/raid1/www/Hosts/bankrupt/TCR_Public/060112.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, January 12, 2006, Vol. 10, No. 10
Headlines
AAIPHARMA INC: Insists on November 7 Governmental Claims Bar Date
AAIPHARMA INC: Seeks Court's Okay to Pay Due Diligence Fees
ALLIANCE GAMING: Performance Decline Prompts Fitch's B- Ratings
AMERICAN CASINO: Moody's Affirms $215 Million Sr. Notes' B2 Rating
AMERICAN FILM: Involuntary Chapter 11 Case Summary
AMERIGAS PARTNERS: Moody's Rates Proposed $350 Million Notes at B1
AMERIGAS PARTNERS: Fitch Rates $350 Million Senior Notes at BB+
ANALYTICAL SURVEYS: Receives Nasdaq Listing Deficiency Notice
ATA AIRLINES: Realigns Senior Leadership Team's Responsibilities
BALLY TOTAL: Files Counterclaim Against Pardus & Liberation
BAYVIEW FINANCIAL: Fitch Affirms Low-B Ratings on 4 Cert. Classes
BOUNDLESS MOTOR: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil.
BUEHLER FOODS: Files Plan and Disclosure Statement in Indiana
BUEHLER FOODS: Buehler LLC Files Plan and Disclosure Statement
BUEHLER FOODS: Carolinas Files Plan and Disclosure Statement
BUEHLER FOODS: Kentucky Files Plan and Disclosure Statement
CALPINE CORP: 2nd Lien Debtholders Want DIP Order Reconsidered
COLLINS & AIKMAN: Has Exclusive Right to File Plan Until May 1
COLLINS & AIKMAN: Inks AIG Insurance Program Agreement
COLLINS & AIKMAN: Taps Hilco as Professional Appraiser
CONTECH CONSTRUCTION: Moody's Rates $525 Million Facilities at B1
CORDOVA FUNDING: S&P Raises Ratings on $225MM Sr. Sec. Bonds to BB
CORPORATE BACKED: S&P Chips Ratings on $29MM Class Certs. to BB-
CORPORATE BACKED: S&P Raises Rating on $68MM Certs. to A from BB+
CORONET FOODS: Stipulates with Sheetz to Resolve Plan Objections
CORUS ENT: Extends 8.75% Senior Subordinated Notes Offering
CRC HEALTH: Moody's Rates $220 Million Sr. Sub. Notes at Caa1
DAVCRANE INC: Court Extends Plan Filing Period to January 30
DON SIMPLOT: Wants Court to Extend Filing of Schedules
EB2B COMMERCE: Posts $23,862 Net Loss in Quarter Ended March 31
ENRON CORP: District Ct. Won't Dismiss RBC From Class Action Suit
ENVIRONMENTAL ELEMENTS: Sells All Assets to Clyde Bergemann
FEDDERS CORPORATION: Files Delinquent Quarterly Reports
FIRSTPLUS HOMEOWNER: Fitch Affirms BB Ratings on 8 Cert. Classes
FREEDOM RINGS: Wants Auction & Bidding Procedures Approved
GIBSON CREDIT: Case Summary & 2 Largest Unsecured Creditors
GREEN TREE: S&P's Rating on Class B-1 Certificates Tumbles to D
GT BRANDS: All Proofs of Claim Must be Filed by February 1
HANOVER INSURANCE: S&P Raises Ratings on Three Cert. Classes to B+
HEILIG-MEYERS: Selling Jefferson Real Property for $985,000
HIRSH INDUSTRIES: Gets Open-Ended Lease Decision Period
HIRSH INDUSTRIES: Unveils Chapter 11 Plan of Reorganization
HUGHES SUPPLY: Moody's Puts Ba1 Corporate Family Rating on Review
INERGY L.P.: Moody's Puts B1 Rating on Proposed $200 Million Notes
INEX PHARMACEUTICALS: B.C. Court Defers Decision on Spin Out Plan
ITS NETWORKS: Sept. 30 Balance Sheet Upside Down by $6.14 Million
KINGPIN LLC: Case Summary & 9 Largest Unsecured Creditors
LARGE SCALE: Case Summary & 20 Largest Unsecured Creditors
LEVEL 3: S&P Junks Rating on Proposed $1.23 Billion Sr. Note Offer
M-WAVE INC: Halts Current Operations of M-Wave DBS
MAKARION ENTERPRISES: Case Summary & 20 Largest Unsec. Creditors
MATERIAL SCIENCES: Files Restated Financial Results
MATHON FUND: Court Okays Jaburg & Wilk as Special Counsel
MEDPOINTE INC: Moody's Rates Proposed $135 Million Facility at B2
MILACRON INC: Moody's Affirms Caa1 Corporate Family & Debt Ratings
MORTON'S HOLDING: Moody's Withdraws B2 Corporate Family Rating
MMM HOLDINGS: Moody's Rates $420 Million Credit Facilities at B2
MULTI-LINK TELECOMMS: Jaspers + Hall Raises Going Concern Doubt
NETWORK INSTALLATION: Rescinds Acquisition of Spectrum Comms.
NEVADA POWER: Fitch Likely to Place BB+ Rating on $210 Mil. Notes
NEVADA POWER: S&P Assigns BB Rating to $210 Million Mortgage Notes
NORTEL NETWORKS: Names Don McKenna as VP of Global Mfg. Services
NORTHWEST AIRLINES: Court Approves Settlement Pact with SIA Eng'g
NORTHWEST AIRLINES: Retiree Panel Wants Jenner & Block as Counsel
NORTHWEST AIRLINES: Retiree Panel Wants Kroll as Fin'l Advisor
O'SULLIVAN INDUSTRIES: Court Extends Removal Period to April 12
O'SULLIVAN IND: Panel Asks Court to Continue Disclosure Hearing
PACIFIC MAGTRON: Court Extends Exclusive Periods Through Jan. 30
PARKWAY HOSPITAL: Gets Bridge Order Extending Exclusive Periods
PARKWAY HOSPITAL: Wants Until March 31 to Decide on Leases
PEP BOYS: Moody's Assigns Ba2 Rating to $200 Million Facility
PEP BOYS: S&P Rates Proposed $200 Mil. Senior Secured Loan at B+
PLIANT CORP: Files Revised List of 30 Largest Unsecured Creditors
PLYMOUTH RUBBER: Files Plan and Disclosure Statement in Mass.
PLYMOUTH RUBBER: Taps Goodwin Procter as Environmental Counsel
PPM AMERICA: Fitch Affirms Junk Rating on $17.8 Mil. Class C Notes
PPM HIGH: Fitch Pares Junk Rating on $55.7 Million Class A-3 Notes
PROVIDENT PACIFIC: Court Converts Case to Chapter 7 Liquidation
QUEBECOR MEDIA: Moody's Puts B2 Rating on New $525 Million Notes
R.H. DONNELLEY: Moody's Rates Proposed $2 Billion Notes at Caa1
REFCO INC: RCM Account Holder Proceedings Stayed Until Jan. 31
REFCO INC: Wants Court to Approve Key Employee Retention Program
REMOTEMDX INC: Hansen Barnett Raises Going Concern Doubt
ROUGE INDUSTRIES: Exclusive Plan Filing Period Ends Today
ROWE COS: Performs Under $57 Mil. GE Commercial Credit Agreement
RUFUS INC: Wants Until Feb. 28 to Decide on Unexpired Leases
SAINT VINCENTS: Court OKs Stipulation Refinancing Mortgage Notes
SAINT VINCENTS: Panel Launches Adversary Proceeding Vs. RCG
SAINT VINCENTS: Panel Submits Stipulation Resolving DASNY Dispute
SMARTIRE SYSTEMS: Inks Agreement with Lenders to Restructure Debt
STELCO INC: Ernst & Young Files 45th Monitor's Report
SWIFT & COMPANY: Earns $2 Million of Net Income in Second Quarter
TO GOD BE THE GLORY: Case Summary & 12 Largest Unsecured Creditors
TOWER AUTOMOTIVE: Retirees' Panel Asks for Sec. 1103(C) Discovery
TOWER: Judge Adlai Wants Dist. Court to Issue Favorable Judgment
TOWER AUTOMOTIVE: Appoints Craig Corrington as VP for Operations
UAL CORP: Flight Attendants Object to Executive Compensation
UAL CORP: Parties Appeal Order Reducing ACA's $1.2 Billion Claim
WESTLAKE CHEMICAL: Moody's Rates $250 Mil. Sr. Unsec. Notes at Ba2
WESTLAKE CHEMICAL: S&P Rates Planned $250 Mil. Senior Notes at BB+
WORLDCOM INC: Court Sets Final Fairness Hearing on February 7
WORLDCOM INC: Tennessee Asks Court to Reinstate Claims
* AlixPartners Names Seven New Managing Directors
* Chadbourne Parke Taps Lopato for Int'l Insurance Practice Group
* Hydee Feldstein Joins Sullivan & Cromwell's Los Angeles Office
* John Llewellyn Joins Deloitte Financial Advisory Services
* Sheppard Mullin Welcomes Peter S. Reichertz as Counsel in D.C.
*********
AAIPHARMA INC: Insists on November 7 Governmental Claims Bar Date
-----------------------------------------------------------------
aaiPharma Inc. and its debtor-affiliates object to the United
States government's request to extend its deadline to file proofs
of claim until Jan. 15, 2006.
The Debtors maintain that the Nov. 7, 2005 governmental bar date
must be enforced. According to the Debtors, distributions due to
general unsecured creditors under their Reorganization Plan could
be significantly reduced due to the government's late-filed
claims. The Plan is scheduled for confirmation on Jan. 18, 2005.
The Debtors ask the U.S. Bankruptcy Court for the District of
Delaware to deny the government's request because the government
has had sufficient time to file its proofs of claim.
Government's Reason for Extension
Karen McKinley, Esq., at Richards, Layton & Finger, PA, relates
that based on recent discussions with the government's attorneys,
the government intends to file additional proofs of claim related
to alleged breaches of duty asserted in an ERISA lawsuit filed
against aaiPharma and its officers approximately one year prior to
the petition date.
The government insists that it was not aware of this litigation
prior to the governmental bar date. However, the Debtors remind
the Bankruptcy Court that it had provided information about the
ERISA lawsuit in its SEC filings, the declaration of Matthew E.
Czajkowski filed on the petition date and the Disclosure
Statement.
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products that
primarily target pain management. AAI operates two divisions:
AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
AAIPHARMA INC: Seeks Court's Okay to Pay Due Diligence Fees
-----------------------------------------------------------
aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware for authority to pay up to
$100,000 in due diligence fees to a potential exit financing
lender.
The Debtors have been working to finalize all requirements for the
confirmation of their First Amended Joint Chapter 11 Plan after
the Bankruptcy Court approved the Disclosure Statement explaining
that Plan on Dec. 5, 2005.
Confirmation of the Plan is dependent on the Debtors' ability to
secure a written commitment from a potential lender for an exit
credit facility. The credit facility will be used to pay
administrative expenses, fund distributions to unsecured creditors
and provide necessary working capital for the Reorganized Debtors'
operations.
Rebecca L. Booth, Esq., at Richards, Layton & Finger, PA, tells
the Bankruptcy Court that the Debtors are currently studying
possible exit financing offers from several lenders. While the
Debtors have not accepted any offers, Ms. Booth says, the Debtors
need the Court's permission to pay fees so that any probable
lender can carry out necessary due diligence prior to the Jan. 18,
2005, Plan confirmation hearing.
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products that
primarily target pain management. AAI operates two divisions:
AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ALLIANCE GAMING: Performance Decline Prompts Fitch's B- Ratings
---------------------------------------------------------------
Fitch Ratings downgraded Alliance Gaming's (NYSE: AGI) secured
bank debt rating to 'B-' from 'B'. The facility comprises a
$314.9 million term loan and an undrawn $75 million revolver. The
recovery rating remains at 'RR4'.
In addition, Fitch has downgraded the company's issuer default
rating to 'B-' from 'B'. The Rating Outlook remains Negative.
Ratings reflect the abrupt decline in AGI's operating performance
in the past year, uncertainty over acceptance of its Alpha game
platform, its constrained liquidity, and its limited operational
flexibility. The Negative Outlook is due to concerns regarding
internal controls over financial reporting and delays in SEC
filings.
In general, gaming equipment demand has been affected by a variety
of challenges over the past 18 months.
* First, the replacement cycle has significantly slowed as
demand driven by cashless slot technology largely peaked at
the end of fiscal 2004.
* Second, expansions of slot machines into new jurisdictions
such as New York, California, and Pennsylvania, as well as
the U.K. have taken much longer than previously expected.
* Third, the emergence of WMS Industries and Aristocrat as
industry players has intensified an already competitive
market led by International Game Technology.
On a company-specific level, AGI has struggled in recent years to
maintain market share in key markets due to its limited content
and relatively weak legacy software platform. As a result, the
company made the decision to move to its new Alpha video platform,
which became commercially available in April 2005. The timing of
the release of the Alpha platform, a poor legacy software
platform, and the previously mentioned weak industry conditions
led to a 10% decrease in domestic unit sales in fiscal 2005.
Admittedly, 2006 could very well be off to a strong start as
management stated in its most recent conference call that
subsequent to the Global Gaming Exposition, 5,000 new gaming
machine orders were placed, of which 1,500 were Alpha video. This
compares favorably with the typical 300-600 orders for new AGI
machines following G2E. However, at this point Fitch has not
confirmed these orders as AGI has not yet filed its 10-Q.
Another critical component to AGI's rating is the strength of its
Bally Systems business segment. AGI has recently successfully
rolled out complete slot and casino management systems at Boyd's
new South Coast casino and will be involved in the upgrade to the
systems at Borgata. Nevertheless, AGI also faces strong
competition in its systems business, which is being successfully
targeted by its much better capitalized competitor, IGT. While
AGI's systems business remains a market leader, AGI's R&D budget
is a fraction of IGT's, making it very difficult to retain its
position in this market.
AGI's turnaround may also be hindered by a constrained balance
sheet and limited liquidity. At June 30, 2005, the company had
$33 million of cash and very limited availability through its
$75 million revolver. Additionally, it was forced to seek
covenant relief in December 2004 to accommodate
higher-than-expected leverage. AGI's bank group agreed to
increase leverage covenant levels to a maximum of 4.75 times at
June 30, 2005. According to the company, average debt to LTM
EBITDA as of June 30, 2005 was 4.6x. While management has
expressed confidence that there is sufficient cushion in the
amended covenants, Fitch believes such a tight liquidity situation
limits the company's operational flexibility. Should a delayed
turnaround in operating results depress EBITDA again in fiscal
2006, AGI could again be forced to seek bank group relief, and the
company may face an even more constrained liquidity position.
Further access to the capital markets would not be assured if
sales of Alpha games lag management expectations.
The Negative Outlook reflects concerns over material weaknesses in
internal controls on financial reporting that have led to delays
in SEC filings. In the company's recently filed 10-K, it
acknowledged its internal control over financial reporting was not
effective as of June 30, 2005 due to several items including
inadequate staffing, ineffective account analyses, and inadequate
controls related to revenue recognition. Moreover, AGI has not
filed its 10-Q for the quarter ended Sept. 30, 2005, which follows
the three-month delay in filing its 2005 10-K.
AMERICAN CASINO: Moody's Affirms $215 Million Sr. Notes' B2 Rating
------------------------------------------------------------------
Moody's Investors Service changed the ratings outlook of American
Casino & Entertainment Properties LLC and its wholly owned
subsidiary American Casino & Entertainment Properties Finance
Corp. (co-issuers; jointly "American Casino" or the "Company") to
positive from stable. The existing B2 ratings of the corporate
family and the $215 million senior (second lien) notes have been
affirmed.
The positive outlook reflects:
1. Greater than anticipated revenue growth and EBITDA margin of
the two Arizona Charlie's properties that were acquired from
an affiliated entity in January 2004, and an expectation
that overall EBITDA margin of existing properties will
remain around the 25% range. For the last twelve month
period ended Sept. 30, 2005 the Company had EBITDA margin of
over 26%.
2. Recognition that existing leverage and coverage measures
remain positive outliers for the current rating category,
though size and lack of property level cash flow
diversification constrains significantly higher ratings
potential.
The ratings could go up if debt to EBITDA were to remain under 3.0
times, and/or if return on assets were to remain at current
levels. For the last twelve-month period ended Sept. 30, 2005 the
Company had free cash flow to debt of 18.9% and EBITA to average
assets of 13.3% on an adjusted basis.
Headquartered in Las Vegas, Nevada, American Casino &
Entertainment Properties LLC is a wholly owned, unrestricted
subsidiary of American Real Estate Partners, L.P., a publicly
traded firm engaged in both real estate and non-real estate
activities. Carl Icahn currently owns approximately 86% of AREP
through non-AREP subsidiaries.
AMERICAN FILM: Involuntary Chapter 11 Case Summary
--------------------------------------------------
Alleged Debtor: American Film Technologies, Inc.
c/o Delaware Division of Corporations
Agent for Service of Process
401 Federal Street, Suite 4
Dover, Delaware 19901
Involuntary Petition Date: January 11, 2006
Case Number: 06-10050
Chapter: 11
Court: Southern District of New York (Manhattan)
Petitioner's Counsel: Barton Nachamie, Esq.
Todtman, Nachamie, Spizz & Johns, P.C.
425 Park Avenue
New York, New York 10022
Tel: (212) 754-9400
Petitioner: Gerald Wetzler
32-04 171st Street
Flushing, New York 11358
Amount of Claim: $1,897,000
AMERIGAS PARTNERS: Moody's Rates Proposed $350 Million Notes at B1
------------------------------------------------------------------
Moody's Investors Service:
* assigned a B1 rating to AmeriGas Partners, L.P.'s proposed
$350 million senior unsecured notes due 2016;
* upgraded its existing $415 million of senior unsecured notes
due 2015 to B1 from B2; and
* affirmed its Ba3 corporate family rating.
The rating outlook is stable.
Proceeds from the notes offering will be used to refinance
AmeriGas' outstanding 10% senior unsecured notes due April 2006,
and two series of first mortgage notes and a bank term loan at
AmeriGas' operating limited partnership (OLP). The rating on the
10% senior unsecured notes will be withdrawn after the completion
of the tender process. Benefits from the refinancing include
reduced interest expense and a simplification and lengthening of
the partnership's debt maturity profile.
AmeriGas' Ba3 corporate family rating continues to reflect:
* its leading position in propane retailing;
* the seasonality and year-to-year fluctuations of propane
volumes due to weather changes; and
* its leveraged financial position and high distribution payout
rate.
With a market share of about 9%, AmeriGas currently has a leading
position in the highly fragmented retail propane industry in the
U.S. Its size provides opportunities for it to leverage economies
of scale to control operating and supply costs. The wide
geographic spread of its locations somewhat mitigates exposure to
the weather and economic conditions of any one region. AmeriGas
also benefits from non-seasonal business from national commercial
and industrial customers as well as counter-seasonal business in
its propane tank exchange business. Even so, AmeriGas' results
can be expected to fluctuate from year-to-year depending on the
degree of cold weather during the winter months as most of its
propane sales are for space heating.
AmeriGas' credit metrics have been relatively stable over the last
couple of years, despite weather that has been warmer than normal.
Distributable cash flow has exceeded distributions over the last
couple of years.
The notching of AmeriGas' senior unsecured notes was reduced to
one notch from two notches to reflect a lower degree of structural
subordination than in the past. With the refinancing, OLP debt as
a percentage of consolidated balance sheet debt is 17%, down from
46% at the end of fiscal 2005 and 60% at the end of fiscal 2002.
Notching for structural subordination remains appropriate because
AmeriGas has no operating assets of its own and relies solely on
distributions from the OLP to service its debt. Also, AmeriGas'
senior unsecured notes are not guaranteed by the OLP.
AmeriGas is headquartered in Valley Forge, Pennsylvania.
AMERIGAS PARTNERS: Fitch Rates $350 Million Senior Notes at BB+
---------------------------------------------------------------
AmeriGas Partners, L.P.'s $350 million senior notes due 2016,
issued jointly and severally with its special purpose financing
subsidiary AP Eagle Finance Corp., are rated 'BB+' by Fitch
Ratings.
Fitch also affirms APU's existing senior unsecured debt rating of
'BB+' and issuer default rating of 'BB+'. The Rating Outlook is
Stable.
An indirect subsidiary of UGI Corp. is the general partner and 44%
limited partner for APU, which, in turn, is a master limited
partnership for AmeriGas Propane, L.P., an operating limited
partnership. Proceeds from the new senior notes will be utilized
to call outstanding AGP first mortgage notes, repay a $35 million
term loan and repurchase $60 million of APU 10% senior notes,
pursuant to a tender offer.
APU's rating reflects the underlying strength of subsidiary AGP's:
* retail propane distribution network,
* broad geographic reach,
* adequate credit metrics, and
* proven ability to manage product costs under various
operating conditions.
Additionally, the company's PPX propane cylinder exchange business
provides moderate positive cash flow during the summer months when
AGP's traditional propane distribution business is relatively
slow. APU's rating also reflects the structural subordination of
its debt obligations to approximately $150 million of first
mortgage notes that will remain at AGP subsequent to this
transaction.
APU's financial performance will continue to be affected by
weather conditions during the winter heating season, and the
company must continue to manage volatile supply costs and customer
conservation. The combination of warm weather during last year's
heating season and elevated commodity prices had a moderately
negative impact on APU's credit metrics.
For fiscal year 2005, consolidated EBITDA to interest and debt to
EBITDA equaled 3.1x and 3.7x, respectively. APU's recent
financial performance has generally exceeded expectations for
company performance under the stress case conditions of a warm
weather and high commodity price heating season environment.
Cash distributions to APU, generally defined as EBITDA generated
by AGP minus AGP interest expense and maintenance capital
expenditures covered interest on APU's stand-alone obligations
by 4.8x during 2005. However, as a consequence of increased
outstanding MLP debt, and despite higher expected levels of cash
available to APU from AGP, distribution coverage of MLP interest
is anticipated to fall to approximately 3.5x.
The persistence of high propane prices and volatility may lead to
further customer conservation, increased bad debt expense, and
test APU's ability to sustain gross profit margins. Wholesale
propane prices, as measured by postings at Mont Belvieu, Texas,
were 28% higher on average in APU's fiscal year 2005 compared to
2004 prices. However, Fitch notes that APU has managed to
effectively pass through propane supply costs to customers and
maintain relatively consistent gross margins during periods of
volatile weather conditions and commodity prices over the past
several years.
ANALYTICAL SURVEYS: Receives Nasdaq Listing Deficiency Notice
-------------------------------------------------------------
Analytical Surveys, Inc. (Nasdaq: ANLT) received notice on
Dec. 30, 2005, from the Nasdaq Stock Market indicating that the
company is not in compliance with one of Nasdaq's requirements for
continued listing because it did not have:
* a minimum of $2,500,000 in stockholders' equity as of
Sept. 30, 2005;
* at least $35,000,000 in market value of listed securities,
or
* at least $500,000 of net income from continuing
operations for the most recently completed fiscal year or
two of the three most recently completed fiscal years.
Nasdaq requires compliance with one of the foregoing criteria for
continued inclusion under Nasdaq Marketplace Rule 4310(c)(2)(B).
Such a notice is routinely issued when a listed company does not
meet the requirements listed above. The notice has no effect on
the listing of the company's common stock at this time.
Nasdaq stated in the notice that it is reviewing the company's
eligibility for continued listing on the Nasdaq Capital Market
and, in order to facilitate the review, the company plans to
provide Nasdaq, within the next two weeks, with a specific plan on
how it intends to achieve and sustain compliance with all the
Nasdaq Capital Market listing requirements.
As reported in the company's Form 10-KSB for the year ended
Sept. 30, 2005, the company had stockholders' equity of $1,629,000
at Sept. 30, 2005.
"Maintaining our listing on the Nasdaq Stock Market is important
to us and our efforts to build long-term shareholder value," Lori
Jones, chief executive officer, said. "We are currently
negotiating equity financings and transactions that, upon closing,
would allow us to demonstrate compliance with Nasdaq's
stockholders' equity test. These equity placements are part of
our long-term plan to expand our service offering into the energy
sector, as we announced on Dec. 7, 2005."
The company also noted that its independent auditors, Pannell Kerr
Forster of Texas, P.C., issued a going concern qualification on
its financial statements for the fiscal year ended Sept. 30, 2005,
based on the Company's significant operating losses reported in
fiscal 2005 and prior years, as well as a lack of external
financing.
Headquartered in San Antonio, Texas, Analytical Surveys Inc. --
http://www.anlt.com/-- provides technology-enabled solutions and
expert services for geospatial data management, including data
capture and conversion, planning, implementation, distribution
strategies and maintenance services. Through its affiliates, ASI
has played a leading role in the geospatial industry for more than
40 years. The company is dedicated to providing utilities and
government with responsive, proactive solutions that maximize the
value of information and technology assets. ASI is and maintains
operations in Waukesha, Wisconsin.
* * *
Going Concern Doubt
Pannell Kerr Forster Of Texas, P.C., expressed substantial doubt
about Analytical Surveys' ability to continue as a going concern
after it audited the company's financial statements for the year
ended Sept. 30, 2005. The company has suffered significant
operating losses in 2005 and prior years and does not currently
have external financing in place to fund working capital
requirements.
As of Sept. 30, 2005, the company had an accumulated deficit
of $33,683,000.
ATA AIRLINES: Realigns Senior Leadership Team's Responsibilities
----------------------------------------------------------------
ATA Holdings Corp. (Pink Sheets:ATAHQ) and ATA Airlines reported
several promotions and realignment of responsibilities at the
senior leadership level, effective immediately. The new structure
reflects ATA's intention to drive accountability down to each of
its two lines of business -- Military/Charter and Scheduled
Service.
-- Subodh Karnik, currently the Company's Senior Vice-
President and Chief Commercial Officer, will become
Executive Vice President and Chief Operating Officer and
will be reporting to John Denison, Chairman, President and
CEO. Mr. Karnik will have direct responsibility for all
operations including marketing, planning, and finance
functions.
-- Captain John Graber, currently the Company's Senior Vice-
President, Flight Operations and Maintenance, will become
General Manager-Military/Charter and Senior Vice President-
Operations. Captain Graber will report to the COO. As
General Manager-Military/Charter, Mr. Graber will have
responsibility for all aspects of ATA's Military/Charter
business. As Senior Vice President-Operations, Mr.
Graber's responsibilities will include Flight Operations,
Maintenance, System Operations Control, and Safety and
Security.
-- ATA has created a new position, Senior Vice President-
Scheduled Service, and expects to name a leader for that
new role within the next month. The SVP-Scheduled Service
will also report to the COO and will have responsibility
for the Marketing and Market Planning functions as well as
Inflight, Station Operations, Cargo, and Corporate
Communications.
-- Doug Yakola, currently the Company's Senior Vice President,
Customers and Ground Operations, will become Senior Vice
President-Chief Financial Officer reporting to the COO.
In addition to his finance and accounting responsibilities,
Mr. Yakola will be responsible for Strategic Sourcing,
Information Technology, and Real Estate. Francis J.
Conway, ATA's interim CFO, will remain with the Company
until ATA emerges from Chapter 11, expected during the
first quarter of 2006, and will assist Mr. Yakola with all
aspects of his new role until that time.
"ATA is fortunate to have professionals with the experience and
determination needed to lead ATA to a profitable future. I am of
course very pleased to announce that Subodh Karnik, Captain John
Graber and Doug Yakola have accepted their new assignments. Our
Company needs their energy, vision, and good judgment as we
complete the financial and operational restructuring process,"
said John Denison, Chairman, CEO, and President. "Against harsh
odds, ATA will emerge from Chapter 11 in First Quarter 2006
because of our employees' hard work and sacrifices, their caring
for one another, and most importantly because of their absolute
determination to 'win.' Work remains to be done, but I have no
doubt of our ultimate success because our employees will accept
nothing less," he added.
-- John Denison - Chairman, CEO, and President:
John Denison was recently elected to succeed George
Mikelsons as Chairman of the Board of the Company upon Mr.
Mikelsons' resignation effective Dec. 31, 2005. Mr.
Denison joined ATA in February of 2005 after a three-year
period of retirement from Southwest Airlines. There his
responsibilities included serving as Executive Vice
President of Corporate Services and Chief Financial
Officer. Prior to joining Southwest in 1986, Mr. Denison
served for six years in various corporate finance roles at
the LTV Corporation also in Dallas, Texas. Among other
responsibilities, Mr. Denison assisted in the financial
restructuring of the conglomerate that held interests in
aerospace defense, steel and energy.
Mr. Denison's leadership in restructuring efforts for
struggling companies dates back to the 1970s. Mr. Denison
spent his early career in the Detroit area with more than a
decade at the Chrysler Corporation. As Manager of
Corporate Finance, Mr. Denison played a role in the
restructuring of the automaker and was part of a team
responsible for obtaining the government assistance that
ultimately saved the company. Mr. Denison earned a
bachelor of arts in economics at Oakland University in
Rochester, Michigan. Mr. Denison continued his graduate
education at Wayne State University, where he earned a
master of business administration in finance.
-- Subodh Karnik - Executive Vice President and Chief
Operating Officer:
Subodh Karnik joined ATA in June of 2005 as Senior Vice
President and Chief Commercial Officer. Mr. Karnik has 15
years of airline experience that includes serving in a wide
range of leadership roles at three major carriers. Most
recently, Mr. Karnik was Senior Vice President of Marketing
Planning at Delta Air Lines. Before joining Delta in 1999,
Mr. Karnik worked as Staff Vice President of International
Finance at Continental Airlines and CFO of subsidiary
Continental Micronesia. Mr. Karnik moved to Continental
from Northwest Airlines, where Karnik maintained
responsibilities in alliances, international sales, revenue
management and strategic planning. Mr. Karnik is a
graduate of the Birla Institute of Technology and Science
and the University of Michigan Ross School of Business.
-- Doug Yakola - Senior Vice President and Chief Financial
Officer:
Doug Yakola joined ATA in 2003 as Vice President, Station
Operations and Cargo. In 2005, Mr. Yakola was promoted to
Senior Vice President, Customers and Ground Operations.
Prior to joining ATA, Mr. Yakola spent eighteen years at
Northwest Airlines. Mr. Yakola's experience with Northwest
included director-level roles with responsibility for the
passenger service operation at Northwest's largest hub
(Detroit), overseeing luggage handling worldwide, and
station technology planning. Mr. Yakola holds a master of
business administration from the Kellogg School of
Management - Northwestern University, and a bachelor of
science in business administration from the University of
Central Florida.
-- Captain John Graber - General Manager-Military/Charter and
Senior Vice President-Operations:
Captain John Graber joined ATA in 1993 as a First Officer.
Mr. Graber has held numerous positions at the carrier, from
Crew Resource Management and Ground School Instructor to
Director of Flight Standards and Training. Mr. Graber was
promoted to Senior Vice President, Flight Operations and
Maintenance in January of 2005. Prior to joining ATA,
Mr. Graber spent time flying for Pan Am Express in Europe,
TW Express Airlines, Inc., and the U.S. Army. Mr. Graber
holds a master of business administration, cum laude, from
the University of Notre Dame, and a bachelor of arts from
Edison State College.
-- Francis J. Conway joined ATA Holdings Corp. in June of 2005
as Interim Chief Financial Officer. In this role, Mr.
Conway continues to work closely with ATA's senior
leadership team to direct the Company's Chapter 11
reorganization efforts. Mr. Conway's professional
background includes more than 20 years of experience
serving financially distressed companies as an officer,
director and advisor. Much of this work has been in the
aviation industry, where he has served as financial advisor
to scheduled carriers as well as an officer and director
with numerous aircraft leasing entities. Mr. Conway comes
to ATA from Navigant Capital Advisors, LLC, the dedicated
corporate finance advisory business of Navigant Consulting,
Inc. As Managing Director for Navigant Capital Advisors,
Mr. Conway leads the firm's restructuring practice. Mr.
Conway holds a bachelor of science in accounting and
management from New York University and is a Certified
Public Accountant.
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.
BALLY TOTAL: Files Counterclaim Against Pardus & Liberation
-----------------------------------------------------------
Bally Total Fitness (NYSE:BFT) disclosed that, after engaging in
extensive settlement negotiations with hedge fund Pardus European
Special Opportunities Master Fund L.P. and its principals,
settlement negotiations have broken down over their unacceptable
demands, forcing the Company to seek legal remedies.
Bally said that it has made a sincere effort to avoid engaging in
a proxy contest with Pardus and Liberation Investments, another
hedge fund engaged in a proxy contest with Bally. Bally said that
despite its attempts to respond to Pardus by adding two of Pardus'
nominees to the Bally slate, it has now determined that it must
take appropriate legal action to protect the rights of its other
shareholders in light of increasing evidence that Pardus and
Liberation are working together to wrest control of the Company
without paying a control premium.
"The independent directors on Bally's Board have taken
extraordinary steps to reach an agreement with Pardus and
Liberation, including meeting with the principals of Pardus on two
separate occasions," said John W. Rogers, Jr., Bally Board member
and Chairman and CEO of Ariel Capital Management LLC, speaking on
behalf of the Company. "Despite Bally offering Pardus exceedingly
fair proposals, Pardus has not shown any willingness to reach a
settlement with the Company unless their ultimatums are accepted,
and have recently indicated no further interest in discussions.
As a result, the Board has come to the unanimous conclusion that
Pardus and Liberation are only interested in advancing their own
interests in gaining effective control of the Board and its
strategic alternatives process. We were left with no choice but
to pursue legal actions to protect the interests of all
shareholders."
In response to Pardus' most recent letter released yesterday,
Bally commented, "It's apparent from the increasingly shrill tone
and misleading statements in Pardus' new filing that they are
engaging in a futile attempt to portray themselves as something
other than self serving. Their latest attempt to frighten
shareholders into believing that triggering Bally's pill could
result in the Company filing for bankruptcy is a blatant
falsehood.
"Any triggering of the Rights Plan would be a result of Pardus and
Liberation's undisclosed concerted actions to seize control. And
while the triggering of the Rights Plan would dilute Pardus and
Liberation, it would inure to the financial benefit of every other
stockholder and would not adversely affect the Company's overall
financial position.
"Additionally, to characterize prospects for the Pill triggering
as management's desire to further entrench itself is simply
ludicrous. The fact is that they and their allies at Liberation
would be the only stockholders hurt by the Pill triggering, which
is ironic, since it would be their clandestine attempt to gain
control of Bally's Board and strategic process that could be the
Pill triggering factor."
Bally's Shareholder Rights Plan, which will expire on July 15,
2006 unless it is ratified by shareholders prior to that time, was
put in place to preserve the rights of all Bally shareholders and
thwart would-be acquirers from seizing control of the Company
without paying a premium.
Bally's Counterclaim
Bally said it has filed a counterclaim in the previously disclosed
proceeding initiated by Liberation in the Delaware Court of
Chancery concerning the validity of the Company's Stockholder
Rights Plan. In its counterclaim, brought against Pardus as well
as Liberation and their principals and Donald Kornstein, the
Company seeks a declaration by the court as to whether Pardus and
Liberation have undisclosed agreements, arrangements or
understandings with respect to their Bally stock which might
result in Bally's Stockholder Rights Plan being triggered. As
previously announced, Kornstein is Liberation's long term loyalist
and suggested candidate on Pardus' slate.
Bally's allegations as to the two hedge funds operating as a group
include:
-- Following Federal proxy litigation, Liberation belatedly
admitted facts pointing to the existence of their group
action with Pardus, including the fact that Don Kornstein,
one of Pardus' director nominees, was suggested as a
possible candidate by Mr. Pearlman. Pardus also belatedly
admitted this fact in its SEC filings.
-- During the 17 years of their acquaintance, Mr. Pearlman and
Mr. Kornstein have been involved in several business
relationships, including each retaining the other as
advisors in various situations.
-- Liberation abandoned its stated intention to slate its own
candidates, and decided not to run any directors after
Pardus accepted Liberation's suggestion that they include
Kornstein, Pearlman's old friend and colleague, on Pardus'
slate. Yet incredibly, Liberation stated in its securities
filings that it had not decided whether or not it will vote
for Kornstein, its former nominee, its current investor, and
the longtime crony of its principal, whom Liberation itself
"suggested" to Pardus.
-- Liberation, in soliciting support for its stockholder
proposal has also sought to solicit the authority to vote
for the Pardus slate. Its proxy card includes only the
Pardus nominees. Moreover, Pearlman has openly called
stockholders and even Bally's sitting directors, urging them
to vote for Pardus' candidates.
-- On its proxy card, Pardus has sought discretion from
stockholders to allow Pardus to vote for the Liberation
proposals.
Notice of Appeal
The Company has also filed a notice of appeal with the U.S. Court
of Appeals for the Third Circuit asking it to reverse the decision
of the U.S. District Court for the District of Delaware that the
merits of the parties' "good faith dispute" concerning whether
Liberation and Pardus were acting as a "group" did not need to be
resolved in advance of the upcoming annual meeting of stockholders
merely because Liberation has now disclosed Bally's allegations.
