/raid1/www/Hosts/bankrupt/TCR_Public/051220.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, December 20, 2005, Vol. 9, No. 301
Headlines
1680 WATERMARK: Case Summary & 4 Largest Unsecured Creditors
ACCESS PHARMACEUTICALS: Receives Delisting Notice from AMEX
ADF GROUP: Oct. 31 Balance Sheet Upside-Down by C$12.3 Million
ALLSERVE SYSTEMS: Teich Groh Approved as Bankruptcy Counsel
ALLSERVE SYSTEMS: Creditors Link Indian Fugitive to Bankruptcy
ALLSERVE SYSTEMS: Bunce Atkinson Appointed as Chapter 11 Trustee
AMERICAN REPROGRAPHICS: S&P Rates $158 Mil. Add-On Sr. Loan at BB-
ARCH COAL: Extends Offer for Stock Conversion to December 30
ASARCO LLC: Court Okays Amber Glass Construction Agreement
ASARCO LLC: Court Okays Envirocon to Demolish & Clean Sinter Plant
ATA AIRLINES: Can Borrow Up to $30MM in MatlinPatterson Financing
ATRIUM CORP: U.S. District Atty. Subpoena Cues S&P to Retain Watch
BANYAN CORP: Posts $1 Million Net Loss in Third Quarter
BEAR STEARNS: Moody's Rates Class M-10 Mezzanine Certs. at Ba2
BP INTERNATIONAL: Reports Deep Losses in Quarter Ended Sept. 30
BRICOLAGE CAPITAL: Employs Arent Fox as Bankruptcy Counsel
BROOKLYN CHEESECAKE: Has $675,568 Equity Deficit at September 30
BUEHLER FOODS: Wants to Finalize Payment to SSG Capital
CAPITAL AUTOMOTIVE: To Become a Limited Liability Co. on Dec. 30
CATHOLIC CHURCH: Indigent Claimant Doesn't Get Free Legal Counsel
CERVANTES ORCHARDS: Taps Jon Hyink at Bell & Bridges as Accountant
CHI-CHI'S: U.S. Trustee Objects to Joint Amended Liquidating Plan
CITIGROUP MORTGAGE: Moody's Rates Class M-11 Sub. Certs. at Ba2
CORUS ENTERTAINMENT: Launches Offer for 8.75% Senior Notes
CREDIT SUISSE: Fitch Lifts Ratings on Class B-1 & B-2 Certificates
CYBERCARE INC: Files Schedules of Assets and Liabilities
CYBERCARE INC: Ct. OKs Johnson Pope as Special Securities Counsel
CYBERCARE INC: Stichter Riedel Approved as Bankruptcy Counsel
DELAFIELD 246 CORP: New York City Says No to Additional Debt
DELTA AIR: Kenton County Wants To Effect Set-Off
DELTA AIR: Ryder Says Agreement with Comair Already Terminated
DELTA AIR: SEC Approves Delisting of Stock from NYSE
DSL.NET INC: Receives Non-Compliance Notice from AMEX
DURANGO PAPER: Court Approves $36.4MM Asset Sale to LandMar Group
EASYLINK SERVICES: Earns $800,000 in Quarter Ended June 30
ENTERGY NEW ORLEANS: Wants OK to Honor Power Purchase Obligations
ENTERGY NEW ORLEANS: Gordon, et al., Want Automatic Stay Modified
ESTERLINE TECH: Darchem Buy-Out Prompts S&P to Affirm Ratings
ENVIRONMENTAL TRUST: Court Okays Krishan Workinger as Accountant
EUREKA READY: Case Summary & 20 Largest Unsecured Creditors
FLYI INC: EDC Wants Adequate Protection on Aircraft Leases
FLYI INC: Court Gives Interim Okay on Claim Transfer Procedures
FLYI INC: U.S. Trustee Objects to Sabre as Management Consultant
GLASS GROUP: Administrative Claims Bar Date Set for Jan. 16
GRUPO TMM: Launches Offer to Buyback $331 Million of Senior Notes
GRUPO TMM: S&P Upgrades Corporate Credit Rating to B- from CCC
HILLENBRAND INDUSTRIES: Expects to File Form 10-K by December 29
ILLINOIS POWER: Moody's Downgrades Preferred Stocks' Rating to Ba2
INDUSTRIAL ENT: Accounting Changes Result in $170,000 Net Loss
INEX PHARMACEUTICALS: Receives Demand Letter from Stark Trading
INTERACTIVE HEALTH: Moody's Junks $100 Million Senior Notes
INTERNATIONAL FIBERCOM: LSB Corporation Recovers 77% on Its Claim
IXIS REAL: Moody's Rates Class B-4 Subordinate Certificates at Ba1
JP MORGAN: S&P Shaves Ratings on Three Class Certificates
KAISER ALUMINUM: Liverpool Limited Balks at Plan Modifications
KAISER ALUMINUM: More Insurers Object to Plan Confirmation
KEYSTONE AUTO: Refinancing Changes Earn S&P's B+ Credit Rating
KRISPY KREME: Completes Restructuring of Canadian Operations
KULLMAN INDUSTRIES: Inks Insurance Financing Agreement with Mepco
LEVITZ HOME: Court Approves Asset Sale to PLVTZ & Pride Capital
LEVITZ HOME: Court Okays GOB Sale of Stores & Support Operations
LEVITZ HOME: Has Until May 31 to Make Lease-Related Decisions
LOS OSOS: Loan Repayment Demand Prompts S&P to Lower Bonds' Rating
LPL HOLDINGS: High Leverage Spurs S&P to Junk Sub. Debt Ratings
MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs.
MCI INC: Inks Five-Year Contract with ABN AMRO for EUR500 Million
MERIDIAN AUTOMOTIVE: Has Until Mar. 31 to File Chapter 11 Plan
MERIDIAN AUTOMOTIVE: Judge Walrath Okays Ford Motor Land Pact
MERRY-GO-ROUND: U.S Trustee Can't Cope with $8.8 Mil. Trustee Fee
MESABA AVIATION: Has Until June 10 to Make Lease-Related Decisions
MESABA AVIATION: U.S. Trustee Adds Two Members to Committee
MESABA AVIATION: Committee Hires Squire Sanders as Counsel
MORGAN STANLEY: S&P Lifts Ratings on Class F Certificates to BB
NAKOMA LAND: Investors Financial Wants Ch. 11 Trustee Appointed
N C TELECOM: Incurs $100,000 DIP Loan from UBET Telecom
NEW YORK RACING: Chapter 11 Looms Amidst Cash Crisis
NORTHWEST AIRLINES: AMFA Says Strikebreakers Have Safety Concerns
NORTHWEST AIRLINES: Appoints Anna Schaefer as VP for Finance
NORTHWEST AIRLINES: Names Todd Anderson to Lead Australasian Unit
NORTHWEST PARKWAY: Fitch Withdraws BB Rating on $218.4M Rev. Bonds
NRG ENERGY: Launches Offer for 8% Senior Secured Notes
NTL INC: S&P Rates Units' Proposed $5.7 Bil. Senior Loans at BB-
NVE INC: Taps Dr. Howard Smith as Medical Expert
NVE INC: Sound Shore Approved as Turnaround Consultant
OFFSHORE LOGISTICS: Extends Waiver Period for 6-1/8% Senior Notes
ON SEMICONDUCTOR: Prices $95 Mil. of 1.875% Senior Sub. Notes
ORECK CORP: Moody's Confirms $215 Million Sec. Debts' B1 Ratings
ORION TELECOM: Creditors Must File Proofs of Claim by January 30
PHOTOCIRCUITS CORP: Taps Deloitte Financial as Advisors
PITTSBURGH TRANSPORTATION: Voluntary Chapter 11 Case Summary
PLAYTEX PRODUCTS: Moody's Raises $340 Mil. Notes' Rating to Caa1
POINT TO POINT: Confirmation Hearing Set for January 20
PONNAMPALAM SABANAYAGAM: Case Summary & 5 Unsecured Creditors
POPULAR ABS: Moody's Rates Class B-2 Sub. Certificates at Ba2
PORTRAIT CORP: Delays Filing of Form 10-Q for Qtr. Ended Oct. 30
PRG-SCHULTZ: Receives Nasdaq Non-Compliance Notice
QUEBECOR WORLD: Renews and Extends $1 Bil. Loan to Jan. 30, 2009
QUIGLEY CO: Wants Court to OK Settlement With Pfizer & Centennial
RADIATION THERAPY: Closes $100 Million Debt Financing
REFCO INC: Geneva Court Lifts Preliminary Injunction on ACM Shares
REFCO INC: Court Approves Bidding Procedures for Asset Sale
RIDDELL BELL: Moody's Affirms $140 Mil. Sr. Sub. Notes' B3 Rating
RITE AID: Posts $5.2 Million Net Loss in Period Ended Nov. 26
SACO I: Moody's Assigns Ba1 Rating to Class B-4 Sub. Certificates
SALOMON BROTHERS: S&P Lifts Low-B Ratings on Four Cert. Classes
SECURED SERVICES: Posts $3MM Net Loss in Quarter Ended Sept. 30
SECURITIZED ASSET: Moody's Rates Class B-4 Certificates at Ba1
THERMA-WAVE: Messrs. Graves & Willinge Join Board of Directors
THERMOVIEW INDUSTRIES: Court Okays Weber & Rose as Panel's Counsel
THERMOVIEW INDUSTRIES: Morris-Anderson Approved as Fin'l Advisors
THERMOVIEW INDUSTRIES: Has Until Feb. 28 to Decide on Leases
THREE-FIVE: Hires SG Cowen as Financial Advisors
TOM'S FOODS: 10-1/2% Noteholders Demand Additional Payments
VACCAR TOWERS: Case Summary & 14 Largest Unsecured Creditors
WAMU MORTGAGE: Moody's Rates Class B-12 Sub. Certificates at Ba3
WASTE SERVICES: Moody's Affirms $160 Million Notes' Caa2 Rating
WCA WASTE: Moody's Upgrades Long-Term Debt Ratings
WCI STEEL: Ch. 11 Cases Permanently Assigned to Judge Shea-Stonum
WEX PHARMACEUTICALS: Shareholders Dissatisfied Over Lack of Info
WINN-DIXIE: Equity Panel Can Retain J&B Despite Protests
WMG ACQUISITION: Debt Plans Spurs S&P to Affirm B+ Credit Rating
WORLDCOM INC: Wants to Interplead MCI Funds and Stock
* Large Companies with Insolvent Balance Sheets
*********
1680 WATERMARK: Case Summary & 4 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: 1680 Watermark LLC
1680 Watermark Drive
Columbus, Ohio 43215
Bankruptcy Case No.: 05-78566
Type of Business: The Debtor's affiliate, Pain Control
Consultants, Inc., filed for chapter 11
protection on Sept. 29, 2003 (Bankr. S.D. Ohio
Case No. 03-64866).
Pain Net, Inc., another debtor-affiliate, filed
for chapter 11 protection on Feb. 11, 2004
(Bankr. S.D. Ohio Case No. 04-51854). Pain
Net's chapter 11 filing was reported in the
Troubled Company Reporter on Feb. 25, 2004.
William D. Leak, managing member of 1680
Watermark, filed for chapter 11 protection
on Dec. 24, 2003 (Bankr. S.D. Ohio Case No.
03-69453).
Chapter 11 Petition Date: December 15, 2005
Court: Southern District of Ohio (Columbus)
Judge: C. Kathryn Preston
Debtor's Counsel: Thomas R. Allen, Esq.
Allen, Kuehnle & Stovall, LLP
21 West Broad Street, Suite 400
Columbus, Ohio 43215-4100
Tel: (614) 221-8500
Fax: (614) 221-5988
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 4 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Smith & Colner Trade debt $4,318
261 South Front Street
Columbus, OH 43228
Peabody Landscape Group Trade debt $3,215
2253 Dublin Road
Columbus, OH 43228
Master Lighting Service, Inc. Trade debt $1,405
P.O. Box 878
5460 Franklin Street
Hilliard, OH 430260878
Top Seed Lawn & Landscape, Inc. Trade debt $1,110
717 North James Road
Columbus, OH 43219
ACCESS PHARMACEUTICALS: Receives Delisting Notice from AMEX
-----------------------------------------------------------
Access Pharmaceuticals, Inc. (Amex: AKC) received notice from the
staff of the American Stock Exchange indicating that the Company
no longer complies with AMEX's continued listing standards due to
losses from continuing operations or net losses in two of its most
recent fiscal years with shareholders' equity of less than $2
million, as set forth in Section 1003(a) (i) of the AMEX "Company
Guide"; due to losses from continuing operations or net losses in
three of its most recent fiscal years with shareholders' equity of
less than $4 million, as set forth in Section 1003(a) (ii) of the
Company Guide; and due to losses from continuing operations and/or
net losses in four of its most recent fiscal years with
shareholders' equity of less than $6 million, as set forth in
Section 1003(a) (iii) of the Company Guide. The Company's common
stock is subject to being delisted from AMEX.
The Company will appeal this determination and request a hearing
before a committee of AMEX to maintain its AMEX listing. The
Company expects the hearing to take place in January 2006. There
can be no assurance that the Company's request for continued
listing will be granted.
Access Pharmaceuticals, Inc. is an emerging pharmaceutical company
focused on developing both novel low development risk product
candidates and technologies with longer-term major product
opportunities. Access markets Aphthasol(R) and is developing
products for other oral indications. Access is also developing
unique polymer platinates for use in the treatment of cancer and
has an extensive portfolio of advanced drug delivery technologies
including vitamin mediated targeted delivery, oral delivery, and
nanoparticle aggregates.
At June 30, 2005, Access Pharmaceuticals, Inc.'s balance sheet
showed a $12,285,000 stockholders' deficit, compared to a
$6,661,000 deficit at Dec. 31, 2004.
ADF GROUP: Oct. 31 Balance Sheet Upside-Down by C$12.3 Million
--------------------------------------------------------------
During the third quarter ended Oct. 31, 2005, Adf Group Inc.
(ticker symbol: DRX.sv) recorded revenues of C$8.4 million
compared to C$6.4 million during the same period last year,
representing a 31% increase in sales in the third quarter ended
Oct. 31, 2005 compared to the same period last year. However, the
late start in the fabrication of an important contract caused
delays out of the company's control. Therefore, because this
fabrication work only started in November 2005, it resulted in a
delay that impacted the third quarter sales on this contract. The
sales of the nine-month period ended Oct. 31, 2005 however
compared to the same period last year, are behind by 55%, a gap
the company will not be able to recover in the fourth quarter
since its backlog decreased.
The company's backlog stood at C$23.9 million on Oct. 31, 2005
compared to C$28.7 million at the end of the second quarter ended
on July 31, 2005. Over and above the contracts signed during the
third quarter, worth C$4.8 million, and since the end of the third
quarter, up to the date of the present date, the company has also
obtained contracts worth C$2.5 million.
For the three-month period ended Oct. 31, 2005, the company
recorded a gross margin, before foreign exchange variation, of
C$1.3 million compared to a loss of C$0.5 million for the same
period last year. This positive gross margin in the third quarter
is due in part to the efforts put forward by the Management to
signed profitable contracts and to ensure these are executed as
per the forecasted budgets.
During the third quarter ended Oct. 31, 2005 the Company recorded
a net loss of C$15.9 million. However, not taking into account
the unusual factors relating to the "Ford Field" project of C$15.0
million and the discontinued operations of C$1.2 million, the
company would have recorded a net loss of C$2.0 million during the
third quarter ended Oct. 31, 2005, which could have been covered
by a noticeably higher sales volume than at the present time, as
provided for in the rationalization plan of its operations.
Moreover, the Company anticipates to sign, in the near future,
contracts that will increase its backlog that should allow the
Company to return to profitability during the next financial year
ending Jan. 31, 2007.
The "Ford Field" Case
In October 2005, the arbitration panel rendered its interim
decision in the claim of the company's subsidiary for direct cost
overruns of C$62.6 million ($53.0 million) incurred on the Ford
Field project. This unfavourable decision prevents the company's
subsidiary from recovering the cost overruns aforementioned and
furthermore exposes the Company to damages relatively to the
respondents' counterclaims as well as their defence expenses.
This interim decision took the company by surprise since both its
technical and contractual arguments presented to the arbitration
panel were very solid. Consequently, the company believes that
the arbitrators made clear errors of law in rendering their
decision and the Company is therefore evaluating its options in
this matter.
However, even tough the Management contests this interim decision,
it must comply to the generally accepted accounting principles by
recording the respondents' counterclaims in the amount of C$10.5
million ($8.9 million) and to record the impacts on its balance
sheet, namely with regards to the debt due to the banking
syndicate, to the amount of the work in progress, as well as the
holdback on contract. The net impact represents an expense of
C$15.3 million on the consolidated statements of income of the
quarter ended Oct. 31, 2005. However, this interim decision binds
jointly and severally the Company and its bonding companies.
This interim decision addressed only the direct loss claims of
this subsidiary against the Lions and the designers. It does not
include independent claims of the Company against the Lions, their
program manager, their designers and the various governmental
entities that own the stadium, relating to consequential damages
in excess of C$177.0 million ($150.0 million) incurred by the
company. This case, which is in front of the Michigan Wayne County
Circuit Court, is now scheduled for an anticipated hearing in the
summer of 2006.
Debt Due to the Banking Syndicate
Because of the unfavourable interim decision rendered in the "Ford
Field" arbitration process and as per the agreement reached with
the banking syndicate on July 21, 2003, ADF wrote-off part of the
monies due to the banking syndicate, amounting to C$11.1 million
since the company no longer meets the necessary conditions to
reimburse this amount. This write-off generated a gain on
assignment of debt in the same amount on the consolidated
statements of income for the quarter ended Oct. 31, 2005.
The balance due to the banking syndicate amount to C$520,000 on
Oct. 31, 2005 which corresponds to the portion of the claims
recorded and included in the agreement at that date.
Credit Facility Waiver
As previously announced, the company signed an agreement with the
National Bank of Canada establishing a credit facility in line
with the anticipated growth of the company. Investissement Quebec
guarantees, under its Support Program for Exporting Companies,
this credit facility in the form of an endorsement of the net
loss. Under the terms of the guarantee by Investissement Quebec,
the company issued the latter 236,486 warrants exercisable on ADF
subordinate voting share at a price of C$1.48 per share, for a
period of five years starting on Aug. 11, 2005.
As of Oct. 31, 2005 the Company is using C$3.4 million on the
credit facility because, amongst others, of the increased
fabrication activity during the third quarter.
Under the terms of the credit facility, the company must respect
certain financial ratios. However, this unforeseen loss,
resulting from the "Ford Field" situation, lead to a decrease in
the company's working capital and largely contributed to the non-
respect of the financial ratios. However, the Company obtained a
waiver from the National Bank of Canada.
Buyback of Convertible Debenture
Furthermore, the Company finalized in December 2005, the buyback
of the convertible debenture totaling C$5.3 million on Oct. 31,
2005 in consideration of a final payment of C$0.675 million,
generating a gain on assignment of debt of C$4.6 million which
will be accounted for in the fourth quarter financial statements.
General Outlook
The Company is currently discussing with partners in order to
improve the Company's financial situation, namely in regards with
the improvement of its working capital and its shareholders'
equity in order to secure its operations for the years to come.
Also, the Company remains cautious with regards to the results of
the fourth quarter of the 2005-2006 financial year because,
amongst others, of the impact of the late renewal of the backlog
on the Company's financial results, as well as the fluctuation of
the Canadian dollar versus the US dollar.
ADF Group Inc. is a North American leader in the design,
engineering, fabrication and erection of complex steel
superstructures, as well as in architectural metal work. ADF is
one of the few players in the industry capable of handling highly
technically complex megaprojects on fast-track schedules in the
commercial, institutional, industrial and public sectors.
At Oct. 31, 2005 ADF Group Inc.'s balance sheet showed a
C$12,271,000 stockholders' deficit compared to a C$15,161 positive
equity at Jan. 31, 2005.
ALLSERVE SYSTEMS: Teich Groh Approved as Bankruptcy Counsel
-----------------------------------------------------------
The Honorable Rosemary Gambardella of the U.S. Bankruptcy Court
for the for the District of New Jersey, Newark Division,
authorized Allserve Systems Corp. to employ Teich Groh as its
bankruptcy counsel.
Teich Groh will provide all services necessary for a successful
reorganization or sale of the Debtor's assets.
Papers filed with the Court did not disclose Teich Groh's hourly
rates.
Barry W. Frost, Esq., a member at Teich Groh, assured the Court
that the Firm is disinterested as that term is defined in Section
101(14) of the U.S. Bankruptcy Code.
Founded in 1939, Teich Groh -- http://www.teichgroh.com/-- is a
full-service law firm that serves clients throughout the state of
New Jersey.
Headquartered in North Brunswick, New Jersey, Allserve Systems
Corp. is an outsourcing company for the IT industry. The Debtor
filed for chapter 11 protection on November 18, 2005 (Bankr. D.
N.J. Case No. 05-60401). When the Debtor filed for protection
from its creditors, it estimated assets between $10 million and
$50 million and debts between $50 million and $100 million.
ALLSERVE SYSTEMS: Creditors Link Indian Fugitive to Bankruptcy
--------------------------------------------------------------
Christopher Byron, writing for the New York Post, relates that
major U.S. companies went to the U.S. Bankruptcy Court for the
District of New Jersey demanding they get back $83 million they
loaned to Allserve Systems Corp. Sovereign Bank, CIT Financial,
Bostonia Investment Group, Qwest Communications, GATX Technologies
Services and Republic Bank claim that the company is linked to an
international fugitive financier, Dinesh Dalmia.
Mr. Dalmia is sought by Interpol for securities fraud committed in
India. He was formerly affiliated with DSQ Software Ltd., but
destroyed the company by selling its most lucrative global
software contracts to Scandent Network 2002, Sucheta Dalal at the
Financial Express relates.
During the hearing, Allserve told the Court that "its business
was, in effect, swallowed by a sink-hole that opened under its
offices in Chennai, India," Mr. Byron relates. However, creditors
refuse to buy the company's explanation of two disasters hitting
call centers in India within months of each other.
As previously reported by The New York Post, Dalmia's activities
have ranged from a failed effort to sell a germ warfare facility
to the Iraqi government following the attacks of Sept. 11, to his
alleged use of identity-hiding offshore shell company accounts in
the British Virgin Islands to sequester millions looted from a
publicly traded company, DSQ Software.
The creditors assert that Allserve's efforts to get bankruptcy
protection appear to be part of a pattern of fraud that may
involve Dalmia as well, Mr. Bryon reports. In addition, the
creditors said in the hearing, Allserve has refused to identify
its top officials, or explain where most of its computers are now
located.
The creditors also wonder what happened to more than $35 million
in cash that vanished from the company's coffers between July and
October.
Headquartered in North Brunswick, New Jersey, Allserve Systems
Corp. is an outsourcing company for the IT industry. The Debtor
filed for chapter 11 protection on November 18, 2005 (Bankr. D.
N.J. Case No. 05-60401). Barry W. Frost, Esq., at Teich Groh
represents the Company. When the Debtor filed for protection from
its creditors, it estimated assets between $10 million and $50
million and debts between $50 million and $100 million.
ALLSERVE SYSTEMS: Bunce Atkinson Appointed as Chapter 11 Trustee
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey approved
the appointment of a chapter 11 trustee in Allserve Systems
Corp.'s chapter 11 proceeding. The Chapter 11 trustee is:
Bunce D. Atkinson, Esq.
Atkinson & Debartolo
P.O. Box 8415
Red Bank, NJ 07701
Mr. Atkinson will post a $1,000,000 bond with the U.S. Trustee.
Headquartered in North Brunswick, New Jersey, Allserve Systems
Corp. is an outsourcing company for the IT industry. The Debtor
filed for chapter 11 protection on November 18, 2005 (Bankr. D.
N.J. Case No. 05-60401). Barry W. Frost, Esq., at Teich Groh
represents the Company. When the Debtor filed for protection from
its creditors, it estimated assets between $10 million and $50
million and debts between $50 million and $100 million.
AMERICAN REPROGRAPHICS: S&P Rates $158 Mil. Add-On Sr. Loan at BB-
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' bank loan
rating and recovery rating of '2' to American Reprographics Co.
LLC's proposed $157.5 million add-on first lien senior secured
term facility due 2009, reflecting the expectation of a
substantial recovery of principal in the event of a payment
default. ARC is expected to use the proceeds from the proposed
facility to refinance its existing second lien term loan facility.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on ARC. Total lease adjusted debt was about
$330 million as of Sept. 30, 2005. The outlook is positive.
The ratings on Glendale, California-based ARC reflect the
company's:
* dependence on a single print industry segment and
* exposure to the cyclical commercial construction industry.
Still, Standard & Poor's recognizes the company's leading position
in the architecture, engineering and construction reprographics
segment, and expects that the company's acquisition strategy will
remain moderate.
ARCH COAL: Extends Offer for Stock Conversion to December 30
------------------------------------------------------------
Arch Coal, Inc. (NYSE: ACI) amended its previously announced offer
to pay a premium to holders of any and all of its 5% Perpetual
Cumulative Convertible Preferred Stock who elect to convert their
preferred stock to shares of the company's common stock subject to
the terms of the offer. Arch Coal also extended the conversion
offer so that it will expire at 12:00 midnight, Eastern Standard
Time, on Friday, Dec. 30, 2005, unless extended or earlier
terminated.
As amended, in addition to the shares of common stock to be issued
upon conversion pursuant to the documents governing the terms of
the preferred stock, holders who surrender their preferred stock
on or prior to the expiration date will receive a per share
premium in an amount of shares of common stock valued at $3.50, as
determined by dividing (i) $3.50 by (ii) the volume-weighted
average of the reported sales prices on the New York Stock
Exchange of the common stock during the 10 trading days ending at
the close of the second trading day prior to the expiration of the
conversion offer.
The offer is being made pursuant to an offering circular, as
supplemented, and related documents, each of which has been
disseminated to holders of the preferred stock. The completion of
the offer is subject to conditions described in the conversion
offer documents. Subject to applicable law, Arch Coal may waive
the conditions applicable to the offer or extend or otherwise
amend the offer.
Holders of preferred stock may address questions about the
conversion offer or requests for copies of the offering circular
and related documents to American Stock Transfer & Trust Company
by calling toll-free at (877) 248-6417.
St. Louis-based Arch Coal, Inc., is the second largest coal
producer in the United States, with subsidiary operations in West
Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through
these operations, Arch provides the fuel for approximately 7% of
the electricity generated in the United States.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2005,
Moody's Investors Service affirmed Arch Coal, Inc.'s Ba3 corporate
family rating. All other ratings of Arch Coal Inc., and its
subsidiary, Arch Western Finance LLC, were affirmed. AWF's notes
are guaranteed by its parent, Arch Western Resources, a subsidiary
of Arch Coal. The affirmation follows Arch's announcement of its
intention to contribute four of its central Appalachian mining
operations to a new company, which will also have mining
operations (known as Trout Coal) contributed to it by ArcLight.
The new company will file for an initial public offering and it is
expected that Arch Coal will initially own approximately 37.5% of
this company. The rating outlook for both Arch Coal and AWF is
stable.
These ratings are affirmed:
Arch Coal, Inc.:
* $700 million five-year guaranteed senior secured revolving
credit facility, Ba2
* $145 million of Perpetual Cumulative Convertible Preferred
Stock, B3
* Corporate Family rating, Ba3
Arch Western Finance, LLC:
* $961 million of 6.75% guaranteed senior notes due 2013, Ba3
ASARCO LLC: Court Okays Amber Glass Construction Agreement
----------------------------------------------------------
Judge Schmidt of the U.S. Bankruptcy Court for the Southern
District of Texas in Corpus Christi gave ASARCO LLC permission to
assume the agreement with Amber Glass & Steel, Inc.
As previously reported in the Troubled Company Reporter on
Nov. 28, 2005, ASARCO LLC and Amber Glass & Steel, Inc., are
parties to an executory agreement concerning Amber Glass'
construction of structural steel mounts, which are necessary for
the installation of industrial air scrubbers at ASARCO's copper
smelter facilities in Hayden, Arizona.
To comply with state environmental regulations, James R. Prince,
Esq., at Baker Botts L.L.P., in Dallas, Texas, tells the Court
that ASARCO must replace its current ventilation system with more
efficient air scrubbers, which must be installed by the beginning
of December 2005, so that testing and inspections can be
completed by a year-end deadline.
ASARCO ordered the steel mounts, which cost $127,000, in June
2005.
Mr. Prince notes that ASARCO is presently not in default under
the Agreement and no cure payment must be made.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors,it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News,
Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Court Okays Envirocon to Demolish & Clean Sinter Plant
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas in
Corpus Christi gave ASARCO LLC authority to enter into an
agreement with Envirocon, Inc., for the demolition and cleaning of
the sinter plant and No. 1 blast furnace flue at the East Helena,
Montana lead smelter plant.
As previously reported in the Troubled Company Reporter on Nov.
25, 2005, James R. Prince, Esq., at Baker Botts L.L.P., in Dallas,
Texas, informed Judge Schmidt that Envirocon, which has done a
substantial amount of work for ASARCO in the past at other sites,
submitted the lowest bid. ASARCO believes that Envirocon is well
qualified to do the work, and, therefore, awarded the contract to
Envirocon.
Envirocon provided ASARCO with a $813,605 cost proposal for the
sinter plant work, and $22,512 for the No. 1 blast furnace flue
work. Potential metal asset recovery from the sinter plant has
been estimated at $250,000, which proceeds will fund at least
part of the cost of the sinter project.
Mr. Prince says that the remediation of the blast furnace flue
involves repairs to a failed flue, removal of brick, and the
installation of plywood baffles to keep the wind from mobilizing
contaminants. He further notes that there is asbestos in the
flue. However, if the asbestos is found to be friable, contrary
to what ASARCO believes, cost of the blast furnace flue work
would increase.
ASARCO has also discussed with Envirocon the schedule for
completing the work. Envirocon is committed to expedite the
schedule, but acknowledges that it will not be possible to
complete all of the work in the sinter plant prior to the end of
year 2005.
Therefore, ASARCO believes that entry into the Agreement with
Envirocon is necessary to complete the remediation work and is in
the interests of public health and safety, as well as of ASARCO's
estate.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors,it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News,
Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000).
ATA AIRLINES: Can Borrow Up to $30MM in MatlinPatterson Financing
-----------------------------------------------------------------
Judge Lorch of the U.S. Bankruptcy Court for the Southern District
of Indiana authorized ATA Airlines, Inc., and its debtor-
affiliates, on a final basis, to borrow up to $30,000,000 in
postpetition financing from MatlinPatterson Global Opportunities
Partners II, L.P.
MatlinPatterson is granted a continuing third priority Lien and
security interest in and to all Collateral, excluding retainers
paid or deposited by the Debtors before the Petition Date to or
with their bankruptcy professionals, any Trust Funds, proceeds
from the Reorganizing Debtors' avoidance actions, and Receivables
from banks and credit card processors.
MatlinPatterson's Lien is subject to:
-- the Carve-out for professional fees, U.S. Trustee fees
pursuant to 28 U.S.C. Section 1930(a)(6), and any fees
payable to the Clerk of the Bankruptcy Court; and
-- Permitted Senior Liens, which include the ATSB Prepetition
Liens, liens granted or confirmed pursuant to the Southwest
DIP Facility Order and the ATSB Cash Collateral Order, and
liens granted to National City Bank of Indiana.
The Reorganizing Debtors are also authorized to pay all fees and
expenses payable to or on behalf of MatlinPatterson, including a
$3,600,000 funding fee.
The DIP Loan will mature on the earliest of (a) March 15, 2006,
(b) the occurrence of an Event of Default and acceleration of the
Obligations, and (c) the effective date of a Chapter 11 plan for
any or all of the Reorganizing Debtors.
A full-text copy of the Reorganizing Debtors' DIP Credit
Agreement with MatlinPatterson is available at no charge at:
http://bankrupt.com/misc/ATAMatlinDIPagreement.pdf
A full-text copy of the Final DIP Financing Order is available at
no charge at:
http://bankrupt.com/misc/ATAMatlinDIPOrder.pdf
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 43; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATRIUM CORP: U.S. District Atty. Subpoena Cues S&P to Retain Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services said that all of its ratings on
Dallas-based Atrium Cos. Inc. and its parent, Atrium Corp.,
including the 'CCC+' corporate credit ratings, remain on
CreditWatch with developing implications. The companies were
first placed on CreditWatch on June 2, 2005, with negative
implications. On July 20, 2005, the corporate credit rating was
lowered to 'CCC+' and the CreditWatch implication was revised to
developing.
Waivers from the accounts receivable securitization facility
lenders, bank credit facility lenders, and bondholders were
extended in November and expire on Feb. 10, 2005, Feb. 10, 2005,
and Feb. 13, 2005, respectively.
"The receipt of the bondholders' initial waivers did ease our
worry that the $174 million senior discount notes would accelerate
and lead to a payment default," said Standard & Poor's credit
analyst Lisa Wright. "However, the expiration date for the
extended waivers is approaching, and Atrium has not yet filed its
2004 financial statements because of an ongoing review of its
2003 financial statements that uncovered a number of accounting
errors. These errors appear limited in scope at this point."
Before receiving the bondholders' initial waivers, Atrium's
ratings were lowered to the current ratings because it had a
30-day cure period from July 13, 2005, to deliver the financial
statements; otherwise it the company would have faced an event of
default under the indenture and a possible acceleration of the
notes.
Ms. Wright said, "The CreditWatch also reflects our concern
following the company's announcement that it had received a
subpoena from the U.S. District Attorney's office in Dallas with
regard to various accounting and financial records and that
Atrium's board of directors had placed its CEO on a leave of
absence."
Atrium's announcement followed the resignation of the company's
CFO on May 13, 2005. The SEC has also begun an informal inquiry.
Although the specific nature of the investigations is unclear,
this series of events raises the specter of concern and
uncertainty pertaining to the company's prior management and
accounting practices and to investor and lender confidence.
Ratings could be lowered if the company's access to liquidity is
restricted or its financial profile is affected by the
investigations or further material adverse revelations. The
ratings could be raised once the audited financial statements are
completed and delivered, barring any significant financial
restatements that might have a meaningful negative impact on
Atrium's future results.
BANYAN CORP: Posts $1 Million Net Loss in Third Quarter
-------------------------------------------------------
Colorado-based Banyan Corporation reported a $1,031,784 net loss
for the three months ended Sept. 30, 2005, versus an $841,405 net
loss for the comparable period in 2004.
Third quarter revenue increased to $376,457 in 2005 from $152,490
in 2004. The diagnostic imaging business produced $146,407 of
revenue in the third quarter. Revenue from franchised operations
increased to $230,050 in 2005 from $152,490 in 2004. This was
caused by the large increase in the number of Chiropractic USA
franchises as the Company builds up its brand.
At Sept. 30, 2005, the Company's balance sheet showed $2,024,781
in total assets and liabilities of $2,452,775, resulting in a
stockholders' deficit of $427,994.
Banyan has incurred operating losses for several years. These
losses have caused the Company to operate with limited liquidity
and have created stockholders' deficit and working capital
deficiencies of $427,994 and $959,223, respectively, as of Sept.
30, 2005.
Senior Securities Default
In March 2005, The Company issued two convertible promissory notes
in the aggregate principal amount of $110,000. The notes do not
bear interest and repayment, due in September, has not been made.
Going Concern Doubt
Schwartz Levitsky Feldman LLP expressed substantial doubt about
Banyan's ability to continue as a going concern after it audited
the Company's financial statements for the year ended Dec. 31,
2004. The auditing firm pointed to the Company's significant
losses, working capital deficiency and lack of long-term
financing.
About Banyan
Banyan Corporation, an Oregon corporation, was incorporated on
June 13, 1978. The Company primarily franchises Chiropractic USA
chiropractic clinics in the health care industry. All clinics are
operated by independent entrepreneurs under the terms of franchise
arrangements.
BEAR STEARNS: Moody's Rates Class M-10 Mezzanine Certs. at Ba2
--------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by Bear Stearns Asset Backed Securities I
Trust 2005-HE11, and ratings ranging from Aa1 to Ba2 to the
mezzanine certificates in the deal.
The securitization is backed by both adjustable-rate (76.16%) and
fixed-rate (23.84%) subprime mortgage loans acquired by EMC
Mortgage Corporation.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- over-collateralization,
-- excess spread, and
-- an interest rate swap agreement.
The interest rate swap is provided by Bear Stearns Financial
Products Inc. Moody's expects collateral losses to range from
5.55% to 6.05%.
EMC will act as master servicer of the loans. Moody's has
assigned EMC its top servicer quality rating (SQ1) as a primary
servicer of subprime loans.
The complete rating actions are:
Bear Stearns Asset Backed Securities I Trust 2005-HE11
Asset-Backed Certificates, Series 2005-HE11
* Class A-1, rated Aaa
* Class A-2, rated Aaa
* Class A-3, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A2
* Class M-5, rated A3
* Class M-6, rated Baa1
* Class M-7, rated Baa2
* Class M-8, rated Baa3
* Class M-9, rated Ba1
* Class M-10, rated Ba2
The Class M-9 and M-10 certificates are being offered in privately
negotiated transactions without registration under the 1933 Act.
The issuance was designed to permit resale under Rule 144A.
BP INTERNATIONAL: Reports Deep Losses in Quarter Ended Sept. 30
---------------------------------------------------------------
DeLand, Florida-based sports equipment manufacturer BP
International, Inc., reported a 10.5% increase in net loss from a
$589,459 net loss for the three months ended Aug. 31, 2004, to a
$651,455 net loss for the quarter ended Aug. 31, 2005.
Sales for the quarter ended Aug. 31, 2005, increased by 19.1% to
$1,837,800 in contrast to $1,542,439 of sales for the comparable
period in the prior year. The increase is attributed to higher
demand for metal fencing products and windscreens.
The Company's balance sheet showed $3,774,091 in total assets at
Aug. 31, 2005, and liabilities of $5,174,224, resulting in a
stockholders' deficit of $1,400,133.
BP International has experienced losses in the last three years
and relies upon borrowings under its revolving credit facilities
and capital investment to maintain liquidity and continue
operations.
Certain investors have committed to a capital infusion of
$500,000. Of that amount, $35,000 has been received in the second
quarter, $200,000 is expected by the end of Nov. 2005 and the
remainder by Dec. 31, 2005.
The Company is also evaluating the potential sale of its
manufacturing facility in Mexico within the current fiscal year.
The sale is expected to net between $500,000 to $750,000.
Accounts Receivable Over Advance
BP International has been over advanced approximately $1,379,000
of eligible accounts receivable on its revolving and minimum
convertible note payable to financial institution due Dec. 2007.
The financial institution has waived the over advance until
November 30, 2005.
The entire loan balance is included in the current portion of the
Company's long-term debt. In an event of default on the note, the
holder, at its option, may elect to require the Company to make a
default payment of 120% of the outstanding principal amount of the
Note, plus accrued but unpaid interest, and all other amounts due.
The Company is currently negotiating with financial institution to
a) extend the over advance waiver for an additional six
months; and
b) increase the line of credit by an additional $500,000.
Going Concern Doubt
Daszkal Bolton LLP expressed substantial doubt about BP
International Inc.'s ability to continue as a going concern after
it audited the Company's financial statement for the year ended
May 31, 2005. The auditing firm pointed to the Company's losses
and accumulated deficit.
About BP International
BP International, Inc., fka Allergy Immuno Technologies, Inc. --
http://www.BPInternational.com/-- is a leading manufacturer of
tennis court equipment, athletic field and gymnasium equipment,
custom netting, and outdoor fabrics for use in privacy and
construction fencing and fabric architecture shade structures and
cabanas. The company recently introduced ShadeZone(TM) shade
structures, an expanding line of standard and custom, permanent
and portable, fabric architecture to reduce heat and block UV rays
on playgrounds, golfing facilities, zoos, baseball and football
complexes, theme parks, parking lots, car dealerships, outdoor
concessions, pool sides, etc.
BRICOLAGE CAPITAL: Employs Arent Fox as Bankruptcy Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Bricolage Capital, LLC, permission to employ Arent Fox PLLC
as its counsel nunc pro tunc to October 14, 2005.
Arent Fox will:
a) provide the Debtor with respect to its powers and duties as
debtor-in-possession in the continued operation of its
business during this Chapter 11 case;
b) provide the Debtor with respect to its duties to maximize
the value of the estate's assets and maximize the return to
creditors;
c) prepare on behalf of the Debtor all necessary applications,
answers, orders, reports, and other legal documents which
may be required in connection with this Chapter 11 case;
d) provide the Debtor with legal services with respect to
formulating and negotiating a plan of reorganization with
creditors; and
e) perform such other legal services for the Debtor as may be
required during the course of this Chapter 11 case,
including but not limited to, a sale of assets, the
institution of actions against third parties, objections to
claims, and the defense of actions which may be brought by
third parties against the Debtor.
Robert E. Grossman, Esq., member at Arent Fox, discloses that he
will bill $645 per hour for his services. Mr. Grossman further
discloses that the firm's other professionals bill:
Professional Hourly Rate
------------ -----------
Members $400 - $645
Counsel $400 - $635
Associates $215 - $450
Legal Assistants $130 - $210
To the best of the Debtor's knowledge, Arent Fox is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in New York, New York, Bricolage Capital, LLC, filed
for chapter 11 protection on October 14, 2005 (Bankr. S.D.N.Y.
Case No. 05-46914). Schuyler G. Carroll, Esq., at Arent Fox PLLC,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets of $1 million to $10 million and debts of $10 million to
$50 million.
BROOKLYN CHEESECAKE: Has $675,568 Equity Deficit at September 30
----------------------------------------------------------------
Brooklyn Cheesecake & Desserts Company, Inc., incurred a $209,506
net loss on $332,763 of revenues for the three-months ended Sept.
30, 2005, versus a $199,508 net loss on $588,644 of revenues for
the same period in 2004.
