule Preparation $225 The Debtors believed that Bankruptcy Services LLC is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Bankruptcy Services LLC -- http://www.bsillc.com/-- specializes in performing noticing, claims processing, claims reconciliation and other administrative tasks for chapter 11 debtors. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on September 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. BROOKLYN HOSPITAL: Wants J.H. Cohn as Accountant & Fin'l Advisor ---------------------------------------------------------------- The Brooklyn Hospital Center and Caledonian Health Center, Inc., ask the Honorable Carla E. Craig of the U.S. Bankruptcy Court for the Eastern District of New York, Brooklyn Division, for permission to employ J.H. Cohn LLP as their accountant and financial advisor, nunc pro tunc to Sept. 30, 2005. J.H. Cohn LLP (a) advise and assist the Debtors in the preparation of financial information, including Statement of Financial Affairs, Schedules of Assets and Liabilities, monthly operating reports, and other information that may be required by the Bankruptcy Court, the United States Trustee, and the Debtors' creditors and other parties-in-interest; (b) assist the Debtors in preparing and analyzing cash collateral and debtor-in-possession financing projections, financial statements, long-term cashflow projections, employee retention and incentive programs, other special projects or reports, and provide expert testimony; (c) attend meetings with parties-in-interest and their respective advisors; (d) advise and assist the Debtors in identifying potential new lenders; (e) advise and assist the Debtors in identifying restructuring alternatives, and in the preparation and negotiation of a plan of reorganization, including advising the Debtors on the timing, nature and terms of the Debtors' modification alternatives to their existing debt; (f) analyze creditor claims and prepare and evaluate litigation and claims objections, including providing expert testimony; (g) other accounting and consulting services requested by the Debtors and their counsel. Clifford A. Zucker, CPA, a member at J.H. Cohn LLP, discloses the Firm's professionals' currenty hourly billing rates: Designation Hourly Rate ----------- ----------- Senior Partner $520 Partner $450 Director $400 Senior Manager $375 Manager $350 Supervisor $300 Senior Accountant $250 Staff Accountant $200 Paraprofessional $135 The Debtors believe that J.H. Cohn LLP is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. As one of the largest independent accounting firms in the country, J.H. Cohn LLP -- http://www.jhcohn.com/-- serves the middle market business owners create, enhance, and preserve wealth. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on September 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. BROOKLYN HOSPITAL: Can Use $1MM+ HUD & DASNY Cash Collateral ------------------------------------------------------------ The Honorable Carla E. Craig of the U.S. Bankruptcy Court for the Eastern District of New York, Brooklyn Division, gave The Brooklyn Hospital Center and Caledonian Health Center, Inc., access to $1,188,000 of cash collateral securing repayment of prepetition debts owed to the Dormitory Authority of the State of New York and the United States Department of Housing and Urban Development. DASNY became the successor to New York State Medical Care Facilities Finance Agency's powers and duties on Sept. 1, 1995. Mortgage Notes The Debtors' indebtedness to MCFFA stems from an original and supplemental mortgage for the purpose of financing and refinancing health care facilities secured by some real property of Brooklyn Hospital. Brooklyn Hospital also became indebted to DASNY for financing additional health care facilities. The 1999 Mortgage Note secured this debt with liens on Brooklyn Hospital's equipment and accounts receivable. The Debtors say that the original mortgage note and 1999 mortgage note are currently outstanding for $32,236,740 and $46,295,800 respectively. The payments under the Original Mortgage Note are currently securing: (a) the MCFFA Hospital and Nursing Home FHA-Insured Mortgage Revenue Bonds, 1992 Series B, and (b) The Brooklyn Hospital Center Hospital and Nursing Home FHA-Insured Mortgage Revenue Bonds, 1998 Series A. The payments under the 1999 Mortgage Note are securing the DASNY The Brooklyn Hospital Center FHA-Insured Mortgage Hospital Revenue Bonds, Series 1999. Depreciation Reserve Fund Brooklyn Hospital's payment obligations on the Mortgage Notes are insured by the Federal Housing Commissioner of the Department of Housing and Urban Development under the applicable provisions of the National Housing Act, 12 U.S.C. Section 1715z-7. In connection with the Debtors' obligations on the Mortgage Notes, Brooklyn Hospital, HUD and the Department of Health and Human Services entered into a Depreciation Reserve Fund Agreement. Brooklyn Hospital agreed to establish a Depreciation Reserve Fund in order to maintain the HUD insurance on the Mortgage Notes and to reimburse