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/raid1/www/Hosts/bankrupt/TCR_Public/060530.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 30, 2006, Vol. 10, No. 127 Headlines ABB LUMMUS: Hires Kirkpatrick & Lockhart as Bankruptcy Counsel ABB LUMMUS: Court Okays Pachulski Stang as Bankruptcy Co-Counsel ACANDS INC: High Court Lets 3rd Circuit Decision Stand ACLC: Moody's Reviews B2 Rating on $13.1MM Notes & May Downgrade ADELPHIA COMMS: Court Okays Erie County Lease-Back Transaction ADVANCED MICRO: Plans $2.5 Billion Expansion in Germany AIRADIGM COMMUNICATIONS: Taps Liebmann Conway as Special Counsel AIRADIGM COMMUNICATIONS: Taps Lukas Nace as FCC Special Counsel AIRBASE SERVICES: Court Extends Deadline to File Schedules ALLIED HOLDINGS: Wants Until September 24 to Decide on Leases AMERIQUEST MORTGAGE: Fitch Cuts Two Certificate Class Ratings to B ANCHOR GLASS: Obtains Court Approval for Glenshaw Settlement ANCHOR GLASS: Court Abates Proceedings on Encore Glass' Claims ANCHOR GLASS: Three Claimants Want Claims Objection Overruled ASARCO LLC: Court Approves Hedging Program Implementation ASARCO LLC: Seeks Approval for Bridgeview Management Agreement ASARCO LCC: Lack of Info Prompts S&P to Withdraw Default Ratings ASPECT SOFTWARE: S&P Puts CCC+ Rating on Proposed $385 Mil. Loan ATA AIRLINES: Court Approves Boeing Settlement Agreement ATA AIRLINES: Settles Claims Dispute with NatTel LLC ATA AIRLINES: SEC Reporting Obligations Officially Suspended BANYAN CORP: Posts $1 Mil. Net Loss in 2006 First Fiscal Quarter BAY POINT: S&P Assigns BB Rating to $125 Million Debt Facility BEARINGPOINT: Moody's Holds B3 Rating on $450 Million of Bonds BLACKROCK: Moody's Reviews B2 Rating on Class B-5 & May Downgrade BOMBARDIER RECREATIONAL: S&P Rates $790 Mil. Loan Facility at B+ BRAVO MORTGAGE: Moody's Puts Low-B Rating on Two Cert. Classes CANON COMMS: Moody's Rates $35.7 Million Sr. Secured Loan at B3 CANON COMMS: Acquisition Plan Cues S&P to Revise Outlook to Neg. CARMIKE CINEMAS: S&P Lowers Sub. Notes' Rating One Notch to CCC CERTIFIED HR: Creditors Have Until July 31 to File Proofs of Claim CITIZENS COMMS: Moody's Reviews Debt Rating & May Upgrade CITX CORPORATION: 3rd Circuit Kills Trustee's Malpractice Suit CLEAN POWER: DBRS Puts BB(high) Issuer Debt Rating Under Review CNL FUNDING: Moody's Puts Low-B Rating on $15.4 Million of Bonds CONGOLEUM CORP: Files Amended Disclosure Statement in New Jersey DANA CORP: Watson & Chalin Wants Stay Lifted to Permit Set-Off DC PROPERTIES: Disclosure Statement Hearing Scheduled on June 14 DELPHI CORP: Court Approves Blake Cassels as Canadian Counsel DELPHI CORP: Court Okays Enlargement of KPMG's Scope of Employment DELPHI CORP: Hires Mayer Brown as Special IT Outsourcing Counsel DELTA AIR: Can Perform Obligations on Seattle Operating Agreement DYNEGY HOLDINGS: S&P Puts BB- Rating on $820 Million Bank Facility E*TRADE: DBRS Places BB Rating on Deposits & Senior Debt EDDIE BAUER: Hires Goldman Sachs to Aid in Possible Sale EDDIE BAUER: S&P Puts B Corp. Credit & Sr. Debt Ratings on Watch EDWARD GROGAN: Chapter 15 Petition Summary ELEPHANT TALK: Auditor Raises Going Concern Doubt ELGIN NATIONAL: S&P Places CCC+ Corporate Credit Rating on Watch EMPIRE GLOBAL: Posts $109,642 Net Loss in 2006 1st Fiscal Quarter ENTERGY NEW ORLEANS: Court Approves Insurance Allocation Protocol FDL INC: U.S. Trustee Names Phoenix Furniture to Creditors Panel FENDER MUSICAL: Moody's Lowers B3 Rating on $100MM Loan to Caa1 FENDER MUSICAL: S&P Affirms B+ Rating & Revises Outlook to Neg. FFCC 1999-2: Moody's Cuts Rating on $16MM Class A-2 Certs. to B1 FLYI INC: Judge Walrath Approves UAL Settlement Agreement FLYI INC: Court Approves Rejection of Seven IAE Purchase Contracts FOAMEX INTERNATIONAL: Can't File 1st Quarter 2006 Results on Time FOSTER WHEELER: Moody's Rates $250MM Sr. Sec. Debt Facility to Ba3 GENERAL MOTORS: 20,000+ Workers Taking Buy-Out & Retirement Offers GOLDSPRING INC: March 31 Balance Sheet Upside Down by $15.6 Mil. H&E EQUIPMENT: Commences $253 Million Debt Securities Offering HEALTHSOUTH CORP: S&P Assigns CCC+ Rating to $1 Billion Sr. Notes HORNE COMMERCIAL: Case Summary & 2 Largest Unsecured Creditors IMAGING3 INC: First Quarter Balance Sheet Upside Down by $3 Mil. INCO LTD: Reaches Tentative CBA with USW Bargaining Committee INGRAM MICRO: S&P Affirms BB+ Corporate Credit Rating IT GROUP: Third Circuit Rejects ERISA Plan Participants' Claims KANSAS CITY SOUTHERN: Names New Finance Department Leadership KL INDUSTRIES: Has Until Friday to File Schedules KMART CORP: Court Signs Order Resolving LNR & Goldblatt Dispute KMART CORP: Settles Dispute Over Texas Taxing Authorities' Claims KMART CORP: Court Rules Heaton's Claim Motion is Withdrawn as Moot LEGACY ESTATE: Gets Interim Nod on DIP Loan & Cash Collateral Use LG.PHILIPS DISPLAYS: Court Converts Case to Chapter 7 Liquidation LUMINENT TRUST: Moody's Rates Class B-4 Certificates at Ba2 MASTR ALTERNATIVE: Moody's Puts Low-B Rating on 2 Cert. Classes MESABA AVIATION: Judge Kishel Okays E*Trade Agreement Rejection MIRANT CORP: Cadwalader Wickersham Asks for $3 Million Bonus MIRANT CORP: MC Asset Recovery Wants BofA to Produce Documents NORTHWEST AIRLINES: Court Sets August 16 as Claims Bar Date NORTHWEST AIRLINES: Court Approves GE & Safran Financing Accord NORTHWEST AIRLINES: Wants Until June 15 to File Statements OAKWOOD HOMES: Trust's Suit Vs. Insurers Survives Dismissal Motion OWENS CORNING: Wants to Execute Terms of Plan Support Agreement OWENS CORNING: Asks Court to Approve Pact with Tobacco Defendants PARMALAT USA: Wants S.N.Y. Dist. Ct. to Dismiss BofA Counterclaims PERFORMANCE TRANSPORTATION: Court Okays Watson Wyatt's Retention PLIANT CORP: Has Until August 1 to Remove State Court Actions PRISM BUSINESS: S&P Assigns CCC+ Rating to $12 Million Term Loan PRO-BUILD HOLDINGS: S&P Rates Proposed $550MM Debt Facility at BB+ RAMP SERIES: Moody's Assigns Ba1 Rating to Class M-10 Certificates REFCO INC: Court Sets July 17 as Refco LLC Claims Bar Date REFCO INC: Court Sets July 17 as Refco Capital Claims Bar Date REFCO INC: Wants to Indemnify RGL Director in FXCM Board RHODES INC: Court Confirms Restated Joint Liquidating Plan SAINT VINCENTS: Inks Memorandum of Agreement with Interns' Union SAINT VINCENTS: Wants to Assign Staten Island Contracts & Leases SEDONA CORP: March 31 Balance Sheet Upside-Down by $6.4 Million SERACARE LIFE: Judge Adler Won't Appoint Equity Holders Committee SILICON GRAPHICS: Will Honor Prepetition Customer Programs SOUNDVIEW HOME: Moody's Puts Low-B Rating on Two Cert. Classes STARBOUND RE: S&P Assigns BB+ Rating to $90 Million Bank Loan STRUCTURED ASSET: DBRS Rates $17.4 Million Loan at BB(high) SYLVEST FARMS: Selling All Assets to Koch Foods for $58 Million SYLVEST FARMS: Can Borrow $34 Million from Wachovia Under DIP Pact SYLVEST FARMS: Court Appoints Nine-Member Creditors Committee TENET HEALTHCARE: Hires Biggs Porter as Chief Financial Officer TOMMY HILFIGER: Completes Tender Offer of 9% Senior Bonds Due 2031 TOWER AUTOMOTIVE: Fuji Dietec Wants Stay Lifted to Recover Tooling TRACE INTERNATIONAL: Directors & Officers Entitled to Jury Trial TRM CORP: Agrees to Sell UK Subsidiary to Digital 4 for $4.9 Mil. USA COMMERCIAL: U.S. Trustee Appoints 5-Member Creditors Committee USA COMMERCIAL: Trustee Names 7-Member Equity Panel in Diversified USA COMMERCIAL: Trustee Names 7-Member Equity Panel in First Trust WALTON SCDO: Moody's Lowers Rating on $5 Million Notes to Ba2 WINN-DIXIE: Opposes Florida Tax Collectors' Move to Collect Taxes * Large Companies with Insolvent Balance Sheets ********* ABB LUMMUS: Hires Kirkpatrick & Lockhart as Bankruptcy Counsel -------------------------------------------------------------- ABB Lummus Global Inc. obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Kirkpatrick & Lockhart Nicholson Graham LLP as its bankruptcy counsel, nunc pro tunc to April 21, 2006. As reported in the Troubled Company Reporter on May 4, 2006, Kirkpatrick & Lockhart will: a. provide legal advice with respect to the Debtor's powers and duties as a debtor-in-possession in the continued operation of its businesses and management of its properties; b. take all necessary legal action to protect and preserve the Debtor's Bankruptcy Estate, including the prosecution of actions on behalf of the Debtor, the defense of any actions commenced against the Debtor, negotiations concerning litigation in which the Debtor is involved, and objection to claims filed against the Debtor's bankruptcy estate; c. prepare on behalf of the Debtor all necessary motions, answers, orders, reports, and other legal papers on connection with the administration of its bankruptcy estate; d. assist the Debtor in connection with approval of its disclosure statement in accordance with Section 1125 of the Bankruptcy Code; e. assist the Debtor in confirming and consummating its prepackaged plan of reorganization at the earliest possible date; f. perform any and all other legal services for the Debtor in connection with its chapter 11 case; and g. perform such other legal services as the Debtor may request. Jeffrey N. Rich, Esq., a member of Kirkpatrick & Lockhart, told the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $350 - $625 Counsel $260 - $385 Legal Assistants $170 - $210 Headquartered in Houston, Texas, ABB Lummus Global Inc. -- http://www.abb.com/lummus/-- offers advanced process technologies, project management, engineering, procurement and construction-related services for the oil and gas, petroleum refining and petrochemical process industries. The group oversees the construction of process plants and offshore facilities. The company filed for chapter 11 protection on Apr. 21, 2006 (Bankr. D. Del. Case No. 06-10401). Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, represents the Debtor. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, LLP, serves as the Debtor's co-counsel. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. Joseph D. Frank, Esq., at Frank/Gecker LLP represents the Informal Asbestos Claimants' Committee. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. ABB LUMMUS: Court Okays Pachulski Stang as Bankruptcy Co-Counsel ---------------------------------------------------------------- ABB Lummus Global Inc. obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Pachulski Stang Ziehl Young Jones & Weintraub LLP as its bankruptcy co-counsel, nunc pro tunc to April 21, 2006. As reported in the Troubled Company Reporter on May 4, 2006, the Debtor told the Court that Pachulski Stang will handle matters arising in its chapter 11 case that could create conflict issues for its lead counsel, Kirkpatrick & Lockhart Nicholson Graham LLP. The Debtor assured the Court that Pachulski Stang will complement and not duplicate the services of Kirkpatrick & Lockhart. The Debtor said that it will implement appropriate procedures to ensure that there is minimal duplication of services rendered. Pachulski Stang will: a. provide legal advice with respect to the Debtor's powers and duties as a debtor-in-possession in the continued operation of its businesses and management of its properties; b. take all necessary legal action to protect and preserve the Debtor's Bankruptcy Estate, including the prosecution of actions on behalf of the Debtor, the defense of any actions commenced against the Debtor, negotiations concerning litigation in which the Debtor is involved, and objection to claims filed against the Debtor's bankruptcy estate; c. prepare on behalf of the Debtor all necessary motions, answers, orders, reports, and other legal papers; d. assist the Debtor in connection with approval of its disclosure statement in accordance with Section 1125 of the Bankruptcy Code; e. assist the Debtor in confirming and consummating its prepackaged plan of reorganization at the earliest possible date; f. appear in Court and protect the interests of the Debtor before the Court; and g. perform all other legal services for the Debtor which may be necessary and proper in the Debtor's chapter 11 case and in any related proceedings. Laura Davis Jones, Esq., a partner at Pachulski Stang, told the Court that she will bill $675 per hour for this engagement. Ms. Jones said that other professionals expected to render services and their hourly rates are: Professional Hourly Rate ------------ ----------- Scotta E. McFarland, Esq. $450 Curtis A. Hehn, Esq. $350 Patricia Cuniff, Esq. $155 Headquartered in Houston, Texas, ABB Lummus Global Inc. -- http://www.abb.com/lummus/-- offers advanced process technologies, project management, engineering, procurement and construction-related services for the oil and gas, petroleum refining and petrochemical process industries. The group oversees the construction of process plants and offshore facilities. The company filed for chapter 11 protection on Apr. 21, 2006 (Bankr. D. Del. Case No. 06-10401). Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, represents the Debtor. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, LLP, serves as the Debtor's co-counsel. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. Joseph D. Frank, Esq., at Frank/Gecker LLP represents the Informal Asbestos Claimants' Committee. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. ACANDS INC: High Court Lets 3rd Circuit Decision Stand ------------------------------------------------------ The U.S. Supreme Court denied certiorari, and will let stand the decision by the U.S. Court of Appeals for the Third Circuit, reported at 435 F.3d 252. In its petition for a writ of certiorari, Travelers Casualty and Surety Co. noted a conflict among the Courts of Appeals as to whether vacatur of a commercial arbitration award may be based upon judicially-created, non-statutory "public policy" grounds, or whether vacatur is limited to the grounds specified in the Federal Arbitration Act. The insurer also argued that, in finding that the "public policy" underlying the automatic stay provisions of the Bankruptcy Code required vacatur of the award, the Third Circuit ignored the Supreme Court's well established precedent favoring arbitration. To avoid interfering with the broad purposes served by the automatic stay, the Third Circuit ruled an arbitration panel had to halt an arbitration proceeding arising out of an insurance coverage dispute between a liability insurer and its insured, an asbestos insulation installer, as soon as the scope of the parties' submissions supported an award that could diminish the insured's Chapter 11 estate. By continuing beyond that point, the arbitration proceeding violated the automatic stay and both the panel's deliberations and the resulting award were void. Moreover, the contractual right of the insured to have 45% of the asbestos-related claims against it allocated to its policies' operations coverage, pursuant to its prepetition letter agreement with the insurer, was property of the estate. Consequently, the arbitration award violated the automatic stay when it granted affirmative relief to the insurer by allocating zero claims to the insured's operations coverage, thereby effectively terminating the insured's coverage. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002, (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. Kathleen Campbell Davis, Esq., and Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. When the Company filed for protection from its creditors, it estimated debts and assets of over $100 million. Chapter 11 Plan Update As previously reported, Judge Fitzgerald approved the adequacy of the Debtor's Amended Disclosure Statement explaining their proposed Plan of Reorganization on Oct. 3, 2003. On Jan. 26, 2004, Judge Fitzgerald entered Proposed Findings of Fact and Conclusions of Law Re Chapter 11 Plan Confirmation (Doc. 979), recommending that the U.S. District Court deny confirmation of the Debtor's Plan. On Feb. 5, 2004, the Debtor and the Official Committee of Asbestos Personal Injury Claimants jointly filed with the District Court an objection to the Bankruptcy Court's Proposed Findings. In that filing, the Debtor and the Committee asked the District Court to reject the Bankruptcy Court's Findings and Conclusions and confirm the proposed chapter 11 plan. ACLC: Moody's Reviews B2 Rating on $13.1MM Notes & May Downgrade ---------------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade one class of franchise loan backed notes issued by ACLC Business Loan Receivables Trust 1998-2. The complete rating action: Under Review For Possible Downgrade: ACLC Business Loan Receivables Trust 1998-2 * $13,154,000 Class B Notes, rated B2. The balance of delinquent, defaulted and accelerated loans in this deal is significant, currently at roughly one-half of the loan balance of the collateral pool. Moody's review will focus on the degree to which these loans and the uncertainty surrounding their recoveries may ultimately impact principal paydown on the notes. ADELPHIA COMMS: Court Okays Erie County Lease-Back Transaction -------------------------------------------------------------- Adelphia Communications Corporation currently participates in a sales tax incentive program in which it has received an exemption from state and local sales taxes in connection with the purchase of certain capital equipment. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that the ACOM Debtors have saved approximately $147,580 in sales tax by their participation in the Program and if their participation is not properly terminated, they could potentially be liable for repayment of the sales tax saved as well as for the interest and penalties of that tax savings. The ACOM Debtors had also paid a $231,863 initial agency fee in connection with the Program, which will be recouped once their participation in the Program is terminated. ACOM now wishes to terminate its participation in the Program in order to gain benefits of approximately $400,000. In order to terminate the participation in the Program, ACOM must comply with certain enabling statutes requiring ACOM to lease computer equipment valued at $1,900,000 acquired through the Program to Erie County Industrial Development. ACOM will lease the computer equipment to ECIDA for seven days, during which time ECIDA will sublease it back to ACOM. At the conclusion of the Lease-Back Transaction, ACOM will retain title to the computer equipment. Ms. Chapman assures the Court that all negotiations with ECIDA have been conducted through counsel on an arm's-length basis. ACOM sought and obtained the Court's authority to enter into the Lease-Back Transaction pursuant to Section 363 of the Bankruptcy Code. While the Lease-Back Transaction arguably could be characterized as a transaction in the ordinary course of business, the ACOM Debtors seek the Court's approval out of abundance of caution and in compliance with ECIDA's request. Based in Coudersport, Pa., Adelphia Communications Corporation -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVANCED MICRO: Plans $2.5 Billion Expansion in Germany ------------------------------------------------------- Advanced Micro Devices, Inc., plans to expand its microprocessor manufacturing capacity over the next three years by adding additional 300-millimeter wafer production capabilities in Dresden through the implementation of three new projects. AMD's newest fabrication facility will come online through a major transformation of the company's existing Fab 30, which will be named Fab 38. The transition from 200mm to 300mm allows for more than twice as many processors on a wafer. In addition, AMD will also expand Fab 36's existing 300mm capacity and build a new clean room facility to handle the site's growing Bump and Test requirements, which is one of the final stages of the manufacturing process where wafers are prepared to be shipped for packaging. With plans to invest a total of $2.5 billion in the Dresden expansion projects, AMD continues to aggressively scale its innovative manufacturing processes to meet growing customer needs. "As global demand continues to rise for AMD products, we are scaling our manufacturing capacity intelligently to meet our customers' growing needs," said Hector Ruiz, chairman of the board and chief executive officer of AMD. "To achieve this, we are pursuing an aggressive path to invest in and expand our top-rated manufacturing capabilities in Dresden. These strategic investments highlight how significant Germany and Europe are to the future of AMD competitiveness. We expect that AMD's momentum and demand for our products will continue to increase, fueled by our technology leadership, our commitment to customer-centric innovation and the continuing global antitrust scrutiny that will ensure truly competitive markets." AMD will ramp down 200mm manufacturing in the second half of 2007, with preparation already underway for the ramp of 300mm wafers on 65nm process technology at Fab 38 by the end of 2007. Through the combination of leading-edge equipment, Automated Precision Manufacturing and the great people of Dresden, the plant will produce the latest generations of AMD microprocessors, reaching full capacity by the end of 2008. The majority of the investment will go into new equipment in the Fab 38 facility. AMD will also build a new clean room facility on its Dresden campus for Bump and Test requirements, which will support both fabrication facilities. Previously the clean room facilities for Bump and Test activities were located within Fab 30 and Fab 36. By moving them into a new facility in 2007, AMD has the ability to maximize production space at both Fab 36 and Fab 38, providing increased output and capacity. These three projects have the potential to increase Dresden-based manufacturing to a full capacity of 45,000 300mm wafer starts per month by the end of 2008. "With the addition of Fab 36, AMD took a major step forward in increasing output and scale for its global manufacturing and with this announcement we raise the bar even further," Daryl Ostrander, senior vice president, logic technology and manufacturing, Microprocessor Solutions Sector, said. "As we look ahead to aggressive process technology transitions to 45nm and beyond, the ability to continue delivering these technologies with world-class yields will provide customers with incredibly sophisticated and agile manufacturing capabilities, whereby we can continue to accommodate the increasing demand for AMD products." About AMD Based in Sunnyvale, California, Advanced Micro Devices Inc. -- http://www.amd.com/-- is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. Founded in 1969, AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide. * * * As reported in the Troubled Company Reporter on Jan. 31, 2006, Standard & Poor's Ratings Services raised its ratings on Sunnyvale, California-based Advanced Micro Devices Inc., including its corporate credit rating, to 'B+' from 'B'. In addition, the ratings on the microprocessor manufacturer were removed from CreditWatch with positive implications, where they were placed on Jan. 24, 2006. S&P says the ratings outlook is stable. As reported in the Troubled Company Reporter on Jan. 26, 2006, Fitch Ratings revised Advanced Micro Devices Inc.'s Rating Outlook to Positive from Stable and affirmed the company's 'B' issuer default rating. AMD's 'B/RR4' senior unsecured debt and 'BB/RR1' senior secured bank credit facility are also affirmed. Fitch's action affected approximately $1.2 billion of total debt. As reported in the Troubled Company Reporter on Jan. 26, 2006, Moody's Investors Service raised the corporate family rating of Advanced Micro Devices, Inc., two notches to Ba3, with a stable outlook. AIRADIGM COMMUNICATIONS: Taps Liebmann Conway as Special Counsel ---------------------------------------------------------------- Airadigm Communications, Inc., asks the U.S. Bankruptcy Court for the Western District of Wisconsin for permission to employ Liebmann, Conway, Olejniczak & Jerry, S.C., as its special counsel. Liebmann Conway will represent the Debtor in general corporate legal matters relating to the operation of its business and fulfillment of requirements relating its corporate status. This includes contract review, matters relating to the structure of the corporation, disputes arising from the Debtor's operation of its business, and financial planning. The Debtor tells the Court that the Firm's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Jerome E. Smyth, Esq. Principal $255 Robert M. Charles, Esq. Principal $230 Michele M. McKinnon, Esq. Associate $200 Kristen M. Hooker, Esq. Associate $180 Title Hourly Rate ----- ----------- Principals $230 - $255 Associates $170 - $200 Legal Assistants and Paralegals $125 Jerome E. Smyth, Esq. a partner at Liebmann Conway, assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Smyth can be reached at: Jerome E. Smyth, Esq. Liebmann, Conway, Olejniczak & Jerry, S.C. 231 South Adams Street P.O. Box 23200 Green Bay, Wisconsin 54305-3200 Tel: (920) 437-0476 Fax: (920) 437-2868 http://www.lcojlaw.com/ About Airadigm Communications Headquartered in Little Chute, Wisconsin, Airadigm Communications, Inc. -- http://www.eisnteinpcs.com/-- provides local wireless phone services through its Einstein PCS wireless networking technology. The company filed for chapter 11 protection on July 28, 1999 (Bankr. W.D. Wis. Case No. 99-33500). The Court confirmed its plan of reorganization in 2000. The company filed a new chapter 11 petition on May 8, 2006 (Bankr. W.D. Wis. Case No. 06-10930). Kathryn A. Pamenter, Esq., and Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., represent the Debtor in its new bankruptcy proceedings. No Official Committee of Unsecured Creditors has been appointed in the Debtor's new bankruptcy case. In its second bankruptcy filing, the Debtor estimated assets between $10 million to $50 million and debts of more than $100 million. AIRADIGM COMMUNICATIONS: Taps Lukas Nace as FCC Special Counsel --------------------------------------------------------------- Airadigm Communications, Inc., asks the U.S. Bankruptcy Court for the Western District of Wisconsin for permission to employ Lukas, Nace, Gutierrez & Sachs, as its special counsel. Lukas Nace will represent and advise the Debtor in negotiations and dealings with the Federal Communications Commission. The Debtor assures the Court that Lukas Nace will not duplicate the services being rendered by Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., its counsel or Liebman, Conway, Olejniczak & Jerry, S.C., its special counsel on general corporate legal matters. The Debtor says that Lukas Nace's services to the Debtor will be limited to matters concerning the FCC. Thomas Gutierrez, Esq., a partner at Lukas Nace, tells the Court that he will bill $440 per hour for this engagement. Mr. Gutierrez discloses that the firm's other professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Russell Lukas, Esq. Principal $440 Steven Chernoff, Esq. Associate $275 Lynn Ratnabale, Esq. Associate $270 Mr. Gutierrez assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Gutierrez can be reached at: Thomas Gutierrez, Esq. Lukas, Nace, Gutierrez & Sachs 1650 Tysons Boulevard, Suite 1500 McLean, Virginia 22102 Tel: (703) 584-8678 Fax: (703) 584-8696 http://www.fcclaw.com/ About Airadigm Communications Headquartered in Little Chute, Wisconsin, Airadigm Communications, Inc. -- http://www.eisnteinpcs.com/-- provides local wireless phone services through its Einstein PCS wireless networking technology. The company filed for chapter 11 protection on July 28, 1999 (Bankr. W.D. Wis. Case No. 99-33500). The Court confirmed its plan of reorganization in 2000. The company filed a new chapter 11 petition on May 8, 2006 (Bankr. W.D. Wis. Case No. 06-10930). Kathryn A. Pamenter, Esq., and Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., represent the Debtor in its new bankruptcy proceedings. No Official Committee of Unsecured Creditors has been appointed in the Debtor's new bankruptcy case. In its second bankruptcy filing, the Debtor estimated assets between $10 million to $50 million and debts of more than $100 million. AIRBASE SERVICES: Court Extends Deadline to File Schedules ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas extended the deadline in which Dennis Faulker, Chapter 11 Trustee for Airbase Services, Inc., may file the Debtor's Schedules and Statements of Financial Affairs. The trustee has until June 17, 2006, or three days before the Section 341(a) creditors' meeting, to file the schedules. The Section 341(a) meeting is scheduled on June 20, 2006. The trustee tells the Court that due to his recent appointment, he needs additional time to collect the data needed for the accurate preparation and filing of the Debtor's schedules and statements. Headquartered in Grand Prairie, Texas, Airbase Services, Inc. -- http://www.airbaseservices.com/-- maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. Due to bankruptcies filed by several of its airline customers, the Company filed for bankruptcy protection on May 1, 2006 (Bankr. N.D. Tex. Case. No. 06-41231). The Court approved the appointment of Dennis Faulkner as trustee in the Debtor's chapter 11 case on May 3, 2006. Mark J. Petrocchi, Esq., at Goodrich Postnikoff Albertson & Petrocchi, LLP, represents the Trustee. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, the Company reported assets and debts amounting to $10 million to $50 million. ALLIED HOLDINGS: Wants Until September 24 to Decide on Leases ------------------------------------------------------------- Pursuant to Section 365(d)(4) of the Bankruptcy Code, Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia to extend their deadline to assume or reject their non-residential real property leases -- except the lease for their corporate headquarters in Decatur, Georgia -- through and including Sept. 24, 2006. Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, relates that the Debtors continue to be parties to around 52 non-residential real property leases. Given the large number of Leases, the Debtors need additional time to determine whether the Leases should be assumed or rejected, Mr. Walker asserts. Mr. Walker assures the Court that the Debtors have paid, and will continue to pay, all postpetition lease obligations under the Leases. Therefore, the landlords will not be harmed by the proposed extension. A list of the 52 Leases is available for free at http://ResearchArchives.com/t/s?a0b Headquartered in Decatur, Georgia, Allied Holdings, Inc. (OTC Pink Sheets: AHIZQ.PK) -- 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERIQUEST MORTGAGE: Fitch Cuts Two Certificate Class Ratings to B ------------------------------------------------------------------ Fitch Ratings took rating actions on these Ameriquest Mortgage Securities Inc. home equity issues: AMSI series 2002-C: -- Class A affirmed at 'AAA' -- Class M1 affirmed at 'BBB' -- Class M2 downgraded to 'B' from 'BBB-' and is removed from Rating Watch Negative AMSI series 2002-3: -- Class M-2 affirmed at 'AA-' -- Class M-3 affirmed at 'BBB' -- Class M-4 downgraded to 'B' from 'BBB-' and is removed from Rating Watch Negative The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $193.64 million. In the case of series 2002-C class A, affirmation on this class reflects the Freddie Mac guarantee of timely distribution on interest and ultimate distribution of principle on the offered certificates and affect approximately $79.48 million of outstanding certificates. The downgrades, affecting approximately $28.97 million of the outstanding certificates, are taken as a result of a deteriorating relationship between CE and expected loss. All of the loans were either originated or acquired by Ameriquest Mortgage Company, which also serves as the servicer (rated 'RSP2+' by Fitch). Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing, and selling mortgage loans. The underlying collateral consists of fully amortizing 15- to 30- year fixed-and adjustable-rate mortgages secured by first liens on one- to four-family residential properties extended to subprime borrowers. As of the May 2006 distribution date, the series 2002- C is 42 months seasoned and series 2002-3 is 44 months seasoned. The pool factors (current principal balance as a percentage of original) are approximately 11% and 10%, respectively. Due to differences in prepayment behavior, the geographic composition of the pools has changed significantly since issuance. Borrowers located in areas enjoying rapid home appreciation have prepaid at a much faster rate than borrowers located in areas with relatively slow home price appreciation. As a result, a large percentage of the remaining pool is now located in states which have experienced slower-than-average home price appreciation trends. Approximately 40% of the remaining loans in both pools are secured by properties in Indiana, Ohio, Michigan, Illinois, Pennsylvania, and Texas. Loans located in these states have generally been more likely to default and have generally experienced high loss severities. This is expected to continue to put upward pressure on loss trends going forward. Series 2002-C collateral losses have exceeded excess spread 9x out of the past 12 months causing the overcollateralization to fall below its target amount. The current OC is at $3,648,590 which falls short of its target by $2,851,410. The cumulative loss as a percentage of the original pool balance is 1.71% and the delinquency rate (including 60+, bankruptcy foreclosure, and REO) as a percentage of the current pool balance is 24.6%. The OC for series 2002-3 is also currently below its target due to losses that have exceeded XS 10x out of the last 12 months. The current OC amount is 2,782,719, about 3.46% of current principal balance. The cumulative loss as a percentage of the original pool balance is 2.08% and the delinquency rate (including 60+, bankruptcy foreclosure, and REO) as a percentage of the current pool balance is 27.94%. Both transactions are currently failing their delinquency trigger tests and Fitch expects that the triggers will continue to fail therefore the transactions will distribute principal sequentially among the classes. As a result, the credit risk for the mezzanine and senior classes is mitigated. ANCHOR GLASS: Obtains Court Approval for Glenshaw Settlement ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida approve a Settlement Agreement between Anchor Glass Container Corporation, GGC LLC, aka Glenshaw Glass Company, and Dufftown Real Estate Limited Partnership. As reported in the Troubled Company Reporter on April 27, 2006, Anchor Glass and GGC exchanged certain molds and related materials used in the container manufacturing process. Glenshaw has a pending bankruptcy petition in the United States Bankruptcy Court for the Western District of Pennsylvania. In June 2005, Glenshaw commenced an adversary proceeding against Anchor Glass in the Pennsylvania Bankruptcy Court, seeking the immediate recovery of certain glass-making molds in Anchor Glass' possession. Glenshaw also alleged that Anchor Glass was improperly using the molds. In August 2005, Glenshaw obtained from the Pennsylvania Bankruptcy Court a default judgment against Anchor Glass on the Complaint, and an order granting Glenshaw injunctive relief against Anchor Glass, as a result of Anchor Glass' alleged continued use of the molds. In October 2005, the Pennsylvania Bankruptcy Court approved the sale of substantially all of Glenshaw's assets, including the rights Glenshaw had in the subject molds, to Dufftown. On Feb. 10, 2006, Anchor Glass asked the Pennsylvania Bankruptcy Court to open and set aside the default judgment and injunction order. To resolve the outstanding issues among them, Anchor Glass, Glenshaw and Dufftown agreed that: (a) Anchor Glass will be permitted to retain possession of the molds allegedly belonging to Glenshaw, and Dufftown will be permitted to retain possession of the molds allegedly belonging to Anchor Glass; (b) Anchor Glass, Glenshaw and Dufftown will each file a motion seeking approval of the Settlement Agreement in the appropriate bankruptcy courts; (c) Glenshaw and Dufftown will seek to reopen the Adversary Proceeding for purposes of causing withdrawal of the complaint and injunctive motion, as well as causing the court to vacate the default judgment and injunction order; (d) Upon approval of the motions seeking approval of the Settlement Agreement, Anchor Glass will pay $115,000 to Dufftown; and (e) The parties will execute mutual releases. