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/raid1/www/Hosts/bankrupt/TCR_Public/060609.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 9, 2006, Vol. 10, No. 136 Headlines ADELPHIA COMMS: Trade Claims Panel Plan Support Pact Draws Flak ADELPHIA COMMS: Files Transaction Agreements for Sale Approval ADELPHIA: Century-TCI & Parnassos Debtors File Joint Venture Plan ADVANCE AUTO: S&P Affirms BB+ Corp. Credit & Sr. Sec. Debt Ratings ADVANCED MEDICAL: Plans to Sell $500MM Senior Subordinated Notes ADVANCED MEDICAL: S&P Puts B Rating on $450 Million Sr. Sub. Debt AIR CANADA: Pilots Seek to Recoup Losses from Bankruptcy AIRNET COMMUNICATIONS: Wants Until June 14 to File Schedules AIRNET COMMUNICATIONS: Hires Gronek & Latham as Bankruptcy Counsel AIRNET COMMUNICATIONS: BDO Seidman Expresses Going Concern Doubt ALLIED HOLDINGS: Rejects License Contract with SEA Inc. ALLIED HOLDINGS: Trustees Dispute Liability Under Insurance Pacts ANCHOR GLASS: Gallen's And Feinberg's Equity Stake Cancelled ANCHOR GLASS: Court Disallows Part of JEA's Claim ANVIL HOLDINGS: S&P Downgrades Rating to CC With Negative Outlook APARTMENT INVESTMENT: Fitch Affirms $900 Mil. Stock's BB+ Rating ARMSTRONG WORLD: Testimony Concluded on 3-Day Confirmation Hearing ARVINMERITOR: Moody's Assigns Ba1 Rating on $1 Billion Loan ATRIUM CO: Moody's Holds Caa1 Rating on $124MM Sr. Discount Notes AUSTIN COMPANY: Files Disclosure Statement in Northern Ohio AVALON RE: S&P Lowers Subordinated Debt's Rating to CCC- from B BENCHMARK HOMES: Auctioning Housing Lots on June 22 BOWATER INC: Posts $18.8 Million Net Loss in 2006 First Quarter CATHOLIC CHURCH: Frank Voth Wants Stay Lifted to Liquidate Claim CCS MEDICAL: S&P Downgrades Rating to B- With Negative Outlook CHARLES RIVER: Posts $100 Mil. Net Loss in Quarter Ended April 1 CHESAPEAKE ENERGY: Fitch Affirms Conv. Pref. Stock's B+ Rating CHOICE ONE: S&P Junks Proposed $160 Million Term Loan's Rating CIMAREX ENERGY: S&P Upgrades Senior Unsecured Debt Rating to BB- CONGOLEUM: Insurers Want to Buy Back Insurance Policies for $25MM CURATIVE HEALTH: Eliminates $185MM Bondholder Debt Upon Emergence DANA CORPORATION: Court Approves Sypris Settlement Agreement DANA CORPORATION: Rejects Ten Equipment & Property Leases DANA CORP: Resolves Shipping Charges Dispute With Toledo Press DELTA AIR: Says Fee Examiner is Inappropriate and Unnecessary DELTA AIR: Court Approves Chicago Set-Off Deal DOBSON COMMS: Posts $10.8 Million Net Loss for First Quarter 2006 DOMINICK PEBURN: Case Summary & 12 Largest Unsecured Creditors EASY GARDENER: Files Schedules of Assets and Liabilities EASY GARDENER: Committee Hires Young Conaway as Bankruptcy Counsel EDS CORP: Completes Purchase of MphasiS Majority Stake for $380MM EUGENE SCIENCE: March 31 Balance Sheet Upside Down by $11.3 Mil. FAIRCHILD SEMICONDUCTOR: S&P Rates New $500MM Facilities at BB- FEDERAL-MOGUL: Plans to Close Malden Facility by Year-End FEDERAL-MOGUL: Insurers Object to Kenesis as Insurance Consultant FLEMING COS: Expects to Allot $73MM to General Unsecured Claims GLASS GROUP: Unsec. Creditors to Recover at Most 36.66% of Claims HAPPY KIDS: Asks Court to Dismiss Chapter 11 Cases HATTERAS REINSURANCE: Chapter 15 Petition Summary HAWKEYE RENEWABLES: S&P Holds Rating Watch on $185 Million Loan HYMAN FREIGHTWAYS: Chapter 11 Professionals Get to Keep Their Fees INTELSAT LTD: March 31 Balance Sheet Upside-Down by $290 Million INTERACTIVE HEALTH: S&P Junks Senior Unsecured Debt's Rating JACOBS ENTERTAINMENT: Moody's Affirms B2 Corporate Family Rating JACOBS ENTERTAINMENT: S&P Rates Proposed $210 Million Notes at B- JDA SOFTWARE: S&P Rates Proposed $225 Million Facilities at B+ JRV INDUSTRIES: Non-Recourse Deficiency Claim Held Not Dissimilar KUSHNER-LOCKE: Allows NIB Capital to Foreclose on Stock Assets LGB INC: Section 341(a) Creditors Meeting Continued to June 29 MANITOWOC COMPANY: Enodis Rejects GBP882 Million Offer MASTERCRAFT INTERIORS: Committee Taps Platzer Swergold as Counsel MASTERCRAFT INTERIORS: U.S. Trustee Appoints Seven-Member Panel MEDIA MEDICAL: Moody's Lowers Rating on Sr. Unsec. Bonds to Ba1 MERIDIAN AUTOMOTIVE: Wants Until July 31 to File Chapter 11 Plan MERIDIAN AUTOMOTIVE: Wants Settlement of Centralia Lawsuit Okayed METABOLIFE INT'L: Asks Court to OK Wendy Davis Ephedra Settlement MMI PRODUCTS: CRH Merger Cues S&P to Lift Rating to BBB+ from B- MORGUARD REAL: DBRS Confirms Issuer Rating at BB (High) Stable NATIONAL CENTURY: Ohio Grand Jury Charges 7 Ex-Officers With Fraud NATIONAL CENTURY: 6th Cir. Affirms Bankr. Court's Enjoinment Order NATIONAL ENERGY: Court Deems USGen's Objection Timely Filed NATIONAL ENERGY: Says Mirick Lost Chance to File Late Claim NORTHWEST AIRLINES: Wants to Assume Worldspan Carrier Agreement NORTHWEST AIRLINES: Wants Court Nod on ALPA CBA Modifications OCA INC: Disclosure Statement Hearing Slated for June 19 OMI TRUST: S&P Lowers Class M-1 & M-2 Transactions' Ratings to CC OWENS CORNING: Files Sixth Amended Plan & Disclosure Statement PLIANT CORP: Creditors Vote to Accept Joint Reorganization Plan PLIANT CORP: Files Memorandum of Support for Second Amended Plan POKAGON GAMING: S&P Puts B Rating on Proposed $305 Million Notes PROVIDENTIAL HOLDINGS: Buys Western Medical Assets for $5.25 Mil. PSEG ENERGY: S&P Affirms BB- Corp. Credit Rating With Neg. Outlook PTC ALLIANCE: Disclosure & Confirmation Hearings Set for July 13 PTC ALLIANCE: Court Approves Reed Smith as Bankruptcy Counsel PULL'R HOLDINGS: U.S. Trustee Names Seven-Member Creditors Panel PUREBEAUTY INC: Gets Court Final Nod to on $4.75 Mil. DIP Facility QUANTUM CORP: Moody's Lowers Rating on Subordinated Notes to Caa2 RENATA RESORT: Files Plan and Disclosure Statement in Florida RESIDENTIAL ASSET: Moody's Lowers Rating on Class M-I-3 to Caa1 SAINT VINCENTS: Committee Taps Alston & Bird as Substitute Counsel SAINT VINCENTS: Reaches License Agreement with McKesson Automation SEAENA INC: Incurs $601,137 Net Loss in 2006 1st Fiscal Quarter SMOKY RIVER: Moody's Withdraws Caa1 Rating on $125 Million Notes SOLUTIA INC: Equistar Says Disclosure Statement Lacks Information SOS REALTY: List of 20 Largest Unsecured Creditors SPHINX STRATEGY: Chapter 15 Petition Summary STRUCTURED ASSET: Moody's Put Low-B Rating on 2 Cert. Classes TATER TIME: Plans to Pay Unsecured Creditors in Full with Interest TECHALT INC: Salberg & Company Raises Going Concern Doubt TEREX CORP: Good Performance Cues S&P to Put BB- Rating on Watch TIRO ACQUISITION: Court Dismisses Ch. 11 Case Due to Lack of Funds TRANSDIGM INC: Moody's Puts Rating on Sr. Sec. Facilities at B1 TRANSDIGM INC: S&P Puts B+ Rating on Proposed $800 Mil. Facility UGS CORP: S&P Assigns B- Rating to Proposed $300 Million Notes UNIVERSAL COMMS: March 31 Balance Sheet Upside Down by $3.5 Mil. U.S. PLASTIC: Plans to Use $2.3M Sale Proceeds to Pay Creditors WILLIAMS COS: S&P Ups $600MM Credit Linked Cert.'s Ratings to BB- WILLIAMS COS: Moody's Lifts Long Term Debt Ratings to Ba2 WINN-DIXIE: Wants to Auction Montgomery Dist. Center on June 14 WORLDCOM INC: Seinfeld Wants to Pursue Claims Against James Allen WORLDCOM INC: Galaxy, Silverstein and Akerman Settles Dispute WORLDCOM INC: Court OKs Pact Settling Missouri's Remaining Claims * BOOK REVIEW: Harvest Moon: Portrait of a Nursing Home ********* ADELPHIA COMMS: Trade Claims Panel Plan Support Pact Draws Flak --------------------------------------------------------------- At least 23 parties-in-interest object to the Plan Support Agreement executed by Adelphia Communications Corporation and its debtor-affiliates and the Ad Hoc Adelphia Operating Company Trade Claims Committee. The principal provisions of the Plan Support Agreement include: (1) Holders of the Allowed Operating Company Trade Claims will receive payment of simple interest at 8% during the postpetition period provided that: * the postpetition interest payable to holders of Arahova, FrontierVision Holdco and Olympus Parent Trade Claims will remain subject to the resolution of the Intercreditor Dispute; and * postpetition interest payable to the Operating Company Trade Claims Holders in the AGPH, Arahova, FrontierVision Holdco and Olympus Parent Debtor Groups remain subject to the ACOM Debtors' November 2005 Plan; (2) Holders of Allowed Operating Company Trade Claims will generally be in cash, with some exceptions; (3) The Parties will make good faith efforts to obtain the Official Committee of Unsecured Creditors' support for the Plan Support Agreement; (4) The Trade Committee will: * stay the prosecution of its appeal of the Government Settlement and to withdraw with prejudice as soon as practicable after the Effective Date of the Plan; and * withdraw, without prejudice, its pending discovery requests against the ACOM Debtors; (5) The ACOM Debtors will support the payment of the reasonable fees and expenses of the Trade Committee's professionals based on the professional's hourly billings subject to the fee application process set in the Plan; and (6) The ACOM Debtors will not oppose any contingent fee claim below $5,000,000 filed by the Trade Committee. A full-text copy of the Plan Support Agreement is available for free at http://ResearchArchives.com/t/s?84f The objecting parties are: a. The Official Committee of Equity Security