HUD for insurance benefits paid to DASNY in the event of the Debtors' bankruptcy or the assignment of the Mortgage Notes to HUD. As of the bankruptcy filing, approximately $19.9 million was on deposit in the DRF at JPMorgan Chase Bank. HUD has agreed to release $1.118 million from the DRF for the month of October 2005. HUD will also release an amount sufficient for the Debtors to honor their obligations with respect to the Mortgage Notes for three months following the Petition Date. But the Debtors must obtain the prior written consent of HUD if they will use the funds for more than three months. To provide DASNY and HUD with protection for any diminution in the value of their collateral, the Debtors will grant DASNY senior, first-priority, valid, perfected, replacement liens. The Court also directed the Debtors to pay: -- the Mortgage Notes when they come due, and -- all DASNY's attorneys' fees. The lien is subject to a carve-out for payment of: -- the U.S. Trustee's statutory fees, and -- the fees and expenses of the professionals retained by the Debtors and the Official Committee of Unsecured Creditors not exceeding $1,000,000. DASNY agrees that a DIP financing agreement with another lender will subordinate its prepetition and postpetition liens in the Debtors' receivables. The Debtors will use the cash collateral to fund their operations, payroll, and other operating expenses that are necessary to maintain the value of their estates. Geoffrey T. Raicht, Esq., at Sidley Austin Brown & Wood LLP in Manhatta, represents Dormitory Authority of the State of New York. Glenn D. Gillett, Esq., the Trial Attorney of the U.S. Department of Justice in Washington, D.C., and Stephen Wang, Esq., at the U.S. Department of Health & Human Services in Manhattan represent U.S. Department of Housing and Urban Development. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on September 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. CABOODLES LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Caboodles, LLC aka Caboodles Cosmetics 17 West Pontotoc Avenue, Suite 101 Memphis, Tennessee 38103 Bankruptcy Case No.: 05-35710 Type of Business: The Debtor manufactures cosmetics. Chapter 11 Petition Date: September 30, 2005 Court: Western District of Tennessee (Memphis) Judge: David S. Kennedy Debtor's Counsel: Steven N. Douglass, Esq. Harris Shelton Hanover Walsh, PLLC 2700 One Commerce Square Memphis, Tennessee 38103 Tel: (901) 525-1455 Fax: (901) 526-4084 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pittco Capital Partners, LP Value of security: $13,000,000 17 West Pontotoc Avenue $10,000,000 Memphis, TN 38103 Crystal Claire $491,255 20 Overlea Boulevard Tornto, Ontario M4H 1A4 AdSert Trade Debt $236,196 Group, Inc. 5750 Wilshire Boulevard Los Angeles, CA 90036 Wormser Corporation $207,760 P.O. Box 5209 Englewood, NJ 07631 Box, LLC $198,687 PBB Global Logistics, Inc. $162,472 Fasken Martineau DuMoulin LLP $160,082 Baker, Donelson, Bearmam $124,567 Caldwell Starr Toof $119,010 McFadden & Dillon PC $108,333 The Color Factory $100,064 Glimpso LLC $71,165 Yellow Freight Service Debt $48,847 Oxygen Development $48,109 Winston & Strawn, LLP $34,020 Alloyd SCA $31,742 BAX Global $30,313 Flex Products $29,530 B.L. Carpenter Ent. $26,744 Proforma Advantage $26,200 CAROLINA TOBACCO: Bell Dewar Approved as Special Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon gave Carolina Tobacco Company permission to employ Bell Dewar and Hall as its special counsel for South Africa. The Debtor explains that the primary location of its business operations is in Johannesburg, South Africa, where Bell Dewar is also located. The Debtor relates that it hired Bell Dewar as its special counsel to represent its interests in South Africa. Bell Dewar will: 1) work with the South African Revenue Service (SARS) on the Debtor's value added tax audit from September-October 2004 and continue negotiations with SARS to obtain a permanent bond; 2) negotiate with the Debtor's vendors, lessors and lessees and handle customs, excise and tax issues; 3) assist the Debtors in transferring titles on purchased equipment, obtaining rebates and warehouse permits and conferring with governmental agencies to ensure the Debtor's operations comply with local rules and regulations in South Africa; and 4) render all other legal services to the Debtor in connection with its business operations in South Africa. Nicolaas Jacobus Roodt, Esq., a Director of Bell Dewar, disclosed that his Firm received a R 200,000 retainer. Mr. Roodt reports Bell Dewar's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Nic Roodt Counsel $330 Freek Van Rooyen Counsel $330 Blaize Vance Counsel $330 Conor McFadden Counsel $156 Rakhee Bhooa Counsel $156 Bell Dewar assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Portland, Oregon, Carolina Tobacco Company -- http://www.carolinatobacco.com/-- manufactures the Roger-brand cigarettes. The Company filed for chapter 11 protection on April 18, 2005 (Bankr. D. Ore. Case No. 05-34156). Tara J. Schleicher, Esq., at Farleigh