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court Abates Proceedings on Encore Glass' Claims -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida rules that all further proceedings related to the objections of Anchor Glass Container Corporation's Official Committee of Unsecured Creditors to Encore Glass Inc.'s Claim No. 730 will be abated until the U.S. District Court for the Middle District of Florida has entered an order on the appeal of the Bankruptcy Court's disallowance of the Encore Claim. All parties are directed to file the appropriate papers to reinstate proceedings on the Objection upon entry of the District Court's order on the Appeal. As of the Effective Date of the Debtor's Plan of Reorganization, Samuel M. Stricklin, as Alpha Resolution Trustee, is automatically substituted in place of the Committee as the Objecting Party, without further Court order. As reported in the Troubled Company Reporter on Feb. 3, 2006, Encore Glass, Inc., filed a claim, which was later amended, in the prior Chapter 11 case of Anchor Glass in 2002. Encore's amended claim in the Anchor Glass 2002 bankruptcy case was disallowed in January 2005 by Judge Thomas E. Baynes, Jr., and is now on appeal to the United States District Court for the Middle District of Florida. Based on the same facts and events underlying Encore's claim in the Anchor Glass 2002 case, Encore filed Claim No. 45 for $6,102,913, in Anchor Glass' current bankruptcy case. Encore later filed an amended Claim No. 730 for the same claim amount. Anchor Glass, the Creditors Committee and Encore agreed that: (a) Claim No. 45 is disallowed as superseded by Claim No. 730 for $6,102,913; (b) Anchor Glass and the Committee will file an objection to Claim No. 730; (c) until the District Court rules, Claim No. 730 will be treated as, and will be deemed to be, a Disputed Class 5 Claim as to which the Alpha Resolution Trustee will maintain an appropriate pro rata reserve as set forth in Anchor Glass' Plan of Reorganization; (d) if the District Court affirms the orders from Anchor Glass' 2002 bankruptcy case, then Claim No. 730 will be disallowed in the current Anchor Glass Chapter 11 case. If Encore file a further appeal of that District Court order, the Alpha Resolution Trustee will not be required to maintain any reserve on account of Claim No. 730 without an order staying the effect of the District Court order; (e) if the District Court reverses the orders from Anchor Glass' 2002 bankruptcy case, then Claim No. 730 will remain a Disputed Claim, and will be subject to further judicial proceedings in Anchor Glass' current bankruptcy case; (f) Claim No. 730 will be treated as a Class 5 general unsecured claim to the extent it is allowed and will, if allowed, share pro rata with the Claims of other Holders of Class 5 Claims. Encore will not be entitled to any payment as administrative or priority claim holder; and (g) Encore's objection to the confirmation of the Plan is overruled, with prejudice. The Creditors Committee asked the Court to disallow Claim No. 730 because of the preclusive and binding effect of the earlier Bankruptcy Court orders, disallowing Encore's identical claims in the Anchor Glass 2002 bankruptcy case, applying principals of law including res judicata, collateral estoppel, and law of the case. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Three Claimants Want Claims Objection Overruled ------------------------------------------------------------- Three claimants ask the U.S. Bankruptcy Court for the Middle District of Florida to overrule Anchor Glass Container Corporation's objection to their claims: 1. Iron Mountain Information Management, Inc., 2. Madison Warehouse Corporation, and 3. Midwest Warehouse & Distribution, Inc. Anchor Glass had asked the Court to disallow nine claims, asserting statutory warehouse liens: Claimant Claim No. Claim Amount -------- -------- ------------ Spartan Warehouse and Distri. 378 $25,983 Spartan Warehouse and Distri. 537 10,762 Iron Mountain, Inc. 498 4,717 H & O Distribution, Inc. 676 40,257 National Distribution Centers LP 902 77,162 New Star Warehouse 938 21,980 Madison Warehouse Corp. 1151 8,725 Regency Warehousing & Distr. 1179 3,742 Midwest Warehouse 1181 31,202 Robert M. Quinn, Esq., at Carlton Fields PA, in Tampa, Florida, asserted that the asserted liens are avoidable under Section 545(3) of the Bankruptcy Code. Claimants' Response Section 545(3) of the Bankruptcy Code provides that "the trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that the lien . . . is for rent." Andrew T. Jenkins, Esq., at Bush Ross PA, in Tampa, Florida, Stated that the Claimants' liens are valid, perfected and enforceable, however, they do not secure "rent" obligations. Mr. Jenkins asserted the Debtor cannot avoid the Claims by merely filing an objection. To avoid a lien, Rule 7001 of the Federal Rules of Bankruptcy Procedure requires that the Debtor file an adversary proceeding. Moreover, Claim No. 498 filed by Iron Mountain cannot be avoided because the avoidance powers in Section 545 only apply to "statutory liens", Mr. Jenkins avers. The Archival Services and Storage Order between Iron Mountain and the Debtor grants Iron Mountain a lien against the Debtor's records material in Iron Mountain's possession. Iron Mountain also has a consensual security interest that is not subject to avoidance under Section 545 as a statutory lien. The Court has overruled Anchor Glass Container Corporation's objections to the claims of Iron Mountain, Inc., and allowed the claims as a fully secured claim for $4,717. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Court Approves Hedging Program Implementation --------------------------------------------------------- The Court authorizes ASARCO LLC's Board of Directors to establish a Hedging Program committee, which will include FTI Consulting, Inc., financial advisors to ASARCO's Official Committee of Unsecured Creditors. FTI's attendance is required at all Hedging Committee meetings provided that the committee meetings may be held by telephone on reasonable notice. ASARCO's Board of Directors is authorized to designate one or more members and advisors of the Hedging Committee in its sole discretion. The Court directs the Hedging Committee to notify the Board of its recommendations once specific trades within the parameters established by the Board has been identified. The Board will review the recommendations, and has the power to veto the recommendations. Before any trades are executed, ASARCO's counsel must disclose the specific terms of the Hedging Program to these parties by e-mail: * counsel for ASARCO Committee; * counsel for Asbestos Debtors' Official Committee of Unsecured Creditors; * counsel for the Future Claims Representative; * counsel for The CIT Group/Business Credit, Inc.; * the U.S. Trustee; and * the Department of Justice. The Notice Parties will have 24 hours after receipt of notice to file an objection with the Court. All objections and responses must be filed under seal. Without a timely objection, ASARCO may implement the specific trades without further Court order. The Court authorizes ASARCO to use up to $30,000,000 in the implementation of the Hedging Program without further Court order. The Maximum Hedging Expenditure can be increased by $10,000,000 more if no notice party objects to the increase. ASARCO will maintain a $10,000,000 minimum cash balance in unrestricted cash after the implementation of the Hedging Program, excluding any borrowings under the DIP Facility. The Hedging Program is limited to copper. All contracts under the Hedging Program must be settled financially on or before Dec. 31, 2007. ASARCO is authorized to extend the Hedging Term until Dec. 31, 2008, if no Notice Party objects to the extension. The Order does not prejudice the Ad Hoc Committee of ASARCO Noteholders from requesting to become a Notice Party at a later time, subject to appropriate confidentiality agreements. 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. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Seeks Approval for Bridgeview Management Agreement -------------------------------------------------------------- ASARCO LLC seek authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to enter into a property management agreement with Bridgeview Management Company, effective as of Aug. 9, 2005. Bridgeview Management Company is a wholly owned subsidiary of ASARCO LLC and is a Chapter 11 debtor. It was formed in the 1970s to manage and hold ASARCO's closed plants and leased properties in New Jersey. Since then, Bridgeview has managed certain properties of ASARCO and its affiliates. Currently, Bridgeview oversees the management of ASARCO's real property in Perth Amboy, New Jersey. Bridgeview is also responsible in the collection of rents for the Property. The Agreement provides that: (a) ASARCO will reimburse Bridgeview for any out-of-pocket expenses in connection with the Property; (b) ASARCO will provide Bridgeview with any personnel who are needed to fulfill Bridgeview's obligations under the Agreement; and (c) rental proceeds related to the Property will be transferred to ASARCO on a monthly basis. As of April 30, 2006, Bridgeview has not distributed to ASARCO $504,357 in outstanding rental proceeds. That amount, plus rentals collected after April 30, 2006, will be distributed to ASARCO upon Court approval of the Property Management Agreement. 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. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LCC: Lack of Info Prompts S&P to Withdraw Default Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'D' corporate credit and senior unsecured debt ratings on ASARCO LCC, owing to the company's lack of financial and operational information. "The rating withdrawals are due to the very limited financial and operational information," said Standard & Poor's credit analyst Juan Pablo Becerra. The current rating reflects ASARCO's announcement that it voluntarily filed for bankruptcy under Chapter 11 on Aug. 10, 2005. To maintain surveillance on its ratings, Standard & Poor's requires the prompt provision of all relevant information by issuers. ASPECT SOFTWARE: S&P Puts CCC+ Rating on Proposed $385 Mil. Loan ---------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Westford, Massachusetts-based Aspect Software Inc. to negative from stable, while affirming its 'B' corporate credit rating on the company. The outlook revision reflects Aspect's recently announced plans for a refinancing and dividend payment, which would result in pro forma operating lease-adjusted total debt to EBITDA of about 6x as of March 2006. "At the same time, we assigned a 'B+' rating and a recovery rating of '1' to Aspect's proposed $775 million first-lien credit facilities, consisting of a $725 million term loan and a $50 million revolving credit facility," said Standard & Poor's credit analyst Stephanie Crane. The rating and recovery rating indicate expectation for full recovery of principal in the event of a payment default. The proposed $385 million second-lien term loan has been assigned a 'CCC+' with a recovery rating of '5', indicating Standard & Poor's expectation of negligible (0%-25%) recovery of principal by creditors in the event of a payment default or bankruptcy. Proceeds of the bank facility, totaling $1.11 billion, together with $35 million of existing cash, will be used to fund a dividend and a refinancing. Aspect develops, installs, and maintains software-based solutions for contact centers. Aspect's strength in "inbound" software, notably automatic call distributors, complements positions in "outbound" technologies of predictive dialing. Aspect also holds solid positions in workforce management software for call centers. The ratings reflect: * a mature industry; * the competitiveness of the contact center solutions market; * the soft corporate spending environment; and * the company's aggressive financial profile. These factors are partially offset by the company's highly recurring revenue base and leading position in a niche market with significant barriers to entry. ATA AIRLINES: Court Approves Boeing Settlement Agreement -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana approved ATA Airlines, Inc.'s Settlement Agreement with the Boeing Company. As reported in the Troubled Company Reporter on April 25, 2006, ATA and Boeing are parties to a purchase agreement dated June 30, 2000, under which ATA Airlines was to purchase seven model 737-800 aircraft on certain terms and conditions. ATA and Boeing agreed to execute a settlement agreement to settle any and all claims and causes of actions that: (i) Boeing may have that arise under the Purchase Agreement as it relates to the Undelivered Aircraft, including the Boeing Claim; and (ii) ATA may have that: (a) arise under the Purchase Agreement as it relates to the Undelivered Aircraft including claims relating to the Advance Payments; or (b) arise under Chapter 5 of the Bankruptcy Code, whether or not related to the Purchase Agreement. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Settles Claims Dispute with NatTel LLC ---------------------------------------------------- The U.S. District Court for the Southern District of Indiana approved ATA Airlines, Inc., and its debtor-affiliates' Settlement Agreement with NatTel, LLC. The salient terms of the Settlement Agreement are: (i) The Debtors, the Committee and NatTel will enter into a stipulation providing that NatTel's appeal pending in the Court will be dismissed with prejudice, with each side to bear its own attorneys' fees and costs. The stipulation will be filed with the District Court; (ii) Except with respect to two filed prepetition claims, NatTel abandons all claims it holds in any of the Chapter 11 cases and agrees that neither NatTel nor its affiliates will be or will become a party-in-interest with respect to any of the Chapter 11 cases or any contested matter or proceeding arising in, or related to, any of the Chapter 11 cases; (iii) NatTel abandons all pleadings filed in any of the Chapter 11 cases and abandons all rights remedies and objections it may have or might assert in any of the Chapter 11 cases, including its objections to various administrative claims asserted in the Chapter 11 case of C8 Airlines, Inc., and any rights or remedies NatTel may have or might assert to comment on or object to any proposed plan or disclosure statement. However, notwithstanding anything to the contrary, NatTel may vote its claims regarding any plan proposed in the C8 Chapter 11 case and share in any recoveries pursuant to the claims pari passu with all of C8's other general unsecured creditors. NatTel agrees that it will not file any other pleadings nor appeal any other orders in the Chapter 11 cases, and the Debtors and the Creditors Committee agree that any plan or disclosure statement filed or approved in the C8 Chapter 11 case will not refer to or mention by name, NatTel and its Affiliates; and (iv) The Parties exchange mutual releases. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: SEC Reporting Obligations Officially Suspended ------------------------------------------------------------ ATA Holdings, Corp., filed a notice with the Securities and Exchange Commission on March 1, 2006, to terminate registration of its securities under Section 12(G) of the Securities Exchange Act of 1934. ATA Holdings' duty to file reports under Sections 13 and 15(D) of the Securities Exchange Act of 1934 is officially suspended. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) BANYAN CORP: Posts $1 Mil. Net Loss in 2006 First Fiscal Quarter ---------------------------------------------------------------- Banyan Corporation filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $1,010,534 net loss on $1,317,967 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $5,113,397 in total assets, $3,833,154 in total liabilities, and $1,280,243 in total stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $1,360,379 in total current assets available to pay $3,093,545 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?a08 Going Concern Doubt As reported in the Troubled Company Reporter on May 17, 2006, Schwartz Levitsky Feldman LLP, Chartered Accountants, in Ontario, Canada, raised substantial doubt about Banyan Corporation's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations, negative working capital and stockholders' deficiency. Banyan Corporation is a holding company focused on investing in and building a network of subsidiaries engaged in diagnostic testing, the franchising of Chiropractic USA branded chiropractic clinics, providing practice development training and assistance to chiropractors, and offering franchise support and related services to franchisees. BAY POINT: S&P Assigns BB Rating to $125 Million Debt Facility -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' counterparty credit rating to Bay Point Re Ltd. and assigned its 'BB' senior secured debt rating to Bay Point's term loan debt facility of up to $125 million. The outlook is stable. Bay Point is a limited-life, special-purpose Class 3 reinsurance company domiciled in Bermuda and set up specifically to offer quota share reinsurance to Harbor Point Re Ltd. (Harbor Point; A- /Stable/--). "The senior debt rating reflects the modeled risk inherent in writing property catastrophe business and to a lesser extent Bay Point's delegation of underwriting authority to Harbor Point," explained Standard & Poor's credit analyst James Brender. "These positive factors are balanced by Harbor Point's strong competitive position and risk management, good alignment of interests between Bay Point and its cedant, the unique structure of sidecars, and a low modeled probability of attachment." Leverage and coverage were not considered explicitly as ratings factors due to Bay Point Re's use of a trust structure. However, these factors indirectly affect the modeled results for a given capital structure and premium base. Bay Point Re may borrow up to $125 million from a consortium of banks for five years. The entity's capital structure will include an equal amount of equity. The proceeds from capital raising transactions will be placed in a collateral account, which will provide Harbor Point with a source of indemnity cover for losses relating to its property catastrophe lines of business and other related lines. The duration of Bay Point's assets will be consistent with that of its obligations. Harbor Point will cede a portion of its premium from its property business to Bay Point through a quota share reinsurance treaty under which Bay Point's liability will attach simultaneously with that of Harbor Point and otherwise follow the fortunes with respect to the business retroceded to Bay Point. The exact cession percentage will depend on Bay Point Re's collateral and Harbor Point's expected premium volume and probable maximum loss from a 1-in-100-year U.S. wind event and 1-in-250-year U.S. earthquake event. Initially, the quota share cession will be up to 50%. BEARINGPOINT: Moody's Holds B3 Rating on $450 Million of Bonds -------------------------------------------------------------- Moody's Investors Service confirmed the ratings for BearingPoint, Inc. This action concludes the review that began on April 21, 2005 following the company's announcement that it would delay the filing of its 2004 financials. The rating outlook is negative. The ratings confirmation reflects the company's ongoing efforts toward the filing of its delayed financials, as well as ongoing efforts to remediate internal control deficiencies and cost imbalances. The company has filed its FY2004 financials but expects to delay the filing of its FY2005 financials to later this year. The confirmation also reflects Moody's expectation that BearingPoint will continue to maintain billing rate stability, reduce employee turnover, and grow bookings and free cash flow. The B1 corporate family rating reflects the company's challenging but stabilizing competitive position, substantial internal control remediation costs, sizable employee turnover, and weak returns. Financial leverage, as measured by debt to EBITDA absent unusual compliance costs and benefiting from bookings growth and bill rate stability, could potentially map to a higher rating. However, the company's high employee turnover and ongoing costs of remediating known internal control deficiencies, and relative size drive the overall B1 corporate family rating. Moody's considered the following IT services key ratings factors in its review: competitive position, financial returns, cash flow generation, financial leverage, and liquidity. The negative outlook reflects the challenges and costs that BearingPoint continues to face to become current on its SEC financial filings, reduce costs, improve internal controls, and deal with its remaining legal issues, an SEC investigation, and high employee turnover. In addition, bill rates have only recently stabilized and the negative outlook reflects the potential for bill rate volatility in the near term. While the company has made progress in recent quarters, it is not yet clear if the positive trend is sustainable. Moody's notes that if the company is unable to become current in its FY2005 and quarterly financial filings by later in 2006, the ratings may be subject to a downgrade or a withdrawal. Ratings confirmed include: * Corporate Family Rating -- B1 * $250 million series A subordinated convertible bonds due 2024 -- B3 * $200 million series B subordinated convertible bonds due 2024 -- B3 * $1 billion multiple seniority shelf -- (P)Ba3/(P)B2/(P)B3/(P)Caa1 BearingPoint, Inc., headquartered in McLean, Virginia, is a global business consulting, systems integration and managed services firms serving government and commercial clients with revenue in excess of $3 billion in 2005. BLACKROCK: Moody's Reviews B2 Rating on Class B-5 & May Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the rating of BlackRock Capital Finance L.L.C. 1997-R2, Class B-5 on review for possible downgrade. The class is being placed on review for possible downgrade based upon the component structure of subordination which has significantly reduced the amount of available credit support. Complete rating actions: Issuer: BlackRock Capital Finance L.L.C. 1997-R2 * Cl. B-5, Currently: B2; on review for possible downgrade. BOMBARDIER RECREATIONAL: S&P Rates $790 Mil. Loan Facility at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on recreational products manufacturer Bombardier Recreational Products Inc., including its long-term corporate credit rating, to 'B+' from 'BB-'. The outlook is negative. In addition, Standard & Poor's assigned its 'BB' bank loan rating, with a recovery rating of '1', to the Valcourt, Quebec-based company's proposed CDN$250 million revolving credit facility, indicating that the asset values provide lenders with the expectation of a high recovery of principal (100%) in a payment default scenario. Standard & Poor's also assigned its 'B+' bank loan rating, with a recovery rating of '3', to the company's proposed US$790 million term loan B facility, indicating that the asset values provide lenders with the expectation of a meaningful recovery of principal (50%-80%) in a payment default scenario. The bank loan ratings are based on preliminary terms and conditions and are subject to review once full documentation is received. Proceeds of the new facility will be used to: * pay a substantial special distribution to shareholders; * refinance the company's existing debt; * redeem preferred shares at parent company J.A. Bombardier Inc. (unrated); and * for general corporate purposes. "The downgrade and negative outlook reflect the company's more aggressive financial policy given the proposed significant increase in debt, which will result in a material weakening in the company's financial profile due to high debt leverage and reduced financial flexibility," said Standard & Poor's credit analyst Lori Harris. Pro forma for the transaction, debt to EBITDA (adjusted for operating leases, accounts receivable securitization, and realized foreign exchange gains) will be about 4.9x based on the EBITDA calculation for the fiscal year ended Jan. 31, 2006. Furthermore, the company's financial flexibility will be reduced to handle unforeseen events such as an economic downturn, poor weather conditions, or unfavorable foreign exchange conditions, given its heavy debt load. The ratings on BRP reflect: * the company's significant debt leverage; * volatile demand for the company's primary products; * highly seasonal operating profits; and * intense competition. These factors are partially offset by: * the company's solid market position; * brand equity; * well-established dealer network; and * the stable margins and revenues of the parts and accessories component of the business. BRP is a manufacturer of motorized recreational products. BRP Manufactures: * snowmobiles under the Ski-Doo and Lynx brand names; * watercraft and sport boats under the Sea-Doo name; * power sport engines under the Rotax name; * all-terrain vehicles under the Can-Am name; and * outboard engines under the Evinrude and Johnson names. The company's revenues are geographically diversified, with the key markets being the U.S., Canada, and Europe. The competitive environment in the recreational products industry is challenging and demand is cyclical. BRP competes against well- established U.S. and Japan-based competitors; therefore, continuous investment in new products is required to maintain market share. Nevertheless, BRP's long history in the snowmobile and personal watercraft markets and strong customer loyalty have facilitated the company's leading development in new products. This, combined with BRP's expansive dealership base, has been key to building market share, which has allowed for maintenance of leading market positions. The negative outlook reflects the company's weakened financial profile, including BRP's significantly reduced financial flexibility to handle unforeseen events such as an economic downturn, poor weather conditions, or unfavorable foreign exchange conditions, given its heavy debt load. The ratings could be lowered if the company does not improve credit metrics meaningfully on a sustainable basis in the medium term. On the other hand, the outlook could be revised to stable if the company reduces leverage and demonstrates a sustained improvement in margins. BRAVO MORTGAGE: Moody's Puts Low-B Rating on Two Cert. Classes -------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Bravo Mortgage Asset Trust 2006-1 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The certificates are backed Encore Credit Corp. and Bravo Credit Corporation originated adjustable-rate and fixed- rate mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, an interest rate swap agreement and an interest rate cap agreement. Moody's expects collateral losses to range from 6.50% to 7.00%. CitiMortgage will act as master servicer and Ocwen Loan Servicing, LLC will service the loans. The Complete Rating Actions: Issuer: Bravo Mortgage Asset Trust 2006-1 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba1 * Cl. M-11, Assigned Ba2 The certificates were sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. CANON COMMS: Moody's Rates $35.7 Million Sr. Secured Loan at B3 --------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Canon Communications LLC's proposed $35.7 million tack-on senior secured first lien term loan and affirmed all other ratings. Full details of the rating action: Ratings assigned: * $35.7 million first lien tack-on senior secured term loan, due 2011 -- B3 Ratings affirmed: * $10 million first lien senior secured revolving credit facility, due 2010 -- B3 * $85 million first lien senior secured term loan, due 2011 -- B3 * Corporate Family rating -- B3 The rating outlook is stable. The ratings reflect Canon's modest scale, continued high leverage, the acquisitiveness of management, its vulnerability to spending in the medical device manufacturing sector for a large proportion of its sales, and its current dependence upon its largest three trade shows and two publications for approximately 65% of total contribution. The proposed acquisition of certain business-to- business assets from Reed Elsevier Inc. is expected to reduce this dependence to around 50% of total contribution. Ratings are supported by the defensibility and leading market position of the company's trade shows and publishing titles, the cost efficiencies and high margins which have resulted from its trade show co-location model, and the high growth prospects of its on-line product offerings. The stable outlook recognizes management's ability to achieve top line and EBITDA growth during fiscal 2005 and the high degree of near-term revenue visibility, which characterizes Canon's trade show business in particular. In May 2006, Canon executed an asset purchase agreement with Reed Elsevier Inc. and Reed Elsevier Properties Inc. to acquire a select portfolio of B2B assets. Management considers that some of these assets have been neglected and will benefit from Canon's more focused approach. The ratings on the proposed first lien facilities are rated at parity with the Corporate Family rating, since first lien debt will continue to represent the preponderance of Canon's debt structure. The interests of first lien creditors are enhanced by: (1) a claim on assets which rank ahead of that of second lien lenders, and (2) covenant provisions which can be triggered before that of second lien holders. Moody's does not rate Canon's $49 million second lien term loan. The ratings are subject to Moody's satisfactory review of loan documentation, which management has indicated will substantially conform to the terms and conditions of the current facilities. At closing, Canon expects to count on full availability of its $10 million revolving credit facility, representing an adequate level of liquidity to meet seasonal cash working capital needs. The recent revitalization in the health of the B2B sector has led to an unusually high level of M&A activity, which has resulted in a significant increase in market valuation multiples. Moody's is concerned that the level of these multiples may not be sustainable going forward. Headquartered in Los Angeles, California, Canon Communications is a leading producer of print productions, trade shows and digital media for the medical device manufacturing and other niche markets. Total revenues for fiscal year 2005 were approximately $61million. CANON COMMS: Acquisition Plan Cues S&P to Revise Outlook to Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Canon Communications LLC to negative from stable while affirming its 'B' corporate credit rating on the company, following the company's announcement that it will be making a $41 million debt-financed acquisition. At the same time, Standard & Poor's raised its recovery rating for Canon's amended first-priority bank credit facility to '2' from '3', while affirming the 'B' bank loan rating, indicating expectations for a substantial (80%-100%) recovery of principal in a payment default scenario. Pro forma for the transaction, the Los Angeles-based business-to- business publication and trade show operator will have approximately $169.7 million in debt. Canon will use the proceeds from debt upsizing: * to acquire eight specialty manufacturing trade shows and one publication from Reed Elsevier Group PLC; and * to repay the $6.5 million outstanding balance on Canon's revolving credit facility. "The outlook revision reflects the risks related to integrating such a large acquisition with the company's existing businesses and our concern over its ability to reduce leverage over the longer term," said Standard & Poor's credit analyst Tulip Lim. "However, we raised the recovery rating after raising our EBITDA valuation multiple based on current market information." CARMIKE CINEMAS: S&P Lowers Sub. Notes' Rating One Notch to CCC --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Columbus, Georgia-based motion picture exhibitor Carmike Cinemas Inc., including lowering the corporate credit rating to 'B-' from 'B'. The ratings remain on CreditWatch with negative implications pending the completion of 2005 and first-quarter 2006 filings of SEC financial documents, and Standard & Poor's review of them. Standard & Poor's lowered the rating on the company's senior secured facility to 'B-' from 'B' and the rating on its subordinated notes to 'CCC' from 'CCC+'. "The downgrade resulted from our concerns over the company's liquidity based on the potential for bondholders to accelerate the payment of principal on the notes," said Standard & Poor's credit analyst Tulip Lim. Also, Standard & Poor's is concerned over broad uncertainty about U.S. box office performance of feature film releases over the balance of 2006. U.S. movie attendance weakness is partially attributable to the proliferation of competing entertainment alternatives and shortening periods in theatrical release prior to home video and video-on-demand release. The rating reflects: * Carmike's high lease-adjusted leverage; * weak discretionary cash flow; * limited liquidity; * less-modern theater circuit compared with key peers; and * the narrower film preferences in its regions of operation. These factors more than outweigh Carmike's decent geographic diversity and competitive positions in many of its smaller markets. CERTIFIED HR: Creditors Have Until July 31 to File Proofs of Claim ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida set July 31, 2006, the deadline for all creditors to file proofs of claims or interests against Certified Services, Inc. On May 10, 2006, the Court entered a memorandum opinion on substantive consolidation of Certified Services with Certified HR Services Company's estate. Any creditor that objects to or seeks reconsideration of the relief must file an objection with the Court by June 30, 2006. Objections and Proofs of Claims or interest must be filed with the: Clerk's Office U.S. Courthouse 299 E. Broward Boulevard Ft. Lauderdale, FL 33301 Headquartered in Ft. Lauderdale, Florida, Certified HR Services Company filed a voluntary petition for relief under Chapter 11 of title 11 of the United States Code on May 12, 2005 (Bankr. S.D. Fla. Case No. 05-22912). Thomas R. Lehman, Esq., at Miami Florida, represents the Debtor in its restructuring efforts. CITIZENS COMMS: Moody's Reviews Debt Rating & May Upgrade --------------------------------------------------------- Moody's Investors Service placed the debt ratings of Citizens Communications' on review for possible upgrade, reflecting the company's increased commitment to maintain a stable and predictable debt profile. Ratings reviewed include: Issuer: Citizens Communications Company On Review for Possible Upgrade: Ratings Actions: Issuer: Citizens Communications Company * Corporate family rating -- Placed on Review for Possible Upgrade, currently Ba3, * Senior unsecured revolving credit facility -- Placed on Review for Possible Upgrade, currently Ba3, * Senior unsecured