Bally believes that the law requires that Liberation and Pardus
advise shareholders of the fact of any arrangement, understanding
or agreement they have entered into concerning the solicitation
and voting of proxies. Bally believes that stockholders are
entitled to know before they vote which insurgents are the actual
sponsors of the candidates and proposals, what power these
insurgents hold collectively, as well as how these dissidents
intend to wield that power. Bally will urge the Court of Appeals
to decide this issue in advance of the annual meeting.
Bally further disclosed that its action for declaratory judgment
in the Delaware Court of Chancery is ongoing against Emanuel
Pearlman and his hedge fund, Liberation, in which it has asked the
court to confirm that Liberation's stockholder proposal violates
both Section 141(a) of the Delaware General Corporation Law and
the Company's Certificate of Incorporation. The Company said if
Liberation's proposal is adopted by the required 75% vote at the
annual shareholders meeting, it intends to call upon the Chancery
Court to invalidate the proposal.
Bally Total Fitness is the largest and only nationwide
commercial operator of fitness centers, with approximately four
million members and 440 facilities located in 29 states,
Mexico, Canada, Korea, China and the Caribbean under the Bally
Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM),
Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of
Canada(R) brands. With an estimated 150 million annual visits
to its clubs, Bally offers a unique platform for distribution
of a wide range of products and services targeted to active,
fitness-conscious adult consumers.
* * *
As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Bally Total Fitness Holding Corp. to developing
from negative. The corporate credit rating remains at 'CCC'.
Bally's ratings were originally placed on CreditWatch on
Aug. 8, 2005, following the commencement of a 10-day period after
which an event of default would have occurred under the company's
$275 million secured credit agreement's cross-default provision
and the debt would have become immediately due and payable.
Subsequently, Bally entered into a consent with lenders to extend
the 10-day period until Aug. 31, 2005. Prior to Aug. 31, the
company received consents from its bondholders extending its
waiver of default to Nov. 30, 2005.
BAYVIEW FINANCIAL: Fitch Affirms Low-B Ratings on 4 Cert. Classes
-----------------------------------------------------------------
Fitch Ratings has taken rating actions on these Bayview Financial
issues:
Bayview Financial Acquisition Trust Mortgage Pass-Through
Certificates, Series 1998-1, Group 1
-- Class A-I affirmed at 'AAA';
-- Class IO-I affirmed at 'AAA';
-- Class M-I-1 affirmed at 'AA';
-- Class M-I-2 affirmed at 'A';
-- Class M-I-3 affirmed at 'BBB';
-- Class M-I-4 affirmed at 'BBB';
-- Class B-I-1 affirmed at 'BB';
-- Class B-I-2 affirmed at 'B'.
Bayview Financial Acquisition Trust Mortgage Pass-Through
Certificates, Series 1998-1, Group 2
-- Class A-II affirmed at 'AAA';
-- Class IO-II affirmed at 'AAA';
-- Class M-II-1 affirmed at 'AA';
-- Class M-II-2 affirmed at 'A';
-- Class M-II-3 affirmed at 'BBB';
-- Class M-II-4 affirmed at 'BBB';
-- Class B-II-1 affirmed at 'BB';
-- Class B-II-2 affirmed at 'B'.
Bayview Financial Asset Trust, Series 2002-F
-- Class A-1 affirmed at 'AAA';
-- Class A-2 affirmed at 'AAA';
-- Class IO-1 affirmed at 'AAA';
-- Class IO-2 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'A';
-- Class M-4 affirmed at 'A-';
-- Class B affirmed at 'BBB+'.
Bayview Financial Asset Trust, Series 2003-A
-- Class A affirmed at 'AAA';
-- Class IO-1 affirmed at 'AAA';
-- Class IO-2 affirmed at 'AAA';
-- Class PO affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'A';
-- Class M-4 affirmed at 'A-'.
Bayview Financial Mortgage Pass-Through Certificates,
Series 2003-D
-- Class A affirmed at 'AAA';
-- Class IO affirmed at 'AAA';
-- Class A-IO affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'A';
-- Class M-4 affirmed at 'A-';
-- Class B affirmed at 'BBB+'.
Bayview Financial Mortgage Pass-Through Certificates,
Series 2003-E
-- Class A affirmed at 'AAA';
-- Class IO affirmed at 'AAA';
-- Class A-IO affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'A';
-- Class M-4 affirmed at 'A-';
-- Class B affirmed at 'BBB+'.
Bayview Financial Mortgage Pass-Through Certificates,
Series 2003-F
-- Class A affirmed at 'AAA';
-- Class IO affirmed at 'AAA';
-- Class A-IO affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'A';
-- Class M-4 affirmed at 'A-';
-- Class B affirmed at 'BBB+'.
All of the mortgage loans in the aforementioned transactions were
either originated or acquired by Bayview Financial Trading Group,
L.P. The mortgage loans consist of fixed- and adjustable-rate,
fully amortizing and balloon loans secured by single-family
residential, multifamily, commercial, and mixed-use properties.
The mortgage loans are generally believed to have been originated
in accordance with underwriting guidelines that are less strict
than Fannie Mae and Freddie Mac guidelines. As a result, the
mortgage loans are likely to experience higher rates of
delinquency, foreclosure, and bankruptcy than mortgage loans
underwritten in accordance with higher standards.
The affirmations reflect a satisfactory relationship between
credit enhancement and future loss expectations and affect
approximately $1.02 billion of outstanding certificates. As of
the December 2005 distribution date, the transactions are seasoned
from a range of 24 to 91 months, and the pool factors range from
approximately 12% to 49%. Cumulative losses, to date, range from
0.29% to 6.01%.
Wells Fargo Bank, N.A., rated 'RMS1' by Fitch, is the master
servicer for all of the transactions detailed above. All of the
mortgage loans are currently serviced by various entities.
Further information regarding current delinquency, loss, and
credit enhancement statistics is available on the Fitch Ratings
Website at http://www.fitchratings.com/
BOUNDLESS MOTOR: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil.
----------------------------------------------------------------
Boundless Motor Sports Racing Inc., nka Dirt Motor Sports, Inc.,
delivered its annual report on Form 10-KSB for the fiscal year
ended Sept. 30, 2005, to the Securities and Exchange Commission on
Dec. 29, 2005.
For the fiscal year ended Sept. 30, 2005, Dirt Motor incurred a
$19.7 million net loss and generated $12.5 million in revenues.
The Company has not yet achieved a profitable level of operations
since its inception.
At Sept. 30, 2005, Dirt Motor had a negative working capital of
$2.8 million and an accumulated deficit of $34 million. For the
period, its primary source of funding for acquisitions and
operating deficits has been from issuance of preferred stock and
notes payable.
Going Concern Doubt
Dirt Motor's independent registered public accountants, Murrell,
Hall, McIntosh & Co., PLLP, audited the Company's financial
statements for the year ended Sept. 30, 2005. Murrell Hall
expressed substantial doubt about Dirt Motor's ability to continue
as a going concern due to its accumulated deficit and negative
working capital.
As of Sept. 30, 2005, the Company's balance sheet showed a
$1,804,913 stockholders' deficit compared to a $9,419,580 positive
equity at Sept. 30, 2004.
Boundless Motor Sports Racing Inc., nka Dirt Motor Sports, Inc.,
is a leading marketer and promoter of motorsports entertainment in
the United States. The Company operate 6 dirt motorsports tracks
in New York, Pennsylvania and Florida, and own and operate four of
the premier sanctioning bodies in dirt motorsports: the World of
Outlaws, DIRT Motorsports, United Midwestern Promoters (UMP) and
the Mid America Racing Series (MARS). As of Sept. 30, 2005, the
Company declared total assets of $14,430,583 and total liabilities
of $16,235,496.
BUEHLER FOODS: Files Plan and Disclosure Statement in Indiana
-------------------------------------------------------------
Buehler Foods, Inc., delivered to the U.S. Bankruptcy Court for
the Southern District of Indiana its Disclosure Statement
explaining its Plan of Reorganization.
The Plan provides a capital structure for the Debtor that can be
supported by cash flows from operations.
Plan Funding
The Plan will be funded from:
(a) the sale of the Debtor's investment securities;
(b) the delivery to the Bank Group on or before the Effective
Date the proceeds of its collateral, including the
escrowed CD and deposits and state tax refund;
(c) proceeds from the cash surrender value of certain life
insurance policies owned by the Debtor;
(d) proceeds from the collection of certain sale rebates;
(e) payments provided by Buehler of Kentucky, LLC, Buehler of
Carolinas, LLC, and Buehler, LLC;
(f) a new credit facility from the Associated Wholesale
Grocers, Inc., and
(g) capital contribution from Kirs Buehler Massat and Peter
Massat.
AWG Loan
Associated Wholesale Grocers, Inc., will lend the Debtor $15
million for a term of 10 years with interest at a rate equal to
the prime rate as determined by USB Bank, N.A., adjusted
quarterly, plus 1% per annum. The debt is secured by a first lien
on all of the Reorganized Debtor's tangible and intangible
property.
The Reorganized Debtor will also grant AWG certain supply
protection rights, including new non-compete and First Refusal
Agreements on its store locations. The financing is contingent
upon the treatment of certain of AWG's other claims as provided in
the Plan. AWG will also provide the Debtor with an additional one
week's trade credit of $2 million.
AWG is also assisting Dave Buehler and related entities to
monetize certain real property. Under the Plan, AWG will acquire
certain real estate and enter into new leases with AWG. The
Debtor anticipates that the AWG Leases will provide for rent
reductions at those store locations. The AWG Leases also restrict
the use of the stores to grocery stores supplied by AWG.
Capital Contribution
The Debtor tells the Court that Kris Buehler Massat and Peter
Massat will contribute $1 million in the aggregate. When the
Massats make the capital contribution provided for in the Plan,
all of the Debtor's prior outstanding stock will be cancelled and
the Massats will be issued new shares constituting 100% of the
outstanding shares of the Debtor.
Treatment of Claims
As reported in the Troubled Company Reporter on Aug. 26, 2005, the
Court approved the Debtor and its debtor-affiliates $6 million
debtor-in-possession financing. Under the Plan, the Debtor's $2
million share of the DIP financing will be paid in full and in
cash at the earlier of:
-- the Effective Date; or
-- Mar. 31, 2006.
Administrative Claims, the Allowed Secured Claim of Great
American, and Reclamation Claims will be paid in full.
Administrative Operating Expenses and Priority Employee Claims
will be assumed by the Reorganized Debtor.
The Debtor tells the Court that it will pay $43,506,000 of the
$48,506,000 secured claim of the Bank Group. The Debtor will also
pay up to $3,075,000 of the Agents' legal fees incurred after
Dec. 21, 2005.
The Debtor discloses that its debtor-affiliates will pay part of
the Bank Group's claim. Buehler, LLC, and Buehler of Carolinas,
LLC, will together pay $4,175,000 and Buehler of Kentucky, LLC,
will pay $8,527,000.
The payment of the Bank Group's claim will be made on the earlier
of the Effective Date or March 31, 2006.
The Allowed Secured Claim of AWG will be satisfied in full
through:
(a) delivery of a $9,798,213 term note;
(b) assumption of the AWG Membership Agreement; and
(c) Assumption of a modified AWG Supply Agreement.
The Claim Term Note will mature on the fifth anniversary date of
its execution and will bear interest at the rate of Prime plus 1%
per annum before maturity and Prime plus 3% after maturity or
default. Interest payments are required to be made on a weekly
basis.
The Claim Term Note will be secured by a first lien on the
Collateral and will contain cross-collateralization and cross-
default provisions with the trade credit and the AWG Term Note.
Personal Property Tax Claims, estimated at approximately $725,000,
will be paid in full through 60 equal monthly installments plus
interest of 5% per annum. Payments will begin on the later of:
(a) Distribution Date; or
(b) as soon as the Claim becomes a Personal Property Tax
Claim.
The Debtor tells the Court that non-priority unsecured claims,
including lease rejection claims, total $10,829,000. Holders will
receive a Pro Rata share of the Fund, paid first from the Fund,
less the Reserve, and second from the net recoveries from
Bankruptcy Causes of Action which are all payable to the Fund.
The initial payment will begin on the later of:
(a) the Distribution Date; or
(b) as soon as the claim becomes a Non-priority unsecured
claim.
Holders of Equity Interests Claims will receive nothing under the
plan.
The Court will convene a hearing at 10:00 a.m. on Feb. 10, 2006,
to consider the adequacy of information contained in the Debtor's
Disclosure Statement explaining its Plan of Reorganization.
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 between $10
million to $50 million and debts between $50 million to $100
million.
BUEHLER FOODS: Buehler LLC Files Plan and Disclosure Statement
--------------------------------------------------------------
Buehler, LLC, a debtor-affiliate of Buehler Foods, Inc., submitted
to the U.S. Bankruptcy Court for the Southern District of Indiana
its Disclosure Statement explaining its Plan of Reorganization.
Plan Funding
The Plan will be funded from:
(a) a $500,000 revolving line of credit with an interest rate
of 7.75% per annum, secured by a first lien on
Reorganized Buehler, LLC's inventory and accounts
receivable;
(b) a $3,000,000 term note with an interest rate of 7.75% per
annum and a term of 5 years, secured by a first lien on
all of Reorganized Buehler, LLC's assets; and
(c) a $665,000 term note with an interest rate of 7.75% per
annum and a term of 2 years, secured by a first lien on
all of Reorganized Buehler, LLC's assets.
Terms of the Plan
Under the Plan, these claims are unimpaired:
* Allowed Secured Claim of the DIP Lender,
* Administrative Claims,
* Allowed Secured Claim of Moran,
* Administrative Operating Expenses,
* Reclamation Claims,
* Priority Employee Claims, and
* Allowed Equity Interest Claims.
As reported in the Troubled Company Reporter on Aug. 26, 2005, the
Court approved the Buehler Foods, Inc. and its debtor-affiliates
$6 million debtor-in-possession financing. Under the Plan,
Buehler, LLC's $250,000 share of the DIP financing will be paid in
full and in cash at the earlier of:
-- the Effective Date; or
-- Mar. 31, 2006.
Administrative Claims, Administrative Operating Expenses, and
Reclamation Claims will be paid in full.
Moran's secured claim for $780,000 will be satisfied in full
through a $764,000 cash payment on the Distribution Date.
Reorganized Buehler, LLC, will assume priority Employee Claims.
Buehler, LLC, tells the Court that Buehler Foods, Inc., owns 100%
of its equity interests. Buehler, LLC, discloses that Buehler
Foods, Inc., will sell its equity interests to Dave Buehler or his
designee with the proceeds to be used to fund Buehler Foods,
Inc.'s plan of reorganization.
Impaired classes consist of:
1. Allowed Secured Claim of the Bank Group:
The Bank Group's claim arises from Buehler, LLC's prepetition
guaranty of Buehler Foods, Inc.'s debt to the Bank Group. The
guaranty was secured by a blanket first lien on Buehler, LLC's
prepetition assets and a junior replacement lien on Buehler, LLC's
postpetition assets to the extent of any diminution in value and
as provided in the DIP Order. Buehler, LLC, will pay $3 million
at the earlier of:
(a) the Effective Date or
(b) Mar. 31, 2006.
2. Priority Personal Property Tax Claims:
Personal Property Tax Claims, estimated at approximately $66,000,
will be paid in full through 60 equal monthly installments plus
interest of 5% per annum. Payments will begin on the later of:
(a) the Distribution Date; or
(b) as soon as the Claim becomes a Personal Property Tax
Claims.
3. Allowed Unsecured Claim of Page, Inc.:
Page, Inc.'s claim for $490,000 will be paid in full through 120
equal monthly payments at an interest rate of 7% per annum.
Payment will begin on the Distribution Date.
4. Allowed Unsecured Claims, including lease rejection claims:
Buehler, LLC, tells the Court that non-priority unsecured claims,
including lease rejection claims, total $377,000. Holders of
unsecured claims will be paid in full of its allowed unsecured
claim through 60 equal monthly installments at an interest rate of
7% per annum. Payments will begin on the later of:
(a) the Distribution Date; or
(b) as soon as the claim becomes an allowed unsecured claim.
The Court will convene a hearing at 10:00 a.m. on Feb. 10, 2006,
to consider the adequacy of information contained in Buehler,
LLC's Disclosure Statement explaining its Plan of Reorganization.
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 between $10
million to $50 million and debts between $50 million to $100
million.
BUEHLER FOODS: Carolinas Files Plan and Disclosure Statement
------------------------------------------------------------
Buehler of Carolinas, LLC, a debtor-affiliate of Buehler Foods,
Inc., delivered to the U.S. Bankruptcy Court for the Southern
District of Indiana its Disclosure Statement explaining its Plan
of Reorganization.
Plan Funding
The Plan will be funded from:
(a) a $500,000 revolving line of credit with an interest rate
of 7.75% per annum, secured by a first lien on Reorganized
Carolinas' inventory and accounts receivable.
(b) a $1,000,000 term note with an interest rate of 7.75% per
annum and a term of 5 years, secured by a first lien on
all of Reorganized Carolinas' assets; and
(c) a $660,000 term note with an interest rate of 7.75% per
annum and a term of 2 years, secured by a first lien on
all of Reorganized Carolinas' assets.
Terms of the Plan
Under the Plan, these claims are unimpaired:
* Allowed Secured Claim of the DIP Lender,
* Administrative Claims,
* Allowed Secured Claim of Moran,
* Administrative Operating Expenses,
* Reclamation Claims,
* Priority Employee Claims, and
* Allowed Equity Interest Claims.
As reported in the Troubled Company Reporter on Aug. 26, 2005, the
Court approved the Buehler Foods, Inc. and its debtor-affiliates
$6 million debtor-in-possession financing. Under the Plan, the
Carolinas' $250,000 share of the DIP financing will be paid in
full and in cash at the earlier of:
-- the Effective Date; or
-- March 31, 2006.
Administrative Claims, Administrative Operating Expenses, and
Reclamation Claims will be paid in full. Moran's secured claim
for $764,000 will also be paid in full and in cash on the
Distribution Date.
Priority Employee Claims will be assumed by the Reorganized
Carolinas.
Carolinas tells the Court that Buehler Foods, Inc., owns 100% of
its equity interests. Carolinas discloses that Buehler Foods,
Inc., will sell its equity interests to Dave Buehler or his
designee with the proceeds to be used to fund Buehler Foods,
Inc.'s plan of reorganization.
Impaired classes consist of:
1. Allowed Secured Claim of the Bank Group:
The Bank Group's claim arises from Carolinas' prepetition guaranty
of Buehler Foods, Inc.'s debt to the Bank Group. The guaranty was
secured by a blanket first lien on Carolinas' prepetition assets
and a junior replacement lien on the Carolinas' postpetition
assets to the extent of any diminution in value and as provided in
the DIP Order. Buehler, LLC, will pay $1 million at the earlier
of:
(a) the Effective Date or
(b) March 31, 2006.
2. Priority Personal Property Tax Claims:
Carolinas tells the Court that Personal Property Tax Claims is
estimated at approximately $64,000, and holders of those claims
will be paid in full through 60 equal monthly installments plus
interest of 5% per annum. Payments will begin on the later of:
(a) the Distribution Date; or
(b) as soon as the Claim becomes a Personal Property Tax
Claim.
3. Allowed Unsecured Claim of CIC:
CIC's claim for $12,000 will be paid in full through 120 equal
monthly payments at an interest rate of 7% per annum. Payment
will begin on the Distribution Date.
4. Allowed Unsecured Claims, including lease rejection claims:
Buehler, LLC, tells the Court that non-priority unsecured claims,
including lease rejection claims, total $421,000. Holders of
unsecured claims will be paid in full through 60 equal monthly
installments at an interest rate of 7% per annum. Payments will
begin on the later of:
(a) the Distribution Date; or
(b) as soon as the claim becomes an allowed unsecured claim.
The Court will convene a hearing at 10:00 a.m. on Feb. 10, 2006,
to consider the adequacy of information contained in Carolinas'
Disclosure Statement explaining its Plan of Reorganization.
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 between $10
million to $50 million and debts between $50 million to $100
million.
BUEHLER FOODS: Kentucky Files Plan and Disclosure Statement
-----------------------------------------------------------
Buehler of Kentucky, LLC, a debtor-affiliate of Buehler Foods,
Inc., submitted to the U.S. Bankruptcy Court for the Southern
District of Indiana its Disclosure Statement explaining its Plan
of Reorganization.
Plan Funding
Kentucky reminds the Court that prior to filing of the Plan it
liquidated all of its assets except for certain Causes of Action
and Bankruptcy Causes of Action. The Plan provides for the
distribution of the proceeds of various sales.
In addition, members of Kentucky will be contributing $3 million
in new capital to make the payments provided for in the Plan.
Both the Causes of Action and Bankruptcy Causes of Action will be
transferred on the Effective Date of the Plan to a Liquidating
Trust for recovery. Amounts recovered net of costs will then be
distributed to the various Classes of Claimants pursuant to the
priorities established in the Plan. No junior class of unsecured
claims or equity can be paid until the Classes of Claims of higher
priority are paid in full.
Terms of the Plan
Under the Plan, only the Allowed Secured Claim of the DIP Lender
and Administrative Claims are unimpaired.
As reported in the Troubled Company Reporter on Aug. 26, 2005, the
Court approved Buehler Foods, Inc. and its debtor-affiliates' $6
million debtor-in-possession financing. Under the Plan, the
Kentucky will pay Harris, N.A., $3 million on the Distribution
Date. The distribution is funded by:
* proceeds of Kentucky's leasehold interests which were
unencumbered prior to the liens granted pursuant to the DIP
financing, and
* $385,000 from the capital contribution.
Administrative Claims will be paid in full.
Impaired classes consists of:
1. Allowed Secured Claim of the Bank Group:
The Bank Group's claim arises from Carolinas' prepetition guaranty
of Buehler Foods, Inc.'s debt to the Bank Group. The guaranty was
secured by a blanket first lien on Carolinas' prepetition assets
and a junior replacement lien on the Carolinas' postpetition
assets to the extent of any diminution in value and as provided in
the DIP Order. Buehler, LLC, will pay $1,000,000 at the earlier
of the Effective Date or March 31, 2006.
2. Allowed Secured Claims of Associated Wholesale Grocers, Inc.:
AWG's claim is secured by a second lien on Kentucky's pre-petition
inventory and equipment. Under the plan, AWG will receive no
distribution other than payment of its allowed PACA claims.
3. Administrative Operating Expenses:
Holders of allowed claims for administrative operating expenses
will receive in cash, a Pro Rata share of their allowed claims
from the net proceeds of recoveries from Kentucky's Bankruptcy
Causes of Action. Kentucky estimates that administrative
operating expense claims total $775,000.
4. Priority Employee Claims:
Employee Claims consist of unpaid wages, salaries or commission,
including vacation, severance and sick leave, earned within 180
days of the Petition Date. Holders of Employee claims will be
paid in cash, a Pro Rata share of the net proceeds of recoveries
from Kentucky's Bankruptcy Causes of Action remaining after
payment of allowed claims excluding unsecured claims. Kentucky
estimates the total employee claims to be $126,000.
5. Allowed Unsecured Claims, including lease rejection claims:
Kentucky estimates that unsecured claims total $7,495,000.
Holders of unsecured claims will be paid in cash, a Pro Rata share
of recoveries from Kentucky's Bankruptcy Causes of Action
remaining after payment of all other claims.
6. Allowed Equity Interest Claims
Holders of Equity Interests will receive nothing under the plan.
The Court will convene a hearing at 10:00 a.m. on Feb. 10, 2006,
to consider the adequacy of information contained in Kentucky's
Disclosure Statement explaining its Plan of Reorganization.
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 between $10
million to $50 million and debts between $50 million to $100
million.
CALPINE CORP: 2nd Lien Debtholders Want DIP Order Reconsidered
--------------------------------------------------------------
As previously reported, the Honorable Burton R. Lifland of the
U.S. Bankruptcy Court for the Southern District of New York
authorized Calpine Corporation to borrow up to $500,000,000 of its
$2 billion DIP financing facility for working capital and other
general corporate purposes, and for payment of interest, fees and
expenses related to the DIP Documents. The Company has received
commitments for the DIP facility from Deutsche Bank and Credit
Suisse First Boston.
A full-text copy of the Interim DIP Financing Order is available
for free at http://bankrupt.com/misc/calpine_interimDIPorder.pdf
Final DIP Financing Hearing
The Court will convene the Final DIP Financing Hearing on
January 25, 2006, at 10:00 a.m. Objections must be filed and
served no later than January 19, 2006, at 4:00 p.m., prevailing
Eastern time.
At the Final Hearing, Calpine Corporation and its debtor-
affiliates will seek the Court's authority to obtain the balance
of the borrowings and letter of credit issuances under the DIP
Documents.
* * *
Second Lien Debtholders Seek Reconsideration
Allan S. Kornberg, Esq., at Paul, Weiss, Rifkind, Wharton &
Garrison LLP, in New York, on behalf of the Unofficial Committee
of Second Lien Debtholders, tells Judge Lifland that the DIP
Financing Order granted the DIP Lenders extraordinary relief on
an expedited basis without notice to any parties-in-interest.
Hours after Calpine entered Chapter 11, the DIP Lenders received
the equivalent of a $30,000,000 "break-up" fee, which if allowed
to stand, will terminate any competitive process for obtaining
DIP financing. The effect of the fee, Mr. Kornberg explains,
would be that a new DIP facility would have to be priced at least
$30,000,000 less than the existing DIP Financing Facility.
The $30,000,000 in fees approved at the emergency interim hearing
constitute all of the fees that may be due to the DIP Lenders for
a $2,000,000,000 DIP facility, only $500,000,000 of which can be
drawn prior to the final DIP hearing. The DIP Financing Facility
provides that this fee is due even if the DIP Financing Facility
is not approved at the final DIP hearing and instead the Debtors
obtain other DIP financing its place. The imposition of a
$30,000,000 break-up fee makes it unlikely, if not impossible,
that the Debtors would be able to find a superior financing
proposal, Mr. Kornberg points out.
At this initial stage of the Chapter 11 cases, the Federal Rules
of Bankruptcy Procedure and constitutional due process permit
only interim relief. Nonetheless, while styled as an interim
order, Mr. Kornberg asserts that the $30,000,000 payment renders
this aspect of the DIP Financing Order final for all practicable
purposes. To this extent, the December 21, 2005 emergency
interim hearing became, in violation of Rule 4001(c)(2) of the
Federal Rules of Bankruptcy Procedure, a "final" hearing.
There also was no evidence before the Court of the need to
approve the break-up fee or that the DIP Lenders would not lend
absent approval of the fee. Rather, Mr. Kornberg says there was
an indication during the hearing that there was considerable
interest in financing Calpine from at least six other lenders,
all of whom might have lent without imposing a $30,000,000 break-
up fee. Thus, he adds, the fee should not have been approved.
Mr. Kornberg further notes that there was no notice to any party-
in-interest that the Debtors were going to seek approval of
considerable fees on a final basis at the emergency interim
hearing. He says there was no meaningful notice of the DIP
Financing Motion at all since counsel to the Unofficial Committee
was not served with a complete copy of the DIP Financing Motion
until the hearing was under way.
Mr. Kornberg also points out that the DIP Financing Motion was
filed only minutes before the hearing began.
Accordingly, the Second Lien Debtholders Committee asks the Court
to:
(1) reconsider approval of the DIP Financing Order to the
extent it authorized the Break-Up Fee; and
(2) amend the DIP Financing Order, including reversal of the
approval of the Break-Up Fee.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. As of Dec. 19, 2005, the Debtors
listed $26,628,755,663 in total assets and $22,535,577,121 in
total liabilities. (Calpine Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Has Exclusive Right to File Plan Until May 1
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
further extended Collins & Aikman Corporation and its debtor-
affiliates' exclusive period to file a chapter 11 plan through
May 1, 2006. The Court also extended, until June 30, 2006, the
Debtors' period to solicit acceptances of that plan.
The Debtors have been pursuing a dual-track process of undergoing
a merger and acquisition process for their businesses while
developing a viable and consensual stand-alone plan of
reorganization, Ray C. Schrock, Esq., at Kirkland & Ellis LLP
explains. In furtherance of both exit strategies, the Debtors
have successfully renegotiated their contracts with key customers
and are presently implementing their cost reduction plans.
To substantially reduce their operating expenses, Mr. Schrock
notes that the Debtors:
* are close to completing a comprehensive business plan that,
among other things, takes into account the strategic benefit
of every part they produce, as well as how to enhance the
profitability of all of their programs;
* are reducing their manufacturing costs by insourcing and
outsourcing various subprograms, reducing or recycling scrap
materials, and utilizing alternative techniques;
* have identified opportunities to obtain certain key
materials from less expensive, qualified, alternate
suppliers or by purchasing scrap materials for regrinding
into useable product;
* are planning to rationalize their production footprint by
the end of 2006. The Debtors have already announced their
plans to consolidate operations at several plants;
* are continuing to assemble a talented group of senior
executives -- in addition to procuring the valuable services
of Frank Macher and John Boken -- who are experienced and
knowledgeable in cost-reduction techniques;
* are presently appraising their excess machinery to determine
which equipment should be retained, and at what cost. After
the appraisal, the Debtors intend to achieve significant
savings by utilizing their options under the Bankruptcy Code
to renegotiate, reject or recharacterize leases;
* are reviewing their many real estate leases for additional
opportunities to trim expenses through renegotiation or
rejection; and
* are planning to reduce corporate overhead through headcount
attrition and related initiatives.
"To be clear, the Debtors are committed to exploring all
reorganization alternatives. Precisely because the Debtors have
not yet determined whether a sale of one or more of their
businesses maximizes value as compared to a stand-alone
restructuring, the Debtors need more time to evaluate their M&A
and stand-alone alternatives," Mr. Schrock relates.
The Official Committee of Unsecured Creditors, the agent and
steering committee for the Debtors' senior, secured prepetition
lenders, and the agent for the Debtors' DIP lenders support the
extension.
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Inks AIG Insurance Program Agreement
------------------------------------------------------
Before the Petition Date, Collins & Aikman Corporation and its
debtor-affiliates purchased an insurance program from National
Union Fire Insurance Company of Pittsburgh, Pennsylvania and its
affiliates -- AIG -- to provide insurance related services.
Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York,
relates that the prepetition Existing Insurance Program was set
to expire on November 30, 2005. The Debtors, through their
insurance broker AON Risk Services, contacted insurance companies
to replace the Existing Insurance Program, effective December 1,
2005, for one year.
However, due to the Debtors' Chapter 11 cases and the
misperception of their financial situation, many insurance
companies were unwilling to offer administrative services and
insurance coverage. Even though AON approached numerous insurers,
it was able to obtain proposals from a very limited number of
service providers.
After comparing the proposals submitted by insurance companies,
the Debtors decided that the proposal from AIG was the best.
AIG Insurance Agreement
Accordingly, the Debtors sought and obtained authority from the
U.S. Bankruptcy Court for the Eastern District of Michigan to
enter into an insurance program agreement with AIG.
For one year beginning on December 1, 2005, AIG will provide the
Debtors with:
-- workers' compensation and employers liability insurance and
related administrative services;
-- automobile liability insurance; and
-- commercial general liability insurance.
The insurance coverages are generally provided with a $1,000,000
deductible or self-insured retention pursuant to which AIG pays
covered claims and seeks reimbursement from the Debtors. The
Debtors are required to post a $10,300,000 letter of credit in
favor of AIG and provide an escrow fund with $325,000 as security
for all of the Debtors' obligations to AIG that arise between the
Petition Date and the expiration of the Insurance Program and any
renewal.
Judge Rhodes further rules that:
(a) the Debtors are authorized to enter into further renewals
of the Insurance Program without further Court order;
(b) the Debtors are authorized and directed to pay their
obligations under the Insurance Program in the ordinary
course of business, in accordance with the relevant terms
of the Insurance Program, without further Court order;
(c) in the event of default by the Debtors, AIG may exercise
all contractual rights in the Insurance Program without
further Court order;
(d) reimbursement obligations and any other obligations under
the Insurance Program arising on or after the Petition
Date will be administrative expenses under Section 503(b)
of the Bankruptcy Code. Inasmuch as the Debtors are to
meet their obligations under the Insurance Program without
further Court order, no additional proof of claim or
request for payment of administrative expenses due under
the Insurance Program need be filed by AIG. AIG will be
exempt from any bar date that may be issued for the filing
of any proof of claim relating to administrative expenses
due under the Insurance Program;
(e) the Collateral held at this time by AIG on account of the
Insurance Program and all prior payments to AIG under the
Insurance Program are approved, and AIG is authorized to
retain and use the Collateral in accordance with the
Insurance Program solely with respect to obligations of
the Debtors' estates which arise from and after May 17,
2005, until the expiration of the Insurance Program;
(f) AIG may adjust, settle and pay insured claims, utilize
funds provided for that purpose, and otherwise carry out
the terms and conditions of the Insurance Program, without
further Court order;
(g) the Insurance Program may not be altered by any plan of
reorganization filed in the Debtors' Chapter 11 cases,
without the AIG's written consent, and will survive any
plan of reorganization filed by the Debtors; and
(h) the Debtors' rights against Collateral held by AIG on
account of the Insurance Program will be governed by the
Insurance Program and the related security documentation,
and the Debtors will not take any action against AIG on
account of the Insurance Program in the Bankruptcy Court
that is inconsistent with the terms of the documentation.
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Taps Hilco as Professional Appraiser
------------------------------------------------------
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York,
relates that Collins & Aikman Corporation and its debtor-
affiliates have begun to evaluate all of their outstanding
personal property leases and interests to determine their
appropriate disposition. As part of this process, the Debtors
have determined that they require the services of a professional
appraiser to maximize the benefits to their estates.
Against this backdrop, the Debtors obtained permission from the
U.S. Bankruptcy Court for the Eastern District of Michigan to
employ Hilco Appraisal Services, LLC, as their personal property
appraiser, nunc pro tunc to Dec. 8, 2005.
Hilco will physically appraise the Debtors' machinery and
equipment, which are the subject of the Leases. Hilco will also
determine the remaining useful life of the Assets, and provide
opinion as to the fair market value and gross liquidation value
the Debtors may receive upon a sale of the Assets.
Mr. Schrock relates that Hilco has performed services for the
Debtors since December 8, 2005, without payment. The nunc pro
tunc retention will assure Hilco that it is not penalized for the
delay in the filing of the Debtors' application, Mr. Schrock
explains.
Under the engagement letter between Hilco and the Debtors, both
parties agree that:
(a) Hilco will provide to the Debtors:
-- a pictorial record of the Assets as of the date of
appraisal;
-- an opinion of the fair market value and gross
liquidation value the Debtors may receive upon sale of
the Assets appraised under certain conditions;
-- an opinion of the remaining useful life of the Assets
appraised; and
-- a final appraisal report, in letterform, of the total
value of the Assets appraised with a statement of
conditions and a signed certificate of appraisal;
(b) Hilco will be paid a $305,000 fixed fee and reimbursed
for any customary, travel expenses. Payment under the
Engagement Letter is subject to the interim compensation
procedures approved in the Chapter 11 cases, as well as
Sections 330 and 331 of the Bankruptcy Code;
(c) If Hilco is required to give expert witness testimony with
respect to its appraisal services under the Engagement
Letter, its fee will be:
-- $300 per hour for research and client consultation;
-- $2,500 per day for deposition and court testimony
including travel days; plus
-- reimbursement for all normal and customary
administrative and travel expense.
Arnie Dratt, chief executive officer of Hilco, assures the Court
that the firm does not hold or represent an interest adverse to
the Debtors' estates, and is a "disinterested" as that term is
defined in Section 101(14) of the Bankruptcy Code, as modified by
Section 1107(b).
Headquartered in Troy, Michigan, Collins & Aikman Corporation --
http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). When the Debtors filed for protection from their
creditors, they listed $3,196,700,000 in total assets and
$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CONTECH CONSTRUCTION: Moody's Rates $525 Million Facilities at B1
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to CONTECH
Construction Products Inc.'s $525 million senior secured credit
facilities and a B1 corporate family rating. The assigned ratings
take into consideration:
* the company's high leverage ratios;
* weak free cash flow generation relative to debt levels; and
* the company's exposure to the slowing residential
construction market from which one third of its revenues are
derived.
At the same time, the ratings benefit from the company's
continuing strong operating performance as reflected by:
* increasing sales and effective cost management;
* leading market position; and
* the expectation for continued robust demand in most of the
company's end markets.
The ratings outlook is stable.
These ratings have been assigned:
* $100 million senior secured revolver, due 2012, rated B1
* $425 million senior secured term loan B, due 2013, rated B1
* Corporate Family Rating, rated B1
The $525 million senior secured credit facilities along with a
$225 million senior subordinated mezzanine debt (not rated by
Moody's) and $408 million equity contribution are used to fund the
acquisition of CONTECH by Apax Partners for $1.031 billion or
approximately 9 times pro forma LTM 12/05 EBITDA. Moody's notes
that the company's senior secured credit facility agreement
includes a provision for $150 million incremental facility that
could be used for possible acquisitions.
The assigned ratings reflect the company's high leverage and cash
flow metrics. The company's pro forma LTM December 2005 debt to
EBITDA is approximately 5.6 times versus pre-transaction 3.4 times
FYE 2005. Significantly, the free cash flow to debt FYE 2007 is
projected to be only approximately 4% and is not expected to
increase above 8% before 2010.