Wada & Witt P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $24,408,298 and total debts of $14,929,169. CAROLINA TOBACCO: Perkins & Company Approved as Accountants ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon gave Carolina Tobacco Company permission to employ Perkins and Company, P.C., as its accountants. The Debtor explains that it hired Perkins and Company as its accountants because of the Firm's considerable accounting expertise. The Firm is also familiar with the Debtor's business operations and tax issues because it prepared the Debtor's financial statements and tax returns since the 2002 fiscal year. Perkins and Company will: 1) prepare the Debtor's 2004 complied financial statements, 2004 corporate tax returns and ancillary documents and assist with the examination by the Internal Revenue Service; 2) perform corporate and tax planning and consulting for the 2005 fiscal year; and 3) perform all other accounting services to the Debtor that are necessary in its chapter 11 case. Grant L. Jones, C.P.A., a Shareholder of Perkins and Company, is one of the lead professionals of the Firm performing services to the Debtor. Mr. Jones charges $295 per hour for his services. Mr. Jones reports Perkins and Company professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Chris Loughran Shareholder $280 Designation Hourly Rate ----------- ----------- Managers $175 - $190 Senior Staff $100 - $135 Perkins and Company assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Portland, Oregon, Carolina Tobacco Company -- http://www.carolinatobacco.com/-- manufactures the Roger-brand cigarettes. The Company filed for chapter 11 protection on April 18, 2005 (Bankr. D. Ore. Case No. 05-34156). Tara J. Schleicher, Esq., at Farleigh Wada & Witt P.C. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $24,408,298 and total debts of $14,929,169. CHESAPEAKE ENERGY: Fitch Affirms BB Rating on Sr. Unsecured Debt ---------------------------------------------------------------- Fitch Ratings affirmed the ratings of Chesapeake Energy Corporation following the company's announcement that it has agreed to acquire Columbia Natural Resources, LLC, for $2.2 billion plus the assumption of liabilities. The Rating Outlook is Stable. Fitch rates Chesapeake's senior unsecured debt at 'BB', senior secured revolving credit facility and hedge facility at 'BBB-', and convertible preferred stock at 'B+'. The rating affirmation and Outlook reflect the size and scope of Chesapeake's reserve base following the acquisition of CNR, the quality and price paid for the reserves, and the balanced mix of debt and equity used to finance the acquisition. The ratings are also supported by Fitch's expectations that Chesapeake will continue to aggressively grow its resource base through further acquisitions, that the company will continue to show significant reserve growth through organic efforts, and that the company will likely remain free cash flow negative despite the current commodity price environment due to the significant expenditures for organic growth. Chesapeake has announced an agreement to acquire CNR for $2.2 billion in cash plus the assumption of liabilities. With the acquisition of CNR, Chesapeake will add 1.1 trillion cubic feet equivalent of reserves, giving the company a total of 7.1 tcfe of proven reserves. This is a 45% increase over year-end 2004 proven reserves of 4.9 tcfe. Proven developed reserves will account for an estimated 64% of Chesapeake's total proven reserves at close. CNR's reserves are located in the onshore Appalachian Basin (West Virginia, Kentucky, Ohio, Pennsylvania, and New York) and, at 125 million cubic feet of natural gas equivalent production per day (mmcfed), have a very long life of more than 23 years, which is typical of the basin. The purchase price of $2.00 per mcfe reflects the long life of the reserves as well as the liabilities associated with CNR's prepaid sales and the significant hedges in place into 2009. As with other acquisitions, Chesapeake anticipates enhancing the value of the assets through an aggressive development program. While financing of the transaction has not been finalized, Chesapeake anticipates using cash on hand to finance $200 million to $400 million of the price with a split between roughly 50% new senior unsecured notes/new senior unsecured convertible notes and 50% common/preferred stock to make up the bulk of the financing. Fitch has incorporated these assumptions into the rating affirmation. The financing of CNR also remains in line with Chesapeake's practice beginning in 2003 to ultimately finance acquisitions with a balance between debt and equity issuances. While the financing is conservative in nature, the debt component will add leverage to Chesapeake's debt to proven reserve metrics due to the escalating prices of acquisitions. Fitch anticipates debt to thousand cubic feet equivalent of proven reserves to approximate $0.70/mcfe and debt to proven developed reserves of nearly $1.10/mcfe as debt will likely total approximately $5.0 billion. Closing is