notes, debentures, bonds -- Placed on Review for Possible Upgrade, currently Ba3 Issuer: Citizens Utility Trust: * Preferred Stock -- Placed on Review for Possible Upgrade, currently B2. The review will focus on the level of expected competition in Citizens' markets, management's ongoing dividend and stock buy- back policies, and management's commitment to maintain a more modest leverage profile, along with the balance in cash flow allocations between debt and equity constituents. Citizens Communications is an RLEC providing wireline telecommunications services to approximately 2.2 million access lines in primarily rural areas and small- and medium-sized cities. The company is headquartered in Stamford, CT. CITX CORPORATION: 3rd Circuit Kills Trustee's Malpractice Suit -------------------------------------------------------------- CitX Corporation, an insolvent internet company involved in an illegal Ponzi scheme, used its financial statements, compiled (but not reviewed or audited) by Robert Schoen, a certified public accountant, and Detweiler, Hershey and Associates, P.C., his employer, to attract investors. After the company spent the investors' money and incurred millions more in debt, it filed for chapter 11 protection in July 2001. The case converted to Chapter 7 liquidation proceeding, and Gary Seitz was appointed as the Chapter 7 trustee. Mr. Seitz sued Mr. Schoen and Detweiler in July 2003. His complaint contained four causes of action: (1) malpractice, (2) deepening insolvency, (3) breach of fiduciary duty, and (4) negligent misrepresentation. The U.S. Bankruptcy Court for the District of Delaware dismissed Mr. Seitz's fiduciary duty claim. Later, after withdrawing the reference of the adversary proceeding to the Bankruptcy Court, the U.S. District Court for the District of Delaware granted summary judgment to Detweiler on the negligent misrepresentation claim. Finally, the District Court granted summary judgment to Detweiler on Seitz's malpractice and deepening-insolvency claims. Mr. Seitz appealed the rulings on the malpractice and deepening insolvency claims to the United States Court of Appeals for the Third Circuit. The Third Circuit says the malpractice claim founders on two grounds: the company was not harmed by its accountants' actions, and in any event the affidavit submitted to support the claim was a sham. Mr. Seitz's malpractice claim, the Third Circuit says, fails because he cannot establish harm or causation. He could not establish harm because deepening insolvency is not a valid theory of damages for negligence. And the affidavit that purported to create a genuine issue of fact on the causation issue should be discarded in favor of that affiant's later, conflicting deposition testimony. As for the deepening-insolvency claim, the Third Circuit says, allegations of negligent conduct do not qualify for consideration. Mr. Seitz's deepening-insolvency claim fails because he cannot establish a genuine factual issue to support the allegation that Detweiler engaged in fraudulent conduct. Negligence cannot support such a claim, the Third Circuit holds. CLEAN POWER: DBRS Puts BB(high) Issuer Debt Rating Under Review --------------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Clean Power Income Fund "Under Review with Developing Implications", after the Fund's announcement that it has reached a definitive agreement regarding the sale of Gas Recovery Systems, Inc., for $90 million. * Income Fund Under Review - Developing STA-3 (low) * Issuer Rating Under Review - Developing BB (high) The sale of GRS will be to Fortistar Renewables Group LLC, a wholly owned subsidiary of Fortistar LLC. The transaction is expected to close by the end of July 2006. Funds from the sale of GRS will be used primarily to pay down debt incurred to develop the Erie Shores Wind Farm in Ontario, which will reduce total interest costs for the Fund and improve key financial ratios. DBRS notes that Clean Power has not generated sufficient cash available for distributions to cover its distributions since its inception, mainly due to lower-than-expected output and higher- than-expected maintenance costs at its GRS landfill-gas electricity generating facilities. The Fund's investment in GRS is in the form of loans with fixed monthly payments. GRS earned $11.7 million in EBITDA in 2006 and paid the Fund $11 million in interest payments. With the sale of GRS, a reduction in debt, and the completion of the Erie Shores Wind Farm -- which has a 20-year power purchase agreement with the Ontario Power Authority, rated A by DBRS -- the Fund's payout ratio should show material improvement going forward. However, Clean Power also indicated that it continues to investigate other "unitholder value-enhancement opportunities" over and above the sale of GRS. Hence, the "Under Review with Developing Implications" rating action reflects the uncertainty with respect to what other value-enhancement opportunities will be undertaken. DBRS will remove the "Under Review" status once the Fund finalizes its value-enhancement strategy. CNL FUNDING: Moody's Puts Low-B Rating on $15.4 Million of Bonds ---------------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade two classes of franchise loan backed bonds issued by CNL Funding 2000-A, LP. The triple net leases backing this transaction were originated by CNL APF Partners, LP and corporate affiliates. Complete rating action: Under Review For Possible Downgrade: CNL Funding 2000-A, LP * $4,631,000 Class B Bonds, rated Ba2; * $10,804,000 Class C Bonds, rated B2. The balance of delinquencies and other specially serviced loans comprise roughly 9% of the collateral pool in this transaction. Moody's review of the Bonds will focus on the degree to which the current levels of delinquencies and specially serviced loans might ultimately impact principal paydown on the notes. Additionally, the Class B and Class C Bonds are behind in interest distributions, and Moody's review will consider the ultimate expected payment of interest to these classes. CONGOLEUM CORP: Files Amended Disclosure Statement in New Jersey ---------------------------------------------------------------- Congoleum Corp. and its debtor-affiliates' filed an Amended Disclosure Statement explaining their Eighth Modified Joint Chapter 11 Plan of Reorganization with the U.S. Bankruptcy Court for the District of New Jersey. The Debtors also submitted their Plan Trust Agreement and Trust Distribution Procedures with respect to their Plan. As reported in the Troubled Company Reporter on Apr. 28, 2006, the Hon. Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey adjourned, until June 8, 2006, the hearing to determine the adequacy of the disclosure statements explaining: * Congoleum Corp. and its debtor-affiliates' Eighth Modified Joint Chapter 11 Plan of Reorganization; * The Official Committee of Bondholders' First Modified Joint Chapter 11 Plan of Reorganization; and * Continental Casualty Company and Continental Insurance Company's Joint Chapter 11 Plan of Reorganization. Judge Ferguson also ordered the Debtors to file their Trust Distribution Procedures Valued Asbestos Claims and Plan Trust Agreement. Means for Execution of the Plan On the effective date, a Plan Trust will be established in accordance with the Plan Documents. In addition, on the effective date, the Plan Trust established pursuant to the Plan Trust Agreement will become solely responsible for the payment of all Plan Trust Asbestos Claims. The Plan Trust will be funded through: * the New Class A Common Stock; * the New Convertible Security; * the Asbestos Insurance Rights; * the proceeds of the Asbestos Insurance Settlement Agreements; * the proceeds of the Asbestos In-Place Insurance Coverage; * the proceeds of the Asbestos Insurance Actions; * the proceeds of the Asbestos Insurance Action Recoveries; * the Asbestos Property Damage Insurance Rights; * the ABI Contribution; * the Additional Plan Trust Contribution; * all of the assets held by the Collateral Trust on the effective date; * Plan Trust Bankruptcy Causes of Action including, without limitation, the Avoidance Actions to the extent not already adjudicated prior to the Effective Date; * other Causes of Action, other than Bankruptcy Causes of Action, related to Plan Trust Asbestos Claims and Plan Trust Assets including, without limitation, the right to void any Asbestos Claim of a Qualified Pre-Petition Settlement Claimant or of a Qualified Participating Claimant whether because of failure to comply with the requirements of any applicable settlement agreement, including, without limitation, the Claimant Agreement, or because such Claim was not submitted in good faith or otherwise and including the right to pursue such Causes of Action, if any, in the name of any Debtor, if necessary; and * the rights granted to the Plan Trust pursuant to the Insurance Assignment Agreement. A full-text copy of the Debtors' Plan Trust Agreement is available for free at http://ResearchArchives.com/t/s?9f0 Treatment of Claims Under the Plan, holders of allowed Administrative Claims will receive either: a. cash equal to the unpaid their claim, or b. other treatment as agreed by the Debtor and the holder of the claims in writing, provided, however, that Administrative Claims representing: (i) post-petition liabilities incurred in the ordinary course of business by the Debtors; and (ii) post-petition contractual liabilities arising under loans or advances to the Debtors, whether or not incurred in the ordinary course of business, will be paid by the Reorganized Debtors in accordance with the terms and conditions of the particular transactions relating to the liabilities and any related agreements. Priority Tax Claims will receive: (i) cash equal to the unpaid portion of the claim; (ii) other treatment as agreed by the Debtor and the holder of the claims in writing; or (iii) at the Reorganized Debtors' sole discretion, deferred Cash payments over a period not exceeding six years after the assessment date of the claim, valued as of the effective date in an amount equal to the claim. Priority Claims will receive either: (i) cash equal to the allowed amount of the claim, or (ii) other treatment as agreed by the Debtor and the holder of the claims. Workers' Compensation Claims will be paid in the ordinary course pursuant to rights that exist under any state workers' compensation system or laws that apply to such Claims. Holders of interests in Congoleum will retain their interests, provided, that on the effective date, the New Class A Common Stock and the New Convertible Security, which will be contributed to the Plan Trust, will be issued. Holders of Subsidiary Interests will also retain their interests. Secured Claims The Debtors tell the Court that Lender Secured Claims constitute any claim arising under or relating to the Existing Credit Agreement, Existing Subsidiary Guaranty or any related documents. On the effective date, the Existing Credit Agreement, as ratified, amended and approved in accordance with the Financing Order, will be amended and restated in accordance with the terms of the Amended Credit Agreement and the holder of the Lender Secured Claim will be entitled to all the rights and benefits of a Lender under the Amended Credit Agreement and related documents, which will be on terms and conditions mutually acceptable to the Debtors and Wachovia Bank, National Association. The Debtors tell the Court that if it is unable to agree on the terms of the Amended Credit Agreement with the holder of the Lender Secured Claim by the confirmation hearing, the claim will be paid in full indefeasibly on the effective date or as soon thereafter as practicable and Wachovia will be released from any and all liabilities and causes of action in accordance with the Financing Order. Holders of Other Secured Claims and General Unsecured Claims will retain their legal, equitable and contractual rights and their respective claims will be reinstated. Senior Note Claims Senior Note Claims will be reinstated, provided that: (i) the maturity date of the Senior Notes will be extended to Aug. 1, 2011; and (ii) holders of the Allowed Senior Note Claims will receive, less $10 million: * all accrued and unpaid interest on the Senior Notes from the filing of the bankruptcy through and including the interest payment date immediately preceding the effective date; and * any accrued and unpaid applicable default interest in accordance with the Indenture from the filing of the bankruptcy through and including the effective date, provided further, that all interest accruing on the Senior Notes from the interest payment date preceding the effective date will be paid on the next succeeding interest payment date after the effective date and thereafter the interest shall be paid in accordance with the Indenture. The Debtors tell the Court that in addition, any funds up to the Maximum Additional Bondholder Recovery actually recovered by the Debtors or Reorganized Congoleum on account of certain disgorgement orders against Gilbert Heintz & Randolph LLP and The Kenesis Group LLC entered by the Court on Mar. 27, 2006, and Mar. 10, 2006, respectively, or on account of any other actions against such parties, including for malpractice, will be paid to the holders of the Senior Note Claims and any settlement of such judgments or actions that result in the receipt by the holders of the Senior Note Claims of less than the Maximum Additional Bondholders' Recovery in the aggregate shall be subject to approval by the Bondholders' Committee. ABI Claims Holders of ABI Claims will receive these treatments: (a) all ABI Claims, other than ABI Asbestos Personal Injury Indemnity Claims, ABI Asbestos Property Damage Indemnity Claims and Other ABI Asbestos Claims, will be reinstated and will be payable; (b) ABI Asbestos Personal Injury Indemnity Claims will be channeled to and become the obligations of the Plan Trust, and be payable in accordance with the terms of the Plan and the TDP; and (c) all ABI Asbestos Property Damage Indemnity Claims and Other ABI Asbestos Claims will be deemed Disallowed and expunged. On the effective date, the Plan Trust will assume all liability for all Allowed Asbestos Property Damage Claims and the Reorganized Debtors will have no liability thereof. Allowed Asbestos Property Damage Claims will be paid solely from the Asbestos Property Damage Claim Sub-Account on account of the unpaid allowed amount of the claim pursuant to the Plan Trust Agreement. Once the assets in the Asbestos Property Damage Claim Sub-Account have been exhausted, the Plan Trust shall have no further liability or obligation for or in respect of any Asbestos Property Damage Claims. Secured Asbestos Claims of Qualified Claimants The Debtors tell the Court that on the effective date, the Plan Trust will assume all liability for all Secured Asbestos Claims of Qualified Claimants and the Reorganized Debtors will have no liability on account of the claims. Each Qualified Claimant will, in respect of its Secured Asbestos Claim, be determined, liquidated and treated pursuant to the Plan Trust Agreement and the TDP without priority of payment and in all respects pari passu with the Unsecured Asbestos Personal Injury Claims. On the Effective Date, each Qualified Claimant will have irrevocably consented or be deemed to have irrevocably consented to the Forbearance of his, her or its rights, if any, under the respective Pre-Petition Settlement Agreements or Claimant Agreement, as applicable, and his, her or its rights, if any, under the Collateral Trust Agreement and the Security Agreement by failing to timely object to the Forbearance upon notice thereof in accordance with procedures established by the Bankruptcy Court. The Forbearance will become irrevocable upon occurrence. If any Qualified Claimant timely objects to the Forbearance, the Secured Asbestos Claim of the objecting Qualified Claimant will be deemed a Plan Trust Disputed Claim and the validity of the Secured Asbestos Claim will be subject to objection by the Plan Trustee based on: (i) the terms of the Collateral Trust Agreement; (ii) any Plan Trust Bankruptcy Cause of Action; and (iii) any other Cause of Action available to the Plan Trustee under Section 12.4 of the Plan or otherwise and each Qualified Claimant will be immediately added as a party defendant to the Avoidance Actions to the extent not already a party. Plan Trust Disputed Claims will be treated as provided in a Final Order of the Bankruptcy Court adjudicating such Claims. Unsecured Asbestos Personal Injury Claims will receive the same treatment as those applied to Secured Asbestos Claims of Qualified Claimants. A copy of the Debtors' Amended Disclosure Statement explaining their Eighth Modified Joint Chapter 11 Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?9ef A copy of the Debtors' Plan Trust Distribution Procedures is available for free at: http://ResearchArchives.com/t/s?9f1 About Congoleum Corporation 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. Michael S. Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP represents the Official Committee of Unsecured Bondholders. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP. Aaron Van Nostrand, Esq., at Coughlin Duffy, LLP, represents Continental Casualty Company and Continental Insurance Company. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At. Dec. 31, 2005, Congoleum Corporation's balance sheet showed a $44,960,000 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). DANA CORP: Watson & Chalin Wants Stay Lifted to Permit Set-Off -------------------------------------------------------------- Watson & Chalin Manufacturing, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to permit a set-off or, in the alternative, allow Watson to recoup the debt of Dana Corporation and its debtor-affiliates against its own debt to the Debtors. Before the Debtors filed for bankruptcy, Watson was engaged in mutual purchasing and selling of products and materials with Dana Corporation. As a result, the parties at various times incurred mutual obligations. At Dana's request, Watson has continued its relationship with Dana postpetition to aid in its efforts to reorganize and continued both buying from and selling to the Debtor on credit. Daniel B. Jones, Esq., in Plano, Texas, discloses that as of the Petition Date: -- Dana owed $312,782 to Watson, and -- Watson owed $492,497 to the Debtor. Pursuant to Section 553 of the Bankruptcy Code, Watson is entitled to set off their mutual debts, Mr. Jones asserts. Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000). DC PROPERTIES: Disclosure Statement Hearing Scheduled on June 14 ---------------------------------------------------------------- The Hon. Ronald G. Pearson of the U.S. Bankruptcy Court for the Southern District of West Virginia will convene a hearing at 2:30 p.m., on June 14, 2006, to consider the adequacy of the information contained in the Disclosure Statement explaining DC Properties, LLC's Chapter 11 Plan of Reorganization. Overview of the Plan The Debtor says that the Plan provides for negative amortization and complete liquidation of its assets. The Plan contemplates the payment of a portion of the contractual interest due to United Bank. The payments will increase as occupancy of the building increases. Treatment of Claims Under the Debtor's plan, administrative claims will be paid in full. Unpaid real estate taxes owed to the Sheriff-Treasurer of Putnam County, West Virginia for the 2005 tax period will be paid over a period of eight quarters from the effective date. Wachovia Securities purchased the unpaid 2004 taxes at a duly convened tax sale scheduled by the Sheriff of Putnam County. These taxes will be redeemed. The Debtor will pay United Bank under the terms of a "New Note". The New Note requires the debtor, one year from the Effective Date of the Plan, to pay United Bank $10,750 per month with interest at 7.5% per annum, over a period of five years. The Debtor will also remit to United Bank the rental net proceeds from Orr Safety, which approximate $4,000 per month, beginning on the first day of the first month following the Effective Date of the Plan, for a 12-month period. United Bank holds a deed of trust lien on the Debtor's real property in West Virginia. Branch Banking & Trust, holding junior liens on a real property for its more than $14 million in total claim , will be paid with interest at a rate of 6% per annum until the property is financed after five years. Headquartered in Huntington, West Virginia, DC Properties, LLC filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D. W.Va. Case No. 05-26014). Joseph W. Caldwell, Esq., at Caldwell & Riffee, and Marshall C. Spradling, Esq., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. DELPHI CORP: Court Approves Blake Cassels as Canadian Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorizes Delphi Corporation and its debtor-affiliates to hire Blake, Cassels & Graydon LLP, as their Canadian counsel, effective as of Jan. 9, 2006. As Canadian counsel, Blakes will provide: (a) legal advice and litigation services with respect to tort, contract, and general business disputes in Canada; (b) legal advice and representation with respect to out-of- court commercial workouts in Canada; (c) legal advice and representations with respect to financially distressed suppliers in Canada; and (d) miscellaneous commercial and litigation advice related to Canadian issues. The Debtors believe that Blakes is especially attuned to the unique Canadian law issues that have arisen and may in the future arise in the Debtors' Chapter 11 cases. The Debtors will pay Blakes at its standard hourly rates, which vary from CN$470 to CN$830 per hour for partners, CN$275 to CN$570 per hour for associates, CN$105 to CN$270 per hour for law clerks, and CN$155 to CN$170 per hour for students. Susan M. Grundy, Esq., a member of the firm, assures the Court that Blakes does not represent or hold any interest adverse to the Debtors or their estates. Blakes has a well-established and prominent bankruptcy and insolvency practice in Canada with extensive experience in crossborder insolvency matters and in dealing with troubled suppliers in the automotive industry. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Court Okays Enlargement of KPMG's Scope of Employment ------------------------------------------------------------------ Delphi Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York for authority to employ KPMG LLP as their valuation advisors, nunc pro tunc to Feb. 16, 2006. In addition, the Court approves the Debtors' continued employment of KPMG as tax advisors, nunc pro tunc to January 1, 2006. The Court also approves the Debtors' employment of KPMG to perform additional international executive tax services, nunc pro tunc to January 18, 2006. As valuation advisors, KPMG will: a. analyze potential impairment charges in accordance with Statements of Financial Accounting Standards (SFAS) 142 and 144 related to goodwill, intangibles, and long-lived assets; and b. assist the Debtors with initial planning for the Fresh Start valuation exercise in connection with the Debtors' future emergence from Chapter 11. KPMG's tax consulting services will be identical to those set forth in its original engagement, other than the extension of the term until December 31, 2006. KPMG will provide these additional international executive services: (1) Prior to assignment services: a. prepare cost projection including revisions; b. prepare draft expatriate agreement; and c. prepare draft pay calculation; (2) Beginning of assignment services: a. prepare final expatriate agreement and pay calc and participate in orientation; b. calculate relocation allowance and mobility premium to be paid in month prior to assignment and provide to payroll; and c. calculate first year spending account to be paid in first month of assignment and provide to payroll; In addition, KPMG will calculate annual spending account on assignment anniversary date and provide to payroll and calculate relocation allowance less outstanding tax and pro-rata spending account due from employee. KPMG has agreed to apply a 20% discount for its advisory and valuation services. Accordingly, the Debtors will pay KPMG at these rates: Professional Rate ------------ ---- Partner $620 Director $600 Manager $488 Senior $376 Staff $312 KPMG's hourly rates for the tax consulting services and international executive tax services are identical to those set forth in KPMG's original engagement. However, the Debtors will pay KPMG at these hourly rates for its additional services: Additional Services Rate ------------------- ---- Prepare amended US income tax returns for employees assigned to the Mexican border $375 Prepare monthly Mexican non-resident income tax withholding calculation for employees assigned to the Mexican Border $40 Prepare and compile payments at host information for employees assigned from the US, expatriates assigned to the US, and expatriates assigned to and from non-US countries $375 Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Hires Mayer Brown as Special IT Outsourcing Counsel ---------------------------------------------------------------- Delphi Corporation and its debtor-affiliates had employed Mayer, Brown, Rowe & Maw LLP, as an ordinary course professional. However, it has become apparent that Mayer Brown will exceed the fee cap established for Ordinary Course Professionals. Therefore, the Debtors asked to formally employ Mayer Brown as special information technology outsourcing counsel, nunc pro tunc to Feb. 1, 2006. The U.S. Bankruptcy Court for the Southern District of New York approves the Debtors' employment application. As special counsel, Mayer Brown will: (a) review documents, including Delphi's form IT outsourcing agreements; (b) draft, revise, and edit a new form IT outsourcing agreement for the IT outsourcing services; (c) negotiate specific IT outsourcing agreements with third- party bidders; and (d) provide miscellaneous information technology advice and counsel related to IT outsourcing matters. The Debtors will pay Mayer Brown's professionals at these hourly rates: Marjorie Harris Loeb, Esq. $580 Paul Chandler, Esq. $475 Greg Manter, Esq. $300 Kristina Herrmann, Esq. $260 Mayer Brown will discount its rates by 5% for the first $500,000 of fees, and by 10% for the portion of its fees that exceed $500,000. Mayer Brown will not charge for travel time, though it will charge for time spent working while traveling. Paul J.N. Roy, Esq., a member of the firm, assures Judge Drain that Mayer Brown does not represent any interest adverse to the Debtors' estates. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Can Perform Obligations on Seattle Operating Agreement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Delta Air Lines, Inc., and its debtor-affiliates authority to undertake and perform their obligations under a Seattle-Tacoma International Airport 2006-2012 Signatory Lease and Operating Agreement between Delta Air Lines, Inc., and the Port of Seattle, effective Jan. 1, 2006. As reported in the Troubled Company Reporter on Apr. 26, 2006, Tacoma owns and operates the Seattle-Tacoma International Airport. Delta is party to a Signatory Lease and Operating Agreement with Tacoma effective January 1, 2004. Delta continues operations at the Airport pursuant to a holdover under the 2004 Agreement. Airlines are eligible to become signatories to the 2006 Agreement by signing the 2006 Agreement and satisfying its requirements. Airlines that become signatories are entitled to receive certain benefits, including: (i) a preferential regime of rates and charges; and (ii) less burdensome security deposit requirements pursuant to the Security Fund arrangement for any Airline that agrees to forever renounce its right to receive a specified portion of its Proportionate Percentage of the 2005 Revenue Available for Sharing. Delta believes that it has the authority under Section 363(c)(1) of the Bankruptcy Code to perform all of its obligations under the 2006 Agreement. Section 363(c) expressly grants a debtor the authority to enter into transactions in the ordinary course of business. However, according to Sharon Katz, Esq., at Davis Polk & Wardwell, in New York, Delta is currently unable to meet the requirements set forth in Section 7.5 of the 2006 Agreement, which requires the Debtor to obtain a Court order providing that: (1) Delta will be authorized to execute, deliver and perform its obligations under the Agreement; (2) Delta will not grant to any person a lien on or security interest in any portion of the Security Fund, as defined in the Agreement; and (3) Tacoma will be granted relief from any applicable stay of action in a case or proceeding against the Security Fund, provided that, after giving effect to the action, there remains in the Security Fund an amount greater than or equal to one month of estimated rental charges for Airline's use of its Preferential Use Premises and Exclusive Use Premises, plus one month of estimated rental charges for Delta's use of Common Use Premises and Joint User Areas, plus one month of the Debtor's estimated Landing Fees. Pursuant to a letter agreement dated March 31, 2006, Tacoma agreed that Delta could (i) conditionally become a signatory to the 2006 Agreement and (ii) become a permanent, unconditional signatory to the 2006 Agreement by obtaining a Court approval of the 2006 Agreement on or before May 31, 2006. Ms. Katz relates that the amount of Delta's economic obligation under the 2006 Agreement is small in relation to the size of Delta's estate. In addition, both airline debtors as well as airlines operating outside of Chapter 11 regularly enter into and perform the kind of obligations set forth in the 2006 Agreement. 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. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000). DYNEGY HOLDINGS: S&P Puts BB- Rating on $820 Million Bank Facility ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' senior secured debt and '1' recovery ratings to Dynegy Inc. (B/Stable/B- 2) subsidiary Dynegy Holdings Inc.'s $820 million bank facility. The 'BB-' rating (which is two notches higher than the corporate credit rating on Dynegy) and '1' recovery rating on the term loan indicate the high expectation for full recovery of principal in the event of default. The loan will be secured by a first priority perfected security interest on all tangible and intangible assets of Dynegy Holdings Inc. E*TRADE: DBRS Places BB Rating on Deposits & Senior Debt -------------------------------------------------------- In May 2006, Dominion Bond Rating Service placed "Under Review with Positive Implications" the short-term and long-term ratings of E*TRADE Financial Corporation and of its subsidiary bank E*TRADE Bank. * Short-Term Instruments Positive R-2 (low) * Short-Term Instruments Positive R-3 (high) * Deposits & Senior Debt Positive BB * Issuer & Senior Debt Positive BB (low) * Subordinated Debt Positive B (high) The review will focus on the Company's success with integrating its recent acquisitions, progress in generating more business from the existing client base and attracting new customers, and the ongoing improvement of its financial profile. E*TRADE has made considerable progress over the past year in its transformation into a broader-based online financial services institution. At the end of Q1 2006, the Company had $47 billion in assets, 3.4 million retail customers with just under $200 billion in customer assets. E*TRADE's success with the integration of its brokerage and banking services demonstrates the power of its online franchise. Providing customers with a broader range of tools to manage their financial activities, E*TRADE's new suite of online products shows the strength of its technology and product development capabilities. In addition, E*TRADE made two major acquisitions in 2005 that added over 600,000 customers with about $69 billion in customer assets. So far, integration of these acquisitions has been largely successful with customer attrition running below the Company's expectations. E*TRADE has leveraged its success with its franchise to strengthen its financial profile. Product integration has generated significant growth in deposits which are now over $19 billion. By accumulating the cash resources of its brokerage customers and putting them to work with ET Bank products, the Company has been able to increase the contribution of net interest income to overall revenues to 51% in 2005 from 29% in 2003. Leveraging growth of E*TRADE's retail business segment, the Company's institutional segment has also seen an increase in revenues. Despite the demands of E*TRADE's expansion, new product development, and major acquisitions, strong cost control has kept expenses and headcount largely flat. With revenues rising and costs constrained, E*TRADE is delivering more stable higher margin earnings. Franchise success and steps to reduce risk have also improved the financial profile of ET Bank. Deposit growth has limited increases in the cost of funds leading to margin improvement. On the asset side, risk has been reduced by growth in secured residential lending in mortgages and home equity lines of credit. The share of consumer loans is declining following the decision to exit lending on RVs, autos and boats, as these portfolios were put into runoff. Strong cost control and the leveraging of E*TRADE's online infrastructure has lowered ET Bank's expense ratio to just 37% in 2005 from 58% in 2003. The current ratings reflect the strength of E*TRADE's online franchise and its improving financial profile. At the same time, the ratings incorporate leverage risks in the Company and in the Bank, exposure to downturns in capital markets and a highly competitive environment. Headquartered in New York City, E*TRADE provides brokerage, banking, and lending products, primarily through electronic delivery channels. It was the ninth-largest U.S. broker/dealer with approximately $1.8 billion in revenues in 2005. EDDIE BAUER: Hires Goldman Sachs to Aid in Possible Sale -------------------------------------------------------- Eddie Bauer Holdings, Inc. reported, on May 25, 2006, that it intends to explore strategic alternatives to increase shareholder value, including among others, a possible sale of the Company. The Company has retained Goldman, Sachs & Co. as its financial advisor to evaluate and assist with a possible sale. There can be no assurance regarding the timing of, or whether, this process will result in any sale or other transaction. The Company does not intend to provide updates or make any further comment until the outcome of the process is determined. Headquartered in Redmond, Washington, Eddie Bauer Holdings, Inc. -- http://www.eddiebauer.com/-- is a specialty retailer that sells casual sportswear and accessories for the "modern outdoor lifestyle." Established in 1920 in Seattle, Eddie Bauer believes the Eddie Bauer brand is a nationally recognized brand that stands for high quality, innovation, style, and customer service. Eddie Bauer products are available at approximately 375 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebaueroutlet.com/ The Company also participates in joint venture partnerships in Japan and Germany and has licensing agreements across a variety of product categories. Eddie Bauer employs approximately 10,000 part-time and full-time associates in the United States and Canada. * * * As reported in the Troubled Company Reporter on March 29, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on specialty apparel retailer Eddie Bauer Holdings Inc. and the bank loan rating on Eddie Bauer Inc. to 'B' from 'B+'. S&P says the outlook is negative. EDDIE BAUER: S&P Puts B Corp. Credit & Sr. Debt Ratings on Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Redmond, Washington-based specialty apparel retailer Eddie Bauer Holdings Inc. on CreditWatch with developing implications. "The action follows the company's recent announcement that it intends to explore strategic alternatives to increase shareholder value, including a possible sale of the company," said Standard & Poor's credit analyst Ana Lai. Standard & Poor's will monitor developments associated with this process to assess the implications for the ratings. Specifically, the 'B' corporate credit rating for Eddie Bauer Holdings and 'B' senior secured debt rating and '2' recovery rating for Eddie Bauer Inc. were placed on CreditWatch. EDWARD GROGAN: Chapter 15 Petition Summary ------------------------------------------ Petitioner: Edward Earl Grogan Mary Beth Grogan 800 Quince Hill Road Jacksonville, Arkansas 72076 Debtor: Edward Earl Grogan Mary Beth Grogan 800 Quince Hill Road Jacksonville, Arkansas 72076 Case No.: 06-12107 Chapter 15 Petition Date: May 29, 2006 Court: Eastern District of Arkansas (Little Rock) Petitioner's Counsel: David K. Lester, Esq. P.O. Box 1515 Cabot, Arkansas 72023 Tel: (501) 843-7754 Estimated Assets: $100,000 to $500,000 Estimated Debts: $100,000 to $500,000 ELEPHANT TALK: Auditor Raises Going Concern Doubt ------------------------------------------------- Jimmy C. H. Cheung & Co., in Hong Kong, raised substantial doubt about Elephant Talk Communications, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's loss, negative working capital, and stockholders' and accumulated deficiencies. The Company reported a $1,213,549 net loss on $282,417 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $9,704,151 in total assets, $7,991,311 in total liabilities, $41,638 in minority interest, and $1,671,202 in total stockholders' equity. The Company's Dec. 31 balance sheet also showed strained liquidity with $2,048,094 in total current assets available to pay $5,421,011 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's 2005 Annual Report is available for free http://ResearchArchives.com/t/s?a06 Elephant Talk Communications, Inc., is a voice-over-internet- protocol telecommunications and mobile short message service and other value added telecom services provider in China. With its completion of acquisition of Beijing China Wind, the Company provides its mobile value added services to over 1 million customers in China. Its services include short message service, ring tone/wall-paper downloads and mobile e-commerce services. Its international call services are provided through an integrated network infrastructure comprising both the packet-switched system and circuit switched system focusing on the Asia Pacific region and the U.S. ELGIN NATIONAL: S&P Places CCC+ Corporate Credit Rating on Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Elgin National Industries, including the 'CCC+' corporate credit rating, on CreditWatch with positive implications. The company recently announced in a regulatory filing that it retained Jefferies & Company to assist it in connection with a possible refinancing or other transaction involving the company's 11% senior notes due 2007. "The CreditWatch listing reflects the possibility that Elgin National's senior notes could be refinanced, eliminating substantial refinancing risk," said Standard & Poor's credit analyst Clarence Smith. The listing also reflects Standard & Poor's expectation that the company will build on the positive operating performance shown in recent months. Standard & Poor's will meet with management to further discuss both the company's operations and its financing strategy before taking further rating actions. Downers Grove, Illinois-based Elgin National is a privately held diversified manufacturer. The company operates a number of small, middle-market manufacturing units serving coal mining, durable goods, and heavy-duty truck markets as well as engineering and construction services units serving the mineral processing and electric utility industries. EMPIRE GLOBAL: Posts $109,642 Net Loss in 2006 1st Fiscal Quarter ----------------------------------------------------------------- Empire Global Corp., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $109,642 net loss on $210,320 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $9,959,709 in total assets, $8,352,658 in total liabilities, and $1,607,051 in total stockholders' equity. The March 31 balance sheet also showed strained liquidity with $460,762 in total current assets available to pay $1,057,385 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?9fd Going Concern Doubt SF Partnership, LLP, in Toronto, Canada, raised substantial doubt about Empire Global Corp.