The Company's balance sheet showed $1,228,007 in total assets at
Sept. 30, 2005, and liabilities of $1,903,575, resulting in a
stockholders' deficit of $675,568. As of Sept. 30, 2005, the
Company had a negative working capital from continuing operations
of approximately $1,055,354 compared to a negative working capital
a year earlier.
Maturity Extension
Effective Nov. 30, 2005, Brooklyn Cheesecake entered into an
agreement extending the term of a $317,000 secured promissory note
owed to the Ronald L. Schutte, the Company's Chairman, Chief
Executive Officer and President. The term of the Note, bearing
interest at 13% per annum, was extended through Jan. 31, 2006.
Going Concern Doubt
Sherb & Co., LLP, expressed substantial doubt about Brooklyn
Cheesecake's ability to continue as a going concern after it
audited the Company's financial statements for the year ended Dec.
31, 2004. The auditing firm pointed to the Company's losses from
continuing operations and working capital deficiency.
About Brooklyn Cheesecake
Brooklyn Cheesecake -- http://www.brooklyncheesecake.com/--
manufactures baking and confectionery products, which are sold to
supermarkets, food distributors, educational institutions,
restaurants, mail-order and to the public. The Company's main
customer base is on the East Coast of the United States.
BUEHLER FOODS: Wants to Finalize Payment to SSG Capital
-------------------------------------------------------
Buehler of Kentucky, LLC, asks the U.S. Bankruptcy Court for the
Southern District of Indiana in Evansville to authorize the
$305,794 payment made to SSG Capital Advisors, LP.
SSG Capital assisted Buehler in evaluating its assets and forming
an exit strategy in its restructuring. In particular, SSG Capital
marketed the Debtor's grocery stores located primarily in
Louisville, Kentucky. SSG Capital has closed the sale of these
stores.
Paul T. Deignan, Esq., at Sommer Barnard, PC, informs the
Bankruptcy Court that the Debtor has paid SSG Capital
approximately $225,794. The payment is subject to an obligation
to disgorge the money, pending the Bankruptcy Court's approval of
the payment.
As reported in the Troubled Company Reporter on Aug. 29, 2005, SSG
Capital is entitled to:
a) an initial fee of $20,000 due upon Court approval of
the engagement;
b) $20,000 per month beginning Sept. 1, 2005; and
c) a minimum Sale Fee of $300,000 less the Initial Fee and
monthly payments.
The Debtor has previously paid the $20,000 initial fee owed to SSG
Capital and $60,000 in monthly fees. The Sale Fee payable to SSG
Capital at the end of its engagement amount to $225,794.
Headquartered in Jasper, Indiana, Buehler Foods, Inc., owns and
operates grocery stores under the BUY LOW and Save-A-Lot banners
in Illinois, Indiana, and Kentucky, North Carolina, and Virginia.
The company also sells gas at about a dozen locations. In 2004
Buehler Foods acquired 16 Winn-Dixie stores in Louisville,
Kentucky, and renamed them Buehler's Markets. Founded in 1940,
the company is still run by the Buehler family. The Company,
along with its three affiliates, filed for chapter 11 protection
on May 5, 2005 (Bankr. S.D. Ind. Case No. 05-70961). Jerald I.
Ancel, Esq., at Sommer Barnard Attorneys, PC, represents the
Debtors in their restructuring efforts. When the Debtor filed for
protection from its creditors, it estimated assets of $10 million
to $50 million and debts of $50 million to $100 million.
CAPITAL AUTOMOTIVE: To Become a Limited Liability Co. on Dec. 30
----------------------------------------------------------------
Capital Automotive REIT (Nasdaq: CARS) reported that, on or about
Dec. 30, 2005, it expects to convert from a Maryland real estate
investment trust to a Delaware limited liability company. The
restructuring will be deemed a liquidation for federal income tax
purposes.
On Dec. 16, 2005, the Company completed its merger with Flag Fund
V LLC and other entities advised by DRA Advisors LLC, pursuant to
which CA Acquisition REIT, a wholly-owned subsidiary of Flag Fund
V LLC, merged with and into the company, with the company
continuing as the surviving REIT, with all of its common shares
owned by Flag Fund V LLC. Following the merger, the company's
7-1/2% Series A Cumulative Redeemable Preferred Shares and 8%
Series B Cumulative Redeemable Preferred Shares remain issued and
outstanding, and quoted on the Nasdaq National Market.
In the restructuring, all of the Company's outstanding Series A
and Series B preferred shares will be converted into Series A and
Series B preferred units, respectively, of the new Delaware
limited liability company, with their rights, preferences,
restrictions, qualifications, limitations, terms and conditions as
provided in the Articles Supplementary with respect to such
securities materially unchanged.
The Series A and Series B preferred shares will remain registered
under the Securities Exchange Act of 1934 and quoted on the Nasdaq
National Market until such time as the restructuring has been
completed and the Series A and B preferred units are issued. Such
units, when issued, will not be registered under the Exchange Act
and will not by quoted on the Nasdaq National Market or any other
automated quotation system or traded on or through any stock
exchange.
Following the restructuring, in early January 2006, the company's
successor expects to commence a cash tender offer for any and all
of its then- outstanding Series A and Series B preferred units at
a price of $25.00 per unit.
Headquartered in McLean, Virginia, Capital Automotive --
http://www.capitalautomotive.com/-- is a self-administered, self-
managed real estate investment trust. The Company's primary
strategy is to acquire real property and improvements used by
operators of multi-site, multi-franchised automotive dealerships
and related businesses.
* * *
As reported in the Troubled Company Reporter on Dec 2, 2005,
Standard & Poor's Ratings Services said its 'BBB-' corporate
credit and senior unsecured debt ratings and its 'BB+' preferred
stock rating on Capital Automotive REIT and Capital Automotive
L.P. remain on CreditWatch with negative implications, where they
were placed Sept. 7, 2005.
The CreditWatch placements followed the company's Sept. 6, 2005,
announcement that it had agreed to be acquired by Flag Fund V LLC
in a transaction expected to close in late 2005.
At the same time, preliminary ratings of 'BB+' and 'BB-' are
assigned to Capital Automotive L.P.'s proposed $1.670 billion
secured credit facility and Capital Automotive REIT's proposed
$500 million senior unsecured notes, respectively.
Proceeds of the two debt instruments will help fund the
$3.4 billion acquisition of CARS and repay all existing rated
senior unsecured debt securities.
CATHOLIC CHURCH: Indigent Claimant Doesn't Get Free Legal Counsel
-----------------------------------------------------------------
Frederick Turner asks the U.S. Bankruptcy Court for the District
of Oregon to appoint a volunteer counsel "for an indigent
plaintiff," at the Court's discretion pursuant to 28 U.S.C.
Section 1915(d).
Mr. Turner needs counsel to represent him in the litigation of his
tort claim against the Archdiocese of Portland.
Mr. Turner explains that Dan Gatti, Esq., his counsel, has
withdrawn from representing him.
Mr. Turner also asks the Court to extend until January 19, 2006,
his time to prepare for litigation of his claim. Mr. Turner
explains he needs enough time to get acquainted with a new
counsel.
Court Denies Request
Mr. Turner's request that the Court appoint volunteer counsel is
not well-taken for several reasons, Judge Perris says. Hence, the
request is denied.
Judge Perris explains that 28 U.S.C. Section 1915 is not
applicable to bankruptcy courts. Judge Perris points out that in
In re Perroton, 958 F.2d 889 (9th Cir. 1992), the U.S. Court of
Appeals for the Ninth Circuit held that bankruptcy courts are not
authorized to provide relief under 28 U.S.C. Section 1915(a),
because bankruptcy courts are not "court[s] of the United States"
as defined in 28 U.S.C. Section 451.
Judge Perris further notes that there is no showing that Mr.
Turner's lack of counsel is the result of indigence. Mr. Turner
had an attorney and there is no evidence that the attorney is
withdrawing due to Mr. Turner's inability to pay.
Judge Perris also points out that tort claims, like Mr. Turner's
claim, are often handled on a contingent fee basis that does not
require Mr. Turner to pay attorney fees unless there is a
recovery.
Even if Mr. Turner had made the necessary showing of indigence,
the Court is not aware of any volunteer attorneys willing to
undertake claims of the type Mr. Turner asserted, Judge Perris
says.
Turner Seeks Reconsideration
Frederick Turner asks Judge Perris to reverse her decision. Mr.
Turner explains that he lack legal knowledge to cite the correct
legal authority for the Court to appoint a volunteer counsel for
him.
Mr. Turner emphasizes that his counsel left him at a crucial stage
not because of his indigent status.
Since the Court is unaware of any volunteer counsel, Mr. Turner
asks Judge Perris to extend his time to obtain counsel to January
or February 2006.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 48; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CERVANTES ORCHARDS: Taps Jon Hyink at Bell & Bridges as Accountant
------------------------------------------------------------------
Cervantes Orchards & Vineyards, LLC, asks the U.S. Bankruptcy
Court for the Eastern District of Washington, for permission to
employ Jon Hyink, at Bell & Bridges, CPA's as its accountant.
Mr. Hyink will provide accounting services for the Debtor which
includes preparing reports of:
-- harvests, sales, income and expenditures;
-- distributions of net profits to creditors under a cash
collateral order;
-- financial statements and reports for the U.S. Trustee and
the bankruptcy court; and
-- tax returns and other financial transactions.
Mr. Hyink does not anticipate performing bookkeeping types of work
for the Debtor.
Mr. Hyink will bill $125 per hour for his services. If
bookkeeping services are necessary, he will charge $75 per hour
for this work.
Mr. Hyink assures the Court that neither he nor his Firm holds any
interest adverse to the Debtor's estate.
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.
CHI-CHI'S: U.S. Trustee Objects to Joint Amended Liquidating Plan
-----------------------------------------------------------------
Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, objects to
the First Amended Joint Plan of Liquidation proposed by Chi-Chi's,
Inc., its debtor-affiliates and their Official Committee of
Unsecured Creditors.
The U.S. Trustee complains that:
a) the limitation of liability/exculpation clause in the
Plan contains releases that are impermissible under
relevant Third Circuit law; and
b) the provision for the payment of U.S. Trustee quarterly
fees incorrectly computes how disbursements are to be
treated for quarterly fee purposes.
Limitation of Liability
Article 15, Section J of the Plan contains a provision titled
"Limitation of Liability", which protects the Debtors, the
Committee, the Liquidating Trust and their respective
professionals from incurring any liability or omission made in
good faith in connection with or related to:
a) the business judgment of the Debtors including, but not
limited to, their chapter 11 cases;
b) the business judgment of the Committee; and
c) the postpetition date administration of the chapter 11
cases.
The U.S. Trustee says the limitation of liability provision should
not be approved because it modifies the appropriate standard of
liability approved by the Third Circuit and lacks an exculpation
clause that specifically carves out actions for gross negligence
and willful misconduct of the parties to be exculpated.
U.S. Trustee Fees
The U.S. Trustee also objects to Article 15, Section K of the
Plan, which, she says, impermissibly dictates both how the U.S.
Trustee is to calculate its Quarterly Fees and what should be
treated as a disbursement for those purposes. Ms. Stapleton
points out that only the U.S. Trustee has the province to
calculate its Fees, and should not be told by the Debtors how to
calculate them.
The Plan
As reported in the Troubled Company Reporter on Nov. 1, 2005, 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.
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
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.
CITIGROUP MORTGAGE: Moody's Rates Class M-11 Sub. Certs. at Ba2
---------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by Citigroup Mortgage Loan Trust Inc., Asset-
Backed Pass-Through Certificates, Series 2005-HE4, and ratings
ranging from Aa1 to Ba2 to the subordinate certificates in the
deal.
The securitization is backed Argent Mortgage Company, L.L.C (84%)
and by MortgageIT (16%) originated adjustable-rate (80%) and
fixed-rate (20%) Jumbo mortgage loans acquired by Citigroup Global
Markets Realty Corp.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- overcollateralization,
-- excess spread, and
-- a cap contract.
Moody's expects collateral losses to range from 5.50% to 6.00%.
Ocwen Loan Servicing, LLC will service the loans.
The complete rating actions are:
Citigroup Mortgage Loan Trust Inc., Asset-Backed Pass-Through
Certificates, Series 2005-HE4
* Class A-1, rated Aaa
* Class A-2A, rated Aaa
* Class A-2B, rated Aaa
* Class A-2C, rated Aaa
* Class A-2D, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A1
* Class M-5, rated A2
* Class M-6, rated A3
* Class M-7, rated Baa1
* Class M-8, rated Baa2
* Class M-9, rated Baa3
* Class M-10, rated Ba1
* Class M-11, rated Ba2
CORUS ENTERTAINMENT: Launches Offer for 8.75% Senior Notes
----------------------------------------------------------
Corus Entertainment Inc. (TSX: CJR.NV.B; NYSE: CJR) commenced a
cash tender offer and consent solicitation for its outstanding
$375.0 million aggregate principal amount of 8.75% Senior
Subordinated Notes due 2012. The tender offer is scheduled to
expire at 12 midnight ET on Jan. 13, 2006, unless extended. The
consent solicitation is scheduled to expire at 5 p.m. ET on Dec.
29, 2005, unless extended. The tender offer is being made upon
the terms, and subject to the conditions, set forth in the Offer
to Purchase and Consent Solicitation Statement dated Dec. 15,
2005, and related Letter of Transmittal and Consent, which more
fully sets forth the terms of the tender offer and consent
solicitation. Holders may withdraw their tenders prior to 5 p.m.
ET on Dec. 29, 2005, but not thereafter, except as may be required
by law or as may be extended under the Offer to Purchase.
The total consideration per $1,000 principal amount of Notes
validly tendered and not withdrawn prior to the Consent Deadline
will be based on thepresent value on the Early Settlement Date (or
on the Final Settlement Date, if Corus forgoes the Early
Settlement Date) of $1,043.75 (the amount payable on Mar. 1, 2007,
which is the date that the Notes may first be redeemed by Corus),
and the present value of interest that would accrue from the last
interest payment date and that would be payable on each interest
payment date occurring on or prior to Mar. 1, 2007, in each case
determined based on a fixed spread of 50 basis points over the
bid-side yield of the 3.375% U.S. Treasury Notes due February 28,
2007. Yields for the treasury notes referenced will be calculated
at 2 p.m. ET, at least one business day following the Consent
Deadline and at least two business days prior to expiration of the
tender offer.
Corus may elect to set an early settlement date for purchase of
Notes previously tendered. Assuming the successful completion of
the tender offer, any tendered notes not purchased on the Early
Settlement Date, if any, will be purchased on a date promptly
following expiration of the tender offer.
In connection with the tender offer, Corus is soliciting consents
to certain proposed amendments to eliminate substantially all of
the restrictive covenants and certain events of default in the
indenture governing the Notes. Corus is offering to make a
consent payment of $20.00 per $1,000 principal amount of Notes to
holders who validly tender their Notes and deliver their consents
at or prior to the Consent Deadline. The consent payment is
included in the total consideration. Holders who come in after
the Consent Deadline but prior to expiration will receive the
total consideration less the consent payment.
Holders tendering Notes will be required to consent to proposed
amendments to the indenture governing the Notes, which will
eliminate substantially all of the affirmative and restrictive
covenants and certain events of default and related provisions
contained in the indenture. The amendments become operative when
the Notes validly tendered and not withdrawn are accepted for
purchase at the earlier of the Early Settlement Date and the Final
Settlement Date.
Adoption of the proposed amendments requires the consent of at
least a majority of the outstanding principal amount of the Notes.
The consummation of the tender offer and consent solicitation is
subject to the conditions set forth in the Offer to Purchase,
including the receipt of consents of Noteholders representing the
majority in aggregate principal amount of the Notes and is
conditioned on Corus obtaining the financing necessary to fund the
tender offer and consent solicitation.
The tender offer will expire at 12 midnight ET on Jan. 13, 2006,
unless the offer is extended or terminated by Corus. Corus may,
subject to certain restrictions, amend, extend or terminate the
offer and consent solicitation at any time in its sole discretion
without making any payments with respect thereto. Tendered Notes
may not be withdrawn and consents may not be revoked after
December 29, 2005, except in limited circumstances.
Corus has engaged Citigroup Corporate and Investment Banking as
dealer manager for the tender offer and solicitation agent for the
consent solicitation. Questions regarding the tender offer and
consent solicitation may be directed to Citigroup at (800) 558-
3745 or (212) 723-6106. Requests for documentation should be
directed to Global Bondholder Services Corporation at (866) 470-
4300 or (212) 430-3774, the information agent and depositary for
the tender offer and consent solicitation.
Corus Entertainment Inc. -- http://www.corusent.com/-- is a
Canadian-based media and entertainment company. Corus is a market
leader in both specialty TV and Radio. Corus also owns Nelvana
Limited, a leading international producer and distributor of
children's programming and products. The company's other
interests include publishing, television broadcasting and
advertising services. A publicly traded company, Corus is listed
on the Toronto (CJR.NV.B) and New York (CJR) Exchanges.
* * *
As reported in the Troubled Company Reporter on June 16, 2005,
Standard & Poor's Ratings Services revised its outlook on Corus
Entertainment Inc. to stable from negative and affirmed its 'BB'
long-term corporate credit rating on the company. Total debt
outstanding was C$604 million at Feb. 28, 2005.
CREDIT SUISSE: Fitch Lifts Ratings on Class B-1 & B-2 Certificates
------------------------------------------------------------------
Fitch Ratings has upgraded these classes from Credit Suisse First
Boston Mortgage Securities home equity mortgage pass-through
certificates, series 2005-4:
-- Class B-1 upgraded to 'BBB-' from 'BB+';
-- Class B-2 upgraded to 'BB+' from 'BB'.
The upgrades are due to additional subordination that was added to
the two certificates during the closing process by the issuer.
With the additional credit enhancement, the bonds meet the stress
requirements for their respective higher ratings.
Further information regarding current delinquency, loss and credit
enhancement statistics is available on the Fitch Ratings Web site
at http://www.fitchratings.com/
CYBERCARE INC: Files Schedules of Assets and Liabilities
--------------------------------------------------------
CyberCare, Inc., f/k/a Medical Industries of America, Inc.,
delivered its Schedules of Assets and Liabilities to the U.S.
Bankruptcy Court for the Middle District of Florida, Tampa
Division, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $0
B. Personal Property $5,058,955
C. Property Claimed
as Exempt $0
D. Creditors Holding
Secured Claims $9,162,443
E. Creditors Holding
Unsecured Priority Claims $10,282
F. Creditors Holding
Unsecured Nonpriority $16,814,412
Claims
----------- -----------
Total $5,058,955 $26,987,138
Cybercare also filed other schedules and statements including
Schedule F. A full-text copy of CyberCare's 128-page list of
creditors holding unsecured nonpriority claims is available for a
fee at:
http://www.researcharchives.com/bin/download?id=051219200855
Headquartered in Tampa, Florida, CyberCare, Inc., f/k/a Medical
Industries of America, Inc., is a holding company that owns
service businesses, including a physical therapy and
rehabilitation business, a pharmacy business, and a healthcare
technology solutions business. The Company and its debtor-
affiliate, CyberCare Technologies, Inc., filed for chapter 11
protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268).
Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$5,058,955 in assets and $26,987,138 in debts.
CYBERCARE INC: Ct. OKs Johnson Pope as Special Securities Counsel
-----------------------------------------------------------------
The Hon. Michael G. Williamson of the U.S. Bankruptcy Court for
the Middle District of Florida, Tampa Division gave CyberCare,
Inc., f/k/a Medical Industries of America, Inc., and Cybercare
Technologies, Inc., permission to employ Johnson, Pope, Bokor,
Ruppel & Burns, LLP, as their special securities counsel.
Johnson Pope will provide advice and services in connection with
the securities of some delinquent accounts receivable. The
Debtors will also need advice with regard to securities law
issues, which may arise during the Debtors' restructuring or in
connection with the formulation and confirmation of the Debtors'
plan of reorganization.
Michael T. Cronin, Esq., a member at Johnson, Pope, Bokor,
Ruppel & Burns, LLP, disclosed the Firm's hourly billing rates:
Designation Hourly Rate
----------- -----------
Partners $275
Associates $175
Paralegals $125
Mr. Cronin assures the court that the Firm does not represent or
hold any interest adverse to the Debtors, their creditors or their
estates.
Founded over 30 years ago, Johnson, Pope, Bokor, Ruppel & Burns,
LLP -- http://www.jbpfirm.com/-- is a full service law firm.
Headquartered in Tampa, Florida, CyberCare, Inc., f/k/a Medical
Industries of America, Inc., is a holding company that owns
service businesses, including a physical therapy and
rehabilitation business, a pharmacy business, and a healthcare
technology solutions business. The Company and its debtor-
affiliate, CyberCare Technologies, Inc., filed for chapter 11
protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268).
Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$5,058,955 in assets and $26,987,138 in debts.
CYBERCARE INC: Stichter Riedel Approved as Bankruptcy Counsel
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida
authorized CyberCare, Inc., f/k/a Medical Industries of America,
Inc., and its debtor-affiliate to employ Stichter, Riedel, Blain &
Prosser as their general bankruptcy counsel.
Stichter Riedel will:
1) assist and advise the Debtors with regard to their rights
and obligations as debtors-in-possession in the continued
operation and management of their businesses and property;
2) prepare on behalf of the Debtors, any applications,
answers, orders, reports and papers in connection with the
administration of their estates and to prepare and file
schedules of assets and liabilities;
3) take all necessary actions to protect and preserve the
Debtors' estates, including the prosecution of actions on
their behalf, the defense of any actions commenced against
them, negotiations concerning all litigation in which they
are involved, and in objecting to claims filed against the
estates;
4) represent the Debtors in negotiations with their creditors
in the preparation of a plan of reorganization and prepare
and file a chapter 11 plan and an accompanying disclosure
statement; and
5) perform all other necessary legal services in connection
with the Debtors' chapter 11 cases.
Scott A. Stichter, Esq., a member at Stichter Riedel, is one of
the lead attorneys for the Debtors. Mr. Stichter disclosed that
his Firm received a $51,700 retainer.
Mr. Stichter says Stichter Riedel's professionals bill:
Designation Hourly Rate
----------- -----------
Partners $260 - $375
Associates $150 - $200
Paralegals $100
Mr. Riedel assured the Court that the Firm does not represent any
interest materially adverse to the Debtors or their estates.
Headquartered in Tampa, Florida, CyberCare, Inc., f/k/a Medical
Industries of America, Inc., is a holding company that owns
service businesses, including a physical therapy and
rehabilitation business, a pharmacy business, and a healthcare
technology solutions business. The Company and its debtor-
affiliate, CyberCare Technologies, Inc., filed for chapter 11
protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268).
When the Debtors filed for protection from their creditors, they
listed estimated assets of up to $50 million and estimated debts
of $50 million to $100 million.
DELAFIELD 246 CORP: New York City Says No to Additional Debt
------------------------------------------------------------
The City of New York opposed Delafield 246 Corporation's move to
secure an additional $150,000 loan from Zion New York, LP, its
affiliated company. The U.S. Bankruptcy Court for the Southern
District of New York had previously allowed the Debtor to borrow
$50,000 from Zion.
The Debtor proposed to collateralize the loan with:
-- a first lien on four parcels of land located in a private
residential community located in Riverdale, New York, plus
-- the assignment of a "general intangible", estimated by the
Debtor at $150,000, allegedly created by the City's
nonbinding proposal to reimburse up to $150,000 of Court-
approved professional fees following the completion of a
City-approved restoration plan.
Michael A. Cardozo, Esq., Corporation Counsel of the City of New
York, tells the Bankruptcy Court that the new debt further
encumbers property of the estate without providing any additional
benefit.
Mr. Cardozo further clarifies that the Debtor does not have any
right to assign the supposed "general intangibles" payable by the
City. He explains that the City's proposal to reimburse
professional fees is not binding and creates no rights or interest
in the Debtor.
City's Claim
The Debtor had purchased the Riverdale property at a foreclosure
sale in 1991. At the time of the purchase, the City held
approximately $838,814 in tax liens against the property.
After unsuccessfully challenging the City's tax liens in state
court, the Debtor filed for bankruptcy in Nov. 2004. Shortly
after the filing, the Debtor commenced an adversary proceeding
against the City, seeking a discharge of the tax liens on the
property.
City's Objections
Mr. Cardozo says that the Debtor does not need to raise additional
debt since any need for cash should come from a capital infusion
or the sale of the Debtor's assets. A sale, according to Mr.
Cardozo, would enable the Debtor to pay off its debts and allow a
new developer to come in and restore and develop the Riverdale
property.
Mr. Cardozo adds that the new loan only serves to:
a) create a captive or friendly impaired class; and
b) dismember the bankruptcy estate by creating a security
interest in part of the estate for the benefit of
insiders.
Headquartered in Plainview, New York, Delafield 246 Corporation is
a real estate investor and developer. The Company filed for
chapter 11 protection on November 29, 2004 (Bankr. E.D.N.Y. Case
No. 04-87515, transferred May 13, 2005, to Bankr. S.D.N.Y. Case
No. 05-13634). Daniel A Zimmerman, Esq., at the Law Offices of
Steven Cohn PC, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $13,000,000 in assets and $9,001,200 in debts
DELTA AIR: Kenton County Wants To Effect Set-Off
------------------------------------------------
The Kenton County Airport Board, owner and operator of the
Cincinnati/Northern Kentucky International Airport, asks the
U.S. Bankruptcy Court for the Southern District of New York to
lift the automatic stay to allow it to set off mutual prepetition
debt obligations under various agreements with Delta Air Lines and
its debtor-affiliates.
The Airport is Delta Air Lines, Inc.'s second largest hub and
Comair, Inc.'s main hub. The Debtors collectively operate about
92% of the total flights at the Airport.
Airport Use Agreement
Selinda A. Melnik, Esq., at Edwards Angell Palmer & Dodge LLP, in
New York, relates that each of the Debtors is a signatory to a
Use Agreement and Lease of Terminal Facilities with the Airport
Board that expires in the year 2015.
The Use Agreement is a financial arrangement with Signatory
Airlines that employs a residual rate setting methodology, whose
effect is to permit the Airport Board to "break-even" each
calendar year on the cost of operating the Airport, either by
distributing year end surplus profits to Signatory Airlines or
requiring Signatory Airlines to pay for any year end operating
deficit.
Maintenance and Operations Services Agreement
In February 1992, Delta and the Airport Board entered into a
Management and Operations Services Agreement whereby the parties
agreed, inter alia, for the Airport Board to maintain, operate
and supervise Delta's concession areas at the Airport located in
Terminal 3, Concourse B, and Hub A.
Ms. Melnik relates that, pursuant to the M&O Agreement, the
Airport Board administers virtually every aspect of the daily
operations of the program, including contracting with and
supervising the concessionaires. The Airport Board receives
payment directly from the concessionaires, retains its share for
managing and operating the concessions, and remits the remaining
portion to Delta on a quarterly basis.
Comair Lease Agreements
In 2001, Comair reached capacity for this facility and requested
the Airport Board to construct a North In-Fill to provide for
additional operational and storage space. The Airport Board and
Comair entered into a Memorandum of Understanding pursuant to
which Comair advanced $10,220,250 toward the construction costs
of the North In-Fill, including an area to be non-exclusive to
Comair.
Pursuant to the Comair Agreements, Comair was to be reimbursed
for the non-exclusive area that was constructed pursuant to the
Lease Supplement. The North In-Fill Reimbursement Obligation was
to be satisfied upon the Airport Board's procurement of
sufficient funding for the project from Passenger Facility
Charges or funding from Majority In Interest approval of
Signatory Airlines as provided under the Use Agreement.
The Airport Board obtained the requisite funding from PFCs and
MII Approval, and the North In-Fill project has been completed.
Parties' Mutual Debt Obligations
For calendar year 2004, actual revenue exceeded actual expenses
at the Airport. Pursuant to the Use Agreement, the Debtors
became entitled to an aggregate credit to be applied monthly to
their landing fee obligations to the Airport Board during
calendar year 2005. As of November 3, 2005, Delta's 2004 Credit
yet to be applied to its 2005 prepetition Landing Fee Obligations
is $892,884. Comair's 2004 Credit yet to be applied to its
prepetition 2005 Landing Fee Obligation is $865,599.
Pursuant to the M&O Agreement, Delta became entitled to a
quarterly remittance for the prepetition period ending Sept. 14,
2005 for $1,391,009 that remains unpaid. Payment of the
Prepetition Outstanding Quarterly Remittance is due to Delta as
of November 15, 2005.
The Airport Board seeks to apply $757,931 of this amount in
satisfaction of Delta's prepetition obligation to the Airport
Board.
Pursuant to the Lease Supplement, the Airport Board owes Comair
$120,165, which amount remains in an Airport Board account that
is payable to Comair under the Lease Supplement as part of the
Airport Board's North In-Fill Reimbursement Obligation.
Landing Fee Obligations constitute the majority of the
prepetition amounts owed by the Debtors that the Airport Board
seeks to be set off. In addition, the Debtors are indebted to
the Airport Board for relatively small amounts for other expenses
like rent, utilities, identification badges and other services
arising under their leases. For August and September 14, 2005,
Delta and Comair owe the Airport Board $1,650,815 and $1,416,418
in prepetition Landing Fee Obligations and other expenses.
The parties' mutual prepetition debt obligations:
Amount owed to Airport Amount owed by Airport
Board by Debtor Board to Debtor
---------------------- ----------------------
Delta $1,650,815 $1,650,815
Comair $1,416,418 $985,765
Set-Off Should Be Allowed
Ms. Melnik assures the Court that granting the Airport Board's
request will not prejudice the Debtors or their Estates. The
set-off will reduce the loss to the Airport Board, directly
benefiting the Debtors who, as the largest Signatory Airlines
serving the Airport, ultimately would be responsible for the
loss. In addition, should the Debtors determine to seek to
assume their Airport related agreements, the set-off will reduce
the cure amounts the Debtors will be required to pay prior to
assumption.
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. (Delta Air Lines Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DELTA AIR: Ryder Says Agreement with Comair Already Terminated
--------------------------------------------------------------
Ryder Truck Rental, Inc., and Comair, Inc., are parties to a
Vehicle Maintenance Services Agreement, dated December 20, 1994,
as amended.
Pursuant to the Agreement, Ryder performs certain maintenance and
other services with respect to Comair-owned buses used to carry
passengers to and from other terminals and Concourse C of the
Cincinnati/Northern Kentucky International Airport.
Michael Bernstein, Esq., in New York, relates that the Agreement
expired by its terms on August 31, 2005. Yet, Ryder has
continued to perform under the Agreement postpetition out of an
abundance of caution and because Comair continues to utilize the
services and goods provided by Ryder.
However, Comair has failed to keep its account current and as of
October 6, 2005, the Debtor owes Ryder $64,789 as prepetition
charges for services and goods provided by Ryder.
Mr. Bernstein notes that the Agreement expired and, therefore
terminated, before the Petition Date and no longer exists to be
assumed. He argues that the fact the Debtor has filed for
Chapter 11 does not change the fact the Agreement is terminated
and Ryder no longer wishes to have a business relationship with
the Debtor.
Ryder asks the U.S. Bankruptcy Court for the Southern District of
New York to lift the automatic stay to allow it to discontinue
providing maintenance services and goods to Comair pursuant to the
Agreement.
Debtors Object
Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New
York, contends that the Services Agreement is devoid of any
provision that would suggest the contract expired on August 31,
2005.
He explains that by its unambiguous terms, the contract between
Ryder and Comair remains effective until terminated by written
notice by either Party. Ryder never provided any written notice,
either before the Petition Date or at any time thereafter.
Hence, the Ryder contract remains in full effect.
Mr. Kaminetzky adds that, to the extent Ryder seeks to terminate
the Contract, Ryder failed to show sufficient cause for lifting
the automatic stay.
Comair asserts that any contract termination would be devastating
to its operations. To reach Concourse C of Cincinnati/Northern
Kentucky International Airport, thousands of Comair passengers
and employees depend on 19 specially designed Comair-owned buses
to carry them to and from the other terminals and concourses.
Without the regular maintenance provided by Ryder under the
Services Agreement, the buses will break down and Comair's
passengers and employees will have no way of reaching Concourse.
The Debtors ask the Court to deny Ryder's request. The Debtors
also want the Court to affirm Ryder's continuing obligation to
perform under the Services Agreement until the time it is assumed
or rejected by Comair.
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. (Delta Air Lines Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DELTA AIR: SEC Approves Delisting of Stock from NYSE
----------------------------------------------------
The U.S. Securities and Exchange Commission approves the request
of The New York Stock Exchange, Inc., to delist securities issued
by Delta Air Lines, Inc.:
(i) Lehman ABS Corporation, Corporate Backed Trust
Certificates, Series 2001-19, Class A-1, due December 15,
2029;
(ii) Corporate Backed Trust Certificates, Trust Certificates,
Series 2001-6, due December 15, 2029.
Delta previously said on Oct. 7, 2005, that it would not challenge
NYSE's application with the SEC.
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. (Delta Air Lines Bankruptcy News, Issue No. 14;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DSL.NET INC: Receives Non-Compliance Notice from AMEX
-----------------------------------------------------
DSL.net, Inc. (AMEX: BIZ) received a notice from the American
Stock Exchange that, pursuant to Section 1009(a) of the AMEX
Company Guide on Dec. 12, 2005, AMEX intended to proceed with an
application to the Securities and Exchange Commission to strike
DSL.net's common stock from listing on AMEX later this month. The
company will not appeal the AMEX determination and expects AMEX to
file its de-listing application on or about Dec. 21, 2005. The
company believes its common stock is eligible for quotation on the
OTC Bulletin Board service following de-listing from AMEX. If a
market maker applies to quote the company's common stock on the
OTCBB and that application is approved, the company expects its
common stock to be quoted on the OTCBB upon de-listing from AMEX.
AMEX' decision to pursue de-listing is based on its determination
that the company is not in compliance with Section 1003(f)(v) of
the AMEX Company Guide due to the low selling price of DSL.net's
common stock and the Company's decision to not effect a reverse
stock split to address such low selling price, as requested by
AMEX. In deciding not to effectuate the reverse split and not to
appeal the AMEX de-listing notice, the company's Board of
Directors cited these various factors and considerations:
* the significant cost and time involved in effecting a
reverse stock split,
* the possibility that such a split may not address the low
selling price of the company's common stock,
* the ongoing costs and burdens of compliance with the
AMEX-listed company regulations and
* the likelihood that the company will not be able to
maintain compliance with one or more of the AMEX
quantitative maintenance standards in the short-term.
As a result of the company's decision not to effect a reverse
stock split and not to appeal the AMEX de-listing determination,
the company anticipates that AMEX will submit an application to
the SEC to strike the company's common stock from listing on AMEX,
and that the company's common stock will be de-listed from AMEX,
later this month. The company intends to encourage market makers
to sponsor quotation of the Company's common stock on OTCBB,
effective immediately following the de-listing of the company's
common stock from AMEX. However, if such securities are de-listed
from AMEX, there is no guarantee that a market maker will sponsor
the company's common stock or that a market will be established in
the company's common stock on OTCBB.
DSL.net, Inc. -- http://www.dsl.net/-- is a leading nationwide
provider of broadband communications services to businesses. The
Company combines its own facilities, nationwide network
infrastructure and Internet Service Provider capabilities to
provide high-speed Internet access, private network solutions and
value-added services directly to small- and medium-sized
businesses or larger enterprises looking to connect multiple
locations. DSL.net product offerings include T-1, DS-3 and
business-class DSL services, virtual private networks, frame
relay, Web hosting, DNS management, enhanced e-mail, online
data backup and recovery services, firewalls and nationwide
dial-up services, as well as integrated voice and data offerings
in select markets.
As of Sept. 30, 2005, DSL.net Inc.'s balance sheet showed a
stockholders' deficit of $5,233,000, compared to $12,106,000 of
positive equity at Dec. 31, 2004.
DURANGO PAPER: Court Approves $36.4MM Asset Sale to LandMar Group
-----------------------------------------------------------------
The Hon. Lamar W. Davis, Jr., of the U.S. Bankruptcy Court for the
Southern District of Georgia approved the sale of the former
Durango Paper Mill in St. Mary's, Georgia, held by the Bankruptcy
Estate of Durango Georgia Paper Company, for $36,450,000 to the
LandMar Group, LLC.
LandMar is a leading developer of residential properties
throughout Florida and the Southeast. The Judge also approved
separate sales of the paper mill equipment, and other properties.
The auction conducted by the Trustee produced a total of
$42,086,000 for the creditors' estate. Judge Davis' ruling paves
the way for the transformation of the abandoned paper mill and
adjacent land into a multi-use residential community.
"This is not just a real estate transaction. The real story here
is how a distressed piece of property, with very limited perceived
value, ultimately became the subject of a vigorous bidding process
which resulted in a significant recovery to the estate and its
creditors," stated Anthony Schnelling, Trustee for the Durango
Georgia Paper Bankruptcy Estate, and Founding Member of Bridge
Associates, LLC.
"When we started this process, the value of the offers that we
received for the bankruptcy estate was virtually zero," noted Ward
Stone, Jr., of Stone and Baxter, LLP, attorneys for the estate.
"To be able to provide in excess of $42 million to the estate is
simply a phenomenal outcome that would not have happened if the
property were marketed as a paper mill. The proof is that we
received no bid from a mill re-starter."
"This 'lemon to lemonade' transformation did not just happen,"
commented Mitchell Kahn, CEO of Hilco Real Estate, LLC, the
exclusive real estate advisor. "It was the result of the vision
and dedication of a team of highly-skilled professionals. Tony
Schnelling and his colleague, Michael Newsom, were early believers
in the true potential of the Durango property. Al Lieberman and
Scott Peterman of Hilco Real Estate were instrumental in unlocking
the hidden value of this property as a real estate development.
Everyone's efforts were rewarded by the outcome of last week's
auction," Mr. Kahn added.
Mr. Schnelling added, "We believe that what we accomplished with
the Durango property can be replicated at other abandoned paper
mill sites around the country."
The Durango estate has been represented in connection with this
transaction by:
-- Anthony H.N. Schnelling and Michael Newsom of Bridge
Associates, LLC, as Trustee;
-- Mitchell Kahn, Al Lieberman and Scott Peterman of Hilco Real
Estate, LLC, headquartered in Northbrook, Illinois, as
exclusive real estate advisor; and
-- Ward Stone, Jr. and Mark Watson of Stone & Baxter, LLP, a
law firm based in Macon, Georgia, as counsel.
The LandMar Group, which is based in Jacksonville, Florida, is
aligned with Crescent Resources, LLC, a premier real estate
development and land management firm that is a subsidiary of Duke
Energy.
Headquartered in St. Mary's, Georgia, Durango Georgia --
http://www.durangopaper.com/-- was a nationally recognized
bleached board and kraft paper producer in the U.S. offering
coast-to-coast and international service. On Oct. 29. 2002,
Durango's creditors filed an involuntary chapter 7 petition
against it and the Company consented to the petition. The Company
filed for chapter 11 relief on Nov. 20, 2002 (Bankr. S.D. Ga. Case
No. 02-21669). George H. Mccallum, Esq., at Stone & Baxter, LLP,
Kate D. Strain, Esq., at Hunter, Maclean, Exley & Dunn, PC, and
Neil P. Olack, Esq., at Duane Morris LLP, represent the Debtor in
its restructuring efforts. Bridge Associates, LLC, was appointed
as Trustee in the Case under the terms of a Plan of Liquidation
approved by creditors and confirmed by the Bankruptcy Court in
June 2004.
EASYLINK SERVICES: Earns $800,000 in Quarter Ended June 30
----------------------------------------------------------
EasyLink Services Corporation (NASDAQ: EASYE) has filed its form
10-Q for the period ended June 30, 2005. As previously reported,
Easylink's 2nd Quarter 2005 10-Q was delayed pending the
amendments to EasyLink's form 10-K for the year ended
Dec. 31, 2004 and form 10-Q for the period ended March 31, 2005
which were filed last week.
The company had previously announced guidance for the second
quarter estimating revenues of just over $20 million and
approximately break even net income. Actual revenues for the
quarter were $20.1 million and net income was $800,000. Net
income was favorably impacted by $500,000 as a result of a
settlement with a telecom carrier on an outstanding claim.
At June 30, 2005, the company's balance sheet showed $47,601,000
in total assets, $36,635,000 in total liabilities and $10,966,000
stockholders' equity.
The company intends to file its form 10-Q for the period ending
Sept. 30, 2005 by Dec. 19, 2005, the deadline established for the
Company by the Nasdaq Listing Qualifications Panel.
EasyLink Services Corporation (NASDAQ: EASYE), --
http://www.EasyLink.com/-- headquartered in Piscataway, New
Jersey, is a leading global provider of outsourced business
process automation services that enable medium and large
enterprises, including 60 of the Fortune 100, to improve
productivity and competitiveness by transforming manual and
paper-based business processes into efficient electronic business
processes. EasyLink is integral to the movement of information,
money, materials, products, and people in the global economy,
dramatically improving the flow of data and documents for
mission-critical business processes such as client communications
via invoices, statements and confirmations, insurance claims,
purchasing, shipping and payments. Driven by the discipline of
Six Sigma Quality, EasyLink helps companies become more
competitive by providing the most secure, efficient, reliable, and
flexible means of conducting business electronically.
* * *
Going Concern Doubt
KPMG LLP expressed substantial doubt about EasyLink's ability to
continue as a going concern after it audited the company's
financial statements for the fiscal year ended Dec. 31, 2004.
The company said it again received that going concern
qualification notwithstanding the significant improvements in its
financial condition and results of operations over the past three
years. The auditors point to the company's working capital
deficiency and an accumulated deficit. The company also received
qualified opinions from its auditors in 2000, 2001, 2002 and 2003.