The ratings are also constrained by the company's acquisition
track record. Moody's expects the company to continue to grow
through acquisitions thereby increasing its leverage metrics
further and weakening its free cash flow generation. Currently,
the expected covenants on the company's senior credit facility
limit the debt used in any prospective acquisition to $150 million
under the senior credit facility and $40 million of subordinated
debt provided that the total leverage (pro forma for acquisition)
is less than 5.5 times.
The ratings benefit from:
* the company's highly variable cost structure;
* expected improvements in the company's product mix; and
* industry's product substitution trends leading to higher
margins and stronger EBITDA generation.
Additionally, the ratings benefit from company's diversified
customer base and strong market position in the manufacturing and
distribution of specialty construction products to the civil
engineering infrastructure sector of the heavy construction
industry. Bulk of the company's revenue is generated from the:
* highway,
* residential, and
* commercial construction markets.
The company's sales should benefit from the recent $286 billion
highway bill as approximately 1/3rd of the company's revenues are
derived from highway spending. Furthermore, the company's revenue
generation in the Environmental Stormwater Management segment
should be positively affected by the U.S. Clean Water Act.
The company's stable ratings outlook reflects the expected strong
demand for CONTECH's products. At the same time, the company's
performance is closely tied to the general economic conditions.
The company's outlook or ratings could deteriorate if the
company's leverage metrics, free cash flow generation and/or
balance sheet were to be pressured further. Moody's notes that
the company is weakly positioned in its ratings category. The
outlook or ratings may improve if the company's balance sheet is
strengthened significantly and the company's free cash flow to
total debt is anticipated to be over 12% on a sustainable basis.
Headquartered in West Chester, Ohio, CONTECH manufacture and
market corrugated steel and plastic pipe and fabricated products
for use in highway, residential and commercial construction.
Revenues for FYE 2005 were approximately $585 million.
CORDOVA FUNDING: S&P Raises Ratings on $225MM Sr. Sec. Bonds to BB
------------------------------------------------------------------
Standard & Poor's Rating Services raised its rating on Cordova
Funding Corp.'s $225 million senior secured bonds due 2019 to 'BB'
from 'B' and removed the rating from CreditWatch. The outlook is
stable.
The rating action follows the announcement that El Paso Marketing
L.P., a subsidiary of El Paso Corp. (El Paso; B/Positive/B-3),
divested to Constellation Energy Commodities Group Inc. the
tolling agreement between EPM and Cordova Energy Co. LLC, the
guarantor of CFC's bond payment obligations, as of Jan. 1, 2006.
The rating on CFC's bonds had been constrained by that on El Paso,
which was the guarantor of EPM's obligations. Constellation
Energy Group Inc. (BBB+/Watch Pos/A-2) is now the guarantor under
the tolling agreement. The improved credit quality of the tolling
counterparty drives the upgrade, but the rating on CFC's bonds
remains below investment grade, as debt service coverage has
hovered around 1x due to weaker-than-projected dispatch.
"The stable outlook on CFC reflects Cordova's stable revenue
stream as a result of the 20-year purchase-power agreement with
Constellation," said Standard & Poor's credit analyst Scott
Taylor. "Thin debt service coverage limits the potential for an
upgrade unless market conditions improve, which we do not expect
in the near to medium term."
Availability problems or increasing operating expenses could lead
to downward pressure on the rating.
CORPORATE BACKED: S&P Chips Ratings on $29MM Class Certs. to BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
$29,000,000 million class A-1 and A-2 certificates issued by
Corporate Backed Trust Certificates Series 2001-16 Trust to 'BB-'
from 'BB+'. The ratings remain on CreditWatch with negative
implications, where they were placed Nov. 17, 2005.
Corporate Backed Trust Certificates Series 2001-16 Trust is a
synthetic transaction. The ratings on the class A-1 and A-2
certificates are linked to the rating on the underlying
securities, Georgia Pacific Corp.'s $29,033,000 7.75% senior
unsecured debentures. The downgrade of the class A-1 and A-2
certificates follows the lowering of the rating on the underlying
securities on Dec. 22, 2005. The rating on the underlying
securities remains on CreditWatch negative, where it was placed
Nov. 17, 2005.
A copy of the Georgia Pacific Corp.-related research update,
"Georgia-Pacific, Koch Cellulose Corporate Credit Ratings Lowered
To 'BB-', GP Off Watch," dated Dec. 22, 2005, can be found on
RatingsDirect, Standard & Poor's Web-based credit analysis system
at http://www.ratingsdirect.com/
CORPORATE BACKED: S&P Raises Rating on $68MM Certs. to A from BB+
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on the
$68 million corporate-backed trust certificates issued by
Corporate Backed Trust Certificates Series 2001-5 Trust to 'A'
from 'BB+' and removed it from CreditWatch, where it was placed
with positive implications July 5, 2005.
This swap-independent synthetic transaction is weak-linked to the
underlying 8.278% capital securities series A issued by MBNA
Capital A, a subsidiary of MBNA Corp., which was recently acquired
by Bank of America Corp. The rating action reflects the
Jan. 3, 2006, raising of the rating on the underlying assets and
its subsequent removal from CreditWatch positive.
A copy of the MBNA Corp.-related research update, "MBNA Corp.
Ratings Raised And Removed From CreditWatch; Ratings Withdrawn,"
dated Jan. 3, 2006, is available on RatingsDirect, Standard &
Poor's Web-based credit analysis system, at
http://www.ratingsdirect.com/
CORONET FOODS: Stipulates with Sheetz to Resolve Plan Objections
----------------------------------------------------------------
Coronet Foods, Inc., and its debtor-affiliate entered into
stipulations to resolve objections raised by Sheetz Inc. against
their Joint Liquidation Plan, including a settlement agreement
that the Debtors have with Howard Long -- their sole shareholder
-- and his entities.
A salmonella outbreak in Pennsylvania in 2004 was identified by
the Department of Health to have come from the Roma tomatoes
supplied by Coronet to Sheetz. The tomatoes were used in Sheetz's
deli sandwiches and salads. Sheetz filed an $11 million
contingent and unliquidated claim against the Debtors for its
business losses as a result of the salmonella outbreak.
Sheetz objected, among others, to the proposed releases as a
result of the settlement agreement described in the Debtors' Joint
Plan of Liquidation.
The settlement agreement calls for a $1.5 million payment from the
Long entities to the Debtors in exchange for releases from
creditors' actions.
Sheetz told the Court during the confirmation hearing on Dec. 28,
2005, that the settlement directly and severely impacts the rights
of all unsecured creditors.
The Debtors entered into stipulations with Sheetz to resolve its
objections. Among others, the parties stipulate and agree that:
* the automatic stay will be lifted to allow Sheetz to pursue
any claims it has against the Debtors provided that any
recovery is limited to proceeds of insurance plus any sums
that the Debtors recover from the suppliers of the Roma
tomatoes;
* Sheetz will withdraw its objections to the Long Settlement
Agreement and the Chapter 11 Plan;
* the Stipulation will fully settle Sheetz's proofs of claim
filed against the Debtors; and
* the Debtors will waive any claims they may have against
Sheetz for the sale of the Roma tomatoes.
The Long entities are represented by:
Paul M. Singer, Esq.
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Phone: 412-288-3114
Email: psinger@reedsmith.com
Sheetz, Inc., is represented by:
Samuel R. Grego, Esq.
John W. Burns, Esq.
Shannon E. Smith, Esq.
Dickie, McCarney & Chilcote, P.C.
Two PPG Place, Suite 400
Pittsburgh, PA 15222-5402
Phone: 412-281-7272, Fax: 412-392-5367
-- and --
S. Jane Anderson, Esq.
Dickie, McCarney & Chilcote, L.C.
1233 Main Street, Suite 2002
Wheeling, WV 26003-2839
Phone: 304-233-1022, Fax: 304-233-1026
-- and --
Frederic L. Gordon, Esq.
Gordon & Holmes
223 West Date Street
San Diego, CA 92101
Phone: 619-696-0444, Fax: 619-696-1144
Headquartered in Wheeling, West Virginia, Coronet Foods, Inc.
-- http://www.coronetfoods.com/-- supplies fresh-cut products
to chain restaurants and retailers. The Company filed for chapter
11 protection on October 29, 2004 (Bankr. N.D. W.Va. Case No.
04-03822). Charles J. Kaiser Jr., Esq., and Denise Knouse-Snyder,
Esq., at Phillips, Gardill, Kaiser & Altmeyer, PLLC, represent the
Debtor in its restructuring. When the Debtor filed for protection
from its creditors, it listed estimated assets of $1 million to
$10 million and estimated debts of $10 million to $50 million.
CORUS ENT: Extends 8.75% Senior Subordinated Notes Offering
-----------------------------------------------------------
Corus Entertainment Inc. (TSX:CJR.NV.B; NYSE: CJR) is extending
its cash tender offer and consent solicitation for its outstanding
$375 million aggregate principal amount of 8.75% Senior
Subordinated Notes due 2012.
The tender offer, which was to have expired at 12 midnight ET on
Jan. 13, 2006, will be extended to 12 midnight ET on Jan. 20,
2006, unless further extended or earlier terminated by Corus.
The depositary, Global Bondholder Services Corporation, has
advised Corus that $373.5 million aggregate principal amount of
the Notes, representing approximately 99.61% of the Notes
outstanding, had been validly tendered and not withdrawn as of
5 p.m. ET on Jan. 10, 2006.
Corus accepted all consents validly tendered prior to 5 p.m. ET on
Dec. 29, 2005, and the supplemental indenture, which eliminates
substantially all of the restrictive covenants and certain events
of default contained in the indenture governing the Notes, has
been executed and will become effective upon acceptance for
payment of the Notes validly tendered and not withdrawn. Notes
tendered and consents delivered prior to 5 p.m. ET on
Dec. 29, 2005 may no longer be withdrawn or revoked.
Information regarding the pricing, tender and delivery procedures
and conditions of the tender offer and consent solicitation is
contained in the Offer to Purchase and Consent Solicitation
Statement dated Dec. 15, 2005 and related Letter of Transmittal
and Consent, which more fully set forth the terms of the tender
offer and consent solicitation. The terms of the extended offer
remain unchanged from the original offer as set forth in these
materials. The financing condition of the tender offer has not
yet been satisfied.
Copies of the Offer to Purchase and Letter of Transmittal can be
obtained from the information agent and depositary:
Global Bondholder Services Corporation
Tel No. (212) 430-3774 (collect) or
Toll Free No. (866) 470-4300
Citigroup Corporate and Investment Banking is the exclusive dealer
manager and solicitation agent for the tender offer and consent
solicitation.
Additional information concerning the terms and conditions of the
tender offer and consent solicitation may be obtained by
contacting Citigroup at (800) 558-3745 or (212) 723-6106.
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.
Corus Entertainment Inc.'s 8.75% Senior Subordinated Notes due
2012 carry Moody's Investors Service's and Standard & Poor's
single B rating.
CRC HEALTH: Moody's Rates $220 Million Sr. Sub. Notes at Caa1
-------------------------------------------------------------
Moody's Investors Service assigned new ratings to CRC Health
Corporation ("CRC") in connection with the acquisition of CRC by
Bain Capital from the former sponsor group, North Castle Partners.
The ratings outlook is stable.
Moody's assigned these proposed ratings:
* B1 to $100 million senior secured revolver, due 2012
* B1 to $225 million senior secured term loan 'B', due 2013
* B2 corporate family rating
* Caa1 to $220 million senior subordinated notes, due 2016
Moody's said that it expects to withdraw CRC's existing debt
ratings in connection with the refinancing of this debt upon
closing of the acquisition. The proceeds from this new
indebtedness will be utilized to repay existing senior bank
facility debt and fund the acquisition.
The ratings reflect:
* the significant increase in pro forma leverage to over
7 times lease-adjusted trailing twelve month EBITDA as of
Sept. 30, 2005;
* the high level of debt relative to total revenues (over two
times sales);
* the company's limited track record of profitability; and
* the company's small size.
CRC has not been able to produce a meaningful amount of free cash
flow on a consistent, sustained basis. Following the increased
capital spending related to the expansion of its newly acquired
Sierra Tucson residential treatment facility Moody's anticipates
that CRC will generate free cash flow in 2006, albeit minimal.
The ratings also reflect the operational and financial risk
inherent in the company's acquisition strategy as the company has
completed a total of 13 acquisitions for a total consideration in
excess of $350 million since inception. Moody's is concerned that
the company may continue to pursue additional leveraged
acquisitions over the next few years, which may constrain the
company's financial flexibility.
Factors mitigating these concerns include:
* a strong payor mix with private payors accounting for
approximately two-thirds of total revenues;
* a relatively successful track record of integrating and
improving the operations of acquired companies;
* the long operating history and strong reputation of its
residential treatment centers; and
* the large and growing demand for its substance abuse
rehabilitation treatment services.
CRC has a significant competitive advantage compared to other
companies that serve this market because of its:
* scale,
* financial resources and access to capital,
* breadth and depth of services,
* its marketing expertise,
* technology investments,
* managed care contracts, and
* professional management.
Additional factors supporting the rating include:
* high facility margins for its opiate treatment centers and
the Sierra Tucson facility; and
* a lean corporate support infrastructure.
The ratings also reflect favorable industry conditions:
* a large and growing market for substance abuse treatment;
* a fragmented market in which the majority of existing
facilities are either non-profit or affiliated with
government and are typically single site with minimal capital
or operational expertise; and
* tight supply because of the decline in the number of
substance abuse facilities resulting in increasing capacity
utilization.
The stable outlook reflects Moody's expectation that CRC will:
* continue to increase top-line growth;
* expand margins at both existing and acquired facilities; and
* generate operating cash flow by means of:
-- higher rates,
-- improved census, and
-- continued, strong cost control measures.
Moody's believes that the company will be able to expand census
through:
* its managed care contracts;
* increased marketing to referral sources; and
* the expansion of new programs such as the treatment of eating
disorders and pain management.
It is anticipated that CRC will continue to supplement internal
growth by adding new opiate and residential treatment facilities.
Capital expenditures are expected to moderate once build out of
existing expansion projects is completed in 2006 and 2007. As a
consequence, adjusted free cash flow to adjusted debt should
average between 5% to 7% during those years.
The rating could be upgraded if greater than anticipated operating
improvements fuel stronger free cash flow and, concomitantly,
incremental debt reduction, or, if the company adopts a more
conservative approach to growth.
The outlook could change to negative if free cash flow does not
grow. A major acquisition that materially increases financial
leverage could also result in a downgrade.
The B1 ratings on the proposed revolving credit facility and term
loan 'B' reflect:
* the security of a first lien on substantially all domestic
assets of the issuer and its direct and indirect
subsidiaries;
* the stock of the issuer and that held by the holding company;
and
* a pledge of stock of 65% of first-tier foreign subsidiaries.
The senior secured facilities and the senior subordinated notes
will be guaranteed by a newly-formed holding company, CRCA
Holdings Inc., together with all material domestic subsidiaries
while the senior subordinated notes will be guaranteed by upstream
guarantees of all material domestic subsidiaries, only.
The rating for the senior credit facility is notched one level
above the corporate family rating to reflect the benefit of the
proposed $220 million senior subordinated note issue and the
contribution of over $300 million in equity from the sponsor. It
is also Moody's opinion that there is adequate coverage of the
senior secured facilities on a distress multiple basis.
The Caa1 rating for the proposed $220 million senor subordinated
note issue reflects the absence of any security and the
contractual subordination to all existing and future senior debt.
The notes do benefit from a guaranty from all material domestic
subsidiaries and from the substantive, $305 million equity layer
beneath it. It is Moody's opinion that the collateral package
would not provide the subordinated note holders adequate
protection in a reasonable distress scenario.
CRC Health Corporation, based in Cupertino, California, owns and
operates drug and alcohol rehabilitation facilities and clinics
specializing in the treatment of chemical dependency and mental
health disorders through a network of 87 facilities in 21 states
with over 2,500 employees. For the twelve months ended
Sept. 30, 2005, the company generated revenues of approximately
$221 million.
DAVCRANE INC: Court Extends Plan Filing Period to January 30
------------------------------------------------------------
The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for
the Southern District of New York further extended until Jan. 30,
2006, the period within which Davcrane, Inc., and its debtor-
affiliates have the exclusive right to file a chapter 11 plan of
reorganization.
The Debtors told the Court that in December 2005, they were in the
process of filing a petition with the U.S. Patent Office. The
Debtors say that the result of the request could have a
significant impact on their intellectual property rights which
will materially affect the plan and disclosure statement.
Headquartered in Harlingen, Texas, Davcrane, Inc., --
http://www.davcrane.com/-- produces and develops cranes. The
Debtor filed for chapter 11 protection on November 12, 2004
(Bankr. S.D. Tex. 04-11507). Michael J. Urbis, Esq., at Jordan
Hyden Womble & Culbreth, represents the Company in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it reported an estimated $1 million to $10 million
in assets and liabilities.
Headquartered in Harlingen, Texas, Davis Pipelayer, Inc., and its
president, Daniel Edward Davis, filed for chapter 11 protection on
Aug. 8, 2005 (Bankr. S.D. Tex. Case Nos. 05-21192 & 05-21194).
Shelby A. Jordan, Esq., at Jordan Hyden Womble and Culberth, P.C.,
represents the Debtors in their restructuring efforts. When Davis
Pipelayer filed for protection from its creditors, it listed total
assets of $12,884,960 and total debts of $890,771.
Davis Pipelayer, Inc. and Daniel Edward Davis' chapter 11 cases
are jointly administered under Davcrane, Inc.'s bankruptcy
proceedings.
DON SIMPLOT: Wants Court to Extend Filing of Schedules
------------------------------------------------------
Don J. Simplot asks the U.S. Bankruptcy Court for the District of
Idaho for an extension of his time to file his schedules of assets
and liabilities and statements of financial affairs.
The Debtor tells the Court that he is a general partner of a
limited partnership called DJS Properties LP, whose numerous
assets may have legal title vested in his individual name even
though all the proceeds to purchase those assets were paid by the
limited partnership. The Debtor says that DJS has paid taxes and
other obligations related to those properties since they were
purchased. The Debtor relates that his accountants and other
professionals are working to prepare the necessary schedules to be
filed in the bankruptcy proceeding.
The Debtor discloses that he invested in numerous limited
liability companies in Washington, Oregon, and Alaska, with the
encouragement of Robert Brennan. The Debtor further discloses
that Mr. Brennan and some of these companies filed for Chapter 11
protection in the U.S. Bankruptcy Court for the Western District
of Washington. The Debtor has been attempting to discover the
nature of his ownership interests and liabilities in these
companies. As an investor, the Debtor has guaranteed numerous
loans but has been unable to obtain complete information showing
where the proceeds of the loans were disbursed.
The Debtor believes that it will not be practical to file complete
schedules within 15 days of the bankruptcy filing.
Headquartered in Boise, Idaho, Don J. Simplot owns 50% interest in
EEX Acquisition, LLC, which filed for chapter 11 protection on
Oct. 14, 2005 (Bankr. W.D. Wash. Case No. 05-28286)(J.
Overstreet). The Debtor is also an affiliate of G B Vessel
Acquisition LLC, which also filed for bankruptcy protection on
Oct. 14, 2005 (Bankr. W.D. Wash. Case No. 05-28316). The Debtor
filed for chapter 11 protection on Jan. 4, 2006 (Bankr. D. Idaho
Case No. 06-00002). Jerome Shulkin, Esq., at Shulkin Hutton Inc.,
P.S., and Joseph M. Meier, Esq., at Cosho Humphrey, LLP, represent
the Debtor in his restructuring efforts. When the Debtor filed
for protection from his creditors, he listed $10 million to
$50 million in assets and debts.
EB2B COMMERCE: Posts $23,862 Net Loss in Quarter Ended March 31
---------------------------------------------------------------
eB2B Commerce, Inc., nka Mediavest, Inc., delivered its quarterly
report on Form 10-QSB for the three months ended March 31, 2005,
to the Securities and Exchange Commission on Jan. 5, 2006.
eB2B incurred a $23,862 net loss on zero revenues for the quarter
ended March 31, 2005, as compared to a $179,228 net loss on zero
revenues for the same period in 2004. The Company's balance sheet
showed $85,238 in total assets and $9,100 in liabilities at
March 31, 2005.
eB2B is currently a "shell" company with no operations and is
controlled by Trinad Capital, LP, its majority shareholder.
Headquartered in New York, New York, eB2B Commerce, Inc., nka as
Mediavest, Inc., provides business-to-business transaction
management services that simplify trading partner integration,
automation, and data exchange across the order management life
cycle. The Company filed for chapter 11 protection on Oct. 27,
2004 (Bankr. S.D.N.Y. Case No. 04-16926). Alan D. Halperin, Esq.,
at Halperin Battaglia Raicht LLP represented the Debtor. The
Bankruptcy Court confirmed the Debtor's chapter 11 plan on
Jan. 28, 2005, and the Court officially terminated the bankruptcy
case on June 30, 2005. When the Debtor filed for chapter 11
protection, it listed $1,232,200 in total assets and $5,546,900 in
total debts.
ENRON CORP: District Ct. Won't Dismiss RBC From Class Action Suit
-----------------------------------------------------------------
The United States District Court for the Southern District of
Texas denied the Royal Bank of Canada's request for dismissal in
the securities class action litigation Newby v. Enron Corp., No.
04-CV-87.
Among others, the Complaint alleged that RBC and six of its
subsidiaries participated in concealing Enron's true financial
position.
RBC asserted that the Complaint did not differentiate between the
different RBC subsidiaries and failed to specify individual acts.
However, the District Court finds that RBC was a substantial
participant in the illicit structured financing transactions of
Enron.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
166; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENVIRONMENTAL ELEMENTS: Sells All Assets to Clyde Bergemann
-----------------------------------------------------------
The Hon. Honorable Duncan W. Keir of the U.S. Bankruptcy Court for
the District of Maryland approved the sale of substantially all of
the assets of Environmental Elements Corporation, including the
stock of EEC's wholly owned subsidiary in the United Kingdom, to
Clyde Bergemann US, Inc., and Clyde Bergemann Investments, Ltd.
The Clyde Bergemann Power Group is the largest supplier of boiler
cleaning and ash handling technologies in the world.
Headquartered in Baltimore, Maryland, Environmental Elements
Corporation is a solutions-oriented provider of innovative
technology for plant maintenance services, air pollution control
equipment and complementary products. The company has served a
broad range of customers in the power generation, pulp and paper,
waste-to-energy, rock products, metal and petrochemical industries
for over 55 years. The Company filed for chapter 11 protection on
July 1, 2005 (Bankr. Md. Case No. 05-25073). Lawrence Coppel,
Esq., at Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated $1
million to $10 million in total assets and $10 million to $50
million in total debts.
FEDDERS CORPORATION: Files Delinquent Quarterly Reports
-------------------------------------------------------
Fedders Corporation (NYSE: FJC) filed its Forms 10-Q for the
first, second and third quarters of 2005 with the Securities and
Exchange Commission on Dec. 30, 2005. The prior year has been
reclassified to reflect the sale of the Company's Melcor
subsidiary as a discontinued operation. Melcor was sold in
October 2005 for $17.4 million.
The filings had been delayed for two reasons. First, Fedders
filed its Form 10-K for 2004 on Sept. 30, 2005, and the Forms 10-Q
preparation needed to follow the Form 10-K filing. Second, the
Company's external auditors did not stand for re-appointment, and
new auditors needed to be engaged following the Form 10-K filing.
Aggregate Net Sales for the first nine months of 2005 decreased by
27.4% to $258.7 million, versus $356.5 million of Net Sales for
the comparable period in the prior year.
Net sales within the "Heating, Ventilation, Air Conditioning and
Refrigeration" segment decreased by 30.2% during the period due to
increased inventory levels of room air conditioners at customers
in key North American markets, caused by cooler-than-normal summer
weather in 2004. The warm summer in 2005 significantly reduced
inventory levels in distribution channels but did not result in
additional sales to channel customers.
Partly offsetting this sales decrease were increased sales of
commercial air conditioners from the Addison acquisition, sales
from the Islandaire acquisition, and a 17.0% increase in sales
within the Engineered Products segment.
Fedders' balance sheet at Sept. 30, 2005, showed $383,255,000 in
total assets and liabilities of $350,238,000.
About Fedders
Headquartered in Liberty Corner, New Jersey, Fedders Corporation -
- http://www.fedders.com/-- manufactures and markets worldwide
air treatment products, including air conditioners, air cleaners,
gas furnaces, dehumidifiers and humidifiers and thermal technology
products.
* * *
As reported in the Troubled Company Reporter on July 5, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
ratings on air treatment products manufacturer Fedders Corp. and
Fedders North America Inc. to 'CC' from 'CCC'. At the same time,
Fedders North America's senior unsecured debt rating was lowered
to 'C' from 'CC'. S&P said the outlook remains negative.
FIRSTPLUS HOMEOWNER: Fitch Affirms BB Ratings on 8 Cert. Classes
----------------------------------------------------------------
Fitch Ratings has removed from Rating Watch Evolving and affirms
these classes from FirstPlus Homeowner Loan Trusts:
Series 1997-2
-- Class A-9 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1997-3
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1997-4
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1998-1
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1998-2
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1998-3
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1998-4
-- Class A-8 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
Series 1998-5
-- Class A-9 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class B-1 affirmed at 'BBB';
-- Class B-2 affirmed at 'BB'.
The trusts consist primarily of closed-end, junior-lien mortgages
with loan-to-value ratios greater than 100% at issuance. The
loans were originated or acquired by FirstPlus Financial, Inc.
FirstPlus was a consumer finance company, which focused on
high-loan-to-value second mortgage loans, but filed for bankruptcy
on March 5, 1999 and has since been liquidated. On April 1, 2000,
the servicing of the loans was transferred to Countrywide Home
Loans, Inc. Countrywide is rated 'RPS1' by Fitch.
Over the past several years, the trustee has notified bondholders
of multiple class action lawsuits against the trusts in various
states. The class actions have been brought by residents of the
various states who are borrowers of second mortgage loans that
collateralize the trusts. The plaintiffs allege that the
originators of the mortgage loans charged fees and rates of
interest exceeding the amounts allowed under consumer protection
statutes. The plaintiffs seek recovery of the alleged excess
payments and other damages from the trusts and judgments to
rescind or reduce their mortgage loan obligations on mortgages
held by the trusts.
The trustee, U.S. Bank N.A., has entered into a settlement
agreement on behalf of the trusts to settle the claims in the
majority of the class actions. The payment of the settlement is
being funded exclusively by distributions otherwise payable to the
holders of the residual interests in the trusts, all of whom have
approved the settlement. The settlement does not require payments
to be made out of any other assets of the trusts or out of
distributions to any other class of securities.
However, Fitch is unable to predict the outcome of the remaining
outstanding litigation or quantify the risk to the bondholders.
Consequently, the rating actions above do not address the
potential risk of bondholder loss due to the outstanding lawsuit.
The loan performance of the transactions is stable. The credit
enhancement percentage for all classes in each transaction has
doubled to their respective target amounts, and monthly losses are
consistently covered by the available excess spread. The
overcollateralization amount in several of the transactions is at,
or near, its floor amount and is expected to grow as a percentage
of the declining pool balance.
FREEDOM RINGS: Wants Auction & Bidding Procedures Approved
----------------------------------------------------------
Freedom Rings LLC asks the Honorable Peter J. Walsh of the U.S.
Bankruptcy Court for the District of Delaware to:
-- set the date to conduct an auction of the Debtor's interests
in some real property leases,
-- set the hearing date for approval of the auction results,
-- approve bidding procedures and terms of the auction,
-- authorize the Debtor to enter into lease termination
agreements,
-- approve the sale of leases to highest bidder, free and clear
of all liens, interests, claims and encumbrances.
Auction
The Debtor wants to sell its unexpired nonresidential leasehold
interests, free and clear of all liens, interests, claims and
encumbrances. The Debtor asks the Court to set Jan. 25, 2006, at
10:00 a.m. as the auction date for those leasehold interests. The
auction will be held at the offices of:
Young Conaway Stargatt & Taylor, LLP
1000 West Street, 17th Floor
Wilmington, DE 19801
The leasehold interests to be auctioned are:
Store # Lease Term Address Landlord
------- ---------- ------- --------
1250 11/01/02-10/31/17 2327 Cottman Avenue New Plan Excel
Philadelphia, PA 19149 Realty Trust
1252 09/01/03-08/31/08 709 Route 70 D & J Realty
Brick, NJ 08723
1254 03/01/04-02/28/14 1000 Lincoln Plaza Lincoln Plaza
Langhome, PA 19047 Associates
1259 09/16/04-09/30/14 1101 Quintillo Drive Governor's
Bear, DE 19701 Square
Associates
1266 05/01/96-04/30/11 3601 Concord Pike R & E
Wilmington, DE 19803 Properties
4523 05/05/04-04/30/09 Terminal E Marketplace/
Philadelphia Airport Redwood, L.P.
Philadelphia, PA 19153
The Debtor also asks the Court to set Jan. 23, 2006, at 4:00 p.m.
as the deadline for landlords and other parties-in-interest to
file and serve objections.
The Debtor wants the sale hearing to be conducted on Jan. 31,
2006, at 2:00 p.m. to consider the lease assignments or lease
termination agreements.
Proposed Bidding Procedures
All written bids for the leases should be submitted on or before
Jan. 23, 2006, at 4:00 p.m. to Young Conaway Stargatt & Taylor,
LLP and copies must be sent to:
(a) Freedom Rings, LLC
408 East Lancaster Avenue
Downingtown, PA 19335
Attn: Charles W. Bruton, III
(b) Counsel to the Official Committee of Unsecured Creditors:
Adelman Lavine Gold and Levin, PC
919 North Market Street, Suite 710
Wilmington, DE 19801
Attn: Gary D. Bressler, Esq.
Bradford J. Sandler, Esq.
(c) Counsel to the Debtor's Postpetition Lender:
Skadden, Arps, Slate, Meagher & Flom LLP
P.O. Box 636
One Rodney Square
Wilmington, DE 19899
Attn: Gregg M. Galardi, Esq.
(d) Counsel to the Debtor's Prepetition Agents:
Milbank Tweed Hadley & McCloy, LLP
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Attn: Gregory A. Bray, Esq.
Matthew S. Barr, Esq.
-- and --
Milbank Tweed Hadley & McCloy, LLP
One Chase Manhattan Plaza
New York, NY 10005-1413
Attn: Richard M. Gray, Esq.
(e) Office of the United States Trustee
Lock Box 35
844 North King Street, Room 2311
Wilmington, DE 19801
Attn: Joseph J. McMahon, Esq.
-- and --
(f) DJM Asset Management, LLC
445 Broad Hollow Road, Suite 417
Melville, NY 11747
Attn: James Avallone
Each bidder must deposit 10% of the bid amount or $5,000 for each
lease on which the bidder submits a bid. If a landlord bids on
its premises, that landlord will deposit $10% of any bid over and
above the cure amounts. A stalking horse bidder will deposit 15%
of the bid amount or $7,500 for each lease on which the bidder
submits a bid.
The Debtor will hold the deposit in escrow. The Debtor will
return the deposits of unsuccessful bidders within 10 business
days of the auction.
In the event the successful bidder fails to consummate a sale of a
lease because of a breach or failure on the bidder's part, the
Debtor seeks the Court's authority to retain the successful
bidder's deposit as liquidated damages. The next highest bidder
will be deemed the successful bidder and will consummate the sale
of the lease without further Court order.
In the event that the successful bidder for a lease is its
landlord, the Debtor asks the Court for authority to enter into a
lease termination agreement.
The Debtor says that any personal property remaining at a vacated
store will be deemed abandoned without any liability to any party.
The Debtor has determined that those personal property have
inconsequential value to its estate.
A full-text copy of Freedom Rings, LLC's bidding procedures is
available for a fee at:
http://www.researcharchives.com/bin/download?id=060111040907
Headquartered in Winston-Salem, North Carolina, Freedom Rings,
LLC, is a majority-owned subsidiary and franchisee partner of
Krispy Kreme Doughnuts, Inc., in the Philadelphia region. The
Debtor 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. D. 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 $10
million to $50 million in assets and debts.
GIBSON CREDIT: Case Summary & 2 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Gibson Credit, Inc.
4200 Convention Street
Baton Rouge, Louisiana 70806
Bankruptcy Case No.: 06-10007
Type of Business: The Debtor offers financial services.
Chapter 11 Petition Date: January 9, 2006
Court: Middle District of Louisiana (Baton Rouge)
Debtor's Counsel: Arthur A. Vingiello, Esq.
Steffes, Vingiello & McKenzie, LLC
13702 Corsey Boulevard, Building 3
Baton Rouge, Louisiana 70817
Tel: (225) 751-1751
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to 10 Million
Debtor's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Wells Fargo $116,749
P.O. Box 348750
Sacramento, CA 95834
First Equity $5,000
P.O Box 84075
Columbus, GA 31908-4075
GREEN TREE: S&P's Rating on Class B-1 Certificates Tumbles to D
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class B-1
from Green Tree Financial Corp. Manufactured Housing Trust 1998-2
to 'D' from 'CCC-'.
The lowered rating reflects the reduced likelihood that investors
will receive timely interest and the ultimate repayment of their
original principal investment. Green Tree Financial Corp.
Manufactured Housing Trust 1998-2 reported an outstanding
liquidation loss interest shortfall for its B-1 class on the
January 2006 payment date.
Standard & Poor's believes that interest shortfalls for this
transaction will continue to be prevalent in the future, given the
adverse performance trends displayed by the underlying pool of
collateral, as well as the location of subordinate class
write-down interest at the bottom of the transaction's payment
priorities after distributions of senior principal.
As of the January 2006 payment date, series 1998-2 had experienced
cumulative net losses totaling 14.36% of the transaction's initial
pool balance.
Standard & Poor's will continue to monitor the outstanding ratings
associated with this transaction in anticipation of future
defaults.
GT BRANDS: All Proofs of Claim Must be Filed by February 1
----------------------------------------------------------
The Honorable Prudence Carter Beatty of the U. S. Bankruptcy Court
for the Southern District of New York established Feb. 1, 2006, at
5:00 p.m. as the deadline for all claimants owed money by GT
Brands Holdings LLC and its debtor-affiliates on account of claims
arising prior to July 11, 2005, to file their proofs of claim.
All written proofs of claims must be filed on or before the Feb. 1
bar date and those forms must be delivered to:
if sent by mail:
United States Bankruptcy Court
Southern District of New York
GT Brands Claims Processing
P.O. Box 5188
One Bowling Green
New York, NY 10274-5209
if sent by messenger or overnight courier:
United States Bankruptcy Court
Southern District of New York
GT Brands Claims Processing
One Bowling Green
New York, NY 10004-1408
Headquartered in New York, New York, GT Brands Holdings LLC,
supplies home video titles to mass retailers. The Debtors also
develop and market branded consumer, lifestyle and entertainment
products. The Company and its affiliates filed for chapter 11
protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167).
Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they listed total assets of
$79 million and total debts of $212 million.
HANOVER INSURANCE: S&P Raises Ratings on Three Cert. Classes to B+
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on two
synthetic transactions related to The Hanover Insurance Group
Inc., formerly Allmerica Financial Corp., and removed them from
CreditWatch, where they were placed with positive implications
Nov. 4, 2005.
The rating actions follow the raising of the rating assigned to
the preferred stock issued by AFC Capital Trust I, a wholly owned
subsidiary of The Hanover Insurance Group Inc., on Dec. 30, 2005,
and its removal from CreditWatch positive, where it was placed
Oct. 31, 2005.
The ratings on these swap-independent synthetic transactions are
weak-linked to the underlying collateral, the preferred stock
issued by AFC Capital Trust I. The rating actions reflect the
current credit quality of the underlying securities.
A copy of the Hanover Insurance Group Inc./Allmerica Financial
Corp.-related research update, "Hanover Insurance Group Inc.
Ratings Raised To 'BB+' And Removed From Watch Pos; Otlk Stable,"
dated Dec. 30, 2005, can be found on RatingsDirect, Standard &
Poor's Web-based credit analysis system, at
http://www.ratingsdirect.com/
Ratings Raised And Removed From Creditwatch Positive
PreferredPLUS Trust Series ALL-1
$48 Million Trust Certificates Series ALL-1
Rating
------
Class To From
----- -- ----
A B+ B/Watch Pos
B B+ B/Watch Pos
CorTS Trust For AFC Capital Trust I
$36 Million Allmerica Corporate-Backed Trust Securities
Certificates Series 2001-19
Rating
------
Class To From
----- -- ----
A B+ B/Watch Pos
HEILIG-MEYERS: Selling Jefferson Real Property for $985,000
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia
approved Heilig-Meyers Company and its debtor-affiliates' sale of
a 2.25-acre real property to B.A.P.S. Northeast, LLC, for
$985,000, free and clear of all claims, liens, and encumbrances.
The property is located at 7041 Jefferson Davis Highway, County of
Chesterfield, Virginia.
The Debtors believe that the sale will promote the efficient
administration of the estate and allow the creditors to recognize
the value for the property. The proceeds will be used to fund the
Debtors' reorganization.