Holders; b. The Ad Hoc Committee of Arahova Noteholders; c. U.S. Bank National Association; d. W.R. Huff Asset Management Co., L.L.C.; e. Wilmington Trust Company, as indenture trustee under that certain Indenture dated November 12, 1996, of Olympus Communications, L.P. and Olympus Capital Corporation; f. Silver Point Capital Fund, L.P., Silver Point Capital Offshore Fund, Ltd., Redwood Master Fund, Ltd. and Goldman Sachs & Co., as holders of approximately 70% of the Olympus Parent Notes Claims; g. the Ad Hoc Committee of ACC Senior Noteholders; h. the Administrative Agents under certain of the ACOM Debtors' prepetition credit agreements: -- Wachovia Bank National Association, -- the Bank of Nova Scotia -- Citibank, N.A., -- JPMorgan Chase Bank, N.A., -- Bank of America, N.A., -- Bank of Montreal; i. the Nominal Agents, namely: -- ABN AMRO Bank N.V., -- Barclays Bank PLC, -- CIBC, INC., -- Merrill Lynch Capital Corp., -- PNC Bank, National Association, -- Societe Generale, S.A. -- Calyon New York Branch -- Bank of New York, & Bank of New York Company, Inc., and -- Credit Suisse, Cayman Branch, & the Royal Bank of Scotland; and j. the Ad Hoc Committee of Non-Agent Secured Lenders. Generally, the parties-in-interest note that although the ACOM Debtors and the Trade Committee propose the Settlement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the terms of the agreement implicate issues relating to the confirmation of the Modified Plan, which incorporates the terms of the Settlement. Accordingly, the Settlement cannot be approved under the standards of Bankruptcy Rule 9019 alone. The parties-in-interest further assert that the "settlement" embodied in the Trade Plan Support Agreement is not reasonable, equitable or in the best interests of the Debtors' estates because it would render any Chapter 11 plan put forward by the Debtors unconfirmable by: -- granting the Trade Creditors more than 100% of their Trade Claims; -- improperly and artificially impairing the Trade Creditors' Claims for the sole purpose of manufacturing one impaired class to accept the Plan in violation of Section 1129(a)(10) of the Bankruptcy Code; and -- causing the Debtors to propose a plan in bad faith in violation of Section 1129(a)(3) of the Bankruptcy Code. The Equity Security Committee argues that any plan is unconfirmable if it incorporates the Plan Support Agreement, which will pay certain creditors more than the full amount of their claims in violation of the absolute priority rule. Wilmington Trust and the Olympus Parent Noteholders ask the Court to deny the Plan Support Agreement, which provides for the payment of unsecured trade claims in the ACC Ops and Olympus Parent Debtor Groups almost entirely in cash while the Olympus Parent Notes Claims, which have the same or higher priority as the trade claims, are to be paid entirely in TWC Class A Common Stock under the Modified Plan. David E. Retter, Esq., at Kelley Drye & Warren LLP, in New York, asserts that the modifications plainly violate both the "unfair discrimination" and "fair and equitable" requirements of Section 1129(b)(1). Mr. Retter further argues that even if the Court were to ultimately approve the Modified Plan terms that incorporate the Trade Claim Settlement, it should concurrently rule that acceptance of the Modified Plan by the Olympus Parent Trade Claim and Other Unsecured Claim Classes cannot satisfy Section 1129(a)(10) since their purported "impairment" is artificially created. The ACC Committee notes that the Plan Support Agreement provides that the ACOM Debtors will: -- "support" the payment of more than $2,130,000 in any fees and expenses of the Trade Committee's counsel; and -- "not oppose or object to" the payment of a contingency fee of up to $5,000,000, less whatever hourly fees, if any, otherwise are awarded, in each case on application to the Court under Section 503(b) of the Bankruptcy Code. The ACC Committee opposes, and will object to, the allowance of any fees of the Trade Committee's counsel, particularly the payment of any contingency fee, because: -- the burden of the proposed contingency fee would be borne not by the Trade Committee's members and constituents but by the ACC Committee members and other creditors of ACC, all of whose recoveries already have been diminished by the agreement to pay postpetition interest as set forth in the Trade Support Agreement; -- contingency fees in bankruptcy cases must be approved under Section 328 before retention, not after the fact; and -- there is no statutory basis for awarding a contingency fee because the Trade Committee members are not otherwise obligated to their counsel for the fee. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- 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. 132; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Files Transaction Agreements for Sale Approval -------------------------------------------------------------- Adelphia Communications Corporation filed forms of Amended Asset Purchase Agreements, a form of Registration Rights and Sale Agreement and a form of Registration Rights Letter Agreement with the U.S. Bankruptcy Court for the Southern District of New York. If the Court approves amended sale procedures relating to the Section 363 sale process, Adelphia, Time Warner NY Cable and Comcast anticipate entering into these agreements to provide for certain amended terms required under the expedited sale transaction process reported in the Troubled Company Reporter on May 29, 2006. Under the expedited sale process, Adelphia's majority interests in the joint ventures, Parnassos and Century-TCI, will be sold to Comcast in connection with a confirmed Chapter 11 Plan of Reorganization that provides for payment in full to the creditors of the joint ventures, while substantially all of Adelphia's remaining Cable assets will be sold to Comcast and Time Warner NY Cable under a court-approved asset sale under Section 363 of the Bankruptcy Code. The closing of the sale of the joint ventures and the sale of the remaining Adelphia assets are conditioned on one another and are expected to occur contemporaneously. A modified Plan of Reorganization relating to the Comcast joint venture debtors was filed on June 6, 2006. Distributions to creditors of Adelphia entities outside the Century-TCI and Parnassos joint ventures will not occur until after the confirmation of a separate plan of reorganization relating to those entities, which Adelphia intends to seek following completion of the sales. Until confirmation of such separate plan of reorganization, the non-joint venture Adelphia entities will remain in bankruptcy. A hearing to approve the amended sale procedures (including new provisions for termination and for the payment or crediting of the Breakup Fee) is expected to be held in mid-June 2006. A hearing to approve the Section 363 Sale and confirm the plan of reorganization for the two Joint Ventures is expected to be held in late June 2006. The sale process is subject to, among other things, execution by Time Warner NY Cable and Comcast of Amendments to the applicable Purchase Agreements, the Registration Rights and Sale Agreement and the Registration Rights Letter Agreement. Although the forms of Amendments, Registration Rights and Sale Agreement and Registration Rights Letter Agreement filed with the Court have been negotiated with Time Warner NY Cable and Comcast, these forms of agreement are not binding, and there can be no assurance that the Bankruptcy Court will approve the amended sale procedures and changes to the break-up fee, or that Time Warner NY Cable and Comcast will execute the agreements if such approval occurs. A full-text copy of the Amended Asset Purchase Agreement between Adelphia Communications Corporation and Time Warner Cable Inc. is available for free at: http://ResearchArchives.com/t/s?b0a A full-text copy of the Amended Asset Purchase Agreement between Adelphia Communications Corporation and Comcast Corporation is available for free at: http://ResearchArchives.com/t/s?b0b A full-text copy of the Registration Rights and Sale Agreement between Adelphia Communications Corporation and Time Warner Cable Inc. is available for free at: http://ResearchArchives.com/t/s?b08 About Adelphia Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- 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. 132; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA: Century-TCI & Parnassos Debtors File Joint Venture Plan ----------------------------------------------------------------- Adelphia Communications and its debtor-affiliates delivered to the Court a Second Modified Fourth Amended Joint Plan of Reorganization for the Century-TCI Debtors and the Parnassos Debtors -- Joint Venture Plan -- on June 5, 2006. As previously reported, the ACOM Debtors, Time Warner NY Cable, LLC, and Comcast Corp. have agreed to modify the Comcast Purchase Agreement and TW Purchase Agreement to provide that the Sale Transaction (other than with respect to the Transferred Joint Venture Entities) may be consummated through a sale of assets pursuant to Sections 105, 363 and 365 of the Bankruptcy Code. The ACOM Debtor want to exclude from the Joint Venture Plan all administratively consolidated entities other than those included in the Century-TCI Debtor Group and the Parnassos Debtor Group. The Joint Venture Plan provides that upon consummation of the Sale Transaction, the net proceeds of the Sale Transaction not otherwise provided for under the terms of the Joint Venture Plan, the Comcast Purchase Agreement, the TW Purchase Agreement or by order of the Bankruptcy Court will be held by the Distribution Companies and Affiliated Debtors pending an order of the Bankruptcy Court as to the disposition of the net proceeds. The Century-TCI Debtors and the Parnassos Debtors will continue to exist after the Effective Date. Classification & Treatment of Claims Designation of Claims or Equity Interests Entitled Class Comprising the Class Impairment to Vote ----- -------------------- ---------- -------- All Debtor Groups 1 Other Priority Claims Unimpaired Presumed to Accept 2 Secured Tax Claims Unimpaired Presumed to Accept 3 Other Secured Claims Unimpaired Presumed to Accept Parnassos Debtor Group P-Bank Parnassos Bank Claims Impaired Yes P-Trade Parnassos Trade Claims Impaired Yes P-Uns Parnassos Other Impaired Yes Unsecured Claims P-JV Equity Interests in Unimpaired Presumed to Parnassos Joint Venture Accept P-Equity Equity Interests in Unimpaired Presumed to Parnassos Distribution Accept Companies Century-TCI Debtor Group TCI-Bank Century-TCI Bank Claims Impaired Yes TCI-Trade Century-TCI Trade Impaired Yes Claims TCI-Uns Century-TCI Other Impaired Yes Unsecured Claims TCI-JV Equity Interests in Unimpaired Presumed to Century-TCI Joint Accept TCI-Equity Equity Interests in Unimpaired Presumed to Century-TCI Distribution Accept Company GSETL Government Claims Unimpaired Presumed to Accept Intercompany Claims InterCo Intercompany Claims N/A No The Debtors reserve the right to classify and treat these claims as unimpaired and not entitled to vote: -- Century-TCI Bank Claims -- Century-TCI Trade Claims -- Century-TCI Other Unsecured Claims -- Parnassos Bank Claims -- Parnassos Trade Claims -- Parnassos Other Unsecured Claims Marc Abrams, Esq., at Willkie Farr & Gallagher LLP, in New York, relates that Joint Venture Plan does not change the Modified Fourth Amended Plan, with respect to the creditors in the Century-TCI and Parnassos Debtor Groups and Classes, in a material and adverse manner. According to Mr. Abrams, the Joint Venture Plan provides for the payment of Allowed Bank Claims in full in cash of principal and non-default interest through the effective date, subject to the Creditors' Committee's pending motion to holdback those distributions pursuant to Section 502(d) of the Bankruptcy Code. The Joint Venture Plan also provides for a single Litigation Indemnification Fund of $30,000,000, which will be "topped up" with proceeds from Designated Litigation and, upon entry of an order of the Bankruptcy Court, additional cash from the proceeds of the Sale. In addition, Mr. Abrams continues, based on the Court's decision regarding grid interest, the Joint Venture Plan does not provide for a reserve for those claims, but provides for their payment if those claims are allowed by final order. The Joint Venture Plan provides for the payment in full of Allowed Trade Claims and Allowed Other Unsecured Claims, including postpetition pre-Effective Date simple interest at a proposed rate of 8%, with the only changes being: (a) that those claims will now receive all cash -- as opposed to a mix of largely cash and some stock -- and (b) the removal of certain contingencies that would have permitted the Debtors to substitute additional TWC Class A Common Stock for cash in distributions to creditors in these Classes. Moreover, Mr. Abrams says, with respect to the Equity Interests in the Century-TCI Debtors and Parnassos Debtors, the Joint Venture Plan continues to provide that those Equity Interests will be unimpaired and transferred to or retained by the Buyer. The Debtors have reserved June 28, 2006, as the date to commence the confirmation hearing with respect to the Joint Venture Plan. ACOM Seeks Approval of Disclosure Supplement The ACOM Debtors ask the Court to: (a) approve the form and content of their Supplement to the Fourth Amended Disclosure Statement, describing the Second Modified Fourth Amended Plan of Reorganization for the Century-TCI and Parnassos Debtors; and (b) find that the Supplement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Mr. Abrams tells the Court that the ACOM Debtors do not believe that re-solicitation of votes on the Plan with respect to previously accepting creditors in the Century-TCI and Parnassos Debtor Groups is required as a result of the proposed modifications because they do not adversely change the treatment of holders of claims and equity interests in those Debtor Groups provided in the Fourth Amended Plan. The ACOM Debtors do not believe that they are required to obtain Court approval of further disclosure but, out of an abundance of caution, they ask the Court to deem that the additional disclosure in their Supplement and their Section 363 Sale Motion constitute any additional disclosure that may be required pursuant to Section 1125. Objections Sunni P. Beville, Esq., at Brown Rudnick Berlack Esraels LLP, in New York, counsel for the Ad Hoc Adelphia Trade Claims Committee, contends that the Debtors: -- not only failed to further prosecute to approval the settlement between the Debtors and the Trade Committee, but also failed to disclose their intentions and position regarding the status of the Trade Committee Settlement; and -- have failed to disclose, with clarity, the exact treatment of trade claims pursuant to the Second Modified Plan; and why the optional treatment, not disclosed in the motion, reserved in new language inserted to the Plan has been added in direct contravention to the terms of the Trade Committee Settlement. The Trade Committee asserts that trade creditors are entitled to know: -- what the proposed "unimpairment" treatment, as provided in the Plan, would be; -- how, when and under what circumstances the Debtors will "elect" to unimpair trade creditors; and -- what the Debtors' election to unimpair trade claims might mean for each creditor as it relates to each particular claim. The Nominal Agents note that the ACOM Debtors do not address what effect, if any, confirmation of the Joint Venture Plan will have on claims and the rights of creditors of the remaining ACOM Debtors that are not part of the Joint Venture Plan. The Nominal Agents are: -- Barclays Bank PLC, -- Calyon New York Branch, -- Merrill Lynch Capital Corp., -- PNC Bank, National Association, -- Societe Generale, S.A., -- the Bank of New York, and the Bank of New York Company, -- Toronto Dominion (Texas), LLC, -- Credit Suisse, Cayman Branch, and -- the Royal Bank of Scotland PLC. According to the Nominal Agents, despite the ACOM Debtors' assertions that the Joint Venture Plan would be no more than a "mini version" of the plan that preceded it, the Joint Venture Plan appears to make substantive changes to provisions of the existing plan that are unrelated to shrinking and conforming that plan into the Joint Venture Plan. The Nominal Agents note that the ACOM Debtors have not explained how the changes in the Joint Venture Plan could affect the substantive rights of the Nominal Agents under the Joint Venture Plan or under any subsequent plan relating to the remaining Debtors. The Nominal Agents inform the Court that they have had insufficient time to determine whether additional disclosure is necessary. Citibank, N.A., as the Century-TCI administrative agent, asks the Court for an extension of time to object to the ACOM Debtors' request to approve Supplement to June 12, 2006. 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. 135; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVANCE AUTO: S&P Affirms BB+ Corp. Credit & Sr. Sec. Debt Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services revised the outlook for Roanoke, Virginia-based Advance Auto Parts Inc. to positive from stable and affirmed its 'BB+' corporate credit and senior secured debt ratings. "This action reflects the expectation that ratings could be raised within 12 months if the company strengthens its credit metrics, and continues to demonstrate financial policy and credit metrics that are consistent with investment-grade levels," said Standard & Poor's credit analyst Stella Kapur. Sales growth levels, profitability, and cash flow generation have continued to improve despite a recent slowdown in same-store sales gains. For the first quarter of 2006, Advance Auto' same-store sales rose 3.9%, following increases of 8.7% and 6.1% in 2005 and 2004, respectively. While growth has slowed, they still remain higher than that of industry peers. In addition, Advance's lease-adjusted operating margins improved to 17% in 2005, from 14.5% in 2002. Profitability levels have improved due to: * sales leverage; * better distribution and efficiency; * reformatting and enhancing of the store base; and * merchandising initiatives. As a result, operating cash flow grew to $325 million in 2005, from $264 million in 2004. The ratings on Advance Auto and its primary operating subsidiary, Advance Stores Co. Inc., reflect: * the company's