expected by mid-December 2005. CLEARLY CANADIAN: Brent Lokash Replaces Douglas Mason as President ------------------------------------------------------------------ Clearly Canadian Beverage Corporation (OTCBB:CCBEF) reported the appointment of Brent Lokash as President. Mr. Lokash replaces chief executive officer, Douglas Mason, who will continue to play an active role with Clearly Canadian. Mr. Mason's beverage career began with launching and marketing Jolt Cola, under licence in Canada and parts of the USA in 1985 and, in 1987, Mr. Mason introduced brand Clearly Canadian. Credited as one of the pioneers of the New Age beverage category, Mr. Mason further led the Clearly Canadian team to launch exciting brands including "Quenchers", "Orbitz" and "Reebok Fitness Water". Over the past 20 years, Mr. Mason has established a reputation for innovation and, in his ongoing advisory role will continue to focus on the innovative and creative roots Clearly Canadian has been known for. "Our efforts to improve our distribution system and to complement and enhance our sales team in recent years has culminated in a successful restructuring and financing with the BG Capital Group earlier this year, and what I believe will be a new beginning for the Company. I am proud to say that, thanks to the hard work and dedication of the Clearly Canadian team, paired with the financing provided by BG Capital, I believe that Clearly Canadian is once again poised for future growth and profitability. I also believe that Brent Lokash will bring a fresh approach to the business and that he has the ability to help guide the Company to the next level. I look forward to remaining an active member of the Clearly Canadian team and to working closely with Brent as he leads the Clearly team into a new era," said Douglas Mason, Clearly Canadian Beverage Corporation. "I am thrilled to be leading a company of Clearly Canadian's calibre, and I look forward to working with the board and the management team in an effort to build upon the strong foundation of Clearly Canadian's innovative culture and to lead the Company to its next phase of anticipated growth," said Brent Lokash, President of Clearly Canadian Beverage Corporation. In his role as President, Mr. Lokash will be responsible for all facets of corporate operations for Clearly Canadian. Mr. Lokash is also associated with BG Capital and is a business lawyer with considerable experience in corporate financings, mergers and acquisitions. Mr. Lokash began his practice in commercial law and subsequently focused on providing business consulting expertise to public and private companies seeking acquisitions and financings. Mr. Lokash received his Bachelor of Law degree in 1995 and was called to the Bar in the same year. He is a member in good standing with the Law Society of British Columbia. Mr. Lokash is the Chairman of The Neptune Society, Inc. Based in Vancouver, B.C., Clearly Canadian Beverage Corporation -- http://www.clearly.ca/-- markets premium alternative beverages and products, including Clearly Canadian(R) sparkling flavoured water and Clearly Canadian O+2(R) oxygen enhanced water beverage, which are distributed in the United States, Canada and various other countries. As of June 30, 2005, Clearly Canadian Beverage Corporation's balance sheet showed a $672,000 equity compared to a $3,515,000 equity deficit at Dec. 31, 2004. COMPOSITE TECHNOLOGY: Court Moves Confirmation Hearing to Oct. 17 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California rescheduled Composite Technology Corporation's (OTC BB: CPTCQ) plan confirmation hearing to Oct. 17, 2005, at 10: a.m. (PDT). Claims Settlement The Company has signed an agreement with the City of Kingman, Kansas, which if approved by the Bankruptcy Court and fully performed by both parties, will: -- significantly reduce claims against the Company's bankruptcy estate; -- facilitate the Company's emergence from bankruptcy; and -- provide the Company with a valuable new customer for its goods and services. The agreement contains provision for Kingman's purchase of 70 linear miles of the Company's ACCC conductor and related hardware. In addition, the Company signed an agreement with John Nunley, which if approved by the Bankruptcy Court will significantly reduce claims against the Company's bankruptcy estate and facilitate the Company's emergence from bankruptcy. Litigation Settlement The Company has filed with the Bankruptcy Court its proposed order approving the settlement of litigation between the Company and Ascendiant Capital Group, Inc., Mark Bergendahl, and Bradley Wilhite. The Company believes the settlement is in the best interest of the bankruptcy estate and is pleased that no objection was filed in connection with the settlement. As part of this settlement, Ascendiant's ballots voting to reject the Company's reorganization plan will be replaced with votes accepting the plan. Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com/-- provides high performance advanced composite core conductor cables for electric transmission and distribution lines. The proprietary new ACCC cable transmits two times more power than comparably sized conventional cables in use today. ACCC can solve high-temperature line sag problems, can create energy savings through less line losses, and can easily be retrofitted on existing towers to upgrade energy throughput. ACCC cables allow transmission owners, utility companies, and power producers to easily replace transmission lines without modification to the towers using standard installation techniques and equipment, thereby avoiding the deployment of new towers and establishment of new rights-of- way that are costly, time consuming, controversial and may impact the environment. The Company filed for chapter 11 protection on May 5, 2005 (Bankr. C.D. Calif. Case No. 05-13107). Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, represents the Debtor in its restructuring efforts. As of March 31, 2005, the Debtors reported $13,440,720 in total assets and $13,645,199 in total liabilities. COTT CORP: Realigning Management in North American Operations ------------------------------------------------------------- Cott Corporation (NYSE:COT; TSX:BCB) will realign the management of its Canadian and U.S. businesses to a North American basis to leverage management strengths, improve supply chain efficiencies and position the North American business to become more profitable and responsive to customers' needs. The Company estimates that pre-tax charges of $60 to $80 million will be recorded over the next 12 to 18 months. This amount is comprised mainly of asset impairment charges and also includes severance and other costs. The Company also estimates that operating income will improve by $10-15 million annually when these changes are completed. Under the new structure, two veteran Cott executives with strong track records of success will lead North American operations and sales. Mark Benadiba, currently Executive Vice President of Canada and International, will head North American operations and supply chain functions including manufacturing, purchasing, logistics and quality. John Dennehy, currently Vice President of New Business Development for Cott U.S.A., will lead North American Sales and Marketing. Additionally, Gil Arvizu, who successfully built Cott's Mexican business, returns to the U.S. to head up the U.S. sales organization, reporting to Mr. Dennehy. Mr. Benadiba and Mr. Dennehy, along with Jason Nichol, Cott's Vice President of Business Development for Wal-Mart, will report directly to President and CEO, John Sheppard. The Company also announced that Robert J. Flaherty, Executive Vice President and President of Cott U.S.A., has left Cott to pursue other interests. Cott's Board of Directors endorsed these changes and reiterated its support of the management team. "The actions are right for Cott's customers, employees and shareowners," said Frank E. Weise, Chairman of the Board. "They will enable the Company to reap the benefits of retailer brand growth potential and position Cott to continue leading that growth. The new structure puts proven Cott executives into key leadership positions with John Sheppard taking a direct role in turning around and growing Cott's North American operations. The skills and experience he demonstrated while delivering record results as President of Cott's U.S. division are exactly what the Company needs to remain the preferred supplier of retailer brand beverages." Mr. Sheppard added: "We committed to taking quick and decisive action. These steps are important in positioning us for increased profitability. With this structure, we will be a more efficient and effective organization with a critical focus on operations and sales. "Mark Benadiba is a seasoned operating executive and a hands-on manager with extensive experience and success in driving operational improvements. Putting a soft drinks industry veteran like John Dennehy in charge of marketing and sales will further enhance our customer relationships and increase our focus on growing profitability for both Cott and our retailer brand customers. They are now reviewing opportunities in their respective areas and we intend to report on our progress during our third quarter earnings conference call." As part of the organizational realignment, the Company also announced that Cott's Mexican business unit and Royal Crown International will now report to Colin Walker, Senior Vice- President of Corporate Resources. All appointments are effective immediately. In addition to the organizational changes, key elements of the Company's plan include rationalizing product offerings, eliminating underperforming assets and increasing focus on high potential accounts. Cott Corporation is the world's largest retailer brand soft drink supplier. Its core markets are the United States, Canada and the United Kingdom. * * * As reported in the Troubled Company Reporter on Sept. 23, 2005, Standard & Poor's Ratings Services placed its 'BB' long-term corporate credit rating and 'B+' subordinated debt rating on the leading supplier of retailer-branded soft drinks, Toronto, Ont.