Heilig-Meyers Company filed for chapter 11 protection on Aug. 16,
2000 (Bankr. E.D. Va. Case No. 00-34533), reporting $1.3 billion
in assets and $839 million in liabilities. When the Company filed
for bankruptcy protection it operated hundreds of retail stores in
more than half of the 50 states. In April 2001, the company shut
down its Heilig-Meyers business format. In June 2001, the Debtors
sold its Homemakers chain to Rhodes, Inc. GOB sales have been
concluded and the Debtors are liquidating their remaining Heilig-
Meyers assets. Bruce H. Matson, Esq., Vernon E. Inge, Jr., Esq.,
Katherine Macaulay Mueller, Esq., at LeClair Ryan, represent the
Debtors.
HIRSH INDUSTRIES: Gets Open-Ended Lease Decision Period
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana in
Indianapolis extended Hirsh Industries, Inc., and its debtor-
affiliates' period within which they can elect to assume, assume
and assign, or reject their unexpired nonresidential real property
leases. The Court gave the Debtors until:
i) March 1, 2006; or
ii) the confirmation of a chapter 11 plan.
The Debtors told the Court that the extension will provide more
time to enhance and to maintain the value of their estates. The
Debtors added that the extension will provide sufficient time for
them to confirm a plan of reorganization, pursuant to which they
can make the final decision to assume or reject the unexpired
leases.
Headquartered in Des Moines, Iowa, Hirsh Industries, Inc.,
manufactures storage and organizational products. Hirsh
Industries' products include metal filing cabinets, metal
shelving, wooden ready-to-assemble organizers and workshop
accessories and retail store fixtures. The Company and two
affiliates filed for chapter 11 protection on July 6, 2005 (Bankr.
S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V.
Possinger, Esq., at Jenner & Block LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated between $1 million
to $10 million in assets and between $50 million to $100 million
in debts.
HIRSH INDUSTRIES: Unveils Chapter 11 Plan of Reorganization
-----------------------------------------------------------
Hirsh Industries, Inc., and its debtor-affiliates delivered to the
U.S. Bankruptcy Court for the Southern District of Indiana,
Indianapolis Division, a First Amended Disclosure Statement
explaining their First Amended Joint Plan of Reorganization.
The Plan provides for the Debtors' substantive consolidation. The
terms of the Plan were negotiated with the holders of secured
debt, the Debtors' chairman of the board of directors, Douglas A.
Smith, and the Official Committee of Unsecured Creditors to
restructure the Debtors' balance sheet in a manner that's fair and
equitable to all parties-in-parties.
Smith Dispute
On Oct. 18, 2000, Hirsh entered into a Subordinated Note Purchase
Agreement with Prudential Capital Partners, L.P., pursuant to
which loans and other credits were extended to the Debtors.
Before the Debtors filed for bankruptcy, Prudential assigned all
of its rights under the agreement to Mr. Smith.
Mr. Smith asserts that the Senior Subordinated Loans are secured
by valid, perfected, second priority liens on substantially all of
the assets of the Debtors and their Mexican subsidiaries. The
Debtors' obligation under the Senior Subordinated Loans, as of the
petition date, is $35,520,000.
Plan Overview
The Debtors were able to negotiate a compromise of Mr. Smith's
claims, subject to the Court's approval, in order to provide
distributions to the estates' general unsecured creditors. The
senior lenders, the junior DIP lenders and the junior subordinated
secured lenders also consented to subordinate their claims to that
of the general unsecured creditors.
Senior lenders, asserting an aggregate $26 million claims, will
receive the New Senior Secured Note from the Reorganized Debtors,
which will have value equal to the amount of the allowed senior
secured claims.
The holder of the Junior DIP Facility Claims will receive:
(a) 100% of the New Hirsh Member Interests; and
(b) issuance of the New Senior Subordinated Note in the
original principal amount of $3,000,000 on account of:
(i) the remainder of the Junior DIP Facility Claims,
plus
(ii) an additional exit advance by that Holder of the
principal amount of $1,000,000.
Senior subordinated secured lenders and junior subordinated
secured lenders, holding an aggregate of $5.5 million claims, will
share in the New Junior Subordinated Notes in the Reorganized
Hirsh.
General unsecured creditors, with allowed claims totaling $9
million, will receive pro rata distributions in cash, equal to the
greater of:
(a) 8% of the total amount of the Allowed Class 7 Claims; or
(b) $800,000 from the General Unsecured Creditor Fund.
Holders of $31.5 million senior subordinated unsecured deficiency
claims, $12 million junior subordinated unsecured deficiency
claims, and Old Hirsh Common Stock Interests will receive no
distribution under the Plan.
Confirmation Hearing
The Court will convene a hearing on Feb. 9, 2006, at 3:00 p.m. to
consider the merits of the Debtors' Plan.
A copy of the Debtors' First Amended Disclosure Statement with
Respect to their First Amended Joint Plan of Reorganization is
available for a fee at:
http://www.researcharchives.com/bin/download?id=060111205631
Headquartered in Des Moines, Iowa, Hirsh Industries, Inc.,
manufactures storage and organizational products. Hirsh
Industries' products include metal filing cabinets, metal
shelving, wooden ready-to-assemble organizers and workshop
accessories and retail store fixtures. The Company and two
affiliates filed for chapter 11 protection on July 6, 2005 (Bankr.
S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V.
Possinger, Esq., at Jenner & Block LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated between $1 million
to $10 million in assets and between $50 million to $100 million
in debts.
HUGHES SUPPLY: Moody's Puts Ba1 Corporate Family Rating on Review
-----------------------------------------------------------------
Moody's Investors Service placed Hughes Supply, Inc.'s ratings
under review for possible upgrade. The rating action follows the
recent announcement that The Home Depot will acquire Hughes for an
aggregate consideration of $3.47 billion, including the payment of
$46.50 per outstanding share and the assumption of $285 million in
net debt.
The review will clarify and assess:
1) the details on how the company will be positioned and
operated;
2) the status and disposition of Hughes' existing senior
unsecured debt following the acquisition;
3) the position of current lenders within a new capital
structure; and
4) the anticipated timing of the process.
Moody's notes that there are no change in control protection
provisions under the indenture to Hughes' 5.5% senior unsecured
notes, however, in the event of an outcome that would result in
improved credit metrics or liquidity, the ratings may be upgraded.
Moody's stated that the outcome will likely depend on whether or
not the debt is retired, guaranteed, assumed, or retained at
Hughes on an unguaranteed basis. Moody's expects to clarify and
assess the impact of this transaction within the next 60 to 90
days.
These ratings have been affected:
1) Corporate Family Rating, Ba1
2) Guaranteed senior unsecured notes, due 2014, rated Ba1
Moody's also affirmed the SGL-1 speculative grade liquidity of
Hughes, which reflects Moody's view that the company possesses
very good liquidity and is likely to meet all cash obligations
through internal resources. The size of the revolving credit
facility is sufficient with no borrowing limitations due to
covenant restrictions.
Headquartered in Orlando, Florida, Hughes Supply, Inc. is a
distributor of wholesale construction, repair and maintenance-
related products with 493 branches in 38 states.
INERGY L.P.: Moody's Puts B1 Rating on Proposed $200 Million Notes
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Inergy, L.P.'s
proposed $200 million senior unsecured, guaranteed notes affirming
the existing Ba3 Corporate Family Rating, the B1 rating on the
existing $425 million of senior unsecured notes; and the SGL-3
Speculative Grade Liquidity Rating. The outlook, which has moved
to negative on Oct. 12, 2005, remains negative reflecting Moody's
concerns about the company's high leverage following its
aggressive acquisition strategy coupled with less than expected
equity funding for the acquisitions in the aggregate. Notably,
the company continues to grow its earnings and cash flows through
its acquisitions and management has demonstrated its ability to
integrate them.
However, thus far, the rise in leverage is has outpaced the
earnings and cash flow growth and given the company's Master
Limited Partnership corporate structure, the potential for
substantial debt reduction remains limited. The outlook also
reflects the expectation that leverage will likely remain high as
Inergy will continue to aggressively grow its propane and
midstream businesses while it also will need to fund the expansion
of the Stagecoach natural gas storage facility acquired this past
August.
In order to retain the Ba3 Corporate Family Rating, the company
must clearly demonstrate that is can execute its expansion,
funding, and operational strategies with leverage in the 3.5x to
4.25x range. This leverage range would accommodate only very
brief increases for acquisitions and must be cured with an
immediate equity funding. If the company continues to carry
leverage above this range and does not promptly fund future
acquisitions with sufficient equity, the ratings downgrade will be
considered.
While Moody's had anticipated the company would be highly
acquisitive, it also expected that management would employ a
higher proportion of equity funding to bring leverage
(Debt/EBITDA) under 4.0x after the acquisition of the Star Gas
propane business in December 2004. However, the company's current
leverage is very high at approximately 4.6x of LTM EBITDA (pro
forma for Stagecoach and the three recent propane acquisitions
totaling $160 million) and has been driven by almost 10
acquisitions totaling nearly $1.0 billion (including the $25
million for the rights to Phase II of Stagecoach) over the last
twelve months while adjusted debt has climbed from about $150
million at FYE Sept. 30, 2004 to about $740 million pro forma.
Although the company issued approximately $457 million in new
equity with the larger acquisitions as it indicated it would and
earnings and cash flows have also significantly grown, leverage
has still grown significantly. Pro forma LTM EBITDA for Q1'06 was
about $160 million (including the Stagecoach and the reported LTM
EBITDA for the recent propane acquisitions) versus current
adjusted debt levels of approximately $741 million at Inergy,
which includes the $160 million drawn under the revolving credit
facility for the new acquisitions and $28 million of debt at
Inergy Holdings, L.P.
Moody's will continue to closely monitor the capital structure of
Inergy Holdings, L.P. (Holdings), the unrated General Partner (GP)
and 11.4% owner of the common units of Inergy. Any debt at the
Holdings level is included in our leverage calculation for Inergy,
L.P. because ultimately, Holdings cash flows (through its G.P. and
L.P. unit ownership) are generated from the same cash flow base at
Inergy. Further, Moody's believes will be will be run in order to
be able to service the debt at Holdings. As a result, Moody's
adds the $28 million of debt at Holdings, to the leverage
calculation of Inergy since we view Holdings as part of the entire
Inergy credit system.
The affirmation of the SGL-3 rating reflects an adequate liquidity
outlook over the next four quarters for Inergy. The SGL-3 rating
is supported by:
* Moody's expectation that internal cash flows will cover:
-- the majority of budgeted maintenance capital expenditures,
-- interest payments, working capital requirements, and
-- cash distributions to unit holders;
* sufficient cushion under facility covenants; and
* ample pro-forma availability under the revolving credit
facility.
The SGL-3 rating continues to be tempered by:
* the company's need to distribute all of its free cash flow to
the Master Limited Partnership (MLP) unit holders;
* the seasonality of the propane business which requires use of
the credit facilities during inventory build up and
subsequent receivable collections;
* the company's highly acquisitive nature, which has resulted
in the reliance of funding from the company's credit
facilities; and
* the collateral of the credit facilities which are secured by
all of the company's assets.
Moody's estimates that Inergy's EBITDA over the next four fiscal
quarters will range between $165 million to $175 million, based on
expected full-year contributions from the company's Stagecoach and
three recent propane acquisitions. This EBITDA level would
sufficiently cover:
* interest expense of about $50 million;
* between $8 million to $10 million of maintenance capital
spending; and
* approximately $100 million to $105 million of cash
distributions to unitholders.
Moody's expects that the company will continue to rely on its
revolving credit facility to fund seasonal working capital needs
of approximately $25 million and roughly $45 million to $50
million of expansion capex related to the Stagecoach Natural Gas
facility unless it is financed separately.
Inergy has two revolvers totaling $425 million which consists of a
$75 million working capital facility and a $350 million
acquisition facility. Pro-forma for the $200 million senior notes
offering that will repay the borrowings associated with
acquisitions. Moody's expects the company will have at least $325
million in undrawn capacity under its facility.
Moody's expects Inergy will remain in compliance with the credit
facilities' maintenance covenants, thus ensuring accessibility
during the next twelve months. The company has two covenants:
* a maximum total leverage ratio covenant of 4.75x that may
increase to 5.25x for two consecutive quarters immediately
following an acquisition with a purchase price in excess of
$100 million; and
* a maximum interest coverage ratio covenant of 2.5x.
Also, the working capital facility has a clean-down provision
which requires Inergy to pay down borrowings to no more than $10
million for 30 consecutive days each fiscal year for the periods
between March 1st and September 30th.
Moody's ratings for Inergy, L.P. are:
* Affirmed at Ba3 -- Corporate Family Rating
* Affirmed at B1 -- existing $425 million of 6.875% senior
unsecured notes due 2014
* Affirmed at SGL-3 -- Speculative Grade Liquidity Rating
* Assigned a B1 -- $200 million proposed senior unsecured notes
offering
The senior unsecured notes remain rate one notch below the
Corporate Family Rating due to the Company's track record of
significantly using the secured credit facilities and the large
secured debt carveout (the $350 million in secured credit
facilities) permitted under the indenture in addition to the
indenture permitting MLP unit distributions even in a weak margin
environment.
The ratings remain restrained by:
* the company's MLP structure, which is typical of most
publicly traded MLP's, and prevents meaningful credit
accretion due to is reliance on aggressive growth of a mature
business through acquisitions while paying out almost all of
the available cash flow to common unit holders;
* the high pro forma leverage (adjusted debt/EBITDA) for the
ratings;
* the ongoing event risk related to the company's aggressive
growth strategy;
* the inherent volatility and seasonality of the company's
earnings and cash flows which is currently dominated by the
propane business; and
* the need to demonstrate that it is a solid operator of the
newly acquired Stagecoach assets and that it can complete the
Phase II expansion as currently budgeted.
The ratings are supported by:
* the company's growth into the 5th largest propane
distribution company in the country;
* the company's ability to access the MLP common units market
since its IPO in 2001;
* the improved regional diversification of its propane
business; and
* the business diversification and cash flow stability added
through the StageCoach acquisition and the opportunities for
further diversification of earnings and cash flows from
completion of that expansion.
Inergy, L.P. is headquartered in Kansas City, Missouri.
INEX PHARMACEUTICALS: B.C. Court Defers Decision on Spin Out Plan
-----------------------------------------------------------------
Inex Pharmaceuticals Corporation (TSX: IEX) reported on Jan. 9,
2006, that the Supreme Court of British Columbia hearing to
discuss INEX's proposed Plan of Arrangement to spin out its
Targeted Immunotherapy assets into a new company has been
completed. The hearing discussed whether the plan can be
completed given the terms of INEX's current outstanding
convertible debt as well as the bankruptcy petition brought
forward by Stark Trading and Shepherd Investments International
Ltd. on Dec. 20, 2005. The judge has reserved judgment until a
later date. INEX will report on the final judgment when it is
received.
Stark is the majority holder of certain promissory 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.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said the completion of this hearing is the next step towards the
company's goal of spinning out of the Targeted Immunotherapy
technology. "With this hearing completed, we can now focus on the
shareholders meeting January 26, 2006 to approve the spin out
transaction. We continue to believe that INEX's two technology
platforms are worth more to our stakeholders as independent
entities than combined in one company and we encourage
shareholders to vote in favor of the transaction."
Inex Pharmaceuticals Corporation -- http://www.inexpharm.com/
-- is a Canadian biopharmaceutical company developing and
commercializing proprietary drugs and drug delivery systems to
improve the treatment of cancer.
* * *
As reported in the Troubled Company Reporter on Dec. 22, 2005,
Inex Pharmaceuticals Corporation received notice on Dec. 20, 2005,
that Stark Trading and Shepherd Investments International Ltd.
filed a petition in the Supreme Court of British Columbia seeking
to have INEX declared bankrupt and that a receiving order be made
in respect of the property of INEX.
Stark is the majority holder of certain promissory notes issued by
Inex International Holdings, a subsidiary of INEX. Other holders
of the notes have not filed a similar petition nor joined in
Stark's petition. The promissory notes are not due until April
2007 and can be repaid in cash or in shares, at INEX's option, at
maturity.
INEX believes that this latest petition brought forward by Stark
is an attempt to block the successful completion of the Plan of
Arrangement announced Nov. 17, 2005. As previously disclosed,
INEX has already asked the Supreme Court of British Columbia to
rule on whether the proposed plan can be completed given the terms
of the Notes. The Supreme Court will hear this plan on Jan. 5 and
Jan. 6, 2006. This hearing will also address Stark's bankruptcy
petition.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said INEX is continuing with its plan to spin out its Targeted
Immunotherapy assets into a new public company. "This is yet
another attempt by Stark to try and block the completion of our
plan to spin out our Targeted Immunotherapy technology. We
believe this transaction represents the greatest value for all
stakeholders, including the Note holders, and we will continue to
move forward to secure court and shareholder approvals for its
completion."
ITS NETWORKS: Sept. 30 Balance Sheet Upside Down by $6.14 Million
-----------------------------------------------------------------
ITS Networks, Inc., delivered its annual report on Form 10-KSB for
the fiscal year ended Sept. 30, 2005, to the Securities and
Exchange Commission on Dec. 29, 2005.
For the fiscal year ended Sept. 30, 2005, ITS Networks incurred a
$3,005,000 net loss compared to a $3,202,000 net loss for
Sept. 30, 2004. The Company had a negative working capital of
$6,643,000 for the year ended Sept. 30, 2005, compared to a
negative working capital of $7,970,000 for the same period last
year. As of Sept. 30, 2005, the Company had an accumulated
deficit of $20,301,000.
Going Concern Doubt
ITS Networks' independent certified public accountants, Murrell,
Hall, McIntosh & Co., PLLP, expressed a going concern
qualification in its reports for the fiscal years 2005 and 2004.
The Company's recurring losses from operations and net capital
deficiency raise substantial doubt about its ability to continue
as a going concern. If the Company's telecommunications services
do not become widely used in the market, it may not be able to
achieve or maintain profitability.
The Company's ability to continue as a going concern is dependent
upon its ability to attain a satisfactory level of profitability
and obtain suitable and adequate financing. There can be no
assurance that the Company's plan will be successful.
ITS Networks, Inc., fka Technology Systems International Inc., is
engaged in the telecommunication industry in Spain and offers
telecommunications services for home and business use. The
Company provides prepaid voice telephone services through prepaid
calling cards as well as prepaid residential and small business
accounts. It also has a prepaid long distance service, which can
be accessed from any mobile phone. As of Sept. 30, 2005, the
Company declared total assets of $430,000 and total liabilities of
$7,073,000.
As of Sept. 30, 2005, ITS Networks' balance sheet showed a
stockholders' deficit of $6,141,000 compared to a stockholders'
deficit of $7,391,000 at Sept. 30, 2004.
KINGPIN LLC: Case Summary & 9 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Kingpin, LLC
2127 Clifton Avenue
Logansport, Indiana 46947
Bankruptcy Case No.: 06-30018
Chapter 11 Petition Date: January 11, 2006
Court: Northern District of Indiana (South Bend Division)
Debtor's Counsel: K. C. Cohen, Esq.
KC Cohen, PC
136 North Delaware Street
Indianapolis, Indiana 46204
Tel: (317) 916-0218
Fax: (317) 916-0406
Total Assets: $1,041,420
Total Debts: $2,111,974
Debtor's 9 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Logansport Savings Bank, FSB Bowlingwood east & $1,283,000
723 East Broadway west real estate;
Logansport, IN 46947 apartments on
Northern Avenue;
1st on all personal
property except on
Shady Lanes
personal property
Myers Lanes, Inc. seller financing $388,788
5695 W. Co. Road 50N
Logansport, IN 46947
5th 3rd Bank first on 508 & $266,000
c/o David M. Blaskovich second on 506
417 S. Dearborn St., Suite 1000 Roosevelt &
Chicago, IL 60605 first on
personal
property at 508
Internal Revenue Service withholding $80,696
P.O. Box 44985 employment taxes
Stop SB380
Indianapolis, IN 46244-0985
Cass County Treasurer property taxes $59,300
200 Court Park Cass Co on east, west &
Government Building apartments
Logansport, IN 46947
AMF Bowling Pins & Lanes Goods on account $7,000
7412 Utica Boulevard
Lowville, NY 13367
Classic Products Corp. services on account $5,600
P.O. Box 12709
Fort Wayne, IN 46825
National Wine & Spirits Corp. goods on account $1,105
P.O. Box 1602
Indianapolis, IN 46206
Olinger Distributing Company goods on account $785
P.O. Box 151
Indianapolis, IN 462067
LARGE SCALE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Large Scale Biology Corporation
3333 Vaca Valley Parkway, Suite 1000
Vacaville, California 95688
Bankruptcy Case No.: 06-20046
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Large Scale Bioprocessing, Inc. 06-20047
Predictive Diagnostics, Inc. 06-20048
Type of Business: The Debtors develop, manufacture and sell
plant-made pharmaceutical proteins and vaccines.
See http://www.lsbc.com/
Chapter 11 Petition Date: January 9, 2006
Court: Eastern District of California (Sacramento)
Judge: Michael S. McManus
Debtors' Counsel: Paul J. Pascuzzi, Esq.
Felderstein Fitzgerald Willoughby & Pascuzzi
400 Capitol Mall, Suite 1450
Sacramento, California 95814-4434
Tel: (916) 329-7400
Financial Condition as of November 30, 2005:
Total Assets: $9,760,000
Total Debts: $7,836,000
Consolidated List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Woodlawn Foundation Trade Debt $2,470,019
333 Gellert Boulevard, Suite 226
Daly City, CA 94015-2614
Fenwick & West LLP Trade Debt $210,882
Two Palo Alto Square
Palo Alto, CA 94306
SRI International Trade Debt $184,525
P.O. Box 2767
Menlo Park, CA 94025-2767
Manatt Phelps Phillips Trade Debt $161,431
National Institute of Trade Debt $150,000
Neurological Disorders
Garger, Stephen J. Employee $138,395
Pogue, Greg Employee $100,304
White, Earl Employee $98,965
Kevin Dawson Trade Debt $90,000
Wasyl Malyj, Ph.D. Trade Debt $90,000
Fitzmaurice, Wayne P. Employee $66,646
Hanley, Kathleen M. Employee $62,248
Cameron, Terri I. Employee $61,243
Sweeney Lev Trade Debt $60,931
Reinl, Stephen J. Employee $57,203
Hasty, Marcie C. Employee $55,893
McCulloch, Michael J. Employee $55,796
Tarcza, John Employee $54,635
Palmer, Kenneth Employee $54,255
Daviess County Sheriff Trade Debt $50,424
LEVEL 3: S&P Junks Rating on Proposed $1.23 Billion Sr. Note Offer
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
Level 3 Communications Inc.'s proposed offering of up to $1.23
billion 11.5% senior notes due 2010. The notes are being offered
in exchange for an aggregate of up to $1.23 billion of the
company's debt maturing in 2008, consisting of its 9.125% senior
notes, 11% senior notes, and 10.5% senior discount notes.
The 'CC' ratings on the 2008 issues and the 'CCC' corporate credit
rating on the wholesale long-haul telecommunications carrier
remain on CreditWatch with negative implications, where they were
placed following the company's Dec. 12, 2005, announcement of the
exchange offer. S&P will view completion of the exchange offer
for the 2008 issues as tantamount to a default on original bond
issue terms. Without the exchange offer, which has been accepted
by more than the 50% of bondholders needed to complete the
transaction, Level 3 would face a high risk of payment default in
2008.
The 'CC' ratings on all other unsecured debt issues and the 'CCC'
rating on the bank loan remain on CreditWatch with positive
implications, where they were placed on Dec. 12, 2005, when the
exchange offer was announced. The transaction will modestly
benefit the overall capital structure and the remaining
bondholders by reducing the company's nearest-term debt
maturities.
Following completion of the exchange offer, the rating on each of
the affected 2008 issues will be lowered to 'D' and the corporate
credit rating will be lowered to 'SD', indicating a selective
default. On the same day, S&P expects to reassign the corporate
credit rating to 'CCC+' and reassign the rating on any remaining
2008 issues to 'CCC-'.
At the same time, S&P intends to raise the ratings on all other
unsecured debt issues of Level 3 and its subsidiary Level 3
Financing Inc. to 'CCC-'. The bank loan rating on Level 3
Financing would be raised to 'CCC+'. S&P expects to assign a
stable outlook.
"Despite the reduction in maturity pressure, Level 3 is likely to
continue suffering from intense price compression from industry
overcapacity and competition in the long-haul telecommunications
sector," said Standard & Poor's credit analyst Eric Geil.
The company's weak cash flow from operations and high capital
expenditures to launch new products needed to replace revenue from
declining services are prolonging negative discretionary cash
flow.
M-WAVE INC: Halts Current Operations of M-Wave DBS
--------------------------------------------------
M-Wave, Inc. (NASDAQ: MWAV) reported it had taken steps to
liquidate its M-Wave DBS, Inc., assets it previously acquired in
February 2005 and estimates it will be completed during the first
120 days of 2006.
In connection with that activity, the company announced that it
had terminated all but its logistics and warehousing DBS personnel
and discontinued current operations. It moreover stated that
Jason Cohen, its former divisional president, terminated by mutual
agreement with the company, his employment contact. Mr. Cohen has
been retained as an independent consultant together with a group
of outside sales staff to liquidate the former DBS inventory for a
5% commission plus further incentives. "I believe we can achieve
a successful liquidation with Jason's industry knowledge,
obtaining the maximum recovery over the next 120 days," stated Joe
Turek, the Company's Chief Operating Officer.
Nasdaq Delisting Notice
The company also said that as expected, it had received a
determination and de-listing letter from NASDAQ's Listing
Qualifications staff last Jan. 6, 2006, indicating it had not yet
satisfied NASDAQ Marketplace Rule 4310(c)(2)(B) that requires the
Company to have a minimum of $2.5 Million in tangible net equity
to remain listed on the Capital Markets exchange. M-Wave has 7
days to appeal this determination and ask for a hearing before a
NASDAQ panel that can extend time, or allow alternative plans for
the company to achieve compliance. The company indicated that it
intended to appeal and pursue its options to become compliant with
NASDAQ requirements. Jim Mayer, M-Wave's Interim CEO, commented:
"As part of our efforts to revitalize the Company, we are
negotiating with certain of our institutional investors who may be
willing to offer incremental equity and support other strategic
and financial alternatives that could place us back into
compliance relatively soon."
The company also reported it had completed its move and
consolidation from West Chicago, Illinois, to Franklin Park,
Illinois, adjacent to Chicago's O'Hare International airport. The
company entered into a short-term lease of space with Harbrook
Tool & Manufacturing Company, located at 11533 Franklin Avenue,
Franklin Park, Illinois 60131.
M-Wave expects to make further public announcements in connection
with its restructuring in the coming weeks.
M-Wave, Inc. - http://www.mwav.com/-- provides supply chain
services and sources, printed circuit boards, custom electronic
components and direct broadcasting satellite parts domestically
and from Asia. M-Wave's Electro-Mechanical Group division
sources high-performance printed circuit boards and custom and
engineered electronic components from original equipment
manufacturers and contract manufacturers in Asia and the US. The
products are used in a wide range of telecommunications and
industrial electronics products. EMG also offers domestic and
international supply chain services and annual forecast financing
for its middle market customers.
* * *
As reported in the Troubled Company Reporter on Nov. 2, 2005, the
company disclosed in a regulatory filing with the Securities and
Exchange Commission that it is in discussions with third party
investors to restructure, acquire or reissue its debt from Silicon
Valley Bank and to provide financing to the Company.
M-Wave received a notice of default from Silicon Valley under its
loan and security agreement. Silicon Valley agreed not to
exercise its rights and remedies resulting from the default until
the earlier of Oct. 31, 2005, or the occurrence and continuance of
any other event of default. By that agreement, the Company also
agreed to deliver additional security to SVB in the form of:
-- a deed of trust with respect to a property at 544 Pine
Street, Bensenville, Illinois; and
-- a pledge of 1,500,000 shares of common stock that the
Company owns in Integrated Performance Systems, Inc.
As of Oct. 31, 2005, the Company owed approximately $1.9 million
outstanding under the agreement. Without the extension, Silicon
Valley would have the right to request acceleration of the said
amount.
MAKARION ENTERPRISES: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Makarion Enterprises Inc.
dba Makarion Institute of Aeronautics
dba Makarion Aircraft Maintenance and Makarion Air
7000 Merrill Avenue, Suite 7
Chino, California 91710-9027
Bankruptcy Case No.: 06-10057
Type of Business: The Debtor operates a flight schools, which
offers training and easy financing.
See http://www.mia2fly.com/
Chapter 11 Petition Date: January 10, 2006
Court: Central District Of California (Riverside)
Judge: Mitchel R. Goldberg
Debtor's Counsel: James C Bastian, Jr., Esq.
Shulman Hodges & Bastian LLP
26632 Towne Centre, Suite 300
Foothill Ranch, California 92610-2808
Tel: (949) 340-3400
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
------ --------------- ------------
American Express Credit Card $186,242
P.O. Box 360002
Fort Lauderdale, FL 33336-0002
Dennis W. Butner Debt $97,000
8855 West Augusta Avenue
Glendale, AZ 85305
Edward Ramos Debt $69,738
5124 Live Oak Street
Cudahy, CA 90201-4419
AICCO, Inc. Debt $62,219
Bank of America Debt $50,498
Advanta Bank Corporation Debt $28,733
Bank of America Debt $22,399
United Mileage Plus Debt $19,538
ADP Small Business Services Debt $19,479
Pacific Coast Aviation Debt $16,000
Jet Executive Transportation Debt $12,768
PennySaver Debt $12,128
PacAdvantage Debt $11,179
JETT Inc. Debt $10,229
Staples Debt $10,193
City of Glendale Debt $9,414
Long Beach Avionics Debt $7,520
United Mileage Plus Debt $6,960
STA International Debt $6,412
Capital One Debt $4,509
MATERIAL SCIENCES: Files Restated Financial Results
---------------------------------------------------
Material Sciences Corporation (NYSE: MSC) restated prior period
financial statements on Form 10-K/A to correct its accounting for
income taxes. The company disclosed on Dec. 5, 2005, that it was
going to amend its Annual Report on Form 10-K for fiscal 2005 to
restate prior period financial statements in order to correct
errors in its accounting for income taxes.
Fiscal 2005 Restated Results
The effect of the restatement for fiscal 2005 is an increase to
the provision for income taxes of $1.2 million. The restated net
loss for fiscal 2005 totals $300,000. The company initially
reported net income of $900,000. The consolidated balance sheet
and statement of cash flows were also restated to reflect the
changes in long term deferred tax assets and retained earnings
resulting from the changes to the tax provision.
First Quarter 2006 Restated Results
The effect of the cumulative adjustments to the provision for
income taxes in fiscal 2005, 2004 and 2003 resulted in a
corresponding decrease in the long term deferred tax assets and
retained earnings of the Company as of May 31, 2005, and are
reflected in the restated condensed consolidated balance sheet at
that date.
Fiscal 2003 and 2004 Restated Results
The effect of the restatement on fiscal 2003 is a decrease in net
income of $900,000 resulting in restated net income of $600,000.
For fiscal 2004 the net loss after accounting for the effects of
the restatement is $13.2 million. Previously reported results
stated a net income in fiscal 2003 of $1.5 million and a net loss
of $13.9 million in fiscal 2004. The corresponding consolidated
balance sheets and statements of cash flows were also restated to
reflect the changes in long term deferred tax assets and retained
earnings resulting from the changes in the accounting for income
taxes.
"As previously disclosed, we identified a material weakness in
internal controls over accounting for income taxes as a result of
the evaluation and testing we undertook as we assessed our
internal controls as required under Section 404 of the Sarbanes
Oxley Act," said Jeffrey Siemers, chief administrative and
financial officer and secretary of Material Sciences. "During the
remediation process, which included the hiring of additional
external tax advisors, we discovered errors in the prior
accounting for income taxes. The restatement of the income tax
expense and related assets is a direct result of this remediation
process."
Material Sciences Corporation - http://www.matsci.com/-- is a
leading provider of material-based solutions for acoustical and
coated metal applications. MSC uses its expertise in materials,
which it leverages through relationships and a network of
partners, to solve customer-specific problems, overcoming
technical barriers and enhancing performance. MSC differentiates
itself on the basis of its strong customer orientation, knowledge
of materials combined with the offer of specific value
propositions that define how it will create and share economic
value with its customers. The company's stock is traded on the
New York Stock Exchange under the symbol MSC.
MATHON FUND: Court Okays Jaburg & Wilk as Special Counsel
---------------------------------------------------------
Mathon Fund, LLC, sought and obtained authority from the U.S.
Bankruptcy Court for the District of Arizona to employ Jaburg &
Wilk, P.C., as its special counsel.
The Firm represented Conservator James C. Sell in the State Court
action against Mathon Management Company, et al., brought by
Arizona Corporation Commission (CV2005-005484). The Debtor
selected the Firm because it is already familiar with the facts
regarding the proceeding.
A conservator is a guardian or protector appointed by a court to
manage the affairs of an individual who isn't capable of managing
his or her own affairs.
Specifically, Jaburg & Wilk will:
a) continue to give the Conservator legal advice with
respect to his powers and duties (to the extent that he
is excused from compliance with Section 543 of the
Bankruptcy Code; and continues operation of the Debtor's
business and management of the Debtor's property);
b) give the Conservator legal advice with respect to his
powers and duties as Conservator in the state action, as
it may relate to his continued involvement in the
bankruptcy proceedings;
c) aid the Debtors' counsel in the prosecution of the
Debtor's Chapter 11 proceeding; and
d) perform all other legal services for the Debtor which may
be necessary.
The Debtor discloses that the Firm's professionals bill:
Professional Hourly Rate
------------ -----------
Partners $225 - $325
Associates $150 - $230
Paralegals $105 - $125
To the best of the Debtor's knowledge, the Firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Phoenix, Arizona, Mathon Fund, LLC, and its
debtor-affiliates filed for chapter 11 protection on Nov. 13, 2005
(Bankr. D. Ariz. Case Nos. 05-27993 through 05-27995). Michael W.
Carmel, Esq., represents the Debtors in their restructuring
efforts. When Mathon Fund, LLC, filed for protection from its
creditors, it listed assets totaling $16,851,721 and debts
totaling $79,259,996.
MEDPOINTE INC: Moody's Rates Proposed $135 Million Facility at B2
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of MedPointe, Inc.
including the B2 corporate family rating. At the same time,
Moody's assigned a B2 rating to the proposed new $135 million
senior secured credit facility of MedPointe Healthcare Inc.,
guaranteed by MedPointe. In addition, Moody's transferred the B2
corporate family rating from MedPointe to MedPointe Healthcare.
The rating outlook is stable.
Moody's understands that this new credit facility, along with a
proposed $30 million asset-backed loan facility (unrated by
Moody's), will replace:
* MedPointe's existing Term Loan A;
* Term Loan B; and
* revolving credit facility.
At the conclusion of the refinancing, Moody's anticipates
withdrawing the ratings on these credit facilities.
MedPointe's B2 rating reflects:
* favorable script trends of core products;
* high gross margins; and
* moderate debt levels.
The rating also reflects:
* MedPointe's limited scale;
* revenue concentration in Astelin (representing approximately
60% of sales);
* limited free cash flow; and
* the risks associated with a new growth strategy for Astelin,
which faces potential competition in 2006 from Alcon.
Moody's expects that the strategy will include greater resources
invested behind the Astelin brand, resulting in lower free cash
flow over the near-term, with uncertain long term benefits
depending on market reaction and competitive dynamics.
Ratings affirmed:
MedPointe Inc.:
* B2 Corporate Family rating
* B2 senior secured bank credit facilities (comprised of a
$25 million revolving credit facility maturing in 2007, Term
Loan A maturing in 2007, and Term Loan B maturing in 2008)
Ratings assigned:
MedPointe Healthcare, Inc.:
* B2 senior secured bank credit facility of $135 million
maturing in 2011
* B2 Corporate Family rating
Rating withdrawn:
MedPointe Inc.:
* B2 Corporate Family rating
Ratings to be withdrawn at closing of transaction:
MedPointe Inc.:
* B2 senior secured bank credit facilities (comprised of a
$25 million revolving credit facility maturing in 2007,
Term Loan A maturing in 2007, and Term Loan B maturing
in 2008)
Based in Somerset, New Jersey, MedPointe Inc. manufactures and
markets branded, specialty pharmaceutical products. MedPointe is
a private company and is majority-owned by a group of equity
sponsors led by The Carlyle Group and by The Cypress Group.
MedPointe Healthcare, Inc. is a wholly owned subsidiary of
MedPointe.
MILACRON INC: Moody's Affirms Caa1 Corporate Family & Debt Ratings
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Milacron Inc. --
Corporate Family, Caa1; guaranteed senior secured notes, Caa1.
The ratings reflect Milacron's high leverage and the weak credit
metrics resulting from the combination of the slower than expected
growth in the company's end markets and the continuing impact of
higher raw material costs.
The rating outlook is changed to negative. The negative outlook
reflects the expectation that Milacron will continue to be
impacted by competitive pricing and higher raw material costs
which will constrain the company's earnings and cash flow
prospects. When considered in conjunction with the company's
elevated debt levels and potential cash calls related to its
underfunded pension obligations, these weak performance trends
could result in further downward pressure on the company's
ratings.