good position as the second-largest domestic auto parts retailer; * credit metrics that are consistent with current ratings; * a conservative financial policy; and * improved cash flow levels. This is partially mitigated by the competitive auto parts retail market, which is experiencing increased pressure because of the impact on consumer demand of higher fuel and energy prices and interest rates. ADVANCED MEDICAL: Plans to Sell $500MM Senior Subordinated Notes ---------------------------------------------------------------- Advanced Medical Optics, Inc. intends to offer, subject to market conditions and other factors, approximately $450 million aggregate principal amount of convertible senior subordinated notes due 2026, plus up to an additional $50 million of notes subject to the initial purchasers' option. The offering will be made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933. The notes will be unsecured senior subordinated obligations of AMO. The interest rate, conversion price and other terms of the notes will be determined by negotiations between AMO and the initial purchasers of the notes. AMO expects to use the net proceeds from the offering, and borrowings under its senior credit facility, to purchase $500 million worth of shares of its common stock, as well as to purchase up to $100 million of its outstanding convertible notes through privately negotiated repurchases. The common stock will be purchased through an accelerated share repurchase arrangement with one or more of the initial purchasers and/or their affiliates with substantially all of the shares being delivered with the closing of the sale of the notes or shortly thereafter. About Advanced Medical Optics Based in Santa Ana, California, Advanced Medical Optics, Inc. -- http://wwwamo-inc.com/-- is a global medical device leader focused on the discovery and delivery of innovative vision technologies that optimize the quality of life for people of all ages. Products in the ophthalmic surgical line include intraocular lenses, laser vision correction systems, phacoemulsification systems, viscoelastics, microkeratomes and related products used in cataract and refractive surgery. AMO employs approximately 3,600 worldwide. The company has operations in 24 countries and markets products in 60 countries. ADVANCED MEDICAL: S&P Puts B Rating on $450 Million Sr. Sub. Debt ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Advanced Medical Optics Inc.'s $450 million convertible senior subordinated debt due 2026, filed under a Rule 415 debt registration. The proceeds, plus a drawdown on the company's revolving credit facility, will be used to buy back $500 million of common stock and $100 million of outstanding convertible notes. The corporate credit rating on AMO is 'BB-' and the rating outlook is stable. "Given that AMO's financial metrics are strong relative to the 'BB-' corporate credit rating, the company has sufficient cushion to absorb the increase in leverage incurred from the convertible debt issue," said Standard & Poor's credit analyst Cheryl Richer. The rating on Santa Ana, California-based Advanced Medical Optics Inc. reflects the risks associated with the ophthalmic company's aggressive efforts to build upon its well-established position as a midsize player in the industry. At the same time, however, AMO's acquisitions have broadened its product and geographic diversity. Opthalmic surgical products (intraocular lenses, phacoemulsification equipment, viscoelastics, and laser vision correction) accounted for 67% of 2005 revenues, with eye care products (to clean, disinfect, and rewet contact lenses) contributing 33%. The company has demonstrated a willingness to use common equity to finance its acquisitions. In May 2005, it acquired VISX Inc. for $1.27 billion. The largely stock-financed transaction diversified AMO into the laser vision correction area. AIR CANADA: Pilots Seek to Recoup Losses from Bankruptcy -------------------------------------------------------- The Air Canada Pilots Association formally met with negotiators from Air Canada on June 6, 2006, as part of the Wage and Pension Re-Opener process. The company is required to re-negotiate wage and pension terms with its unions, a process which was agreed upon during the Companies Creditors Arrangement Act process in 2003 and 2004. "Based on the company's strong financial results, we believe they can afford our proposals to recoup losses sacrificed during bankruptcy protection," ACPA spokesperson Capt. Serge Beaulieu said. Capt. Beaulieu said the association's proposals maintain Air Canada's competitiveness, while at the same time ensuring pilots receive recognition for the sacrifices they made to bring the company back from the brink. "We took significant wage concessions, in addition to work rule changes that resulted in substantial layoffs and demotions. Now that the company is North America's aviation success story, we expect our contribution to be recognized," Capt. Beaulieu adds. ACPA is the largest pilot group in Canada, representing the 3,100 pilots who fly Air Canada's mainline fleet. About Air Canada Air Canada -- http://www.aircanada.com/-- together with Air Canada Jazz and other business units of parent company ACE Aviation Holdings Inc., provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations, vacation packages to over 90 destinations, as well as maintenance, ground handling and training services to other airlines. Canada's flag carrier is recognized as a leader in the global air transportation market by pursuing a strategy based on value-added customer service, technical excellence and passenger safety. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. AIRNET COMMUNICATIONS: Wants Until June 14 to File Schedules ------------------------------------------------------------ AirNet Communications Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to extend until, June 14, 2006, the period within which it can file its Schedules and Statement of Financial Affairs. The Debtor tells the Curt that in order to prepare the schedules and statements, it needs to gather information from various documents and compile information with regard to the creditors of AirNet. The Debtor says that it has been diligently compiling this information but requires additional time to complete this project. Headquartered in Melbourne, Florida, AirNEt Communications Corporation -- http://www.aircom.com-- designs, manufactures, and markets wireless infrastructure products and offers infrastructure solutions for commercial GSM customers, and government, defense, homeland security based agencies. The Debtor filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham, LLP, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $15,701,881 and total debts of $21,615,346. AIRNET COMMUNICATIONS: Hires Gronek & Latham as Bankruptcy Counsel ------------------------------------------------------------------ AirNet Communications Corporation obtained authority from the U.S. Bankruptcy Court for the Middle District of Florida to employ Gronek & Latham, LLP, as its bankruptcy counsel, nunc pro tunc to May 22, 2006. Gronek & Latham is expected to: a. advise the Debtor regarding its rights and duties in its chapter 11 case; b. prepare pleadings related to the Debtor's case, including a disclosure statement and a plan of reorganization; and c. take any and all other necessary action incident to the proper preservation and administration of the Debtor's estate. The Debtor tells the Court that it has paid the firm a $75,088 advance fee for this engagement. R. Scott Shuker, Esq., a partner at Gronek & Latham, assures the Court that his firm does not represent any interest adverse to the Debtor or its estate. Mr. Shuker can be reached at: R. Scott Shuker, Esq. Gronek & Lathan, LLP 390 North Orange Avenue, Suite 600 Orlando, Florida 32801 Tel: (407) 481-5800 Fax: (407) 481-5801 http://www.groneklatham.com/ Headquartered in Melbourne, Florida, AirNet Communications Corporation -- http://www.aircom.com-- designs, manufactures, and markets wireless infrastructure products and offers infrastructure solutions for commercial GSM customers, and government, defense, homeland security based agencies. The Debtor filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham, LLP, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $15,701,881 and total debts of $21,615,346. AIRNET COMMUNICATIONS: BDO Seidman Expresses Going Concern Doubt ---------------------------------------------------------------- AirNet Communications Corporation's auditor, BDO Seidman, LLP, expressed substantial doubt about the Company's ability to continue as a going concern pointing to the Company's recurring losses from operations, negative cash flows, and accumulated deficit. The auditor issued the statement after auditing the Company's financial statements for the year ending December 31, 2005. A full-text copy of the auditor's report is included in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission. The Company reported a $17,667,540 net loss from operations on $19,642,269 of net revenues for the year ending December 31, 2005. The Company incurred a $26,188,872 net loss in 2004 and a $14,436,940 net loss in 2003. During the year, the Company used up $4,707,027 of cash in its operations. As of December 31, 2005, the Company's balance sheet showed $23,733,053 in assets, $13,014,017 in debts and $276,780,018 of accumulated deficit. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?ad8 About AirNet Headquartered in Melbourne, Florida, AirNet Communications Corporation -- http://www.aircom.com-- designs, manufactures, and markets wireless infrastructure products and offers infrastructure solutions for commercial GSM customers, and government, defense, homeland security based agencies. The Debtor filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham, LLP, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $15,701,881 and total debts of $21,615,346. ALLIED HOLDINGS: Rejects License Contract with SEA Inc. ------------------------------------------------------- On Aug. 9, 2002, Allied Holdings, Inc., entered into a software program product license and maintenance agreement with Software Engineering of America, Inc. The maintenance agreement portion of the Contract was subject to automatic renewal, but could be terminated on proper notice by either party. The Debtors believe they have already terminated the Contract. However, out of caution, the Debtors ask the U.S. Bankruptcy Court for the Northern District of Georgia to: * approve the rejection of the Contract; and * set a deadline for Software Engineering to file any related rejection claim. Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, discloses that the Debtors have determined that the Contract: -- is a burden to their estates; -- is no longer necessary for their ongoing business operations; and -- will increase administrative costs if not rejected. 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. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Trustees Dispute Liability Under Insurance Pacts ----------------------------------------------------------------- Rebecca C. Poole and Donna D. Glenn, as trustees of the Poole Split-Dollar Insurance Agreement, and Ms. Glenn as trustee of the AMP Family Insurance Trust Agreement, ask the U.S. Bankruptcy Court for the Northern District of Georgia to dismiss the adversary proceeding commenced by Allied Holdings, Inc., and its debtor-affiliates against certain insurance trustees. As reported in the Troubled Company Reporter on May 25, 2006, the Debtors asked the Court to declare that: (1) these agreements terminated as of July 31, 2005: * BFW Split-Dollar Insurance Agreement, * Poole Split-Dollar Agreement, * RJR/CBR Split-Dollar Insurance Agreement, * GWR,III/LBR Split-Dollar Insurance Agreement, * AR-JA-AR Split-Dollar Insurance Agreement, and * AMP Split-Dollar Insurance Agreement. (2) they are presently entitled to receive their interest in the proceeds of these Policies calculated as of July 31, 2005: * BFW Policies, * Poole Policies, * RJR/CBR Policies, * GWR,III/LBR Policies, * AR-JA-AR Policies, and * AMP Policies. (3) they are presently entitled to obtain loans or other withdrawals from the Policies to the extent of their interest in the Policies. The Debtors further asked the Court to compel the Trustees to: -- surrender the Policies and turnover the Debtors' interest in the Policies; and -- repay all postpetition loans against the cash value of the Policies to the extent that the loans are greater than the equity cushion in cash value of the Policies. Trustees Object According to L. Taylor Hanson, Esq., at Gilbert, Harrell, Sumerford & Martin P.C., in Brunswick, Georgia: -- the Debtors' complaint fails to state a claim against the Trustees on which relief may be granted; -- some of the Debtors' claims are barred by the terms of the Poole Split-Dollar Agreement, the first amendment to the Poole Split-Dollar Agreement, and the AMP Split-Dollar Insurance Agreement; -- the Trustees are not currently liable to the Debtors in any manner or amount; and -- the Trustees contest the damages and injuries asserted in the claims and demand strict proof. 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) ANCHOR GLASS: Gallen's And Feinberg's Equity Stake Cancelled ------------------------------------------------------------ In separate filings with the Securities and Exchange Commission, Jonathan Gallen and Stephen Feinberg disclose that they cease to beneficially own any shares of Anchor Glass Container Corporation's common stock as of May 3, 2006. Anchor Glass' Plan of Reorganization was consummated on May 3, 2006. Accordingly, all of the Company's shares of common stock were cancelled without consideration. Before the consummation of Anchor Glass' Plan, Mr. Gallen was deemed to beneficially own 473,591 shares of the Company's common stock and Mr. Feinberg was deemed to beneficially own 14,679,752 shares of the Company's common stock. Mr. Gallen has also ceased to be a member of Anchor Glass' Board of Directors. 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 Disallows Part of JEA's Claim ------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida disallows the $299,055 portion of Claim No. 558 filed by Jacksonville Electric Authority, without prejudice to the Alpha Resolution Trustee's rights to object to the remaining $339,618 part of the Claim. Anchor Glass Container Corporation had disputed JEA's Claim No. 558 for $638,674 to the extent that JEA asserts that it is entitled to recover $299,055, relating to amounts owed from Anchor Glass' 1996 bankruptcy case. Hywel Leonard, Esq., at Carlton Fields PA, in Tampa, Florida, argued that debt relating to the 1996 bankruptcy has been discharged, and that any claim dating back to 1996 is barred by the applicable statute of limitations. 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) ANVIL HOLDINGS: S&P Downgrades Rating to CC With Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and unsecured debt ratings on New York, New York-based apparel manufacturer and marketer Anvil Knitwear Inc. and parent Anvil Holdings Inc. to 'CC' from 'CCC+'. The outlook is negative. The company had about $139 million of total debt and about $56 million of preferred stock outstanding at Jan. 28, 2006. The downgrade follows the company's recent 10-K filing with the SEC in which the company indicated it is unlikely that it would be able to satisfy its $130 million in senior notes due March 2007, and accordingly has hired Jefferies & Company, Inc., as its financial advisor in exploring and reviewing strategic alternatives with respect to its capital structure. Also, the company's revolving credit facility matures in January 2007 and may not be renewed if the notes are not refinanced. Per the 10K filing, "(these) factors raise substantial doubt about the Company's ability to continue as a going concern." The ratings on Anvil Knitwear Inc. reflect: * its leveraged financial profile; * its small revenue base; * participation in the highly competitive imprinted segment of the active wear market; and * exposure to raw material price fluctuations. The ratings also reflect the commodity-like nature of most of its products and some customer-concentration risk. APARTMENT INVESTMENT: Fitch Affirms $900 Mil. Stock's BB+ Rating ---------------------------------------------------------------- Fitch affirmed the ratings for Apartment Investment and Management Company: AIMCO: -- $900 million preferred stock 'BB+' AIMCO Properties L.P.: -- $850 million bank credit facility 'BBB-' Fitch's also revised AIMCO's Rating Outlook to Stable from Negative. Fitch's ratings reflect AIMCO's asset and geographic diversification encompassing 234,000 units spanning 47 states. Leverage is moderate measuring 53% debt to undepreciated book capital as of March 31, 2006, and particularly good for this rating category on a risk adjusted basis for the multifamily property sector. AIMCO has a well laddered debt maturity schedule and ample short-term liquidity with approximately $400 million available on its $450 revolving bank facility. AIMCO's Outlook revision to Stable reflects the recent strong performance in same store net operating income. In first quarter 2006 same store NOI grew 9.4% compared to the first quarter 2005 and same store occupancy increased 420 basis points to 94.5%. This turnaround performance is a reflection of the strong management team in place. Stronger rental pricing power and management's initiatives to reduce expenses should also contribute to more solid coverage ratios going forward. The expectation for continued positive NOI growth is further enhanced by positive multifamily property fundamentals. Rating concerns include the currently weak debt service coverage ratios for the rating category. Fitch anticipates improved operating performance will translate into higher coverage ratios. Interest and fixed-charge coverage (adjusted for capitalized interest and capital expenditures) measured 1.9x and 1.4x respectively for the last 12 months as of first quarter 2006. Another concern is the nearly 100% encumbered portfolio. The use of secured debt in the capital structure encumbering substantially all assets has the potential to limit flexibility in a more difficult capital raising environment. Apartment Investment and Management Company, a Maryland corporation incorporated on January 10, 1994, owns a