ENTERGY NEW ORLEANS: Wants OK to Honor Power Purchase Obligations
-----------------------------------------------------------------
To have sufficient generating capacity to meet the needs of its
customers at the lowest reasonable cost, Entergy New Orleans,
Inc., entered into several power purchase agreements with four of
its affiliates:
(1) Entergy Gulf States, Inc.;
(2) Entergy Arkansas, Inc.;
(3) Entergy Mississippi, Inc.; and
(4) Entergy Louisiana, Inc.
In each of the Power Purchase Agreements, ENOI makes capacity
payments and, thus, is entitled to count the associated capacity
towards fulfilling its capacity requirements.
Elizabeth J. Futrell, Esq., at Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, LLP, in Baton Rouge, Louisiana,
tells the U.S. Bankruptcy Court for the Eastern District of
Louisiana that in the aftermath of Hurricane Katrina, ENOI had a
immediate need to sell, on a temporary basis, valuable PPA
Resources, while maintaining the future availability of those
resources.
ENOI decided to sell these PPA Resources to Entergy Louisiana and
Entergy Gulf States:
(a) ENOI's life-of-unit purchase of 51 MW from the interest of
Entergy Power, Inc., in Unit 2 of the Independence Steam
Electric Station, a coal-fired electric generating station
located near Newark, Arkansas;
(b) ENOI's life-of-unit purchase of one-third of the output of
the unregulated 30% interest owned by Entergy Gulf States
in the River Bend Nuclear Station located near St.
Francisville, Louisiana, which 30% interest formerly was
owned by Cajun Electric Power Cooperative, Inc.; and
(c) ENOI's life-of-unit purchase from Entergy Arkansas of 110
MW of base load capacity and associated energy out of
Entergy Arkansas' six solid fuel units, which whole base
load previously had been devoted by Entergy Arkansas to
the wholesale market.
Ms. Futrell attests that the vast majority of ENOI's service area
sustained serious damage due to Hurricane Katrina. As a result,
ENOI lost most of load that it serves and had far more resources
than necessary to meet its load. Hence, ENOI's immediate need to
re-sell the PPA Resources is particularly acute because of the
extreme financial burden caused by ENOI's loss of its load and
associated income and the need to rebuild much of its generation,
transmission and distribution facilities, Ms. Futrell asserts.
Consequently, as ENOI had no load, the output of the PPAs was
going to the Affiliate Companies at fuel cost, but ENOI was going
to have to pay the capacity costs, Ms. Futrell explains. In
deciding on the best manner in which to temporarily sell its PPA
Resources, ENOI recognized its need to be compensated both for
the energy and capacity costs for which it is liable under the
PPAs.
Pursuant to the PPA Resources Agreements, ENOI may reclaim the
portion of the PPA Resources that it may be able to use, and
receive from Entergy Louisiana and Entergy Gulf States sufficient
funds to pay 100% of its obligations to the non-debtor parties to
the PPAs.
As the electric load it will serve increases, ENOI is expected to
re-acquire the output of the PPA Resources gradually. Ms.
Futrell relates that ENOI already has reclaimed more than half of
the capacity available under the PPAs. ENOI is expected to
continue recalling the capacity that it is selling to Entergy
Louisiana and Entergy Gulf States as its load increases.
To prevent non-debtor parties to the PPAs from taking any action
to terminate the outstanding transactions and the PPAs, and to
preserve the value of the PPA Resources, ENOI has paid the
amounts due under the PPAs:
Power Purchase Agreement Amount
------------------------ ------
Independence Steam PPA $1,091,471
River Bend PPA 5,021,988
Whole Base Load PPA 6,821,182
By this motion, ENOI seeks retroactive authority from the Court
for those payments.
Ms. Futrell assures the Court that the PPAs are priced well below
comparable, available alternatives.
"Through the PPAs, ENOI is able to help meet its needs for
generating capacity and energy that are much lower than what ENOI
would have paid had it obtained that capacity and energy through
the wholesale market," Ms. Futrell explains. In addition, the
PPAs also offer advantages in terms of fuel diversity, fuel
security, and fuel stability with its coal or nuclear fuel.
Without the PPAs, ENOI would be heavily dependent on natural gas-
fired resources.
Ms. Futrell relates that ENOI had no ready alternative to
preserve the PPA Resources other than payment of the prepetition
amounts due under the PPAs. Although not all of the PPA
Resources were needed after Hurricane Katrina, ENOI believes it
must preserve and maintain the stable, competitively priced
resources that are available under the PPAs for future sources of
energy.
The PPAs are forward contracts within the meaning of Section 556
of the Bankruptcy Code and have acquired regulatory approval from
the Council of the City of New Orleans.
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. 7; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENTERGY NEW ORLEANS: Gordon, et al., Want Automatic Stay Modified
-----------------------------------------------------------------
The Reverend C.S. Gordon, Jr., on behalf of New Zion Baptist
Church, J. Michael Malec, Darryl Malek-Wiley, Willie Webb, Jr.,
and Maison St. Charles, L.L.C., doing business as Quality Inn
Maison St. Charles, ask the U.S. Bankruptcy Court for the Eastern
District of Louisiana to modify the automatic stay to allow them
resume prosecution of two civil matters involving Entergy New
Orleans, Inc., to final judgment:
(a) A putative class action civil suit styled "Reverend C. S.
Gordon, Jr., et al. v. Entergy New Orleans, Inc., Entergy
Corporation, Entergy Services, Inc. and Entergy Power,
Inc.", No. 99-5707, pending before the Civil District
Court, Parish of Orleans, Louisiana; and
(b) A regulatory appeal pending before the Louisiana Fourth
Circuit Court of Appeal, No. 2005-CA-1381.
Gordon Suit
Michael H. Piper, Esq., at Steffes, Vingiello & Mckenzie, LLC,
in Baton Rouge, Louisiana, relates that on April 8, 1999, the
Gordon Plaintiffs filed a class action against the Debtor, its
parent Entergy Corporation, and its unregulated affiliates
Entergy Services, Inc., and Entergy Power, Inc. The Gordon
Plaintiffs filed a request to certify the plaintiff class, but
that request has not yet been heard or decided.
The Gordon Suit asserts state-law causes of action for:
-- restitution of ascertainable losses of money and damages
for violations of Louisiana anti-trust laws and other state
laws, plus interest, costs; and
-- declaratory and injunctive relief, arising from the
Debtor's manipulation and abuse of its fuel adjustment
charges and other costs ostensibly passed through to
ratepayers pursuant to its fuel adjustment clause filings.
The Fuel Adjustment Clause, Mr. Piper explains, is an automatic
cost recovery mechanism and is included in the Debtor's monthly
bills to its ratepayers without antecedent regulatory review, in
addition to the base rate, the charge per kilowatt-hour. The
Council for the City of New Orleans, the Debtor's regulator,
approves the Debtor's base rates.
Gordon Regulatory Appeal
Immediately after filing the Gordon Suit, the Gordon Plaintiffs
filed a regulatory complaint with the City Council, asking the
City Council to review the Debtor's FAC filings and the
ostensible costs passed through to the Debtor's ratepayers.
The Gordon Plaintiffs asked the City Council to determine, after
an administrative hearing, what relief it would award on the
regulatory claims for restitution of overcharges, which could then
be appealed to the Louisiana courts under their appellate
jurisdiction to review administrative and regulatory rulings of
the City Council so that the Gordon Plaintiffs could also pursue
the Gordon Suit.
Mr. Piper relates that the regulatory experts retained by the
Gordon Plaintiffs recommended more than $90,000,000 in refunds
resulting from the Debtor's imprudent and improper fuel
adjustment clause practices since 1985. Experts retained by the
City Council also submitted pre-filed, written testimony, and
recommended refunds of $34,300,000 to the Debtor's ratepayers,
including the City of New Orleans.
Upon completion of the administrative hearing, the hearing
officer compiled the record and submitted it to the City Council
for consideration. The City Council ruled in the Council
Proceeding by adopting Resolution No. R-04-66, dated February 5,
2004. The City Council awarded only $11,310,072 to the Debtor's
ratepayers, inclusive of $4,106,645 in interest. The Debtor did
not appeal the decision.
The Gordon Plaintiffs assert that Entergy Corporation, and its
unregulated subsidiaries -- Entergy Services and Entergy Power --
should bear the ultimate financial burden and entire cost of any
relief awarded or to be awarded against the Debtor in the Council
Proceeding, the Gordon Regulatory Appeal, the Gordon Suit, or in
any appeal. Entergy and its shareholders, rather than the Debtor
and its ratepayers and creditors, should ultimately absorb those
liabilities, Mr. Piper contends.
The Gordon Plaintiffs believe that the Debtor, or in default of
appropriate action by the Debtor, then the Official Committee of
Unsecured Creditors or a Court-appointed trustee, should pursue:
-- in the Gordon Suit a third-party demand or cross claim
against Entergy for full indemnity and reimbursement of the
$11,310,072 in refunds and interest already awarded, and
any additional sums to be awarded, to ratepayers in the
Council Proceeding;
-- a claim and action against the Debtor's directors and their
insurers, if any, for full indemnity and reimbursement of
the $11,310,072 already awarded, and any additional sums to
be awarded, to ratepayers in the Council Proceeding; and
-- a claim and action against its Entergy for full restitution
and recoupment of all dividends paid and other payments
made by the Debtor to Entergy at any time during the period
of the Council proceeding.
The liquidation of the Gordon Plaintiffs' claims could be done
either in state court or through the Debtor's Chapter 11 case.
However, Mr. Piper points out that liquidating the Gordon
Plaintiff's claims in the state court would allow the Bankruptcy
Court to focus on the Debtor's reorganization and not be bogged
down with complicated regulatory issues. Allowing the State
Court Litigation to go forward as scheduled would permit the
Gordon Plaintiffs' issues to be determined sooner than they could
be in the bankruptcy forum.
"The misconduct of [the Debtor] and the Entergy Defendants
resulted in a substantial financial loss for the [Debtor's]
customers, including the Gordon Plaintiffs and the City of New
Orleans, itself," Mr. Piper argues. "To allow [the Debtor] and
the Entergy Defendants to hide their misconduct behind the
automatic stay in order to delay the resolution of the Gordon
Plaintiffs' claims is unconscionable and should not be allowed."
Mr. Piper assures the Honorable Jerry A. Brown of the Bankruptcy
Court for the Eastern District of Louisiana that the Debtor's
creditors would not be prejudiced by the liquidation of the
claims.
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. 7; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ESTERLINE TECH: Darchem Buy-Out Prompts S&P to Affirm Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Esterline Technologies Corp., including the 'BB' corporate credit
rating. The outlook is stable. The company has $175 million in
rated debt.
The affirmation follows Esterline's acquisition of Darchem
Holdings Ltd. for $120 million in cash.
"Although the purchase will likely be partially debt financed, the
effect on Esterline's credit protection measures, which are
generally better than average for the rating, will be modest,"
said Standard & Poor's credit analyst Christopher DeNicolo.
Darchem is a leading manufacturer of thermally engineered
components for critical aerospace and defense applications, such
as lightweight thermal insulation for jet exhaust ducting, nacelle
and thrust reverser units, and heat shields. The acquisition is
expected to add about $70 million in annual sales.
Bellevue, Washington-based Esterline designs and manufacturers
highly engineered products and systems for defense and aerospace
customers, as well as for general industrial applications.
Products include lighted switches and displays for commercial and
military aircraft, temperature and pressure sensors for engines,
and electronic countermeasures. Revenues in recent years have
benefited from acquisitions, military sales, and the recovery in
the commercial aftermarket. The company's Sensors & Systems unit
provides temperature and pressure sensors for aircraft turbine
engines, fluid regulation systems, and motion control components.
Avionics & Controls produces technology interface systems, lighted
switches, displays, and control products for commercial and
military aircraft. The Advanced Materials unit produces
high-performance silicone elastomer products, electronic warfare
countermeasure products, and combustible ordnance. Esterline's
revenue base is fairly balanced between military, commercial
aerospace, and industrial markets. The firm's products are used
on wide range of commercial and military airplanes, with no one
aircraft type accounting for more than 5% of revenues. Firm
backlog was $482 million as of Oct. 28, 2005.
The company's diversified and balanced revenue base should enable
it to maintain acceptable profitability as the commercial
aerospace market recovers. Although acquisitive, management is
expected to maintain leverage appropriate for current ratings.
The revision of the outlook to either positive or negative would
likely depend on the impact on credit quality of future
acquisitions, especially the amount of debt financing.
ENVIRONMENTAL TRUST: Court Okays Krishan Workinger as Accountant
----------------------------------------------------------------
The Hon. Louise DeCarl Adler of the U.S. Bankruptcy Court for the
Southern District of California gave The Environmental Trust,
Inc., permission to employ Krishan Workinger CPA's, Inc., as its
accountant, nunc pro tunc to Nov. 10, 2005.
Krishan Workinger will:
(1) prepare Federal and Californian State tax returns with all
supporting schedules,
(2) perform any accounting and bookkeeping necessary in order
to prepare the income tax returns,
(3) provide accounting, tax and general business consulting
services, and
(4) prepare 1099 and other appropriate business tax statements.
Papers filed with the court did not indicate the Firm's billing
rates.
Craig Workinger, C.P.A., a member at Krishan Workinger CPA's,
Inc., assures the court that the Firm is disinterested as that
term is defined in Section 101(14) of the U.S. Bankruptcy Code.
Krishan Workinger CPA's, Inc., is experienced in not-for-profit
accounting, auditing, business consulting and taxation.
Headquartered in San Diego, Calif., The Environmental Trust, Inc.,
filed for chapter 11 protection on Mar. 23, 2005 (Bankr. S.D.
Calif. Case No. 05-02321). Michael D. Breslauer, Esq., at Solomon
Ward Seidenwurm & Smith, LLP, represents the Debtor. When the
Debtor filed for protection from its creditors, it listed $1
million to $10 million in assets and $10 million to $50 million in
debts.
EUREKA READY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Eureka Ready Mix, Inc.
dba Contractors Steel Supply
1105 Oak Street
Corsicana, Texas 75110
Bankruptcy Case No.: 05-87156
Chapter 11 Petition Date: December 19, 2005
Court: Northern District of Texas (Dallas)
Judge: Harlin DeWayne Hale
Debtor's Counsel: Areya Holder Pronske, Esq.
Law Office of Areya Holder Pronske, P.C.
800 West Airport Freeway, Suite 1100
Irving, Texas 75062
Tel: (972) 438-8800
Fax: (972) 438-8825
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Cemexusa Financial Service LP Non-Purchase Money $162,458
840 Gessner, Suite 1400
Houston, TX 77024
Pappy's Sand and Gravel, Inc. Non-Purchase Money $113,694
P.O. Box 307
Scurry, TX 75158
Holcim Non-Purchase Money $110,460
1100 Victory Way, Suite 50
Ann Arbor, MI 48408
Ashgrove Non-Purchase Money $105,014
P.O. Box 843750
Dallas, TX 75284-3750
Martin Marietta Materials Non-Purchase Money $85,151
Attn: Suzanne Rousseau
8200 IH-10 West, Suite 600
San Antonio, TX 78230
Arrowhead Rebar Non-Purchase Money $66,193
P.O. Box 560664
Dallas, TX 75356-0664
Wells Fargo Non-Purchase Money $47,420
Business Direct Division
P.O. Box 7487
Boise, ID 83707
Premium Financing Non-Purchase Money $42,805
P.O. Box 3100
Tallahassee, FL 32315-3100
Bill Short, Esq. Non-Purchase Money $37,854
8080 North Central Expressway
Suite 1600, LB65
Dallas, TX 75206
Mine Service, Inc. Non-Purchase Money $34,398
P.O. Box 32
Rockdale, TX 76567
Kolberg Pioneer Non-Purchase Money $27,993
P.O. Box 538455
Atlanta, GA 30353-8455
International Profit Associates Non-Purchase Money $26,396
1250 Barclay Boulevard
Buffalo Grove, IL 60089
Johnson Oil Non-Purchase Money $22,335
P.O. Box 3016
Corsicana, TX 75110
Caterpiller Financial Services Purchase Money $93,716
Attn: Mary Jane Cassidy
2120 West End Avenue
Nashville, TN 37203
Nucor Steel Non-Purchase Money $13,014
P.O. Box 840697
Dallas, TX 75284-0697
Eagle National Steel, LLC Non-Purchase Money $8,992
540 Skyline Drive
Hutchins, TX 75141
Norton Metals Non-Purchase Money $8,325
1350 Lawson Road
Fort Worth, TX 76131
Seven Points Sand and Gravel Non-Purchase Money $8,150
P.O. Box 43752
Seven Points, TX 75143
U.S. Bank Credit Card $6,226
P.O. Box 740408
Saint Louis, MO 63179-0408
American Express/Optima Non-Purchase Money $5,989
P.O. Box 360002
Fort Lauderdale, FL 33336-0002
FLYI INC: EDC Wants Adequate Protection on Aircraft Leases
----------------------------------------------------------
Export Development Canada, as a loan participant or lender
holding interests in certain of the FLYi, Inc. and its debtor-
affiliates' aircraft, ask the U.S. Bankruptcy Court for the
District of Delaware to condition the Debtors' use of the aircraft
upon the grant of adequate protection pursuant to Sections 361 and
363(e) of the Bankruptcy Code.
EDC is a party to 23 leveraged lease transactions, each involving
the lease to Independence Air, Inc., of one Bombardier
CL-600-21319 regional jet, together with the related jet engines,
equipment, appliances and documents. EDC is also a lender under
a credit agreement secured by security interests in four of
Independence's owned aircraft.
On the Petition Date, the Debtors asked the Court's permission to
reject leases to 14 EDC aircraft. The remaining nine EDC
aircraft leased to the Debtors pursuant to leases in which EDC
has an interest and the four aircraft, which EDC has a security
interest securing loans from EDC to the Debtors, are being
operated on a daily basis in the ordinary course of the Debtors'
business.
John S. Demmy, Esq., at Stevens & Lee, P.C., in Wilmington,
Delaware, points out that the Debtors' continued use of the
retained aircraft is causing the retained aircraft to depreciate
in value.
Even if the Debtors are performing regular maintenance, use of an
aircraft significantly diminishes its value, Mr. Demmy points
out. The continued operation of the retained aircraft increases
the risk that valuable components may be removed and swapped or
replaced with older or less valuable components from other
aircraft in which EDC does not have an interest, thus further
diminishing the value of the retained aircraft.
In this regard, EDC asserts that it is entitled to adequate
protection of its interests pursuant to Section 363(e). Thus,
EDC proposes that the Debtors should:
a. comply with the requirements of the regulations issued
under the Federal Aviation Act and any other laws with
respect to the retained aircraft, including all
airworthiness directives;
b. comply with all terms and conditions of the various
agreements relating to the use, maintenance and operation
of the retained aircraft;
c. continue to carry and maintain at their own expense, valid
and collectible insurance on the retained aircraft for not
less than the amounts required under the agreements;
d. pay cash payments equal in amount to the regular fully
amortized payments or rent due under the agreements;
e. confirm whether the Debtors continue to use the retained
aircraft as revenue service, and if not, provide evidence
that storage and maintenance of the retained aircraft is
consistent with commercially reasonable industry practices
and the terms of the various agreements;
f. confirm the location or routes of the retained aircraft;
g. provide access to the retained aircraft for inspection by
EDC or its designated representatives at times and
locations reasonably agreed to by the parties;
h. refrain and be enjoined from swapping, removing or
replacing any parts on any of the retained aircraft except
as specifically permitted under the various agreements;
i. pay on a monthly basis cash maintenance reserves in respect
of the operation of the retained aircraft beginning from
the Petition Date and continuing for as long as the
retained aircraft remain in the possession and control of
the Debtors, with EDC being granted an administrative
expense claim under Section 507(b) of the Bankruptcy Code
as:
-- Airframe reserves toward the next scheduled heavy
structural and system check based on the Debtors'
FAA-approved maintenance program at a rate to be
determined at the hearing of the motion;
-- Engine reserves on each engine toward its next shop
visit for performance restoration overhaul, based on
industry averages at a rate to be determined at the
hearing of the motion;
-- Engine reserves on each engine toward its next shop
visit for life limited parts replacement, based on
scheduled replacement of life limited parts at a rate to
be determined at the hearing of the motion;
-- Landing gear reserves on each landing gear based on time
between overhaul in the Debtors' FAA approved
maintenance program; and
-- Auxiliary power unit reserves based on the Debtors'
typical shop visit interval for performance restoration
for similar APU's in its fleet at a rate to be
determined;
j. maintain, in the manner customary in the United States
airline industry, complete and organized records for each
retained aircrafts, including an up-to-date master
maintenance computerized report listing the status of all
inspections, hard time and life limited components,
airworthiness directives and modification status of the
retained aircrafts together with all underlying inspection
and task cards to verify compliance with the Debtors'
Approved Maintenance Planning Guide and Form 8130s to
support all hard time and life limited components; and
k. pay EDC's attorney's fees and other costs and expenses in
accordance with the terms of the various agreements.
If EDC's request for adequate protection measures is insufficient
for protection of EDC's interests in the retained aircraft, EDC
asks the Court to grant it a "super priority" administrative
claim pursuant to Section 507(b) higher in priority than any
administrative claims to the Debtors' assets, to the fullest
extent necessary to protect EDC from any postpetition decline in
value of the retained aircraft resulting from Debtors'
postpetition use.
Mr. Demmy believes that at a minimum, the measures requested are
necessary to provide adequate protection against the actual and
inevitable diminution in value that will result from the Debtors'
continued use of the retained aircraft.
Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast
Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent
of Independence Air Inc., a small airline based at Washington
Dulles International Airport. The Debtor and its six affiliates
filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del.
Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon,
Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in their
restructuring efforts. As of Sept. 30, 2005, the Debtors listed
assets totaling $378,500,000 and debts totaling $455,400,000.
(FLYi Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
FLYI INC: Court Gives Interim Okay on Claim Transfer Procedures
---------------------------------------------------------------
FLYi, Inc. and its debtor-affiliates estimate that their net
operating losses total $330,000,000, which amounts may be
substantially higher when they emerge from Chapter 11. Brendan
Linehan Shannon, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, relatesthat these NOLs would translate into
potential future cash savings for the Debtors of $116,000,000
based on a corporate federal income tax rate of 35%.
If left unrestricted, trading of claims against, and equity
securities in, the Debtors could:
-- severely limit the Debtors' ability to use their NOLs; and
-- have significant negative consequences for the Debtors,
their estates, and their reorganization efforts.
Specifically, trading of claims and equity securities could
adversely affect the Debtors' NOLs if:
(a) too many 5% or greater blocks of equity securities of the
Debtors are created, or too many shares are added to or
sold from those blocks, in that, together with trading
by 5% shareholders during the previous three years, an
ownership change within the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended, is triggered
prior to consummation, and outside the context, of a
confirmed Chapter 11 plan; or
(b) the beneficial ownership of claims against the Debtors
that are currently held by "Qualified Creditors" is
transferred, prior to consummation of the plan, in that:
* those claims, either alone or when accumulated with
other claims currently held by a transferee, would be
converted under a plan of reorganization into a 5% or
greater block of the stock of the reorganized Debtors;
and
* the sum of all 5% or greater blocks and the blocks of
stock of the reorganized Debtors held by all other
non-qualified creditors would represent 50% or more of
that stock.
To preserve to the fullest extent possible the flexibility to
craft a plan of reorganization that maximizes the use of their
NOLs, the Debtors should be able to closely monitor certain
transfers of claims and equity securities so as to prevent those
transfers.
Hence, the Debtors ask the U.S. Bankruptcy Court for the District
of Delaware to enter interim and final orders establishing uniform
notification and hearing procedures for trading in equity
securities or in claims:
a. Any person or entity who currently is or becomes a
Substantial Equityholder or a Substantial Claimholder will
file with the Court, and serve on the Debtors and their
counsel, a notice of status, on or before the later of;
* 20 days after the effective date of the notice of entry
of the interim order or the final order, as applicable;
or
* 10 days after becoming a Substantial Equityholder or
a Substantial Claimholder.
b. Prior to any transfer of equity securities that would
result in an increase or decrease in the amount of common
stock of FLYi, Inc., beneficially owned by a Substantial
Equityholder or would result in a person or entity becoming
a Substantial Equityholder, that Substantial Equityholder
will file with the Court, and serve on the Debtors and
their counsel an advance written notice of the intended
transfer of equity securities.
Similarly, a Substantial Claimholder should serve an
advance written notice of any intended transfer of claims
that would result in an increase or decrease in the amount
of aggregate principal claims that the Substantial
Claimholder beneficially owned or would result in a person
or entity becoming a Substantial Claimholder; and
c. The Debtors will have 30 days to object to a proposed
transfer of equity securities or claims.
Mr. Shannon notes that a "Substantial Equityholder" is any person
or entity that beneficially owns at least 2,200,000 shares,
representing approximately 4.5% of all issued and outstanding
shares, of the common stock of FLYi. A "Substantial Claimholder"
is any individual or entity that beneficially owns:
-- an aggregate principal amount of claims against the Debtors
equal to or exceeding $30,000,000; or
-- a lease or leases under which one or more of the Debtors
are lessees and pursuant to which payments of $30,000,000
or more, in the aggregate, are or will become due.
Beneficial ownership of equity securities and beneficial
ownership of claims will be determined in accordance with
applicable rules under Section 382 of the Internal Revenue Code.
An "option" to acquire stock includes any contingent purchase,
warrant, convertible debt, put, stock subject to risk of
forfeiture, contract to acquire stock or similar interest,
regardless of whether it is contingent or otherwise not currently
exercisable. An "option" to acquire claims includes any
contingent purchase, put, contract to acquire a claim or claims
or similar interest, regardless of whether it is contingent or
otherwise not currently exercisable.
Responses
(a) Manufacturers and Traders Trust Company
Manufacturers and Traders Trust Company, successor by merger to
Allfirst Bank, formerly known as The First National Bank of
Maryland, is an indenture trustee or mortgagee on behalf of
holders of debt securities directly or indirectly owed by the
Debtors.
M&T wants to propose modifications to the Debtors' claims trading
procedures to address:
-- certain concerns noted by the Seventh Circuit in In re UAL
Corp., 412 F.3d 775, 778 (7th Cir. 2005); and
-- other issues raised by the restrictions proposed by the
Debtors.
Stephanie Wickouski, Esq., at Gardner Carton & Douglas LLP, in
Washington, D.C., notes that the Seventh Circuit, in UAL's case,
stated that restrictions on the trading of securities for the
putative benefit of the reorganized debtor and its investors
should generally be disfavored absent specific concerns about
trading on insider or confidential information or otherwise
taking unfair advantage of the debtor or the estate.
M&T proposes that the Procedures should provide appropriate
exceptions and clarifications for trustees. To the extent that a
trustee follows its standard practice or acts pursuant to the
operative documents in any of its transactions in connection with
the ministerial or involuntary transfer of "debt securities" or
ownership interests in assets leased to the Debtors, those
actions or transactions should be exempt from the Procedures.
Additionally, the Procedures should make it clear that any
restrictions imposed do not prevent a trustee from exercising its
remedies under its transaction documents, Ms. Wickouski says.
Moreover, M&T seeks to modify the definition of "Substantial
Claimholder." The definition of Substantial Claimholder focuses
solely on the face amount of the claim and makes no distinction
for secured debt, Ms. Wickouski notes. Hence, M&T suggests that
the definition be modified to clarify that it includes only
unsecured claims. Secured claims should be excluded from the
calculation of claims for these purposes, she says.
The modifications must also address the calculation of lease-
based claims and the potential collision between the Procedures
and the rights of aircraft financers and lessors under Section
1110 of the Bankruptcy Code, Ms. Wickouski says. M&T believes
that the Procedures must include an expedited mechanism to allow
a claimholder to request a bond or other security in connection
with a trading restriction.
Furthermore, M&T submits that the positions taken by the parties
and the Court's findings in connection with the Procedures should
have no precedential effect outside the confines of the matters
specifically addressed by the Procedures.
Ms. Wickouski adds that any order approving the Procedures should
provide that the Order will become null and void and all
restrictions will be lifted immediately upon the conversion of
the Debtors' bankruptcy cases to Chapter 7.
M&T's proposed modifications are consistent with similar claims
trading procedures adopted in recent and pending airline
bankruptcy cases, Ms. Wickouski informs the Hon. Mary F. Walrath.
(b) International Lease Finance
The Debtors' request fails to identify any authority under the
Bankruptcy Code, which permits the Court to encroach on the
rights of International Lease Finance Corporation to trade its
claims against them, Therese V. Brown-Edwards, Esq., at Potter
Anderson & Corroon LLP, in Wilmington, Delaware, asserts.
The only "authority" cited by the Debtors are Sections 105, 362
and 541 of the Bankruptcy Code. "None of these sections provide
the necessary authority," Ms. Edwards says.
Rule 3001(e) of the Federal Rules of Bankruptcy Procedure
inherently recognizes that claims can be freely traded. Under
the 1991 amendments to the Rule, the Bankruptcy Court is not to
engage in controlling trading in claims. Thus, absent some
specific provision of the Bankruptcy Code, there is simply no
authority for the Bankruptcy Court to restrict, or ultimately to
block, regular trading in claims.
Additionally, Ms. Edwards continues, the Debtors' request is
premature and seeks protection for a Chapter 11 reorganization
without having filed a Plan or demonstrated an ability to
reorganize.
To the extent that the Court is inclined to grant the Debtors'
request based on a theory of preservation of their purported
NOLs, the Court must scale back the procedures to strike a
balance between ILFC's established rights to trade its claims if
it so chooses and the Debtors' concerns with losing its ability
to utilize its NOLs, if any, Ms. Edwards asserts.
* * *
Judge Walrath approves, on an interim basis, the Debtors'
notification and hearing procedures that must be satisfied before
certain transfers of the Company's claims to holders of
$30,000,000 or more in claims are deemed effective, unless those
holders elect out of, or are deemed to have elected out of, the
procedures.
In the event of election or deemed election, those holders may be
required prior to the effective date of a Chapter 11 plan of
reorganization for the Company either to sell some of their
claims or to forfeit some of the equity consideration they might
otherwise receive under the plan.
A full-text copy of Judge Walrath's Interim Order on the
procedures governing the Debtors' trading in claims is available
at http://bankrupt.com/misc/ClaimsTradingInterimOrder.pdf
The Order will become null and void and all restrictions on
transfers of Claims against the Debtors will be lifted
immediately upon conversion of the Debtors' Chapter 11 cases to
Chapter 7 cases.
Judge Walrath will convene the Final Hearing on the Debtors'
request on Dec. 21, 2005, at 2:00 p.m. (ET).
Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast
Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent
of Independence Air Inc., a small airline based at Washington
Dulles International Airport. The Debtor and its six affiliates
filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del.
Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon,
Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in their
restructuring efforts. As of Sept. 30, 2005, the Debtors listed
assets totaling $378,500,000 and debts totaling $455,400,000.
(FLYi Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
FLYI INC: U.S. Trustee Objects to Sabre as Management Consultant
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Nov. 22, 2005,
FLYi, Inc., and its debtor-affiliates' sought the U.S. Bankruptcy
Court for the District of Delaware's permission to employ Sabre
Inc. as their management consultant, nunc pro tunc to Nov. 8,
2005, pursuant to an Engagement Letter dated Aug. 3, 2005, and a
Work Order dated Nov. 1, 2005.
U.S. Trustee Objects
Steven Hendrickson, a Senior Partner at Sabre, Inc., attested
that the firm is a "disinterested person" pursuant to Section
101(14) and Section 327(a) of the Bankruptcy Code.
The United States Trustee tells the Court that firm's disclosure
of its connections is incomplete and the indemnity to be provided
to it by the Debtors is inappropriate.
Margaret L. Harrison, Esq., trial attorney for the U.S. Trustee,
in Wilmington, Delaware, notes that Mr. Hendrickson's affidavit
lists Sabre Holding Corp. as a party with a material contract
with the Debtors.
Ms. Harrison also notes that a work order accompanying the
Debtors' employment application was effective as of November 1,
2005, one week before the Petition Date. By the terms of that
work order, Sabre Inc. is:
-- to receive $312,000 for four months' work;
-- to be paid $39,000 on the first and last days of each of
those four months;
-- not to be required to keep time entries;
-- not required to file interim applications; and
-- to file its final fee application and receive its final
order approving its fees and expenses, as soon as the four
months of employment end.
Ms. Harrison points out that no Engagement Letter was filed along
with the Application.
On November 28, 2005, Sabre, Inc., filed its amended affidavit
disclosing, among other things, that:
* Sabre Holding Corp. owns the stock of Sabre, Inc.;
* Sabre, Inc., "owns the stock" of Travelocity.com LLP; and
* Travelocity.com LLP is a creditor that appears on the
consolidated list of FLYi's 40 largest unsecured creditors.
"It appears that Sabre Holding Corp., Sabre, Inc., and
Travelocity.com LLP are affiliates," Ms. Harrison tells the
Court.
Ms. Harrison asserts that although Sabre, Inc., has now disclosed
that it is connected to both Sabre Holding and Travelocity.com,
it has not disclosed the nature of the contract between Sabre
Holding Corp. and the Debtors. The firm also does not disclose
whether Sabre Holding, Sabre, Inc., and Travelocity.com are
separate entities controlled by separate, unrelated parties.
Aside from the fact that the Application accompanied no
Engagement Letter, it does not assert or provide any evidence
that indemnification is common in the marketplace for management
consultants, Ms. Harrison adds. "Unless Sabre, Inc., produces
evidence that the indemnification provisions are common in the
marketplace for management consultants, that provision of the
proposed order should be stricken. Alternatively, the
Application must be denied," Ms. Harrison asserts.
Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast
Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent
of Independence Air Inc., a small airline based at Washington
Dulles International Airport. The Debtor and its six affiliates
filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del.
Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon,
Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in their
restructuring efforts. As of Sept. 30, 2005, the Debtors listed
assets totaling $378,500,000 and debts totaling $455,400,000.
(FLYi Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
GLASS GROUP: Administrative Claims Bar Date Set for Jan. 16
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware established
Jan. 16, 2005, at 4:00 p.m., as the deadline for all creditors
owed money by The Glass Group, Inc., on account of administrative
expense claims arising from Feb. 28, 2005, through Oct. 31, 2005,
to file their proofs of claim.
Administrative Claimants must file written proofs of claim on or
before the Jan. 16 Administrative Claims Bar Date and those forms
must be delivered to the claims agent:
(a) via mail to:
Donlin, Recano & Company, Inc.,
Re: The Glass Group Inc.
P.O. Box 2007
Murray Hill Station
New York, New York 10156
(b) via hand-delivery, courier or overnight service to:
Donlin, Recano & Company, Inc.,
Re: The Glass Group Inc.
419 Park Avenue South
Suite 1206
New York, New York 10016
Headquartered in Millville, New Jersey, The Glass Group, Inc.
-- http://www.theglassgroup.com/-- manufactures molded glass
container and specialty products with plants in New Jersey and
Missouri. Its products include cosmetic bottles, pharmaceutical
vials, specialty jars, and coated containers. The Company filed
for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case
No. 05-10532). Derek C. Abbott, Esq., at Morris, Nichols, Arsht &
Tunnell represents the Debtor in its restructuring efforts. When
the Debtor filed for protection from its creditors, it estimated
assets and debts of $50 million to $100 million.
GRUPO TMM: Launches Offer to Buyback $331 Million of Senior Notes
-----------------------------------------------------------------
Grupo TMM, S.A. (NYSE:TMM; BMV:TMM A) initiated a cash tender
offer to purchase up to $331,018,794 aggregate principal amount of
its outstanding Senior Secured Notes due 2007 in accordance with
the 2007 Notes Indenture.
TMM is making an offer to purchase up to $331,018,794 aggregate
principal amount of the 2007 Notes in accordance with Section 5.18
of the Indenture with the net cash proceeds remaining from the
recent sale of 18 million shares of Kansas City Southern Common
Stock. The purchase price in the offer is 100% of the principal
amount of the Notes, plus accrued and unpaid interest, up to but
not including the date of settlement. The offer is scheduled to
expire at 12:00 midnight, New York City time, on Friday,
Jan. 13, 2006, unless extended. Noteholders may withdraw their
tender from the offer at any time prior to the expiration date,
unless extended. Specific details of the offer are fully
described in the Company Notice and Offer to Purchase dated
Dec. 15, 2005.
The Bank of New York is the paying agent for the offer. Requests
for assistance or documentation should be directed to the paying
agent:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street -- 7 East
New York, New York 10286
Attention: Mr. William Buckley
Telephone: (212) 815-5778
Beneficial owners of the Notes may also contact their brokers,
dealers, commercial banks, trust companies or other nominee
through which they hold the Notes with questions and requests for
assistance.
Headquartered in Mexico City, Grupo TMM S.A. --
http://www.grupotmm.com/-- is a Latin American multimodal
transportation and logistics company. Through its branch offices
and network of subsidiary companies, TMM provides a dynamic
combination of ocean and land transportation services.
* * *
As reported in today's Troubled Company Reporter, Standard &
Poor's Ratings Services raised its corporate credit rating on
Grupo TMM S.A. to 'B-' from 'CCC.' The rating was removed from
Creditwatch, where it was placed on Dec. 15, 2004. The outlook is
positive.
GRUPO TMM: S&P Upgrades Corporate Credit Rating to B- from CCC
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Grupo TMM S.A. to 'B-' from 'CCC.' The rating was
removed from Creditwatch, where it was placed on Dec. 15, 2004.
The outlook is positive.
The upgrade reflects TMM's use of cash proceeds from
Transportacion Ferroviaria Mexicana (TFM; BB-/Negative/--)'s
acquisition by Kansas City Southern (KCS; BB-/Stable/--) to reduce
debt.
"The rating on TMM reflects its weak cash flow generation and the
inherent risks associated with the capital-intensive and
competitive shipping industry," said Standard & Poor's credit
analyst Juan P. Becerra. "These factors are partially offset by
its position as the largest integrated logistics company in Mexico
and an improved balance sheet."
Although TMM's cash flow generation has improved during 2005, it
remains weak. TMM's interest coverage, as of Sept. 30, 2005, was
0.1x. The company's cash flow generation could improve in the
coming years. Nevertheless, this is highly dependent on the
company's success in upcoming bids for maritime transportation
contracts in Mexico. TMM is expected to participate in bids for
new vessels that will start operations in 2006. Standard & Poor's
believes that the corresponding increase in revenues, coupled with
higher margins, could lead to an interest coverage ratio above
2.0x and a total debt/EBITDA ratio of about 5.0x.
The sale of TMM's stake in KCS will lead to a significant
reduction in TMM's debt, to $150 million from $420 million.
However, S&P expects that TMM will finance the vessels required to
satisfy future contractual commitments with debt. S&P believes
that the debt associated with the aforementioned contracts would
be about $50 million per contract.
Grupo TMM is the largest Mexican logistics and transportation
company and is one of the main providers of logistical outsourcing
services, trucking, specialized maritime, and port management in
Mexico.
TMM's rating could be raised if the issuer is able to win future
contracts and improves its operating and financial performance
during the year, particularly its operating and free operating
cash flow generation. Failure to win upcoming bids would lead to
a stable outlook.
Grupo TMM S.A.'s securities are traded in the United States and
are registered in the Securities and Exchange Commission. SEC
filings by and against the company are available at no charge at
http://ResearchArchives.com/t/s?3ce
HILLENBRAND INDUSTRIES: Expects to File Form 10-K by December 29
----------------------------------------------------------------
Hillenbrand Industries, Inc. (NYSE: HB) reported on Dec. 14, 2005,
that it has filed with the United States Securities and Exchange
Commission for an automatic extension for the filing of its fiscal
2005 Annual Report on Form 10-K. The company expects to file the
Annual Report on Form 10-K for the year ended Sept. 30, 2005 on or
before Dec. 29, 2005.
Restatement of Financial Results
The filing for an automatic extension is necessary because
Hillenbrand plans to restate its fiscal 2003 financial results and
will revise the previously announced restatement of its fiscal
2004 financial results upward. Because of the time and effort
required of Hillenbrand's accounting and financial reporting
personnel to complete the review and documentation of the effects
of the restatements, the company will not be able without
unreasonable effort and expense to file its Annual Report on Form
10-K on or before the prescribed due date of Dec. 14, 2005.
Financial Impacts
As part of the restatement, income from discontinued operations
and net income in fiscal 2003 will increase $51 million.
Hillenbrand's previously announced restatement to its annual
fiscal 2004 financial results increased its income from
discontinued operations and net income by $15.3 million. The new
restatement also results in an additional increase in fiscal 2004
income from discontinued operations and net income of $18.3
million bringing the total increase in net income for 2004 to
$33.6 million.
The effects of this restatement on the income statement impact
only discontinued operations and have no impact on previously
reported results from continuing operations or cash flows.
Hillenbrand's balance sheets as of Sept. 30, 2003 and all
succeeding periods will also be restated to reflect $69.3 million
of additional goodwill as a result of the restatement. The
restatement will update only fiscal 2003 and 2004 reported results
of operations, with no changes to fiscal 2005 results of
operations. The company's restated results are subject to the
completion of audit procedures by PricewaterhouseCoopers LLP, the
company's independent registered public accounting firm.
Restatement Summary
The Audit Committee of Hillenbrand's Board of Directors concluded
earlier that Hillenbrand will restate its results of operations
for fiscal 2003 and 2004. This restatement is in addition to the
previously announced restatement of fiscal 2004 financial results
related to the understatement of income tax benefits associated
with discontinued operations, including Hillenbrand's fiscal 2004
sale of Forethought Financial Services, Inc.
This latest restatement is the result of errors in the company's
allocation of goodwill to Hill-Rom's piped-medical gas and infant
care businesses for purposes of determining the original
impairment loss recognized on the transactions in the fourth
quarter of fiscal 2003 and the effect of the dispositions
recognized upon the closing of the transactions in fiscal 2004.
These businesses were included in the Hill-Rom reporting unit for
goodwill impairment assessment purposes. When a portion of a
reporting unit that constitutes a business is sold, Statement of
Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets, requires that the amount of goodwill associated
with that business be determined based on the relative fair values
of the business to be sold versus the portion of the reporting
unit to be retained. SFAS 142 further provides, however, that if
a business to be disposed of was never integrated into the
reporting unit after its acquisition, the current carrying amount
of acquired goodwill should be included in the carrying amount of
the business to be disposed of.