The ratings affirmed include:
Milacron, Inc.:
* $225 million of 11.5% guaranteed senior secured notes
due 2011, Caa1
* Corporate Family rating, Caa1
Milacron maintains a $75 million asset based revolving credit
facility which is not rated by Moody's.
Moody's last rating action for Milacron was on June 16, 2004 when
the ratings were confirmed.
As a manufacturer of plastic processing machinery, Milacron's
operating performance remains highly cyclical and dependent upon
the production levels of its customers within the:
* automotive,
* packaging,
* consumer goods,
* building materials,
* medical device, and
* other end-markets.
This diversification of end markets, as well as the company's
strong business position in the industry, is considered favorably
under Moody's rating methodology. Nevertheless, plastic
processing machinery orders have not returned to pre-2001
recession levels and the high cost of plastic resin has further
constrained demand in recent periods. Further, Milacron's
performance has been impacted by price competition and higher
steel costs which the company has not been able to fully recover
from its customers. Consequently, the weak cyclical trends in the
company performance are viewed less favorably in Moody's rating
assessment.
Milacron's credit metrics are considered to be consistent with the
Caa rating using Moody's rating methodology. For the last twelve
months ended Sept. 30, 2005 total debt/EBITDA (using Moody's
standard adjustments) was 10.5x, EBIT/interest expense was 0.8x.
Free cash flow was negative $2 million and is expected to be
negative for the full year.
The company's management expects new orders in its end markets
combined with the implementation of additional restructuring
actions will improve operating performance in 2006. Nevertheless,
Moody's anticipates that even with any improvement, the company's
credit metrics will remain consistent with a Caa rating for the
foreseeable future.
At Sept. 30, 2005, Milacron maintained cash of $48.3 million and
maintained access to $35 million of availability under its asset
based revolving credit facility, demonstrating a liquidity profile
that has been viewed favorably in the rating. However, the
company has indicated that it may not be able to meet the fixed
charge coverage covenant under the asset based revolver for the
first quarter of 2006 and will have to begin negotiations with its
bank group to amend the financial covenant. The negative rating
outlook considers the company's need to obtain such an amendment
to preserve availability under the revolver.
Milacron has nominal debt maturities in 2006. Nevertheless,
another factor which adversely impacts the company's rating and
outlook under Moody's rating methodology is the currently
estimated minimum funding requirement under its pension plan of
approximately $54.4 million in 2007. The bulk of this payment is
due in Sept. 2007. Management is investigating liquidity
alternatives to meet this need.
The rating of the guaranteed senior secured notes reflects:
* their relative priority within the company's capital
structure; and
* the potential for less than full recovery under various
distressed scenarios.
The notes have:
* a first lien on all property, plant and equipment and certain
other assets;
* a second lien on the current assets of Milacron behind the
asset based revolving credit;
* 100% of the capital stock of the domestic subsidiaries; and
* 65% of the capital stock of the non-US subsidiaries.
Milacron's ratings could be subject to downgrade if liquidity is
not adequately maintained due to:
* an inability to obtain needed bank amendments;
* erosion of cash balances; or
* inability to achieve a financing plan to address the minimum
pension funding requirements in 2007.
The ratings could also be adversely impacted if weak business
trends persist or the company is unable to pass through raw
materials price increases, and these trends result in further
weakness in operating performance, including further increase of
the company's debt/EBITDA metric above 10.5x or erosion of
EBIT/Interest coverage below 0.5x.
Factors that could contribute to a stabilization of the rating
outlook include:
* substantial growth in new business priced at profitable
margins;
* stabilized raw material cost resulting in improved margins;
or
* additional equity contributions.
Consideration for a stabilized rating outlook could arise if any
combination of these factors were to reduce leverage consistently
under 10.0x or increase EBIT/interest coverage consistently above
1.0x.
Milacron, headquartered in Cincinnati, Ohio, is a leading global
manufacturer and supplier of plastics-processing equipment and
related supplies. Milacron is also one of the largest global
manufacturers of synthetic water-based industrial fluids used in
metalworking applications. The company has major manufacturing
facilities in:
* North America,
* Europe, and
* Asia.
Milacron's annual revenues approximated $805 million over the last
twelve months.
MORTON'S HOLDING: Moody's Withdraws B2 Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service moved Morton's Holding Company, Inc.'s
(MHC) corporate family rating and rating outlook to Morton's
Restaurant Group, Inc. (MRG) due to the fact that:
* the $40 million holding company note is not guaranteed by
MRG; and
* separate financial statements do not support a standalone
rating and outlook for MHC.
Moody's currently rates MRG's 7.5% senior secured notes due in
2010 B2 but does not rate the MHC note.
Ratings withdrawn:
Morton's Holding Company, Inc.:
* B2 corporate family rating and stable rating outlook.
Ratings assigned:
Morton's Restaurant Group, Inc.:
* B2 corporate family rating and stable rating outlook.
Morton's Restaurant Group, Inc., headquartered in New Hyde Park,
New York, owns and operates upscale steakhouses under the
"Morton's" trade name as well as several upscale Italian
restaurants under the trade name "Bertolini's".
MMM HOLDINGS: Moody's Rates $420 Million Credit Facilities at B2
----------------------------------------------------------------
Moody's Investors Service assigned a B2 senior debt rating to MMM
Holdings, Inc.'s and NAMM Holdings, Inc.'s $420 million senior
secured bank credit facility, which consists of:
* a $420 million six year term loan; and
* a $20 million five year revolving credit facility.
On July 21, 2005 Moody's had assigned a (P)B2 rating to the credit
facility. This current action reflects the receipt and review, by
Moody's, of the credit facility and its covenants. The outlook on
all the ratings is stable.
MMM and NAMM are co-borrowers under the credit facility, with the
proceeds split as:
* MMM -- term loan of $340million and revolver of $20 million;
and
* NAMM -- term loan of $80 million.
Both companies are subsidiaries of Aveta Holdings, LLC, which as
the parent, is the ultimate guarantor of the credit facility.
Moody's ratings are based on the expectation that there are no
changes in the methodology used by the Centers for Medicare and
Medicaid Services (CMS) in determining the Medicare
Advantage reimbursement rates, that 100% of excess unregulated
cash is used for debt repayment, that the companies issue no
additional debt, and maintain a consolidated RBC of at least 50%
of company action level. Moody's also expects that there are no
significant changes to the financial covenants contained in the
secured bank credit facility and all covenants will be met or
exceeded.
These ratings were assigned with a stable outlook:
* MMM Holdings, Inc. -- senior secured debt rating of B2;
* NAMM Holdings, Inc. -- senior secured debt rating of B2.
These ratings were affirmed with a stable outlook:
* MMM Holdings, Inc. -- corporate family rating of B2;
* MMM Healthcare, Inc. -- insurance financial strength rating
of Ba2; and
* PrimeCare Medical Network, Inc. -- insurance financial
strength rating of Ba2.
Aveta Holdings, LLC is headquartered in Hackensack, New Jersey.
Through Sept. 30, 2005, Aveta reported year to date net income of
approximately $30 million and revenues of $685 million. Total
members equity as of Sept. 30, 2005 was a negative $25 million.
MULTI-LINK TELECOMMS: Jaspers + Hall Raises Going Concern Doubt
---------------------------------------------------------------
Jaspers + Hall, PC, expressed substantial doubt about Multi-Link
Telecommunications, Inc.'s ability to continue as a going concern
after it audited the Company's financial statements for the fiscal
year ended Sept. 30, 2005. The auditing firm pointed to the
Company's significant operating losses, minimal working capital
as of Sept. 30, 2005, and lack of an ongoing source of income.
Multi-Link incurred a $125,480 net loss for the fiscal year ended
Sept. 30, 2005, as compared with a $19,080 net loss for the fiscal
year ending Sept. 30, 2004. The Company had no activities that
produced revenues from operations in fiscal year 2005.
The Company's had total assets of $21,330 at Sept. 30, 2005. It
had no liabilities as of Sept. 30, 2005.
About Multi-Link
Multi-Link Telecommunications provides a link to missed calls.
Its messaging systems link office, home, and mobile phones and
offer voice mail, call routing, integrated voice and fax
messaging, and live answering services. However, the company,
which was founded by former executives Nigel Alexander and Shawn
Stickle in 1991 with the acquisition of Voice Services, Inc.,
filed for bankruptcy protection in late 2002 and subsequently sold
all of its operations, including units in Denver, Atlanta, and
Raleigh, North Carolina. Mr. Alexander acquired the Denver
operations and continues to operate using the Multi-Link brand.
The reorganized company continues to seek opportunities to acquire
an existing business.
NETWORK INSTALLATION: Rescinds Acquisition of Spectrum Comms.
-------------------------------------------------------------
Network Installation Corp. (OTC Bulletin Board: NWKI) reported
that its previously announced acquisition of Spectrum
Communications has been rescinded.
Network Installation CEO Jeffrey R. Hultman stated, "It is with
much regret that we are announcing the rescission of our
acquisition of Spectrum Communications. Since the transaction
closed on Nov. 1, 2005 there have been material philosophical
differences between the parties regarding operations as well as
our future direction. As a result, both parties felt it best to
part ways prior to any considerable integration of the two
companies. We are however pleased that Spectrum has agreed to
assist us with the completion of several of our existing
projects."
Spectrum founder Robert Rivera added, "I too am very disappointed
in this development but also agree that this is the right move for
both parties. In addition to our commitment to assist Network
Installation with their projects, we leave on amicable terms and
believe there may be the potential for future collaboration."
Pursuant to the Rescission Agreement, Spectrum will return
18,567,639 shares of Network Installation common stock and a
promissory note for $1.5 million in exchange for 100% of the
outstanding shares of Spectrum. Additionally, Spectrum's two
appointed directors to the Network Installation Board, Mr. Kurt
Jensen and Mr. William Sullivan have resigned effective
immediately. The Company plans to replace them in the near
future.
About Spectrum Communications
Spectrum Communications provides network design, installation and
maintenance of voice and data network systems.
About Network Installation
Network Installation Corp. --
http://www.networkinstallationcorp.net/-- is a single source
provider of communications infrastructure, specializing in the
design, installation, deployment and integration of specialty
systems and computer networks. Through its wholly-owned
subsidiaries Com Services and Kelley Technologies, it provides its
services to the following customers and industries; Gaming &
casinos, local and regional municipalities, K-12 and education.
At Sept. 30, 2005, Network Installation's balance sheet showed a
$6,700,753 stockholders' deficit, compared to a $1,877,631 deficit
at Dec. 31, 2004.
NEVADA POWER: Fitch Likely to Place BB+ Rating on $210 Mil. Notes
-----------------------------------------------------------------
Fitch Ratings expects to assign a 'BB+' rating to Nevada Power
Co.'s $210 million general and refunding mortgage notes, series M,
due 2016. Net proceeds will be utilized to repay funds borrowed
under its $500 million revolving credit facility to purchase a 75%
interest in the Silverhawk power plant from Pinnacle West Capital
Corp.
The Rating Outlook is Stable. The notes are being offered in a
private placement under Rule 144A of the Securities Act.
NPC's ratings and Stable Outlook reflect:
* a more supportive regulatory environment in Nevada,
* an improving financial profile,
* an adequate system liquidity and
* the absence of near-term maturities.
Primary risks for NPC fixed income investors include exposure to
the wholesale energy markets, high capital spending needs and
relatively weak financial metrics. Positively, NPC recently
settled pending litigation with creditors of Enron Corp. If
approved by the Federal Energy Regulatory Commission, the
settlement will resolve all pending litigation with Enron and
require only a modest incremental cash payment. Additionally, the
recent decision approving construction of a new gas-fired plant by
its affiliate, Sierra Pacific Power Co. in northern Nevada, which
included a higher incentive return on equity and
construction-work-in-progress in rate base, highlights the
continuation of constructive regulatory orders by the Public
Utilities Commission of Nevada.
The contentious regulatory environment in Nevada that contributed
to NPC's financial distress in 2002-2003 has significantly
improved over the last two years, in Fitch's view. Since early
2004, NPC has benefited from favorable deferred energy and general
rate case rulings by the PUCN and greater coordination between
company management and regulators on power and fuel supply
procurement issues. Regulatory decisions will remain critical
going forward as the utilities are expected to consistently file
for recovery of capital investments and deferred energy costs.
The Stable Outlook reflects the assumption that NPC will receive
reasonable rate treatment in future rate filings.
Because output from NPC's own generation portfolio is considerably
short of meeting its load requirements and substantial amounts of
power must be purchased from the wholesale markets, high and
volatile power and gas prices subject NPC to greater commodity
price exposure relative to other utilities. To help manage
seasonal working capital borrowings NPC recently increased
capacity under its revolving credit facility to $500 million and
extended its maturity until 2010.
To increase its generation portfolio and expand its transmission
and distribution system to meet high-growth electric demand, NPC
will need to incur significant capital investments over the next
five years. These investments should spur significant earnings
growth, but because these anticipated expenditures would exceed
internally generated cash, NPC will rely on external financing.
Near-term credit metrics at NPC will remain relatively weak. This
is, in part, due to debt associated with the purchase and
construction of the Lenzie plant and the Silverhawk purchase as
the company seeks to narrow its short generation position.
However, these ratios have improved over the last several years
and are expected to further strengthen over the intermediate-term
as the company recovers its deferred energy costs and major
capital investments.
A positive rating action could result from further improvement in
credit metrics due to capital and deferred energy cost recovery,
the continuation of constructive rate orders by the PUCN, further
equity issuances or a significant reduction in system debt levels.
A negative rating action could result from events restricting
access to adequate liquidity, the disallowance of significant
deferred energy costs or capital expenditures by regulators or
over-reliance on debt financings for substantial construction
expenditures.
NEVADA POWER: S&P Assigns BB Rating to $210 Million Mortgage Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
electric utility company Nevada Power Co.'s $210 million general
and refunding mortgage notes series M due 2016.
The company will use the proceeds to repay amounts that were
borrowed under a bank revolving credit facility to finance a
portion of the purchase price for the 75% ownership interest in,
and related costs of, the gas-fired combined cycle 570 MW
Silverhawk power plant.
The 'B+' corporate credit rating on Las Vegas, Nevada-based Nevada
Power, a utility subsidiary of Sierra Pacific Resources, along
with Sierra Pacific Power Co., reflects the consolidated credit
quality of the three companies.
The positive outlook on Nevada Power mirrors that of SRP.
"The positive outlook reflects the substantial improvements in the
regulatory regime, liquidity, Nevada Power's much-reduced short
power position, a steady improvement in financial ratios, and the
potential for further upside through debt refinancing or a
reduction in capital expenditures," said Standard & Poor's credit
analyst Swami Venkataraman.
Nevada Power provides electricity to approximately 738,000
customers in Las Vegas, Nevada and adjoining areas in southern
Nevada.
NORTEL NETWORKS: Names Don McKenna as VP of Global Mfg. Services
----------------------------------------------------------------
Nortel Networks NYSE/TSX: NT) appointed Don McKenna as vice
president, Global Manufacturing Services.
In this position, Mr. McKenna will have overall accountability for
all aspects of Manufacturing Services from materials and supply
management through to supply chain product management, hardware
quality and logistics. Mr. McKenna will play a pivotal role in
leading the transformation of Nortel's Supply Chain into a
competitive advantage for Nortel, helping to ensure on-time
delivery, lowest cost and highest quality.
"Don has a proven track record of success and reflects Nortel's
leadership values in everything he does," said Joel Hackney,
senior vice president, Global Supply Chain and Quality, Nortel.
"He will be singularly focused on charting a winning course for
our Supply Chain and doing it with a passion and optimism that
will lead to superior results."
During his impressive 40-year career at GE, Mr. McKenna led
manufacturing processes, supply chain and across-the-board quality
efforts. Mr. McKenna served in a number of leadership positions
at GE including country manager for GE Consumer and Industrial
Puerto Rican operations and vice president of Lighting for GE's
European Operations. Mr. McKenna also served as president of GE
Capital's TIP and Mod Space Business as well as vice president of
GE Industrial and Consumer operations in Europe and Asia.
Mr. McKenna's appointment is effective Jan. 9, 2006. Mr. McKenna
will be based at the Company's Research Triangle Park facility in
North Carolina.
Nortel Networks Limited -- http://www.nortel.com/-- is a
recognized leader in delivering communications capabilities that
enhance the human experience, ignite and power global commerce,
and secure and protect the world's most critical information.
Serving both service provider and enterprise customers, Nortel
delivers innovative technology solutions encompassing end-to-end
broadband, Voice over IP, multimedia services and applications,
and wireless broadband designed to help people solve the world's
greatest challenges. Nortel does business in more than 150
countries.
* * *
As reported in the Troubled Company Reporter on Oct. 31, 2005,
Standard & Poor's Ratings Services affirmed its 'B-' long-term
corporate credit rating on Nortel Networks Ltd., on the release of
security with respect to the Export Development Canada
performance-based support facility. At the same time, Standard &
Poor's withdrew all the senior secured debt ratings on the company
and assigned its senior unsecured ratings on Nortel's public debt
securities at 'B-'.
NORTHWEST AIRLINES: Court Approves Settlement Pact with SIA Eng'g
-----------------------------------------------------------------
The Honorable Allan Gropper of the U.S. Bankruptcy Court for the
Southern District of New York approved a settlement agreement
Between Northwest Airlines Corp. and its debtor-affiliates and SIA
Engineering Company Limited.
Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, in
New York, recounted that before the Petition Date, Northwest
Airlines, Inc., and SIA entered into a ground handling agreement,
pursuant to which SIA agreed to, among other things, service
certain aircraft belonging to Northwest Airlines.
On August 16, 1999, a Northwest Airlines aircraft sustained
damages during a servicing by SIA employees.
As a result of the incident, Northwest Airlines brought damage
claims under the Ground Handling Agreement. The Claims are
pending before an arbitrator in the matter styled "In the Matter
of an Arbitration in Singapore under the UNCITRAL Rules Between
Northwest Airlines, Inc. and SIA Engineering Company Pte. Ltd."
A final award on all issues of liability has been entered against
SIA in the Arbitration.
Subsequently, the Debtors and SIA have negotiated the Settlement
Agreement, which provides that:
(a) SIA will pay Northwest $2,091,968 by wire transfer no
later than December 22, 2005;
(b) SIA will pay Associated Aviation Underwriters $3,408,032
by wire transfer no later than December 22, 2005;
(c) SIA will forego any appeal of the Final Award on all
Issues of Liability; and
(d) Northwest will release SIA from claims arising from the
damaged aircraft.
Mr. Zirinsky said that the Settlement Agreement will result in
payment to the estate, and that payment, as determined by
Northwest Airlines in the exercise of its business judgment, will
adequately compensate its estate for the damages sustained.
Specifically, the amount to be paid by SIA under the Settlement
Agreement constitutes the balance of the repair costs to the
aircraft, together with compensation for the loss of use and for
interest, to the extent the amounts are not otherwise covered by
insurance. The Settlement Agreement will also avoid the costs
associated with the continuation of the Arbitration.
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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST AIRLINES: Retiree Panel Wants Jenner & Block as Counsel
-----------------------------------------------------------------
The Section 1114 Committee of Retired Employees of Northwest
Airlines Corp. and its debtor-affiliates seek the U.S. Bankruptcy
Court for the Southern District of New York's authority to retain
Jenner & Block LLP as its counsel effective as of December 5,
2005.
The Retiree Committee needs Jenner & Block to:
(a) provide assistance, advice and representation concerning
any proposed modification of the benefits to be provided
to the Retirees;
(b) negotiate with the Debtors concerning any proposed
modification of the Retirees' benefits in general;
(c) represent the Committee in any proceedings and hearings
that involve or might involve matters pertaining to
Retiree benefits;
(d) prepare on the Committee's behalf any necessary adversary
complaints, motions, applications, orders and other legal
papers relating to those matters;
(e) advise the Committee of its powers and duties;
(f) prosecute and defending litigation matters and other
matters concerning any proposed modification of the
Retirees' medical benefits, or the Retirees' benefits in
general, that might arise;
(g) advise the Retiree Committee with respect to bankruptcy,
general corporate, labor, employee benefits and litigation
issues concerning any proposed modification of the
Retirees' medical benefits, or the Retirees' benefits in
general; and
(h) perform other legal services as may be necessary and
appropriate for the efficient and economical resolution of
the Retiree Committee's consideration of any proposal to
modify the Retirees' benefits.
The Retiree Committee notes that the scope of Jenner & Block's
representation may be expanded to include certain matters to
protect the Retirees' rights.
Jenner & Block will be paid at these rates:
General Range of Rates
----------------------
Professional Hourly Rates
------------ ------------
Partners $410 - $800
Associates $230 - $395
Paralegals $160 - $225
Project Assistants $120 - $130
Professionals Expected to Be Most Active
----------------------------------------
Partners Hourly Rates
-------- ------------
Catherine L. Steege $565
Charles B. Sklarsky $585
Seth A. Travis $450
Jacob I. Corre $435
Associate
---------
Andrew S. Nicoll $250
Paralegal
---------
Michael Matlock $225
The Retiree Committee believes that Jenner & Block is well
qualified to represent it in the Debtors' Chapter 11 cases.
Jenner & Block has represented the Section 1114 committee of non-
unionized retirees in United Airlines, Inc.'s bankruptcy case.
Catherine L. Steege, a partner at Jenner & Block, assures the
Court that neither Jenner & Block nor any of its partner or
associate:
(a) represent any interest adverse to that of the Retiree
Committee;
(b) have any connection with the Debtors or any parties-in-
interest in the Debtors' cases;
(c) have an interest materially adverse to that of the
estate or of any class of creditors or equity security
holders, by reason of any direct or indirect relationship
to, connection with, or interest in, the Debtors.
Ms. Steege discloses that Jenner & Block represented Honeywell
International, Inc., in the Debtors' case. The Retiree Committee
has been informed of this representation, and has given its
consent notwithstanding Jenner & Block's prior and continuing
representation of Honeywell in the Debtors' Chapter 11 cases.
Ms. Steege relates that beginning in 1985, Jenner & Block has
intermittently represented Northwest Airlines, Inc., in
connection with various litigation and transactional matters.
Jenner & Block has never represented Northwest Airlines in any
matters relating to its insolvency or its retiree benefits, and
currently is not representing Northwest Airlines in any matters.
Jenner & Block's prior representation of Northwest Airlines does
not constitute a conflict with its representation of the Retiree
Committee, Ms. Steege maintains.
Jenner & Block has represented or is currently representing
certain parties-in-interest in matters unrelated to the Debtors'
cases:
-- Current Clients:
(a) Blue Cross Blue Shield Association;
(b) Chase Insurance;
(c) Kemper Insurance Company;
(d) Sabre Inc.;
(e) Honeywell Corporation;
(f) General Electric Co.;
(g) ACS State and Local Solutions, Inc.; and
(h) AT&T; and
-- Former Clients:
(a) State Street Bank;
(b) United Healthcare Corporation;
(c) Galileo International, Inc.;
(d) Travelocity.com;
(e) CIT Group/Credit Finance, Inc.;
(f) Amtech Corporation;
(g) Globe Ground North America, LLC; and
(i) CIGNA
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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NORTHWEST AIRLINES: Retiree Panel Wants Kroll as Fin'l Advisor
--------------------------------------------------------------
The Section 1114 Committee of Retired Employees of Northwest
Airlines Corp. and its debtor-affiliates requires the services of
experienced bankruptcy consultants and financial advisors to
analyze and advise it concerning the Debtors' business and
financial affairs. In this regard, the Retiree Committee asks the
U.S. Bankruptcy Court for the Southern District of New York for
authority to retain Kroll Zolfo Cooper LLC as its financial
advisors nunc pro tunc to December 5, 2005.
As financial advisors, Kroll Zolfo Cooper will:
(a) analyze and comment on operating and cash flow
projections, business plans, operating results, financial
statements, other documents and information provided by
the Debtors or their professionals, and other information
and data requested by the Retiree Committee;
(b) advise and assist the Retiree Committee in reviewing the
Debtors' support information relating to any proposed
modifications, including historical financial information,
financial projections and underlying assumptions, retiree-
related proposed modifications for each retiree class,
underlying retiree plan assumptions, and any other
relevant information deemed appropriate;
(c) advise the Retiree Committee in its examination and
analysis of any proposed retiree benefit modifications by
the Debtors that impact the Retiree Committee and its
constituents;
(d) meet and negotiate with the Debtors, their advisors
and counsel regarding proposed modifications, underlying
assumptions, and support information, and provide expert
testimony on related matters, as appropriate; and
(e) perform other general business consulting or assistance as
the Retiree Committee or its counsel may deem necessary.
Kroll Zolfo Cooper will be paid in accordance with the firm's
customary hourly rates:
Professional Hourly Rate
------------ -----------
Managing Directors $615 to $760
Professional Staff $125 to $610
Support Personnel $50 to $225
The firm's billing rates are subject to revision by January 1,
2006.
The firm will also be reimbursed for out-of-pocket expenses.
Catherine L. Steege, Esq., at Jenner & Block LLP, in Chicago,
Illinois, assures the Court that none of Kroll Zolfo Cooper's
employees is related to the Debtors, their creditors, other
parties-in-interest in the pending proceedings, or the United
States Trustee or anyone employed in the Office of U.S. Trustee.
In addition, the firm does not hold any adverse interest to the
parties. The firm is a "disinterested person," as that term is
defined in Section 101(14) of the Bankruptcy Code.
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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000)
O'SULLIVAN INDUSTRIES: Court Extends Removal Period to April 12
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
extended until April 12, 2006, the deadline by which O'Sullivan
Industries Holdings, Inc., and its debtor-affiliates can remove
causes of action.
As previously reported in the Troubled Company Reporter on Jan. 4,
2006, the Debtors have not reviewed the actions pending against
them to determine whether any should be removed under Bankruptcy
Rule 9027(a) because they have focused primarily on:
-- stabilizing their business;
-- responding to a multitude of creditor inquiries and
addressing a variety of creditor concerns; and
-- working towards negotiating a potential consensual plan of
reorganization.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). On September 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)
O'SULLIVAN IND: Panel Asks Court to Continue Disclosure Hearing
---------------------------------------------------------------
The Official Committee of Unsecured Creditors asserts that while
the deficiencies in the Disclosure Statement were glaring,
O'Sullivan Industries Holdings, Inc., and its debtor-affiliates
chose not to file their First Amended Plan of Reorganization and
Disclosure Statement until after the close of business on Jan. 3,
2006, which is:
-- less than three days before the Creditors Committee's
deadline to file its objection to the Disclosure Statement;
-- less than three days before the Creditors Committee's
discovery responses were due to the Debtors; and
-- just nine days before the January 12, 2006 Continued
Disclosure Hearing.
James R. Sacca, Esq., at Greenberg Traurig, LLP, in Atlanta,
Georgia, tells the U.S. Bankruptcy Court for the Northern District
of Georgia that as the Amended Plan and Disclosure Statement are
more than 200 pages in length, the Creditors
Committee and its professionals have not been given a reasonable
opportunity to review and evaluate materials submitted by the
Debtors to the Court. The Bankruptcy Code requires that parties-
in-interest be given at least 25 days to consider a debtor's
disclosure statement, Mr. Sacca says.
Mr. Sacca contends that the Debtors continue to inflict on the
Court and the Creditors Committee an artificial deadline imposed
by the Senior Secured Noteholders, which is unconnected to any
legitimate business justification and is being used solely for the
purpose of precluding a fair and considered evaluation of the
Debtors' Plan and Disclosure Statement.
Mr. Sacca asserts that while the Creditors Committee has had no
meaningful time to review the Amended Plan and Disclosure
Statement, it appears that the Debtors have radically changed
their view of their cases. Instead of completely wiping out all
general unsecured claims, which the Debtors and the Senior Secured
Noteholders vigorously defended in multiple filings, the
Amended Plan gives general unsecured creditors their pro rata
share to proceeds of avoidance actions. Importantly, general
unsecured creditors are now entitled to vote on the Amended Plan,
so the need for adequate disclosure as to the Debtors' unsecured
creditors is absolutely critical.
The Debtors disclosed that their estates have no unencumbered
assets that could provide any value to their general unsecured
creditors. However, Mr. Sacca argues that the Amended Plan now
provides for general unsecured creditors to participate in
recoveries from available avoidance actions.
"The Amended Disclosure Statement still provides no analysis of
these avoidance actions nor an analysis of the estimated recovery
to general unsecured creditors," Mr. Sacca insists. "Thus,
general unsecured creditors who previously were presumed to reject
the proposed plan, now must be solicited and must receive a copy
of the Amended Disclosure Statement."
To allow sufficient time to undertake its independent analysis of
the Amended Plan and Disclosure Statement and to prepare a
responsive pleading, the Creditors Committee asks the Court to
continue the Disclosure Hearing until February 2, 2006.
Mr. Sacca points out that the Debtors' case is not a case where
business exigencies require a truncated timetable. Moreover,
there is nothing compelling a "fast track" in these cases other
than the desire to curtail the rights of interested parties.
There is no legitimate reason why the Creditors Committee and the
Court should be held hostage to an artificially created deadline
which has no business necessity, especially in a complex case in
which the plan and disclosure statement remain moving targets.
Furthermore, Mr. Sacca tells the Court that by allowing the
Creditors Committee time to complete its due diligence review with
respect to the Amended Plan and Disclosure Statement, the
Debtors' opportunity to confirm a plan of reorganization is not
jeopardized, rather, the voices of other parties-in-interest to be
heard are merely allowed.
Debtors Object
The Creditors Committee's request is its latest maneuver in an
ongoing campaign of harassment designed to extract a recovery,
recklessly putting in jeopardy the Debtors' chances of emerging
from bankruptcy with a sound and intact business, James C.
Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in
Atlanta, Georgia, tells the Court.
Mr. Cifelli says the amendments to the Disclosure Statement are
routine and minimal. As is common in similar cases, the changes
merely update the events that have taken place in the Debtors'
Chapter 11 cases since the Petition Date, and attempt to address
some of the concerns already raised by the Creditors Committee and
the Securities and Exchange Commission. Hence, the changes do not
provide grounds to further delay the Disclosure Statement
Hearing.
In addition, the Debtors believe that the filing of the Amended
Plan and Disclosure Statement provides the Creditors Committee
with more responsive time than is customary in similar situations.
Mr. Cifelli also emphasizes that there will be more changes to be
made to the Amended Disclosure Statement prior to and after the
Disclosure Statement Hearing in response to specific objections
and other matters.
"The Committee is merely repeating a litigation tactic intended to
exert pressure on the Debtors and their bona fide stakeholders by
imposing enormous expense and attempting to hinder reorganization
unless the Senior Secured Noteholders, who are themselves
impaired, reallocate some of their recovery. The
Court should not countenance this tactic or reward the
Committee's abuse," Mr. Cifelli insists.
Ad Hoc Committee Supports
Debtors' Objection
GoldenTree Asset Management L.P., Mast Credit Opportunities I,
(Master) Ltd., and Breakwater Fund Management, LLC, as the Ad Hoc
Senior Secured Noteholders Committee, agree that the Creditors
Committee's request is a continuation to delay the Debtors'
bankruptcy proceedings.
In addition, the Ad Hoc Committee believes that the Creditors
Committee's request recklessly burden the estates with excessive
administrative fees and expenses in an effort to pressure the
Debtors and the Ad Hoc Committee to allocate reorganization value
to the Creditors Committee's out-of-the-money constituency.
Dennis J. Connolly, Esq., at Alston & Bird, LLP, in Atlanta,
Georgia, informs Judge Mullins that in response to the filing of
the Amended Disclosure Statement, the Creditors Committee had the
option of acting reasonably and responsibly by requesting the
Debtors consent to a brief extension of time to file its
objections. Instead, the Committee took the course that
potentially could wreak the most havoc on the Debtors' estates.
Mr. Connolly clarifies that the change in the Plan and Disclosure
Statement was made to accommodate a complaint registered by the
Creditors Committee.
"The change in no way alters the jointly held view of the Debtors
and the Ad Hoc Senior Secured Noteholders Committee that the
Debtors' enterprise value is grossly insufficient to entitle
general, unsecured creditors, as a matter of law, to a
distribution of such value under the Amended Plan," Mr. Connolly
insists. "[I]ndeed, the Amended Plan provides for no distribution
to general, unsecured creditors of any of the
Debtors' enterprise value."
Moreover, Mr. Connolly notes that the Creditors Committee has
unleashed a highly unusual and abusively excessive discovery
campaign in connection with the disclosure statement hearing.
Hence, the Committee's workload is entirely self-inflicted, Mr.
Connolly argues.
In this regard, the Ad Hoc Committee asks the Court to summarily
reject the Creditors Committee's request without hearing.
Committee Responds
The Creditors Committee asserts that the amendments to the Plan
and Disclosure Statement are extensive and substantive.
Mr. Sacca explains that prior to the amendment, the Debtors'
position was that holders of general unsecured claims were
receiving nothing and not voting, the subordination provisions
were not applicable, and any creditor who did not vote was not
subject to a release.
Thus, the proposition that the Debtors have not radically changed
the Plan and Disclosure Statement reminds one of "Alice and the
Looking Glass," Mr. Sacca argues.
In addition, Mr. Sacca contends that the Debtors' condemnation of
the Creditors Committee fulfilling its statutory duties has no
place in these Chapter 11 Cases. The fact that the Committee is
doing its job is not a basis for criticism, nor for ignoring its
legitimate concerns and needs, Mr. Sacca explains.
The Debtors continue to argue that they hold the keys to the
castle and anyone who seeks entry is an intruder, hence, Mr.
Sacca avers, due to the Debtors' own making, the Creditors
Committee was forced to commence discovery to obtain information.
It was the Debtors who chose to ignore lesson one of Chapter 11,
Mr. Sacca says. "If the Debtors are so concerned about timing and
costs, why has it taken them this long to understand [the] basic
bankruptcy concept [that] bankruptcy avoidance actions are
unencumbered assets that are for the benefit of general unsecured
Creditors."
As is clear from the Debtors' own financial reports, the Debtors
are tracking their budgets, have plenty of liquidity, and are not
in extremis, hence, there is no basis to deny the Creditors
Committee the time it needs to do its job, Mr. Sacca insists.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). On September 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PACIFIC MAGTRON: Court Extends Exclusive Periods Through Jan. 30
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada extended
until Jan. 30, 2006, the period within which Pacific Magtron
International Corp. and its debtor-affiliates have the exclusive
right to propose amended plans and seek plan confirmation.
The Debtors filed a joint plan of reorganization and a joint
disclosure statement on July 18, 2005. An amended joint plan and
disclosure statement was filed on Aug. 26, 2005.
The Debtors tell the Court that they have reached a settlement
with their largest remaining creditor and now need to file amended
plans and disclosure statements which incorporate the settlement's
provisions.
Headquartered in Milpitas, California, Pacific Magtron
International Corp. -- http://www.pacificmagtron.com/--
distributes some 1,800 computer hardware, software, peripheral,
and accessory items that it buys directly from 30 manufacturers
like Creative Labs, Logitech, and Yamaha. The Company, along with
its subsidiaries, filed for chapter 11 protection on May 11, 2005
(Bankr. D. Nev. Case No. 05-14326). As of Dec. 31, 2004, the
Company reported $11,740,700 in total assets and $11,105,200 in
total debts.
PARKWAY HOSPITAL: Gets Bridge Order Extending Exclusive Periods
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
entered a bridge order extending, until Feb. 2, 2006, the time
within which The Parkway Hospital, Inc., alone can file a chapter
11 plan. The Debtor also has until April 3, 2006, to exclusively
solicit acceptances of that plan from its creditors.
The Debtor seeks an extension of its exclusive plan-filing period
until March 1, 2006, and its exclusive right to solicit plan
acceptances until May 1, 2006.
Presently, the Debtor is preoccupied with various important
matters concerning the administration of its chapter 11 case. The
Debtor is also currently involved in negotiations with various
creditor constituencies and other parties-in-interest for the
terms of a consensual plan of reorganization.
The extension will also give the Debtor more opportunity to
analyze the claims asserted against its estate.
The Court will convene a hearing at 2:30 p.m., on Jan. 31, 2006,
to consider the Debtor's request on a final basis.
The Parkway Hospital, Inc., operates a 251-bed proprietary, acute
care community hospital located in Forest Hills, New York. The
Company filed for chapter 11 protection on July 1, 2005 (Bankr.
S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper
Rudnick Gray Cary US LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $28,859,000 in total assets and
$47,566,000 in total debts.
PARKWAY HOSPITAL: Wants Until March 31 to Decide on Leases
----------------------------------------------------------
The Parkway Hospital Inc. asks the U.S. Bankruptcy Court for the
Southern District of New York to extend until March 31, 2006, the
period within which it can elect to assume, assume and assign, or
reject its unexpired nonresidential real property leases.
The Debtor is a party to four unexpired nonresidential real
property leases consisting of:
a) a finance and business office located at 15 Yellowstone
Boulevard, Forest Hills, New York 11375;
b) primary operations located at 70-35th 113th Street, Forest
Hills, New York 11375;
c) an extension clinic located at 90-33 Elmhurst Avenue,
Jackson Heights, New York 11372; and
d) a credentialing staff office located at 2nd floor 22-02
Steinway Street, Astoria, New York 11105.