majority of the ownership interests in AIMCO Properties, L.P. through its wholly owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP, Inc. AIMCO, an S&P 500 company, is a $12.6 billion (undepreciated book capital) equity real estate investment trust and one of the largest owner/managers of multifamily properties in the United States. As of March 31, 2006, AIMCO owned a controlling equity interest in 172,313 units in 748 properties, owned a non- controlling equity interest in 14,913 units in 111 properties, and provided services or managed, for third party owners, 46,672 units in 478 properties. ARMSTRONG WORLD: Testimony Concluded on 3-Day Confirmation Hearing ------------------------------------------------------------------ Testimony has concluded in the confirmation hearing on Armstrong World Industries, Inc.'s Fourth Amended Plan of Reorganization before the Hon. Eduardo C. Robreno in the U.S. District Court for the Eastern District of Pennsylvania on May 25, 2006. Judge Robreno on May 30, 2006, issued a post-trial scheduling order directing AWI, the Official Committee of Asbestos Claimants, and Dean M. Trafelet, as the legal representative for future asbestos personal injury claimants, to file, by June 12, 2006: -- a post-trial brief, -- proposed findings of fact and conclusions of law, and -- a proposed order. The Official Committee of Unsecured Creditors will file a post- trial brief and proposed findings of fact and conclusions of law by June 22, 2006. The Plan Supporters will file any rebuttal by June 30, 2006. Judge Robreno scheduled closing arguments for July 11, 2006, at 9:30 a.m., in Philadelphia. CONFIRMATION TRIAL DAY 1 -- May 23, 2006 The major constituencies that participated in the Confirmation Trial and their professionals are: For the Debtors: Stephen Karotkin, Esq. Debra A. Dandeneau, Esq. Weil, Gotshal & Manges 767 Fifth Avenue, 10th Floor New York, New York 10153 For the Creditors Committee: Stephen J. Shimshak, Esq. John F. Baughman, Esq. Andrew N. Rosenberg, Esq. Andrew N. Gordon, Esq. Robert N. Kravitz, Esq. Paul, Weiss, Rifkind, Wharton & Garrison, L.L.P. 1285 Avenue of the Americas New York, New York 10019 Peter Lockwood, Esq. Caplin & Drysdale Chartered Thomas Circle Suite 1100 Washington, DC 20005 For the Asbestos Committee: Elihu Inselbuch, Esq. Nathan D. Finch, Esq. Caplin & Drysdale, Chartered 375 Park Avenue, 35th Floor New York, New York 10152 For the Futures Rep: Jane W. Parver, Esq. Michael Lynn, Esq. Andrew Kress, Esq. Kaye Scholer, LLP 425 Park Avenue New York, New York 10022 Sharon M. Zieg, Esq. Young Conaway Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 OPENING STATEMENTS Asbestos Committee Discloses Fact and Expert Witnesses Mr. Inselbuch, on behalf of the Plan Supporters, told Judge Robreno that the only remaining matter that needs to be resolved is the allegation that the Plan unfairly discriminates against the unsecured creditors by providing too much value to the asbestos claimants. "There seems little disagreement that, if the estimate of the asbestos liabilities is [$3,100,000,000] or more, then there cannot be unfair discrimination because the unsecured creditors will be treated at least pari passu or better," Mr. Inselbuch said. "And, in fact, on that number, the unsecured creditors' expert at depositions said about the 3.1 billion, 'I consider it to be at or above the high end of what I think would be a reasonable estimate.'" Mr. Inselbuch asserted that what should be estimated is what AWI's tort system liability would have been had it not gone into bankruptcy in December 2000. He emphasized that it is the burden of the District Court to accept the state tort system as it finds it. The Supreme Court has said it is not for the bankruptcy system to alter those values anymore for the asbestos claimants than it would for the unsecured creditors. Mr. Inselbuch presented five fact witnesses to testify on these matters: (i) what was really going on in the CCR; (ii) how the CCR mitigated the costs of all of its members; (iii) how the members of the CCR agreed a reasonable basis for allocating the costs of settlement; and (iv) what has been going on since the CCR closed down. Two fact witnesses appeared before the Court: -- Daniel Myer, who has worked for the Center for Claims Resolution as a settlement negotiator; and -- Edward Houff, AWI's principal defense counsel The Plan Supporters submitted deposition transcripts of three fact witnesses: -- Lawrence Keating, AWI's in-house counsel; -- William Hanlon, CCR's principal house counsel; and -- Paul Hanley, counsel for Federal Mogul and other defendant in the CCR and out of the CCR. Mr. Inselbuch also brought in three expert witnesses. Dr. Laura Welch described for the District Court the relevant issues that involve the medicine surrounding the claims for mesothelioma, lung cancer, other cancer, and non-malignant disease that are the subject of the estimation. Dr. Mark Peterson and Dr. Thomas Florence provided estimates that Armstrong's liability will exceed the $3,100,000,000 threshold that the creditors are looking at. Creditors Committee Lays Out Three Critical Points Mr. Shimshak, Esq., on the Creditors Committee's behalf, stated that it was apparent to the Creditors Committee in early 2003 that a litigation over a contested plan presented a real risk that unsecured creditors would face an outcome worse than the deal that's on the table today; a cram down plan with an even more unfavorable allocation of value between unsecured creditors and asbestos claimants. Mr. Shimshak advised Judge Robreno to look at the estimates of Dr. Florence and Dr. Peterson to see how well founded those concerns were. In addition, Mr. Shimshak said that confirmation of the Plan during the time would have at least produced prompt distributions for those who had invested substantial amounts in the Debtors' liabilities, yet were not receiving any interest on that debt. "Resolving the issue [of whether the Plan unfairly discriminates in favor of Class VII PI claim holders] requires determining what Armstrong's asbestos-related personal injury liability really is," Mr. Shimshak noted. "To do that, [the District] Court must find that the [P]lan does not unjustifiably give more distributable value on a ratable basis to the class of asbestos personal injury claimants that it gives to the unsecured commercial creditors." The Creditors Committee maintained that the Plan does give far too much value to Class VII and that it unfairly discriminates against Class VI. Mr. Shimshak pointed out that: (1) As a medical matter, the incidence of all asbestos- related diseases is declining, and that decline is particularly significant for AWI given its corporate and commercial history. Dr. Hans Weill, the Creditors Committee's medical expert, testified in regards to this matter. (2) The Creditors Committee designated testimony of AWI's own fact witnesses that establishes how AWI struggled in a legal environment riddled with abuse had skewed against the company and other asbestos defendants. (3) Creditors Committee's expert Dr. Letitia Chambers estimated that the exact number for AWI's present and future asbestos personal injury liability is $1,960,000,000. According to Mr. Shimshak, the "decline" only makes sense. Asbestos related diseases are exposure or dose driven. Workplace exposures have substantially decreased since the 1970s. "Combine this fact with the latency period for asbestos diseases, rarely more than 30 years and often less than that, and the decline is easy to understand." Mr. Shimshak asserted that the general phenomenon has particular significance for Armstrong, which never mined asbestos and never manufactured commercial successful asbestos products. As its own disclosure statement makes clear, AWI was out of the asbestos business as early as 1958, when it placed that business in a subsidiary -- Armstrong Contracting & Supply -- or, at the latest, when it sold off AC&S altogether in 1969. Mr. Shimshak also explained that in arriving at her estimate, Dr. Chambers reflected the new reality of the tort environment, a reality which is now requiring and will increasingly require better proof that AWI is liable, along with credible medical evidence of injury caused by AWI. FACT WITNESS NO. 1: Daniel Myer Mr. Finch, on the Asbestos Committee's behalf, called Daniel Myer to the witness stand. Mr. Myer started managing asbestos-related PI claims under Continental Insurance Company in 1982. He served between 1986 and 1988 as a supervisor in the claims department for the Asbestos Claim Facility, in which he was involved with middle management responsibilities for the evaluation, disposition, and settlement of cases on behalf of different asbestos defendants. With the demise of the Asbestos Claim Facility, Mr. Myer was appointed to the board of the newly created CCR, in which AWI was one of its members. He was responsible for the overall management of asbestos claims and PI claims on behalf of approximately 20 different defendants for about 36 different jurisdictions across the country. After the CCR dissolved, Mr. Myer started up his own company with three other partners -- Claims Management Services -- and provide essentially the same service provided