When definitive agreements to sell the piped-medical gas and
infant care businesses were reached in the fourth fiscal quarter
of 2003, an impairment assessment was performed as if the
businesses were non-integrated, separate, stand-alone entities for
which we concluded that that the benefits of the acquired goodwill
associated with these businesses had not been realized, and would
not be realized in the future. Therefore, all the original non-
amortized goodwill associated with the acquisitions of these
businesses, other than a portion pertaining to a retained
business, was included in the carrying values of the businesses to
be disposed of, thereby resulting in the recognition of an
impairment loss of $51 million (net-of-tax) in the fourth quarter
of fiscal 2003. Had the company appropriately allocated goodwill
to the disposed businesses based on their relative fair values
compared to the fair value of the reporting unit containing such
businesses, the carrying amounts of the disposed businesses would
have been lower and no impairment loss would have been recorded.
Further, the company would have recognized gains on the
divestitures of both businesses in fiscal 2004 of a combined $18.3
million, net of tax.
The effects of this restatement will be included in the previously
announced amendment of the Annual Report on Form 10-K for fiscal
2004, and the impacts on the company's quarterly reports on Form
10-Q will also be covered by the originally planned amendments of
the three quarterly reports for fiscal 2005 on Form 10-Q.
Material Weakness
Hillenbrand plan to file a Form 8-K further describing the
restatement. Hillenbrand intends to file its amendment on
Form 10-K/A to its 2004 Annual Report on Form 10-K with the SEC in
the near term, but prior to the filing of our fiscal 2005 Annual
Report on Form 10-K, and will follow-up with amended Form 10-Qs
for fiscal 2005 as soon as practicable after that date. The
company's previously filed fiscal 2003 and 2004 consolidated
financial statements, and its quarterly consolidated financial
statements for fiscal 2004 and 2005, should no longer be relied
upon. The Form 10-K/A will disclose that the company's internal
controls over financial reporting were not effective as of
September 30, 2004 due to the existence of material weaknesses in
the company's controls over the accuracy of its accounting for
goodwill and its accounting for income taxes, including the
determination of income taxes payable, deferred income tax assets
and liabilities and the related income tax provision.
Hillenbrand Industries, Inc., headquartered in Batesville,
Indiana, is a publicly traded holding company for two major wholly
owned businesses serving the health care and funeral services
industries. Hill-Rom Company is a manufacturer of equipment for
the health care industry and a provider of associated services for
wound, pulmonary and circulatory care. It is also a provider of
medical equipment outsourcing and asset management services.
Batesville Casket is a leading manufacturer and supplier of burial
caskets, cremation products and related services to licensed
funeral homes.
ILLINOIS POWER: Moody's Downgrades Preferred Stocks' Rating to Ba2
------------------------------------------------------------------
Moody's Investors Service downgraded the long term debt ratings
of:
* Ameren Corporation (Ameren: senior unsecured to Baa1
from A3);
* Central Illinois Public Service Company (d/b/a AmerenCIPS:
senior unsecured to Baa1 from A2);
* CILCORP Inc. (senior unsecured to Baa3 from Baa2);
* Central Illinois Light Company (d/b/a AmerenCILCO: senior
unsecured to Baa1 from A3); and
* Illinois Power Company (d/b/a AmerenIP: Issuer Rating to Baa3
from Baa2).
These ratings were initially placed under review on September 30,
and remain under review for possible further downgrade. Moody's
also placed under review for possible downgrade Ameren's Prime-2
short term rating for commercial paper and Union Electric
Company's (d/b/a AmerenUE) long term debt ratings (A2 senior
unsecured) and Prime-1 short term rating for commercial paper.
The rating of AmerenEnergy Generating Company (Baa2 senior
unsecured) is affirmed.
The rating downgrades reflect a difficult political and regulatory
environment for electric utilities in Illinois during a period
when Ameren's operating utilities in the state are attempting to
implement plans for power procurement and are expecting electric
rate increases of between 20% and 35% beginning in 2007. Both the
Attorney General (AG) and the Governor of the State of Illinois
have strongly opposed Ameren's power procurement plan for its
Illinois utilities, with the AG filing suit against the Illinois
Commerce Commission (ICC) to stop the procurement proceedings.
Although the staff and an administrative law judge (ALJ) at the
ICC have since endorsed Ameren's power procurement plan, Moody's
believes that regulatory risk remains high with regard to the
prospects for full and timely recovery of costs incurred by
Ameren's Illinois utilities post-2006.
Under the terms of the current regulatory arrangement that is in
place until December 31, 2006, rates for electric supply at
Ameren's Illinois utilities are capped at below-market rates
through contracts with both affiliated and unaffiliated generation
companies. Under electric restructuring legislation passed in the
state, electric generation rates are expected to change to market-
based rates beginning on January 1, 2007. The average price for
electricity is currently significantly higher than the generation
component that is incorporated in the current rates. Although
utilities are usually allowed to recover prudently incurred costs
and an eventual settlement on rates is anticipated, Moody's
believes that a settlement that results in immediate pass-through
of power procurement costs is unlikely due to the large gap
between current market prices for wholesale power and existing
utility rates, along with strong opposition that has been signaled
by several key state government officials.
Ameren has expressed a willingness to consider a rate increase
phase-in plan for its Illinois utilities to mitigate rate shock
for customers. A lengthy deferral would result in increased debt
balances and raise concerns about the ultimate full recovery of
costs. The downgrade reflects Moody's expectation that some
material deferral of these costs is likely and that the utilities'
credit quality will be negatively affected over the intermediate
term. Moody's notes that Ameren management has continued to
acknowledge the prospect of a potential bankruptcy of its Illinois
utilities, most recently during its third quarter earnings call,
and has indicated that it is evaluating all the legal and
financial steps necessary to prepare for this possibility.
In addition to opposing the power procurement plan, the Governor
also took the extraordinary step of removing the Chairman of the
ICC in order to name a candidate who had previously filed
testimony in opposition to the utilities' procurement plans while
acting as the head of the largest state consumer advocate group.
Although the Illinois state senate declined to approve this
appointment, a new Chairman has not been nominated and there
remains considerable uncertainty about the future direction of the
commission.
The downgrade of parent company Ameren's ratings reflects the
importance of the Illinois utility businesses to its consolidated
financial profile, particularly since the acquisition of Illinois
Power last year. The Illinois utilities now make up nearly half
of Ameren's total utility business. The two notch downgrade of
AmerenCIPS' ratings represents a narrowing of the notching among
Ameren's Illinois utilities, reflecting Moody's view that Ameren
is increasingly operating these utilities as a single system,
which are likely to be further integrated following the expiration
of their current supply contracts on December 31, 2006 and
subsequent changes in the power procurement plan. It also
reflects the increased importance of the difficult political and
regulatory environment for electric utilities in Illinois as a
credit and ratings driver relative to individual differences in
each utility's financial ratios.
The review of Union Electric Company's ratings reflects the
likelihood that if the operating cash flow of the Illinois
utilities declines, Ameren would need to rely on its Missouri
operations for a larger share of cash flow and upstreamed
dividends to meet parent company obligations than had previously
been envisioned. The affirmation of the rating of AmerenEnergy
Generating Company considers:
* its competitive, low cost generating portfolio;
* upside potential beyond January 1, 2007 when contracts to
sell power expire and there is potential for the company to
benefit from higher market prices; and
* the company's reduced leverage following the retirement of
$225 million of long-term debt on November 1, 2005.
The ratings remain under review pending additional clarity on the
eventual resolution of the dispute over rates and market
structure. The review will focus on:
* the prospects for a resolution of the on-going dispute;
* clarity regarding the amount and timing of any related
rate increases;
* the mechanisms for ultimate recovery of the utilities'
increased costs and investment outlays; and
* the regulatory climate for the utilities going forward.
Further rating action could occur if the parties fail to make
progress on a negotiated settlement over the next two to three
months.
Ratings downgraded and remaining under review for possible
downgrade include:
* Ameren's senior unsecured debt and Issuer Rating, to Baa1
from A3;
* Central Illinois Public Service Company:
-- senior secured debt to A3 from A1,
-- senior unsecured debt and Issuer Rating to Baa1 from A2,
-- preferred stock to Baa3 from Baa2, and
-- short-term rating to VMIG-2 from VMIG-1;
* CILCORP, Inc.'s senior unsecured debt to Baa3 from Baa2;
* Central Illinois Light Company:
-- senior secured debt to A3 from A2,
-- Issuer Rating, to Baa1 from A3, and
-- preferred stock to Baa3 from Baa2;
* Illinois Power Company:
-- senior secured debt to Baa2 from Baa1,
-- Issuer Rating to Baa3 from Baa2, and
-- preferred stock to Ba2 from Ba1; and
* the shelf rating for the trust preferred securities issued by
Ameren Capital Trust I and II to (P)Baa2 from (P)Baa1.
Ratings placed under review for possible downgrade include:
* Ameren's Prime-2 short-term rating for commercial paper;
* Union Electric Company:
-- A1 senior secured debt,
-- A2 Issuer Rating,
-- A3 subordinate,
-- Baa1 preferred stock, and
-- Prime-1 short-term rating for commercial paper; and
* the (P)A3 rating for the shelf registration for trust
preferred securities of Union Electric Capital Trust I.
Ameren Corporation is a public utility holding company
headquartered in St. Louis, Missouri. It is the parent company
of:
* Union Electric Company (d/b/a AmerenUE),
* Central Illinois Public Service Company (d/b/a AmerenCIPS),
* CILCORP Inc.,
* Central Illinois Light Company (d/b/a AmerenCILCO),
* Illinois Power Company (d/b/a AmerenIP), and
* AmerenEnergy Generating Company.
INDUSTRIAL ENT: Accounting Changes Result in $170,000 Net Loss
--------------------------------------------------------------
Industrial Enterprises of America, Inc. (OTCBB:ILNPE) filed, on
Dec. 16, 2005, its delayed quarterly report for the fiscal first
quarter ended Sept. 30, 2005.
The Company's operating subsidiaries, EMC Packaging and Unifide
Industries, both experienced profitability for the quarter and
contributed over $430,000 of net income even after taking into
account one time merger expenses. On a pro forma basis, these
subsidiaries demonstrated earnings of approximately 2 cents per
share, however due to unexpected accounting changes recommended by
the Company's auditors at the parent company level, ILNP recorded
a net loss of $170,000 for the quarter rather than the previously
reported net income of $265,000.
As reported in the Troubled Company Reporter on Dec. 13, 2005, the
company expected to report net income of $265,000, which reflects
certain nonrecurring expenses related to merger activity and
recent financings that occurred during the first quarter.
Financial highlights for the quarter ended Sept. 30, 2005 include
an increase in total assets to $12,733,032 and an increase in
revenues to $4,909,803 as compared to Sept. 30, 2004 when the
Company's assets were negligible and the Company had no revenues.
"While unexpected alterations made by our auditors have negatively
impacted the Company's net income for the first quarter, the
Company has greatly increased its revenues and total assets,
positioning itself for future growth and profitability. Our
impending acquisition of an automotive products manufacturer is
set to double annual revenues and streamline manufacturing
operations. With these anticipated revenues and the non-recurring
nature of this quarter's financial modifications, investors should
look forward to seeing positive earnings in the coming quarter,"
commented John Mazzuto, Chief Executive Officer of Industrial
Enterprises of America, Inc.
Headquartered in New York, New York, Industrial Enterprises of
America, Inc. -- http://www.TheOtherGas.com/-- is a holding
Company with three operating subsidiaries, EMC Packaging, Unifide
Industries and Todays Way Manufacturing, LLC. EMC Packaging is
one of the largest worldwide providers of refrigerant gases,
specializing in converting hydroflurocarbon gases into branded and
private label refrigerant and propellant products as well as
packaging of "gas dusters" used in a variety of industries.
Unifide Industries markets and sells specialty automotive products
under proprietary trade names and private labels, and Todays Way
Manufacturing manufactures and packages the products sold by
Unifide Industries.
* * *
Going Concern Doubt
Beckstead and Watts, LLP, has expressed substantial doubt about
Industrial Enterprises of America, Inc.'s ability to continue as a
going concern after it audited the company's financial statements
for the fiscal year ended June 30, 2005. The auditors issued the
opinion because "the company has had limited operations and [has]
not commenced planned principal operations."
INEX PHARMACEUTICALS: Receives Demand Letter from Stark Trading
---------------------------------------------------------------
Inex Pharmaceuticals Corporation (TSX: IEX) received a copy of a
demand letter for repayment of the promissory notes on Dec. 16,
2005, held by Stark Trading and Shepherd Investments International
Ltd.
Stark is the majority holder of the Notes issued by Inex
International Holdings, a subsidiary of INEX. The promissory
notes are not due until April 2007 and can be repaid in cash or in
shares, at INEX's option, at maturity. Other holders of the Notes
have not issued a similar demand.
Notes Default
Stark has alleged that the Notes are in default as a result of
INEX announcing Nov. 17, 2005, its intention to spin-off its
Targeted Immunotherapy assets into a new company. INEX and Inex
International do not believe the Notes are in default and intend
to continue to oppose any action taken by Stark.
As disclosed on Dec. 6, 2005, INEX has asked the Supreme Court of
British Columbia to rule on whether the proposed plan can be
completed given the Notes. The Supreme Court will hear this on
Jan. 5 and 6, 2006.
INEX believes that the reorganization and the spin-out of the
Targeted Immunotherapy reflects the highest value path forward for
all stakeholders.
The Supreme Court of British Columbia previously dismissed the
bankruptcy petition brought forward by Stark Trading for Inex
Pharmaceuticals on Oct. 27, 2005.
INEX Pharmaceuticals Corporation -- http://www.inexpharma.com/--
is a Canadian biopharmaceutical company developing and
commercializing proprietary drugs and drug delivery systems to
improve the treatment of cancer.
INTERACTIVE HEALTH: Moody's Junks $100 Million Senior Notes
----------------------------------------------------------
Moody's Investors Service downgraded the senior notes and
corporate family ratings of Interactive Health LLC to Caa1 from B3
and changed the ratings outlook to negative from stable. At the
same time, Moody's also downgraded Interactive Health's
speculative grade liquidity rating to SGL 4 from SGL 3.
The downgrades of the senior notes rating and corporate family
rating reflect the recent softening in profitability together with
the uncertainties created by the recent acquisition of Brookstone,
a major customer, and the expected continued weakness in
profitability and cash flow from both Brookstone and The Sharper
Image, the company's largest customer. The change in ratings
outlook reflects Moody's belief that Interactive's profitability
and operating cash flow will be challenged as it attempts to
broaden its distribution channels amid uncertainty with Brookstone
and moderating business with The Sharper Image.
Moody's is concerned about the company's future business
relationship with Brookstone, which accounted for 11% of the
company's revenue in the nine months ended September 30, 2005.
Brookstone was recently acquired by Osim International, which is
believed to own approximately 30% of Daito, the company's major
supplier. Moody's believes that Brookstone may significantly
reduce its business with Interactive Health as Brookstone
increases the prominence of robotic chairs made by other companies
going forward. Along these lines, Interactive disclosed that its
Q4 2005 and Q1 2006 revenue and net income are expected to be
materially lower due to the Brookstone acquisition and excess
inventory levels at The Sharper Image. Moody's believes these
issues may extend beyond Q1 2006.
Operating margins softened for the LTM ended September 30, 2005,
due to increased sales to distributors in the lower-margin
international channels and because of increased costs associated
with the recently launched infomercials. The company is highly
leveraged at over 7x adjusted debt/EBITDA with over $130 million
of lease-adjusted debt outstanding, including $47 million of
redeemable convertible preferred stock at its parent holding
company. The company's high leverage could limit its ability to
respond to the uncertainties created by the Brookstone situation.
In addition to its significant customer concentration with
Brookstone and The Sharper Image, the company's ratings are also
constrained by the company's modest size compared to its main
competitor, and its reliance on one overseas vendor, Daito, for
its main massage chair product line.
The ratings are supported by the company's low-cost flexible
operations, and strong, albeit moderating, operating margins. The
company's ratings are also supported by management's focus on new
product development at lower price points as demonstrated by the
introduction of its iJoy chair in 2003 and new distribution
channel opportunities at select mass retail centers as well as
direct sales.
The SGL downgrade reflects Moody's belief that, despite
Interactive's $14 million of cash at September 30, 2005 and
availability under its $30 million revolver, Interactive's
liquidity over the next twelve months will be weak due to:
* the potential moderation of operating cash flow following the
expected loss of business with Brookstone;
* weakness in its business with The Sharper Image; and
* the uncertainties surrounding the introduction of new
distribution channels.
The SGL downgrade also reflects Moody's belief that the company
may have to modify its interest coverage covenant because of
likely EBITDA moderation.
The negative ratings outlook reflects Moody's belief that
Interactive Health's profitability and cash flow generation could
further moderate over the next 12 to 18 months if the company's
new strategic initiatives do not replace the lost Brookstone
business and moderating business with The Sharper Image.
Moody's will consider stabilizing Interactive Health's ratings if
profitability and cash flow generation improve through a likely
combination of:
1) resolution of the Brookstone relationship;
2) improved traction of its new sales initiatives; and
3) enhanced adjusted operating metrics to previous levels (EBIT
margins in the high teens, adjusted leverage of about 5x and
interest coverage in the 2x to 3x range).
Ratings could be pressured if:
* Interactive Health's operating results decline more than
expected in the fourth quarter of 2005 or in 2006 resulting
in EBIT margins of less than 10%;
* leverage increases to 8x or higher; or
* interest coverage falls below 1.5x.
These ratings have been downgraded:
* Corporate family rating to Caa1 from B3
* $100 million senior discount notes due 2011, to Caa1 from B3
* Speculative grade liquidity rating to SGL-4 from SGL-3
Interactive Health LLC, located in Long Beach, California, is a
leading producer and marketer of technologically advanced, branded
robotic massage chairs and zero-gravity chairs, and also produces
a variety of complementary massage products. Sales for the LTM
ended September 30, 2005 approximated $120 million.
INTERNATIONAL FIBERCOM: LSB Corporation Recovers 77% on Its Claim
-----------------------------------------------------------------
LSB Corporation (NASDAQ: LSBX) reported the receipt of a final
$2.2 million distribution pursuant to a U.S. Bankruptcy Judge's
Order in International Fibercom, Inc.'s bankruptcy proceeding on
the Trustee's Report on Claims' and Proposed Distribution and the
Trustees' Final Report for authorization to make a final
distribution in a case in which the LSB Corp.'s wholly owned
subsidiary, Lawrence Savings Bank, is a creditor.
The Bank was awarded a $4.2 million judgment against the debtor in
1997. The judgment accrued interest from the date of judgment to
the date of the bankruptcy filing of approximately $1.9 million.
In the quarter ended June 30, 2004, LSB received an interim
distribution of $2.5 million in this matter.
The interim and final distributions return approximately 77 cents-
on-the-dollar to LSB and other similarly situated creditors.
International Fibercom, Inc., and its debtor-affiliates filed for
chapter 11 protection on February 13, 2002 (Bankr. Ariz. Case No.
02-02143). The company sold its assets in April 2002, and the
case was converted to a chapter 7 liquidation proceeding later
that year.
IXIS REAL: Moody's Rates Class B-4 Subordinate Certificates at Ba1
------------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by IXIS Real Estate Capital Trust 2005-HE4,
and ratings ranging from Aa1 to Ba1 to the mezzanine and
subordinate certificates issued in the securitization.
The securitization is backed by adjustable-rate (87%) and fixed-
rate (13%) subprime mortgage loans IXIS Real Estate Capital Inc.
acquired from eighteen separate originators.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- overcollateralization,
-- excess spread, and
-- an interest rate swap agreement.
Moody's expects collateral losses to range from 4.75% to 5.25%.
Saxon Mortgage Services, Inc. will service the loans. Moody's has
assigned Saxon an SQ2 rating as a primary servicer of subprime
loans.
The complete rating actions:
Issuer: IXIS Real Estate Capital Trust 2005-HE4
Securities: Mortgage Pass-Through Certificates, Series 2005-HE4
* Class A-1, rated Aaa
* Class A-2, rated Aaa
* Class A-3, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A1
* Class M-5, rated A2
* Class M-6, rated A3
* Class B-1, rated Baa1
* Class B-2, rated Baa2
* Class B-3, rated Baa3
* Class B-4, rated Ba1
JP MORGAN: S&P Shaves Ratings on Three Class Certificates
---------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on six
classes of J.P. Morgan Chase Commercial Mortgage Securities
Corp.'s commercial mortgage pass-through certificates from
series 2002-C2. Concurrently, the ratings on three classes of
certificates from the same series are lowered, and the ratings
on 12 classes are affirmed.
The upgrades and affirmations reflect credit enhancement levels
that support the raised and affirmed ratings through various
stress scenarios. The lowered ratings on the raked certificates
primarily reflect the weakening operating performance at one of
the three properties underlying the loan.
As of Nov. 14, 2005, the trust collateral consisted of 106 loans
with an outstanding principal balance of $998.9 million, down from
108 loans amounting to $1.1 billion at issuance. The master
servicer, Wachovia Securities N.A., provided mostly year-end 2004
financial data for 95.9% of the pool. Based on this information,
Standard & Poor's calculated a weighted average net cash flow debt
service coverage of 1.41x, down from 1.54x at issuance. These
DSC figures exclude three loans with an aggregate balance of
$29.1 million that have been defeased, as well as the seventh-
largest loan, which is secured by a fee interest in a land parcel.
The trust has incurred one loss to date, which amounted to
$0.7 million.
The top 10 loans have an aggregate trust balance of $450.8 million
and a weighted average DSC of 1.54x, down from 1.78x at issuance.
The largest loan in the trust has a pooled, senior component
amounting to $115.1 million and $18.9 million in raked
certificates. This loan is secured by three retail properties
owned and managed by Simon Property Group Inc. The pooled portion
of this loan no longer exhibits credit characteristics of an
investment-grade obligation, and the ratings on the raked
certificates have been lowered to reflect the expectation of
continued weakness at the Century III Mall in West Mifflin,
Pennsylvania. This mall has an in-line vacancy of approximately
26.7%, up from 11.3% at issuance. Additionally, several prominent
tenants will vacate the property in the near future.
The second-largest loan, the 75/101 Federal Street loan, has a
whole-loan balance of $119.7 million. The senior interest has an
outstanding balance of $95.6 million and is included in the trust
collateral. The junior interest serves as collateral for Merrill
Lynch Mortgage Trust's commercial mortgage pass-through
certificates series 2002-FED. The underlying properties had a 21%
decline in Standard & Poor's underwritten NCF since issuance, and
Standard & Poor's recently visited the property, spoke with the
property manager, and revalued the property based on current
market conditions. While the senior component of this loan
continues to exhibit credit characteristics of a high-investment-
grade obligation, the revaluation led to the downgrade of the
five certificates in the Merrill Lynch Mortgage Trust 2002-FED
transaction.
The seventh-largest loan has a $23.9 million balance and is
secured by a fee interest in a land parcel located at 600 Fifth
Avenue in New York, New York. This loan still exhibits credit
characteristics of a high-investment-grade obligation.
None of the top 10 loans are in special servicing, but the sixth-
largest loan appears on Wachovia's watchlist. As part of its
surveillance review, Standard & Poor's reviewed recent property
inspections provided by Wachovia for the properties securing the
top 10 loans, and all of these properties were characterized as
"good" or "excellent." In addition to the shadow-rated assets
among the top 10 loans, the loan secured by a portfolio of U-Haul
properties continues to exhibit credit characteristics of a low-
investment-grade obligation.
There is one loan with the special servicer, ARCap Servicing Inc.
This loan is secured by a 90-unit multifamily property in Ocean
Springs, Mississippi, with a $2.4 million outstanding principal
balance. This loan was previously on the watchlist, as it
reported DSC of 0.78x for 2004. The property is located in a
county designated by FEMA as a Federally Declared Disaster Area
and was recently transferred to the special servicer because it is
more than 60 days delinquent in its debt service payment. The
property incurred damage as a result of Hurricane Katrina, and 35
of its 90 units were taken offline for repair. According to the
special servicer, the borrower is working to bring the loan
current, and Standard & Poor's expects that this loan will
eventually be returned to the master servicer. This loan was
incorporated into Standard & Poor's loss analysis.
There are 20 loans on Wachovia's watchlist with an aggregate
balance of $156 million, which includes one top-10 loan. The
sixth-largest loan is secured by a 400-unit multifamily property
in Chicago, Illinois, with an outstanding balance of $25 million.
This loan reported a 2004 DSC of 0.89x, down from 1.45x at
issuance. The property is slated for conversion into a
condominium property, and Wachovia has received a formal
notification of defeasance. In addition, a $21.2 million loan
secured by a 402-unit multifamily property in North Miami,
Florida, also is on the watchlist. This loan reported a 2004 DSC
of 1.26x and was placed on the watchlist because the property was
in an area adversely affected by Hurricane Wilma. Wachovia was
informed that this property did not incur any damage, and this
loan is expected to be removed from the watchlist next month.
Most of the remaining loans appear on the watchlist due to DSC or
occupancy issues.
Standard & Poor's stressed the specially serviced loan, loans on
the watchlist, and other loans with credit issues as part of its
analysis. The resultant credit enhancement levels support the
raised, lowered, and affirmed ratings.
Ratings Raised
J.P. Morgan Chase Commercial Mortgage Securities Corp.
Pass-through Certificates Series 2002-C2
Rating
Class To From Credit enhancement
----- -- ---- ------------------
B AAA AA 15.18%
C AAA AA- 14.13%
D AA A 11.24%
E A+ A- 9.79%
F BBB+ BBB 7.81%
G BBB BBB- 6.50%
Ratings Lowered
J.P. Morgan Chase Commercial Mortgage Securities Corp.
Pass-Through Certificates Series 2002-C2
Rating
Class To From Credit enhancement
----- -- ---- ------------------
SP1 BB- BBB- N/A
SP2 B BB N/A
SP3 B- BB- N/A
Ratings Affirmed
J.P. Morgan Chase Commercial Mortgage Securities Corp.
Pass-through Certificates Series 2002-C2
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 19.39%
A-2 AAA 19.39%
X-1 AAA N/A
X-2 AAA N/A
H BB+ 4.92%
J BB 3.74%
K BB- 3.34%
L B+ 2.55%
M B 2.16%
N B- 1.63%
N/A - Not applicable.
KAISER ALUMINUM: Liverpool Limited Balks at Plan Modifications
--------------------------------------------------------------
As previously reported in the Troubled Company on Nov. 30, 2005,
Kaiser Alumina Australia Corporation, Kaiser Finance Corporation,
Alpart Jamaica Inc. and Kaiser Jamaica Corporation sought the U.S.
Bankruptcy Court for the District of Delaware's authority to make
certain modifications to their Third Amended Joint Plans of
Liquidation.
The Plan Modifications will enable the Liquidating Debtors to:
-- confirm the Liquidating Plans in 2005 even if the Court
does not render a decision on the dispute relating to the
relative priority of holders of Senior Note Claims and
holders of Senior Subordinated Note Claims to payments by
the Liquidating Debtors; and
-- avail of significant potential tax savings.
Liverpool's Limited Objection
Liverpool Limited Partnership tells the Court that it does not
oppose the initial distributions under the Liquidating Plans. To
the extent that funds are not subject to the Guaranty
Subordination Dispute, Liverpool believes there is no reason to
delay the distribution of funds to creditors.
However, Liverpool is concerned that the proposed modifications to
the Liquidation Plans may also permit distributions of disputed
funds before the Guaranty Subordination Dispute is fully resolved.
Rebecca Street Beste, Esq., at Potter, Anderson & Corroon LLP, in
Wilmington, Delaware, points out that distribution of the disputed
funds before a final order is entered could lead to additional
time-consuming and costly litigation.
She also notes that there is nothing in the proposed modification
that purports to limit any party's rights to seek a stay pending
appeal of any decision of the Court in the Guaranty Subordination
Dispute. Requiring a final order would eliminate any reason for
a party to need to seek a stay, Ms. Beste says.
Debtors' Response to Liverpool
The Debtors ask the Court to summarily overrule Liverpool's
limited objection.
Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, argues that because the proposed Plan
modifications now separate confirmation of the Liquidating Plans
from the Court's ruling on the Guaranty Subordination Dispute, the
final order requirement in the Liquidating Plans will no longer
have the potential to affect the implementation of the Court's
Guaranty Decision, and the losing party, whether Liverpool or not,
will have to seek a stay pending appeal.
She asserts that Liverpool's position is simply a legal maneuver
to gain for itself the ability to delay distributions for several
years without having to meet the requirements for a stay,
particularly the requirement of showing the ability to succeed on
the merits.
To give all parties a period of time to seek a stay, Ms. Newmarch
says, the Liquidating Debtors have added a provision in the
proposed confirmation order that stays implementation of the
Guaranty Decision until the expiration of 10 days after entry of
the decision. The 10-day stay, consistent with the 10-day stay
that would have applied if the Guaranty Decision was issued in
connection with the confirmation order, will afford any party that
wants to appeal from the Guaranty Decision ample time to seek a
stay of distributions pending the appeal.
U.S. Bank's Proposed Changes
U.S. Bank is the indenture trustee for the 10-7/8% Senior Notes
issued by Kaiser Aluminum & Chemical Corporation pursuant to the
terms of an indenture for the issuance of up to $175,000,000 of
10-7/8% Series B Senior Notes and another indenture for the
issuance of up to $50,000,000 of 10-7/8% Series D Senior Notes.
These notes are jointly and severally guaranteed by each of the
Alumina Subsidiaries.
Theodore J. Tacconelli, Esq., at Ferry, Joseph & Pearce P.A., in
Wilmington, Delaware, tells the Court that U.S. Bank does not
oppose confirmation of the Alumina Subsidiary Plans in advance of
the resolution of the contractual subordination dispute regarding
the public notes of the Debtors that is currently under advisement
with the Court. As the Debtors in the modification motion
correctly point out, the confirmation of the Alumina Subsidiary
Plans would prevent the incurrence of unnecessary taxes and permit
the immediate distribution of undisputed amounts to claimants,
including the holders of 10-7/8% Senior Notes.
However, U.S. Bank has asked the Liquidating Debtors to make some
changes in the modified Plans to resolve these issues:
(a) the definition of contractual subordination dispute
should be updated and revised to reflect the procedural
history of the subordination proceedings to date and the
contemplated post-confirmation proceedings;
(b) the modified Liquidating Plans should explicitly state
the procedural basis on which the Court is retaining
jurisdiction to decide the contractual subordination
dispute as a contested matter post-confirmation and
provide that all evidence in the record from the earlier
proceedings is automatically part of the record in the
post-confirmation proceedings;
(c) the fees and expenses of the Senior Notes Trustee and
the ad hoc group incurred up through entry of a final
order resolving the contractual subordination dispute
should be paid from the distribution trust to be
consistent with the Plans' current terms;
(d) conforming modifications to all parts of Section 2.4 of
the Plans need to be made to reflect the inapplicability
of certain provisions by reason of the vote outcome; and
(e) all of the proposed modifications, when finalized, must
be adequately addressed with appropriate modifications
to the Confirmation Orders.
U.S. Bank reserves its right to object to the form of confirmation
order and to raise additional objections based on additional
changes to the modification motion or the form of confirmation
order.
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. 85; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KAISER ALUMINUM: More Insurers Object to Plan Confirmation
----------------------------------------------------------
As previously reported in the Troubled Company Reporter on
December 2, 2005, several parties-in-interest in Kaiser Aluminum
Corporation and its debtor-affiliates' cases filed objections to
the confirmation of the Remaining Debtors' second amended plan of
reorganization filed on September 7, 2005.
More Insurers Object
(1) Columbia Casualty Insurance Company, et al.
Fifteen insurers complain that the Debtors' contributions to the
Asbestos Personal Injury Trust fail to satisfy the minimum funding
requirements of Section 524 of the Bankruptcy Code:
* Columbia Casualty Insurance Company
* Transcontinental Insurance Company
* Harbor Insurance Company
* Continental Insurance Company
* Westport Insurance Corporation
* TIG Insurance Company
* Republic Indemnity Company
* Transport Insurance Company
* ACE Property and Casualty Company
* Century Indemnity Company
* Industrial Underwriters Insurance Company
* Pacific Employers Insurance Company
* St. Paul Mercury Insurance Company
* Industrial Indemnity Company
* Hudson Insurance Company
Section 524 of the Bankruptcy Code requires, among others, that
the Debtors establish a personal injury trust to pay present and
future asbestos claims and fund that trust with the Debtors' long
term, going-concern value.
Kevin Gross, Esq., at Rosenthal, Monhait, Gross & Goddess PA, in
Wilmington, Delaware, notes that Congress designed Section 524 to
provide asbestos claimants with the benefit of the reorganized
debtors' long-term upside potential through a trust fund by shares
of the debtors' stock and future profits, including dividends.
Further, it provides that the contribution of securities will
provide future payments to the trust, including dividends.
The Debtors value the new common stock of the reorganized Kaiser
Aluminum Corporation at $380,000,000. The trust will receive 6%,
valued at $22,800,000. If there are at least 120,000 asbestos
claimants as asserted by the Asbestos Claimants Committee, each
claimant would receive $186 from the reorganized KAC stock
contributed to the trust.
The reorganized Kaiser Trading stock, a business worth less than
$1,000,000, is even less substantial. While 94% of its common
stock was supposed to be transferred to the fund, Kaiser Trading
is expected to generate minimal profits, if any, especially since
the Brooklawn property in Louisiana, its only asset, is subject to
substantial environmental liabilities.
While the Debtors and the insurers agree that the contribution of
6% of the stock of the Reorganized KAC does not satisfy the 51%
requirement in Section 524, they disagree on the Debtors' claim
that the Reorganized Kaiser Trading stock contribution does.
(2) Century Indemnity Company, et al.
Thomas G. Whalen Jr., Esq., at Stevens and Lee PC, in Wilmington,
Delaware, tells the U.S. Bankruptcy Court for the District of
Delaware that Century Indemnity Company, ACE Property & Casualty
Company, Industrial Indemnity Company, Industrial Underwriters
Insurance Company, Pacific Employers Insurance Company, and
Central National Insurance Company of Omaha object to the Plan
because:
(1) it improperly provides for assignment, which is invalid,
unenforceable and violates the anti-assignment
provisions of the policies and applicable state law;
(2) it fails to satisfy the minimum requirements of Section
524(g) of the Bankruptcy Code regarding contributions to
the Asbestos Personal Injury Trust; and
(3) it is not fair and equitable to certain insurers to the
extent that their independent contract right claims
against a non-Debtor third party under a reinsurance
agreement dated April 15, 1985, between Insurance
Company of North America and United Insurance Company,
Ltd., are impaired pursuant to any PI Channeling
Injunction.
(3) First State Insurance Company, et al.
First State Insurance Company, Hartford Accident and Indemnity
Company, New England Reinsurance Corporation, and Nutmeg
Insurance Company agree that the Debtors' contribution to the
Asbestos PI Trust is inadequate and fails to satisfy the minimum
requirements in Section 524 of the Bankruptcy Code.
The Insurers ask the Court to deny confirmation of the Second
Amended Joint Plan of Reorganization.
(4) AIU Insurance Company, et al.
Frederick B. Rosner, Esq., at Jaspan, Schlesinger, Hoffman, LLP,
in Wilmington, Delaware, notes that the Debtors' proposed
Reorganization Plan contemplates numerous alterations of certain
insurers' contract rights and the Debtors' obligations under
certain insurance policies, as well as the elimination of coverage
defenses of the insurers.
The Court should hold that the statutory preemption of the
insurers' contract rights and the Debtors' obligations is
inapplicable, and that no part of the proposed Plan preempts or
alters the insurers' contract rights under their policies, Mr.
Rosner asserts on behalf of:
* AIU Insurance Company
* Granite State Insurance Company
* Insurance Company of the State of Pennsylvania
* Landmark Insurance Company
* Lexington Insurance Company
* National Union Fire Insurance Company of Pittsburgh, PA
* New Hampshire Insurance Company
* Columbia Casualty Insurance Company
* Transcontinental Insurance Company
* Harbor Insurance Company
* Continental Insurance Company
* Westport Insurance Corporation
Among other provisions, each of the policies contains a "no
assignment" clause prohibiting the assignment of rights under the
policies without the insurers' consent. The Debtors have neither
sought nor obtained the consent of any insurer to the Debtors'
proposed assignment of their rights to the Policies. Under
applicable state law -- California -- the Debtors are therefore
prohibited from the assignment, Mr. Rosner contends.
Accordingly, the insurers ask the Court to:
(1) determine that statutory preemption does not apply to
insurers' rights and Debtors' obligations under the
relevant insurance policies;
(2) determine that the Amended Plan's treatment of those
rights and obligations does not comply with provisions
of the Bankruptcy Code; and
(3) deny confirmation of the Amended Reorganization Plan.
(5) Republic Indemnity Company and Transport Insurance Company
Republic and Transport agree with the other insurers and join in
their objection to the alleged preemption of their rights and
Debtors' obligations under insurance policies.
Richard W. Riley, Esq., at Duane Morris LLP, in Wilmington,
Delaware, points out that apart from the arguments of the other
insurers, Republic and Transport note that Section 363 of the
Bankruptcy Code does not preempt, either expressly or impliedly,
the policies' anti-assignment provision or state law enforcing the
provisions. Under this controlling statute, he says, the Debtors
have no power to transfer property out of the estate, before or
after confirmation, contrary to state anti-assignment law.
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. 85; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KEYSTONE AUTO: Refinancing Changes Earn S&P's B+ Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Keystone Automotive Operations Inc. This follows
a change to the company's refinancing plans to fund its
acquisition of Reliable Automotive and cover integration costs and
other fees and expenses. At the same time, all other ratings were
affirmed. The outlook remains negative.
In addition to a new $90 million term C loan for Keystone
Automotive Operations Inc., Keystone Automotive Holdings, Inc. the
parent company, will issue $12.6 million of junior subordinated
promissory notes due 2011. Interest on these notes will be 8%,
paid in kind. The seller notes will not be guaranteed by Keystone
Automotive Operations and will not be rated by Standard & Poor's.
However, for analytical purposes, S&P will treat the seller notes
as consolidated debt of Keystone Automotive Operations. As a
result of these additional seller notes, Keystone will have only
$4 million drawn under its revolving credit facility at closing.
"As the company makes progress in integrating Reliable and
benefits from synergies -- primarily from warehouse
consolidation," said Standard & Poor's credit analyst Stella
Kapur, "credit measures are anticipated to improve to levels more
consistent with current ratings over time."
KRISPY KREME: Completes Restructuring of Canadian Operations
------------------------------------------------------------
Krispy Kreme Doughnuts, Inc. (NYSE: KKD) disclosed that Krispy K
Canada Company, which is wholly owned by the Company through
various subsidiaries, has acquired substantially all of the assets
of KremeKo, Inc., Krispy Kreme's franchisee in eastern and central
Canada. The closing of this transaction represents the successful
completion of the restructuring of these operations.
The Company's operations in eastern and central Canada include six
factory stores, with both retail and wholesale operations.
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 350 stores and 60 satellites in 45 U.S. states,
Australia, Canada, Mexico, the Republic of South Korea and the
United Kingdom.
KULLMAN INDUSTRIES: Inks Insurance Financing Agreement with Mepco
-----------------------------------------------------------------
Kullman Industries, Inc., asks the U.S. Bankruptcy Court for the
District of New Jersey to approve a financing agreement with Mepco
Insurance Premium Financing.
The Debtor has failed to obtain unsecured credit, as required
under section 364 of the Bankruptcy Code, to pay for the insurance
polices. Mepco has agreed to finance the payment of the annual
premiums.
The agreement provides for:
* an amount financed of $429,014 payable with an initial down
payment of $70,352, and
* nine monthly installments of $46,303 at $10.750% annual
percentage rate, for total payments of Mepco of $487,083.
To secure payment due to Mepco, the Debtor will grant Mepco a
security interest in unearned or returned premiums and other
amounts due to the Debtor under the policies.
Headquartered in Lebanon, New Jersey, Kullman Industries, Inc.
-- http://www.kullman.com/-- is a modular construction builder.
The company filed for chapter 11 protection on Oct. 17, 2005
(Bankr. D. N.J. Case No. 05-60002). James N. Lawlor, Esq., at
Wollmuth, Maher & Duetsch, LLP represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated assets between $1 million and $10
million and debts between $10 million to $50 million.
LEVITZ HOME: Court Approves Asset Sale to PLVTZ & Pride Capital
---------------------------------------------------------------
Levitz Home Furnishings, Inc., and its debtor-affiliates sought
and obtained the U.S. Bankruptcy Court for the Southern District
of New York's authority to sell substantially all of their assets
to PLVTZ, LLC, an affiliate of Prentice Capital Management, LP,
and The Pride Capital Group LLC, doing business as Great American
Group, pursuant to an asset purchase agreement dated November 30,
2005. The Court approves the Asset Purchase Agreement.
PLVTZ and Pride Capital Group emerged the highest and best bidder
at an auction on December 1, 2005. They beat purchase offers
from:
(a) Chrysalis Capital Partners, Inc.;
(b) Schultze Asset Management, LLC;
(c) Raymours Furniture Company, Inc.; and
(d) DJM Asset Management, LLC.
Sale Terms
The Purchasers will acquire all of the Debtors' personal property
and, until May 31, 2006, the exclusive right to designate each of
the Debtors' executory contracts and unexpired leases for later
assumption and assignment to the Purchasers or their designee.
The Purchasers will also acquire the Indenture Collateral
provided under an Amended and Restated Intercreditor Agreement,
dated May 20, 2005, between Wells Fargo Bank, N.A., the
collateral agent and trustee under a prepetition secured
indenture dated November 9, 2004, and General Electric Capital
Corporation, as agent under a prepetition credit agreement with
the Debtors.