The Debtor gives the Court three reasons supporting the extension:
1) prematurely assuming the leases now could lead to
unnecessary administrative claims against the Debtor's
estate if those leases are eventually rejected or
terminated;
2) if the Debtor rejects the leases now, it may forego
significant value in those leases, create large unwarranted
rejection damage claims and be forced to move its operations
at great expense; and
3) it is current on all pre-petition and post-petition
obligations under the leases and the landlords of those
leases will not be prejudiced by the requested extension.
The Parkway Hospital, Inc., operates a 251-bed proprietary, acute
care community hospital located in Forest Hills, New York. The
Company filed for chapter 11 protection on July 1, 2005 (Bankr.
S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper
Rudnick Gray Cary US LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $28,859,000 in total assets and
$47,566,000 in total debts.
PEP BOYS: Moody's Assigns Ba2 Rating to $200 Million Facility
-------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Pep Boys'
Inc.'s new $200 million senior secured credit facility and
affirmed the B1 corporate family and B3 senior subordinated debt
ratings. The outlook remains negative.
This rating was assigned:
* $200 million senior secured credit facility due 2011 at Ba2
These ratings were affirmed:
* corporate family rating at B1;
* senior guaranteed unsecured convertible notes due 2007 at B1;
and
* senior subordinated notes due 2014 at B3.
The Ba2 rating on the new $200 million senior secured facility,
which will be used to pre-fund the repayment of roughly $143
million in upcoming maturities and reduce revolver balances,
results from its solid collateral package consisting of a pool of
mortgaged properties with an advance rate representing 50% loan to
appraised value of the pool. Release and replacement provisions
are conservative, ensuring that the pool will remain "in balance"
with this 50% construct. This facility will rank pari passu with
the unrated $357 million senior secured asset-based credit
facility with the exception of the differences in collateral type,
i.e., receivables plus inventory versus pool of operating stores.
While operating performance for 2005 has been well below plan, it
is important to note that Pep Boys has not increased its debt
levels as funding for its aggressive capital expenditure program
has been supplemented out of pre-existing excess cash due to its
lower operating cash flow. The B1 rating affirmation takes into
consideration that debt protection measures have become weaker for
this issuer due to the soft 2005 operating performance; however,
the rating also reflects Pep Boys' strong brand recognition, the
favorable industry fundamentals that are evident, with the average
age of vehicles increasing, as is the proportion of higher repair
costs for sport utility vehicles, balanced by the challenges
remaining for the company as it attempts to rebalance its
operating model away from more complicated service and repairs to
a higher velocity, more retail- based platform.
The ratings also reflect some benefit, though now reduced due to
the pledging of the majority of its currently owned stores to
secure the new $200 million financing. Pep Boy's historical
ownership of a significant number of its stores, has reduced rents
relative to sales and continues to provide some underlying support
for the credit; however, the monetization via this new credit
facility to pre-fund an upcoming maturity does reduce financial
flexibility as well as the amount of cushion currently available
at the B1 corporate family rating level.
The negative outlook reflects the poor operating performance
achieved thus far in 2005 which is primarily attributed to the
disruptions associated with the aggressive store remodeling
program and secondarily to the lackluster results generated by the
company's tire business, both private label and branded. While
the store repositioning strategy process remains very much a work
in progress, the remodeling disruptions are expected to abate
shortly under a more disciplined approach resulting in an expected
earnings improvement in Q42005 with continuation into 2006.
Moody's anticipates the company returning to FY 2004 performance
levels by the end of FY 2006.
Pep Boys has been working to improve its operating performance
over the last few years with its store remodeling program which
has lead to some past asset write-downs, as well as its uneven
operating performance year-to-date during fiscal 2005. Moody's
expects that Pep Boys will continue to have to invest in its store
base to keep pace with its competition and bring its operating
performance in line with its peers. While these investments will
have longer term benefits for Pep Boys, it will likely be a few
more quarters before these benefits become reflected in the
company's operating results.
Downward rating pressure will continue if operating performance
does not begin to improve by the end of the second quarter of
fiscal 2006 to a level sufficient to reduce debt/EBITDA below 6x.
Considering the negative outlook, upward rating momentum is highly
unlikely; however, a stable outlook could result if debt/EBITDA
declines below 5.5x and is deemed sustainable, which would
indicate operational improvement.
Headquartered in Philadelphia, Pennsylvania, The Pep Boys - Manny,
Moe and Jack operate about 593 stores in 36 states and Puerto Rico
with annual revenues of approximately $2.3 billion.
PEP BOYS: S&P Rates Proposed $200 Mil. Senior Secured Loan at B+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating with a recovery rating of '1+' to Pep Boys-Manny, Moe &
Jack's proposed $200 million senior secured term loan due January
2011.
Proceeds from this term loan will be used to refinance existing
debt and pay for fees and expenses and other corporate
requirements.
At the same time, the 'B-' corporate credit and all other ratings
were affirmed. The outlook remains negative.
The ratings on Philadelphia-based Pep Boys reflect:
* weak operating trends,
* the risks of operating in the highly competitive and
consolidating auto parts retail sector,
* its highly leveraged capital structure, and
* limited liquidity and financial flexibility.
"Progress in turning around its operations has continued to
disappoint our expectations," said Standard & Poor's credit
analyst Stella Kapur. "The company faces considerable challenges
and needs to turn around its service segment and reinvest capital
in its store base."
PLIANT CORP: Files Revised List of 30 Largest Unsecured Creditors
-----------------------------------------------------------------
Pliant Corporation and its debtor-affiliates delivered to the U.S.
Bankruptcy Court for the District of Delaware their revised
consolidated list of 30 largest unsecured creditors.
George Miller, Tredegar Film Products Corp., Burlington Northern &
Santa Fe Railway Company, Innovene Polymers, and Bake-Line Group,
LLC, were added to the Revised List of Creditors.
On the other hand, Atofina Chemicals, USF Holland, Amoco Polymer,
Standridge Color, and C.H. Robinson International were removed
from the List.
Dupont Company's listed claim was changed from $884,963 to
$1,323,664.
The Debtors' 30 Largest Unsecured Creditors are:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York Note Debt $220,000,000
Attn: Corporate Trust 13% Senior
Administration Subordinated
21st Floor West Notes Due 2010
101 Barclay Street
New York, NY 10286
Tel: (800) 254-2826
Fax: (315) 414-3885
The Bank of New York Note Debt $100,000,000
Attn: Corporate Trust 13% Senior
Administration Subordinated
21st Floor West Notes Due 2010
101 Barclay Street
New York, NY 10286
Tel: (800) 254-2826
Fax: (315) 414-3885
Dow USA Trade Debt $2,495,722
2030 Dow Center
Midland, MI 48674
Tel: (800) 258-2436
Fax: (989) 638-1740
Equistar Trade Debt $2,493,377
1221 McKinney
Houston, TX 77010
Tel: (713) 652-7300
Fax: (713) 652-4542
Paper Converting Machine Co. Trade Debt $2,281,947
39068 Treasury Center
Chicago, IL 60694
Tel: (920) 494-5601
George Miller Litigation Claim $2,200,000
Attn: Michael D. Laplante
Ferguson Barristers
531 King Street
Midland, Ontario
Canada L4R 3N6
Tel: (705) 526-1471
Fax: (705) 526-1067
Total Petrochemicals Trade Debt $2,067,031
1201 Louisiana Street, Suite 1800
Houston, TX 77002
Tredegar Film Products Corp. Litigation Claim $2,030,000
Attn: Joseph A. Tessari
1100 Boulders Parkway
Richmond, VA 23225
Tel: (312) 655-1500
Fax: (312) 655-1501
Sun Chemical Corporation Trade Debt $1,361,828
35 Waterview Boulevard
Parsippany, NJ 07054-1285
Tel: (973) 404-6000
Fax: (973) 404-6439
DuPont Company Trade Debt $1,323,664
Center Chestnut Run
Plaza 705/GS38
Wilmington, DE 19880-0705
Tel: (800) 628-6208
Fax: (302) 351-7191
Blue Cross Blue Shield Insurance $1,100,000
P.O. Box 1186
Chicago, IL 60690-1186
Tel: (800) 541-2768
Fax: (312) 819-1943
Sonoco Trade Debt $1,092,100
1 North Second Street
Hartsville, SC 29550-3305
Tel: (800) 377-2692
Fax: (843) 339-6682
Burlington Northern & Santa Fe Litigation Claim $1,066,841
Railway Company
Attn: Jacob D. Flesher
Barry Ubaldi
McPherson & Flesher LLP
11249 Gold Country Boulevard
Suite 170
Gold River, CA 95670
Tel: (916) 635-2200
Fax: (916) 635-2120
Chevron Phillips Chemical Co. Trade Debt $1,022,254
10001 Six Pines Drive
The Woodlands, TX 77380
Tel: (800) 231-1212
Fax: (832) 813-6060
Oxyvinyls LP Trade Debt $686,371
5005 LBJ Freeway
Dallas, TX 75244-6119
Tel: (877) 699-8465
Fax: (972) 720-7408
BASF Canada Trade Debt $604,066
P.O. Box 7841
Station A
Toronto, ON
Canada M5W 2R2
Tel: (416) 675-3611
Fax: (289) 360-6005
Ampacet Corporation Trade Debt $598,527
660 White Plains Road
Tarrytown, NY 10591-5130
Tel: (888) AMPACET
Fax: (914) 631-7197
Phenix Marketing Group Inc. Brokerage $506,968
3305 Healy Drive
Winston Salem, NC 27103
Attn: Nyal Cannon
Tel: (336) 251-1100
Fax: (603) 798-5434
Huntsman Polymers Trade Debt $479,373
10003 Woodloch Forest Drive
The Woodlands, TX 77380
Windmoeller & Hoelscher Corp. Capital Improvement $470,968
23 New England Way
Lincoln, RI 02865-4252
BASF USA Trade Debt $443,479
100 Campus Drive
Florham Park, NJ 07932
GE Capital Leases $404,730
1415 West 22nd Street, Suite 600
Oak Brook, IL 60523
Yellow Freight Systems Shipping $333,339
10990 Roe Avenue
Overland Park, KS 66211-1213
ARKEMA Inc. Trade Debt $329,154
2000 Market Street
Philadelphia, PA 19103-3222
Eastman Chemicals Trade Debt $321,926
P.O. Box 511
Kingsport, TN 37662
Smurfit Stone Container Corp. Trade Debt $319,835
150 North Michigan Avenue
Chicago, IL 60601
Westlake Polymers Trade Debt $316,644
2801 Post Oak Boulevard
Houston, TX 77056
Innovene Polymers Trade Debt $296,419
4225 Naperville Road
Lisle, IL 60532
Bake-Line Group, LLC Preference Action $274,500
aka Biscuit Acquisition LLC
17 West 220 22nd Street
Oakbrook Terrace, IL 60181
D. Thomas & Associates, Inc. Brokerage $265,470
1717 West 91st Place
Kansas City, MO 64114-3279
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr.
D. Del. Lead Case No. 06-10001). Edmon L. Morton, Esq., and
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor,
represent the Debtors in their restructuring efforts. As of Sept.
30, 2005, the company had $604,275,000 in total assets and
$1,197,438,000 in total debts.
PLYMOUTH RUBBER: Files Plan and Disclosure Statement in Mass.
-------------------------------------------------------------
Plymouth Rubber Company, Inc., and its debtor-affiliate, Brite-
Line Technologies, Inc., submitted to the U.S. Bankruptcy Court
for the District of Massachusetts a Disclosure Statement
explaining their Joint Plan of Reorganization.
Treatment of Claims
The Plan groups claims and interests into seven classes of
creditor claims and three classes of equity interests.
Under the Plan, Allowed Priority Claims will be paid in full. The
Town of Canton will retain its lien on the real estate of the
Debtors located in Canton, Massachusetts, and its Allowed Secured
Claim will be paid in full using the proceeds of the sale of the
real estate. Plymouth Rubber will retain its 100% common stock
interest in Brite-Line but may pledge these interests as part of
the available collateral to one or more of the holders of Allowed
Secured Claims.
The Allowed Secured Claim of LaSalle Bank National Association,
General Electric Capital Corporation, TD BankNorth, N.A. (f/k/a
BankNorth, N.A.) and the Pension Benefit Guaranty Corporation will
either be:
(a) partly paid from the Debtors' cash collateral accounts,
plus the portion of the proceeds of the New Revolver
agreed by the secured creditors. The remaining balance
will be paid by the delivery of the Bank Term Note and is
secured by the available collateral as agreed by the
secured creditors; or
(b) paid in full by the Secured Creditors Trust on or before
Dec. 31, 2009.
The Debtors tell the Court that Allowed Unsecured Claims are
divided into two subclasses. Holders of unsecured claims
classified under subclass A will be paid in cash, 25% of the
amount of their claims. Creditors under subclass B will be paid,
as applicable:
* either or both of its Pro Rata Share of the Annual Dividend
on or before March 31, 2008, 2009, 2010 and 2011, and
* the applicable Lump Sum Dividend as of the time any Lump Sum
Dividend will be paid.
Intercompany Claims will be waived and discharged without payment
or distribution of any kind.
Plymouth Rubber's Class A and Class B Common Stock Interests will
be subject to dilution of up to 90% on a fully diluted basis
through the issuance of New Securities on the Effective Date, and
will be paid a Nominal Cash Dividend if it is reduced to less than
a full share through a reverse stock split. Holders of Plymouth
Rubber's Class A and Class B Common Stock may elect to surrender
all those interests in exchange for the Nominal Cash Dividend.
Plan Funding
The Plan will be funded from:
-- revenues generated by the Debtors' ongoing operations;
-- the proceeds of sales of Plymouth Rubber's excess real
estate and equipment assets; and
-- the proceeds of a New Revolver loan to be obtained by the
Debtors on or after the Effective Date.
Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc.,
manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
$10 million to $50 million in assets and debts.
PLYMOUTH RUBBER: Taps Goodwin Procter as Environmental Counsel
--------------------------------------------------------------
Plymouth Rubber Company, Inc., and Brite-Line Technologies, Inc.,
ask the U.S. Bankruptcy Court for the District of Massachusetts,
Eastern Division, for permission to employ Goodwin Procter LLP as
their special environmental counsel, nunc pro tunc to Dec. 28,
2005.
The Debtors tell the Court that they urgently needed the Firm's
services to assist Plymouth in addressing an administrative
enforcement proceeding filed against it by the U.S. Environmental
Protection Agency under the Clean Air Act on Dec. 23, 2005.
Specifically, the Firm will:
(a) continue to represent Plymouth Rubber with respect to the
EPA's administrative complaint, and the resolution of the
matters raised therein;
(b) respond to the auditor's request regarding the status of
environmental matters Goodwin was handling for Plymouth
prepetition;
(c) advise and represent Plymouth in the resolution of
prepetition federal and state environmental claims in the
context of PRC's chapter 11 case; and
(d) assist Plymouth regarding other environmental matters as may
arise in the course of these environmental compliance and
liability matters on which PRC may request Goodwin's advice.
Christopher P. Davis, Esq., a partner at Goodwin Procter,
disclosed that he will bill $495 per hour for his services.
Associates assisting in these matters will charge between $295 to
$420 per hour.
Mr. Davis disclosed that the Firm has worked but has not billed
approximately 7.5 hours, at $3,750 total, since Dec. 28, 2005.
To the best of the Debtors' knowledge, the Firm does not hold any
interest materially adverse to the Debtors' estates.
Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc.,
manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
$10 million to $50 million in assets and debts.
PPM AMERICA: Fitch Affirms Junk Rating on $17.8 Mil. Class C Notes
------------------------------------------------------------------
Fitch Ratings affirms seven classes of notes issued by PPM America
High Grade CBO I Ltd. These actions are the result of Fitch's
review process and are effective immediately:
-- $289,716,893 class A-1 notes at 'AAA/F1';
-- $183,487,366 class A-2A notes at 'AAA';
-- $384,744,034 class A-2B notes at 'AAA';
-- $11,505,943 class A3 accreting notes at 'AAA';
-- $11,895,933 class A3 participating notes at 'AAA';
-- $48,000,000 class B-1 notes at 'BB+';
-- $10,000,000 class B-2 notes at 'BB+';
-- $17,850,000 class C notes at 'CCC+'.
PPM High Grade I is a collateralized bond obligation managed by
PPM America which closed Dec. 19, 2000. PPM High Grade I is
supported by collateral consisting of primarily investment grade
corporate bonds with the remaining support provided by below
investment grade corporate bonds. Included in this review, Fitch
Ratings performed a full analysis of the portfolio. As a result
of this analysis, Fitch has determined that the current rating
assigned to each class of notes continues to reflect the current
risk to noteholders.
Since the last rating action on Oct. 27, 2004, overall performance
has remained relatively stable. The deal exited the reinvestment
period following the January 2005 payment date, and began failing
its overcollateralization test for the second time on the
March 1, 2005 trustee report. The OC test has continued to fail
since that time period, and was 102.91% versus a trigger of
103.25% according to the Dec. 1, 2005 trustee report. The failure
of the OC test causes pro rata distributions to be made to the
class A notes. Total distributions to date have left 96.6% of the
original balance of both the class A-1 and A-2 notes outstanding,
and 99.1% of the class A-3 initial accreted amount outstanding.
The class B-1 and B-2 notes have continued to receive scheduled
interest distributions, while the class A-3 participating notes
and the class C notes have received only minimal distributions
from the class A-1 excess interest created through their annual
remarketing.
Regarding the collateral performance, the weighted average rating
factor of the portfolio has increased to 10.1 from 8.3, but has
remained stable in the 'BBB-/BB+' rating category. The slight
deterioration in credit quality has been partially offset by the
decrease in weighted average life to 3.53 years from 4.87 years at
the last review, which has lead to lower default probabilities of
the collateral. There is currently a total of $21 million of
collateral rated 'CCC+' or below, which is haircut at 75% for OC
calculations, and there are currently no defaulted assets in the
portfolio.
The ratings of the class A-1 and A-2 notes address the likelihood
that investors will receive full and timely payments of interest,
as per the governing documents, as well as the stated balance of
principal by the legal final maturity date. The rating of the
class A-3 notes addresses the return of the accreted investment
amount by the legal final maturity. The ratings of the class B-1
and class B-2 notes address the likelihood that investors will
receive ultimate and compensating interest payments, as per the
governing documents, as well as the stated balance of principal by
the legal final maturity date. The rating of the class C notes
addresses the likelihood that investors will ultimately receive
the stated balance of principal by the legal final maturity date.
Since the close of the deal, the class C noteholders has received
distributions amounting to $3,479,788, which brings the rated
balance to $14,370,212, or 80.5% of the original balance.
Additional deal information and historical data are available on
the Fitch Ratings Web site at http://www.fitchratings.com/ For
more information on the Fitch VECTOR Model, see 'Global Rating
Criteria for Collateralized Debt Obligations,' dated
Sept. 13, 2004, available on Fitch's Web site at
http://www.fitchratings.com/
PPM HIGH: Fitch Pares Junk Rating on $55.7 Million Class A-3 Notes
------------------------------------------------------------------
Fitch Ratings downgrades two classes of notes issued by PPM High
Yield CBO I Company Ltd. These rating actions are effective
immediately:
-- $93,662,465 class A-1 notes downgraded to 'B' from 'BB';
-- $22,000,000 class A-2 accreting notes affirmed at 'AAA';
-- $55,700,000 class A-3 notes downgraded to 'C' from 'CC';
-- $73,100,000 class B notes remain at 'C'.
PPM High Yield CBO I is a collateralized bond obligation managed
by PPM America. PPM High Yield CBO I closed on March 2, 1999.
The notes are supported by a portfolio primarily consisting of
high-yield corporate bonds.
These rating actions are due to the decline in credit enhancement
available to support the liabilities. This decline stems from two
primary factors:
* exposure to Calpine unsecured debt and
* continued diversion of principal proceeds to pay current
interest primarily to the class A-3 and class B
noteholders.
PPM America sold most of its initial $14.5 million Calpine
exposure in late 2004 and throughout 2005. As of the
Dec. 16, 2005 trustee report, $3.25 million remained in the
portfolio. This excludes the $3.25 million position, which was
sold on Dec. 6, 2005 for a price of 27.5%.
In addition, since the last rating action on Feb. 23, 2005,
approximately $9.2 million of principal proceeds were applied to
pay interest to the notes. Fitch expects this trend to continue
for the foreseeable future resulting in the class A-1 notes being
undercollateralized in approximately two to three payment periods.
However, there are two possible scenarios, which could benefit the
class A-1 noteholders. First, if the interest default test were
activated, interest payments to the class A-3 and B notes would be
used to redeem the class A-1 notes. The test would require that
either the cumulative default level reach 54% or the current
default percentage reach 8% in any given payment period. As the
collateral portfolio becomes more concentrated, there is a chance
that the current portion of the interest default test will be
triggered thus halting the leakage of principal to pay interest.
The second and more remote is the possibility of an interest
shortfall to the class A-1 notes, which would trigger an event of
default allowing the controlling class to accelerate the life of
the transaction.
The class A-3 and B noteholders will receive interest payments as
long as sufficient principal proceeds are available; however, the
class A-3 and B noteholders will likely suffer a total loss of
principal.
The class A-2 accreting notes were defeased with a U.S. treasury
instrument maturing on May 15, 2011. The 'AAA' rating on the class
A-2 notes reflects the treasury strip rating collateralizing the
notes.
Additional deal information and historical data are available on
the Fitch Ratings Web site at http://www.fitchratings.com/
PROVIDENT PACIFIC: Court Converts Case to Chapter 7 Liquidation
---------------------------------------------------------------
The Honorable Alan Jaroslovsky of the U.S. Bankruptcy Court for
the Northern District of California converted the chapter 11 case
of Provident Pacific Corporation into a liquidation proceeding
under chapter 7 of the Bankruptcy Code.
Evan D. Smiley, Esq., at Weiland, Golden, Smiley, Wang Ekvall &
Strok, LLP, attorneys for MKA Capital Group, Inc., told the Court
that the Debtor is not operating, has no employees, and has no
assets. Mr. Smiley added that the Debtor has failed to perform
any of its duties under a settlement agreement with MKA Capital.
Pursuant to the settlement, MKA Capital deposited $50,000 with
Michael H. Lewis, the Debtor's attorney. However, the Debtor has
not signed the settlement agreement. Furthermore, the Debtor has
failed to meet its obligation to file a rejection motion and to
refund all of the deposits to the purchasers.
Mr. Smiley said that the Debtor is unlikely to reorganize and made
no progress toward the consummation of the settlement.
Headquartered in Belvedere, California, Provident Pacific
Corporation, filed for chapter 11 protection on June 8, 2005
(Bankr. N.D. Calif. Case No. 05-11435). Michael H. Lewis, Esq.,
at Law Offices of Michael H. Lewis, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $39,545,023 and total
liabilities of $28,495,982.
QUEBECOR MEDIA: Moody's Puts B2 Rating on New $525 Million Notes
----------------------------------------------------------------
Moody's Investors Service affirmed the Corporate Family Rating of
Quebecor Media Inc. ("QMI"), all ratings at Videotron Ltee and Sun
Media Corporation, assigned a B2 Senior Unsecured rating to QMI's
new US$525 million Note issue, and upgraded QMI's existing Senior
Secured rating to B1 from B2. The outlook for all ratings remains
stable.
The QMI Senior Unsecured and Senior Secured ratings have been
raised one notch because the amount of prior-ranking consolidated
debt which ranks ahead of each of these QMI debt classes has been
reduced from Moody's original expectations. Moody's will withdraw
the rating on the existing 11-1/8% and 13-3/4% QMI Senior
Unsecured Note issues, totaling approximately C$1,180 million
(equivalent), once they are repaid as part of the company's
refinancing.
The Ba3 Corporate Family Rating of Quebecor Media Inc. reflects
Moody's expectation that increases in capital expenditures will be
offset by increasing EBITDA, primarily from double digit growth at
Videotron. Near term expenditures on new printing presses are
likely, in Moody's opinion, to create a cash drain this year, and
weaken several credit metrics for the rating category in 2007 as
well. However, when these metrics are considered in the context
of the company's strong market position in diverse and
stable/growing businesses, Moody's believes QMI is appropriately
positioned in its rating category.
The rating is supported by:
1) QMI's good market positions in the Canadian newspaper and
cable sectors, as well as by diversity of cash flows;
2) relatively stable newspaper operating results, even though
likely pressured somewhat over the next few years; and
3) strong cable growth with relatively stable margins.
The rating is constrained by:
1) increasing capital expenditures;
2) much reduced free cash flow in 2005-2006;
3) increasing debt; and
4) formidable telecom competition.
The outlook for the Corporate Family Rating is stable, as Moody's
expects that increased capital expenditures in 2005 and 2006
should produce increased cash flows beginning in 2007 from two
relatively stable businesses with good market positions. Moody's
expects that a number of QMI's credit metrics will be largely
unchanged from the levels that existed at the end of 2004, albeit
after being stressed in 2006.
Moody's expects:
* 2007 consolidated Free Cash Flow/ Debt (after Moody's
standard adjustments) to approximate 5%;
* Debt/EBITDA to reduce towards 3.5X;
* Retained Cash Flow/Debt to improve slightly into the mid-
teens; and
* (EBITDA-Capex)/Interest coverage to improve modestly to
roughly 2X.
The Corporate Family Rating might be upgraded if the cable
telephony and printing press capital expenditures, once completed,
enable QMI to generate additional cash flow and improve
sustainable credit metrics beyond current expectations. Amongst
other metrics, Moody's would expect (EBITDA- Capex)/Interest to
exceed 3X, Free Cash Flow/Debt to exceed 8%, and Retained Cash
Flow/Debt to exceed 17% (all on a sustainable basis) in order to
consider an upgrade. These improved metrics would likely reflect
relative competitive success by Videotron against its telecom
competitor, coupled with a sustainable EBITDA margin by Sun of at
least 25% based upon the improved efficiencies of the new presses.
The Corporate Family Rating might be downgraded if an aggressive
response by Videotron's telecom competitor slows Videotron's
growth into mid-single digits or reduces Videotron's EBITDA margin
into the mid-30% range, or if Sun's margin were to shrink towards
20% due to a continuing move away from newspaper readership and
market share loss in the competitive Toronto region. This would
likely result in sustainable debt/EBITDA in excess of 4.5X, free
cash flow/debt of well less than 5%, and retained cash flow of
about 12%, especially beyond 2007.
Moody's currently expects QMI's consolidated capital expenditures
to approximate Cash from Operations in 2006, but materially
improve by 2007 through a combination of reduced capital
expenditures and stronger EBITDA. Unless such improvement remains
likely to occur, the ratings could be lowered.
Ratings affected by this action are:
Quebecor Media Inc.:
* Corporate Family Rating, Ba3 (unchanged)
* Senior Secured Bank Debt, B1 (upgraded from B2)
* CDN$125 million revolver, due January 2011
* CDN$125 million Term Loan A, final maturity January 2011
* US$350 million Term Loan B, final maturity January 2013
* Senior Unsecured Notes, B2 (upgraded from B3)
-- 11.125% due July 2011 CDN$795 million equivalent (rating
to be withdrawn upon repayment expected shortly)
* Senior Unsecured Discount Notes, B2 (upgraded from B3):
-- 13.75% due July 2011 CDN$385 million equivalent (rating
to be withdrawn upon repayment expected shortly)
* Senior Unsecured Notes, B2 (assigned)
-- Proposed Notes, US$525 million due January 2016
Videotron Ltee:
* Senior Unsecured Notes, rated Ba3 (unchanged):
-- 6.875% due January 2014 C$811 million equivalent
-- 6.375% due December 2015 US$175 million
Sun Media Corporation:
* Senior Secured Revolving Bank Facility, Ba2 (unchanged):
-- Due 2008 C$75 million (C$ Nil outstanding)
* Senior Secured Term Loan B, Ba2 (unchanged):
-- Due 2009 US$200 million
* Senior Secured Term Loan C, Ba2 (unchanged):
-- Due 2009, C$40 million
* Senior Unsecured Notes, Ba3 (unchanged):
-- 7.625% due Feb 2013 C$248 million equivalent
Quebecor Media Inc. owns all of Sun Media Corporation, the second-
largest newspaper chain in Canada, and all of Videotron Ltee, the
third-largest cable operator in Canada and the largest in the
Province of Quebec. All of the companies are headquartered in
Montreal, Quebec, Canada.
R.H. DONNELLEY: Moody's Rates Proposed $2 Billion Notes at Caa1
---------------------------------------------------------------
Moody's Investors Service affirmed R.H. Donnelley Corporation's B1
Corporate Family rating and assigned a Caa1 rating to its proposed
$2.142 billion senior unsecured notes. The rating action follows
the company's announcement that it has revised the structure of
the debt that it plans to issue in connection with its proposed
acquisition of Dex Media Inc.
Moody's took these rating actions:
Ratings Assigned:
R.H. Donnelley Corporation:
* Proposed $332 million (in gross proceeds) 6.875% series A-1
senior discount notes, due 2013-- Caa1
R.H. Donnelley Finance Corporation III:
* Proposed $600 million (in gross proceeds) 6.875% series A-2
senior discount notes, due 2013 -- Caa1
* Proposed $1,210 million Series A-3 senior unsecured notes,
due 2016 -- Caa1
Ratings Withdrawn:
R.H. Donnelley Corporation:
* Proposed $1,842 million senior unsecured notes -- Caa1
Dex Media, Inc.:
* Proposed $250 million 7% add-on senior unsecured notes
-- B3
Ratings Affirmed:
R.H. Donnelley Corporation:
* Corporate Family rating -- B1
* $300 million 6.875% senior unsecured notes, due 2013
-- Caa1
R.H. Donnelley Inc.:
* $175 million senior secured revolving credit facility,
due 2009 -- Ba3
* Proposed $350 million add-on senior secured term loan D-1,
due 2011 -- Ba3
* $544 million senior secured term loan A, due 2009 -- Ba3
* $1,433 million senior secured term loan D, due 2011 -- Ba3
* $325 million 8.875% senior notes, due 2010 -- Ba3 (will be
withdrawn at closing)
* $600 million 10.875% senior subordinated notes, due 2012
-- B2
Dex Media Inc.:
* Corporate Family rating -- Ba3 (will be withdrawn at
closing)
* $570 million 9% senior discount notes, due 2013 -- B3
* $500 million 8% senior unsecured notes, due 2013 -- B3
Dex Media East LLC:
* $100 million senior secured revolving credit facility,
due 2008 -- Ba2
* $364 million senior secured term loan A, due 2008 -- Ba2
* $452 million senior secured term loan B, due 2009 -- Ba2
* $450 million 9.875% senior unsecured notes, due 2009 -- Ba3
* $341 million senior subordinated notes, due 2012 -- B1
Dex Media West LLC:
* $453 million add-on senior secured term loan B-1 (reduced
from $503 million), due 2010 -- Ba2
* $100 million senior secured revolving credit facility,
due 2009 -- Ba2
* $392 million senior secured term loan A, due 2009 -- Ba2
* $917 million senior secured term loan B, due 2010 -- Ba2
* $385 million senior unsecured notes, due 2010 -- B1
* $300 million senior unsecured notes, due 2011-- B1 (will be
withdrawn at closing)
* $762 million 9.875% senior subordinated notes, due 2013
-- B2
R.H. Donnelley Corporation's speculative grade liquidity rating is
affirmed at SGL-1. However, Moody's expects to withdraw this
rating at closing and assign a new speculative grade liquidity
rating to the surviving entity.
The rating outlook is stable.
The most significant changes to the previously announced structure
are:
1) R.H. Donnelley Corp. will issue an additional $300 million
(in gross proceeds) senior notes through its wholly owned
subsidiary, R.H. Donnelley Finance Corporation III;
2) Dex Media West LLC will reduce its proposed add-on term loan
B-1 by $50 million; and
3) Dex Media Inc. will no longer issue $250 million in add-on
senior unsecured notes.
The proposed discount notes have not yet been priced; however,
Moody's expects that the face value of the discount notes will not
exceed $150 million over the gross proceeds amount. This will
result in only a modest increase in R.H. Donnelley Corporation's
pro-forma consolidated debt and leverage compared to the previous
proposal. In addition, the revised financing will result in a
modest increase in the pro-forma stand-alone debt (and leverage)
of R.H. Donnelley Corporation as well as a decrease in the pro-
forma debt of Dex Media Inc. compared to the previously announced
financing structure. In Moody's opinion, these changes are
insufficient to warrant a change of these issuers' ratings.
The gross proceeds of R.H. Donnelley Finance Corporation III notes
will be held in escrow until the closing of the Dex Media Inc.
acquisition, at which time R.H. Donnelley Finance Corporation III
will be merged into its parent, and its notes will become
obligations of R.H. Donnelley Corporation. In the event that the
proposed acquisition is not concluded, the notes will be redeemed
from the proceeds of the escrow account. R.H. Donnelley
Corporation will pay the redemption price to the extent that the
proceeds from the escrow account are insufficient.
Headquartered in Cary, North Carolina, R.H. Donnelley Corporation
reported LTM revenues of approximately $2.7 billion at the end of
Sept. 2005, pro-forma for the proposed acquisition of Dex Media
Inc.
REFCO INC: RCM Account Holder Proceedings Stayed Until Jan. 31
--------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Nov. 15, 2005, Anthony W. Clark, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Wilmington, Delaware, reports,
approximately 45 holders of accounts with Refco Capital Markets,
Ltd., have raised, in adversary proceedings, motions and
objections filed with the U.S. Bankruptcy Court for the Southern
District of New York, and in correspondence with the Debtors, a
common and overarching issue -- whether certain securities and
other property held by RCM are property of the bankruptcy estate
or in some way belong, in whole or in part, to the account
holders.
Refco Inc., and its debtor-affiliates seek the Court's authority
to pursue determination of the Estate Property Issue through the
defendant class action adversary proceeding procedure. The
Debtors also ask the Honorable Robert D. Drain of the Southern
District of New York Bankruptcy Court to stay all pending and
future individual RCM account holder proceedings, which raise the
Estate Property Issue until the class action has been concluded.
* * *
At the Debtors' request, Judge Drain continues the stay of
proceedings through and including January 31, 2006.
The Court directs the Debtors to use their best efforts to
produce documents to, and make witnesses available for deposition
by, parties-in-interest. The persons identified in the Debtors'
Notice of Designation of Witnesses filed on December 5, 2005,
will be made available for deposition from January 5, 2006,
through and including January 16, 2006, on specified topics.
The protocol for questioning witnesses at the depositions will
be:
* by the Official Committee of Unsecured Creditors;
* by counsel selected by the customer group that requested
conversion of Refco Capital Markets, Ltd.'s Chapter 11 case
to a stockbroker liquidation;
* by counsel selected by parties-in-interest who oppose
the Conversion Motion;
* by counsel for any other party-in-interest who desires to
examine the witness; and
* by the Debtors' counsel.
All parties, including the Debtors, the Customer Group and the
Official Committee of Unsecured Creditors, may seek discovery
from additional parties and will confer with those parties to
agree upon a schedule to conduct that discovery.
The Court also directs the Debtors to post on their Web site a
statement concerning whether margin loans to RCM Clients were
netted against the cash positions reflected in the account
statements sent by the Debtors to each of RCM's clients in
accordance with the Initial Order.
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
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REFCO INC: Wants Court to Approve Key Employee Retention Program
----------------------------------------------------------------
Refco Inc., and its debtor-affiliates' ability to preserve the
value for their estates is dependent on the continued employment
and dedication of certain employees who possess the knowledge,
experience and skills necessary to support the Debtors' remaining
operations and wind-down the Debtors' estates, Sally McDonald
Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New
York, tells the U.S. Bankruptcy Court for the Southern District of
New York.
In this regard, the Debtors propose a key employee compensation
program to provide financial incentive for certain of their
employees and to provide security against unanticipated
termination of employment.
The Key Employee Compensation Program will cover:
-- 11 employees of Refco Capital Markets, Ltd.;
-- six employees of Refco F/X Associates LLC; and
-- 15 additional employees whose work benefits both Debtor and
non-Debtor entities, like human resources, information
technology and accounting.
The cost of the Key Employee Compensation Program for the 15
additional employees will be allocated equally among Refco
Securities LLC, a non-debtor, and Debtors RCM, RFX and Refco LLC,
a Chapter 7 debtor, Ms. Henry notes.
The KECP divides Key Employees into two tiers:
(i) The first tier includes those employees who have the
knowledge and expertise necessary to lead the wind-down of
the Debtors' estates and maximize the value of the
Debtors' estates.
(ii) The second tier includes employees who will support the
efforts to wind-down the Debtors' business and maximize
value for the Debtors' estates and who have the
institutional knowledge and experience to assist in these
efforts.
Ms. Henry clarifies that none of the Key Employees hold officer
or director positions with the Debtors.
Under the KECP, Key Employees are eligible for:
(i) a year-end bonus, consistent with the Debtors' historical
policy of paying year end bonuses, but which will be paid
in two installments after January 1, 2006; and
(ii) a performance bonus based on the successful and timely
sale and wind-down of the Debtors' businesses.
In addition, Key Employees will remain eligible for severance
benefits consistent with the Debtors' severance policy, which
provided for two weeks' salary per year of service, capped at six
months' salary.