in the CCR. Mr. Myer disclosed that his responsibility insofar as resolving cases on the defendants' behalf is to ensure that whatever amount that he is paying reflects their relative liability and, in turn, from a dollar standpoint, their relative dollar amount of that total gross value. Mr. Myer estimated that the total gross value of a mesothelioma case in 1999 or 2000 was between $2,500,000,000 and $3,500,000,000 and range from $5,000,000 to $8,000,000 at present. Considering Armstrong to be a national defendant, Mr. Myer attested that the geographic scope and size of Armstrong's potential liability was across the country. Mr. Myer further testified that the CCR differed from the ACF in the sense that the CCR claims philosophy was to go out and be proactive in regards to resolving cases. In other words, the CCR attempted to try to resolve cases not necessarily right on the eve of trial, but also tried to resolve cases to, inter alia, reduce defense costs and settlement costs. Mr. Myer told Mr. Finch that before it would pay money to a claimant, the CCR required the existence of an asbestos-related medical condition and an occupational exposure -- an exposure to at least one or more of the asbestos-containing products. For non-malignant claims, the requirement to pay any case rested on the fact that a plaintiff was able to provide the CCR with the existence of a medical report that showed confirmation of an asbestos-related disease. Mr. Myer clarified that the settlement amounts negotiated on behalf of the CCR members do not contain any kind of premium for punitive damages. Mr. Myer said that the cases were valued based on the likelihood that they go to trial and an award be returned absent punitive damages. Mr. Myer confirmed that the plaintiffs had basically used a mass consolidation as a hook to try to get more cases settled. However, the settlement averages by disease did not increase dramatically. Mr. Kravitz cross-examined Mr. Myer, tackling on CCR's "three-tier approach" in resolving certain claims. Mr. Myer attested that settlement values would be higher for cases that were closer to trial dates than those newly filed cases. He illustrated that in Mississippi, there were cases that went to verdict that resulted in an award against the CCR defendants of $48,000,000. Those exact same cases when they were being resolved is part of global settlements, and newly filed cases would be resolved for somewhere in the range of $500 to $700. Mr. Myer reasserted that the settlement value of a given case was a direct reflection of what information the plaintiff was providing or supplying in terms of support for all the product identification, as well as medical information. FACT WITNESS NO. 2: Edward Houff Edward Houff has defended Armstrong and other asbestos personal litigation for approximately 20 years. He became a liaison counsel for the Asbestos Claim Facility and represented AWI in connection with punitive damages cases in other jurisdictions, as well as special issues that included contentions relating to AWI's liability, if any, for Armstrong Contracting Supply Corporation. He also became a regional counsel for the CCR in 1988. Mr. Houff admitted that one of his special projects was to defend Armstrong in gasket and floor tile claims. Between these cases, the insulation contracting activities made up majority of the claims against AWI. In addition, Mr. Houff related that effective January 1, 1958, Armstrong Cork Company transferred its asbestos insulation contracting work to Armstrong Contracting Supply Corporation. To hold AWI responsible either independently of or in conjunction with ACS for asbestos-containing products, Mr. Houff said that the plaintiffs tried to employ various methods, including the claim that the licensing of certain trademarks that were ultimately used by AC&S on asbestos-containing insulation products was a source of liability to AWI because of the licensing, making them a seller in the chain of distribution. Mr. Houff said that alter ego was sometimes employed as a theory of vicarious liability against Armstrong Cork, as well as the use of the generic name, Armstrong. During cross-examination, Mr. Kravitz reviewed Armstrong's historical background and its relation to ACS and Armstrong Cork. Mr. Houff confirmed that before Armstrong was changed into AWI, it was called Armstrong Cork. When ACS -- which was incorporated as a separate entity from Armstrong -- was formed, it took over all of the insulation contracting business that Armstrong Cork itself had previously performed. Mr. Houff said he has found nothing from actual evidence from anyone indicating that Armstrong formed ACS to avoid asbestos liabilities or for any fraudulent purpose. He said ACS was formed because it was fundamentally different than the manufacturing business that Armstrong Cork had. Mr. Houff further admitted that in some cases there are a lot of defendants named, and there was over-naming. Mr. Houff attested that it was Armstrong's position that for any case in which the plaintiff's early exposure was after 1969 -- when ACS was sold and changed its name to AC&S -- Armstrong was not responsible for that. PLAN SUPPORTERS' 1ST EXPERT WITNESS: Dr. Welch Dr. Laura Welch was first to take the witness stand as medical expert for the Asbestos Committee. Under Mr. Finch's direct examination, Dr. Welch testified that she has made the subject matter of asbestos disease her professional specialty since 1980. She has treated thousands of patients who have asbestos-related diseases, and has published articles in peer review medical journals concerning the causation, epidemiology, or other issues related to asbestos-related disease. Dr. Welch has also received grants from the National Institute of Occupational Safety and Health to study asbestos-related disease on two different occasions to look at cause of death among sheet metal workers. Dr. Welch testified that she managed a large national medical screening program for asbestos disease in sheet metal workers since 1987. She has also been recognized many times by a court as an expert on medical issues relating to asbestos-related diseases, and has testified before the United State Congress on subjects related to the causation and epidemiology and diagnosis of asbestos-related diseases. Dr. Welch confirmed that she is not a certified B Reader. Mr. Gordon objected to see how expansive Dr. Welch's testimony is. At Judge Robreno's request, Mr. Finch restated Dr. Welch's field of expertise. Judge Robreno then allowed the testimony to proceed. Dr. Welch explained that the Surveillance Epidemiology and End Results program is designed by the National Cancer Institute to capture data on all cancers and look at incidents and survival to project national statistics, specifically on the estimation of mesothelioma incidents in the United States. Based on the SEER charts from 2002 to 2004, she said that the incidence of mesothelioma in the U.S. were just really right around the peak; the rates have stabilized and are not statistically declining yet. Dr. Welch characterized the decline in mesothelioma beginning in 2003 and 2004, based on Dr. Nicholson's mesothelioma projections, as "a gradual step-down." Dr. Welch testified that Dr. Nicholson's asbestos cancer projections were used in predicting the costs for the Senate Asbestos Trust, which data has been used by the Asbestos Workers' Pension Fund to predict the cost of the fund of future deaths among asbestos workers. Dr. Welch declared that "[a]sbestos causes lung cancer." Dr. Welch added that SEER can provide data on lung cancer, but the proportion that are due to asbestos cannot be determined from the clinical case of lung cancer. Dr. Welch asserted that one does not have to have asbestosis to be able to say that lung cancer was caused by asbestos. She said this was the consensus of experts in asbestos epidemiology at a 1997 conference in Helsinki, Finland. Dr. Welch pointed the District Court to a study by Cullen, et al., which looked at lung cancer and the presence or absence of asbestosis in about 4,000 asbestos-exposed workers that had been gathered together in a clinical trial. "I think it demonstrates what many people believed before, that asbestosis is not necessary to say a lung cancer is related to asbestos," Dr. Welch said. PLAN SUPPORTERS' 2ND EXPERT WITNESS: Dr. Peterson Dr. Mark Alan Peterson had an undergraduate degree from the University of Minnesota in Psychology and Mathematics, a law degree from Harvard, and a Masters and Ph.D. in Experimental Social Psychology from the University of California, Los Angeles. Since completing his Graduate Ph.D. degree, Dr. Peterson has been working as a research scientist for over 20 years and then as expert and researcher in mass tort litigation since early 1980s. Throughout all that time, his work has been to conduct empirical research on how the legal system functions. Dr. Peterson has been engaged by certain U.S. court judges to render services related to consolidated class action and claims estimation. In his voir dire examination conducted by Mr. Baughman, Dr. Peterson admitted that he has "never settled a case as an attorney for any party in an asbestos case." However, to