During the designation rights period for leases, the Debtors will
have 15 days from delivery of a notice from the Purchasers
identifying an assignee of a lease to seek the Court approval of
the assumption and assignment of the lease.
The aggregate consideration for the Purchased Assets will be:
(a) $1,000,000 cash in exchange for the Debtors' intellectual
property and fixtures and equipment;
(b) additional cash of at least $150,000;
(c) forgiveness of $7,000,000 due Prentice under the DIP
Credit Agreement;
(d) payment of any Court-approved professional fees and
expenses up to the "Carve-Out" amount under the Final DIP
Order;
(e) payment of any Court-approved fees and expenses incurred
in connection with the proposed transaction up to
$891,100;
(f) payment of the Debtors' wind-down costs and expenses up to
$848,700;
(g) payment of any accrued and unpaid payroll obligations of
the Debtors up to $1,887,900;
(h) payment of any accrued and unpaid sales tax obligations of
the Debtors up to $4,749,100;
(i) assumption of all of the Debtors' obligations to deliver
goods in respect of a customer order;
(j) assumption of all obligations of the Debtors to GECC under
the DIP Facility;
(k) assumption of all unpaid October rent and all liability
for amounts necessary to cure defaults on any lease or
executory contract that the Purchasers seek to have
assumed and assigned up to $8,274,900;
(l) assumption of all operational and other expenses relating
to a lease or contract that is subject to designation
rights and that accrues after the closing date and before
the lease or contract is excluded by the Purchasers;
(m) assumption of any Court-approved severance obligations up
to $1,700,000; and
(n) assumption of transfer taxes.
The Purchasers will not assume:
(i) the amount owed to them under the DIP Credit Agreement;
(ii) all Liabilities of the Debtors to any Retained Employee in
excess of $1,700,000 in the aggregate for severance and
any and all Liability relating to workers' compensation
claims, employee benefits, severance or compensation
arrangements existing on or prior to the Closing Date;
(iii) any Liability for costs and expenses incurred or owed in
connection with the administration of the bankruptcy case;
and
(iv) the Debtors' costs and expenses incurred in connection
with the negotiation, execution and consummation of the
transactions contemplated under the Purchase Agreement and
a related agency agreement.
The $6,500,000 in cash Prentice previously delivered to the
Debtors pursuant to the terms of the DIP Credit Agreement will be
deemed as deposit under the Purchase Agreement.
The Purchase Agreement may be terminated by either Party, if the
Closing will not have occurred by the close of business on
February 1, 2006.
If the Closing will occur, the Deposit Amount will be applied
towards the Credit Bid Amount. If the Purchase Agreement is
terminated by the Debtors, the amount due to the Purchasers
pursuant to the DIP Credit Agreement will be reduced by an amount
equal to the Deposit Amount.
The Purchasers obligation to close is conditioned upon the value
of the Debtors' inventory immediately prior to closing being at
least $50,000,000. At the Purchasers' sole discretion, the
Debtors may count in the In-Transit Inventory for purposes of
determining the value of the Inventory in the event the Pre-
Closing Eligible Inventory Value is less than $50,000,000.
A full-text copy of the Purchase Agreement is available at no
charge at:
http://bankrupt.com/misc/514_levitz_purch_accord.pdf
A full-text copy of the Court Order approving the Sale and the
Purchase Agreement is available at no charge at:
http://bankrupt.com/misc/lvtz_514_sale_ord.pdf
Court Rules on Objections
The Honorable Burton R. Lifland of the Southern District of New
York Bankruptcy Court rules that to the extent any Objection was
not withdrawn, waived, or settled, the Objection and all
reservations of rights are overruled on the merits and denied with
prejudice.
"The Debtors have demonstrated both good, sufficient and sound
business purpose and justification for the Sale, and compelling
circumstances for the Sale . . . prior to, and outside of, a plan
of reorganization," Judge Lifland says.
Noteholder Settlement
The Purchasers have entered into a settlement agreement with the
Ad Hoc Committee and U.S. Bank. The objections of the Ad Hoc
Committee and the Indenture Trustee are withdrawn.
Pursuant to the Noteholder Settlement, PLVTZ will acquire the
Class A Notes for $5,000,000 in the aggregate. The purchase
price will be added to the consideration to be paid by PLVTZ to
holders of Class A Notes on account of the Indenture Collateral.
Jefferies & Company, Inc., together with its affiliates, as a
holders of Class A Notes, has agreed to assign all of its Notes
to PLVTZ.
PLVTZ will also reimburse the Indenture Trustee, the Ad Hoc
Committee and Jefferies for all legal fees, costs, and expenses
incurred in connection with the bankruptcy cases or pursuant to
the Indenture, up to $750,000.
A full-text copy of the Noteholder Settlement is available at no
charge at:
http://bankrupt.com/misc/levitz_noteholder_settlement.pdf
GUC Trust
Prentice has entered into a settlement agreement with the
Official Committee of Unsecured Creditors, wherein the parties
agree to establish a trust for the benefit of general unsecured
creditors.
Upon the closing of the Sale, PLVTZ will fund the GUC Trust with
consideration or assets that Prentice or PLVTZ own, are
purchasing or are entitled to receive either under the Purchase
Agreement or the DIP Credit Agreement, including proceeds from
the sale of certain merchandise, the disposition of contracts,
and avoidance actions.
The Official Committee and its members, solely in their capacity
as members of the Official Committee, will release all rights,
claims and causes of action they may have against Prentice and
PLVTZ to the extent accrued prior to December 14, 2005.
A full-text copy of the GUC Trust is available at no charge at:
http://bankrupt.com/misc/levitz_GUC_trust.pdf
Judge Lifland says the Sale, the funding of the GUC Trust, and
the funding of the Noteholder Settlement do not constitute a sub
rosa Chapter 11 plan for which approval has been sought without
the protections a disclosure statement would afford.
The Noteholder Settlement and the funding of the GUC Trust are
approved.
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. (Levitz Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LEVITZ HOME: Court Okays GOB Sale of Stores & Support Operations
----------------------------------------------------------------
In connection with the sale of substantially all of Levitz Home
Furnishings, Inc., and its debtor-affiliates' assets, the
Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the
Southern District of New York authorizes the Debtors to close
certain retail store locations and related support operations,
conduct "going out of business", "store closing", "bankruptcy
liquidation" or similar themed sales.
The Court also approves an Agency Agreement, dated November 30,
2005, between the Debtors and a joint venture formed by:
-- The Pride Capital Group, LLC, doing business as Great
American Group;
-- Zimmer-Hester Furniture Liquidations, Inc.;
-- Hilco Merchant Resources, LLC;
-- The Nassi Group, LLC;
-- SB Capital Group, LLC; and
-- PLVTZ, LLC.
Pursuant the Agency Agreement, the Joint Venture, as Agent, will
conduct the Sale of all Merchandise or Inventory located in these
retail store locations:
Store Location Store No.
-------------- ---------
St. Paul, MN 30801
Danbury, CT 10403
Newington, CT 10601
Manchester, CT 10602
Norwalk, CT 10603
Mays Landing, NJ 10803
Oregon Ave Philadelphia 11002
Plymouth Meeting, PA 11005
Cherry Hill, NJ 20301
Fairless Hills, PA 20302
Deptford, NJ 20303
Wilmington, DE 20304
Newark, DE 20307
Lawrenceville 20308
Whitehall, PA 20401
Downington, PA 20402
King of Prussia, PA 20403
Springfield, PA 20404
Reading, PA 20406
Hatfield, PA 20407
Milford, CT 20501
Plainville, CT 20503
Stamford, CT 20508
Scottsdale, AZ 40505
Nesconset, NY 10103
Queens Blvd, NY 11103
River Edge, NJ 20104
Livingston, NJ 20105
Claymont, DE 20305
Langhorne, PA 20306
Wall Township 20310
Cathedral City, CA 30102
Northridge, CA 30202
Oxnard, CA 30204
Glendale, CA 30306
The Agent will be entitled, at its expense, to include in the
Sale additional merchandise procured by the Agent, which is of no
lesser quality and similar in type to the Merchandise located in
the Closing Locations, including, without limitation, furniture,
rugs, wall coverings, lighting, bedding and accessories.
To the extent that Additional Agent Merchandise is actually
delivered to the Stores, the Agent will contribute these amounts
to the Purchase Agreement consideration:
(i) $20,000 each up to and including the first 25 Additional
Agent Merchandise Stores;
(ii) $40,000 for each of the next 25 Stores; and
(iii) $50,000 for each of the Stores thereafter.
The Agent will be unconditionally responsible for all costs of
the Sale and all operating expenses of the Closing Locations that
arise or are incurred in conducting the Sale.
After payment in full of the Purchase Agreement Consideration,
Additional Return and payment of Expenses, the Agent will be
entitled to retain any remaining Proceeds of the Sale including
all proceeds from the sale or disposition of the Additional Agent
Merchandise. All Merchandise and Equipment remaining at the
conclusion of the Sale will become property of the Agent, free
and clear of all Liens.
With respect to the Designated Closing Locations, the Sale will
commence on the closing date of the Purchase Agreement. With
respect to closing Locations designated from time to time by
Prentice, the Sale will commence on the effective date of the
designation. The Agent will complete the Sale in the Closing
Locations on or before May 31, 2006.
If the Agent intends to vacate a Closing Location before the Sale
Termination Date, the Agent will provide the Debtors with not
less than 10 days' advance written notice. On each Vacate Date
and on the Sale Termination Date, the Agent will vacate in favor
of the Debtors, remove all remaining Merchandise, and leave the
applicable Closing Locations in "broom clean" condition.
A full-text copy of the Agency Agreement is available at no
charge at:
http://bankrupt.com/misc/515_agency_accord_lvtz.pdf
A full-text copy of the GOB Sales Order is available at no charge
at:
http://bankrupt.com/misc/levitz_GOB_sale.pdf
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. (Levitz Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LEVITZ HOME: Has Until May 31 to Make Lease-Related Decisions
-------------------------------------------------------------
At Levitz Home Furnishings, Inc., and its debtor-affiliates'
request, the U.S. Bankruptcy Court for the Southern District of
New York extends their deadline to decide whether to assume,
assume and assign, or reject unexpired non-residential real
property leases until May 31, 2006.
The Debtors lease all of their business locations, including
their retail store locations, their corporate headquarters, and a
number of distribution centers used in their retail business. As
of November 28, 2005, each of the Leases remains in effect and
has not expired or been terminated according to its terms.
Richard H. Engman, Esq., at Jones Day, in New York, relates that
the Debtors received at least five bids on varying combinations
of the Debtors' assets. Prentice Capital Management, LP, through
its affiliate, PLVTZ, LLC, and The Pride Capital Group LLC,
emerged the winning bidder for the assets.
Prentice has made both a bid to purchase substantially all of the
Debtors' assets other than the Leases and to purchase designation
rights for all of the Leases. Prentice's designation rights bid
provides for a lease decision period on May 31, 2006.
Without any extension, the Debtors will be unable to consummate
the sale, Mr. Engman says.
At least 27 lessors to separate leases with the Debtors opposed
an extension of the Lease Decision Period on grounds that:
(i) the Debtors have not completely cured all their defaults
under the terms of their individual Leases or Subleases
with the Landlords; and
(ii) there is no provision for security in the event a
purchaser of the Designation Rights or its agent breaches
any covenant under their Leases.
The Landlords assert that, pursuant to Section 365(d)(3) of the
Bankruptcy Code, the extension must be conditioned upon the full
performance of the terms of the Leases.
The Landlords are:
* PetSmart, Inc.;
* Plaza 200 Associates, LLC;
* 2488 Grand Concourse Realty Corp.;
* Joan and Jerome Leflein, Gage Family II Limited Partnership,
and Smith & Sons Investment Co.;
* The Prudential Insurance Company of America and The Krausz
Companies, Inc.;
* Hillary Gilson, Louis Rodman and Pamela Jarman;
* Alan J. Silvers and Shirley Silvers;
* Westfield America, Inc., Westfield Corporation, Inc., and
Eastland Shopping Center LLC;
* Simvest Real Estate I, LLC;
* Miller's Furniture, Inc.;
* Louise Partners;
* PL Smithtown, LLC;
* Village Walk Retail, L.P.;
* BBRG, Inc., as agent for Islip U-Slip, L.L.C.;
* Richard Sachs Interiors, Inc.;
* Costco Wholesale Corporation;
* The Prudential Insurance Company of America; and
* J.W. Mays, Inc.
The Honorable Burton R. Lifland of the Southern District of New
York Bankruptcy Court rules that the extension of the Debtors'
Lease Decision Period is without prejudice to the right of any
landlord to seek an order requiring the Debtors to elect to
assume, assume and assign, or reject a particular Lease prior to
May 31.
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. (Levitz Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LOS OSOS: Loan Repayment Demand Prompts S&P to Lower Bonds' Rating
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its underlying rating
to 'BB' from 'BBB' on Los Osos Community Services District
Wastewater Assessment District No. 1, California's limited
obligation improvement bonds, and placed the rating on CreditWatch
with negative implications.
"The rating action reflects the concern and uncertainty around the
recent demand by the State Water Control Board that the district
repay a $6.53 million loan by Friday, Dec. 16, 2005," said
Standard & Poor's credit analyst Paul Dyson. "The board's position
is that the district is not in compliance with the State Revolving
Fund contract, and the district has refused to adapt a structured,
phased approach to bring itself into compliance with the
contract."
As of the most recent audit, fiscal year 2004, Los Osos had
$3.974 million in cash on hand.
LPL HOLDINGS: High Leverage Spurs S&P to Junk Sub. Debt Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
counterparty credit rating to LPL Holdings Inc. In addition,
Standard & Poor's assigned LPL its 'B' senior secured and its
'CCC+' subordinated debt ratings. The outlook is stable.
"The ratings on LPL reflect the highly levered nature of the
balance sheet and the high debt-servicing load," said Standard &
Poor's credit analyst Jayan U. Dhru. "The resources of LPL will
be stretched as a result of the leverage and the earnings required
to service the debt.
"Standard & Poor's believes the company's track record and the low
level of operating risk will give it the wherewithal to service
the obligations and manage the financial risks of the company,"
Mr. Dhru said.
LPL is the leading independent broker/dealer providing outsourced
brokerage and infrastructure services to independent financial
advisors. LPL is being acquired by the private equity firms
Hellman & Friedman and Texas Pacific Group in a deal that values
the company at $2.5 billion. Following the closing, which is
expected by year-end, the management and founders will control 40%
of the company. No substantive changes to the management or the
business model are expected as a result of the change in control.
Standard & Poor's expects the outlook to remain stable. Over the
next 18 months, S&P expects LPL to solidify its position within
the rating category. If progress continues as expected, the
outlook could be revised to positive. LPL's financial ratios are
below the current rating category; however, the strength of the
business position lifts the financial profile of the company. If
there is weakening in performance or the business dynamics, the
ratings could be lowered.
MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs.
------------------------------------------------------------------
Fitch Ratings has affirmed these Manufacturers and Traders Trust
Company Mortgage Corp. residential mortgage-backed certificates:
M&T Mortgage Pass-Through Certificates, Series 2002-1
-- Class A affirmed at 'AAA';
-- Class B-1 at 'AAA';
-- Class B-2 at 'AAA';
-- Class B-3 at 'AA';
-- Class B-4 at 'BBB';
M&T Mortgage Pass-Through Certificates, Series 2003-1
-- Class A at 'AAA';
-- Class B-1 at 'AA';
-- Class B-2 at 'A';
-- Class B-3 at 'BBB';
-- Class B-4 at 'BB.'
The affirmations, affecting approximately $890 million of the
outstanding certificates, are due to credit enhancement consistent
with future loss expectations. M&T 2002-1 has suffered
approximately $460,000 in losses since the last rating action and
0.06% of the original balance in cumulative losses. M&T 2003-1
has suffered approximately $4,300 in losses since the last rating
action and less than 0.01% of the original balance in cumulative
losses. The losses have not affected the timely payment of
principle and interest to the bonds. The last rating action was
taken in November 2004.
The collateral of the above M&T deals primarily consists of prime,
15- to 30-year fixed- and adjustable-rate mortgages secured by
first liens on one- to four-family residential properties. The
mortgage loans were originated by M&T Bank. M&T 2002-1, issued in
November 2002, had an original collateral balance of approximately
$1.1 billion with original weighted average coupon of 7.07% and
weighted average loan-to-value ratio of 76.11%. M&T 2003-1,
issued in November 2003, had an original collateral balance of
approximately $840 million with original WAC of 5.68% and weighted
average LTV ratio of 71.30%. Both deals are serviced by M&T
Mortgage Corporation, which is currently rated 'RPS2' by Fitch.
The pool factors are 25% and 73% respectively for deals 2002-1 and
2003-1. Further information regarding current delinquency, loss
and credit enhancement statistics is available on the Fitch
Ratings Web site at http://www.fitchratings.com/
MCI INC: Inks Five-Year Contract with ABN AMRO for EUR500 Million
-----------------------------------------------------------------
MCI, Inc., has signed a five-year global network integration
agreement with ABN AMRO to manage their global data network and
firewall platforms. The value of the contract is EUR 500 million
(approximately $550 million) over five years.
The scope of the agreement includes wide-area network, local-area
network and security services connecting more than 6,000 ABN AMRO
locations in 25 countries, and 200-plus regional network
providers. Under the terms of the agreement, MCI will assume
overall management and delivery responsibility for ABN AMRO's
global networking services.
"The ABN AMRO agreement showcases MCI's industry-leading global
network integration capabilities," said Wayne Huyard, president of
Sales and Service for MCI. "With ABN AMRO, we are delivering the
best in global network and security management, professional
services and managed network migration to global IP. We are
honored to be a strategic partner supporting ABN AMRO and, through
the transformation to IP, we are committed to delivering the IP-
enabled productivity enhancements and significant operational cost
savings."
MCI will utilize its Global Service Operations team to manage all
aspects of ABN AMRO's service and supply chain around the globe
and deliver managed network and managed security services. MCI's
award-winning network management platform IMPACT will be at the
heart of the managed services.
"This is a key milestone in the evolution of ABN AMRO's Global
Telecommunications & Network Services strategy, this contract will
see the transformation of ABN AMRO's global infrastructure to an
end to end Managed Service based on MPLS technologies at the
core," said Peter Josse, Global Head, Telecoms & Network Services,
ABN AMRO. "By transferring operational responsibility of our
global network service to MCI we will achieve significant service
and quality improvements while driving major cost efficiencies."
MCI has an extensive history as a global network service
integrator and Managed Network Services provider. Today the
company manages more than 3,100 customer networks in 149
countries, including overseeing 22,000+ non-MCI connections from
more than 60 network providers globally. MCI's advanced local-
to-global IP network spans more than 100,000 miles across 150
countries on six continents and is backed by 5,000 technical
experts who operate around the globe.
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. 109; 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.
MERIDIAN AUTOMOTIVE: Has Until Mar. 31 to File Chapter 11 Plan
--------------------------------------------------------------
As previously reported in the Troubled Company Reporter on Dec. 5,
2005, Meridian Automotive Systems, Inc., and its debtor-affiliates
ask the U.S. Bankruptcy Court for the District of Delaware to
further extend their exclusive periods to:
(1) file a plan of reorganization through April 21, 2006; and
(2) solicit and obtain acceptances of that plan through
June 30, 2006.
Credit Suisse Objects
On behalf of Credit Suisse, Cayman Islands Branch, Victoria W.
Counihan, Esq., at Greenberg Traurig, LLP, in Wilmington,
Delaware, complain that the Debtors offer no evidence or
explanation why a 120-day extension of their Exclusive Periods
will better allow them to foster consensus on a reorganization
plan.
Although the Debtors are required to deliver a term sheet for a
plan of reorganization no later than Dec. 15, 2005, Ms. Counihan
notes that nothing prohibits the Debtors from delivering the Term
Sheet in advance of that date so that Credit Suisse may have an
opportunity to review it.
Ms. Counihan further notes that the Debtors are seeking to use
the requirement of delivery of a Term Sheet as a sword, when they
stated that "there is clearly insufficient time between December
15th and the date the current Exclusive Filing Period terminates
(December 22nd) for the Debtors to bridge the gap between a term
sheet and a confirmable plan of reorganization."
This may be true, Ms. Counihan says, but the Debtors did not have
to wait until the deadline to deliver the Term Sheet.
Ms. Counihan asserts that an extension of the exclusive filing
period through and including March 31, 2006, would best address
the concerns the Debtors have expressed in their request and
would be acceptable to Credit Suisse. Credit Suisse believes an
extension of the Exclusive Filing Period until March 31 will give
the Debtors well in excess of two months to build consensus
around the Term Sheet.
However, if the Debtors are unable to obtain a consensus by that
time, Credit Suisse, other parties-in-interest, and the Court
should re-evaluate the situation at that time, Ms. Counihan adds.
* * *
To settle Credit Suisse's objection, the Debtors agreed to modify
their request.
Accordingly, Judge Walrath extends the Debtors' exclusive periods
to:
(1) file a plan through March 31, 2006; and
(2) solicit and obtain acceptances of that plan through
May 31, 2006.
Credit Suisse' objection is deemed withdrawn.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Judge Walrath Okays Ford Motor Land Pact
-------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Sept. 30, 2005, the Honorable Mary F. Walrath of the U.S.
Bankruptcy Court for the District of Delaware extended Meridian
Automotive Systems, Inc., and its debtor-affiliates' time to
assume, assume and assign or reject unexpired non-residential real
property leases. The Debtors have until Jan. 25, 2006, to decide
on their leases.
Lease Agreement with Ford Motor Land
As reported in the Troubled Company Reporter on Dec. 5, 2005, Ford
Motor Land Development Corporation seeks to terminate its
lease agreement with the Debtors relating to 40,000 square feet of
office space located at 550 Town Center Drive in Dearborn,
Michigan. Ford Motor wants the Debtors to vacate their corporate
headquarters on or before March 1, 2006.
The Debtors disputed Ford's right to deliver the Notice of
Termination and terminate the Lease agreement, without replying
to Ford's demand to vacate the Existing Premises.
The parties engaged in negotiations to resolve any dispute
regarding the Lease Agreement and the Debtors' occupancy of the
Existing Premises. Those discussions have culminated in a third
amendment to the Lease Agreement.
Under the Third Amendment, the Debtors' corporate headquarters
will be relocated to 999 Republic Drive in Allen Park, Michigan,
consisting of approximately 37,000 square feet of office and
garage space. Ford Land, at its own expense, intends to complete
certain agreed upon improvements to the New Premises that are
expected to be completed by March 1, 2006, at which time Ford
Land, at its own expense, will pack, move and relocate the
Debtors' personal property and furnishings to the New Premises.
Pursuant to the Third Amendment, the term of the Lease Agreement
will be quarter-to-quarter. The gross monthly rent for the New
Premises will be $81,786, payable in advance on the first day of
each month.
Court Ruling
Judge Walrath authorizes the Debtors to enter into and perform
their obligations under the Third Amendment Lease Agreement with
Ford Motor Land Development Corporation.
Ford is deemed to have withdrawn its objection to the Debtors'
request to extend their lease decision period with prejudice, and
the Debtors are deemed to have waived any claim they may have
against Ford.
Judge Walrath rules that the Third Amendment does not constitute
or imply the Debtors' assumption of the Lease Agreement.
Furthermore, no claims assertable under the Lease Agreement will
be elevated to the status of, or deemed, an administrative
expense.
The automatic stay is modified solely for the limited purpose of
permitting Ford to provide a notice of termination of the Lease
Agreement to the Debtors in accordance with the term of the Third
Amended Lease Agreement.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $530 million in
total assets and approximately $815 million in total liabilities.
(Meridian Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
MERRY-GO-ROUND: U.S Trustee Can't Cope with $8.8 Mil. Trustee Fee
-----------------------------------------------------------------
"The United States Trustee does not contest that [Deborah H.
Devan's service as the Chapter 7 Trustee and her] work in [Merry-
Go-Round Enterprises' bankruptcy] case and certain of the results
obtained were extraordinary and merit a significant enhancement of
her fee," Katherine A. Levin, Esq., representing the United States
Trustee tells the Honorable E. Stephen Derby in an objection to
Ms. Devan's final $8.8 million application for compensation.
The U.S. Trustee suggests that payment of a $2.5 million lodestar
amount -- derived by multiplying reasonable hourly rates of $225
to $330 per hour by 9,300 reasonable hours Ms. Devan worked on the
case over the past decade -- is fine. The U.S. Trustee can't
support a $6.3 million fee enhancement.
Ms. Levin tells Judge Derby that the burden is on Ms. Devan to
demonstrate that her compensation request is appropriate under
Sec. 330 of the Bankruptcy Code and applicable law. Ms. Levin
argues that although Ms. Devan's overall efforts and the results
obtained in this case are outstanding -- including extracting a
$185 million settlement from Ernst & Young -- her reliance on Sec.
326 of the Bankruptcy Code is misplaced. Ms. Levin says that the
law in effect in 1994 said Sec. 326 served as a cap on a chapter 7
trustee's compensation.
To date, Ms. Devan has distributed (or plans to distribute) $294.4
million to Merry-Go-Round creditors. Ms. Devan is prepared to
make a final distribution to unsecured creditors as soon as her
compensation is approved. Ms. Devan made a 30% distribution to
unsecured creditors in early 2003. This final distribution will
return another 11 cents-on-the-dollar to unsecured creditors.
A full-text copy of Ms. Devan's 85-page Application is available
at no charge at:
http://bankrupt.com/misc/94-50161-9771.pdf
The issue before the Court at this juncture is simple, Ms. Devan
tells Judge Derby -- if the requested 3% maximum commission is not
reasonable in this case, taking into account the Trustee's
rigorous efforts, extraordinary results, novel theories (impacting
not only this case but the entire restructuring profession) and
the personal and professional risk she took upon herself, then
when would a maximum commission be reasonable?
In a Memorandum of Law in support of her Application, Ms. Devan
reminds Judge Derby how she investigated, developed and pursued
the groundbreaking (yet unpopular) litigation against Ernst &
Young:
"The Trustee's legal strategy of attacking the 'bait and
switch' staffing of professionals by E&Y was untried and
unpopular. As such, it was unpredictable and exposed the Trustee
to substantial personal risks. She could pursue the litigation,
working days and nights for years, and if unsuccessful, would
have nothing to show for it. Moreover, by turning against a major
player in the insolvency field, the Trustee put into jeopardy her
own professional standing and source of referrals. Indeed, the
Trustee has not had a single referral of business from a national
accounting firm since she sued E&Y, and even today trustees,
debtors and committees are reluctant to pursue claims like these.
The Trustee's unselfish pursuit of this claim led to a substantial
dividend for estate's creditors. The E&Y litigation also turned
Merry-Go-Round into a household name for those in the
restructuring community.
"The Trustee's huge success in the E&Y case shook the
restructuring industry and had significant ramifications well
beyond Merry-Go-Round. The Trustee took on her own industry --
the "bankruptcy establishment" -- to pursue this groundbreaking
litigation. Since then, many bankruptcy professionals, including
other large accounting firms, have changed the way they staff
cases and handle bankruptcy-related engagements. The Trustee's
success against E&Y did more than just bring $185 million to this
estate, it also gained worldwide attention and brought about
meaningful and substantive changes in how the restructuring
industry operates. The Trustee's pursuit of the E&Y claim was
courageous and tenacious. For example, on the eve of trial, E&Y
offered to settle the estate's claim for roughly $100 million.
Many trustees would have taken that offer for fear of being
criticized if the recovery at trial was lower (or worse, nothing).
The Trustee, however, knew her case inside and out and was ready
to prove it at trial. Therefore, she was confident in demanding a
larger amount and convinced E&Y that it would be unwise to call
her bluff. After rejecting E&Y's $100 million offer, the
Trustee's resolve directly resulted in a huge gain for the estate
- the case settled later that day for $185 million.
"The Trustee could have simply ignored the E&Y claim, as did
the professionals employed in the Chapter 11 case. Such a
decision could hardly be criticized because, until the settlement
amount was announced, many parties did not view the E&Y claim as
worth pursuing. Had she ignored the claim, the Trustee still
would have turned an expected administratively insolvent case into
a case with a 100% distribution to administrative and priority
claimants and 20% percent distribution to general unsecured
creditors. She also would have spared herself the significant
professional risk of attacking one of the leading players in the
insolvency world. Instead, she fulfilled her duty to the estate,
pursued the E&Y claim and obtained sufficient funds to make a 40%
distribution to unsecured creditors."
A full-text copy of Ms. Devan's Memorandum of Law is available at
no charge at:
http://bankrupt.com/misc/94-50161-9789.pdf
A full-text copy of the U.S. Trustee's 12-page Objection is
available at no charge at:
http://bankrupt.com/misc/94-50161-9817.pdf
Judge Derby will convene an hearing on this matter on
__________________ in Baltimore.
Merry-Go-Round filed chapter 11 bankruptcy protection in 1994
(Bankr. D. Md. Case No. 94-5-0161-SD). Following a couple of
failed attempts to find its place on the retail landscape, the
case converted to a chapter 7 liquidation in early 1996. Since
that time, Ms. Devan has worked on winding-up the Debtors'
estates. Cynthia L. Leppert, Esq., and Jason N. St. John Esq., at
Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., in Baltimore
represent Ms. Devan.
MESABA AVIATION: Has Until June 10 to Make Lease-Related Decisions
------------------------------------------------------------------
In the ordinary course of its business, Mesaba Aviation, Inc.,
doing business as Mesaba Airlines, leases hangar and maintenance
facilities, airport locations and other nonresidential real
property under certain written leases. As an ordinary element of
a reorganization under Chapter 11 of the Bankruptcy Code, the
Debtor's management is engaged in an ongoing process of
evaluating their options with respect to assumption, assumption
and assignment or rejection of the Leases.
In light of the large number of Leases and the Debtor's complete
reliance on Northwest Airlines, Inc., which is currently
reorganizing under Chapter 11 of the Bankruptcy Code, the Debtor
has not yet been able to determine whether to assume or reject
the Leases, Will R. Tansey, Esq., at Ravich Meyer Kirkman
McGrath & Nauman, P.A., in Minneapolis, Minnesota, says.
Section 365(d)(4) of the Bankruptcy Code provides in pertinent
part:
"If the [debtor] does not assume or reject an unexpired lease
of nonresidential real property under which the debtor is the
lessee within 60 days after the date of the order for relief,
or within such additional time as the court, for cause, within
such 60 day period, fixes, then such lease is deemed rejected,
and the [debtor] shall immediately surrender such
nonresidential real property to the lessor."
The size and complexity of the Debtor's operations, Mr. Tansey
contends, has made it impossible for the Debtor to intelligently
appraise its financial condition and the value of the Leases
within the first 60 days of its Chapter 11 case.
"The Debtor's operations are absolutely dependent on its ability
to remain in possession of the Leased Premises," Mr. Tansey tells
the Court. "Continued possession of the Leased Premises is
necessary for the Debtor to conduct its financial affairs and to
preserve the possibility that it can reorganize."
Hence, the Debtor asks the U.S. Bankruptcy Court for the District
of Minnesota to extend the time to decide whether to assume or
reject the Leases until the earlier of:
-- June 10, 2006; or
-- the confirmation of a plan.
Before June 10, 2006, the Debtor expects to be able to determine
the general course of its future operations and hopes to have
assumed or rejected the Leases.
Mr. Tansey attests that the Debtor is current on all of its
obligations under the Leases and intends to make timely payment
of all future obligations during the pendency of its Chapter 11
case.
"If the Debtor is forced to prematurely assume the Leases, the
estate and unsecured creditors will be exposed to potentially
significant administrative priority claims arising from the
possible termination of the Leases," Mr. Tansey says.
Creditors Respond
A. UMB Bank
UMB Bank, N.A., is the successor indenture trustee for a
$14,000,000 bond issuance under the Trust Indenture dated July 1,
1999. The proceeds of the bonds were used to build an aircraft
hangar and maintenance facility at the Cincinnati/Northern
Kentucky International Airport, which is the subject of a non-
residential real property lease with the Debtor. As an indenture
trustee, UMB is the assignee of rights under the facilities.
William P. Wassweiler, Esq., at Rider Bennett, LLP, in
Minneapolis, Minnesota, argues that the proposed extension is not
reasonable. "If the Debtor does not confirm a plan by June 10,
2006, it would have received a six-month extension of the time to
assume or reject leases, a period of time that is three times the
initial decision making period found in Section 365(d)(4) of the
Bankruptcy Code," he explains. "On the other hand, if the Debtor
were to confirm a plan prior to June 10, 2006, UMB may find
itself in a position having to vote on a plan before knowing
which leases the debtor intends to assume or reject.
Mr. Wassweiler points out that given the Debtor's poor
postpetition payment history, the assertions that it "intends to
make timely payment of all future obligations during the pendency
of this case" and that the Lessors "will not be prejudiced by an
extension as Debtor is current on all post-petition obligations
under the Leases and will remain current on all post-petition
obligations" cannot be taken seriously.
B. Spectrum Commerce
The Debtor and Spectrum Commerce Center LLC are parties to an
unexpired non-residential real property lease dated April 25,
2003, for premises located at 1000 Blue Gentian Road, also known
as the Spectrum Commerce Center. The Center Lease has a ten-year
term, commencing on January 1, 2004, but the tenant may terminate
the lease after seven years.
Pursuant to the Center Lease, the Debtor leases an estimated
32,921 usable square feet. The current annual rental rate is
$12.75 per usable square foot plus $3.50 per usable square foot
for operating costs in 2005. This works out to a total monthly
rental of approximately $44,580. The Commerce Center as
constructed as of the date of the Lease contained 191,463 usable
square feet.
Currently, the building is subject to a construction financing
loan and mortgage and a mezzanine loan and mortgage. The
applicable interest rate that Spectrum pays for the loans would
be approximately 7.08% on the $30,200,000 construction financing
loan and 11.33% on the $5,600,000 mezzanine loan.
Just before the Debtor filed for bankruptcy, Spectrum was in a
position to obtain long-term refinancing of both the construction
loan and the mezzanine loan at a fixed rate of 1.15% over the 10-
year U.S. Treasury Note rate. At an annual interest rate of
5.65%, Spectrum would realize substantial monthly costs savings
on the debt service.
The difference between the interest rates of the interim and
permanent financing is significant. Spectrum is paying an
estimated $60,000 more to service its existing mortgages than it
would pay if long-term financing were in place.
Richard V. Morphew, president of Spectrum Commerce Center LLC,
relates that upon learning of the Debtor's Chapter 11 filing, the
provider of the long-term financing informed Spectrum that it
could not provide permanent financing to Spectrum while the
status of the Center Lease remains in limbo. "Spectrum's
inability to obtain long-term fixed-rate financing to replace the
interim construction financing costs is costing Spectrum
approximately $60,000 a month," he says.
The Debtor rents additional space in the Commerce Center pursuant
to month-to-month arrangements:
-- space for its accounting department; and
-- space in the Commerce Center to store parts of an aircraft.
The Debtor has informed Spectrum that it will no longer be
occupying the space used by its accounting department as of the
end of December 2005. The Debtor has not stated its intention
with respect to the space used for aircraft part storage.
Spectrum agreed to allow the Debtor to store this particular
aircraft in the Commerce Center as a courtesy following the
filing of the Debtor's bankruptcy petition. The Debtor is paying
rent on a month-to-month basis at a warehouse rate of
approximately $7.00 a square foot (which includes operating
expenses), rather than the office rate for which the premises
could be used. If Debtor does not intend to lease the space long
term, Spectrum intends to market and release the space
immediately to avoid vacancy.
Spectrum objects to the proposed extension because:
a. Spectrum will suffer significant monetary harm if it must
wait until the earlier of June 10, 2006, or confirmation of
a plan before it can obtain permanent financing.
b. Spectrum will suffer substantial harm if it must wait until
the Debtor's last-minute decision regarding the month-to-
month leases because it cannot arrange to release the space
prior to vacancy.
c. The Debtor has not established cause to warrant extension
of the lease decision deadline.
Court Grants Extension
The Court extends the Debtor's Lease Decision Period to the
earlier of June 10, 2006, or confirmation of a plan. The Court
makes it clear that the extension is without prejudice to the
right of any party to an executory contract or unexpired lease to
file a motion with the Court for a hearing to consider a
reduction of the time.
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed total assets of $108,540,000 and
total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MESABA AVIATION: U.S. Trustee Adds Two Members to Committee
-----------------------------------------------------------
On Nov. 29, 2005, Habbo G. Fokkena, the United States Trustee
for Region 12, added the Association of Flight Attendants - CWA
and Dowty Propellers - Americas to the list of creditors that
will serve on the Official Committee of Unsecured Creditors in
Mesaba Aviation, Inc.'s Chapter 11 case.
The Committee is now composed of nine members:
1. BAE Systems Regional Aircraft
13850 McLearen Road
Herndon, VA 20171
Contact Person: John J. Seichter
Phone No.: (703) 736-2507
2. Messier Services, Inc.
4360 Severn Way
Sterling, VA 20166-8910
Contact Person: John Freiling
Phone No.: (703) 450-8200
3. AAR Aircraft & Turbine Center
3312 Paysphere Circle
Chicago, IL 60674
Contact Person: Michael Carr
Phone No.: (630) 227-2140
4. Aircraft Braking Systems
PO Box 73252
Cleveland, OH 44193-0165
Contact Person: Matt Rice
Phone No.: (330) 796-9640
5. Air Line Pilots Association, Intl.
c/o Cohen, Weiss and Simon LLP
330 West 42nd Street
New York, NY 10036-6976
Contact Person: Paul Glover
Phone No.: (212) 356-0216 (Peter DeChiara)
6. Pan Am International Flight Academy
5000 NW 36th Street
Miami, FL 33122
Contact Person: Paul Glover
Phone No.: (407) 275-3900
7. Aerospace Composite Tech
3220 S. Groove Street
Fort Worth, TX 76110
Contact Person: Steven Bowen
Phone No.: (817) 921-2220
8. Association of Flight Attendants - CWA
5548 33" Avenue South
Minneapolis, MN 55417
Contact Person: Tim Evenson
Phone No.: (612) 724-9124
9. Dowty Propellers - Americas
114 Powers Court
Sterling, VA 20106-9321
Contact Person: Bob Morgan
Phone No.: (703) 421-4430
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed total assets of $108,540,000 and
total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MESABA AVIATION: Committee Hires Squire Sanders as Counsel
----------------------------------------------------------
The Official Committee of Unsecured Creditors of Mesaba Aviation,
Inc., sought and obtained the U.S. Bankruptcy Court for the
District of Minnesota's authority to retain Squire, Sanders &
Dempsey L.L.P. as its counsel, nunc pro tunc to Nov. 10, 2005.
The Committee relates that Squire Sanders possesses extensive
knowledge in the areas of law relevant to the Debtor's Chapter 11
case. The firm had represented either debtors or committees in
numerous significant Chapter 11 cases.
As the Committee's counsel, Squire Sanders will:
a. advise the Committee with respect to its rights, powers and
duties in the Debtor's Chapter 11 Case;
b. assist and advise the Committee in its consultations with
the Debtor relative to the administration of the case;
c. assist the Committee in analyzing the claims of and in
negotiation with the Debtor's creditors;
d. assist the Committee in analyzing the relationships with
creditors, equity interest holders and other parties-in-
interest;
e. assist with their investigation of the acts, conduct,
assets, rights, liabilities and financial condition of the
Debtor and of the operation of the Debtor's business;
f. advise the Committee in connection with any proposed sales
of the Debtor's assets;
g. investigate, file and prosecute litigation on behalf of the
Committee;
h. assist the Committee in its analysis of, and negotiations
with, the Debtor or any third party concerning matters
related to the terms of a plan of reorganization or
liquidation for the Debtor;
i. assist and advise the Committee with respect to its
communications with the general creditor body regarding
significant matters in the Debtor's Chapter 11 case;
j. represent the Committee at hearings and other proceedings;
k. review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee with respect to the same;
l. assist the Committee in preparing pleadings and
applications as may be necessary in its interests and
objectives; and
m. perform other legal services as may be required and are
deemed to be in the interests of the Committee, in
accordance with the Committee's powers and duties as set
forth in the Bankruptcy Code.
Squire Sanders' standard hourly rates are:
Position Hourly Rate
-------- -----------
Partners $280 - $675
Associates $165 - $425
Legal Assistants $30 - $220
Squire Sanders will seek reimbursement of actual, necessary
expenses it will incur in connection with its representation of
the Committee.
Craig D. Hansen, Esq., a partner at Squire Sanders, believes that
the firm does not hold or represent any interest adverse to the
Debtor's estate. However, Mr. Hansen discloses, some potential
parties-in-interest and their subsidiaries are or were previously
clients of Squire Sanders but in matters not related to the
Debtor's Chapter 11 case.
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed total assets of $108,540,000 and
total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
MORGAN STANLEY: S&P Lifts Ratings on Class F Certificates to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on classes
B, C, D, E, and F of the commercial mortgage pass-through
certificates from Morgan Stanley Capital I Inc.'s series 1998-XL2.
Concurrently, the ratings on the remaining classes from the same
transaction are affirmed.
The rating actions reflect:
* the strong operating performance of four of the seven
collateral properties securing the pool,
* the stable performance of the remaining collateral, and
* the slight decrease in leverage that resulted from a
reduction in the mortgage pool due to the planned
amortization for five loans in the mortgage pool.
The collateral pool includes 35 properties with an aggregate
principal balance of $678.2 million, compared with 41 properties
with an aggregate balance of $706.4 million at issuance. The
decrease in the number of properties is due to collateral
substitutions in the Edens & Avant pool I and II loans. The
overall pool has a retail concentration of 91% of the principal
balance, which includes four loans collateralized by regional
malls and two loans that are supported by neighborhood shopping
and community centers. Standard & Poor's reviewed property
inspections provided by the master servicer for all of the assets
underlying the loans, and all were characterized as "good" or
"excellent."