Key Employee Compensation Program
Program
Component Description
--------- -----------
Year End Each covered employee will receive a year-end
Bonus bonus payment:
* Tier one: four months base salary
* Tier two: two months base salary
The year-end bonus will be paid as:
* 50% payable on January 15, 2006, if the
covered employee does not resign before
January 1, 2006; and
* 50% payable on the earlier of April 15,
2006 or with 15 days of the covered
employee's separation date.
Eligibility to receive year-end bonus payment:
* To receive the full year end bonus, the
covered employee must be employed on
December 31, 2005, and the earlier of
March 31, 2006, or the date on which the
employee's services are no longer needed.
Performance Each covered employee will receive a performance
Bonus bonus payment:
* Tier one: one month base salary for each
month worked from December 1,
2005, through March 31, 2006.
* Tier two: one-half month base salary for
each month worked from December 1,
2005, through March 31, 2006.
The performance bonus will be paid on April 15,
2006, or within 15 days of the date the
employee's services are no longer needed. The
performance bonus will accrue monthly and will
be placed into escrow pending payment.
Eligibility to receive performance bonus
payment:
* Employee must be employed through and
including the earlier of March 31, 2006, or
the date the employee's services are no
longer needed.
* If a covered employee's services are no
longer needed and the covered employee
terminates employment prior to the end of a
month, then the Debtors will make a pro-rata
bonus payment to the employee.
The total estimated cost is $1,400,000 for 32 employees.
Ms. Henry emphasizes that any Key Employee who voluntarily leaves
the Debtors' employment before the target dates will forfeit his
right to future payment under the KECP. Any amounts that would
have otherwise been payable to a Key Employee under the KECP, but
are not paid due to the Key Employee's voluntary resignation,
will be returned to the Debtors' estates and available for
distribution to the Debtors' creditors.
The Debtors believe that the costs associated with the adoption
of the KECP are more than justified by the benefits that are
expected to be realized by encouraging the Key Employees to
continue working for them and implementing their wind down
efforts.
Accordingly, the Debtors seek the Court's authority to implement
their Key Employee Compensation Program.
Ms. Henry contends that because the Debtors are winding down
their remaining affairs, it is extremely difficult for them to
attract employees at this time. Hence, the Debtors' ability to
preserve their assets would be substantially hindered if they are
unable to retain the services of the Key Employees who retain the
institutional experience essential to efficiently and effectively
assist the Debtors through the wind-down of their businesses.
The KECP will provide the Key Employees with a greater sense of
financial security thus minimizing the need to seek other
employment, which would otherwise distract the Key Employees from
the necessary tasks they need to perform for the Debtors, Ms.
Henry maintains.
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
Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REMOTEMDX INC: Hansen Barnett Raises Going Concern Doubt
--------------------------------------------------------
Hansen, Barnett & Maxwell expressed substantial doubt about
RemoteMDx, Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended Sept. 30, 2005. The auditing firm pointed to the Company's
recurring operating losses and working capital deficit at
Sept. 30, 2005.
Fiscal Year 2005 Results
In fiscal year 2005, RemoteMDx incurred a $10,983,689 net loss and
negative cash flows from operating activities of $3,839,236,
versus a $6,406,711 net loss and negative cash flow of $2,035,052
for the year ended Sept. 30, 2004. Management attributes the
higher loss in fiscal year 2005 primarily to expenses associated
with the development of the TrackerPAL device for parolees.
The Company reported $861,868 of net sales during fiscal year
2005, compared to $1,117,520 of net sales in the prior year. The
$255,652 decrease in sales is attributed to the Company's shift
from selling the MobilePAL to developing the TrackerPAL.
At Sept. 30, 2005, RemoteMDx's balance sheet showed $1,196,444 in
total assets and liabilities of $6,419,888. In addition, the
Company had a working capital deficit of $5,217,466 as of
Sept. 30, 2005, compared to a working capital deficit of
$2,269,202 a year earlier. The increase in working capital
deficit is the result of losses from operations and use of cash in
addition to increased borrowings.
Note Payable Defaults
Notes payable at Sept. 30, 2005, consisted of:
-- $95,830 unsecured note payable to a corporation with
interest at 5%. The note, due Dec. 20, 2005, is currently
in default.
-- $169,676 in unsecured notes payable to former SecureAlert
shareholders, with interest at 5%, payable in installments
of $80,000 per month until paid in full. These notes are
currently in default.
About RemoteMDx
Headquartered in Salt Lake City, Utah RemoteMDx, Inc. --
http://www.remotemdx.com/-- engages in the marketing and sale of
wireless location technologies and the related monitoring
services, as well as in the development and sale of personal
security, supervision, and health monitoring devices and services
in the United States. Its products and monitoring services
features wireless products that utilize global positioning system
and cellular technologies in conjunction with a monitoring center.
The company's product includes MobilePAL, a mobile emergency
response device, locates persons in distress. It also develops
TrackerPAL, which would be used to monitor convicted offenders in
the criminal justice system. RemoteMDx sells its medical
diagnostic stains and equipment primarily to laboratories.
ROUGE INDUSTRIES: Exclusive Plan Filing Period Ends Today
---------------------------------------------------------
The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware extended until today, Jan. 12, 2006, the
period within which Rouge Industries, Inc., and its debtor-
affiliates have the exclusive right to file a chapter 11 plan.
The Debtors also have until March 14, 2006, to solicit acceptances
of that plan.
As reported in the Troubled Company Reporter on Oct. 24, 2005,
the Debtors asked for an extension to secure more time to resolve
pending litigation and related proceedings with Ford Motor
Company. Ford Motor asserts liens and security interests
purportedly securing debts in excess of $80 million.
The Debtors also sought an extensions to advance claims,
investigate and litigate potential claims and causes of action,
wind up their affairs and liquidate any remaining assets.
Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an
integrated producer of flat-rolled steel, filed for chapter 11
protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272).
Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz,
Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at
Morris, Nichols, Arsht & Tunnell represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $558,131,000 in total assets and
$558,131,000 in total debts. On Dec. 19, 2003, the Court approved
the sale of substantially all of the Debtors' assets to SeverStal
N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005.
ROWE COS: Performs Under $57 Mil. GE Commercial Credit Agreement
----------------------------------------------------------------
The Rowe Companies (Amex: ROW) executed a comprehensive credit
agreement with GE Commercial Finance, consisting of:
* a $50,000,000 senior secured revolving credit facility; and
* a $7,000,000 senior secured Tranche B loan.
The new financing will replace the company's existing term loan
and revolving credit facility with Bank of America and capital
lease with SunTrust Bank.
As an asset-based loan, the amount of the senior secured revolving
credit facility that can be drawn at any given time will be
determined based on eligible assets, which includes the company's
accounts receivable, inventory, real estate, fixed assets and
other assets. Based on current calculations of eligible assets,
the company's current maximum borrowing capacity as of the date of
Closing under the Credit Agreement, taking into account the
Company's drawing the entire $7 million available under the
Tranche B Loan on the closing date, was approximately
$46.9 million. The company used $33.8 million of the financing to
repay the company's term loan and revolving credit facility with
Bank of America and its capital lease with SunTrust Bank and to
pay fees associated with the transaction.
Both the interest rate on the revolving credit facility and the
interest rate on the Tranche B loan are variable, based on a
margin over, at the company's election, either LIBOR or the
greater of the prime rate or the Federal Funds rate plus 50 basis
points. In addition, after June 30, 2006, the interest rate on
the revolving credit facility will also vary based on company
financial performance.
Under the terms of the Credit Agreement, the company must, by
Feb. 10, 2006:
* complete an offering of equity capital resulting in net
proceeds of at least $9.5 million, and
* secure a commitment for at least an additional $2 million
in equity capital.
Until these additional equity requirements are satisfied, the
maximum amount of the revolving facility is limited to
$45,000,000.
If the company fails to satisfy these additional equity
requirements in the amounts and within the time frames agreed
upon, it will be, absent a waiver or amendment from the Lender in
default of the Credit Agreement and, in addition to other rights
and remedies reserved to Lender under the Credit Agreement, the
amount of eligible assets required to secure any borrowings will
be increased until the equity requirements are met. As previously
announced, the company has retained an investment bank to assist
it in raising capital.
"We are appreciative of the speed and dedication at which GE was
able to conclude this financing. We are excited to work with a
financial institution that combines speed, flexibility, strength
and the ability to execute," said Gerald M. Birnbach, Chairman and
President. "We continue to work on initiatives intended to return
our Rowe Furniture division to profitability and to continue the
growth in Storehouse."
The Rowe Companies -- http://www.therowecompanies.com/-- operates
two subsidiaries in the home furnishings industry: Rowe
Furniture, Inc., a major manufacturer of quality upholstered
furniture serving the middle and upper middle market throughout
the U.S.; and Storehouse, Inc., a multi-channel, lifestyle home
furnishings business including 69 retail home furnishings stores.
Storehouse makes good design accessible by selling an edited
assortment of casual, contemporary home furnishings through its
stores located in the Southeast, Southwest and Mid-Atlantic
markets, its catalog and over the Internet.
* * *
Default
As reported on Oct. 13, 2005, the company has been negotiating
with its lenders, namely the Bank of America, N.A. and The CIT
Group/Commercial Services, Inc., to modify the terms of the
agreement governing the company's working capital revolving credit
facility and term loan, and the agreement governing the capital
lease of the company's Elliston, Virginia manufacturing facility,
so that the company would be in compliance with certain covenants
under these agreements as of Aug. 28, 2005, and based upon
projected revenues and expenses, for the next twelve months. The
company has not been able to successfully complete these
negotiations. As a result, the company is in default under these
agreements, and the lenders have the right to accelerate the
company's obligation to repay this debt.
RUFUS INC: Wants Until Feb. 28 to Decide on Unexpired Leases
------------------------------------------------------------
Rufus, Inc., asks the U.S. Bankruptcy Court for the District of
Delaware to extend the period within which it may decide to
assume, assume and assign, or reject unexpired nonresidential real
property leases until Feb. 28, 2006, or through the effective date
of the plan.
Rufus' unexpired leases consist of six retail stores in New York,
New Jersey, Connecticut, Pennsylvania and Massachusetts. The
Debtor tells the Court that it has been occupied with:
-- stabilizing its business operations;
-- addressing creditor issues and concerns with respect to the
bankruptcy proceedings;
-- filing its schedules and statement of financial affairs;
-- completing store consolidations;
-- establishing claims' bar dates;
-- negotiating with respect to the disposition of its business
and assets; and
-- preparing and filing its plan and disclosure statement.
Given that the unexpired leases will be an integral part of its
merger with Maxie Biggz, LLC, the Debtor requires additional time
to evaluate and determine whether to assume or reject the
unexpired leases.
The Debtor assures the Court that the landlords will not be
prejudiced by the extension because it is current on its
postpetition rent obligations and intends to continue to timely
perform all its obligations under the leases.
The Court will convene a hearing on Jan. 18, 2006, to consider the
Debtor's request.
Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs,
dog food, supplies and accessories. The Debtor also operates a
chain of six retail stores in the Northeastern United States. The
Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr.
D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S.
Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP,
represent the Debtor in its bankruptcy proceeding. When the
Debtor filed for protection from its creditors, it listed
$1.8 million in total assets and $12.7 million in total debts.
SAINT VINCENTS: Court OKs Stipulation Refinancing Mortgage Notes
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the stipulation providing for the refinancing or
prepayment of Saint Vincents Catholic Medical Centers of New
York's FHA-Insured Mortgages and Mortgage Notes, redemption of the
tax-exempt bonds issued by the Dormitory Authority of the State of
New York and the New York State Medical Care Facilities Finance
Agency, and repayment of the DASNY DIP Loan.
As reported in the Troubled Company Reporter on Dec. 26, 2005,
Saint Vincent's Catholic Medical Centers of New York became
indebted to the DASNY and the MCFFA before the Petition Date for
the purposes of financing and refinancing health care facilities
owned and operated by SVCMC. The indebtedness is evidenced by
mortgage notes.
The Debtors also seek to pay certain unpaid costs that have been
or will be incurred in connection with the refinancing or
prepayment of the FHA-Insured Mortgage Notes and Mortgages and
redemption and defeasance of the Bonds, and repayment of the
DASNY DIP Loan, including:
(a) the DASNY semi-annual administrative fees for due August
2005 and February 2006 -- pro-rated for anticipated
closing by December 27, 2005;
(b) the DASNY fees payable in connection with the defeasance
of the Bonds;
(c) Bond Trustee fees;
(d) fees payable to counsel for the Bond Trustees;
(e) FHA mortgage insurance premiums due to the HUD;
(f) fees payable to the DASNY's arbitrage consultant; and
(g) postpetition fees and expenses of the DASNY's counsel.
The HUD agree to direct the trustee under the Depreciation
Reserve Trust Agreements to transfer, first, from the applicable
account of the Depreciation Reserve Fund, the amount which is
necessary, together with other amounts currently held by the
applicable Mortgage Servicer to pay HUD the amount due and owing
in FHA mortgage insurance premiums and, second, remaining amounts
on deposit in the accounts of the Depreciation Reserve Fund,
currently estimated at $38,441,326, from the accounts to the
applicable Bond Trustees as a partial prepayment of the
outstanding principal of the FHA-Insured Mortgage Notes.
SVCMC and the DASNY will direct transfer of the funds to the
applicable Bond Trustee, for the purpose of refinancing or
prepaying the applicable FHA-Insured Mortgage Notes and
Mortgages.
The Debtors will direct transfer to the applicable Bond Trustees
portion of the proceeds advanced under the GE DIP Facility to
enable (i) the FHA-Insured Mortgages and Mortgage Notes to be
refinanced or prepaid and (ii) for the DASNY to cause a
defeasance and redemption of the Bonds in accordance with the
applicable bond resolutions. The amounts must be delivered no
later than December 27, 2005.
Pursuant to the terms of the GE DIP Documents, the Debtors will
transfer to the DASNY $5,658,093 from the proceeds under the GE
DIP Facility to repay the DASNY DIP Loan.
The automatic stay is modified, to the extent necessary, to allow
the DASNY to accelerate the amounts due under the FHA-Insured
Mortgage Notes.
A full-text copy of the Stipulation is available at no charge at:
http://bankrupt.com/misc/SVCMCpactrefinancingnotes.pdf
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 18; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SAINT VINCENTS: Panel Launches Adversary Proceeding Vs. RCG
-----------------------------------------------------------
RCG Longview II, L.P., made a $10,000,000 loan to Saint Vincents
Catholic Medical Centers of New York in May 2005, which loan was
secured by a Subordinate Mortgage and Security Agreement dated
May 18, 2005. The Subordinate Mortgage was recorded on July 6 in
the Office of the City Register of the City of New York.
The $10,000,000 Subordinate Mortgage encumbered SVCMC properties
at:
(a) 555 Sixth Avenue, in New York, New York (Block 791,
Lot 36);
(b) 122-132 West 12th Street, New York, New York (Block 607,
Lot 27); and
(c) 203 West 12th Street, New York, New York (Block 617,
Lot 55).
The Loan was also secured by a Subordinate Assignment of Leases
and Rents dated May 18, 2005, which was recorded on July 6 in the
Office of the City Register.
RCG made an additional $6,000,000 loan to SVCMC in June 2005,
which loan was secured by a Third Subordinate Mortgage and
Security Agreement dated as of June 27, 2005. The Subordinate
Mortgage was recorded on August 2 in the Office of the City
Register.
The $6,000,000 Subordinate Mortgage encumbered the same SVCMC
properties encumbered by the $10,000,000 Subordinate Mortgage.
The $6,000,000 Loan was also secured by a Third Subordinate
Assignment of Leases and Rents dated as of June 27, 2005, which
Subordinate Assignment was recorded on August 2 in the Office of
the City Register.
Pursuant to a Court-approved stipulation, the Debtors acknowledged
the validity of RCG's claims and acknowledged that the Debtors
would not challenge RCG's security interests and liens. The Cash
Collateral Stipulation provides a reservation of rights period
through December 15, 2005, for the Official Committee of Unsecured
Creditors or any parties-in-interest to, among other things,
object to or challenge the validity, extent, perfection or
priority of the liens and security interests asserted by RCG and
assert claims against RCG under Chapter 5 of the Bankruptcy Code.
In this regard, the Creditors Committee argues that at the time
SVCMC filed for Chapter 11, the Transfers were not recorded and
perfected. Accordingly, the Committee asks the Court to avoid the
$10,000,000 Subordinate Mortgage, the $10,000,000 Subordinate
Assignment, the $6,000,000 Subordinate Mortgage and the $6,000,000
Subordinate Assignment.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, in New York,
tells Judge Beatty that the Transfers are voidable by a bona fide
purchaser of real property, other than fixtures, from SVCMC,
against whom applicable law permits those Transfers to be
perfected, that obtained the status of a bona fide purchaser and
perfected the Transfers on the Petition Date, whether or not a
purchaser existed.
Mr. Bunin also notes that the Transfers:
(a) were transfers of an interest of SVCMC in property;
(b) were made to or for the benefit of RCG;
(c) were made for or on account of an antecedent debt owed by
SVCMC before the Transfers were made;
(d) were made while SVCMC was insolvent;
(e) were made on or within 90 days before the Petition Date;
and
(f) enabled RCG to receive more than RCG would receive if:
(i) SVCMC's Chapter 11 case were a case under Chapter 7
of the Bankruptcy Code;
(ii) the Transfers had not been made; and
(iii) RCG received payment of its debt to the extent
provided under the provisions of the Bankruptcy
Code.
The Committee also objects to RCG's claims on the grounds that
RCG's liens are subject to avoidance and, therefore, RCG's claims
should be reclassified as unsecured claims to the extent RCG's
liens are avoided. Given that RCG's liens are subject to
avoidance, the Committee objects to RCG's claims to the extent
the claims include postpetition interest and legal fees and RCG
becomes an unsecured or undersecured creditor as a result of the
avoidance of its liens.
The Committee reserves the right to seek disgorgement of any
postpetition interest or legal fees paid to RCG.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 18; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SAINT VINCENTS: Panel Submits Stipulation Resolving DASNY Dispute
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Saint Vincents
Catholic Medical Centers of New York and its debtor-affiliates has
raised certain issues relating to the validity, enforceability,
avoidability, priority or perfection of a portion of the Dormitory
Authority of the State of New York's liens on the Debtors' real
property.
The DASNY has disputed the issues raised by the Creditors
Committee.
The December 23, 2005 Order approving the General Electric Capital
Corporation DIP Financing and the December 23 Stipulation entered
into by the Debtors and the DASNY in connection with the FHA-
issued Mortgage Notes required the Creditors Committee to serve a
Notice or a Challenge, if any, on or before 5:00 p.m. on Dec. 28,
2005.
The Creditors Committee served a Notice on counsel prior to the
expiration of the Notice Deadline.
Subsequently, the Committee and the DASNY entered into a
stipulation to avoid potentially protracted litigation with
respect to the dispute, avoid the need for the DASNY to exercise
of its rights under the Bond Documents, and enable the Debtors to
realize the benefit of the GE Capital DIP Facility in a timely
manner.
The salient terms of the Court-approved Stipulation are:
(1) The DASNY waives its $2,000,000 general unsecured claim
arising out of an unsecured prepetition loan made by the
DASNY to the Debtors pursuant to a loan agreement dated
December 19, 2003.
(2) The transfers specified in the Mortgage Notes Stipulation
to effect payment of the Associated Costs will be modified
in that the DASNY will satisfy the Associated Costs, up to
$1,107,628, by advancing the remaining unpaid tranche
under the DASNY DIP Loan Agreement and thereafter
depositing into the applicable Debt Service Funds for
disbursement by the relevant Bond Trustee. As a result,
the amount owed to the DASNY under the DASNY DIP Loan
Agreement will be $6,765,721. The DASNY will also be
responsible for the payment of any Associated Costs in
excess of the Associated Cost Cap.
(3) The transfer specified in the Mortgage Notes Stipulation
to effect repayment of amounts loaned under the DASNY DIP
Loan Agreement will be modified in that the payments will
not be made by the Debtors to the DASNY from proceeds of
the GE Capital DIP Facility to effect repayment.
(4) The DASNY DIP Loan Claim will be bifurcated and secured by
the collateral provided as security under the DASNY DIP
Loan Agreement -- but in all respects junior to the liens
of GE Capital and the Senior Permitted Lienholders granted
under the GE Capital DIP Order. The DASNY DIP Loan Claim
will be payable as:
-- $2,865,721 of the DASNY DIP Loan Claim will become an
obligation of and be payable by the Reorganized Debtors
only if:
(a) there is a reorganization of the Debtors' estates;
and
(b) the Debtors' general unsecured creditors actually
receive all of the distributions provided to them
under any Chapter 11 plan confirmed by the Court;
The DASNY will have no right to recover the portion
of the DASNY DIP Loan Claim in the event of a
liquidation of the Debtors' estates unless and
until all of the allowed claims of the Debtors'
general unsecured creditors are paid in full;
-- $3,900,000 of the DASNY DIP Loan Claim will be fully
subordinated to the claims of the Debtors' general
unsecured creditors in either a reorganization or
liquidation and will only be payable if and when all
of the allowed claims of the Debtors general unsecured
creditors are paid in full; and
-- Each portion of the DASNY DIP Loan Claim will not
accrue interest until repayment of that portion
actually commences.
(5) The DASNY will not unreasonably withhold its consent to
further subordination of the DASNY DIP Loan Claim upon
request by the Debtors, if subordination is requested to
aid the Debtors' efforts to obtain exit financing.
(6) The Notice served by the Creditors Committee will be
deemed withdrawn with prejudice and the releases and
injunctions contemplated in the GE Capital DIP Order will
become effective immediately as if no Notice or Challenge
was ever served. However, nothing in the GE Capital DIP
Order will limit the ability of the Debtors or the
Committee to challenge or object to any claims asserted by
the DASNY, other than the DASNY DIP Loan Claim and the
claims of DASNY being satisfied pursuant to the Mortgage
Notes Stipulation.
The Debtors have endorsed the terms of the Stipulation.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 18; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SMARTIRE SYSTEMS: Inks Agreement with Lenders to Restructure Debt
-----------------------------------------------------------------
SmarTire Systems Inc. (OTC Bulletin Board: SMTR) reached an
agreement with its investment bankers to restructure its debt
obligations and its equity line of credit.
In respect to SmarTire's $30 million of 10% convertible
debentures, the principal and interest installment payments
previously due in cash during the term of such convertible
debentures have been eliminated. Principal and interest are
convertible into common stock of SmarTire at the option of the
debenture holders during the term of the 10% convertible
debentures. The 10% convertible debentures must be fully
converted by the debenture holders on or prior to June 23, 2008,
subject to a provision prohibiting any debenture holder from
holding in excess of 4.99% of the outstanding shares of SmarTire's
common stock. On June 23, 2008, any unconverted amount of
principal or interest under the 10% convertible debentures must be
paid in cash by SmarTire. SmarTire intends to file with the
Securities and Exchange Commission a registration statement on
Form SB-2 to, among other things, register shares of its common
stock underlying such 10% convertible debentures.
SmarTire has also replaced its $160 million equity line of credit
with a new $100 million equity line, which has a term of five
years from the date a registration statement registering the
underlying shares of common stock is declared effective by the
SEC. SmarTire cannot draw down on the equity line of credit until
a registration statement covering the underlying shares of common
stock becomes effective. It is unlikely that SmarTire will file
such a registration statement until all of the outstanding
principal and interest under the 10% convertible debentures has
been converted by the holders of such 10% convertible debentures
or redeemed or paid in full by SmarTire.
Jeff Finkelstein, CFO of SmarTire, said, "Cash is paramount in any
microcap company, and this financial restructuring plan enables us
to preserve our cash. It provides us with the financial resources
to capitalize on market opportunities and to execute our business
plan."
SmarTire develops and markets proprietary advanced wireless
sensing and control systems worldwide, including tire pressure
monitoring systems for global vehicle markets. The U.S.
government, through the TREAD Act, has legislated that all new
passenger vehicles must be equipped with tire monitoring systems
beginning with a phased implementation in 2004. This has raised
the awareness for tire monitoring throughout the vehicle industry,
and SmarTire is capitalizing on the rapidly emerging original
equipment manufacturer and aftermarket opportunities. SmarTire
has offices in North America and Europe.
As of October 31, 2005, the Company's balance sheet showed a
$8,577,636 stockholders deficit compared to a $10,383,957 equity
at October 31, 2004.
STELCO INC: Ernst & Young Files 45th Monitor's Report
-----------------------------------------------------
Ernst & Young Inc., the Monitor appointed in Stelco Inc.'s
(TSX:STE) Court-supervised restructuring, filed its Forty-Fifth
Report of the Monitor.
Creditors' Range of Recoveries
The Report notes that the total of proven claims plus post-filing
interest obligations is estimated to be approximately
$640 million. The Report also provides an illustrative range of
recoveries for affected creditors based on the plan approved in
December 2005 and various enterprise value ranges.
Stelco's Forecasting Process
The Monitor notes that it has reviewed concerns expressed about
the Company's forecasting processes in an affidavit by Fabrice
Tayor filed by certain equity holders in December 2005. The
Monitor states its view that the forecasting processes followed by
Stelco have been thorough and comprehensive, and that the
projections have been prepared in a responsible and detailed
manner. In support of this conclusion the Report notes that the
forecasts have been prepared by senior management with input from
key departments. The Monitor adds that Stelco has regularly
updated its financial projections as business conditions have
shifted, and has kept key stakeholder groups informed of changes
to its forecasts on a regular basis.
Stelpipe asset Sale
The Report expresses the view that the Taylor affidavit
inaccurately claims that Stelco delayed closing of the sale of
Stelpipe to Lakeside Steel. The Report notes that the Monitor was
involved in the negotiation of the definitive sale agreement and
with the closing of the transaction. The Monitor notes that the
transaction closed on Oct. 31, 2005, which was the date
contemplated under the definitive agreement.
Absence of Prospective Purchasers
The Monitor confirms that during the last several months it has
not been approached by, or received any expression of interest
from, any party interested in purchasing Stelco. The Report adds
that no such overtures have been made since the terms of the
Company's restructuring plan were approved by affected creditors
in December.
Equity Holder Meeting
The Report reviews the manner in which Stelco, with the Monitor's
assistance, has received and reviewed information requests from
certain equity holders. The Report notes that Stelco and the
Monitor have met with the equity holders' financial advisors and
solicitors, have provided them with the same detailed presentation
made to other stakeholders, and responded to questions.
Claims Process
The Report provides an update in matters as the number and value
of claims received, the manner of dealing with such claims under
the Court's claims process, and the assignment of claims under
that process.
Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses.
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco and
certain related entities filed for protection under the Companies'
Creditors Arrangement Act.
The Court extended the stay period under Stelco's Court-supervised
restructuring from Dec. 12, 2005, until Jan. 31, 2006.
SWIFT & COMPANY: Earns $2 Million of Net Income in Second Quarter
-----------------------------------------------------------------
Swift & Company reported net sales of $2.33 billion for its fiscal
second quarter ended Nov. 27, 2005, down 6% from fiscal second
quarter 2005. Net sales declined in all three business segments.
Selling price improvements in Swift Australia and Swift Beef and a
volume increase in Swift Pork were more than offset by volume
declines in Swift Australia and Swift Beef and a selling price
decline in Swift Pork. Swift Australia net sales benefited from a
2.7% increase in the Australian dollar to U.S. dollar exchange
rate compared to the prior year period.
The company's second quarter EBITDA was $2 million, versus $44
million in the prior year period. EBITDA declines at Swift Beef
and Swift Australia accounted for nearly all of the year-over-year
change as Swift Pork EBITDA remained relatively flat.
Swift & Company's liquidity position remained strong despite
difficult market conditions. At the end of the fiscal second
quarter, the company's borrowing capacity under its $550 million
revolving credit facility stood at $291 million. The company
ended the second quarter with $67 million of cash on hand and $772
million of total debt outstanding.
"Challenging market conditions prevailed again this past quarter,"
said Sam Rovit, Swift & Company's president and chief executive
officer. "Swift Australia's profitability continued to suffer
because of limited local cattle supplies. Swift Beef's pricing
improvements were unable to offset continued high cattle costs and
rising energy prices. In contrast, Swift Pork's profitability
held relatively steady despite a 5% net sales decline."
Mr. Rovit continued, "The recent opening of several important
Asian markets, including Japan, Hong Kong and Thailand, is a
positive long term catalyst for the US beef industry. Over the
next several years, we hope to return to historical export sales
and volume levels. In the meantime, our solid financial liquidity
position affords us the opportunity to remain focused on executing
our strategy as we await the return of more favorable beef market
conditions both domestically and abroad."
With nearly $10 billion in annual sales, Swift & Company -
http://www.swiftbrands.com/-- is one of the world's leading fresh
beef and pork companies. Swift processes, prepares, packages,
markets and delivers fresh, further processed and value-added beef
and pork products to customers in the United States and
international markets.
TO GOD BE THE GLORY: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: To God Be The Glory Ministries
16801 Van Dam Road
South Holland, Illinois 60473
Bankruptcy Case No.: 06-00250
Type of Business: The Debtor operates a nondenominational church.
Chapter 11 Petition Date: January 11, 2006
Court: Northern District of Illinois (Chicago)
Judge: Eugene R. Wedoff
Debtor's Counsel: Joel A. Schechter, Esq.
Law Offices of Joel Schechter
53 West Jackson Boulevard, Suite 1025
Chicago, Illinois 60604
Tel: (312) 332-0267
Fax: (312) 939-4714
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
ShoreBank 16801 Van Dam $1,600,000
7054 South Jeffery Boulevard Road, South
Chicago, IL 60649 Holland, Illinois
and 182nd & Cicero
Country Club Hills,
Illinois
Cook County Collector 2004 real estate $17,000
P.O. Box 7552 taxes
Chicago, IL 60680-7552
Cook County Collector 2003 real estate $17,000
P.O. Box 7552 taxes
Chicago, IL 60680-7552
Mercedes-Benz Credit 1997 Mercedes-Benz $16,603
P.O. Box 9001921 S500
Louisville, KY 40290-1921
ThyssenKrupp Elevator Company $15,279
c/o Menges & Molzahn, LLC
20 North Clark Street, Suite 2300
Chicago, IL 60602-5002
South Suburban College $14,609
Attn: Jeanne Galloway-Spivey
15800 South State Street
South Holland, IL 60473
Dontron, Inc. $3,560
c/o Stein & Rotman
105 W. Madison, Suite 600
Chicago, IL 60602
Expanets $2,290
P.O. Box 368
Buffalo, NY 14209
Kinko's, Inc. $1,462
P.O. Box 8033
Ventura, CA 93002-8033
McLeod USA $1,113
P.O. Box 3243
Milwaukee, WI 53201
Pitney Bowes Credit Corporation $1,056
P.O. Box 856460
Louisville, KY 40285-6460
Illinois Department of Revenue Payroll tax Unknown
Bankruptcy Division, Level 7-400 liabilities
100 West Randolph Street
Chicago, IL 60601
TOWER AUTOMOTIVE: Retirees' Panel Asks for Sec. 1103(C) Discovery
-----------------------------------------------------------------
The Official Committee of Retired Employees of Tower Automotive
Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for
the Southern District of New York to direct the Debtors to
immediately produce documents and other information pursuant to
Section 1103(c) of the Bankruptcy Code and Rule 2004 of the
Federal Rules of Bankruptcy Procedure.
Debtors' Scheduling Request
Steven C. Bennett, Esq., at Jones Day, in New York, relates that
on December 6, 2005, the Debtors filed a request seeking to
establish a schedule to modify retiree benefits under Section
1114(g) of the Bankruptcy Code to set an extremely strict
timetable for briefing and hearings on the Debtors' proposed
modification to the benefits to be provided to their retirees.
The Debtors also requested that a hearing on the Section 1114
request that they plan to file take place on February 1, 2006.
However, the Debtors waited until the evening of January 4, 2006,
the night before the Initial Hearing, to file their Section 1114
request, Mr. Bennett notes.
Data Requests
Mr. Bennett relates that since its formation, the Retirees
Committee has worked expeditiously to gain access to relevant
information as is necessary to evaluate the Debtors' proposal to
modify retiree benefits, as required under Section 1114. At the
outset, the Debtors, Mr. Bennett continues, promised to conduct
an intensive information sharing process with the Retirees
Committee.
Relying on this representation, and to put itself in the best
possible position to evaluate the Debtors' proposal to modify
retiree benefits, the Retirees Committee formulated and submitted
four information requests in accordance with the procedures
established by the Debtors.
According to Mr. Bennett, the Data Requests, in general terms,
address the major issues associated with the Debtors' prospective
Section 1114 request:
(1) Whether the modifications of retiree benefits proposed by
the Debtors are necessary to permit their reorganization;
(2) Whether the modifications proposed by the Debtors treat
the retirees "fairly and equitably";
(3) Whether the Debtors have explored, in "good faith,"
alternatives to their proposed benefit plan modifications;
and
(4) Whether the "balance of the equities" clearly favors the
Debtors' proposal.
Despite the Retiree Committee's efforts to date, the Debtors, Mr.
Bennett notes, have failed to provide much of the information
most essential to the evaluation of the Debtors' proposal. Thus,
the Retirees Committee and its advisors have been hampered in
their efforts to formulate additional counterproposals due to the
lack of information from the Debtors, rendering the negotiation
process stymied.
A detailed examination of the documents and information sought in
the Data Requests, including the Debtors' financial models,
restructuring plans and analysis of potential cost savings with
respect to alternative methods of administering the retiree
benefit plans, is essential to the Retiree Committee's ability to
evaluate and negotiate with the Debtors regarding the Debtors'
proposal to modify retiree benefits, Mr. Bennett asserts.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer,
including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda,
Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products
include body structures and assemblies, lower vehicle frames and
structures, chassis modules and systems, and suspension
components. The Company and 25 of its debtor-affiliates filed
voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y.
Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq.,
Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq.,
and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$787,948,000 in total assets and $1,306,949,000 in total
debts. (Tower Automotive Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
TOWER: Judge Adlai Wants Dist. Court to Issue Favorable Judgment
----------------------------------------------------------------
As previously reported, 11 purported class action lawsuits
have been filed against Tower Automotive Inc. and its
debtor-affiliates' current and former officers, directors and
employees since the Debtors' bankruptcy filing. The Class Action
Lawsuits sought hundreds of millions of dollars in potential
damages for a variety of alleged violations of the Securities and
Exchange Act of 1934 and the Employee Retirement Income Security
Act.
Federal Insurance Company, the Debtors' insurance carrier, has
acknowledged coverage of the Securities Class Actions. Because
the ERISA Class Actions allege ERISA violations, the Debtors
promptly notified Federal and sought access to the insurance
policy to cover defense costs related to the Class Action
Lawsuits.
The Adversary Proceeding is a non-core proceeding. Pursuant to
28 U.S.C. 157 Section (c)(1), Judge Gropper issued an order
proposing findings and recommendations to the U.S. District Court
for Southern District of New York:
* granting the Debtors' request for summary judgment
declaring that Federal Insurance Company is obligated to
provide a defense to the ERISA Actions at least to the date
of a determination as to whether the exclusion applies;
* denying Federal's request to dismiss the complaint; and
* granting, in part, Federal's request for reconsideration of
the Bankruptcy Court's decision.
For the reasons stated in his Memorandum of Opinion dated
September 19, 2005, Judge Gropper proposes that the New York
District Court grant summary judgment in favor of the Debtors on
the issue of the applicability of the "Securities-Based Claims
Exclusion" to Federal's obligation to pay the defense costs of
any Insured Persons who are named as individual defendants in the
six ERISA actions.
The six ERISA Actions pending before the New York District Court
are:
(1) Kowalewski, et al. v. The Administrative Committee of
the Tower Automotive Retirement Plan, et al., Case No. 05-
CV-2215, filed on February 17, 2005;
(2) Hill v. S.A. Johnson, et al., Case No. 05-CV-2184, filed
on February 17, 2005;
(3) McMillion, et al. v. S.A. Johnson, et al., Case No. 05-CV-
2762, filed on May 10, 2005;
(4) Vanderhoof, et al. v. S.A. Johnson, et al., Case No. 05-
CV-3637, filed on April 8, 2005;
(5) Argove, et al., v. S.A. Johnson et al., Case No. 05-CV-
3641, filed on April 8, 2005; and
(6) Gryzelak, et al., v. S.A. Johnson, et al., Case No. 05-CV-
3496, filed on April 8, 2005,
The six Actions have been consolidated under the caption "In re
Tower Automotive ERISA Litigation," 05-CV-2184 (RWS).
As previously reported, Judge Gropper ruled that because both the
Debtors and Federal have set forth possible constructions of the
Securities-Based Claims Exclusion, on the record before the
Court, Federal's motion to dismiss -- which is based on the
premise that the contract is clear as a matter of law and can
only be read in its favor -- must be denied.
In addition, Judge Gropper held that Federal's request for
reconsideration is granted only to the extent of deleting all
reference to the doctrine of reasonable expectations as
referenced in the September 19 Memorandum of Opinion.
The Bankruptcy Court has submitted its prior rulings to the
District Court as proposed findings of fact and conclusions of
law.
The proposed Order is limited to Federal's obligation to
reimburse and pay defense costs. Nothing will prejudice any
policy defense Federal may assert with respect to its ultimate
obligation, if any, to indemnify the Debtors or any of their
former or current directors and officers for any adverse judgment
or settlement in the ERISA Actions, Judge Gropper says.