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31 2004, and 2005. The auditor pointed to the Company's recurring losses from operations and working capital deficit. Empire Global Corp., (OTCBB: EMGL) is a holding company that acquires, develops and operates income producing real estate properties that service commercial business tenants, and hotel, tourism and leisure travel business operators internationally. ENTERGY NEW ORLEANS: Court Approves Insurance Allocation Protocol ----------------------------------------------------------------- The Hon. Jerry A. Brown of the U.S. Bankruptcy Court for the Eastern District of Louisiana approved a protocol by which insurance proceeds related to Entergy New Orleans, Inc.'s losses for Hurricane Katrina would be allocated and distributed to and among the Operating Companies. The allocation and distribution would also apply to the First Partial Payment. Responses 1. Creditors Committee The Official Committee of Unsecured Creditors and its financial advisors have had the opportunity to review and analyze the proposed insurance protocol, Carey L. Menasco, Esq., at Liskow & Lewis, APLC, in New Orleans, Louisiana, states. The Committee expects that Entergy New Orleans, Inc.'s affiliates will proceed quickly to obtain all insurance proceeds to which ENOI may be entitled. Thus, the Committee does not object to the Court's approval of the proposed insurance protocol. However, the Committee expresses several concerns regarding the seeming effects of the proposed protocol on ENOI's estate and related benefits to Entergy Corporation and ENOI's affiliates. Under the proposed insurance protocol, ENOI would be entitled to receive 80% of the total insurance proceeds. But the proposed method of allocating insurance proceeds will result in ENOI's receipt of only $4,700,000 -- 32% of the first partial insurance payment of $14,750,000. ENOI's share of the initial payment will be $7,000,000 less than what ENOI would receive if the allocation of those proceeds were based on the expected ultimate distribution of proceeds among the Entergy companies, Mr. Menasco asserts. ENOI's financial situation is more desperate than that faced by the other Entergy affiliates, Mr. Menasco contends. The immediate receipt of money by ENOI would help in rebuilding critical infrastructure destroyed by the hurricanes and in repaying the accruing indebtedness to Entergy Corp. If the allocation of the initial insurance payment to ENOI were based on the expected distribution of proceeds rather than the proposed protocol, and if ENOI thus could use the additional $7,000,000 it received from the first insurance payment to repay the DIP Loan, ENOI would receive a $315,000 annual reduction in interest expense payable to Entergy Corp., Mr. Menasco points out. The protocol would allow ENOI to recover most of its own very substantial claims only on the back end, toward the conclusion of the insurance claim adjustment process, Mr. Menasco says. If the ongoing insurance payments to Oil Insurance Limited's insureds reach the $1,000,000,000 cap before completion of the insurance adjustment process for ENOI's own massive losses, ENOI obviously will not receive from the OIL policy its full share of the insurance proceeds since OIL also caters to companies with sizeable hurricane damages. Mr. Menasco adds that if the $1,000,000,000 cap comes into play, the protocol mechanism may permit some of ENOI's affiliates to end up fully compensated for insured losses, while ENOI will not. Despite these potential shortcomings, the Committee recognizes that a completely-satisfactory remedy may well require the involvement of numerous parties, including the governmental authorities regulating other Entergy operating companies as well as substantial time and effort of ENOI's professionals and key employees. "Moreover, any funds the [D]ebtor can obtain now, even if only a reduced portion of ENOI's rightful share of insurance proceeds, will benefit the estate now," Mr. Menasco maintains. 2. The Gordon and Lowenburg Plaintiffs From the Insurance Allocation Motion and the Committee's response, it appears that ENOI was substantially underinsured with respect to the losses suffered as a result of Hurricane Katrina, Michael H. Piper, Esq., at Steffes, Vingiello & McKenzie, in Baton Rogue, Louisiana, contends. The failure to adequately insure may give rise to claims by the Debtor, its estate, its creditors or its ratepayers against either Entergy Corp. or its affiliates, and ENOI's officers. The Gordon and Lowenburg Plaintiffs, in the event that the Insurance Allocation Motion is approved, reserve all potential claims for the benefit of ENOI, its creditors and its ratepayers. 3. New Orleans Council The Council for the city of New Orleans reserves its regulatory rights and powers as to the Insurance Allocation Motion, which will be unaffected by the Motion. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) FDL INC: U.S. Trustee Names Phoenix Furniture to Creditors Panel ---------------------------------------------------------------- Nancy J. Gargula, the United States Trustee for Region 10, appointed Phoenix Furniture Group Co. Ltd. to the Official Committee of Unsecured Creditors in FDL, Inc.'s chapter 11 case. The Committee is now composed of: (1) Ms. Wanna Harindhanavudhi Phoenix Furniture Group Co. Ltd. 753 Moo 4 Phuttaraksa Road Tambol Prakkasa, Ampuhur Muang Samutprakarn Province 10280 Thailand (2) Noppandon Mingvanish Torch 2100 Co., Ltd. No. 99 Moo & Taboonme Khochan Sub District Chonburi 20240 Thailand Cell Phone No.: +66 18048410 Fax No.: +66 29383129 United States Representative: Steven Strum P.O. Box 780 Mamaroneck, NY 10543-0780 Tel: (914) 381-6000 Fax: (914) 381-6499 (3) Susan McCardell UPS Global Trade Finance Corp. 800 Red Brook Boulevard Owings Mills, MD 21117-1008 Tel: (410) 753-0753 Fax: (410) 753-0943 (4) Ken Ho, Vice-President Excellent Tripod Co., Ltd. XiaoBian Village, ChangAn Town DongGuan City, GuangDong Province, China 523852 Tel: (86) 769-8547-8335 Fax: (86) 769-8531-6500 (5) Charlie Wen Mean Young Universal Co., Ltd. c/o 2, Shang YI TS'US, TA BAY Hisiang, Yun Lin Hsien, 631 Taiwan Tel: (86) 559-12315 Fax: (86) 559-16200 United States Representative Steven Strum P.O. Box 780 Mamaroneck, NY 10543-0780 Tel: (914) 381-6000 Fax: (914) 381-6499 (6) Millon Tsai Fusco Industrial Corporation 7F, No. 352, Sec. 1, FU Hsing S. Road Taipei 10640, Taiwan R.O.C. Tel: (886) 2-27073597 Fax: (886) 2-27073379 (7) Ada Chen, Sales Manager King Technology B.V.I. Inc. Jinghe Industrial Area . Zhang Mu Tou Dongguan City, Guang-Dong, China Tel: (86) 769-8779-3957 Fax: (86) 769-8779-3946 (8) James Wang Delight Furniture Co., Ltd. Yixing Ind. Area, Shiguang Road, Shiqiao Town, Panyu Dist, Guangzhou, China Tel: (86) 20-3480-8118 Fax: (86) 20-3480-8113 (9) Gregory Chang, Sales Manager ZhongShan QingYi Metal Products DingXi Village, ShenWan Town Zhong-Shan City, GuangDong Province, China Tel: (486) 760-660-7888 Fax: (486) 760 660-9955 (10) China Export & Credit Insurance Corporation aka Sinosure Attn: Malhar S. Pagay, Esq. Pachulski Stang Ziehl Young Jones & Weintraub LLP 10100 Santa Monica Boulevard, 11th Floor Los Angeles, CA 90067 Tel: (310) 277-6910 Fax: (310) 201-0760 eFax: (603) 462-5486 Headquartered in Kokomo, Indiana, FDL, Inc., manufactures office and fast food metal furniture. The company filed for Chapter 11 protection on March 24, 2006 (Bankr. S.D. Ind. Case No. 06-01222). Deborah Caruso, Esq., and Erick P. Knoblock, Esq., at Dale & Eke, P.C., represent the Debtor. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 million and $50 million. FENDER MUSICAL: Moody's Lowers B3 Rating on $100MM Loan to Caa1 --------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Fender Musical Instruments Corporation by one notch in light of the deterioration in operating performance and ongoing uncertainty regarding the demand for the company's products, although recent demand has started to rebound. The rating outlook is stable. These ratings were downgraded by this action: * $170 million term loan under the first lien credit facility to B2 from B1; * $50 million revolver under the first lien credit facility to B2 from B1; * $100 million second lien credit facility to Caa1 from B3; * Corporate family rating to B2 from B1 The ratings downgrade reflects deterioration in the company's operating performance in the first quarter of 2006, stemming from softening consumer demand and further exacerbated by weaknesses in the company's inventory management system in 2005 that caused higher inventory levels. The weak operating performance has precipitated the need for the company to amend its financial covenants; Moody's expects the banks to grant such waivers within the next month. In addition to the covenant revisions and weakening operating performance, the ratings and stable outlook reflect the continuing challenges the company faces in operating in a competitive environment and a high leverage structure, which Moody's expects will exceed 5 times by the end of 2006. Offsetting these concerns are Fender's record of cash flow generation and debt reduction, history of product innovation, leading market position and strong brand value. Fender Musical Instruments Corporation, based in Scottsdale, Arizona, develops, manufactures and distributes musical instruments, principally guitars and amplifiers, to wholesale and retail outlets throughout the world. Net sales for the LTM ended March 31, 2006 approximated $425 million. FENDER MUSICAL: S&P Affirms B+ Rating & Revises Outlook to Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Fender Musical Instruments Corp. to negative from stable. Existing credit ratings on the company, including the 'B+' corporate credit rating, were affirmed. Approximately $242 million of debt is affected. While Standard & Poor's affirmed all its existing credit ratings on Fender, including the 'B+' rating on the company's $192 million first-lien secured loan (which is at the same level as the corporate credit rating), the rating agency revised the recovery rating on this loan to '2' from '3'. The '2' recovery rating indicates the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. The revision of the recovery rating reflects debt paydowns of $28 million, as well as the use of a somewhat higher enterprise value multiple. "The revised rating outlook reflects Fender's weaker-than-expected operating performance through the first quarter of fiscal 2006 and our expectation that these trends may continue over the near term," said Standard & Poor's credit analyst Patrick Jeffrey. This could result in debt leverage peaking at more than 6x before operations begin to improve. The company faced soft sales trends in the key fourth-quarter holiday season which continued into the first quarter of fiscal 2006. As a result, the company plans to amend its existing bank facility to provide covenant relief over the near term. The ratings are based on: * Fender's high debt leverage; * narrow business focus; and * the discretionary nature of its products. The factors are somewhat mitigated by the company's strong market share and global brand names in the guitar and amplifier segment, including Fender, Squier, Gretsch, and Guild. The company has been a musical instrument innovator since its founding in the 1940s, and has produced some of the best known electric guitars, including the Telecaster and the Stratocaster. Despite its defendable position, purchases are highly discretionary, and lower-priced foreign competition remains a concern. The company has some concentration with its largest customer, Guitar Center Inc. FFCC 1999-2: Moody's Cuts Rating on $16MM Class A-2 Certs. to B1 ---------------------------------------------------------------- Moody's Investors Service downgraded three classes of franchise loan backed certificates issued by FFCA 1999-2. FFCA was acquired by GE Capital Franchise Finance Corporation, a subsidiary of General Electric Capital Corporation, in 2001. The complete rating actions: FFCA Secured Lending Corporation Franchise Loan Grantor Trust 1999-2 * $17,560,509 Class A-1b Certificates, downgraded from Baa3 to Ba2; * $16,037,210 Class A-2 Certificates, downgraded from Ba1 to B1; * Class IO Certificates, downgraded from Baa1 to Ba2. The balance of specially serviced loans in the 1999-2 portfolio remains significant, currently over one-quarter of the collateral pool. Recoveries relating to several obligors are uncertain due to continued arbitration between American International Specialty Lines Insurance Company, a subsidiary of American International Group, Inc., as provider of environmental insurance policies, and GEFF. The downgrade reflects the degree to which the current levels of specially serviced loans, and the uncertainty surrounding their recoveries, might ultimately impact principal repayment on the certificates. The downgrade also reflects the impact of cash flow paid to the interest-only certificates, which pay interest based on the total certificate balance until the certificates are written down, and the level of outstanding servicer advances. FLYI INC: Judge Walrath Approves UAL Settlement Agreement --------------------------------------------------------- The Hon. Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware approved FLYi, Inc., and its debtor- affiliates' Settlement Agreement with United Airlines. Judge Walrath also authorized the Debtors, in consultation with the Official Committee of Unsecured Creditors, to sell the UAL Shares and the right to receive UAL Shares using commercially reasonable methods. The UAL Claim Independence Air, Inc., fka Atlantic Coast Airlines, operated as a regional airline under code share agreements with United Airlines, Inc., providing service as part of the United Express program. In December 2002, UAL Corporation and its subsidiaries filed for protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois. Subsequently, Independence Air announced that it intended to utilize its assets to operate as an independent low-fare airline if United Airlines determined to reject the UA Agreements. On April 5, 2004, Independence Air announced that it had reached an agreement with United Airlines providing for a transition schedule and exit plan for all of its United Express aircraft and related operations as a result of United Airlines' decision to reject the UA Agreements. The UAL Bankruptcy Court approved the Exit Plan Agreement and United Airlines' rejection of the UA Agreements. In September 2004, FLYi, Inc., and Independence Air filed claims in UAL Bankruptcy Court for more than $1,000,000,000, resulting from United Airlines' rejection of the UA Agreements. United Airlines argued that the claim should be reduced to $300,000,000, while the Official Committee of Unsecured Creditors of UAL asserted that the claim should be disallowed in its entirety. The UAL Bankruptcy Court fixed the amount of the Rejection Damages Claims against United Airlines at $500,000,000. According to M. Blake Cleary, Esq., at Young Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, the Rejection Damages Claim is by far the largest asset in the Debtors' Chapter 11 cases, and it is also fully unencumbered. The Debtors, United Airlines and the UAL Creditors Committee all filed notices of appeal of the Rejection Damages Claim Order. Independence Air also filed an administrative claim in UAL's Chapter 11 cases, based on United Airlines' potential violations of state and federal antitrust laws. Independence Air alleged that conduct by United Airlines that might be anti-competitive and illegal under antitrust laws negatively impacted its economic performance and was a factor to the failure of its operations. UAL Settlement Agreement After extensive arm's-length negotiations, the Debtors and United Airlines agreed to resolve all of the claims and disputes among them. The Parties agree that: (a) The Rejection Damages Claim will be allowed as a Class 2E-6 general unsecured claim for $750,000,000, in UAL's Chapter 11 cases. United Airlines' objection to the Rejection Damages Claim will be deemed withdrawn, and the appeals from the Rejection Damages Claim order will be dismissed; (b) Pursuant to UAL's confirmed Chapter 11 Plan of Reorganization, creditors with allowed claims in Class 2E-6, including the Debtors, are entitled to shares of stock in reorganized UAL Corporation. Those shares are distributed from a disputed claims reserve. As a claim against United Airlines is allowed, it is entitled to receive an initial distribution of New UAL Common Stock and may receive additional shares of New UAL Common Stock as other disputed claims subject to the reserve subsequently are allowed. The initial distribution will be no less than 3,266,250 shares of New UAL Common Stock; (c) The parties will mutually release each other from all claims that arose prior to the date of the Settlement Agreement, except for a certain subrogation claim; and (d) The Settlement Agreement specifically preserves the "Subrogation Claim", relating to an accident at the Chicago O'Hare Airport involving United Airlines' bus and Independence Air's airplane. The Subrogation Claim consists of claims by Independence Air and its insurer against United Airlines' insurer for economic and other damages. A full-text copy of the FLYi-UAL Settlement Agreement is available for free at http://ResearchArchives.com/t/s?9f4 Mr. Cleary asserts delay in the resolution of the Rejection Damages Claim would mean delay in the receipt of the primary asset that will be used to fund distributions to unsecured creditors under a plan of liquidation, which the Debtors intend to propose in the near future. Failure to settle the Antitrust Administrative Claim would require the Debtors to embark on an expensive and time-consuming litigation over that claim, Mr. Cleary adds. Moreover, if the Debtors did not settle the Rejection Damages Claim, but instead waited to receive New UAL Common Stock at that time as all appeals of the amount of the claim had been exhausted, the Debtors would bear the risk of the price of the stock at that time, Mr. Cleary notes. Mr. Cleary contends that because the Debtors are in liquidation, it is appropriate for the Debtors to sell the shares of New UAL Common Stock received as a result of the Settlement Agreement. The sale will provide the Debtors with adequate proceeds to fund their Chapter 11 cases. About FLYi Inc. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLYI INC: Court Approves Rejection of Seven IAE Purchase Contracts ------------------------------------------------------------------ FLYi, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to reject seven executory contracts with IAE International Aero Engines AG. As reported in the Troubled Company Reporter on May 12, 2006, the Debtors told the Court that as a result of the discontinuation of the their scheduled flight operations, the contracts, which relate to the purchase of aircraft engines, have become unnecessary to their estates. The Debtors said that the IAE Contracts have no value to their estates and thus are appropriate for immediate rejection: 1. Initial Order Interim Agreement for the Supply of New V2500 Engine Spare Parts signed 9/1/2004; 2. Side Letter No. 1 to the V2500-A5 General Terms of Sale dated 9/30/2004; 3. Side Letter No. 2 to the V2500-A5 General Terms of Sale dated 9/30/2004; 4. Side Letter No. 3 to the V2500-A5 General Terms of Sale dated 9/30/2004; 5. Standard Terms of Business for Lease of V2500 Engines signed 9/30/2004; 6. Standard Terms of Business for Lease of V2500 Engines signed 9/30/2004; and 7. V2500 General Terms of Sale dated 9/30/2004. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Can't File 1st Quarter 2006 Results on Time ----------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Foamex International, Inc., discloses that it won't be able to timely file its financial report for the first quarter ended April 2, 2006. Because of the Company's recent trading activity and the newly established trading limit procedures, Gregory J. Christian, executive vice president of Foamex International, says the Company needs more time to assess the impact the recent trades of the Company's equity securities may have on the Company's ability to utilize its net operating loss carryforwards for the first quarter of 2006. Foamex International expects to report income before income taxes of $16,200,000 for the first quarter, as compared to a loss before income taxes of $10,900,000 in the first quarter of 2005. Mr. Christian says the improvement is due to an increase in gross profit of $33,400,000, principally due to higher selling prices. The increase in gross profit is partially offset by restructuring charges and reorganization expenses, which aggregate $8,900,000. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOSTER WHEELER: Moody's Rates $250MM Sr. Sec. Debt Facility to Ba3 ------------------------------------------------------------------ Moody's Investors Service upgraded Foster Wheeler LLC's corporate family rating to B1 from B3 and assigned a Ba3 rating to FWC's $250 million senior secured bank revolving credit facility. The rating outlook is changed to Positive. The upgrade and positive outlook reflect the successful completion of the company's debt reduction program and continued improvement in demand within FWC's key end markets resulting in increased bookings, backlog and free cash flow generation. The five-year $250 million credit facility for standby letters of credit, with a final maturity date of 2010, includes a currently undrawn $75 million sub-limit for borrowings. Substantially all the assets and capital stock of Foster Wheeler Ltd. and its direct subsidiaries secure the credit facility. Guarantees are provided by Foster Wheeler Ltd. and certain domestic and foreign subsidiaries. Financial covenants include a maximum leverage ratio, a fixed charge ratio and a minimum liquidity level. The company was in compliance with its covenants at March 31, 2006 and expects to remain in compliance throughout the year. The key rating factors driving the upgrade and positive outlook include: 1) the completion FWC's debt reduction program, reducing debt by $380 million since 2004 to $190 million; 2) a significant improvement in global E&C market conditions and an improving global power outlook, which should continue to drive growth in FWC's bookings and backlog; 3) Moody's expectation of continued improvement in free cash flow generation despite the drag from asbestos settlements funded from operations; and 4) the removal of the going concern opinion and the correction of material weaknesses identified in 2005. Moody's noted that the Ba3 rating for the bank facility incorporates the benefits and limitations of the collateral, as well as the modest level of potential borrowing. The facility represents virtually all of FWC's corporate debt, is expected to remain undrawn, and is highly collateralized, resulting in a one notch upgrade from the corporate family rating. Moody's has withdrawn the B3 rating on the 10.359% senior secured notes due in 2011 and the Caa3 rating on the FW Preferred Capital Trust I - Preferred trust securities following FWC's exchange and/or redemption of these issuances. Moody's previous rating action on FWC was the June 16, 2005 upgrade of the corporate family rating to B3 from Caa2. Foster Wheeler Ltd, headquartered in Hamilton, Bermuda, is a leading industrial engineering, construction, maintenance, and related technical service company. Consolidated operating revenues were $2.2 billion in 2005. GENERAL MOTORS: 20,000+ Workers Taking Buy-Out & Retirement Offers ------------------------------------------------------------------ General Motors Corp.'s buy-out offers were accepted by around 20,000 of its employees, published reports say. GM spokesman Dan Flores said the Company would release the results after the offers expire. The offers, which apply to about 113,000 GM workers and 15,000 Delphi Corporation workers, are part of an agreement among GM, Delphi and the United Auto Workers union to accelerate a restructuring plan. This plan calls for 30,000 job cuts and nine plant closings by 2008. Delphi's viability is important to GM. GM gets most of its car parts from Delphi. GM and Delphi workers have until June 23, 2006, to accept offers for buy-outs and early retirement. GM and Delphi offered $35,000 for workers with at least 30 years to retire and begin a $36,000-a-year pension. Workers not eligible to retire can opt for a buyout of as much as $140,000 and give up health care benefits. Under current union contracts, employees get almost their full pay even where there's no work for them to do. Reducing the number of active workers would let GM put idled workers back in operating factories and make it easier for Delphi to close plants. GM would hire temporary workers at some of its plants to compensate for employees taking the buyout and early retirement offers. The number of additional temporary workers will depend on how many employees chose to take buyouts. Temps will be paid $18 to $19 an hour without benefits, compared with about $26 to 28 an hour plus benefits for permanent workers. About General Motors General Motors Corp. -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries including Mexico. In 2005, 9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM operates one of the world's leading finance companies, GMAC Financial Services, which offers automotive, residential and commercial financing and insurance. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on May 9, 2006, Moody's Investors Service placed the B3 senior unsecured rating of General Motors Corporation under review for possible downgrade, and affirmed the company's Corporate Family Rating at B3. The rating actions are in response to the company's disclosure that it is pursuing various options to replace or amend its existing $5.6 billion bank credit facility, and that these options could result in providing its bank lenders with a security interest in certain GM assets. GM anticipates that any credit facility replacement or amendment will be completed by the end of the second quarter or early in the third quarter. GOLDSPRING INC: March 31 Balance Sheet Upside Down by $15.6 Mil. ---------------------------------------------------------------- Goldspring, Inc., filed its amended first quarter financial statements for the period ended March 31, 2006, with the Securities and Exchange Commission on May 16, 2006. The Company's Statement of Operations for the period ended March 31, 2006, showed a net loss of $1,017,133 on revenues of $537,806. At March 31, 2006, the Company's balance sheet showed $3,759,327 in total assets and $19,409,917 in total liabilities, resulting in a $15,650,590 in stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $778,105 in total current assets available to pay $18,658,827 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's financial statements for the period ended March 31, 2006, are available for free at http://researcharchives.com/t/s?9fa Going Concern Doubt Jewett, Schwartz & Associates, in Hollywood, Florida, raised substantial doubt about Goldspring, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the Company's operating losses and working capital deficit. Goldspring, Inc. (OTCBB:GSPG.OB) -- http://www.goldspring.us/-- is a North American precious metals mining company with an operating gold and silver mine in northern Nevada. The primary nature of its business is the exploration and development of mineral producing properties. H&E EQUIPMENT: Commences $253 Million Debt Securities Offering -------------------------------------------------------------- H&E Equipment Services, Inc., and wholly owned subsidiary, H&E Finance Corp. commenced a cash tender offer and consent solicitation for all $200 million of the Issuers' outstanding 11-1/8% Senior Secured Notes due 2012 (CUSIP No. 404085AB8), and all $53 million of the Issuers' outstanding 12-1/2% Senior Subordinated Notes due 2013 (CUSIP No. 404085AF9). The total consideration for each $1,000 principal amount of the Senior Secured Notes and Senior Subordinated Notes tendered and accepted for purchase pursuant to the tender offer will be determined as specified in the Offer to Purchase and Consent Solicitation Statement of the Issuers, dated May 25, 2006, on the basis of a yield to the applicable first redemption date equal to the sum of (i) the yield (based on the bid side price) of the U.S. Treasury security specified in the Statement for each of the Notes, as calculated by Credit Suisse Securities (USA) LLC in accordance with standard market practice on the Price Determination Date, plus (ii) a fixed spread of 50 basis points. The Price Determination Date will be June 7, 2006 (unless the Issuers extend the tender offer for any period longer than ten business days from the previously scheduled expiration date, in which case a new Price Determination Date will be established). In connection with the tender offer, the Issuers are soliciting consents to certain proposed amendments to the indentures pursuant to which the Notes were issued, which would eliminate substantially all of the restrictive covenants, eliminate or modify certain events of default and eliminate or modify related provisions of the indentures. The Issuers are offering to make a cash consent payment of $30 per $1,000 principal amount of Notes (which is included in the total consideration for the Notes described above) to holders who validly tender (and do not withdraw) their Notes and deliver (and do not revoke) their consents prior to 5:00 p.m., New York City time, on June 6, 2006. No consent payments will be made in respect of Notes tendered and consents delivered after the Consent Date. Holders may not tender their Notes without delivering their consents, and may not deliver their consents without tendering their Notes. The tender offer is scheduled to expire at Midnight, New York City time, on June 22, 2006, unless extended. Notes tendered prior to the Consent Date may not be withdrawn, and consents delivered prior to the Consent Date may not be revoked, after the Consent Date, except in the limited circumstances described in the Statement. Notes tendered and consents delivered after the Consent Date and prior to the Expiration Date may not be withdrawn or revoked, except in the limited circumstances described in the Statement. Subject to satisfaction of the conditions to the tender offer, the Issuers currently expect to accept for purchase, and pay the total consideration (as to all Notes tendered prior to the Consent Date) and the tender offer consideration (which is the total consideration less the cash consent payment, as to all Notes tendered after the Consent Date) with respect to, all validly tendered Notes on a date promptly following the Expiration Date. On the Payment Date, the Issuers will also pay accrued and unpaid interest up to, but not including, the Payment Date on the Notes accepted for purchase. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including the receipt of consents from the holders of at least a majority in principal amount of each series of the Notes and the consummation by H&E Inc. of one or more debt financings on terms satisfactory to H&E Inc. in an aggregate amount not less than $250 million and consent of the lenders under H&E Inc.'s senior secured credit facility. No assurance can be given that such new financing will be completed in a timely manner or at all or that such consent will be obtained. The complete terms and conditions of the tender offer and consent solicitation are described in the Statement and the related Consent and Letter of Transmittal, copies of which may be obtained by contacting the information agent for the tender offer and consent solicitation: D.F. King & Co. Inc. Telephone (212) 269-5550 Toll Free (866) 387-1500 Questions regarding the tender offer and consent solicitation may be directed to the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation: Credit Suisse Securities (USA) LLC Telephone (212) 538-0652 Toll Free (800) 820-1653 Based in Baton Rouge, Louisiana, H&E Equipment Services, Inc. -- http://www.he-equipment.com/-- is one of the largest integrated equipment services companies in the United States with 47 full- service facilities throughout the Intermountain, Southwest, Gulf Coast, West Coast and Southeast regions of the United States. The Company is focused on heavy construction and industrial equipment and rents, sells and provides parts and service support for four core categories of specialized equipment: hi-lift or aerial platform equipment; cranes; earthmoving equipment; and industrial lift trucks. The Company trades on the Nasdaq Stock Exchange under the symbol "HEES." * * * As reported in the Troubled Company Reporter on Feb. 20, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on rental equipment company H&E Equipment Services Inc. (formerly known as H & E Equipment Services LLC) to 'BB-' from 'B+'. At the same time, Standard & Poor's raised its rating on H & E's $165 million first-lien revolving credit facility due in 2009. That rating is now 'BB+', two notches higher than the corporate credit rating, while the recovery rating on the facility is '1', meaning that full recovery of principal is expected in the event of a default. The rating on H & E's $200 million second-lien notes, due in 2012, rose to 'B+', one notch lower than the corporate credit rating, and was assigned a recovery rating of '3'. This indicates that S&P expects a meaningful recovery of principal (50%-80%) in the event of a default after full recovery of the first-lien facility. S&P said the outlook is stable. HEALTHSOUTH CORP: S&P Assigns CCC+ Rating to $1 Billion Sr. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to HealthSouth Corp.'s $1 billion (in aggregate) of floating-rate senior unsecured notes due 2014 and fixed-rate senior unsecured notes due 2016. At the same time, existing ratings on HealthSouth, including the 'B' corporate credit rating, were affirmed. The rating outlook is stable. The new notes transactions were anticipated when the corporate credit rating was originally assigned (April 11, 2006). In the short time since then, the company has performed within Standard & Poor's expectations. Proceeds of the notes will be used to refinance an existing unsecured interim term facility of the same size. HealthSouth's senior unsecured notes are rated 'CCC+', two notches below the 'B' corporate credit rating, in line with Standard & Poor's criteria. Although these notes are considered senior, the company has a sizable amount of priority debt (secured bank debt and capitalized operating leases). Because of the magnitude of priority debt (totaling more than 30% of total eligible assets), the unsecured notes are considered materially disadvantaged. "The speculative-grade ratings on Birmingham, Alabama-based HealthSouth reflect the company's position as a major U.S. provider of rehabilitative health care services, outpatient surgery, and diagnostic imaging, as well as the challenges of operating in a competitive industry that has significant reimbursement risk," said Standard & Poor's credit analyst David Peknay. "HealthSouth's size and scope of services position it well to benefit from an aging population that could help drive healthy growth rates in its businesses. However, the company has not realized these benefits due to mismanagement and fraudulent financial reporting, which caused significant damage to its operations and reputation." HealthSouth had incurred large financial losses that were revealed after extensive forensic accounting was performed to reconstruct several years of financial statements. Now with entirely new governance, new senior management in 2004, substantially new local management, and more responsible and appropriate business practices, Standard & Poor's believes that HealthSouth is past the worst of its troubles and will operate with a strong commitment to the principles of sound corporate governance. However, though its corporate renaissance bodes well for the company's ability to navigate through a difficult health care environment, its success is uncertain, as it will continue to face a number of risks. HORNE COMMERCIAL: Case Summary & 2 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Horne Commercial Properties, LLC 550 Corporate Center Drive Raleigh, North Carolina 27607 Bankruptcy Case No.: 06-00770 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: May 26, 2006 Court: Eastern District of North Carolina (Raleigh) Judge: A. Thomas Small Debtor's Counsel: William P Janvier, Esq. Everett Gaskins Hancock & Stevens, LLP P.O. Box 911 Raleigh, North Carolina 27602 Tel: (919) 755-0025 Fax: (919) 755-0009 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Southern States $1,241,699 Cooperative, Inc. c/o Luther Starling P.O. Drawer 1960 Smithfield, NC 27577 Johnston County Real Estate Unknown P.O. Box 1049 Smithfield, NC 27577 IMAGING3 INC: First Quarter Balance Sheet Upside Down by $3 Mil. ---------------------------------------------------------------- Imaging3, Inc., filed its amended first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 16, 2006. The Company's Statement of Operations for the period ended March 31, 2006, showed a net loss of $368,488 on revenues of $268,436. At March 31, 2006, the Company's balance sheet showed $640,835 in total assets and $3,645,982 in total liabilities, resulting in a $3,005,147 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $567,365 in total current assets available to pay $3,645,982 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's financial statements for the three months ended March 31, 2006, is available for free at http://ResearchArchives.com/t/s?a01 Going Concern Doubt Kabani & Company, Inc., in Los Angeles, California, raised substantial doubt about Imaging3, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the Company's net losses, accumulated deficit, and negative cash flow from operating activities. Headquartered in Burbank, California, Imaging3, Inc. (OTCBB:IMGG) -- http://www.imaging3.com/-- manufactures and sells medical equipment and parts to hospitals, surgery centers, and research labs. Imaging3 specializes in medical imaging devices. INCO LTD: Reaches Tentative CBA with USW Bargaining Committee ------------------------------------------------------------- Inco Limited and United Steelworkers Locals 6500 and 6200 reached a tentative collective bargaining agreement at 1 p.m. May 29, 2006, for Inco's Sudbury and Port Colborne operations. The bargaining committee for Locals 6500 and 6200 is unanimously recommending acceptance of the proposed new three-year agreement. Mark Cutifani, Inco's President of North America/Europe said the Company's offer includes improvements to wages, benefits and pensions and provides the basis for continuing the business improvement and growth strategy in Ontario. "We believe the tentative agreement is a fair and reasonable one," Mr. Cutifani, said. "Our employees are the key to our success. Looking forward, our strategy is to continue working in partnership with all employees to grow the business in Ontario and generate positive returns in all price cycles." The USW has scheduled information sessions for its members today, May 30, with a vote on the deal taking place on tomorrow, May 31. Details of the tentative agreement will not be made public until the USW has an opportunity to present the tentative agreement to its membership. About Inco Headquartered in Sudbury, Ontario, Inco Limited (TSX, NYSE:N) -- http://www.inco.com/-- is the world's #2 producer of nickel, which is used primarily for manufacturing stainless steel and batteries. Inco also mines and processes copper, gold, cobalt, and platinum group metals. It makes nickel battery materials and nickel foams, flakes, and powders for use in catalysts, electronics, and paints. Sulphuric acid and liquid sulphur dioxide are produced as byproducts. The company's primary mining and processing operations are in Canada, Indonesia, and the UK. * * * Inco Limited's 3-1/2% Subordinated Convertible Debentures due 2052 carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. INGRAM MICRO: S&P Affirms BB+ Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Santa Ana, California-based Ingram Micro Inc., and revised the outlook to positive from stable. The outlook revision reflects the company's improving profitability, and good financial profile for the rating. "The rating reflects relatively thin profitability levels and highly competitive industry conditions, partially offset by the company's leading market position and moderately leveraged balance sheet," said Standard & Poor's credit analyst Martha Toll-Reed. Ingram Micro is the world's largest wholesale provider of technology products and services. Fiscal 2005 revenues were $28.8 billion. With a leading market share and global presence, Ingram is well positioned to provide a broad range of distribution and logistics services to its customers. Although the computer products distribution market is relatively mature and highly competitive, Ingram is expected to achieve revenue growth through ongoing expansion into adjacent product lines and markets. EBITDA margins of about 1.7% have trended up gradually but consistently from 1.1% in fiscal 2002. Ingram is expected to sustain profitability levels through ongoing cost reduction actions and revenue growth. EBITDA coverage of interest -- in excess of 6x -- is good for the rating level. Free operating cash flow varies with revenue growth and with seasonal working capital fluctuations. At current revenue growth rates Ingram is expected to be moderately cash flow positive on an annual basis. Total debt (including capitalized operating leases) to EBITDA was below 2x as of March 31, 2006. IT GROUP: Third Circuit Rejects ERISA Plan Participants' Claims --------------------------------------------------------------- A group of participants in IT Corporation's Deferred Compensation Plan, filed an adversary complaint in the U.S. Bankruptcy Court for the District of Delaware against IT Corporation, its parent company, IT Group, Inc., and their subsidiaries, seeking secured, priority status for their claims for benefits owed to them under the Plan. The Participants' complaint relied principally on the Plan and Trust documents, but also alleged that a former President and CEO of IT Corporation orally promised a senior officer and other potential Plan participants that the Corporation would fund the Trust for the exclusive benefit of plan participants and ensure that benefits would be paid in full if the Corporation ever faced the prospect of insolvency or bankruptcy. The Debtors and the Plan Fiduciaries filed a consolidated motion to dismiss the Participants' claims. The Bankruptcy Court found that the Plan was "unfunded" and offered only to a "select group of management or highly compensated employees," and was, thus, a top hat plan exempt from ERISA's substantive protections. The Bankruptcy Court's decision was reported at 305 B.R. 402. The Participants took an appeal to the United States District Court for the District of Delaware (Civil No. 04-cv-00146), and the Honorable Joseph J. Farnan, Jr., affirmed the Bankruptcy Court's ruling. The Participants took another appeal to the U.S. Court of Appeals for the Third Circuit (Docket No. 05-2191), arguing that certain novel features of the Plan obligated IT Corporation to fund a secular trust, outside the reach of creditors, for their exclusive benefit when the committee learned that the Corporation was facing insolvency. The Third Circuit disagrees, and affirmed the District Court's decision last week. The Decision is reported at 2006 WL 1421016 and a copy of the Slip Opinion is available at http://www.ca3.uscourts.gov/opinarch/052191p.pdf "[T]he terms of the Plan and Trust documents clearly and unambiguously evince the Corporation's intent to create an unfunded top hat plan," the Third Circuit says. "Moreover, as the Bankruptcy Court observed, the oral representation alleged by Participants 'would add an additional term to the contract regarding funding; it would not shed light on the written terms of the Plan.' [T]he oral representation does not undermine our initial conclusion that the Plan is unfunded, and has no place in our analysis." Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. -- http://www.theitgroup.com/-- together with its 92 direct and indirect subsidiaries, is a leading provider of diversified, value-added services in the areas of consulting, engineering and construction, remediation, and facilities management. The Company filed for chapter 11 protection on Jan. 16, 2002 (Bankr. Del. Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate Meagher & Flom LLP, represents the Debtors. On Sept. 30, 2001, the Debtors listed $1,344,800,000 in assets and 1,086,500,000 in debts. The Court confirmed the Debtors' chapter 11 Plan on April 5, 2004, and the Plan took effect on April 30, 2004. Alix Partners LLC is the IT Litigation Trust Trustee appointed under the confirmed Plan. John K. Cunningham, Esq., and Ileana Cruz, Esq., at White Case LLP represents the Trustee. KANSAS CITY SOUTHERN: Names New Finance Department Leadership ------------------------------------------------------------- Kansas City Southern appointed Patrick J. Ottensmeyer as executive vice president and chief financial officer. Mr. Ottensmeyer brings over 25 years of financial experience to KCS. Most recently, he served as chief financial officer of Intranasal Therapeutics, Inc. Mr. Ottensmeyer will lead KCS' international finance department. "Pat understands the rail industry and brings a broad set of financial and leadership skills to our company," said KCS chairman, president and chief executive officer Michael R. Haverty. "We look forward to his contributions as we continue to drive costs out of our newly integrated rail network." Susan B. Wollenberg has been promoted to vice president financial planning and administration. Ms. Wollenberg joined KCS in early April 2006 and will serve as interim chief accounting officer. She is a former chief financial officer for E.W. Blanch Holdings, Inc. and has ten years experience with GE Capital Services, where she held various financial roles, including manager strategic investments and second vice president. She also serves on the board of directors of Windhaven Insurance Company. Julio Quintero has been named controller for Kansas City Southern de Mexico and will be based in Monterrey, N.L. While leading the accounting department in Monterrey, he will spend his first six months with the holding company in Kansas City to ensure standardized accounting procedures in both countries. Mr. Quintero joins KCSM from Wyeth Pharmaceuticals, where he served as controller for Mexico and Central America with responsibilities for cost accounting, treasury and Sarbanes Oxley compliance. T. Nicholas Nocita has been promoted from general director financial compliance to assistant vice president international internal audit and financial compliance and retains responsibility for Sarbanes Oxley compliance in both the U.S and Mexico. Mr. Nocita joined the company in 1998. Prior to joining KCS, he spent nine years as a certified public accountant in Kansas City. KCS thanks former executive vice president and chief financial officer Ronald G. Russ and former vice president and comptroller James S. Brook for their service to the company. Headquartered in Kansas City, Missouri, Kansas City Southern (NYSE: KSU) - http://www.kcsi.com/-- is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include KCSM, serving northeastern and central Mexico and the port cities of L zaro Cardenas, Tampico and Veracruz, and a 50 percent interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS' North American rail holdings and strategic alliances are primary components of a NAFTA Railway system, linking the commercial and industrial centers of the U.S., Canada and Mexico. * * * As reported in the Troubled Company Reporter on May 22, 2006, Standard & Poor's Ratings Services lowered its preferred stock ratings on Kansas City Southern to 'D' from 'C' and removed the ratings from CreditWatch where they were initially placed on March 23, 2006; ratings were previously lowered on April 4 and May 1 and maintained on CreditWatch with negative implications. Standard & Poor's other ratings on Kansas City Southern, including its 'B' corporate credit rating, remain on CreditWatch with negative implications, where they were initially placed April 4, 2006. Ratings were lowered on April 10 and maintained on CreditWatch. KL INDUSTRIES: Has Until Friday to File Schedules ------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois gave KL Industries, Inc., until June 2, 2006, to file its Schedules and Statement of Financial Affairs. The Debtor tells the Court that in order to accurately and completely prepare its schedules and statements, it will assemble information from various books and records, reports, agreements, tax returns and other sources. The Debtor says that this task is expected to be rather arduous and quite time consuming given the fact that the employee with responsibility over the its finances has been in plan for only a couple of weeks and is still in the process of familiarizing himself with the Debtor's books and records. The Debtor contends that it has just begun the process of compiling the information necessary to complete the schedules and statements since it has been focusing all of its efforts on operating its business. Headquartered in Addison, Illinois, KL Industries, Inc., manufactures springs, assemblies and other products for the automotive and electronic markets. The Company does business as KL Spring & Stamping Division, KL Spring Division, KL Stamping Division, KL Assembly Division and American Metal Forming Division. The Company filed for bankruptcy protection on May 2, 2006 (Bankr. N.D. Ill. Case No. 06-04882). Peter J. Roberts, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has retained Winston & Strawn LLP, to represent it in the Debtor's case. When the Debtor filed for bankruptcy protection, it reported assets totaling between $1 million and $10 million and debts amounting between $10 million to $50 million. KMART CORP: Court Signs Order Resolving LNR & Goldblatt Dispute --------------------------------------------------------------- The Hon. Susan Pierson Sonderby of the U.S. Bankruptcy Court for the Northern District of Illinois signed the agreed order between LNR Partners, Inc., and Richard A. Goldblatt. Kmart Corporation and Continental Mart Michigan Limited Partnership are parties to lease agreement where Kmart leases property from Continental in Three Rivers, Michigan. On January 31, 2002, Confederation Life Insurance Co., and Continental entered a Mortgage and Security Agreement and Fixture Financing Statement covering a property known as Kmart Store No. 3950 located in Three Rivers. On the same day, Confederation and Continental also entered into an assignment of lease agreement, which assigned the Lease between Continental and Kmart to Confederation. Continental transferred all of its interests in Store No. 3950 to Good Neighbor Properties pursuant to an Amendment and Assignment agreement dated April 23, 1993. Good Neighbor assumed Continental's obligations under the original Assignment of Lease Agreement between Confederation and Continental. Good Neighbor, in turn, transferred all of its interests in Store No. 3950 to Mr. Goldblatt pursuant to an Amendment and Assignment Agreement relating to Financing Documents of Record dated February 14, 1994. Mr. Goldblatt assumed Good Neighbor's obligations under the Original Assignment of Lease Agreement. On April 12, 1994, Confederation assigned its right, interest and title in Store No. 3950 to LaSalle National Bank. LaSalle National serves as Trustee for the holders of the Structured Asset Securities Corporation Multiclass Pass-Through Certificates, Series 1996-CFL. On the Petition Date, Lennar Partners, Inc., was LaSalle's attorney-in-fact. LaSalle held a mortgage on Store No. 3950, which Store was now property of Mr. Goldblatt and was leased to Kmart. On July 29, 2002, Kmart rejected the Store No. 3950 Lease. Mr. Goldblatt filed Claim No. 34563 for $1,118,663 asserting lease rejection damages for loss of future rent, damages for maintenance fees, and 2001 taxes. In September 2002, LaSalle transferred its interests in Store No. 3950 to SASCO 1996-CFL Three Rivers, LLC, pursuant to an Assignment of Mortgage dated September 17, 2002. SASCO was an entity created by LaSalle. On September 20, 2002, SASCO recorded an assignment of lease. Mr. Goldblatt defaulted on his obligations under the Mortgage that belonged to LaSalle. Pursuant to the which, LaSalle advertised the sale of Store No. 3950 for the applicable period of time. LaSalle was the highest bidder at the forced sale of Store No. 3950. On November 14, 2002, LaSalle was granted a deed of ownership rights -- the Sheriff's Deed -- in Store No. 3950. Lennar Transfers Claim to LaSalle On February 25, 2003, the Debtor objected to the allowance of Claim No. 34563 and notified both Lennar and Mr. Goldblatt of the objection and their right to respond. In 2004, Lennar filed a notice transferring the Claim from Mr. Goldblatt to LaSalle. Mr. Goldblatt objected. As authorized in the Assignment of Lease Agreement between Confederation and LaSalle, the Mortgage by Mr. Goldblatt, and a Consent Agreement between Kmart and LaSalle, LaSalle and the Debtors entered agreed to resolve the lease rejection claim for Kmart Store No. 3950 by: * allowing the Claim in favor of SASCO for $1,012,873; and * barring Mr. Goldblatt from asserting, collecting, seeking to collect any lease rejection or administrative expense amount relating to Store No. 3950. On August 30, 2004, the Court signed the agreed order between LaSalle and the Debtors. Mr. Goldblatt has not appealed the order or filed a request for reconsideration. In November 2004, Lennar asked the Court to rule that Mr. Goldblatt's rights in Claim No. 34653 were transferred to LaSalle and that LaSalle is the owner of the Claim. On Lennar's behalf, Gabriel Reilly-Bates, Esq., at Jenner & Block LLP, in Chicago, Illinois, argued that LaSalle was entitled to the lease rejection claim on the basis that: (i) Mr. Goldblatt has not timely objected to the agreed order between LaSalle and the Debtors; (ii) the Assignment of Lease Agreement between Confederation and LaSalle gave LaSalle the explicit authority to settle any bankruptcy claims arising out of the Lease; (iii) the Assignment of Lease Agreement between Confederation and LaSalle transferred Mr. Goldblatt's rights to receive rent and bankruptcy claims to LaSalle prior to the foreclosure; and (iv) any residual interest that Mr. Goldblatt may have had in Store No. 3950 was terminated and transferred to LaSalle by the Sheriff's Deed, which transferred all right, title and interest, including tenements in Store No. 3950. LNR and Goldblatt Allow Transfer In December 2004, Mr. Goldblatt sought to vacate the agreed order between LaSalle and the Debtors. To settle the dispute, Lennar, now known as LNR Partners, Inc., and Mr. Goldblatt, agree that on the effective date of the Debtors' Plan of Reorganization: * the Claim Transfer Request is granted provided that any distributions to be made on account of Claim No. 34563 will be made in accordance with the Agreed Order between LNR and Mr. Goldblatt; * Mr. Goldblatt's request to vacate the August 2004 Agreed Order and the remaining Goldblatt requests are deemed withdrawn with prejudice; and * the Debtor will distribute the first 3,198 shares to be issued on account of Claim No. 34563 to Mr. Goldblatt and all remaining shares to LNR. Headquartered in Troy, Michigan, Kmart Corporation nka KMART Holding Corporation -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Settles Dispute Over Texas Taxing Authorities' Claims ----------------------------------------------------------------- Sixty-one taxing authorities in Texas filed prepetition secured proofs of claim against the Debtors aggregating in excess of $14,000,000. The Claims were for ad valorem property taxes assessed against the Debtors' real and personal property for tax year 2002. To liquidate and resolve the Debtors' prepetition liability to the Taxing Authorities: * the Debtors and nine Taxing Authorities agree to the allowance of the non-contingent, undisputed, liquidated amounts, to be paid in full and final satisfaction of the Claims and the Debtors' prepetition liability: Taxing Entity Claim Nos. Allowed Amount ------------- ---------- -------------- Brownsville Isd 42, 334, 47794, 57288 $30,382 Cameron County 333, 47792, 57285 32,672 City of Arlington 17285, 47702, 48023, 18,110 48195 City of Harlingen 335, 47793 8,791 Harlingen Cisd 336, 47813, 57315 23,420 Round Rock Isd 331, 47797, 48207 26,537 Tarrant County 831, 17286, 21404, 111,777 47717, 48016, 48194 Victoria County 427, 47800, 57319 46,009 Williamson County 769, 781, 45898, 13,792 45819,57249 The nine Taxing Authorities agree that their sole remedy for the liabilities is payment pursuant to the Stipulation. The nine Taxing Authorities will promptly update their records following receipt of the payment to confirm application to the Debtors' prepetition obligations, in full, and to reflect that the tax obligations are deemed paid in full, whether ore not formally claimed. * the Debtors and 52 Taxing Authorities agree that all prepetition ad valorem tax liabilities of the Debtors', whether previously claimed or not, are fully satisfied. Therefore, the claims filed by the 52 Taxing Authorities are deemed withdrawn, and the claims administrative agent is authorized to expunge the claims, including: Taxing Entity Claim Nos. ------------- ---------- Angelina County 7, 47867, 48344 Bexar County 16, 48182, 48214, 47879 City of Carollton 830, 13403, 47711, 48019, 48193 City of Del Rio 18, 47880, 57321 City of Desoto 117, 47705, 48020, 48202 City of El Paso 14, 47878, 57287 City of Forth Worth 13388, 14467, 37373, 44509, 44626, 52415, 54279 Corsicana ISD 802, 32817, 43534, 47707, 47954, 48014, 48200 Cypress-Fairbanks 2173, 45058, 45060, 47868, 48345 ISD Dallas County 114, 17284, 47715, 48018, 48201 Ector CAD 57516 Ector County 17, 47860, 47861, 57316, 57515 Ector ISD 1320, 47752, 47875, 47907 Fort Bend County 8, 21730, 47883, 57339, 57343 Fort Bend ISD 9, 47884, 57337 Grayson County 115, 47710, 4802, 48198 Gregg County 48017, 48192, 56911 Harris County/ 3, 1335, 21736, 29341, 37871, City of Houston 40152, 40153, 40480, 40481, 45061, 47876, 48342, 55336 Hidalgo County 585, 47799, 48209 Hopkins County 928, 47703 Houston ISD 12, 21732, 29410, 47882, 48343, 55335 Hunt County 801, 47712, 57309, 57313 Jefferson County 601, 817, 45903, 47804, 48173 Katy ISD 6, 21734, 37870, 40151, 40573, 47866, 47892, 48341, 55311, 55337 Lamar CAD 832, 47708, 57029 The Debtors and the 61 Taxing Authorities exchange mutual releases. A full-text copy of the Taxing Authorities' allowed and withdrawn claims is available for free at: http://researcharchives.com/t/s?a09 Headquartered in Troy, Michigan, Kmart Corporation nka KMART Holding Corporation -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Court Rules Heaton's Claim Motion is Withdrawn as Moot ------------------------------------------------------------------ The Hon. Susan Pierson Sonderby of the U.S. Bankruptcy Court for the Northern District of Illinois ruled that Helen Heaton's request to file claim is "withdrawn as moot." The Court established June 20, 2003, as Kmart Corporation and its debtor-affiliates' Bar Date for filing administrative expense claims. On September 9, Ms. Heaton filed an administrative expense claim against Kmart Corporation. According to Bruno Bellucci, III, Esq., at Law Offices of Bruno Bellucci, III, P.C., in Linwood, New Jersey, the delay was due to inadvertence, oversight, or excusable neglect. On these grounds, Ms. Heaton asked the Court to allow her late-filed administrative expense claim. Claim Must be Disallowed David E. Gordon, Esq., at Wilmer Cutler Pickering LLP, in New York, asserts that while a late claim was indeed filed on September 9, 2003, Ms. Heaton's request for the allowance of her late administrative claim was not filed until two and one-half years had passed. Mr. Gordon says Ms. Heaton failed to present sufficient facts to establish that the failures of her counsel and the delay in filing a late claim request amount to excusable neglect. Ms. Heaton's counsel admitted that he received communications and notices mailed directly to him by the Court and from Kmart, Mr. Gordon continues. Ms. Heaton also received copies of additional communications mailed directly to her. According to Mr. Gordon, although Ms. Heaton's counsel was aware that he needed to obtain relief from the Bankruptcy Court, he put off filing the request for more than two years. Mr. Gordon informs the Court that allowance of the late Claim would be highly prejudicial as Kmart will expend significant resources to determine the value of the claim and may end up litigating them. The Debtors, hence, ask the Court to deny Ms. Heaton's request. Headquartered in Troy, Michigan, Kmart Corporation nka KMART Holding Corporation -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEGACY ESTATE: Gets Interim Nod on DIP Loan & Cash Collateral Use ----------------------------------------------------------------- The Honorable Alan Jaroslovsky of the U.S. Bankruptcy Court for the Northern District Of California in Santa Rosa gave The Legacy Estate Group LLC interim access to a debtor-in-possession credit facility to be provided by Connaught Capital Partners, LLC. The Court also allowed the Debtor to use cash collateral securing repayment of the Debtor's prepetition loan from a group of lenders headed by Laminar Direct Capital, L.P. The Debtor can borrow $6.381 million from Connaught to pay growers holding valid producer's liens under California law who supplied the Debtor with grapes during the 2005 harvest. The Debtor will also borrow $4.736 million to pay growers during the 2006 harvest. An additional $5 million from the DIP loan and the cash collateral will be used for the Debtor's working capital needs. A portion of the DIP loan is reserved to pay up to $250,000 of the fees and expenses incurred by professionals hired in the Debtor's chapter 11 cases, except Chanin Capital Partners. The Debtor owes the Laminer lenders $15.89 million, secured by a lien on substantially all of its assets. The Laminer lenders are granted replacement lien to the same extent, validity and priority as the prepetition lien. They have a junior superpriority claim against the Debtor's assets, with priority over and above all administrative expenses of any kind. As additional adequate protection, the Debtor is ordered to pay $75,000 monthly to the Laminer lenders. Headquartered in Saint Helena, California, The Legacy Estate Group LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey Winery, which produces a range of red, white, and dessert wines. Legacy Estate and Connaught Capital Partners, LLC, filed for chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif. Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas, Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray and Murray represent the Debtors in their restructuring efforts. Lawyers at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts between $50 million and $100 million. LG.PHILIPS DISPLAYS: Court Converts Case to Chapter 7 Liquidation ----------------------------------------------------------------- The Hon. Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware converted LG.Philips Displays USA, Inc.'s chapter 11 case to a liquidation proceeding under chapter 7 of the Bankruptcy Code. Kelly Beaudin Stapleton, U.S. Trustee for Region 3, asked the Court to convert the case after the Debtor ceased operations and abandoned all prospects for rehabilitating its business. Since stopping operations, the Debtor had been unable to generate revenue and administrative expenses are being paid from the its eroding assets. Ms. Stapleton pointed out that these circumstances constitute a "continuing loss to or diminution of the Debtor's estate and the absence of a reasonable likelihood of rehabilitation" under Section 1112(b)(4)(A) of the Bankruptcy Code. Headquartered in San Diego, California, LG.Philips Displays USA, Inc., is an indirect American affiliate of LG.Philips Displays Holding B.V. The company manufactures cathode ray tubes that are incorporated into television sets and computer monitors. The company filed for chapter 11 protection on Mar. 15, 2006 (Bankr. D. Del. Case No. 06-10245). Adam Hiller, Esq., at Pepper Hamilton LLP represents the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has retained the services of Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., as lead counsel and Bonnie Glantz Fatell, Esq., at Blank Rome LLP, as co-counsel to represent them in the Debtor's bankruptcy proceedings. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $50 million and $100 million. LUMINENT TRUST: Moody's Rates Class B-4 Certificates at Ba2 ----------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Luminent Mortgage Trust 2006-4, Mortgage Loan Pass-Through Certificates, Series 2006-4, and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by adjustable-rate negative amortization Alt-A mortgage loans acquired by Maia Mortgage Finance Statutory Trust. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Moody's expects collateral losses to range from 1.45% to 1.65%. GMAC Mortgage Corporation, Paul Financial, LLC, and National City Mortgage Co. will service the loans, and Wells Fargo Bank, N.A. will act as master servicer. The Complete Rating Actions: Luminent Mortgage Trust 2006-4 Mortgage Loan Pass-Through Certificates Series 2006-4 * Cl. A-1A, Assigned Aaa * Cl. A-1B, Assigned Aaa * Cl. A-1C, Assigned Aaa * Cl. X, Assigned Aaa * Cl. PO, Assigned Aaa * Cl. A-R, Assigned Aaa * Cl. B-1, Assigned Aa2 * Cl. B-2, Assigned A2 * Cl. B-3, Assigned Baa2 * Cl. B-4, Assigned Ba2 The Class B-4 certificates were sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. MASTR ALTERNATIVE: Moody's Puts Low-B Rating on 2 Cert. Classes --------------------------------------------------------------- Moody's Investors Service assigned a rating of Baa2 to the Class N-1 notes, a rating of Ba3 to the Class N-2 notes, and a rating of B2 to the Class N-3 notes issued by MASTR Alternative Loan NIM 2006-5. The notes are backed by residual and prepayment penalty cash flows from two underlying securitizations of Alt-A, negative amortization residential mortgage loan transactions: CWALT, Inc. Alternative Loan Trust 2006-OA3 and MASTR Adjustable Rate Mortgage Trust 2006-OA1. The notes are also supported by a Yield Maitenance Agreement with Bear Stearns Financial Products Inc. The cash flows available to repay the notes are most significantly impacted by the level of prepayments, as well as the timing and amount of losses on the underlying mortgage pool. Moody's applied various combinations of loss and prepayment scenarios to evaluate the adequacy of cash flows to fully amortize the rate notes. The Complete Rating Actions: Issuer: MASTR Alternative Loan NIM 2006-5 Co-Issuer: MASTR Alternative Loan NIM 2006-5 Asset Holdings Corp. Securities: MASTR Alternative Loan NIM 2006-5 * Cl. N-1, Assigned Baa2 * Cl. N-2, Assigned Ba3 * Cl. N-3, Assigned B2 The notes are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. MESABA AVIATION: Judge Kishel Okays E*Trade Agreement Rejection --------------------------------------------------------------- The Hon. Gregory Kishel of the U.S. Bankruptcy Court for the District of Minnesota permitted Mesaba Aviation, Inc., doing business as Mesaba Airlines, to reject its Stock Plan Outsourcing and OptionsLink Services Agreement with E*Trade Financial Corporate Services, Inc., effective as of May 1, 2006. Pursuant to the Contract, E*Trade administered the Debtor's employee stock option plan and the Contract remains enforceable through December 23, 2006. The Contract was executed in contemplation of the Debtor's employees' extensive participation. However, a very limited number of the Debtor's employees participated in the Plan. The Debtor has determined that the Contract is no longer cost effective and creates unnecessary expense to its estate. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MIRANT CORP: Cadwalader Wickersham Asks for $3 Million Bonus ------------------------------------------------------------ Cadwalader, Wickersham & Taft LLP and Cox Smith Matthews Incorporated, attorneys for the Official Committee of Unsecured Creditors of Mirant Americas Generation LLC, ask Judge Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas to approve a $3,000,000 fee enhancement for services they performed for the MAGi Committee from July 25, 2003, through January 3, 2006. Gregory M. Petrick, Esq., a partner at Cadwalader, Wickersham & Taft LLP, relates that the $3,000,000 fee enhancement represents a 22% premium to fees charged by each firm. If awarded, the fee enhancement will be allocated pro rata between the two firms based on fees billed. With Cadwalader's and Cox Smith's efforts, the MAGi Committee fulfilled its mandate for a full recovery, Mr. Petrick asserts. Under the confirmed Plan of Reorganization, effective as of January 3, 2006, MAGi creditors holding approximately $1,157,000,000 in claims have been paid, through a combination of cash and new equity, the full par value of their claims, plus all accrued interest due and owing, totaling approximately $210,000,000, through the Effective Date. Mr. Petrick adds that MAGi creditors holding $1,732,000,000 in claims have: * had their claims reinstated in accordance with its original terms, with enhanced covenant protections; and * been paid in cash all interest due and owing on their claims, totaling $416,000,000, through the Effective Date. According to Mr. Petrick, Cadwalader and Cox Smith worked cooperatively and efficiently without duplication of effort in delivering to the MAGi Committee strategic and substantive legal issues relating to: * intercompany claims, * substantive consolidation, * stand-alone plan of reorganization, * reinstatement, * postpetition interest, and * de-leveraging Mirant. Cadwalader and Cox Smith also performed actions to protect the MAGi creditors, relating to: * the $500,000,000 DIP financing; * issues in connection with Potomac Electric Power Company; * MIRMA leases; * hedging practices; * commodities trading; * the Debtors' net operating losses tax attributes; * a screening wall order; and * claims against Mirant entities arising from the California energy crisis. For these reasons, Mr. Petrick asserts that payment of a fee enhancement to Cadwalader and Cox Smith is justified. New Mirant Objects The New Mirant Entities believe that no professional, including the MAGi Committee' attorneys should be rewarded with a success fee, Craig H. Averch, Esq., at White & Case LLP, in Miami, Florida, tells the Court. Providing quality services does not qualify a professional for a fee enhancement. Rather, fee enhancements should be granted only in "rare and exceptional" circumstances. Mr. Averch argues that the award of fee enhancement is inappropriate where the success of the Debtors' Chapter 11 cases was the result of a combination of many factors. In addition, the MAGi Committee's lawyers were appropriately compensated for their services through the lodestar method. The grant of any fee enhancement should take into account the fact that Cadwalader and Cox Smith have received an hourly rate that reflects the firms' expertise and experience, Mr. Averch points out. The MAGi Committee's lawyers, however, failed to demonstrate that their representation of the Committee was "superior" in light of their hourly rate. Although Cadwalader and Cox Smith's services were of a high quality, they were not superior to that reasonably expected from a law firm of their skill and experience, to justify a request for an enhancement, Mr. Averch contends. New Mirant notes that, as the party responsible for payment of the fee enhancement, its lack of consent should be weighed heavily when determining whether the award of a fee enhancement to MAGi Committee's counsels is appropriate. Accordingly, New Mirant asks the Court to deny Cadwalader and Cox Smith's fee enhancement request. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services placed a 'B+' corporate credit rating on Mirant and said the outlook is stable. MIRANT CORP: MC Asset Recovery Wants BofA to Produce Documents -------------------------------------------------------------- Jeff P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth, Texas, relates that prior to confirmation of the plan of reorganization filed by Mirant Corporation and its debtor- affiliates, the Debtors undertook an investigation of potential causes of action against, among others, Bank of America. Mirant's investigation included potential claims against Bank of America either through affirmative acts or omissions for avoidance, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, negligence, breach of professional duties, and breach of statutory duties. The Avoidance Action is based on a Credit Agreement dated as of May 22, 2000, entered into by Mirant's predecessor-in-interest, Southern Energy, Inc., with Bank of America, as agent. Under the Credit Agreement, Bank of America has a commitment, as an initial lender, totaling $550,000,000 -- the 2000 Dividend Facility. On May 26, 2000, Mirant transferred $450,000,000 of the $538,000,000 initial borrowing to The Southern Company from the 2000 Dividend Facility. On October 2, 2000, Mirant repaid $450,000,000 to Bank of America from the proceeds of Mirant's initial public offering. On July 13, 2005, Bank of America entered into a Stipulated Tolling Agreement with Mirant that tolled the statute of limitations while Mirant continued its investigation of potential claims against Bank of America. The Original Stipulation was set to expire on January 13, 2006, but Bank of America and MC Asset Recovery, LLC, entered into an Amended Stipulation extending the toll to July 13, 2006. In connection with the investigation, MCAR asks the Court to direct Bank of America, N.A., and Banc of America Securities LLC, to produce for inspection and copying, certain documents not later than May 22, 2006, at the offices of Forshey & Prostok, L.L.P. Mr. Prostok asserts that MCAR's request for examination of Bank of America is within the scope of Rule 2004 of the Federal Rules of Bankruptcy Procedure and Local Bankruptcy Rule 2004. Bank of America Responds According to Toby L. Gerber, Esq., at Fulbright & Jaworski L.L.P., in Dallas Texas, MCAR's requests for production of documents by May 22, 2006, are in direct conflict with the Amended Tolling Agreement not to seek any legal or equitable relief against Bank of America prior to July 1, 2006. For this reason, Bank of America asks the Court to deny MCAR's request as improper. Additionally, MCAR's Requests contain overly broad requests for production that do not relate to "the acts, conduct, or property or to the liabilities and financial condition of the debtor" or the "administration of the debtor's estate," Mr. Gerber points out. Specifically, MCAR asks for documents that pertain to transactions between Bank of America and Southern Company, neither of which are debtors. Mr. Gerber asserts that the Court lacks jurisdiction to require Bank of America to produce documents that fall outside the scope of Rule 2004. Mr. Gerber notes that the Debtors have adversary proceedings pending against other parties related to the spin-off of Mirant from the Southern Company. To the extent that the discovery requests will benefit MCAR or the Debtors in other litigation or contested matters, Bank of America asks the Court to deny MCAR's motion. In the event the Court grants MCAR's Motion, Bank of America, in the alternative, asks the Court: (i) to limit the scope of the 2004 Requests; and (ii) for additional time to produce all responsive, relevant and non-privileged documents at a mutually convenient date, time and place after July 1, 2006. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services placed a 'B+' corporate credit rating on Mirant and said the outlook is stable. NORTHWEST AIRLINES: Court Sets August 16 as Claims Bar Date ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set 5:00 p.m., on Aug. 16, 2006, as the deadline for creditors owed money by Northwest Airlines Corp. and its debtor-affiliates, on account of claims arising prior to Sept. 14, 2006, to file their proofs of claims, subject to these provisions: -- An entity need not file a proof of claim if it does not dispute that its claim is an obligation of a specific Debtor against which the claim is listed on the Debtors' schedules of assets and liabilities; and -- Any employee subject to a collective bargaining agreement and labor unions representing the employees need not file a proof of claim based on wages, salaries and benefits that were to be paid in accordance with the First Day Wage Order, unless the Debtors notify an employee or the union that they do not intend to pay the Claim. All proofs of claim will be deemed timely filed if actually received by the Bankruptcy Court on or before the Bar Date. The proofs of claim must either be mailed to the Court or delivered by messenger or overnight courier to the Clerk of Court. Proofs of claim sent by facsimile or telecopy will not be accepted. Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000). NORTHWEST AIRLINES: Court Approves GE & Safran Financing Accord --------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York gave Northwest Airlines, Inc., authority to implement the transactions and agreements contemplated in its Financing Restructuring Term Sheet, dated January 20, 2006, with General Electric Company, and Safran, pursuant to Sections 105(a), 363, 364 and 1110 the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure. The Parties agree to restructure the terms of: (a) Northwest Airline's $125,000,000 Variable Rate Guaranteed Notes due December 22, 2009; (b) the leveraged leases regarding two 1990 vintage Airbus A320-200 aircraft into mortgage loan facilities; (c) the indebtedness relating to four 1992 vintage Airbus A320-200 aircraft; and (d) the indebtedness relating to two 2003 vintage aircraft -- an Airbus A319-100 and an Airbus A320-200. As reported in the Troubled Company Reporter on Feb. 9, 2006, Bruce R. Zirinsky, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, told the Court that Northwest Airlines negotiated a restructuring of each of the four aircraft financing arrangements and agreements to purchase spare engines, to provide Northwest substantial reductions in principal of the indebtedness relating to the Aircraft, deferrals of principal payments with respect to other Aircraft and the Term Loan, and deferral of progress payments with respect to purchase of the engines. Mr. Zirinsky asserts that these restructurings will result in substantial savings for the estate and reduce the burdens on Northwest Airlines' cash flow. The agreement with GE and Safran will also settle other disputes among the parties, including a payment due on the term loan in December 2005. About Northwest Airlines Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000). NORTHWEST AIRLINES: Wants Until June 15 to File Statements ---------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend, until June 15, 2006, the deadline to file their statements of financial affairs. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that the preparation and filing of the Debtors' schedules of assets and liabilities on May 1, 2006, was a major undertaking considering that they have more than 60,000 creditors and are party to over 100,000 executory contracts. "The Debtors worked diligently to gather the necessary information to prepare and file the Schedules, which consists of over 26,500 pages of information in total." Mr. Petrick tells Judge Gropper that, in order to complete the SOFAs, the Debtors and their professionals need additional time to review the data collected from various sources and reconcile discrepancies between those data and the Debtors' books and records, resolve certain inconsistencies, and identify errors and omissions. Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000). OAKWOOD HOMES: Trust's Suit Vs. Insurers Survives Dismissal Motion ------------------------------------------------------------------ OHC Liquidation Trust (created under Oakwood Homes Corp.'s confirmed chapter 11 plan in 2004), by and through Alvarez & Marsal, LLC, the OHC Liquidation Trustee, sued Discover Re and United States Fidelity & Guaranty Co. last year in the U.S. Bankruptcy Court for the District of Delaware (Adv. Pro. No. 05-51766). The Trust's lawsuit asserts causes of action against the Insurers for breach of contract, fraudulent transfer, turnover and other theories. The Insurers filed a motion to dismiss for a variety of reasons. The Honorable Peter J. Walsh issued a decision, published at 2006 WL 1314664, granting and denying the Insurers' Motion in part, and holding: (1) a forum selection clause in the underlying indemnity and premium agreements don't require that any lawsuit proceed in a state or federal court in Connecticut; (2) the Trust's request that Bankruptcy Court estimate the Insurers' claims under 11 U.S.C. Sec. 502(c)(1) for purposes of recovering estate property under 11 U.S.C. Sec. 105(a) fails to state a claim upon which relief can be granted because estimation of claims is only for the purpose of allowance of a claim; (3) proceeds of a letter of credit issued by Wells Fargo are not property of Oakwood's estate and can't be recovered by the Trust, and the Trust's fraudulent conveyance theory fails if it contends that the improper transfer is the Insurers' draw on the L/C; the Trust has leave to amend its Complaint if the fraudulent conveyance claim is based on some other fact pattern; (4) Count III of the Trust's Complaint alleges that the defendants refused to return the excess funds and that the refusal constitutes a breach of the agreements. The Insurers assert that their retention of the funds is not a breach. The issue is one of contract interpretation, Judge Walsh says, and, ordinarily, contract interpretation is a question of fact. PSE Consulting, Inc. v. Frank Mercede & Sons, Inc., 267 Conn. 279, 838 A.2d 135, 145 (Conn. 2004). However, if there is "definitive contract language," then the determination is a question of law. The Insurers assert that their interpretation is the only one possible, in other words, there is definitive contract language. If true, then that would end this Court's inquiry. "I do not accept this as true, however," Judge Walsh says. "In the Court's view, at this early stage, there is no clearly articulated provision in the agreements that supports either parties' position. The provisions cited are either unclear or simply inapplicable. Therefore, under Connecticut law, a court may look to industry custom to interpret a contract that is ambiguous or silent on a particular point. New England Rock Servs., Inc. v. Empire Paving, Inc., 53 Conn. App. 771, 731 A.2d 784, 789 (Conn. App. 1999). Whether industry custom will support the plaintiff's interpretation, as it argues, will have to await trial." (5) Count VI of the Trust's Complaint alleges a breach of the implied covenant of good faith and fair dealing. The Insurers argue that the count should be dismissed because the complaint fails to allege the requisite bad faith. Judge Walsh disagrees because under Connecticut law, "[e]very contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." See Habetz v. Condon, 224 Conn. 231, 618 A.2d 501, 505 (Conn. 1992). The Complaint, Judge Walsh holds, sufficiently states a claim for breach of the covenant of good faith and fair dealing; and (6) the Trust's allegations are sufficient to state claim under Connecticut law for unjust enrichment. Oakwood Homes Corporation and its subsidiaries are engaged in the production, sale, financing and insuring of manufactured housing throughout the U.S. The Debtors filed for chapter 11 protection on November 15, 2002 (Bankr. Del. Case No. 02-13396). Robert J. Dehney, Esq., Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell, and C. Richard Rayburn, Esq., and Alfred F. Durham, Esq., at Rayburn Cooper & Durham, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they listed $842,085,000 in total assets and $705,441,000 in total debts. The Court confirmed the Debtors' Joint Consolidated Plan of Reorganization on March 31, 2004, and the Plan took effect on April 15, 2004. Pursuant to the confirmed Plan, all of the Debtors' assets and businesses were sold to Clayton Homes, Inc. OWENS CORNING: Wants to Execute Terms of Plan Support Agreement --------------------------------------------------------------- Owens Corning and its debtor-affiliates, as reported in the Troubled Company Reporter on May 12, 2006, reached a settlement agreement in principle with representatives of all major constituencies in their Chapter 11 cases. The Debtors filed with the Court a Settlement Term Sheet and the parties entered into a plan support agreement with respect to the terms contained in the agreement in principle. Pursuant to the Plan Support Agreement, the Plan Proponents agree to file a Sixth Amended Joint Plan of Reorganization for the Debtors, related Disclosure Statement and other related plan documents. As an initial and critical step towards transforming the platform of the Fifth Amended Plan into, what is anticipated to be, a consensual Sixth Amended Plan on an expedited basis, and their ultimate emergence from Chapter 11, the Debtors seek the U.S. Bankruptcy Court for the District of Delaware's authority to execute and implement the terms of the Plan Support Agreement. The salient terms of the Plan Support Agreement are: A. Treatment of the Key Creditor Constituencies under the Settlement Term Sheet The Debtors have agreed to modify their Plan with respect to the treatment of these claims: a. Owens Coming & Fibreboard Asbestos Personal Injury Claims On the Effective Date, the Debtors will pay the Asbestos Personal Injury Trust a total of: * $2,872,000,00 in cash; and * a contingent payment which, subject to certain conditions precedent, will consist of $1,390,000,000 plus interest in cash and 28,600,000 shares of common stock, par value $0.10 per share, of Reorganized Owens Coming -- New OCD Common Stock. Owens Corning has entered into a backstop agreement with J.P. Morgan Securities, Inc., and a syndicate of investors consisting of D.E. Shaw Laminar Portfolios, L.L.C., Plainfield Special Situations Master Fund Limited or their affiliates, and certain other bondholders, in connection with a proposed equity rights offering. Pursuant to the Plan Support Agreement, the Asbestos PI Trust will grant the Backstop Providers options to purchase the 28,600,000 shares at an exercise price of $37.50 per share. The options will expire 12 months after the date the Trust receives the shares. The Backstop Providers will grant the Asbestos PI Trust options to sell to them 28,600,000 shares in the aggregate at a $25 per share exercise price. The options will expire three months after the date the Trust receives the shares. b. Owens Corning Bank Debt Holders Claims The Banks will receive the treatment afforded to them under the Fifth Amended Plan. c. Owens Corning Bondholders Claims In full satisfaction of their claims, the Bondholders will receive 26,600,000 shares of New OCD Common Stock on the Effective Date and, if exercised, their pro rata share of 72,900,000 shares of New OCD Common Stock at $30 per share pursuant to the Rights Offering. d. Owens Corning General Unsecured Claims In full satisfaction of their claims, the senior and junior unsecured creditors in Classes A6-A and A6-B will receive $248,500,000 in cash on the Effective Date and, if exercised, their pro rata share of 72,900,000 shares of New OCD Common Stock at $30 per share pursuant to the Rights Offering. e. Owens Corning Subordinated Claims Holders of the subordinated claims against Owens Corning in Class A11 will receive warrants -- with customary market protections, exercisable within seven years of the Effective Date -- to obtain 10% of the fully diluted New OCD Common Stock at a strike price of $43 per share. Upon the occurrence of certain events, holders of certain subordinated claims against Owens Corning in Class A11 will have the right to exchange the warrants for 5.5% of the fully diluted New OCD Common Stock. If the holders of certain subordinated claims against Owens Corning in Class A11 vote to reject the Plan, they will get the corresponding cramdown treatment provided in the Fifth Amended Plan. f. OCD Interests Holders of Interests in Owens Corning in Class A12 will receive warrants -- with customary market protections, exercisable within seven years of the Effective Date -- to obtain 5% of the fully diluted New OCD Common Stock at a strike price of $45.25 per share. Upon the occurrence of certain events, holders of Interests in Owens Corning in Class A12 will have the right to exchange the warrants for 14.75% of the fully diluted New OCD Common Stock. If the holders of Interests in Owens Corning in Class A12 vote to reject the Plan, they will get the corresponding cramdown treatment set forth in the Fifth Amended Plan. B. Support of the Plan Proposal Each of the Holders agrees: a. to vote to accept the Sixth Amended Plan; b. to recommend and support confirmation of the Sixth Amended Plan and to approve any other action or document necessary to implement the terms of the Plan Support Agreement; c. to permit disclosure in the Amended Disclosure Statement and any filings with the Securities and Exchange Commission regarding the execution and contents of the Plan Support Agreement; d. not to object or commence any proceedings to oppose the Sixth Amended Plan, Amended Disclosure Statement or Plan Support Agreement; e. not to support, solicit or participate in the formulation of any other plan of reorganization, restructuring or settlement with respect to the Debtors; and f. not to take any other action that is materially inconsistent with or would materially delay the confirmation of the Sixth Amended Plan, Amended Disclosure Statement or Plan Support Agreement. C. Conditions The Holders' undertakings are subject to certain conditions, including: a. each of the Sixth Amended Plan, Amended Disclosure Statement and all of the documents relating to the Rights Offering will be reasonably satisfactory to the Holders; b. the material terms of the Plan Documents will be substantially identical to the terms set forth in the Plan Support Agreement; c. the Court's approval of the Amended Disclosure Statement; d. there is no material modification of the Plan Documents and no material breach of the Plan Support Agreement; and e. each of the Holders agrees, subject to certain exceptions, not to transfer or otherwise dispose of its Holdings unless, among others, the transferee agrees in writing to be bound by all of the terms of the Plan Support Agreement. D. Termination The Plan Proponents and the Holders have the right to terminate the Plan Support Agreement where there has been a material breach of the agreement, any Holder fails to satisfy a material term or condition of the agreement, or the Plan Effective Date does not occur by October 30, 2006, or at a later date as the Plan Proponents will agree. The Debtors believe that the Plan Support Agreement represents a major advance toward their ultimate emergence from Chapter 11 in that the ACC and the FCR and a majority of their bondholders support it. Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, asserts that the Plan Support Agreement is the result of arm's-length, good-faith negotiations among the parties. The obligations contained in the Agreement are fair and reasonable under the circumstances. Owens Corning (OTC: OWENQ.OB) (BULLETIN BOARD: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 131; Bankruptcy Creditors' Service, Inc., 215/945-7000). OWENS CORNING: Asks Court to Approve Pact with Tobacco Defendants ----------------------------------------------------------------- Before Owens Corning and its debtor-affiliates filed for bankruptcy, Debtors Owens Corning and Fibreboard Corporation pursued litigation against tobacco companies and other tobacco industry defendants before the Circuit Court for Jefferson County, Mississippi, and the Superior Court of California, County of Alameda. The Debtors asserted claims for indemnification, unjust enrichment restitution, fraud and violations of state antitrust and unfair competition laws. The Debtors sought payment of monetary damages, including punitive damages, for payments they made to asbestos claimants who have used tobacco products and allegedly developed smoking-related diseases. In June 2001, the Jefferson County court granted the defendants' request for summary judgment dismissing Owens Corning's claims. The Jefferson County court held that Owens Corning's claims were indirect and too remote under Mississippi law to allow recovery. Owens Corning took an appeal to the Supreme Court of Mississippi. The defendants in the California Litigation also sought summary judgment to dismiss Owens Corning's claims, citing the Jefferson County court's ruling. However, the California court denied the motions to dismiss and stayed litigation pending the outcome of Owens Corning's appeal in the Mississippi case. In March 2004, the Supreme Court of Mississippi upheld the summary judgment against Owens Corning. Defendants' Claims The Tobacco defendants are: 1. R.J. Reynolds Tobacco Company; 2. British American Tobacco (Investments) Limited, formerly known as British American Tobacco Company Limited; 3. Brown & Williams Tobacco Corporation, individually and as successor by merger to the American Tobacco Company; 4. Philip Morris USA, Inc., formerly known as Philip Morris Incorporated; 5. Liggett Group, Inc.; and 6. Lorillard Tobacco Company Certain of the defendants filed claims against the Debtors for the costs and expenses they incurred in the California and Mississippi actions: Defendant Amount Status Debtor --------- ------ ------ ------ R.J. Reynolds $11,860 Unsecured, Owens Corning, Non-priority et al. Philip Morris USA $48,714 Secured Owens Corning, et al. Lorillard Tobacco $12,785 Secured Owens Corning, et al. Liggett Group unliquidated Unsecured, Fibreboard Non-priority Unliquidated Unsecured, Owens Corning Non-priority The Lorillard Claim was later reclassified as unsecured, non- priority claims pursuant to the Bankruptcy Court's orders granting the Debtors' Non-Substantive Objection to Claims. Settlement Agreement The Debtors and the Defendants engaged in discussions with respect to the California Litigation and the Claims. Subsequently, the parties agreed to dismiss the California Litigation and the Claims on the terms set forth in an Agreement to Dismiss Suit and Related Claims dated as of May 10, 2006. The parties will execute mutual releases from the claims, liabilities and demands related to the Mississippi and California actions. Each party will shoulder its attorney's fees and other costs in connection with the Mississippi and California cases. The Agreement to Dismiss will not affect an $8,400 claim filed by RJR Packaging Co. against Debtor Exterior Systems, Inc. The Debtors ask Judge Fitzgerald to approve the Agreement to Dismiss. The Debtors explain that the probability of success in prosecuting the California litigation to its conclusion and obtaining judgment against the Defendants -- which would be costly in terms of expense, inconvenience and delay -- is uncertain. The Debtors also face additional risks in connection with the Claims from certain of the Defendants. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service, Inc., 215/945-7000). PARMALAT USA: Wants S.N.Y. Dist. Ct. to Dismiss BofA Counterclaims ------------------------------------------------------------------ Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York had allowed Bank of America Corp. and its related entities to proceed with their compulsory counterclaims against Dr. Enrico Bondi, as extraordinary commissioner of Parmalat Finanziaria and its debtor-affiliates. Dr. Bondi asks the District Court to dismiss the BofA Counterclaims. "It is undisputed that a fraud was committed at Parmalat," says Johanna Y. Ong, Esq., at Quinn Emanuel Urquhart Oliver & Hedges LLP, counsel for Dr. Bondi. However, Ms. Ong points out, BofA's allegations do not show that the Parmalat entities it sued perpetuated the fraud. BofA also did not demonstrate it was a victim of that fraud or if it has a right to sue. Dr. Bondi asserts at least six grounds why the BofA counterclaims must be dismissed: 1. BofA has not alleged any wrongdoing by 13 of the 16 counterdefendants; 2. BofA's securities fraud claim is barred by res judicata principles and the claim also fails because BofA has not sufficiently alleged economic loss; 3. BofA's RICO claim fails because it has not alleged a distinct "person" and "enterprise," and it is based on transactions that caused no financial loss to it; 4. BofA's claim for unfair and deceptive trade practices fails because it is based on securities transactions and transactions that caused no injury to it; 5. BofA's conspiracy claim fails because a corporation cannot conspire with its alleged agents and subsidiaries; and 6. all BofA's claims against Parmalat Netherlands B.V. fail as a matter of law. Dr. Bondi asks the District Court to dismiss: a. BofA's claims against Parmalat Netherlands B.V., Parmalat Finance Corporation B.V., Parmalat Capital Netherlands B.V., Dairies Holding International B.V., Olex S.A., Eurolat S.p.A., Lactis S.p.A., Contal S.r.l., Geslat S.r.l., Newco S.r.l., Centro Latte Centallo S.r.l., Panna Elena S.r.l., Parmengineering S.r.l. and Parmalat Soparfi; b. BofA's affirmative claim for punitive and treble damages; c. BofA's claims for RICO, securities fraud and civil conspiracy; and d. BofA's unfair trade practices claim to the extent it is based on securities transactions and transactions that caused the bank no injury. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: Court Okays Watson Wyatt's Retention ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York authorized Performance Transportation Services, Inc., and its debtor-affiliates to retain Watson Wyatt & Company as their compensation experts. Without further Court approval, the Debtors can spend up to $125,000 for the retention. As reported in the Troubled Company Reporter on April 27, 2006, Watson Wyatt will: a. assist the Debtors in reviewing and modifying the terms of a performance-based bonus program for three of their management personnel; and b. provide expert testimony regarding its opinion of the modified Program's reasonableness. The Debtors will pay Watson Wyatt's professionals according to the firm's customary hourly rates: Position Rate -------- ---- Senior Consultants $700 Associates $360 Analysts/Research $285 Teamsters Moved to Deny Motion The Teamsters National Automobile Transporters Industry Negotiating Committee and certain local unions affiliated with the International Brotherhood of Teamsters asked Judge Kaplan to deny the Debtors' request to hire Watson Wyatt. "The only conceivable purpose for this motion is to use estate funds to benefit two insiders by utilizing a consultant to design a bonus program to skirt the outer limits of the congressional prohibitions," Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller and Brueggeman, s.c., in Milwaukee, Wisconsin, said. The Teamsters had asserted that the compensation program was an attempt to circumvent the recently enacted proscription on bonus programs in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. About Performance Transportation 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). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Has Until August 1 to Remove State Court Actions ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the period within which Pliant Corporation and its debtor- affiliates can remove state court civil actions to the U.S. District Court for the District of Delaware to Aug. 1, 2006. The Debtors sought the extension to afford them additional time to make fully informed decisions concerning removal of each pending prepetition civil action. The extension will also assure that they do not forfeit valuable rights under Section 1452 of the Judiciary Code. The Debtors have not yet been able to comprehensively evaluate the potential need to remove any of their pending prepetition civil actions, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, told Judge Walrath. Since the Debtors filed for bankruptcy, Mr. Brady explained, they have focused on the transition into Chapter 11, as well the formulation and filing of their Plan of Reorganization and Disclosure Statement. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. (Pliant Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRISM BUSINESS: S&P Assigns CCC+ Rating to $12 Million Term Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned bank loan and recovery ratings to bank loans of Prism Business Media Inc. (formerly PBI Media Inc.). Standard & Poor's assigned its 'B' bank loan rating and a recovery rating of '3' to Prism's $26 million first-lien tack-on term loan due 2012, indicating an expected meaningful (50%-80%) recovery of principal in the event of a payment default. The rating agency also assigned its 'CCC+' rating and a recovery rating of '5' to the company's $12 million second-lien tack-on term loan due 2013, indicating the expectation of a negligible (less than 25%) recovery of principal in the event of a payment default. At the same time, Standard & Poor's revised its outlook on Prism to negative from stable and affirmed its 'B' corporate credit rating and existing ratings on the company's bank debt. Prism's total debt, pro forma for the special dividend, was $332 million at March 31, 2006. The New York-based company is a leading business-to-business communications concern. "The outlook revision reflects the increase in debt leverage resulting from the company's plan to pay a debt-financed $38 million special dividend to Prism's common stockholders," said Standard & Poor's credit analyst Hal F. Diamond. Ratings also consider the company's already high financial risk resulting from: * the September 2005, highly leveraged acquisition of the company; * its cyclical operating performance; and * mature growth prospects for many of the company's end markets. These factors are only partially offset by: * the company's good niche positions in the trade publishing and exhibition industries; * diverse customer base; and * experienced management team. PRO-BUILD HOLDINGS: S&P Rates Proposed $550MM Debt Facility at BB+ ------------------------------------------------------------------ Standard & Poor's Rating Services assigned its 'BB' corporate credit rating to Delaware-based Pro-Build Holdings Inc. At the same time, Standard & Poor's assigned its 'BB+' secured bank loan rating and '1' recovery rating to the company's proposed $550 million revolving credit facility due in 2011 and $750 million term loan due in 2013, based on preliminary terms and conditions. The bank loan and recovery ratings indicate expectations of full recovery of principal in the event of a payment default. The outlook is stable. The proceeds from the term loan, $100 million of equity contributed by affiliates of Fidelity Capital and $600 million of unsecured subordinated notes, which will be held by Fidelity entities, will be used to: * repay $750 million of interim financing provided by Fidelity entities; * repay existing indebtedness; and * fund additional acquisitions. Fidelity Capital used the interim financing and $500 million of equity for the acquisition of unrated Lanoga Corp., which was combined with unrated Strober Organization Inc. to form Pro-Build Holdings. Pro forma for the proposed financing transaction and additional acquisitions, Pro-Build will have total debt of $1.8 billion, including capitalized operating leases and treating the $600 million of subordinated notes held by Fidelity entities as equity for our analysis, with pro forma total debt to projected 2006 EBITDA of 3.3x. Pro-Build is the largest "Pro-Dealer," a company that primarily supplies homebuilders and repair/remodeling contractors, in the U.S. with $5.1 billion in pro forma 2005 sales. "Pro-Build's national footprint and relatively positive long-term housing market fundamentals support the ratings," said Standard & Poor's credit analyst Lisa Wright. "However, Pro-Build's growth strategy and our expectations for a moderate drop in new residential construction as well as repair and remodeling spending over the near term are expected to constrain the ratings. We could revise the outlook to positive in the intermediate term if housing market fundamentals remain strong and Pro-Build meaningfully increases its market share, which allows it to gain clout with the large homebuilders. We could revise the outlook to negative if the U.S. experiences a sharper-than-expected slowdown in new residential construction, or if Pro-Build pursues a more aggressive acquisition strategy than expected." RAMP SERIES: Moody's Assigns Ba1 Rating to Class M-10 Certificates ------------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by RAMP Series 2006-RZ2, Mortgage Asset-Backed Pass-Through Certificates, Series 2006-RZ2 Trust, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by HomeComings Financial Network, Inc. and Meritage Mortgage Corporation originated adjustable-rate and fixed-rate high loan-to-value mortgage loans acquired by Residential Funding Corporation. The ratings are based primarily on the credit quality of the loans and on the protection from subordination, overcollateralization, excess spread, and a yield maintenance agreement. Moody's expects collateral losses to range from 4.90% to 5.40%. Primary servicing will be provided by HomeComings Financial Network, Inc., and GMAC Mortgage Corporation. Residential Funding Corporation will act as master servicer. Moody's has assigned HomeComings its servicer quality ratings of and as a servicer of subprime and prime first lien loans, respectively, and RFC its top servicer quality rating as master servicer. The Complete Rating Actions: RAMP Series 2006-RZ2 Trust Mortgage Asset-Backed Pass-Through Certificates Series 2006-RZ2 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba1 REFCO INC: Court Sets July 17 as Refco LLC Claims Bar Date ---------------------------------------------------------- At the request of Albert Togut, the interim Chapter 7 trustee appointed to oversee the liquidation of Refco LLC's estate, the U.S. Bankruptcy Court for the Southern District of New York, set July 17, 2006, as the deadline for all persons and entities -- including, without limitation, individuals, partnerships, corporations, joint ventures, trusts and governmental units -- that assert a claim against Refco LLC, prior to Nov. 25, 2005, to file their proofs of claim. The Court also approves procedures for the filing of proofs of claim: a. Proofs of claim must conform substantially to the customized Proof of Claim Form; b. Proofs of claim must be filed either by mailing the original proof of claim to the Court, or by delivering the original proof of claim by hand or overnight courier to the Court. The Clerk of the Court will not accept for filing, proofs of claim filed by facsimile, telecopy, or other electronic means; c. Proofs of claim will be deemed filed only when received by the Clerk of the Court on or before the Bar Date; d. Proofs of claim must (i) be signed; (ii) include supporting documentation -- if voluminous, attach a summary -- or an explanation as to why documentation is not available; (iii) be in the English language; and (iv) be denominated in United States currency; and e. Proofs of claim asserting Claims against Refco LLC must be filed in the Chapter 7 Debtor's case. Proofs of claim naming the Chapter 7 Debtor and filed in the Chapter 11 cases will not be deemed received unless also filed in the Chapter 7 Debtor's case. The Proof of Claim Form has been modified, at the request of the Commodity Futures Trading Commission, to add an additional category under unsecured priority claims for "Customer Property - 11 U.S.C. Section 766(h)." These entities need not file a proof of claim on or prior to the Bar Date: -- Any person or entity that has already filed a proof of claim against Refco LLC with the Clerk of the Court for in a form substantially similar to Official Bankruptcy Form No. 10; -- Any holder of a claim that heretofore has been allowed by Court order; -- Any person or entity whose claim has been paid in full; -- Any holder of a claim for which specific deadlines have previously been fixed by the Court; -- Any holder of a claim allowable under Sections 503(b) and 507(a) of the Bankruptcy Code as an expense of administration; and -- Any person or entity who timely submitted a claim to any board of trade, derivatives transaction execution facility, derivatives clearing organization, securities exchange, electronic trading facility or other trading facility in accordance with the Clearing Organization's regulations providing for the filing of claims. Any person or entity that holds a claim that arises from the rejection of an executory contract or unexpired lease must file a proof of claim based on the rejection on or before the Bar Date. Any person or entity that holds a claim that arises from the rejection of an executory contract or unexpired lease must file a proof of claim on or before the date as the Court may fix in the applicable order authorizing the rejection. Nothing in the Bar Date Order will prejudice the right of the Chapter 7 Trustee or any other party-in-interest to dispute or assert offsets or defenses to any Claim reflected in Refco LLC's schedules of assets and liabilities. The Chapter 7 Trustee will publish notice of the Bar Date once in the national and global editions of The Wall Street Journal, The Times of London, and the national and global editions of The Financial Times. With regard to those holders of Claims relating to customer accounts of Refco LLC, the Trustee will mail a customer notice along with the Proof of Claim Form. About Refco Inc. Based in New York, New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. (Refco Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Court Sets July 17 as Refco Capital Claims Bar Date -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set 5:00 p.m., on July 17, 2006, as the deadline for all persons and entities -- including, without limitation, individuals, partnerships, corporations, joint ventures, trusts and governmental units -- that asserts a claim against Refco Capital Markets, Ltd., prior to Oct. 17, 2005, to file their proofs of claim. Written proofs of claim must be filed on or before the July 15 Claims Bar Date and those forms must be delivered to: If by mail: U.S. Bankruptcy Court Southern District of New York Attn: Refco Inc., Claims Docketing Center Bowling Green Station P.O. Box 5175 New York, New York 10274-5175 If by messenger or overnight courier: U.S. Bankruptcy Court Southern District of New York Attn: Refco Inc., Claims Docketing Center One Bowling Green Room 534 New York, New York 10004-1408 About Refco Inc. Based in New York, New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. REFCO INC: Wants to Indemnify RGL Director in FXCM Board -------------------------------------------------------- Refco Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York's consent to indemnify the RGL Director appointed to FXCM Board of Directors in accordance with an Indemnification Agreement. Refco F/X Associates, LLC, a debtor-affiliate, operates an on-line retail foreign exchange trading business under the trade name RefcoFX.com. The business operates under a Facilities Management Agreement between Refco Group Ltd., LLC, and Forex Capital Markets, LLC, on a software trading platform created and maintained by FXCM. In connection with entering into the FMA, RGL acquired a 35% limited liability company interest in FXCM and still currently holds that interest. Under FXCM's Amended and Restated Limited Liability Company Agreement, RGL is entitled to appoint a director to FXCM's Board of Directors. Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, relates that before Oct. 17, 2005, Phillip R. Bennett served as the FXCM director appointed by RGL. In light of the circumstances surrounding Mr. Bennett's resignation as an officer and director of Refco, the Debtors have not had an effective representative on the FXCM Board of Directors since filing for bankruptcy. FXCM approached the Debtors to propose an acquisition of the assets related to FXA's online business, including RGL's 35% equity stake in FXCM, FXA's on-line customer accounts and related cash balances, and other related executory contracts. The Selling Debtors engaged in extensive negotiations with FXCM ultimately culminating in a Memorandum of Understanding. Stipulation To allow customers to continue to trade and preserve the business's customer base and good will pending a sale transaction, FXA and FXCM entered into a stipulation in conjunction with the MOU. Under the Stipulation, FXA and FXCM agreed to continue the operation of the RefcoFX trading platform under the FMA. FXCM also agreed that both parties would continue to share any positive net spread, but FXCM would cover all negative net spread for any month, subject to certain limitations. On December 21, 2005, the Bankruptcy Court approved the Stipulation and bid procedures, including breakup fee, expense reimbursement, and overbid protections. Pursuant to the Bid Procedures Order, the Debtors are allowed to enter into a purchase agreement that was negotiated after the parties entered into the MOU, and establish bid procedures and protections in connection with an auction to sell the Acquired Assets to FXCM or the successful bidder. The Bank of America, N.A., and the Official Committee of Unsecured Creditors subsequently objected to the sale of FX Assets to FXCM. Various document requests and deposition notices were served between the parties. To continue negotiations among the parties and avoid unnecessary expense and litigation, the parties agreed to adjourn the Sale Hearing and all related discovery requests indefinitely. Ms. Henry tells Judge Drain that as the largest single equity holder in FXCM, RGL is entitled to appoint a director to the FXCM Board of Directors. This corporate governance right, Ms. Henry says, is an important mechanism for RGL to preserve its equity investment in FXCM, which is a valuable asset of the Debtors' estates. In addition, Ms. Henry states that because the parties were attempting to consummate a re-purchase of RGL's equity stake by FXCM, RGL had not exercised its appointment right pending a resolution of whether FXCM would purchase RGL's equity interest. Although the Operating Agreement contains standard limitation of liability and indemnification provisions, the Debtors have been advised that FXCM does not carry director and officer insurance. Ms. Henry attests that the protections afforded to FXCM's directors is limited to FXCM's ability and willingness to honor its obligations to its directors. Considering that the Debtors and FXCM are potential adverse parties, the Debtors are uncertain that anyone would be willing to serve as the Refco Director, unless the individual was also indemnified by the Debtors for its service. To provide the appropriate level of protection to the Refco Director, the Debtors propose that the Indemnification Agreement should cover any act, conduct or omission of the Refco Director. In addition, the Debtors intend to make payments under the Indemnification Agreement in the ordinary course of business without further order of the Court. Otherwise, the Refco Director will be subject to unusual uncertainty as to whether the proposed protection would actually be available in case of need. The Debtors believe that granting a separate indemnity to the Refco Director is reasonable under Section 363(c) of the Bankruptcy Code. Moreover, even if the Court finds that Section 363(c) does not apply, the Debtors assert that their request is still warranted under Section 363(b), which permits a debtor to use an estate property "other than in the ordinary course of business" after notice and a hearing. About Refco Inc. Based in New York, New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. (Refco Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) RHODES INC: Court Confirms Restated Joint Liquidating Plan ---------------------------------------------------------- The Honorable James Massey of the U.S. Bankruptcy Court for the Northern District of Georgia confirmed the Third Amended and Restated Joint Plan of Liquidation filed by Rhodes, Inc., and its two debtor-affiliates, Rhodes Holdings, Inc., and Rhodes Holdings II, Inc. The Court determined that the Plan satisfies the 13 standards for confirmation under Section 1129(a) of the Bankruptcy Code. Overview of the Plan Under the plan, Rhodes will continue to exist after the effective date as a separate corporate entity while Rhodes Holdings and Rhodes Holdings II will be dissolved. Treatment of Claims Under the Plan, administrative expense claims, priority tax claims, and the debtor-in-possession loan will be paid in full. Priority claims will be paid in full and in cash. Other secured Claims will receive, in full satisfaction of their claims, either: (a) a reinstatement of the legal, equitable and contractual rights of the claim, or (b) the surrender of the collateral securing the claim by the Liquidating Agent. Holders of general unsecured claims will a receive their pro rata share of the liquidation proceeds remaining after payment of administrative, priority tax, DIP lender, other secured claims, priority claims and unsecured convenience claims. The third amended plan did not quantify how much unsecured creditors will get. Unsecured convenience claims will receive a one-time cash payment equal to 25% of their claims. Holders of subordinated claims will receive their pro rate distribution of the liquidation proceeds remaining after payment of all other claims except Rhodes Holdings and Rhodes Holdings II unsecured claims. Holder of Rhodes Holdings II unsecured claims will receive a pro rata distribution of the liquidation proceeds remaining after payment of all other claims. Holders of these claims will also receive their pro rata share of any net recoveries on account of causes of action attributable to the assets of Rhodes Holdings II. Otherwise, the Debtors say, holders of general unsecured claims will also be entitled to the distribution. Under the plan, holders of Rhodes Holdings unsecured claims will receive no distributions on account of their respective claims. Holders of interests in the Debtors will receive nothing under the Plan and those interests will be cancelled and extinguished. A copy of the Debtors' Third Amended and Restated Joint Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060419210729 Headquartered in Atlanta, Georgia, Rhodes, Inc., will continue to offer brand-name residential furniture to middle- and upper- middle-income customers through 63 stores located in 11 southern and midwestern states (after disposing of the locations listed above). The Company and two of its debtor-affiliates filed for chapter 11 protection on Nov. 4, 2004 (Bankr. N.D. Ga. Case No. 04-78434). Paul K. Ferdinands, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors. Clifford A. Katz, Esq., at Platzer, Swergold, Karlin, et al, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in total assets but more than $50 million in total debts. SAINT VINCENTS: Inks Memorandum of Agreement with Interns' Union ---------------------------------------------------------------- Saint Vincent Catholic Medical Centers of New York and its debtor- affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve a Memorandum of Agreement with the Committee of Interns and Residents. If approved, the MOA would become effective retroactive to May 1, 2006, and will be in full force and effect through April 30, 2009. Since June 2004, Saint Vincent Catholic Medical Center has engaged in extensive collective bargaining negotiations with the Committee of Interns and Residents relating to its obligations at St. Vincent's Hospital in Manhattan and the Hospital's interns, residents, and fellows, Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in Boston, Massachusetts, tells the Court. The CIR currently represents 347 of SVM's House Staff Officers, including 20 chief residents. Pursuant to the National Labor Relations Act, the CIR is the only entity with whom SVM may negotiate and enter into agreements regarding terms and conditions of employment for House Staff Officers. On May 9, 2006, SVM and the CIR entered into a memorandum of agreement entitled, Memorandum of Agreement Between Saint Vincents Catholic Medical Centers - St. Vincent's Manhattan and the Committee of Interns and Residents. The MOA The MOA consists of procedural, operational, and economic terms and conditions of employment. The major economic changes from historical practice contained in the MOA relate to wage increases for, and rent subsidies to be provided to, the House Staff Officers. A) Wage Increases Each House Staff Officer employed on: * May 1, 2006, will receive a 6% wage increase, effective retroactively on that date; * May 1, 2007 will receive a 3% wage increase, effective on May 1, 2007; and * May 1, 2008, will receive a 3% wage increase, effective on May 1, 2008. Each full-time chief resident will receive an annual stipend of $1,500 for the period of his or her service as chief resident, which will increase by 6% on July 1, 2006 and 3% on July 1, 2007, and July 1, 2008. SVM expects that the wage increases will total: -- $1,050,513 for May 1, 2006, to April 30, 2007; -- $556,772 for May 1, 2007, to April 30, 2008; and -- $573,475 for May 1, 2008, to April 30 2009. SVM also expects that the chief resident stipend increase cost will total to $1,800 for July 1, 2006, to June 30, 2007, and that it will increase by an aggregate of: -- $960 for July 1, 2007, to June 30, 2008, and -- $980 from July 1, 2008, to April 30, 2009. B) Rent Subsidies SVM currently owns 253 apartments, of which 213 are leased by House Staff Officers. Historically, SVM has leased these apartments to House Staff Officers at rates substantially below not only fair market, but also below the modified market rent charged by other academic medical institutions to their interns and residents, Mr. Troop tells the Court. SVM has decided to increase rents to a more competitive rate effective July 1, 2006. Accordingly, pursuant to the MOA, SVM has agreed to provide limited rent subsidies to House Staff Officers residing in housing owned by SVM to help defer the cost of rent. The amount of each rent subsidy depends on the size of the apartment and whether or not the lessee has a family with a child, Mr. Troop explains. The amount of the rent subsidies will decrease from year to year, and, for the most part, be eliminated by July 1, 2008. In addition, House Staff Officers entering a residency program on or after July 1, 2007, will generally not be eligible to receive rent subsidies. SVM expects that the rent subsidies provided to the House Staff Officers will total: -- $1,298,820 from July 1, 2006, through June 30, 2007, -- $611,200 from July 1, 2007, through June 30, 2008, and -- $0 from July 1, 2008, through April 30, 2009. SVM also expects that the increased revenue from these apartments realized from the proposed rent increases will more than offset the amount of subsidies offered through June 30, 2008. Mr. Troop relates that the wages currently paid to the House Staff Officers are 7% less than the wage paid to interns and residents at local competing hospitals. The 6% wage increase to be effective retroactively on May 1, 2006, merely brings the House Staff Officers closer to market and reflects the wage adjustments they should have otherwise received in 2004 and 2005 if their standard annual wage increase of 3% was not frozen due to the collective bargaining negotiations with the CIR and the Debtors' filing for bankruptcy, Mr. Troop tells the Court. The subsequent 3% yearly increases to be effective in 2007 and 2008 are consistent with the annual wage increases that the House Staff Officers received prior to entering into collective bargaining negotiations, and to the annual wage increases provided by SVM's peer hospitals. The yearly stipends to be provided to the chief residents are also consistent with the practices of SVM's peer hospitals, Mr. Troop explains. Similarly, the rent subsidies are necessary to help the House Staff Officers residing in SVM's housing units adjust to the sudden increase in their rent. Absent Court approval of the MOA, SVM will be at risk of work stoppages by the House Staff Officers, which may severely disrupt its ability to provide high-quality patient care. The importance of the House Staff Officers to SVM's successful operations cannot be underestimated, Mr. Troop says. About Saint Vincents 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Wants to Assign Staten Island Contracts & Leases ---------------------------------------------------------------- Pursuant to Section 365 of the Bankruptcy Code, Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to assume and assign executory contracts and unexpired leases related to St. Vincent's Hospital, Staten Island to Castleton Acquisition Corporation, an affiliate of Bayonne Medical Center Bayonne, or to the Successful Bidder. A list of the Contracts and Leases to be assumed and assigned is available for free at http://ResearchArchives.com/t/s?a0e The Debtors propose to amend the list of the Assumed Contracts and Leases at a later date. The Debtors will retain the right to amend the Assumption Schedule to remove any contracts or leases at any time prior to the Closing Date. The Assumption Schedules will include any amount the Debtors believe is required to be paid, pursuant to Section 365(b) to cure any defaults under the agreements listed on the Assumption Schedule. The Successful Bidder will be fully responsible for satisfying the requirements of Section 365(b), including payment of the Cure Amounts, with regard to the Assumed Contracts and Leases. The Debtors will not be required to pay any Cure Amounts. As the Debtors are selling the Staten Island Assets, the Assumed Contracts and Leases, which generally relate solely to the Staten Island Hospital, no longer have any value to the Debtors. By assuming and assigning the Assumed Contracts and Leases to Castleton or the Successful Bidder and causing the assignee to pay the Cure Amounts, the Debtors' estates benefit from avoiding the rejection damage claims that would arise from rejecting the Assumed Contracts and Leases. 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SEDONA CORP: March 31 Balance Sheet Upside-Down by $6.4 Million --------------------------------------------------------------- SEDONA(R) Corporation filed its financial results for the first quarter ended March 31, 2006, with the Securities and Exchange Commission on May 22, 2006. For the three months ended March 31, 2006, the company reported a $420,000 net loss on $468,000 of net revenues, compared to a $817,000 net loss on $157,000 of net revenues for the same period in 2005. At March 31, 2006, the company's balance sheet showed total assets of $642,000 and total debts of $7 million, resulting in $6.4 million stockholders' deficit. As of March 31, 2006, the Company's accumulated deficit widened to $70.6 million from a $70.2 million accumulated deficit at Dec. 31, 2005. A full-text copy of SEDONA(R) Corp.'s Quarterly Report is available for free at http://researcharchives.com/t/s?9f3 Going Concern Doubt McGladrey & Pullen, LLP, raised substantial doubt about SEDONA(R) Corp.'s ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2005. The auditing firm points to the company's substantial operating losses, negative working capital and stockholders' equity and anticipates that it will require additional debt or equity financing in 2006. SEDONA(R) Corporation (OTCBB: SDNA) -- http://www.sedonacorp.com/ -- is a technology and services provider that delivers verticalized Customer Relationship Management solutions specifically tailored for the small to mid-sized business market. Utilizing SEDONA's CRM solutions, community and regional banks, and insurance companies can effectively identify, acquire, foster, and retain loyal, profitable customers. SERACARE LIFE: Judge Adler Won't Appoint Equity Holders Committee ----------------------------------------------------------------- The Honorable Judge Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California denied the request of SeraCare Life Sciences, Inc.'s Ad Hoc Committee of Equity Holders for the appointment of an Official Committee of Equity Holders, The Deal reports. The Court said that the motion "rehashed a motion previously denied." As reported in the Troubled Company Reporter on May 5, 2006, the Ad Hoc Equity Committee defended its plea for an official appointment, saying Debtor is not insolvent and that the Debtor: -- has sufficient cash in its bank accounts to pay all creditors in full; -- maintains a cash-flow-positive operating business with clear growth potential; and -- enjoys a significant market share. Apart from arguments relating to the material value for equity in the Debtor's case, the Ad Hoc Equity Committee also claimed that the circumstances of the Debtor's bankruptcy filing are highly suspect. The Official Committee of Unsecured Creditors opposed the Ad Hoc Equity Committee's request. The Creditors' Committee pointed out that it is unclear what benefits the Debtor's estate will gain from an official equity committee appointment. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SILICON GRAPHICS: Will Honor Prepetition Customer Programs ---------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates obtained the U.S. Bankruptcy Court for the Southern District of New York's permission to: -- honor their obligations under the Warranty and Customer Support Programs; -- pay up to $187,000 in respect of the Debtors' prepetition obligations under the Marketing Development Fund Program; -- pay up to $33,000 in respect of the Debtors' prepetition obligations under the Limited Refund Program; and -- honor their obligations, including the provision of up to $4,800,000 worth of products to Customers, under the Prepayment Program. According to Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, Silicon Graphics, Inc.'s customers include many Fortune 1,000 corporations, world-leading research organizations, and numerous government agencies, including NASA. The Debtors engage in certain activities to develop and sustain a positive reputation with the distributors, resellers, and end- users to whom the Debtors market their products. To that end, the Debtors implemented various customer-service programs and policies designed to: -- ensure customer satisfaction, -- effectively compete with their market, -- develop and sustain customer loyalty, -- improve profitability, and -- generate goodwill for the Debtors and their products. The benefits of the Customer Programs are integral to the Debtors' efforts to rehabilitate, restore vitality to their businesses, and ultimately to deliver the most value to their creditors. The Debtors believe they must quickly assure Customers of their continued ability to fulfill their obligations under the Customer Programs in order to maintain their valuable Customer relationships after the Petition Date, particularly given the increased pressure from competitors that the Debtors believe will inevitably arise. Among others, the Debtors' Customer Programs include: A. Warranty and Customer Support Programs B. Marketing Development Fund Program -- As of the Petition Date, the Debtors estimate that no more than approximately $187,000 in outstanding prepetition obligations under the Marketing Development Fund Program remain unpaid. C. Limited Refund Program -- The Debtors estimate that, as of the Petition Date, approximately $33,000 may be owed to Customers relating to prepetition obligations. D. Prepayment Program -- As of the Petition Date, the Debtors hold approximately $4,800,000 in Customers' Prepayments. Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUNDVIEW HOME: Moody's Puts Low-B Rating on Two Cert. Classes -------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Soundview Home Loan Trust 2006-OPT3, Asset- Backed Certificates, Series 2006-OPT3, and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Option One Mortgage Corporation originated or acquired adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, and an interest rate swap agreement. Moody's expects collateral losses to range from 5.70% to 6.20%. Option One Mortgage Corporation will service the loans. Moody's has assigned Option One its top servicer quality rating as a primary servicer of subprime loans. The Complete Rating Actions: Soundview Home Loan Trust 2006-OPT3 Asset-Backed Certificates Series 2006-OPT3 * Cl. I-A-1, Assigned Aaa * Cl. II-A-1, Assigned Aaa * Cl. II-A-2, Assigned Aaa * Cl. II-A-3, Assigned Aaa * Cl. II-A-4, Assigned Aaa * Cl. M-1, Assigned Aa2 * Cl. M-2, Assigned Aa3 * Cl. M-3, Assigned A1 * Cl. M-4, Assigned A2 * Cl. M-5, Assigned A3 * Cl. M-6, Assigned Baa1 * Cl. M-7, Assigned Baa2 * Cl. M-8, Assigned Baa3 * Cl. M-9, Assigned Ba1 * Cl. M-10, Assigned Ba2 STARBOUND RE: S&P Assigns BB+ Rating to $90 Million Bank Loan ------------------------------------------------------------- Standard & Poor's Ratings Services assigned: -- its 'A+' senior unsecured bank loan rating to Starbound Re Ltd.'s $50 million (Debt III) bank loan; -- its 'BBB-' senior unsecured bank loan rating to Starbound's $50 million bank loan (Debt II subordinated to Debt III); and -- its 'BB+' senior secured bank loan rating to Starbound's $90 million bank loan (Debt I subordinated to Debt II and Debt III). The differences in ratings reflect the probabilities of the debt becoming impaired. Starbound is a limited-life, special-purpose Class 3 reinsurance company domiciled in Bermuda and set up specifically to offer reinsurance to Renaissance Reinsurance Ltd. (Ren Re; A+/Stable/--). "The ratings on Starbound are based on a very remote (0.2%) modeled probability of even the most junior bank loan (Debt I) becoming impaired," said Standard & Poor's credit analyst James Brender. "They're also based on Ren Re's strong competitive position and risk management, Starbound Re's predetermined exposures and risk tolerances, and very strong price increases in Florida, which is about 75% of Starbound Re's exposure." These positive factors are offset in part by the difficulties of modeling exposure to natural disasters, which is exacerbated by Starbound's significant concentration of risk in Florida. The lack of a strong alignment of interest between Ren Re and Starbound is a minor negative rating factor. Leverage and coverage were not considered explicitly as ratings factors because of Starbound's use of a trust structure. However, these factors indirectly affect the modeled results for a given capital structure and premium base. Starbound may borrow up to $190 million from a consortium of banks for a term of about 1.75 years. The entity's capital structure will also include $125 million of equity. The proceeds from capital-raising transactions will be placed in a collateral account, which will provide Ren Re with a source of indemnity cover for losses relating to its property catastrophe lines of business and other related lines. The duration of Starbound's assets will be consistent with that of its obligations. Ren Re will cede 80% of the premium from a defined selection of its property catastrophe business to Starbound through a quota share reinsurance treaty, under which Starbound's liability will attach simultaneously with that of Ren Re and otherwise follow the fortunes with respect to the business retroceded to Starbound. STRUCTURED ASSET: DBRS Rates $17.4 Million Loan at BB(high) ----------------------------------------------------------- Dominion Bond Rating Service assigned these ratings to the Mortgage Pass-Through Certificates, Series 2006-S2 issued by Structured Asset Securities Corporation. * $295.3 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class A1 New Rating AAA * $98.4 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class A2 New Rating AAA * $196.9 million (notional), Mortgage Pass-Through Certificates, Series 2006- S2, Class A-IO New Rating AAA * $106.6 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M1 New Rating AA (high) * $34.8 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M2 New Rating AA * $13.8 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M3 New Rating AA (low) * $17.4 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M4 New Rating A (high) * $14.8 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M5 New Rating A * $9.2 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M6 New Rating A (low) * $8.9 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M7 New Rating BBB (high) * $6.6 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M8 New Rating BBB * $6.6 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class M9 New Rating BBB (low) * $5.3 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class B1 New Rating BBB (low) * $6.9 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class B2 New Rating BB (high) * $10.5 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class B3 New Rating BB (high) * $11.5 million, Mortgage Pass-Through Certificates, Series 2006-S2, Class B4 New Rating BB The AAA ratings on the Class A Certificates reflect 40.00% of credit enhancement provided by the subordinate classes, initial overcollateralization, and monthly excess spread. The AA (high) rating on Class M1 