The master servicer, Midland Loan Services Inc., reported one
loan, Crystal Plaza IV, on its watchlist. Crystal Plaza IV is
secured by a leasehold interest in an 11-story, 466,369-sq.-ft
class A office building in Crystal City, Virginia. The property
was built in 1988 and has 1,122 underground parking spaces through
an easement. As of year-end 2004, occupancy was 85% and the DSC
was 1.71x. The loan was placed on the watchlist after the largest
tenant, US Airways, filed for bankruptcy protection. US Airways
occupies 205,598 sq. ft. of the property. In light of the recent
merger between US Airways and America West Airlines, it is
uncertain if US Airways will remain at the property after the
lease expires on March 31, 2006. Standard & Poor's arrived at a
stabilized net cash flow for the property, reflecting the
properties historical occupancy and market conditions. Based on
this analysis, the stabilized loan-to-value ratio is 75.5%.
Based upon servicer-reported financials for the year ending
Dec. 31, 2004, four of the seven loans reported an increase in NCF
of 15% or more from Standard & Poor's adjusted NCF at issuance.
-- Grapevine Mills, the largest loan in the pool, is secured
by a 1.24-million-sq. ft. mall in Grapevine, Texas. The
anchors include J.C. Penney, Burlington Coat Factory, and
AMC Theatre. Year-end 2004 DSC was 2.02x and occupancy
was 97%.
-- Edens and Avant Pool I is secured by 1.96 billion sq. ft.
that comprises 12 neighborhood and community shopping
centers. Anchors include Marshalls, Stop & Shop, and
Staples. Year-end 2004 DSC and occupancy were 3.20x and
95%, respectively.
-- Mall of New Hampshire is secured by 329,913 sq. ft of a
793,533-sq.-ft. mall in Manchester, New Hampshire.
Anchors include Filenes Basement, Sears, and J.C Penney,
all of which own their own stores. Year-end 2004 DSC and
occupancy were 1.71x and 89%.
-- Westside Pavilion is secured by 443,723 sq. ft. of a
755,701-sq.-ft regional mall in West Los Angeles,
California. Anchors include Nordstrom, Macy's Home, and
Robinsons-May. Robinsons-May is not part of the
collateral. Year-end 2004 DSC and occupancy were 2.04x
and 98%, respectively.
The remaining two loans are Northtown Mall and Edens & Avant pool
II. Northtown Mall is secured by a 947,341-sq.-ft. regional mall
in Spokane, Washington that was built in 1955 and renovated in
1997. While the mall is currently 88% occupied, it faces leasing
challenges in light of the fact that the original third anchor
space, vacated by Emporium in May 2003, remains unoccupied.
Year-end 2004 DSC was. 1.89x.
Edens & Avant Pool II is secured by 2.1 billion sq. ft. composed
of 18 neighborhood and shopping centers. Anchors include
Jitney-Jungle, Wal-Mart, and Home Depot. Year-end DSC was 3.09x
and occupancy was 97%.
Standard & Poor's performed a stabilized analysis in order to
revalue the loans. The raised and affirmed ratings reflect the
resultant valuations.
Ratings Raised
Morgan Stanley Capital I Inc.
Commercial Mortgage Pass-through Certs Series 1998-XL2
Rating
Class To From
----- -- ----
B AAA AA+
C AA+ AA-
D A BBB+
E BBB BBB-
F BB BB-
Ratings Affirmed
Morgan Stanley Capital I Inc.
Commercial Mortgage Pass-through Certs Series 1998-XL2
Class Rating
----- ------
A-1 AAA
A-2 AAA
X AAA
NAKOMA LAND: Investors Financial Wants Ch. 11 Trustee Appointed
---------------------------------------------------------------
Investors Financial, LLC, asks the U.S. Bankruptcy Court for the
District of Nevada to appoint a Chapter 11 Trustee in Nakoma Land,
Inc. and its debtor-affiliates' chapter 11 cases.
Investors Financial, a secured creditor in the Debtors' chapter 11
proceedings, loaned approximately $15 million to the Debtors
pursuant to a Promissory Note and Deed of Trust before the Debtors
filed for chapter 11 protection. The loan is secured by real
property owned by the Debtors. Dariel Garner and Margaret Garner
each guaranteed the loan.
In December 2004, the Debtors ceased making required monthly
payments on the loan.
On May 19, 2005, the Nakoma Land, Inc., Sierra Highlands, Inc.,
and Grizzly Golf, Inc., filed for chapter 11 protection. Nakoma
Resort, LLC, Gold Mountain Ranch, LLC, and Dragon Golf, LLC,
followed, filing chapter 11 petitions on June 6, 2005, to
contemplate the sale of Nakoma Resort.
On Sept. 22, 2005, the Debtors agreed to grant Investors
additional security in the form of liens on all personal property
used in connection with the Nakoma Resort.
Kevin A. Darby, Esq., at Downey Brand LLP, tells the Court that
Mr. Garner sold his equity interest to Margaret Garner on Oct. 1,
2005, which now makes Ms. Garner the Resort's controlling member.
Investors Financial gives the Court five reasons why the
appointment of a chapter 11 trustee is warranted:
(1) Mr. Garner's sudden departure as Nakoma Resort's sole owner
compounds management instability and a chapter 11 trustee
could bring credibility to the Debtor's management;
(2) the Debtors have not been open with the Court or its
creditors in relation to the filing of unscheduled claims by
Mr. Garner. Thus a trustee is necessary to investigate the
legitimacy of any claim asserted by insiders or related
entities;
(3) the Debtors selected an investment bank, General Capital
Partners, to market and sell the Nakoma Resort, instead of
an experienced real estate broker thus a need for the Court
to appoint an independent party in whom Investors and other
creditors can repose confidence;
(4) the Debtors now rely on Ms. Garner, their new sole owner, to
advance funds to preserve and protect the Dragon Golf Course
during the winter season since they have no money and no
positive cash flow. Investors believes that Ms. Garner has
advanced few funds to winterize the golf course and that the
Debtors will only spend the absolute minimum necessary to
winterize the course. A trustee is necessary, Investors
Financial continue, to prevent significant damage and loss
in value; and
(5) the Debtors did not include the Garners' personal 10 acre
homesite, now owned by Sierra Highlands, or Melkon Inc.'s
residential lots in their agreement with General Capital
Partners which illustrates, Investors say, that the Garners
are incapable of acting in the best interest of anyone but
themselves.
Headquartered in Reno, Nevada, Nakoma Land, Inc., operates the
Nakoma Resort in Plumas County, California. The Debtor along with
its affiliates filed for chapter 11 protection on May 19, 2005
(Bankr. D. Nev. Case No. 05-51556). Alan R. Smith, Esq., at the
Law Offices of Alan R. Smith represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed total assets of $18,000,000 and total
debts of $15,252,580.
N C TELECOM: Incurs $100,000 DIP Loan from UBET Telecom
-------------------------------------------------------
N C Telecom, Inc., and its debtor-affiliates sought and obtained
authority from the U.S. Bankruptcy Court for the District of
Colorado to incur $100,000 postpetition debt from UBET Telecom,
Inc.
The Debtor needs the fund to pay its operating and administrative
expenses incurred while in chapter 11. Without the additional
cash, the Debtor won't be able to maintain the going concern value
of its estate.
The loan will be secured by a lien on assets not encumbered and
will be subordinated from existing debts.
The loan will mature on the earlier of:
a) one year after the loan is made;
b) plan confirmation;
c) default;
d) case dismissal; or
e) case conversion to chapter 7 liquidation.
Headquartered in Meeker, Colorado, N C Telecom --
http://www.nctelecom.net-- offers Internet connection services.
The Company filed for chapter 11 protection on Oct. 14, 2005
(Bankr. D. Colo. Case No. 05-47275). Duncan E. Barber, Esq., at
Bieging Shapiro & Burrus LLP represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $1 million to $10 million in assets and
$10 million to $50 million in debts.
NEW YORK RACING: Chapter 11 Looms Amidst Cash Crisis
----------------------------------------------------
New York Racing Association, which operates racing tracks in
Aqueduct, Belmont Park and Saratoga, will need to raise cash by
year-end in order to avert a bankruptcy filing.
NYRA may have to declare bankruptcy possibly as soon as Dec. 28,
Ed Fountaine of the New York Post reports, citing NYRA Chief
Executive Officer Charles Hayward as his source.
NYRA contemplates a $5 million sale of a parcel of land at
Aqueduct, subject to approval from the New York State Racing and
Wagering Board and the Oversight Board.
Mr. Hayward tells Bill Heller at ThoroughbredTimes.com that if the
state doesn't approve the sale, the NYRA might have to shut down
or declare bankruptcy.
Mr. Hayward met with officials from a state oversight board on
Dec. 6 to discuss other options available for NYRA. The oversight
board was created earlier this year in order to monitor NYRA's
operations, Matt Hegarty of Daily Racing Form reports.
In the event NYRA contracts its racing operations or declares
bankruptcy, Jim Smith, president and CEO of Friends of New York
Racing, Inc., a not-for-profit industry group, recommended in a
20-page report last week that the state must take all feasible
steps to prevent the interruption of racing at the NYRA tracks.
Mr. Smith proposes:
(a) cash advances to the oversight board to fund operations at
Aqueduct, Belmont and Saratoga until an interim franchisee
can be selected;
(b) authorization of the hiring of an interim personnel by the
oversight board as may be needed and as may be necessary to
protect the best interests of New York racing and the state.
NYRA's balance sheet reflects a $35 million negative working
capital balance and over $100 million in unfunded pension and
post-retirement liabilities.
NYRA's franchise to operate its three racing tracks expires on
Dec. 31, 2007.
NORTHWEST AIRLINES: AMFA Says Strikebreakers Have Safety Concerns
-----------------------------------------------------------------
Aircraft Mechanics Fraternal Association officials said that some
union members who returned to work during the current strike have
left their jobs because of serious concerns about maintenance
safety at Northwest Airlines.
According to AMFA National Safety and Standards Director John
Glynn, "Two former strikebreakers who quit their jobs at Northwest
just within the past week told me that maintenance
practices there are still in such disarray that the situation
raises serious safety concerns they were unwilling to tolerate.
"Soon after they decided to cross the picket lines and return to
work, they were assigned to find tools to build up carbon seals on
gearboxes and were alarmed by what they saw," Glynn said. "There
were incompletely installed engines in the
shop with parts hanging from them, which in itself is not
alarming, but there was no paperwork anywhere to document what
was supposed to be happening with the engines. When they asked a
manager about the engines, he said some were going onto live
aircraft and others back to the leasing company for major
overhaul or disposal, but there was no paperwork to identify
which was which. In addition to that, the right tools for the
jobs they were assigned were unavailable.
"I made the FAA inspector aware of these facts. It's a serious
safety concern because people come to this area for parts for live
aircraft all the time, and they have no way of knowing which parts
are in working order. I immediately reported this situation to
the FAA inspector," he said.
Mr. Glynn said one of the strikebreakers discussed the situation
with a replacement worker who has worked at Northwest since the
AMFA strike began on August 20. "The replacement worker said he
could not believe how Northwest was trying to operate with this
lack of tools and paperwork.
"It was no surprise to us that Northwest came in dead last among
20 airlines in the Department of Transportation's rankings for
September on-time performance. While Northwest is telling people
on-time performance and maintenance are back to normal, the truth
is very different. As airline analyst Terry Trippler told the
Detroit News, 'It has to be the strike.'"
The U.S. Department of Transportation is conducting an
investigation into maintenance safety at Northwest Airlines, based
on serious allegations reported by one of the FAA's most
experienced inspectors. The FAA itself is conducting a separate
investigation based on the same allegations. "I wish the FAA also
ranked airlines on maintenance safety, so the public would
know what's been going on," Mr. Glynn said.
AMFA's craft union represents aircraft maintenance technicians and
related support personnel at Alaska Airlines, ATA, Horizon Air,
Independence Airlines, Mesaba Airlines, Northwest Airlines,
Southwest Airlines and United Airlines. AMFA's credo is "Safety
in the air begins with quality maintenance on the ground."
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. (Northwest Airlines Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST AIRLINES: Appoints Anna Schaefer as VP for Finance
------------------------------------------------------------
Northwest Airlines has named Anna Schaefer as vice president -
finance and chief accounting officer, effective December 1.
She replaces James Mathews, who will depart from Northwest on
November 30 to become controller of ADC Telecommunications.
"Anna's 14 years at Northwest Airlines and her deep experience in
finance and accounting will be critical as we restructure our
costs so that the airline can remain a strong global competitor in
the years ahead," said David Davis, senior vice president -
finance and controller.
Schaefer, who will report to Davis, will be responsible for
overseeing all accounting related functions at Northwest including
revenue accounting, corporate accounting and reporting,
cargo accounting, payroll and payables.
Commenting on Jim Mathews, Davis said, "We appreciate Jim's
five years of dedicated service to Northwest in finance and
accounting and we wish him well in his new position."
Schaefer has held a variety of leadership positions in accounting,
information services and marketing at Northwest
including her most recent position as managing director,
accounting. In addition to working with Northwest Airlines,
Schaefer has also held positions at Sabre Travel Information
Network, National Car Rental System, Inc., and Equico Lessors,
Inc.
Schaefer holds a bachelor's degree in accounting and business
administration/finance from Mankato State University. She is a
certified public accountant.
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. (Northwest Airlines Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST AIRLINES: Names Todd Anderson to Lead Australasian Unit
-----------------------------------------------------------------
Northwest Airlines has named Todd Anderson as general manager for
Philippines, Australia and New Zealand. Mr. Anderson will oversee
Northwest's marketing, sales, operations and administrative
functions throughout the Philippines, supporting the carrier's two
daily flights serving Manila, as well as representing Northwest in
Australia and New Zealand.
In his new position, Mr. Anderson replaces Ray Nishihira and
inherits a strong management team in Manila.
"Todd Anderson's 26 years of experience at Northwest will allow us
to build on our long history in the Philippines and strengthen our
relationships in Australia and New Zealand," said Jim Mueller,
managing director - Asia. "Our customers and employees will
benefit from his vast experience, diplomacy and professionalism."
A native of Minnesota, Mr. Anderson joined Northwest Airlines
in 1979. Since 2000, he has served as director of specialty
sales, where he managed national sales efforts within the U.S.
and Canada. Previously, as a pricing specialist and manager, he
developed and priced products for wholesale distribution channels
and targeted customer segments in the U.S. and Europe.
Mr. Anderson holds a bachelors of arts degree in history from
Trinity College in Deerfield, Illinois.
From Manila, Northwest offers daily Boeing 747-400 service to its
Tokyo hub, where travelers can make single connections to seven
U.S. gateways, and additional connections to hundreds of
destinations throughout the world. Northwest also offers daily
747-400 service from Manila to Nagoya, Japan with continuing
service onto its WorldGateway at Detroit hub.
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. (Northwest Airlines Bankruptcy News, Issue No. 10;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST PARKWAY: Fitch Withdraws BB Rating on $218.4M Rev. Bonds
------------------------------------------------------------------
Fitch Ratings withdraws the 'BBB-' rating on $203.6 million in
Northwest Parkway Public Highway Authority, CO (Northwest Parkway,
or the authority) senior refunding revenue bonds series 2005A and
series 2005B and the 'BB' rating on the authority's $218.4 million
in first tier subordinate refunding revenue bonds, series 2005C.
Fitch is withdrawing the ratings because the authority was not
able to execute its debt restructuring through the issuance of the
series 2005 bonds.
At the same time, Fitch downgrades the underlying rating on the
authority's $404.5 million in outstanding senior revenue bonds,
series 2001A, 2001B, and 2001C to 'BB-' from 'BBB-'.
The Rating Outlook is Negative. The series 2001 senior revenue
bonds are insured by Ambac Assurance Corporation and Financial
Security Assurance, Inc., both of whose insurer financial strength
is rated 'AAA' by Fitch.
The series 2005 bonds were part of the authority's debt
restructuring strategy, which would feature lower fixed debt
service obligations through the medium term and mandatory
prepayments, to address traffic and revenue performance that has
been significantly less than forecast. Since the debt
restructuring is not being undertaken at this time, the
authority's annual debt service requirements remain the same
profile as when the series 2001 bonds were sold.
Fitch's downgrade of the outstanding series 2001 senior revenue
bonds to 'BB-' and the Negative Outlook reflect a constrained
financial environment where toll revenues are not expected to be
sufficient to pay the escalating debt service profile, requiring
the authority to draw down its internal liquidity to meet its
obligations. Fitch's rating also recognizes Northwest Parkway's
demonstrated base level of growing traffic demand and a moderate
level of economic ratemaking ability that combined with available
internal liquidity provides the authority with several years
before it would encounter debt service payment problems.
Potential resistance to toll increases in addition to the
authority's rate adjustment schedule remains a risk.
While traffic and revenue continue to exhibit strong growth, the
gap between actual toll revenues and the initial 2001 forecast is
widening. Toll revenue equaled $4.2 million in 2004, or about 67%
of the initial forecast, and is expected to increase this year by
35% to $5.6 million, which, despite this growth, is about 54% of
the 2001 estimate. Toll revenues are expected to benefit from
growing traffic levels, the scheduled Jan. 1, 2006 main line toll
increase and the early opening of the Sheridan Interchange but are
likely to be about 40%-45% of the 2001 forecast through the near
term. As a result, net revenues are expected to be insufficient
to pay senior and first tier subordinate debt service.
These authority's internal liquidity are available to pay debt
service:
* $14.5 million in the construction account,
* $36.2 million in the senior debt service reserve fund, and
* $5.1 million in the first tier subordinate debt service
reserve fund.
With the authority's current toll rate schedule and expected
traffic growth, Fitch estimates that toll revenues combined with
available liquidity would be sufficient to meet senior and first
tier subordinate debt service obligations for about three years.
However, senior and first tier subordinate debt service payment
problems may be deferred as the authority will need to raise rates
to meet the rate covenant requirement where net revenues provide
at least 1.30 times senior debt service and 1.15x debt service due
on senior and first tier subordinate bonds.
The senior bonds are secured by toll revenues after payment of
operations and maintenance expenses. The Northwest Parkway is a
westward extension of the Denver region's beltway and consists of
the two-mile Interlocken Loop between State Highway 128 and Tape
Drive and a nine-mile limited access toll road between Tape Drive
and I-25 with a connection to E-470. The authority, which is a
subdivision of the State of Colorado as authorized by the public
highway authority law and was established in 1999 by the City and
County of Broomfield, Weld County, and the City of Lafayette, is
responsible for the financing, design, construction, and operation
of the Northwest Parkway.
NRG ENERGY: Launches Offer for 8% Senior Secured Notes
------------------------------------------------------
NRG Energy, Inc. (NYSE:NRG) has commenced a cash tender offer and
consent solicitation for any and all outstanding $1,080,412,000
aggregate principal amount of its 8% second priority senior
secured notes due 2013 (CUSIP No. 629377AS1). This tender offer
and consent solicitation is subject to the terms and conditions
set forth in NRG's Offer to Purchase and Consent Solicitation
Statement dated Dec. 15, 2005 relating to the NRG Notes.
NRG is also commencing a cash tender offer and consent
solicitation for any and all outstanding $1,125,000,000 aggregate
principal amount of Texas Genco LLC's and Texas Genco Financing
Corp.'s 6.875% senior notes due 2014 (CUSIP Nos. 882444AA0,
U88243AA5). This tender offer and consent solicitation is subject
to the terms and conditions set forth in NRG's Offer to Purchase
and Consent Solicitation Statement dated Dec. 15, 2005 relating to
the Texas Genco Notes.
This offer to purchase the NRG Notes and the Texas Genco Notes is
part of the company's previously announced financing plan in
connection with its pending acquisition of Texas Genco LLC. NRG
continues to work towards a first quarter 2006 transaction close
date.
Tender Offer and Consent Solicitation for NRG Notes
The tender offer for the NRG Notes is scheduled to expire at 5:00
p.m., New York City time, on Jan. 31, 2006, unless extended. The
consent solicitation for the NRG Notes will expire at 5:00 p.m.
New York City time, on Dec. 29, 2005, unless extended. The total
consideration for each $1,000 principal amount of NRG Notes
validly tendered and accepted for payment and consents validly
delivered on or prior to the NRG Consent Date will be equal to the
present value of $1,040 and all future interest payments on the
NRG Notes to Dec. 15, 2008, minus accrued and unpaid interest from
the last date on which interest has been paid, up to, but not
including, the payment date. The present value will be determined
using the yield on the 3.375% U.S. Treasury Note due
Dec. 15, 2008, plus a fixed spread of 50 basis points. The total
consideration for each Note tendered includes a consent payment of
$30.00 per $1,000 principal amount of NRG Notes to holders who
validly tender their NRG Notes and deliver their consents prior to
5:00 p.m. on the NRG Consent Date. Holders who tender their NRG
Notes after the NRG Consent Date will not receive the consent
payment. Payment for all NRG Notes validly tendered in the tender
offer, including the consent payment for consents validly
delivered on or prior to the NRG Consent Date, will be made
promptly after expiration of the tender offer for the NRG Notes.
In conjunction with the tender offer, NRG is soliciting:
(1) the consents of the holders of the Notes to eliminate
substantially all of the restrictive covenants and
certain events of default and related provisions in the
indenture under which the NRG Notes were issued, and
(2) a waiver of the application of the restrictive covenants
in the indenture to allow a portion of the funds to be
raised in connection with the pending acquisition of
Texas Genco LLC to be held in escrow pending the closing
of that acquisition.
Holders who tender their NRG Notes must consent to the proposed
amendments and the waiver.
Tender Offer and Consent Solicitation for Texas Genco Notes
The tender offer for the Texas Genco Notes is scheduled to expire
at 5:00 p.m., New York City time, on Jan. 31, 2006, unless
extended. The consent solicitation for the Texas Genco Notes will
expire at 5:00 p.m. New York City time, on Dec. 29, 2005, unless
extended. The total consideration for each $1,000 principal
amount of Texas Genco Notes validly tendered and accepted for
payment and consents validly delivered on or prior to the Texas
Genco Consent Date will be equal to the sum of:
(i) 40% of the Equity Claw-back Price and
(ii) 60% of the Fixed Spread Price.
The "Equity Claw-back Price" is equal to $1,068.75 per $1,000
principal amount of Texas Genco Notes validly tendered. The
"Fixed Spread Price" will be equal to the present value of
$1,034.38 and all future interest payments on the Texas Genco
Notes to Dec. 15, 2009, minus accrued and unpaid interest from the
last date on which interest has been paid, up to, but not
including, the payment date. The present value will be determined
using the yield on the 3.5% U.S. Treasury Note due Dec. 15, 2009,
plus a fixed spread of 50 basis points. The total consideration
for each Note tendered includes a consent payment of $30.00 per
$1,000 principal amount of Texas Genco Notes to holders who
validly tender their Texas Genco Notes and deliver their consents
prior to 5:00 p.m. on the Texas Genco Consent Date. Holders who
tender their Texas Genco Notes after the Texas Genco Consent Date
will not receive the consent payment. Payment for all Texas Genco
Notes validly tendered in the tender offer, including the consent
payment for consents validly delivered on or prior to the Texas
Genco Consent Date, will be made promptly after expiration of the
tender offer for the Texas Genco Notes.
In conjunction with the tender offer, NRG is soliciting the
consents of the holders of the Texas Genco Notes to eliminate
substantially all of the restrictive covenants and certain events
of default and related provisions in the indenture under which the
Texas Genco Notes were issued. Holders who tender their Texas
Genco Notes must consent to the proposed amendments.
Each tender offer and consent solicitation is subject to the
satisfaction of certain conditions, including
(1) NRG having obtained funds sufficient to pay the
consideration, costs and expenses of the tender offers
and consent solicitations from the financing transactions
related to the pending acquisition of Texas Genco LLC,
(2) the consummation of the pending acquisition of Texas
Genco LLC,
(3) the receipt of consents from holders of a majority in
aggregate principal amount of outstanding NRG Notes or
Texas Genco Notes, as the case may be, and
(4) certain other customary conditions.
NRG may waive some or all of these conditions in its sole
discretion (other than consummation of the acquisition of Texas
Genco, which will not be waived in the case of the tender offer
and consent solicitation for the Texas Genco Notes). NRG may
amend, extend or terminate each of the tender offers and consent
solicitations in its sole discretion.
The complete terms and conditions of the tender offer and consent
solicitations are described in the Offer to Purchase and Consent
Solicitation Statement dated Dec. 15, 2005 relating to the NRG
Notes, and the Offer to Purchase and Consent Solicitation
Statement dated Dec. 15, 2005 relating to the Texas Genco Notes,
copies of which may be obtained from the information agent for the
tender offers and consent solicitations, at:
MacKenzie Partners, Inc.
U.S. Toll Free No.: (800) 322-2885
Tel. No.: (212) 929-5500 (collect)
NRG has engaged Morgan Stanley & Co. Incorporated and Citigroup
Corporate and Investment Banking to act as dealer managers and
solicitation agents in connection with the tender offers and
consent solicitations. Questions regarding the tender offers and
consent solicitations may be directed to:
Morgan Stanley & Co. Incorporated
U.S. Toll Free No.: (800) 624-1808
Tel. No.: (212) 761-1457 (collect) or
Citigroup Corporate and Investment Banking
U.S. Toll Free No.: (800) 558-3745 and
Tel. No.: (212) 723-6106 (collect)
The Depositary for the tender offers and consent solicitations can
be contacted at:
Law Debenture Trust Company of New York
Tel. No.: (212) 750-0888
NRG Energy, Inc., owns and operates a diverse portfolio of
power-generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities. The company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case
No. 03-13024) on May 14, 2003. The Company emerged from chapter
11 on December 5, 2003, under the terms of its confirmed Second
Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor,
Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented
NRG Energy in its $10 billion restructuring.
* * *
As reported in the Troubled Company Reporter on Oct. 6, 2005,
Moody's Investors Service affirmed the ratings of NRG Energy, Inc.
(NRG: B1 Corporate Family Rating) and Texas Genco, LLC (TGN: Ba3
Corporate Family Rating). This action follows the announcement
that NRG has agreed to acquire all the outstanding equity of TGN
for about $5.8 billion and the assumption of about $2.5 billion of
TGN net debt. The rating outlook for NRG is revised to developing
from stable. The rating outlook for TGN continues to be stable.
Ratings affirmed at NRG include:
* Secured term loan and secured revolving credit rated Ba3;
* Corporate Family Rating at B1;
* Second lien secured notes rated B1;
* Preferred stock at B3;
* Speculative Grade Liquidity Rating of SGL-1
NTL INC: S&P Rates Units' Proposed $5.7 Bil. Senior Loans at BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
debt rating and '1' recovery rating to the proposed GBP3.3 billion
($5.7 billion) senior secured credit facilities of NTL Investment
Holdings Ltd., a guaranteed related entity of NTL Inc.
(NTL; B+/Watch Dev/--), the U.K. cable telephony, TV, and Internet
provider.
The debt rating was immediately placed on CreditWatch with
developing implications, reflecting the CreditWatch status of the
ratings on NTL. The ratings on NTL were placed on CreditWatch
with developing implications on Dec. 5, 2005, following the
company's announcement of a cash and equity bid for Virgin Mobile
Holdings PLC.
The '1' recovery rating on the proposed senior credit facilities
of NTL Investment Holdings indicates our expectation of full
recovery of principal for senior secured lenders in the event of a
payment default. The facilities are rated 'BB-', one notch higher
than the 'B+' corporate credit rating on NTL because senior
secured lenders are expected to benefit from a comprehensive
security package that should result in full recovery. The
facilities are being arranged as part of NTL's merger with
Telewest Communications Networks Ltd. (BB-/Watch Neg/--). This
transaction is now expected to be structured as a reverse
acquisition.
The developing CreditWatch implications indicate that the ratings
on NTL and related entities could be raised, lowered, or affirmed
following Standard & Poor's review of the Virgin Mobile
transaction. Potential for a negative action exists considering
the cumulative risks that NTL would have to manage in integrating
a business with a different customer base, product, and culture,
as well as in developing a compelling quadruple-play offering.
In addition, the company has shown an appetite for a potential
further increase in debt. Conversely, the developing CreditWatch
implications also recognize the potential upside for the NTL
rating, as Virgin is a strong consumer brand, the combined entity
might be better positioned over the longer term, and Virgin Mobile
is presently a cash-generative, dividend-paying business.
The ratings on NTL are constrained by the group's:
* competitive operating environment,
* significant gross leverage and
* modest cash generation.
The group benefits, however, from:
* a high bandwidth,
* two-way network,
* an established residential customer base, and
* gradual operational improvements.
The final amount of NTL Investment Holdings' bank loan debt will
depend on the ultimate capital structure and mix of senior and
subordinated debt. The amount of the senior secured facilities
might increase to GBP4.5 billion depending on the outcome of a tax
ruling that will influence the capital structure adopted. This
increase would leave the issue and recovery rating unchanged.
The senior secured facilities are presently expected to comprise:
-- Tranche A (GBP3.2 billion, amortizing, and maturing in
five years); and
-- A revolving credit facility (GBP100 million, bullet
repayments, maturing in five years).
When estimating recoveries, Standard & Poor's simulates a default
scenario. S&P used an enterprise valuation approach as S&P
believes the group, with its fair business profile, would most
likely default as a result of its high leverage, and lenders would
achieve greater value through reorganization than through a
liquidation of assets. Standard & Poor's simulated default
scenario assumed a potential combination of these factors:
-- Lower-than-expected sales growth;
-- Pressure on costs;
-- Increased capital expenditure spend as a percentage of
sales; and
-- A gradual increase in the company's interest costs, due to
rising interest rates and debt levels that might be
incurred to fund operational shortfall or to secure
covenant waivers.
Under our simulated scenario, a default is unlikely to occur
before 2008, when principal repayments become more significant.
The outstanding amount of senior debt to be covered at the point
of default was estimated to be up to GBP3 billion, assuming that
prior scheduled repayments have been made and the revolver is
fully drawn, and including approximately GBP140 million of finance
leases. Using primarily a discounted cash flow analysis, the
enterprise value at the point of default was estimated to fully
cover the senior secured facilities outstanding, leading to a
recovery rating of '1'.
Ratings information is available to subscribers of RatingsDirect,
Standard & Poor's Web-based credit analysis system, at
http://www.ratingsdirect.com/ It can also be found on Standard &
Poor's public Web site at http://www.standardandpoors.com/under
Credit Ratings in the left navigation bar, select Find a Rating,
then Credit Ratings Search. Alternatively, call one of the
following Standard & Poor's numbers:
* Client Support Europe (44) 20-7176-7176;
* London Press Office Hotline (44) 20-7176-3605;
* Paris (33) 1-4420-6708;
* Frankfurt (49) 69-33-999-225;
* Stockholm (46) 8-440-5916; or
* Moscow (7) 095-783-4017.
Members of the media may also contact the European Press Office
via e-mail on: media_europe@standardandpoors.com.
NVE INC: Taps Dr. Howard Smith as Medical Expert
------------------------------------------------
NVE Inc. asks the U.S. Bankruptcy Court for the District of New
Jersey for permission to employ Howard L. Smith, M.D., J.D., as a
medical expert to assist Steven Kirsch, Esq., of Murnane Brandt,
the Debtor's special litigation counsel.
The Debtor tells the Court that it is a named defendant in more
than 114 wrongful death and personal injury actions relating to
Ephedra.
The Debtor believes that Dr. Smith, an attorney and neurosurgeon,
is well qualified to serve as its medical expert since he is
already familiar with the NVE product line, literature and witness
testimony. Dr. Smith has worked closely with the Murnane Brandt
firm.
Dr. Smith has already reviewed medical records of over 30
plaintiffs for evaluation and other issues. It is anticipated
that Dr. Smith will review 50 more cases, essentially performing
initial medical evaluations for the Debtor.
Given the number of cases involved in the Debtor's chapter 11
proceedings, it is estimated that the medical evaluation of each
Ephedra case will cost the Debtor approximately $2 million, with
charges estimated between $50 million to $100 million, depending
on the number of cases reviewed.
Dr. Smith will bill $200 per hour for his services.
To the best of the Debtor's knowledge, Dr. Smith does not hold any
interest adverse to the Debtor or its estate.
Headquartered in Andover, New Jersey, NVE Inc., dba NVE
Pharmaceuticals, Inc., manufactures dietary supplements. The
Debtor is facing lawsuits about its weight-loss products which
contain the now-banned herbal stimulant, Ephedra. The Company
filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J.
Case No. 05-35692). When the Debtor filed for protection from its
creditors, it listed $10,966,522 in total assets and $14,745,605
in total debts.
NVE INC: Sound Shore Approved as Turnaround Consultant
------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey
authorized NVE Inc. to retain Sound Shore Financial, LLC, as its
turnaround consultant.
Sound Shore will serve as a primary intermediary between the
Debtor and the Creditors' Committee's financial consultants.
Sound Shore will:
a) assist the Debtor in employing appropriate management
personnel and structuring the Debtor's business in a manner
that will provide greater confidence to the Creditors'
Committee and create an appropriate structure once the
Debtor emerges from bankruptcy; and
b) assist the Debtor in the formulation of reorganization plan
and in obtaining exit financing to fund any plan of
reorganization negotiated.
The firm will bill the Debtor at the rate of $250 per hour. Sound
Shore requested that they paid the sum of $6,000 per week for the
initial two weeks of retention. The firm further asked a $50,000
bonus if they are successful in assisting in the structuring and
negotiation of the plan.
To the best of the Debtor's knowledge, Sound Shore does not hold
interest adverse to the bankruptcy estate.
Headquartered in Andover, New Jersey, NVE Inc., dba NVE
Pharmaceuticals, Inc., manufactures dietary supplements. The
Debtor is facing lawsuits about its weight-loss products which
contain the now-banned herbal stimulant, Ephedra. The Company
filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J.
Case No. 05-35692). When the Debtor filed for protection from its
creditors, it listed $10,966,522 in total assets and $14,745,605
in total debts.
OFFSHORE LOGISTICS: Extends Waiver Period for 6-1/8% Senior Notes
-----------------------------------------------------------------
Offshore Logistics, Inc. (NYSE: OLG) has elected to extend the
waiver period for complying with the financial reporting covenants
and related compliance certificate and auditors' statement
covenants in the indenture for its 6-1/8% Senior Notes due 2013
from Dec. 15, 2005 to Jan. 16, 2006. Note holders of record as of
July 25, 2005 who delivered (and did not revoke) consents to the
waiver in connection with the company's consent solicitation that
expired on Aug. 15, 2005 will receive payment of an additional fee
equal to $2.50 per $1,000 principal amount of Notes.
The paying agent of the additional fee to consenting holders is:
Global Bondholder Services Corporation
Attention: Corporate Actions
65 Broadway, Suite 704
New York, New York 10006
Toll Free No.: (866) 873-7700
Tel. No.: (212) 430-3774.
The company also has elected to extend to Jan. 16, 2006 a similar
waiver arrangement upon payment of a fee for its revolving credit
facility and a term loan under which an affiliate of Offshore
Logistics is borrower and Offshore Logistics is a partial
guarantor.
Offshore Logistics, Inc. -- http://www.olog.com/-- is a major
provider of helicopter transportation services to the oil and gas
industry worldwide. Through its subsidiaries, affiliates and
joint ventures, the company provides transportation services in
most oil and gas producing regions including the United States
Gulf of Mexico and Alaska, the North Sea, Africa, Mexico, South
America, Australia, Russia, Egypt and the Far East. The company's
Common Stock is traded on the New York Stock Exchange under the
symbol OLG.
Offshore Logistics, Inc.'s 6-1/8% Senior Notes due 2013 carry
Moody's Investors Service's Ba3 rating and Standard & Poor's BB
rating.
ON SEMICONDUCTOR: Prices $95 Mil. of 1.875% Senior Sub. Notes
-------------------------------------------------------------
ON Semiconductor Corp. (NASDAQ: ONNN) has priced its previously
announced private offering of $95 million aggregate principal
amount of 1.875% convertible senior subordinated notes due
Dec. 15, 2025. The notes will bear interest at a rate of 1.875%
per year. The notes will rank pari passu in right of payment with
ON Semiconductor's existing and future senior subordinated
indebtedness and will be subordinated in right of payment to ON
Semiconductor's existing and future senior indebtedness. The sale
of the notes is expected to close on Dec. 21, 2005, subject to
customary closing conditions.
ON Semiconductor intends to use the net proceeds of the offering
to repay its 10% junior subordinated note due 2011. In connection
with the offering, ON Semiconductor has granted to the initial
purchasers of the notes a 30-day over-allotment option to purchase
up to an additional $14 million aggregate principal amount of the
notes. If that option is exercised, any resulting net proceeds
not used to repay the junior subordinated note will be used for
general corporate purposes.
The notes will be convertible beginning on June 15, 2012, or
earlier upon the occurrence of certain events, at an initial
conversion rate of 142.8571 shares per $1,000 principal amount of
notes (equivalent to an initial conversion price of approximately
$7.00 per share of common stock), subject to adjustment. The
initial conversion price represents a premium of approximately 23%
relative to the last reported cross of ON Semiconductor common
stock on the NASDAQ National Market of $5.71 on Dec. 15, 2005.
The notes will provide for "net share settlement" of any
conversions, meaning that upon any conversion ON Semiconductor
will pay the noteholder an amount in cash equal to the lesser of
the conversion value or the par value of the notes and will settle
any excess of the conversion value above the notes' par value in
cash or common stock, at ON Semiconductor's election.
ON Semiconductor will have the right to redeem some or all of the
notes on or after Dec. 20, 2012. Holders of the notes will have
the option to require ON Semiconductor to repurchase the notes on
Dec. 15 of 2012, 2015, and 2020. Upon the occurrence of certain
corporate events, each holder may require the company to purchase
all or a portion of such holder's notes. In each case, the
redemption or repurchase price would be 100% of the principal
amount of the notes, plus accrued and unpaid interest to, but
excluding, the redemption or repurchase date, as applicable.
The offering was conducted through a private placement to
qualified institutional buyers, pursuant to Rule 144A under the
Securities Act of 1933, as amended. The notes and common stock
issuable upon conversion of the notes have not been registered
under the Securities Act or applicable state securities laws and,
unless so registered, may not be offered or sold in the United
States or to a U.S. person except pursuant to an applicable
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws.
ON Semiconductor Corp. -- http://www.onsemi.com/-- supplies power
solutions to engineers, purchasing professionals, distributors and
contract manufacturers in the computer, cell phone, portable
devices, automotive and industrial markets.
ON Semiconductor Corp.'s 12% Senior Secured Notes due 2010 carry
Standard & Poor's B+ rating.
ORECK CORP: Moody's Confirms $215 Million Sec. Debts' B1 Ratings
--------------------------------------------------------------
Moody's Investors Service confirmed the debt ratings of Oreck
Corp., ending the review for possible downgrade started in
September 2005. The ratings were placed on review based on
concerns that the company's operating performance and financial
condition could be affected by damage to its facilities caused by
Hurricane Katrina. Moody's has concluded that the effects of the
hurricane are unlikely to impact Oreck's long term credit quality.
Revenue and margin levels could be modestly affected in the
upcoming year, but Moody's believes that insurance coverage will
be sufficient to compensate the company for financial losses due
to replacement costs or business interruption. The company was
able to restore manufacturing, product delivery and payments
processing abilities relatively quickly. It was also able to
adjust current operating costs while it was operating below peak
capacity. The combination helped to preserve Oreck's immediate
liquidity and, for the longer term, customer satisfaction. The
rating outlook is stable.
These ratings were confirmed:
* Corporate family rating of B1; and
* $195 million secured term loan and $20 million secured
revolving credit facility at B1.
The stable rating outlook anticipates some volatility in revenue
and margin levels in the upcoming year as the company normalizes
operations. Even though Oreck's primary call center,
manufacturing and distribution functions are largely restored,
Moody's believes the company will continue to face challenges in
fulfillment and could also experience larger than usual
fluctuations in sales levels. Much of the company's outsourced
inventory was lost and safety stock needs to be rebuilt.
The stable outlook assumes:
* that Oreck's liquidity will remain unimpaired with consistent
availability of more than half its revolving credit facility;
* that EBIT to interest coverage will remain at 2.5 times; and
* that the company will generate positive net cash flow which
will be used to repay debt over any 12-month period.
Ratings could fall:
* if the company loses access to backup liquidity;
* if it ceases to generate positive cash flow; or
* if EBIT to interest is expected to be persistently
below 2.0 times.
Given the company's recent challenges, an upgrade is unlikely in
the near future unless Oreck is able to significantly reduce debt.
The ratings continue to reflect:
* the ongoing challenges of a narrow product line;
* the high cost of maintaining direct sales distribution
strategy;
* geographic concentration of physical facilities; and
* a relatively high debt burden.
Ratings are supported by:
* Oreck's long history and strong brand recognition;
* the benefits of multiple channels of distribution; and
* an experienced and motivated management team.
Oreck Corp., based in New Orleans, is a leading manufacturer and
marketer of premium priced vacuum cleaners and air purifiers.
ORION TELECOM: Creditors Must File Proofs of Claim by January 30
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of
New York, set January 30, 2006, as the deadline for all creditors
owed money on account of administrative claims arising from
April 1, 2004, to March 14, 2005, the period where this case was
converted to chapter 7 proceeding, by Orion Telecommunications
Corp., to file their proofs of claim.
Proof of claim forms must be filed either by mailing or delivering
the original form by hand or overnight courier to:
United States Bankruptcy Court
Southern District of New York
Alexander Hamilton Custom House
One Bowling Green, Room 534
New York, New York 10004
Headquartered in New York, New York, Orion Telecommunications
Corp. -- http://www.oriontelcorp.net/-- is a market-leading
manufacturer and distributor of telecommunication services. The
company filed for chapter 11 protection on April 1, 2004 (Bankr.