- based Cott Corp., on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Sept. 23, 2005, Moody's Investors Service placed the ratings for Cott Corporation under review for possible downgrade following the announcement that it expects 2005 earnings to be substantially lower than previous guidance. These ratings were placed on review for possible downgrade: Cott Corporation: -- Ba2 corporate family rating Cott Beverages, Inc.: -- Ba3 rating on the $275 million 8% senior subordinated notes, due 2011 The review for possible downgrade will focus on: * the impact that the above pressures will have on the company's operating profit; * cash flow and debt protection measures going forward; and * the company's plans for cost reduction efforts and pricing. CWMBS INC.: Fitch Assigns BB Rating on $790,000 Class B Certs. -------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-23: -- $303.3 million classes A-1, A-2, PO, and A-R certificates (senior certificates) 'AAA'; -- $6.9 million class M certificates 'AA'; -- $2.0 million class B-1 certificates 'A'; -- $1.2 million class B-2 certificates 'BBB'; -- $790,000 class B-3 certificates 'BB'; -- $632,000 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.00% subordination provided by the 2.20% class M, the 0.65% class B-1, the 0.40% class B-2, the 0.25% privately offered class B-3, the 0.20% privately offered class B-4, and the 0.30% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB', and 'B', based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The pool consists of 30-year fixed-rate mortgage loans totaling $281,576,864 as of the cut-off date, Sept. 1, 2005, secured by first liens on one- to four-family residential properties. All the mortgage loans have interest-only payments for a period of 10 years following the origination of the loan. Following the 10- year period, the monthly payment with respect to each of these mortgage loans will be increased to an amount sufficient to amortize the principal balance of the mortgage loans over the remaining term. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original loan-to-value ratio of 72.57%. The weighted average FICO credit score is approximately 742. Cash-out refinance loans represent 29.85% of the mortgage pool and second homes 6.34%. The average loan balance is $577,002. The states that represent the largest portion of mortgage loans are California (38.69%), Virginia (7.26%), and Florida (5.36%). Subsequent to the cut-off date, additional loans were purchased prior to the closing date, Sept. 29, 2005. The aggregate stated principal balance of the mortgage loans transferred to the trust fund on the closing date is $315,999,820. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available at http://www.fitchratings.com/ Approximately 99.73% and 0.27% of the mortgage loans were originated under CHL's Standard Underwriting Guidelines and Expanded Underwriting Guidelines, respectively. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios, and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CWMBS INC.: Fitch Places Low-B Ratings on Two Certificate Classes ----------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-26: -- $480.0 million classes 1-A-1 through 1-A-14, 2-A-1, 2-A-2, PO, and A-R certificates (senior certificates) 'AAA'; -- $12.8 million class M certificates 'AA'; -- $3.3 million class B-1 certificates 'A'; -- $1.5 million class B-2 certificates 'BBB'; -- $1.0 million class B-3 certificates 'BB'; -- $750,011 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.00% subordination provided by the 2.55% class M, the 0.65% class B-1, the 0.30% class B-2, the 0.20% privately offered class B-3, the 0.15% privately offered class B-4, and the 0.15% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB', and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a group of 30- year conventional, fully amortizing mortgage loans. The pool consists of 30-year fixed-rate mortgage loans totaling 500,007,523 as of the cut-off date, Sept. 1, 2005, secured by first liens on one- to four-family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average loan-to-value ratio of 72.16%. The weighted average FICO credit score is approximately 741. Cash-out refinance loans represent 31.56% of the mortgage pool and second homes 6.93%. The average loan balance is $ $552,495. The three states that represent the largest portion of mortgage loans are California (40.94%), New York (6.79%), and Virginia (6.27%). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available at http://www.fitchratings.com/ CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. DELAWARE AUTO: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Delaware Auto Leasing, Inc. 55 Delaware Street Tonawanda, New York 14120 Bankruptcy Case No.: 05-19192 Type of Business: The Debtor is a car rental agency. Chapter 11 Petition Date: October 4, 2005 Court: Western District of New York (Buffalo) Debtor's Counsel: R. Thomas Burgasser, Esq. 825 Payne Avenue North Tonawanda, New York 14120 Tel: (716