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/raid1/www/Hosts/bankrupt/TCR_Public/060217.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 17, 2006, Vol. 10, No. 41 Headlines AB LIQUIDATING: Has Until June 30 to Object to Proofs of Claims AIRNET COMMUNICATIONS: Receives Non-Compliance Notice from Nasdaq AIRTRAN AIRWAYS: Moody's Cuts EETC Series 1999-1 Ratings ALLIED HOLDINGS: Wants to Assume Norfolk Lease Agreement ALLIED HOLDINGS: Wants More Time to Decide on Headquarters Lease AMR CORP: Senior VP & Chief Financial Officer James Beer Resigns ANCHOR GLASS: Creditors' Committee Objects to Disclosure Statement ARIZONA ALE: Case Summary & 5 Largest Unsecured Creditors ASARCO LLC: Wants to Assume Westland Resources Contract ASARCO LLC: Wants to Quash Resurrection's Deposition and Subpoena ASSET BACKED: S&P Downgrades One Note Class' Rating to CCC AVETA INC: S&P Upgrades Counterparty Credit Rating to B from B- BCBG MAX: Max Rave Unit Makes Winning $35MM Bid for G+G Retail BELVA BROWN: Case Summary & 11 Largest Unsecured Creditors BERKLINE/BENCHCRAFT: S&P Affirms Corporate Credit Rating at B+ BERRY-HILL: Court Approves Motion Protecting Consigned Artwork BEVERLY ENTERPRISES: Shareholders Okay Pearl Senior Merger Accord BOSTON COMMS: Incurs $54.2 Million Net Loss in 2005 BRIDGES TRANSITIONS: Discloses Financial Results for Six Months CATHOLIC CHURCH: Portland Responds to Insurers' Objections CATHOLIC CHURCH: Portland Responds to FCR's Disclosure Objection CELLSTAR CORP: Posts $3.2 Mil. Net Loss in 4th Qtr. Ended Nov. 30 CHOICE HOTELS: Earns $21.5 Million in Fourth Quarter Ended Dec. 31 CONCENTRA OPERATING: Earns $212,000 in Fourth Quarter 2005 CONGOLEUM CORPORATION: Files Seventh Modified Reorganization Plan CORUS ENT: Moody's Withdraws Senior Subordinated Bond's B1 Rating CREDIT SUISSE: Fitch Affirms $5.1 Mil. Class E Certs.' B+ Rating CRYOPORT INC: Dec. 31 Balance Sheet Upside-Down by $1.9 Million D&M FINANCIAL: Case Summary & 20 Largest Unsecured Creditors DADE BEHRING: Earns $34.3 Million in Fourth Quarter Ended Dec. 31 DANKA BUSINESS: Poor Performance Cues Moody's to Cut Rating to B3 DATICON INC: Court Approves Asset Sale to Xiotech Corp. DAVE & BUSTER'S: S&P Rates Planned $175 Million Sr. Notes at CCC+ DELTA AIR: Receives Court Approval for Aircraft Lease Transactions DOLLAR FINANCIAL: Moody's Assigns B3 Corporate Family Rating DUNKIN' BRANDS: S&P Affirms B- Corporate Credit & Other Ratings E.DIGITAL CORP: Equity Deficit Tops $3.9MM at December 31 EL PASO CORP: Moody's Reviews Ratings for Possible Upgrade ENTERGY NEW ORLEANS: Wants Incentive Compensation Programs Okayed ENTERGY NEW ORLEANS: Wants More Time to Make Lease Decisions ENXNET INC: Balance Sheet Upside-Down by $846K at December 31 EPOCH 2001-1: Fitch Holds CC Rating on $12.2 Mil. Class IV Notes ESTERLINE TECH: Moody's Reviews Low-B Ratings for Likely Upgrade FERRO CORP: Amends U.S. Employees' Retirement Benefit Program FIREARMS TRAINING: Dec. 31 Balance Sheet Upside-Down by $27.7 Mil. FMA CBO: Losses Cue Moody's to Watch Ratings for Likely Downgrade FORD CREDIT: Fitch Expects to Rate $59 Mil. Class D Notes at BB+ FREEDOM RINGS: Files Disclosure Statement & Liquidation Plan G+G RETAIL: Max Rave & Guggenheim Win Bid at $35 Million GENERAL GROWTH: Gets Lenders Pledge to Amend $5 Billion Facility GENERAL GROWTH: S&P Puts BB+ Bank Loan Rating on $3.5 Bil. Debts GEORGIA-PACIFIC: Amends Revolving Loan from $250MM to $1.75 Bil. GERDAU AMERISTEEL: Posts $295.5M of Net Income in Fiscal Year 2005 GLEACHER CBO: Moody's Confirms Junk Ratings on $26 Mil. Notes GREGG APPLIANCES: Earns $22.6MM of Net Income in 3rd Fiscal Qtr. HANDEX GROUP: Sells Core Business Assets to Handex Consulting HANDEX GROUP: Wants to Reject Burdensome Contracts & Leases HIRSH INDUSTRIES: Judge Metz Confirms Amended Joint Chap. 11 Plan IMMUNOMEDICS INC: Balance Sheet Upside-Down by $14.26M at Dec. 31 ITS NETWORKS: Dec. 31 Balance Sheet Upside-Down by $6.1 Million IVOICE INC: Board Proposes Special $1.5MM Dividend to Shareholders J.B. POINDEXTER: S&P Affirms Senior Unsecured Rating at B- JO-ANN STORES: Moody's Cuts $100 Mil. Senior Notes' Rating to B3 KNOLL INC: Second Stock Offering Priced at $18.40 Per Share LEVITZ HOME: Wohl/Anaheim Wants Levitz to Pay Rent Without Delay LOVESAC CORP: Meeting of Creditors Scheduled for March 10 LOVESAC CORP: U.S. Trustee Names Five-Member Creditors Committee MAYTAG CORP: DoJ Gets More Time to Review Whirlpool Merger Deal METALFORMING TECH: Terminates UAW Collective Bargaining Agreement MORTON'S RESTAURANT: S&P Withdraws $105 Million Notes' B- Rating MUSICLAND HOLDING: Final DIP Financing Hearing Going Forward Today MUSICLAND HOLDING: Court Fixes May 1 as Claims Bar Date NBS TECHNOLOGIES: Balance Sheet Upside-Down by $6.48M at Dec. 31 NATIONAL GAS: Chap. 11 Trustee Wants to Use Cash Collateral NATIONWIDE HEALTH: Posts $69.94M of Net Income in 2005 Fiscal Year NORTEL NETWORKS: CICC Seeks Court Clarification on Securities Suit O'SULLIVAN INDUSTRIES: Selling Unused Equipment for $1,100,000 PENNSYLVANIA REAL: Completes $90 Million Financing of Valley Mall PERFORMANCE TRANSPORTATION: Maintains Existing Cash Mgt. System PIER 1: Sales Decline Prompts Moody's to Downgrade Rating to B1 PHOTOCIRCUITS CORP: Wants to Continue Using Cash Collateral PINNACLE FOODS: S&P Rates Proposed $143 Mil. Loan B Add-On at B+ PLYMOUTH RUBBER: Cleanosol Wants Brite-Line to Pay Royalty Fees PRESTWICK CHASE: Wants to Refinance APC's $1.7-Mil. Secured Claim RADNOR HOLDINGS: S&P Lowers Senior Unsecured Notes' Rating to CC S-TRAN HOLDINGS: Court Gives Final Nod to Use Cash Collateral SAINT VINCENTS: Objects to Lift-Stay Motions Filed by 18 Claimants STATE STREET: Hires Raichle Banning as New Bankruptcy Counsel STOCKHORN CDO: Fitch Affirms $5 Million Class E Notes' BB- Rating TELOGY INC: Wants to Hire Independent Equipment as Appraiser TITAN CRUISE: Wants to Reject St. Petersburg Operational Pact TITAN CRUISE: Wants to Walk Away from Aristocrat License Agreement TITANIUM METALS: Discloses Preliminary 2005 Financial Results THOMAS LINDSAY: Case Summary & 6 Largest Unsecured Creditors TRENBERTH LLC: Case Summary & 9 Largest Unsecured Creditors URSTADT BIDDLE: Fitch Affirms $114 Mil. Pref. Stocks' Rating at BB USI HOLDINGS: Moody's Rates New Sr. Secured Credit Facility at B1 VALLEY FOOD: Case Summary & 20 Largest Unsecured Creditors WALTER DUNN: Case Summary & 20 Largest Unsecured Creditors WARRIOR ENERGY: Plans to Raise $172.5 Million in Stock Sale WILLIAMS CONTROLS: Balance Sheet Upside-Down by $917K at Dec. 31 WINN-DIXIE: Newport Wants Property Vacated & Holdover Rent Paid WINN-DIXIE: Diversified Wants SMB State Court Lawsuit Enjoined WINN-DIXIE: Wants Central's Request for Summary Judgment Denied XYBERNAUT CORP: Hires Morris Nichols as Board's Bankruptcy Counsel * BOOK REVIEW: Evaluation and Decision Making for Health Services ********* AB LIQUIDATING: Has Until June 30 to Object to Proofs of Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California gave AB Liquidating Corp., f/k/a Adaptive Broadband Corporation, until June 30, 2006, to object to proofs of claim and interest filed against its estate. The Court confirmed the Debtor's First Amended Plan of Reorganization on Feb. 28, 2002, and that Plan took effect on Sept. 6, 2002. E&Y Litigation May Fund Shareholder Recovery The Reorganized Debtor tells the Court that a distribution to shareholders is possible and it may be necessary to file objections to both proofs of claim filed by creditors and proofs of interest filed by equity holders, if appropriate. Additionally, the Debtor is currently involved in a lawsuit against a claimant, Ernst & Young, which may result in the recovery of additional monies for the estate. If the estate is successful in the Ernst & Young lawsuit, the Debtor believes there will sufficient funds for distribution to shareholders. If a distribution to shareholders is possible, the extension will give the Debtor more time and opportunity to prepare for the claims objection process and to timely file the appropriate objections. Headquartered in Sunnyvale, California, AB Liquidating Corp. (f/k/a Adaptive Broadband Corporation), provided leading-edge technology for the deployment of broadband wireless communication over the Internet. The Company filed for chapter 11 protection on July 26, 2001 (Bankr. N.D. Cal. Case No. 01-53685). David M. Bertenthal, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represents the Debtor in its bankruptcy case. The Bankruptcy Court confirmed the Debtor's chapter 11 Plan on Feb. 28, 2002, and the Plan took effect on Sept. 6, 2002. AIRNET COMMUNICATIONS: Receives Non-Compliance Notice from Nasdaq ----------------------------------------------------------------- AirNet Communications Corporation (NASDAQ:ANCC) received a notice dated Feb. 10, 2006 from the Listing Qualifications Department of The Nasdaq Stock Market confirming that for the last thirty consecutive business days, the bid price of AirNet's common stock has closed below the $1.00 minimum per share requirement for continued inclusion under Marketplace Rule 4450(a)(5). AirNet will be provided with 180 calendar days or until Aug. 9, 2006 to regain bid price compliance. If at any time before Aug. 9, 2006, the bid price for AirNet's common stock closes at $1.00 per share for a minimum of ten consecutive business days, the Nasdaq staff will provide notification that it has regained compliance with the Rule. If AirNet does not regain compliance by Aug. 9, 2006, the Nasdaq staff will provide AirNet with another written notification that its common stock will be delisted. At that time, AirNet may appeal the Nasdaq staff's determination to a Listing Qualifications Panel. Alternatively, AirNet also has the option of applying to transfer its common stock to the Nasdaq Capital Market if it satisfies the requirements for initial inclusion set forth in Marketplace Rule 4310(c). If its application is approved, AirNet would then be afforded the remainder of this market's second 180 calendar day compliance period in order to regain compliance while on the Nasdaq Capital Market. AirNet may also submit an application at any time during the initial 180 day compliance period to transfer its listing to the Nasdaq Capital Market. AirNet Communications Corporation -- http://www.airnet.com/-- is a leader in wireless base stations and other telecommunications equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless data and voice services to mobile subscribers. AirNet's patented broadband, software- defined AdaptaCell(R) SuperCapacity(TM) adaptive array base station solution provides a high-capacity base station with a software upgrade path to high-speed data, utilizing ArrayComm, Inc.'s IntelliCell(TM) adaptive array algorithms. The Company's RapidCell(TM) base station provides government communications users with up to 96 voice and data channels in a compact, rapidly deployable design capable of processing multiple GSM protocols simultaneously. The Company's AirSite(R) Backhaul Free(TM) base station carries wireless voice and data signals back to the wireline network, eliminating the need for a physical backhaul link, thus reducing operating costs. AirNet has 68 patents issued or filed and has received the coveted World Award for Best Technical Innovation from the GSM Association, representing over 400 operators around the world. * * * Going Concern Doubt BDO Seidman, LLP, had expressed substantial doubt about AirNet Communications' ability to continue as a going concern after reviewing the company's financial statements for the year ending Dec. 31, 2004. Deloitte & Touche, LLP, expressed similar doubts when it reviewed the company's 2003 financials. BDO Seidman points to the Company's recurring losses from operations, negative cash flows, and accumulated deficit, as the problem areas. As of Aug. 5, 2005, the Company's cash balance was $6.5 million. The Company's current 2005 operating plan projects that cash available from planned revenue combined with the on hand at Aug. 5, 2005, may be adequate to defer the requirement for new funding at least until the fourth quarter of 2005. There can be no assurances that new financing can be secured at a reasonable cost, if at all. AIRTRAN AIRWAYS: Moody's Cuts EETC Series 1999-1 Ratings -------------------------------------------------------- Moody's Investors Service downgraded all ratings of the Series 1999-1 Enhanced Equipment Trust Certificates, which are supported by payments from AirTran Airways, Inc., and affirmed the Corporate Family Rating at B3 for the parent AirTran Holdings, Inc. Moody's also changed the outlook to stable from negative. These rating actions complete a review of AirTran's EETC ratings initiated Jan. 18, 2005. Ratings affected were: AirTran Airways EETC Series 1999-1 * Class A -- to Ba1 from Baa2; * Class B -- to B1 from Ba1; and * Class C -- to B3 from B2. The downgrades of the EETC ratings reflect Moody's assessment that the secondary market value of the B717 aircraft which collateralize these EETC's has declined faster than the related debt has amortized. Deterioration in market value of the aircraft reduces collateral protection under a liquidation scenario and increases the risk to EETC debt holders, especially for the Class B and C certificates which are junior to the Class A tranche. Although the B717 is expected to continue to serve AirTran well, ongoing valuation of B717 is uncertain because this aircraft type will no longer be produced and because there are few operators of the limited number of aircraft already produced. The Boeing Company recently announced that the last B717 is in production, although we expect that Boeing will provide operational support for the aircraft consistent with their other models. Only nine airlines operate the 155 B717 aircraft, and AirTran's fleet represents over half of this amount. With so few B717 aircraft in service and a limited number of operators, it could be difficult to place these aircraft under a liquidation scenario, particularly a fleet the size of AirTran's, without offering discounts. However, a substantial number of the B717s in service are leased from Boeing, including the majority of AirTran's fleet. In recent airline bankruptcies, major lessors and owners of aircraft have attempted to manage the liquidation of aircraft to limit the negative impact on secondary market values. Boeing has no obligation nor has it indicated that it would undertake any actions to support B717 secondary market values in the event of a liquidation of a meaningful portion of the B717 fleet. However, Boeing's objectives may coincide with those of other debt holders. All classes of the EETC's continue to be supported by liquidity facilities intended to pay up to 18 months of interest in the event AirTran defaults on its payment obligations under the equipment notes. Any future changes in the underlying credit quality of AirTran and its ratings, or meaningful changes in the value of the aircraft pledged as collateral, or changes in the status of the liquidity facilities or the credit quality of the liquidity provider could cause a change in the ratings of all classes of the EETC's. The stable outlook reflects Moody's expectations that AirTran will continue to generate positive earnings and cash flow from operations as a result of continued cost control and better revenue from higher enplanements and a slight improvement in yield. The airline's low-cost structure has allowed it to somewhat offset the high fuel prices, and remain profitable in the competitive environment of the airline industry. AirTran has established a competitive advantage by continuing to contain its non-fuel operating expenses, and Moody's anticipates the airline will continue to operate at one of the lowest non-fuel CASMs in the industry. Non-fuel CASM during 2005 was 6.25 cents, down 1.6% compared to 2004. However, total operating CASM was 9.33 cents due to escalating fuel prices, representing a 10.8% increase year over year. Some fuel hedging instruments are in place through 2007 that will help AirTran mitigate a portion of its fuel expenses. Fuel, however, will have a meaningful negative effect on the overall costs. The revenue environment is also expected to improve, as capacity comes out of the markets served by AirTran and overall fares are rising. For 2005, average yield per revenue passenger mile was up 4% over 2004, passenger revenue per available seat mile was 9.07 cents, up 8.1% year over year, and the load factor was 73.5%, an increase of 2.7 percentage points from 2004. Passenger revenue and enplanements for 2005 represented historical highs for AirTran. The ratings also take into account that the company's already high financial leverage will increase further as AirTran finances its aggressive growth strategy. During 2006, the company plans to take delivery of 18 B737's and 2 B717's increasing its total fleet to 125 aircraft. AirTran has obtained either debt financing or operating lease arrangements for aircraft expected to be delivered through 2006. Additional B737s are expected to be delivered during 2007. To date, management has demonstrated ability to integrate the B737 into its fleet and continue to control costs. However, Moody's notes there the operational risks increase as the company continues to grow, including operating two separate fleet types, training for flight crew and maintenance, additional city pairs, and efforts to attract a different type of passenger than historically used AirTran service. AirTran's record of maintaining adequate balance sheet liquidity is considered in support of the ratings. At Dec. 31, 2005, unrestricted cash and short-term investments were approximately $371 million. It is Moody's expectation that the company will use a portion its balance sheet liquidity as it continues to expand its operations and then gradually begin to rebuild it AirTran's rating could raised if growth in internally-generated cash flow can be sustained to reduce the company's reliance on debt financing, and improve its key credit metrics such as EBIT to interest expense greater than 2x and retained cash flow to debt of greater than 10%. Downward pressure on the company's rating could occur if flat or declining operating cash flows increase the company's overall leverage or a substantial worsening to the operating environment were to occur. Moody's notes that the company continues to rely primarily on internally generated cash flow for liquidity, and negative external events affecting cash flow from operations could put downward pressure on the company's fundamental debt ratings. AirTran Airways, Inc., and its parent, AirTran Holdings, Inc. are headquartered in Orlando, Florida. ALLIED HOLDINGS: Wants to Assume Norfolk Lease Agreement -------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Georgia to assume a lease agreement with Norfolk Southern Railway. Prior to the Petition Date, Allied Systems, Ltd., and Norfolk Southern entered into a lease agreement wherein Norfolk Southern agreed to lease to Allied four acres of its property in Walkertown, Forsyth County, North Carolina. The Parties subsequently amended the Lease on April 8, 2003, extending the Lease term until Feb. 28, 2006. The Parties executed a second amendment to the Agreement on Dec. 28, 2005, extending the term of the Lease to Feb. 28, 2009. Significantly, the Second Amendment also permits Allied to install a two-inch sewer line with pump station, which is expected to cost around $240,000. A recapture provision allows Allied to recover a percentage of the costs associated with installing the Sewer Line if Norfolk Southern will prematurely terminate the Lease. The Second Amendment acknowledges and confirms Allied's $10 cure amount. Norfolk Southern has agreed to cap its claim for future rent at $19,620, if Allied later rejects their Agreement. Alisa H. Aczel, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, tells the Court that since executing the Second Amendment, the Parties have discovered that Allied owes Norfolk Southern $368 for 2005 property taxes. Accordingly, in addition to the $10 cure amount, the Parties have agreed that Allied will also remit the Taxes to Norfolk Southern in full satisfaction of Allied's 2005 tax obligations. Ms. Aczel tells the Court that the Second Amendment is critical to Allied's continued operations and service to critical customers in Winston Salem. Ms. Aczel adds that the terms of the Second Amendment are fair and favorable to the Debtors. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Wants More Time to Decide on Headquarters Lease ---------------------------------------------------------------- As previously reported, LEPERQ Corporate Income Fund, LP, asked the U.S. Bankruptcy Court for the Northern District of Georgia to compel Allied Holdings, Inc., and its debtor-affiliates to assume or reject a nonresidential real property lease for the Debtors' corporate headquarters at Decatur, Georgia, before Feb. 28, 2006. The Debtors ask the Court to extend the time to decide whether to assume or reject the Georgia Premises Lease until May 31, 2006. According to Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, adequate grounds exist for the Court to grant an extension because: (a) the Debtors will continue to pay all postpetition lease obligations; (b) Lexington will not be harmed with an extension of time because all obligations under the Lease will continue to be paid, and the rent that Lexington is receiving from the Debtors is well above market; (c) Lexington will be adequately protected by its continued receipt of above-market rent and by the Debtors' consent for Lexington to market the unused portions of the Premises despite the Debtors' payment of rent obligations for those portions of the Premises; and (d) the Debtors have determined that, logistically, the earliest they could possibly vacate the Premises without jeopardizing their reorganization efforts would be in June or July 2006. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMR CORP: Senior VP & Chief Financial Officer James Beer Resigns ---------------------------------------------------------------- AMR Corporation, parent company of American Airlines, reported that James Beer, the company's senior vice president and chief financial officer, would leave the company to take a position with Symantec, a software company based in Northern California. "James has been a great team player, exceptional leader and good friend. He played a key role in the progress we've made under our Turnaround Plan and will be missed," said Gerard Arpey, AMR Chairman and CEO. Mr. Beer became AMR's chief financial officer in December 2003 after serving in various leadership roles in his 15-year tenure with American. Mr. Arpey said that the company will begin a search for a successor immediately. Mr. Beer will remain with the company as its CFO through the filing of AMR's Annual Report on Form 10-K, including the execution of the CFO's certification of the 10-K. "While it is always disappointing to unexpectedly lose an executive of James' exceptional capabilities and leadership, American continues to have one of the strongest management teams in the industry, including a very strong finance department. Given that, we expect a smooth transition." "We wish James every success in his new position," said Arpey. "Our focus now will be to select a leader who will help us build on the great progress we've made." American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award- winning Web site -- http://www.AA.com/-- provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 600 destinations in over 135 countries and territories. American Airlines, Inc. and American Eagle are subsidiaries of AMR Corporation (NYSE: AMR). * * * As reported in the Troubled Company Reporter on Nov. 2, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to $800 million of New York City Industrial Development Agency special facility revenue bonds, series 2005 -- American Airlines Inc., John F. Kennedy International Airport Project, which mature at various dates. At the same time, the ratings on existing series 2002 bonds were raised to 'B-' from 'CCC', reflecting changes in the security arrangements that apply to those bonds. Both series of bonds will be serviced by payments made by AMR Corp. unit American Airlines Inc. under a lease between the airline and the agency. ANCHOR GLASS: Creditors' Committee Objects to Disclosure Statement ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to deny approval of the Disclosure Statement explaining the Debtors Plan of Reorganization because it failed to provide adequate information. However, as advised by Anchor Glass Container Corporation, the Committee did not disclose the specific details of their objection. The Committee believes it is possible that the proposed amendments to the Plan of Reorganization and its accompanying Disclosure Statement will cure the existing defects. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, in Dallas, Texas, reiterates the Committee's willingness to work with the Debtor to reach agreement on the additional disclosures to be made in, and the other amendments to, the Plan and Disclosure Statement. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARIZONA ALE: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------- Debtor: The Arizona Ale House, LLC 95 West River Road Tucson, Arizona 85704-5105 Tel: (520) 292-6500 Bankruptcy Case No.: 06-00098 Type of Business: The Debtor operates a restaurant and bar. See http://www.arizonaalehouse.com/ Chapter 11 Petition Date: February 16, 2006 Court: District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Eric Slocum Sparks, Esq. Eric Slocum Sparks, P.C. 110 South Church Avenue #2270 Tucson, Arizona 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Newplan Excel Realty Trust, Inc. Trade Debt $35,000 File #56843 Los Angeles, CA 90074 Shamrock Foods Trade Debt $3,000 P.O. Box 52408 Phoenix AZ 85072 Golden Eagle Distribution Trade Debt $1,800 P.O. Box 27506 Tucson, AZ 85726 Finley Distributing Trade Debt $1,550 2104 South Euclid Tucson, AZ 85713 City of Tucson Trade Debt $1,250 P.O. Box 28811 Tucson, AZ 85726 ASARCO LLC: Wants to Assume Westland Resources Contract ------------------------------------------------------- ASARCO LLC and Westland Resources, Inc., are parties to an engineering contract dated March 9, 2005. Under the Contract, Westland will provide ASARCO with an environmental impact statement for a new tailings dam at the Ray Mine Complex. ASARCO seeks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to assume the Westland Resources Contract. C. Luckey McDowell, Esq., at Baker Botts LLP, in Dallas, Texas, tells the Court that Westland began its work on the environmental impact statement before the Petition Date. Thus, Westland is already familiar with the issues involved in the tailings dam. ASARCO owes Westland $25,890 as of its bankruptcy filing. Upon assumption of the Contract, ASARCO will promptly cure its defaults by paying Westland the $25,890 outstanding balance. ASARCO estimates that it will pay $313,228 more to Westland as additional work is completed. Mr. McDowell tells the Court that the assumption of the Contract is more economical than replacing Westland with a new consultant. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. gives the Debtor financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP gives legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee.When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants to Quash Resurrection's Deposition and Subpoena ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 9, 2005, ASARCO LLC sought authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to immediately reject all 15 Contracts relating to the Joint Venture with Resurrection Mining Company, effective as of Oct. 14, 2005. Eric A. Soderlund, Esq., at Baker Botts L.L.P., in Dallas, Texas, told Judge Schmidt that the Contracts provided for the conduct of exploration, development and mining activities on properties owned or leased by the parties in the vicinity of Leadville, Colorado. The Joint Venture ceased active mining in the area in 1999. Over time, the focus of the Joint Venture's activities shifted to environmental remediation. On the Petition Date, ASARCO was the Joint Venture's managing partner. ASARCO has been the operator of the water treatment facility described in certain consent decrees as Operable Unit 1 of the California Gulch Superfund Site since its construction in the mid-1990s. Mr. Soderlund said that rejecting the Contracts will free ASARCO from the burdensome obligation of operating the Water Treatment Facility. ASARCO Seeks to Quash Resurrection's Subpoena Resurrection Mining Company served a Notice of Deposition with Subpoena Duces Tecum on ASARCO LLC in December 2005, to take discovery whether ASARCO properly exercised its business judgment when it decided to reject the Res-ASARCO joint venture contracts. Resurrection sought the production of certain documents and the deposition of one or more ASARCO representatives in Houston, Texas. Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas, argues that ASARCO exercised sound business judgment in rejecting the joint venture contracts and that the Court, not Resurrection, should be the final arbiter of whether ASARCO's judgment is in fact sound. Resurrection's attempt to depose an ASARCO representative is counter to the well-established bankruptcy policy of expedient resolution of ASARCO's estate, Mr. Kinzie contends. "Upon a motion to assume or reject an executory contract, the only issue properly before the court is whether the assumption or rejection of the subject contract is based on a debtor's business judgment." Mr. Kinzie adds that Resurrection's attempt to depose an ASARCO representative will have little or no effect on the outcome of ASARCO's Rejection Motion since Resurrection will have no more than a general unsecured claim whether ASARCO rejects the joint contracts or not. Furthermore, discovery will only delay the administration of ASARCO's bankruptcy case. Mr. Kinzie notes that the discovery will require ASARCO to unnecessarily expend money for attorneys' fees, and will require time for at least one ASARCO employee to gather documents and prepare for his deposition -- time which could be much better spent on other more important matters. Accordingly, ASARCO asks the Court to: (a) quash Resurrection's Deposition Notice and Subpoena; and (b) enter a protective order, staying discovery on the issue of whether ASARCO has exercised sound business judgment in rejecting the Res-ASARCO agreements. Resurrection Responds ASARCO has not proven that the burden of complying with the Deposition Notice outweighs the benefits to be gained by Resurrection Mining Company through discovery, H. Rey Stroube, III, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Houston, Texas, argues. ASARCO has not provided any support for its contention that deposing an appropriate corporate representative and complying with a simple document subpoena is unfairly burdensome, Mr. Stroube contends. According to Mr. Stroube, legitimate issues of fact do exist that the Court needs to resolve before the ruling on the Rejection Motion. Resurrection asserts it is entitled to take discovery on these factual questions and should not be prevented from doing so because of ASARCO's vague allegations of cost and burden. Resurrection complains that ASARCO did not specifically identify all of the Contracts it seeks to reject. Resurrection also observes that the identified Contracts are not executory contracts, and therefore may not be rejected under Section 365 of the Bankruptcy Code. Moreover, ASARCO did not provide sufficient explanation of its basis to reject the Contracts, Mr. Stroube points out. Accordingly, Resurrection asks the Court to: (a) deny ASARCO's request; (b) compel ASARCO to comply with the Deposition Notice as soon as possible; and (c) direct ASARCO to reimburse Resurrection for all of its reasonable costs and attorneys' fees incurred as a result of filing its request. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. gives the Debtor financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP gives legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee.When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASSET BACKED: S&P Downgrades One Note Class' Rating to CCC ---------------------------------------------------------- Fitch Ratings affirmed 45, downgraded one, upgraded six & placed one class of notes on Rating Watch Negative rating actions on the Asset Backed Funding Corporation issues listed below: Series 2001-AQ1: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'BB' -- Class B remains at 'C' Series 2002-NC1: -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A' -- Class M-3 affirmed at 'BBB' -- Class M-4 affirmed at 'BBB-' Series 2002-OPT1: -- 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 M-5 affirmed at 'BBB+' -- Class M-6 affirmed at 'BBB-' Series 2002-SB1: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A' -- Class M-3, rated 'BBB', placed on Rating Watch Negative -- Class B downgraded to 'CCC' from 'B' Series 2002-WF1: -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A' -- Class M-3 affirmed at 'BBB-' -- Class B affirmed at 'B+' Series 2002-WF2: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA+' -- Class M-2 affirmed at 'A' -- Class M-3 affirmed at 'BBB' -- Class M-4 affirmed at 'BBB-' Series 2003-AHL1: -- Class A affirmed at 'AAA' -- Class M-1 upgraded to 'AA+' from 'AA' -- Class M-2 upgraded to 'AA-' from 'A+' -- Class M-3 upgraded to 'A' from 'A-' -- Class M-4 upgraded to 'A-' from 'BBB+' -- Class M-5 upgraded to 'BBB' from 'BBB-' Series 2003-OPT1: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A+' -- Class M-3 affirmed at 'A' -- Class M-4 affirmed at 'A-' -- Class M-5 affirmed at 'BBB+' -- Class M-6 affirmed at 'BBB' Series 2003-WF1: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A+' -- Class M-3 affirmed at 'BBB+' -- Class M-4 affirmed at 'BBB-' Series 2003-WMC1: -- Class A affirmed at 'AAA' -- Class M-1 upgraded to 'AAA' from 'AA' -- Class M-2 affirmed at 'A+' -- Class M-3 affirmed at 'A' -- Class M-4 affirmed at 'BBB+' -- Class M-5 affirmed at 'BBB' -- Class M-6 affirmed at 'BBB-' The affirmations reflect a satisfactory relationship between credit enhancement (CE) and future loss expectations and affect approximately $616.93 million of outstanding certificates. The upgrades reflect improvements in the relationships between CE and future loss expectations and affect approximately $116.88 million of outstanding certificates. All of the trusts which contain upgrades are generally benefiting from monthly excess spread (XS) greater than monthly losses and overcollateralization (OC) at, or near, the target amount. The CE levels for all of the upgraded classes have increased by more than three times the original levels since the closing date. The downgrade of class B of series 2002-SB1 affects $2.79 million of outstanding certificates and reflects the deterioration of CE relative to monthly losses. Class M-3 of the same issue is being placed on Rating Watch Negative and affects approximately $6.79 million of outstanding certificates. Series 2002-SB1 has experienced monthly losses that exceeded XS for at least 11 out of the last 12 months. As of the January 2006 distribution date, the OC amount of $1,358,526 is below the target amount of $1,809,816. Fitch expects the losses to continue to exceed excess spread in the future, causing the OC amount to decrease further and preventing CE as a percentage of the current pool balances to build for all bonds. The trigger for this trust is currently failing and principal is distributed sequentially among the classes. While this helps protect the senior classes, the failed trigger will extend the life of the subordinate bonds and pose an additional risk at the bottom of the waterfall. The transactions are seasoned from a range of 26 (series 2003- WMC1) to 58 (series 2001-AQ1) months. The pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 9% (series 2001-AQ1) to 27% (series 2003-AHL1). The cumulative loss to date as a percentage of the pool's initial balance ranges from 0.24% (series 2003-WMC1) to 4.27% (series 2002-SB1). The underlying collateral for the mortgage transactions listed above consist of both fixed- and adjustable- mortgage loans secured by first and second liens on residential mortgages extended to subprime borrowers. At issuance, the weighted average original loan-to-value ratio ranged from 76.39% to 82.68%. The properties are primarily located in: * California, * Florida, and * New York. The mortgage loans were acquired from various originators and have various master servicers, including: * Wells Fargo Bank, N.A.; * Option One Mortgage Corporation; and * Litton Loan Servicing, LP (all rated 'RPS1' by Fitch). AVETA INC: S&P Upgrades Counterparty Credit Rating to B from B- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its counterparty credit rating on Aveta Inc. and its senior secured debt ratings on MMM Holdings Inc. and NAMM Holdings Inc., to 'B' from 'B-' and removed these ratings from CreditWatch. The outlook is positive. The credit facilities (issued by MMM and NAMM, collectively) presently consist of a $287.6 million term loan due August 2011 and a $20 million revolver due August 2012. The upgrade reflects Aveta's improved financial condition attributed to strengthened health plan profitability and more balance capital structure resulting from the repayment of debt and addition of equity stemming from its recently completed private placement of equity shares. "Aveta is reasonably well positioned to sustain (and likely build on) its existing market profile because we consider its core Managed Medicare markets to be under-penetrated," explained Standard & Poor's credit analyst Joseph Marinucci. "We also believe that legislation supporting the Medicare Advantage Program is likely to provide sufficient funding for the program over the intermediate term and we believe the existing operating companies have developed an infrastructure capable of supporting cost- effective care-coordination initiatives." Standard & Poor's considers this particularly important because the rate structure has shifted and will continue to shift more toward the inclusion of health risk adjusters and be less influenced by demographic variables. Standard & Poor's expects Aveta to achieve strong organic enrollment growth over the near term (one year) and more moderate growth over the intermediate term (five years). By year-end 2006, Standard & Poor's expects total Medicare membership to grow by about 25% and be 160,000-170,000 and for commercial membership to be very modestly lower at about 210,000 members. Standard & Poor's expects pretax income and cash flow for 2006 to be $100 million-$110 million and $140 million-$150 million, respectively. Also, Standard & Poor's expects financial leverage and interest coverage to be 65%-75%, 1.5x-2.5x, and 6x-7x, respectively, which would be viewed as conservative for the rating. The positive outlook reflects the potential for the ratings to be raised by one notch to 'B+' if Aveta sustains its earnings and cash flow profile and effectively manages its growth and return objectives without jeopardizing operational focus. Conversely, the outlook could be revised to stable if profitability were to erode or if the company altered its capital structure in a way that materially diminishes statutory capitalization or materially increases debt outstanding. BCBG MAX: Max Rave Unit Makes Winning $35MM Bid for G+G Retail -------------------------------------------------------------- BCBG Max Azria Group, Inc., reported that Max Rave, LLC, an entity to be owned by BCBG and Guggenheim Corporate Funding LLC, has emerged as the successful bidder in the auction for the assets of G+G Retail, Inc. The winning bid of $35 million cash was approved on Feb. 15, 2006, in the U.S. Bankruptcy Court. The purchase transaction is expected to be completed on or before Feb. 21, 2006. GCF provided equity and loan commitments to Max Rave in order to fund the purchase of the company, provide fresh inventory for stores and provide operating working capital for operations. In addition, BCBG committed to provide equity capital to Max Rave. Max Rave will be operated as a separate entity from BCBG and it is anticipated that later in 2006, subject to the approval of BCBG's lenders, it will be merged into BCBG. G+G Retail currently operates more than 500 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. Created in 1989, BCBG Max Azria -- http://www.bcbg.com/-- was named for the Parisian phrase "bon chic, bon genre", meaning "good style, good attitude". BCBG Max Azria Group, Inc. designs, develops, produces and markets complete collections of women's ready-to-wear and accessories, and select categories for men, each known for being at the forefront of creativity, quality and style. The Group is one of the worldwide leaders in ready-to-wear, encompassing a portfolio of 15 brands including BCBG Max Azria, Max Azria Collection, Max Azria Atelier, BCBGirls, BCBG//Attitude, To The Max, Herve Leger Paris, Herve Leger Couture, Parallel, Max and Cleo, Noun, Maxime, Dorothee Bis, Don Algodon and Alain Manoukian, and a retail and wholesale network that includes more than 5,200 points of sale throughout the world. * * * As reported in the Troubled Company Reporter on Oct. 21, 2005, Moody's Investors Services assigned first time ratings to BCBG Max Azria Group, Inc. The ratings are being assigned in connection with the company's syndication of two bank credit facilities, the proceeds of which will be used to: * finance its acquisition of Alain Manoukian S. A.; * refinance existing indebtedness; and * to pay a modest dividend. These ratings have been assigned: * Corporate family rating of B1 * $100 million senior secured revolving credit facility at Ba3 * $200 million senior secured term loan B at B1 The outlook is stable. The ratings are constrained by the company's high exposure to fashion risk which is likely to result in volatile earnings, and the company's strong reliance on its founder Max Azria, as well as its small size and scale. The ratings also consider the highly competitive nature of the apparel industry, the fashion-forward nature of BCBG's merchandise, which limits the potential footprint of the company's stores, as well as increasing the risk associated with the proper selection of new markets. BELVA BROWN: Case Summary & 11 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Belva Jean Brown aka B.J. Brown 13652 Burt Street Omaha, Nebraska 68154 Bankruptcy Case No.: 06-80155 Chapter 11 Petition Date: February 16, 2006 Court: District of Nebraska (Omaha) Debtor's Counsel: Robert V. Ginn, Esq. Blackwell Sanders Peper Martin LLP 1620 Dodge Street, Suite 2100 Omaha, Nebraska 68102 Tel: (402) 964-5000 Fax: (402) 964-5050 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mid City Bank $260,797 304 South 42nd Street Omaha, NE 68131 US Bank $79,106 P.O. Bank 790408 Saint Louis, MO 63179 Marriott Rewards $28,551 Cardmember Services P.O. Box 94014 Palatine, IL 60094 Nebraska Furniture Mart $12,719 Bank of America $12,186 Sears Mastercard $7,473 Citi Business Platinum Select $4,789 Phillips 66 $2,772 Von Maur $643 Younkers $632 Sams Club $500 BERKLINE/BENCHCRAFT: S&P Affirms Corporate Credit Rating at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed all its outstanding ratings on furniture manufacturer Berkline/BenchCraft Holdings LLC, including its 'B+' corporate credit rating. All ratings have been removed from CreditWatch, where they were initially placed on April 15, 2005, with positive implications following Berkline's filing of a registration statement for an IPO. The IPO did not take place and CreditWatch implications were subsequently revised to negative on Nov. 30, 2005, reflecting Standard & Poor's concerns about Berkline's potential inability to meet financial covenants required by its bank credit facilities for the period ended Oct. 1, 2005. The outlook on Morristown, Tennessee-based Berkline/BenchCraft is negative. The company had about $163 million of total debt and $14.5 million of mandatorily redeemable preferred stock outstanding at Dec. 31, 2005. The ratings affirmation takes into consideration the company's recent waivers and amendments to the terms of its first-lien and second-lien credit agreements and Standard & Poor's expectations for a reduction in leverage. Because of a $7 million write-off of receivables from a major customer that filed for bankruptcy, the company was not in compliance with financial covenants for the period ended Oct. 1, 2005. The amendments allow for the add-back of this write-off in the calculation of bank EBITDA going forward and revised the covenant levels to provide additional cushion over the next six quarters. The ratings affirmation also reflects credit protection measures that, although weaker-than-expected, remain appropriate for the current ratings and expectations that Berkline will gradually improve these credit measures. BERRY-HILL: Court Approves Motion Protecting Consigned Artwork -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has entered an order approving, in part, Berry-Hill Galleries, Inc's previously filed motion relating to consigned artwork that was received by the Company before its filing for chapter 11 protection. The Court entered a prior order relating to consigned artwork received by the Company after the filing on Jan. 17, 2006. The latest order ensures, among other things, that the agreed consignment price may be paid to the consignment party from the proceeds of the post-petition sale of any pre-petition consigned artwork and any pre-petition consigned artwork in the Company's possession may be returned to the consignment party, if certain conditions are satisfied. The order also permits Berry-Hill to make payments to partial owners of artwork, consistent with the terms of applicable agreements, if such artwork is sold. "Our customers are our most important assets," Frederick D. Hill, a director of Berry-Hill Galleries, Inc., said. "A major focus of our strategic restructuring is to ensure that the artwork placed with us on consignment may be sold in the ordinary course and any amounts due to consignors may be paid upon the sale of that artwork. With this order in place we have accomplished this." The Company also noted that preparations for its highly anticipated exhibition "Toward a New American Cubism," which will run from May 23 through July, continue. The exhibition will feature extensive new research on the subject. It will include important works of art on loan from major institutions as well as private collections, and will be accompanied by the publication of a substantial catalog. Berry-Hill Galleries is represented by the law firm of Kramer Levin Naftalis & Frankel LLP, and has engaged Gordian Group, LLC as its investmentbank. Alan M. Jacobs of AMJ Advisors, LLC is the Chief Restructuring Officer. Headquartered in New York, New York, Berry-Hill Galleries, Inc. -- http://www.berry-hill.com/-- buys paintings and sculpture through outright purchase or on a commission basis and also exhibits artworks. The Debtor and its affiliate, Coram Capital LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr. S.D.N.Y. Case Nos. 05-60169 & 05-60170). Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $100 million and debts between $1 million and $50 million. BEVERLY ENTERPRISES: Shareholders Okay Pearl Senior Merger Accord ----------------------------------------------------------------- Beverly Enterprises, Inc. (NYSE: BEV), reported that at a special meeting of the stockholders held in Fort Smith, Ark., its stockholders voted to adopt the merger agreement providing for the acquisition of BEI by Pearl Senior Care, Inc., an affiliate of Fillmore Capital Partners, LLC. Approximately 99.3 percent of stockholders voting in person or by proxy voted for adoption of the merger agreement. The number of shares voting to adopt the merger agreement represented approximately 76 percent of the total number of shares outstanding and entitled to vote. The proposed merger is expected to be completed no later than March 15, 2006, subject to the satisfaction or waiver of all the closing conditions set forth in the merger agreement. Under the terms of the merger agreement, BEI stockholders will receive $12.50 per share in cash, without interest. Beverly Enterprises, Inc., and its operating subsidiaries providers of healthcare services to the elderly in the United States. BEI, through its subsidiaries, operates 342 skilled nursing facilities, as well as 18 assisted living centers, and 67 hospice/home care centers. Through Aegis Therapies, Inc., BEI offers rehabilitative services on a contract basis to nursing facilities operated by other care providers. * * * As reported in the Troubled Company Reporter on Mar. 28, 2005, Standard & Poor's Ratings Services placed its ratings on Beverly Enterprises Inc. on CreditWatch with negative implications. The CreditWatch listing reflects the announcement that Beverly's board of directors has voted to sell the company through an auction process. This is in response to the possibility that an investor group, the Whitman/Appaloosa group, may take control of the company if it is successful at the upcoming board elections at the company's shareholder meeting in April. The CreditWatch listing reflects the apparent likelihood that a sale of the company will take place. Regardless of who acquires Beverly, it is likely that the company's credit profile will weaken. As reported in the Troubled Company Reporter, on June 16, 2004, Standard & Poor's Ratings Services assigned its 'B' rating to Beverly's the $225 million senior subordinated notes due 2014. The existing ratings on the company were affirmed. The company's bank facility, which is rated 'BB', or one notch above the 'BB-' corporate credit rating, has been assigned a recovery rating of '1'. As reported in the Troubled Company Reporter on Mar. 28, 2005, Moody's Investors Service affirmed the ratings of Beverly Enterprises, Inc., and changed the outlook to developing. This action follows the announcement by Beverly that its Board of Directors voted unanimously to pursue the sale of the company through an auction process. This announcement follows the expression of interest from and ensuing proxy battle with the Whitman/Appaloosa investor group. These ratings were affirmed: * Senior implied rating, Ba3 * Senior unsecured issuer rating, B1 * $90 million senior secured revolving credit facility due 2007, Ba3 * $135 million senior secured term loan B due 2008, rated Ba3 * $215 million 7.875% senior subordinated notes due 2014, rated B2 * $115 million 2.75% convertible subordinated notes, rated B2 As reported in the Troubled Company Reporter on Mar. 24, 2005, Fitch Ratings has placed Beverly Enterprises, Inc., on Rating Watch Evolving. Beverly's Board of Directors announced they were putting the company up for sale. Beverly is currently in the midst of a Proxy contest with a group led by Formation Capital, LLC, which includes a host of investors that have collectively acquired 8.1% of BEV common shares. Formation has provided an indication of interest of $11.50 per share of BEV common stock, or approximately $1.8 billion. Fitch's ratings on Beverly affected by this action include: -- Secured bank facility 'BB'; -- Senior unsecured debt (indicative) 'BB-'; -- Senior secured subordinated notes 'B+'; -- Senior subordinated convertible notes 'B+'. BOSTON COMMS: Incurs $54.2 Million Net Loss in 2005 --------------------------------------------------- Boston Communications Group, Inc., earned $2.7 million of net income for the fourth quarter ended Dec. 31, 2005, as compared to $4 million of net income for the fourth quarter of 2004. On a non-GAAP basis excluding legal expenses and related charges associated with the Freedom Wireless lawsuit, the Company would have reported net income of $2.5 million. For the full year ended December 31, 2005, the Company reported a consolidated net loss of $54.2 million that includes a $64.3 million non-cash charge recorded in the second and third quarters to reserve for the potential loss in the Freedom Wireless lawsuit, which the Company continues to contest. The Company earned $17.2 million of net income in the prior year. Total revenues for the fourth quarter of 2005 increased by $247,000, or 1%, to $26.3 million from the fourth quarter of 2004 and increased by $629,000, or 2% sequentially, from the third quarter of 2005. For the year ended Dec. 31, 2005, Total revenues decreased 4% to $103.9 million from 2004 annual revenues of $107.9 million. "Our financial results for the fourth quarter reflect [Boston Communication's] ability to meet operator demand for world-class products and services," said E.Y. Snowden, [the Company's] president and chief executive officer. "Additionally, we are encouraged by the recent favorable rulings from the Appeals Court to stay the injunction pending appeal. Our product and customer diversification strategy, supported by innovative product development, a targeted sales push into emerging and mature markets worldwide, and our recently announced Global Alliance Program, continue to be our primary focus, in addition to resolution of the Freedom Wireless litigation." Freedom Wireless Litigation Status Boston Communications is in the process of appealing the Freedom Wireless judgment in the U.S. Court of Appeals for the Federal Circuit. On Dec. 15, 2005 the Appeals Court stayed the injunction previously granted by the U.S. District Court for the District of Massachusetts. Therefore, the Company's carrier customers, including its co-defendant Cingular Wireless, may continue to use the Company's Real-Time Billing service during the appeal process. Although the timing of proceedings during the appeal process may vary, the Company believes the appeal will continue into 2007. As previously announced, the Company has accrued an estimated loss of $64.3 million with respect to the Freedom Wireless judgment, excluding additional legal charges which are, and will continue to be, expensed as incurred. However, the actual loss, if any, may be higher or lower than the amount accrued and could be higher than the current judgment of $165 million. Bankruptcy Warning As reported in the Troubled Company Reporter on Nov. 11, 2005, the potential outcome of the Freedom Wireless Litigation varies greatly and could include any of the following: * If the injunction is not stayed or if security is required to be posted for royalties that exceed the Company's ability to pay, BCGI would need to negotiate a settlement and/or a license with Freedom Wireless or would likely seek protection under the U.S. Bankruptcy Code. * If the Appeals Court overturns the judgment of infringement, the Appeals Court could either rule that the Company would have no liability to Freedom Wireless or that the case would be returned to the District Court for a new trial on infringement. * If the Appeals Court overturns the judgment that the patents held by Freedom Wireless were valid or enforceable, BCGI would have no liability to Freedom Wireless, or the case could be returned to the District Court for a new trial on the issue of invalidity or unenforceability. * If the Appeals Court rules in favor of Freedom Wireless, the Company would need to seek protection under the U.S. Bankruptcy Code. * The parties may enter into a settlement agreement About Boston Communications Boston Communications Group, Inc. -- http://www.bcgi.net/-- develops products and services that enable wireless operators to fully realize the potential of their networks. BCGI's access management, billing, payment and network solutions help operators rapidly deploy and manage innovative voice and data services for subscribers. Available as licensed products and fully managed services, BCGI's solutions power carriers and enable MVNOs with market-leading implementations of prepaid wireless, postpaid billing, wireless account funding and m-commerce. BCGI was founded in 1988. BRIDGES TRANSITIONS: Discloses Financial Results for Six Months --------------------------------------------------------------- Bridges Transitions Inc. (TSX:BIT) disclosed its financial results for the six months ending December 31, 2005. Through the second quarter of our 2006 fiscal year, the Company reportedly remained focused on our three-point corporate strategy -- plans designed: (1) to consolidate its significant market share; (2) to deepen the relationships that it has with its large subscriber base through the provision of additional products and services; and (3) to open new business relationships reportedly made possible by its unique market position. In October, the Company disclosed the hiring of investment bankers to advise its Board of Directors as to alternatives that may allow its shareholders to realize greater value. Work by its bankers and management that was initiated in the second quarter continues to progress satisfactorily and on schedule. Naturally, any announcements respecting this work will be made promptly if or when there is tangible progress. Until such time, it will continue to place operating focus on it business plan and build on it second quarter financial improvements. During the three months ended September 30, 2005, the Company experienced a significant reduction in invoicing as compared to the comparable quarter in 2004. This trend continued in the second quarter, but at a significantly more moderate pace. Invoicing was $122,316 less than the comparable quarter in 2004, a 5% reduction. Revenue for the current six months is 10% below last year. Both Costs of Revenue and Expenses are also reduced period over period by 8.6% and 16.6% respectively. The combined impact of lower revenue and lower expenses has a combined 6-month result of Net Earnings rising from a loss of $165,983 to a profit of $351,478 period over period. Bridges Transitions Inc. -- http://www.bridges.com/-- provides software-based and online education planning, career exploration, and high school/college test prep resources designed to help students achieve education and career success. Over 14,000 schools and other agencies across the U.S. and Canada use Bridges' products and services. The Company is listed on the Toronto Stock Exchange under the symbol: BIT. As of December 31, 2005, the Company's balance sheet reflected assets amounting to $7,190,468 and debts aggregating $7,272,244. As of December 31, 2005, the Company's showed an $81,776 equity deficit. The equity deficit was $576,636 deficit at June 30, 2005. CATHOLIC CHURCH: Portland Responds to Insurers' Objections ---------------------------------------------------------- As previously reported in the Troubled Company Reporter on Jan. 27, 2006, certain insurers asserted that the Archdiocese of Portland in Oregon's disclosure statement should be modified to remove ambiguity about whether the Plan of Reorganization and the "Claims Resolution Facility Agreement" would impact the insurers' rights or the Archdiocese's obligations under certain insurance policies. The Insurers include: * ACE Property & Casualty Insurance Company, * Centennial Insurance Company, * Employers Surplus Lines Insurance Company, * General Insurance Company of America, * Interstate Fire & Casualty Company, * Oregon Insurance Guarantee Association, * St. Paul Mercury Insurance Company, and * St. Paul Fire and Marine Insurance Company. Joseph A. Field, Esq., at Field & Jerger, LLP, in Portland, Oregon, told the U.S. Bankruptcy Court for the District of Oregon that the Disclosure Statement does not provide sufficient information for any party to make an informed judgment about the Plan. * * * National Surety Corporation supports the arguments raised by the insurers in their objection to the Disclosure Statement filed by the Archdiocese of Portland in Oregon. National Surety issued insurance policies to Portland from 1981 through 1986. It is also a defendant in adversary proceeding no. 04-03373-elp captioned Archbishop of Portland in Oregon v. ACE USA, Inc., et al. Portland Addresses Insurers' Objections According to Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, Portland's Disclosure Statement will be modified to provide that ". . . all claims and defenses of the [Archdiocese] and the Insurance Companies relating to the Insurance Claims [will] remain unaffected by the Plan and Confirmation Order." Mr. Stilley notes that the Archdiocese will consider whether to modify the Plan to assign its rights that have accrued for covered losses that have already occurred relating to Tort Claims under the insurance policies and the Insurance Claims, to the Claims Resolution Facility. In the event it chooses to make that change, Mr. Stilley says the Archdiocese will likewise modify the Claims Resolution Facility Agreement to provide that as insurance recoveries are obtained, the recoveries will be used to reduce the amount of credit available on the notes and letter of credit provided for in the Claims Resolution Facility Agreement. Portland believes that its major insurers -- Safeco Insurance Company of America and General Insurance Company of America -- abandoned their customer well before the bankruptcy filing. The Archdiocese has lost the full support of some of its insurers in resolving claims of alleged sexual misconduct. However, the Archdiocese will modify the Disclosure Statement to indicate that the Insurers disagree with Portland's assertion. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Responds to FCR's Disclosure Objection ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Jan. 31, 2006, David A. Foraker, the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case, argued that the Disclosure Statement accompanying the Plan of Reorganization filed by the Archdiocese should not be approved because the Plan is unconfirmable as a matter of law. Mr. Foraker pointed out that: (1) the Plan of Reorganization provides for categorical disallowance of all claims for punitive damages or for loss of consortium, which is impermissible under the Bankruptcy Code. (2) the "best interest of creditors" test of Section 1129(a)(7)(A)(ii) of the Bankruptcy Code cannot be satisfied with regard to the Plan. Archdiocese Answers Back To address the Future Claimants Representative's concerns, Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, relates that the Archdiocese of Portland in Oregon will modify the Plan to provide that: * the consortium claims, if any, will be treated like other tort claims and will be included in Classes 7, 8, 9, or 10, as applicable; and * the payment of all allowed tort claims by the Claims Resolution Facility will be subject to the approval of the District Court. Mr. Stilley notes that the issue on "Best Interest of Creditors Test" has been and will be separately dealt with in three estimation pleadings already filed with the Bankruptcy Court. On the issue of punitive damages, Mr. Stilley asserts that the Bankruptcy Court has equitable power under Section 105(a) of the Bankruptcy Code to categorically disallow punitive damage claims. According to Mr. Stilley, to impose punitive damages on the Archdiocese would not only result in inequitable distribution of the estate's assets to the actual creditors but would also punish innocent parishioners and the children attending Catholic schools and their parents. The issue of absolute priority rule is not applicable to a reorganization plan involving a non-profit debtor corporation since the Archdiocese has no equity security holders who can receive or retain any property on account of their equity interest, Mr. Stilley points out. "Even if the absolute priority rule was applicable, it would be satisfied because the Archdiocese's Plan provides for payment in full of the allowed amount of the claims as estimated by the Court," Mr. Stilley adds. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELLSTAR CORP: Posts $3.2 Mil. Net Loss in 4th Qtr. Ended Nov. 30 ----------------------------------------------------------------- CellStar Corporation (OTC Pink Sheets: CLST) reported results for fourth quarter and fiscal 2005. The Company reported revenues in the fourth quarter of 2005 of $221 million, compared to $233.8 million in 2004. For the quarter ended Nov. 30, 2005, the Company reported a consolidated net loss of $3.2 million for the fourth quarter of 2005, compared to a net loss of $65.7 million in 2004. Consolidated gross profit increased to $13.7 million in the fourth quarter of 2005 compared to $10.2 million in 2004. "Operating income in North America and Latin America improved 56% in fiscal 2005 compared to fiscal 2004, despite the reporting delays and issues in the Asia-Pacific Region in 2005," said Robert Kaiser, Chairman of the Board and Chief Executive Officer. The Company recorded revenues of $987.3 million in fiscal 2005, compared to $821.5 million in 2004. The Company reported a consolidated net loss of $24.6 million, or $1.20 per share, in fiscal 2005, compared to a net loss of $118.1 million, or $5.80 per share, in 2004. Consolidated gross profit in fiscal 2005 increased to $50 million from $48.6 million in 2004. Gross profit as a percentage of revenues was 5.1% in fiscal 2005, compared to 5.9% in 2004. Cash and cash equivalents at Nov. 30, 2005, were $10.7 million, compared to $13.2 million at Nov. 30, 2004. The Company's continuing operations generated net cash from operating activities of $4.1 million for the year ended Nov. 30, 2005, compared to a cash usage of $22.5 million for the year ended Nov. 30, 2004. As of Nov. 30, 2005, the Company had borrowed $30.5 million under its domestic revolving credit facility compared to $35.8 million at Nov. 30, 2004. The Company had additional borrowing availability under the credit facility of $18.2 million at Nov. 30, 2005. At Nov. 30, 2005, the Company had outstanding $12.4 million of 12% Senior Subordinated Notes due in January 2007. Headquartered in Coppell, Texas, CellStar Corporation -- http://www.cellstar.com/-- is a leading provider of logistics and distribution services to the wireless communications industry. CellStar has operations in North America and Latin America, and distributes handsets, related accessories and other wireless products from leading manufacturers to an extensive network of wireless service providers, agents, MVNO's, insurance/warranty providers and big box retailers. CellStar specializes in completely integrated forward and reverse logistics solutions, repair and refurbishment services, and in some of its markets, provides activation services that generate new subscribers for wireless service providers. Moody's Investors Service assigned its B3 Long-Term Corporate Family Rating to CellStar on Sept. 6, 2001, and rates CellStar's outstanding 12% Senior Subordinated Notes due January 2007 at Ca. Standard & Poor's tagged CellStar with its selective default rating on Feb. 15, 2002, in response to what it perceived as an overly coercive exchange offer. CellStar is the borrower under a Loan and Security Agreement dated as of September 28, 2001 (as amended fifteen times, most recently by a FIFTEENTH AMENDMENT AND WAIVER TO LOAN AGREEMENT dated as of February 10, 2006) with WELLS FARGO FOOTHILL, INC., as Agent and as a Lender, BANK OF AMERICA, N.A. (successor to Fleet Capital Corporation), as, as a Lender, and TEXTRON FINANCIAL CORPORATION, as a Lender. Last year, CellStar failed to comply with the Consolidated Tangible Net Worth covenant and required Fixed Charge Coverage Ratios under the Loan Agreement. The Loan Agreement matures by its own terms on Sept. 27, 2006. CHOICE HOTELS: Earns $21.5 Million in Fourth Quarter Ended Dec. 31 ------------------------------------------------------------------ Choice Hotels International, Inc. (NYSE:CHH) reported its fourth quarter and full year 2005 results. Highlights -- Earnings before interest taxes and depreciation expense for full year 2005 increased 13% to $153 million from $135 million in 2004. Operating income increased more than 15% for both full year and fourth quarter 2005 compared to the same periods in the prior year, to $143.8 million and $36.2 million, respectively; -- Domestic unit growth increased 5.6%; excluding the acquisition of Suburban, domestic unit growth increased 3.9%; -- Domestic system-wide revenue per available room (RevPAR) increased 7.3% for fourth quarter 2005 and 6.1% for full year 2005 compared to prior year results; -- Full year 2005 new domestic hotel franchise contracts up 16% to a record 639; -- Franchising revenues up 16% and 13% for fourth quarter and full year 2005, respectively; total revenues up 14% and 11% for fourth quarter and full year, respectively; -- The domestic hotel pipeline of hotels under construction, awaiting conversion or approved for development increased more than 30% to 603 hotels representing 46,464 rooms; the worldwide pipeline increased 21% to 687 hotels, representing 54,075 rooms; -- According to Smith Travel Research, Choice branded system-wide market share in the United States has increased 89 basis points to 7.35% of total industry rooms since 2002. The total number of domestic hotel rooms has increased at an annual rate of less than 1% per annum during these same 3 years. "We are very pleased with our performance for the fourth quarter and for the full year 2005. We achieved record results, including record franchise sales and our highest year-end domestic hotel pipeline. These results provide solid momentum heading into 2006 and reflect the strength and sustainability of our business model," Charles A. Ledsinger, Jr., president and chief executive officer said. "While continuing to invest in the business, we also returned nearly $80 million to our shareholders through share repurchases and dividends during the year." "We continue to be encouraged by our strong pipeline, the healthy operating environment for the lodging industry and the development potential for the two brands we added to our portfolio in 2005, the upscale Cambria Suites brand and Suburban Extended Stay Hotels," Mr. Ledsinger added. During 2005, the company acquired Suburban Franchise Holding Company, Inc., which included 67 Suburban Extended Stay Hotels units open and operating in the United States. The results of operations for Suburban have been included in the company's results of operations since Sept. 28, 2005. Two-For-One Stock Split The company effected a two-for-one stock split of its outstanding shares of common stock, par value $.01 per share, effective on Oct. 21, 2005. During the year ended Dec. 31, 2005, the company repurchased approximately 1.1 million shares (including 0.5 million prior to the 2 for 1 stock split effected in October 2005) of its common stock for a total cost of $48.6 million. The company has remaining authorization to purchase up to 5.1 million shares. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, and through Feb. 14, 2006, the company has repurchased 33.6 million shares (including 33.0 million prior to the 2 for 1 stock split effected in October 2005) of its common stock at an average price of $21.16 per share and for a total cost of $711.9 million. Dividends For the year ended Dec. 31, 2005, the company paid $30.2 million of cash dividends to shareholders. The annual dividend rate per common share is $0.52. The company expects to continue to return value to its shareholders through a combination of dividends and share repurchases, subject to market and other conditions. Headquartered in Silver Spring, Maryland, Choice Hotels International, Inc. -- http://www.choicehotels.com/-- franchises more than 5,000 hotels, representing more than 400,000 rooms, in the United States and more than 40 countries and territories. As of June 30, 2005, 471 hotels are under development in the United States, representing 36,058 rooms, and an additional 92 hotels, representing 8,329 rooms, are under development in more than 40 countries and territories. The company's Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide. At Dec. 31, 2005, Choice Hotels' balance sheet showed a $167,176,000 stockholders' deficit, compared to a $203,053,000 deficit at Dec. 31, 2004. CONCENTRA OPERATING: Earns $212,000 in Fourth Quarter 2005 ---------------------------------------------------------- Concentra Operating Corporation reported results for the fourth quarter ended Dec. 31, 2005. The Company reported consolidated Adjusted Earnings Before Interest Taxes Depreciation and Amortization of $34,160,000 for the quarter. This represented an increase of 18% over the $29,005,000 in Adjusted EBITDA reported for the same period in 2004. The Company also reported strong increases in its cash flow from operations and its retained cash balances. Due to its strong fourth quarter cash flow trends, the Company currently intends to prepay $31,623,000 in senior term indebtedness at the conclusion of the first quarter. Revenue for the fourth quarter of 2005 increased 16% to $303,396,000 from $261,022,000 in the year-earlier period. Operating income was $20,945,000 in the fourth quarter, an increase of 5% from $19,880,000 in the same period last year. Growth in operating income during the quarter was affected by increases in general and administrative expenses related primarily to a $3,286,000 increase in the Company's non-cash equity compensation expenses, as well as other increases related to Concentra's fourth quarter acquisitions, legal expenses and other compensation costs. Approximately $2,500,000 of the non-cash equity compensation expenses related to the Company's fourth quarter appointment of its new Chairman and were non-recurring in nature. Net income for the quarter was $212,000, which included a pre-tax loss on early retirement of debt totaling $6,029,000, versus net income of $4,557,000 in the year-earlier quarter. Concentra's revenue for 2005 increased 5% to $1,155,069,000 from $1,095,849,000 in 2004. Operating income increased to $127,586,000, up 72% from $74,118,000 for 2004. The Company's growth in operating income reflected the impact of a non-cash impairment charge of $41,682,000 reported in the third quarter of 2004 related to the write down of goodwill and other long-lived assets of the Company's Care Management Services segment. Net income for 2005 was $53,801,000 as compared to a net loss of $9,975,000 in 2004. The Company's net loss for 2004 included a loss on early retirement of debt totaling $14,105,000. For 2005, Adjusted EBITDA was $165,022,000, representing a 7% increase from $154,755,000 in 2004. "We are pleased to have finished the year on such positive notes," Daniel Thomas, President and Chief Executive Officer of Concentra said. "During the fourth quarter, we were able to complete the acquisition of Beech Street Corporation and commence our integration process. By combining the strengths of Beech Street with our existing group health and workers' compensation network operations, we are well positioned to deliver new services that will assist payors and employers in achieving broader provider access and in lowering their healthcare and disability costs. With these expanded services, I believe we will re-establish growth in the Network Services segment of our business during the coming year." "Another positive note during the quarter was that our Health Services division continued to provide us with the solid growth trends that we have been experiencing all year," Thomas added. "Our same-center patient visits grew at a rate of 4.1%, and we continued to achieve strong growth in the diversified services portion of this business segment. With the acquisition of Occupational Health + Rehabilitation Inc., we now have 300 health centers nationwide." Due primarily to positive accounts receivable collection trends, the Company also achieved significant increases in its operating cash flows and cash balances. At the conclusion of the fourth quarter, the Company's Days Sales Outstanding decreased to 51 days, which represented the lowest level achieved in Concentra's history. As a result of these working capital trends and the Company's underlying operating growth, Concentra's net cash provided by operating activities for the year grew to $141,799,000, an increase of $42,926,000 as compared to the year ended Dec. 31, 2004. At Dec. 31, 2005, Concentra had $65,057,000 in unrestricted cash and investments. As a result of its strong fourth quarter cash flow performance and growing cash balances, the Company currently intends to prepay $31,623,000 in senior term indebtedness at the conclusion of the first quarter, in addition to its normal scheduled principal payments. Of this amount, $14,123,000 is being prepaid in compliance with the excess cash flow covenants of the Company's Senior Credit Facility. The remaining $17,500,000 is being made as an optional prepayment. Concentra Operating Corporation, a wholly owned subsidiary of Concentra Inc., is dedicated to improving the quality of life by making healthcare accessible and affordable. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services that include employment-related injury and occupational healthcare, in-network and out-of-network medical claims review and repricing, access to preferred provider organizations, first notice of loss services, case management and other cost containment services. Concentra provides its services to approximately 136,000 employer locations and 3,700 insurance companies, group health plans, third-party administrators and other healthcare payors. The Company has 300 health centers located in 40 states. It also operates the Beech Street and FOCUS networks. These provider networks include 544,000 providers, 52,000 ancillary providers and 4,400 acute-care hospitals nationwide. * * * Concentra Operating Corporation's 9.5% Senior Subordinated Notes due 2010 carry Moody's Investor Services' B3 rating and Standard and Poor's Ratings Services' B- rating. Moody's and S&P assigned those ratings on October 10, 2003. CONGOLEUM CORPORATION: Files Seventh Modified Reorganization Plan ----------------------------------------------------------------- Congoleum Corporation filed with the U.S. Bankruptcy Court for the District of New Jersey a disclosure statement explaining its seventh modified plan of reorganization. The changes incorporated in the seventh modified plan includes: (1) Allowed Secured Asbestos Claims, Not Previously Determined Unsecured Asbestos Personal Injury Claims, and Allowed Previously Determined Unsecured Asbestos Personal Injury Claims will be paid pari passu with each other in all Respects; (2) In lieu of the contribution of the Promissory Note that was to be contributed to the Plan Trust under the Sixth Modified Plan, the new plan contemplates on Reorganized Congoleum issuing 3,800,000 shares of Congoleum Class A common stock, and a New Convertible Security to the Plan Trust, which if certain contingencies occur, will entitle the Plan Trust to own a majority of the voting shares of the common stock of Reorganized Congoleum. In addition, the Additional Plan Trust Contribution, consisting of: (a) 50% of the amount of accrued and unpaid interest from the Petition Date through and including the Effective Date on the Senior Notes, which, if the Effective Date occurs on December 31, 2006, will amount to approximately $15 million; and (b) $7.3 million in Cash, will also be contributed by Congoleum to the Plan Trust; (3) A new section, Section 9.6, was added to the plan, in order to expressly reserve the Debtors' right to seek confirmation of the Plan by means of the fair and equitable power contained in Section 1129(b) of the Bankruptcy Code; (4) The conditions to confirmation of the Plan, was also modified to: (a) reflect the issuance of the New Common Stock and the New Convertible Security to the Plan Trust in lieu of the Promissory Note; (b) reflect the pledge of Congoleum stock by ABI and to remove the requirements that: * at least 95% of the holders of Allowed Secured Asbestos Claims of Qualified Participating Claimants will have irrevocably consented or be deemed to have irrevocably consented to the Forbearance of their rights under Articles II, III.C, IV and VIII of the Claimant Agreement and their rights, if any, under the Collateral Trust Agreement and the Security Agreement by voting to accept the Plan or by failing to timely object to such Forbearance upon notice thereof and that * a forbearance agreement, in the form set forth in Exhibit I to the former Plan, will have been executed and delivered on behalf of Congoleum and all of the Qualified Pre-Petition Settlement Claimants; and (c) incorporate certain rights of Settling Asbestos Insurance Companies under Asbestos Insurance Settlement Agreements as conditions to confirmation. (5) The section regarding exculpation and releases, were modified to clarify that in no event will any party be exculpated or released from liability for any Claim asserted in the Avoidance Actions and in no event will the Pre-Petition Asbestos Claimants' Committee be exculpated or released from liability for any relief granted or costs or expenses incurred in connection with the Avoidance Actions. The Claimants' Representatives and Collateral Trustee were deleted as parties to be exculpated or released under the Plan. (6) An Anti-Suit Injunction provision was added to provide for an injunction pursuant to Section 105(a) of the Bankruptcy Code enjoining non-asbestos claims against any Settling Insurance Company for which liability for non-asbestos coverage has been repurchased and released under an Asbestos Insurance Settlement Agreement. (7) Under the section concerning Plan Trust Bankruptcy Causes of Action, the exception of Plan Trust Disputed Claims from the Plan Trust Bankruptcy Causes of Action to be released by the Debtors was deleted. (8) The seventh modified plan also clarifies that none of the Debtors, ABI, the Futures Representative, the Plan Trustee, the Asbestos Claimants' Committee and the Claimants' Representative may seek to modify the scope of the Asbestos Channeling Injunction or any other injunction contained in the Plan that inures to the benefit of any Settling Asbestos Insurance Company. (9) The provision regarding the funding by the Debtors of Claimants' Representative Fee Claims was deleted in its entirety. (10) The Plan Trust Agreement was also modified to take into the account the impact of the Forbearance and the resolution of Plan Trust Disputed Claims on the treatment of Asbestos Personal Injury Claims under the Plan. The limitation on the Debtors' right to reimbursement of $6 million in Coverage Costs and the Claims Handling Fee has been eliminated as an off-set by the Additional Plan Trust Contribution which consists, in part, of $7.3 million in Cash being contributed by Reorganized Congoleum to the Plan Trust on the Effective Date. (11) The Trust Distribution Procedures revised to reflect the Forbearance and to impose more stringent exposure criteria. Under the revised procedures, all Asbestos Personal Injury Claims of claimants that consent or are deemed to have consented to the Forbearance will be considered for allowance and paid without priority in payment and in all respects pari passu with each other. The modified Plan also provides that interest accrued on Congoleum's 8-5/8% Senior Notes during the period it is in Chapter 11 will be forgiven, and the maturity date of the Notes would be extended by three years to August 1, 2011. Full-text copies of Congoleum Corporation's seventh modified plan of reorganization and disclosure statement are available at no charge at http://ResearchArchives.com/t/s?542 Full-text copies of Congoleum Corporation's sixth modified plan of reorganization and disclosure statement are available at no charge at http://ResearchArchives.com/t/s?91 Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Swidler Berlin LLP. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At. Sept. 30, 2005, Congoleum Corporation's balance sheet showed a $35,614,000 stockholders' deficit compared to a $20,989,000 deficit at Dec. 31, 2004. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL). CORUS ENT: Moody's Withdraws Senior Subordinated Bond's B1 Rating ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings of Corus Entertainment Inc., following the company's redemption of virtually all of its US$375 million 8.75% Senior Subordinated Notes due 2012 on Jan. 23, 2006. Corus Entertainment Inc. is a leading media company headquartered in Calgary, Alberta, Canada. Outlook Actions: Issuer: Corus Entertainment, Inc. * Outlook, Changed To Rating Withdrawn From Stable Withdrawals: Issuer: Corus Entertainment, Inc. * Corporate Family Rating, Withdrawn, previously rated Ba2 * Senior Subordinated Regular Bond/Debenture, Withdrawn, previously rated B1 CREDIT SUISSE: Fitch Affirms $5.1 Mil. Class E Certs.' B+ Rating ---------------------------------------------------------------- Fitch Ratings upgraded the ratings for these classes of Credit Suisse First Boston Mortgage Securities 1995-M1: -- $5.5 million class B to 'AAA' from 'AA' -- $7.8 million class C to 'A+' from 'A' -- $2.8 million class D to 'BBB' from 'BBB-' In addition, these classes' ratings were affirmed: -- $31.4 million class A 'AAA' -- $5.1 million class E 'B+' -- Interest only class AX 'AAA' The $1.5 million class F-1 and $1.2 million class F-2 remain at 'CCC'. Fitch does not rate the $ 3,724 class G-1 certificates. The rating upgrades are the result of increased subordination levels due to paydown. As of the January 2006 distribution report the transaction balance has decreased 28% to $55.2 million from $77.9 million at issuance. Eighteen of the transactions 28 original loans remain outstanding. There is one delinquent loan (3.80%), located in Dallas, Texas, which transferred to the special servicer in January 2006. The special servicer working with the borrower to determine the best resolution of the asset and has begun the foreclosure process. The transaction is composed of Low Income Housing Tax Credits properties. Tax credits are earned over 15 years and paid out over 10 years. All loans in the transaction have ended their tax free period. Fitch remains concerned that some borrowers may have difficulty funding debt service without the tax credits. The transaction's structure is such that losses are absorbed by classes depending on the originator of the disposed loan with Dynex originated loans absorbed first by class G-2, then G-1, followed by F-2 and F-1. CBA originated loans first toG-1, then G-2, followed by F-1 and F-2. CRYOPORT INC: Dec. 31 Balance Sheet Upside-Down by $1.9 Million --------------------------------------------------------------- CryoPort, Inc. delivered its financial results for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 13, 2006. Sales decreased to $11,225 for the quarter ended Dec. 31, 2005, from $85,652 for the quarter ended Dec. 31, 2004. For the three months ended Dec. 31, 2005, CryoPort incurred a $288,469 net loss compared to a $232,47 net loss for the three months ended Dec. 31, 2004. As of Dec. 31, 2005 the Company's current liabilities of $670,599 exceeded its current of $292,845 by $377,754. Approximately 41% of current liabilities represent accrued payroll for executives who have opted to defer taking salaries until the Company has achieved positive operating cash flows. Total assets decreased $697,841 to $382,587 at December 31, 2005 from $1,080,428 at March 31, 2005 as a result of funds used in operating activities and capital acquisitions, partially offset by cash received from the sale of common stock funds used in operating activities. The company's balance sheet at Dec. 31, 2005, showed $382,587 in total assets and $2,343,742 in total liabilities resulting in a stockholders' deficit of $1,961,155. Going Concern Doubt The company reports that its Independent Registered Public Accountant raised substantial doubt on its ability to continue as a going concern after the Firm audited the company's financial statements for the periods ended Mar. 31, 2005 and Mar. 31, 2004. The auditing firm pointed to the company's recurring losses from operations and stockholders' deficit. Management has reiterated that doubt in the company's latest filing. CryoPort, Inc. develops leading edge, proprietary, technology driven shipping and storage products for use in the rapidly growing global biotechnology and pharmaceutical sectors. The products developed by CryoPort are essential components of the infrastructure required for the testing and research components that make up the foundation of the pharmaceutical and biotechnology industries. The company's product line includes single-use drug delivery systems for use in the delivery of pharmaceuticals requiring cryogenic shipping temperatures. D&M FINANCIAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: D&M Financial Corp. 383 Washington Avenue Belleville, New Jersey 07109 Tel: (973) 759-4003 Bankruptcy Case No.: 06-11040 Type of Business: The Debtor is a full-service mortgage company that offers home loan products. See http://www.dnmfc.com/ Chapter 11 Petition Date: February 14, 2006 Court: District of New Jersey (Newark) Judge: Morris Stern Debtor's Counsel: Saul A. Berkman, Esq. 465 Monroe Avenue Washington Township, New Jersey 07676 Tel: (201) 666-8849 Estimated Assets: $100,000 to $500,000 Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ AGF Loan Repurchases $9,000,000 1655 Oak Tree Road Edison, New Jersey 08820 Freemont Loan Repurchases $4,514,800 175 No. Riverview Drive Anaheim, CA 92808 EMC Loan Repurchases $3,000,000 909 Hidden Ridge Drive Irving, TX 75038 Lydian Bank Loan Repurchases $1,200,000 3801 PGA Boulevard, Suite 700 Palm Beach Gardens, FL 33410 ALS Loan Repurchases $1,200,000 601 Fifth Avenue Scottsbluff, NE 69363 Morequity Loan Repurchases $1,000,000 600 No. Royal Avenue Evansville, IN 47715 Countrywide Loan Repurchases $842,685 First National Bank of Arizona Loan Repurchases $700,000 Indymac Bank Loan Repurchases $353,000 Credit Suisse First Boston Loan Repurchases $310,000 GMAC Bank Loan Repurchases $280,000 Rosenbilt, Dapeer, Esq. Attorney Bill $38,074 Scarinci & Hollenbeck LLC Attorney Bill $36,387 Minolta Business Solutions Lease Rental $32,119 Lazer, Aptheker, Attorney Bill $30,141 Rosella & Yedid, P.C. American Express Credit Card $23,111 Paetec Communications, Inc. Phone Bill $20,378 Bank One - Chase Card Credit Card $11,465 Member Services Cohen Norris, Esq. Attorney Bill $7,635 Worldwide Express Courier Bills $5,397 DADE BEHRING: Earns $34.3 Million in Fourth Quarter Ended Dec. 31 ----------------------------------------------------------------- Dade Behring Holdings, Inc. (NASDAQ:DADE) reported net income of $34 million for the quarter ended Dec. 31, 2005, an increase of 43% and 46%, respectively, over the same period last year, reflecting solid business momentum and improving profitability. Worldwide fourth quarter revenue of $421 million increased slightly over the fourth quarter of 2004 and grew 3.6% on a constant currency basis. Net income for the full year increased 56% to $125 million on revenue growth of 6.3%, and revenue reached approximately $1.7 billion, establishing yet another record year for the company in terms of reported earnings and revenue. Full year revenue increased 5.9% on a constant currency basis. "Our consistently strong performance comes directly from the successful execution of our targeted business strategy and the excellent service and practical innovation we provide our customers in the clinical laboratory," Jim Reid-Anderson, Dade Behring's Chairman, President and CEO said. "We are especially pleased with the record-level gains in our installed base of instruments at customer facilities, a key indicator of market share growth." The company's installed base of instruments grew to 38,100 during the fourth quarter, an increase of 2.7% since Sept. 30, 2005, and 8.7% or 3,000 instruments for the year. Revenue growth relative to installed base growth reflects the trend of a declining percentage of instruments being placed under sales-type leases. Cash flow from operations, after investing activities, was $50 million for the quarter, and was negatively impacted by a $10 million reduction in non-U.S. factored receivables. Cash flow was favorably impacted by strong working capital management. "We have effectively managed our operations, and the fundamentals of our business continue to be solid," John Duffey, Dade Behring's Chief Financial Officer said. "In addition, we have established key processes with the goal to further generate strong profitability and cash flow for our shareholders." Key Highlights Worldwide core product revenue increased 3.6% and 6.6% for the quarter and full year, respectively, on a constant currency basis driven primarily by strong reagent, service and operating lease revenue. Revenue in the United States grew 2.5% in the fourth quarter and 6.9% for the full year, and was negatively impacted by the lower level of instruments placed under sales-type leases. Revenue outside of the United States grew 4.5% and 5.0% for the quarter and full year, respectively, on a constant currency basis. Fourth quarter global instrument revenue, which was 11% of total sales, declined by approximately two percentage points from the same period last year. Sales-type lease revenue represented 4% of total sales in 2005. Key revenue drivers for the quarter included strong global growth in Dimension(R) test volume and continued strength in the company's cardiac, hemostasis and microbiology product lines. Core product reagent, service, and operating lease revenue increased 6.0% for the quarter. In 2005, the company invested an incremental $7.5 million in research and development to help fuel future revenue growth. The company has a number of new products across all product segments that it expects to launch in 2006. During the fourth quarter, the company repurchased $63 million of its common shares at an average price of $39.26 per share, and paid its third cash dividend of $0.03 per common share. Stock Repurchase Plan The company's board of directors has authorized the company to purchase an incremental 5 million shares of common stock under the company's share repurchase plan. As of Dec. 31, 2005, the company had purchased 3.0 million of the 5.0 million shares authorized for repurchase in April 2005. In addition, the company announced that its board of directors increased the quarterly cash dividend from $0.03 to $0.05 per common share beginning with the first quarter, 2006, payout. Fourth Quarter 2005 Announcements During the fourth quarter, the company announced the launch of the homocysteine cardiac marker for use on its BN(TM) II and BN ProSpec(R) systems. This test is used to determine if a patient is at high risk of a heart attack or stroke, and has been well received by customers. The company also announced the signing of an important three-year agreement with Novation, a health care contracting services company that serves the purchasing needs of more than 2,500 members and affiliates of VHA Inc. and the University HealthSystem Consortium, for Dade Behring's MicroScan(R) microbiology instruments and test panels. Also during the fourth quarter, the company announced the opening of its new distribution center in Duisburg, Germany, a facility that services customers in over 40 countries. In addition, the company announced it had been awarded Treasury and Risk Management magazine's annual Alexander Hamilton Gold Award for excellence in financial risk management. With 2005 revenue of nearly $1.7 billion, Dade Behring Holdings, Inc. -- http://www.dadebehring.com/-- is the world's largest company dedicated solely to clinical diagnostics. Dade Behring offers a wide range of products, systems and services designed to meet the day-to-day needs of labs, delivering innovative solutions to customers and enhancing the quality of life for patients. * * * Dade Behring Holdings, Inc.'s Senior Subordinated Debt carry Fitch Ratings BB+ rating. DANKA BUSINESS: Poor Performance Cues Moody's to Cut Rating to B3 ----------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of Danka Business Systems PLC to B3 from B2 and maintained a negative ratings outlook. The downgrade reflects continued weak financial performance, negative cash flow from operations and a difficult competitive environment. Moody's took these rating actions: * Downgraded corporate family rating to B3 from B2 * Affirmed $175 million senior unsecured notes (guaranteed) due 2010 at B3 The outlook remain negative. Despite a series of worldwide restructuring and operational initiatives over the last few years, Danka has been unable to reverse a trend of declining revenues and profitability. Revenues and gross profit for the nine months ending Dec. 31, 2005 were down about 7% and 17%, respectively, over the comparable period in 2004. Although the company has significantly reduced selling, general and administrative expenses as a result of its restructuring efforts, declining top line performance and gross margins have resulted in an operating loss in the nine months ending Dec. 31, 2005. Poor performance has been driven by the inability of the company to adapt its high cost business model to the intense competition and rapid technological change in the office imaging industry. Danka has lost market share consistently over the last few years. The company's cash flow stream from its legacy analog service contracts has contracted sharply as the market continues to rapidly transition from analog to digital devices. As a result of new technology trends, Danka has experienced downward pressure on selling prices for equipment and service and supply contracts. Service and supply revenues, which remain the most profitable portion of the business, have been pressured by the increasing reliability of digital products and a shift in pricing towards a cost per copy basis with no minimum base rates. Product line gaps in the rapidly growing color category and new product introductions by printer manufacturers have also pressured results. Moody's is also concerned that a continued decline in the company's financial condition could lead to limitations on the willingness of third party finance and leasing companies to provide financing to Danka's customers. In December 2005, Danka's largest third party financing company in Europe, De Lage Landen International B.V., issued a notice of termination of its local operating agreements effective June 2006. Since a large majority of retail equipment and related sales are financed by third party finance and leasing companies, an inability by Danka to negotiate a new agreement on comparable financial terms could have a material effect on its business. Danka has informed Moody's that it believes that it will be able to either negotiate a new agreement with DLL or utilize alternative financing arrangements on acceptable terms. Danka's liquidity has weakened significantly in its 2006 fiscal year with cash and cash equivalents of $50 million as of Dec. 31, 2005 compared to $92 million at March 31, 2005. Pro forma for additional cash collateral deposited in Jan. 2006, unrestricted cash would have been $30 million at Dec. 31, 2005. The decrease in cash balances came despite the receipt of $17 million in proceeds from businesses sold. The company appears to have sufficient liquidity for the near term with the combination of cash on hand and $38 million of availability under a $50 million borrowing base revolver. Moody's notes, however, that Danka has material commitments which may reduce liquidity over the next twelve months. Restructuring charges payable over the next year are estimated at $16 million and tax payments related to audit settlements are estimated at about $10 million. The negative outlook anticipates flat to declining revenues and minimal free cash flow from operations. Although cost reductions, sales of underperforming businesses and new contracts recently signed with Kodak and Pitney Bowes have the potential to improve profitability, the company's track record of translating new initiatives into profitable performance has been weak. The ratings may be downgraded if Danka cannot stabilize service and equipment revenues and margins which leads to further reductions in cash balances and reliance on the borrowing base revolver. The outlook could be raised if the company generates revenue growth and improves operating margins such that free cash flow to debt increases to over 5% and leverage, as measured by Debt to EBITDA, declines to about 5 times. The $175 million of senior unsecured notes are rated at the corporate family rating level reflecting the preponderance of senior unsecured notes in the debt capitalization. The senior unsecured notes are effectively subordinated to the revolving credit facility and other secured debt of the company. Headquartered in London, England and St. Petersburg, Florida, Danka is one of the largest independent providers of office imaging equipment, document solutions and related services and supplies in the United States and Europe. Revenue for the twelve month period ending Dec. 31, 2005 was $1.1 billion. DATICON INC: Court Approves Asset Sale to Xiotech Corp. ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut in New Haven approved Daticon, Inc.'s request to sell substantially all of its assets, free and clear of liens, to Xiotech Corporation, subject to higher and better offers at an auction. As reported in the Troubled Company Reporter on Jan. 27, 2006, Xiotech agreed to buy the Debtor's assets for: 1) $19 million if the closing of the asset sale occurs on or before Feb. 10, 2006; 2) $18 million if the closing of the asset sale occurs after Feb. 10, 2006 and prior to or on Feb. 18, 2006; 3) $17 million if the closing of the asset sale occurs after Feb. 18, 2006 and prior to or on Feb. 26, 2006; and 4) $16 million if the closing of the asset sale occurs after Feb. 26, 2006 and prior to or on March 6, 2006. The purchase agreement also provides that Xiotech or the winning bidder will offer employment to the Debtor's 170 employees. Daticon agreed that if a competitor topped Xiotech's bid in an auction, the estate would pay Xiotech a 3% break-up fee. No competing bidder showed up. The Debtor stressed that consummation of the asset sale is imperative because of the provision in the Purchase Agreement that the purchase price for the Assets will decrease by $1 million for each week during a three-week time-period that the sale does not close. In all events, the final closing must occur by March 6, 2006. Headquartered in Norwich, Connecticut, Daticon, Inc. -- http://www.daticon.com/-- works with law firms, corporations and government agencies to capture, review and manage the volumes of electronic data and paper documents generated by complex litigation, merger and acquisition transactions, and investigations. The Debtor filed for chapter 11 protection on Jan. 17, 2006 (Bankr. D. Conn. Case No. 06-30034). Douglas S. Skalka, Esq., at Neubert, Pepe & Monteith, PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $9,089,033 in assets and $18,997,028 in debts as of Dec. 31, 2005. DAVE & BUSTER'S: S&P Rates Planned $175 Million Sr. Notes at CCC+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to theme restaurant operator Dave & Buster's Inc. At the same time, Standard & Poor's assigned its 'B-' rating to the company's planned $160 million bank loan, along with a recovery rating of '3', indicating the expectation of meaningful (50%-80%) recovery of principal in the event of a payment default. Standard & Poor's also assigned its 'CCC+' rating to the company's planned $175 million senior unsecured notes. The outlook is negative. "The ratings on Dave & Buster's," said Standard & Poor's credit analyst Robert Lichtenstein, "reflect the company's small size in the highly competitive restaurant/entertainment business and low barriers to entry." Other challenges include its vulnerability to changes in consumer spending and a very highly leveraged capital structure that limits cash flow protection. DELTA AIR: Receives Court Approval for Aircraft Lease Transactions ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York has granted approval for certain aircraft lease transactions that will result in approximately $200 million of annual savings for Delta Air Lines Inc. compared with its existing rent and debt service obligations for those aircraft. "Less than six months after filing for reorganization under Chapter 11, we have already made significant progress in our effort to achieve substantial annual cost reductions from the renegotiation or rejection of aircraft leases," Edward H. Bastian, Executive Vice President and Chief Financial Officer of Delta, said. "Restructuring plans for over 90% of our mainline fleet and over a third of our regional jets have now been agreed to or otherwise implemented with aircraft financing parties." "The cost reductions resulting from these transactions are a critical element in our business plan, which calls for $3 billion in annual revenue and cost benefits," Mr. Bastian continued. "At the time of our Chapter 11 filing, we had targeted fleet savings of approximately $450 million. With the court approval received today, the Company is well on its way to achieving that objective. We are also on track to achieve our goal of eliminating four aircraft types from our fleet by the end of 2006." The transactions approved by Judge Adlai S. Hardin on Feb. 15, 2006, negotiated with a group of aircraft creditors, will restructure the financing arrangements for 88 aircraft in Delta's mainline fleet. Closing of the transactions is subject to the completion of definitive documentation. "We are very pleased that the parties involved in these negotiations were able to arrive at a consensual agreement on such a large group of aircraft so quickly," Mr. Bastian said. "This agreement is an important milestone for Delta and a key cornerstone of our aircraft lease renegotiation efforts." Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DOLLAR FINANCIAL: Moody's Assigns B3 Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service affirmed the B3 senior unsecured debt rating of Dollar Financial Group, Inc. In a related action Moody's assigned a corporate family rating of B3 to the firm. The rating outlook is stable. The ratings reflect Dollar's strong market positions in the U.S., Canada and the U.K. in serving the large and growing under-banked population, the company's diversified product and geographic mix, improved financial flexibility following Dollar's January 2005 initial public offering, strong operating cash flow generation, continued solid performance of the core check cashing business, enhanced technological platform for servicing and loss mitigation, and experienced/long-tenured management team. These factors are balanced by Dollar's high consolidated leverage, large debt service requirements, and historical tolerance for leverage demonstrated by Dollar's numerous leveraged recapitalizations. Additionally, Dollar faces the challenges of operating in a highly competitive environment, the highly regulated nature of Dollar's U.S. business as exemplified by the March 2005 FDIC mandate to curtail certain payday lending practices that comprised a significant portion of Dollar's business, political/regulatory uncertainty related to key international markets such as Canada, and the company's aggressive expansion over the past several years. Although Dollar's bank debt is secured, the senior unsecured debt is rated at the same level as the corporate family rating because of the modest amount of secured debt anticipated to be used, as well as the fact that bank debt usage is limited by a borrowing base of liquid assets. Moody's views the payday lending portion of Dollar's business as higher risk than the check cashing business, given regulatory uncertainty and the higher credit risk profile of Dollar's core customer base. In the past, a substantial portion of loans originated by Dollar in the U.S. were funded by County Bank and First Bank of Delaware acting as lenders, with Dollar acting as servicer and retaining credit risk. The rest of the loans were self-funded by Dollar. With the revised FDIC payday lending guidelines, Dollar has terminated its relationship with County Bank, curtailed its relationship with First Bank of Delaware, and transitioned its U.S. payday lending business from a largely bank-funded model to a largely company-funded model. This transition has entailed both operational and financial challenges which, in Moody's opinion, the company has handled well to date. This rating has been assigned: * Corporate Family Rating B3 Moody's last rating action on Dollar occurred on February 9, 1999, when Moody's downgraded the company's senior unsecured debt rating to B3 from B2. Dollar Financial Group is a wholly-owned subsidiary of Dollar Financial Corp., a leading international financial services company serving under-banked consumers. Dollar, based in Berwyn, Pa., reported total assets of $409 million as of the most recent fiscal quarter ended Sept. 30, 2005. DUNKIN' BRANDS: S&P Affirms B- Corporate Credit & Other Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B-' corporate credit, on quick-service restaurant operator Dunkin' Brands Inc. after the Canton-Massachusetts-based company announced its plans to increase the size of its proposed term loan B to $850 million from $700 million. At the same time, Standard & Poor's affirmed its 'B+' bank loan rating and recovery rating of '1', indicating the expectation for 100% recovery of principal in the event of a payment default. The outlook is negative. The ratings are based on preliminary terms and are subject to change after review of final documents. Proceeds from the these bank facilities will be used: a) to finance the acquisition of Dunkin' by: -- Bain Capital Partners LLC, -- The Carlyle Group, and -- Thomas H Lee Partners LP; and b) for general corporate purposes. "Ratings reflect Dunkin's very highly leveraged capital structure, thin cash flow protection measures, narrow product focus, and participation in the intensely competitive quick-service sector of the restaurant industry," explained Standard & Poor's credit analyst Diane Shand. Standard & Poor's expects the investor group to fund $1.5 billion of their $2.4 billion acquisition of Dunkin' with debt. Standard & Poor's estimates that after the transaction the company's leverage will be very high, at more than 8.5x, and cash flow protection measures will be very, thin with EBITDA coverage of interest less than 1.5x. "Because the amortization schedule is minimal," said Ms. Shand, "leverage is expected to remain high." E.DIGITAL CORP: Equity Deficit Tops $3.9MM at December 31 --------------------------------------------------------- e.Digital Corporation delivered its financial results for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 14, 2006. e.Digital generated $115,000 of revenues for the quarter ended Dec. 31, 2005, compared to $1.42 million of revenues for the third fiscal quarter of 2005. Management attributes the decrease in revenues to one customer pushing out their delivery schedule. The Company incurred a $699,072 loss attributable to common stockholders for the three months ended Dec. 31, 2005, as compared to a $997,232 loss for the same period in 2004. At Dec. 31, 2005, the Company's balance sheet showed $658,863 in total assets and liabilities of $4,575,205, resulting in a $3,916,342 stockholders' deficit. The Company had a $3,995,013 working capital deficiency at Dec. 31, 2005, too. A full-text copy of the Company's quarterly report for the period ended Dec. 31, 2005, is available for free at http://researcharchives.com/t/s?575 Financial Statement Amendments The company also filed an amended Form 10-Q for the second fiscal quarter ended Sept. 30, 2005. A total of $128,057 of product costs paid in the third fiscal quarter should have been accrued in the second fiscal quarter, the Company explained, so management took steps to remediate that problem. The amendment does not change the company's nine-month revenues, costs or operating results. A copy of the Company's amended quarterly report for the period ended Sept. 30, 2005, is available for free at http://researcharchives.com/t/s?576 eVU Product Launch e.Digital has commenced pilot deliveries of its new, proprietary eVU(TM) mobile entertainment product to companies in the healthcare and travel and leisure industries. Based on the Company's proprietary digital video technology, eVU features razor-sharp images on its 7" high resolution LCD screen, superb audio fidelity, dual stereo headphone jacks, embedded credit card reader/processor, touch screen capabilities, bright full featured graphical user interface, e.Digital's patent-pending hardware security technology, 10+ hours of high resolution video playback on a single battery charge, and other important features. "We are very pleased with initial feedback from companies evaluating our eVU mobile entertainment devices and turnkey entertainment services business," said Will Blakeley, e.Digital's president and chief technical officer. "We have developed logistic and secure content solutions to enable customers to rapidly deploy, operate and maintain eVUs for their customers, passengers and patients. e.Digital has also initiated efforts to partner with an intellectual property management company to jointly pursue monetizing the company's patent portfolio. "With the proliferation of flash memory based products and the increasing recording capacity of flash, we believe our patent holdings in this area are fundamental and valuable, particularly in the areas of content file management, optimal flash memory management, and in removable flash applications," concluded Blakeley. "With the assistance of an intellectual property management partner, our strategy is to aggressively pursue licensing agreements with companies we believe have products utilizing our intellectual property." Going Concern Doubt Singer Lewak Greenbaum & Goldstein LLP expressed substantial doubt about the e.Digital's ability to continue as a going concern after it audited the company's financial statement for the fiscal year ended Mar. 31, 2005. The auditing firm pointed to the company's recurring losses and stockholders' deficit. About e.Digital e.Digital Corporation -- http://www.edigital.com/-- provides engineering services, product reference designs and technology platforms to customers focusing on the digital video/audio and player/recorder markets. EL PASO CORP: Moody's Reviews Ratings for Possible Upgrade ---------------------------------------------------------- Moody's Investors Service placed under review for possible upgrade the ratings on the debt and supported obligations of El Paso Corporation and its subsidiaries. These rating actions reflect the prospect of EP reducing more than previously expected amount of debt in the near future, the company's progress in reducing its business risks and contingent liabilities, and signs of recovery in its production operations. These positive factors, combined with a large available cash balance, help to improve the outlook for its near-term liquidity and its credit profile overall. Moody's believe that EP is set to accomplish a number of its 2006 credit improvement objectives early this year. The company has more than sufficient cash on hand to retire $615 million of its zero-coupon notes, this year's largest single debt maturity, at their scheduled put date at the end of this month. EP also has over $1 billion of contracted asset sales, which are expected to close during the first half of this year, and which would help to reduce $3 billion of debt as it plans this year. Moody's expects to conclude the review sometime over the next three months. Given the transitional state of the company, the review could result in a positive outlook, a one-notch upgrade, or a combination of the two. Moody's will review the company's 2005 10-K, including the FAS 69 data, and its first quarter results. Moody's will analyze EP's ability to generate operating cash flow in line with its expectations and to reach a sustainable free cash flow position from its core pipeline and production businesses. Prospects for the production unit would be a key consideration in our analysis, since an improvement in EP's earnings and cash flows would depend greatly on the company significantly raising production volumes as it projects. Headquartered in Houston, Texas, El Paso Corporation is a diversified natural gas company. On Review for Possible Upgrade: Issuer: ANR Pipeline Company * Issuer Rating, Placed on Review for Possible Upgrade, currently B1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Issuer: Colorado Interstate Gas Company * Issuer Rating, Placed on Review for Possible Upgrade, currently B1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Issuer: El Paso CGP Company * Subordinated Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently Caa3 Issuer: El Paso Capital Trust II * Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Caa3 Issuer: El Paso Capital Trust III * Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Caa3 Issuer: El Paso Corporation * Corporate Family Rating, Placed on Review for Possible Upgrade, currently B3 * Speculative Grade Liquidity Rating, Placed on Review for Possible Upgrade, currently SGL-3 * Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Ca * Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently B3 * Subordinated Conv./Exch. Bond/Debenture, Placed on Review for Possible Upgrade, currently Caa3 * Subordinated Shelf, Placed on Review for Possible Upgrade, currently (P)Caa3 Issuer: El Paso Energy Capital Trust I * Preferred Stock, Placed on Review for Possible Upgrade, currently Caa3 Issuer: El Paso Exploration & Production Company * Corporate Family Rating, Placed on Review for Possible Upgrade, currently B3 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B3 Issuer: El Paso Natural Gas Company * Issuer Rating, Placed on Review for Possible Upgrade, currently B1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Issuer: El Paso Tennessee Pipeline Co. * Preferred Stock 2 Shelf, Placed on Review for Possible Upgrade, currently (P)Ca Issuer: Tennessee Gas Pipeline Company * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Outlook Actions: Issuer: ANR Pipeline Company * Outlook, Changed To Rating Under Review From Stable Issuer: Colorado Interstate Gas Company * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso CGP Company * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Capital Trust II * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Capital Trust III * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Corporation * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Energy Capital Trust I * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Exploration & Production Company * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Natural Gas Company * Outlook, Changed To Rating Under Review From Stable Issuer: El Paso Tennessee Pipeline Co. * Outlook, Changed To Rating Under Review From Stable Issuer: Tennessee Gas Pipeline Company * Outlook, Changed To Rating Under Review From Stable ENTERGY NEW ORLEANS: Wants Incentive Compensation Programs Okayed ----------------------------------------------------------------- Entergy New Orleans, Inc., seeks the U.S. Bankruptcy Court for the Eastern District of Louisiana's authority to pay incentive compensation for exemplary performance by its employees during the calendar year 2005 pursuant to its incentive compensation programs. The Incentive Plans have been used by the Debtor for five years now and are divided into two categories: A. The Non-Exempt Employees Incentive Plan As of December 31, 2005, there are 265 Non-Exempt employees eligible under the Non-Exempt Plan. The Non-Exempt Employees are employees not exempt from overtime under the Fair Labor Standards Act. Each Non-Exempt Employee will receive about $2,373. The total incentive compensation due to the Non-Exempt Employees will not exceed $628,860. B. The Exempt Employees Incentive Plans About 102 employees are eligible to receive an award under the Exempt Plans, including 11 management level participants and 91 lower-ranked professional participants. There are two separate incentive plans for the management level and lower-ranked professional participants. The aggregate amount of the Exempt Employee incentive compensation pool will not exceed $745,726. As of February 2, 2006, it is not yet determined how much each eligible Exempt Employee will receive because the Debtor's supervisors have just commenced the performance review process. ENOI anticipates that the performance review process will be completed no sooner than March 1, 2006. Daniel E. Packer, president of ENOI, will not receive -- at his request -- any incentive compensation for 2005. The awards are usually paid on or before March 15, 2006. Elizabeth J. Futrell, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre LLP, in New Orleans, Louisiana, relates that among other things, the Incentive Plans are designed to: (a) reward the Debtor's Employees for their performance achievements in 2005; (b) provide an important incentive to the Employees to improve performance results in the future; and (c) supply a necessary component of a competitive total compensation program to the Employees. The Incentive Plans ensure the continued support and enthusiasm of the Debtor's current employees, in the aftermath of Hurricane Katrina, Ms. Futrell adds. Any deterioration of morale could have a substantial adverse impact on the Debtor's ability to maintain its recovery operations and reorganization. The Incentive Plans are necessary to ensure the retention of employees knowledgeable of the Debtor's business and the continuance of quality services provided by the employees at a time they are clearly needed, Ms. Futrell asserts. The Incentive Plans also allow the Debtor to remain competitive in the highly competitive New Orleans job market. On the contrary, failure to pay the amounts under the Incentive Plans could inflict serious hardships on some employees, many of whom are victims of Hurricane Katrina, Ms. Futrell notes. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: Wants More Time to Make Lease Decisions ------------------------------------------------------------ Entergy New Orleans, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to further extend the deadline by which it may assume or reject its non-residential real property leases until the confirmation of a plan of reorganization. Nan Roberts Eitel, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in Baton Rouge, Louisiana, tells the Court that the Debtor needs more time to decide whether its Real Property Leases are a necessary part of its restoration efforts and continued operations. The Debtor did not disclose how many leases it is a party to. Ms. Eitel notes that an extension of the lease decision deadline will avert the forfeiture of the Debtor's valuable assets and maximize the value of the Debtor's assets. An extension will also allow the Debtor to minimize the likelihood of an inadvertent rejection of a valuable lease or premature assumption of a burdensome one, thus avoiding the acquisition of unnecessary administrative expenses. Ms. Eitel maintains that an extension will not adversely affect any substantive rights of, or prejudice any of, the Debtor's lessors. Any lessor may ask the Court to fix an earlier date by which the Debtor must assume or reject its lease in accordance with Section 365(d)(4) of the Bankruptcy Code. Pursuant to Section 365, the Debtor is also obliged to pay and remain current on the postpetition rent obligations under the Real Property Leases to the extent that it required to do so under applicable state law, Ms. Eitel notes. * * * The Court will convene a hearing on March 8, 2006, to consider the Debtor's request. On an interim basis, the Honorable Jerry A. Brown of the Bankruptcy Court for the Eastern District of Louisiana extends the deadline by which the Debtor may assume or reject the Real Property Leases until the conclusion of that hearing. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENXNET INC: Balance Sheet Upside-Down by $846K at December 31 ------------------------------------------------------------- EnXnet, Inc., delivered its quarterly report on Form 10-QSB for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 14, 2006. The Company reported a $39,688 net loss on zero revenues for the quarter ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $211,199 in total assets and liabilities of $1,057,318, resulting in a stockholders' deficit of $846,119. A copy of the regulatory filing is available for free at http://researcharchives.com/t/s?577 Going Concern Doubt Sprouse & Anderson, LLP, expressed substantial doubt about EnXnet's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's working capital deficit and losses since inception About EnXnet, Inc. EnXnet, Inc. -- http://www.enxnet.com/-- has concentrated on identifying and developing new technologies with significant potential for making positive impacts in the multimedia environment. The Company is currently launching the commercialization of its advanced product line. EnXnet's distinctive product portfolio consists of new methods of deterring theft, improving listening and viewing experiences, and presenting information in useful interactive formats. These technologies and related products, while at the leading edge in their respective applications, provide affordable and useful solutions. EPOCH 2001-1: Fitch Holds CC Rating on $12.2 Mil. Class IV Notes ---------------------------------------------------------------- Fitch Ratings affirmed 3 tranches of EPOCH 2001-1, Ltd. and removed them from Rating Watch Negative. These actions are a result of Fitch's review process and are effective immediately: -- $25,000,000 class I notes affirm at 'AA-' -- $16,000,000 class II notes affirm at 'BBB' -- $15,000,000 class III notes affirm at 'B' -- $12,292,229 class IV notes remain at 'CC' -- Class V Notes rated 'D' withdrawn EPOCH 2001-1, Limited, incorporated under the laws of the Cayman Islands, was created to enter into a credit default swap with Morgan Stanley Credit Products, Ltd. (MSCPL) and to issue the above-referenced note liabilities. The notes are supported by the cash flows of the collateral, as well as the credit default swap premium paid by MSCPL. The credit default swap currently references a portfolio of 95 entities, compared with 100 reference entities at origination. The ratings assigned to the notes address the timely payment of interest and ultimate payment of principal. These affirmations and removal from Rating Watch Negative are due to a combination of a higher than expected settlement on the Delphi Corporation credit event and continued seasoning of the transaction. Fitch placed this transaction on rating watch negative on Oct. 13, 2005, following Delphi Corporation's filing under Chapter 11. The settlement resulted in a loss of approximately 50% of the $10 million reference amount. The settlement exhausted the reserve account and resulted in the complete write-down of the class V notes and a partial write-down of the class IV notes. This loss in subordination was offset by the decline in required credit enhancement levels due to the decrease in the remaining life of the transaction (approximately six months.) Currently, the three senior tranches can withstand at least one more credit event given no recovery and still avoid impairment. The class V notes will not receive further distributions; thus the rating has been withdrawn. The ratings assigned to the notes address the timely payment of interest and ultimate payment of principal. Fitch will continue to monitor and review this transaction for future rating adjustments. ESTERLINE TECH: Moody's Reviews Low-B Ratings for Likely Upgrade ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Esterline Technologies Corporation on review for possible upgrade in response to observed strengthening in the company's credit profile owing to improved recent operating results and the expectation of continued strong financial performance for the intermediate term. In addition, Moody's has withdrawn the rating on Esterline's senior secured credit facilities. Moody's has withdrawn the rating for business reasons. The ratings review will focus on the ultimate application of funds raised from Esterline's new term loan offering, confirmation of continued growth and improvement in operating conditions at least through the first quarter of 2006, and Moody's assessment of event risk going forward with respect to the size and pace of levered acquisitions. Moody's will assess the probability of continued strong financial results including stable margins, strong cash flows, and modest leverage in light of continued expected acquisition activity. In addition, Moody's will review the prospects for continued strong growth in each of its three business segments, and expectations for the operating environment in the commercial aircraft OEM supplier market. Of particular focus will be the potential for event risk associated with Esterline's acquisition strategy, albeit to date highly successful, particularly where leverage may be used to finance such acquisitions. These ratings have been placed on review for possible upgrade: * Senior subordinated notes due 2013, rated B1 * Corporate Family Rating of Ba3 This rating has been withdrawn: * Senior secured revolving credit facility, rated Ba2. Esterline Technologies Corporation, headquartered in Bellevue WA, primarily serves aerospace and defense customers with products for avionics, propulsion and guidance systems. Esterline operates in three business segments: Avionics and Controls, Sensors and Systems and Advanced Materials. Esterline had FY 2005 revenue of $835 million. FERRO CORP: Amends U.S. Employees' Retirement Benefit Program ------------------------------------------------------------- Ferro Corporation (NYSE:FOE) is moving to a common retirement benefit program for salaried and certain hourly employees in the United States effective April 1, 2006. The new plan supports a diverse and mobile workforce with a competitive, flexible and portable retirement benefit, while lowering and providing greater predictability to the Company's cost structure. These changes do not affect current retirees or former employees. The changes transfer the affected employees into the defined contribution plan that covers salaried employees hired on or after July 1, 2003. "We are committed to offering employees a competitive retirement benefit, but we also need to effectively manage future retirement expenses," James Kirsch, president and CEO, said. "Achieving the right balance between competitive benefits and related costs is critical to securing the long-term future of Ferro." The changes include: -- freezing the Company's defined benefit pension plan. Employees who currently participate in the Company's defined benefit pension plan will cease accruing benefit service from March 31, 2006. All retirement benefits accrued up to that time will be fully preserved. -- providing additional contributions to the Company's defined contribution benefit plan. Beginning April 1, 2006, Ferro will begin making an annual contribution, ranging from 2% to 8% based on each employee's pay and years of service, to the employee's Company-sponsored 401(k) plan. Company contributions will be made whether or not the employee contributes to the plan. In addition, to encourage employees to save their own money, Ferro will continue to match employee contributions to 401(k) accounts with Company contributions up to 5% of pay. -- limiting eligibility for the retiree medical and life insurance coverage. Only employees age 55 or older with 10 or more years of service as of Dec. 31, 2006, will be eligible for post-retirement medical and life insurance benefits. Moreover, these benefits will be available only to those employees who retire by Dec. 31, 2007 after having advised the Company of their retirement plans by March 31, 2007. The Company estimates that the changes in retirement plans will reduce its retirement plan expenses by $30 to $40 million over five years. Analysis of other companies' retirement programs indicates that, with its defined contribution plan, Ferro will be providing competitive retirement benefits to its employees. "By transitioning to the defined contribution plan, we will be offering competitive benefits that allow employees to take greater control over their financial future," Kirsch concluded. "In a changing world, it is imperative that we continue to examine our benefit programs and make appropriate changes that are in the best interests of our Company, while allowing us to attract and retain the best talent." Based at Cleveland, Ohio, Ferro Corp. -- http://www.ferro.com/-- is a major international producer of performance materials for industry, including coatings and performance chemicals. The Company has operations in 20 countries and reported sales of approximately $1.8 billion in 2004. * * * As reported in the Troubled Company Reporter on Jan. 30, 2006, Standard & Poor's Ratings Services holds its 'BB' long-term corporate credit and senior unsecured debt ratings on Ferro Corp. on CreditWatch with negative implications. "Resolution of the CreditWatch awaits likely developments near term, resulting from new management's strategies to bolster the company's depressed financial profile," said Standard & Poor's credit analyst Wesley E. Chinn. FIREARMS TRAINING: Dec. 31 Balance Sheet Upside-Down by $27.7 Mil. ------------------------------------------------------------------ Firearms Training Systems, Inc., delivered its financial results for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 14, 2006. The Company generated $16.6 million of revenue for the quarter ended Dec. 31, 2005, versus $21.5 million for the same period in the prior year. For the quarter ended Dec. 31, 2005, the Company incurred a $98,000 net loss, in contrast to $1,136,000 of net income earned during the quarter ended Dec. 31, 2004. The decline in revenue during the quarter is attributed to timing of new orders. International sales declined $4.9 million primarily due to the near completion of a large, long-term, percentage-of-completion contract in fiscal 2005. At Dec. 31, 2005, the Company's balance sheet showed a stockholders' deficit of $27,748,000. The Company had working capital of $27.2 million at Dec. 31, 2005, compared to a working capital of $27.6 million a year earlier. Ronavan R. Mohling, the Company's Chairman and Chief Executive Officer stated, "Even though the quarter's revenue was less than expected, we feel good about continued momentum in new orders. We are very pleased that new bookings for the quarter were $29.0 million. Year-to-date new bookings are $63.4 million, an increase of 19% versus the same period last year. As a result of higher bookings, our backlog at the end of December was $66 million, an increase of $13.8 million from last year. New bookings from our long-time customers, including the UK Ministry of Defence, the New Zealand Army and the Australian Defence Force, demonstrate the continued strength of our strategic relationships. Our R&D commitments, operational improvements and quality initiatives remain on track." A full-text copy of the regulatory filing is available for free at http://researcharchives.com/t/s?574 Firearms Training Systems, Inc., through its subsidiary FATS, Inc. -- http://www.fatsinc.com/-- designs and sells virtual training systems that improve the skills of the world's military, law enforcement and security forces. FATS training provides judgmental, tactical and combined arms experiences, utilizing quality engineered weapon simulators. The Company serves U.S. and international customers from headquarters in Suwanee, Georgia, with branch offices in Australia, Canada, Netherlands and United Kingdom. FMA CBO: Losses Cue Moody's to Watch Ratings for Likely Downgrade ----------------------------------------------------------------- Moody's Investors Service placed on watch for possible downgrade the ratings of the following classes of notes issued by FMA CBO Funding II, L.P., a collateralized debt obligation issuer: (1) The U.S. $251,000,000 Class A First Priority Senior Floating Rate Notes due 2011 Prior Rating: Aa3 Current Rating: Aa3 (on watch for possible downgrade) (2) The U.S. $47,000,000 Class B Second Priority Senior Floating Rate Notes due 2011 Prior Rating: Ba3 Current Rating: Ba3 (on watch for possible downgrade) The rating actions reflect the occurrence of par losses in the transaction's underlying collateral portfolio, consisting primarily of corporate bonds, as well as an increase in the percentage of lower-rated assets and the continued failure of certain collateral and structural tests, according to Moody's. FORD CREDIT: Fitch Expects to Rate $59 Mil. Class D Notes at BB+ ---------------------------------------------------------------- Fitch Ratings expects to rate the Ford Credit Auto Owner Trust 2006-A as: -- $540,000,000 class A-1 4.72480% asset-backed notes, 'F1+' -- $500,000,000 class A-2a 5.07% asset-backed notes, 'AAA' -- $549,951,000,000 class A-2b 5.03% asset-backed notes, 'AAA' -- $901,239,000 class A-3 5.05% asset-backed notes, 'AAA' -- $316,809,000 class A-4 5.07% asset-backed notes, 'AAA' -- $86,674,000 class B 5.29% asset-backed notes, 'A' -- $59,116,000 class C 5.48% asset-backed notes, 'BBB+' -- $59,116,000 class D 7.21% asset-backed notes, 'BB+' The expected ratings on the notes are based upon: * their respective levels of subordination; * the specified credit enhancement amount (funds in the reserve account and overcollateralization; and * the yield supplement overcollateralization (YSOC) amount. All ratings reflect the transaction's sound legal structure, the high quality of the retail auto receivables originated by Ford Motor Credit Company and the strength of Ford Credit as servicer. The class A-1 and class D notes will be initially retained by the seller. The weighted average APR in 2006-A is 6.65%. As with previous deals, the 2006-A transaction incorporates a YSOC feature to compensate for receivables with interest rates below 9.75%. The YSOC is subtracted from the pool balance to calculate bond balances and the first priority, second priority, and regular principal distribution amounts, resulting in the creation of 'synthetic' excess spread. These amounts enhance the receivables' yield and are available to cover losses and turbo the class of securities then entitled to receive principal payments. Initial enhancement for the class A notes as a percentage of the adjusted collateral balance (collateral balance less YSOC) is 5.5% (5.0% subordination, and the 0.5% initial reserve deposit). Initial enhancement for the class B notes is 2.5% (2.0% subordination and the 0.5% reserve). Initial enhancement for the class C notes is 0.5% provided by the reserve account. On the closing date, the aggregate principal balance of the notes will be 102% of the initial pool balance less the YSOC. The class D notes represent the undercollateralized 2%. During amortization, both excess spread and principal collections are available to reduce the bond balance. Hence, if excess spread is positive, the bonds will amortize more quickly than the collateral. It is this mechanism that ensures that the class D notes are collateralized and the specified credit enhancement level is achieved. Furthermore, the 2006-A transaction provides significant structural protection through a shifting payment priority mechanism. In each distribution period, a test will be performed to calculate the amount of desired collateralization for the notes versus the actual collateralization. If the actual level of collateralization is less than the desired, then payments of interest to subordinate classes may be suspended and made available as principal to higher rated classes. Based on the loss statistics of Ford Credit's prior securitizations, and Ford's U.S. retail portfolio performance, Fitch expects consistent performance from the pool of receivables in the 2006-A pool. For the nine months ending September 2005, average net portfolio outstanding totaled approximately $66 billion, had total delinquencies of 1.99% and net losses of 0.88% of the average net portfolio outstanding. FREEDOM RINGS: Files Disclosure Statement & Liquidation Plan ------------------------------------------------------------ Freedom Rings, LLC unveiled to the U.S. Bankruptcy Court for the District of Delaware a Disclosure Statement explaining its Chapter 11 Plan of Liquidation. Overview of the Plan The plan contemplates the liquidation of the assets of the Debtor and distribution of the proceeds among its creditors. Sale of Assets The Debtor reminds the Court that during the course of its bankruptcy proceedings, it had managed to sell: * the Montgomery Township Property to First Capital Realty, Inc. for $1.9 million; and * nonresidential real property leases to various buyers for $1.53 million. The Debtor tells the Court that its unexpired leasehold interest located in 3601 Concord Pike Wilmington, Delaware, is to be sold at auction on Feb. 23, 2006. The Debtor says that it has entered into a stalking horse agreement with R & E Properties, Inc. for the lease in the amount of $650,000 Terms of the Plan Under the plan, 1. Administrative Claims, 2. Priority Tax Claims, 3. Fee Claims, 4. Krispy Kreme Doughnut Corp.'s DIP claim, and 5. Other Priority Claims, are unimpaired and will be paid in full. At the option of the Debtor and provided that holders of miscellaneous secured claims don't elect to bifurcate their claims under Section 1111(b) of the Bankruptcy Code, holders of miscellaneous secured claims will receive either: (a) return of the collateral securing the claim; (b) net proceeds from the disposition of the collateral securing the claim, without recourse against the Debtor; or (c) any treatment agreed between the Debtor and the holder of the miscellaneous secured claim. Under the plan, Krispy Kreme, on account of its unsecured claim, will receive its pro rata share of cash on hand plus proceeds from the sale of the remaining assets less: * the aggregate distributions to holders of allowed administrative claims, allowed DIP claim, allowed fee claims, allowed priority claims, allowed other priority claims, and allowed miscellaneous secured claims; and * payment of plan administrator expenses. The Debtor tells the Court that if general unsecured claim holders accept the plan and the confirmation order approves the release, exculpation and injunctive provisions in the plan, or the confirmation order is satisfactory to Krispy Kreme, then: (i) Krispy Kreme's unsecured claim will be allowed and Krispy Kreme will waive and give up its right to receive the first $75,000 of the unsecured claims distribution distributed on account of its unsecured claim. The $75,000 will be distributed pro rata to general unsecured claim holders; and (ii) holders of general unsecured claims will be entitled to receive, in addition to their pro rata share of the unsecured claims distribution, their pro rata share of Krispy Kreme's payment. However, the Debtor relates, if holders of general unsecured claims reject the plan or the confirmation order does not approve the release, exculpation, and injunctive provisions of the plan, or the confirmation is not satisfactory to Krispy Kreme, then holders of general unsecured claims will only be entitled to their pro rata share of the unsecured claims distributions. Prepetition Lenders Contingent Secured Claims will receive no distribution under the plan. Holders of Equity Interests will receive no distribution and all equity instruments will be cancelled on the effective date. The Court has scheduled a hearing on Mar. 14, 2006, 10:30 a.m., to consider the adequacy of the Debtor's Disclosure Statement. 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. Bradford J. Sandler, Esq., and Jonathan M. Stemerman, Esq., at Adelman Lavine Gold and Levin, PC provide the Official Committee of Unsecured Creditors with legal advice. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. G+G RETAIL: Max Rave & Guggenheim Win Bid at $35 Million -------------------------------------------------------- Max Rave, LLC, an entity to be owned by BCBG Max Azria Group, Inc., and Guggenheim Corporate Funding LLC, has emerged as the successful bidder in the auction for the assets of G+G Retail, Inc. The winning bid of $35 million cash was approved on Feb. 15, 2006, in the U.S. Bankruptcy Court. The purchase transaction is expected to be completed on or before Feb. 21, 2006. GCF provided equity and loan commitments to Max Rave in order: * to fund the purchase of the company, * to provide fresh inventory for stores, and * to provide operating working capital for operations. In addition, BCBG committed to provide equity capital to Max Rave. Max Rave will be operated as a separate entity from BCBG and it is anticipated that later in 2006, subject to the approval of BCBG's lenders, it will be merged into BCBG. Created in 1989, BCBG Max Azria -- http://www.bcbg.com/-- was named for the Parisian phrase "bon chic, bon genre", meaning "good style, good attitude". BCBG Max Azria Group, Inc. designs, develops, produces and markets complete collections of women's ready-to-wear and accessories, and select categories for men, each known for being at the forefront of creativity, quality and style. The Group is one of the worldwide leaders in ready-to-wear, encompassing a portfolio of 15 brands including BCBG Max Azria, Max Azria Collection, Max Azria Atelier, BCBGirls, BCBG//Attitude, To The Max, Herve Leger Paris, Herve Leger Couture, Parallel, Max and Cleo, Noun, Maxime, Dorothee Bis, Don Algodon and Alain Manoukian, and a retail and wholesale network that includes more than 5,200 points of sale throughout the world. Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young & Jones P.C. represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. GENERAL GROWTH: Gets Lenders Pledge to Amend $5 Billion Facility ---------------------------------------------------------------- General Growth Properties, Inc. (NYSE:GGP) received the lender commitments required to amend and restate the 2004 Credit Facility, which was put into place to purchase The Rouse Company. "We were very pleased at the positive response from the lending community as we took advantage of our rapid and successful integration with The Rouse Company and received substantially enhanced loan terms and conditions just 15 months after closing. This transaction extends many of our existing lending relationships and establishes several new ones," noted CFO Bernie Freibaum. The $5 billion amended and restated Senior Credit Facility will consist of: * a $2.85 billion Term Loan, * a $650 million revolving credit facility and * a $1.5 billion Short-Term Term Loan. The proceeds of which will be applied to the 2004 Credit Facility. The applicable interest rates will be based on a spread over LIBOR that will vary according to leverage. Initially, that spread is expected to be 125 basis points, which is 50 and 75 basis points lower than that of the existing Term Loans A and B, respectively. Funding is currently scheduled to be complete by the end of February 2006. The $3.5 billion Senior and Revolving Credit Facility has a four-year term and a one-year extension option. The $1.5 billion Short-Term Term Loan is due by year-end 2006 and it is expected to be repaid primarily with excess proceeds from new fixed rate non-recourse mortgage loans on assets that are currently underleveraged. As a result of this and other planned prepayments, the company expects to record a $5.4 million non-cash charge for unamortized loan fees in the first quarter of 2006. General Growth Properties, Inc. -- http://www.generalgrowth.com/ -- is the second largest U.S.-based publicly traded Real Estate Investment Trust (REIT). General Growth currently has an ownership interest in or management responsibility for a portfolio of more than 200 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings. The portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. General Growth Properties, Inc. is listed on the New York Stock Exchange under the symbol GGP. * * * Moody's Investors Service currently assigned this rating: * Bank loan debt rating -- Ba3 Fitch Ratings currently assigned these ratings: * Bank loan debt rating -- BB * Preferred stock rating -- B+ GENERAL GROWTH: S&P Puts BB+ Bank Loan Rating on $3.5 Bil. Debts ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' bank loan rating to General Growth Properties Inc.'s $2.85 billion term loan and new $650 million revolving credit facility, which are part of a $5 billion-plus recapitalization plan to refinance the credit facility put in place in 2004 to finance the acquisition of The Rouse Co. Additionally, all other General Growth-related ratings, including the 'BBB-' corporate credit rating, are affirmed affecting $1.6 billion in senior notes. Ratings for the existing acquisition facility affecting $6.15 billion in senior notes will be withdrawn upon closing of the new credit facility. The outlook is negative. "The ratings acknowledge General Growth's strong market position as one of the top two players in the highly concentrated U.S. regional mall sector, a high quality portfolio, and solid operating performance, particularly in view of the ongoing integration of the assets attained through the Rouse acquisition, which doubled the company's portfolio size in just over a year," said credit analyst Linda Phelps. "The new bank loan rating accommodates the timing needs of the new credit facility. The assignment of this rating precedes the release of the company's fourth quarter 2005 results, scheduled for Feb. 21, 2006, and presumes that the actual results will be in line with our expectations." Though General Growth has made significant progress integrating Rouse and reducing exposure to interest rate risk, the company's financial policies and credit metrics remain very aggressive. Standard & Poor's will look for improvement in General Growth's leverage and coverage metrics (which may be possible through land development/noncore assets or an equity offering), continued progress on the Rouse integration, and reduction of 2007 debt maturities to maintain the current rating. However, any deterioration in market conditions, the company's operating performance, or currently weak financial metrics would drive ratings lower. GEORGIA-PACIFIC: Amends Revolving Loan from $250MM to $1.75 Bil. ---------------------------------------------------------------- Georgia-Pacific Corp. amended its First Lien Credit Facility to, among other things, increase the amount of the revolving credit facility by $250 million to $1.75 billion. In addition, Georgia-Pacific amended its First Lien Credit Facility and Second Lien Credit Facility to provide, among other things, that $250 million of the loans previously advanced under the Second Lien Credit Facility will be reallocated to the First Lien Credit Facility as Term B Loans. Based in Atlanta, Ga., Georgia-Pacific Corp. -- http://www.gp.com/ -- is one of the world's leading manufacturers and marketers of tissue, packaging, paper, pulp, and building products and related chemicals. The company employs approximately 55,000 people at more than 300 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So-Dri(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia-Pacific's building products manufacturing business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. * * * As reported in the Troubled Company Reporter on Feb. 01, 2006, Standard & Poor's Ratings Services lowered its rating on the $29,000,000 class A-1 and A-2 corporate backed trust certificates issued by Corporate Backed Trust Certificates Series 2001-16 Trust to 'B' from 'BB-'. At the same time, the ratings are removed from CreditWatch, where they were placed with negative implications Nov. 17, 2005. The rating on this synthetic transaction is linked to the rating on the underlying securities, Georgia Pacific Corp.'s $29,033,000 7.75% senior unsecured debentures. This rating action follows the lowering of the rating on the underlying securities on Jan. 18, 2006, and its subsequent removal from CreditWatch negative. GERDAU AMERISTEEL: Posts $295.5M of Net Income in Fiscal Year 2005 ------------------------------------------------------------------ Gerdau Ameristeel Corporation reported its financial results for the fourth quarter and fiscal year ended Dec. 31, 2005. For the three months ended Dec. 31, 2005, Gerdau Ameristeel's net income increased to $80.4 million from a net income of $66.4 million for the same period in 2004. For the 12 months ended Dec. 31, 2005, Gerdau Ameristeel's net income decreased to $295.5 million from a net income of $337.7 million for the 12 months ended Dec. 31, 2004. For the 12 months ended Dec. 31, 2005, net sales increased to $3.9 billion from net sales of $3 billion for the year ended Dec. 31, 2004. Gerdau Ameristeel's EBITDA for the full year ended Dec. 31, 2005, was $620.9 million compared to an EBITDA of $527.3 million for the full year ended Dec. 31, 2004. Included in the 2004 results was the recognition of certain net operating losses related to the U.S. operations that resulted in a $48.6 million reduction of tax expense. On Oct. 31, 2005, Gerdau Ameristeel amended its Senior Secured Credit Facility, increasing the Facility from $350 million to $650 million and extending the term of the Facility to October 31, 2010 and lowering interest rates. For the fiscal year ended Dec. 31, 2005, Gerdau Ameristeel reported total assets of $2,829,451,000 and total liabilities of $1,245,432,000. A full-text copy of Gerdau Ameristeel's Feb. 8 press release outlining 2005 financial results is available for free at http://ResearchArchives.com/t/s?571 Headquartered in Tampa, Florida, Gerdau Ameristeel Corporation -- http://www.gerdauameristeel.com/-- is the second largest minimill steel producer in North America with annual manufacturing capacity of over 8.4 million tons of mill finished steel products. Through its vertically integrated network of 15 minimills (including one 50%-owned minimill), 16 scrap recycling facilities and 42 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern two-thirds of North America. The Company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers (or "OEMs") for use in a variety of industries, including construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services revised its outlook on Gerdau Ameristeel Corp. to positive from stable. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. In addition, Standard & Poor's raised its senior unsecured debt rating on the company to 'BB-' from 'B+', and its rating on its $350 million senior secured revolving credit facility due 2008, to 'BB+' from 'BB' and assigned a '1' recovery rating. The bank loan rating is rated two notches higher than the corporate credit rating; this and the '1' recovery rating indicate a high expectation of full recovery of principal in the event of a payment default. GLEACHER CBO: Moody's Confirms Junk Ratings on $26 Mil. Notes ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of these classes of notes issued by Gleacher CBO 2000-1 Ltd., a collateralized debt obligation issuer: (1) The U.S. $276,000,000 Senior Secured Class A Notes Prior Rating: A3 (on watch for possible upgrade) Current Rating: Aa3 (on watch for possible upgrade) (2) The U.S. $33,000,000 Senior Secured Class B-1 Notes Prior Rating: B1 (on watch for possible upgrade) Current Rating: Baa1 (on watch for possible upgrade) (3) The U.S. $10,000,000 Senior Secured Class B-2 Notes Prior Rating: B1 (on watch for possible upgrade) Current Rating: Baa1 (on watch for possible upgrade) (4) U.S. $13,000,000 Secured Class C Notes Prior Rating: Caa3 (on watch for possible upgrade) Current Rating: B2 Moody's also confirmed the ratings of these classes of notes issued by Gleacher CBO 2000-1 Ltd.: (i) The U.S. $21,000,000 Secured Class D-1 Notes Prior Rating: Ca (on watch for possible upgrade) Current Rating: Ca (ii) The U.S. $5,000,000 Secured Class D-2 Notes Prior Rating: Ca (on watch for possible upgrade) Current Rating: Ca The rating actions reflect the improvement in the credit quality of the transaction's underlying collateral portfolio, consisting primarily of corporate bonds, the liquidation of defaulted and low-rated assets and the ongoing delivering of the transaction, according to Moody's. GREGG APPLIANCES: Earns $22.6MM of Net Income in 3rd Fiscal Qtr. ---------------------------------------------------------------- Gregg Appliances, Inc., delivered its financial results for the third quarter of fiscal year 2006 ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 14, 2006. The company generated a 10.6% increase in total sales for the three months ended December 31, 2005, as sales increased to $281.2 million compared to $254.2 million for the comparable prior year period. This increase in sales was primarily attributable to the net addition of eight stores during the past twelve months coupled with a 1.7% increase in comparable stores sales for the third quarter of fiscal 2006. Net income for the third quarter of fiscal 2006 was $22.6 million compared with $14.6 million for the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 included a pretax gain of approximately $27.9 million on the transfer of the majority of our extended service plan obligations to a third party. This gain partially offset by a $4.6 million increase in pretax interest expense versus the third quarter of fiscal 2005 associated with the recapitalization of Gregg Appliances in February 2005, as well as $15.3 million in income tax expense. Gregg Appliances also announced that it currently expects comparable store sales for the fourth quarter of fiscal 2006 (the three months ending March 31, 2006) to decline between 3% to 5% as compared to the comparable period in fiscal 2005 as a result of declining consumer demand for big screen projection televisions in favor of plasma and LCD flat panel technology. The company expects, however, that earnings before net interest expense, income taxes, depreciation and amortization will increase during the fourth fiscal quarter compared to the prior year period. During this transition, Gregg Appliances expects that larger screen plasma and LCD flat panel supply adjusts in the second half of calendar 2006 to compensate for the declining demand for big screen projection televisions. The Company's balance sheet showed $323,386,000 in total assets at Dec. 31, 2005, and liabilities of $332,413,000, resulting in a stockholders deficit of $9,027,000. Headquartered in Indianapolis, Indiana, Gregg Appliances, Inc., -- http://www.hhgregg.com/-- is a specialty retailer of consumer electronics, home appliances and related services operating under the name HH Gregg. The Company operates 58 stores in six midwestern and southeastern states with revenues of approximately $753 million for the fiscal year ended March 31, 2004. As previously reported in the Troubled Company Reporter on Jan. 18, 2006, Moody's Investors Service assigned the ratings to Gregg Appliances, Inc.: -- Senior Implied of B2, -- $165 million of senior unsecured guaranteed notes of B2, -- Issuer rating of B2, -- Speculative Grade Liquidity Rating of SGL-2. HANDEX GROUP: Sells Core Business Assets to Handex Consulting ------------------------------------------------------------- The Hon. Arthur B. Briskman of the U.S. Bankruptcy Court for the Middle District of Florida in Orlando authorized Handex Group, Inc., and its debtor-affiliates to sell substantially all of their assets, free and clear of liens, to Handex Consulting & Remediation, LLC. Handex Consulting will acquire all real and personal property related to and necessary for the operation of the Debtors' core environmental remediation business. The purchase excludes (i) tangible assets and claims solely related to the Debtors' civil construction business and (ii) proceeds of causes of action pursuant to section 544 through 551 of the Bankruptcy Code. In exchange for the assets, Handex Consulting will assume approximately $12.1 million of the Debtors' $18.8 million prepetition debt to Demco-Venco, LLC. Handex Consulting will also assume the Debtors' obligations to certain vendors, estimated at no less than $3 million as of the petition date. A list of the executor contracts and customer agreements the Debtor will assume and assign to Handex Consulting is available at no charge at http://researcharchives.com/t/s?570 Handex Consulting will pay any cure amount due on the assumed contracts and agreements in three equal monthly installments, with the first payment due 30 days after the Bankruptcy Court enters an order authorizing the assumption. The Debtors will also assume and assign its factoring agreement with EnviroCap, LLC, to Handex Consulting pursuant to Section 365 of the Bankruptcy Code. Judge Briskman directs the Debtors to pay to EnviroCap all sums due under the factoring agreement through the date of the closing of the sale. This payment will constitute a cure for all defaults under the factoring agreement. A copy if the eight-page purchase agreement is available for a fee at http://www.researcharchives.com/bin/download?id=060216043730 Headquartered in Mount Dora, Florida, Handex Group Inc. -- http://www.handex.com/-- and its affiliates help companies solve environmental issues. The Debtors offer management and consulting services, which include remediation, regulatory support, risk management, waste minimalization, health and safety training, data support, engineering and construction services. The Debtors filed for chapter 11 protection on Nov. 23, 2005 (Bankr. M.D. Fla. Case No. 05-17617). Mariane L. Dorris, Esq., and R. Scott Shuker, Esq., at Gronek & Latham LLP, represent the Debtor. The U.S. Trustee advised the Bankruptcy Court on Dec. 30, 2005, that there was insufficient interest among the Debtor's unsecured creditors in order to form an official committee. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $10 million to $50 million. HANDEX GROUP: Wants to Reject Burdensome Contracts & Leases ----------------------------------------------------------- Handex Group, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida in Orlando for permission to reject a variety of lease agreements and executory contracts that no longer represent value to their estates and won't be assumed and assigned to Handex Consulting & Remediation LLC, the purchaser of their core business and assets. The Debtors are convinced that marketing and selling any of the leases or contracts will not bring any significant economic benefit to their respective estates. A list of the leases and executory contracts the Debtors want to reject is available for free at http://researcharchives.com/t/s?56c Headquartered in Mount Dora, Florida, Handex Group Inc. -- http://www.handex.com/-- and its affiliates help companies solve environmental issues. The Debtors offer management and consulting services, which include remediation, regulatory support, risk management, waste minimalization, health and safety training, data support, engineering and construction services. The Debtors filed for chapter 11 protection on Nov. 23, 2005 (Bankr. M.D. Fla. Case No. 05-17617). Mariane L. Dorris, Esq., and R. Scott Shuker, Esq., at Gronek & Latham LLP, represent the Debtor. The U.S. Trustee advised the Bankruptcy Court on Dec. 30, 2005, that there was insufficient interest among the Debtor's unsecured creditors in order to form an official committee. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $10 million to $50 million. HIRSH INDUSTRIES: Judge Metz Confirms Amended Joint Chap. 11 Plan ----------------------------------------------------------------- The Honorable Anthony J. Metz III of the U.S. Bankruptcy Court for the Southern District of Indiana confirmed the Third Amended Joint Plan of Reorganization filed by Hirsh Industries, Inc., and its debtor-affiliates. Judge Metz confirmed the Debtors' Joint Plan on Feb. 13, 2006. As reported in the Troubled Company Reporter on Jan. 12, 2006, 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 holders 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. A full-text copy of the Third Amended Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060216044557 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. IMMUNOMEDICS INC: Balance Sheet Upside-Down by $14.26M at Dec. 31 ----------------------------------------------------------------- Immunomedics, Inc. (Nasdaq: IMMU), reported revenues of $500,000 and a net loss of $8.8 million for the second quarter of fiscal year 2006, which ended December 31, 2005. This compares to revenues of $1.0 million and a net loss of $6.4 million for the same period last year. For the first half of the 2006 fiscal year, the Company reported revenues of $0.9 million and a net loss of $17.4 million. This compares to revenue of $2.1 million and a net loss of $10.6 million for the same period last year. The increase in net loss for the three-month period was primarily due to increased interest expense from the Company's outstanding 5% senior convertible notes issued in April 2005, and reduced sales revenue from diagnostic imaging products. The increased interest expense includes the amortization of the debt issuance costs and debt discounts, and a $1.0 million charge resulting from the change in the market value of the derivative interest liability associated with the make-whole interest provision relating to the 5% senior convertible notes. The increase in the net loss for the six-month period was due to these factors as well as higher levels of R&D spending, primarily to support the Phase III trials evaluating epratuzumab in patients with lupus. Additionally, the 2004 results included a net litigation settlement gain of $1.2 million. During this second quarter, the Company received $500,00 in tax benefits through the New Jersey Technology Tax Certificate Transfer Program. At December 31, 2005, the Company had $14.6 million in cash and marketable securities, in addition to $3.2 million of restricted securities that collateralize the New Jersey Economic Development Authority financing completed in May 2003 for the construction of the Company's expanded manufacturing facilities. "The implementation of our cost savings program during this quarter has allowed us to maintain our operating loss at a level similar to that of the same period last year. To further conserve capital for our research and development programs, we have deferred certain executive's salaries, the executive bonus program and continue to evaluate the deferral of non-essential expenditures. At the same time we are working diligently on establishing a global corporate partner for the further clinical development and commercialization of epratuzumab," commented Gerard G. Gorman, Vice President, Finance, and Chief Financial Officer. As reported previously during the second quarter of fiscal year 2006, other developments of note were: -- The Company provided details of the ALLEVIATE trial designs, testing epratuzumab in patients with lupus, at the Lazard Capital Markets Annual Life Sciences Conference; -- The Company presented updated clinical results for epratuzumab in Sjogren's syndrome at the 2005 annual scientific meeting of American College of Rheumatology/Association of Rheumatology Health Professionals; -- At the 47th Annual Meeting of American Society of Hematology, the Company reported preclinical results on a new therapeutic, advances in lymphoma therapy with a humanized anti-CD20 antibody, and results with the combination of epratuzumab and rituximab in patients with lymphoma; -- The Company presented at the Rodman & Renshaw Techvest 7th Annual Healthcare Conference during which a corporate overview was provided; -- The Company published an article on a new diagnostic assay for pancreatic cancer in the Journal of Clinical Oncology. Immunomedics Inc. -- http://www.immunomedics.com/-- is a New Jersey-based biopharmaceutical company focused on the development of monoclonal, antibody-based products for the targeted treatment of cancer, autoimmune and other serious diseases. The Company developed a number of advanced proprietary technologies that allow us to create humanized antibodies that can be used either alone in unlabeled or "naked" form, or conjugated with radioactive isotopes, chemotherapeutics or toxins, in each case to create highly targeted agents. As of December 31, 2005, the Company's equity deficit widened to $14,268,735 from a $1,263,407 deficit at June 30, 2005. ITS NETWORKS: Dec. 31 Balance Sheet Upside-Down by $6.1 Million --------------------------------------------------------------- ITS Networks, Inc., delivered its financial results for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 13, 2006. Sales decreased by $203,000 to $1,307,000 for the quarter ended Dec. 31, 2005, from $1,510,000 for the quarter ended Dec. 31, 2004. For the three months ended Dec. 31, 2005, the company incurred a $413,000 net loss compared to a $531,000 net loss for the three months ended Dec. 31, 2004. The company's balance sheet at Dec. 31, 2005, showed $913,000 in total assets, $6,893,000 in current liabilities and $122,000 in long-term debt resulting in a $6,102,000 stockholders' deficit. Liquidity and Capital Resources At Dec. 31, 2005, the company had negative working capital of approximately $6,618,000, compared to negative working capital of $8,446,000 at Dec. 31, 2004. The company discloses that in order to satisfy its obligations, it would need to raise funds either through: * sale of additional shares of its Common Stock, * increase borrowings, or * reach profitable level of operations. The company says that its capital resources have been provided primarily by: -- capital contributions from stockholders, -- stockholder loans, -- the exchange of outstanding debt into Common Stock of the Company, and -- services rendered in exchange for Common Stock. The company also intends to sell its Common Stock or borrow additional funds from investors to pay debts and for working capital. 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. * * * Going Concern Doubt ITS Networks' independent certified public accountants, Murrell, Hall, McIntosh & Co., PLLP, expressed doubt about the Company's ability to continue as a going concern 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, the auditing firm says. If the Company's telecommunications services do not become widely used in the market, it may not be able to achieve or maintain profitability. IVOICE INC: Board Proposes Special $1.5MM Dividend to Shareholders ------------------------------------------------------------------ iVoice, Inc.'s (OTCBB: IVOC) Board of Directors proposed a special one-time cash dividend of $1.5 million payable on its outstanding shares of common stock, a stock buy-back program of the Company's Class A Common Stock of up to $1 million, a one-for-two hundred reverse stock split and other proposals as set forth in the Company's Definitive Proxy Statement to be filed with the Securities and Exchange Commission. This one time cash dividend equals over 20% of the Company's current stock price as quoted on the OTC Bulletin Board. These proposals, in addition to several other proposals, are subject to shareholders' approval at the Company's 2005 Annual Meeting of Shareholders scheduled for March 31, 2006 and thereafter may be implemented at the discretion of the Board of Directors. All matters to be considered by iVoice shareholders are subject to the approvals, terms and conditions as set forth in the Company's Definitive Proxy Statement. All shareholders of record on Feb. 17, 2006, will be permitted to vote at the meeting either in person or via proxy. "The strength of our current balance sheet and our confidence in the future prospects for iVoice prompted the Board of Directors to declare the special one-time cash dividend," Jerry Mahoney, President and CEO of iVoice, remarked. "We are delighted to be able to reward our shareholders in this fashion and remain committed to delivering long-term shareholder value. "The Company is undergoing a transformation, reflecting general market conditions and is undergoing a restructuring that is intended to position the Company for growth," Mr. Mahoney added. "The Board of Directors deems a reverse stock split as an essential initiative for the long-term health of the Company and its shareholders by enhancing the acceptability of the Class A Common Stock by the financial community and investing public. The reduction in the number of issued and outstanding shares of Class A Common Stock caused by the reverse stock split is anticipated to increase the market price of the Class A Common Stock." This is fifth dividend declared in the last 3 years and the sixth dividend announced to date. Management has taken major steps to restructure the Company in ways that will be most favorable to shareholders with the spin-off and/or distribution of the stock of five separate companies. The five companies are: * Trey Resources, Inc. The common stock of Trey Resources, previously a wholly owned subsidiary, was distributed to iVoice shareholders in February 2004. Since that time, Trey has acquired two companies, hired the management of a third company, and grown from no sales to revenues at a current operating rate of nearly $4 million per annum. * iVoice Technology, Inc. On Sept. 7, 2004, iVoice, Inc. reported the anticipated distribution to its shareholders of this wholly owned subsidiary, iVoice Technology, Inc. The common stock iVoice Technology was distributed to shareholders of iVoice in August 2005. * Deep Field Technologies, Inc. On Sept. 13, 2004, iVoice, Inc. intended to distribute to its shareholders, the common stock of its wholly owned subsidiary, Deep Field Technologies, Inc. The common stock of Deep Field Technologies was distributed to shareholders of iVoice in August 2005. * SpeechSwitch, Inc. On Nov. 5, 2004, iVoice, Inc. intended to distribute to its shareholders the common stock of its wholly owned subsidiary, SpeechSwitch, Inc., in order to pursue a strategy designed to unlock the value in the Company's speech-recognition software. The common stock of SpeechSwitch was distributed to shareholders of iVoice in August 2005. * Corporate Strategies, Inc. On Sept. 15, 2004, iVoice intended to distribute to its shareholders 5 million Class A common stock shares of Corporate Strategies, Inc. Corporate Strategies has filed a registration statement with the SEC and this distribution will be completed when the registration statement is declared effective by the SEC. iVoice, Inc. (OTCB: IVOC) -- http://www.ivoice.com/index2.htm-- designs, manufactures, and markets innovative speech-enabled applications and computer telephony communications systems. * * * Going Concern Doubt Bagell, Josephs & Company, LLC, in Gibbsboro, New Jersey, raised substantial doubt about iVoice's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2004. Bagell Josephs points to substantial accumulated deficits and spinning out of subsidiaries. J.B. POINDEXTER: S&P Affirms Senior Unsecured Rating at B- ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and its 'B-' senior unsecured rating on Houston, Texas-based van and truck body manufacturer J.B. Poindexter & Co. Inc. and revised its outlook to stable from positive. "The outlook revision reflects J.B. Poindexter's weaker-than- expected operating performance and cash flow generation, which could make it more difficult for the company to reduce debt and strengthen credit-protection measures in the near term," said Standard & Poor's credit analyst Natalia Bruslanova. The company's 2005 results were hurt: * by a decline in fleet business at its Morgan Olson unit; * by soft sales and higher delivery costs in the Truck Accessories Group (TAG); and * by higher raw material and utility costs. The ratings on privately held J.B. Poindexter continue to reflect: * its high leverage; * its cyclical and medium-size end markets; * its historically variable cash flows; * its raw material price exposure; and * the significant customer concentration at its Morgan unit (a manufacturer of Class 5-7 truck bodies separate from the Morgan Olson unit, which makes step vans). Two customers represent about 50% of the Morgan unit's sales. J.B. Poindexter, a diversified manufacturer, produces: * truck and van bodies, * truck accessories, * packaging material, and * precision-engineered components, all of which it sells in North America. In 2005, the company estimates that it had consolidated net sales of about $670 million, an increase of 14% from its 2004 sales of $585 million. The revenue increase followed the acquisitions of Pace Edwards and Federal Coach and also reflected the higher average unit price of truck bodies. The Morgan unit's sales will be between 7% and 10% higher, although shipments of Class 5-7 truck bodies are expected to be flat. Morgan Olson's step-van business experienced a decline in fleet business in the last four months of 2005. TAG sales will be approximately 10% higher, year over year, despite fourth-quarter weakness. While the company implemented price increases in 2005, these were generally not enough to fully offset higher commodity raw material costs, partly because of timing differences. In addition, the company has weathered increases in fuel, utility, and delivery costs that have not been fully recouped from delivery surcharges. Manufacturing inefficiencies at Morgan Olson have also increased costs. Consequently, for the first three quarters of 2005, the company's gross margin as a percentage of net sales decreased to 12%, a decline from 13% in 2004. While raw material costs are expected to continue to be a challenge in 2006, price increases could dampen the impact. JO-ANN STORES: Moody's Cuts $100 Mil. Senior Notes' Rating to B3 ---------------------------------------------------------------- Moody's Investors Service lowered all ratings of Jo-Ann Stores, Inc., including the senior subordinated notes to B3 from B2. The rating downgrade is prompted by the adverse impact that weak merchandising programs and a slowdown in several categories have had on sales, cash flow, and working capital. Key credit metrics have fallen well below levels that are typical for the company's previous ratings, and Moody's does not expect that debt protection measures will soon regain prior levels. The rating outlook is revised to negative. These ratings are lowered: * Corporate family rating to B1 from Ba3; and the * $100 million 7.5% senior subordinated notes (2012) to B3 from B2. Moody's does not rate the $365 million secured bank credit facility. The lower ratings reflect the weak sales results, deteriorating debt protection measures, and large free cash flow deficit over the previous four quarters, the $124 million inventory increase in Oct. 2005 compared to Oct. 2004, and the uncertainty of the company's strategic direction following the transition in the senior management team. The ratings also reflect the significant ongoing investment to develop additional superstores, the risks inherent in specialty retailing, and the high degree of seasonality with a substantial fraction of revenue and a high level of cash flow in the quarter that includes December. However, credit strengths are strong average unit volume at the new superstores compared to the traditional stores, potential scale advantages in purchasing, marketing, and information technology because of Jo-Ann's position as a leading national brand in the crafting segment, and the currently adequate liquidity position. The revenue diversity derived from stores across many geographies and several revenue categories and the deeper and wider assortment of Jo-Ann in many crafting and sewing categories compared to competitors such as Wal-Mart also benefit the company. The negative outlook recognizes Moody's concern that ratings could again decline over the next 12 to 18 months if operating performance, free cash flow, and credit metrics remain weak. Specifically, ratings would decline if debt to EBITDA stays near 6 times, outflows for cash interest expense, capital expenditures, and working capital exceed EBITDA, or the company's liquidity position declines. In Moody's opinion, stabilization of ratings at current levels would require greater financial flexibility as represented