S.D.N.Y. Case No. 04-12203). Frank A. Oswald, Esq., at Togut,
Segal & Segal LLP represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $16,347,957 in total assets and $97,588,754
in total debts. As reported in the Troubled Company Reporter on
Mar. 16, 2005, Orion Telecommunications emerged from Chapter 11
bankruptcy protection.
PHOTOCIRCUITS CORP: Taps Deloitte Financial as Advisors
-------------------------------------------------------
The Official Committee of Unsecured Creditors of Photocircuits
Corporation asks the U.S. Bankruptcy Court for the Eastern
District of New York for authority to retain Deloitte Financial
Advisory Services LLP as its financial advisors, nunc pro tunc to
Oct. 25, 2005.
Deloitte Financial will:
a) assist the Committee in connection with its assessment of
the Debtor's cash, liquidity and financing requirements;
b) assist the Committee in connection with its monitoring of
the Debtor's financial and operating performance, including
its current operations, monthly operating reports, and
other financial and operating analyses or periodic reports
as provided by management or the Debtor's financial
advisors;
c) assist the Committee in evaluating any potential key
employee retention plans, compensation and benefit plans or
other incentive plans;
d) assist the Committee in evaluating the Debtor's business,
operational, and financial plans, both short-term and long-
term, including actual results versus forecast, capital
expenditure and cost reduction opportunities;
e) assist the Committee in connection with its evaluation of
the Debtor's statement of financial affairs and supporting
schedules, executory contracts and claims;
f) assist the Committee in evaluating the Debtor's operating
structure, business configuration and strategic
alternatives;
g) assist the Committee in evaluating restructuring
alternatives;
h) assist the Committee in plan negotiations including
analysis, preparation or evaluation of any plan of
reorganization proposed by the Debtor or any party-in-
interest;
i) assist the Committee in its analysis of issues related to
claims filed against the Debtor including reclamation
issues, administrative, priority or unsecured claims, case
litigation, contract rejection damages;
j) assist the Committee in evaluating auction procedures or
sale transactions that may take place;
k) attend and participate in hearings before the Court;
l) assist the Committee in its analysis of the Debtor's books
and records in connection with potential recovery of funds
from voidable transactions, preference payments, fraudulent
transfers and unenforceable claims; and
m) provide other services that may be required by the
Committee.
Daniel S. Polsky discloses that Deloitee Financial will be paid at
an hourly rate of $300 for all professional staff involved.
To the best of the Committee's knowledge, Deloitte Financial is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Glen Cove, New York, Photocircuits Corporation --
http://www.photocircuits.com/-- was the first independent printed
circuit board fabricator in the world. Its worldwide reach
comprises facilities in Peachtree City, Georgia; Monterrey,
Mexico; Heredia, Costa Rica; and Batangas, Philippines. The
Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr.
E.D.N.Y. Case No. 05-89022). Gerard R Luckman, Esq., at Silverman
Perlstein & Acampora LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it estimated more than $100 million in assets and
debts.
PITTSBURGH TRANSPORTATION: Voluntary Chapter 11 Case Summary
------------------------------------------------------------
Debtor: Pittsburgh Transportation Company
1825 Liverpool Street, 2nd Floor
Pittsburgh, Pennsylvania 15233
Bankruptcy Case No.: 05-50406
Chapter 11 Petition Date: December 16, 2005
Court: Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Michael Kaminski, Esq.
William C. Price, Esq.
Thorp Reed & Armstrong, LLP
One Oxford Centre
301 Grant Street, 14th Floor
Pittsburgh, Pennsylvania 15219-1425
Tel: (412) 394-7711
Fax: (412) 394-2555
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor's list of its 20 largest unsecured creditors was not
available at press time.
PLAYTEX PRODUCTS: Moody's Raises $340 Mil. Notes' Rating to Caa1
----------------------------------------------------------------
Moody's Investors Service raised the senior subordinated notes
rating of Playtex Products, Inc. to Caa1 and revised the outlook
for all of Playtex's ratings to positive. The rating action
reflects the company's substantially improved financial position
over the past year, as the company has:
* divested non-core brands;
* reduced debt levels; and
* improved operating efficiency.
The rating actions:
* Corporate family rating (formerly, senior implied rating),
affirmed at B2
* $100 million senior secured revolving credit facility
due 2009, affirmed at B1
* $339.2 million senior secured notes due 2011, affirmed at B2
* $340 million 9.375% senior subordinated notes due 2011,
upgraded to Caa1 from Caa2
Playtex's positive outlook reflects the substantial operational
and financial improvements the company has achieved over the past
year as a result of:
* its focus on core categories (feminine care, infant care, and
skin care);
* its use of cash and asset sale proceeds to reduce debt; and
* its efforts to lower its cost structure.
During fiscal 2005 (through September 2005), Playtex has repaid
around $100 million of its 8% senior secured notes and announced
that it bought back an additional $20 million in October. Debt
repurchases were achieved using balance sheet cash, including
proceeds from the divestiture of its Woolite product line in
November 2004. More recently, Playtex announced the additional
sale of non-core brands for around $57 million and has indicated
that proceeds will be used to repay debt or reinvested in the
business.
The upgrade of the senior subordinated notes reflects the
reduction in higher priority debt ahead of these notes, just as
the placement of the secured notes in fiscal 2004 had caused a
downgrade of the subordinated note rating.
Despite the lost sales associated with the divested Woolite
business, Playtex has meaningfully grown operating profits in the
nine-month period ending September 2005, as the company has
benefited from the sales growth of its higher-margin tampon
products and from the cost savings derived from restructuring
programs in fiscal 2004 and 2005. These gains are particularly
noteworthy given the company's depressed profit levels in prior
years following competitive actions from Procter & Gamble's Tampax
brand.
As result of its operational and financial discipline, Playtex has
substantially improved its debt protection measures, with debt-to-
EBITDA at 6.0x versus 7.5x at December 2004, and retained cash
flow less capex to debt at 6.4% versus 4.0% at year-end. Moody's
views these metrics as strongly positioned in the B2 category,
especially given:
* the company's large cash balances ($84 million);
* its post quarter-end debt reduction; and
* the additional asset sale proceeds.
Moody's could upgrade Playtex's ratings over the coming quarters
if the company continues its prudent use of cash balances and
maintains positive sales and profit trends for its remaining core
brands, such that debt-to-EBITDA falls under 5.5x and retained
cash flow less capex to debt is maintained in the mid-to-high
single digit range.
Downward rating pressures are not expected over the coming year,
but could materialize if the company is unable to sustain profit
gains or adopts more aggressive financial and strategic policies,
particularly if EBITDA margins fall into the mid-teens or retained
cash flow less capex drops into the mid-single digits as a
percentage of debt.
Playtex's ratings remain constrained by high debt levels and its
participation in highly competitive and promotional product
segments, often against companies with significantly more
resources and financial flexibility. Moody's also notes the
potential for sales and margin pressure given Playtex's high
customer concentration (Wal-Mart is 28% of sales; top five are
50%), and the moderate risks present in the sun care business
segment given its high seasonality and weather sensitivity and the
generous return privileges that retailers are provided.
The ratings are supported by Playtex's leading brand names and
historical product innovation, as nearly all of the company's
revenues are generated from leading or number two brands in their
categories with strong profit margins. The company's established
supply chain, manufacturing, and distribution platform provides
additional ratings support through its:
* benefits to profitability,
* strong customer relationships, and
* disciplined working capital management.
Playtex Products, Inc., with executive offices in Westport,
Connecticut, is a leading marketer, manufacturer and distributor
of a diversified portfolio of consumer and personal products
including:
* infant care,
* feminine care, and
* skin care items.
POINT TO POINT: Confirmation Hearing Set for January 20
-------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
approved the Disclosure Statement explaining Point to Point
Business Development, Inc.'s Plan of Reorganization filed on
Sept. 20, 2005.
The Honorable Dennis R. Dow determined that the Disclosure
Statement contained adequate information -- the right amount of
the right kind for creditors to make informed decisions when the
Debtor asks them to vote to accept the Plan.
The Court will convene a hearing on Jan. 20, 2006, at 2:00 p.m.
Objections to the Plan, if any, must be filed by Jan. 17, 2006.
The Plan provides for the recovery of the bankruptcy assets, and
the continuing operation of the Debtor to pay the amounts due
under it. The Plan is drafted to allow for confirmation to
proceed before final implementation of the Debtor's turn around
and before any value can be realized from the bankruptcy assets,
because it passes the value of those assets directly to creditors
on a pro rata basis.
Treatment of Claims
Administrative Claims will be paid in full. Priority Claims will
be paid in full as they appear in the schedules.
Secured creditors will receive a lump sum payment of $121,500 out
of funds held in escrow immediately upon entry of an order
approving the settlement between the Debtor and the secured
creditors, plus $218,500 from amounts recovered or released by the
estate's prosecution of the Declaratory Judgment Action.
General unsecured creditors will be paid:
-- their pro rata share of 20% the amount of monthly net profit
actually earned in accordance with Generally Accepted
Accounting Principles, at the end of each calendar quarter
following confirmation of the Plan; plus
-- 50% of net cash held at the end of the calendar year
starting in 2006, payable in January the following year,
from the operation of the Debtor's business for a period of
not less than the length of time needed to pay to creditors
the gross amount paid through the Plan on hard assets plus
20% or 30 months.
In addition, as soon as practicable, unsecured creditors will get
a pro rata distribution from any net bankruptcy assets collected
or received by the estate.
Equity security holders will be retained in exchange for new value
contributions as follows:
-- $250,000 to be contributed to operations as needed to
capitalize operations and cover cash shortfalls; plus
-- the guarantee of an additional $250,000 in loans to be made
to the Debtor.
A full-text copy of the Debtor's chapter 11 plan of reorganization
is available for a fee at:
http://www.researcharchives.com/bin/download?id=051018035536
Based in Liberty, Missouri, Point to Point Business Development,
Inc. -- http://www.P2PMRO.com/-- says it helps clients lower
costs through its maintenance, repair and operating (MRO) Web
platform which enables manufacturers to streamline the process of
supply ordering, reduce excess in inventory management, and more
efficiently manage supply chains. Point to Point filed for
chapter 11 protection (Bankr. W.D. Mo. Case No. 05-44642) on July
7, 2005. The Debtor estimated at the time of the chapter 11
filing that it had less than $50,000 in assets and more than $1
million of debt.
PONNAMPALAM SABANAYAGAM: Case Summary & 5 Unsecured Creditors
-------------------------------------------------------------
Debtors: Ponnampalam & Erlinda Sabanayagam
681 Webb Road
Chadds Ford, Pennsylvania 19317-0050
Bankruptcy Case No.: 05-39565
Type of Business: Ponnampalam Sabanayagam is a medical doctor.
The Debtors previously filed for chapter 11
protection on October 15, 2002 (Bankr. E.D. Pa.
Case No. 02-34715).
Chapter 11 Petition Date: December 15, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Diane W. Sigmund
Debtors' Counsel: Eugene J. Malady, Esq.
Eugene J. Malady, LLC
200 East State Street, Suite 309
Media, Pennsylvania 19063
Tel: (610) 565-5000
Fax: (610) 565-1201
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $100,000 to $500,000
Debtors' 5 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Mercedes-Benz Credit Auto lease $15,861
P.O. Box 9001880 deficiency
Louisville, KY 402901880
Citibank (SD), NA Credit card $9,723
701 East 60th Street North purchases
Sioux Falls, SD 571040432
First USA Bank Credit card $4,990
P.O. Box 15153 purchases
Wilmington, DE 198865153
Internal Revenue Service Unknown
Special Procedures Staff
P.O. Box 12051
Philadelphia, PA 19105
Internal Revenue Service Taxes Unknown
Special Procedures Staff
P. O. Box 12051
Philadelphia, PA 19105
POPULAR ABS: Moody's Rates Class B-2 Sub. Certificates at Ba2
-------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by Popular ABS Mortgage Pass-Through Trust
2005-D, and ratings ranging from Aa2 to Ba2 to the subordinate
certificates in the deal.
The securitization is backed by Equity One, Inc. originated or
acquired adjustable-rate (67%) and fixed-rate (33%) subprime
mortgage loans.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- overcollateralization, and
-- excess spread.
Moody's expects collateral losses to range from 5.30% to 5.80%.
Equity One, Inc. will service the loans. Moody's has assigned
Equity One, Inc. its SQ2- rating as a servicer of subprime first
lien loans.
The complete rating actions are:
Popular ABS Mortgage Pass-Through Trust 2005-D
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class A-4, Assigned Aaa
* Class A-5, Assigned Aaa
* Class A-6, Assigned Aaa
* Class M-1, Assigned Aa2
* Class M-2, Assigned A2
* Class M-3, Assigned A3
* Class M-4, Assigned Baa1
* Class M-5, Assigned Baa2
* Class M-6, Assigned Baa3
* Class B-1, Assigned Ba1
* Class B-2, Assigned Ba2
PORTRAIT CORP: Delays Filing of Form 10-Q for Qtr. Ended Oct. 30
----------------------------------------------------------------
Portrait Corporation of America, Inc. filed a Form 12b-25,
Notification of Late Filing, in connection with its Quarterly
Report on Form 10-Q, which was due Dec. 14, 2005. In its filing,
PCA noted it is unable to file timely its 10-Q for the fiscal
quarter ended Oct. 30, 2005, because its newly appointed
independent registered public accounting firm, Eisner LLP, has not
had sufficient time to complete their review of the Company's
financial statements for Q3 2005.
PCA disclosed in its Form 12b-25 filing the following preliminary
financial information for Q3 2005, which it expects to report in
its 10-Q for Q3 2005, subject to review of Q3 2005 by Eisner LLP.
The Company anticipates higher sales in Q3 2005 than in the fiscal
quarter ended Oct. 31, 2004, $70.6 million as compared to $68.8
million. The Company experienced negative same studio sales in
its Wal-Mart permanent portrait studios of 4.2% in Q3 2005,
despite a 1.4% increase in customer orders. This increase in
orders was offset by a decrease in customer deliveries as a result
of the Company's decision during Q3 2005 to abandon the
operational practice of accelerating delivery of an additional
week's worth of customer photography during the last two weeks of
a fiscal period. The Company concluded that the costs of this
practice (e.g., diversion of associates' attention to delivering
product rather than acquiring and photographing customers;
consumption of field resources that otherwise could be
productively utilized for hiring and training support; additional
film shipments from studios; additional freight costs; and
employee overtime pay in manufacturing) outweighed the potential
perceived benefits. This decision impacts sales and cost of sales
in the condensed consolidated statement of operations and
inventories and other accrued liabilities in the condensed
consolidated balance sheet.
The company anticipates lower sales in the thirty-nine weeks ended
Oct. 30, 2005 than in the thirty-nine weeks ended Oct. 31, 2004,
$215.6 million as compared to $217.2 million. The Company
experienced negative same studio sales in its Wal-Mart permanent
portrait studios of 6.4% in YTD 2005 which was comprised of a 2.9%
decrease in customer orders and a decrease in customer deliveries.
Again, the decrease in customer deliveries was a result of the
company's decision to abandon the operational practice of
accelerating deliveries.
These same studio sales trends have reduced expected gross profit
to 8.2% of sales in Q3 2005, or $5.8 million, compared to 10.9% in
Q3 2004, or $7.5 million. Gross profit is expected to be reduced
to 13.7% of sales in YTD 2005, or $29.5 million, compared to 16.5%
in YTD 2004, or $35.9 million. Loss from operations is expected
to increase to 9.9% of sales in Q3 2005, or $7.0 million, compared
to 9.2% in Q3 2004, or $6.3 million. Loss from operations is
expected to increase to 3.4% of sales YTD 2005, or $7.4 million,
compared to 0.1% in YTD 2004, or $0.2 million. Loss before taxes
is expected to increase to $17.6 million in Q3 2005, compared to
$14.6 million in Q3 2004. The expected increase in loss before
taxes is primarily the result of a $2.4 million increase in
interest expense. Loss before taxes is expected to increase to
$36.7 million in YTD 2005, compared to $24.4 million in YTD 2004.
The expected increase in loss before taxes is the result of a $7.2
million increase in loss from operations, a $4.1 million increase
in interest expense, and $1.0 million in early extinguishment of
debt. Net loss is expected to decrease to $17.6 million in Q3
2005, compared to $34.4 million in Q3 2004. The expected decrease
in net loss in Q3 2005 is the result of changes in loss before
taxes described above and a $19.8 million income tax provision
recorded in Q3 2004 as a result of recognizing a valuation
allowance on PCA's deferred tax assets. During Q3 2004, the
Company determined, based on the weight of available evidence, it
is more likely than not that such assets will not ultimately be
realized. Net loss is expected to decrease to $36.7 million in
YTD 2005, compared to $37.8 million in YTD 2004. The expected
decrease in net loss in YTD 2005 is the result of changes in loss
before taxes and a $13.4 million income tax provision recorded in
YTD 2004 as a result of recognizing a valuation allowance on the
company's deferred tax assets.
In addition, on Dec. 13, 2005, PCA received a comment letter from
the Securities and Exchange Commission on its Form 10-K for the
fiscal year ended Jan. 31, 2005 and its Form 10-Q for the fiscal
quarter ended July 31, 2005. The company is currently in the
process of reviewing and preparing its responses to the comment
letter. The company believes, but can give no assurance, that the
ultimate resolution of these comments will not have a material
effect on the Company's previously reported or future financial
statements or disclosures.
Portrait Corporation of America, Inc., is the largest operator of
retail portrait studios in North America and one of the largest
providers of professional portrait photography products and
services in North America based on sales and number of customers.
Operating under the trade name Wal-Mart Portrait Studios, PCA is
the sole portrait photography provider for Wal-Mart Stores, Inc.
As of Oct. 30, 2005, PCA operated 2,513 permanent portrait studios
in Wal-Mart discount stores and supercenters in the United States,
Canada, Mexico, Germany and the United Kingdom and provided
traveling services to approximately 600 additional Wal-Mart store
locations in the United States. PCA also serves other retailers
and sales channels with professional portrait photography
services.
At Oct. 30, 2005, Portrait Corporation of America, Inc.'s balance
sheet showed a $207,136,000 shareholders' deficit compared to a
$171,041,000 deficit at Jan. 30, 2005.
PRG-SCHULTZ: Receives Nasdaq Non-Compliance Notice
--------------------------------------------------
PRG-Schultz International, Inc. (Nasdaq: PRGX) received a notice
on Dec. 12, 2005 from the Nasdaq Stock Market indicating that the
company is not in compliance with Nasdaq Marketplace Rule
4450(a)(5) because, for the last 30 consecutive business days, the
bid price of the company's common stock has closed below the
minimum $1.00 per share. The issuance by Nasdaq of such letters
is standard procedure when a company does not meet the minimum bid
price rule. Nasdaq stated in its notice that in accordance with
Nasdaq Marketplace Rule 4450(e)(2), PRG-Schultz will be provided
180 calendar days, or until June 12, 2006, to regain compliance
with the minimum bid price rule. This notification has no effect
on the listing of the company's common stock at this time.
If at any time before June 12, 2006, 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 the
company written notification that it has achieved compliance with
the minimum bid price rule. If the company does not regain
compliance with the minimum bid price rule by June 12, 2006,
Nasdaq will notify the company that the company's common stock
will be delisted from the Nasdaq Stock Market. In the event that
the company receives notice from Nasdaq that its common stock is
being delisted from the Nasdaq Stock Market, Nasdaq rules permit
the company to appeal any delisting determination by the Nasdaq
staff to a Nasdaq Listings Qualifications Panel
Headquartered in Atlanta, PRG-Schultz International, Inc.
http://www.prgx.com/-- is the world leader in recovery auditing
and a leading profit improvement firm, providing clients
throughout the world with insightful value to optimize and
expertly manage their business transactions. Using proprietary
software and expert audit methodologies, PRG industry specialists
review client purchases and payment information to identify and
recover overpayments.
* * *
Material Weaknesses
Based upon an evaluation on the effectiveness of the company's
disclosure controls and procedures, the management concluded that
a material weakness in its internal controls exists relating to
revenue and the reserve for estimated refunds. The material
weakness, as originally reported in the company's Annual Report on
Form 10-K/ A for the year ended December 31, 2004, related to
ineffective oversight and review over revenue and the reserve for
estimated refunds.
In the quarter ended June 30, 2005, management made significant
progress in remediating certain aspects of the deficiencies found,
specifically in the training of affected personnel and the
improvement of the amount and quality of evidence gathered to
calculate the reserve for estimated refunds. However, other
aspects of the deficiencies found are still in the remediation
process and appear to constitute a material weakness.
A material weakness in internal control over financial reporting
is a significant deficiency, or combination of significant
deficiencies, that result in a more than remote likelihood that a
material misstatement of the annual or interim financial
statements will not be prevented or detected.
There were no changes in the company's internal control over
financial reporting identified that occurred during the quarter
ended June 30, 2005, that have materially affected, or are
reasonably likely to materially affect, the Company's internal
control over financial reporting.
The company reported a second material weakness in its Annual
Report on Form 10-K/ A for the year ended Dec. 31, 2004, relating
to insufficient oversight and review of the company's income tax
accounting practices. In the quarter ended March 31, 2005, the
Company established and implemented additional review steps by
management to detect errors in the calculation and roll forward of
its tax assets and valuation allowances. Management believes
these new procedures, and performance of the procedures, have
effectively remediated this material weakness.
QUEBECOR WORLD: Renews and Extends $1 Bil. Loan to Jan. 30, 2009
----------------------------------------------------------------
Quebecor World Inc. (NYSE:IQW; TSX:IQW.SV) has renewed and
extended its $1 billion bank credit facility through to
Jan. 30, 2009. The terms and conditions are similar to the
previous agreement and the obligation ranks pari passu with other
senior unsecured indebtedness of Quebecor World Inc. The
three-year agreement was arranged by RBC Capital Markets and
includes two new major international banks as well as 13 of the 14
previous lenders.
"We are pleased and appreciate that the vast majority of our
lenders have renewed their commitment to the Company and we
welcome the two new participants," said Jacques Mallette,
Executive Vice-President and Chief Financial Officer, Quebecor
World. "This renewed long-term commitment provides us with
appropriate financial flexibility and liquidity to support our
world-wide operations going forward."
Quebecor World Inc. -- http://www.quebecorworld.com/-- is one of
the largest commercial printers in the world. It is a market
leader in most of its major product categories which include
magazines, inserts and circulars, books, catalogs, direct mail,
directories, digital pre-media, logistics, mail list technologies
and other value added services. Quebecor World has approximately
32,000 employees working in more than 140 printing and related
facilities in the United States, Canada, Argentina, Austria,
Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico,
Peru, Spain, Sweden, Switzerland and the United Kingdom.
* * *
As reported in the Troubled Company Reporter on Nov. 04, 2005,
Standard & Poor's Ratings Services lowered its ratings, including
its long-term corporate credit rating, on printing company
Quebecor World Inc. by one notch to 'BB' from 'BB+'. The outlook
is negative.
QUIGLEY CO: Wants Court to OK Settlement With Pfizer & Centennial
-----------------------------------------------------------------
Quigley Company, Inc., asks the U.S. Bankruptcy Court for the
Southern District of New York to approve a Settlement Agreement
between it, Pfizer Inc., and Centennial Insurance Company.
The Litigation and Insurance Policy
Centennial Insurance issued to Pfizer a general liability
Insurance Policy that provides $2 million of coverage from Oct. 1,
1978 through Oct. 1, 1979 for products and completed operations,
including asbestos-related bodily injury claims. The Insurance
Policy also provides coverage to Quigley, as a subsidiary of
Pfizer, during that period.
In 1993, Pfizer and Quigley commenced an action against certain
insurers, including Centennial. That Litigation involved disputes
concerning the obligations of certain insurers, including
Centennial, for asbestos-related bodily injury claims in
connection with certain insurance policies, including the
Insurance Policy.
The 1999 Agreement and Shortfall Action
To settle the Litigation, Quigley, Pfizer and Centennial entered
into an Agreement on March 17, 1999. The 1999 Agreement governs
the application of the Insurance Policy to Asbestos-Related Bodily
Injury Claims, and defines the manner in which Quigley and Pfizer
may bill and Centennial would pay for Asbestos-Related Bodily
Injury Claims under the Insurance Policy. Pfizer and Quigley
agreed to dismiss Centennial from the Litigation with prejudice
upon execution of the 1999 Agreement.
In 2001, Pfizer, Quigley and other plaintiffs brought the
Shortfall Action against Centennial. That action addresses
amounts Quigley or Pfizer may become liable to pay in settlement
of a judgment on claims or lawsuits alleging that Quigley or
Pfizer are obligated for amounts initially allocated to
members of the Center for Claims Resolution (CCR) who withdrew
from the CCR and have filed for chapter 11 protection, as well
as fees and expenses incurred in connection with the defense and
disposition of those claims.
Summary of the September 2005 Settlement Agreement
In September 2005, the Debtor, Pfizer and Centennial entered into
the Settlement Agreement to resolve the Shortfall Action. The
salient terms of that Settlement Agreement are:
1) Centennial will pay $2 million to the Asbestos PI Trust,
with:
a) $600,000 to be paid within 10 days of the entry of the
Court's Order approving the Settlement Agreement and
$700,000 to be paid within 10 days of the date of
confirmation of the Debtor's Third Amended Plan of
Reorganization becomes, and
b) $700,000 to be paid within one year of the date of the
confirmation order; and
2) within 10 days after the entry of the Court's Order
approving the Settlement Agreement, Quigley and Pfizer will
dismiss Centennial from the Shortfall Action with prejudice,
and Centennial will dismiss Quigley and Pfizer from the
Shortfall Action with prejudice.
A full-text copy of the September 2005 Settlement Agreement is
available for free at http://ResearchArchives.com/t/s?3cf
The Court held a hearing on Dec. 6, 2005, to consider the Debtor's
request. Bankruptcy Court records don't reveal the outcome of
that hearing.
Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary
of Pfizer, Inc., which used to produce and market a broad range of
refractories and related products to customers in the iron, steel,
glass and other industries. The Company filed for chapter 11
protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to
resolve legacy asbestos-related liability. When the Debtor filed
for protection from its creditors, it listed $155,187,000 in total
assets and $141,933,000 in total debts. Michael L. Cook, Esq.,
Lawrence V. Gelber, Esq., and Jessica L. Fainman, Esq., at
Schulte Roth & Zabel LLP, represent the Company in its
restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal
serves as the Futures Representative.
RADIATION THERAPY: Closes $100 Million Debt Financing
-----------------------------------------------------
Radiation Therapy Services, Inc. (Nasdaq: RTSX) closed its
previously announced $100 million debt financing. The company has
added a $50 million accordion feature to the facility, which
allows it to increase the aggregate principal amount of the
Term B financing to $150 million, at the company's option.
The $100 million Term B loan has an initial interest rate spread
of 200 basis points, with the opportunity to permanently reduce
the spread to 175 basis points after six months, provided the
Company's leverage ratio is below 2:1.
The Company used the proceeds of the Term B loan to pay off its
pre-existing Term A loan as well as the borrowings drawn on its
$140 million revolving credit facility. The current availability
under the revolving credit facility is $140 million.
The Term B loan is a seven-year borrowing with a maturity of
Dec. 31, 2012. The maturity for the revolving credit facility
remains Mar. 15, 2010. Participants in the Term B financing
include institutional investors as well as the Company's senior
bank lending group.
David M. Koeninger, Executive Vice President and Chief Financial
Officer, stated, "We are extremely pleased with the high level of
interest received among institutional investors, particularly
institutions new to Radiation Therapy. This additional capital
source will support program expansions within our existing local
markets, entry into new local markets and ensure that we have the
most advanced treatment technology. We look forward to a healthy,
long-term relationship with our new investors."
Radiation Therapy Services, Inc. -- http://www.rtsx.com/-- which
operates radiation treatment centers primarily under the name 21st
Century Oncology, is a provider of radiation therapy services to
cancer patients. The Company's 68 treatment centers are clustered
into 22 local markets in 14 states, including Alabama, Arizona,
California, Delaware, Florida, Kentucky, Maryland, Massachusetts,
Nevada, New Jersey, New York, North Carolina, Rhode Island and
West Virginia. The Company is headquartered in Fort Myers,
Florida.
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'BB' corporate
credit rating to Radiation Therapy Services Inc. The rating
outlook is stable.
In addition, the company's $240 million secured credit facilities
were rated 'BB', with a recovery rating of '3', reflecting the
expectation for meaningful recovery of principal in the event of a
payment default.
REFCO INC: Geneva Court Lifts Preliminary Injunction on ACM Shares
------------------------------------------------------------------
Refco Inc. (OTC: RFXCQ) reported on Dec. 15, 2005, that a court in
Geneva, Switzerland, removed the preliminary injunction previously
granted by the court to prohibit the issuance of new ACM shares to
the non-Refco shareholders of ACM.
Although the court has acknowledged the breach alleged by Refco
(in particular, that the 20-day notice for calling a general
meeting was not provided), the court nevertheless decided to lift
the injunction against issuance of the shares on various grounds,
including an assumption that the shares had already been issued
and based on the minority shareholders' statement that they did
not intend to transfer the shares.
The U.S. Bankruptcy Court for the Southern District of New York
had previously issued a temporary restraining order enjoining the
issuance of the ACM shares to the non-Refco shareholders.
Refco intends to evaluate all its alternatives to protect its
investment in ACM, including further action in the bankruptcy
court and Switzerland as necessary or warranted.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases.
REFCO INC: Court Approves Bidding Procedures for Asset Sale
-----------------------------------------------------------
Refco Inc. reported on Dec. 15, that it received approval from the
U.S. Bankruptcy Court for the Southern District of New York
regarding the bidding procedures for the proposed sale of assets
related to Refco's online foreign-exchange trading unit, namely:
* The sale of more than 15,000 retail client accounts of Refco
FX Associates LLC -- http://www.refcofx.com/--; and
* The 35% share of Forex Capital Markets LLC currently owned by
Refco. FXCM, a Futures Commission Merchant registered with
the CFTC and a member of the National Futures Association,
provides a foreign currency trading platform and execution
services to retail investors
The order establishes, among other things, the these deadlines and
procedures:
* Deadline for the interested parties to qualify as potential
bidders and access the virtual data room: Jan. 20, 2006, at
noon;
* Deadline for the submission of a qualified bid package:
Jan. 23, 2006, at 10:00 a.m.;
* Potential bidders will be notified whether they are a
"qualified bidder" under the Bidding Procedures Order by
10:00 a.m. on Jan. 25, 2005;
* If there is more than one "qualified bidder," an auction
would be held at the offices of Skadden, Arps, Slate,
Meagher&Flom LLP on Jan. 26, 2006, at 10:00 a.m.; and
* A hearing to approve the sale to the winning bidder will be
held at the U.S. Bankruptcy Court in lower Manhattan on
January 27, 2006, at 10:00 a.m.
The bidding procedures for the sale of Refco's retail foreign
exchange assets are similar to those employed in the sale of the
assets of Refco LLC, the company's regulated commodity futures
business, which was completed on Nov. 25, 2005.
"We are gratified with the court's approval of the bidding
procedures and look forward to completing the sale process
quickly," said Robert Dangremond, Refco's chief executive officer.
"We expect the sale to demonstrate interest among financial
institutions and important entities in the online foreign-exchange
trading business and are convinced the process will demonstrate
once again the value placed on the Refco franchise by those in the
industry," Mr. Dangremond said.
All those interested in taking part in the bidding process should
contact Ashish Contractor at Greenhill&Co. at 212-389-1500.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases.
RIDDELL BELL: Moody's Affirms $140 Mil. Sr. Sub. Notes' B3 Rating
-----------------------------------------------------------------
Moody's Investors Service raised the speculative grade liquidity
rating of Riddell Bell Holdings, Inc. to SGL-2 from SGL-3 and
affirmed the company's long term ratings with a stable outlook.
The upgrade of the speculative grade liquidity rating reflects
Moody's expectation that the company's free cash flow will
materially improve in 2006 as integration costs related to the
combination of Riddell and Bell decline.
Rating upgraded:
* to SGL-2 from SGL-3, speculative grade liquidity rating
Ratings affirmed:
* B1 corporate family rating
* B1 rating for $50 million guaranteed senior secured revolving
credit facility due 2010
* B1 rating for $109 million guaranteed senior secured term
loan due 2011
* B3 for $140 million 8.375% guaranteed senior subordinated
notes due 2012
Moody's expects Riddell Bell to generate around $15 million of
free cash flow in 2006, implying FCF/debt in the high single
digits. Additionally, this amount would represent a material
increase from the breakeven level of free cash flow that Moody's
expects for 2005. Higher levels of free cash flow going forward
reflects lower levels of spending associated with integration of
Riddell and Bell and, to a lesser extent, the benefit of new
product introductions on sales growth and margins. Moody's cash
flow forecast incorporates approximately $20 million and $6
million of expected interest expense and capital expenditures,
respectively. Moody's also expects that the revolving credit
facility will adequately meet Riddell Bell's seasonal working
capital build through the first half of fiscal 2006.
Under its credit agreement, Riddell Bell remains subject to:
* a minimum interest coverage covenant;
* a maximum leverage covenant; and
* a maximum capital expenditures covenant.
Moody's expects the company to remain compliant with these ratios
through 2006 even as the leverage covenant tightens in 1Q2006 to
5.75 times from 6.00 times the prior quarter.
The SGL rating is constrained by the company's minimal cash
balances, which heighten the company's reliance on the facility,
both for seasonal purposes and potentially to meet unexpected
operating expenses. The SGL rating is further constrained by
Riddell Bell's limited alternative liquidity sources, as the vast
majority of the company's assets are pledged to the rated
facilities.
Riddell Bell Holdings, Inc. is a leading developer and marketer of
head protection equipment and related accessories for numerous
athletic and recreational activities. Sales for the twelve-month
period ended October 1, 2005 were approximately $359.5 million.
RITE AID: Posts $5.2 Million Net Loss in Period Ended Nov. 26
-------------------------------------------------------------
Rite Aid Corporation (NYSE, PCX:RAD) reported financial results
for its third quarter ended Nov. 26, 2005.
Revenues for the 13-week third quarter were $4.15 billion versus
revenues of $4.11 billion in the prior year third quarter.
Revenues increased 0.9%.
The third quarter had a net loss of $5.2 million compared to last
year's third quarter net income of $.3 million. The change was
due primarily to:
* a $21.7 million decrease in adjusted EBITDA,
* a $1.8 million increase in the LIFO charge,
* a $2.8 million increase in depreciation and amortization
expense and
* a $13.8 million decrease in gain from litigation
settlements.
These negative factors were partially offset primarily by:
* a $3.7 million decrease in interest expense,
* a $1.1 million income tax benefit compared to a $5.4
million income tax expense in the prior year quarter and
* no loss on debt modification compared to a $20.2 million
loss in the prior year quarter.
"We are pleased with the positive sales trends in the third
quarter, with pharmacy sales moving back into positive territory
and solid gains on the front end," said Mary Sammons, Rite Aid
president and CEO. "We expect that with our continued focus on
initiatives to gain new customers and improve customer
satisfaction, along with the seasonality of our business and an
extra week this fiscal year, we will deliver a strong fourth
quarter. We're also looking forward to a significant number of new
and relocated store openings in the fourth quarter, keeping us on
track to meet our goal of 80 new and relocated stores by the end
of the fiscal year."
Rite Aid Corporation -- http://www.riteaid.com/-- is one of the
nation's leading drugstore chains with annual revenues of
$16.8 billion and approximately 3,350 stores in 28 states and the
District of Columbia.
* * *
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Moody's Investors Service lowered the Speculative Grade Liquidity
Rating of Rite Aid Corporation to SGL-3 from SGL-2, affirmed all
long-term debt ratings (Corporate Family Rating of B2), and
revised the rating outlook to negative from stable. The downgrade
of the Speculative Grade Liquidity Rating reflects Moody's
expectation that mediocre operating cash flow and planned capital
investment increases over the next twelve months will require the
company to rely on external financing sources to cover the cash
flow deficit.
This rating is lowered:
-- Speculative Grade Liquidity Rating to SGL-3 from SGL-2.
Ratings affirmed are:
-- $860 million 2nd-lien senior secured notes at B2;
-- $1.28 billion of senior notes at Caa1;
-- $250 million of 4.75% convertible notes at Caa1; and
-- Corporate Family Rating (previously called the Senior
Implied Rating) at B2.
SACO I: Moody's Assigns Ba1 Rating to Class B-4 Sub. Certificates
-----------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by SACO I Trust 2005-9, and ratings ranging
from Aa1 to Ba1 to the mezzanine and subordinate certificates in
the deal.
The securitization is backed by closed-end second lien subprime
mortgage loans acquired by EMC Mortgage Corporation.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- overcollateralization, and
-- excess spread.
Moody's expects collateral losses to range from 7.25% to 7.75%.
EMC Mortgage Corporation will service the loans and act as master
servicer.
The complete rating actions are:
SACO I Trust 2005-9
Mortgage-Backed Certificates, Series 2005-9
* Class A-1, rated Aaa
* Class A-2, rated Aaa
* Class A-3, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A1
* Class M-5, rated A2
* Class M-6, rated A3
* Class B-1, rated Baa1
* Class B-2, rated Baa2
* Class B-3, rated Baa3
* Class B-4, rated Ba1
The Class B-4 certificates were sold in a privately negotiated
transaction without registration under the Securities Act of 1933
under circumstances reasonably designed to preclude a distribution
thereof in violation of the Act. The issuance has been designed
to permit resale under Rule 144A.
SALOMON BROTHERS: S&P Lifts Low-B Ratings on Four Cert. Classes
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on 12
classes of commercial mortgage pass-through certificates from
Salomon Brothers Commercial Mortgage Trust's series 2002-KEY2.
Concurrently, the ratings on seven other classes from the same
transaction are affirmed.
The raised and affirmed ratings reflect increased credit
enhancement levels that support the ratings through various stress
scenarios.
As of Nov. 18, 2005, the trust collateral consisted of 64 loans
with an aggregate outstanding principal balance of $877.6 million,
down from 66 loans amounting to $932.8 million at issuance. The
master servicer, Keycorp Real Estate Capital Markets Inc.,
provided year-end 2004 financial data for 98.7% of the pool.
Based on this information, Standard & Poor's calculated
a weighted average net cash flow debt service coverage of 1.58x,
up from 1.55x at issuance. The current DSC figure excludes five
defeased loans totaling $76.7 million. The trust has incurred one
loss to date totaling $2.7 million.
The top 10 exposures secured by real estate have an aggregate
pooled balance of $472.1 million and a weighted average DSC of
1.70x. This compares to a balance of $498.4 million and a 1.74x
DSC at issuance. The fifth-largest exposure consists of four
loans that are cross-collateralized and cross-defaulted, two of
which are on the servicer's watchlist. The ninth- and
10th-largest exposures are also on the servicer's watchlist. None
of the top 10 loans are specially serviced. As part of its
surveillance review, Standard & Poor's reviewed recent property
inspections, provided by Keycorp, for the top 10 exposures. All
of these properties were characterized as "good."
The largest-, second-, and fourth-largest loans in the trust were
shadow-rated at issuance. All of these loans exhibit credit
characteristics consistent with a high investment-grade rated
obligation. The third-largest loan in the trust was shadow-rated
investment-grade at issuance, and retains these credit
characteristics.
There are no loans in special servicing. There are 13 loans with
an outstanding balance of $130.4 million that are on Keycorp's
watchlist, including three of the top 10 exposures. The
fifth-largest exposure, the Northland portfolio, has a $39 million
balance and reported a 2004 DSC of 1.34x. The portfolio consists
of four loans secured by multifamily properties located in Florida
and Texas. Two of the four loans are on the watchlist due to
collateral exposure to Hurricane Wilma. Two of the properties may
have incurred damage due to the hurricane, but the borrower has
indicated that the occupancy of the properties has not been
affected and stated that the occupancy remains in the high 90%
range. The ninth-largest loan has an outstanding balance of
$18.4 million and is secured by a 334-unit multifamily property in
Denver, Colorado. This loan reported a 2004 DSC of 0.65x and
appears on the watchlist due to low DSC. The 10th-largest loan is
secured by a 282-unit multifamily property in Broomfield,
Colorado. This loan has an outstanding balance of $16.4 million
and reported a 2004 DSC of 0.86x. It also appears on the
watchlist due to low DSC. Additionally, two other loans on the
watchlist are secured by properties in Florida that are in the
region affected by Hurricane Wilma. Both properties reported
minor damage as a result of the hurricane. Most of the remaining
loans on the watchlist have occupancy or DSC issues.
Standard & Poor's stressed the loans on the watchlist and the
other loans with credit issues as part of its analysis. The
resultant credit enhancement levels support the raised and
affirmed ratings.
Ratings Raised
Salomon Brothers Commercial Mortgage Trust
Commercial Mortgage Pass-through Certs Series 2002-KEY2
Rating
Class To From Credit Enhancement
----- -- ---- ------------------
B AAA AA 14.30%
C AAA AA- 13.24%
D AAA A+ 12.18%
E AA+ A 10.58%
F AA A- 9.52%
H AA- BBB+ 8.72%
J A BBB 7.13%
K A- BBB- 6.06%
L BBB BB+ 4.47%
M BB+ BB 3.41%
N BB BB- 2.88%
P BB- B+ 2.61%
Ratings Affirmed
Salomon Brothers Commercial Mortgage Trust
Commercial Mortgage Pass-through Certs Series 2002-KEY2
Class Rating Credit Enhancement
----- ------ ------------------
A-1 AAA 18.82%
A-2 AAA 18.82%
A-3 AAA 18.82%
Q B 1.81%
S B- 1.02%
X-1 AAA N/A
X-2 AAA N/A
N/A - not applicable.
SECURED SERVICES: Posts $3MM Net Loss in Quarter Ended Sept. 30
---------------------------------------------------------------
Secured Services, Inc., delivered its financial results for the
quarter ended Sept. 30, 2005, to the Securities and Exchange
Commission on Nov. 22, 2005.
