/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/051101.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 1, 2005, Vol. 9, No. 259 Headlines 20 BOOT INC: Case Summary & 21 Known Creditors A PARTNERS: Case Summary & 20 Largest Unsecured Creditors ADELPHIA COMMS: Wants to Fix Plan Reserves & Estimate Claims AEGIS ASSET: Fitch Puts BB Rating on $13.2-Mil Cert. Class ALLEGHENY ENERGY: Posts $35.7 Million Net Income in Third Quarter ALLIANCE ONE: EC Fines Won't Trigger Credit Facility Default ALPHARMA INC: Refinancing Prompts Moody's to Affirm Low-B Ratings AMERIQUEST MORTGAGE: Fitch Rates $19.2 Mil Cert. Classes at Low-B AMERUS GROUP: Fitch Puts BB+ Rating on Perpetual Preferred Stock AMHERST TECHNOLOGIES: Court Converts Ch. 11 Cases to Ch. 7 AMHERST TECHNOLOGIES: Court Sets February 27 as Claims Bar Date AMHERST TECHNOLOGIES: U.S. Trustee Will Meet Creditors on Nov. 28 APCO LIQUIDATING: Bell Boyd as Special Environmental Counsel APCO LIQUIDATING: Richards Layton Approved as Bankruptcy Counsel ARLINGTON HOSPITALITY: Sells Assets to Sunburst for $21.3 Million ARMSTRONG WORLD: Balance Sheet Upside-Down by $1.35B at Sept. 30 ATA AIRLINES: Gets Court Nod to Assume RPK Capital Engine Lease BANC OF AMERICA: Fitch Places Low-B Ratings on $1.7M Cert. Classes BEAR STEARNS: Fitch Rates $51 Million Certificate Classes at Low-B BLOUNT INT'L: Equity Deficit Narrows to $201.43 Mil. at Sept. 30 BROKERS INC: Courts Extends Solicitation Period to December 1 CERVANTES ORCHARDS: Hires Messrs. Fischer and Johnston as Counsel CHARLES BRIGGS: Case Summary & 5 Largest Unsecured Creditors CHARLES RIVER: Earns $32.1 Million of Net Income in Third Quarter CHEMTURA CORP: Posts $118.9 Million Net Loss in Third Quarter CHI-CHI'S: Judge Baxter Approves Amended Disclosure Statement COLORADO INTERSTATE: S&P Places B Rating on $400M Sr. Unsec. Notes CORNERSTONE PRODUCTS: Assets Being Auctioned Tomorrow in Dallas CORNERSTONE PRODUCTS: Taps Mesirow Financial as Investment Banker CP SHIPS: S&P Revises CreditWatch Placement Due to TUI Debt Rating CRE RENTAL: Case Summary & 20 Largest Unsecured Creditors CREDIT SUISSE: Moody's Cuts Rating on Class B-F Tranche to B1 CREDIT SUISSE: Fitch Junks Ratings on Twelve Certificate Classes CUMMINS INC: Earns $145 Million of Net Income in Third Quarter CWMBS INC: Fitch Assigns Low-B Ratings to $806K Cert. Classes CWMBS INC: Fitch Places Low-B Ratings on $1.46-Mil Cert. Classes CWMBS INC: Fitch Rates $1.78M Cert. Classes at Low-B DE LA CONCHA: Case Summary & Largest Unsecured Creditor DELPHI CORP: Court Approves De Minimis Asset Sale Procedures DELPHI CORP: Judge Drain Authorizes Use of All Cash Collateral DELPHI CORP: U.S. Trustee Meeting With Creditors on February 6 DELTA AIR: Board Agrees to Pay Cuts as Part of Cost-Reduction Plan DORAL FINANCIAL: Financial Non-Filing Cues Moody's to Cut Ratings EASTMAN KODAK: Fitch Puts BB+ Rating on $2.7-Bil Sr. Secured Loan ELDERCARE PROPERTIES: Case Summary & 20 Largest Creditors ENRON CORP: Court Okays Claims Settlement Pact on Brazos Financing ENRON CORP: Wants Court to Bless SRP Settlement Agreement ENTERGY NEW ORLEANS: Court Okays Up To $200 Mil. of DIP Financing ENTERGY NEW ORLEANS: Section 341(a) Meeting Set on November 18 ENTERGY NEW ORLEANS: U.S. Trustee Appoints 3-Member Interim Panel EVANSTON INC: Case Summary & 11 Largest Unsecured Creditors EXIDE TECH: Eight Directors Buy Restricted Shares & Stock Options FIRSTBANK PUERTO: SEC Investigation Cues Moody's to Cut Ratings FIRST HORIZON: Fitch Assigns Low-B Ratings to $735K Cert. Classes FOOTSTAR INC: U.S. Trustee Amends Creditors Committee Membership HIGH VOLTAGE: Asks Court to Approve Ricci Consultants' Retention HIGH VOLTAGE: Ch. 11 Trustee Wants to Reject Executory Contracts HIGH VOLTAGE: U.S. Trustee Amends Equity Committee Membership HIRSH INDUSTRIES: Committee to Conduct Rule 2004 Examination IKON OFFICE: Earns $20 Million of Net Income in Fourth Quarter KAISER ALUMINUM: Gets Ct. OK to Extend Deadline to Remove Actions KAISER ALUMINUM: Insurers Want Motion to Enforce Stay Denied KMART CORP: Court Won't Deem G. Carbajo's Claim as Timely Filed KRISPY KREME: Appoints Jeff Jervik as Operations EVP KRISPY KREME: Board Taps James Mead to Search for Permanent CEO LEVI STRAUSS: Streamlining Cues Fitch to Upgrade Ratings MAPLE LEAF: Voluntary Chapter 11 Case Summary MCI INC: Gets Regulatory Approval From FCC on Verizon-MCI Merger MCLEODUSA INC: Confirmation Hearing Scheduled for December 15 MCLEODUSA INC: Gets Access to $50 Million DIP Credit Facility MIRANT CORP: Mintz Levin's Environmental Legal Work Increases MORRIS PUBLISHING: Moody's Rates Proposed $350MM Sr. Loan at Ba2 NORTHWEST AIRLINES: Posts $475 Million Net Loss in Third Quarter NOVA CHEMICALS: Fitch Puts BB+ Rating on Proposed $400MM Sr. Notes NVF COMPANY: CB Richard Ellis Approved as Real Estate Broker O'SULLIVAN INDUSTRIES: Court Fixes January 9 as Claims Bar Date O'SULLIVAN IND: Gets Okay to Employ Ordinary Course Professionals O'SULLIVAN INDUSTRIES: Wants to Hire Garden City as Claims Agent ON TOP: Turns to Conwell William for Financial Advice ON TOP: U.S. Trustee Objects to Hiring of Conwell Williams ON TOP: Wants to Hire Sciarrino & Associates as FCC Counsel PONDEROSA PINE: McGuireWoods Approved as Construction Counsel PROSOFT LEARNING: Likely Defaults Cue Going Concern Doubt QUINTILES TRANSNATIONAL: S&P Affirms BB- Corp. Credit Rating RESIDENTIAL ACCREDIT: Fitch Rates $19.4 Mil Sub. Certs. at Low-B RUSSELL-STANLEY: Hunter Drums Gets Court Approval to Sell Assets SCOTTS MIRACLE-GRO: Financial Plan Cues S&P to Affirm Low-B Rating SEARS HOLDINGS: Richard Perry Appointed to Sears Holdings' Board SHC INC: Administrator Wants Until Feb. 22 to Object to Claims SINGER-DENMAN: Case Summary & 20 Largest Unsecured Creditors SOLUTIA INC: Has Exclusive Right to File Ch. 11 Plan Until Nov. 17 SOUTHERN PRODUCTS: Case Summary & 45 Largest Unsecured Creditors SOUTHWEST RECREATIONAL: Sues Zurich American Insurance for $2 Mil. STONERIDGE INC: Posts $3.3 Million Net Loss in Third Quarter STRUCTURED ASSET: Fitch Rates $21.9 Mil Certificate Class at Low-B THOMAS JOHNSON: Case Summary & 2 Largest Unsecured Creditors TIDEWATER SENIORS: Case Summary & Largest Unsecured Creditor TRUMP HOTELS: Wants Court to Clarify Power Plant Stipulation TRUMP HOTELS: Wants Court to Expunge DLJ's $25,000,000 Claims UAL CORPORATION: Plans to Recall 300 Pilots for 2006 UAL CORP: Wants to Walk Away from One Boeing Aircraft Lease UNITED SURGICAL: 3rd Quarter Results Cue S&P to Review Ratings US AIRWAYS: Bank of America Sues for Breach of Credit Card Accord US AIRWAYS: Buys Back $250 Million of America West's Senior Notes US AIRWAYS: Swaps Common Stock for America West's Sr. Exch. Notes US JESCO: Case Summary & 56 Largest Unsecured Creditors VALE OVERSEAS: Fitch Assigns BB Rating to Foreign Currency VINCENT DAVINCI: Case Summary & 8 Largest Unsecured Creditors W.R. GRACE: Wants January 12, 2006 Set as Asbestos Claims Bar Date WELLS FARGO: Fitch Places Low-B Rating on $1.78-Mil Cert. Classes WELLS FARGO: Fitch Rates $2.45-Mil Class Certificates at Low-B WHITEHALL JEWELLERS: Newcastle Offers $1.10 Per Share Buy-Out WHITEHALL JEWELLERS: NYSE Halts Common Stock Trading WILLIAM BRADLEY: Case Summary & 20 Largest Unsecured Creditors WILLIAM MCKINLEY: Case Summary & 20 Largest Unsecured Creditors WILLIAM SHIPWASH: Case Summary & 20 Largest Unsecured Creditors WILLIAM WEST: Case Summary & 20 Largest Unsecured Creditors WINN-DIXIE: Posts $832.6MM Net Loss for the Year Ended June 2005 WINN-DIXIE: Wants to Auction Miami Reclamation Center on Nov. 14 WORLDCOM INC: Parties Want Court to Set Final Fairness Hearing WORLDCOM INC: Wants Court to Allow Tax Claim as Timely Filed * Timothy Coleman Joins Dewey Ballantine as Litigation Partner * Large Companies with Insolvent Balance Sheets ********* 20 BOOT INC: Case Summary & 21 Known Creditors ---------------------------------------------- Debtor: 20 Boot, Inc. dba $1.00 Super Dollar Store, Inc. 8050 McKnight Road Pittsburgh, Pennsylvania 15237 Bankruptcy Case No.: 05-50081 Chapter 11 Petition Date: October 27, 2005 Court: Western District of Pennsylvania (Pittsburgh) Judge: Bernard Markovitz Debtor's Counsel: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, Pennsylvania 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets: $50,000 to $100,000 Estimated Debts: $1 Million to $10 Million Debtor's 21 Known Creditors: Entity Claim Amount ------ ------------ Artistry Designs Unknown 2222 West 138th Street Blue Island, IL 60406 BE Industries, Inc. Unknown 21 Annie Place Stamford Stamford, CT 06902 CIT Unknown P.O. Box 1036 Charlotte, NC 28201 Encore Unknown 333 North Rivermede Road Concord Ontario L4K 3N7 First City North Associates Unknown Four Gateway Center, Suite 212 Pittsburgh, PA 15222 Fleet Equipment, Inc. Unknown P.O. Box 110 Beeno Road Darragh, PA 15625 Herr Food Inc./Credit Mediators, Inc. Unknown P.O. Box 456 Upper Darby, PA 19082 Hillcrest Food Service/Transworld System Unknown 2695 East 40th Street Cleveland, OH 44115 Jumbo Products, Inc. Unknown 3926 24th Street Long Island City, NY 11101 Jurassic Dog Products L.L.C. Unknown 224 Nazareth Drive Belle Vernon, PA 15012 KDKATV Unknown 21251 Network Place Chicago, IL 60673 Knickerbocker, Russell Co. Unknown 4759 Campbells Run Pittsburgh, PA 15205 Kole Imports Unknown 24600 South Main Street Carson, CA 90745 Loomco International Group, LLC Unknown 209 Reynolds Industrial Park Transfer, PA 16154 NYRS Debt Collectors Unknown 1319 Hickory Street Kansas City, MO 64102 OKK Trading Unknown 5500 East Olympic Boulevard, Suite A Los Angeles, CA 90022 PFE Fire & Safety Corporation Unknown 519 East General Robinson Street Pittsburgh, PA 15212 Regents Products Unknown 8999 Palmer Street River Grove, IL 60171 Sunset Wholesale Unknown 1650 North 7th Street Lebanon, PA 17046 The Custom Companies Unknown 317 West Lake Street Melrose Park, IL 60164 Zampogna, Inc. Unknown 715 Ewing Street New Kensington, PA 15068 A PARTNERS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: A Partners, LLC 1171 North Fulton Mall, 12th Floor Fresno, California 93721 Bankruptcy Case No.: 05-62656 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Ronald Allison Family Trust 05-62657 Type of Business: The Debtors own Helm Building, a 10-story building with over 55,000 square feet of office space available for rent. See http://www.apartnersllc.com/ Chapter 11 Petition Date: October 28, 2005 Court: Eastern District of California (Fresno) Judge: W. Richard Lee Debtors' Counsel: John P. Eleazarian, Esq. 7489 North First Street, Suite 104 Fresno, California 93720-2823 Tel: (559) 261-9110 Fax: (559) 261-9112 Estimated Assets Estimated Debts ---------------- --------------- A Partners LLC $10 Million to $1 Million to $50 Million $10 Million Ronald Allison Family Trust $50 Million to $10 Million to $100 Million $50 Million A. A Partners LLC's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mauldin-Dorfmeir Construction Unknown 3240 North Millbrook Fresno, CA 93726 Scripps Investments & Loans Unknown 484 Prospect Street La Jolla, CA 92037 B. Ronald Allison Family Trust's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Charles W. Briggs Unknown 3097 Willow Avenue, Suite 10 Clovis, CA 93612 Scripps Investments & Loans Unknown 484 Prospect Street La Jolla, CA 92037 ADELPHIA COMMS: Wants to Fix Plan Reserves & Estimate Claims ------------------------------------------------------------ Article V of the Third Amended Plan of Reorganization of Adelphia Communications Corporation and its debtor-affiliates provides for the substantive consolidation of the reorganized Debtors into 18 separate and distinct Debtor Groups, effectively combining the assets and liabilities of multiple Debtors within those Debtor Groups for the purposes of: (1) voting with respect to the confirmation of the Plan, and (2) making distributions under the Plan. The partial substantive consolidation structure represents the ACOM Debtors' application of two principles: (1) respect for legal ownership, and (2) third party expectations. With respect to legal ownership, the ACOM Debtors sought to preserve the prepetition chain of ownership with each entity entitled to the residual equity of the entities it owns. To ensure that the substantive consolidation structure is consistent with third party expectations, the ACOM Debtors sought to preserve three principal sets of creditor expectations: (a) the expectations of the Lenders under the Credit Agreements; (b) the expectations of purchasers of notes; and (c) the expectations of joint venture partners. The Plan allocates Plan Consideration to each Debtor Group. The Plan Consideration will be available for distribution to the creditors of each Debtor Group in accordance with the absolute priority rule. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, asserts that no payments or distributions will be made under the Plan on account of Disputed Claims or Equity Interests unless and until the Disputed Claim or Equity Interest becomes allowed. To permit the Plan Consideration to be paid to the various classes of Claims within each Debtor Group and to permit residual equity value to flow from a subsidiary Debtor Group to structurally junior Debtor Groups, the Plan contemplates that the Debtors will estimate appropriate reserves of Plan Consideration for each class of Claims in each Debtor Group, including reserves for Disputed Claims in each class. "This permits amounts in excess of the Debtor Group Reserves to flow to the structurally junior Debtor Groups before all Disputed Claims become Allowed Claims. Without establishing Debtor Group Reserves, residual value (and, therefore, distributions) to structurally junior creditors would not be possible until all Disputed Claims in structurally senior Debtor Groups are resolved," Ms. Chapman says. Given the substantial number of Disputed Claims in the vast majority of the Debtor Groups, the Plan also provides that an Estimation Order may be used to estimate the amount of any Disputed Claim or Equity Interest. The ACOM Debtors have diligently been reviewing, analyzing, and reconciling the approximately $3.2 trillion of claims filed in their cases and have filed seven omnibus objections which address more than $3 trillion of those claims. Because the claims reconciliation process is ongoing, the Debtors seek to establish procedures to implement estimation on a rolling basis as their cases proceed towards confirmation and emergence. To facilitate the fixing of the Debtor Group Reserves and the estimation of Disputed Claims, the ACOM Debtors propose these deadlines and procedures: A. Setting of Plan Reserves 1. On or before the date which is 25 days prior to the Voting Deadline, the ACOM Debtors will file one or more supplements indicating the proposed reserve amounts for: -- Funding Company Distribution Reserve, -- Notes/Trade Distribution Reserve, -- Other Unsecured Distribution Reserve, and -- Existing Securities Law Claim Reserve. 2. Interested parties will have 20 calendar days after service of the Notice to object to the proposed reserve amount. 3. If an objection is timely filed, the ACOM Debtors will attempt to resolve the objection. Absent an agreement, the Debtors will schedule a hearing before the Bankruptcy Court to determine the appropriate reserve amount. 4. If no objection is timely filed, the reserve amount will be deemed to be set as indicated in the Notice and the Notice will be deemed to constitute an Estimation Order. B. Estimation of Individual Disputed Claims 1. In the event that the ACOM Debtors determine that it is necessary to seek to place a maximum limitation on the Allowed Amount of any Claim or Equity Interest, the Debtors will file a Notice of Estimation of Disputed Claim, setting forth the asserted amount of that claim and the proposed maximum limitation for distribution purposes. 2. The holder of that Disputed Claim will have 30 calendar days after service of the Notice to object to the potential maximum limitation on that claim. 3. If an objection is timely filed, the ACOM Debtors will attempt to resolve the objection or agree on a scheduling order to set a hearing to determine the appropriate maximum limitation amount of the Disputed Claim. Absent an agreement, the Debtors will request that a status conference be held to establish an appropriate schedule. 4. If no objection is timely filed, the holder of a Disputed Claim will be deemed to have consented to the maximum limitation proposed and will be forever enjoined and barred from objecting to that maximum limitation. Ms. Chapman notes that the procedures proposed by the ACOM Debtors would permit initial Distributions under the Plan to be made promptly while providing for an appropriate reserve for each Disputed Claim. Thus, the ACOM Debtors ask U.S. Bankruptcy Court for the Southern District of New York to grant their request. 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. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) AEGIS ASSET: Fitch Puts BB Rating on $13.2-Mil Cert. Class ---------------------------------------------------------- Aegis Asset Backed Securities Trust, mortgage pass-through certificates, series 2005-5, are rated by Fitch Ratings: -- $917,400,000 class A senior certificates 'AAA'; -- $47,400,000 class M1 'AA+'; -- $43,200,000 class M2 'AA+'; -- $29,400,000 class M3 'AA'; -- $20,400,000 class M4 'AA-'; -- $21,600,000 class M5 'A+'; -- $18,000,000 class M6 'A'; -- $19,200,000 class B1 'A-'; -- $13,800,000 class B2 'BBB+'; -- $13,800,000 class B3 'BBB'; -- $9,000,000 class B4 'BBB'; -- $12,000,000 class B5 'BBB-'; -- $13,200,000 class B6 'BB'. The 'AAA' rating on the senior certificates reflects the 23.55% initial credit enhancement provided by the 3.95% class M1, the 3.60% class M2, the 2.45% class M3, the 1.70% class M4, the 1.80% class M5, the 1.50% class M6, the 1.60% class B1, the 1.15% class B2, the 1.15% class B3, the 0.75% class B4, the 1.00% class B5, the 1.10% privately offered class B6, the 1.25% privately offered unrated class B7, and overcollateralization. The initial and target OC is 0.55%. All certificates have the benefit of excess interest. In addition, the ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capability of Ocwen Loan Servicing, LLC as servicer, which is rated 'RPS2' by Fitch. The collateral pool consists of 8,495 fixed- and adjustable-rate mortgage loans and totals $1,200,000,002 as of the cut-off date. Approximately 21.66% of the mortgage loans have fixed interest rates and approximately 78.34% of the mortgage loans have adjustable interest rates. The weighted average original loan-to- value ratio is 79.91%. The average outstanding principal balance is $141,260, the weighted average coupon is 7.684% and the weighted average remaining term to maturity is 355 months. The weighted average credit score is 614. The loans are geographically concentrated in Florida, California and New York. Aegis Mortgage Corporation, the seller, is a privately held mortgage banking company that originates and purchases residential mortgage loans through its wholly owned subsidiaries, Aegis Wholesale Corporation, Aegis Lending Corporation, Aegis Funding Corporation and Aegis Correspondent Corporation. Aegis is headquartered in Houston, Texas. ALLEGHENY ENERGY: Posts $35.7 Million Net Income in Third Quarter ----------------------------------------------------------------- Allegheny Energy, Inc. (NYSE: AYE) reported $35.7 million of consolidated net income for the third quarter of 2005, compared with a $376.8 million net loss for the same period in 2004. To provide a better understanding of core results and trends, Allegheny Energy also reported adjusted financial results, which are non-GAAP financial measures. Adjusted net income from continuing operations was $74.8 million for the third quarter of 2005. The adjusted 2005 results exclude costs of $32.6 million (pre-tax) for the redemption of Allegheny's 10.25% and 13% Senior Notes, a $30.5 million (pre-tax) impairment charge associated with the planned sale of the company's Ohio service territory and insurance proceeds of $11 million (pre-tax) related to the 2004 extended outage at the Hatfield's Ferry power station. Also excluded is a $7.8 million after-tax loss from discontinued operations. For the third quarter of 2004, net income from continuing operations was $50.6 million excluding a $427.5 million after-tax loss from discontinued operations. Impairment charges associated with asset sales. "I am pleased to report that our earnings were up substantially in the third quarter. Increased output from our power plants and higher market prices for power, together with lower recurring interest expense, were the key drivers of our improved results," said Allegheny Energy Chairman, President and Chief Executive Officer Paul J. Evanson. "We completed the sale of our West Virginia natural gas operations and Wheatland peaking facility in the third quarter, and we are running ahead of our debt reduction target. We expect to continue delivering earnings growth well above the industry average next year and beyond." Third Quarter Consolidated Results Income from continuing operations before income taxes and minority interest was $65.3 million for the third quarter of 2005. With the adjustments mentioned, adjusted income from continuing operations before income taxes and minority interest was $117.4 million, an increase of $46.6 million compared with the same period in 2004. Key factors contributing to the improved results include: * Operating revenues increased by $121.8 million compared to the same period in 2004, largely as a result of higher market prices for power, increased power plant output, and the inception of market-based rates for certain commercial and industrial customers in Maryland. * Fuel, purchased power and transmission expense increased by $86.5 million, reflecting higher coal costs, increased fuel consumption due to higher plant output and power purchases at market-based rates in Maryland and Ohio. * Operations and maintenance expense, excluding the insurance proceeds previously mentioned, increased by $2.9 million. The increase reflects higher litigation reserves, largely offset by lower special maintenance spending at power plants and lower costs for insurance and uncollectible accounts. * Interest expense, excluding the debt redemption costs previously mentioned, decreased by $10.9 million. The decrease reflects benefits from debt reduction and debt refinancing. The $30.5 million pre-tax impairment charge on the planned sale of the Ohio service territory includes the estimated value of a related power sale agreement, partly offset by proceeds in excess of the net book value of the assets. Allegheny has agreed to sell power to the buyer at $45 per megawatt-hour from the time of the closing through May 31, 2007. The $45 rate is substantially above Allegheny's current average rate in Ohio, but below current market prices for power. Adjusted earnings from continuing operations before interest, taxes, depreciation and amortization (adjusted EBITDA) for the third quarter of 2005 were $274.2 million, a $31 million increase from the third quarter of 2004. Adjusted EBITDA is a non-GAAP financial measure. Third Quarter Segment Results Delivery and Services The Delivery and Services segment reported income from continuing operations of $10.7 million for the third quarter of 2005, a decrease of $19.5 million compared to the same quarter of the prior year. The decrease was due to the $30.5 million (pre-tax) impairment charge on the Ohio sale and higher litigation reserves, partly offset by improved results from core operations. Operating revenues increased by $41.7 million, reflecting growth in the number of customers and warmer weather compared to the same period in 2004. Kilowatt-hour sales increased by 4.8%. Cooling degree-days for the third quarter of 2005 were 55% higher than the prior year, and 42% above normal. The inception of market-based rates for certain commercial and industrial customers in Maryland affected both revenues and purchased power. Purchased power cost increased by $41.5 million from the prior period. Interest expense decreased by $6.5 million, and income tax expense decreased by $8.4 million. Generation and Marketing The Generation and Marketing segment reported income from continuing operations of $32.7 million for the third quarter of 2005, an increase of $12.1 million compared to the same period in the prior year. Segment results were adversely affected by a $28.6 million increase in interest expense due to the previously mentioned debt redemption costs. Revenues increased by $78.8 million, driven by a 5.7% increase in power plant output and higher prices in the regional power market. Fuel costs increased by $48.4 million due to higher coal prices and increased generation. Operations and maintenance expenses decreased by $15.3 million, primarily as a result of the insurance proceeds. Discontinued Operations For the third quarter of 2005, Allegheny Energy reported an after-tax loss of $7.8 million on discontinued operations, compared to a loss of $427.5 million in the same quarter of the prior year. The 2005 loss reflects the results of the West Virginia natural gas operations and the Gleason generating facility. The 2004 loss was largely due to impairment charges related to Allegheny's decision to sell its Midwestern peaking facilities and West Virginia natural gas operations. All of those sales, with the exception of Gleason, have been completed. Nine-Month Consolidated Results For the first nine months of 2005, Allegheny reported consolidated net income of $59.9 million as compared to a net loss of $383 million for the same period in the prior year. Results for the nine-month period in 2004 reflected a loss from discontinued operations ($431.5 million after tax) and the adverse effect of unplanned outages at the Pleasants and Hatfield's Ferry power stations. Adjusted net income from continuing operations was $146.1 million for the first nine months of 2005, compared to $21.7 million for the same period in the prior year. Adjusted results for both nine-month periods exclude the items detailed in the attached reconciliation of non-GAAP financial measures. Headquartered in Greensburg, Pa., Allegheny Energy -- http://www.alleghenyenergy.com/-- is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service assigned a Senior Implied rating of Ba1 to Allegheny Energy, Inc. and also assigned a Speculative Grade Liquidity Rating of SGL-2. This is the first time that Moody's has assigned both such ratings to AYE. The company's other ratings, including the Ba2 senior unsecured rating, remain unaffected. ALLIANCE ONE: EC Fines Won't Trigger Credit Facility Default ------------------------------------------------------------ Alliance One International, Inc. (NYSE: AOI) obtained an amendment to its senior secured credit facility to clarify that the previously reported fines imposed by the European Commission will not result in an event of default. The Company had previously reported that in connection with the administrative investigation by the Directorate General for Competition of the EC into leaf tobacco buying and selling practices in Italy, the EC decided to impose fines on Alliance One and its present and former Italian subsidiaries, Transcatab and Mindo. The amendment to the senior secured credit facility, which has received approvals from the requisite majority of lenders, makes clear such fines will not result in a default, whether or not paid, discharged, stayed or bonded pending appeal. The Company's previously reported discussions with lenders under the senior secured credit facilities regarding potential amendments to the financial covenants applicable to future periods are ongoing. As reported in the Troubled Company Reporter on Oct. 27, 2005, The European Commission has decided to impose fines on Alliance One International, Inc. and its present and former Italian subsidiaries, Transcatab and Mindo. The decision came after administrative investigation by the Directorate General for Competition of the European Commission into the Company's tobacco buying and selling practices within the leaf tobacco industry in Italy. The EC imposed fines on the Company and Mindo jointly and severally in the aggregate amount of EUR10 million or US$12 million). The EC imposed fines on the Company and Transcatab, a subsidiary of Standard Commercial prior to its merger into the Company earlier this year, jointly and severally in the aggregate amount of EUR14 million or $16.8 million). Discussion with Lenders Under Alliance One's senior secured credit facility, any judgment or decree in excess of $15 million becomes an event of default if not paid, discharged, stayed or bonded pending appeal within ten days. Alliance One is discussing with the administrative agent under the senior secured credit facility an amendment to the credit agreement to clarify that the EC's imposition of these fines is not such a judgment or decree and therefore will not result in an event of default if not paid or bonded within ten days. If for any reason the Company cannot obtain this amendment before the expiration of the ten days, the Company has cash available to pay the fines in a manner that does not limit its rights to appeal so that no event of default will occur. Alliance One -- http://www.aointl.com/-- is a leading independent leaf tobacco merchant. It selects, purchases, processes, stores, packs and ships tobacco grown in over 45 countries, and serves the world's large multinational cigarette manufacturers in over 90 countries. * * * As reported in the Troubled Company Reporter on Oct. 27, 2005, Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating and other ratings on one of the largest independent leaf tobacco processors, Alliance One International, Inc., on CreditWatch with negative implications. ALPHARMA INC: Refinancing Prompts Moody's to Affirm Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Alpharma Inc., including its B2 corporate family rating. At the same time, Moody's withdrew the B1 senior secured bank credit facility ratings of Alpharma Operating Corporation. These rating actions follow the recent announcement that Alpharma has entered a new $210 million senior secured credit agreement to replace its existing 2001 credit agreement. The new credit agreement, unrated by Moody's, consists of: * a $175 million asset-based loan and * a $35 million term loan. The rating affirmation also follows the recent announcement that Alpharma has entered a definitive agreement to sell its global generics business to Actavis Group for $810 million in cash. Alpharma has stated that it expects the transaction with Actavis to close by year-end 2005, and that it intends to use the proceeds from the transaction to repay its existing debt by June 2006. As a result of the refinancing, Alpharma is no longer required to reduce the balance of its 3% Senior Subordinated Notes due 2006 to $10 million by December 1, 2005 -- a requirement under the 2001 credit agreement. The affirmation of Alpharma's B2 rating reflects: * its adequate free cash flow, which has facilitated debt reduction, * its growing presence in the branded pain market with Kadian, * its good position in the active pharmaceutical ingredients business, and * the diversity provided by its animal health segment. However, the rating also reflects the reduced scale and lower cash flow Moody's expects after the divestiture. Moody's views favorably the company's target of eliminating debt and acknowledges the initial improvement in financial flexibility expected upon closing of the Actavis transaction. However, the company has stated it will evaluate potential product acquisitions to complement its product portfolio, which currently consists solely of Kadian. The implications of this strategy for Alpharma's capital structure and credit profile are not yet known. The rating outlook is currently stable. Over time, Alpharma's ratings will depend on its success as a more focused specialty pharmaceutical company, and how its growth strategy affects its capital structure. In the event the transaction with Actavis does not close and Alpharma retains its generic drug business, the rating over time would depend on the business environment for generic pharmaceutical companies, Alpharma's cash flow relative to its debt levels, and its liquidity profile including compliance with financial covenants. The following ratings were affirmed: Alpharma Inc. * B2 corporate family rating, and * B3 8-5/8% guaranteed senior unsecured notes of $220 million due 2011. The following ratings were withdrawn: Alpharma Operating Corporation * B1 guaranteed senior secured revolving credit facility of $150 million maturing 2007; * B1 guaranteed senior secured term loan A maturing 2007; and * B1 guaranteed senior secured term loan B maturing 2008 Moody's does not rate Alpharma's new bank credit facility, or its convertible notes due 2006. Alpharma Inc. is controlled by A.L. Industrier A.S.A, a Norwegian entity that is controlled by Alpharma's chairman E.W. Sissener. A.L. Industrier holds 100% of the class B shares of Alpharma, or about 54% of the total outstanding shares. Alpharma Operating Corporation, a wholly owned direct subsidiary of Alpharma, Inc., headquartered in Fort Lee, New Jersey, is a global pharmaceutical company, which primarily develops, manufactures, and markets generic and branded human pharmaceutical and animal health products. Revenues in 2004 totaled approximately $1.3 billion. AMERIQUEST MORTGAGE: Fitch Rates $19.2 Mil Cert. Classes at Low-B ----------------------------------------------------------------- Ameriquest Mortgage Securities Inc. asset-backed P-T certificates are rated by Fitch Ratings: -- $1.132 billion classes A-1, A-2A - A-2C, AF-1 -AF6 'AAA' -- $93.94 million class M-1 certificates 'AA+'; -- $37.02 million class M-2 certificates 'AA'; -- $12.34 million class M-3 certificates 'AA-'; -- $11.66 million class M-4 certificates 'A+'; -- $13.71 million class M-5 certificates 'A'; -- $8.91 million class M-6 certificates 'A-'; -- $9.60 million class M-7 certificates 'BBB+'; -- $6.86 million class M-8 certificates 'BBB'; -- $11.66 million class M-9 certificates 'BBB-'; -- $11.66 million privately offered class M-10 certificates 'BB+'; -- $7.54 million privately offered class M-11 certificates 'BB'. Credit enhancement for the 'AAA' rated class A certificates reflects the 17.45% credit enhancement provided by classes M-1 through M-11, monthly excess interest and initial overcollateralization of 1.05%. CE for the 'AA+' rated class M-1 reflects the 10.60% CE provided by classes M-2 through M-11, monthly excess interest and initial OC. CE for the 'AA' rated class M-2 reflects the 7.90% CE provided by classes M-3 through M- 11, monthly excess interest and initial OC. CE for the 'AA-' rated class M-3 reflects the 7.00% CE provided by classes M-4 through M-11, monthly excess interest and initial OC. Credit enhancement for the 'A+' rated class M-4 certificates reflects the 6.15% CE provided by classes M-5 through M-11, monthly excess interest and initial OC. In addition, CE for the 'A' rated class M-5 reflects the 5.15% CE provided by classes M-6 through M-11, monthly excess interest and initial OC. CE for the 'A-' rated class M-6 certificates reflects 4.50% CE provided by classes M-7 through M-11, monthly excess interest and initial OC. CE for the 'BBB+' rated class M-7 reflects the 3.80% CE provided by classes M-8 through M-11, monthly excess interest and initial OC. CE for the 'BBB' rated class M-8 reflects the 3.30% CE provided by classes M-9 through M- 11, monthly excess interest and initial OC. CE for the 'BBB-' rated class M-9 reflects the 2.45% CE provided by classes M-10 and M-11, monthly excess interest and initial OC. Furthermore, CE for the non-offered 'BB+' rated class M-10 reflects the 1.60% CE provided by class M-11, monthly excess interest and initial OC. CE for the non-offered 'BB' class M-11 reflects the monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of Ameriquest Mortgage Company as master servicer. Deutsche Bank National Trust Company will act as Trustee. As of the cut-off date, the Group I mortgage loans have an aggregate principal balance of $869,042,778, and the average balance of the mortgage loans is approximately $160,104. The weighted average loan rate is approximately 7.626%. The weighted average remaining term to maturity is 350 months. The weighted average original loan-to-value ratio is 76.78%. The properties are primarily located in California, Florida, New Jersey, Maryland, and New York. All other states represent less than 5% of the Group I pool balance as of the cut-off date. As of the cut-off date, the Group II mortgage loans have an aggregate principal balance of $173,134,322, and the average balance is approximately $342,163. The weighted average loan rate is approximately 7.278%. The weighted average remaining term to maturity is 356 months. The weighted average OLTV ratio is 79.43%. The properties are primarily located in California, New Jersey, New York, Florida, and Massachusetts. All other states represent less than 5% of the Group II pool balance as of the cut- off date. As of the cut-off date, the Group III mortgage loans have an aggregate principal balance of $329,148,793, and the average balance is approximately $190,150. The weighted average loan rate is approximately 6.785%. The weighted average remaining term to maturity is 334 months. The weighted average OLTV ratio is 77.32%. The properties are primarily located in California, New York, Florida, Massachusetts, and Maryland. All other states represent less than 5% of the Group III pool balance as of the cut-off date. The mortgage loans were originated or acquired by Ameriquest Mortgage Company. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. AMERUS GROUP: Fitch Puts BB+ Rating on Perpetual Preferred Stock ---------------------------------------------------------------- Fitch Ratings affirms the 'BBB' long term issuer rating of AmerUs Group Co. as well as the ratings on its outstanding debt. In addition, Fitch affirmed the 'A' insurer financial strength ratings to these AmerUs insurance subsidiaries: AmerUs Life Insurance Co., Indianapolis Life Insurance Co., American Investors Life Insurance Co., and Bankers Life Insurance Co. of New York. The Rating Outlook is Stable. Ratings of AmerUs are supported by good profitability, diverse product offerings with niche positions in indexed life and indexed annuities and good distribution capabilities through a variety of sources. Fitch believes that AmerUs exhibits product design and product hedging capabilities, exemplified in its indexed annuity and life products. Additional strengths include a highly liquid investment portfolio and strong statutory capitalization at the insurance operating subsidiaries, as measured by a consolidated NAIC risk-based capital ratio of 342% of the company action level at June 30, 2005. Ratings concerns include exposure to below investment grade bonds and high operating leverage, which are both larger than similarly-rated peer companies. Further, Fitch believes that as an issuer of indexed products, which are nonregistered with the Securities and Exchange Commission, AmerUs faces potential industry-wide regulatory and market conduct issues regarding distribution, product disclosures, and customer suitability. AmerUs is in the process of settling its California lawsuits, covering all California policyholders, related to one particular wholly-owned marketing organization selling traditional fixed annuities. During the third quarter, AmerUs took a $6.4 million after tax charge and believes this amount to be appropriate to cover all costs for California policyholders. The management team at AmerUs has spent 2005 working on simplifying the capital structure of the company by redeeming hybrid securities. Specifically, proceeds from issuances of senior notes and perpetual preferred securities were used to repay optionally convertible equity-linked accreting notes and bank debt. Pro forma, equity-adjusted, June 30, 2005 debt-to-total capital was less than 17%, comparing favorably to similarly rated companies. Factors that would negatively impact ratings in the AmerUs Group include losses related to significant litigation or damage to AmerUs's competitive position as measured by declining sales or significant surrender activity. AmerUs's fixed-charge coverage was 7.5 times in 2004, eliminating realized/unrealized investment gains from the earnings figure. This level of fixed-charge coverage is considered solid and remains an important component in AmerUs's debt ratings. Fitch expects AmerUs to meet management's guidance for profitability as measured by GAAP ROE of 12%, for leverage as measured by adjusted debt-to-total capital below 25%, and for capitalization as measured by NAIC risk-based capital in excess of 300% of the company action level. AmerUs, an insurance holding company, is headquartered in Des Moines, Iowa, and reported total assets of $24 billion and stockholders' equity of $1.7 billion at June 30, 2005. These issues are affirmed with a Stable Outlook by Fitch: AmerUs Group Co. -- Perpetual preferred stock at 'BB+'; -- Long-term issuer at 'BBB'; -- Senior notes at 'BBB'; -- PRIDES at 'BBB'. AmerUs Capital I -- Trust preferred at 'BB+'. AmerUs Life Insurance Co. -- Insurer financial strength (IFS) at 'A'. Indianapolis Life Ins. Co -- Surplus notes at 'BBB+'; -- IFS at 'A'. American Investors Life Insurance Co. -- IFS at 'A' Bankers Life Insurance Co. of New York -- IFS at 'A'. AMHERST TECHNOLOGIES: Court Converts Ch. 11 Cases to Ch. 7 ---------------------------------------------------------- The Hon. J. Michael Deasy of the U.S. Bankruptcy Court for the District of New Hampshire converted the chapter 11 cases of Amherst Technologies, LLC, and its debtor-affiliates into liquidation proceedings under chapter 7 of the Bankruptcy Code on Oct. 19, 2005. As previously reported in the Troubled Company Reporter, Phoebe Morse, Esq., the U.S. Trustee for Region 1, asked the Bankruptcy Court to appoint an operating chapter 11 Trustee to oversee the Debtors' ongoing bankruptcy. On Oct. 17, 2005, Ms. Morse amended that request and asked in open court that Judge Deasy deem the motion as a motion to convert the Debtors' cases to chapter 7. Ms. Morse's request for appointment of an operating chapter 11 Trustee contained allegations of prepetition and postpetition fraud, incompetence and gross mismanagement of the Debtors' affairs. The Official Committee of Unsecured Creditors had alleged that the Debtors' cases have proceeded based on an undisclosed prepetition agreement that aims to effectively carve up equity in a reorganized debtor for the benefit of the Debtors' management, David Lipson, and IBM Credit, LLC. The Committee argues that the omission skewed the playing field in the Debtors' chapter 11 cases to the disadvantage of unsecured creditors. Headquartered in Merrimack, New Hampshire, Amherst Technologies, LLC -- http://www.amherst1.com/-- offers enterprise class solutions including wired and wireless networking, server and storage optimization implementations, document management solutions, IT lifecycle solutions, Microsoft solutions, physical security and surveillance and complex configured systems. The Company and its debtor-affiliates filed for chapter 11 protection on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W. Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. AMHERST TECHNOLOGIES: Court Sets February 27 as Claims Bar Date --------------------------------------------------------------- The Honorable J. Michael Deasy of the U.S. Bankruptcy Court for the District of New Hampshire set February 27, 2006, as the deadline for all creditors owed money on account of claims arising prior to July 20, 2005, against Amherst Technologies LLL to file proofs of claim. Creditors must file written proofs of claim on or before the February 27 Claims Bar Date and those forms must be sent to: George A. Vannah Clerk of the Bankruptcy Court 1000 Elm Street Suite 1001 Manchester, New Hampshire 03101-1708 Tel: 603-222-2600 Governmental units must file proofs of claim on or before April 17, 2006. Headquartered in Merrimack, New Hampshire, Amherst Technologies, LLC -- http://www.amherst1.com/-- offers enterprise class solutions including wired and wireless networking, server and storage optimization implementations, document management solutions, IT lifecycle solutions, Microsoft solutions, physical security and surveillance and complex configured systems. The Company and its debtor-affiliates filed for chapter 11 protection on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W. Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. AMHERST TECHNOLOGIES: U.S. Trustee Will Meet Creditors on Nov. 28 ----------------------------------------------------------------- The United States Trustee for Region 1 will convene a meeting of Amherst Technologies, LLC's creditors at a.m., on Nov. 28, 2005, at 1000 Elm Street, 7th Floor, Room 702 in Manchester, New Hampshire. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Merrimack, New Hampshire, Amherst Technologies, LLC -- http://www.amherst1.com/-- offers enterprise class solutions including wired and wireless networking, server and storage optimization implementations, document management solutions, IT lifecycle solutions, Microsoft solutions, physical security and surveillance and complex configured systems. The Company and its debtor-affiliates filed for chapter 11 protection on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W. Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. APCO LIQUIDATING: Bell Boyd as Special Environmental Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved Apco Liquidating Trust and APCO Missing Stockholder Trust's request to employ Bell, Boyd & Lloyd, L.L.C., as their special environmental counsel. The Debtors want to employ Bell Boyd as their special environmental counsel because the law firm: (a) has extensive knowledge of the Debtors' assets, affairs and businesses in light of Bell Boyd's services as primary environmental counsel to the Debtors for the past six years; (b) has significant experience and knowledge in the fields of environmental compliance, transaction and enforcement matters; and (c) is well qualified to represent the Debtors as debtors-in- possession. Bell Boyd will advise the Debtors specifically with respect to: (a) various legal services relating to litigation in the U.S. District Court for the District of Kansas, captioned City of Wichita Kansas v. Aero Holding, Inc., Case No. 96-1360-MLB; (b) various legal services relating to Travelers Insurance Company's obligations to cover defense costs of the Wichita Litigation; and (c) prosecution of objections to claims based on alleged environmental liability. The Debtors believe that Bell Boyd's services will provide will complement, not duplicate, the services provided by Richards, Layton & Finger, P.A., the Debtors' general counsel. Neal H. Weinfield, Esq., a member at Bell, Boyd & Lloyd, L.L.C., disclosed that the Firm received a $100,000 prepetition retainer. The current hourly rates of the professionals who will work in the engagement are: Professional Hourly Rate ------------ ----------- Neal H. Weinfield, Esq. $435 Bruce Lithgow, Esq. $400 Richard E. Hill, Esq. $390 Jay Truty, Esq. $260 The Debtors believe that Bell, Boyd & Lloyd, L.L.C., is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Oklahoma City, Oklahoma, Apco Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The Debtors filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). Gregory P. Williams, Esq., John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. APCO LIQUIDATING: Richards Layton Approved as Bankruptcy Counsel ---------------------------------------------------------------- Apco Liquidating Trust and APCO Missing Stockholder Trust sought and obtained the U.S. Bankruptcy Court for the District of Delaware's permission to employ Richards, Layton & Finger, P.A., as their bankruptcy counsel. The Debtors selected Richards Layton because of the Firm's expertise, experience, and knowledge. Also, the Firm has rendered legal services and advice to the Trustees since 1978. Richards Layton will: (a) advise the Debtors of their rights, powers and duties as debtors and debtor-in-possession; (b) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; (c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; and (d) perform all other necessary legal services in connection with the Debtors' cases. John H. Knight, Esq., a director at Richards, Layton & Finger, P.A., disclosed that the Firm received a $100,000 prepetition retainer. The current hour rates of professionals who will work in the engagement: Professionals Hourly Rate ------------- ----------- Gregory P. Williams, Esq. $510 John H. Knight, Esq. $445 Rebecca L. Booth, Esq. $305 Amy L. Rude $155 Mr. Knight assures the Court that Richards, Layton & Finger, P.A., is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Oklahoma City, Oklahoma, Apco Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The Debtors filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. ARLINGTON HOSPITALITY: Sells Assets to Sunburst for $21.3 Million ----------------------------------------------------------------- Arlington Hospitality, Inc. (HOST.PK), entered into a definitive asset purchase agreement to sell substantially all of its assets to Sunburst Hospitality Development Inc. for approximately $21.3 million (subject to certain adjustments), including cash of approximately $6.25 million and the assumption of the mortgage debt on the hotel assets to be purchased. The Agreement is subject to the bidding procedures of the Chapter 11 proceeding pending in the U.S. Bankruptcy Court for the Northern District of Illinois for Arlington and its subsidiaries. Asset Purchase Agreement As part of the Agreement, Sunburst agrees to purchase Arlington's rights in certain contracts, leases and agreements, including the development agreement, royalty sharing agreement and the individual hotel franchise agreements between certain debtors and affiliates of the Cendant Corporation (NYSE: CD). The Agreement contemplates the purchase of: * 10 wholly-owned hotels, * ownership interests in four hotel joint ventures, * the Cendant Agreements, and * certain other assets. Certain Arlington assets have been excluded from the Agreement, including: * four wholly owned hotels, * the company's corporate headquarters office building, and * certain hotel joint venture ownership interests, all of which remain offered for sale. The Agreement contemplates the auction of the assets pursuant to Section 363 of Title 11 of the U.S. Bankruptcy Code and the bidding procedures order entered by the Bankruptcy Court on October 12, 2005, with Sunburst Hospitality having been qualified as the "stalking horse" bidder for substantially all the assets of Arlington. The Agreement calls for the payment of a break up fee of 2% of the purchase price in certain circumstances if a sale to another purchaser is consummated. In order to participate in the auction process, each potential bidder must be "qualified" and submit a bid by Nov. 10, 2005 to Richard Morgner, Chanin Capital Partners (330 Madison Avenue, 11th Floor, New York, NY, 10017 (212) 758-2629; rmorgner@chanin.com) no later than 11 a.m. CST, as established by the Bankruptcy Court. The auction will be held on Nov. 14, 2005 at 11 a.m. CST in Chicago, Ill. Bids can also be qualified and accepted for the assets excluded from the Sunburst Agreement, including certain individual hotel assets, the office building, and certain joint venture ownership interests. The company has engaged Cohen Financial to assist in the sale of the office building, as approved by the Court. Parties interested in purchasing the office building, or submitting a bid for the office building at the auction, should contact Richard Tannenbaum, managing director for Cohen, at (312) 803-5689, rtannenbaum@cohenfinancial.com; or Jon Simon, managing director, at (312) 803-5107, jsimon@cohenfinancial.com. Consummation of the transaction contemplated by the Agreement is subject to higher and better offers, approval of the Bankruptcy Court and customary closing conditions. Cendant Stipulation On Oct. 26, 2005, the Bankruptcy Court also approved a Stipulation and Order between the Chapter 11 debtors and affiliates of Cendant. The stipulation and order provides, among other things, that Cendant and its affiliates agree not to object to the debtors' assignability of the Cendant Agreements. The Cendant parties also agree to provide Arlington with potential modifications to the development agreement that, if acceptable to Arlington, could be presented to potential bidders in an effort to maximize the value to all stakeholders. Sunburst Hospitality, based in Silver Spring, Maryland, is a diversified real estate owner and operator, with interests in hotels, golf course and residential developments, multi-family communities and self-storage properties. Currently, Sunburst Hospitality's hotel portfolio includes 30 hotels with approximately 4,500 rooms in 16 states. Headquartered in Arlington Heights, Illinois, Arlington Hospitality, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor- affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARMSTRONG WORLD: Balance Sheet Upside-Down by $1.35B at Sept. 30 ---------------------------------------------------------------- Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ), reported third quarter 2005 net sales of $937.0 million that were 4.9% higher than third quarter net sales of $893.5 million in 2004. Excluding the effects of favorable foreign exchange rates of $2.8 million, consolidated net sales increased by 4.5%. Operating income of $66.5 million was recorded for the third quarter of 2005 compared to $48.2 million in the third quarter of 2004. The increase in operating income was primarily due to increased sales volume and selling prices and improved manufacturing productivity, which offset inflationary cost pressures and higher SG&A expenses. Resilient Flooring Resilient Flooring net sales were $311.5 million in the third quarter of 2005 and $308.1 million in the third quarter of 2004. Excluding the favorable impact of foreign exchange rates, net sales increased 0.5%. Operating income of $7.7 million was recorded for the quarter compared to operating income in the third quarter of 2004 of $10.8 million. Operating income for the third quarter declined due to inflationary cost pressures, especially on raw materials, higher charges for cost reduction initiatives and increased expenses for environmental matters at a formerly owned site. These items more than offset the benefits of selling price increases, production efficiencies, a gain from the settlement of a breach of contract dispute and $2.4 million of proceeds received from a business interruption insurance claim. Wood Flooring Wood Flooring net sales of $220.2 million in the third quarter of 2005 increased 5.2% from $209.4 million in the prior year. Units sold of pre-finished solid wood floors increased by approximately 10% in the third quarter primarily due to strong sales to home center retailers. Units sold of engineered hardwood floors increased 14% in the third quarter primarily due to continued strong overall demand. Net sales in the third quarter were negatively impacted by price declines, which were made in response to declining lumber prices and competitive pressures. Operating income was $25.7 million in the third quarter of 2005 compared to $7.1 million in the third quarter of 2004. The increase was due to higher sales volume, declines in lumber prices, improved manufacturing productivity and a gain from the settlement of a breach of contract dispute, that more than offset lower selling prices and non-lumber inflationary cost pressures. Textiles and Sports Flooring Textiles and Sports Flooring net sales in the third quarter of 2005 increased to $79.7 million from $70.0 million in 2004. Excluding the effects of favorable foreign exchange rates, sales were up 13.7% due to higher volume of carpet tiles and outdoor sports flooring. Operating income of $3.2 million was recorded in 2005 compared to operating income in 2004 of $2.8 million. The 2005 operating income increased from 2004 as the impact of higher sales volume offset raw material inflation. Building Products Building Products net sales of $268.2 million in the third quarter of 2005 increased from $250.2 million in the prior year. Excluding the effects of favorable foreign exchange rates, sales increased by 6.8%, primarily due to higher selling prices and favorable product mix. Operating income increased to $43.1 million from operating income of $40 million in the third quarter of 2004. The increase was primarily due to higher equity earnings from WAVE and the impact of sales volume gains. Inflationary cost pressures offset most of the impact of higher selling prices. Cabinets Cabinets net sales in the third quarter of 2005 of $57.4 million increased from $55.8 million in 2004. Net sales increased due to improved product mix, primarily due to new product introductions and higher selling prices, partially offset by lower volume and decreased installation revenue. An operating loss of $0.3 million was recorded in 2005 compared to operating income of $2.8 million in the prior year. The decline was due to manufacturing inefficiencies in other plants resulting from the transfer of production from a plant closed in 2004 and higher SG&A expenses (primarily consulting costs), partially offset by the impact of improved product mix and higher selling prices. Year-to-Date Results For the nine-month period ending September 30, 2005, net sales were $2,696.7 million, an increase of 2.1% from the $2.64 billion reported for the first nine months of 2004. Increases were reported in the Wood Flooring, Textiles and Sports Flooring, and Building Products segments, while the Resilient Flooring and Cabinets segments reported decreases. Excluding the favorable impact of foreign exchange rates, consolidated net sales increased 0.8%. Operating income in the first nine months of 2005 was $110.8 million. This compares to operating income of $91 million for the first nine months of 2004. 2004 results include a non-cash charge of $60 million to reflect a goodwill impairment loss related to the European resilient flooring reporting unit. Excluding this non-cash charge results in an adjusted operating income of $151 million in 2004. The decline in adjusted operating income was primarily due to higher raw material, energy and transportation costs, significantly increased charges for cost reduction initiatives, higher SG&A expenses and manufacturing inefficiencies in our Cabinets business. As of September 30, 2005, the Company's balance sheet reflects a $1.35 billion equity deficit. A full-text copy of Armstrong's 3rd Quarter 2005 Financial Results on Form 10-Q is available for free at: http://ResearchArchives.com/t/s?29e Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, 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 $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Gets Court Nod to Assume RPK Capital Engine Lease --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana gave ATA Airlines, Inc., permission to assume an unexpired personal property lease with RPK Capital V, L.L.C., successor-in- interest to Provident Commercial Group, Inc. As previously reported in the Troubled Company Reporter on October 5, 2005, ATA Airlines leased one Rolls Royce RB 211-535E4 engine and two BF Goodrich (Rohr) thrust reverser halves under an agreement dated December 28, 1998. Jeffrey J. Graham, Esq., at Sommer Barnard Attorneys, PC, in Indianapolis, Indiana, relates that as of the Petition Date the Debtor was not in default in the payment of the basic rent under the lease. The Debtor has continued to utilize the Engine postpetition in its flight operations. ATA Airlines finds it necessary to retain the Engine going forward as the Debtor may be adding additional Boeing 757-200 aircraft to its fleet and the terms of the Lease are at or better than the cost for ATA to obtain a replacement engine. 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. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) BANC OF AMERICA: Fitch Places Low-B Ratings on $1.7M Cert. Classes ------------------------------------------------------------------ Banc of America Funding Corporation mortgage pass-through certificates, series 2005-6, are rated by Fitch Ratings: -- $472,107,912 classes 1-A-1 through 1-A-10, 1-A-R, 30-IO, 30-PO, 2-A-1 through 2-A-13 'AAA' 'senior certificates'; -- $8,544,000 class B-1 'AA'; -- $2,930,000 class B-2 'A'; -- $1,952,000 class B-3 'BBB'; -- $977,000 class B-4 'BB'; -- $732,000 class B-5 'B'. The 'AAA' rating on the senior certificates of group 1 reflects the 3.30% subordination provided by the 1.75% class B-1, the 0.60% class B-2, the 0.40% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.20% privately offered class B-6. The ratings on class B-1, B-2, B-3, B-4, and B-5 certificates reflect each certificate's respective level of subordination. Class B-6 is not rated by Fitch. Fitch believes the amount of credit enhancement will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral purchased by Banc of America Funding Corporation, the integrity of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, N.A. The collateral consists of 918 fully amortizing, fixed interest rate, first lien mortgage loans, with original weighted averaged terms to maturity of 360 months. The aggregate unpaid principal balance of the pool is $488,220,063.20 as of Oct. 1, 2005, and the average principal balance is $531,830.13. The weighted average original loan-to-value ratio of the loan pool is approximately 65.97%; approximately 2.90% of the loans have an OLTV greater than 80%. In addition, the weighted average coupon of the mortgage loans is 5.889% and the weighted average FICO score is 736. Cash-out and rate/term refinance loans represent 30.84% and 26.15% of the loan pool, respectively. The states that represent the largest geographic concentration are California, New York and New Jersey. All other states represent less than 5% of the outstanding balance of the pool. 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, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings Web site at http://www.fitchratings.com/ BAFC, a special purpose corporation, purchased the mortgage loans from CitiMortgage, Inc., GMAC Mortgage Corporation, National City Mortgage Co., PHH Mortgage Corporation, Residential Funding Corporation, SunTrust Mortgage Corporation, Washington Mutual Bank, and Wells Fargo Bank, N.A. and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. Wells Fargo Bank, N.A. will serve as master servicer and as securities administrator. Wachovia Bank, N.A. will serve as trustee and custodian. For federal income tax purposes, an election will be made to treat the trust as three separate real estate mortgage investment conduits. BEAR STEARNS: Fitch Rates $51 Million Certificate Classes at Low-B ------------------------------------------------------------------ Bear Stearns Commercial Mortgage Securities Trust, series 2005-TOP20, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $126,750,000 class A-1 'AAA'; -- $189,450,000 class A-2 'AAA'; -- $176,000,000 class A-3 'AAA'; -- $142,600,000 class A-AB 'AAA'; -- $954,956,000 class A-4A 'AAA'; -- $130,816,000 class A-4B 'AAA'; -- $147,699,000 class A-J 'AAA'; -- $2,072,978,628 class X 'AAA'; -- $15,548,000 class B 'AA+'; -- $20,730,000 class C 'AA'; -- $15,547,000 class D 'AA-'; -- $28,503,000 class E 'A'; -- $18,139,000 class F 'A-'; -- $18,139,000 class G 'BBB+'; -- $23,321,000 class H 'BBB'; -- $18,138,000 class J 'BBB-'; -- $5,183,000 class K 'BB+'; -- $7,773,000 class L 'BB'; -- $7,774,000 class M 'BB-'; -- $2,591,000 class N 'B+'; -- $2,591,000 class 0 'B'; -- $5,183,000 class P 'B-'; -- $15,547,628 class Q 'NR'; -- $20,000,000 class LF 'B'. Class Q is not rated by Fitch Ratings. Classes A-1, A-2, A-3, A- AB, A-4A, A-4B, A-J, B, C, D, and E are offered publicly, while classes X, F, G, H, J, K, L, M, N, O, P, Q, and LF are privately placed pursuant to rule 144A of the Securities Act of 1933. With the exception of the LF certificates, the certificates represent beneficial ownership interest in the trust, primary assets of which are 221 fixed rate loans having an aggregate principal balance of approximately $2,072,978,628, as of the cutoff date. The LF certificates represent a non-pooled interest in a subordinate note secured by Lakeforest Mall. The rating for the class LF certificates addresses the likelihood of the ultimate payment of principal and interest to holders thereof on or before the Rated Final Maturity Date of all payments to which they are entitled. For a detailed description of Fitch's rating analysis, please see the report titled 'Bear Stearns Commercial Mortgage Securities Trust, Series 2005-TOP20', dated Oct. 12, 2005 and available on the Fitch Ratings Web site at http://www.fitchratings.com/ BLOUNT INT'L: Equity Deficit Narrows to $201.43 Mil. at Sept. 30 ---------------------------------------------------------------- Blount International, Inc. [NYSE: BLT], reported results for the third quarter ended September 30, 2005. Sales for the third quarter of 2005 were $186.7 million, a 7.5% increase from last year's third quarter. Sales were strongest in the Industrial and Power Equipment segment with a 26.6% increase from last year, while third quarter Outdoor Products segment sales declined slightly from last year. Overall, operating income was $30 million in this year's third quarter compared to $31.1 million last year. Net income in this year's third quarter was $16 million compared to a net loss of $31.8 million last year. This year's third quarter includes a $1.3 million charge for the early extinguishment of debt and a $0.6 million tax charge related to the Company's intent to repatriate international earnings under the provisions of the American Jobs Creation Act. Last year's third quarter loss included a $42.8 million charge related to an August 2004 debt refinancing. Year to Date Results Sales for the first three quarters of 2005 were $565.7 million, an 11.2% increase from the comparable period last year. Operating income increased to $90.1 million this year compared to $86.8 million last year. Net income was $50.4 million in the first nine months of this year compared to a net loss of $15.8 million for the same period last year. This year's net income includes a $1.7 million charge for the early extinguishment of debt and $0.6 million charge for the intended repatriation of foreign earnings. Last year's net loss included a $42.8 million charge related to the August 2004 refinancing. Commenting on the Company's results, James S. Osterman, Chairman and Chief Executive Officer, stated: "We continued to experience good top line growth in the third quarter, although at a lesser rate than during the first half of the year. The Industrial and Power Equipment segment achieved sales growth of over 26% through higher domestic and international unit sales, as well as increased selling prices. The Outdoor Products segment gained some incremental domestic replacement sales of chainsaw products during September following the hurricanes in the southeast, but these gains were offset by lower year over year sales in other regions. The Company's operating margin increased to 16.1% of sales in the third quarter from 15.7% in this year's second quarter. Adverse foreign currency trends and continued high steel costs limited additional operating margin improvement. The Company's manufacturing operations in Canada and Brazil, which account for about 15% of the Company's total cost base, were negatively impacted by approximately $0.8 million in currency fluctuations as compared to this year's second quarter and $1.7 million as compared to last year's third quarter. Demand for wood cutting products in the hurricane region was dampened by the short-term effects of power outages, sawmill closures and the inability of people to get to the damaged timber as a result of the severity of the storms. In the fourth quarter, we expect demand for our products in the hurricane region to increase, although this will be somewhat offset by weaker sales of chainsaw products in other geographical regions. Nonetheless, we expect this year's unprecedented hurricane season to have a positive impact on North American saw chain demand through the first half of 2006. The Company estimates that full year 2005 sales will be between $750 million and $755 million, with operating income between $118 million and $120 million. Fourth quarter sales are estimated to range between $184 million and $189 million, with operating income estimated to be between $28 million and $30 million. Estimated full year net income of $65 million to $67 million includes $3.3 million expense for the early repayment of debt and $0.6 million income tax expense for the repatriation of foreign earnings. Blount International, Inc. -- http://www.blount.com/-- is a diversified international company operating in three principal business segments: Outdoor Products, Industrial and Power Equipment and Lawnmower. Blount International, Inc., sells its products in more than 100 countries around the world. As of Sep. 30, 2005, the Company's equity deficit narrowed to $201,428,000 from a $256,154,000 equity deficit at Dec. 31, 2004. BROKERS INC: Courts Extends Solicitation Period to December 1 ------------------------------------------------------------- The Honorable Catharine R. Carruthers of the U.S. Bankruptcy for the Middle District of North Carolina further extended until Dec. 1, 2005, the period within which Brokers Inc. may solicit acceptances of its Amended Plan of Liquidation. The Debtor submitted its Amended Plan of Liquidation with an accompanying Amended Disclosure Statement to the Court on Aug. 19, 2005. The Debtor reminds the Court that its period to solicit plan acceptances was originally extend to Aug. 22, 2005. The Debtor originally asked for the extension in order to assess certain environmental concerns which the Debtor believed would impact its Disclosure Statement and Plan. The Debtor tells the Court it has discovered that it will not be able to resolve its environmental concerns at any point in the near future. The Debtor says that the resolution of its environmental concerns will be an ongoing matter that will most likely continue well after any Plan of Liquidation is confirmed. The Debtor discloses however that it is presently holding funds in a sum sufficient to pay in full all creditors with allowed priority claims and anticipates that it will generate additional proceeds from the liquidation of its properties in a sum sufficient to: * pay in full all undisputed unsecured claims, or * place in reserve funds sufficient to satisfy all disputed unsecured claims. The Debtor further tells the Court that on a cumulative basis, the Debtor's income-producing real properties are continuing to generate gross rents in excess of operating expenses. 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. CERVANTES ORCHARDS: Hires Messrs. Fischer and Johnston as Counsel ----------------------------------------------------------------- Cervantes Orchards and Vineyards, LLC, asks the U.S. Bankruptcy Court for the Eastern District of Washington for permission to employ Francois L. Fischer, Esq., at Fischer Law Offices and R. Bruce Johnston, Esq., at the Law Offices of R. Bruce Johnston as its bankruptcy counsel. Mr. Fischer will coordinate with Mr. Johnston in representing the Debtor in matters concerning the administration and litigation of the chapter 11 case. Professionals from Messrs. Johnston and Fischer's firms bill for their services by the hour: Designation Billing Rate ----------- ------------ Attorneys $140 - $225 Associates $75 - $140 Paralegals $55 - $75 To the best of the Debtor's knowledge, both law firms are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Sunnyside, Washington, Cervantes Orchards and Vineyards LLC, filed for chapter 11 protection on Aug. 19, 2005 (Bankr. E.D. Wash. Case No. 05-06600). R. Bruce Johnston, Esq., at Law Offices of R. Bruce Johnston represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. CHARLES BRIGGS: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Charles W. Briggs 3097 Willow Avenue #10 Clovis, California 93612 Bankruptcy Case No.: 05-62659 Type of Business: The Debtor is an affiliate of A Partners LLC and the Ronald Allison Family Trust, which own the Helm Building, a 10-story building with over 55,000 square feet of office space available for rent. See http://www.apartnersllc.com/ A Partners LLC and the Ronald Allison Family Trust filed for chapter 11 protection on October 28, 2005 (Bankr. E.D. Calif. Case No. 05-62656). Chapter 11 Petition Date: October 28, 2005 Court: Eastern District of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Michael Terry Hertz, Esq. Lang, Richert & Patch P.O. Box 40012 Fresno, California 93755-0012 Tel: (559) 228-6700 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Scripps Investments & Loans Unknown 484 Prospect Street La Jolla, CA 92037 Lexus Financial Unknown P.O. Box 60116 City of Industry, CA 91716 Willow Complex Unknown 3097 Willow Avenue Clovis, CA 93612 Discover Card Unknown P.O. Box 15156 Wilmington, DE 19850-5156 Washington Mutual Unknown Legal Department 1201 Third Avenue Seattle, WA 98101 CHARLES RIVER: Earns $32.1 Million of Net Income in Third Quarter ----------------------------------------------------------------- Charles River Laboratories International, Inc. (NYSE:CRL), reported third-quarter 2005 financial results. Net sales for the third quarter of 2005 increased 55.6% to $273.9 million, compared to $176 million reported in the third quarter of 2004. The increase was due primarily to the acquisition of Inveresk Research Group, and also to continuing strong demand for outsourced preclinical services. Net income on a GAAP basis was $32.1 million in the third quarter of 2005, compared to $25.8 million in the third quarter of 2004. On a non-GAAP basis, net income for the third quarter increased 61.5% to $41.7 million, compared to $25.8 million in the third quarter of 2004. Non-GAAP results in the third quarter of 2005 exclude amortization of intangibles of $13.2 million and compensation charges of $1.3 million related to the acquisition of Inveresk. James C. Foster, Chairman, President and Chief Executive Officer said, "Third-quarter sales of outsourced preclinical toxicology services and North American Research Models were strong, but overall growth was hampered by lower sales of large animals, lower demand for transgenic services in the United States and slower sales of interventional and surgical services, and of research models in Europe. Although sales growth was lower than we expected, our continuing focus on operating efficiency and the success of our integration efforts again allowed us to achieve excellent sequential operating margin improvement in the Preclinical and Clinical business segments. In addition, we are taking a number of actions in the fourth quarter that we expect will allow us to continue to improve operating efficiency, and expect to see the benefits of these actions in the fourth quarter and in 2006." "We continue to believe that our extensive portfolio of value-added, essential products and services is extremely well positioned to benefit from the strong demand for drug discovery and development products and services, and are adding capacity and personnel to support our growth in the coming years," he said. For the first nine months of 2005, net sales increased 57.1% to $831.1 million from $528.9 million for the same period in 2004. Net income on a GAAP basis was $91.6 million in the nine-month period in 2005, compared to $69.7 million in the nine-month period in 2004. On a non-GAAP basis, net income for the year-to-date increased 62.7% to $122.9 million, compared to $75.5 million in the same period in 2004. Non-GAAP results in the first nine months of 2005 exclude amortization of intangibles of $39.7 million and compensation charges of $7.1 million related to the acquisition of Inveresk. Non-GAAP results in the first nine months of 2004 exclude a net charge of $5.8 million related to the write-off of a deferred tax asset and release of a related tax valuation allowance in connection with the Company's reorganization of its European operations. Fourth-Quarter Actions In order to improve overall operating efficiency, and particularly with respect to the Interventional and Surgical Services (ISS), Transgenic Services, and Clinical Services businesses, the Company will take a one-time, primarily non-cash charge in the fourth quarter of 2005 for impairment of fixed assets, intangible assets and lease obligations and for severance costs related to headcount reductions. The most significant of these actions will be the planned closure of Preclinical Services Wisconsin, one of the Company's two ISS facilities. The total ISS business, which is expected to report net sales in 2005 of approximately $20 million, will be consolidated with the Company's Massachusetts location. Also in the fourth quarter of 2005, the Company expects to repatriate up to $150 million of its accumulated income earned outside the United States in a distribution that qualifies for the reduced tax rate under the American Jobs Creation Act of 2004. As a result of this repatriation, the Company expects that it will recognize a one-time net tax benefit conservatively estimated at $15 million. 2005 Outlook For the fourth quarter of 2005, the Company expects net sales to increase between 19% and 22%, and including the net benefit of one-time items, expects GAAP earnings per diluted share to be in a range of $0.53 to $0.55. Non-GAAP earnings per diluted share, which exclude acquisition-related amortization of intangible assets and compensation charges totaling $0.14 per diluted share, and the one-time net benefit of approximately $0.11 per diluted shares, are expected to be in a range of $0.56 to $0.58. The Company now expects 2005 revenue growth in a range of 43% to 46% and GAAP earnings per diluted share in a range of $1.81 to $1.83. Non-GAAP earnings, which exclude acquisition-related amortization of intangible assets and compensation charges totaling $0.56 per diluted share and the one-time net tax benefit of approximately $0.11 per diluted share, are expected to be in a range of $2.26 to $2.28 per diluted share. Charles River Laboratories International, Inc., sells pathogen-free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models--rats and mice bred for preclinical experiments, including transgenic "knock out" mice--to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. * * * Moody's Investors Service assigned Ba1 ratings to the credit facilities of Charles River Laboratories International, Inc. Moody's also assigned a Ba1 Senior Implied Rating, a Ba2 Senior Unsecured Issuer Rating, and a Speculative Grade Liquidity Rating of SGL-1 to the company. Moody's said the rating outlook for the company is stable. Assigned Ratings: * $150 Million Revolving Credit Facility -- Ba1 * $400 Million Term Loan A -- Ba1 * Senior Implied Rating -- Ba1 * Senior Unsecured Issuer Rating -- Ba2 * Speculative Grade Liquidity Rating -- SGL-1 * Outlook - stable Standard & Poor's Ratings Services assigned a BB+ corporate credit rating for Charles River Laboratories International Inc. At the same time, Standard & Poor's placed a BB senior unsecured debt rating on the company. S&P said the outlook is stable. CHEMTURA CORP: Posts $118.9 Million Net Loss in Third Quarter ------------------------------------------------------------- Chemtura Corporation (NYSE: CEM) reported a loss from continuing operations for the third quarter of 2005 of $120.3 million and pro forma adjusted earnings from continuing operations of $40.7 million. Earnings (loss) per share from continuing operations and pro forma adjusted earnings per share from continuing operations for the third quarter of 2005 both include a positive effect from the impact of harmonizing accounting methods for manufacturing variances following the July 1, 2005, merger of Great Lakes Chemical Corporation and the Company. Pro forma adjusted earnings from continuing operations for the third quarter of 2005 exclude pre-tax costs related to the merger, consisting of the write-off of in-process research and development of $75.4 million, the impact of purchase accounting relating to inventory of $37.1 million and merger costs of $19.4 million. Other pre-tax items excluded from pro forma adjusted earnings from continuing operations are a loss on the early extinguishment of debt of $10.9 million, antitrust costs of $6.7 million, direct expenses due to Hurricanes Katrina and Rita of $4.6 million and facility closure, severance and related costs of $0.2 million. The third quarter 2004 loss from continuing operations was $44.9 million or $0.39 per share. Pro forma adjusted earnings from continuing operations for the third quarter of 2004 were $19.3 million or $0.08 per share. Pro forma adjusted earnings from continuing operations exclude pre-tax charges of $40.2 million for facility closure, severance and related costs, $10.4 million of costs related to a fire at the Company's Conyers, Georgia facility, $8.4 million for antitrust costs, $3.1 million in additional depreciation related to a change in useful life for computer software, $1.7 million for executive termination costs and a $20.1 million loss on the early extinguishment of debt. The net loss for the third quarter of 2005 was $118.9 million compared with a net loss of $40.7 million in the third quarter of 2004. Discontinued operations for the third quarter of 2005 included a gain of $1.4 million primarily due to the settlement of certain contingencies related to the July 2003 sale of the Company's OrganoSilicones business. Reported income tax expense for the third quarter of 2005 reflects a $19.3 million tax charge for a dividend under the Foreign Earnings Repatriation provisions of the 2004 American Jobs Creation Act and no tax benefit for in-process research and development related to the merger. Actual and Pro Forma Net Sales and Pro Forma Adjusted Non-GAAP Operating Profit Third quarter 2005 net sales of $918.4 million were $344.4 million above the third quarter 2004 net sales of $574.0 million. The increase was primarily due to $413.8 million in additional sales resulting from the merger. On a pro forma basis, after giving effect to the merger, third quarter 2005 net sales were $47.4 million or 5 percent less than pro forma third quarter 2004 net sales of $965.9 million. The decrease was a result of 12 percent lower volume and a 4 percent decrease from the deconsolidation of the Company's Polymer Processing Equipment business unit, partially offset by an 11 percent increase in selling prices and a 1 percent increase from foreign currency translation. Operating loss for the third quarter of 2005 was $47.8 million as compared with an operating loss of $15.8 million for the third quarter of 2004. On a non-GAAP basis, third quarter 2005 adjusted operating profit of $95.6 million was $32.4 million or 51% higher than third quarter 2004 pro forma adjusted operating profit of $63.2 million. As compared with prior year, on a pro forma adjusted basis, third quarter price increases and cost savings more than offset raw material and energy cost increases and lower volumes. Net sales for the first nine months of 2005 were $2,110.5 million as compared with $1,710.9 million for the first nine months of 2004. For the first nine months of 2005, pro forma net sales, after giving effect to the merger, of $3,022.3 million were 4% or $118.4 million higher than the $2,903.9 million of pro forma net sales for the first nine months of 2004. Operating profit for the first nine months of 2005 was $62.9 million as compared with $17.6 million for the first nine months of 2004. On a non-GAAP basis, pro forma adjusted operating profit of $313.1 million was $149.5 million or 91% higher than the $163.6 million of pro forma adjusted operating profit for the first nine months of 2004. As compared with prior year, on a pro forma adjusted basis, nine month year-to-date price increases and cost savings more than offset the effect of lower volumes and raw material and energy cost increases. "While I am disappointed in our execution this quarter, pro forma adjusted year-over-year comparisons demonstrate that our focus on raising prices to cover rising raw material and energy costs is taking us in the right direction," said Robert L. Wood, chairman and chief executive officer. "Even though some of our businesses did not meet their targets for the quarter, we saw modest improvement in September. On a positive note, we continue to exceed targets for cost savings. Last year we committed to savings of $12.5 million per quarter in 2005 from headcount reductions taken largely in 2004. This quarter we exceeded our commitment, delivering over $13 million from this pre-merger program. We have achieved cost savings in the third quarter of approximately $29 million, including $9 million in operations and other efficiencies and $7 million of merger-related synergies, mainly from headcount reductions. Realizing $7 million in merger-related synergies this quarter puts us on track to exceed the $10 million synergy target we set for 2005. "While the balance of the year will be difficult, we remain relentlessly focused on integration, synergy savings and business improvement. As volatility in the raw material and energy environment continues, we will be steadfast in our efforts to manage pricing and cost in order to achieve our goal of 15% operating margins. Although we have work left to do, I am confident that our actions will yield continued performance improvement." Chemtura Corporation -- http://www.chemtura.com/-- is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Headquartered in Middlebury, Connecticut, the company has approximately 7,300 employees around the world. * * * As reported in the Troubled Company Reporter on Sept. 26, 2005, Moody's Investors Service affirmed the ratings of Chemtura Corporation (Chemtura -- Corporate Family Rating of Ba1) and changed the outlook on the company's ratings to negative from stable. Ratings affirmed: * Corporate Family Rating -- Ba1 * Senior Unsecured Notes due 2012, $375 million -- Ba1 * Senior Unsecured Floating Rate Notes due 2010, $225 million -- Ba1 * Senior Unsecured Notes, $260 million due 2023 and 2026 -- Ba1 * Senior Unsecured Notes, $10 million due 2006 -- Ba1 * Senior Unsecured Notes, $400 million due 2009 -- Ba1 As reported in the Troubled Company Reporter on July 7, 2005, Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB+' from 'BB-', on Chemtura Corp. (fka Crompton Corp.). The ratings are removed from CreditWatch with positive implications, where they were placed on March 9, 2005. The outlook is stable. The rating actions follow Middlebury, Connecticut-based Chemtura's recently completed acquisition of Great Lakes Chemical Corp. for approximately $1.6 billion in common stock, plus the assumption of debt. The upgrades reflect an immediate strengthening of Chemtura's business mix and cash flow protection and debt leverage measures as a result of the equity-financed acquisition of a much higher-rated company. CHI-CHI'S: Judge Baxter Approves Amended Disclosure Statement ------------------------------------------------------------- The Honorable Randolph Baxter of the U.S. Bankruptcy Court for the District of Delaware approved the adequacy of the Amended Disclosure Statement explaining the First Amended Joint Plan of Liquidation filed by Chi-Chi's Inc., and its debtor-affiliates and their Official Committee of Unsecured Creditors. Judge Baxter put his stamp of approval on the Disclosure Statement on Oct. 28, 2005. The Debtors are now authorized to send copies of the Amended Disclosure Statement and Amended Joint Plan to creditors and solicit their votes in favor of the Plan. The Debtors and the Committee filed their Amended Disclosure Statement and Amended Joint Plan on Oct. 21, 2005. Summary of the Amended Joint Plan The Plan provides for the establishment of a Liquidating Trust to hold and distribute the Debtors' assets and funds for the benefit of holders of Allowed Claims against the Debtors. Not less that five days prior to the confirmation date of the Joint Plan, the Committee will appoint a Liquidating Trustee to assist the Debtors in the performance of their duties and obligations under the Plan. On the Effective Date, the Debtors will transfer their Distribution Fund, which consist of all funds available for distribution to creditors except for recoveries from the Supplier Litigation, to the Liquidating Trust, except the Insurance Policies, the California Disability Reserve and, if already established, the Hepatitis A Reserve. If the Hepatitis A Reserve is established on the Effective Date, Chi-Chi's will transfer any Cash to be transferred to the Reserve and the Liquidating Trustee will manage and control the distribution of the Hepatitis A Reserve in accordance with the Plan. The Debtors will retain their rights under the Insurance Policies, which will be assumed as of the Effective Date pursuant to Article XI of the Plan, subject to the right of the Liquidating Trustee to manage, liquidate and control the prosecution of any matters related to the Debtors' interest in the Insurance Policies and to receive any proceeds of the Insurance Policies to which the Debtors are entitled. Treatment of Claims and Interest Against Chi-Chi's Inc. The Amended Joint Plan groups claims and interests into eight classes against lead Debtor Chi-Chi's Inc. Unimpaired claims consist of: 1) Secured Claims, which will be cured and reinstated pursuant to Section 1124(2) of the Bankruptcy Code, or the legal, equitable and contractual rights to which the holders of Allowed Secured Claims are entitled will remain unaltered; 2) Priority Claims, totaling approximately $7,000 will receive on the Effective Date the principal amount of their Allowed Claims from the Chi-Chi's Assets without interest; 3) Unsecured Hepatitis A Claims, which will be paid in full from the Hepatitis A Insurance Proceeds and in the event that the Unsurance Proceeds are insufficient to pay all those Claims in full, any unpaid portion of their Allowed Claims will be paid from the Hepatitis A Reserve Fund Impaired claims consist of: 1) Unsecured Claims of FRI-MRD, which are slated to receive the FRI-MRD Distribution as more fully described in Section VII.B of the Plan; 2) Other Unsecured Claims, totaling $9 million to $12 million, will receive periodic payments from the Liquidating Trust only after full satisfaction of Holders of Secured Claims, Priority Claims, Unsecured Hepatitis A Claims and Unsecured Hepatitis A Claims. Each holder of an Allowed Other Unsecured Claim will receive either the lesser of: a) an amount equal to that holder's Allowed Claim, or b) the Pro Rata share of the available sum of monies to be distributed to all holders of Allowed Other Unsecured Claims from the Chi-Chi's Assets by the Liquidating Trust; 3) AIG Policy Creditors Claims, which will receive Pro Rata beneficial interest in the AIG Policy Trust Fund and their distributions from the Trust Fund will be deducted by certain expenses incurred by the Liquidating Trust, including the costs of investigating and prosecuting claims objections and costs of administering the Trust Fund; 4) Inter-Debtor Claims, which will receive periodic payments from the Liquidating Trust only after full satisfaction of Holders of Secured Claims, Priority Claims, Unsecured Hepatitis A Claims, Unsecured Hepatitis A Claims and Other Unsecured Claims. Each holder of an Allowed Inter-Debtor Claim will receive either the lesser of: a) an amount equal to that Holder's Allowed Claim, or b) the Pro Rata share of the available sum of monies to be distributed to all holders of Allowed Inter-Debtor Claims by the Liquidating Trustee; 5) Interests will be cancelled on the Effective Date and will not receive any distribution under the Plan on account of those claims. A full-text copy of the black-lined version of the Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051031025516 A full-text copy of the black-lined version of the Amended Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=051031025132 Objections to the Amended Joint Plan, if any, must be filed and served by Dec. 1, 2005. Judge Baxter will convene a hearing at 1:30 p.m., on Dec. 15, 2005, to consider confirmation of the Amended Joint Plan. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each engages in the restaurant business. The Debtors filed for chapter 11 protection on October 8, 2003 (Bankr. Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtor filed for bankruptcy, it estimated $50 to $100 million in assets and more than $100 million in liabilities. COLORADO INTERSTATE: S&P Places B Rating on $400M Sr. Unsec. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' rating to natural gas pipeline company Colorado Interstate Gas Co.'s planned $400 million senior unsecured notes. Colorado Interstate is a unit of diversified energy company El Paso Corp. At the same time, Standard & Poor's affirmed its 'B' corporate credit ratings on El Paso and its subsidiaries. The outlook remains positive. As of June 30, 2005, the El Paso, Texas-based company had $17.5 billion of debt outstanding. Colorado Interstate is expected to use proceeds from the issuance to buy Wyoming Interstate Co. from a separate subsidiary of El Paso and fund an intercompany loan to the parent. The cash will be used to add to the company's liquidity at the parent level going into the winter heating season. Collateral requirements under El Paso's hedge portfolio could grow in the event that natural gas prices spike. "The transaction increases El Paso's considerable debt burden; however, the step is favorable because it reinforces the company's liquidity," said Standard & Poor's credit analyst Ben Tsocanos. The positive outlook on El Paso and its units reflects the potential for higher ratings provided additional debt repayment occurs, liquidity remains robust, and its upstream business becomes self-funding. The ratings on El Paso and its subsidiaries, including Colorado Interstate, are based on a consolidated credit method, resulting in the same corporate credit rating for the holding company and each of its subsidiaries. CORNERSTONE PRODUCTS: Assets Being Auctioned Tomorrow in Dallas --------------------------------------------------------------- The Hon. Brenda T. Rhoades of the U.S. Bankruptcy Court for the Eastern District of Texas in Sherman scheduled an auction of substantially all of Cornerstone Products, Inc.'s assets for tomorrow, Nov. 2, 2005, 10:00 a.m., at the offices of Hance Scarborough Wright Ginsberg & Brusilow, LLP, in Dallas, Texas. The Debtor's primary business assets include: a. a 519,566 square foot state of the art injection molding manufacturing and storage facility located on 25.31 acres at 1811 W. Arkansas, Durant, Oklahoma, with a market value of $4.6 million per an April 2005 appraisal; b. 37 injection molding machines, and related equipment and fixtures with a fair market value of $8,658,380 per a September 2005 appraisal; c. 110 molds for molding trashcans, totes, etc. with a fair market value of $14,590,053 as of April 2005 per the Company's internal appraisal; d. accounts receivable with a book value of $7,696,691 as of Oct. 5, 2005; e. inventory at book of $9,458,402.24 as of Oct. 5, 2005; and f. Cash of $3,372,709.05 as of Oct. 5, 2005. The auction follows approval of emergency bidding procedures proposed by the Debtor. The Debtors asked the Court to approve expedited, uniform bidding procedures because it can no longer continue to operate without a cash infusion or sale of its assets. The Debtors explained that the value of their business will decrease if the sale process is unreasonably delayed. The period for the submission of bids closed on Oct. 31, 2005. All interested buyers were required to make a good-faith deposit equal to 10% of the amount of their initial bids. The minimum bid for the Debtor's assets is $20 million. The Official Committee of Unsecured Creditors took an active role in drafting the emergency bidding procedure for the sale of the Debtor's assets. Assisted by FTI Consulting, Inc, the Committee took an active role in the process of communicating and transacting with potential buyers. The Bankruptcy Court will convene a hearing to approve the sale to the successful bidder at 2:00 p.m. on Nov. 8, 2005, in Plano, Texas. Headquartered in Plano, Texas, Cornerstone Products, Inc. -- http://www.cornerstoneproducts.com/-- manufactures custom injection molded plastic products. The Company filed for chapter 11 protection on July 5, 2005 (Bankr. E.D. Tex. Case No. 05-43533). Frank J. Wright, Esq., at Hance Scarborough Wright Ginsberg & Brusilow, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $59,595,144 and total debts of $65,714,015. CORNERSTONE PRODUCTS: Taps Mesirow Financial as Investment Banker ----------------------------------------------------------------- Cornerstone Products, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Texas in Sherman for authority to retain Mesirow Financial, Inc., as its investment banker. The Debtor selected Mesirow Financial because of the Firm's well-established national reputation in financial and investment banking services and its experience in financial restructuring, distressed business and bankruptcy settings. In this engagement, Mesirow Financial will: a) assist the Debtor in securing bids, subject to higher and better offers as may be obtained through a continued marketing effort; b) identify, contact and screen interested prospective purchasers; c) coordinate the data room with potential purchasers' due diligence investigations; d) assist the Debtor in evaluating proposals received from potential purchasers; e) assist the Debtor in structuring and negotiating the Sale f) support the efforts of Debtor's counsel, including bankruptcy court testimony; and g) meet with the Debtor's Board of Directors, bank lenders, and other constituencies to discuss the proposed sale. The Debtor agrees to make a $25,000 non-refundable deposit to Mesirow Financial. The Firm will receive no further compensation if it fails to secure a buyer for the Debtor's assets. Mesirow Financial agrees to waive the standard retainer fee in exchange for a percentage of the sales proceeds, payable upon the successful closing of a sale. In the event of a successful sale, the Firm is entitled to: a) $250,000 if the aggregate selling price is less than $15 million; plus b) 2.5% of the aggregate selling price in excess of $15 million, but less than $25 million; plus c) 5% of the aggregate selling price in excess of $25 million; plus d) reimbursement of actual, necessary expenses and other charges. To the best of the Debtor's knowledge, Mesirow Financial and its professionals and employees do not hold any interest adverse to the Debtor or its estate and is a "disinterested person," as that term is defined in section 101(14) of the Bankruptcy Code. Headquartered in Chicago, Mesirow Financial -- http://www.mesirowfinancial.com/-- is a diversified financial services firm encompassing six service divisions: -- Investment Management; -- Investment Services; -- Insurance Services; -- Investment Banking; -- Consulting; and -- Real Estate. Headquartered in Plano, Texas, Cornerstone Products, Inc. -- http://www.cornerstoneproducts.com/-- manufactures custom injection molded plastic products. The Company filed for chapter 11 protection on July 5, 2005 (Bankr. E.D. Tex. Case No. 05-43533). Frank J. Wright, Esq., at Hance Scarborough Wright Ginsberg & Brusilow, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $59,595,144 and total debts of $65,714,015. CP SHIPS: S&P Revises CreditWatch Placement Due to TUI Debt Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised the implications of its CreditWatch placement on New Brunswick-based CP Ships Ltd. to negative from developing. The ratings were originally placed on CreditWatch with developing implications on Aug. 22, 2005, when its management board recommended it accept a takeover offer from Germany-based tourism and container shipping group, TUI AG. The revision comes after Standard & Poor's assigned its 'BB+' corporate credit ratings to TUI, CP Ships' new majority owner. TUI AG recently acquired 89% of the shares of CP Ships and is expected to complete the takeover of the remaining shares by late 2005. When the takeover has been completed, we expect to equalize the corporate credit rating on CP Ships with those on TUI. CP Ships is the 18th-largest container shipping company in the world. The company is registered in the Province of New Brunswick, Canada, but is headquartered in Gatwick, England. CP Ships specializes in serving niche trade lanes in the Transatlantic, Australasian, Latin American, and Asian markets. CP Ships' annual revenues were about $3.6 billion in 2004. CRE RENTAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: CRE Rental Equipment Corporation Post Office Box 1608 Yauco, Puerto Rico 00698-1608 Bankruptcy Case No.: 05-12235 Type of Business: The Debtor leases medical equipment. Chapter 11 Petition Date: October 15, 2005 Court: District of Puerto Rico (Old San Juan) Judge: Sara E. De Jesus Kellogg Debtor's Counsel: Modesto Bigas Mendez, Esq. Modesto Bigas Law Office Post Office Box 7462 Ponce, Puerto Rico 00732-7462 Tel: (787) 844-1444 Total Assets: $1,243,592 Total Debts: $922,062 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CRIM Taxes $317,110 P.O. Box 195387 San Juan, PR 00919-5387 Departamento De Hacienda Taxes $133,354 Sec. De Quiebras Ofic 424-B P.O. Box 9024140 San Juan, PR 00902-4140 Internal Revenue Service Taxes $47,119 Philadelphia, PA 19255-0029 Ed Distributors, Inc. $12,436 Azga Medical Distributors $6,225 Atlantic Gas Station $4,736 Jasvi Sales & Services, Inc. $3,322 Munoz Auto Parts $2,806 Aga Linde Healthcare $2,213 Borschow Hospital $1,705 Supercare Medical Co. $1,648 Pagan Service Station $1,607 RL Health Care Solutions $1,506 Tri-Quality $1,502 New Medical Technology $1,080 Bio Compression $540 Equip-Plus Medical $460 Tyco Health Care $387 Medical Industries $350 Island Pharmaceutical $290 CREDIT SUISSE: Moody's Cuts Rating on Class B-F Tranche to B1 ------------------------------------------------------------- Moody's upgraded two subordinate tranches from two mortgage backed securitizations issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002. In addition, Moody's has downgraded three classes of subordinated tranches from two mortgage backed securitization and confirmed one subordinated tranche from one mortgage backed securitization issued by Credit Suisse First Boston Mortgage Securities Corp. in 2002. The pools are backed by subprime first lien adjustable-rate and fixed-rate loans. The actions are based on the fact that the bonds' current credit enhancement levels, including excess spread, are either high, sufficient, or low compared to the current projected loss numbers for the current rating level. The complete rating actions are as follows: Credit Suisse First Boston Mortgage Securities Corp. Upgrades: * Series 2002-HE4; Class M-1, upgraded to Aa1 from Aa2 * Series 2002-HE16; Class M-1, upgraded to Aa1 from Aa2 Downgrades: * Series 2002-HE1; Class B, downgraded to Ba1 from Baa2 * Series 2002-HE4; Class M-F-2, downgraded to Baa1 from A2 * Series 2002-HE4; Class B-F, downgraded to B1 from Baa3 Confirmed: * Series 2002-HE11; Class M-1, Aa2 rating confirmed CREDIT SUISSE: Fitch Junks Ratings on Twelve Certificate Classes ---------------------------------------------------------------- Fitch Ratings has affirmed and taken rating action on these Credit Suisse First Boston Mortgage Securities Corp. issues: Series 1997-2 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AA'; -- Class B-4 downgraded to 'CC' from 'B+'. Series 2001-2 -- Class 1-A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Classes B-3 and B-4 downgraded to 'CC' from 'B'; -- Class B-5 remains at 'C'; -- Class B-6 remains at 'C'. Series 2001-9 -- Class IIA, IIIA affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AAA' from 'AA'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed 'BB'; -- Class B-5 remains at 'CCC' Series 2001-28 -- Class IA, IIA affirmed at 'AAA'; Series 2002-5 G1, 2, and 3 -- Class IA, IIA affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB2 affirmed at 'AAA'; -- Class CB3 upgraded to 'AA' from 'A+'; -- Class CB4 upgraded to 'A' from 'BBB+'; -- Class CB5 upgraded to 'BBB' from 'BB+'. Series 2002-5 G4 -- Class IVA affirmed at 'AAA'; -- Class IVB1 affirmed at 'AA'; -- Class IVB2 downgraded to 'BBB' from 'A'; -- Class IVB3 downgraded to 'BBB' from 'A'; -- Class IVB4 downgraded to 'BB' from 'BBB'; -- Class IVB5 downgraded to 'C' from 'CCC'; -- Class IVB6 remains at 'C'. Series 2002-18 G2 -- Class IIA affirmed at 'AAA'; -- Class IIB1 affirmed at 'AA'; -- Class IIB2 affirmed at 'A'; -- Class IIB3 downgraded to 'BB' from 'BBB+'; -- Class IIB4 downgraded to 'CCC' from 'BB'; -- Class IIB5 downgraded to 'C' from 'CCC'; -- Class IIB6 remains at 'C'. Series 2002-24 G1 -- Class IA affirmed at 'AAA'; -- Class IB1 upgraded to 'AAA' from 'AA'; -- Class IB2 affirmed at 'A'; -- Class IB3 downgraded to 'BB' from 'BBB'; -- Class IB4 downgraded to 'C' from 'CCC'; -- Class IB5 remains at 'C'. Series 2002-24 G2 and 3 -- Class IIA, IIIA affirmed at 'AAA'; -- Class CB1 affirmed at 'AAA'; -- Class CB4 upgraded to 'AA' from 'A'; -- Class CB5 upgraded to 'A' from 'BBB'. Series 2002-26 G1 -- Class IA affirmed at 'AAA'; -- Class IB1 affirmed at 'AAA'; -- Class IB3 upgraded to 'AAA' from 'A'; -- Class IB4 upgraded to 'AA' from 'BBB'; -- Class IB5 upgraded to 'A' from 'BB'. Series 2002-26 G2 -- Class IIA affirmed at 'AAA'; -- Class IIB1 upgraded to 'AAA' from 'AA+'; -- Class IIB2 upgraded to 'AAA' from 'A+'; -- Class IIB3 upgraded to 'AA+' from 'BBB+'; -- Class IIB5 upgraded to 'A' from 'BB'. The upgrades, affecting approximately $31.0 million of outstanding certificates, are being taken as a result of low delinquencies and losses, as well as increased credit support levels. The affirmations, affecting approximately $342.69 million of outstanding certificates, are due to credit enhancement and collateral performance generally consistent with expectations. The downgrades, affecting approximately $13.36 million of the outstanding certificates, reflect the deterioration of credit enhancement relative to consistent or rising monthly losses. The mortgage loans consist of fixed-rate and adjustable-rate, 15- and 30-year mortgages extended to prime borrowers and are secured by first and second liens, primarily on one- to four- family residential properties. As of the September 2005 distribution date, the transactions are seasoned from a range of 36 to 102 months and the pool factors -- current mortgage loan principal outstanding as a percentage of the initial pool -- range from 2% to 17%. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ Fitch will continue to monitor these deals. CUMMINS INC: Earns $145 Million of Net Income in Third Quarter -------------------------------------------------------------- Cummins Inc. (NYSE: CMI) reported third quarter net income of $145 million on sales of $2.47 billion. Sales were strong across the entire business and the Company's gross margins rose to their highest levels in more than eight years. "We continued to deliver on our commitments to our customers and shareholders in the third quarter," said Cummins Chairman and Chief Executive Officer Tim Solso. "Our business outlook remains positive, and our focus on execution has significantly improved margins and strengthened the bottom line." Net income in the third quarter rose 25 percent from $116 million in the same period in 2004, while sales increased 12 percent from the $2.19 billion reported in the third quarter of 2004. For the first nine months of the year, Cummins has earned $383 million, or $7.70 per share, which is more than the Company earned for all of 2004 - its most profitable full year ever. Earnings before interest and taxes (EBIT) of $240 million also were a record and, at 9.7 percent of sales, were at the high end of the Company's target range of 7 to 10 percent. The Company's gross margin of 22.7 percent was the highest since the second quarter of 1997. In addition to setting a record for net income and EBIT, the Company achieved a number of other quarterly financial records, including: * engine segment revenues; * engine shipment volumes to DaimlerChrysler for the Dodge Ram; * segment EBIT for the Power Generation segment; and * segment EBIT for the Distribution segment. Third-quarter sales were slightly below the record set in the second quarter of 2005, but improved margins contributed to a 3% quarter-to-quarter increase in net income. "These results are another sign that we are building a "New Cummins" - a company that is less cyclical, more diversified and committed to turning a greater share of its sales into profits," Mr. Solso said. "Not only have we delivered higher year-over-year quarterly earnings for seven consecutive quarters, but we also are investing in future growth and focusing on prudent cash management. "And, as good as 2004 and 2005 have been, I am confident 2006 will be an even better year for Cummins and that we are well-positioned for the future." Cummins increased its full-year earnings guidance to $10.70 to $10.80 per share from its previous guidance of $10.10 to $10.30 per share, resulting in fourth-quarter guidance of $3.00 to $3.10 per share. The Company generated cash from operations of $230 million in the quarter, just off its record set in the fourth quarter of 2004, bringing its total to $385 million for the first nine months of 2005. In addition, the Company has paid down debt by $278 million this year from operating cash. The Company signed a number of agreements during the quarter that reflect its commitment to future growth. Cummins's Dongfeng Cummins Engine Company joint venture in China will develop a new 13-liter heavy-duty engine that is expected to be ready for production in 2009. Cummins also entered into a 50/50 joint venture with Shaanxi Automobile Group Co. to produce the Cummins 11-liter ISM engine in Xi'an, China, starting late next year. Cummins is the largest foreign investor in the China diesel engine market. In late September, the Company announced that it has expanded its partnership with Bluebird Corp. and that the Cummins ISB engine will be available in all Bluebird school buses starting in early 2006. Cummins Inc. -- http://www.cummins.com/-- a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. With more than 28,000 employees worldwide, Cummins reported sales of $8.4 billion in 2004. * * * As reported in the Troubled Company Reporter on Sept. 20, 2005, Moody's Investors Service raised its rating of Cummins Inc.'s debt securities (senior unsecured to Ba1 from Ba2), and also affirmed the company's Ba1 corporate family rating and SGL-1 speculative grade liquidity rating. The rating outlook is changed to positive from stable. As reported in the Troubled Company Reporter on Aug. 5, 2005, Standard & Poor's Ratings Services raised its rating on the $28,000,000 Structured Asset Trust Unit Repackagings Cummins Engine Co. Debenture-Backed Series 2001-4 certificates to 'BBB-' from 'BB+'. CWMBS INC: Fitch Assigns Low-B Ratings to $806K Cert. Classes ------------------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL mortgage pass-through trust 2005-J4 is rated by Fitch: -- $194.5 million classes A-1 through A-8, PO, X, and A-R senior certificates 'AAA'; -- $3.2 million class M certificates 'AA'; -- $1.6 million class B-1 certificates 'A'; -- $705,000 million class B-2 certificates 'BBB'; -- $503,500 class B-3 certificates 'BB'; -- $302,100 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 3.40% subordination provided by the 1.60% class M, the 0.80% class B-1, the 0.35% class B-2, the 0.25% privately offered class B-3, the 0.15% privately offered class B-4, and the 0.25% privately offered class B-5. Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, 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 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 $161,536,039 as of the cut-off date, Oct. 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 original loan-to-value ratio of 70.43%. The weighted average FICO credit score is approximately 741. Cash-out refinance loans represent 22.64% of the mortgage pool and second homes 2.82%. The average loan balance is $542,067. The three states that represent the largest portion of mortgage loans are California, Virginia, and Maryland. 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, please see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' issued May 1, 2003, available on the Fitch Ratings Web site 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. CWMBS INC: Fitch Places Low-B Ratings on $1.46-Mil Cert. Classes ---------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-28: -- $400.9 million classes A-1 through A-14, X, PO and A-R senior certificates 'AAA'; -- $10.2 million class M certificates 'AA'; -- $2.5 million class B-1 certificates 'A'; -- $1.3 million class B-2 certificates 'BBB'; -- $834,000 class B-3 certificates 'BB'; -- $625,500 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 3.85% subordination provided by the 2.45% class M, the 0.60% 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, which is 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 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 $416,999,436 as of the cut-off date, Oct. 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 original loan-to-value ratio of 71.86%. The weighted average FICO credit score is approximately 742. Cash-out refinance loans represent 32.90% of the mortgage pool and second homes 7.75%. The average loan balance is $575,966. The three states that represent the largest portion of mortgage loans are California, Virginia, and Maryland. 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, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation' available at http://www.fitchratings.com/ All of the mortgage loans were originated under CHL's Standard Underwriting Guideline. 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 Rates $1.78M Cert. Classes at Low-B ---------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL mortgage pass-through trust 2005-27 is rated by Fitch Ratings: -- $499.9 million classes 1-A-1 through 1-A-8, 2-A-1, 1-X, 2-X, PO, and A-R senior certificates 'AAA'; -- $13.5 million class M certificates 'AA'; -- $3.4 million class B-1 certificates 'A'; -- $1.6 million class B-2 certificates 'BBB'; -- $1 million class B-3 certificates 'BB'; -- $781,500 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.05% subordination provided by the 2.60% 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, which is not rated by Fitch. Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, 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 certificates represent an ownership interest in two groups of conventional mortgage loans. Loan group 1 consists of 30-year fixed-rate mortgage loans totaling $364,496,682 as of the cut-off date Oct. 1, 2005, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average original loan-to-value ratio of 72.23%. Approximately 46.62% of the loans were originated under a reduced documentation program. The weighted average FICO credit score is approximately 743. Cash-out refinance loans represent 31.31% of the mortgage pool and second homes 10.59%. The average loan balance is $579,486. The three states that represent the largest portion of mortgage loans are California, New York, and New Jersey. Loan group 2 consists of 30-year fixed-rate mortgage loans totaling $156,502,650 as of the cut-off date, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average OLTV of 72.59%. Approximately 45.10% of the loans were originated under a reduced documentation program. In addition, the weighted average FICO credit score is approximately 740. Cash-out refinance loans represent 47.65% of the mortgage pool and second homes 3.79%. The average loan balance is $562,959. The three states that represent the largest portion of mortgage loans are California, Virginia, and New York. 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, please see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' issued May 1, 2003, available on the Fitch Ratings Web site at http://www.fitchratings.com/ All of the mortgage loans were originated under CHL's standard underwriting guideline. 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. DE LA CONCHA: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: De La Concha Tobacconist, Inc. 1390 Sixth Avenue New York, New York 10019-3907 Bankruptcy Case No.: 05-60082 Type of Business: The Debtor is an on-line shop of cigars, pipes, lighters and humidors. See http://www.delaconcha.com/ Chapter 11 Petition Date: October 31, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Melinda D. Middlebrooks, Esq. Middlebrooks Shapiro Nachbar Pflumm, P.C. 140 Eagle Rock Avenue Roseland, New Jersey 07068 Tel: (973) 228-1616 Fax: (973) 228-1635 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ New York State Tax $1,311,354 Department of Taxation & Finance 80-02 Kew Gardens Road, 5th Floor Kew Gardens, NY 11415-3618 Attn: A. Richards Tel: (718) 459-6388 DELPHI CORP: Court Approves De Minimis Asset Sale Procedures ------------------------------------------------------------ Prior to the Petition Date, and in furtherance of their reorganization efforts, Delphi Corporation and its debtor- affiliates strove to streamline their operations by eliminating unnecessary operating expenses by exiting certain non-core business lines and dispensing of surplus assets. Kayalyn A. Marafioti, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York, relates that as part of their strategy, the Debtors: (a) sold their interest in CEI Co., Ltd., a manufacturer of flat-pack and servo motor actuators, thermo control units, and backplate assemblies; (b) sold their interest in AMBRAKE Corporation, a manufacturer of base brake assemblies and components, and its subsidiaries; (c) over the course of the last few years, periodically sold various miscellaneous assets in connection with the disposition of their generator business line; (d) sold various parcels of real property, including real property in Anaheim, California, and Olathe, Kansas; and (e) have actively marketed other assets and their interests in other subsidiaries and affiliates involved in other businesses identified by the Debtors as unnecessary to their overall business strategy. To further optimize cash flow, maximize the value of their Chapter 11 estates, and minimize excessive costs, the Debtors seek the U.S. Bankruptcy Court for the Southern District of New York's authority to dispose of excess real and personal property -- in and outside the ordinary course of their businesses -- that will involve numerous sale transactions involving $10,000,000 or less in the aggregate. In addition, the Debtors seek The Honorable Robert D. Drain of the Southern District of New York Bankruptcy Court' permission to pay applicable market rate broker commissions to brokers utilized in the ordinary course of their businesses, in connection with the dispositions of de minimis assets. The Debtors believe that the use of brokers will significantly aid in the timely disposition and realization of the maximum possible value for the assets. The Debtors expect that a proposed buyer's offer with respect to the assets will necessarily be conditioned on the utilization of a streamlined process that can be completed in an expedited time frame, and at a cost commensurate with the remuneration to be received by the Debtors and their estates. The Debtors further ask the Court for authority to implement procedures for the sale of De Minimis Assets. De Minimis Sale & Notice Procedures According to Ms. Marafioti, the Debtors would give notice of each proposed sale so as to be received by 5:00 p.m. (Eastern Time), on the date of service, and by overnight mail, to: * the Office of the United States Trustee; * counsel to any official committees appointed in the Debtors' Chapter 11 cases; * counsel for the agent to the DIP Lenders; * any other known holder of a lien, claim, or encumbrance against the specific property to be sold; and * any known interested party in the subject De Minimis Assets. Ms. Marafioti says the Sale Notice would specify the assets to be sold, and the identity of the proposed purchaser, including a statement that the proposed purchaser is not an "insider" as defined in Section 101(31) of the Bankruptcy Code. The Sale Notice would also specify: -- the proposed sale price; -- a copy of any documentation executed in contemplation of the transaction; and -- an affidavit of the broker, if any, pursuant to Rule 2014 of the Federal Rules of Bankruptcy Procedure, that identifies the Broker, the amount of the Broker Commission, and contains the disclosures required by Rule 2014. The Notice Parties will have five business days following initial receipt of the Sale Notice to object to or request additional time to evaluate the proposed transaction and the Broker Commission. If the Debtors' counsel receives no written objection or written request for additional time prior to the expiration of the five-day period, the Debtors would be authorized to consummate the proposed sale transaction and to take actions as are necessary to close the transaction and collect the proceeds of the sale, including payment of the Broker Commission. If a Notice Party objects to the proposed transaction or the Broker Commission, within five business days after the Sale Notice is received, the Debtors and the objecting Notice Party would use good faith efforts to resolve the objection consensually. If the Debtors and the objecting Notice Party are unable to achieve a consensual resolution, the Debtors would not take any further steps to consummate the proposed transaction without first obtaining Bankruptcy Court approval of the transaction, including retention of any broker, upon notice and a hearing. To the extent that a competing bid is received for the purchase of the De Minimis Assets, which materially exceeds the value of the purchase price contained in the Sale Notice, then the Debtors will re-notice the proposed sale to the subsequent bidder pursuant to the Notice Procedures. However, this is provided that the proposed purchase price is still less than or equal to $10,000,000. To the extent the proposed purchase price is greater than $10,000,000, the Debtors would seek Court approval of the proposed transaction. Ms. Marafioti also notes that any valid and enforceable liens would attach to the net proceeds of the sale, subject to any claims and defenses the Debtors may possess. Any amounts in excess of those liens would be utilized by the Debtors in accordance with the terms of the DIP Agreement, if approved by the Court. Procedures Must be Approved The expedited procedures would permit the Debtors to be responsive to the needs of interested purchasers, thereby guarding against lost sales due to delay, Ms. Marafioti asserts. "Without an expedited process for closing the Debtors' sales, these estates will, at best, incur added and unnecessary expenses and will, at worst, both be deprived of income from these sales and forced to continue to operate businesses that the Debtors have determined are neither necessary nor beneficial to their overall restructuring strategy," Ms. Marafioti adds. * * * The Court approves the procedures for the sale of none-core de minimis assets, and authorizes the Debtors to consummate, without further Court approval, arm's-length sales of real and personal property outside of the ordinary course of business when the purchase price is $10,000,000 or less for each transaction. Without further Court approval, the Debtors are authorized to pay market rate broker commissions for brokers utilized in the ordinary course of the Debtors' business in connection with any sales of de minimis assets upon satisfaction of the disclosure requirements. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Judge Drain Authorizes Use of All Cash Collateral -------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Oct. 13, 2005, the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved Delphi Corporation and its debtor-affiliates' request to dip into the Prepetition Lenders' cash collateral on an interim basis. * * * Judge Drain finds that the Debtors' access to sufficient working capital and liquidity through the use of Cash Collateral is vital to the preservation and maintenance of the going concern values of the Debtors and to a successful reorganization of the Debtors. Accordingly, Judge Drain authorizes the Debtors to use all Cash Collateral of the Prepetition Secured Lenders. The Prepetition Secured Lenders and the holders of Replacement Liens or Adequate Protection Liens are granted adequate protection of their interest in the Cash Collateral for and equal in amount to the aggregate diminution in the value of their interest in the Collateral. The Debtors will provide JPMorgan Chase Bank, N.A., as administrative agent for the Prepetition Secured Lenders, and the Official Committee of Unsecured Creditors with any written financial information or periodic reporting that is provided to, or required to be provided to, the DIP Lenders. The Debtors' right to use Cash Collateral will terminate automatically upon the occurrence of the Termination Date or the voluntary reduction by the Borrower of the Total Commitments to zero, as the terms are defined in the DIP Credit Agreement. Any party-in-interest may file an adversary proceeding or contested matter: (1) challenging the validity, enforceability, priority or extent of the Prepetition Debt or the Prepetition Agent's or the Prepetition Secured Lenders' liens on the Prepetition Collateral by no later than January 16, 2006; and (2) seeking a determination that the Prepetition Debt was under-secured as of the Petition Date, or otherwise asserting or prosecuting any Avoidance Actions or any other any claims against the Prepetition Agent or any of the Prepetition Secured Lenders or their affiliates by no later than April 17, 2006. The Creditors Committee will be limited to $250,000 in its investigations of the validity of the Prepetition Secured Lenders' liens. No other official committee will be authorized to perform the investigations. The $250,000 limit does not include the fees and expenses of an investment banker for the Creditors Committee. The Creditors Committee is represented by Robert Rosenberg, Esq., at Latham & Watkins LLP, in New York. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: U.S. Trustee Meeting With Creditors on February 6 -------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, has called for a meeting of Delphi Corporation and its debtor- affiliates' creditors and equity security holders pursuant to Section 341 of the Bankruptcy Code on February 3, 2006, at 1:30 p.m., Prevailing Eastern Time. The meeting will be held at 80 Broad Street, 2nd Floor, in New York. All creditors are invited, but not required, to attend. This Official Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Board Agrees to Pay Cuts as Part of Cost-Reduction Plan ------------------------------------------------------------------ The Board of Directors for Delta Airlines, Inc., unanimously agreed to reduce its compensation package in order to participate in the Company's cost reduction efforts, effective Nov. 1, 2005. The reduced compensation package includes: -- Annual Retainer: Reduced the annual retainer for non- employee directors from $25,000 to $20,000 (a 20% reduction). -- Chairman of the Board Retainer: Reduced the annual retainer paid to the non-executive Chairman of the Board from $150,000 to $112,500 (a 25% reduction). This reduction was made at the request of the non-executive Chairman of the Board. It is equivalent to the previously announced percentage reduction in the base salary of Delta's Chief Executive Officer, which will also become effective Nov. 1, 2005. -- Deferred Annual Payment: Eliminated the annual $6,300 deferred payment for non-employee directors who joined the Board after Oct. 24, 1996. -- Stock Grant to New Directors: Eliminated the one-time grant of $10,000 of Delta common stock to a new director upon his or her initial election to the Board. -- Non-Employee Directors' Stock Option Plan: Terminated the Delta Non-employee Directors' Stock Option Plan under which non-employee directors were eligible to receive grants of non-qualified stock options. -- Directors' Deferred Compensation Plan: Terminated the Directors' Deferred Compensation Plan, which permitted non- employee directors to defer receipt of all or a portion of their cash fees for services as a director. -- Non-employee Directors' Stock Plan: Terminated the Non- employee Directors' Stock Plan, which permitted directors to receive all or a portion of their cash fees for services as a director in shares of Delta's Common Stock at current market prices. The Board of Directors also eliminated the annual retainer paid to former members of the Board who were elected Advisory Directors upon the completion of their service as a member of the Board of Directors. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.