by working capital efficiency progressing towards historical norms, achievement of break-even cash flow, and a sustained reversal of weakening credit metrics such that EBIT margin comes close to historical norms of about 5 or 6%, leverage falls toward 5 times, and EBIT covers interest expense by 2 times. The B3 rating on the senior subordinated notes considers that this debt is guaranteed by the company's domestic operating subsidiaries. However, as of October 2005 this debt class was subordinated to other obligations including the $365 million bank loan and $70 million of capital leases. In a hypothetical default scenario with the revolving credit facility fully utilized, Moody's believes that recovery for this subordinated class of debt would partially rely on residual enterprise value. For the twelve months ending Oct. 29, 2005, leverage equaled 5.8 times, EBIT covered interest expense by 1.5 times, and retained cash flow to debt was 10%. The pace of revenue increases has decelerated since the middle of 2004 due to sharp declines in several key categories and weak consumer response to merchandising initiatives. Comparable store sales grew 0.3% in the first three quarters of 2005 compared to 2.7% in the same period of 2004. For the nine months ending October 2005, EBITDA was small at $33 million compared to $9 million for interest expense, $92 million for capital expenditures, and net investment of $179 million in inventory and accounts payable. The company has made $190 million of revolver borrowings between April 2005 and October 2005 in order to finance the substantial free cash flow deficit. The one covenant in the bank loan agreement only becomes effective if excess revolver availability falls below $35 million. Jo-Ann Stores, with headquarters in Hudson, Ohio, is one of the nation's largest fabric and craft specialty retailers. The company operates 838 retail locations in 47 states. Revenue for the twelve months ending October, 2005 was about $1.9 billion. KNOLL INC: Second Stock Offering Priced at $18.40 Per Share ----------------------------------------------------------- Knoll, Inc. (NYSE: KNL), reported the pricing of the secondary offering by certain of its stockholders of 11,600,000 shares of common stock at $18.40 per share. The shares of common stock are being sold by Warburg, Pincus Ventures, L.P. and Burton B. Staniar. The selling stockholders have also granted the underwriters of the offering an option to purchase up to an additional 1,740,000 shares of common stock. The offering was increased from the previously announced amount of 10,300,000 shares and an option of 1,545,000 shares. Knoll will not sell shares in the offering or receive any offering proceeds. Goldman, Sachs & Co. and Banc of America Securities LLC are serving as joint book-running lead managers of the offering. Merrill Lynch & Co. and UBS Investment Bank are serving as co- managers of the offering. Copies of the final prospectus supplement relating to the offering may be obtained by contacting: Goldman, Sachs & Co. Attn: Prospectus Dept. 85 Broad St., New York, NY 10004 Fax: 212 902 9316 - or - Banc of America Securities LLC Capital Markets Operations 100 West 33rd Street, 3rd Floor New York, NY 10001 Attn: Prospectus Fulfillment Headquartered in East Greenville, Pennsylvania, Knoll Inc., designs and manufactures branded office furniture products and textiles, serves clients worldwide. * * * As reported in the Troubled Company Reporter on Sept. 12, 2005, Standard & Poor's Ratings Services assigned its 'BB-' rating and its '3' recovery rating to Knoll Inc.'s proposed $450 million senior secured credit facilities, indicating that lenders can expect meaningful recovery of principal in the event of payment default. These ratings are based on preliminary offering statements and are subject to review upon final documentation. In addition, Moody's Investors Service assigned a Ba3 rating to the Company's $450 million senior secured credit facility, which is comprised of a revolver and a term loan. At the same time, Moody's affirmed Knoll's corporate family rating at Ba3. Moody's said the ratings outlook is stable. Moody's will withdraw its ratings on Knoll's $425 million senior secured term loan and $75 million revolver upon the closing of the new secured credit facility. LEVITZ HOME: Wohl/Anaheim Wants Levitz to Pay Rent Without Delay ---------------------------------------------------------------- Wohl/Anaheim LLC owns a commercial property in a retail shopping center located at 1000 N. Tustin Avenue, in Anaheim, California. Lee J. Mendelson, Esq., at Moritt Hock Hamroff & Horowitz LLP, in Garden City, New York, relates that Levitz Furniture Corporation leases the premises from Wohl. The Lease will expire in 2009. Levitz Furniture is required to pay to Wohl $11,250 per month as base rent. The Lease also obligates Levitz Furniture to pay "percentage rent" equal to 3% of its gross sales over $2,500,000 per year, plus a portion of certain other costs and expenses with respect to the Premises, like taxes and a portion of certain parking and common area maintenance expenses. On the Petition Date, Levitz Furniture owed Wohl $15,475 for base rent and CAM Charges. Levitz Furniture also owed other related charges due under the Lease, which have not yet been determined. Levitz Furniture has made one payment since October 11, 2005, but still owes postpetition base rent and CAM Charges of not less than $30,950 as of December 31, 2005, plus other related charges due under the Lease for the postpetition period in an undetermined amount. Mr. Mendelson notes that Levitz Furniture continues to occupy and do business from the Premises despite its failure to pay Wohl all postpetition base rent and CAM Charges due and owing through December 31, 2005. Levitz has not indicated to Wohl or any of its representatives whether the Lease will be assumed, rejected, or assigned. By this motion, Wohl asks the U.S. Bankruptcy Court for the Southern District of New York to: (a) compel Levitz Furniture to immediately pay the postpetition rent due; and (b) declare that its current claim for postpetition rent is allowable and that its claims for subsequent postpetition rent are entitled to priority. In addition, if Levitz fails to immediately pay the postpetition rent due, or fails to pay any further rent to Wohl when due, Wohl asks Court to modify the automatic stay to allow it to pursue state-court proceedings to terminate the Lease and evict Levitz Furniture from the Premises. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) LOVESAC CORP: Meeting of Creditors Scheduled for March 10 --------------------------------------------------------- The United States Trustee for Region 3 will convene a meeting of The LoveSac Corporation and its debtor-affiliates' creditors at 10:00 a.m., on March 10, 2006, at the Office of the United States Trustee, Room 2112, 844 King Street in Wilmington, Delaware. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Salt Lake City, Utah, The LoveSac Corporation -- http://www.lovesac.com/-- operates and franchises retail stores selling beanbags furniture. The LoveSac Corp. and three affiliates filed for chapter 11 protection on Jan. 30, 2006 (Bankr. D. Del. Case No. 06-10080). Anthony M. Saccullo, Esq., and Charlene D. Davis, Esq., at The Bayard Firm, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. LOVESAC CORP: U.S. Trustee Names Five-Member Creditors Committee ---------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S Trustee for Region 3, appointed five creditors to serve on the Official Committee of Unsecured Creditors in The LoveSac Corporation and its debtor-affiliates' chapter 11 cases: 1. Sino China Trading Ltd. Attn: Wayne Schmirler 50 Hua Xiang Rd., Unit E Shanghai, China 201105 Tel: (714) 842-2269; Fax: (714) 841-4227 2. Airgroup (SLC)/Airgroup Corporation Attn: Richard St. Jean P.O. Box 3627 Bellevue, Washington 98005-3627 Tel: (425) 462-1094; Fax: (425) 462-0768 3. Simon Property Group Attn: Ronald M. Tucker 115 W. Washington Street Indianapolis, Indiana 46204 Tel: (317) 263-2346; Fax: (317) 263-7901 4. Key Construction Company Attn: Olen Kenneth Key, Jr. 9888 Monroe Drive Dallas, Texas 75220 Tel: (214) 357-4555; Fax: (214) 357-4856 5. Scrapfoam.Com, Inc. Attn: Stuart Lieblein 1979 Marcus Avenue, Suite 210, Lake Success, New York 11042 Tel: (516) 622-2233; Fax: (516) 622-2236 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Official committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Salt Lake City, Utah, The LoveSac Corporation -- http://www.lovesac.com/-- operates and franchises retail stores selling beanbags furniture. The LoveSac Corp. and three affiliates filed for chapter 11 protection on Jan. 30, 2006 (Bankr. D. Del. Case No. 06-10080). Anthony M. Saccullo, Esq., and Charlene D. Davis, Esq., at The Bayard Firm, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. MAYTAG CORP: DoJ Gets More Time to Review Whirlpool Merger Deal --------------------------------------------------------------- Maytag Corporation (NYSE: MYG) and Whirlpool Corporation (NYSE: WHR) have agreed with the Antitrust Division of the U.S. Department of Justice to a limited extension of time to complete the review of the proposed acquisition of Maytag by Whirlpool. The companies have agreed not to close the transaction before March 30, 2006, without the Division's concurrence. On December 1, 2005, the companies announced they had certified substantial compliance with the Division in response to its request for additional information and agreed not to close the merger before February 27, 2006, without the Division's concurrence, recognizing that the Division could request additional time for review. "We appreciate the work of the Department of Justice staff to date and will continue to work with them cooperatively as they complete their review," said Jeff M. Fettig, Whirlpool's chairman and CEO. "The agreed upon extension is simply a continuation of the review process. This is a complex and rapidly changing industry, and it is not surprising that some additional time is required to fully understand and fairly evaluate it." Ralph F. Hake, Maytag's chairman and CEO said, "We believe this additional time will be sufficient for the review to be completed, and we are confident that the acquisition will close rapidly upon completion of the review." Mr. Fettig added: "We strongly believe that the combination will create substantial benefits for consumers, trade customers and our shareholders. This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base in the highly competitive global home appliance industry." Whirlpool and Maytag are working closely with the Department of Justice and continue to cooperate fully with its investigation and respond promptly to its inquiries. About Whirlpool Whirlpool Corporation -- http://www.whirlpoolcorp.com/-- manufactures and markets major home appliances, with annual sales of over $14 billion, 68,000 employees, and nearly 50 manufacturing and technology research centers around the globe. The company markets Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and other major brand names to consumers in more than 170 countries. About Maytag Headquartered in Newton, Iowa, Maytag Corporation -- http://www.maytag.com/-- manufactures and markets home and commercial appliances. Its products are sold to customers throughout North America and in international markets. The corporation's principal brands include Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-Narco(R) and Jade(R). At Dec. 31, 2005, Maytag Corp.'s balance sheet showed a stockholders' deficit of $187 million, compared to a $75 million deficit at Jan. 1, 2005. * * * As reported in the Troubled Company Reporter on Jan. 17, 2006, Moody's Investors Service anticipates downgrading Whirlpool Corp.'s senior long term debt by one notch to Baa2 and subordinated debt to (P)Baa3 at the conclusion of the purchase of Maytag Corp. Whirlpool's commercial paper rating is expected to be confirmed at P-2. The rating outlook will be determined at the conclusion of the review based on updated financial and operating trends of the companies. Whirlpool's ratings are currently under review for possible downgrade pending the acquisition of Maytag. The acquisition is under review by the U.S. Department of Justice and has already been approved by European authorities. The acquisition is expected to close as early as the first quarter of 2006. Maytag's ratings are under review with direction uncertain, pending the completion of the merger. If its debt is legally assumed or guaranteed by Whirlpool on a pari passu basis with Whirlpool's existing debt, Moody's would rate Maytag's debt at the same level as Whirlpool's. Moody's maintains these ratings for Maytag, which are on review with direction uncertain: * Corporate family rating of B1 * Senior unsecured notes ratings at B2 * Senior unsecured credit facility rating at B1 METALFORMING TECH: Terminates UAW Collective Bargaining Agreement ----------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Metalforming Technologies, Inc., and its debtor-affiliates to terminate its collective bargaining agreement with UAW Local 1134 and International Union, UAW, pursuant to a Termination Agreement between the Debtors and the union. The Termination Agreement provides the framework for a seamless transition of work for union members from the Debtors to Zohar Tubular Acquisition, LLC. As reported in the Troubled Company reporter on Jan. 30, 2006, Zohar purchased substantially all of the Debtors' assets for $25 million plus the assumption of all of the Debtor's postpetition liabilities. Under the terms of the Termination Agreement, all of the Debtors' obligations to the union are revoked effective on the closing of sale of its assets to Zohar. The Debtors agree to pay bargaining unit employees all of their unpaid wages earned from the petition date through the sale. The Debtors will pay a severance fee of $500 to the 110 active employees covered by the CBA within 14 days from the close of the sale to Zohar. In addition, the Debtors agree to maintain the existing health care plan and coverage for all retirees and employees through Feb. 28, 2006. A copy of the seven-page Termination Agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=060216044102 Headquartered in Chicago, Illinois, Metalforming Technologies, Inc., and its debtor-affiliates manufacture seating components, stamped and welded powertrain components, closure systems, airbag housings and charge air tubing assemblies for automobiles and light trucks. The Company and eight of its affiliates filed for chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case Nos. 05-11697 through 05-11705). Michael E. Foreman, Esq., at Proskauer Rose LLP, and Joel A. Waite, Esq., Robert S. Brady, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor, represent the Debtors in their restructuring efforts. Francis J. Lawall, Esq., at Pepper Hamilton LLP represents the Official Committee of Unsecured Creditors. Robert del Genio at Conway, Del Genio, Gries & Co., LLC, provides the Debtors with financial and restructuring advice and Larry H. Lattig at Mesirow Financial Consulting LLC serves as the Committee's financial advisor. As of May 1, 2005, the Debtors reported $108 million in total assets and $111 million in total debts. MORTON'S RESTAURANT: S&P Withdraws $105 Million Notes' B- Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Hyde Park, New York-based Morton's Restaurant Group Inc. and removed them from CreditWatch with positive implications, where they were placed on Dec. 6, 2005. The 'B-' rating was withdrawn on the company's $105 million senior secured notes after it was repaid using proceeds from Morton's recently completed IPO. The 'B-' corporate credit rating was withdrawn at the company's request. MUSICLAND HOLDING: Final DIP Financing Hearing Going Forward Today ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on Jan. 23, 2006, Musicland Holding Corp. and its debtor-affiliates sought the U.S. Bankruptcy Court for the Northern District of Georgia's authority to continue their credit relationship with their senior secured lenders. The Debtors seek to convert their prepetition loan agreement -- a revolving secured credit facility with outstanding amounts as of the Petition Date of no less than $38,097,756, into a DIP revolving secured credit facility under Section 364(c) of the Bankruptcy Code. Without access to fresh financing, the Debtors will not be able to sustain on-going business operations, Craig Wassenaar, chief financial officer of Musicland Holding Corp., told the Court. The Debtors do not have sufficiently reliable liquidity sources available to ensure continued operations. The Debtors need fresh financing to permit, among other things, the orderly continuation of their businesses, to maintain business relationships with vendors, suppliers and customers, to make payroll disbursements, to make capital expenditures, and to satisfy other working capital and operational needs. The DIP Lenders are Wachovia Bank, N.A., Banc of America Securities, LLC, National City Business Credit, Inc., Western Bank Business Credit, GMAC Commercial Finance LLC, LaSalle Retail Finance, Wells Fargo Retail Finance, LLC, Textron Financial Corporation, Burdale Financial Limited, Grayson & Co., Senior Debt Portfolio, Eaton Vance Senior Income Trust and The CIT Group/Business Credit. Responses (1) Creditors Committee The Official Committee of Unsecured Creditors asserts that the DIP Loan is not even necessary for the remainder of the DIP Budget period. The DIP Lenders have no risk and are significantly oversecured, with an estimated equity cushion of 180% or more, Michael S. Fox, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP, in New York City, points out. The Debtors' own budget reflects that during the 12-week period, they will generate $23,000,000 of surplus cash flow while reducing their DIP Loan by $22,500,000. Moreover, as a result of the going-out-of-business auction, the Debtors' estates will receive a guaranteed amount of approximately $51,750,000, being the winning bid of a 34.5% payment for inventory, which is projected to be $150,000,000, Mr. Fox points out. The Committee also complains that the Debtors failed to demonstrate the requisite exhaustive effort to attempt to obtain financing from other sources or on less onerous terms and conditions. The Committee argues that the fees charged under the DIP Loan are unreasonably high and should not be approved. Mr. Fox notes that: 1. the $750,000 "Facility Fee" exceeds 2% when measured against the new money of $37,000,000; 2. the 0.5% unused line fee is based on the entire $75,000,000; and 3. the prepayment fee 0.5% of the maximum credit equates to $375,000. (2) Trade Committee Beth E. Levine, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in New York City, asserts that the Informal Committee of Secured Trade Creditors should be accorded the same opportunity as the Official Committee of Unsecured Creditors to review, investigate and bring appropriate actions against the Debtors' Agents and Lenders. The Trade Creditors' efforts in reviewing and bringing potential derivative actions against the Lenders would not burden the estates, and may even enhance the prospects of any recovery on account of derivative claims, Ms. Levine maintains. The Trade Committee supplied inventory and extended trade credit to the Debtors prior to the Petition Date. (3) Taubman Landlords The Taubman Landlords is a group of independent entities that own various regional retail shopping centers, including Cherry Creek, International Plaza, Wellington Green, Willow Bend, Fairlane and Sun Valley. According to Andrew S. Conway, Esq., at Honigman Miller Schwarts and Cohn LLP, in Bloomfield Hills, Michigan, each of the Taubman Leases contain prohibitions against the assignment of the tenant's interest in the lease. The assignment of the leases must qualify pursuant to Section 365 of the Bankruptcy Code. The Taubman Landlords complain that the Debtors' proposed budget does not show any intention to pay its postpetition "stub" rent due from January 12 to 31, 2006. Mr. Conway asserts that the Debtors' agents should not be allowed to use the landlords' real property for their own benefit without at the very least making the landlords whole for all accrued administrative rent and other charges. In the event the Debtors' request is granted, the Taubman Landlords ask the Court to provide that any lien pertaining to the Taubman Leases will be in and to only the proceeds of those leaseholds, and not against the leaseholds themselves. The Taubman Landlords also ask the Court not to give the agents and lenders any extraordinary rights not in accordance with Section 365 of the Bankruptcy Code. Furthermore, the Taubman Landlords ask Judge Bernstein to compel the Debtors to immediately pay the January 2006 stub administrative rent. (4) Macerich Company, et al. The Macerich Company, The Mills Corporation, Urban Retail Properties, Inc., and Passco Real Estate Enterprises, Inc., complain that the Debtors' proposed budget does not provide the payment of January 12 to 31, 2006, postpetition stub rent. The Macerich Company, et al., are the owners or managing agents of 84 shopping centers throughout the United States where the Debtors operate retail stores under real property leases. The Leases contain language prohibiting the transfer of any nature of the Leases, including the mortgage of the Leases contemplated by the DIP Financing Motion. The Landlords do not necessarily object to the Debtors obtaining postpetition financing, but the terms for the financing should be appropriately proscribed to maintain the bargained-for exchange negotiated by the Debtors and the Landlords, and preserve the rights afforded to the Landlords under the Bankruptcy Code, Brian D. Huben, Esq., at Katten Muchin Rosenman LLP, in Los Angeles, California, tells the Court. (5) Aronov Realty, et al. Aronov Realty, Developers Diversified Realty Corporation, Federal Realty Investment Trust, General Growth Management, Inc., Kravco Simon Company, New Plan Excel Realty Trust, Inc., Union Station Venture II, LLC, PREIT Services, LLC, and Simon Property Group L.P., note that most of their Leases specifically prohibit the Debtor from assigning, moving, mortgaging, hypothecating or encumbering the Leases. The Landlords are concerned with the possibility of liens being placed on the non-residential real property leases to which the Debtor is a party. (6) Gregory Greenfield, et al. Gregory Greenfield & Associates, Ltd., Jones Lang Lasalle Americas, Inc., Weingarten Realty Management, Madison Monroe Mall LLC, and Turnberry Associates assert that the DIP Financing Motion is in direct violation of the term of their Leases because it seeks to grant the Agent and the DIP Lenders a lien directly on the Leases. The Objectors argue that the Debtors and the DIP Lenders provide no justification as to why they require a lien directly on the leases, as opposed to having a lien solely on the proceeds from the Lease dispositions. Twelve landlords support the Objectors' assertions: * College Square Mall * Columbia Grand Forks Mall * EklecCo NewCo LLC * Marshall Town Center * Minot Dakota Mall LLC * North Grand Mall * Peru Mall * Steamtown Mall Partners L.P. * Sunset Mall * Vornado Realty L.P. * Westfield America * Westfield Corporation, Inc. (7) Deluxe Media Thomas R. Califano, Esq., at DLA Piper Rudnick Gray Cary US LLP, in New York City, relates that Deluxe Media Services, Inc., has a lien on the charges and expenses related to the warehousing of $70,000,000 of inventory. As of the Petition Date, the Debtors owe Deluxe $27,000,000. A portion of that claim is secured by the Deluxe Lien. To prevent suspension of services, to preserve its lien and to provide adequate protection for the Deluxe Lien, the Debtors, the DIP Lenders and the Second Lien Trade Creditors agreed that a language protecting the Deluxe Lien will be added to the Final DIP Order. According to Mr. Califano, that language will provide Deluxe with replacement liens as compensation for any diminution in the value of its Lien. Deluxe Media complains that the proposed Final DIP Order does not contain the language it has negotiated with the Debtors and the DIP Lenders. * * * The Court has rescheduled the Final DIP Hearing to today, February 17, 2006, at 10:00 a.m. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Court Fixes May 1 as Claims Bar Date ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set May 1, 2006, as the last day for all creditors, other than governmental units, to file prepetition claims against Musicland Holding Corp. and its debtor-affiliates. The Court also set July 12, 2006, as last day for all governmental units to file prepetition claims. Filing Claims As previously reported in the Troubled Company Reporter on Feb. 3, 2006, the Debtors require these persons or entities to file a Proof of Claim on or before the Bar Date: (a) any entity whose claim is listed as disputed, contingent, or unliquidated in the Debtors' Schedules and that desires to participate in any of the Debtors' Chapter 11 cases or share in any distribution in those chapter 11 cases; (b) any entity whose claim is improperly classified in the Debtors' Schedules or is listed in an incorrect amount and that desires to have its claim allowed in a classification or amount other than that listed in the Schedules; or (c) any entity whose claim against a Debtor is not listed in the applicable Debtors' Schedules. Entities holding these claims need not file a proof of claim: * claims listed in the Debtors' Schedules as contingent, unliquidated or disputed, and which are not disputed by the creditor holding that claim as to nature, amount, or classification; * claims on account of which a proof of claim has already been properly filed with the Court; * claims previously allowed by the Court; * claims allowable under Sections 503(b) and 507(a)(1) of the Bankruptcy Code as administrative expenses of the chapter 11 cases; * claims made by any of the Debtors or any direct or indirect subsidiary of any of the Debtors against one or more of the other Debtors; or * claims for which specific deadlines have previously been fixed by the Court. Entities asserting Claims against more than one Debtor are required to file a separate proof of claim form with respect to each Debtor. Each proof of claim must identify the particular Debtor against which the Claim is asserted. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) NBS TECHNOLOGIES: Balance Sheet Upside-Down by $6.48M at Dec. 31 ---------------------------------------------------------------- NBS Technologies Inc. (TSX:NBS), disclosed its unaudited financial results for the first quarter ended December 31, 2005. For the first quarter ended December 31, 2005, the Company recorded a net loss of $1.9 million compared with net loss of $2.3 million in the first quarter of fiscal 2005. Revenue for the quarter totalled $14.3 million, a decrease from $16.6 million reported in the first quarter of fiscal 2005. The revenue decrease relates primarily to elimination of lower-margin business activities and delayed deal closings in the Smart Solutions business unit. Gross margins improved mainly as a result of higher margin software and transaction sales from the payment solutions business unit. The Company's Smart Solutions business unit generated $9.8 million in revenue, representing 69% of the Company's total revenue base. The Company's Payment Solutions business contributed $4.4 million of revenue, a $0.3 million increase from the previous year. "I am confident that we are transforming NBS into a higher- performance business with increased potential for innovation and growth. Our primary priority remains returning the Company to sustained profitability through continued re-structuring of our operations to achieve higher gross margins and lower operating expenses", stated Anthony Molluso, Chairman of NBS Technologies Inc. Outlook "I remain confident that NBS is on the correct path to increase our market share and return the company to long term profitability by creating innovative solutions for major accounts in focused market segments and re-structuring our operations to achieve higher gross margins and lower operating expenses. This effort, combined with our dedication and commitment to customer service, will allow us to realize our goal of achieving long-term, sustainable growth and shareholder value", concluded Anthony Molluso. NBS Technologies Inc. (TSX:NBS) -- http://www.nbstech.com/-- provides smart card manufacturing and personalization equipment, secure identity solutions, and point of sale transaction services for financial institutions, governments, and corporations worldwide. NBS Technologies is a global company with locations in Canada, China, France, U.S., and the UK, along with a worldwide dealer network. As of December 31, 2005, the Company's equity deficit widened to $6,480,000 from a $4,646,000 deficit at September 30, 2005. NATIONAL GAS: Chap. 11 Trustee Wants to Use Cash Collateral ----------------------------------------------------------- Richard M. Hutson, II, the Chapter 11 Trustee for National Gas Distributors, LLC, asks the U.S. Bankruptcy Court for the Eastern District of California, for authority to use cash collateral securing repayment of the Debtor's prepetition obligations to First-Citizens Bank & Trust Company and Chatham Investment Fund OP II, LLC. The Trustee will use the cash collateral according to a four-week budget. A copy of this budget is available for free at http://researcharchives.com/t/s?572 The Trustee offers to provide the Lenders with adequate protection including: a) limiting the use of cash collateral; and b) providing creditors an administrative expense claim to the extent use of cash collateral results in a decrease in the value of the entity's interest in the property. The Trustee assures the Court that the use of the cash collateral will not prejudice the rights of the creditors asserting an interest in the cash collateral. National Gas Distributors, LLC -- http://www.gaspartners.com/-- used to supply natural gas, propane, and oil to industrial, municipal, military, and governmental facilities. As of mid- December 2005, the Company had effectively ceased business operations due to inadequate remaining capital and its inability to arrange for the purchase and delivery of natural gas to its customers. The Company filed for bankruptcy on January 20, 2006 (Bankr. E.D.N.C. Case No. 06-00166). When the Debtor filed for bankruptcy, it reported $1 million to $10 million in assets and $10 million to $50 million in debts. NATIONWIDE HEALTH: Posts $69.94M of Net Income in 2005 Fiscal Year ------------------------------------------------------------------ Nationwide Health Properties, Inc., reported its financial results for the fourth quarter and fiscal year ended Dec. 31, 2005. For the three months ended Dec. 31, 2005, Nationwide Health's net income increased to $23,883,000 from a net income of $20,947,000 for the three months ended Dec. 31, 2004. For the 12 months ended Dec. 31, 2005, total revenues increased to $216,477,000 from total revenues of $179,388,000 for the year ended Dec. 31, 2004. For the 12 months ended Dec. 31, 2005, net income decreased to $69,941,000 from a net income of $74,822,000 for the year ended Dec. 31, 2004. For the fiscal year ended Dec. 31, 2005, Nationwide Health reported total assets of $1,867,220,000 and total liabilities of 1,086,188,000. 2005 Financing Transactions On Oct. 20, 2005 Nationwide Health closed on its new $700 million senior unsecured credit facility that includes both a $600 million revolving facility with a three year maturity and an option on its part to extend for one year and a $100 million term loan with a five year maturity. That credit facility replaces the Company's existing $400 million senior unsecured revolving credit facility that was due to mature in April 2007. The all-in drawn pricing is 110 basis points over LIBOR on the revolving facility and the term loan, an improvement of 27.5 basis points over the existing facility. A full-text copy of Nationwide Health's Feb. 9 press release outlining 2005 financial results is available for free at http://ResearchArchives.com/t/s?56f Headquartered in Newport Beach, California, Nationwide Health Properties, Inc. -- http://www.nhp-reit.com-- is a real estate investment trust that invests in senior housing and long-term care facilities. The Company has investments in 447 facilities in 39 states in the United States. * * * As reported in the Troubled Company Reporter on Jan. 20, 2006, Standard & Poor's Ratings Services affirmed its: * 'BBB-' corporate credit rating; * 'BBB-' senior unsecured debt rating; and * 'BB+' preferred stock rating on Nationwide Health Properties Inc. The affirmations affect approximately $570 million in outstanding senior unsecured notes and $197 million in preferred stock. The outlook is stable. NORTEL NETWORKS: CICC Seeks Court Clarification on Securities Suit ------------------------------------------------------------------ Chubb Insurance Company of Canada (CICC) filed a declaratory action in the Ontario Superior Court of Justice in Toronto related to its insurance policies for Nortel Networks Corporation (NNC). The action seeks a determination by the court regarding the insurance coverage available for certain securities class action lawsuits filed against NNC in the United States District Court for the Southern District of New York (In Re Nortel Networks Securities Litigation, No. 04 Civ. 02115 (GDB) (S.D.N.Y.)). The action asks a Canadian court to confirm that the directors and officers' liability insurance policy CICC issued to NNC for the Nov. 1, 2003 to Nov. 1, 2004 policy period is the policy that responds to this securities litigation. Declaratory actions are typically filed to provide clarity and direction on complex, disputed matters that affect multiple parties. In the action filed on Feb. 15, 2006, CICC acknowledges its obligation to provide coverage for this securities litigation under the terms and conditions of this policy, except for certain former officers of NNC whom NNC has terminated for cause. NNC similarly has never disputed the fact that any coverage CICC provides for this securities litigation is provided solely under this 2003-2004 Policy. In connection with the proposed settlement of this securities litigation recently announced by NNC, however, an issue has arisen as to whether this litigation is covered under different policies that CICC issued to NNC for an earlier policy period. The earlier CICC policies and the 2003-2004 policy differ in several respects, including limits of coverage. As the lead insurer in these periods, CICC has brought the declaratory action to confirm that it is the 2003-2004 policy that responds to this securities litigation, and it looks forward to working cooperatively with NNC to quickly resolve this issue. Chubb Insurance Company of Canada has offices in Toronto, Montreal, Vancouver and Calgary and employs an exclusive network of more than 200 brokers across Canada. The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb's global network includes branches and affiliates in North America, Europe, Latin America, Asia and Australia. Headquartered in Ontario, Canada, Nortel Networks Corporation -- 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. Nortel Network Corp.'s 4-1/4% Senior Notes due 2008 carry Moody's Investors Service's B3 rating and Standard & Poor's B- rating. As previously reported in the Troubled Company Reporter on Feb. 10, 2006, Standard & Poor's affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company. O'SULLIVAN INDUSTRIES: Selling Unused Equipment for $1,100,000 -------------------------------------------------------------- Judge C. Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia authorized O'Sullivan Industries Holdings, Inc., and its debtor-affiliates to sell certain Unused Equipment following uniform Transaction Procedures. The Debtors anticipate the equipment sales will generate about $1.1 million. The Court further authorized the Debtors to employ X-Factory as broker. Pursuant to Section 363(f) of the Bankruptcy Code, the sale of the Unused Equipment will be free and clear of liens and other encumbrances, and will be exempt from transfer and other similar taxes pursuant to Section 1146(c) of the Bankruptcy Code. As previously reported in the Troubled Company Reporter on Jan. 3, 2006, the Debtors were currently in the process of evaluating the potential sale of certain equipment that is no longer necessary for their operations. The equipment has not been used since 2000, and is currently in storage or occupying valuable floor or warehouse space in Lamar, Missouri. The Debtors estimate that the total net book value of the Unused Equipment is $1,100,000, with individual items ranging from $0 to $300,000 in value. Transaction Procedures The Debtors proposed these procedures: a. The Debtors will sell the Unused Equipment without satisfying the notice requirements for all sales that do not exceed $25,000 in total; b. For sales that exceed $25,000 in total, the Debtors will conduct individual sales of the Unused Equipment subject to the notice requirements; c. The Debtors will give notice of each proposed sale to: (i) the United States Trustee; (ii) counsel for the Official Committee of Unsecured Creditors; (iii) counsel for CIT/Group Business Credit, Inc.; (iv) counsel for the largest holders of the Debtors' 10.63% senior secured notes due 2008; (v) counsel to The Bank of New York, as trustee under the Senior Secured Notes; and (vi) any holder of a known lien, claim or encumbrance relating to that property proposed to be sold, if any. In addition, the Debtors will give notice of each proposed sale to all likely potential purchasers of which they are aware. The Notices will specify: (i) the identity of the proposed purchaser; (ii) the proposed purchase price; and (iii) a brief description of the property proposed to be sold; d. The Notice Parties will have two business days after the Notice is served to object to the proposed sale and any party would have two business days after the Notice is served to make a higher or better offer for the property proposed to be sold. All objections and offers would be served by facsimile to: Dechert LLP 30 Rockefeller Plaza New York, New York 10112 Attn: Joel H. Levitin, Esq. David C. McGrail, Esq. Facsimile: (212) 698-3599 e. If one or more parties timely makes an additional offer, the Debtors, after conferring with the Competing Offerors and the Proposed Purchaser to determine whether any of the party will enhance its offer, will propose to accept the offer that in their business judgment, is most beneficial to their estates. The Debtors will then send a second notice of the offer they propose to accept to the Notice specifying: (i) the identity of the Proposed Purchaser and the amount of its initial offer; (ii) the identity of any Competing Offeror and the terms of its offer; (iii) the identity of the party whose offer the Debtors propose to accept; and (iv) the reasons for the Debtors' conclusion; f. The Notice Parties will have two business days after the Second Notice is served to object to the offer the Debtors propose to accept. All objections should be served by facsimile to: Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112 Attn: Joel H. Levitin, Esq. David C. McGrail, Esq. Facsimile: (212) 698-3599 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 Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-83049). Joel H. Levitin, Esq., at Dechert LLP, represents the Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C., represent the Official Committee of Unsecured Creditors. On Sept. 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENNSYLVANIA REAL: Completes $90 Million Financing of Valley Mall ----------------------------------------------------------------- Pennsylvania Real Estate Investment Trust (NYSE:PEI) completed a $90 million financing of Valley Mall in Hagerstown, Maryland. The ten-year fixed-rate mortgage loan was provided by Eurohypo AG and bears interest at a rate of 5.49%. The proceeds were used to repay a portion of the amount outstanding under the Company's credit facility and for general corporate purposes. "We are pleased with our progress in executing the Company's ongoing capital plan. By placing long-term debt on this property, PREIT has increased its available capacity under the credit facility," Robert McCadden, Chief Financial Officer of PREIT, said. "As a result, PREIT will have additional financial flexibility to fund the capital requirements of our announced projects and to pursue additional growth initiatives." Headquartered in Philadelphia, Pa., Pennsylvania Real Estate Investment Trust -- http://www.preit.com/-- has a primary investment focus on retail shopping malls and power centers (approximately 34.5 million square feet) located in the eastern United States. Founded in 1960 and one of the first equity REITs in the U.S., PREIT's portfolio currently consists of 52 properties in 13 states, including 39 shopping malls, 12 strip and power centers and one office property. * * * As reported in the Troubled Company Reporter on Oct. 18, 2005, Fitch Ratings has affirmed the preferred stock rating of 'B+' on Pennsylvania Real Estate Investment Trust. Fitch has also established an issuer rating of 'BB' for P-REIT and revises its Outlook to Positive from Stable. PERFORMANCE TRANSPORTATION: Maintains Existing Cash Mgt. System --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York authorized Performance Transportation Services, Inc., and its debtor-affiliates continue using their Cash Management System. The Court also authorizes the Debtors to deposit funds in and withdraw from their bank accounts by all usual means, including, checks, wire transfers, electronic funds transfers, ACH payments and other debits. The Debtors' existing cash management system consists of various operational accounts, Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, relates. The principal components of the Debtors' Cash Management System and of the flow of funds among their various bank accounts are: A. General Concentration Account The Debtors' general operating account is maintained at U.S. Bank, National Association. All payments and cash received by the Debtors are ultimately transferred into the General Concentration Account. The Debtors use the General Concentration Account to fund all of the Debtors' other accounts. B. Operating Accounts The Debtors conduct their business through certain operating companies each of which maintains a separate operating account at U.S. Bank or PNC Bank, National Association. The operating accounts are: -- PLG Leasing Corp. -- E. and L. Transport Company L.L.C. -- Hadley Auto Transport -- Transportation Releasing L.L.C. -- Leaseway Motorcar Transport Company -- Leaseway legacy The Debtors receive payment from their customers by means of written checks or funds electronically transferred to the Operating Accounts. At the end of each day, all funds in the Operating Accounts are consolidated and transferred into the General Concentration Account. C. Payables and Payroll Accounts To satisfy their day-to-day obligations, some of the Debtors' operating companies maintain their own separate payable accounts at U.S. Bank: -- Performance Transportation Services, Inc. -- E&L -- Hadley -- Performance Logistics Group, Inc. -- Transportation Releasing -- Logistics Computer Services, Inc. -- Leaseway With the exception of the PTS, PLG and LCS payables accounts, funds contained in the General Concentration Account are transferred on an as-needed basis into the Operating Accounts and then from the Operating Accounts into the respective Payables Accounts. With respect to the PTS, PLG and LCS payables accounts, funds are transferred directly from the General Concentration Account into their Payables Accounts. If payment to any of the Debtors' employees is not provided through the Payables Accounts, the employees are paid through one of five payroll accounts: -- PTS -- E&L -- Hadley -- Transportation Releasing -- Leaseway With the exception of the PTS payroll account, the Payroll Accounts are funded on an as-needed basis from funds transferred from the General Concentration Account to their Operating Accounts to their Payables Accounts and then ultimately into the Payroll Accounts. The PTS payroll account is funded on an as-needed basis from funds transferred from the General Concentration Account into the PTS payable account and then into the PTS payroll account. Additionally, Leaseway Puerto Rico, a non-debtor affiliate, does not maintain its own independent payables or payroll accounts to pay its suppliers and employees. Instead, Leaseway Puerto Rico pays expenses through the Leaseway payables and payroll accounts. D. Standalone Accounts Though most of the Debtors' funds are swept into the General Concentration Account at the end of each day, any funds in the Administrative Expense Account, the Petty Cash Accounts, the Flexible Spending Account and the Leaseway Canada Account remain in those accounts and are not transferred to the General Concentration Account. A flow chart of the Debtors' Cash Management System is available for free at http://bankrupt.com/misc/PTS_CashMgmtSystem.pdf Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) PIER 1: Sales Decline Prompts Moody's to Downgrade Rating to B1 --------------------------------------------------------------- Moody's Investors Service downgraded Pier 1's corporate family rating to B1 from Ba2. The rating outlook remains negative. The rating action follows Pier 1's continuing operating difficulties, triggered by a general decline in same store sales over the last two years, and Moody's expectation that store performance and operating margins will likely be slow to rebound over the near term. The rating action also reflects an increase in leverage following the companies recent $150 million unrated convertible note offering. The key rating drivers for Pier 1's B1 rating include: 1) Business and cash flow volatility. The high dependency on furniture sales, which tends to be more cyclical and susceptible to economic slowdowns, is a credit weakness as is the company's decreasing operating cash flow over the last couple of years. On the other hand, the consistent generation of over $1.7 billion of revenue the last three years and through the LTM ended November 2005 is a credit strength. 2) Market position. Pier 1's strong brand name and national presence is a credit positive, although its loss of market share to lower priced competitors is a significant credit challenge. This loss of market share has contributed to continuing monthly same store sales compression in 28 of the last 35 months in addition to margin compression. Although Moody's recognizes that the company had over 8% same store sales growth in January this growth may not be sustainable as it was fueled by promotional discounts. 3) Strategy execution. Pier 1's renewed focus of continually refreshing its merchandise and the new advertising campaign, should help increase customer traffic. However, the new merchandising strategy of reducing the number of SKUs but offering newer products poses risks. It remains to be seen how successful the new strategy will be to increase sales volume. The key rating drivers for Pier 1's B1 rating also include: 1) Real Estate. The company's strategy of continually opening new stores every year generally helps offset Pier 1's continuing same store sale compression and sustain its brand image. However, if the company's operations continue to decline, Moody's believes that the company will likely slow down its new store openings and may ultimately have to reduce its total number of stores. The company's conversion of Cargo Kids stores to Pier 1 Kids stores capitalizes on Pier 1's brand name and is considered a credit strength. 2) Financial policies. Existing cash balances access to capital markets and access to a mostly undrawn but secured $325 million revolving credit facility provide sufficient liquidity. That said, the company's additional leverage from the note offering and diminishing operating cash flow are key risks. Pier 1's propensity to repurchase shares and issue dividends over the past few years poses additional financial risk, although the company's curtailment of share repurchases in fiscal 2006 and, more importantly, its stated intent to invest most of its future earnings for growth, moderates this risk. 3) Key ratios. Pier 1's sluggish operating performance amid continuing same store sales compression has resulted in deteriorating adjusted credit metrics. Of particular concern is the company's high and increasing leverage. For example, debt/adjusted EBITDA increased to 6.9x in LTM ended November 2005 from 4.4x in fiscal 2004, while retained cash flow/adjusted debt decreased to 8.4% from 14% during the same period. Decreasing adjusted EBIT margins and adjusted interest coverage are also concerns and adjusted interest coverage decreased to 2.1x. Retained cash flow is defined as cash flow from operations less dividends but before working capital changes. The negative outlook reflects Moody's belief that Pier 1's deteriorating operating performance experienced over the last two plus years will be slow to recover and that the company may continue to consume operating cash flow over the next 12 to 18 months. Moody's expects management to attempt to recoup its lost market share through continued development of its marketing and product strategies. Moody's will consider stabilizing Pier 1's ratings if operations and cash flow generation improve through a likely combination of: i) strong customer traffic coupled with same store sales growth; and ii) enhanced operating metrics to previous levels. Ratings could be further lowered if Pier 1's same store sales decline more than expected in the next few months or if Pier 1 does not return to same store sales growth in fiscal 2007 and beyond. Ratings could also be lowered if Pier 1's operating performance continues to deteriorate resulting in adjusted EBIT margins of less than 4%, adjusted leverage increases to 8.0x or higher or adjusted interest coverage declines to about 1.5x or lower. Finally, ratings could also be lowered if the company's operating cash flow does not show improvement or if Pier 1 were to further increase debt levels in order to continue to grow its store base, pay dividends or to repurchase stock. Rating downgraded: * Corporate family rating to B1 from Ba2 Pier 1 is a specialty retailer, located in Forth Worth, Texas, which operates principally through its Pier 1 Imports stores. Sales for the LTM ended Nov. 2005, approximated $1.9 billion. PHOTOCIRCUITS CORP: Wants to Continue Using Cash Collateral ----------------------------------------------------------- Photocircuits Corporation asks the U.S. Bankruptcy Court for the Eastern District of New York for permission to continue using cash collateral securing repayment of its prepetition debts to Stairway Capital Management, LP. The Debtor wants continued access to Stairway's cash collateral in order to meet payroll obligations and continue its efforts to stabilize business operations. The Debtor will use the cash collateral based on a four-week budget. A copy of the budget is available for free at http://researcharchives.com/t/s?515 As reported in the Troubled Company Reporter on Dec. 23, 2005, the Court authorized the Debtor to incur $7.33 million in postpetition debt from Stairway, on an interim basis. That post-petition loan matured on January 31, 2006. Without access to cash collateral at this juncture, the company will not be able to continue in Chapter 11 and any recoveries by unsecured creditors will be severely diminished. To provide Stairway with adequate protection of its existing liens, the Debtor proposes that Stairway will have superiority administrative expense status and all obligations to Stairway will be secured by superpriority liens taking priority over all other liens on the Debtor's assets. Headquartered in Glen Cove, New York, Photocircuits Corporation -- http://www.photocircuits.com/-- was the first independent printed circuit board fabricator in the world. Its worldwide reach comprises facilities in Peachtree City, Georgia; Monterrey, Mexico; Heredia, Costa Rica; and Batangas, Philippines. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. E.D.N.Y. Case No. 05-89022). Gerard R Luckman, Esq., at Silverman Perlstein & Acampora LLP, represents the Debtor in its restructuring efforts. Ted A. Berkowitz, Esq., and Louis A. Scarcella, Esq., at Farrell Fritz, P.C., represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. PINNACLE FOODS: S&P Rates Proposed $143 Mil. Loan B Add-On at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating and a recovery rating of '2' to Pinnacle Foods Group Inc.'s (formerly Pinnacle Foods Holding Corporation) proposed $143 million senior secured term loan B add-on, indicating the expectation of substantial recovery of principal (80%-100%) in a payment default or bankruptcy scenario. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' corporate credit rating, on the company. The outlook is negative. Mountain Lakes, New Jersey-based pickle frozen food producer will have about $1.06 billion in lease- adjusted total debt outstanding at closing. Proceeds from the new credit facility will be used to finance a potential acquisition, expected to close in the near term. The rating on the proposed credit facility is based on preliminary offering statements and is subject to review upon final documentation. PLYMOUTH RUBBER: Cleanosol Wants Brite-Line to Pay Royalty Fees --------------------------------------------------------------- Cleanosol A.S., asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, to: a) compel Brite-Line Technologies, Inc., a debtor-affiliate of Plymouth Rubber Company, Inc., to pay its postpetition royalties to Cleanosol; b) compel Brite-Line to decide on its license agreement with Cleanosol; and c) in the alternative, grant Cleanosol relief from the automatic stay to terminate the license agreement. A hearing to consider Cleanosol's request is scheduled to Apr. 10, 2006, at 11:00 am. The Debtor and Cleanosol are parties to a license agreement dated October 31, 2000, which allowed the Debtor to be the exclusive United States licensee of a road marking technology known as "DropOnLine". Cleanosol argues that the Debtor continues to use and benefit from the road marking technology, without making any postpetition royalty payments. Cleanosol asserts that is owed approximately $12,500 as a minimum royalty fee for the period from July 5, 2005, through December 31, 2005. Similarly, since the Petition Date, the Debtor has not filed royalty reports with Cleanosol as required by the License Agreement, hence, Cleanosol insists that it reserves its right to increase the amount owed. Cleanosol A.S. -- http://www.cleanosol.com/-- is the Norwegian subsidiary for contracting operations of Cleanosol AB, a road marking company based in Sweden. Headquartered in Canton, Massachusetts, Plymouth Rubber Company, 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. John J. Monaghan, Esq., at Holland & Knight LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated $10 million to $50 million in assets and debts. As reported in the Troubled Company Reporter on Feb. 16, 2006, the Plymouth Rubber has proposed a Joint Plan of Reorganization and filed a First Amended Disclosure Statement. The Debtor's Plan offers to compromise and settle unsecured creditors' claims for a 25% cash payment. PRESTWICK CHASE: Wants to Refinance APC's $1.7-Mil. Secured Claim ----------------------------------------------------------------- Prestwick Chase, Inc., asks the U.S. Bankruptcy Court for the Northern District of New York to approve a secured debt refinancing transaction that will pave the way for dismissal of the company's chapter 11 proceeding. The Debtor reminds the Court that it has already approved a settlement agreement under which the Debtor will pay APC Partners II, LLC, as assignee of Ballston Spa National Bank, $1,700,000. The Debtor has one more secured obligation owed to M & T Real Estate Trust, as successor-in-interest to M & T Real Estate, Inc. Prestwick Chase has obtained a commitment from The Community Preservation for $14 million that will pay-off M & T. Together, the Debtor indicates, these refinancing transactions will save the Debtor not less than $2.5 million. Headquartered in Saratoga Springs, New York, Prestwick Chase, Inc. -- http://www.prestwickchase.com/-- offers senior housing and independent living as an alternative to home ownership. The Company filed for chapter 11 protection on March 11, 2005 (Bankr. N.D.N.Y. Case No. 05-11456). Robert J. Rock, Esq., at Albany, New York, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. RADNOR HOLDINGS: S&P Lowers Senior Unsecured Notes' Rating to CC ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Radnor, Pennsylvania-based Radnor Holdings Corp. to 'CCC-' from 'CCC+'. At the same time, Standard & Poor's lowered its rating on Radnor's senior unsecured notes to 'CC' from 'CCC-'. All ratings remain on CreditWatch with negative implications, where they were placed on Nov. 20, 2003. The CreditWatch placement followed the company's debt-financed acquisition of Polar Plastics Inc., but has focused subsequently on Radnor's deteriorating financial performance and business challenges. Total debt outstanding, including the present value of operating leases, as of Sept. 30, 2005, was approximately $362 million. "The downgrade reflects increased financial risk arising from a decline in earnings and cash flow in the past several quarters, and from Radnor's inability to meaningfully improve its already weak liquidity ahead of approximately $10 million in interest payments due within the next month," said Standard & Poor's credit analyst Paul Kurias. Profitability and cash flow generation declined during the first nine months of 2005 due to cost increases in raw materials and a delay in the commercial introduction of polypropylene cold drink cups. As a result, liquidity at Sept. 30, 2005, was constrained with cash balances at about $2 million and availability under the revolving credit facility of about $8 million. While not yet reported, Standard & Poor's remains concerned that subsequent pressure on profitability and cash flow in the fourth quarter of 2005, could heighten liquidity concerns or at least have forestalled the necessary improvements to support the previous ratings. Increases in raw-material costs and higher working capital requirements from the introduction of new products are likely to have hurt operating performance for the fourth quarter. In addition, there remains uncertainty with respect to the timing of cash contributions from the launch of new products that are important to Radnor's turnaround. Proceeds from the sale of non-core assets and an IPO have not materialized as anticipated and are not factored in at the current ratings. Consequently, liquidity levels and cash flow generation are likely to remain low relative to the size of the interest payout and working capital and capital expenditure requirements. The CreditWatch listing will be resolved after an assessment of Radnor's prospects to restore credit quality and improve liquidity. The company has been able to raise new finances and take some steps toward the rollout of new products. However, the ratings could be lowered again if liquidity deteriorates further or if Radnor is unable to solidify its financial profile. Conversely, the receipt of cash proceeds from an asset sale or a meaningful operational turnaround will result in a reevaluation of Radnor's liquidity position and would add support to the ratings. S-TRAN HOLDINGS: Court Gives Final Nod to Use Cash Collateral ------------------------------------------------------------- Accordingly, S-Tran Holdings, Inc., and LaSalle Business Credit, LLC, presented a stipulation to the U.S. Bankruptcy Court for the District of Delaware allowing the Debtor to continue using cash collateral through Feb. 10, 2006, subject to possible extension through March 31, 2006, if agreed by the parties. The Bankruptcy Court put its stamp of approval on the consensual post-petition financing arrangement. Accounts Receivable and Other Proceeds The parties also agreed that until LaSalle is repaid in full, for any given week starting the week of Jan. 2, 2006, it will retain $25,000 of cash collateral collected by the Debtor during that week. In the event that the cash collateral collected by the Debtor is not sufficient to pay the budgeted items for that week, then the Lender will retain only $20,000 of cash collateral for that week, but will retain an additional $5,000 the following week, so that for every consecutive 2-week period, a total of $50,000 will be remitted to it. Insurance Proceeds The parties further agree that until LaSalle is repaid in full, it will retain 85% of all proceeds related to any reimbursements, refunds or any other refunds received to the Debtor relating to Protective Insurance Company, Liberty Mutual Insurance Company, and any other insurance policies held by the Debtor. The remaining 15% of the Insurance Proceeds will be held by LaSalle in the segregated account and may be used by the Debtor to the extent needed to pay the budgeted amounts. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SAINT VINCENTS: Objects to Lift-Stay Motions Filed by 18 Claimants ------------------------------------------------------------------ Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates object to the motions for relief from stay to pursue medical malpractice claims filed by 18 Claimants and Alex Cooke. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors have developed a workable system for addressing requests for relief from stay during the course of their Chapter 11 cases. The system balances the Debtors' need to conserve estate assets and flexibility while a reorganization is being pursued and the desire of malpractice claimants to liquidate claims based on the availability of third-party commercial insurance to pay defense costs and a claimant's willingness to limit recoveries to available insurance proceeds. As previously reported, the Debtors intend to develop and submit for Court approval a compulsory mediation program as a means to liquidate these claims by February 28, 2006. Accordingly, the Debtors ask the Court to maintain the automatic stay unless a claimant agrees to limit claims or recoveries consistent with Categories One and Two. Claimants Respond A. Patsy Merola Patsy Merola, as administrator of the Estate of Wanda Merola, argues that the Debtors' categorization of creditors and the creation of a "compulsory mediation process" fail to consider her position. Howard A. Suckle, Esq., at Suckle, Schlesinger & Leifert PLLC, in New York, tells the Court that unlike other medical malpractice claimants, Ms. Merola has a wholly separate third-party who is responsible for paying a judgment in her favor in the form of a Surety Bond posted during the Debtors' Appeal of the Judgment before the Petition Date. There is no commercial coverage for Ms. Merola to agree to accept as per the stipulations or to cover the cost of the defense of his claim as the reason offered by the Debtors' for the proposal of a compulsory mediation process. All that needs to be done in Ms. Merola's case is the entry of the Judgment and Ms. Merola can then proceed against the third-party surety, Mr. Suckle asserts. Accordingly, Mr. Merola asks the Court to reject the Debtors' request to categorize creditors and create a compulsory mediation process. B. 18 Claimants In separate objections, 18 Claimants argue that the Debtors did not accurately state the facts and circumstances surrounding their requests to lift the automatic stay. The Claimants refuse to stipulate to the compulsory mediation process. They find that the terms offered by the Debtors are unacceptable. Nevertheless, the Claimants say that they are still willing to enter into a Stipulation that allows for collection of a judgment or settlement up to and including the amount of primary insurance available. 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, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) STATE STREET: Hires Raichle Banning as New Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York gave State Street Houses, Inc., and its debtor-affiliate, State Street Associates, L.P., permission to employ Raichle Banning Weiss, PLLC as their replacement bankruptcy counsel. By order of the Court, the Debtors' previous general bankruptcy counsel, Hancock & Estabrook, LLP was granted leave to withdraw from legal representation of the Debtors. Raichle Banning will: 1) prepare the Debtors' statement of financial affairs, assist in negotiations with creditors, including the secured lenders and with taxing authorities, and assist in examining liens against real and personal property; 2) advise the Debtors with respect to the restructuring and refinancing of their debt; 3) prepare and file on behalf of the Debtors, all necessary applications, motions, orders, reports, complaints, answers and other pleadings and documents in the administration of the Debtors' estates; 4) take all necessary actions to protect and preserve the Debtors' estates, including: a) the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, and b) negotiations in connection with any litigation in which the Debtors are involved and objections to claims filed against the Debtors' estates; 5) advise and assist the Debtors in the negotiation and documentation of cash collateral orders and their related transactions; 6) assist in developing, negotiating and drafting an amended disclosure statement and plan of reorganization; and 7) render all other legal services to the Debtors that are necessary in their chapter 11 cases. Arnold Weiss, Esq., a member at Raichle Banning, is one of the lead attorneys from the Firm performing services to the Debtors. Mr. Weiss charges $250 per hour for his services. Bankruptcy Court records don't show if Raichle Banning received a retainer, nor do they disclose the Firm's professionals' compensation rates. Raichle Banning assures the Court that it does not represent any interest materially adverse to the Debtors and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Utica, New York, State Street Houses, Inc., is a New York Corporation and legal titleholder of Kennedy Plaza Apartments in Utica, New York. The Company and its affiliate, State Street Associates, L.P., filed for chapter 11 protection on May 21, 2004 (Bankr. N.D.N.Y. Case No: 04-63673). When the Debtors filed for chapter 11 protection, they reported estimated assets and debts amounting between $10 million to $50 million. STOCKHORN CDO: Fitch Affirms $5 Million Class E Notes' BB- Rating ----------------------------------------------------------------- Fitch Ratings affirmed seven classes of notes issued by Stockhorn CDO, Limited and removed them from Rating Watch Negative. These actions are the result of Fitch's review process: -- $11,500,000 class A affirmed at 'AAA' -- $10,000,000 class B affirmed at 'AA-' -- $3,000,000 class C-1 affirmed at 'BBB+' -- $5,500,000 class C-2 affirmed at 'BBB+' -- $3,000,000 class D-1 affirmed at 'BBB-' -- $2,000,000 class D-2 affirmed at 'BBB-' -- $5,000,000 class E affirmed at 'BB-' Stockhorn CDO, Limited I is a static-pool, synthetic collateralized debt obligation structured by Swiss Re Capital Markets. The CDO was established in July 2002 to issue approximately $40 million in notes that reference a $500 million portfolio of investment grade credit default swaps. The proceeds of the notes were utilized to enter into a deposit swap with Swiss Re Financial Products, which expires in August 2007. These affirmations and removal from Rating Watch Negative are due to a combination of a higher than expected settlement on the Delphi Corporation credit event and continued seasoning of the transaction, resulting in adequate remaining first loss protection. Fitch placed this transaction on Rating Watch Negative on Oct. 13, 2005, following Delphi Corporation's filing under Chapter 11. The settlement resulted in a 51% loss ($2.55 million) on the $5 million reference obligation. The reserve account, funded by excess spread, buffered the reduction of the first loss piece to approximately $1.7 million, leaving approximately $8.2 million in remaining subordination. In addition, required credit enhancement levels declined due to the narrowing window of time before the expiration of the transaction. The ratings of the notes address the timely payment of interest and the ultimate payment of principal. Fitch will continue to monitor and review this transaction for future rating adjustments. TELOGY INC: Wants to Hire Independent Equipment as Appraiser ------------------------------------------------------------ Telogy, Inc., and e-Cycle, LLC, ask the U.S. Bankruptcy Court for the Northern District of California for permission to employ Independent Equipment Company as their appraiser. The Debtors selected IEC because of the firm's expertise in providing valuation services, coupled with its prior experience in providing appraisal services to the Debtors. IEC will perform a review appraisal of a portfolio of approximately 17,900 test and measurement equipment. The Debtors require an appraisal of the equipment for audit and other purposes. The Debtors tell the Court that before they filed for bankruptcy, IEC provided them with similar equipment appraisals and was paid about $37,500 for its services. The Debtors clarify that they owe no amounts to IEC as of the petition date and that IEC has not been paid any retainer. IEC will receive a $27,500 flat fee plus reimbursement of actual and reasonable expenses. Given the nature of IEC's services, the Debtors ask the Court to fix IEC's Compensation and authorize payment of the Compensation, without further Court order as an administration expense. To the best of the Debtors' knowledge, IEC does not represent any interest adverse to them and the estates and is "disinterested" under applicable sections of the Bankruptcy Code. Headquartered in Union City, California, Telogy, Inc. -- http://www.tecentral.com/-- rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. Telogy, Inc., and its debtor-affiliate, e-Cycle, LLC, filed for chapter 11 protection on Nov. 29, 2005 (Bankr. N.D. Calif. Case No. 05-49371). Ramon M. Naguiat, Esq., at Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. As reported in the Troubled Company Reporter on Feb. 8, 2006, Telogy and e-Cycle filed a Joint Plan of Reorganization with the U.S. Bankruptcy Court for the Northern District of California on January 23, 2005. The Joint Plan proposes that (x) secured creditors will own the Reorganized Company; (y) unsecured creditors will share, pro rata, a $100,000 pot of money; and (z) subordinated debt holders will receive a small basket of new stock and warrants. TITAN CRUISE: Wants to Reject St. Petersburg Operational Pact ------------------------------------------------------------- Titan Cruise Lines, Inc., seeks permission from the U.S. Bankruptcy Court for the Middle District of Florida, to reject its berthing and operational agreement with the City of St. Petersburg, Florida. The Debtor wants to walk away from the Agreement because it's no longer a source of potential value to the estate, creditors, or anybody else, Gregory M. McCoskey, Esq., at Glenn Rasmussen Fogarty & Hooker, P.A., in Tampa, Florida, says. To avoid the accrual of additional administrative expenses, the Debtor asks that the rejection be effective as of Jan. 31, 2006. Titan also asks the Court to establish a deadline for the City to file any rejection damage claim. Pursuant to the five-year Agreement dated Sept. 15, 2003, the Debtor leased certain facilities at the port of St. Petersburg for the purpose of berthing the Ocean Jewel, a casino gaming vessel, and the shuttles used to transport passengers to and from the Ocean Jewel while offshore. The Agreement also provided for leased areas for passengers to park and to congregate while waiting to board the shuttles. The Debtor agreed to pay the City a $9,000 monthly dockage fee, plus passenger wharfage fees and other charges. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITAN CRUISE: Wants to Walk Away from Aristocrat License Agreement ------------------------------------------------------------------ Titan Cruise Lines, Inc., seeks permission from the U.S. Bankruptcy Court for the Middle District of Florida, to reject its license agreement with Aristocrat Technologies, Inc. Pursuant to the Agreement, the Debtor purchased certain equipment and components from ATI. ATI then granted the Debtor a license to use "Oasis" -- a standard version of ATI's slot accounting and player tracking software -- for a 30-year term. The Debtor wants to reject the Agreement because it is burdensome to the estate. To avoid the accrual of additional administrative expenses, the Debtor asks that the rejection be effective as of Jan. 31, 2006. Titan also asks the Court to establish a deadline for ATI to file any claim on account of the rejection. Headquartered in Saint Petersburg, Florida, Titan Cruise Lines and its subsidiary owns and operates an offshore casino gaming operation. The Company and its subsidiary filed for chapter 11 protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154 and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen & Fogarty, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITANIUM METALS: Discloses Preliminary 2005 Financial Results ------------------------------------------------------------- Titanium Metals Corporation (NYSE: TIE) reported that full year 2005 sales revenue increased 50% to approximately $750 million, compared to 2004 sales revenue of $501.8 million. The increase in sales revenue results from increases in volumes and average selling prices for both melted and mill products. Mill product average selling prices increased approximately 31% and melted product average selling prices increased approximately 50% during 2005, as compared to 2004. Mill product sales volumes increased approximately 11% while melted product sales volumes increased approximately 6% during 2005, as compared to 2004. The Company expects full year 2005 operating income of $170 million to $175 million, compared to operating income of $43.0 million for 2004. The increase in operating income primarily results from higher selling prices and volumes for both melted and mill products, offset in part by higher raw material costs. Operating income in 2004 has been restated for the effects of the Company's previously reported change its method for inventory costing from the last-in, first-out cost method to the specific identification cost method for the approximate 40% of the Company's consolidated inventories previously accounted for under the LIFO cost method. The Company expects full year 2005 net income attributable to common stockholders of approximately $142 million to $147 million, compared to $43.3 million (as restated) for 2004. The 2005 net income attributable to common stockholders includes: (1) a $13.9 million pre-tax non-operating gain on the sale of certain property; and (2) a $51 million income tax benefit related to the reversal of the Company's deferred tax valuation allowance in the U.S. and the U.K. The Company's backlog at the end of December 2005 was a record $870 million, a $160 million (23%) increase over the $710 million backlog at the end of September 2005 and a $420 million (93%) increase over the $450 million backlog at the end of December 2004. The Airline Monitor, a leading aerospace publication, recently issued its January 2006 semiannual forecast for commercial aircraft deliveries. In this new forecast, The Airline Monitor increased its estimate of large commercial aircraft deliveries over the next five years beginning in 2006 by 513 planes, a 12% increase over its July 2005 forecast. This forecast includes a 20% increase in Boeing 787 wide bodies, which are expected to require a higher percentage of titanium in their airframes, engines and other parts than any other commercial aircraft. The Company continues to believe that the titanium industry is in the early stages of the business cycle and that the current uptrend will likely continue beyond 2006. As a result, the Company currently expects full year 2006 net sales revenue will increase by 35% to 50% from 2005. This increase is primarily driven by expected continued increases in melted and mill product average selling prices. Although raw material and other costs will likely continue to increase in 2006 as well, the Company expects to achieve significant operating income growth again in 2006, with anticipated full year 2006 operating income at levels 35% to 50% higher as compared to operating income in 2005. Headquartered in Denver, Colorado, Titanium Metals Corporation -- http://www.timet.com/-- is a worldwide producer of titanium metal products. * * * As reported in the Troubled Company Reporter on Mar. 18, 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Denver, Colorado-based Titanium Metals Corp., to 'B+' from 'B'. Standard & Poor's also raised its preferred stock rating to 'CCC+' from 'CCC'. S&P says the outlook is stable. THOMAS LINDSAY: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Thomas A. Lindsay 3868 Stanley Road Columbiaville, Michigan 48421 Bankruptcy Case No.: 06-30228 Chapter 11 Petition Date: February 14, 2006 Court: Eastern District of Michigan (Flint) Judge: Walter Shapero Debtor's Counsel: Dennis M. Haley, Esq. Winegarden, Haley, Lindholm & Robertson, P.L.C. G-9460 South Saginaw Street, Suite A Grand Blanc, Michigan 48439 Tel: (810) 579-3600 Total Assets: $4,027,660 Total Debts: $1,704,593 Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ferrell Gas $1,000 390 Lake Nepessing Road Lapeer, MI 48446 Lapeer County EMS $500 3056 Davison Road, Ste 1 Lapeer, MI 48446 DTE Energy $135 P.O. Box 2859 Detroit, MI 48260 Verizon $29 Capitol One $10 Mastercard $7 TRENBERTH LLC: Case Summary & 9 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Trenberth, LLC 3950 Venture Court Columbus, Ohio 43228 Bankruptcy Case No.: 06-50497 Chapter 11 Petition Date: February 16, 2006 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Michael D. Bornstein, Esq. Ricketts Co., LPA 580 South High Street, 3rd Floor Columbus, Ohio 43215 Tel: (614) 358-8052 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Oak Hill Bank $3,500,000 445 East Main Street Columbus, OH 43215 Osram Sylvania Products $400,000 100 Endicott Danvers, MA 01923 ADT $21,814 P.O. Box 96175 Las Vegas, NV 89193 Onda Labuhn & Rankin $3,829 Roof Craft Systems $3,340 Safeco $3,192 Bildsten Landscape Services $150 Tour Andover $120 Plank & Brahm $85 URSTADT BIDDLE: Fitch Affirms $114 Mil. Pref. Stocks' Rating at BB ------------------------------------------------------------------ Fitch Ratings affirmed the 'BB' rating of the preferred stock ($114 million outstanding) of Urstadt Biddle Properties Inc. (NYSE: UBA). The ratings reflect UBP's low leverage and strong coverage ratios in comparison to comparably rated REITs. The company generates stable, consistent cash flows through the ownership of solid quality, predominantly grocery-anchored shopping centers located primarily in the high income, mature suburban markets of Fairfield County, Connecticut and Westchester and Putnam counties in New York, which together comprise 83% of the company's gross leaseable area. In addition, the management team is well seasoned with highly localized expertise, and the company has reasonable lease expiration and debt maturity schedules. Moreover, the company's lack of development projects or complicated joint venture structure is also looked upon favorably. The ratings acknowledge the significant geographic, asset, and tenant concentrations inherent in the portfolio and the overall small size of the company ($520 million in undepreciated book capital). Out of UBP's 26 core retail properties, 23 are located in one of three suburban metropolitan New York counties. While this represents 83% of gross leaseable area and 87% of net operating income (NOI), these are strong markets in which to be located due to their high income, above-average barriers to entry, and mature nature. Furthermore, single asset concentration and size is a concern as the company's portfolio consists of 34 total properties and UBP's three largest assets comprise approximately 31% of total company NOI. Support for the rating comes from strong coverage of both interest expense and preferred stock dividends and low leverage levels. This is exemplified by an EBITDA coverage of interest expense of 5.2x and a fixed-charge coverage of 2.5x. In addition, debt-to- total book capitalization and debt plus preferred-to-total book capitalization are 22% and 43%, respectively. The company has approximately $112 million of debt, all of which is secured, and none of the company's outstanding debt carries a variable rate. The company's mortgage debt is secured by 14 of the company's 34 properties, which represent $246 million of gross book value. Urstadt Biddle Properties Inc. is a fully integrated, self- administered real estate investment trust, which acquires, owns, and leases primarily grocery-anchored retail shopping centers, with most of the properties located in suburban metropolitan New York markets in Connecticut and New York state. The company owns 34 properties aggregating 3.7 million square feet of space located in nine states, with 26 of them considered core retail properties. The company currently has total assets of $464 million, total debt of $112 million, and an undepreciated total book capital of $520 million. USI HOLDINGS: Moody's Rates New Sr. Secured Credit Facility at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the new senior secured credit facilities to be arranged by USI Holdings Corporation. Proceeds from the new facilities will be used to refinance all outstanding amounts under the company's existing credit facilities and for general corporate purposes. USIH currently has an approximate $210 million senior secured term loan due in 2008 and a $30 million senior secured revolving credit due in 2007. The purpose of the refinancing is to increase the total amount of the facilities, enhance financial and operating flexibility and extend maturities. The rating outlook is stable. Moody's said that its rating on USIH reflects the company's expertise in serving small and mid-sized businesses, its strategic focus on cross-selling to strengthen client relationships, and its stable operating margins. These strengths are partly offset by the company's modest size relative to the largest global brokers, and by the integration risk associated with its acquisition strategy. USIH has posted fairly volatile net results over the past several years, largely because of costs associated with discontinued operations. The company's bank facilities are guaranteed by and secured by the stock of all significant subsidiaries. Like other brokers, USIH faces regulatory inquiries into market practices, and related litigation. In response to such inquiries, several of the largest brokers have made pricing structure reforms, including the elimination of contingent commissions paid by insurance carriers. Moody's noted that if similar reforms are someday imposed on smaller brokers that still receive contingent commissions, such as USIH, these firms could face margin compression. Moody's identified these factors that could lead to an upgrade of USIH: -- sustained operating margins above 15%; -- sustained net profit margins above 5%; -- EBIT coverage of interest consistently above 3 times; and -- a debt-to-EBITDA ratio consistently below 4 times. Factors that could lead to a downgrade include: -- deterioration in operating margins to less than 10%; -- EBIT coverage of interest below 2 times; -- a debt-to-EBITDA ratio above 5 times; or -- material adverse developments in connection with regulatory proceedings or related litigation. USIH, based in Briarcliff Manor, New York, ranks among the 10 largest U.S. insurance brokers. For the first nine months of 2005, the company reported total revenues of $371.8 million and net income of $4.5 million. Shareholders' equity was $404.5 million as of Sept. 30, 2005. VALLEY FOOD: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Valley Food Services, L.L.C. 1310 South 58th Street St. Joseph, Missouri 64507 Bankruptcy Case No.: 06-50038 Type of Business: The Debtor sells and distributes food and paper products to restaurants. See http://www.valleyfoodservices.com/ Chapter 11 Petition Date: February 14, 2006 Court: Western District of Missouri (Kansas City) Judge: Jerry W. Venters Debtor's Counsel: Laurence M. Frazen, Esq. Cynthia Dillard Parres, Esq. Bryan Cave LLP 3500 One Kansas City Place 1200 Main Street Kansas City, Missouri 64105 Tel: (816) 374-3200 Fax: (816) 374-3300 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coca-Cola Trade Debt $610,818 P.O. Box 102499 68 Annex Atlanta, GA 30368 Penske Truck Leasing Trade Debt $499,726 3600 West 65th Street Little Rock, AR 72209 Dr. Pepper Company Trade Debt $437,493 5301 Legacy Drive Plano, TX 75024 West Liberty Foods Trade Debt $412,025 37401 Eagle Way Chicago, IL 60678 Birchwood Foods Trade Debt $410,375 3111 152nd Avenue Kenosha, WI 53141 Surlean Foods Trade Debt $409,971 1545 South San Marcos San Antonio, TX 78207 Pilgrim's Pride Corp. Trade Debt $405,269 4840 US Highway 271 North Pittsburgh, TX 75686 Pepsi Cola Company Trade Debt $388,896 P.O. Box 10 Winston - Salem, NC 27102 Simmons Foods Inc. Trade Debt $377,587 601 North Hico Siloam Springs, AR 72761 Dairy Farmers of America Trade Debt $319,083 10525 North Ambassador Drive Kansas City, MO 64153 Schreiber Foods Inc. Trade Debt $315,174 P.O. Box 19010 Green Bay, WI 54307 Casa De Oro Trade Debt $313,508 4433 South 94th Street Omaha, NE 68127 Dopaco Packaging Trade Debt $294,373 100 Arrandale Exton, PA 19341 Cargill, Inc. Trade Debt $282,185 Meat Solutions/Oil/Foods 151 North Main Wichita, KS 67202 Frito-Lay, Inc. Trade Debt $254,592 7701 Legacy Drive Planto, TX 75024 Fresh Express Inc. Trade Debt $248,520 950 Blanco Road Salinas, CA 93901 International Paper Co. Trade Debt $235,545 4049 Willow Lake Boulevard Memphis, TN 38118 Liberty Fruit Co. Trade Debt $220,891 1247 Argentine Boulevard Kansas City, MO 66105 Cavendish Farms Trade Debt $208,899 5855 3rd Street Southeast Jamestown, ND 58401 Huhtamaki Plastics Inc. Trade Debt $182,826 9201 Packaging Drive Desoto, KS 66018 WALTER DUNN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: Walter C. Dunn and Sally J. Dunn 102 Truehart Way Morrisville, North Carolina 27560 Bankruptcy Case No.: 06-00197 Chapter 11 Petition Date: February 15, 2006 Court: Eastern District of North Carolina (Raleigh) Judge: A. Thomas Small Debtors' Counsel: Jason L. Hendren, Esq. Kirschbaum, Nenney, Keenan & Griffin, P.A. P.O. Box 19766 Raleigh, North Carolina 27619 Tel: (919) 848-0420 Fax: (919) 848-4216 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CIT Small Business Lending Loan Guaranty $1,026,878 P.O. Box 1529 Livingston, NJ 07039-1529 J.E. Brown & Associates Loan Guaranty $258,406 213 Riverwood Drive Clayton, NC 27520 Schlotzsky's Ltd. Royalty and $252,258 203 Colorado Street Advertising Austin, TX 78701-3922 Buckhead Properties, LLC Lease $250,000 1000 Darrington Drive, Suite 105 Cary, NC 27513 James E. Brown Lease $147,000 Crescent State Bank Loan Guaranty $130,977 SI Restructuring Royalty and $107,131 Advertising James E. Brown Loan Guaranty $48,323 Trustreet Properties Lease $38,760 CIT Small Business Lending Loan Guaranty $30,733 Bankcard Services Credit card $22,192 purchases MBNA America Credit card $15,091 purchases Capital One Bank Credit card $12,992 purchases The GM Card Credit card $11,014 purchases Visa Gold Credit card $6,981 purchases Discover Platinum Credit card $6,058 purchases Capital One Lowes Credit card $6,013 purchases Capital One, F.S.B. Credit card $5,375 purchases Bank of America Visa Credit card $5,043 purchases Visa - Deere Harvester Credit card $5,027 purchases WARRIOR ENERGY: Plans to Raise $172.5 Million in Stock Sale ----------------------------------------------------------- Warrior Energy Services Corporation fka Black Warrior Wireline Corporation disclosed the filing of a registration statement on Form S-1 for the sale of up to $172.5 million of common stock by the Company and selling securityholders. The Company expects to use the proceeds it receives from the offering to simplify its capital structure by repurchasing outstanding derivative securities and to reduce debt. Raymond James & Associates, Inc., Simmons & Company International and Johnson Rice & Company L.L.C. will be acting as underwriters in this offering. When available, a preliminary prospectus relating to these securities may be obtained from Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, FL 33716. Warrior Energy Services Corporation fka Black Warrior Wireline Corporation is a natural gas and oil well services company that provides cased-hole wireline and well intervention services to E&P companies. The Company has applied to list the common stock on the Nasdaq National Market under the symbol "WARR". The current trading symbol for the common stock on the over-the-counter market is "WGSV". * * * As reported in the Troubled Company Reporter on Nov. 22, 2005, Black Warrior Wireline Corp. delivered its quarterly report on Form 10-QSB for the quarter ending September 30, 2005, to the Securities and Exchange Commission on November 14, 2005. The Company reported $2,223,728 of net income on $17,421,589 of net revenues for the quarter ending September 30, 2005. At September 30, 2005, the Company's balance sheet showed $36,427,947 in total assets and $55,052,978 in total debts. As of September 30, 2005, the Company's equity deficit narrowed to $18,625,031 from a $25,208,634 deficit at December 31, 2004. WILLIAMS CONTROLS: Balance Sheet Upside-Down by $917K at Dec. 31 ---------------------------------------------------------------- Williams Controls, Inc., delivered its financial results for the quarter ended Dec. 31, 2005, to the Securities and Exchange Commission on Feb. 13, 2006. For the three months ended Dec. 31, 2005, Williams Controls earned $1,527,000 of net income, compared to $1,714,000 of net income for the corresponding quarter in fiscal 2005. The Company reported $16,132,000 of net sales the first quarter of fiscal 2006, up 6.3% from $15,169,000 of net sales reported in the corresponding quarter last year. The increase in sales was primarily due to higher unit volumes of electronic throttle control systems to the Company's heavy truck, transit bus and off- road customers, specifically in the North American markets, and to a lesser extent increases in sales of pneumatic control systems. The Company's balance sheet at Dec. 31, 2005, showed $30,389,000 in total assets and liabilities of $$31,306,000, resulting in a stockholders' deficit of $917,000. Growth Initiatives Williams Controls initiated several strategic growth initiatives in mid-2005, including: -- establishment of sales and manufacturing operations in China; -- opening of a sales and technical office in Europe; -- development of sensors for use in the Company's electronic throttle control product lines; and -- administration and systems infrastructure improvements to support its China operations, which contributed to higher operating expenses. Williams Controls' Chief Executive Officer, Patrick W. Cavanagh, stated, "During the quarter we continued to make progress on important strategic initiatives such as ramping up production of selected throttle control products at the new China manufacturing facility, the start of sensor production and an increase in our international and off-road sales efforts." He continued, "While these activities had a short-term negative impact on operating margins, we believe that in the long run these activities are crucial to maintaining and improving the Company's world-wide leadership position in our markets." He concluded, "We are fortunate to be able to aggressively proceed with these initiatives while continuing to reduce debt and execute a 2,500,000 share stock buy back." A copy of the regulatory filing is available for free at http://researcharchives.com/t/s?573 Headquartered in Portland, Oregon, Williams Controls, Inc. -- http://www.wmco.com/-- designs and manufactures Electronic Throttle Control Systems for the heavy truck and off-road markets. WINN-DIXIE: Newport Wants Property Vacated & Holdover Rent Paid --------------------------------------------------------------- In 2003, R.P.D.A. Corp. and Malone & Hyde, Inc., entered into a prime lease for a property at 3275 Coral Way, in Miami, Florida. Malone & Hyde subsequently merged into Fleming Companies, Inc., and RPDA subsequently sold the property and assigned the Prime Lease to Morris Tract Corp., doing business as Newport Partners. Jonathan Williams, Esq., at Meland, Russin, Hellinger & Budwick, P.A., in Miami, Florida, relates that the Lease permits subleasing and the first subtenant under it was Xtra Super Food Centers, Inc. Xtra's sublease was subsequently assigned to Winn-Dixie Stores, Inc. Fleming filed for bankruptcy, which ultimately resulted in the liquidation of Malone & Hyde. As part of its bankruptcy case, Fleming rejected both the Lease with Newport and the Sublease with Winn-Dixie. Mr. Williams explains that as a result of the Lease and Sublease's rejection, Winn-Dixie became a month-to-month tenant under Florida law. According to Mr. Williams, there is nothing to cure under the Lease because: (1) Fleming went beyond merely defaulting on the lease and actually terminated the Lease; (2) the Lease no longer remains in effect as a matter of law; and (3) the Lease and Sublease were terminated by Fleming -- and not by Newport. On July 14, 2005, Newport provided Winn-Dixie with a notice that its month-to-month tenancy had been terminated and that it must vacate the premises by July 31, 2005. Despite termination of its month-to-month tenancy, Winn-Dixie remains in possession of the Property, refuses to surrender possession, and refuses to pay holdover rent. Winn-Dixie has made no effort to vacate the premises, Mr. Williams says. Winn-Dixie filed a complaint to enjoin Newport from commencing an eviction proceeding or in any way interfering with its possessory rights to the Premises. By failing to comply with the notice of termination, Mr. Williams points out that Winn-Dixie became a tenant at sufferance under Chapter 83 of the Florida Statutes entitling Morris to holdover rent from Aug. 1, 2005, onward. Accordingly, Newport asks the U.S. Bankruptcy Court for the Middle District of Florida to declare that: a. Winn-Dixie has no interest in the Property under the Lease, Sublease, Agreement or related documents; b. the Debtors' estate has no interest in the property; c. the notice of termination was valid and Winn-Dixie had until July 31, 2005, to vacate the Property; d. Winn-Dixie has been a tenant at sufferance entitling Newport to double rent from Aug. 1, 2005; e. Newport is entitled to stay relief to the extent required to pursue eviction of Winn-Dixie from the Property; f. Newport did not violate the automatic stay; and g. Newport is entitled to its reasonable attorneys fees and costs under Chapter 83 of the Florida Statutes. Winn-Dixie Responds Beau Bowin, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, argues that Newport fails to state a claim on which relief can be granted because it relies on the conclusion that Fleming's rejection of the Prime Lease and Sublease "terminated" those leases. Mr. Bowin contends that rejection of the Prime Lease and the Sublease did not terminate those leases but merely placed them outside the administration of the Fleming estate. Mr. Bowin asserts that Newport have waived and are estopped from bringing this action because they have knowingly allowed Winn-Dixie, who relied on Newport's prior silence regarding the alleged "termination," to incur substantial expense for improvements to the Premises. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Diversified Wants SMB State Court Lawsuit Enjoined -------------------------------------------------------------- On June 23, 2005, SMB of Davie, Inc., initiated a state court lawsuit against Diversified Maintenance Systems, Inc., before the Circuit Court of the Seventeenth Judicial Circuit in Broward County, Florida. The lawsuit was transferred to Hillsborough County. SMB asserted in the lawsuit that Diversified owes it money pursuant to janitorial services rendered to the Debtors at their facilities. On Jan. 9, 2006, Diversified removed the State Court Action to the U.S. Bankruptcy Court for the Middle District of Florida. A full-text copy of the removed action is available for free at http://researcharchives.com/t/s?578 Before Winn-Dixie's bankruptcy filing, Winn-Dixie Stores, Inc., and its debtor-affiliates and Diversified entered into a contract for floor care and janitorial services. Lara Roeske Fernandez, Esq., at Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullins, P.A., in Tampa, Florida, tells the Court that the Debtors owe Diversified $946,000 in prepetition services from Jan. 23, 2005, to Feb. 21, 2005. As a result of the Debtors' bankruptcy case, Diversified is stayed from collecting this prepetition debt. The Debtors have not assumed or rejected the Contract -- they have not cured prepetition arrears. Diversified is required to pay SMB, its sub-contractor, only after payment by the Debtors to Diversified. Thus, Diversified is faced with shouldering a substantial payment to SMB. In this regard, Diversified asks the Court to grant a preliminary injunction against SMB enjoining the continuation of the State Court Action for a sufficient amount of time to allow for the confirmation of the Debtors' Chapter 11 Plan or the assumption or rejection of the Contract. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Wants Central's Request for Summary Judgment Denied --------------------------------------------------------------- In 2004, Central Progressive Bank filed a Petition for Executory Process against By-Pass Partnership in the Fifteenth Judicial District Court for the Parish of Vermillon, in Louisiana. Central exercised its option to accelerate all sums due and owning under certain loan documents and for seizure and sale of a property in Abbeville, Louisiana, which is leased by Winn-Dixie Montgomery, Inc. In 2005, Winn-Dixie filed a complaint against Central for violating the automatic stay by commencing the Foreclosure Proceeding. Winn-Dixie sought to enjoin Central from prosecuting the Foreclosure Proceeding and from taking further action in violation of the automatic stay. Robin B. Cheatham, Esq., at Adams and Reese LLP, in, in New Orleans, Louisiana, argues that Winn-Dixie failed to allege facts sufficient to support its requests. Winn-Dixie has failed to show that Central is using the Foreclosure Proceeding to exert pressure on Winn-Dixie rather that exercising a legitimate right to collect from By-Pass, Mr. Cheatham points out. While Central has commenced a Foreclosure Proceeding against By-Pass, it has taken no action against Winn- Dixie or the estate's property. Mr. Cheatham clarifies that Winn-Dixie has no ownership interest in the Property. Accordingly, Central asks the U.S. Bankruptcy Court for the Middle District of Florida to dismiss Winn-Dixie's complaint. In the alternative, Central asks the Court to grant summary judgment in its favor. The pleadings and evidence show that there is no genuine issue as to any material fact, Mr. Cheatham tells Judge Funk. "The Foreclosure Proceeding does not affect the Debtor or the estate. The Foreclosure Proceeding has been commenced against a non-debtor third party, which is not protected by the automatic stay. The Debtor seeks the extend the automatic stay to By-Pass, which is clearly impermissible," Mr. Cheatham says. Winn-Dixie Responds Because Winn-Dixie is merely seeking to enforce the automatic stay, it is not required to allege or prove the traditional elements for imposing injunctive relief, D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, argues. Central' Foreclosure Proceeding threatens to extinguish the Lease because, under Louisiana law, a sheriff's sale extinguishes all inferior leases. Winn-Dixie is seeking the enforcement of the automatic stay against the Bank for its attempt to exercise control over property of the estate, rather than the extension of the stay to a third party. Winn-Dixie is currently sustaining injury as a result of the Foreclosure Proceeding and is in immediate danger of sustaining further injury, because the Execution Proceeding threatens to extinguish the Lease. Thus, Central's request for summary judgment should be denied. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000). XYBERNAUT CORP: Hires Morris Nichols as Board's Bankruptcy Counsel ------------------------------------------------------------------ Xybernaut Corporation and its debtor-affiliate ask the U.S. Bankruptcy for the Eastern District of Virginia for authority to employ Morris, Nichols, Arsht & Tunnel LLP as bankruptcy counsel to the Debtors' Board of Directors, nunc pro tunc to Jan. 12, 2006. Morris Nichols will: a) advise the Board concerning any and all issues that may arise in these cases; b) advise and assist the Board in connection with any litigation that might be necessary, or might arise out of, any sale, business combination or other disposition or transaction involving the Debtors' assets; c) perform all other necessary or appropriate legal services in connection with these chapter 11 cases as requested by the Board. Robert J. Dehney, Esq., partner at Morris Nichols, discloses that he will bill $600 per hour for his services. Mr. Dehney further discloses that the principal attorneys and paralegal designated to represent the Debtors are: Professional Designation Hourly Rate ------------ ----------- ----------- William M. Lafferty, Esq. Partner $550 Eric D. Schwartz, Esq. Partner $475 Curtis S. Miller, Esq. Associate $260 Angela Conway Paralegal $175 Mr. Dehney assures the Court that his Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. * BOOK REVIEW: Evaluation and Decision Making for Health Services ----------------------------------------------------------------- Author: James E. Veney & Arnold D. Kaluzny Publisher: Beard Books Softcover: 448 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587982307/internetbankrupt Now in its fourth printing, Evaluation and Decision Making for Health Services has proved instructive and relevant to healthcare management since its original publication in 1984. Revised printings came out in 1991 and 1998. This is a reprint of the 1998 revision. Veney and Kaluzny do not present a whole new structure or method of management; nor do they give guidance on how to adapt to or undertake change. Their book refines and substantiates the processes management uses to make significant decisions affecting the soundness of the healthcare organization. The key principle recommended for refining and substantiating management decisionmaking is cybernetics. First cited as a term in 1948, cybernetics has become "popular as a way of defining a methodological approach to a wide variety of scientific and management endeavors and is closely linked with general systems theory and its application in the social organization," say the authors. But it is only in more recent years that cybernetics has been applied to scientific work and business management to make these more efficient, dependable, and germane. Cybernetics has also been applied to the area of self-improvement. Veney and Kaluzny apply the concept of cybernetics specifically to the healthcare field. With backgrounds in healthcare administration and thus the particular problems, considerations, circumstances, and ends of a healthcare organization, the authors describe how management applies cybernetics in a variety of areas to make decisions in five main areas. These areas are monitoring, case studies, survey research, trend analysis, and experimental design. These are not new to well-trained managers - there could be no substantive or relevant management without attention to or practice of them. But in discussing and demonstrating how the exceptionally informative principle of cybernetics works in these key areas, Veney and Kaluzny bring a new, fresh perspective to them for managers. The authors identify two components of cybernetics that make it of particular relevance and value to managers. One is that, in any system, there are the interrelated variables of inputs, throughputs, and outputs responsible for "a process of accomplishing an end." The authors note that this process is not intended to replace any healthcare management system, but to improve or refine one in place by making it more informed and pertinent. Some of the aspects of these three main types of variables are "regulated and controlled by decisions made on the basis of feedback of information about the state of the system." As further explained, cybernetics is largely, though not completely, a monitoring of the "communication of information in any system." This can be done in such a way that intended outcomes can be compared with actual outcomes. With this comparison afforded by the cybernetic's methodology, the gap between intended outcomes and actual outcomes can be closed as much as is possible in the real world of management with its inevitable pressures of decision-making, employee changes, effects of new technology and government regulations, and constant competition. The large, 8-1/2" x 11" format of Evaluation and Decision Making for Health Services gives the appearance of a workbook. Some of the interior matter and formatting contribute to this workbook- like feel of the book. There are many charts and graphs and tables. Sections, titles of the varied visual matter, and sometimes the "illustration" of a chapter section are provided in the wide margins. Fairly complex formulas are also provided in the margins. And, at the end of the chapters are discussion questions. But although it may first seem to be an interactive workbook, Evaluation and Decision Making for Health Services is actually one of the leading textbooks in the relatively specialized field of healthcare management. The plentiful visual matter, including the formulas, serves the educational purpose of helping the reader to learn how to apply the general concepts and methods of cybernetics to both the daily and ongoing concerns and operations of a healthcare organization. The authors do this in a comprehensive way, not only meticulously treating every significant subject of interest to management from the standpoint of understanding and applying cybernetics, but also making use of varied visual tools and actual and hypothetical scenarios from the healthcare workplace. Cybernetics is not simply a fad that has found its way into the popular culture for a time. Nor is cybernetics another one of the latest management principles or systems that has come and gone over recent decades. As the two authors convincingly demonstrate, cybernetics is an essential management methodology with applicability across the entire range of management responsibilities. From employee morale to financial goals to prospective new products or services, cybernetics offers the best means for exceptionally informed, clear-sighted, concrete, and productive management. James E. Veney and Arnold D. Kaluzny are both professors of Health Policy and Administration at the School of Public Health of the University of North Carolina-Chapel Hill. And both have wide- ranging experience in the health field as published authors and consultants to private, government, and international organizations. ********* 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. Marie Therese V. Profetana, Shimero Jainga, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, 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- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***