Secured Services incurred a $3,351,000 net loss for the three
months ended Sept. 30, 2005, versus a $1,487,000 net loss for the
same period a year earlier. The loss resulted from the Company's
failure to meet revenue and expansion goals. The loss includes
$315,000 of expected restructuring costs; $218,000 related to a
previous acquisition, $251,000 as a reserve to reduce a related
party note to zero, and $27,000 attributable to an acquisition
that has been terminated.
Revenues for the three months ended Sept. 30, 2005 and 2004 were
$652,000 and $419,000, respectively, a 56% growth. The increase
in revenues was due primarily to additional sales resulting from
the acquisition of Cybrix Corporation in Nov. 2004. Cybrix'
business contributed $289,000 in total sales for the three months
ended Sept. 30, 2005.
The Company's balance sheet showed $12,978,018 in total assets at
Sept. 30, 2005, and liabilities of $9,694,126. Secured Services
had cash flow deficiencies of approximately $6,225,000 and
$1,934,000 for the nine months ended Sept. 30, 2005 and 2004,
respectively.
Midsummer Bridge Loan
On Dec. 7, 2005, Secured Services closed a $500,000 bridge loan
financing with Midsummer Investment, Ltd.
Pursuant to the financing agreement, the Company issued a 7.5%
Promissory Note due, at the Company's option, on the earlier of
March 7, 2006 or upon our consummation of an equity or debt
financing in the aggregate of at least $500,000.
To secure repayment of the note, each of Secured Services' wholly
owned subsidiaries provided a guarantee and pledged all assets to
Midsummer as collateral, except for assets securing an existing
debt to VASCO Data Security International, Inc., which will be
included in the Midsummer Collateral when the VASCO Debt has been
satisfied.
Midsummer currently holds $4 million of the Company's 3-year
convertible debentures and warrants to purchase 1.5 million shares
of common stock at an exercise price of $1.2791 per share.
Going Concern Doubt
Secured Services' management disclosed that there is substantial
doubt about the Company's ability to continue as a going concern
in the absence of a substantial increase in revenues from sales
and services. Management pointed to the Company's low revenues,
recurring losses and cash flow deficiencies.
J.H. Cohn LLP, the Secured Service's independent auditor, however
expressed a clean and unqualified opinion after auditing the
Company's financial statements for the year ended Dec. 31, 2004.
About Secured Services
Secured Services - http://www.secured-services.com/delivers
Secured User Management software for identity-based management of
enterprise IT security, operations, and regulatory compliance.
Deploying rapidly and without disruption to any infrastructure,
Identiprise(TM) is a comprehensive identity and network access
management solution for complete administration, security, and
audit of a user's application and network access privileges, both
wired and wireless.
SECURITIZED ASSET: Moody's Rates Class B-4 Certificates at Ba1
--------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by Securitized Asset Backed Receivables LLC
Trust 2005-HE1, and ratings ranging from Aa2 to Ba1 to the
subordinate certificates in the deal.
The securitization is backed by New Century Mortgage Corporation
(37%) and WMC Mortgage Corp. (63%) originated adjustable-rate
(88%) and fixed-rate (12%) subprime mortgage loans acquired by
Barclays Bank PLC.
The ratings are based primarily:
* on the credit quality of the loans; and
* on the protection from:
-- subordination,
-- overcollateralization,
-- excess spread, and
-- an interest rate swap agreement.
The Class M and Class B certificates will each benefit from
interest rate cap agreements. The Class A-1B certificates will
benefit from a certificate guarantee insurance policy. Moody's
expects collateral losses to range from 4.85% to 5.35%.
Countrywide Home Loans Servicing LP and HomeEq Servicing
Corporation will service the loans. Moody's has assigned both
Countrywide Home Loans Servicing LP and HomeEq Servicing
Corporation its top servicer quality rating (SQ1) as primary
servicers of subprime first lien loans.
The complete rating actions are:
Securitized Asset Backed Receivables LLC Trust 2005-HE1 Mortgage
Pass-Through Certificates, Series 2005-HE1
* Class A-1A, Assigned Aaa
* Class A-1B, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3A, Assigned Aaa
* Class A-3B, Assigned Aaa
* Class A-3C, Assigned Aaa
* Class M-1, Assigned Aa2
* Class M-2, Assigned A2
* Class M-3, Assigned A3
* Class B-1, Assigned Baa1
* Class B-2, Assigned Baa2
* Class B-3, Assigned Baa3
* Class B-4, Assigned Ba1
THERMA-WAVE: Messrs. Graves & Willinge Join Board of Directors
--------------------------------------------------------------
Therma-Wave, Inc. (NASDAQ:TWAV) reported the addition of Gregory
Graves and John Willinge to its Board of Directors. The latest
appointments increase the number of Therma-Wave Board members from
eight to ten.
"We are pleased to announce the addition of Gregory Graves and
John Willinge to the Therma-Wave Board of Directors," stated
Papken Der Torossian, Therma-Wave's Chairman. "Each brings a
strong track record of success and Therma-Wave will benefit
greatly from the extensive financial as well as strategic counsel
that Greg and John offer. The expansion of the Board helps ensure
that we best leverage our position as a worldwide leader in the
metrology space to the benefit of all our stakeholders and these
additions provide an excellent complement to the distinguished
Board of Directors already in place."
Mr. Graves is Senior Vice President Strategic Planning and
Business Development of Entegris. Previous to this role, he
served as the Chief Business Development Officer of Entegris
Minnesota since September 2002 as well as Senior Vice President of
Finance from September 2003 to September 2004. Prior to joining
Entegris Minnesota, Mr. Graves held positions with Deloitte and
Touche, General Motors, The Pillsbury Company, RBC Capital Markets
and most recently at U.S. Bancorp Piper Jaffray from June 1998 to
August 2002. Mr. Graves has extensive experience in accounting,
investment banking as well as corporate development and is a CPA.
He holds a B.S. and Masters in Accounting from the University of
Alabama and an MBA from the Darden School at the University of
Virginia.
Mr. Willinge is the founder of Alverstoke Capital Group LLC, an
investment management firm based in New York. Prior to forming
Alverstoke, he was most recently a Partner at Thomas Weisel
Partners LLC where he managed an investment fund. Previously, he
was Executive Director of direct investments for a high net worth
family. Mr. Willinge also worked at Goldman, Sachs & Co. and
Rothschild. Prior to entering the finance industry, Mr. Willinge
worked as an operations engineer. Mr. Willinge has 14 years
experience in corporate finance, mergers and acquisitions, and
investment management and has served as a member of the board of
directors of a number of public and private companies. Mr.
Willinge received a Master of Business Administration from Harvard
Business School, a Bachelor of Commerce from the University of
Western Australia, and a Bachelor of Applied Science from Curtin
University of Technology.
Since 1982, Therma-Wave, Inc. -- http://www.thermawave.com/-- has
been revolutionizing process control metrology systems through
innovative proprietary products and technologies. The company is
a worldwide leader in the development, manufacture, marketing and
service of process control metrology systems used in the
manufacture of semiconductors. Therma-Wave currently offers
leading-edge products to the semiconductor manufacturing industry
for the measurement of transparent and semi-transparent thin
films; for the measurement of critical dimensions and profile of
IC features; for the monitoring of ion implantation; and for the
integration of metrology into semiconductor processing systems.
* * *
Going Concern Doubt
As reported in the Troubled Company Reporter on July 7, 2005,
PricewaterhouseCoopers LLP raised substantial doubt about
Therma-Wave, Inc.'s ability to continue as a going concern after
it audited the company's financial statements for the year ended
April 3, 2005. The qualification was included in PwC's audit
report as a result of the Company's recurring net losses and
negative cash flow.
THERMOVIEW INDUSTRIES: Court Okays Weber & Rose as Panel's Counsel
------------------------------------------------------------------
The Honorable Joan L. Cooper of the U.S. Bankruptcy Court for the
Western District of Kentucky gave the Official Committee of
Unsecured Creditors appointed in Thermoview Industries, Inc., and
its debtor-affiliates' bankruptcy cases permission to hire Weber &
Rose, PSC, as its counsel.
Weber & Rose will:
(a) advise the Committee with respect to its powers and duties
in the debtors' chapter 11 cases;
(b) prepare all necessary pleadings, attend and represent the
Committee at hearings before the court;
(c) assist the Committee in its investigation of the acts,
conduct, assests, liabilities and financial condition of
the Debtors, and to review the operation of the Debtors'
business and other matters relevant to the Debtors'
bankruptcy cases;
(d) participate with the Committee and the Debtors in the
formulation and confirmation of a plan of reorganization
and a disclosure statement, if necessary and appropriate;
and
(e) perform all other legal services for the Committee as may
be required or necessary and in the interests of the
unsecured creditors involved in these bankruptcy cases.
Cathy S. Pike, Esq, a member at Weber & Rose, PSC, discloses that
the Firm will be paid from the carve-out for professional fees for
the Committee as previously ordered by the Court in the DIP order.
Papers filed with the court did not specify the Firm's billing
rates.
Ms. Pike assures the court that Weber & Rose, PSC, is
disinterested as that term is defined in Section 101(14) of the
U.S. Bankruptcy Code.
Weber & Rose, PSC -- http://www.weberandrose.com/-- a full
service law firm that provides quality legal services to the
healthcare and business communities of Kentucky and Southern
Indiana.
Headquartered in Louisville, Kentucky, ThermoView Industries, Inc.
-- http://www.thv.com/-- is a national company that designs,
manufactures, markets and installs high-quality replacement
windows and doors as part of a full-service array of home
improvements for residential homeowners. The Company and its
subsidiaries filed for chapter 11 protection on Sept. 26, 2005
(Bankr. W.D. Ky. Case Nos. 05-37123 through 05-37132). When the
Debtors filed for protection from their creditors, they listed
$3,043,764 in total assets and $34,104,713 in total debts.
THERMOVIEW INDUSTRIES: Morris-Anderson Approved as Fin'l Advisors
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Kentucky
gave ThermoView Industries, Inc. and its debtor-affiliates,
permission to employ Morris-Anderson & Associates, Ltd. as their
financial advisors.
Morris-Anderson will:
1) assist the Debtors in preparing their bankruptcy schedules
and statements, including their schedules of assets and
liabilities and statements of financial affairs;
2) prepare bankruptcy reporting requirements for the Debtors
and assists them in dealing with vendor issues as they
may arise; and
3) render all other financial advisory services to the Debtors
that are necessary in their chapter 11 cases.
Mark J. Welch, a member of Morris-Anderson, discloses that his
Firm received a $75,000 retainer.
Mr. Welch reports Morris-Anderson's professionals bill:
Designation Hourly Rate
----------- -----------
Partners $395
Managers $275
Morris-Anderson assures the Court that it does not represent any
interest materially adverse to the Debtors and is a disinterested
person as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Louisville, Kentucky, ThermoView Industries, Inc.
-- http://www.thv.com/-- is a national company that designs,
manufactures, markets and installs high-quality replacement
windows and doors as part of a full-service array of home
improvements for residential homeowners. The Company and its
subsidiaries filed for chapter 11 protection on Sept. 26, 2005
(Bankr. W.D. Ky. Case Nos. 05-37123 through 05-37132). When the
Debtors filed for protection from their creditors, they listed
$3,043,764 in total assets and $34,104,713 in total debts.
THERMOVIEW INDUSTRIES: Has Until Feb. 28 to Decide on Leases
------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Kentucky
gave ThermoView Industries, Inc. and its debtor-affiliates, until
Feb. 28, 2006, the period within which they can elect to assume,
assume and assign, or reject their unexpired nonresidential real
property leases.
The Debtors remind the Court that they have a pending motion to
sell substantially all of their assets free and clear of all
liens, claims and encumbrances and the assumption and assignment
of certain contractual obligations to Thermoview Acquisition
Corporation, a special acquisition entity established by MMP
Capital Partners, L.P., or to a successful bidder in a public
auction.
The Debtors gave the Court three reasons in support of the
extension:
1) the number of unexpired leases involved in relation to the
proposed asset sale and the complexities of the real estate
market;
2) it will give the Debtors more time and opportunity to
properly evaluate the profitability of the locations where
the unexpired leases are located; and
3) it will aid in effectuating the proposed asset sale by
assuring a smooth transition of the Debtors' operations to
the Thermoview Acquisition or the successful bidder.
Headquartered in Louisville, Kentucky, ThermoView Industries, Inc.
-- http://www.thv.com/-- is a national company that designs,
manufactures, markets and installs high-quality replacement
windows and doors as part of a full-service array of home
improvements for residential homeowners. The Company and its
subsidiaries filed for chapter 11 protection on Sept. 26, 2005
(Bankr. W.D. Ky. Case Nos. 05-37123 through 05-37132). When the
Debtors filed for protection from their creditors, they listed
$3,043,764 in total assets and $34,104,713 in total debts.
THREE-FIVE: Hires SG Cowen as Financial Advisors
------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona gave Three-
Five Systems, Inc., permission to employ SG Cowen & Co., LLC, as
its financial advisors, nunc pro tunc to June 1, 2005.
Before filing for bankruptcy, the Debtor retained SG Cowen in
connection with the sale of:
-- TFS Beijing to International Display Works, Inc.,
-- Innovative Display Systems to Video Display Corporation; and
-- Three Five Systems Pacific, Inc., to Ionic EMS, Inc.
In addition, SG Cowen currently advises the Debtor on transactions
with respect to the remainder of the Debtor's assets, including
the pending sale of TFS Electronic Manufacturing Services, Inc.,
and potential transaction with respect to TFS Electric
Manufacturing Services Sdn. Bhd.
Specifically, SG Cowen will continue to:
(a) assist the Debtor in the completion of the pending sale of
TFS Electronic Manufacturing Services, Inc., or its assets;
(b) assist the Debtor in the potential sale of TFS Electronic
Manufacturing Services Sdn. Bhd. and in preparing materials
for distribution and presentation to parties-in-interest;
(c) advise the Debtor as to strategy and tactics for
negotiations related to a transaction and, if request by the
Debtor, participate in the negotiations;
(d) assist and advise the Debtor with respect to the financial
form and structure of a transaction;
(e) if requested by the Debtor's Board of Directors, render a
written opinion customary to SG Cowen for similar
transaction to the Board as to the fairness, from a
financial point of view, to the Debtor's stockholders of the
consideration to be received pursuant to a transaction,
provided that the opinion may be in a form as SG Cowen may
determine and it may qualify as deem appropriate; and
(f) render other financial advisory and investment banking
services as may from to time be agreed upon by the Debtor
and SG Cowen.
Robert Smock, a director at SG Cowen, disclosed that his Firm will
receive:
-- a $50,000 non-refundable retainer to be credited against the
first transaction fee payable;
-- a $400,000 fairness opinion fee due and payable if and when
SG Cowen delivers the opinion to the company's Board of
Directors;
-- if a transaction is consummated or a definitive agreement
with respect to a transaction is executed:
(i) $1,000,000 in transaction fee;
(ii) 2.5% of aggregate consideration greater than
$60 million but less than $100 million; and
(iii) 3.5% of aggregate consideration equal to or greater
than $100 million;
-- a break-up fee equal to 25% in cash of the aggregate of all
fees, payments, judgments or amounts payable promptly.
The Debtor has paid the Firm $550,000, which will be credited
towards the transaction fee.
Mr. Smock assures the Court that his Firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Tempe, Arizona, Three-Five Systems, Inc. --
http://tfsc.com/-- provides specialized electronics manufacturing
services to original equipment manufacturers. TFS offers a broad
range of engineering and manufacturing capabilities. The Company
filed for chapter 11 protection on Sept. 8, 2005 (Bankr. D. Ariz.
Case No. 05-17104). Thomas J. Salerno, Esq., at Squire, Sander &
Dempsey, LLP, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
$11,694,467 in total assets and $2,880,377 in total debts.
TOM'S FOODS: 10-1/2% Noteholders Demand Additional Payments
-----------------------------------------------------------
The Bank of New York, as successor Indenture Trustee and
Collateral Agent under an indenture, dated Oct. 14, 1997, issued
by Tom's Foods in connection with the issue of its 10-1/2% Senior
Notes due November 1, 2004, asks the U.S. Bankruptcy Court for the
Middle District of Georgia, Columbus Division, for an order:
a) granting relief from automatic stay;
b) fixing the amount of the Bank's superpriority claim; and
c) directing payment of the Bank's claim.
Under the 1997 $60 million indenture, the Bank asserts an interest
in the proceeds of the sale of the Debtor's assets to Columbus
Capital Acquisitions, Inc. The sale proceeds are being held in
escrow in accordance with a Court order dated Oct. 19, 2005. The
Bank wants the stay lifted so it can get hold of the escrowed
account in satisfaction of its adequate protection liens.
The Bank tells the Court that the value of the assets securing its
claim decreased during the course of the Debtor's bankruptcy case
by at least $38 million. The Bank wants the Court to acknowledge
the $38 million decline in the value of the collateral and direct
payment of that amount as adequate protection as required under
the Bankruptcy Code.
Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures
and distributes snack foods. Its product categories include
chips, sandwich crackers, baked goods, nuts, and candies. The
Company filed for chapter 11 protection on April 6, 2005 (Bankr.
M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at
Greenberg Traurig, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $93,100,000 and total debts of
$79,091,000.
VACCAR TOWERS: Case Summary & 14 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Vaccar Towers, Inc.
dba Lincoln Place
845 East Indianola
Youngstown, Ohio 44502-0000
Bankruptcy Case No.: 05-84586
Chapter 11 Petition Date: December 15, 2005
Court: Northern District of Ohio (Youngstown)
Judge: Kay Woods
Debtor's Counsel: Andrew W. Suhar, Esq.
Suhar & Macejko, LLC
1101 Metropolitan Tower
P.O. Box 1497
Youngstown, Ohio 44501-1497
Tel: (330) 744-9007
Fax: (330) 744-5857
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $500,000 to $10 Million
Debtor's 14 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
ADP Payroll Service Payroll service $125,000
100 Commerce Drive
Pittsburgh, PA 15230
AFCO General liability $100,000
4501 College Boulevard, insurance
Suite 320
Leawood, KS 66211
US Foodservice Food vendor $70,000
P.O. Box 642561
Pittsburgh, PA 15264
Dominion East Ohio Utility bill $60,000
Anthem Blue Cross Blue Shield Health insurance $25,000
Freidman Rummell Legal services $25,000
Austintown Dairy Food vendor $18,000
Millisor & Nobil Legal services $18,000
Ohio Edison Utility bill $15,000
SBC Credit Corp. Utility bill $15,000
Western Reserve Mechanical Contractor $15,000
Institutional Prescriptions Medical supplies $10,093
Hunter Consulting $6,243
Manpower Temp. agency $6,158
WAMU MORTGAGE: Moody's Rates Class B-12 Sub. Certificates at Ba3
----------------------------------------------------------------
Moody's Investors Service assigned a Aaa rating to the senior
certificates issued by WaMu Mortgage Pass-Through Certificates,
Series 2005-AR15 and ratings ranging from Aa1 to Ba3 to the
subordinate certificates in the deal.
The securitization is backed by Washington Mutual Bank originated
adjustable rate loans with a negative amortization option. The
ratings are based primarily on the credit quality of the loans,
and on the protection from subordination. Moody's expects
collateral losses to range from 1.05% to 1.25%.
Washington Mutual Bank will service the loans.
The complete rating actions are:
WaMu Mortgage Pass-Through Certificates, Series 2005-AR15
* Class A-1A1, Assigned Aaa
* Class A-1A2, Assigned Aaa
* Class A-1B1, Assigned Aaa
* Class A-1B2, Assigned Aaa
* Class A-1B3, Assigned Aaa
* Class A-1B4, Assigned Aaa
* Class A-1C1, Assigned Aaa
* Class A-1C2, Assigned Aaa
* Class A-1C3, Assigned Aaa
* Class A-1C4, Assigned Aaa
* Class X, Assigned Aaa
* Class B-1, Assigned Aa1
* Class B-2, Assigned Aa2
* Class B-3, Assigned Aa3
* Class B-4, Assigned A1
* Class B-5, Assigned A2
* Class B-6, Assigned A3
* Class B-7, Assigned A3
* Class B-8, Assigned Baa1
* Class B-9, Assigned Baa2
* Class B-10, Assigned Baa3
* Class B-11, Assigned Ba2
* Class B-12, Assigned Ba3
* Class R, Assigned Aaa
WASTE SERVICES: Moody's Affirms $160 Million Notes' Caa2 Rating
---------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Waste Services,
Inc. The affirmation follows Waste Services announcement that the
company proposes to incur up to $50 million of additional term
loan indebtedness as provided for under the terms of its existing
senior credit facility.
Moody's took these rating actions:
* affirmed the B2 rating on the $60 million guaranteed senior
secured revolving credit facility due 2011;
* affirmed the B2 rating on the $100 million guaranteed senior
secured Term Loan C due 2011;
* assigned a B2 rating on the the proposed $50 million
accordion senior secured term loan tranches, including
a $25 million unfunded delayed draw tranche;
* affirmed the Caa2 $160 million guaranteed senior subordinated
notes due 2014; and
* affirmed the B3 Corporate Family Rating.
The ratings outlook is stable.
The proposed incremental guaranteed senior secured term loan
comprises:
* a $25 million funded tranche; and
* a $25 million unfunded delayed draw tranche.
The net proceeds under the funded tranche will be used to
refinance amounts outstanding under Waste Services' existing
revolving credit facility. The remaining $25 million undrawn
tranche will be available for future acquisitions. The terms of
the new term loans will be substantially identical to the
company's existing term loans.
Moody's affirmation of the ratings reflects the fact that leverage
is unchanged by the transaction and that the incremental liquidity
provides increased future flexibility to the company, subject to
compliance with existing covenants. Any draws on the $25 million
currently undrawn tranche will be for acquisition purposes and
will be represented by assets.
Moody's notes that the company is highly leveraged with negative
free cash flows expected for 2005 but anticipates that the company
will continue to show performance improvement through the next
several quarters as it capitalizes further on:
* recent pricing initiatives;
* improved volume and internalization momentum as demonstrated
through improved EBITDA margins in the third quarter; and
* the exit from certain underperforming municipal contracts
in Florida.
Waste Services, Inc. is a multi-regional, integrated solid waste
services company, providing:
* collection,
* transfer,
* landfill disposal, and
* recycling services for:
- commercial,
- industrial, and
- residential customers in the:
-- United States, and
-- Canada.
The company is the successor to Capital Environmental Resource
Inc., now Waste Services (CA) Inc., by a migration transaction
completed effective July 31, 2004. Waste Services had revenues of
$379 million for the twelve months ending September 30, 2005. The
company is in the process of moving its U.S. corporate office from
Scottsdale, Arizona to Boca Raton, Florida.
WCA WASTE: Moody's Upgrades Long-Term Debt Ratings
--------------------------------------------------
WCA Waste Corporation (Nasdaq:WCAA) reported on Dec. 16, 2005,
that Moody's' Investors Service upgraded the rating of WCA Waste
Corporation. The upgrade acknowledges WCA Waste Corporation's
continued progress in implementing its acquisition-based strategy,
recent strong relative performance in terms of organic volume and
price increases in excess of industry trends and a favorable
pricing environment across the industry. Moody's took the
following actions:
-- Upgraded to B2 from B3 $100 million guaranteed first lien
credit facility due 2010, including the proposed activation
of the $25 million accordion feature;
-- Upgraded to B2 from B3 $100 million guaranteed first lien
credit facility due 2011;
-- Affirmed the Caa1 rating of $25 million guaranteed second
lien term facility due 2011; and
-- Upgraded to B2 from B3 the Corporate Family Rating.
Concurrently, Moody's assigned a Speculative Grade Liquidity
rating of SGL-2 for WCA Waste Corporation. The ratings outlook is
stable.
WCA Waste Corporation is an integrated company engaged in the
transportation, processing and disposal of non-hazardous solid
waste. The company's operations consists of nineteen landfills,
twenty-one transfer stations/material recovery facilities and
twenty-three collection operations located throughout Alabama,
Arkansas, Florida, Kansas, Missouri, North Carolina, South
Carolina, Tennessee and Texas. The Company's common stock is
traded on the Nasdaq National Market System under the symbol
"WCAA."
WCI STEEL: Ch. 11 Cases Permanently Assigned to Judge Shea-Stonum
-----------------------------------------------------------------
The Hon. Randolph Baxter, Chief Judge of the U.S. Bankruptcy Court
for the Northern District of Ohio, Eastern Division, transferred
the chapter 11 cases of WCI Steel, Inc., and its debtor-affiliates
to the U.S. Bankruptcy Court for the Northern District of Ohio,
Eastern Division at Akron and assigned these cases to the Hon.
Marilyn Shea-Stonum.
Judge Shea-Stonum had previously shared responsibility over the
Debtors' chapter 11 cases with the Hon. Kaye Woods of the U.S.
Bankruptcy Court for the Northern District of Ohio, Eastern
Division at Youngstown.
Judge Shea-Stonum presided over all matters related to the
confirmation of a chapter 11 plan of reorganization while Judge
Woods presided over all other matters and proceedings arising in
the bankruptcy cases.
WCI is an integrated steelmaker producing more than 185 grades of
custom and commodity flat-rolled steel at its Warren, Ohio
facility. WCI products are used by steel service centers,
convertors and the automotive and construction markets. WCI Steel
filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D.
Ohio Case No. 03-44662). Christine M Pierpont, Esq., and G.
Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P.,
represent the Company. When WCI Steel filed for chapter 11
protection it reported $356,286,000 in total assets and
liabilities totaling $620,610,000.
WEX PHARMACEUTICALS: Shareholders Dissatisfied Over Lack of Info
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Dec. 13, 2005, the
Board of Directors of WEX Pharmaceuticals Inc. called for a
special meeting of shareholders for 10:00 a.m. PT on Thursday,
Jan. 26, 2006 to enable shareholders to consider the two proposals
for restructuring the Board.
Dr. Margaret How Yeen Chow says that she is pleased that
management has finally determined to call a special meeting of
shareholders but notes that it is one month past the date the
meeting was required to have been called by law and seven weeks
after it was initially requisitioned by Dr. Chow.
Dr. Chow is disappointed that, in its announcement calling the
Special Meeting, the Board provided no explanation as to why it:
- waited until December 9th to announce that it had received
two shareholder requisitions, notwithstanding that the
requisition for a Board restructuring was initially made by
Dr. Chow on Oct. 21, 2005;
- failed to call a special meeting in response to the
requisition made by Dr. Chow, within the time that it was
required by law to do so;
- determined to call the Special Meeting two weeks after the
date fixed by Dr. Chow for a special meeting; and
- determined to call the Special Meeting during an important
Chinese holiday period, thereby potentially adversely
impacting the participation of a large number of WEX's
shareholders at the Special Meeting.
"The Board's failure to call a special meeting in the manner
required by applicable law, its ongoing failure to recruit either
a permanent Chief Executive Officer or Chief Financial Officer,
and its failure to appoint an interim Chief Financial Officer
since Michael Chen resigned from that position, is further
evidence of the Board's ongoing inability to effectively function
and to establish a strategic direction for WEX," said Dr. Chow.
"I am dismayed and bewildered that the Board has still not been
able to assemble an independent management team to run even the
day-to-day operations of the company, let alone lead it to the
next level." "It is strong evidence that a change in the Board is
essential to maximize shareholder value," said Dr. Chow.
Notwithstanding that Dr. Chow has already called a special meeting
of shareholders of WEX, Dr. Chow is prepared to consolidate that
meeting with the Special Meeting so that a single meeting of
shareholders can be held on Jan. 26, 2006. "This will allow WEX
shareholders a proper and orderly way of selecting directors and
protect their right to make a fully informed decision on the
future direction of WEX," said Dr. Chow.
Dr. Chow will be preparing and delivering to all shareholders a
proxy circular with respect to the combined meeting outlining her
proposed nominees for appointment to the Board, and a
commercialization strategy for WEX going forward, in early
January.
WEX Pharmaceuticals Inc. is dedicated to the discovery,
development, manufacture and commercialization of innovative drug
products to treat moderate to severe acute and chronic pain,
symptom pain relief associated with addiction withdrawal from
opioid abuse and medicines designed for local anaesthesia. The
Company's principal business strategy is to derive drugs from
naturally occurring toxins and develop proprietary products for
the global market. The Company's Chinese subsidiary sells generic
products manufactured at its facility in China.
* * *
As reported in the Troubled Company Reporter on Aug. 22, 2005, WEX
Pharmaceuticals Inc. was issued a request for early redemption of
its unsecured convertible debentures in the aggregate principal
amount of US$5.1 million that were issued in June 2004 by the
Company's wholly owned subsidiary, Wex Medical Ltd., to 3
investment funds managed by a major Asian financial institution.
The Institution alleges that the Company breached certain
representations and warranties contained in the agreements in
regards to the registered ownership of the drug withdrawal patent
"Use of Amino Quinazoline Hydride Compound and its Derivative for
Abstaining from Drug Dependence". As the debentures may now be
due on demand, in accordance with Canadian generally accepted
accounting principles, for financial statement purposes they have
been reclassified as current liabilities as at June 30, 2005.
Going Concern Doubt
Management believes that with the existing cash resources there
are sufficient resources for the Company's current programs to
fund operations until early Q1 in fiscal 2007. At June 30, 2005,
the Company had incurred significant losses and had an accumulated
deficit of $49 million. The Company's ability to continue as a
going concern is uncertain and dependent upon its ability to
achieve profitable operations, obtain additional capital and
dependent on the continued support of its shareholders.
Management is planning to raise additional capital to finance
expected growth. The outcome of these matters cannot be predicted
at this time. If the Company is unable to obtain adequate
additional financing, management will be required to curtail the
Company's operations.
The Company's contractual commitments are related to the lease of
the Company's office space and operating leases for office
equipment, plus clinical and non-clinical research. Payments
required under these agreements and leases are:
-- pursuant to the license agreement referred to in note 12 to
the consolidated financial statements, the Company is
jointly responsible for development costs in excess of
$40 million (EUR 25 million), if any.
-- pursuant to certain People's Republic of China
regulations, the Company's subsidiary is likely required to
transfer certain percentages of its profit, as determined
under the PRC accounting regulations, to certain statutory
funds. To date, the subsidiary has not recognized any
statutory reserves as it has not been profitable. Should
the subsidiary become profitable in the future, it will be
required to recognize these statutory accounts and
accordingly, a portion of the subsidiary's future earnings
will be restricted in use and not available for
distribution.
WINN-DIXIE: Equity Panel Can Retain J&B Despite Protests
--------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Oct. 21, 2005, on Sept. 7, 2005, Winn-Dixie Stores, Inc., and its
debtor-affiliates' Official Committee of Equity Security Holders
sought the authority of the U.S. Bankruptcy Court for the Middle
District of Florida to retain Paul, Hastings, Janofsky & Walker
LLP as its legal counsel.
The Equity Committee and Paul Hastings have chosen Jennis &
Bowen, P.L., to serve as the Committee's local co-counsel to
represent its interests in the Debtors' Chapter 11 proceedings,
nunc pro tunc to Aug. 18, 2005. Jennis & Bowen maintains its
office in Tampa, Florida. David S. Jennis, Esq., and Chad S.
Bowen, Esq., would assume primary responsibility as local
bankruptcy counsel.
As reported in the Troubled Company Reporter on Oct. 21, 2005, the
firm will be paid in accordance with its current hourly rates.
Mr. Jennis charges at $285 per hour and Mr. Bowen at $225 per
hour. Additional attorneys and legal assistants will be staffed
to work on the firm's representation as necessary.
Jennis & Bowen will also be reimbursed for necessary out-of-
pocket expenses incurred.
Retirees Committee Objects
The Ad Hoc Committee of Winn-Dixie Retirees asks the Court to
postpone any consideration of the Retention Application until the
request to disband the Official Committee of Equity Security
Holders is resolved or the U.S. Trustee decides to disband the
Equity Committee. The Retirees Committee further asks the Court
to withhold any approval of the Application until evidence
regarding the reasonableness of the proposed hourly rates can be
presented.
* * *
The Court permits the Equity Committee to retain Jennis & Bowen,
P.L., as its local counsel, over the Retirees Committee's
objection.
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, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 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. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WMG ACQUISITION: Debt Plans Spurs S&P to Affirm B+ Credit Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' long-term
corporate credit rating on WMG Acquisition Corp. All ratings on
the company have been removed from CreditWatch with positive
implications, where they were previously placed on April 20, 2005.
The outlook is stable.
New York City, New York-based music recording and publishing
company WMG had approximately $2.2 billion in debt outstanding at
Sept. 30, 2005.
The company was acquired from Time Warner Inc. in March 2004 by an
investor group comprising:
* Thomas H. Lee Partners,
* Music Capital Partners,
* Bain Capital Partners, and
* Providence Equity Partners.
"Affirmation of WMG's 'B+' long-term corporate credit rating,"
said Standard & Poor's credit analyst Alyse Michaelson Kelly,
"reflects Standard & Poor's expectation that WMG is more likely to
use its good discretionary flow in the near term to return capital
to shareholders or for business reinvestment, rather than to
reduce debt."
WMG has aggressively rewarded shareholders since its first rated
debt issuance, with capital distributions amounting to more than
$1 billion in 2004. WMG completed an initial public offering in
May 2005 and used the proceeds to pay down debt, resulting in a
debt-to-EBITDA ratio of 4.6x at fiscal year-end Sept. 30, 2005,
compared to 7x in 2004.
Standard & Poor's is concerned that WMG's debt capacity could be
consumed in the near term, depending on management's financial
policies.
"The potential for shareholder-favoring initiatives, even if
fully funded out of WMG's discretionary cash flow," added
Ms. Kelly, "while CD sales continue to decline and the business
rapidly transitions to digital, limits upward rating momentum at
this time."
WORLDCOM INC: Wants to Interplead MCI Funds and Stock
-----------------------------------------------------
Before WorldCom, Inc., and its debtor-affiliates filed for chapter
11 filing, Debtors MCI WorldCom Network Services, Inc., MCI
WorldCom Communications, Inc., TTI National, Inc., and WorldCom,
Inc., filed a lawsuit against Galaxy Long Distance, Inc., in
United States District Court for the Middle District of Florida.
Subsequently, Akerman Senterfitt withdrew as Galaxy's counsel.
Murray Silverstein, P.A., succeeded Akerman as Galaxy's
representative.
Philip V. Martino, Esq., at DLA Piper Rudnick Gray Cary US, LLP,
in Tampa, Florida, relates that pursuant to the District Court
Litigation, Galaxy filed Claim No. 12138 for $20,000,000 in the
Debtors' Chapter 11 case. The Debtors objected to Galaxy's claim.
In a Court-approved stipulation dated September 28, 2005, the
parties agreed that Galaxy's Claim No. 12138 will be reduced and
allowed as a general unsecured claim for $1,000,000, equivalent to
a $178,500 cash payment and 7,140 shares of stock distribution
with a then current market value aggregating $141,586.
However, Mr. Martino reveals that three entities are now asserting
a right to all or some of the cash and stock settlement proceeds:
1. Galaxy;
2. Akerman Senterfitt, Galaxy's former law firm; and
3. Murray Silverstein, P.A., Galaxy's current law firm.
In this regard, the Reorganized Debtors ask the Court for leave to
interplead these stock and cash proceeds with the Clerk of the
Court pending resolution of the competing claims:
a) a $178,500 settlement check;
b) a $28,788 special dividend check; and
c) a certificate for 7,140 shares of MCI stock.
In its motion to enforce charging lien filed with the Tampa
Court, Akerman asserts these amounts:
-- $198,228 for services rendered; plus
-- $124,839 in interest from April 1, 2002, to September 30,
2005; plus
-- a per diem of $98 until it is paid in full from the
settlement proceeds.
Consequently, the Tampa Court denied Akerman's Motion to Enforce
without prejudice, finding that the dispute should be resolved by
the Bankruptcy Court.
In addition, Silverstein filed with the Bankruptcy Court a notice
of charging and retaining liens asserting $125,000 plus an
unspecified amount of interest.
Akerman and Silverstein each demanded that none of the proceeds be
paid without first addressing their respective liens. Galaxy also
claims a right to the proceeds pursuant to the Settlement
Agreement.
Mr. Martino relates that Rule 22(1) of the Federal Rule of Civil
Procedure provides that "[p]ersons having claims against the
plaintiff may be joined as defendants and required to interplead
when their claims are such that the plaintiff is or may be exposed
to double or multiple liability."
Thus, Mr. Martino argues that by reason of the conflicting and
excessive claims, the Debtors, as stakeholders, may be exposed to
having to pay more than is justly due and is in doubt as to which
claimant is entitled to be paid from the settlement proceeds.
Mr. Martino informs Judge Gonzalez that DLA Piper, the Debtors'
law firm, retains the settlement proceeds in its Client Funds
Account pending guidance from the Court.
Galaxy Responds
Galaxy disputes the Debtors' contention that they have received
competing demands for the settlement funds.
Murray B. Silverstein, Esq., in St. Petersburg, Florida, asserts
that to maintain an action for interpleader, DLA Piper must
establish that:
(a) the competing claims have a common origin;
(b) the same thing or "stake" must be claimed by the
defendants;
(c) it has no interest in the subject matter; and
(d) it must stand indifferent between the claimants, having
incurred no independent liability to either of the
claimants, and it must appear that it has no action that
has caused the embarrassment of conflicting claims and the
peril of double vexation.
Mr. Silverstein contends that the competing claims do not have a
common origin. Galaxy's claim arises out of its Settlement
Agreement with the Debtors, while Akerman's claim arises out of an
attorney fee dispute, which it may properly bring in a separate
action, Mr. Silverstein says.
The Debtors' counsel has filed a notice of a charging lien to
secure its rights as against the purported Akerman lien.
Silverstein did not make demands on DLA Piper with respect to its
fees, but only with respect to demanding delivery of Galaxy's
settlement proceeds.
Mr. Silverstein further contends that DLA Piper cannot maintain an
action for interpleader because it is not a disinterested party.
It would not ordinarily be exposed to any liability.
DLA Piper has caused its own exposure by intercepting the
settlement proceeds that were to be paid directly to Galaxy
pursuant to the Settlement Agreement, Mr. Silverstain says.
Thus, when a complainant subjects itself to double liability by
its own conduct, it is in no position to complain of the
embarrassment caused by its own course of action, Mr. Silverstein
maintains.
Accordingly, Galaxy asks the Court to deny the Debtors'
Interpleader Motion.
Galaxy further believes that Akerman's request to enforce charging
lien should also be dismissed because:
(a) Akerman's lien is untimely;
(b) the settlement proceeds have been distributed; and
(c) jurisdiction no longer exists to enforce the purported
lien.
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 $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Abraxas Petro ABP (27) 120 (4)
Accentia Biophar ABPI (8) 34 (20)
AFC Enterprises AFCE (44) 216 53
Alaska Comm Sys ALSK (9) 589 49
Alliance Imaging AIQ (43) 643 42
AMR Corp. AMR (729) 29,436 (1,882)
Atherogenics Inc. AGIX (98) 213 190
Bally Total Fitn BFT (1,463) 486 (442)
Biomarin Pharmac BMRN (65) 209 (38)
Blount International BLT (201) 427 110
CableVision System CVC (2,486) 10,204 (1,881)
CCC Information CCCG (95) 112 34
Centennial Comm CYCL (463) 1,456 85
Cenveo Inc CVO (12) 1,146 127
Choice Hotels CHH (165) 289 (34)
Cincinnati Bell CBB (672) 1,893 (10)
Clorox Co. CLX (532) 3,570 (229)
Columbia Laborat CBRX (13) 17 10
Compass Minerals CMP (83) 686 149
Crown Media HL CRWN (64) 1,250 (125)
Deluxe Corp DLX (101) 1,461 (297)
Denny's Corporation DENN (261) 498 (72)
Domino's Pizza DPZ (553) 414 3
DOV Pharmaceutic DOVP (3) 116 94
Echostar Comm DISH (785) 7,533 321
Emeritus Corp. ESC (134) 713 (62)
Empire Resorts NYNY (18) 65 (4)
Foster Wheeler FWLT (375) 1,936 (186)
Guilford Pharm GLFD (20) 136 60
Graftech International GTI (13) 1,026 283
Hollinger Int'l HLR (112) 1,025 (331)
I2 Technologies ITWO (144) 352 112
ICOS Corp ICOS (67) 232 141
IMAX Corp IMAX (34) 245 30
Immersion Corp. IMMR (15) 46 29
Indevus Pharma IDEV (103) 119 86
Intermune Inc. ITMN (30) 194 109
Investools Inc. IED (20) 64 (46)
Kulicke & Soffa KLIC (32) 386 186
Ligand Pharm LGND (96) 306 (99)
Lodgenet Entertainment LNET (69) 283 22
Maxxam Inc. MXM (681) 1,024 103
Maytag Corp. MYG (95) 2,989 371
McDermott Int'l MDR (53) 1,627 244
McMoran Exploration MMR (61) 407 118
NPS Pharm Inc. NPSP (55) 354 258
Owens Corning OWENQ (8,443) 8,142 976
ON Semiconductor ONNN (317) 1,171 300
Qwest Communication Q (2,716) 23,727 822
Revlon Inc. REV (1,169) 980 86
Riviera Holdings RIV (28) 221 6
Rural/Metro Corp. RURL (93) 315 56
Rural Cellular RCCC (460) 1,367 46
SBA Comm. Corp. SBAC (47) 886 25
Sepracor Inc. SEPR (213) 1,193 703
St. John Knits Inc. SJKI (52) 213 80
Tiger Telematics TGTL (66) 31 (76)
Tivo Inc. TIVO (9) 163 36
US Unwired Inc. UNWR (76) 414 56
Unigene Labs Inc. UGNE (15) 14 (9)
Unisys Corp UIS (141) 3,888 318
Vector Group Ltd. VGR (38) 536 168
Vertrue Inc. VTRU (35) 441 (80)
Visteon Corp. VC (1,430) 8,823 404
Worldspace Inc. WRSP (1,475) 765 249
WR Grace & Co. GRA (574) 3,465 848
*********
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.
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