Federal Objects to Recommendations
Federal Insurance Company ask the District Court to reject the
Bankruptcy Court's Proposed Findings of Fact and Conclusions of
Law, and to deny the Debtors' request for summary judgment.
Federal asserts that the District Court should not adopt the
Bankruptcy Court's recommendations and rulings because they are
inconsistent with the plain language of the Policy and contrary
to Michigan Law.
Ira Greene, Esq., at Hogan & Hartson LLP, in New York, says the
Securities-Based Claims Exclusion clearly and unambiguously
excludes coverage for the ERISA Actions. The ERISA Actions are,
therefore, barred from coverage based on the terms of the
Securities Based Claims Exclusion.
Mr. Greene contends that it was expressly conceded by Tower in
the Bankruptcy Court that the Securities Actions were "other
civil proceedings" seeking relief for purchasers of Tower stock
who were not Plan participants or beneficiaries.
Mr. Greene argues that the Bankruptcy Court's Opinion setting
forth its recommendation is wrong for three reasons:
(1) Tower's alternate construction of the Securities-Based
Claim Exclusion was not reasonable but instead was a
patently unreasonable construction of the Exclusion, which
attempted to limit its scope by adding additional language
not present in the Exclusion;
(2) The Bankruptcy Court erred in giving weight to Tower's
concern regarding the purported "absurd result" that would
occur if the language of the Exclusion were applied; and
(3) The Bankruptcy Court erred in concluding that because each
party had advanced "possible constructions" of the Policy,
additional extrinsic evidence was necessary to discern the
parties' actual intent.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer,
including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda,
Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products
include body structures and assemblies, lower vehicle frames and
structures, chassis modules and systems, and suspension
components. The Company and 25 of its debtor-affiliates filed
voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y.
Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq.,
Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq.,
and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$787,948,000 in total assets and $1,306,949,000 in total
debts. (Tower Automotive Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
TOWER AUTOMOTIVE: Appoints Craig Corrington as VP for Operations
----------------------------------------------------------------
Tower Automotive, Inc., reported that Craig Corrington has joined
the company as vice president of operations for North America. He
will report to Bill Pumphrey, president, North America.
Mr. Corrington, who recently retired from DaimlerChrysler
Corporation, will develop and implement manufacturing strategies
to enhance Tower's North American product portfolio. He also
will improve manufacturing processes and help execute the
company's restructuring plans in North America.
"As a key industry leader, Craig brings a wealth of knowledge and
expertise to support and lead Tower's turnaround plans," said Mr.
Pumphrey. "He is a results-driven executive with the ability to
integrate key manufacturing principles with strategic business
planning. His leadership will be key in Tower's ongoing
commitment to produce high-quality, cost-competitive metal
structures and assemblies."
Craig Corrington has 32 years of experience in automotive
manufacturing with DaimlerChrysler. He was most recently vice
president in charge of assembly and stamping operations and
advanced stamping engineering. In that role he incorporated lean
manufacturing principles into future product and process
planning, which significantly reduced capital expenditures.
Prior to assuming that position he was vice president of the
Jeep/Truck Assembly Division and Stamping and Component
Operations.
He also served as vice president in charge of stamping and
components operations and vice president of stamping and general
manager of lean manufacturing. During his career at
DaimlerChrysler he held several other leadership positions
including plant manager of DaimlerChrysler's Sterling Stamping
and Warren Stamping plants.
Mr. Corrington earned a bachelor's degree in sociology from the
University of Kentucky and a master's degree in business
administration from Central Michigan University. He also
attended the Executive Development Program at Harvard University.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer,
including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda,
Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products
include body structures and assemblies, lower vehicle frames and
structures, chassis modules and systems, and suspension
components. The Company and 25 of its debtor-affiliates filed
voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y.
Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq.,
Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq.,
and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$787,948,000 in total assets and $1,306,949,000 in total
debts. (Tower Automotive Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
UAL CORP: Flight Attendants Object to Executive Compensation
------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
scheduled a confirmation hearing on United Airlines' Plan on
Jan. 18, 2006.
As United Airlines seeks approval of its Plan, many key creditors
are objecting to portions of the Plan. The Association of Flight
Attendants-CWA has filed an objection to United's Plan due to:
* additional bonus program,
* the Management Equity Incentive Plan and
* management's attempt to include a reservation of rights to
reject the Flight Attendant Collective Bargaining Agreement
after exit from bankruptcy.
"In Medieval times, people guilty of this kind of greed would have
been boiled in oil. Our more civilized society has substituted
legal remedies where torture was once called for," said Greg
Davidowitch, president of the AFA United Master Executive Council.
"Now matters like this are left up to the court, not to the mob.
The masses, however, still expect justice -- shared pain, shared
sacrifice and shared success."
Rather than generating unity and momentum for a new United
Airlines, management has engendered an "us versus them" mentality.
In the beginning of the bankruptcy, executives promised to
"equitably share the pain of United's restructuring."
Unfortunately, the record reflects an entirely different reality.
Employees have been forced to sacrifice annually over $4 billion
in pay, pensions, work rules and healthcare while executives have
richly rewarded themselves. With total disregard for the welfare
of others or the success of the airline, management will have
further widened the gap between a select group of managers and the
thousands of employees who have made United Airlines a success.
United explains in its Disclosure Statement that the purpose of
the MEIP is "to provide the Reorganized Debtors' management with
incentives to maximize future stockholder value [and to] align
their interests with the interests of stockholders." Then,
incredibly, they also state that "awards under the [MEIP] ... will
not be based on performance conditions." The bonuses would be
rewarded to 400 members of management for not giving up their
employment during the bankruptcy -- something they had already
been handsomely rewarded for through millions of dollars in Key
Employee Retention Program bonuses.
"Clearly, this bonus scheme does not reflect either sound business
judgment or good faith, much less respect for the enormous
sacrifices Flight Attendants and other employees have made to keep
United flying." Mr. Davidowitch stated. "If there is so much
equity available to enrich current management, that equity
rightfully belongs to those who have sacrificed to ensure United
Airlines' survival. Current management's profiteering comes
predictably at the expense of the dedicated workers who strive
daily to ensure our airline's viability and success."
Current management's attempt to retain the right to reject the
Flight Attendant Collective Bargaining Agreement after exit from
bankruptcy is both without precedent or merit. United cites as
one of the main reasons for this right the uncertain outcome of
the restoration of the Flight Attendant Defined Benefit Pension
Plan. The law does not provide for utilizing the bankruptcy code
to reject a Union Contract outside of bankruptcy. It would appear
that management is willing to stop at nothing from attempting to
prevent Flight Attendants from having the retirement security they
deserve.
A full text copy of AFA-CWA's objection to United Air's First
Amended Joint PLan of Reorganization is available for free at:
http://ResearchArchives.com/t/s?441
About the AFA-CWA
The Association of Flight Attendants-CWA -
http://www.unitedafa.org/-- has more than 46,000 Flight
Attendants, including the 18,000 Flight Attendants at United,
joined together to form AFA, the world's largest Flight Attendant
union. AFA is part of the 700,000 member strong Communications
Workers of America, AFL-CIO.
About UAL Corporation
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UAL CORP: Parties Appeal Order Reducing ACA's $1.2 Billion Claim
----------------------------------------------------------------
As previously reported in the Troubled Company Reporter, the
Official Committee of Unsecured Creditors appointed in UAL
Corporation and its debtor-affiliates' chapter 11 proceedings
objected to Claim No. 43738 filed by Atlantic Coast Airlines, now
known as Independence Air, Inc., for $1,278,478,579.
Prior to the Petition Date, ACA flew certain United Express routes
for the Debtors pursuant to the United Express Agreement. On
July 28, 2003, ACA disclosed the formation of Independence Air,
which would use the same gates and aircraft that ACA was using
under the UAX Agreements. After it separated from the UAX
program, ACA reported staggering losses, depressing its market
capitalization to less than 10% of that in June 2003, right before
separating from the Debtors. Subsequently, ACA filed its claim
against the Debtors for alleged lost profits due to the rejection
of the UAX Agreement.
The Debtors supported the Committee's objection pointing out that
ACA provides no information on how it arrived at its claim amount.
ACA should have recouped most of its losses related to rejection,
through use of its assets -- regional jet aircraft -- to generate
profit elsewhere. To recover money, ACA must prove that it would
still have lost profits even after making reasonable mitigation
choices, Marc R. Carmel, Esq., at Kirkland & Ellis, in Chicago,
Illinois, says.
ACA Responds
Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher, in
Dallas, Texas, says the Debtors would not assume the prepetition
UAX Agreements, but wanted to continue the relationship with ACA
if the terms were more favorable to the Debtors. When the parties
were unable to reach consensual terms, the Debtors indicated their
intention to reject the UAX Agreements and the parties negotiated
a Transition Agreement.
Mr. Rosenthal explains that the Transition Agreement preserved
ACA's rights to file claims against the Debtors for rejection
damages.
ACA disclosed that it was ready to perform under the UAX
Agreements through 2010. However, the Debtors refused to assume
the UAX Agreements. The Debtors proclaimed the UAX Agreements
above market and slated for rejection. As a result, the only
question in ACA's mind was "when," and not "whether," the Debtors
would reject the UAX Agreements.
The damages need not be mitigated because ACA pursued its best
option: the establishment of Independence Air. Mr. Rosenthal
acknowledges that the Debtors' offered ACA a choice, but since
projected losses were greater under that proposal, ACA can pursue
the full amount of rejection damages against the Debtors.
* * *
Court Reduces Claim
Judge Wedoff reduced Claim No. 43738 filed by Atlantic Coast
Airlines, now known as Independence Air, Inc., to $500,000.
Judge Wedoff notes that the Debtors, the Official Committee of
Unsecured Creditors and ACA performed calculations of ACA's claim
and had different results.
Parties to Appeal Court Order
The Debtors, the Official Committee of Unsecured Creditors and
FLYi, Inc., filed separate notices of appeal, advising the
U.S. Bankruptcy Court for the Northern District of Illinois that
they will pursue an appeal of Judge Wedoff's order reducing the
Atlantic Coast Airlines claim to $500,000 to the U.S. District
Court for the Northern District of Illinois.
FLYi counsel Brendan Linehan Shannon, Esq., at Young Conaway
Stargatt & Taylor, LLP, in Wilmington, Delaware, said based on
the current trading value of general unsecured claims in the
United Chapter 11 case, the ACA Claim would ultimately provide
over $80,000,000 in value to FLYi estate if the allowed amount
remains unchanged after the appeal.
FLYi is investigating potential claims against United for certain
violations of federal antitrust laws, according to Mr. Shannon.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WESTLAKE CHEMICAL: Moody's Rates $250 Mil. Sr. Unsec. Notes at Ba2
------------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Westlake
Chemical Corporation's $250 million senior unsecured notes due
2016. Moody's also affirmed the company's other existing ratings
(Ba2 corporate family rating) and withdrew the rating on
Westlake's $200 million senior secured revolving credit facility.
These actions are a result of the company's announcement today
regarding the refinancing of its outstanding debt. The ratings on
the existing notes and term loan will be withdrawn upon completion
of the refinancing.
Additionally, the ratings outlook has been changed to positive
reflecting the company's strong financial profile and Moody's
belief that the company's intermediate-term financial performance
could potentially support a higher rating.
Ratings assigned:
-- Guaranteed senior unsecured notes, $250 million due 2016 -
Ba2
Ratings affirmed:
-- Corporate family rating at Ba2
-- Guaranteed senior unsecured notes, $247 million due 2011 -
Ba2*
-- Guaranteed senior secured term loan B, $120 million
due 2010 - Ba1*
Ratings withdrawn:
-- Guaranteed senior secured revolver, $200 million due 2007 -
Ba1
*: These ratings will be withdrawn once the refinancing is
completed
Westlake's Ba2 rating reflects:
-- Moody's concerns over the company size;
-- the lack of product diversity;
-- the regional nature of its operations; and
-- its feedstock exposure.
The company is strongly placed in the rating category due to its:
-- relatively conservative financial policies;
-- strong financial metrics for a Ba2 company;
-- management's willingness to retain an elevated cash balance
throughout the cycle; and
-- its discipline in pursuing acquisitions and capital
investments.
The positive outlook reflects Moody's belief that the company's
financial metrics could remain elevated over the next two years
despite concerns over polyvinyl chloride (PVC) imports and
significant volatility in the feedstocks for its ethylene
crackers. Moody's could raise the company's ratings if its
margins remain elevated in 2006, despite significantly lower PVC
prices in Asia and the expected volatility in its ethylene cracker
feedstocks. Moody's could return the outlook to stable if margins
decline precipitously in 2006 due to, for example, pressures from
imports or greater feedstock volatility.
On an LTM basis ending Sept. 30, 2005, the company had strong
financial metrics for a Ba2 industrial company with debt to EBITDA
of 0.6 times and free cash flow to debt of nearly 60%. When these
ratios are adjusted utilizing Moody's Standard Financial
Adjustments, which includes the capitalization of pensions and
operating leases, these ratios are modestly weaker at 0.9 times
and 41%, respectively. Moody's expects the company's financial
ratios to fall from these levels in 2006, but still remain robust
for the Ba2 rating.
Westlake is a vertically integrated producer of PVC and
polyethylene (PE). The company is also notable for its
integration downstream (the company uses roughly 65% of its PVC
captively) into fabricated products such as:
* vinyl pipe,
* siding,
* windows,
* decking, etc.
The company is also a merchant producer of:
* ethylene,
* styrene, and
* caustic soda.
Over the longer term, Moody's is concerned over the company's
feedstock position in the US. The company is primarily reliant on
ethane, propane and butane as feedstocks for its ethylene
crackers. While the company is modifying its facility in Lake
Charles, Louisiana to enable the use of somewhat heavier
feedstocks, it will still have limited flexibility, with less than
20% of the company's total ethylene capacity able to utilize these
heavier feedstocks. Additionally, this upgrade will not allow
them to utilize heavier crude oil based feedstocks such as naphtha
and gas oil.
Westlake's exposure to feedstocks has not adversely impacted their
financial performance over the past year to the extent that
Moody's had previously anticipated. Currently, producers in the
US reliant on ethane and/or natural gas liquids are moderately
disadvantaged versus their international competitors that utilize
naphtha or other refinery feedstocks. Additionally, Moody's
expects the differential between gas and crude oil feedstocks to
decline in 2006. However, there is substantial uncertainty over
future feedstock costs for US producers and this will have a
significant impact on the company's future earnings and cash flow.
The company has several advantages; roughly 60% of the company's
polyethylene capacity produces low density polyethylene (LDPE).
LDPE is a more capital intensive process and typically prices at a
premium to linear low density polyethylene (LLDPE). There will be
limited new capacity additions in LDPE and hence it should
continue to yield a premium to other PE grades. The company's PVC
operations in Calvert City, Kentucky, are advantaged relative to
most Gulf Coast producers due to a power contract that is not
based on natural gas costs. Moody's feels that this provides an
advantage in the supply of PVC to many US customers in the Midwest
and the Northeast. However, if propane prices rise significantly
relative to naphtha, the small ethylene facility in Calvert City
could be adversely impacted.
Westlake Chemical Corporation is a second-tier producer of:
* commodity petrochemicals (ethylene and styrene),
* plastics (polyvinyl chloride and polyethylene), and
* fabricated products.
Revenues were $1.6 billion for the LTM ended June 30, 2004.
WESTLAKE CHEMICAL: S&P Rates Planned $250 Mil. Senior Notes at BB+
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Westlake
Chemical Corp.
"The upgrade reflects favorable operating prospects over the
intermediate term, and our expectation that management will
continue to adhere to moderate financial policies that will limit
debt in the capital structure," said Standard & Poor's credit
analyst Paul Kurias.
The corporate credit rating was raised to 'BB+' from 'BB' and the
senior unsecured debt rating was raised to 'BB+' from 'BB-'. The
outlook is stable.
At the same time, S&P assigned a 'BB+' rating to Westlake's
proposed $250 million senior unsecured notes due 2016, the
proceeds of which will be used primarily for refinancing purposes.
The senior unsecured debt ratings are the same as the corporate
credit rating to recognize Westlake's progress toward reducing its
secured debt obligations and the expectation that the secured
revolving credit facility is not likely to be utilized to a
meaningful extent.
However, Standard & Poor's notes that the unsecured debt rating
could be lowered if Westlake increases priority claims, including
greater than expected usage of the secured credit facility, which
could result in a material disadvantage to unsecured creditors in
the event of a default.
Houston, Texas-based Westlake Chemical has approximately
$261 million in debt outstanding, excluding unfunded
postretirement benefit obligations and other adjustments to
capitalize operating leases.
The ratings reflect the balance of the company's moderate
financial policies and intermediate financial risk profile,
against a weak business position that reflects vulnerability to
business cycles as a focused commodity chemical producer.
Westlake, whose majority owner is the Chao Group, is a midsize
producer of commodity petrochemical products, with market
positions in two broad categories and annual sales of over
$2.4 billion. The olefins/polyolefins category includes ethylene,
polyethylene, and styrene. The chlorovinyl category includes
polyvinyl chloride, caustic soda, vinyl chloride monomer, and PVC
fabricated products.
WORLDCOM INC: Court Sets Final Fairness Hearing on February 7
-------------------------------------------------------------
As reported in the Troubled Company Reporter on October 11, 2005,
the U.S. Bankruptcy Court for the Southern District of New York's
Preliminary Order approving the Louisiana right of way settlement
among WorldCom, Inc., its debtor-affiliates and William Kimball,
H.M. Kimball Jr., and Elizabeth Kimball Lewis, as class
representatives, provided for a final fairness hearing to be held
on December 6, 2005, with any objections to be filed and served by
October 31, 2005. The Order directed the parties to provide
notice to members of the Settlement Class beginning on September
1, 2005. However, as a result of the disruptions caused by
Hurricanes Katrina and Rita throughout Louisiana, the parties
delayed the settlement notification process.
Except for Orleans, Jefferson, St. Tammany, and Calcasieu
Parishes, conditions in Louisiana appear to be suitable for
continuing the notification and approval process, with a two-month
delay.
* * *
Judge Arthur Gonzalez scheduled the final fairness hearing for
February 7, 2006, with the schedule for notice, opt-outs, and
claims adjusted accordingly.
The Court further rules that XCL, Ltd., LM Holding, Associates,
LP, David Odom, Katherine McClellan Sibille, the Sibille Co.,
Inc., and Sylvia Weil Marcuse are added as additional class
representatives. William Kimball is deleted as a class
representative.
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. 110; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WORLDCOM INC: Tennessee Asks Court to Reinstate Claims
------------------------------------------------------
The Tennessee Department of Revenue has filed three sets of claims
against WorldCom, Inc., and its debtor-affiliates with each
subsequent set amending the prior set:
Prepetition Claim Administrative Claim
----------------- --------------------
Claim No. Claim Amount Claim No. Claim Amount
--------- ------------ --------- ------------
Original Claim 21570 $71,389,200 21605 $390,060
32444 28890
1st Amendment 38374 $6,239,434 38373 $465,328
2nd Amendment 38518 $5,448,353 38519 $249,154
For some reason, the original claims were assigned two separate
claim numbers, Marvin E. Clements, Jr., Esq., in Nashville,
Tennessee, relates.
The Debtors have filed numerous objections to the Claims. The
Claims were finally expunged in the Debtors' 61st Omnibus
Objection to Income Tax Claims.
Mr. Clements argues that Tennessee was unaware of the expungement
until negotiations began regarding the Debtors' 83rd Omnibus
Objection to Tax Claims.
The Claims under the 2nd Amendment are the subject of the 83rd
Omnibus Objection. The Debtors seek to disallow Claim Nos. 38518
and 38519, contending that the Claims were already expunged in the
61st Omnibus Objection.
Mr. Clements points out that the 61st Omnibus Objection refers to
Income Tax Claims. Consequently, Tennessee does not have an
income tax. Thus, the characterization of Tennessee's Claim as
"Income Tax" is incorrect.
Mr. Clements elaborates that Claim Nos. 38518 and 38519
specifically denoted the taxes as franchise, excise, sales and use
taxes. The Tennessee franchise and excise tax is not an income
tax and should not have been the subject of the 61st
Omnibus Objection, Mr. Clements avers.
Tennessee has acted in complete good faith in responding to the
Debtors when called upon, Mr. Clements asserts. In particular,
the Claims have been amended twice to reflect a diminishing tax
liability, which will benefit the remaining creditors.
The repetitive objections to the Claims only discourage the claim
resolution process, Mr. Clements argues. "It is an undue burden
and hardship on limited government resources to have to constantly
be wary of these fishing tactics, of repetitive objections to the
same claims, of calling them different things, of objecting to
portions without specificity."
Accordingly, Tennessee asks the U.S. Bankruptcy Court for the
Southern District of New York to:
(a) set aside the default and reinstate Claim Nos. 38374 and
38373 as proper and timely filed claims; and
(b) allow the matter to go forward on the 83rd Omnibus
Objection, addressing Claim Nos. 38518 and 38519.
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. 110; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* AlixPartners Names Seven New Managing Directors
-------------------------------------------------
AlixPartners reported the promotions of Stephanie Anderson,
Michael Baur, Larry Hagenbuch, Bob Hecht, Art Kubert, Vinzenz
Schwegmann, and Jared Yerian as managing directors.
"We are pleased to recognize the superb client service and
leadership capabilities of our new managing directors," said
Michael Grindfors, AlixPartners' president. "The promotion of
these highly-respected professionals is in response to the growing
demand for the hands-on, consensual approach that is the hallmark
of AlixPartners and which drives our clients' success."
Based in Dallas, Anderson joined AlixPartners in November 2003
from PricewaterhouseCoopers, where she was a Director in the
Financial Advisory Services practice as part of the firm's Dispute
Analysis and Investigations practice. She is an experienced
financial expert with over 18 years of diverse accounting and
financial experience as a forensic accountant, international
investment advisor, restructuring consultant and testifying expert
in litigation matters. She holds a BBA degree in accounting from
Texas State University and a Master in Business Administration
from Texas A&M. She is a Certified Fraud Examiner and a Certified
Public Accountant (Texas).
Baur, formerly the chief operating officer and chief financial
officer for edel Music AG, was also a partner with Roland Berger
before joining AlixPartners in September 2004. He is an
experienced business advisor and executive manager in corporate
restructuring and turnarounds with expertise in accounting,
corporate finance, mergers and acquisitions, cost management, and
financial restructuring. He graduated from the University of
Regensburg in Germany, where he received his bachelor's degree in
accounting and finance. Baur is based in Munich.
Hagenbuch, who joined AlixPartners in Dallas in July 2003,
formerly was the chief executive officer of a privately owned
manufacturing company. His capabilities include developing
business plan direction, improving market capitalization and
increasing profits in turnaround and performance improvement
situations. He spent several years with General Electric serving
as both a general manager in the General Electric Transportation
Systems division (responsible for Europe, Africa and the Middle
East) and GE Capital's Vendor Financial Services division
(responsible for back office operations). He earned an MBA in
finance from The Wharton School and a bachelor's degree in
mechanical and materials engineering from Vanderbilt University.
Larry started his professional career in the United States Navy.
Hecht, based in London, joined the Southfield, Michigan office of
AlixPartners in September 1996 and later transferred to London.
He has nearly 30 years of experience addressing strategic,
managerial and operational issues involving information
technology. His expertise is building an IT strategy around a
company's business objectives, and enabling the organization to
extract the highest business value from their IT investment.
Prior to joining AlixPartners, Bob served for 13 years as Vice
President and CIO for Harbor Industries in Grand Haven, Michigan.
Hecht holds a master's degree in communications from Western
Michigan University and a bachelor's degree in English and French
from Hope College.
Based in Southfield, Michigan, Kubert came to AlixPartners in
August 1997. He has managed the firm's accounting department and
kept it running smoothly during a period of significant growth for
the firm. Before joining AlixPartners, Kubert was the finance
director for the law firm Miller, Canfield, Paddock and Stone,
PLC. He also served as an auditor with Price Waterhouse serving
middle market companies. He holds a bachelor's degree in
accounting from Central Michigan University, and he is a Certified
Public Accountant.
Schwegmann joined the AlixPartners Munich office in January 2004.
He has considerable experience in operational strategy and
effectiveness, supply chain management, manufacturing, and
logistics in industries such as automotive, machinery, shipping,
and consumer goods. Prior to joining AlixPartners, he was an
associate principal with McKinsey & Co. He holds a bachelor's
degree in business administration from the University of Erlangen-
Nurnberg, and both masters and doctorate degrees in business
administration from the University of Cologne.
Yerian has been with AlixPartners since May 1999 when he joined
the Chicago office. He has developed complex capital
restructuring plans, prepared business and asset valuations,
performed portfolio rationalization analyses, assisted creditors
and debtor senior management in developing operational and capital
turnarounds, and served as an expert in litigation matters.
Before that, he was the assistant treasurer, vice president, and
member of the investment committee of Oak Brook Bank. He earned
an MBA in finance and accounting from the University of Chicago,
and a bachelor's degree in finance from Indiana University. He is
a CFA chartholder and a Certified Insolvency and Restructuring
Advisor.
The firm also announced these promotions:
-- in Chicago, Mark Thorson was promoted to Director.
-- in Dallas, John Alagood, Mike Han, Larry Ramaekers, and
Abhinav Shukla were promoted to Director.
-- in Dusseldorf, Patrik Jacob was promoted to Director.
-- in London, Matthew Johnston and Wim Overeynder were promoted
to Director.
-- in Los Angeles, Bill Choi was promoted to Director.
-- in Milan, Giuseppe Farinacci and Giacomo Mori were promoted
to Director.
-- in Munich, Marcus Kleinfeld was promoted to Director.
-- in New York, Seth Alter and Chris Capers were promoted to
Director.
About AlixPartners
AlixPartners - http://www.alixpartners.com/-- is internationally
recognized for its hands-on, results-oriented approach to solving
operational and financial challenges for large and middle market
companies globally. Since 1981, the firm has become the "industry
standard" for performance improvement aimed at producing bottom-
line results quickly and helping clients achieve a more positive
outcome during times of transition. The firm has over 450
employees in its Chicago, Dallas, Detroit, Dsseldorf, London, Los
Angeles, Milan, Munich, New York, San Francisco, and Tokyo
offices.
* Chadbourne Parke Taps Lopato for Int'l Insurance Practice Group
-----------------------------------------------------------------
The law firm of Chadbourne & Parke LLP reported that Mary A.
Lopatto has been elected partner in the insurance and reinsurance
practice group, resident in the Firm's Washington, D.C. office.
Ms. Lopatto is Chairman of the AIDA U.S. Reinsurance and Insurance
Arbitration Society, the leading U.S. association serving the
insurance and reinsurance arbitration community. Prior to joining
Chadbourne, she was a partner at LeBoeuf, Lamb, Green & MacRae
LLP, and recently completed her tenure as managing partner of its
Washington, D.C. office.
Ms. Lopatto brings to Chadbourne 20 years of experience handling
insurance and reinsurance matters. She has particular expertise
in handling reinsurance disputes, including arbitrations subject
to Bermuda arbitration law. She has arbitrated disputes relating
to, among other things, allocation of environmental claims,
insolvency and run-off matters, MGA and broker negligence, life
reinsurance, variable annuity products, financial reinsurance,
surety bonds, and reinsurance accounting. Ms. Lopatto lectures
and publishes frequently on reinsurance and dispute resolution.
"In 2005, Chadbourne's insurance practice saw a year of sustained
growth and professional success, and our ability to attract a
partner of Mary's caliber reflects the strength of our reinsurance
arbitration practice," Charles K. O'Neill, managing partner, said.
In addition to handling arbitrations, Ms. Lopatto has represented
clients in litigation in state and federal courts. She has also
advised clients with respect to contract drafting and coverage
issues.
Chadbourne's insurance and reinsurance group offers clients an
experienced interdisciplinary legal team able to address virtually
any legal issue affecting the worldwide insurance and reinsurance
industries. The group comprises 25 lawyers based in the
Washington, D.C., New York and Los Angeles offices, and 15 lawyers
based in London. It represents insurers, reinsurers,
intermediaries, financial institutions and governmental entities
on matters regarding the property-casualty and life and health
business. The Firm handles reinsurance litigations and
arbitrations throughout the United States, in Bermuda and in
Europe.
Ms. Lopatto has been recognized by the International Who's Who of
Business Lawyers (2005), Who's Who Legal (September 2004) and
Euromoney's World's Leading Insurance and Reinsurance Lawyers
(November 2002).
Ms. Lopatto earned an A.B. from Princeton University in 1976 and a
J.D. in 1986 from Catholic University of America, where she served
as Associate Editor of the Law Review.
Headquartered in New York City, Chadbourne & Parke LLP --
http://www.chadbourne.com/-- is an international law firm that
provides a full range of legal services, including mergers and
acquisitions, securities, project finance, corporate finance,
energy, telecommunications, commercial and products liability
litigation, securities litigation and regulatory enforcement,
special investigations and litigation, intellectual property,
antitrust, domestic and international tax, insurance
and reinsurance, environmental, real estate, bankruptcy and
financial restructuring, employment law and ERISA, trusts and
estates and government contract matters. The Firm has offices in
New York, Washington, D.C., Los Angeles, Houston, Moscow, St.
Petersburg, Kyiv, Almaty, Warsaw (through a Polish partnership),
Beijing, and a multinational partnership, Chadbourne & Parke, in
London.
* Hydee Feldstein Joins Sullivan & Cromwell's Los Angeles Office
----------------------------------------------------------------
Sullivan & Cromwell LLP announced that Hydee R. Feldstein will
join the Firm's General Practice Group as Counsel, resident in the
firm's Los Angeles office from January 17, 2006.
Ms. Feldstein brings over 20 years of experience and expertise in
leveraged lending and insolvency-related financings to the Firm.
She has been the lead counsel to the lenders in hundreds of high
profile leveraged lending and workout transactions and is a
frequent lecturer in these areas.
H. Rodgin Cohen, Sullivan & Cromwell's Chairman, commented, "We
are delighted that Hydee Feldstein will be joining us. Her broad
experience and great expertise in the areas of leveraged and
hybrid finance, as well as insolvency law, will complement and
strengthen our preeminent corporate finance practice."
Hydee Feldstein graduated from Swarthmore College and Columbia Law
School, where she was a member of the Columbia Law Review. She
has been a partner at Paul Hastings and was a founding principal
of Chrysalis Management Group, LLC.
About Sullivan & Cromwell
Sullivan & Cromwell LLP -- http://www.sullcrom.com-- is a global
law firm that has provided its clients with sophisticated legal
advice regarding the world's most significant mergers and
acquisitions, corporate finance and litigation matters since its
founding in New York in 1879. The Firm also is recognized for its
expertise in corporate investigations and complex regulatory, tax
and estate planning matters as well as its dedication to finding
practical solutions to client problems. Sullivan & Cromwell LLP
has over 650 lawyers and conducts its global practice through an
international network of 12 offices located in the United States,
Europe, Asia and Australia.
* John Llewellyn Joins Deloitte Financial Advisory Services
-----------------------------------------------------------
Deloitte Financial Advisory Services LLP, a subsidiary of Deloitte
& Touche USA LLP, announced that John S. Llewellyn III has joined
as a New York-based principal in the Reorganization Services
Group.
Previously, Mr. Llewellyn was a managing director in the corporate
restructuring and transaction advisory services group at a Big
Four accounting firm in New York and most recently London.
While in London, Mr. Llewellyn focused on expanding the U.K.
practice's company side offering and pursuing debtor restructuring
opportunities while helping grow the firm's presence among U.S.
investors in the U.K. marketplace. In New York, he specialized in
restructuring transactions, strategic business planning and
advising companies and lenders in the troubled credit environment.
"John brings a tremendous amount of restructuring experience to
the practice, much of it in a global context," said Sheila Smith,
national service line leader of the Reorganization Services Group.
"His strong industry knowledge in telecommunications, construction
and energy will be especially valuable as we further increase the
depth and breadth of our team. His broad financial, operational
and strategic international experience is a great match for the
continued growth of our practice."
As a principal in RSG, Mr. Llewellyn will be working with
companies, lenders and stakeholders in distressed and
underperforming situations. In his new role, Mr. Llewellyn will
further strengthen a restructuring practice that was recently
ranked fifth among leading non-investment banks in terms of the
number of active bankruptcy cases by The Deal, a financial
industries publication.
"The integrated service offerings and the access to global
resources through the DTT member firms and their affiliates
attracted me to Deloitte FAS," Mr. Llewellyn said. "It's an
enormous challenge for other financial advisory organizations to
try to match the depth, breadth, reach or industry knowledge in
working with distressed or bankrupt companies that can be found
within RSG," he said.
Mr. Llewellyn earned a bachelor's degree in economics from Boston
College and a master's degree in business administration from the
Fuqua School of Business at Duke University.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a
Swiss Verein, its member firms and their respective subsidiaries
and affiliates. As a Swiss Verein, neither Deloitte Touche
Tohmatsu nor any of its member firms has any liability for each
other's acts or omissions. Each of the member firms is a separate
and independent legal entity operating under the names "Deloitte",
"Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related
names. Services are provided by the member firms or their
subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu
Verein.
Deloitte & Touche USA LLP is the US member firm of Deloitte Touche
Tohmatsu. In the US, services are provided by the subsidiaries of
Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte
Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte
Tax LLP and their subsidiaries), and not by Deloitte & Touche USA
LLP.
* Sheppard Mullin Welcomes Peter S. Reichertz as Counsel in D.C.
----------------------------------------------------------------
Peter S. Reichertz, Esq., has joined the Washington, D.C. office
of Sheppard, Mullin, Richter & Hampton LLP as a partner.
Reichertz, most recently with Sonnenschein Nath & Rosenthal in
Washington, D.C., joins as the chair of the firm's new Food and
Drug Law group and as a member of the Intellectual Property
practice group.
Deborah Shelton, Esq., also joins the firm as a member of the Food
and Drug Law group in the Washington, D.C. office. Ms. Shelton
most recently practiced at Reed Smith in Washington, D.C.
Mr. Reichertz concentrates in both food and drug regulatory law
and intellectual property law. Mr. Reichertz counsels companies
whose products are regulated by the FDA under the Federal Food
Drug and Cosmetic Act. Mr. Reichertz represents manufacturers and
distributors in obtaining approval to market drugs, medical
devices, food, dietary supplements and cosmetic products, and
counsels on all aspects of marketing of such products, including
labeling, advertising, manufacturing and distribution.
Additionally, Mr. Reichertz's practice includes advising
advertising agencies, clinical investigators, research
organizations and other non-manufacturers on compliance with the
Federal Food Drug and Cosmetic Act. Mr. Reichertz represents
clients in FDA rulemaking proceedings, and in enforcement
proceedings brought by the U.S. on behalf of the FDA. Mr.
Reichertz also counsels on related federal and state regulatory
statutes.
"Peter's impressive skills and experience will be a huge asset to
the firm, especially in launching our FDA practice," said Guy
Halgren, managing partner of the firm. "He will play a important
role in the firm's ongoing expansion in D.C."
"I look forward to building a food and drug regulatory practice at
Sheppard Mullin and am excited to join a growing firm with an
excellent reputation," Mr. Reichertz said. "The FDA practice I
plan to lead will dovetail perfectly with the firm's existing
corporate and litigation practices so that our clients will be
able to enjoy seamless representation with respect to any and all
food and drug matters."
"We are excited to have Peter in the D.C. office," said Edward
Schiff, managing partner of the firm's Washington, D.C. office.
"Peter's specialization is an excellent fit for us, given the
corporate and M&A matters which we handle and the strong
regulatory focus the office has built in the government contracts,
antitrust and communications practice areas."
Mr. Reichertz also practices in intellectual property,
specifically in trademarks, copyrights, trade secrets and
licensing. Mr. Reichertz's trademark expertise includes
counseling and advising clients on the selection and adoption of
trademarks, as well as the prosecution of trademark applications
in the United States Patent and Trademark Office. Mr. Reichertz
also prepares and negotiates trademark licensing agreements. Mr.
Reichertz has been extensively involved in trademark infringement
litigation, as well as opposition and cancellation proceedings
before the Trademark Trial and Appeal Board.
Mr. Reichertz earned his law degree from The National Law Center,
George Washington University in 1975 and graduated, with honors,
from Brown University, with an AB in 1972.
About Sheppard, Mullin, Richter & Hampton LLP
Sheppard, Mullin, Richter & Hampton LLP -
http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm
with more than 480 attorneys in nine offices located throughout
California and in New York and Washington, D.C. The firm's
California offices are located in Los Angeles, San Francisco,
Santa Barbara, Century City, Orange County, Del Mar Heights and
San Diego. Sheppard Mullin provides legal expertise and counsel
to U.S. and international clients in a wide range of practice
areas, including Antitrust, Corporate and Securities;
Entertainment, Media and Communications; Finance and Bankruptcy;
Government Contracts; Intellectual Property; Labor and Employment;
Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts &
Estates; and White Collar Defense.
*********
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 A. Soriano-Baaclo, Marjorie C. Sabijon, Terence
Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo
Junior M. Pinili, Tara Marie A. Martin and Peter A. Chapman,
Editors.
Copyright 2006. 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 $725 for 6 months delivered via e-
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for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
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*** End of Transmission ***