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 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DORAL FINANCIAL: Financial Non-Filing Cues Moody's to Cut Ratings ----------------------------------------------------------------- Moody's Investors Service downgraded to Ba3 from Ba1 the senior debt of Doral Financial Corporation. The ratings have been downgraded a number of times since Moody's initial review process began in April 2005. According to Moody's, a number of negative developments have occurred since the most recent downgrade, which was on Sept. 6, 2005. Doral has recently disclosed that it will not be able to file restated financial reports as formerly indicated and this is the main reason for the downgrade. With a very strong position in the Puerto Rico mortgage market, Doral's franchise remains robust. Nevertheless, the negative outlook captures continued uncertainty regarding the longer term prospects for Doral. The audit committee of the board of directors is continuing its investigation into accounting and control issues. The SEC's previously informal inquiry has been expanded to a formal investigation. Furthermore, the company's preferred shares are likely to be delisted from the NASDAQ. Moody's said that litigation and regulatory risks are high. The rating agency noted that creditors have not elected to accelerate debt repayments. Therefore, said Moody's, liquidity remains adequate to meet upcoming cash needs through mid-year 2007. In addressing the negative outlook, Moody's said that any credit deterioration including regulatory consequences or liquidity issues could result in a review for possible downgrade or in a further downgrade. A partial list of ratings that have been downgraded: Doral Financial Corporation * Senior debt to Ba3 from Ba1 and * Subordinated debt to B1 from Ba2. Doral Financial Corporation, headquartered in San Juan, Puerto Rico, had total assets of $15 billion at December 31, 2004. EASTMAN KODAK: Fitch Puts BB+ Rating on $2.7-Bil Sr. Secured Loan ----------------------------------------------------------------- Fitch Ratings has downgraded Eastman Kodak Company's senior unsecured debt to 'B+' from 'BB-', assigned a 'BB+' rating to Kodak's new $2.7 billion senior secured credit facility, and affirmed the issuer default rating of 'BB-'. The Rating Outlook remains Negative. Approximately $4.4 billion of debt is affected by Fitch's action, including $2.7 billion of secured facilities. The downgrade of Kodak's senior unsecured debt reflects the structural subordination as a result of the new $2.7 billion of senior secured credit facilities and reduced recovery prospects. The secured credit facility rating incorporates Fitch's expectations for superior recovery prospects based on the significant assets pledged as security, which include the U.S. assets of Kodak and its subsidiaries organized in the U.S., consisting of accounts receivable, inventory, personal property and equipment, intellectual property, and investments, as well as the capital stock of certain material subsidiaries of Kodak and Kodak Graphic Communications Canada Company. Kodak's low senior debt leverage of only 1.7 times, assuming the facility is fully drawn for the latest 12 months ended Sept. 30, 2005, is also factored into the credit facility rating. The affirmation of the 'BB-' IDR continues to consider the accelerated erosion of Kodak's traditional film business resulting in more extensive restructuring efforts, increasing volatility of the company's financial and operating performance including challenges associated with achieving digital profitability targets, integration risk related to its multiple acquisitions within the Graphics Communications Group, and continued pricing pressure for digital cameras. The Negative Outlook continues to reflect the timing and uncertainty regarding the stability of earnings and digital profitability and the financial impact that will result from extensive, ongoing restructuring efforts. Fitch believes Kodak's liquidity and financial flexibility remain pressured, with cash declining to $610 million as of Sept. 30, 2005, compared with $1.3 billion at the end of fiscal 2004, but have improved slightly as a result of the new $2.7 billion secured credit facility. The $2.7 billion secured credit facility consists of a five-year, nearly undrawn $1 billion revolving credit facility due October 2010; a seven-year, $1.2 billion term B-1 loan maturing in October 2012; and a committed $500 million delayed-draw term B-2 loan that is available through June 15, 2006. In addition, the secured credit agreement includes a future uncommitted term loan of up to $500 million, which, if requested and approved by the lenders, would have terms agreed to at the time of commitment and a maturity date at least six months after the maturity of the term B loan on Oct. 18, 2012. The $1.2 billion of proceeds from term loan B-1 were used to increase cash levels by approximately $200 million and to refinance Kodak's previous bank revolver, which was nearly fully drawn to fund the $965 million acquisition of Creo, Inc. Financial covenants for the credit agreement include consolidated interest coverage of 3x and consolidated leverage ranging from 4.75x at Dec. 31, 2005, to 3.5x at Dec. 31, 2006, based on a rolling four consecutive quarter basis. Although free cash flow after dividends on a year-to-date basis through Sept. 30, 2005, was negative $464 million, Kodak has historically experienced strong seasonality in its cash flow and the company expects to generate cash in the fourth quarter of 2005. Fitch estimates that Kodak will generate at least $600 million in free cash flow after dividends in the fourth quarter of 2005, despite an estimated $180 million of cash restructuring charges in the quarter. Kodak's ability to achieve Fitch's estimated FCF forecast for the fourth quarter is contingent upon Kodak's ability to achieve profitability targets and to successfully manage its inventory, particularly traditional film inventory. Failure to achieve profitability and/or cash flow targets could result in further negative rating actions. Fitch believes the company's near-term debt maturities are manageable, following Kodak's obtainment of the $2.7 billion secured credit facility as it provides additional liquidity to meet upcoming debt maturities of approximately $200 million in November 2005 and $751 million in 2006. Kodak's next significant maturity is $271 million due in 2008. ELDERCARE PROPERTIES: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: ElderCare Properties, Ltd. 2605 Sagebrush Drive, Suite 103 Flower Mound, Texas 75028 Bankruptcy Case No.: 05-71283 Type of Business: The Debtor operates a nursing home. Chapter 11 Petition Date: October 14, 2005 Court: Southern District of Texas (McAllen) Judge: Richard S. Schmidt Debtors' Counsel: Michael J. Urbis, Esq. Jordan, Hyden, Womble & Culbreth, P.C. 1534 East 6th Street, Suite 104 Brownsville, Texas 78520 Tel: (956) 542-1161 Fax: (956) 542-0051 Total Assets: $1,539,368 Total Debts: $2,329,196 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Texas State Bank Accounts Receivable $421,186 P.O. Box 8008 Value of Security: Weslaco, TX 78596 $1,185,827 American Pharmacy Services/ Goods and/or Services $141,028 Omnicare P P.O. Box 957947 Saint Louis, MO 63195-7947 Valley Educational Foundation Goods and/or Services $76,593 P.O. Box 800 Alvarado, TX 76009 McKesson Medical-Surgical Goods and/or Services $57,800 Minnesota Supply, Inc. MedCare Ems, Inc. Goods and/or Services $42,740 Rehabcare Group Goods and/or Services $40,427 Alimed, Inc. $32,276 A.I. Credit Corporation $23,351 Texas State Bank Accounts Receivable $20,979 Value of Security: $1,185,827 BKD LLP Goods and/or Services $17,605 KNVO-TV 48 Goods and/or Services $13,650 Philadelphia Insurance Cos. Goods and/or Services $12,184 Rio Grande Valley Mobile Goods and/or Services $9,673 X-Rays William, Cain Goods and/or Services $8,207 Roerig, Oliveira & Fisher Goods and/or Services $7,954 U.S. Food Service Goods and/or Services $7,768 BKD Goods and/or Services $7,479 Gulf South Medical Supply Goods and/or Services $6,633 Physician Laboratory Services Goods and/or Services $6,577 Aflac Remittance Processing Goods and/or Services $6,394 ENRON CORP: Court Okays Claims Settlement Pact on Brazos Financing ------------------------------------------------------------------ The Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approves the Settlement Agreement among Reorganized Enron Corporation and its debtor-affiliates, their non-Debtor affiliates, JP Morgan Chase Bank, and certain lenders in connection with the Brazos Financing Structure. As previously reported, on or before the Bar Date, JPMC: (i) as Agent on behalf of the Lenders, filed Claim No. 11224; and (ii) on behalf of Brazos, filed Claim No. 11225, against Enron Corp. for claims arising in connection with, among other things, the April 14, 1997 Guaranty, the April 14, 1997 Credit Agreement and the May 14, 2002 Forbearance Agreement. In addition, JPMC filed 70 proofs of claim against the Debtors relating to the Brazos Financing. Each of the JPMC Claims asserts claims in an unliquidated amount against 70 Debtors arising out of, in connection with, or related to: 1. the Transaction Documents and any related documents; 2. the use and occupancy of Enron Center North; and 3. any acts or omissions of those Debtors, which may have harmed or caused damage to the Claimant. On Jan. 18, 2005, JPMC filed a Request for Payment of Administrative Expense Claim pursuant to which it asserted that Enron Leasing Partners, L.P., has an administrative rent claim against Enron and its affiliated Debtors for their use and occupancy of Enron Center North. On Sept. 26, 2003, Enron and several of its affiliates commenced an adversary proceeding against, among other persons, JPMC and certain Lenders. ELP, a non-Debtor affiliate of Enron, holds a scheduled, prepetition claim against Enron for $472,369,095 and an administrative rent claim for $8,300,000 pursuant to the Sublease, dated April 14, 1997. ELP holds a scheduled, prepetition claim against Enron Property & Services Corp. for $7,933,829. Enron Property Management Corp. holds a scheduled prepetition claim against Enron for $6,645,738. ELP holds an 80.2% preferred stock interest in EPHC. EPHC holds a scheduled prepetition claim against Enron for $109,878,637. As part of the Debtors' comprehensive review and reconciliation of all filed and scheduled claims, Enron determined that the Original EPHC Claim is no longer accurate and that Enron's liability to EPHC is $131,992,165. ELP's net interest in Enron Pipeline Holding Company, a non-Debtor affiliate of Enron, is $99,593,207. The salient terms of the Settlement are: (1) Enron's non-Debtor affiliate, Organizational Partner, Inc., will pay $5,000,000, ELP will pay $3,620,470, and EPMC will pay $1,474,235, to the Settling Lenders; (2) on the Closing Date: (i) the ELP Claim will be fully allowed as a Class 4 general unsecured claim against Enron, (ii) the EPSC Claim will be fully allowed as a Class 4 general unsecured claim against EPSC, (iii) the EPMC Claim will be fully allowed as a Class 4 general unsecured claim against Enron, (iv) upon the liquidation and dissolution of EPHC, a evidenced by the filing with the Delaware Secretary of State of a Certificate of Dissolution of EPHC, the Amended EPHC Claim will be allowed in amount equal to the Net EPHC Claim as a Class 4 general unsecured claim against Enron, (v) the Guaranty Claim will be allowed as a Class 4 general unsecured claim against Enron for $117,811,631, and (vi) the Administrative Rent Claim will be fully allowed as an administrative claim against Enron; (3) On the Closing Date with respect to all Allowed Claims except the EPHC Claim, and on the EPHC Dissolution Date with respect to the allowed portion of the EPHC Claim, the amount of each Allowed Claim set forth for each Settling Lender will be deemed to be assigned to the Settling Lender without the need for any additional documentation or the entry of any additional orders of the Bankruptcy Court; (4) the distribution of the Allowed Claims will be made in accordance with the Plan and will be paid to the Settling Lenders after the deduction of any out-of-pocket fees and expenses, if any, owing to the Agent in respect of the Allowed Claims; (5) In the event that any Settling Lender holds or owns any debt or obligations under the Credit Agreement, which were held or owned by a Named Defendant as of the Petition Date, that portion of any distributions attributable to the Guaranty Claim will be placed into the Disputed Claims Reserve in accordance with the terms and conditions of the Plan. Any holder of the Recovery Action Indebtedness will receive no distributions on account of the Recovery Action Indebtedness with respect to the Guaranty Claim until the earliest to occur of: (a) entry of a Final Order in the Adversary Proceeding dismissing the claims and causes of action asserted against the defendant, in which case, any distributions so reserved will be released to the Agent, on behalf of the holder of Recovery Action Indebtedness; (b) entry of a Final Order granting the relief requested in the Adversary Proceeding, in which case, any distributions so reserved will be released to Enron or its designee or, in the event that the Litigation Trust has been created and Litigation Trust Claims are assigned thereto, to the Litigation Trust, as the case may be; (c) the entry of a Final Order declaring that the amounts attributable to the Guaranty Claim are not subject to any potential objection, offsets, or other challenges, including equitable subordination, and directing a release of the distribution that has been placed into the Disputed Claims Reserve to the Settling Lender; and (d) entry of a Final Order compromising and settling the claims and causes of action asserted against such defendant in the Adversary Proceeding, in which case, any distributions so reserved will be released to the party entitled thereto; (6) The Enron Parties and the Settling Lenders will release each other from all claims relating to the Synthetic Lease Transaction; (7) On the Closing Date, each claim, other than the Allowed Claims and any counterclaim with respect to any other actions initiated by any Enron Party or any subsidiary or affiliate of an Enron Party in connection with the Synthetic Lease Transaction will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable expunged and disallowed, with respect to that portion of the claim applicable to a Settling Lender; and (8) The rights, remedies, claims and obligations of any Lender which is not a Party to the Settlement Agreement as a Settling Lender with respect to that Remaining Lender's Loans and Notes and that Remaining Lender's interests in or under the Credit Agreement and the other Credit Documents are in no way affected, diminished, impaired or released by the Settlement Agreement. Any Remaining Lender may elect to become a Settling Lender by executing a copy of the Settlement Agreement prior to the entry of a Court Order approving the Settlement. The Settling Parties and their pro rata share of the distributions are: Settling Party Pro Rata Share -------------- -------------- ABN AMRO BANK N.V. 0.072472958524 B Office LLC 0.072472958524 BZ Realty Holdings Ltd 0.269876573904 Bank One, NA 0.047107423025 Contrarian Funds, LLC 0.036236479284 Credit Suisse, New York & Cayman Is 0.047107423025 Deutsche Batik Trust Company America 0.036236479284 Edouard VII Properties, Inc. 0.047107423025 Goldman Sachs Credit Partners L.P. 0.077993627048 JPMorgan Chase Bank, N.A. 0.101335314281 Mizuho Global, Ltd. 0.083343902310 Royal Bank of Canada 0.072472958524 Wachovia Bank National Association 0.036236479284 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. 161; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Wants Court to Bless SRP Settlement Agreement --------------------------------------------------------- Debtors Enron Corp., Enron North America Corp., Enron Power Marketing, Inc., Enron Energy Marketing Corp., Enron Energy Services, Inc., ENA Upstream Company, LLC, Enron Energy Services North America, Inc., Enron Capital & Trade Resources International Corp., Enron Energy Services, LLC, Enron Energy Services Operations, Inc., and Enron Natural Gas Marketing Corp. ask the Court to approve their Settlement and Release of Claims Agreement with: -- two Enron Non-Debtor Gas Entities: * Enron Canada Corp., * Enron Compression Services Company, and * Enron M.W., L.L.C.; and -- the SRP Parties: * New West Energy Corp., and * Salt River Project Agricultural Improvement & Power District. New West filed six separate unliquidated proofs of claim against these Debtors: Claim No. Debtor --------- ------- 13047 Enron 13054 EPMI 13055 EEMC 13066 ENA 13067 EESO 13068 EESI The New West Claims allege that New West was forced to abandon its business in California due to the high wholesale electricity prices that existed in 2000 and 2001 as a result of the illegal conduct by the Debtors or other Enron entities. Salt River Project also filed claims in the Debtors' Chapter 11 cases including four partially unliquidated and partially or fully unliquidated claims: -- Claim No. 13060 against EPMI for $5,235,687, seeking damages based on EPMI's alleged breach of Western Systems Power Pool Agreements and a Firm Wholesale Power Agreement between the parties and asserting additional claims against EPMI and other Enron entities, which were unliquidated, involving balances at the California Power Exchange, balances at the Automated Power Exchange, balances at the California Independent System Operator, and balances resulting from other proceedings before the Federal Energy Regulatory Commission, in various courts, and before the California Public Utilities Commission; -- Claim No. 13029 against EESI; -- Claim No. 13057 against EPMI; and -- Claim No. 13069 against ENA. The Debtors, the Enron Non-Debtor Gas Entities and the SRP Parties have reached an agreement resolving their disputes. Among others, the Settlement provides that: (1) Claim No. 13060 will be allowed as a Class 6 general unsecured claim against EPMI in the additional agreed-to amount of $2,700,000; (2) the New West Claims will be expunged and disallowed; (3) Claim Nos. 13029, 13057 and 13069 will be expunged and disallowed. The Settlement Agreement is a comprehensive resolution of complex and disputed regulatory proceedings, bankruptcy and adversary proceedings, appellate proceedings, litigations and investigations concerning numerous issues and allegations arising from events in the California and western electricity and natural gas markets, Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, points out. The Settlement will avoid future disputes and litigation concerning these matters since the parties have agreed to release one another from claims, causes of action, obligations and liabilities with respect to the matters addressed in the Settlement Agreement. The Settlement, Mr. Smith continues, will also result in the resolution of millions of dollars in claims filed by the SRP Parties arising from the Debtors' alleged activities in the California and western electricity and natural gas markets. The Debtors believe that the compromise embodied in the Settlement Agreement is fair, equitable and reasonable. 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. 161; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTERGY NEW ORLEANS: Court Okays Up To $200 Mil. of DIP Financing ----------------------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the Eastern District of Louisiana authorized Entergy New Orleans, Inc., on an interim basis, to borrow up to $100,000,000. Elizabeth J. Futrell, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in Baton Rouge, Louisiana, relates that the Debtor at the Interim DIP Hearing agreed that it would not borrow more than the interim borrowing limit. However, the Debtor reserved its rights to borrow additional funds under the DIP Credit Agreement, if needed in its unprecedented post- hurricane efforts. Ms. Futrell tells the Honorable Jerry A. Brown of the Bankruptcy Court for the Eastern District of Louisiana that the Debtor anticipates that its borrowing under the DIP Credit Agreement will exceed, or nearly exceed the Interim Borrowing Limit. Hence, the Debtor asks the Court to enter a second interim order authorizing it to increase the Interim Borrowing Limit to $200,000,000, pursuant to Sections 364(c) and 364(d) of the Bankruptcy Code and the DIP Credit Agreement. The Debtor does not seek to impose priming liens under the Second Interim Order on the assets encumbered by liens in favor of existing prepetition creditors. However, the Debtor propose to grant the panoply of available liens and protections in the Second Interim Order that are available under the Bankruptcy Code short of the priming lien, and to have any priming lien granted under the Final Order apply nunc pro tunc to advances made under the Second Interim Order. Responses A) Interim Creditors Committee The interim Official Committee of Unsecured Creditors appointed in the Debtor's case recognizes that until the City of New Orleans is repopulated and industrial, commercial and residential customers resume electric and gas utilization approaching historical levels, the Debtor will almost certainly need cash from third-party sources to cover the difference between severely degraded revenue and unavoidable operating costs. Nonetheless, the Committee notes that until late in the day on October 24, 2005, no parties-in-interest had been provided with any information regarding the Debtor's need for the additional DIP financing. Moreover, the Committee attests that nothing was received prior to October 24 regarding the sources and uses of the financing authorized in the Court's Interim Order. Under normal circumstances, a creditor's committee would object to any borrowing by a Chapter 11 debtor without advance notice and opportunity to evaluate the justification and need for such borrowing. However, the Committee recognizes the extremely difficult conditions under which the Debtor is operating and that virtually all resources are dedicated to the restoration effort. Accordingly, the Committee supports the Debtor's request for essential third party funding of a financial bridge. The Committee reserves its right to investigate further and, if appropriate, object to forecasted expenditures that it determines are not necessary or proper to the restoration effort and the Debtor's financial rehabilitation. B) The Bank of New York The Bank of New York, as indenture trustee pursuant to a Mortgage and Deed of Trust dated as of May 1, 1987, objects to any increase in the Debtor's Initial Borrowing Limit because the Debtor has not provided any budget or other pertinent information regarding its interim emergency credit. Clayton T. Hufft, Esq., at Heller, Draper, Hayden, Patrick and Horn, L.L.C., in Baton Rouge, Louisiana, relates that the Bank is aware extenuating circumstances caused by Hurricanes Katrina and Rita may have prevented the Debtor from presenting to the Court and parties-in-interest a budget showing the anticipated expenditures it was required to make to avoid immediate and irreparable harm. However, Mr. Hufft notes that weeks have passed and the Debtor has had sufficient time to prepare a proposed budget for the additional funds it is requesting. Indeed, Mr. Hufft recounts, on October 19, 2005, the Debtor publicly disclosed a revised estimate of its storm restoration and business continuity costs and reduced those estimates to $260 to $325 million, so it is clear that the Debtor has performed a detailed analysis of the costs. Thus, Mr. Hufft contends that there is no justification for the Debtor to request additional funding without first disclosing: a) how the initial $100 million was expended; b) whether the funds were used to pay emergency costs or costs which it could have deferred payment on but elected to pay for business reasons; and c) its anticipated expenditures under the DIP Facility until the Final Hearing. The Bank also objects to any effort by the Debtor to impose a priming lien on the bond collateral to secure the advances made under the DIP facility. The Bank does not believe that the Bond Collateral can be primed by the DIP Facility, especially nunc pro tunc to the Petition Date. "[T]here is no current indication that the Debtor can establish at the Final Hearing any form of adequate protection for the Bond Collateral to justify a priming lien in the amount of $200 million," Mr. Hufft tells Judge Brown. Moreover, Mr. Hufft points out that nothing in the Bankruptcy Code or otherwise, prevents Entergy Corporation from providing interim postpetition financing to the Debtor to the limited extent necessary to avoid immediate and irreparable harm without seeking a priming lien on the Bond Collateral. "Funding by Entergy of any immediate cash requirements of the Debtor would be inconsistent with Entergy's historical practice of providing its subsidiaries, including the Debtor, with access to funds through an inter-company borrowing pool -- an available funding source which would not seek to shift to the Bondholders the financial risks of operating Entergy's subsidiary," Mr. Hufft explains. C) FGIC Financial Guaranty Insurance Company agrees with Bank of New York's assertions. Notwithstanding, FGIC reserves all of its rights to object to the final consideration of the DIP Motion, including, but not limited to, the imposition of a "priming" lien on the Bond Collateral. D) Boh Bros. Christy R. Bergeron, Esq., at Kingsmill Riess, L.L.C., in Houston, Texas, relates that Boh Bros. Construction Co., Inc., performed vital prepetition services for the Debtor related to the Hurricane Katrina reconstruction efforts, and has continued to provide those services postpetition conditioned on the Debtor's assurances that it would be paid all amounts owed. "It was based on these assurances that Boh Bros. continued to work for the Debtor," Ms. Bergeron notes. Boh Bros. tells the Court that it has not received all the amounts it is owed from the Debtor. Accordingly, Boh Bros. is seeking assurances that it will receive payment for all amounts it is owed for pre- and postpetition work as a condition for its continued work. * * * Judge Brown finds that the Debtor has an immediate need for an increase in the maximum interim borrowing amount. Hence, the Court authorizes the Debtor, on an interim basis, to borrow up to $200,000,000 pursuant to the DIP Agreement. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: Section 341(a) Meeting Set on November 18 -------------------------------------------------------------- R. Michael Bolen, the United States Trustee for Region 5, will convene a meeting of Entergy New Orleans, Inc.'s creditors at 11:00 a.m. Eastern Time, on November 18, 2005. The meeting will be held at Room 107, 707 Florida Street in Baton Rouge, Louisiana. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: U.S. Trustee Appoints 3-Member Interim Panel ----------------------------------------------------------------- Pursuant to Sections 1102(a) and 1102(b)(1) of the Bankruptcy Code, R. Michael Bolen, the United States Trustee for Region 5, appoints three creditors to serve as the Interim Committee of Unsecured Creditors in Entergy New Orleans Inc.'s chapter 11 case: (1) Apache Corporation Attn: Roxanne Armstrong 2000 Post Oak Blvd. Houston, Texas 77056-4400 Tel: (713) 296-6501 Fax: (713) 296-6501 (2) Western Gas Resources, Inc. Attn: Brian Jeffries 1099 - 18th Street, Suite 1200 Denver, Colorado 80202 Tel: (303) 452-5603 Fax: (303) 457-9748 (3) Magnus Entergy Marketing, Inc. Attn: Robert Helm 800 N. Shoreline, Suite 9005 Corpus Christi, Texas 78401 Case No. 05-17697 Tel: (361) 844-6035 Fax: (361) 888-4418 The U.S. Trustee will finalize the Committee after the First Meeting of Creditors under Section 341 scheduled for November 18, 2005. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) EVANSTON INC: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Evanston, Inc. Post Office Box 40788 North Charleston, South Carolina 29418 Bankruptcy Case No.: 05-13674 Type of Business: The Debtor specializes in property leasing, management and development. Chapter 11 Petition Date: October 14, 2005 Court: District of South Carolina (Charleston) Judge: John E. Waites Debtor's Counsel: Ivan N. Nossokoff, Esq. Ivan N. Nossokoff, LLC 25 Cumberland Street Charleston, South Carolina 29401 Tel: (843) 577-5292 Fax: (843) 723-3159 Total Assets: $9,451,179 Total Debts: $4,100,876 Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $67,625 1835 Assembly Road, RM 548 MDP 37 Columbia, SC 29201 Everhome Mortgage $32,752 P.O. Box 530580 Atlanta, GA 30353 Riser, McClaurin, & Gibbons $7,500 P.O. Box 60250 Attn: Barry McClaurin North Charleston, SC 29406 Brouorton Roofing $4,325 Accusweep $2,800 Risk Tech $1,800 Burke Airconditioning $1,365 Susan Teschner, Esq. $787 Service Master $778 Asphalt Doctors $495 Lankford Plumbing $345 EXIDE TECH: Eight Directors Buy Restricted Shares & Stock Options ----------------------------------------------------------------- In separate filings with the Securities and Exchange Commission on Oct. 14, 2005, eight directors of Exide Technologies, Inc., disclose that they recently acquired shares of restricted common stock and stock options in the Company: Shares of Restricted Stock Common Stock Options Officer Acquired Acquired -------- ------------ -------- Dappolonia, Michael R. 4,036 5,673 Demetree, Mark C. 4,036 5,673 Ferguson, David S. 4,036 5,673 Martineau, Phillip M. 4,036 5,673 Reilly, John Paul 4,036 5,673 Ressner, Michael P. 4,036 5,673 Wetzel, Carroll R. 4,036 5,673 York, Jerome B. 4,036 5,673 The conversion or exercise price of the stock options is $4.955. The Restricted Common Stock and Stock Options were granted pursuant to the 2004 Stock Incentive Plan. 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. (Exide Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * 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 post-employment benefit liabilities of $380 million. FIRSTBANK PUERTO: SEC Investigation Cues Moody's to Cut Ratings --------------------------------------------------------------- Moody's Investors Service downgraded the long-term deposit rating of FirstBank Puerto Rico to Ba1 from Baa3 and its short-term deposit rating to Not Prime from Prime-3. The bank's financial strength rating remains D+. The ratings remain under review for possible downgrade. The ratings had been placed under review for possible downgrade on Oct. 3, 2005, prompted by the then sudden and unexplained resignations of the CEO and CFO from their management positions at First BanCorp. First BanCorp is the parent of FirstBank Puerto Rico. Moody's rating action follows the announcement that the SEC has initiated a formal order of investigation related to mortgage loan purchases. Combined with the ongoing review, being conducted by outside law firms on behalf of the audit committee of First BanCorp's board of directors, the potential for adverse regulatory consequences is heightened. First BanCorp has yet to file its second quarter 2005 10Q report and the audit committee of First BanCorp's board has undertaken a review of the accounting treatment of mortgage loan purchases as well as other financial control issues. According to Moody's, the review for possible downgrade reflects the potential for further regulatory pressures and potential litigation risk. The rating agency added that a long and protracted audit committee review could have management repercussions, in addition to the management changes that have already taken place. Moody's also assumes that internal controls failures will also be announced in due course. The ratings are sustained by the breadth of franchise including a branch network in Puerto Rico and the bank's strong market share in the U.S. Virgin Islands. The rating agency said that liquidity appears to be adequate at the bank and holding company. A partial list of ratings that have been lowered and remain under review for possible downgrade: FirstBank Puerto Rico * Long-term Bank Deposits to Ba1 from Baa3 * Issuer and Senior Unsecured Debt to Ba2 from Ba1 * Subordinated Debt to Ba3 from Ba2 The bank financial strength rating, unchanged at D+, remains under review for possible downgrade. Short-term bank deposits were lowered to Not Prime from Prime-3. First BanCorp, Puerto Rico, headquartered in San Juan, Puerto Rico, had total assets of approximately $17.4 billion at March 31, 2005. FirstBank Puerto Rico accounts for nearly 98% of First BanCorp's consolidated total assets. FIRST HORIZON: Fitch Assigns Low-B Ratings to $735K Cert. Classes ----------------------------------------------------------------- Fitch rates First Horizon Asset Securities Inc. $202.73 million mortgage pass-through certificates, series 2005-7 class A-1 through A-14, A-PO, A-R, certificates 'AAA'. In addition, Fitch rates: -- $4,412,000 class B-1 'AA'; -- $1,261,000 class B-2 'A'; -- $630,000 class B-3 'BBB'; -- $420,000 class B-4 'BB'; -- $315,000 class B-5 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 3.50% subordination provided by the 2.10% class B-1, the 0.60% class B- 2, the 0.30% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of First Horizon Home Loan Corporation, currently rated 'RPS2' by Fitch. As of the cut-off date, Oct. 1, 2005, pool I consists of 367 conventional, fully amortizing, 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $210,089,711. The average principal balance of the loans in this pool is approximately $572,452. The mortgage pool has a weighted average original loan-to-value ratio of 70.16%. The weighted average FICO score is approximately 741. The states that represent the largest portion of the mortgage loans are California, Virginia, Maryland, and Washington. All other states represent less than 5% of the pool as of the cut-off-date. 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, the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings Web site at http://www.fitchratings.com/ All of the mortgage loans were originated or acquired in accordance with First Horizon Home Loan Corporation's underwriting guidelines. The trust, First Horizon Mortgage Pass-Through Trust 2005-7, was created for the sole purpose of issuing the certificates. For federal income tax purposes, an election will be held to treat the trust as multiple real estate mortgage investment conduits. The Bank of New York will act as trustee. FOOTSTAR INC: U.S. Trustee Amends Creditors Committee Membership ---------------------------------------------------------------- The U.S. Trustee for Region 2 amended the appointment of creditors to serve on the Official Committee of Unsecured Creditors of Footstar, Inc., and its debtor-affiliates. Rockport Company, a subsidiary of Reebok International Inc., has replaced Reebok International in the Committee. The Creditors' Committee's current members are: 1. S. Goldberg & Co., Inc. d/b/a SGFootwear Co. 20 East Broadway Hackensack, New Jersey 07601-6892 Attn: Bernard Leifer, President Tel: 201-342-1200 Fax: 201-342-4405 2. Simon Property Group, LP 115 West Washington Street Indianapolis, Indiana 46204 Attn: Ronald M. Tucker, Esq. Tel: 317-263-2346 Fax: 317-263-7901 3. Mercury International Trading Corporation 19 Alice Agnew Drive North Attleboro, Massachusetts 02761 Attn: Mr. Louis R. Rotella, Executive VP - CFO Tel: 508-699-9000 Fax: 508-699-9088 4. Longacre Management, LLC 810 Seventh Avenue New York, New York 10019 Attn: John Brecker Tel: 212-259-4300 Fax: 212-259-4343 5. SPCP Group, LLC as agent for Silver Paint Capital Fund, L,P. and Silver Point Capital Offshore Fund, Ltd. Two Greenwich Plaza Greenwich, Connecticut 06830 Attn: Michael A. Gatto Tel: 203-542-4031 Fax: 203-542-4100 6. Rockport Company 1895 J.W. Foster Boulevard Canton, Massachusetts 02021 Attn: Richard L. Fay, Sr. Dir. Credit/Collections Tel: 781-401-7260 Fax: 781-401-7567 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 West Nyack, New York, Footstar Inc., retails family and athletic footwear. As of August 28, 2004, the Company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. The Company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their restructuring efforts. When the Debtor filed for protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. HIGH VOLTAGE: Asks Court to Approve Ricci Consultants' Retention ---------------------------------------------------------------- Stephen S. Gray, the chapter 11 trustee of High Voltage Engineering Corp. and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for authority to employ Ricci Consultants, Incorporated, as his actuarial consultant with respect to: * the termination of the High Voltage Engineering Corporation Retirement Plan; and * the resolution of the Pension Benefit Guaranty Corporation's claim arising from the proposed termination of the pension plan. Stephen Ricci, president of Ricci Consultants, will be the Debtor's primary consultant. Ricci Consultants' professionals' hourly billing rate ranges from $50 to $250. The Debtor asked the Court in September for permission to retain Ricci Consultants as his actuarial consultant. The Court denied the Debtor's request based on Mr. Ricci's affidavit disclosing that his Firm will share a portion of its compensation with The Bostonian Group, which referred the Firm to the Debtor. The Court said that the compensation sharing violates Section 504(a) of the Bankruptcy Code. In his second affidavit, Mr. Ricci states his Firm no longer intends to share any portion of its compensation with any other entity, including the Bostonian Group. To the best of the Debtor's knowledge, Ricci Consultants is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products, which are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage filed its second chapter 11 petition on Feb. 8, 2005 (Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at Goulston & Storrs, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray was appointed chapter 11 Trustee in February 2005. John F. Ventola, Esq., and Lisa E. Herrington, Esq., at Choate, Hall & Stewart LLP represents the chapter 11 Trustee. HIGH VOLTAGE: Ch. 11 Trustee Wants to Reject Executory Contracts ---------------------------------------------------------------- Stephen S. Gray, the chapter 11 Trustee appointed in High Voltage Engineering Corp. and its debtor-affiliates' chapter 11 proceedings, completed the sale of substantially all of Robicon Corporation's assets to Siemens Energy & Automation, Inc., on July 15, 2005. In connection with the sale, Mr. Gray assumed and assigned certain executory contracts to Siemens to which Robicon was a party. On Sept. 2, 2005, Mr. Gray completed the sale of certain HVE assets, related particularly to Evans Analytical Group, to EAG Acquisition LLC. Similarly, Mr. Gray assumed and assigned to EAG certain executory contracts to which HVE was a party. Against this backdrop, Mr. Gray asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, for permission to reject certain unexpired executory contracts that were not assumed by Siemens or EAG and to which Robicon, High Voltage or Ansaldo Ross Hill, Inc., are parties. Mr. Gray tells the Court that if he is authorized to reject the contracts, he will soon know the amount of the claims asserted against the Debtors arising from the rejection. Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products which are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage filed its second chapter 11 petition on Feb. 8, 2005 (Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at Goulston & Storrs, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray was appointed chapter 11 Trustee in February 2005. John F. Ventola, Esq., and Lisa E. Herrington, Esq., at Choate, Hall & Stewart LLP represents the chapter 11 Trustee. HIGH VOLTAGE: U.S. Trustee Amends Equity Committee Membership ------------------------------------------------------------- The United States Trustee for Region 1 amended the Official Committee of Equity Interest Holders in High Voltage Engineering Corp. and its debtor-affiliates' chapter 11 cases. J Goldman Master Ltd. Partnership withdrew as a member of the Equity Committee. The Committee's members are: 1. Basso Multi-Strategy Holding Fund, Ltd. Attn: Dixon Yee 1266 E. Main Street Stamford, Connecticut 06302 Phone: 203-352-6129, Fax: 203-352-6193 Email: dyee@bassocap.com 2. IFC Acquisition Group, LLC Wilfrid Aubrey Growth Fund, LP. Wilfrid Aubrey International, Ltd. Attn: Nicholas W. Walsh, CFA 3 Sheridan Square, Suite #11E New York, New York 10014 Phone: 212-675-4906, Fax: 212-255-6624 Email: walshn@wilfridaubrey.com Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products that are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage filed its second chapter 11 petition on Feb. 8, 2005 (Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at Goulston & Storrs, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray was appointed chapter 11 Trustee in February 2005. John F. Ventola, Esq., and Lisa E. Herrington, Esq., at Choate, Hall & Stewart LLP represents the chapter 11 Trustee. HIRSH INDUSTRIES: Committee to Conduct Rule 2004 Examination ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Indiana gave its permission to the Official Committee of Unsecured Creditors appointed in Hirsh Industries, Inc., and its debtor- affiliates' chapter 11 cases, to conduct an examination pursuant to Rule 2004 of the Bankruptcy Code of: (1) Philip Schneider & Associates, Inc., (2) Stout Risius Ross, and (3) Deloitte & Touche LLP. The tells the Court that the additional examinations are necessary in order to: (a) understand a number of documents produced by the Debtors in discovery; (b) follow-up on statements made in the course of the 2004 examination of Douglas Smith, chairman and principal shareholder of Hirsh Industries; and (c) understand the issues raised in an adversary proceeding filed by Mr. Smith. The Committee wants to conduct 2004 examinations and order the production of certain documents relevant to the subject of such examinations to: (1) Philip Schneider and the individuals in the Firm having personal knowledge of the "Appraisal of the Fair Market Value of Hirsh Industries, Inc. as of Jan. 1, 2001," commissioned by Hirsh and produced by Hirsh in discovery, and the production by Philip Schneider of all work papers and supporting documentation in possession of Philip Schneider associated with the said "appraisal."; (2) Stout Risius and individuals in the Firm having personal knowledge with regard to the 2005 valuation report prepared by Stout Risius produced by Hirsh in discovery, and production by Stout Risius of all work papers and supporting documentation in possession of Stout Risius associated with the said 2005 valuation reports; and (3) Deloitte & Touche with regard to its Independent Auditors' Report of the consolidated balance sheets and the related consolidated financial statements as of Dec. 31, 2004 and 2003, produced by Hirsh in discovery, and production by Deloitte & Touche of all work papers and supporting documentation in possession of Deloitte & Touche associated with the said consolidated balance sheets and financials statements. Headquartered in Des Moines, Iowa, Hirsh Industries, Inc., manufactures storage and organizational products. Hirsh Industries' products include metal filing cabinets, metal shelving, wooden ready-to-assemble organizers and workshop accessories and retail store fixtures. The Company and two affiliates filed for chapter 11 protection on July 6, 2005 (Bankr. S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V. Possinger, Esq., at Jenner & Block LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated between $1 million to $10 million in assets and between $50 million to $100 million in debts. IKON OFFICE: Earns $20 Million of Net Income in Fourth Quarter -------------------------------------------------------------- IKON Office Solutions (NYSE:IKN) reported results for the fourth quarter and fiscal year ended Sept. 30, 2005. Net income from continuing operations for the fourth quarter was $20 million. "Our performance during the quarter confirmed that we are headed in the right direction," said Matthew J. Espe, IKON's Chairman and Chief Executive Officer. "Our momentum in both the Mid-Market and in National Accounts continued to deliver positive results. We increased placements of new digital black and white office equipment by 7%. Color equipment revenue grew 11% and color copy volume increased 48% as compared to the fourth quarter of fiscal 2004. In addition, this was our sixth consecutive quarter of record performance for placements of the IKON CPP 500, with 96% growth year over year from this important 50 page per minute production color multifunction system. These are all positive trends that we expect to continue as we begin our new fiscal year." Total revenue for the fourth quarter of fiscal year 2005 was $1.1 billion, compared to $1.14 billion for the fourth quarter of fiscal year 2004, a decline of 3%. Targeted revenue, which represents 98% of total revenue and excludes revenue from North American lease financing and de-emphasized technology hardware businesses, declined 1% compared to the prior year. When further adjusted for the sale of the Company's operating subsidiaries in France and Mexico, targeted revenue was flat year-to-year. Foreign currency translation had a positive impact on total revenue of 0.3%. IKON Office Solutions, Inc. -- http://www.ikon.com/-- the world's largest independent channel for copier, printer and MFP technologies, delivers integrated document management solutions and systems, enabling customers worldwide to improve document workflow and increase efficiency. IKON integrates best-in-class systems from leading manufacturers, such as Canon, Ricoh, Konica Minolta, EFI and HP, and document management software from companies like Captaris, EMC (Documentum), Kofax and others, to deliver tailored, high-value solutions implemented and supported by its global services organization--IKON Enterprise Services. With fiscal year 2005 revenue of $4.4 billion, IKON has approximately 26,000 employees in 450 locations throughout North America and Western Europe. * * * As reported in the Troubled Company Reporter on Sept. 12, 2005, Moody's Investors Service affirmed the Ba2 corporate family rating of IKON Office Solutions and assigned a Ba2 rating to the proposed $225 million ten-year senior unsecured notes to be issued under SEC Rule 144A. Moody's said the ratings outlook remains negative. KAISER ALUMINUM: Gets Ct. OK to Extend Deadline to Remove Actions ----------------------------------------------------------------- Judge Fitzgerald extends Kaiser Aluminum Corporation and its debtor-affiliates' Removal Deadline to the later of 30 days: -- after the effective date of the Plan of Reorganization; and -- after the entry of an order terminating the automatic stay with respect to a particular action sought to be removed. The Debtors' right to remove insurance proceedings against certain insurers pending in the San Francisco Superior Court, in California, expired on September 12, 2004. As previously reported in the Troubled Company Reporter on September 28, 2005, the Debtors are parties to a wide-variety of non-asbestos prepetition litigation. Kaiser Aluminum & Chemical Corporation is also a party to a significant number of prepetition asbestos-related proceedings that are pending in various courts throughout the country. Due to several factors, including the number of Actions involved and the complex nature of the Actions, the Debtors have not yet determined which, if any, of the Actions should be removed and, if appropriate, transferred to the District of Delaware. 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Insurers Want Motion to Enforce Stay Denied ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on October 12, 2005, Kaiser Aluminum Corporation and its debtor- affiliates asked the U.S. Bankruptcy Court for the District of Delaware to enforce the automatic stay and direct the Insurers to dismiss their state court motion. Because the Insurers' actions have been deliberate and willful, the Debtors also ask the Court to sanction the Insurers by requiring them to reimburse the Debtors for the attorneys' fees and expenses incurred in filing and litigating the stay request. Gregory M. Gordon, Esq., at Jones Day, in Dallas, Texas, relates that at the September 1, 2005, Disclosure Statement Hearing, certain insurers complained that the confirmation schedule set by the U.S. Bankruptcy Court for the District of Delaware did not provide them with enough time to conduct discovery and litigate issues relating to Kaiser Aluminum Corporation and its debtor- affiliates' pending plan of reorganization. The Insurers alleged that the Debtors' Plan is not "insurance neutral." At the omnibus hearing held on September 26, 2005, the Insurers also complained that some of the deadlines in a proposed pretrial scheduling order were too short and did not provide them with enough time to conduct discovery. Hence, the Court agreed to extend some of those deadlines. Consistent with their asserted intention to litigate alleged confirmation issues, including the proposed transfer of insurance rights under the Debtors' Plan, the Insurers filed a number of pleadings with the Bankruptcy Court, including: -- a motion for more definite statement seeking certain modifications to the Debtors' plan of reorganization; -- a motion for access to Bankruptcy Rule 2019 statements; and -- an omnibus objection to silica personal injury claims. Creditors Committee Supports Debtors' Request The Official Committee of Unsecured Creditors asserts that the Insurers' request is improper because it seeks to substantially impair the value of the insurance policies by precluding Kaiser Aluminum & Chemical Corporation from transferring rights in and proceeds from those policies pursuant to the Debtors' Plan of Reorganization. The Creditors Committee also finds the Insurers' request as an improper collateral attack on the Plan and on the Bankruptcy Court's exclusive jurisdiction to adjudicate core confirmation issues. According to William P. Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, the Creditors' Committee is concerned that the issues raised by the Insurers' request may seriously threaten the Debtors' ability to: (a) even confirm any plan under Section 524(g) of the Bankruptcy Code for Kaiser Aluminum Corporation, KACC and affiliates, including the present Plan, since the insurance coverage will be a critical source of recovery for the tort claimants in any plan of reorganization; (b) negotiate with certain creditor constituencies regarding the terms of the Plan and the related exhibits and documents; and (c) assign their rights under the insurance policies to the Funding Vehicle Trust. Thus, the Creditors Committee asks the Court to enforce the automatic stay against the Insurers and direct the Insurers to withdraw their request. Insurers Object The Insurers contend that Debtors are not entitled to assign to the Funding Vehicle Trust the Insurers' rights under their liability policies. Kevin Gross, Esq., at Rosenthal, Monhait, Gross & Goodness, P.A., in Wilmington, Delaware, explains that the Policies contain provisions requiring the Insurers' consent to any assignment, which consent the Debtors have not requested and the Insurers have not given. Under the Plan, Mr. Gross notes, the Debtors seek to: (a) "transfer" the "rights and obligations" under the Policies to a "Funding Vehicle Trust" for the funding and payment of various tort claims; and (b) a finding by the Bankruptcy Court as to the propriety of that assignment. According to Mr. Gross, the Plan includes, as an express condition to confirmation, the requirement that the Bankruptcy Court declares that the insurance assignment is "valid and enforceable," without any provision as to whether that declaration is to be made under the State of California or bankruptcy law. In addition, Mr. Gross says, the Plan's alleged "insurance neutrality" provision includes a carve-out for the insurance assignment, providing that: "the transfer of rights in and under the [Policies] to the Funding Vehicle Trust is valid and enforceable and transfers such rights under the [Policies] as the Debtors may have, and that such transfer [will] not affect the liability of any PI Insurance Company." The Debtors included these provisions in the Plan to nullify the consequences of their breach of the anti-assignment clauses in the Policies, Mr. Gross tells the Court. The Insurers do not seek any adjudication of the validity of the insurance assignment proposed in the Plan under the Bankruptcy Code, but instead request for relief solely under California state law, Mr. Gross explains. "Prior to their filing of the Stay Motion, the Debtors never disputed that California state law applies to all coverage issues, including the validity of the Policies' anti-assignment provisions." Mr. Gross relates that contrary to the Debtors' assertions, the Insurers' Summary Adjudication Motion on the issue of assignment of policies was filed in the ordinary course of the Coverage Litigation, captioned as Kaiser Aluminum & Chemical Corp. v. London Market Insurers, et al., Case No. 312415. Additionally, the Insurers have advised the Debtors of their intent to file that Assignment Motion in pleadings filed with the California state court in the beginning of September 2005. Mr. Gross notes that the Insurers' subsequent participation in the Debtors' bankruptcy cases with respect to confirmation of the Plan: (a) occurred after the Insurers announced their intention to and actually filed the "Assignment Motion"; and (b) demonstrates that the Assignment Motion was intended to be narrowly focused and not intended to resolve any bankruptcy issues with respect to the Plan. Contrary to the Debtors' assertion, the automatic stay clearly does not apply because the Debtors initiated the Coverage Litigation, not the Insurers. Similarly, the Assignment Motion seeks resolution of a defense to coverage, which is not subject to the automatic stay under applicable law. Moreover, even if the Court determines that the Assignment Motion raises new "claims" against the Debtors and is not a defense to coverage, Mr. Gross argues that those "claims" arose postpetition at the time the Plan was filed, thus, the automatic stay is not applicable. "The Debtors' reference to possible preemption of the anti-assignment provisions is a red herring, as the insurers have not sought any adjudication of whether the Bankruptcy Code preempts the Policies' anti-assignment provisions in their Assignment Motion." Therefore, the Bankruptcy Court clearly does not have exclusive jurisdiction over the issues raised in the Assignment Motion, Mr. Gross points out. "The relief sought in the Stay Motion is contrary to [the Bankruptcy Court's] order and the Debtors' decision to allow the Coverage Litigation to remain before the State Court." The Stay Motion is merely an effort by the Debtors to forum shop, Mr. Gross contends. The Debtors want to have it both ways: * they wish for the Coverage Litigation to continue as to every other state law issue; but * recognizing that the Policies and California state law restricts their ability to assign the Policies without the insurers' consent, they want to prevent the State Court from ruling on the state law assignment issue. Consequently, the Insurers ask the Court to deny the Stay Motion and allow the validity of the insurance assignment to be adjudicated under California state law in the Coverage Litigation. 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. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Court Won't Deem G. Carbajo's Claim as Timely Filed --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on September 8, 2005, Georgina Carbajo asked the U.S. Bankruptcy Court for the Northern District of Illinois to: (i) extend the Bar Date so that she could file her claim, and (ii) deem the claim timely filed. Ms. 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 Court 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 Kmart Objects David E. Gordon, Esq., at Wilmer Cutler Pickering LLP, in New York, attests that in January 2004, Kmart Corporation served Georgina Carbajo notice of the February 23, 2004, Supplemental Bar Date, in accordance with Rule 2002(g) of the Federal Rules of Bankruptcy Procedure and applicable Court orders. Mr. Gordon argues that Ms. Carbajo has failed to make an adequate showing of a lack of notice during the relevant notice period. The Claimant also did not present sufficient facts and evidence to establish that her failure to timely file a proof of claim was due to excusable neglect. Accordingly, Kmart asks the Court to deny Ms. Carbajo's request. * * * Judge Sonderby denies Ms. Carbajo's request for reasons stated in open court. 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) KRISPY KREME: Appoints Jeff Jervik as Operations EVP ---------------------------------------------------- Krispy Kreme Doughnuts, Inc. (NYSE: KKD) has named Jeff Jervik as its Executive Vice President of Operations, effective immediately. Mr. Jervik will report directly to Steve Panagos, President and Chief Operating Officer of Krispy Kreme, and will be responsible for all company-owned operations, franchisee operations and wholesale operations. Prior to joining Krispy Kreme, Mr. Jervik served as National Vice President of Operations for Pizza Hut Inc., where he was responsible for the operations of over 1,000 Pizza Hut restaurants with sales of approximately $800 million and over 25,000 employees. Most recently, Mr. Jervik owned and operated a chain of Papa John's restaurants in Hawaii, which he expanded from inception to become one of the top two pizza chains in the state. "We are very pleased to have someone with Jeff's extensive operational background join the Krispy Kreme team," said Steve Panagos. "Jeff represents a further step in providing leadership for our operations team. With his extensive background in implementing profitable franchisee growth strategies and improving underperforming operations, we are confident that Krispy Kreme will benefit greatly from Jeff's expertise." "I see tremendous potential in the Krispy Kreme brand and I am very excited to be joining the Company at this time," said Mr. Jervik. "While we have some challenges ahead of us, I believe that they are manageable and that the opportunities for this business are significant." KremeKo, Inc., Krispy Kreme's Canadian franchisee, is currently restructuring under the Companies' Creditors Arrangement Act. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. The Monitor is attempting to sell the KremeKo business. Headquartered in Winston-Salem, North Carolina, Freedom Rings operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme -- http://www.krispykreme.com/-- is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 360 stores and 50 satellites in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. KRISPY KREME: Board Taps James Mead to Search for Permanent CEO --------------------------------------------------------------- The Executive Search Committee of the Board of Directors for Krispy Kreme Doughnuts, Inc. (NYSE: KKD) is working with James Mead & Company, a well-respected executive search firm with experience placing top executives in companies such as Starbucks, Sara Lee, Dean Foods and The Gillette Company, to assist in the search for a permanent Chief Executive Officer. The Board and Executive Search Committee look to identify and retain a CEO as soon as possible. General Counsel to Retire Krispy Kreme also reported that Frank Murphy, the Company's General Counsel, will be retiring effective Dec. 1, 2005. In order to ensure a smooth transition, Mr. Murphy will serve as an advisor to the Board of Directors and the Company. The Company will initiate a search for Mr. Murphy's successor. "We regret Frank's decision to retire, but appreciate his guidance and commitment to Krispy Kreme, especially over the past 18 months," said James H. Morgan, Chairman of the Company's Board. "We value Frank's counsel and appreciate his willingness to serve as an advisor during the transition." KremeKo, Inc., Krispy Kreme's Canadian franchisee, is currently restructuring under the Companies' Creditors Arrangement Act. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. The Monitor is attempting to sell the KremeKo business. Headquartered in Winston-Salem, North Carolina, Freedom Rings operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme -- http://www.krispykreme.com/-- is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. Krispy Kreme currently operates approximately 360 stores and 50 satellites in 45 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. LEVI STRAUSS: Streamlining Cues Fitch to Upgrade Ratings -------------------------------------------------------- Fitch Ratings has upgraded its ratings on Levi Strauss & Co.: -- Issuer default rating to 'B-' from 'CCC'; -- $1.8 billion senior unsecured debt to 'B' from 'CCC+'; -- $650 million asset-based loan (ABL) to 'BB-' from 'B'; -- $500 million term loan at 'BB-' from 'B'. Fitch's recovery ratings remain unchanged. The Rating Outlook is Stable. The upgrade reflects the progress the company has made in streamlining and rationalizing its operations and stabilizing its core product areas, which have resulted in improvement in the company's overall credit profile. The ratings also consider Levi's well known brand name, sales base diversity, and liquidity, offset by the heavy debt burden and the highly competitive nature of the denim and casual bottoms market. Over the past two years, Levi's has made improvements in its core segment distribution and product offerings and grown its Levi Strauss Signature and Asia Pacific segments. As a result, revenue increased 0.8% to $4.1 billion for the latest 12 months ended Aug. 28, 2005, compared to full year fiscal 2003, despite the company's rationalization of unprofitable product lines in its core U.S. Levi's and U.S. Dockers divisions. This product rationalization as well as cost reductions from the transition to finished product sourcing led to operating EBITDA margin doubling to 15.8% over the same period. Fitch expects Levi to continue to benefit from its core product investments and the growth of the Levi Strauss Signature segment despite challenges in its U.S. Dockers and European segments. In addition, while the growth of lower margin product lines, such as Levi Strauss Signature, is expected to pressure operating margins, the company's ability to leverage its manufacturing network and further rationalize product lines should result in good cash flow generation. The company's cash flow generation has allowed Levi's to maintain strong liquidity while funding investments in working capital. As of Aug. 28, 2005 Levi's had cash balances of $213.1 million plus additional liquidity of $377 million in net available borrowing capacity under its credit facility. In addition, gross debt totaled $2.4 billion, which has remained flat as restrictions related to the repayment of debt have limited the company's ability to reduce balances. However, as a result of improved operating profit, credit metrics have strengthened, with leverage, measured by total debt to EBITDA, falling to 3.6 times for the latest 12 months ended Aug. 28, 2005, from 7.1x in fiscal 2003, and EBITDA coverage of interest increasing to 2.5x from 1.3x, over the same period. In the near term, cash balances and cash flow generation are anticipated to be used to address trailing liabilities related to historical taxes, pensions, and benefits and fund inventory increases related to improving service levels. As a result, credit metrics are expected to remain near current levels. MAPLE LEAF: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Maple Leaf Lincoln Mercury, Inc. 527 East Locust Geneseo, Illinois 61254 Bankruptcy Case No.: 05-87486 Type of Business: The Debtor is new and used automobile dealer. See http://www.mapleleaflincmerc.com/ Chapter 11 Petition Date: October 28, 2005 Court: Central District of Illinois (Peoria) Judge: Thomas L. Perkins Debtor's Counsel: Barry M. Barash, Esq. Sabrina M. Petesch, Esq. Barash & Everett, LLC P.O. Box 1408 Galesburg, Illinois 61402 Tel: (309) 341-6010 Fax: (309) 762-3643 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. MCI INC: Gets Regulatory Approval From FCC on Verizon-MCI Merger ---------------------------------------------------------------- The Federal Communications Commission approved the proposed acquisition of MCI, Inc. (NASDAQ:MCIP) by Verizon Communications Inc. (NYSE:VZ) after it concluded that the transaction advances the public's interest. Coming just days after the U.S. Department of Justice cleared the Verizon-MCI combination following a comprehensive, eight-month review, yesterday's action by the FCC increases momentum as attention turns toward the handful of states with approvals still pending. Executives of both companies anticipate that they can close the transaction, which was announced on Feb. 14, later this year or early in 2006. "After two federal reviews and strong approvals by shareholders and the international community, it is clear that this combination is undeniably in the public interest," said Tom Tauke, Verizon executive vice president of public affairs, policy and communications. "The Department of Justice and FCC approvals put us on firm footing as we seek the remaining few state approvals." Jim Lewis, MCI senior vice president of policy and planning, said, "This approval represents a significant milestone in the regulatory approval process, and we look forward to delivering the benefits of this transaction to U.S. consumers and the enterprise market as a combined company." As part of the FCC approval, Verizon and MCI committed to: -- continue the rollout of Verizon's stand-alone DSL service; -- continue to adhere to "network neutrality" principles adopted by the FCC earlier this year; -- cap temporarily certain special access and UNE rates; and - maintain for a period of time the current number of settlement-free Internet peering arrangements. On Thursday, the DOJ filed for approval by a federal court a consent decree that includes stipulations agreed to by Verizon and MCI. Under the decree, Verizon and MCI will lease dark (unused) fiber connections to 356 buildings in several states in the Verizon footprint on the East Coast. Fiber currently being used to serve customers will not be affected. The Verizon-MCI combination, part of the continuing evolution of the industry driven by customers and technology, will capitalize on the complementary strengths of each company and create one of the world's leading providers of communications services. The combined company will be better able to compete for and serve large-business and government customers by providing a full range of services, including wireless and sophisticated Internet protocol-based services. Consumers and businesses will also benefit because the new company will have the financial strength to maintain and improve MCI's extensive Internet backbone network. Verizon Communications Inc. (NYSE: VZ) -- http://www.verizon.com/ -- a Dow 30 company, is a leader in delivering broadband and other communication innovations to wireline and wireless customers. Verizon operates America's most reliable wireless network, serving 49.3 million customers nationwide, and one of the nation's premier wireline networks, serving home, business and wholesale customers in 28 states. Based in New York, Verizon has a diverse workforce of nearly 215,000 and generates annual revenues of more than $71 billion from four business segments: Domestic Telecom, Domestic Wireless, Information Services and International. 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. 104; 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. MCLEODUSA INC: Confirmation Hearing Scheduled for December 15 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, set Dec. 15, 2005, as the date for the combined hearing to approve the disclosure statement and plan of reorganization filed by McLeodUSA Incorporated. As previously reported in the Troubled Company Reporter on Oct. 31, 2005, The Company's prepackaged reorganization plan should allow it to complete, as quickly as possible, a restructuring of its approximately $777.3 million in debt, plus interest, while continuing to maintain normal business operations for its more than 320,000 customers nationwide. The Company has approximately $27 million in cash available as of the date of filing, and has secured a commitment from its lenders for debtor-in-possession financing of up to $50 million, to be replaced upon the Company's exit from bankruptcy with a new $50 million revolving credit facility. The Company's approximately $677.3 million of secured Junior Debt, plus accrued interest, will be converted into 100% of the Company's equity, and the Company's existing $100 million in secured Senior Debt will be cancelled and replaced with a $100 million term facility. All of the Company's existing Preferred and Common stock will be cancelled, and holders of that stock will have no recovery. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. MCLEODUSA INC: Gets Access to $50 Million DIP Credit Facility ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, gave McLeodUSA Incorporated access to up to $20 million of a new $50 million debtor-in-possession credit facility. The Court also approved all of the Company's requests in a series of court filings known as "First Day Motions." The First Day Motions allow McLeodUSA to conduct business as usual with respect to its customers, employees and suppliers and to maintain existing cash management systems. Among other things, the Court authorized the Company to: -- continue payment of all trade creditors in the ordinary course and without interruption; -- continue payment of all employee salaries and benefits without interruption; and -- continue to use existing cash management systems and maintain existing bank accounts. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. MIRANT CORP: Mintz Levin's Environmental Legal Work Increases ------------------------------------------------------------- Mirant Corporation and its debtor-affiliates previously retained Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as an ordinary course professional. Mintz Levin provided legal advice concerning the renewal of the National Pollutant Discharge Elimination Permit issued by the U.S. Environmental Protection Agency and the Massachusetts Department of Environmental Protection for cooling water discharges from the Mirant Kendall, LLC, power station in Cambridge, Massachusetts. On May 31, 2005, the Debtors sought the U.S. Bankruptcy Court for the Northern District of Texas' authority to pay Mintz Levin $66,478 for fees and expenses. The fee is in excess of the $50,000 ordinary course professional cap. The fee is for the very extensive and time critical services Mintz Levin rendered to the Debtors in a three-month period in 2004, Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, tells the Court. At the Fee Review Committee's request, the hearing on the Payment Application was postponed and has not yet been reset. Mr. Peck informs the Court that at the time the Payment Application was filed, the Debtors did not anticipate needing further services from Mintz Levin that would result in monthly fees and expenses in excess of the Cap. Since that time, a need has arisen for additional services from Mintz Levin, specifically in the: (a) real estate and steam contract issues in connection with the Kendall Facility; (b) representation of Mirant Canal in negotiations with the Town of Sandwich, Maryland, for a new tax valuation agreement; and (c) representation of Mirant Canal concerning the renewal of the National Pollutant Discharge Elimination Permit issued by the U.S. Environmental Protection Agency and the Massachusetts Department of Environmental Protection for cooling water discharge. The Debtors believe that Mintz Levin is very qualified for the additional services because of the firm's expertise in the related areas of law and its solid understanding of Massachusetts environmental, real property, and real property tax law. Thus, the Debtors seek the Court's authority to employ Mintz Levin as their special counsel to perform the Additional Services. The Debtors also ask the Court to allow their pending Payment Application and permit them to pay Mintz Levin $66,478 for the services it rendered as an ordinary course professional. Ralph A. Child, Esq., a member at Mintz Levin, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Child notes that the firm's Conflict Check System reveals that its connections and representations of certain entities have no relation to the matter involving Mirant Kendall. 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. 80 Bankruptcy Creditors' Service, Inc., 215/945-7000) MORRIS PUBLISHING: Moody's Rates Proposed $350MM Sr. Loan at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Morris Publishing Group LLC's proposed $350 million senior secured credit facility and downgraded the Corporate Family rating to Ba3 from Ba2. Morris Publishing is a wholly owned subsidiary of Morris Communications Company, LLC. Ratings assigned: * Proposed $175 million senior secured revolving credit facility due 2012 -- Ba2 * Proposed $175 million senior secured tranche A term loan facility due 2012 -- Ba2 Ratings downgraded: * $300 million of senior subordinated notes due 2013 -- to B1 from Ba3 * Corporate Family rating -- to Ba3 from Ba2 Ratings downgraded, subject to withdrawal at closing: * $150 million senior secured revolving credit facility -- to Ba2 from Ba1 * $100 million senior secured tranche A term loan -- to Ba2 from Ba1 * $150 million senior secured tranche C term loan -- to Ba2 from Ba1 The rating outlook is stable. The lowered ratings reflect Morris's inability to reduce its debt or generate cash flow in accordance with Moody's expectations when the ratings were assigned in July 2003. Moody's had expected that by year-end 2005, Morris Communications restricted group debt would decline to approximately 4.0 times EBITDA. Moody's currently estimates that year-end debt will stand at approximately 5.6 times EBITDA, reflecting both higher debt levels and weaker cash flow generation than expected. The downgrade also reflects management's use of free cash flow and debt to fund acquisitions and pay dividends. Ratings are supported by: * the value of Morris's attractive media assets, * the strength of its prominent position in local newspaper markets, * the dependability of its core newspaper publishing revenues, * the geographic diversification of its cash flows, and * its relatively good liquidity position. The ratings are constrained by: * an overall worsening of financial leverage, * the acquisitiveness of Morris's management, * a continuing decline in aggregate newspaper paid circulation, and * the dependence of the company's non--newspaper publishing affiliates upon the liquidity provided by Morris Publishing. As a private company, controlled and managed by the Morris family, Morris does not provide any measure of board independence or any meaningful corporate governance provisions to protect debt holders. Nevertheless, the Morris family has many years of experience in successfully managing its newspaper properties and is well respected within the industry. The stable outlook reflects the general recovery of the newspaper publishing sector from the recent economic downturn and the limited competition faced by Morris from other forms of local print advertising. For 2Q05, Morris's newspaper advertising revenues grew by 3% as positive results in retail and classified offset the decline in national advertising sales. Circulation revenues increased by 1% as the weakness in many markets was offset by cover price increases in Jacksonville and Savannah. Declines in paid circulation were most noticeable at Morris's Topeka and Amarillo properties. At the end of June 2005, Morris Publishing recorded total debt of $547 million, or 5.4 times LTM EBITDA. Morris Communications Company and its restricted subsidiaries recorded total debt of $578 million or 5.6 times EBITDA, while Morris Communications Company and subsidiaries recorded consolidated debt of $621 million or 6.0 times consolidated EBITDA. Morris Communications Company is a wholly-owned subsidiary of Shivers Trading and Operating Company. A significant level of intercompany transactions exists between Morris Publishing, Morris Communications, and Shivers Trading and Operating Company. Morris Publishing reimburses Morris Communications a management fee totaling 4% of its revenues, a shared service fee (up to 2.5% of revenues) and other fees. In addition, Morris Communications provides advances to the parent as well as to Shivers Lending, LLC which is involved in financing real estate purchases, construction projects and other investments for related parties. At the end of June 2005, Morris Communications Company consolidated debt included: (1) $547 million in Morris Publishing Company debt, (2) $43 million outstanding under Shivers Investments, LLC's $60 million margin loan facility which is secured by Mediacom stock, (3) Morris Communications' $24 million aircraft loan, and (4) Morris Communications' $5 million seller note payable. In addition, at the end of June 2005, Morris Communications recorded notes receivable of $32 million outstanding under a $ 57 million loan commitment to an unrestricted affiliate, Shivers Lending LLC, and a $12 million advance to Shivers Trading and Operating Company. At closing, Moody's expects that Morris Publishing will record total liquidity of $116 million, largely comprising undrawn availability under its proposed revolving credit facility. In Moody's opinion, Morris Publishing will depend upon its revolving credit facility to fund working capital requirements and make intercompany reimbursements. Proceeds from the proposed financing will be used to refinance Morris's existing $400 million senior secured credit facilities. Moody's plans to withdraw the ratings on the existing senior secured credit facilities at closing. Morris Publishing is the issuer of both the senior secured credit facility and the senior subordinated notes. Senior secured lenders receive guarantees from Morris Communications Company LLC and its restricted subsidiaries. Accordingly senior secured lenders are supported by the operations of Morris's newspaper, outdoor, radio, and other publishing assets. The senior secured facilities are rated one notch above the Corporate Family rating in recognition of the relatively strong asset protection afforded to senior secured lenders. The subordinated noteholders benefit from a guarantee only from Morris Publishing and its subsidiaries, and these guarantees are junior to the secured guarantees provided to senior secured lenders. Consequently, subordinated note holders may count only upon the operations of Morris's newspaper publishing operations to support their debt. Covenants under the bank facility relate to the financial results of Morris Communications Company LLC, and its restricted group of subsidiaries. Neither the subordinated notes nor the credit facility are guaranteed by Shivers Investments, LLC, an unrestricted subsidiary which holds Morris's investment in Mediacom Communications cable company, nor will they benefit from a security interest in Morris' Mediacom stock holdings, which were recently valued at about $194 million in aggregate. An upgrade of ratings is unlikely in the near term, given the company's worsening leverage profile and continuing leverage in excess of five times EBITDA. Conversely ratings could be lowered or the outlook changed to negative if management continues to use free cash flow or debt to fund acquisitions or dividends. Moody's rating is based upon a review of the financial statements of Morris Publishing Group, LLC and Morris Communications Company, LLC. Moody's has not been provided audited financial statements for Morris Communications Holding Company LLC or Shivers Trading & Operating Company. Morris Publishing Group, one of the nation's largest newspaper publishers, is headquartered in Augusta, Georgia. At the end of June 2005, the company recorded LTM sales of $463 million. NORTHWEST AIRLINES: Posts $475 Million Net Loss in Third Quarter ---------------------------------------------------------------- Northwest Airlines Corporation (OTC: NWACQ) reported a third quarter net loss of $475 million. This compares to the third quarter of 2004 when the airline reported a net loss of $46 million. Excluding $82 million in pension curtailment charges and $159 million in reorganization items in connection with the company's bankruptcy proceedings, the third quarter net loss was $234 million or $2.69 per common share. "Our third quarter results clearly demonstrate the need for Northwest to restructure expeditiously. We now are focusing on achieving a competitive labor and non-labor cost structure, strengthening our balance sheet, achieving market-level lease rates on our aircraft, developing a more efficient business model and returning to profitability," said Doug Steenland, president and chief executive officer. "Realizing these goals will result in $2.5 billion in overall profit improvement." Mr. Steenland continued, "We are working hard to transform Northwest Airlines into a network carrier with competitive costs that will enable it to be profitable and compete effectively against all airlines for the long term." "While all employees will contribute to our cost savings requirements, other stakeholders will be required to shoulder their fair share of the necessary burden in order for the airline to restructure successfully." Financial Results Operating revenues in the third quarter increased by 10.7% versus the third quarter of 2004 to $3.38 billion. Passenger revenue per available seat mile increased by 6.5% on 1.5% more available seat miles. Operating expenses in the quarter, excluding unusual items, increased 16.5% versus a year ago to $3.46 billion. Unit costs, excluding fuel and unusual items, were 3.3% higher. Fuel prices averaged 184.5 cents per gallon, excluding taxes, up 48.3% versus the third quarter of 2004. Neal Cohen, executive vice president and chief financial officer, said, "The Chapter 11 process is allowing us to address our cost issues. In addition to achieving the required labor and non-labor cost savings, the airline must restructure its balance sheet and reshape its fleet in order to return to sustained profitability." Northwest's quarter-end unrestricted cash balance was $1.6 billion. Other Commenting on Northwest's reorganization progress, Steenland said, "We are in intensified negotiations with union leaders in order to reach consensual agreements that reduce labor costs by $1.4 billion annually. We remain open to exploring various options to attain the needed labor cost savings, but we need to resolve the issue quickly. Reluctantly, if we fail to reach agreements, we will be forced to ask the bankruptcy court to reject the existing labor agreements." As reported in previous quarters, an issue that continues to affect Northwest is the heavy burden of taxation. "Our ability to restructure quickly and return to profitability is hampered by the level of taxes and fees that we must impose on our customers' tickets. Northwest Airlines paid $330 million in transportation taxes and fees during the third quarter to various government entities. We urge federal officials to minimize ticket taxes on an industry that continues to have a greater tax burden than alcohol and tobacco," Steenland concluded. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NOVA CHEMICALS: Fitch Puts BB+ Rating on Proposed $400MM Sr. Notes ------------------------------------------------------------------ Fitch Ratings affirms NOVA Chemicals Corporation's issuer default rating and senior unsecured debt rating at 'BB+'. At the same time, Fitch affirms the senior secured credit facility rating at 'BBB' and assigned a 'BB+' to the proposed offering of $400 million in new senior floating notes due 2013. Fitch also assigned a 'BBB' rating to the series A preferred shares. The ratings apply to approximately $1.9 billion of debt. The Rating Outlook remains Stable. Cash proceeds from NOVA's new floating senior unsecured notes due 2013 are expected to be used to repay NOVA's obligations under its accounts receivable securitization program and the balance will be used for general corporate purposes. The ratings are supported by NOVA's size, market position in North America and Europe, low-cost position as a domestic ethylene and polyethylene producer, and significant earnings leverage during the peak of the chemical cycle. NOVA has adequate liquidity and a manageable maturity schedule, and has increased its financial flexibility by extending expiration dates for its senior secured credit facility and A/R securitization program until 2010. Additionally, the availability under NOVA's senior secured credit facility was increased to $375 million from $300 million as well as its A/R securitization program was enlarged to $300 million from $250 million in 2005. The total return swap agreement for NOVA's outstanding series A preferred shares also expires in 2007. In relation to the series A preferred shares, approximately $65 million is held as restricted cash and included in other current assets. As result of the $65 million cash collateral, the notional amount of the total return swap for the series A preferred shares is approximately $126 million. Fitch's concerns include the cash burn and weak performance in the styrenics business, potential share repurchase activity not supported by operational cash flow, and potential for softening in consumer demand with rapidly increasing product prices. The Stable Rating Outlook reflects the year-over-year improvement in NOVA's olefin and polyolefins business as the petrochemical industry approaches its expected peak in 2006 and 2007. Industry participants continue to face several challenges including high and volatile raw materials, supply constraints, and product availability. With inventory levels low and high operating rates for most chemical commodities, producers are expected to substantially benefit from increased pricing power and margin expansion during the fourth quarter of 2005 and throughout 2006. Fitch remains moderately concerned about the sustainability of economic growth with increasing energy costs and the overall effect of high petrochemical prices on demand throughout the supply chain. As of Sept. 30, 2005, NOVA's balance sheet debt plus A/R program balance and outstanding series A preferred shares totaled $1.9 billion. The company's credit metrics have weakened slightly for the 12-month period ending Sept. 30, 2005 compared to 2004 year- end primarily due to a decline in EBITDA levels. NOVA had a total debt-to-EBITDA of 3.2 times and total adjusted debt-to-EBITDAR, incorporating gross rent, of 4.2x for the latest 12 months ending Sept. 30, 2005. EBITDA-to-interest incurred was 4.0x for the same period. Fitch expects credit metrics will strengthen in 2006 and beyond, due to both improved EBITDA and some debt reduction. NOVA continues to have sufficient liquidity, with $97 million in cash and cash equivalents as of the end of the third quarter of 2005. The company has access to additional liquidity through an undrawn and committed credit facility, which expires June 2010 totaling $375 million, less $62 million in outstanding letters of credit as of Sept. 30, 2005. Additionally, the company has a $300 million A/R securitization program, which matures in June 2010. Approximately $285 million was utilized at the end of the third quarter of 2005. NOVA Chemicals Corporation is a multinational producer of commodity chemicals, including ethylene, polyethylene, styrene, and polystyrene. The company generated EBITDA of $507 million on $5.71 billion sales during the latest 12-months ending Sept. 30, 2005. A majority of its assets are located in Canada and the U.S. In North America, NOVA is the fifth largest producer of ethylene and polyethylene. The company reports two business segments, olefins/polyolefins and styrenics. The U.S. accounts for 72% of sales, Canada accounts for 1%, Europe and rest of the world accounts for 27%. Polyethylene and styrenic polymers are used in rigid and flexible packaging, containers, plastic bags, plastic pipe, electronic appliances, housing and automotive components, and consumer goods. NVF COMPANY: CB Richard Ellis Approved as Real Estate Broker ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave NVF Company and its debtor-affiliate permission to employ CB Richard Ellis, Inc., as their real estate broker. CB Richard will: (a) market and sell the Wilmington facility; (b) develop and execute a marketing program for the Wilmington facility; (c) prepare professional brochures for distribution to potential purchases; (d) list the property in the commercial real estate database and the internet; and (e) contact and negotiate with potential purchasers on behalf of the Debtors. CB Richard will be paid a commission of 4% of the gross sale price or 5% of the gross sale price if the property is co-brokered. To the best of the Debtors' knowledge, CB Richard does not hold any interest adverse to the Debtors or their estates. Headquartered in Yorklyn, Del., NVF Company -- http://www.nvf.com/ -- manufactures thermoset composites (glass, Kevlar), vulcanized fiber, custom containers, circuitry materials, custom fabrication, and welding products. The Company along with its wholly owned subsidiary, Parsons Paper Company, Inc., filed for chapter 11 protection on June 20, 2005 (Bankr. D. Del. Case Nos. 05-11727 and 05-11728). Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million to $50 million and estimated debts of more than $100 million. O'SULLIVAN INDUSTRIES: Court Fixes January 9 as Claims Bar Date --------------------------------------------------------------- At O'Sullivan Industries Holdings, Inc., and its debtor- affiliates' request, Judge Mullins directs all creditors holding or wishing to assert claims against the Debtors to file a proof of claim with the Clerk of the United States Bankruptcy Court for the Northern District of Georgia by January 9, 2006, 5:00 p.m. Eastern Time. Claims arising from the rejection of a lease or an executory contract by operation of the Bankruptcy Code or by any Court order will be filed by the later of 30 days from the date of the rejection or rejection order or the Bar Date. Judge Mullins exempts these creditors from filing a proof of claim: a) Creditors holding or wishing to assert claims that have previously been allowed or paid by any Court order, or that belong to a Debtor; b) Holders of the Debtors' equity securities need not file proofs of interest solely on account of their ownership interests in or possession of those equity securities; and c) Creditors holding a claim that is: -- not scheduled as "disputed," "contingent," or "unliquidated" and the creditor does not disagree with the amount, nature and priority of the claim as set forth in the Schedules; or -- allowable under Sections 503(b) and 507(a)(1) of the Bankruptcy Code as an expense of administration of the Debtors' estates. The Debtors will recognize proofs of claim timely filed by the trustee under the Senior Secured Notes and the Senior Subordinated Notes, on behalf of their noteholders. In the event that the applicable trustee timely files the proofs of claim, any proof of claim filed by a registered or beneficial holder of notes that is limited exclusively to claims for the repayment of principal, interest or other applicable fees and charges in respect of the notes will be disallowed as duplicative. The Court further directs the Debtors to serve on or before November 21, 2005, a Bar Date Notice and a proof of claim form by first class United States mail to: a) the United States Trustee; b) counsel to any official committees appointed in the Debtors' cases; c) all parties who have requested service pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure; d) all parties to any executory contract or unexpired leases of the Debtors; e) counsel to GE Capital Corporation, as agent to the Prepetition Lender; f) counsel to The Bank of New York, the trustee for 10.63% senior secured notes due 2008; g) counsel to the largest holders of the Senior Secured Notes; h) counsel to the ad hoc committee of holders of 13.375% senior subordinated notes due 2009; i) counsel to Wells Fargo Bank Minnesota, N.A., the trustee for the Senior Subordinated Notes; j) counsel to Wells Fargo, the trustee for the variable rate industrial revenue bonds due October 1, 2008; k) counsel to BancBoston Investments, Inc.; l) all other secured creditors of the Debtors; m) all employees and directors of the Debtors who served before the Petition Date; n) the District Director of the Internal Revenue Service for the Northern District of Georgia; o) the United States Securities and Exchange Commission; and p) all other known holders of prepetition claims, if any. The Debtors will publish the Bar Date Notice once in the: * Atlanta Journal-Constitution; * Lamar Democrat; and * Gazette-Virginian. Moreover, Judge Mullins made it clear that any creditor that is required but fails to file a proof of claim for its claim will be forever barred, estopped and enjoined from asserting the claim against the Debtors or their estates. "[T]he Debtors, their estates, and their property shall be forever discharged from any and all indebtedness or liability with respect to such claim, and such holder shall not be permitted to vote to accept or reject any plan of reorganization filed in these Chapter 11 cases or participate in any distribution in the Debtors' Chapter 11 cases on account of such claim," Judge Mullins rules. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN IND: Gets Okay to Employ Ordinary Course Professionals ----------------------------------------------------------------- O'Sullivan Industries Holdings, Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Northern District of Georgia's authority to continue to employ nine professionals they utilize in the ordinary course of their business: Professionals Services Provided ------------- ----------------- Armstrong Teasdale LLP Legal Services -- trademark and employment law matters Bennet Thrasher, PC Tax preparation services BKD LLP Auditing services for benefit plans Blackwell Sanders Legal Services -- general Peper Martin LLP corporate law matters Crutchfield, Gary Consultant services related Closing the Debtors' Australian operations Haynes & Boone LLP Legal Services -- patent law matters Norton Mancini Legal Services -- general Weiler & De Ano PC litigation matters PricewaterhouseCoopers LLP Auditing and accounting services Traub, Bonacquist & Fox LLP Legal Services -- bankruptcy preference defense matters The Ordinary Course Professionals will render services to the Debtors' estates similar to those rendered prior to the Petition Date. "It is essential that the employment of the Ordinary Course Professionals, who are already familiar with the Debtors' affairs, be continued on an ongoing basis, so as to enable the Debtors to conduct their ordinary business affairs without disruption," James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia, tells Judge Mullins. The Debtors also want to employ additional Ordinary Course Professionals, as may be necessary throughout the pendency of their Chapter 11 cases. In light of the costs associated with the preparation of employment and retention applications for professionals who will receive relatively small fees or who will provide services entirely unrelated to their bankruptcy cases, the Debtors believe that it would be impractical, inefficient, and unnecessarily costly for them to submit individual applications and proposed retention orders for each professional. Accordingly, the Debtors ask the Court to dispense with the requirement of individual employment and retention applications and retention orders with respect to each Ordinary Course Professional and that each professional be retained from time to time as of the Petition Date. Each Ordinary Course Professional will file with the Court: a) an affidavit, pursuant to Section 327(e) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, stating that the professional does not represent or hold any interest materially adverse to the Debtors or to their respective estates with respect to the matters for which they would be retained; and b) a retention questionnaire, which, among other things, would detail the type of services to be provided and the compensation to be paid for such services. The Debtors will pay each approved Ordinary Course Professional 100% of fees and expenses incurred upon the submission to and approval by the Debtors of an appropriate invoice. However, if any Ordinary Course Professional's fees and disbursements exceed $35,000 in any given month, then the Ordinary Course Professional must apply to be retained under the Bankruptcy Code and the payments to the Ordinary Course Professional for the excess amounts will be subject to the prior Court approval. The Debtors believe that certain of the Ordinary Course Professionals may hold unsecured claims against them in respect of prepetition services rendered. However, the Debtors assures the Court that the Ordinary Course Professionals do not represent or hold any interest adverse to them or to their estates. Mr. Cifelli states that the employment procedure of the Ordinary Course Professionals will save the Debtors the expense of separately applying for the employment and retention of each professional. Furthermore, Mr. Cifelli notes that relieving the Ordinary Course Professionals of the requirement of preparing and prosecuting fee applications will save the estates the additional professional fees and expenses. Likewise, Mr. Cifelli adds, the Employment Procedures will spare the Court and the United States Trustee from having to consider numerous fee applications involving relatively modest amounts of fees and expenses. * * * Judge Mullins grants the Debtors' request. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN INDUSTRIES: Wants to Hire Garden City as Claims Agent ---------------------------------------------------------------- O'Sullivan Industries Holdings, Inc., and its debtor-affiliates have more than 1,000 creditors and other potential parties-in- interest. The Debtors note that the Office of the Clerk of the United States Bankruptcy Court for the Northern District of Georgia is not equipped to: (i) distribute notices; (ii) process all of the proofs of claim filed; and (iii) assist in the balloting process. In this regard, the Debtors sought and obtained the Court's authority to employ Garden City Group, Inc., as their Chapter 11 claims, notice, and balloting agent. GCG specializes in noticing, ballot tabulation, and other administrative tasks in Chapter 11 cases. The Debtors chose GCG based on both its experience and the competitiveness of its fees. GCG's billing rates are: Task Pricing ---- ------- Set-up Creditor File * Create creditor file $170/hr * Data entry of names $0.50/name * Manual entry of creditor data $45/hr * Produce SOFAs/SALs $135/hr Notice Printing and Mailing * Notice $0.20/first page and $0.15/add'l page * Personalization of Notice $0.05 each Claims Processing & Docketing * Including data entry $60/hr Document Management, Imaging, Storage * Mail sorting $40/hr * Document Scanning $0.12/page * Document Management $35 - $75/hr * File Maintenance (paper) $1.50/box * File Maintenance (electronic) $200 plus $0.04/creditor record/mo * Tracking undeliverables $0.25 each System Support * System Customization: - Programmer $125 - $150/hr - Senior Programmer $150 - $185/hr *Remote web-based access $1,500/mo Reporting * Standard and Customized Reports $65/creation Consulting & General Project Mngt. * Supervisor $70 - $90/hr * Project Manager $95/hr * Senior Project Manager $135/hr * Directors/ Asst. VP $150/hr * VP $175/hr * Quality Assurance $75 - $125/hr * Senior VP Systems and Managing Director $250/hr Voting and Tabulation * Set up $1000/tabulation element * Processing ballots $60/hr Website, if requested * Creating web site $3,000 * Monthly Maintenance Fee $250/mo Disbursements * per record to transfer agent $0.25 each Telephone Support, if requested * Initial design fee $1,500 * Monthly maintenance $100/mo * Interactive platform $0.49/min and $0.95/transaction * Management oversight $100 - $150/hr Miscellaneous Expenses * Travel, postage, courier at cost * Copying $0.15/page * Facsimile $0.15/page In addition, the Debtors agreed to pay GCG a $7,500 retainer. The Debtors believe that GCG's engagement is the most effective, efficient, and cost conscious manner by which to distribute the notices, process the proofs of claim, assist in the balloting process, and perform other related administrative tasks. As Claims, Notice and Balloting Agent, GCG will: (a) notify all potential creditors of the filing of the Debtors' bankruptcy petitions and of the setting of the first meeting of creditors, pursuant to Section 341 of the Bankruptcy Code; (b) notify all potential creditors of the existence and amount of their respective claims, as evidenced by the Debtors' books and records and as set forth in their schedules and statements of financial affairs; (c) furnish a notice of the last day for the filing of proofs of claim and a form for the filing of a proof of claim, after the notice and form are approved by the Court; (d) file with the Clerk a copy of the notice, a list of persons to whom it was mailed, and the date the notice was mailed, within 10 days of service; (e) docket all claims received, maintain the official claims registers for each of the Debtors on behalf of the Clerk, and provide the Clerk with certified duplicate unofficial Claims Registers on a monthly basis, unless otherwise directed; (f) specify, in the applicable Claims Register, these information for each claim docketed: * the claim number assigned, * the date received, * the name and address of the claimant and agent, if applicable, who filed the claim, and * the classifications of the claim; (g) record all transfers of claims and provide any notices of the transfers required by Bankruptcy Rule 3001; (h) make changes in the Claims Register pursuant to Court Order; (i) upon completion of the docketing process for all claims received to date by the Clerk's office, turn over to the Clerk copies of the Claims Registers for the Clerk's review; (j) maintain the official mailing list for each Debtor of all entities that have filed a proof of claim, which list will be available upon request by a party-in-interest or the Clerk; (k) assist with, among other things, solicitation, calculation, and tabulation of votes and distribution, as required in furtherance of confirmation of the Plan; (l) provide and maintain a website where parties can view pleadings or other documents filed with the Court by the Debtors; and (m) at the close of the case, box and transport all original documents in proper format, as provided by the Clerk's office, to the Federal Records Center. Michael Sherin, Chairman of Garden City Group, says GCG has not and will not represent the separate interests of any creditor in the Debtors' Chapter 11 cases. However, Mr. Sherin notes, GCG's employees may, in the ordinary course of their personal affairs, have relationships with certain of the creditors. Mr. Sherin ascertains that GCG neither holds nor represents any interest adverse to the Debtors' estates and that it is a "disinterested person," as referenced in Section 327(a) of the Bankruptcy Code and as defined in Section 101(14), as modified by Section 1107(b). Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) ON TOP: Turns to Conwell William for Financial Advice ----------------------------------------------------- On Top Communications, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division, for authority to employ Conwell Williams, LLC, as their financial consultant. The Debtors tell the Court that Conwell Williams has provided them financial and accounting services for several years prior to the bankruptcy filings. During their restructuring, the Debtors need Conwell Williams to provide financial advice relative to the chapter 11 proceedings. Leonard Rayford, manager of Conwell Williams, will be the Debtors' primary financial consultant. Mr. Rayford discloses his firm received an initial $3,000 retainer from the Debtors and will bill a monthly retainer fee of $12,000. The Debtors assure the Court that Conwell Williams is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Lanham, Maryland, On Top Communications, LLC, and its affiliates acquire, own and operate FM radio stations located in the Southeastern United States. The Company and its debtor- affiliates filed for chapter 11 protection on July 29, 2005 (Bankr. D. Md. Case No. 05-27037). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. ON TOP: U.S. Trustee Objects to Hiring of Conwell Williams ---------------------------------------------------------- W. Clarkson McDow, Jr., the United States Trustee for Region 4 objects to and asks the U.S. Bankruptcy Court for the District of Maryland to deny the application of On Top Communications, LLC, and its debtor-affiliates to employ Conwell Williams, LLC as their exclusive financial advisor. The Debtors filed an application with the Court to employ Conwell Williams as their financial advisor on Oct. 25, 2005. Mr. McDow explains that according to the Engagement Letter between the Debtors and Conwell Williams, the Debtor seeks to employ the Firm to: 1) consummate transactions with parties willing to make an investment in the Debtors and consummate transactions with parties willing to purchase assets of the Debtors; and 2) provide monthly accounting services. Mr. McDow gives the Court six reasons to deny the Debtors' application: 1) the Debtors' application is completely devoid of any information regarding their intentions with regards to their assets and exit strategy and the Debtors provide no information regarding the qualifications or experience of the Firm to act as an exclusive financial advisor. 2) paragraph 2(A) of the Engagement Letter states that Conwell Williams will be paid an Advisory Fee upon the first funding or closing of any Transaction. Paragraph 2(A) seems to make first funding or closing a condition precedent to receiving the Advisory Fee. However, paragraph 2(d) states that the Debtor will pay the Advisory Fee even if it declines an offer for a Transaction, either an investment or acquisition. Therefore, paragraphs 2(A) and 2(d) appear to contradict each other; 3) the Debtors will pay Conwell Williams an initial retainer of $3,000 and a monthly retainer of $12,000, but those retainers will not be off-set against any Advisory Fee. Neither the Engagement Letter nor the Application state why the Debtor is paying the Firm any money beyond the Advisory Fees because they do not link the retainer to any performance requirement; 4) although not stated in any of the documents submitted to the Court, the U.S. Trustee assumes that the retainer is for the monthly accounting services that Conwell Williams will perform on behalf of the Debtor. But how Conwell Williams will be paid for the monthly accounting services is not specifically stated in either the Engagement Letter or the Application; 5) the Application states that Conwell Williams will be paid its normal and customary rates, but it fails to state what those rates are and for what services the Firm will be entitled to receive those rates; and 6) the engagement is for a one-year term and the U.S. Trustee believes that in the event a Chapter 11 Trustee or Chapter 7 Trustee is ever appointed during that time, they should not be bound to use Conwell Williams as a financial advisor. There should be a provision in the contract that it becomes Void if a Chapter 11 Trustee is appointed, or the case converts to Chapter 7, or if Conwell Williams fails to perform under the contract. There is currently no default or termination provisions in the Engagement Letter. The Court has yet to schedule a hearing to consider Mr. McDow's request. Headquartered in Lanham, Maryland, On Top Communications, LLC, and its affiliates acquire, own and operate FM radio stations located in the Southeastern United States. The Company and its debtor- affiliates filed for chapter 11 protection on July 29, 2005 (Bankr. D. Md. Case No. 05-27037). Thomas L. Lackey, Esq., of Bowie, Maryland, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. ON TOP: Wants to Hire Sciarrino & Associates as FCC Counsel ----------------------------------------------------------- On Top Communications, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Maryland for permission to employ Sciarrino & Associates, PLLC as their special counsel to represent them in Federal Communication Commission matters. Sciarrino & Associates will: 1) assist and advise the Debtors with respect to FCC matters and appear before the FCC and protect the interests of the Debtors before the FCC; and 2) perform all other legal services to the Debtor that may be necessary in connection with FCC matters. Dawn M. Sciarrino, Esq., a Member of Sciarrino & Associates, is the principal attorney from the Firm performing services to the Debtors. Mr. Sciarrino discloses that his Firm received a $6,044.66 retainer. Mr. Sciarrino charges $250 per hour for his services. Mr. Sciarrino reports that Sciarrino & Associates' attorneys performing services to the Debtors will charge from $100 to $250 per hour. Sciarrino & Associates assures the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in Lanham, Maryland, On Top Communications, LLC, and its affiliates acquire, own and operate FM radio stations located in the Southeastern United States. The Company and its debtor- affiliates filed for chapter 11 protection on July 29, 2005 (Bankr. D. Md. Case No. 05-27037). Thomas L. Lackey, Esq., of Bowie, Maryland, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. PONDEROSA PINE: McGuireWoods Approved as Construction Counsel ------------------------------------------------------------- The Honorable Novalyn L. Winfield of the U.S. Bankruptcy Court for the District of New Jersey put her stamp of approval on Ponderosa Pine Energy, LLC, and its debtor-affiliates' request to employ McGuireWoods LLP as their special construction counsel, nunc pro tunc to Aug. 29, 2005. McGuireWoods will: (a) negotiate a firm price proposal with Deltak LLC; (b) negotiate a letter of intent with Deltak LLC; (c) negotiate a final binding contract with Deltak for material procurement and the purchase of Long Lead Time Parts; and (d) negotiate and draft contracts with other suppliers and contractors for the repair, installation and reconstruction of the heat recovery steam generator, as necessary. The Debtors related that McGuireWoods' services will not duplicate any work of the retained professionals. Joseph Tirone, Esq., a partner at McGuireWoods LLP, disclosed the current hourly rates of professionals to be engaged: Designation Hourly Rate ----------- ----------- Partners $225 - $500 Associates $195 - $335 Paralegals/Clerks $80 - $160 Mr. Tirone assured the Debtors that McGuireWoods LLP is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. With 725 lawyers in 15 offices worldwide, McGuireWoods LLP -- http://www.mcguirewoods.com/-- is a full service law firm that serves public, private, government and nonprofit clients from many industries including automotive, energy resources, health care, technology and transportation. Headquartered in Morristown, New Jersey, Ponderosa Pine Energy, LLC, and its affiliates are utility companies that supply electricity and steam. The Company and its debtor-affiliates filed for chapter 11 protection on April 14, 2005 (Bankr. D. N.J. Case No. 05-22068). Mary E. Seymour, Esq., Sharon L. Levine, Esq., and Kenneth A. Rosen, Esq., at Lowenstein Sandler PC represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. PROSOFT LEARNING: Likely Defaults Cue Going Concern Doubt --------------------------------------------------------- Hein & Associates LLP expressed substantial doubt about Prosoft Learning Corporation's ability to continue as a going concern after it audited the Company's financial statement for the fiscal year ended July 31, 2005. The auditing firm says that the Company is party to certain note agreements that provide creditors with the ability to demand accelerated repayment of amounts owed if the Company is unable to comply with the terms of the note agreements. The auditing firm notes that the Company's ability to comply with the terms of the agreement in uncertain. The auditing firm also says that the Company also experienced losses from operations in each of the last three years. Fourth Quarter Results Revenue in the fourth quarter of fiscal 2005 was $1.77 million, compared to $1.75 million in the fourth quarter of fiscal 2004, marking the first time the Company has achieved year-over-year revenue improvement since the third quarter of fiscal 2001. Gross profit, as a percentage of revenue, was 73% for the fourth quarter of fiscal 2005, compared to 66 percent for the fourth quarter of the previous fiscal year. Net loss for the fourth quarter of fiscal 2005 was $490,000 compared to a net loss of $640,000 for the fourth quarter of fiscal 2004. "Clearly we are delighted to achieve the improvements in revenue, gross profit and net loss compared to the fourth quarter of 2004," stated Benjamin Fink, Prosoft's president and CEO. "Although our market remains challenging, our efforts in restructuring our product mix and sales focus, combined with the execution of our academic strategy, are beginning to show tangible results." Mr. Fink continued, "While our team continues to focus on improving our operating performance, our capital structure needs to be addressed in the near term. Although our long-term debt does not begin to mature until mid-2006, an event of default under our debt agreements would arise if the Company loses its listing status on the Nasdaq SmallCap market, which could occur on or after November 2, 2005. We are aggressively seeking resolution of this issue with our noteholders." Fink also noted that the Company had retained East Wind Advisors, LLC to act as its advisor as it explores strategic alternatives. Content development, sales and marketing, and general and administrative expenses were $1.43 million in the fourth quarter of fiscal 2005, compared to $1.60 million for the same quarter of the previous fiscal year, a decrease of $170,000 or 11%. Days Sales Outstanding of receivables were at 29 days, consistent with recent performance. Notes Agreement On August 30, 2004, the Company received $1.35 million from institutional investors pursuant to the issuance of Secured 8% Convertible Notes due August 30, 2006. The Notes are secured by all of the assets of the Company, subject to an intercreditor agreement, and require interest payments semi-annually in cash or, at the Company's option, in shares of its Common Stock or in the form of additional one-year notes accruing interest at the rate of 10% per annum. The Notes are convertible into common stock of the Company at $1.68 per share. In connection with this financing, the Company also issued to the investors: (i) warrants to purchase up to 200,893 shares of the Company's Common Stock, exercisable at $2.28 per share and expiring in March 2010, and (ii) warrants to purchase up to 642,857 shares, exercisable at $2.10 per share and generally expiring in August 2009. Default Condition A term of the Subordinated Secured Convertible Note and the Secured 8% Convertible Notes require that the Company maintain the listing and trading of its common stock on the Nasdaq SmallCap Market. If the Company is unable to maintain the trading of its common stock on Nasdaq for any reason, the Company will be in default on the listing requirement covenant in the note agreements. Such a default provides the holders of the notes with the ability to require immediate repayment of the principal and interest then owed under the notes. November 2 Deadline The Company's stock has remained listed on the Nasdaq SmallCap Market subject to a grace period granted by Nasdaq through November 2, 2005, as a result of the Company's failure to meet the $1.00 minimum bid price listing maintenance requirement of the exchange. To remain listed past that date, the bid price of the Company's stock must be at least $1.00 for 10 consecutive trading days prior to that date. Since the Company's stock continues to trade at less than $1.00 per share as of Oct. 28, 2005, and fewer than 10 trading days remain before November 2, 2005, it is a certainty that the Company will be out of compliance with the Nasdaq minimum bid requirement as of the expiration of the grace period. If the Company's stock is delisted from Nasdaq, and if as a result of that delisting the lenders should choose to accelerate the repayment of their notes, the Company may be unable to repay the principal and interest owed. The Company is aggressively seeking resolution of this issue with the noteholders. Nasdaq Delisting Notice On May 6, 2005, the Company received notice of a Nasdaq Staff Determination indicating that the Company's common stock did not qualify for continued listing on The Nasdaq SmallCap Market based upon Nasdaq Marketplace Rule 4310(c)(4) (the "Rule"). The Company's common stock has closed for the last 30 consecutive business days below the minimum $1.00 per share requirement for continued listing under the Rule. In accordance with Marketplace Rule 4310(c)(8)(D), the Company was provided 180 calendar days, or until November 2, 2005, to regain compliance. If, at any time before November 2, 2005, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide written notification that it complies with the Rule. If the Company does not comply with the Rule by November 2, 2005, Nasdaq will determine whether the Company meets The Nasdaq SmallCap initial listing criteria as set forth in Marketplace Rule 4310(c), except for the bid price requirement. If the Company meets the initial listing criteria, Nasdaq will notify the Company that it has been granted an additional 180 calendar day compliance period. If the Company is not eligible for an additional compliance period, Nasdaq will provide written notification that the Company's securities will be delisted. At that time, the Company may appeal Nasdaq's determination to delist its securities to a Listing Qualifications Panel. Prosoft Learning Corporation -- http://www.ProsoftLearning.com/-- offers content and certifications to enable individuals to develop and validate critical Information and Communications Technology workforce skills. Prosoft is a leader in the workforce development arena, working with state and local governments and school districts to provide ICT education solutions for high school and community college students. Prosoft has created and distributes a complete library of classroom and e-learning courses. Prosoft distributes its content through its ComputerPREP division to individuals, schools, colleges, commercial training centers and corporations worldwide. Prosoft owns the CIW job-role certification program for Internet technologies and the Certified in Convergent Network Technologies certification, and manages the Convergence Technologies Professional vendor-neutral certification for telecommunications. QUINTILES TRANSNATIONAL: S&P Affirms BB- Corp. Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Quintiles Transnational Corp. to positive from stable. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. "The outlook revision reflects the acceleration of debt payments made possible by the securitization of Quintiles' rights to royalties and fees from sales of Eli Lilly & Co.'s depression treatment, Cymbalta," said Standard & Poor's credit analyst David Lugg. The transaction yielded proceeds of $240 million, a portion of which was used to pay off the remaining $154 million borrowed under the company's existing credit facility, which was terminated. The mid-speculative-grade ratings on Research Triangle Park, North Carolina-based Quintiles reflect the large financial burden that the company assumed to fund its 2003 management-led leveraged buyout, as well as customers' inconstant appetite for the company's services. Somewhat mitigating these factors, however, is Quintiles' leading position as a service provider to well-heeled pharmaceutical companies and its significant cash reserves. The largely debt-financed buyout weakened lease-adjusted credit measures dramatically, with adjusted total debt to EBITDA peaking at double digits in 2004. Since then, Quintiles has used the proceeds of asset sales and cash made available through the American Jobs Creation Act to prepay its bank borrowings. Among the remaining obligations of the company, the preferred stock held by equity investors is recognized by Standard & Poor's as a potentially significant call on financial resources; as such, we view this preferred stock as a hybrid with an intermediate equity content. Also, a $220 million debt issue at Quintiles' parent, Pharma Services Intermediate Holding Corp., is consolidated with the Quintiles debt. With these analytical adjustments, annualized total debt to EBITDA is now 5.5x if the preferred is viewed strictly as debt, or 3.6x if viewed as equity. This dramatic improvement from the levels in 2004 reflects both ongoing debt reduction and five quarters of improved EBITDA. RESIDENTIAL ACCREDIT: Fitch Rates $19.4 Mil Sub. Certs. at Low-B ---------------------------------------------------------------- Residential Accredit Loans, Inc. mortgage pass-through certificates, series 2005-QS15, are rated by Fitch Ratings: -- $407,334,630 classes I-A, II-A, III-A, A-P, A-V, and R senior certificates 'AAA'; -- $11,220,600 class M-1 'AA'; -- $4,315,000 class M-2 'A'; -- $3,236,300 class M-3 'BBB'. In addition, these privately offered subordinate certificates are rated by Fitch: -- $2,157,500 class B-1 'BB'; -- $1,726,000 class B-2 'B'. The $1,510,279 class B-3 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 5.60% subordination provided by the 2.60% class M-1, the 1.00% class M- 2, the 0.75% class M-3, the privately offered 0.50% class B-1, the 0.40% privately offered class B-2 and the 0.35% privately offered class B-3. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities as master servicer. As of the cut-off date, Oct. 1, 2005, the mortgage pool consists of 2,038 conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $431,500,310. The mortgage pool has a weighted average original loan-to-value ratio of 75.64%. The pool has a weighted average FICO score of 718, and approximately 45.54% and 5.56% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 30.64%, and second homes account for 3.36%. The average loan balance of the loans in the pool is $211,727. The three states that represent the largest portion of the loans in the pool are California, Florida and New York. All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 18.6% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly-owned subsidiary of the master servicer. Approximately 15.4% of the mortgage loans were purchased from American Home Mortgage Corporation, an unaffiliated seller. Except as described in the preceding sentence, no unaffiliated seller sold more than 8.7% of the mortgage loans to Residential Funding. Approximately 77.5% of the mortgage loans are being subserviced by HomeComings. None of the mortgage loans were subject to the Home Ownership and Equity Protection Act of 1994. Furthermore, none of the mortgage loans are loans that, under applicable state or local law in effect at the time of origination of the loan, are referred to as 'high-cost' or 'covered' loans or any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' issued May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/. The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program. One or more of these attributes often marks alt-A program loans: a non-owner-occupied property, the absence of income verification, or a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as one real estate mortgage investment conduit. RUSSELL-STANLEY: Hunter Drums Gets Court Approval to Sell Assets ---------------------------------------------------------------- Hunter Drums Limited, a wholly-owned subsidiary of Russell-Stanley Holdings, Inc., received approval on Oct. 27, 2005, from the Ontario Supreme Court for the sale of substantially all of its assets to Mauser Canada Ltd., a Canadian affiliate of Mauser-Werke GmbH & Co. KG, and One Equity Partners. As reported in the Troubled Company Reporter on Oct. 27, 2005, the U.S. Bankruptcy Court for the District of Delaware confirmed on October 25, 2005, Russell-Stanley Holdings, Inc.'s Joint Prepackaged Plan of Reorganization. The Debtor's Disclosure Statement explaining its Plan was approved on October 20. The Debtor filed a prepackaged chapter 11 plan in order to effectuate an asset purchase agreement with an affiliate of Mauser-Werke GmbH & Co. KG and One Equity Partners. Pursuant to that agreement, Russell-Stanley and certain of its subsidiaries will sell substantially all of their assets to Mauser. Prior to the filings, Russell-Stanley obtained 100% acceptance of the Plan from voting creditors. This unanimous support is expected to minimize the duration of the Chapter 11 cases. Under the proposed plan, Russell-Stanley's existing subordinated debt and equity will be cancelled, and bondholders will receive their pro rata share of the sale proceeds that remain after secured claims, unsecured claims other than bond claims, and Chapter 11 expenses have been paid or reserved. Hunter Drums has not been part of Russell-Stanley's Chapter 11 proceedings and has initiated its own ancillary proceedings in Canada. During the Canadian proceedings, Hunter Drums has paid its creditors in the ordinary course of business and will continue to do so until the sale of its business to Mauser Canada Ltd. "This week's announcements and our combination with Mauser would not have been possible without the strong support of our creditors, vendors, customers and employees, including those associated with Hunter Drums. We are very appreciative of their continued confidence during this process," said Ronald M. Litchkowski, President and Chief Executive Officer of Russell- Stanley. "We are now looking forward to a new era in our business as we become part of an organization that is a global leader in industrial packaging." Mauser-Werke GmbH Co. KG -- http://www.mauser-werke.com/-- is a global leader in industrial packaging, with its headquarters in Bruehl, Germany. Headquartered in Bridgewater, New Jersey, Russell-Stanley Holdings, Inc. -- http://www.russell-stanley.com/-- is North America's largest plastic drum manufacturer, second largest steel drum manufacturer, and a leading industrial container supply chain management company. The Company and its affiliates filed for chapter 11 protection on Aug. 19, 2005 (Bankr. D. Del. Case No. 05-12339). Mark S. Chehi, Esq., and Sarah E. Pierce, Esq., Kayalyn A. Marafioti, Esq., Frederick D. Morris, Esq., and Bennett S. Silverberg, 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 estimated more than $100 million in assets and debts. SCOTTS MIRACLE-GRO: Financial Plan Cues S&P to Affirm Low-B Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on lawn and garden care products supplier Scotts Miracle-Gro Co. to stable from positive. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and 'B+' senior subordinated debt ratings on the company. Marysville, Ohio-based Scotts had about $393.5 million of total debt outstanding at Sept. 30, 2005, excluding operating leases. The revised outlook follows Scott's recent announcement that it has authorized a $500 million share repurchase program, spread out over the next five years. "We believe this reflects a more aggressive financial policy, which will reduce the company's financial flexibility for acquisitions and debt reduction," said Standard & Poor's credit analyst Mark Salierno. Scotts also announced the acquisition of Gutwein & Co., Inc., a family-owned provider of birdseed, for about $77 million. Standard & Poor's expects Gutwein to be funded through cash and the company's revolving credit facility. Standard & Poor's now expects a majority of free cash flow to be applied to dividends, share repurchases, and opportunistic tuck-in acquisitions versus its prior expectations for further deleveraging. The current rating and revised outlook provides flexibility for additional small-sized acquisitions. SEARS HOLDINGS: Richard Perry Appointed to Sears Holdings' Board ---------------------------------------------------------------- Sears Holdings Corporation (Nasdaq: SHLD) reported the election of Richard C. Perry, 50, co-founder of investment management firm Perry Capital L.L.C., to membership on the Sears Holdings board. His election increases the number of directors to 11. "Richard Perry is an accomplished investor and businessman. Importantly, funds he manages are a significant owner of Sears Holdings shares. The Board of Directors looks forward to his contribution, advice and leadership," said Sears Holdings Corporation Chairman Edward S. Lampert. Prior to founding Perry Capital, Perry worked in the equity trading area of Goldman, Sachs & Co. He also was an adjunct associate professor at the Stern School of Business at New York University. Perry also serves on the boards of Radio & Records, Inc. and Endurance Specialty Insurance, Ltd. Perry is a member of the boards of trustees of the Allen Stevenson School, Milton Academy, Facing History and Ourselves, Harlem Children's Zone and the University of Pennsylvania. He also serves on the Undergraduate Executive Board of the University of Pennsylvania's Wharton School. He earned an MBA at New York University's Stern School of Business in 1980, and a BS at the University of Pennsylvania's Wharton School in 1977. About Perry Capital Founded in 1988, Perry Capital is a private investment management firm with approximately $11 billion under management and offices in New York, London and Hong Kong. Perry Capital generally considers its investments to be long-term and seeks to develop close working relationships with the key members of a company's management and operating team. 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. 103; 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. SHC INC: Administrator Wants Until Feb. 22 to Object to Claims -------------------------------------------------------------- Walker Truesdell & Associates, Inc., the Plan Administrator, and Carroll Services, LLC, the Liquidation Trustee, appointed pursuant to the confirmed Plan of SHC, Inc., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the District of Delaware to further extend until Feb. 22, 2006, the period to object to claims. As reported in the Troubled Company Reporter on Sept. 29, 2005, the Court extended the period for the Plan Trustee and Liquidating Trustee to object to claims to Oct. 25, 2005. The Plan Administrator tells the Court that since the date of the approval of the original extension, the Plan Administrator has: (i) filed two notices of satisfaction addressing pending priority claims; (ii) filed, together with the Liquidation Trustee, an omnibus claim objection to certain late-filed claims; (iii) achieved, together with the Liquidation Trustee, an agreement in principle - pending the agreement of the parties on acceptable language for a proposed form of order - a joint objection to the claims of the U.S. Customs and Border Protection; (iv) obtained, together with the Liquidation Trustee, an order approving the settlement of the claims of the Pension Benefit Guaranty against the Debtors; and (v) obtained as extension of the deadline by which actions may be removed. The Plan Administrator and Liquidation Trustee tell the Court that along with PBGC, they have conducted extensive settlement discussions, which culminated in a global settlement and resolution of PBGC's claims. The Plan Administrator and Liquidation Trustee say that given the magnitude and complexity of the PBGC Claims, they have devoted much of their time and attention to negotiating and resolving the PBGC Claims and obtaining an order approving the settlement of the PBGC Claims. The Plan Administrator tells the court that more time is needed for to analyze and resolve the remaining priority claims. The Liquidation Trustee, on the other hand, tells the Court that since the effective date, Carroll Services, in addition to performing many tasks, has been conducting a review and analysis of General Unsecured Claims. The Liquidation Trustee discloses that the Debtors' schedules listed approximately 2000 creditors holding General Unsecured Claims and in addition, approximately 360 proofs of claim have been filed asserting GEneral Unsecured Claims. The aggregate amount of all General Unsecured Claims, as filed, is estimated to total $156,000,000, the Liquidation Trustee says. The Liquidation Trustee reminds the Court that Carroll Services has: (a) with the cooperation and assistance of the Plan Administrator, filed eleven objections to general unsecured claims; (b) actively participated in the settlement of the PBGC Claims and Customs Claims; and (c) filed a notice of satisfaction seeking to expunge over $4 million in general unsecured claims. The Liquidation Trustee tells the Court that although many of the General Unsecured Claims have been resolved, Carroll Services is continuing to perform a careful and thorough analysis of the remaining General Unsecured Claims to determine whether any objections should be filed to invalid of deficient claims. The Liquidation Trustee discloses that in light of recent developments, more time is needed to complete this critical analysis. The Liquidation Trustee says that it has learned that certain potential creditors might not have received adequate notice of the Debtors' chapter 11 cases or the claims bar date in the cases. Together with the Plan Administrator, the Liquidation Trustee says that they have investigated this complex issues and determined that these parties should receive, after the Debtors' schedules are amended, notice and an opportunity to file claims. The Liquidation Trustee tells that Court that it will address any resulting claims received from such parties. The Plan Administrator and Liquidation Trustee say that extending the period to object to claims would provide them with sufficient time to: (1) analyze claims; (2) prepare and file additional objection to claims; and (3) where appropriate, attempt to consensually resolve disputed claims. Headquartered in Chicopee, Massachusetts, SHC, Inc., is a manufacturer of golf balls and clubs and other sporting goods. The Company and its debtor-affiliates filed for chapter 11 protection on June 30, 2003 (Bankr. Del. Case No. 03-12002). Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors. When the Debtors filed for chapter 11 protection, they listed estimated assets of more than $50,000 and estimated debts of more than $100 million. The Court confirmed the Debtors' Joint Plan on July 8, 2004, and the Plan took effect on Aug. 2, 2004. Walker Truesdell & Associates, Inc., is the Plan Administrator pursuant to the confirmed Plan. SINGER-DENMAN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Singer-Denman Lumber Co., Inc. 4115 Route 28 P.O. Box 308 Boiceville, New York 12412-0308 Bankruptcy Case No.: 05-55011 Type of Business: The Debtor owns, operates and manages a shopping mall in Boiceville, New York. Chapter 11 Petition Date: October 31, 2005 Court: Southern District of New York (Poughkeepsie) Debtor's Counsel: Lawrence M. Klein, Esq. Drake, Sommers, Loeb, Tarshis Catania & Liberth, PLLC 1 Corwin Court P.O. Box 1479 Newburgh, New York 12550 Tel: (845) 561-2500 Fax: (845) 561-2520 Total Assets: $2,005,369 Total Debts: $574,322 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Wells Fargo $100,000 Attn: President P.O. Box 29746 Phoenix, AZ 85038-9746 MBNA $20,000 Attn: President P.O. Box 15026 Wilmington, DE 19850-5026 Feldman Wood Products $4,752 Attn: President 1 Herricks Road Garden City Park, NY 11040 Wilcor International $4,000 Attn: President 700 Broad Street Utica, NY 12501 3-G Supply East LLC $3,000 Attn: President P.O. box 35106 Cleveland, OH 44135 Jolly Gardner Products Inc. $2,769 Attn: President W-510379 P.O. Box 7777 Philadelphia, PA 19175-0379 Sperry, Cuno, Molgate & Churchill $2,720 Attn; President P.O. Box 757 Lake Katrine, NY 12449-0757 National Nail Company $1,632 Attn: President 2964 Clydon Grand Rapids, MI 49509 Rug Doctor $1,522 Attn: President 4701 Old Shepard Place Plano, TX 75093-5250 Central Hudson Gas & Electric $1,500 Attn: President 284 South Avenue Poughkeepsie, NY 12601-4839 Suburban Propane $1,446 Attn: President CPO Box 1151 Kingston, NY 12402-1151 NuI Telecom $1,118 Attn: President 254 South Main Street New City, NY 10956 DB Rasch $800 Attn: President 19 Clinton Avenue Monticello, NY 12701 Hillman Fastener $739 Attn: President P.O. Box 31012 Cincinnati, OH 45231-0012 UGL $680 Attn: President P.O. Box 1347 Gibsonia, PA 15044 AT & T $610 Attn: President P.O. Box 78225 Phoenix, AZ 85062-8225 Verizon $589 Attn: President P.O. Box 15124 Albany, NY 12212-5124 Weeks Seed Co., Inc. $564 Attn: President 2103 Chestnut Street Greenville, NC 27834 Phoenicia Times $550 Attn: President P.O. Box 444 Shokan, NY 12481 Waste Management $501 Attn: President 264 Old Flatbush Road Kingston, NY 12401 SOLUTIA INC: Has Exclusive Right to File Ch. 11 Plan Until Nov. 17 ------------------------------------------------------------------ In a bridge order, the U.S. Bankruptcy Court for the Southern District of New York extends Solutia Inc. and its debtor- affiliates' exclusive period to file a plan of reorganization through the date of the final hearing on the extension request on November 17, 2005. The Debtors' exclusive period to solicit acceptances of that plan is extended to January 16, 2006. As reported in the Troubled Company Reporter on Oct. 5, 2005, the Debtors asked the Court extend their exclusive plan filing period through and including January 9, 2006. The Debtors also asked the Court to extend their exclusive solicitation period through and including March 6, 2006. Robbin L. Itkin, Esq., at Kirkland & Ellis LLP, in New York, related that at an August 5, 2005, hearing, the Court recognized the breadth and complexity of the issues faced by the Debtors with regard to their legacy environmental and tort liabilities. At that hearing, the Court asked the Debtors to prepare a confidential written report discussing its environmental and tort liabilities and the proposed plan treatment and resolution of those claims and liabilities. In addition, the Court indicated that it would not consider a plan of reorganization or disclosure statement until it had reviewed the Environmental and Tort Liability Report. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. (Solutia Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHERN PRODUCTS: Case Summary & 45 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Southern Products Company 70 Corporate Woods Drive Bridgeton, Missouri 63044 Bankruptcy Case No.: 05-61822 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- SPC Transportation, Inc. 05-61823 UHT Mix Specialties, Inc. 05-61823 Type of Business: The Debtor sells ice cream and custard mixes and provides full-service delivery to hundreds of fast food outlets throughout the Central United States. See http://www.1spc.com/ Chapter 11 Petition Date: October 28, 2005 Court: Eastern District of Missouri (St. Louis) Judge: Kathy A. Surratt-States Debtors' Counsel: Norman W. Pressman, Esq. Robert A. Breidenbach, Esq. Goldstein & Pressman, P.C. 121 Hunter Avenue, Suite 101 St. Louis, Missouri 63124 Tel: (314) 727-1717 Estimated Assets Estimated Debts ---------------- --------------- Southern Products Company Less than $50,000 $1 Million to $10 Million SPC Transportation, Inc. Less than $50,000 $500,000 to $1 Million UHT Mix Specialties, Inc. Less than $50,000 Less than $50,000 A. Southern Products Company's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ MidStates DairyPlant $341,055 6040 North Lindbergh Boulevard Hazelwood, MO 63042 SWS Inc. $323,249 P.O. Box 678228 Dallas, TX 75267 TR Topper IDQ $322,459 P.O. Box 11521 Pueblo, CO 81001 SPC Real Estate, LLC $307,913 Missouri LyonsMagnus $293,641 P.O. Box 49121 San Jose, CA 95161 Dairy Farmers of America $269,683 2637 Collection Center Drive Chicago, IL 60693 International Food $229,176 4029 Solutions Centre #774029 Chicago, IL 60677 West Liberty Foods, LLC $227,034 37401 Eagle Chicago, IL 60678 Delmonte Fresh Produce Co. $223,251 33979 Treasury Center Chicago, IL 60694 Birchwood Meat & Provision Inc. $211,942 BIN NO 63012 Milwaukee, WI 53288 Scholle Corporation $139,360 7243 Collection Center Drive Chicago, IL 60693 Conagra Grocery JHS IDQ $130,982 P.O. Box 409626 Atlanta, GA 30384 International Paper IDQ $128,396 1689 Solution Center Chicago, IL 60677 Tarrier Foods $125,368 P.O. Box 4310 Cincinnati, OH 45263 AgriDairy Products Inc. $125,102 3020 Westchester Avenue Purchase, NY 10577 Pecan Deluxe Candy IDQ $120,297 P.O. Box 846068 Dallas, TX 75284 Hunter Farms $100,781 c/o Yogurt Ventures 1750 The Exchange Atlanta, GA 30339 Blumenfeld Kaplan & Sandweiss, P.C. $100,000 168 North Meramec, Suite 400 Saint Louis, MO 63105-3763 Schrober Foods Inc. $36,673 P.O. Box 93486 Chicago, IL 60673 B. SPC Transportation, Inc.'s 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Hogan Motor Leasing Inc. $354,948 1000 North 14th Street Saint Louis, MO 63106-3827 TMCI, Inc. $82,182 12448 Sportsman Road Highland Ryder Truck Rental Inc. $68,436 2025 East Chestnut Parkway J.D. Street & Company Inc. $68,140 144 Weldon Parkway Maryland Heights, MO 63043 American Family Insurance $66,298 Flexway Trucking $52,703 Scopelitis, Garvin, Light & Hanson $29,214 DTS Truck Division $14,304 Sprint $13,671 R.L. Smith Truck Brokers Inc. $13,362 Edwards Brothers Inc. $10,067 Witte Bros Exchange Inc. $7,207 Assurant Employee Benefits $6,798 Holiday Inn SE - Indianapolis $4,923 Labor Finder - St. Peters $3,863 Eickhoff Enterprises Inc. $3,700 Door Controls Inc. $3,610 Cintas $3,402 Southern Products Company $839 C. UHT Mix Specialties, Inc.'s 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ INPACO $12,428 P.O. Box 494 Columbus, OH 43085 Ultra Process Systems, LLC $6,004 [Address Not Provided] Union Planters Bank $1,816 8182 Maryland, 2nd Floor Saint Louis, MO 63105 One Beacon $1,141 P.O. Box 4002 Woburn, MA 01888-4002 American Family Insurance $615 6000 American Parkway Madison, WI 53783 Ronald A. Leggett $380 Collector of Revenue 1200 Market Street Saint Louis, MO 63103 Missouri Department of Revenue $280 P.O. Box 475 Jefferson City, MO 65105 SOUTHWEST RECREATIONAL: Sues Zurich American Insurance for $2 Mil. ------------------------------------------------------------------ Ronald L. Glass, the chapter 11 Trustee for Southwest Recreational Industries, Inc., and its debtor-affiliates, commenced an adversary proceeding seeking to recover excess collateral proceeds and punitive damages from Zurich American Insurance Company. Mr. Glass tells the U.S. Bankruptcy Court for the Northern District of Georgia, Rome Division, that Zurich is guilty of: -- violating the automatic stay; -- unlawful post-petition transfer; -- breach of contract; and -- conversion and unjust enrichment. Retrospective Rating Agreement Zurich provided the Debtors with workers' compensation, automobile liability and general liability insurance prior to the Petition Dates. A Deductible and Paid Loss Retrospective Rating Agreement between Zurich and Southwest Recreational's affiliate, American Sports Products Group, Inc., governs these insurance policies. Pursuant to the retrospective rating agreement, the Debtors posted three renewable letters of credit, totaling $2.25 million, for Zurich, through Heller Financial, Inc. In addition, American Sports posted $282,000 in escrow funds to secure its obligations under the retrospective rating agreement. Zurich contends that the Debtors owe approximately $3 million under the insurance agreements. The amount includes contingent, unliquidated and unmatured reserve claims and other disallowable charges. The Debtors say that Zurich's maximum claim against their estate is no more than $1.2 million. Improper Application of Collateral Without permission from the Bankruptcy Court, Zurich drew down the entire $2.25 million balance of the letters of credit and applied these proceeds, along with American Sports' escrow funds, to the Debtors' liabilities under the insurance policies. Zurich says it still has a $547,608 in deficiency claim and wants administrative priority treatment for $319,409 of this claim and priority treatment for the remaining $228,199. The Trustee says that Zurich's action resulted in an overpayment of at least $1.3 million and has consequently demanded for the return of the overpaid sums. Zurich refuses to comply with the Trustee's demands. Debtors' Allegations The Debtors want the Bankruptcy Court to compel Zurich to return the overpaid sums saying the application of the letters of credit constitutes a breach of contract. Apart from the return of the overpaid sums, the Debtors also want to collect interest from the date of the demand letter, post judgment interest, attorney's fees and all costs associated with the adversary action. In addition, The Debtors allege separate counts of: a) avoidance and recovery of post-petition collateral, and seeks judgment of at least $1.3 million, plus interest; b) conversion, and seeks actual and punitive damages in an amount to be proven at trial of not less than $1.3 million, plus interest; c) unjust enrichment, and seeks judgment of not less than $1.3 million, plus interest; d) avoidance and recovery or preferential transfers totaling $680,083 e) willful violation of the automatic stay, and seeks judgment voiding the application of the credit balance refund and escrowed funds. The Debtors also seek damages in an amount to be proven at trial, plus interest. A copy of the Deductible and Paid Loss Retrospective Rating Agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=051031024658 Headquartered in Leander, Texas, Southwest Recreational Industries, Inc. -- http://www.srisports.com/-- designs, manufactures, builds and installs stadium and arena running tracks for schools, colleges, universities, and sport centers. The company filed for chapter 11 protection on February 13, 2004 (Bankr. N.D. Ga. Case No. 04-40656). Jennifer Meir Meyerowitz, Esq., Mark I. Duedall, Esq., and Matthew W. Levin, Esq., at Alston & Bird, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed $101,919,000 in total assets and $88,052,000 in total debts. On Aug. 11, 2004, Ronald L. Glass was appointed as Chapter 11 Trustee for the Debtors. Henry F. Sewell, Jr., Esq., Gary W. Marsh, Esq., at McKenna Long & Aldridge LLP represent the Chapter 11 Trustee. The Bankruptcy Court converted the Debtors' chapter 11 cases into liquidation proceedings under chapter 7 of the Bankruptcy Code on Oct. 14, 2005. STONERIDGE INC: Posts $3.3 Million Net Loss in Third Quarter ------------------------------------------------------------ Stoneridge, Inc. (NYSE: SRI) reported net sales of $158.7 million and a net loss of $3.3 million for the third quarter ended Oct. 1, 2005. Net sales decreased $5.6 million, or 3.4 percent, to $158.7 million, compared with $164.3 million for the third quarter of 2004. The decrease in sales was primarily due to decreased commercial vehicle production and product price reductions. The effect of foreign currency translation reduced third-quarter net sales by approximately $0.5 million compared with the same period in 2004. Net loss for the third quarter was $3.3 million, compared with net income of $3.9 million, in the third quarter of 2004. The decrease in net income was primarily the result of the Company's previously disclosed restructuring activities and related operating inefficiencies, along with product price reductions and estimated non-cash losses from bad debt reserves required as a result of the October 8, 2005 bankruptcy protection filing of one of our customers, Delphi Corporation. "The environment for suppliers in the North American automotive industry remains challenging as evidenced by Delphi's bankruptcy filing," Gerald V. Pisani, president and chief executive officer, said. "Stoneridge is committed to overcoming these challenges through our cost-reduction programs and our focus on organic growth of our highly engineered electrical and electronic products." For the nine months ended October 1, 2005, net sales were $519.8 million, an increase of $1.4 million compared with $518.4 million for the nine months ended September 30, 2004. Net income for the first nine months of 2005 was $3.9 million, compared with $22.4 million, in the comparable 2004 nine-month period. Headquartered in Warren, Ohio, Stoneridge, Inc. -- http://www.stoneridge.com/-- is a leading independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the automotive, medium- and heavy-duty truck, agricultural and off-highway vehicle markets. Net sales in 2004 were approximately $682 million. * * * As reported in the Troubled Company Reporter on May 3, 2005, Standard & Poor's Ratings Services revised its outlook on Stoneridge Inc. to stable from positive, following the company's announcement that 2005 earnings will fall well short of previous guidance. Because of the lower earnings target, it is unlikely the company will achieve and sustain credit statistics sufficiently improved to support a ratings upgrade in the next year or two. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit, 'BB' senior secured debt, and 'B+' senior unsecured debt ratings on Stoneridge. STRUCTURED ASSET: Fitch Rates $21.9 Mil Certificate Class at Low-B ------------------------------------------------------------------ Structured Asset Securities Corp. $482 million mortgage pass-through certificates, series 2005-S6, are rated by Fitch Ratings: -- $343.9 million classes A-1 and A-2 'AAA'; -- $26.2 million class M1 'AA+'; -- $22.4 million class M2 'AA'; -- $10.3 million class M3 'AA-'; -- $14.8 million class M4 'A+'; -- $10.8 million class M5 'A'; -- $6.5 million class M6 'A-'; -- $11.3 million class M7 'BBB+'; -- $7.3 million class M8 'BBB'; -- $6.5 million class M9 'BBB-'; -- $3.8 million class B1 'BB+'; -- $5 million class B2 'BB+'; -- $13.1 million class B3 'BB'. The 'AAA' rating on the class A-1 and A-2 certificates reflects the 31.65% total credit enhancement provided by the 5.20% class M1, the 4.45% class M2, the 2.05% class M3, the 2.95% class M4, the 2.15% class M5, the 1.30% class M6, the 2.25% class M7, the 1.45% class M8, the 1.30% class M9, the 0.75% non-offered class B1, the 1.00% non-offered class B2, the 2.60% non-offered class B3, as well as the 4.20% target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Aurora Loan Services LLC as master servicer. Wells Fargo Bank, N.A, rated 'AA' by Fitch, will act as trustee. On the closing date, the trust fund will consist of a pool of conventional, second lien, fixed-rate, fully amortizing and balloon, residential mortgage loans with a total principal balance as of the cut-off date of approximately $506,454,107. All of the mortgage loans are fixed-rate mortgage loans. The weighted average loan rate is approximately 10.451%. The weighted average remaining term to maturity is 290 months. The average principal balance of the loans is approximately $51,531. The weighted average combined loan-to-value ratio is 97.00%. The properties are primarily located in California, Florida, and Arizona. Approximately 95.63% of the mortgage loans are 80 plus LTV Loans. Approximately 54.12% of the mortgage loans were acquired by Lehman Brothers Holdings Inc. from Aurora Loan Services LLC and 35.07% from Ameriquest One Mortgage Corporation. For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. THOMAS JOHNSON: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Thomas F. Johnson 1 Bow Lane Barrington Hills, Illinois 60010 Bankruptcy Case No.: 05-63257 Type of Business: The Debtor is the President of Klodno-Pivo, Inc., which is located in Crystal Lake, Illinois. Chapter 11 Petition Date: October 31, 2005 Court: Northern District of Illinois (Chicago) Judge: Jack B. Schmetterer Debtor's Counsel: Thomas W. Drexler, Esq. Law Office of Thomas W. Drexler 77 W Washington, Suite 1910 Chicago, Illinois 60602 Tel: (312) 726-7335 Fax: (312) 263-7300 Total Assets: $5,908,050 Total Debts: $4,057,200 Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service A-K Trade debt $5,600 230 South Dearborn Street Stop 5016 Chicago, IL 60604 Illinois Department of Revenue Trade debt $1,600 P.O. Box 19035 Springfield, IL 62794-9035 TIDEWATER SENIORS: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------ Debtor: Tidewater Seniors, Inc. 3403-C County Street Portsmouth, Virginia 23707 Bankruptcy Case No.: 05-77118 Chapter 11 Petition Date: October 14, 2005 Court: Eastern District of Virginia (Norfolk) Judge: David H. Adams Debtor's Counsel: John D. McIntyre, Esq. Willcox & Savage, P.C. One Commercial Place, Suite# 1800 Norfolk, Virginia 23510 Tel: (757) 628-5500 Fax: (757) 628-5566 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,00 to $500,000 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tidewaters Seniors Apartments Contract Unknown 340 Royal Poinciana Way Suite# 305 Palm Beach, FL 33480 TRUMP HOTELS: Wants Court to Clarify Power Plant Stipulation ------------------------------------------------------------ On Dec. 30, 2004, Trump Hotels & Casino Resorts Development, LLC, filed a complaint against Richard T. Fields, Coastal Development, LLC, Power Plant Entertainment, LLC, Native American Development, LLC, Joseph S. Weinberg, and The Cordish Company, in the Circuit Court of the 17th Judicial District for Broward County, in Florida. THCR Development alleged that the Power Plant Group deceitfully obtained agreements with the Seminole Tribe to open and operate casinos on the Seminole Reservations. The Complaint asserted claims for fraud, breach of fiduciary duty, conspiracy, violation of the Florida Deceptive and Unfair Trade Practices Act, and interference with a prospective business relationship. After initially objecting to the Debtors' proposed Disclosure Statement accompanying the Joint Plan of Reorganization, the Power Plant Group agreed to mutually acceptable language, which disclosed the Florida Litigation and the alleged, unfiled claims and counterclaims. After unsuccessfully appointing an examiner, the Power Plant Group objected to the confirmation of the Plan. To resolve all claims between them, the Debtors and the Power Plant Group entered into a stipulation. Power Plant Group Stipulation As previously reported, the Stipulation allowed the parties to proceed in the Florida State Court as if the Debtors' bankruptcy cases had not been filed, so that the Florida Litigation and any future litigation between them may proceed in the Florida court or other courts of competent jurisdiction other than the Bankruptcy Court. The Stipulation also allowed the Power Plant Group, individually and collectively, to file a counterclaim against the Debtors in the Florida Litigation despite the release provision granted to the Debtors and the non-debtors in the Debtors' Second Amended Plan. The counterclaims could only exist to counter the claims pled by the Debtors in the Florida Litigation. Moreover, the language directly inserted from the Stipulation into the Amended Plan clearly states that the Debtors disputed all of the claims alleged by the Power Plant Group relating to the Florida Litigation. The Confirmation Order, entered by the Court in April 2005, explicitly provided that claims arising out of gross negligence and willful misconduct were carved out of the Debtors' releases contained in the Amended Plan. Summary Judgment Motion Contrary to the Stipulation and the Second Amended Plan, on July 1, 2005, Mr. Fields filed a motion for summary judgment against THCR Development in the Florida Litigation. The Summary Judgment Motion alleges that the Stipulation, the Second Amended Plan and the Confirmation Order released Mr. Fields from any claims either asserted by THCR Development or existing in favor of THCR Development before the Effective Date. Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, LLP, in Newark, New Jersey, asserts that the Summary Judgment Motion completely misrepresents and distorts the Stipulation, the Second Amended Plan and the Confirmation Order. Furthermore, Mr. Stanziale says, the misrepresentations and distortions jeopardize the Debtors' ability to pursue a substantial recovery for their estates. The Summary Judgment Motion shows a complete disregard for the Court and its orders, Mr. Stanziale adds. Debtors Seek Clarification Accordingly, the Reorganized Debtors ask the U.S. Bankruptcy Court for the District of New Jersey to clarify that the Power Plant Stipulation, the Amended Plan, and the Confirmation Order do not provide a release in favor of the Power Plan Group or Mr. Fields, which would deny the Debtors' right to prosecute their claims in the Florida Litigation and which would deny the Debtors' ability to pursue a valuable recovery for their estates. The Stipulation, the Second Amended Plan and the Confirmation Order were clearly intended to allow the parties to fully and substantively litigate and present all of their claims and counterclaims in the Florida Litigation, Mr. Stanziale maintains. 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. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000). TRUMP HOTELS: Wants Court to Expunge DLJ's $25,000,000 Claims ------------------------------------------------------------- Reorganized Debtors Trump Hotels & Casino Resorts, Inc., Trump Hotels & Casino Resorts Holdings, L.P., Trump Plaza Associates, Trump Taj Mahal Associates, Trump Atlantic City Associates and Trump Casino Holdings, LLC, ask the U.S. Bankruptcy Court for the District of New Jersey to disallow the proofs of claim filed by DLJ Merchant Banking Partners III, L.P., in the Debtors' Chapter 11 cases. DLJ Merchant is a managing firm owned and controlled by Credit Suisse First Boston, Inc. During the third quarter of 2003, DLJ told the Debtors it is interested in proposing a restructuring transaction that would include a significant equity investment by the firm as part of the Debtors' recapitalization. Confidential Exclusivity Agreement Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, LLP, in Newark, New Jersey, relates that on Jan. 20, 2004, DLJ led the Trump Parties to believe that it will pursue a transaction. DLJ required THCR to execute an exclusivity agreement that restricted THCR and its affiliates and representatives from soliciting, participating in negotiations with, or furnishing nonpublic information to any party other than DLJ regarding a potential recapitalization of the Debtors. DLJ would cease further discussions about the potential equity investment unless it was given the exclusive opportunity to have those discussions. The Exclusivity Agreement provided, inter alia, that THCR would provide DLJ with access to the Trump Parties' properties, books, records and documents and that THCR would reimburse DLJ for some transaction expenses in the event a restructuring transaction were to be consummated or they breached the Exclusivity Agreement. The Agreement also contained a provision limiting the Trump Parties' ability to disclose the Exclusivity Agreement. Original Letter Agreement On Feb. 12, 2004, DLJ insisted that, as a prerequisite to it moving forward with a transaction, the Trump Parties execute a letter agreement. The Original Letter Agreement requires the Trump Parties, except for THCR Holdings, to pay DLJ a $25 million transaction fee, plus up to $5 million of expenses, if they consummate a restructuring transaction having a value to THCR in excess of $200,000,000 with any party other than DLJ, so long as the terms of the alternative transaction are in place by Dec. 1, 2004. The Original Letter Agreement did not bind DLJ to pursue consummation of a transaction with the Debtors or even to continue discussions with the Debtors. Thus, the Original Letter Agreement imposed no obligations upon DLJ, while it required the Debtors to pay DLJ $25,000,000 to $30,000,000 if they did not do a deal with the firm. If DLJ whimsically terminated discussions minutes after the Original Letter Agreement was executed, the Debtors nevertheless would be obligated to pay DLJ at least $25,000,000 when they entered into an alternative restructuring transaction. Thus, even if the Debtors sought to consummate a transaction with DLJ, and DLJ simply declined without explanation, DLJ would become entitled to at least a $25,000,000 payment if an Alternative Transaction were to occur on or prior to Dec. 1, 2004 -- the Tail Period. Under the terms of the Original Letter Agreement, the $25,000,000 Transaction Fee amounted to 12.5% of the minimum transaction value that could qualify as an Alternative Transaction. By insisting that the Trump Parties enter into the Original Letter Agreement, DLJ knew or should have known that the Trump Parties would believe that DLJ was committed to pursuing a restructuring transaction in good faith, and would rely on that belief as the basis for determining to execute the Original Letter Agreement. Second Exclusivity Agreement On March 19, 2004, the Exclusivity Agreement expired in accordance with its terms leaving the Debtors free to solicit offers from and negotiate with other parties. On Aug. 9, 2004, THCR and DLJ entered into a Second Exclusivity Agreement, which reinstated the Exclusivity Period through the earlier of Dec. 31, 2004 or the Trump Parties' filing of a Chapter 11 case. DLJ made it clear that it would not continue to pursue a restructuring transaction unless the Trump Parties executed the Second Exclusivity Agreement. Pursuant to a DLJ Restructuring Term Sheet attached to the Second Exclusivity Agreement, DLJ and the Trump Parties agreed to a $400,000,000 equity investment by DLJ in exchange for THCR new common stock. A portion of the equity investment were to constitute part of the consideration to be provided to the holders of certain First Priority Mortgage Notes issued by TAC and its affiliates, and certain of the First Priority and Second Priority Mortgage Notes issued by TCH and Trump Casino Funding, Inc. Another portion of the proceeds would be used to fund the Debtors' ongoing business operations and capital expenditures. Additionally, DLJ agreed, in its capacity as a holder of the Second Priority Mortgage Notes, to vote for any plan of reorganization proposed by THCR on terms materially consistent with the DLJ Restructuring Term Sheet. The Trump Parties believe that DLJ was committed to pursuing a restructuring transaction in good faith, and would rely on that belief as the basis for determining to execute the Second Exclusivity Agreement. Amended Letter Agreement On Aug. 9, 2004, the Trump Parties entered into a Letter Agreement Amendment with DLJ. The Amended Letter Agreement extended the Tail Period to June 30, 2005, and required the Trump Parties, other than THCR Holdings, to reimburse DLJ for up to $5,000,000 in expenses in connection with the Proposed Restructuring Transaction. Mr. Stanziale attests that DLJ provided no consideration to the Trump Parties in exchange for the extension or the enhanced obligations. The Amended Letter Agreement did not explicitly require DLJ to pursue in good faith the Proposed Restructuring Transaction. However, DLJ knew or should have known that its insistence that the Trump Parties enter into the Amended Letter Agreement would cause them to believe that DLJ was committed to pursuing the Proposed Restructuring Transaction in good faith, Mr. Stanziale says. Escrow Agreements On Aug. 16, 2004, each of the Trump Parties and DLJ entered into identical Escrow Agreements, pursuant to which the Trump Parties transferred $2,379,966 into an escrow account to cover DLJ's expenses. On Sept. 22, 2004, DLJ informed the Trump Parties that it was terminating its discussions and would not enter into a restructuring transaction with them. The following day, DLJ informed the escrow agent that it had terminated discussions and demanded the release of the Escrow Funds. DLJ Misled the Trump Parties According to Mr. Stanziale, DLJ's decision to terminate negotiations, just weeks after having induced the Trump Parties to enter into the Amended Letter Agreement, the Second Exclusivity Agreement, and the Escrow Agreements -- the August 2004 Agreements -- astounded the Debtors. Mr. Stanziale points out that DLJ did not discover any material adverse information about the Debtors or their businesses between the time of the August 2004 Agreements and the Sept. 22, 2004, notice of termination that it had not become aware of prior to the August 2004 Agreements through its lengthy due diligence process. From the totality of circumstances, Mr. Stanziale asserts that DLJ misled the Debtors into believing that the firm intended to pursue a transaction in good faith to induce the Debtors to enter into the August 2004 Agreements "in order to line its pockets with huge and totally underserved fees." At the time the August 2004 Agreements were signed, the Debtors allege that DLJ had already decided that it was not going to go forward with a restructuring transaction, but was merely perfecting and expanding its ability to assert claims for the Restructuring Fee and Expenses. Had the Trump Parties known of DLJ's true intentions, they would never have executed the August 2004 Agreements, Mr. Stanziale says. By inducing the Trump Parties to enter into the August 2004 Agreements, DLJ harmed the Debtors by preventing them from soliciting genuine restructuring transactions at the time that insolvency and illiquidity posed the greatest threat to the Debtors' future and ability to repay creditors. On Sept. 22, 2004, after having been prohibited by DLJ from negotiating with other parties, the Debtors scrambled to create a new restructuring strategy. The Debtors succeeded in reaching an agreement on terms for a recapitalization with certain large noteholders. However, the terms included higher interest rates than those that were contemplated under DLJ's Proposed Restructuring Transaction. Hence, the recapitalization was materially less valuable to the Debtors than the DLJ Proposed Transaction. On Oct. 20, 2004, the Debtors entered into a Restructuring Support Agreement with Donald J. Trump, some of the holders of the TAC First Priority Mortgage Notes, and some of the holders of the First Priority and Second Priority Mortgage Notes issued by TCH and TCF. The Restructuring Support Agreement set forth some of the material terms and conditions that were incorporated in the joint plan of reorganization and related disclosure statement that that were later amended. As previously reported, the Plan was confirmed on April 5, 2005, and consummated on May 20, 2005. DLJ Claims On Jan. 18, 2005, DLJ filed Claim Nos. 1645, 1909, 1910, 1911 and 1912 for a $25,000,000 Transaction Fee plus over $1,000,000 in unpaid Transaction Expenses. DLJ asserts in that it is entitled to the $25,000,000 Transaction Fee because, "rather than simply turn off the lights and close their doors when DLJ refused to provide financing, the Debtors succeeded in obtaining the Restructuring Support Agreement on Oct. 20, 2004, and filing of their Initial Plan on December 15, 2004." DLJ alleges that the Transaction Fee became payable upon the consummation of the Plan. DLJ attempted to prevent the Debtors from reorganizing by requesting the Court to deny confirmation of the Plan. Subsequently, the Debtors and other parties-in-interest entered into a stipulation with DLJ pursuant to which DLJ withdrew its Confirmation Objection in exchange for, inter alia, the Debtors' waiver of rights to seek affirmative recoveries from DLJ for its conduct. DLJ Claims Must Be Disallowed Mr. Stanziale notes that the Third Circuit Court of Appeals has established that potential financiers who window-shop without committing to fund do not provide reasonably equivalent value to support the payment of large fees by an insolvent debtor. Thus, the DLJ Claims must be disallowed and expunged, the Debtors assert. The Letter Agreements provided no value or consideration to the Debtors because they never bound DLJ to consummate or pursue any transaction, or do or refrain from doing anything at all, Mr. Stanziale maintains. The Letter Agreements, and any alleged related fee obligations of the Trump Parties, therefore summarily should be avoided as constructively fraudulently obligations. Furthermore, because there is a complete lack of consideration running from DLJ to the Debtors under the Letter Agreements, the Letter Agreements are not enforceable under general principles of contract law even outside of the context of an insolvency proceeding. Accordingly, the Reorganized Debtors ask the Court to enter a judgment in their favor: (a) avoiding and setting aside the obligation in the Letter Agreements as fraudulently incurred obligations; (b) declaring that all obligations of the Trump Parties in the Letter Agreements are unenforceable and non-binding because they are unsupported by adequate consideration; (c) avoiding the Fraudulent Escrow Transfer and directing DLJ to turn over the Fraudulent Escrow Transfer, or its value, to the Debtors' estates to the fullest extent permitted by the Escrow Agreement; (d) declaring that DLJ is not entitled to the Transaction Fee because an Alternative Transaction did not occur; (e) declaring that DLJ is not entitled to the Transaction Fee or the Expenses because it induced the Trump Parties to enter into the Letter Agreements through negligent or fraudulent misrepresentations, rendering the Letter Agreements void and unenforceable; (f) in the alternative, declaring that DLJ breached the Letter Agreements; (g) expunging and disallowing the DLJ Claims in their entirety; (h) expunging and disallowing the DLJ Claims Nos. 1909 to 1912 on the grounds that there is no basis for DLJ to assert claims against any entity other than THCR, or alternatively, disallowing the claims as duplicative of DLJ Claim No. 1645; (i) subordinating any portion of the DLJ Claims that is not disallowed or expunged to be equal in priority to, and provided the treatment of, old THCR common stock equivalents under the Plan; (j) declaring that the avoidable transfers and conveyances to DLJ result in the mandatory disallowance of any and all claims of DLJ unless and until DLJ returns all transfers or their value to the Debtors' estates; (k) for damages to the extent permitted by the DLJ Stipulation, and in an amount to be proved at trial; (l) for punitive damages; (m) for prejudgment interest; and (n) for attorney's fees and costs. * * * The Reorganized Debtors also filed an Objection in the Chapter 11 cases "as a prophylactic measure to ensure that no party can raise any doubt as to whether the Debtors timely interposed their objections to the DLJ Claims." 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. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000). UAL CORPORATION: Plans to Recall 300 Pilots for 2006 ---------------------------------------------------- United Airlines' Flight Operations Division plans to recall approximately 300 pilots in 2006 to meet an expected increase in flying next year, according to papers filed in the U.S. Bankruptcy Court for the Northern District of Illinois. This is about 16% of the 1,872 pilots currently on furlough, or 5% of the Debtors' total pilot population. According to Catherine Larkin at Bloomberg News, United will recall the furloughed pilots to fill jobs left by pilots who are retiring or called to active military duty. Furloughed pilots must be offered available positions before the airline hires outside the company. 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 Airlines Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants to Walk Away from One Boeing Aircraft Lease ----------------------------------------------------------- David A. Agay, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells the U.S. Bankruptcy Court for the Northern District of Illinois that UAL Corporation and its debtor-affiliates want to reject the lease for a Boeing 737-322 aircraft -- Tail No. N343UA -- and engines. The Debtors entered into the Lease as part of a leveraged lease, whereby an Owner Trust holds title to, and leases the aircraft and engines to, the Debtors for Equity Participants. An Indenture Trustee holds a security interest in the Lease, the aircraft, and the engines for various lending parties to secure their debt. Mr. Agay explains that the rejection of the aircraft lease is a component of the settlement with Vx Capital Partners LLC. The Debtors are restructuring and marking to market its aircraft financings to reflect current market rates. The Debtors are shrinking the fleet to match capacity with demand and are pursuing a strategy to focus on international routes. In light of the settlement with Vx Capital, rejection of the aircraft lease is in the Debtors' best interests, Mr. Agay tells the Court. 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 Airlines Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED SURGICAL: 3rd Quarter Results Cue S&P to Review Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Addison, Texas-based United Surgical Partners Inc., including the 'BB-' corporate credit rating, on CreditWatch with positive implications -- indicating that the ratings could be raised or affirmed upon further review. "The CreditWatch placement follows United Surgical's continued strong performance in the third quarter of 2005," said Standard & Poor's credit analyst Jesse Juliano. The ratings on United Surgical were last raised in October 2003; since then, the company has grown in a controlled manner and continued to improve its financial profile. As such, Standard & Poor's plans to meet with the management team in the coming months to discuss the company's financial policy for the future and any potential threats to its business model. S&P will resolve the CreditWatch listing shortly thereafter. The ratings could be raised if we believe that the business risk and financial metrics are in line with those of a 'BB' credit. US AIRWAYS: Bank of America Sues for Breach of Credit Card Accord ----------------------------------------------------------------- Bank of America Corporation accuses US Airways Group, Inc., and America West Airlines Inc., of violating its the exclusive agreement with US Air to issue frequent-flyer credit cards, Bloomberg News reports. According to Bloomberg writers Phil Milford and Jef Feeley, Bank of America alleges that US Airways breached the contract by switching its allegiance to Juniper Bank, a unit of Barclays Plc, of London. Bank of America is asking a judge in the Chancery Court of Delaware to force US Airways to honor the original agreement. Bank of America argues that America West encouraged US Airways to invalidate the contract, which would expire in December 2008. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Fitch Ratings has affirmed the issuer default rating of 'CCC' and the senior unsecured rating of 'CC' on the debt obligations of America West Airlines, Inc. Fitch has also initiated coverage of US Airways Group, Inc., (NYSE: LCC) with an IDR of 'CCC' and a senior unsecured rating of 'CC'. The recovery ratings for the senior unsecured obligations of both US Airways Group and AWA are 'R6', indicating an expected recovery of less than 10% in a default scenario. US AIRWAYS: Buys Back $250 Million of America West's Senior Notes ----------------------------------------------------------------- US Airways Group, Inc. (NYSE: LCC) has repurchased from noteholders approximately $250 million in principal amount at maturity of America West Airlines, Inc.'s 7.25 percent senior exchangeable notes due 2023. Other than a modest payment for accrued interest, the transaction does not result in a cash outlay for the Company; rather the notes were exchanged for US Airways common stock. Specifically, the Company exchanged 16 shares of US Airways Group common stock per $1,000 principal amount at maturity for an aggregate of approximately 4.2 million shares. Following the exchange there were approximately 82 million primary shares of common stock outstanding. The amount of notes exchanged represented approximately 99% of the outstanding principal amount and were repurchased at the option of the noteholders in accordance with their terms following the merger with America West Holdings Corp. The notes were originally issued in July 2003 and represented $87 million in debt on the Company's balance sheet. The reduction of debt will lower interest expenses by $6.9 million annually. "This transaction represents another step in the right direction for our airline as we continue to build a firm foundation for our future," said US Airways Chief Financial Officer Derek Kerr. "Converting debt to equity further strengthens our balance sheet while reducing annual interest expenses." Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US Airways and America West's recent merger creates the fifth largest domestic airline employing nearly 38,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 4,000 flights per day and serve more than 225 communities in the U.S., Canada, Europe, the Caribbean and Latin America. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Fitch Ratings has affirmed the issuer default rating of 'CCC' and the senior unsecured rating of 'CC' on the debt obligations of America West Airlines, Inc. Fitch has also initiated coverage of US Airways Group, Inc., (NYSE: LCC) with an IDR of 'CCC' and a senior unsecured rating of 'CC'. The recovery ratings for the senior unsecured obligations of both US Airways Group and AWA are 'R6', indicating an expected recovery of less than 10% in a default scenario. US AIRWAYS: Swaps Common Stock for America West's Sr. Exch. Notes ----------------------------------------------------------------- US Airways Group, Inc. (NYSE: LCC) repurchased from noteholders approximately $250 million in principal amount at maturity of America West Airlines, Inc.'s 7.25 percent senior exchangeable notes due 2023. Other than a modest payment for accrued interest, the transaction does not result in a cash outlay for the Company; rather the notes were exchanged for US Airways common stock. Specifically, the Company exchanged 16 shares of US Airways Group common stock per $1,000 principal amount at maturity for an aggregate of approximately 4.2 million shares. Following the exchange there were approximately 82 million primary shares of common stock outstanding. The amount of notes exchanged represented approximately 99 percent of the outstanding principal amount and were repurchased at the option of the noteholders in accordance with their terms following the merger with America West Holdings Corp. The notes were originally issued in July 2003 and represented $87 million in debt on the Company's balance sheet. The reduction of debt will lower interest expenses by $6.9 million annually. "This transaction represents another step in the right direction for our airline as we continue to build a firm foundation for our future," said US Airways Chief Financial Officer Derek Kerr. "Converting debt to equity further strengthens our balance sheet while reducing annual interest expenses." Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Fitch Ratings has affirmed the issuer default rating of 'CCC' and the senior unsecured rating of 'CC' on the debt obligations of America West Airlines, Inc. Fitch has also initiated coverage of US Airways Group, Inc., (NYSE: LCC) with an IDR of 'CCC' and a senior unsecured rating of 'CC'. The recovery ratings for the senior unsecured obligations of both US Airways Group and AWA are 'R6', indicating an expected recovery of less than 10% in a default scenario. US JESCO: Case Summary & 56 Largest Unsecured Creditors ------------------------------------------------------- Debtor: US Jesco International Ltd., Inc. 1421 Westway Circle Carrollton, Texas 75006 Bankruptcy Case No.: 05-86777 Type of Business: The Debtor. Chapter 11 Petition Date: October 31, 2005 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 56 Known Creditors: Entity Claim Amount ------ ------------ Advanced IT Solutions Inc. Unknown 11651 Plano Road, Suite 100 Dallas, TX 75243 Advanta Business Bank Corp. Unknown P.O. Box 8088 Philadelphia, PA 19101-8088 Agricredit Unknown Amercian Packaging Capital P.O. Box 2000 Johnston, IA 50131-0020 AIT Worldwide Unknown P.O. Box 66730 Chicago, IL 60666-0730 American Express Bank, FSB Unknown P.O. Box 30799 Salt Lake City, UT 84130-0799 American Express Blue for Business Unknown P.O. Box 360002 Fort Lauderdale, FL 33336-6002 Atradius Collections Unknown 1200 Arlington Heights Road, Suite 410 Itasca, IL 60143 Capital One Visa FSB Unknown Remittance Processing P.O. Box 650010 Dallas, TX 75265-0010 Carrollton Farmer's Branch ISD Unknown 1445 North Perry Road Carrollton, TX 75011-0611 Citicorp Leasing Inc. Unknown P.O. Box 7247-7878 Philadelphia, PA 19170-7878 City of Inglewood Unknown 1 Manchester Boulevard Inglewood, CA 90301 City of Los Angeles Unknown LDC Collection Systems P.O. Box 30087 Los Angeles, CA 90030-0087 CMCS Unknown 822 East Grand River Avenue Brighton, MI 48116-1802 Consumers Energy Unknown Lansing, MI 48937-0001 Country Inn & Suites Unknown 6511 Centurion Drive Lansing, MI 48917 County of Los Angeles Unknown P.O. Box 30629 Los Angeles, CA 90030-0629 David Childs Tax Assessor-Collector Unknown (Dallas County) DHL Danzas Air & Ocean Unknown P.O. Box 7247-6745 Philadelphia, PA 19170 DTE Energy Unknown P.O. Box 2859 Detroit, MI 48260-0001 Equity Corp. Housing Unknown Attn: Doug Halstead 6525 Morrison Boulevard, Suite 212 Charlotte, NC 28211 Franklin Collection Service Inc. Unknown P.O. Box 3910 Tupelo, MS 38803-3910 Fort Worth Economic Development Corp. Unknown 1150 South Freeway, Suite 215 Fort Worth, TX 76104 GC Services Ltd. Partnership Unknown Collection Division 6330 Gulfton Houston, TX 77081 GE Capital Corp. Unknown 635 Maryville Centre Drive, Suite 120 Saint Louis, MO 63141 Giodi SPA/Etafelt Unknown CSO Piemonte 66 10099 San Mauotge Italy GMAC Unknown Payment Processing Center P.O. Box 78234 Phoenix, AZ 85062-8234 Harry C. Post Unknown 1407 Briarcrest Drive Grapevine, TX 76051 Hearthside Suites Unknown 10326 Finnell Street Dallas, TX 75220 Ingle Rental Unknown 200 East Beltline Road Coppell, TX 75019 Insurance Corp. of British Columbia Unknown 151 West Esplanade North Vancourver, BC Canada V7M3H9 JDF Distribution Solutions-Daryl Flood Unknown P.O. Box 678018 Dallas, TX 75267-8018 Kent H. Landsberg of Dallas LP Unknown dba Apollo Paper Co. of Dallas 4151 Highway 121N Grapevine, TX 76051 Lane Gorman Trubitt LLP Unknown 2626 Howell 7th Floor Dallas, TX 75204 Law Office of John Sherwood Unknown 2926 Maple Avenue, Suite 200 Dallas, TX 75201 Law Office of Michael Hawk Unknown 4514 Travis Street, Suite 212 Dallas, TX 75205 Law Office of W. Michael Clay Unknown 6565 North MacArthur Boulevard, Suite 140 Irving, TX 75039 Leaman Contariner Unknown 5701-A east Rosedale P.O. Box 24369 Fort Worth, TX 76124 MCI Unknown P.O. Box 4649 Iowa City, IA 52240-4649 NCO Financial Systems Inc. Unknown 507 Prudential Road Horsham, PA 19044 Nextel Unknown P.O. Box 4191 Carol Stream, IL 60197-4191 Oakwood Corp. Housing Unknown 004217 Collections Cent Drive Chicago, IL 60693 Ohlen-Air Inc Unknown 556 South Coppell Road, Suite 1 Coppell, TX 75019 PAC International Logistics Co. Unknown 1200 East Northwest Highway Grapevine, TX 76051 Productivity Card/GE Capital Finance Unknown P.O. Box 520310 Salt Lake City, UT 84152-0310 Raymond Leasing Corp. Unknown P.O. Box 203905 Houston, TX 77216-3905 Somerset Park Apartments Unknown 2405 North Dorchester Drive Troy, MI 48084 SPRINT PCS Unknown Attn: Stephen Boyd P.O. Box 723115 Atlanta, GA 31139-0115 Taxese Unknown 12240 Inwood Road, Suite 405 Dallas, TX 75244 Texas Workforce Commission Unknown Special Hearings 101 East 15th Street Austin, TX 78778 TEXCO Unknown P.O. Box 9010 Des Moines, IA 50368-9010 The Home Depot Unknown P.O. Box 6029 The Lakes, NV 88901-6029 United Health Care Unknown 22561 Network Place Chicago, IL 60673-1225 Wachovia Small Business Capital Unknown 1620 East Roseville Parkway, Suite 100 Roseville, CA 95661 Watkins Moter Freight Unknown P.O. Box 95001 Lakeland, FL 33804-5001 Wingfoot Commercial Tires Unknown 8501 Peterbuilt Drive Dallas, TX 75241 Zola Blicker-Attorney Unknown 12221 Merit Drive, Suite 750 Dallas, TX 75251 VALE OVERSEAS: Fitch Assigns BB Rating to Foreign Currency ---------------------------------------------------------- Fitch Ratings has assigned a long-term foreign currency rating of 'BB' to Vale Overseas Limited's $800 million issuance due 2034. Vale Overseas is a wholly owned subsidiary of Companhia Vale do Rio Doce, the world's largest producer and exporter of iron ore. The notes are unsecured obligations of Vale Overseas and are unconditionally guaranteed by CVRD. The obligation to guarantee the notes rank pari passu with all of CVRD's other unsecured and unsubordinated debt obligations. The Rating Outlook is Positive. Fitch also maintains these ratings for CVRD and CVRD Finance Ltd., a wholly owned subsidiary of CVRD: -- Foreign currency rating: 'BB', Outlook Positive; -- Local currency rating: 'BBB' Outlook Stable; -- National scale rating: 'AAA', Outlook Stable; -- CVRD Finance Ltd., series 2000-1 and series 2000-3: 'BBB'; -- CVRD Finance Ltd., series 2000-2 and series 2003-1: 'AAA'. CVRD's ratings are supported by the company's strong financial profile and dominant global position as the world's largest producer and exporter of iron ore. The company's leading industry position is primarily a result of its low-cost production capabilities, its high-quality iron ore, and an extensive and integrated transportation system consisting of railways and port facilities. The fully integrated nature, from mine to port, of CVRD's operations and the high iron content of its ore, result in a favorable cost structure that provides significant protection from price fluctuations in the cyclical metals markets. CVRD stands to benefit from the strong price environment for iron ore and the positive outlook for demand over the near to medium term. Iron ore prices rose by about 18% in 2004 and 72% in 2005. These price increases, along with those of several other commodities, have been driven by the confluence of a relatively strong global economy and China's surging demand for raw materials. Consumers of iron ore face an international market dominated by just a few large rivals. CVRD's strong cash generation has resulted in an improving financial profile, with the ratio of total debt-to-EBITDA declining to 0.7 times as of June 30, 2005, from 2.1x at year-end 2003, and the ratio of net debt-to-EBITDA decreasing to 0.5x from 1.8x over the same period. CVRD's foreign currency rating of 'BB', Rating Outlook Positive exceeds the foreign currency rating and country ceiling of Brazil by one notch. CVRD's Rating Outlook Positive status mirrors the Rating Outlook Positive status of the foreign currency rating of the Federative Republic of Brazil, as CVRD's foreign currency ratings remain linked to the 'BB-' foreign currency rating of the sovereign. CVRD's foreign currency rating reflects the strength of the company's iron ore exporting business and the associated hard currency generation. The rating is further supported by the company's low leverage and strong liquidity position. Existing offshore cash balances and access to hard currency credit lines help mitigate the transfer and convertibility risks associated with a 'BB-' rated sovereign. In addition, CVRD's consolidated cash balance of $1.0 billion at June 30, 2005, covers short-term debt by about 0.9x. CVRD's liquidity position is supported by $750 million in committed credit lines from an international bank consortium. The company intends to use these short-term facilities only in times of financial crisis and periods of tight liquidity. Offshore cash and funds available under committed credit facilities cover CVRD's annual debt service by about 1.0x. CVRD, headquartered in Brazil, is the world's largest producer and exporter of iron ore and pellets, with a share of approximately 32% in the global seaborne iron ore trade of about 600 million tons. In 2004, consolidated sales totaled 231 million tons and consisted of 204 million tons of iron ore and 27 million tons of pellets. In addition to iron ore, CVRD produces nonferrous minerals and metals, provides logistics services and has strategic interests in the steel industry. VINCENT DAVINCI: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Vincent Gene Davinci a/k/a Vincent Gene Amorando, Jr. 24 Lowe Street Norwlk, Connecticut 06854 Bankruptcy Case No.: 05-51785 Chapter 11 Petition Date: October 14, 2005 Court: District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtor's Counsel: Jennifer A. Sadaka, Esq. Novak, Witt and Associates, LLC 129 Church Street, Suite# 816 New Haven, Connecticut Tel: (203) 787-3400 Fax: (203) 787-9400 Total Assets: $1,839,255 Total Debts: $3,284,925 Debtor's 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Elizabeth Silverman Judgment $1,219,393 296 Main Avenue, Apt.# 26 Norwalk, CT 06851 Edgar Cortez Potential Claim $50,000 27 Ferris Avenue Norwalk, CT 06854 Fleet National Bank SBA Loan $19,000 P.O. Box 5091 Hartford, CT 06102 Capital One Credit Cards $8,232 Rings End Lumber Lumber Purchases $5,000 Sherwin Williams Credit Card $4,000 HSBC Card Services Credit Card $2,482 Brandman's Paint Paint Credit Extended $2,000 W.R. GRACE: Wants January 12, 2006 Set as Asbestos Claims Bar Date ------------------------------------------------------------------ James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, in Wilmington, Delaware, recounts that although the Debtors previously requested a deadline for filing asbestos personal injury prepetition litigation claims to ensure an adequate return of the PI Questionnaires, the Bankruptcy Court had declined to fix a bar date, indicating that the filed statements in accordance with Rule 2019 of the Federal Rules of Bankruptcy Procedure should protect against any inadequate responses to the PI Questionnaire. However, the Bankruptcy Court still expressly recognized the potential need for a PI Claims Bar Date. Mr. O'Neill notes that a significant number of firms have failed to file Rule 2019 Statements, contrary to the Bankruptcy Court's expectations. Mr. O'Neill points out that without the Rule 2019 Statements, the Debtors and the Bankruptcy Court have no way of knowing whether those who return the PI Questionnaire represent the universe of the PI Claimants who intend to file claims against a Section 524(g) Trust to be created under the Debtors' ultimate Chapter 11 plan. Instead, the Bankruptcy Court and the Debtors will be forced to guess whether failure to return the PI Questionnaires indicates an intent to merely refuse to cooperate with the discovery process, or a decision not to file a claim against the Section 524(g) Trust. Moreover, some parties may argue that the absence of a completed Questionnaire or Rule 2019 Statement deprives the Bankruptcy Court of jurisdiction over both the claimants and their attorneys, Mr. O'Neill says. The Debtors are concerned that certain parties may be positioning themselves to contest the binding effect of the Bankruptcy Court's estimate of the Debtors' asbestos PI liability. For the Section 524(g) Trust to be adequately funded, Mr. O'Neill explains that the parties must be bound by estimation. To date, Mr. O'Neill notes, these issues concerning service of the PI Questionnaire cause the Debtors to believe that a proof of claim form is necessary to identify, with greater certainty, those PI Claimants who intend to file a claim against the Trust: (a) Reaud Morgan and Quinn has disputed the Debtors' definition of what constitutes unresolved claims and has filed an objection to completing the PI Questionnaire on behalf of those claimants who have a settled but unpaid or partially paid claim. (b) Based on the Debtors' preliminary comparison of Reaud Morgan's Rule 2019 statement to the information in the Debtors' claims database, it appears that Reaud Morgan has omitted around 50 claimants whose claims are not fully resolved and who also have filed claims in the "In re Silica" multi-district litigation. (c) Law firms have denied that they currently represent or ever have represented claimants for whom the Debtors' records indicate that they are counsel of record. (d) Law firms have been requesting extra PI Questionnaires for claimants who they believe should have been served with the PI Questionnaires although the Debtors' records do not indicate that the individuals have unresolved, prepetition PI asbestos claims. (e) Law firms have been requesting lists of the social security numbers of the claimants for whom they have received PI Questionnaires to cross-reference their list of PI clients with the list of claimants for whom they have received PI Questionnaires. The Debtors believe that to the extent there is a legitimate discrepancy between their files and the PI Claimants' records, a proof of claim form and a bar date are necessary to resolve any uncertainty. Accordingly, the Debtors ask the Court to approve the Asbestos PI Prepetition Litigation Proof of Claim Form and establish January 12, 2006, as the PI Claims Bar Date. Any entity who fails to file a claim by that deadline will be forever barred and enjoined from asserting any PI Claim against any of the Debtors or the Trust. Mr. O'Neill points out that a Bar Date is needed to ensure that firms file the appropriate Rule 2019 Statements to: (1) verify that the Questionnaires are sent to the appropriate parties; (2) determine whether the Questionnaires are filed by an authorized representative of the claimant; and (3) determine whether a claimant indeed has authorized the filing of the underlying action against the Debtors. Mr. O'Neill assures Judge Fitzgerald that the PI Claim Form and the Bar Date will not impose any undue burden on the PI Claimants since the Claim Form can be completed with minimal time and effort. Headquartered in Columbia, Maryland, W.R. Grace & Co. -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) WELLS FARGO: Fitch Places Low-B Rating on $1.78-Mil Cert. Classes ----------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2005-12, are rated by Fitch Ratings: -- $572,488,152 classes I-A-1 through I-A-10, II-A-1, II-A-2, A-PO, and II-A-R 'AAA' senior certificates; -- $12,914,000 class B-1 'AA'; -- $3,867,000 class B-2 'A'; -- $2,380,000 class B-3 'BBB'; -- $1,190,000 class B-4 'BB'; -- $595,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 3.77% subordination provided by the 2.17% class B-1, the 0.65% class B- 2, the 0.40% class B-3, the 0.20% privately offered class B-4, the 0.10% privately offered class B-5, and the 0.25% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the primary servicing capabilities of Wells Fargo Bank, N.A. The transaction consists of two groups of 1,219 fully amortizing, fixed interest rate, interest-only, first-lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $594,921,377 as of Oct. 1, 2005, which is the cut-off date and the average principal balance is $488,041. The weighted average original loan-to-value ratio of the loan pool is approximately 76.02%; 0.83% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.884%, and the weighted average FICO score is 743. Cash-out and rate/term refinance loans represent 28.43% and 17.49% of the loan pool, respectively. The states that represent the largest geographic concentration are California, Virginia, and Maryland. All other states represent less than 5% of the outstanding balance of the pool. 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 on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian and Wachovia Bank, N.A. will act as trustee. Elections will be made to treat the trust as a real estate mortgage investment conduit for federal income tax purposes. WELLS FARGO: Fitch Rates $2.45-Mil Class Certificates at Low-B -------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2005-11, are rated by Fitch Ratings: -- $677,734,772 classes I-A-1 through I-A-3, II-A-1 through II-A-7, A-PO, and II-A-R senior certificates 'AAA'; -- $13,667,000 class B-1 'AA'; -- $3,854,000 class B-2 'A'; -- $2,103,000 class B-3 'BBB'; -- $1,402,000 class B-4 'BB'; -- $1,051,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 3.30% subordination provided by the 1.95% class B-1, the 0.55% class B- 2, the 0.30% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. The class B-6 certificates are not rated by Fitch. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the primary servicing capabilities of Wells Fargo Bank, N.A. (WFB; rated 'RPS1' by Fitch). The transaction consists of two groups of 1,303 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity (WAM) of approximately 30 years. The aggregate unpaid principal balance of the pool is $700,863,515 as of Oct. 1, 2005 (the cut-off date), and the average principal balance is $537,885. The weighted average original loan-to-value ratio (OLTV) of the loan pool is approximately 68.86%; 0.91% of the loans have an OLTV greater than 80%. The weighted average coupon (WAC) of the mortgage loans is 5.855%, and the weighted average FICO score is 742. Cash-out and rate/term refinance loans represent 36.5% and 19.39% of the loan pool, respectively. The states that represent the largest geographic concentration are California (39.44%), New Jersey (6.67%), and Massachusetts (5.46%). All other states represent less than 5% of the outstanding balance of the pool. 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,' issued May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation (WFASC), a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A. will act as trustee. Elections will be made to treat the trust as a real estate mortgage investment conduit (REMICS) for federal income tax purposes. WHITEHALL JEWELLERS: Newcastle Offers $1.10 Per Share Buy-Out ------------------------------------------------------------- Whitehall Jewellers, Inc. (NYSE:JWL) reported that the Company received a proposal from Newcastle Partners, L.P. The proposal, which is subject to a number of conditions and definitive documentation, expresses Newcastle's willingness to offer $1.10 per share in cash by merger or otherwise and cash out warrants and in-the-money options based on that price. Under the proposal, Newcastle would pay off the Company's recent bridge loan. Newcastle expects to obtain a commitment to replace the Company's senior credit facility or obtain consents from the Company's senior lenders. A copy of the proposal letter is contained in an amendment to Newcastle's Schedule 13D filed electronically with the Securities and Exchange Commission. On October 4, 2005, the Company announced its entry into agreements with funds managed by Prentice Capital Management, L.P. and Holtzman Opportunity Fund, L.P. Under the Prentice Agreements, the Company has the right, subject to certain conditions, to consider alternative proposals. The Board of Directors has not made a determination as to what action, if any, it may take with respect to the Newcastle proposal. Whitehall Jewellers, Inc., is a national specialty retailer of fine jewelry, operating 387 stores in 38 states. The company operates stores in regional and super regional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers. * * * Needs Additional Capital As previously reported, Whitehall is reviewing its financial situation in light of current and forecasted operating results and management changes. The Company believes it needs additional capital to support its operations. The Company is evaluating various alternatives to meet these needs, including the raising of additional debt or equity financing. The Company has requested temporary extensions of payment terms from some of its key suppliers in order to manage liquidity and has also slowed its accounts payable schedules generally. In addition, the Company plans to retain restructuring professionals to assist it. Lender Talks The Company is actively engaged in discussing alternatives with its bank lenders and other parties. There is no assurance that the discussions will result in additional financing or that an alternative transaction will be available. If the Company is not able to procure additional financing or otherwise able to obtain additional liquidity, it may be forced to pursue other alternatives, such as a restructuring of its obligations. 10-Q Filing Delay The Company does not expect to be in a position to file its Quarterly Report on Form 10-Q, including financial results for its second fiscal quarter, on a timely basis. The Company expects to report a net loss for its second fiscal quarter. WHITEHALL JEWELLERS: NYSE Halts Common Stock Trading ---------------------------------------------------- The common stock of Whitehall Jewellers, Inc., was suspended from trading on the New York Stock Exchange prior to the opening of trading on Friday, Oct. 28, 2005. As previously disclosed, the decision was reached in view of the fact that the Company was not in compliance with the NYSE continued listing standards because its average market capitalization had been less than $25 million over a consecutive 30 trading-day period. The Company's common stock began trading in the Pink Sheets under the symbol "JWLR" starting Oct. 28, 2005. The Company may also seek quotation of its common stock on the OTC Bulletin Board. Whitehall Jewellers, Inc., is a national specialty retailer of fine jewelry, operating 387 stores in 38 states. The company operates stores in regional and super regional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers. * * * Needs Additional Capital As previously reported, Whitehall is reviewing its financial situation in light of current and forecasted operating results and management changes. The Company believes it needs additional capital to support its operations. The Company is evaluating various alternatives to meet these needs, including the raising of additional debt or equity financing. The Company has requested temporary extensions of payment terms from some of its key suppliers in order to manage liquidity and has also slowed its accounts payable schedules generally. In addition, the Company plans to retain restructuring professionals to assist it. Lender Talks The Company is actively engaged in discussing alternatives with its bank lenders and other parties. There is no assurance that the discussions will result in additional financing or that an alternative transaction will be available. If the Company is not able to procure additional financing or otherwise able to obtain additional liquidity, it may be forced to pursue other alternatives, such as a restructuring of its obligations. 10-Q Filing Delay The Company does not expect to be in a position to file its Quarterly Report on Form 10-Q, including financial results for its second fiscal quarter, on a timely basis. The Company expects to report a net loss for its second fiscal quarter. WILLIAM BRADLEY: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: William J. Bradley 3375 Mayette Avenue Santa Rosa, California 95405 Bankruptcy Case No.: 05-14366 Chapter 11 Petition Date: October 15, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtor's Counsel: Michael C. Fallon, Esq. Law Offices of Michael C. Fallon 100 East Street, Suite 219 Santa Rosa, California 95404 Tel: (707) 546-6770 Fax: (866) 305-7592 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rentrak Personal Guarantee $2,024,230 P.O. Box 18888 Corporate Obligation Portland, OR 97218 VPD Inc. Personal Guarantee $365,505 150 Parshore Drive Corporate Obligation Folsom, CA 95630 Greater Bay Bank NA Personal Guarantee $100,000 Marin Office Corporate Obligation 999 Fifth Avenue, Suite# 100 San Rafael, CA 94901 Wells Fargo Bank Personal Guarantee $92,694 Corporate Obligation Dennis Link Labor for Construction $50,000 of Commercial Building Wells Fargo Bank Personal Guarantee $3,925 Corporate Obligation Wells Fargo Bank Personal Guarantee $800 Corporate Obligation Wells Fargo Bank Personal Guarantee $329 Corporate Obligation Wells Fargo Bank Personal Guarantee $176 Corporate Obligation Wells Fargo Bank Personal Guarantee $37 Corporate Obligation AFC Rosewood LLC Personal Guarantee Unknown Lease Obligation Cameron Stewart Personal Guarantee Unknown Corporate Obligation Donahue Schriber Realty LP Personal Guarantee Unknown Corporate Obligation Fox Partners LP Personal Guarantee Unknown Corporate Obligation Gabrielsen & Company Personal Guarantee Unknown Corporate Obligation Holbrook Plaza Associates LLC Personal Guarantee Unknown Corporate Obligation LAM Properties Personal Guarantee Unknown Corporate Obligation Lloyd Square Personal Guarantee Unknown Corporate Obligation Novato Fair Limited Personal Guarantee Unknown Partnership Corporate Obligation Rand Enterprises Personal Guarantee Unknown Corporate Obligation WILLIAM MCKINLEY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtors: William McKinley & Marlene M. McKinley d/b/a Master Musician Collective 240 West Street Reading, Massachusetts 01867 Bankruptcy Case No.: 05-23442 Type of Business: The debtor records music for CD release. Chapter 11 Petition Date: October 15, 2005 Court: District of Massachusetts (Boston) Judge: Robert Somma Debtors' Counsel: Nina M. Parker, Esq. Parker & Associates 10 Converse Place Winchester, Massachusetts 01890 Tel: (781) 729-0005 Fax: (781) 729-0187 Total Assets: $1,151,872 Total Debts: $1,424,285 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ To be supplied To be supplied $133,121 American Express $25,752 P.O. Box 360001 Fort Lauderdale, FL 33336 American Express $23,450 P.O. Box 360001 Fort Lauderdale, FL 33336 American Express $19,987 Fleet National Bank Cash Reserve $19,778 Fleet National Bank $17,106 Maryland National Bank For CACV/13051024050 $16,349 400583 Great Seneca Financial Corp. $16,247 Fleet Credit Card Service $14,669 Chase Bankcard Services, Inc. $14,113 Chase Bankcard Services, Inc. $14,108 Bank One $13,882 Monogram Bank North America $13,160 MBNA America $12,655 MBNA America $12,528 Bank One $11,719 Chase Bankcard Services, Inc. $9,955 Chase Bankcard Services, Inc. $9,882 Direct Merchants Bank $9,837 Chase Bankcard Services, Inc. $9,825 WILLIAM SHIPWASH: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: William L. Shipwash III 6649 Showhorse Court Colorado Springs, Colorado 80922 Bankruptcy Case No.: 05-49070 Chapter 11 Petition Date: October 14, 2005 Court: District of Colorado Judge: Sidney B. Brooks Debtor's Counsel: Lee M. Kutner, Esq. Kutner Miller, P.C. 303 East 17th Avenue, Suite 500 Denver, Colorado 80203 Tel: (303) 832-2400 Fax: (303) 832-1510 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pueblo Bank and Trust Loan $1,757,743 301 West 5th Street Pueblo, CO 81003 First United Bank Loan $184,253 8095 East Belleview Avenue Englewood, CO 80111 Adams Bank and Trust Loans $175,642 265 Cheyenne Mountain Blvd. Colorado Springs, CO 80906 Pikes Peak Regional Loan $145,000 Development Corp. MBNA America Credit Card $25,886 GMAC Automobile Loan $19,740 U.S. Bank Credit Card $19,478 Chase Credit Card $18,606 Target National Bank Credit Card $12,266 Citi Cards Credit Card $12,048 Wright Express $10,500 Chase Credit Card $9,931 MBNA Credit Card $9,860 American Express Credit Card $9,313 Cabela's Visa Credit Card $8,280 MBNA America Credit Card $7,136 Chase Credit Card $6,644 Discover Credit Card $5,777 American Express Credit Card $1,694 Office Depot Credit Card $128 WILLIAM WEST: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtors: William C. West & Jacquelyn West d/b/a Digitech Reprographics 5712 Hatchery Court Penngrove, California 94951 Bankruptcy Case No.: 05-13975 Type of Business: The Debtor operates a full-scale, full-color, black and white, high-speed, digital printing shop. See http://www.digitechrepro.com/ Chapter 11 Petition Date: October 14, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtors' Counsel: Paul M. Jamond, Esq. Law Offices of Paul M. Jamond 200 4th Street, Suite# 300 Santa Rosa, California 95401 Tel: (707) 526-4550 Total Assets: $1,494,596 Total Debts: $1,683,193 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Oce Financial Services Value of Collateral: $375,000 5600 Broken Sound Blvd. $145,000 Boca Raton, FL American Express $31,916 Suite 0001 Los Angeles, CA 90096-0001 Internal Revenue Service $31,145 Special Procedures 1301 Clay Street, Stop 1400 S Oakland, CA 94612-5210 Xerox Corporation Value of Collateral: $31,000 $10,000 Citicorp Vendor Finance Value of Collateral: $30,000 $15,000 American Express $29,478 American Express $28,299 WFS Financial Value of Collateral: $15,052 $11,000 Internal Revenue Service $13,103 WFS Financial Value of Collateral: $11,856 $6,600 Choice Visa Citi Cards $8,816 Discover Card $8,660 Wells Fargo Bank-Auto Finance $8,554 State Bd. Of Equalization, $6,900 State of California Harley Davidson Credit $6,746 MBNA America $6,279 Household Bank HSBC $5,553 Sonoma County Tax Collector $4,238 Neiman Marcus $3,685 Charette LLC $3,583 WINN-DIXIE: Posts $832.6MM Net Loss for the Year Ended June 2005 ---------------------------------------------------------------- Winn-Dixie Stores, Inc. and Subsidiaries Consolidated Balance Sheets June 29, 2005 (In thousands) Assets Current assets: Cash and cash equivalents $62,141 Marketable securities 19,656 Trade and other receivables, net 206,297 Insurance claims receivable 8,656 Income tax receivable 30,084 Merchandise inventories, net 798,414 Prepaid expenses and other current assets 82,713 Assets held for sale - Deferred income taxes - ------------ Total current assets 1,207,961 Property, plant and equipment, net 663,087 Goodwill - Non-current deferred income taxes - Other assets, net 116,258 ------------ TOTAL ASSETS $1,987,306 ============ Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $194 Current obligations under capital leases 4,849 Accounts payable 104,169 Reserve for self-insurance liabilities 78,704 Accrued wages and salaries 83,759 Accrued rent 26,837 Accrued expenses 99,938 ------------ Total current liabilities 398,450 Reserve for self-insurance liabilities 140,829 Long-term debt 396 Long-term borrowings under DIP Credit Facility 245,003 Obligations under capital leases 10,637 Defined benefit plan - Lease liability on closed facilities, net - Other liabilities 21,421 ------------ Total liabilities not subject to compromise 816,736 Liabilities subject to compromise 1,111,276 ------------ Total Liabilities 1,928,012 Shareholders' equity: Common stock $1 par value 141,889 Additional paid-in-capital 32,452 (Accumulated deficit) retained earnings (76,714) Accumulated other comprehensive loss (38,333) ------------ Total shareholders' equity 59,294 ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,987,306 ============ Winn-Dixie Stores, Inc. and Subsidiaries Consolidated Statements of Operations Year ended June 29, 2005 (In thousands) Net sales $9,921,319 Cost of sales 7,383,476 ------------ Gross profit on sales 2,537,843 Other operating and administrative expenses 2,804,959 Impairment charges 264,815 Restructuring charges 83,999 ------------ Operating (loss) income (615,930) Bank agreement termination income - Interest expense, net 33,166 ------------ (Loss) earnings before reorganization items and income taxes (649,096) Reorganization items, net (148,293) Income tax expense (benefit) 190,459 ------------ Net (loss) earnings from continuing operations (691,262) Discontinued operations: (Loss) earnings from discontinued operations (61,645) Loss on disposal of discontinued operations (79,695) Income tax (benefit) expense - ------------ Net (loss) earnings from discontinued operations (141,340) ------------ NET (LOSS) EARNINGS ($832,602) ============ Winn-Dixie Stores, Inc. and Subsidiaries Consolidated Statements of Cash Flows Year ended June 29, 2005 (In thousands) Cash flows from operating activities: Net (loss) earnings ($832,602) Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: (Gain) loss on sale of assets, net (28,276) Reorganization items, net (148,293) Depreciation and amortization 150,459 Impairment charges 272,354 Deferred income taxes 241,747 Stock compensation plans 9,383 Change in operating assets and liabilities: Trade and other receivables (105,901) Merchandise inventories 121,574 Prepaid expenses and other current assets (36,316) Accounts payable (25,698) Reserve for self-insurance liabilities 10,662 Lease liability on closed facilities 132,220 Income taxes payable / receivable 19,727 Defined benefit plan 2,011 Other accrued expenses 3,832 ------------ Net cash (used in) provided by operating activities before reorganization items (213,117) Cash effect of reorganization items (15,019) ------------ Net cash (used in) provided by operating activities (228,136) Cash flows from investing activities: Purchases of property, plant and equipment (111,485) Decrease (increase) in investments and other assets 8,341 Proceeds from sales of assets 107,245 Marketable securities, net (733) ------------ Net cash provided by (used in) investing activities 3,368 Cash flows from financing activities: Gross borrowings on DIP Credit Facility 1,105,211 Gross payments on DIP Credit Facility (860,208) Gross borrowings on revolving credit facility 486,000 Gross payments on revolving credit facility (486,000) Principal payments on long-term debt (288) Debt issuance costs (13,121) Principal payments on capital lease obligations (2,321) Dividends paid - Swap termination receipts/payments, net - Other 818 ------------ Net cash provided by (used in) financing activities 230,091 Increase (decrease) in cash and cash equivalents 5,323 Cash and cash equivalents at beginning of year 56,818 ------------ Cash and cash equivalents at end of year $62,141 ============ Winn-Dixie filed its annual report on Form 10-K with the Securities and Exchange Commission on Oct. 26, 2005. A full-text copy of that regulatory filing is available at no charge at http://ResearchArchives.com/t/s?29f Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants to Auction Miami Reclamation Center on Nov. 14 ---------------------------------------------------------------- Before filing for bankruptcy protection, Winn-Dixie Stores, Inc., and its debtor-affiliates owned and operated a 54,460-square foot warehouse at 10900 NW 36 Avenue, in Miami, Florida. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that the Debtors used the warehouse to store damaged or other unsold goods pending their return to the applicable vendor. Since the Petition Date, the Debtors have closed the Miami Reclamation Center and instead operated a reclamation center at their headquarters in Jacksonville, Florida. Thus, the Debtors no longer need the Miami Reclamation Center, Mr. Baker says. According to Mr. Baker, the Debtors remain liable for the carrying costs associated with the center of about 1,700 per month. The Debtors have marketed the Miami Reclamation Center extensively through DJM Asset Management, Inc. DJM sent over 10,000 sale notices for the center to potential purchasers. Through DJM's efforts, the Debtors have received six offers, including an offer by Commercial Long Trading, Inc., for $1,499,400. After reviewing all offers, the Debtors have determined that Commercial's offer is the highest and best offer for the Miami Reclamation Center. Thus, the Debtors seek the authority of the U.S. Bankruptcy Court for the Middle District of Florida to sell the Miami Reclamation Center and related fixtures and equipment to the Purchaser, subject to higher or better offers. Purchase Agreement On Oct. 14, 2005, the Debtors and the Purchaser entered into a Real Estate Purchase Agreement, which, among other things, provide that: a. The assets to be sold and transferred to the Purchaser will include: * the Debtors' fee simple title interest in the Miami Reclamation Center; and * the Debtors' interest in all fixtures and fixed equipment located at the center. b. The net aggregate purchase price for the Assets is $1,499,400. The Purchaser Price is to be paid by the Purchaser on or before the Sale Closing Date. A $153,000 deposit has been paid by the Purchaser; c. The Assets are to be transferred free and clear of any liens, claims and interests and encumbrances, with certain exceptions; and d. The Assets do not include certain excluded personal property. Solicitation & Auction Notwithstanding that the Assets have been sufficiently marketed, the Debtors are soliciting higher and better bids for them. Mr. Baker reports that any person or entity interests must submit their bids so that they are received by 12:00 p.m. on Monday, Nov. 14, 2005. The Bids must be addressed to: James Avallone DJM Asset Management 445 Broadhollow Road, Suite 417 Melvin, New York 11747 A copy of the Bids should also be submitted to the Debtors' counsel. Mr. Baker explains that to qualify as a competing bid, the offer must net the Debtors' estates at least $1,510,000 and be accompanied by a certified check made out to Winn-Dixie Stores, Inc., in an amount equal to 10% of the competing bid. If the Debtors receive a higher or better offer for the Assets, they will conduct an auction, which will take place at 10:00 a.m., on Wednesday, November 16, 2005, at the offices of Smith Hulsey & Busey, at 225 Water Street, Suite 1800, in Jacksonville, Florida. The Debtors will conduct the Auction in consultation with the Official Committee of Unsecured Creditors and the DIP Lender. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000). WORLDCOM INC: Parties Want Court to Set Final Fairness Hearing -------------------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the Southern District of New York's Preliminary Order approving the Louisiana right of way settlement among WorldCom, Inc., its debtor- affiliates and William Kimball, H.M. Kimball Jr., and Elizabeth Kimball Lewis, as class representatives, provided for a final fairness hearing to be held on December 6, 2005, with any objections to be filed and served by October 31, 2005. The Order directed the parties to provide notice to members of the Settlement Class beginning on September 1, 2005. However, as a result of the disruptions caused by Hurricanes Katrina and Rita throughout Louisiana, the parties delayed the settlement notification process. Except for Orleans, Jefferson, St. Tammany, and Calcasieu Parishes, conditions in Louisiana appear to be suitable for continuing the notification and approval process, with a two-month delay. Accordingly, the parties ask the Court to schedule a final fairness hearing on February 7, 2006, with notice to be provided commencing November 1, a deadline for objections and opt-outs of December 31, 2005, and a deadline for claims of April 28, 2006. With respect to property in Orleans, Jefferson, St. Tammany, and Calcasieu Parishes, conditions do not yet appear suitable for continuing the notification and approval process. Hence, the parties ask the Court to indefinitely postpone the final fairness hearing, along with the notice, objection, opt-out, and claims schedule, with respect to property in those parishes. The parties will submit either a status report or a motion to re- commence the notification and approval process with respect to those Parishes by December 15, 2005. The parties further ask the Court to add XCL, Ltd., LM Holding, Associates, LP, David Odom, Katherine McClellan Sibille, The Sibille Co., Inc., and Sylvia Weil Marcuse as class representatives to conform to the pleadings in the Louisiana state court proceedings, and to delete William Kimball as a class representative due to his death. 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Wants Court to Allow Tax Claim as Timely Filed ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on October 13, 2005, Carolyn Hochstadter Dicker, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Philadelphia, Pennsylvania, tells the U.S. Bankruptcy Court for the Southern District of New York that pursuant to records, WorldCom, Inc., and its debtor- affiliates currently owe the City of Philadelphia these business privilege taxes inclusive of interest and penalties through Sept. 7, 2005: Period Principal Interest Penalty Total ------ --------- -------- ------- ----- 12/31/2002 $167,920 $48,697 $86,059 $302,676 04/15/2003 45,476 113,690 159,166 04/15/2004 91,847 15,614 33,294 140,755 12/31/2004 962 48 67 1,077 --------- -------- ------- -------- TOTAL $260,728 $109,835 $233,111 $603,674 Interest and penalties continue to accrue through the date of payment, Ms. Dicker says. * * * While going through its records, the City of Philadelphia discovered a liability due by the Debtors under MCI WorldCom Communications Inc.'s account. Pursuant to the City's Records, the Debtors' liability consists of non-filer liability for failure to have filed tax returns for business privilege and wage taxes from 1995 to 2001. The City filed a claim in an unliquidated amount for this liability. By this motion, the City asks the Court to: a) allow its Claim, nunc pro tunc, as timely filed, on grounds of "excusable neglect," as a priority tax claim pursuant to Section 507(a)(8) of the Bankruptcy Code, together with penalties and interest accrued through the Petition Date; and b) compel the Debtors to file the Tax Returns immediately and fully pay the Taxes in cash. Section 507(a)(8) of the Bankruptcy Code provides for the payment of unsecured taxes assessed before the commencement of the bankruptcy case as priority tax claims, together with penalties and interest accrued through the Petition Date. Carolyn Hochstadter Dicker, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Philadelphia, Pennsylvania, relates that because the Taxes are self-assessed, the Debtors were on notice of their obligation to pay the Taxes prior to the Petition Date. Thus, the Debtors cannot claim surprise or prejudice from lack of notice. Ms. Dicker points out that there would be little, if any, prejudice to the Debtors' estates from the delay in the allowance and payment of the City's Claim, due to the relative small size of the claim with respect to the outstanding claims against the Debtors' estates, as well as the sufficiency of funding available for their payment. Similarly, Ms. Dicker continues, while the Plan has gone effective, the Debtors are still in the midst of administering claims. Moreover, Ms. Dicker insists that because tax claims are so unique in nature, there is little danger that allowance of the City's Claim as late-filed will open the floodgates to the filing of similar claims against the Debtors' estates. "The balance of the equities lies in favor of the taxing authority, as representative of the taxpayers," Ms. Dicker maintains. "While a City employee did admittedly fail to timely file an unliquidated claim, the taxpayers should not be prejudiced by this error, as long as the creditors of the Debtors' estates are similarly not prejudiced by the allowance and payment of the City's Claim." 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. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Timothy Coleman Joins Dewey Ballantine as Litigation Partner -------------------------------------------------------------- Timothy J. Coleman will join Dewey Ballantine LLP, as a Partner in the Litigation Department. Mr. Coleman will be resident in the firm's Washington, D.C. and New York offices, and will Co-Chair the firm's White Collar Crime and Government Investigations Practice Group. "Tim Coleman is an outstanding addition to our Litigation Department, and to the firm as a whole," said Morton A. Pierce, Chairman of the firm's Executive Committee. "This move demonstrates Dewey Ballantine's commitment to expanding its capabilities in the increasingly important area of government enforcement actions and white collar criminal defense." Mr. Coleman, a nationally recognized expert on white-collar crime and government enforcement, currently serves as Senior Counsel to the Deputy Attorney General of the United States. After completing his government service, he will join Dewey Ballantine in January 2006. Prior to entering Government service, Mr. Coleman was associated for more than six years with Cravath, Swaine & Moore in New York. He received his J.D. degree from Georgetown University Law Center in 1990. Before beginning his legal career, Mr. Coleman worked as a foreign exchange trader for a commercial bank. Dewey Ballantine LLP, founded in 1909, is an international law firm with more than 550 attorneys located in New York, Washington, D.C., Los Angeles, East Palo Alto, Houston, Austin, London, Warsaw, Budapest, Frankfurt, Milan and Rome. Through its network of offices, the firm handles some of the largest, most complex corporate transactions, litigation and tax matters in such areas as M&A, private equity, project finance, corporate finance, corporate reorganization and bankruptcy, antitrust, intellectual property, sports law, structured finance and international trade. Industry specializations include energy and utilities, healthcare, insurance, financial services, media, consumer and industrial goods, consumer electronics, technology, telecommunications and transportation. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- ACCO Brands Corp ABD (28) 878 (364) Abraxas Petro ABP (43) 106 (5) Accentia Biophar ABPI (8) 34 (20) AFC Enterprises AFCE (44) 216 52 Alaska Comm Sys ALSK (9) 589 49 Alliance Imaging AIQ (52) 621 43 AMR Corp. AMR (729) 29,436 (1,882) Atherogenics Inc. AGIX (76) 234 213 Bally Total Fitn BFT (172) 1,461 (290) Biomarin Pharmac BMRN (110) 167 (4) Blount International BLT (220) 446 126 CableVision System CVC (2,430) 10,111 (1,607) CCC Information CCCG (95) 112 34 Centennial Comm CYCL (463) 1,456 85 Choice Hotels CHH (164) 288 (34) Cincinnati Bell CBB (625) 1,891 (18) Clorox Co. CLX (553) 3,617 (258) Columbia Laborat CBRX (12) 18 11 Coley Pharma COLY (5) 71 30 Compass Minerals CMP (81) 667 129 Crown Media HL CRWN (34) 1,289 (130) Deluxe Corp DLX (101) 1,461 (297) Denny's Corporation DENN (260) 498 (72) Domino's Pizza DPZ (553) 414 (3) Echostar Comm DISH (972) 7,281 269 Emeritus Corp. ESC (123) 720 (43) Foster Wheeler FWLT (490) 2,012 (175) Guilford Pharm GLFD (20) 136 60 Graftech International GTI (34) 1,006 264 I2 Technologies ITWO (153) 386 124 ICOS Corp ICOS (57) 243 160 IMAX Corp IMAX (38) 241 27 Immersion Corp. IMMR (11) 46 30 Indevus Pharma IDEV (103) 119 86 Intermune Inc. ITMN (7) 219 133 Investools Inc. IED (22) 56 (47) Isis Pharm. ISIS (124) 147 46 Kulicke & Soffa KLIC (44) 365 182 Lodgenet Entertainment LNET (69) 282 22 Maxxam Inc. MXM (681) 1,024 103 Maytag Corp. MYG (95) 2,989 371 McDermott Int'l MDR (140) 1,488 123 McMoran Exploration MMR (61) 407 118 NPS Pharm Inc. NPSP (98) 310 215 ON Semiconductor ONNN (317) 1,171 300 Qwest Communication Q (2,663) 24,070 1,248 RBC Bearings Inc. ROLL (5) 247 125 Riviera Holdings RIV (27) 216 5 Rural/Metro Corp. RURL (97) 316 44 Rural Cellular RCCC (464) 1,376 30 Ruth's Chris Stk RUTH (49) 110 (22) SBA Comm. Corp. SBAC (50) 857 19 Sepracor Inc. SEPR (213) 1,193 830 St. John Knits Inc. SJKI (52) 213 80 Tiger Telematics TGTL (46) 20 (54) TRX Inc TRXI (8) 62 (27) US Unwired Inc. UNWR (76) 414 56 Vector Group Ltd. VGR (33) 527 173 Verifone Holding PAY (36) 248 48 Vertrue Inc. VTRU (35) 441 (80) Weight Watchers WTW (36) 938 (266) Worldspace Inc. WRSP (1,720) 560 (1,786) WR Grace & Co. GRA (605) 3,423 811 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., Tara Marie Martin, and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***