reflects 23.75% of credit enhancement. The AA rating on Class M2 reflects 18.45% of credit enhancement. The AA (low) rating on Class M3 reflects 16.35% of credit enhancement. The A (high) rating on Class M4 reflects 13.70% of credit enhancement. The "A" rating on Class M5 reflects 11.45% of credit enhancement. The A (low) rating on Class M6 reflects 10.05% of credit enhancement. The BBB (high) rating on Class M7 reflects 8.70% of credit enhancement. The BBB rating on Class M8 reflects 7.70% of credit enhancement. The BBB (low) rating on Class M9 reflects 6.70% of credit enhancement. The BBB (low) rating on Class B1 reflects 5.90% of credit enhancement. The BB (high) rating on Class B2 reflects 4.85% of credit enhancement. The BB (high) rating on Class B3 reflects 3.25% of credit enhancement. The BB rating on Class B4 reflects 1.50% of credit enhancement. The ratings on the Certificates also reflect the quality of the underlying assets and the capabilities of Aurora Loan Services LLC as Servicer, as well as the integrity of the legal structure of the transaction. Citibank, N.A. will act as Trustee. The trust will enter into an interest rate swap agreement with HSBC Bank USA, National Association. The trust will pay to the Swap Provider, a fixed payment of 5.85% per annum in exchange for a floating payment at LIBOR from the Swap Provider. Interest and principal payments collected from the mortgage loans will be distributed on the 25th day of each month commencing in June 2006. Interest will be paid first to the Class A Certificates on a pro rata basis and then sequentially to the subordinate Certificates. Until the step-down date, principal collected will be paid exclusively to the Class A Certificates unless their respective note balances have been reduced to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among all classes on a pro rata basis. In addition, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 3.0% of the then-current balance of the mortgage loans. All of the mortgage loans in the Underlying Trust were originated or acquired by Aurora Loan Services LLC. They are all fixed-rate, closed-end, second lien mortgage loans, which are subordinate to the first-lien loans on the respective properties. As of the cut- off date, the aggregate principal balance of the mortgage loans is $656,215,417. The weighted-average mortgage rate is 11.35%, the weighted-average FICO is 703, and the weighted average original loan-to-value ratio is 96.61%. SYLVEST FARMS: Selling All Assets to Koch Foods for $58 Million --------------------------------------------------------------- The Honorable Thomas B. Bennett of the U.S. Bankruptcy Court for the Northern District of Alabama gave Sylvest Farms, Inc., and its debtor-affiliates permission to sell substantially all of their assets to Koch Foods of Alabama, LLC and Koch Farms of Alabama, LLC, for $58 million. The sale will be made pursuant to an Amended Asset Purchase Agreement dated as of April 27, 2006. The Court directed the Debtors to pay these amounts at the closing of the sale: (1) $35.88 million to Wachovia Bank, N.A., to be applied under the Debtor-in-Possession Credit and Security Agreement; (2) $1 million from the DIP loan to pay the carve-out reserved to all of the reasonable hourly fees and expenses incurred by professionals employed in the Debtors' cases; (3) $659,250 to a segregated bank account to pay the Carve-Out; (4) $3 million to fund an escrow account contemplated by the Asset Purchase Agreement; (5) $802,000 to a segregated bank account to pay the "Retention/Success Fee Payable" as contemplated by the Asset Purchase Agreement. The balance of the sales proceeds will be provisionally paid to Wachovia as payment of its prepetition secured claims. Headquartered in Montgomery, Alabama, Sylvest Farms, Inc. -- http://sylvestcompanies.com/-- produces, processes and markets poultry products. The Debtors employ approximately 1,500 workers. The Company and two debtor-affiliates filed for chapter 11 protection on April 18, 2006 (Bankr. N.D. Ala. Case No. 06-40525). The Debtors selected Richard A. Robinson, Esq., and Eric S. Golden, Esq., at Baker & Hostetler LLP as their bankruptcy counsel. The Committee R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, as its counsel. When the Debtors filed for protection from their creditors, they estimated their total assets and debts at $50 million to $100 million. SYLVEST FARMS: Can Borrow $34 Million from Wachovia Under DIP Pact ------------------------------------------------------------------ The Honorable Thomas B. Bennett of the U.S. Bankruptcy Court for the Northern District of Alabama allowed Sylvest Farms, Inc., and its debtor-affiliates to borrow $34 million from Wachovia Bank, National Association. The Court also gave the Debtors permission to use cash collateral securing repayment of their prepetition debt to Wachovia. The Debtors' other secured lender, Federal Land Bank Association of South Alabama, FLCA, has decided to sell its secured claim against the Debtors to Wachovia for $8 million. Federal Land is a federally chartered instrumentality of the United States government. The Debtors will use the proceeds of the debtor-in-possession loan to pay Wachovia, as prepetition lender, $24.68 million in full satisfaction of the Wachovia's secured claim. The rest of the DIP loan proceeds and the cash collateral will be used to fund working capital needs. The Court granted Wachovia perfected first priority claims and priming liens on the Debtors' asset pursuant to the DIP Loan. Wachovia holds superpriority administrative claims and all other benefits and protections allowable under Sections 507(b) and 503(b)(1) of the Bankruptcy Code, senior in right to all other administrative claims against the estate, except for: -- bankruptcy administrator fees; -- fees and expenses incurred by professionals hired in the Debtors' chapter 11 cases; -- employee success fees; and -- $520,000 cash payment to the estate for the benefit of unsecured creditors. If the Debtors default on the DIP loan, professional fees would be capped at $125,000. The Debtors are prohibited from using the DIP loan to pay professionals used to litigate against Wachovia. The Debtors, Wachovia and the Official Committee of Unsecured Creditors also agreed that none of the first $300,000 of proceeds from avoidance actions would go to Wachovia. Headquartered in Montgomery, Alabama, Sylvest Farms, Inc. -- http://sylvestcompanies.com/-- produces, processes and markets poultry products. The Debtors employ approximately 1,500 workers. The Company and two debtor-affiliates filed for chapter 11 protection on April 18, 2006 (Bankr. N.D. Ala. Case No. 06-40525). The Debtors selected Richard A. Robinson, Esq., and Eric S. Golden, Esq., at Baker & Hostetler LLP as their bankruptcy counsel. The Committee R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, as its counsel. When the Debtors filed for protection from their creditors, they estimated their total assets and debts at $50 million to $100 million. SYLVEST FARMS: Court Appoints Nine-Member Creditors Committee ------------------------------------------------------------- The Honorable Thomas B. Bennett of the U.S. Bankruptcy Court for the Northern District of Alabama appointed nine creditors to serve on an Official Committee of Unsecured Creditors in the chapter 11 cases of Sylvest Farms, Inc., and its debtor-affiliates: (1) Romero Trucking, Inc. Attn: Rauls Romero [sic] 367 G&S Road Prattville, AL 36067 Tel: (334) 365-9455 ext. 203 (2) The Starke Agency, Inc. Attn: Bolling P. Starke, III 310 Commerce Street P.O. Box 4359 Montgomery, AL 36103 Tel: (334) 263-5535 (3) Bunge North America, Inc. Attn: Beverly D. Garner 11720 Borman Drive St. Louis, MO 63146 Tel: (314) 292-2514 (4) Georgia-Pacific Corporation Attn: Michael H. Traison 150 West Jefferson Ave., Suite 2500 Detroit, MI 48226 Tel: (586) 914-7658 (5) Southeastern Energy Corp. Attn: Jack R. Pitts P.O. Box 9309 Montgomery, AL 36109 Tel: (334) 265-2501 (6) FGDI LLC dba Farmers Grain Dealers Attn: Steve Speck Jean Bratton 19901 North Dixie Highway, Suite B Bowling Green, OH 43402 Tel: (419) 373-6311 (7) FMC Foodtech Attn: Tom Huneke 1700 Cannon Road Northfield, MN 55057 Tel: (507) 664-7223 (8) H.J. Baker & Bro., Inc. Attn: Scott D. Michelsen 228 Saugatuck Ave. Westport, CT 06880 Tel: (203) 682-9234 (9) UPS Supply Chain Services Attn: Steven Sass Kelly Bohuslav-Kail 307 International Drive, Suite 270 Hunt Valley, MD 2130 Tel: 410 (773-4040) The Committee selected R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, as its counsel. As reported in the Troubled Company Reporter on May 5, 2006, Jon A. Dudeck, the assistant U.S. Bankruptcy Administrator for the Northern District of Alabama, asked the Court to approve his request for the appointment of an Omnibus Unsecured Creditors' Committee in the Debtors' cases. Pursuant to Section 1102 of the Bankruptcy Code, the USBA is authorized to recommend to the Court a committee of creditors holding unsecured claims. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Montgomery, Alabama, Sylvest Farms, Inc. -- http://sylvestcompanies.com/-- produces, processes and markets poultry products. The Debtors employ approximately 1,500 workers. The Company and two debtor-affiliates filed for chapter 11 protection on April 18, 2006 (Bankr. N.D. Ala. Case No. 06-40525). The Debtors selected Richard A. Robinson, Esq., and Eric S. Golden, Esq., at Baker & Hostetler LLP as their bankruptcy counsel. When the Debtors filed for protection from their creditors, they estimated their total assets and debts at $50 million to $100 million. TENET HEALTHCARE: Hires Biggs Porter as Chief Financial Officer --------------------------------------------------------------- Tenet Healthcare Corporation appointed Biggs C. Porter as chief financial officer, effective June 5, 2005. Mr. Porter will join Tenet from Raytheon Co., where he serves as vice president and corporate controller. He also serves as Raytheon's principal accounting officer. Mr. Porter will report to Trevor Fetter, Tenet's president and chief executive officer. He succeeds Robert S. Shapard, who resigned as Tenet's chief financial officer last November. "Biggs has demonstrated a commitment to absolute integrity in financial reporting and related control systems, which fits perfectly with Tenet's emphasis on transparency in all we do," Mr. Fetter said. "His experience in competitive, highly regulated industries such as aerospace and defense is relevant to our health care business. He also has managed successfully through rapid change and a variety of challenges. We have made significant progress in the last three years to put Tenet on a solid foundation for sustainable success, and I look forward to Biggs' leadership and counsel in all our financial matters as we continue that momentum." Mr. Fetter added, "During the transition period of the past six months, I have been grateful for the commitment and efforts of our entire financial team, especially the leadership of Tim Pullen, our chief accounting officer, who has served ably as acting chief financial officer." Mr. Porter said, "I'm joining Tenet because I believe in the integrity of the management team and in their commitment and ability both to achieve the highest level of quality and to improve financial performance." At Tenet, Mr. Porter will be in charge of the company's finance, accounting, investor relations and related functions. His office will be at Tenet's headquarters in Dallas. A certified public accountant, Porter holds a bachelor's degree in accounting from Duke University and a master's degree in accounting from the University of Texas, Austin About Tenet Healthcare Headquartered in Dallas, Texas Tenet Healthcare Corporation (NYSE: THC) -- http://www.tenethealth.com/-- through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. * * * As reported in the Troubled Company Reporter on April 6, 2006, Fitch Ratings affirmed Tenet Healthcare Corp.'s issuer default rating at 'B-' and senior unsecured notes at 'B-/RR4'. Fitch say the rating outlook is negative. As reported in the Troubled Company Reporter on Jan. 25, 2006, Moody's Investors Service affirmed Tenet Healthcare Corporation's speculative grade liquidity rating at SGL-4. Moody's said the outlook for the ratings remains negative. TOMMY HILFIGER: Completes Tender Offer of 9% Senior Bonds Due 2031 ------------------------------------------------------------------ Tommy Hilfiger U.S.A., Inc., a wholly owned subsidiary of Tommy Hilfiger Corporation, reported that, in connection with its tender offer and consent solicitation for its outstanding 9% Senior Bonds due 2031, it had received, as of 5:00 p.m., New York City time, on May 25, 2006, tenders and consents from holders of a majority in principal amount of its outstanding 2031 Senior Bonds. As contemplated by the consent solicitation with respect to the 2031 Senior Bonds, the Company has executed a supplemental indenture to the indenture governing the 2031 Senior Bonds that will, once operative, eliminate the principal restrictive covenants, including those relating to limitations on the Company's liens and indebtedness, as well as certain related events of default contained in the indenture under which the 2031 Senior Bonds were issued. Although the supplemental indenture has been executed and has therefore become effective, the modifications and eliminations effected by the amendments will not become operative until the 2031 Senior Bonds are accepted for payment pursuant to the Offer. The Company currently expects to make prompt payment for 2031 Senior Bonds validly tendered prior to the Expiration Time and not properly withdrawn at or prior to 5:00 p.m., New York City time, on April 20, 2006. Assuming a settlement date of May 26, 2006, the total consideration is $25.25 plus accrued interest of $0.53 (for a total of $25.78) for each $25 principal amount of 2031 Senior Bonds that were validly tendered and accepted for payment pursuant to the Offer. A soliciting dealer fee of $0.25 per $25 principal amount of 2031 Senior Bonds that were validly tendered and accepted for payment will be paid by the Company to retail brokers that are entitled to receive this fee. As of the Expiration Time, the Company had received tenders of 2031 Senior Bonds and related consents in these amounts: Percentage of Principal Outstanding Amount Principal Title of Security CUSIP No. Tendered Amount of Series ----------------- --------- -------- ---------------- 9% Senior Bonds 430908202 $75,738,200 50.49% due 2031 For further information with respect to the tender offers and consent solicitations, holders should contact their broker and the Dealer Manager: Citigroup Corporate and Investment Banking Telephone (212) 723-6106 (collect) Toll Free (800) 558-3745 or the Information Agent: Global Bondholder Services Corporation Telephone (212) 430-3774 (collect) Toll Free (866) 389-1500 Tommy Hilfiger U.S.A., Inc., incorporated in Delaware, is a direct wholly owned subsidiary of Tommy Hilfiger Corporation, which is owned by funds advised by Apax Partners. Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear. Tommy Hilfiger Corporation's brands include Tommy Hilfiger and Karl Lagerfeld. Through a range of strategic licensing agreements, Tommy Hilfiger Corporation also offers a broad array of related apparel, accessories, footwear, fragrance, and home furnishings. Tommy Hilfiger Corporation's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Tommy Hilfiger Corporation's own network of outlet and specialty stores in the United States, Canada and Europe. * * * As reported in the Troubled Company Reporter on May 23, 2006, Moody's Investors Service withdrew the Ba2 corporate family rating and unsecured debt ratings of Tommy Hilfiger Corporation and its subsidiaries following the closing of the company's acquisition by affiliates of Apax Partners on March 10, 2006. TOWER AUTOMOTIVE: Fuji Dietec Wants Stay Lifted to Recover Tooling ------------------------------------------------------------------ Fuji Dietec Corporation asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay in Tower Automotive, Inc., and its debtor-affiliates' chapter 11 cases to allow it to repossess the Fuji Tooling. Fuji Dietec also asks the Court to direct the Debtors to: (a) return the Fuji Tooling to Fuji Dietec; or (b) alternatively, provide adequate protection to Fuji Dietec for the use and diminution in value of the Fuji Tooling if they are to stay in the Debtors' possession. Fuji Dietec tells the Court that prior to the Debtor filing for bankruptcy, it fabricated, repaired, or otherwise modified and delivered to the Debtors certain tooling for the Debtors' operations. The Debtors owe Fuji Dietec at least $4,751,025 for goods and services, Dennis W. Loughlin, Esq., at Raymond & Prokop, P.C., in Southfield, Michigan, tells the Court. Pursuant to the Michigan Special Tool Lien Act, Fuji Dietec: (a) permanently affixed its name and address on the Tooling prior to shipping it to the Debtors; (b) filed UCC-1 financing statements relative to the Fuji Tooling; (c) has a perfected first priority statutory lien on the Fuji Tooling. According to Mr. Loughlin, the Debtors have failed to pay Fuji Dietec on, and have failed to otherwise satisfy the liens on, the Fuji Tooling. Mr. Loughlin explains that the Fuji Tooling was singularly designed for use in the automotive industry for the purpose of producing specific production parts and components for a particular vehicle program. After the production life of the part ends either by the vehicle program being discontinued or sufficient parts are produced, the Tooling becomes obsolete and its value is diminished to scrap value. The Debtors' continued used of the Fuji Tooling results in wear and tear and other depreciation-related damage to the Tooling, Mr. Loughlin relates. However, he continues, the Debtors have failed to provide adequate protection to Fuji or otherwise satisfy the tool liens on the Fuji Tooling. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000). TRACE INTERNATIONAL: Directors & Officers Entitled to Jury Trial ---------------------------------------------------------------- The U.S. Supreme Court denied certiorari from a Second Circuit decision that gave directors and officers of Trace International Holdings, Inc., and Trace Foam Sub, Inc., the right to a jury trial in a breach of fiduciary duty lawsuit brought against them by John S. Pereira, the Chapter 7 Trustee overseeing Trace's liquidation. The Chapter 7 Trustee alleges that the former directors and officers allowed the debtor's CEO to engage in improper transactions unchecked, including the CEO's unauthorized borrowing, excessive compensation, and the like. The Second Circuit says the relief sought by the Chapter 7 Trustee must be regarded as a legal remedy in the nature of "compensatory damages," rather than as "restitution" as Mr. Pereira claimed. The officers and directors had never possessed the funds in question. Since the nature of the remedy sought was the most important factor in assessing the officers' and directors' right to a jury trial, they had a Sixth Amendment right, the Court of Appeals concluded. In his petition for a writ of certiorari, the trustee questioned whether the Second Circuit correctly read the Supreme Court's decision in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), as being of constitutional magnitude, under the Seventh Amendment, so as to overrule long-settled jurisprudence that actions against fiduciaries are exclusively equitable and therefore not triable of right to a jury. The Second Circuit's decision is reported at 413 F.3d 330. Trace international Holdings, Inc., and Trace Foam Sub, Inc., filed for chapter 11 protection on July 21, 1999 (Bankr. S.D.N.Y. Case Nos. 99-B-10425 and 99-B-10426 (SMB)). Barry N. Seidel, Esq., at King & Spalding LLP, represents the Debtors. Trace reported $136,322,000 in assets and $266,455,000 in its bankruptcy petition. On Jan. 24, 2000, the Bankruptcy Court signed an order converting the cases to chapter 7 liquidation proceedings and the U.S. Trustee appointed John S. Pereira to serve as the Chapter 7 Trustee. Harold D. Jones, Esq., at Jaspan Schlesinger Hoffman LLP, represents the Chapter 7 Trustee. TRM CORP: Agrees to Sell UK Subsidiary to Digital 4 for $4.9 Mil. ----------------------------------------------------------------- TRM Corporation entered into a definitive agreement for the stock sale of TRM Copy Centres (UK) Limited, TRM's wholly owned UK photocopier subsidiary, to Digital 4 Convenience PLC, a UK-based operator of retail photocopiers. The purchase price is based on the net sales average for the period November 2005 through April 2006. Based on preliminary April net sales, the estimated purchase price is 2.6 million pounds Sterling ($4.9 million). The definitive sale agreement is subject to certain pre-closing conditions, including the transfer of certain assets not relating to the UK photocopier business, the confirmation of aggregate copier meter readings up to the closing date and formal notification to TRM UK staff. TRM Copy Centres (UK) Limited includes approximately 2,500 photocopier units and represents approximately 10% of the TRM photocopier units in stores worldwide. The UK Copier business generated approximately $4.2 million of net sales in fiscal 2005. "The sale of the UK photocopier business is part of our overall focus on improving shareholder value," says Jeff Brotman, TRM President and Chief Executive Officer. "It will allow our UK operations to focus solely on growing the existing ATM business and related services." Headquartered in Portland, Oregon, TRM Corporation (NASDAQ: TRMM) -- http://www.trm.com/-- is a consumer services company that provides convenience ATM and photocopying services in high-traffic consumer environments. TRM's ATM and copier customer base has grown to over 35,000 retailers throughout the United States and over 46,200 locations worldwide, including 6,400 locations across the United Kingdom and over 4,900 locations in Canada. TRM operates one of the largest multi-national ATM networks in the world, with over 22,000 locations deployed throughout the United States, Canada, Great Britain, including Northern Ireland and Germany. * * * As reported in the Troubled Company Reporter on Mar. 23, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Portland, Oregon-based TRM Corporation to 'CCC' from 'B+' and revised its CreditWatch placement to developing from negative. The downgrade reflected the weakened status of the company's loan agreement. As reported in the Troubled Company Reporter on Mar. 23, 2006, Moody's Investors Service downgraded the corporate family rating of TRM Corporation to Caa1 from B2 and assigned a negative outlook. USA COMMERCIAL: U.S. Trustee Appoints 5-Member Creditors Committee ------------------------------------------------------------------ The U.S. Trustee for Region 17 appointed five creditors to serve on an Official Committee of Unsecured Creditors in USA Commercial Mortgage Company and its debtor-affiliates' chapter 11 cases: 1. Del Bunch d/b/a Loan Partners Capital Donald R. Walker 9209 Eagle Hills Drive Las Vegas, Nevada 89134-6109 Tel: (702) 250-3638 Fax: (702) 228-2279 2. Russell/AD Development Group, LLC Robert A. Russell 8585 East Hartford Drive, Suite 500 Scottsdale, Arizona 85255 Tel: (480) 505-4048 Fax: (480) 505-4049 3. Annee Nounna 8057 Lands End Court Las Vegas, Nevada 89117-7635 Tel: (702) 217-8599 Fax: (702) 364-8822 4. Advanced Information Systems Michael T. Yoder 4270 Cameron Street, Suite 1 Las Vegas, Nevada 89103 Tel: (702) 360-2266 Fax: (702) 360-2022 5. Robert L. Hagmaier 15254 Candlewood Court Lake Oswego, Oregon 97035 Tel: (503) 344-3733 Fax: (503) 344-3733 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. USA COMMERCIAL: Trustee Names 7-Member Equity Panel in Diversified ------------------------------------------------------------------ The U.S. Trustee for Region 17 appointed seven equity holders to serve on an Official Committee of Equity Security Holders in USA Capital Diversified Trust Deed Fund, LLC's chapter 11 case: 1. Robert Worthen 1112 Worthen Circle Las Vegas, NV 89145 Tel: (702) 254-8735 Fax: (702) 363-6661 2. Katz 2000 Separate Property Trust Sara M. Katz, Managing Trustee 4250 Executive Square, #670 San Diego, CA 92037 Tel: (619) 813-9551 Fax: (619) 552-8437 3. Thomas C. Lawyer Family Trust Thomas C. Lawyer 45 Ventana Canyon Drive Las Vegas, Nevada 89113 Tel: (702) 876-7530 Fax: (702) 876-6612 4. Maryan Rutar 4043 Chalfont Court Las Vegas, NV 89121 Tel: (702) 434-2242 Fax: None provided 5. Charles O. Nichols 2561 Seascape Drive Las Vegas, NV 89128 Tel: (702) 255-5594 Fax: (702) 233-0306 6. The Gannaway Charitable Remainder Trust Dated 4/15/97 Kurt Hunsberger 3500 Lakeside Court, #200 Reno, NV 89520 Tel: (775) 827-2999 Fax: (775) 827-2185 7. Robert H. Mansfield 3611 Victory Avenue Las Vegas, NV 89121-7224 Tel: (702) 434-6227 The Official Committee of Equity Security Holders in USA Capital Diversified Trust Deed Fund, LLC, along with the Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC, and the Official Committee of Holders Of Executory Contract Rights Through USA Commercial Mortgage Company has retained Stutman, Treister & Glatt, P.C., as their special bankruptcy counsel for all matters of common interest. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. USA COMMERCIAL: Trustee Names 7-Member Equity Panel in First Trust ------------------------------------------------------------------ The U.S. Trustee for Region 17 appointed seven equity holders to serve on an Official Committee of Equity Security Holders in USA Capital First Trust Deed Fund, LLC's chapter 11 case: 1. Robert E. Taylor Chuck Heinrichs 198 El Pajaro Newbury Park, CA 91320 Tel: (805) 498-2457 2. John H. Warner, Jr. 2048 North Chettro Trail St. George, UT 84770-5345 Tel: (435) 652-8308 Fax: (435) 652-8379 3. Mary Ellen Moro 1009 - 8th Street Manhattan Beach, CA 90266 Tel: (310) 379-9250 Fax: (310) 279-9250 4. Richard G. Woudstra Revocable Trust Richard G. Woudstra, Trustee P.O. Box 530025 Henderson, NV 89053 Tel: (702) 217-8710 Fax: None provided 5. Wen Baldwin Separate Property Trust u/a/d 9/2/97 Wen Baldwin, Trustee 365 Dooley Drive Henderson, NV 89015 Tel: (702) 566-8010 Fax: (702) 566-8010 6. Jerry T. McGimsey 3115 South El Camino Road Las Vegas, NV 89146-6621 Tel: (702) 871-0296 7. Richard Horowitz 5 Fir Drive Kings Point, NY 11024 Tel: (516) 487-4434 Fax: (516) 487-6368 The Official Committee of Equity Security Holders of USA Capital First Trust Deed Fund, LLC, along with the Official Committee of Equity Security Holders in USA Capital Diversified Trust Deed Fund, LLC, and the Official Committee of Holders Of Executory Contract Rights through USA Commercial Mortgage Company, has retained Stutman, Treister & Glatt, P.C., as their special bankruptcy counsel for all matters of common interest. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. WALTON SCDO: Moody's Lowers Rating on $5 Million Notes to Ba2 ------------------------------------------------------------ Moody's Investors Service downgraded seven notes issued by Walton SCDO 2003-1 Ltd.: (1) $10,000,000 Class A-2F Notes Due 2009 Previous Rating: Aa3 Current Rating: A1 (2) $2,000,000 Class A-2L Notes Due 2009 Previous Rating: Aa3 Current Rating: A1 (3) $5,000,000 Class A-2-1 Swap Due 2009 Previous Rating: Aa3 Current Rating: A1 (4) $3,000,000 Class A-2 Swap Due 2009 Previous Rating: Aa3 Current Rating: A1 (5) $5,000,000 Class A-3LD Notes Due 2009 Previous Rating: A3 Current Rating: Baa2 (6) $5,000,000 Class A-3LD-1 Notes Due 2009 Previous Rating: A3 Current Rating: Baa2 (7) $5,000,000 Class B-1F Notes Due 2009 Previous Rating: Baa3 Current Rating: Ba2 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of investment grade credits, as well as the occurrence of asset defaults and par loss. WINN-DIXIE: Opposes Florida Tax Collectors' Move to Collect Taxes ----------------------------------------------------------------- As reported in the Troubled Company Reporter on May 24, 2006, the Florida Tax Collectors ask the U.S. Bankruptcy Court for the Middle District of Florida to recognize the continued provision of necessary services to Winn-Dixie Stores, Inc., and its debtor- affiliates and their locations, and ensure that taxing authorities will be refunded the full amount of the ad valorem taxes owed the Florida Tax Collectors. Furthermore, the Florida Tax Collectors ask the Court to: (a) provide that all tangible personal property and real estate taxes will be paid in full in accordance with standard commercial sales practices; or (b) in the alternative, order that: * all ad valorem tax liens will attach to the proceeds and that 2006 postpetition taxes will be paid before delinquency in accordance with Florida law; and * sufficient provision be made to separate and escrow into an account identified to their benefit for payment of the full amount of taxes plus monthly accrued interest and attorneys' fees as allowed by Florida statutes. The Florida Tax Collectors assert that the Debtors' amended request seeks to essentially liquidate, either through sale or lease rejection procedures, the Debtors' remaining interests in the listed stores, 28 of which are located within the state of Florida. Debtors' Objection Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to deny the Florida Tax Collectors' request because they are: (a) not entitled to adequate protection in connection with taxes owed by the landlords on property leased by the Debtors; and (b) adequately protected by an equity cushion in excess of 98%, on property owned by the Debtors, regardless of the ultimate valuation of these properties. The Debtors dispute that they owe the Florida Tax Collectors taxes on properties they lease rather than own. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, asserts that the Debtors have paid to their landlords, as required by their leases, all ad valorem taxes accruing postpetition -- as administrative expenses of their estates. With regard to 2005 ad valorem taxes on real and personal real property owned by the Debtors, the amount the Debtors actually owe and have not paid is not more than $8,600,000. Moreover, any tax claims against property owned by the Debtors, which are ultimately allowed by the Court, are secured under Florida law by first liens against the taxed property. It is undisputed that the Florida Tax Collectors' tax claim against the Debtors is over-secured, Mr. Baker says. The Debtors' property is worth in excess of $430,000,000, assuming a tax effective rate of 2%. Mr. Baker explains that the difference between the value of the collateral securing the Florida Tax Collectors' secured tax claim and the amount of the tax claim itself represents an equity cushion in favor of the Florida Tax Collectors of more than 98%. Even taking into account the Debtors' assertion that these properties have been overvalued for tax purposes, any decrease in tax value will correspondingly decrease the tax liability, so that there will always be an equity cushion of 98%, assuming an effective tax rate of 2%, Mr. Baker maintains. Unpaid Taxes As reported in the Troubled Company Reporter on Nov. 14, 2005, at the Florida Tax Collectors' request, the Court further extended the Bar Date to Nov. 23, 2005, solely as to the Florida Tax Collectors' claims on account of the 2005 ad valorem taxes. The Florida Tax Collectors asked the Court to allow their claims to be filed without prejudice to any further amendments relative to the amounts due. The Florida Tax Collectors clarify that their claims will be without prejudice and will not be considered a waiver of any defenses whatsoever. The Florida Tax Collectors have contacted the Debtors and have been proactive in identifying and liquidating outstanding tax obligations due pursuant to Florida law. This process, if allowed to continue, will greatly reduce the amount of unnecessary "Omnibus Claims Objections" which burden the Court and create excessive administrative professional fee expenses for the Debtors. The Florida Tax Collectors believe that the Debtors intend to contest virtually all of the Debtors' tangible personal property and real estate taxes in the state of Florida. According to the Florida Tax Collectors, despite their repeated requests to work together informally with the Debtors to allow them to pay the appropriate taxes with the maximum discount, the Debtors refused to do so. In this regard, the Florida Tax collectors asked the Court: -- to compel the Debtors to consult with them to determine the actual tax accounts and amounts in which the Debtors are responsible for paying; and -- that the full amount of the taxes either be paid and contested pursuant to Florida law in the Florida judicial system or, alternatively, that the full amount of the Debtors' ad valorem property taxes plus a monthly deposit of interest, be paid into a separate segregated escrow account. 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 $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (22) 125 (6) AFC Enterprises AFCE (44) 176 31 Adventrx Pharma ANX (26) 23 (27) Alaska Comm Sys ALSK (29) 550 12 Alliance Imaging AIQ (29) 683 19 AMR Corp. AMR (1,272) 29,918 (1,924) Atherogenics Inc. AGIX (114) 227 182 Bally Total Fitn BFT (1,463) 486 (442) Biomarin Pharmac BMRN 46 488 (322) Blount International BLT (134) 462 129 CableVision System CVC (2,468) 12,832 2,643 CCC Information CCCG (95) 112 34 Centennial Comm CYCL (1,069) 1,409 32 Cenveo Inc CVO (56) 1,045 157 Choice Hotels CHH (148) 274 (68) Cincinnati Bell CBB (727) 1,888 33 Clorox Co. CLX (427) 3,622 (258) Columbia Laborat CBRX 11 43 24 Compass Minerals CMP (59) 702 171 Crown Holdings I CCK 46 6,885 171 Crown Media HL CRWN (165) 1,229 93 Deluxe Corp DLX (71) 1,394 (264) Denny's Corporation DENN (261) 505 (75) Domino's Pizza DPZ (632) 387 (10) Echostar Comm DISH (690) 8,935 1,438 Emeritus Corp. ESC (105) 725 (19) Emisphere Tech EMIS (26) 13 (11) Empire Resorts I NYNY (28) 57 (5) Encysive Pharm ENCY (38) 119 82 Foster Wheeler FWLT (239) 2,032 (52) Gencorp Inc. GY (84) 1,002 (3) Graftech International GTI (175) 919 286 H&E Equipment HEES 204 667 13 Hollinger Int'l HLR (198) 1,038 (271) I2 Technologies ITWO (65) 195 (20) ICOS Corp ICOS (51) 248 121 IMAX Corp IMAX (25) 238 33 Incyte Corp. INCY (38) 399 189 Indevus Pharma IDEV (134) 86 50 Investools Inc. IEDU (33) 87 (54) Koppers Holdings KOP (100) 556 150 Kulicke & Soffa KLIC 46 399 204 Labopharm Inc. DDS (8) 46 9 Level 3 Comm. Inc. LVLT (546) 8,284 713 Ligand Pharm LGND (212) 289 (144) Linn Energy LLC LINE (45) 280 (51) Lodgenet Entertainment LNET (70) 261 7 Maxxam Inc. MXM (661) 1,048 101 Maytag Corp. MYG (187) 2,954 150 McDermott Int'l MDR (50) 3,160 277 McMoran Exploration MMR (38) 411 (1) Movie Gallery MOVI (171) 1,248 (843) NPS Pharm Inc. NPSP (129) 287 212 New River Pharma NRPH 3 96 82 Omnova Solutions OMN (15) 360 65 ON Semiconductor ONNN (224) 1,211 251 Qwest Communication Q (3,060) 21,126 (923) Revlon Inc. REV (1,042) 1,085 37 Riviera Holdings RIV (30) 219 7 Rural/Metro Corp. RURL (93) 302 50 Rural Cellular RCCC (500) 1,427 144 Sepracor Inc. SEPR (128) 1,284 906 St. John Knits Inc. SJKI (52) 213 80 Sun Healthcare SUNH (1) 531 (46) Tivo Inc. TIVO (33) 143 19 USG Corp. USG (496) 6,522 1,956 Unigene Labs Inc. UGNE (7) 21 (2) Vertrue Inc. VTRU (24) 466 (78) Weight Watchers WTW (42) 856 (69) Worldspace Inc. WRSP (1,516) 682 197 WR Grace & Co. GRA (548) 3,506 881 ********* 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/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. 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, Joel Anthony Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., 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 ***