familiarize himself with the necessary information in an asbestos case, Dr. Peterson testified that he reviewed documents with regard to the asbestos liabilities of a company, as well as depositions and testimony both from earlier hearings. He has also talked with Armstrong's representatives in resolving its asbestos liabilities, with the plaintiffs' lawyers, and with the CCR members. According to Dr. Peterson, the three steps that he employed in cleaning up and organizing pending claims data are: -- separately make an estimate of Armstrong's liability for claims pending as of the Petition Date and then a separate analysis of its liability for future claims. -- determine what percent of those claims will end up being paid by Armstrong; and -- determine the settlement value the claimants will receive. Dr. Peterson expected that the future percent that Armstrong would pay and how much it would pay on average to resolve claims would be substantially different, considering that there are major changes since 2000 that have occurred affecting both Armstrong, other CCR members, and asbestos defendants. CONFIRMATION TRIAL DAY 2 -- May 24, 2006 Dr. Peterson's testimony continued the following day. He discussed the estimation process and forecasts of settlement values of the types of claim that will be filed in Armstrong's case. Dr. Peterson forecasted that Armstrong's real obligations for asbestos related diseases is about what it was at the time of its bankruptcy. He added that mesothelioma is the disease that has increased the most in the past and has continued to increase more than any other disease. Dr. Peterson also projected that the number of non-malignant claims will go down, even though he was forecasting increasing finds for cancers because of the changes in the way lawyers handle screening processes. Furthermore, Dr. Peterson estimated that Armstrong's liability for its present asbestos PI claims may aggregate approximately $7,000,000, subject to an agreed 5.55% present valuation and $5,300,000,000 for future claims, had it not filed for Chapter 11 protection. The cancer claimants would receive 70% of the total amount paid. Other defendants would assert future liabilities arising from cancer claims, and not non-malignant claims. Of that total, 60% of would go to mesothelioma claims, which have shown the greatest growth in value. During cross-examination, Mr. Baughman questioned Dr. Peterson's interpretation of certain data to make comparisons on liability between Armstrong and other companies. Mr. Baughman said Dr. Peterson was basing his future estimates of value on essentially what happened in one particular year. Dr. Peterson explained that the quantitative measure he used to calculate the effects that he had forecasted is based on the changes of events between 2000 and 2001 in the asbestos litigation, which events were a continuation of important changes that occurred between 1999 and 2000. PLAN SUPPORTERS' 3RD EXPERT WITNESS: Dr. Florence Dr. Barry Thomas Florence was retained by the FCR as expert to estimate present and future asbestos liabilities that would accrue to Armstrong under the assumption that it did not go into bankruptcy but stayed in the tort system. Dr. Florence has an undergraduate degree from the University of Kentucky in Commerce, Business and a Masters and a Ph.D. from Michigan State University in research design and statistics. He worked for a consulting firm doing research for the California Court, Administrative Office of the Courts, and the Law Enforcement Assistance Administration. He was became former executive vice president of Resource Planning Corporation, which was later sold to KPMG Peat Marwick. He stayed with KPMG Peat Marwick as National Director of Litigation Services, before forming his own business, ARPC. During his stint with Research Planning Corp., KPMG and ARPC, Dr. Florence did analysis related to mass torts, planning and management work for claim processing facilities, and survey and economic research. In 1988, Dr. Florence was hired by the Manville trust to forecast the number of claims it would receive in the early years of the trust. Shortly thereafter, his team was hired by the UNR trust to do a full liability analysis. He also worked in, among others, the EaglePicher bankruptcy case, the Fuller Austin bankruptcy case, Insulations, Pittsburgh-Corning, Babcock & Wilcox, A.P. Green, Flintkote, Kaiser, U.S. Gypsum, and W.R. Grace. Mr. Baughman tried to block Dr. Florence from taking the witness stand. He questioned Dr. Florence's qualification as expert witness. He argued that Dr. Florence wasn't qualified because he didn't actually do the bulk of the work reflected in his report. "He isn't competent to explain the work that was done," Mr. Baughman said. However, the District Court cleared Dr. Florence, subject to a motion to strike testimony for failure to satisfy the requirements of Rule 702 of the Federal Rules of Evidence. In his testimony, Dr. Florence explained that Armstrong's asbestos liability to range from $4,000,000,000 to $4,900,000,000, with a median of $4,500,000,000 at net present value, using a 5.55% discount rate. According to Dr. Florence, the number of claims against Armstrong is expected to go down. Dr. Florence concurred with Dr. Welch's testimony that the claim filing is at a peak. He believes that the peak is extending over about a 40- to 45-year period. Dr. Florence also told the District Court that regardless of whoever retains him, his methodology for estimating pending and future asbestos liability remains the same. During cross-examination, Mr. Baughman again took a stab at Dr. Florence's qualification and reiterated that Dr. Florence had nothing to do with the preparation of the analyses contained in his report. He even noted that neither Dr. Florence nor anyone at ARPC has ever published a peer-review paper using the estimation techniques contained in his report. Mr. Baughman asked Dr. Florence if the methodology that he and his staff employed was designed at every step to increase the number of future claims. Dr. Florence denied this. Mr. Baughman also asked the District Court to strike Dr. Florence's testimony. "I think the testimony . . . has established that there is essentially no foundation for any of the opinions that Dr. Florence has often -- has offered." The District Court took the motion under advice. CONFIRMATION TRIAL DAY 3 -- May 25, 2006 CREDITORS COMMITTEE'S 1ST EXPERT WITNESS: Dr. Weill Dr. Hans Weill is a certified pulmonologist and a member of various organizations of internal medicine specialists and lung disease specialty organizations, like the American Thoracic Society. He is retired from full time faculty work at Tulane University. Dr. Weill started working in asbestos disease research in 1969. The research was centered primarily on the workers in two plants in the New Orleans area. For 15 years, his team of physicians, physiologists, engineers, etc., studied people who worked with asbestos cement building products. Those studies have been published. Dr. Weill also studied silica exposure and chemical exposures. Dr. Weill disclosed that over the course of his career, he has been retained to provide expert testimony in cases involving asbestos-related injuries. During direct examination, Dr. Weill underscored that: 1. The median latency period for mesothelioma is 30 years, not 40 years as indicated by Dr. Welch. Dr. Welch's opinion was based on a recent paper by Miller. However, Dr. Weill pointed out that the Miller paper is based on a population of household contacts solicited from more than nine plaintiffs' law firms. "There's nothing really new in that study and certainly that can't be used to characterize what the latency period is in this large pool of claimants or any other worker population," Dr. Weill explained. 2. The incidence of mesothelioma is declining and past the peak. Dr. Weill cited his 2004 study, "Changing Trends in U.S. Mesothelioma Incidents." He noted that data from the Surveillance Epidemiology and End Results Program of the National Cancer Institute showed a long-term increase in male mesothelioma cases from workplace exposure to asbestos that peaked in the early 90s and then started going down since then. Dr. Weill noted that Dr. Bertram Price of Price Associates, Inc., used the same SEAR data to project incidence of mesothelioma. Mr. Price's projections give a slightly later peak, but his data showed a peak that occurred some time between 2000 and 2004. 3. Asbestosis is also declining and the median latency period for asbestosis is in the 20-year range. According to Dr. Weill, publications on asbestos merely show today who are all the people who have x-ray changes that are characteristic of asbestosis. These studies do not tell what's happening over time. He said the only way to know what's happening over time is if every year new cases of asbestosis are counted. However, it's not being done in the U.S. 4. Asbestosis is a necessary precursor to asbestos-related lung cancer. Dr. Weill explained that his team studied workers at the asbestos cement manufacturing industry in 1970 for the next 13 or so years. They looked at the workers' mortality by causes and determined how it relates to the 1970 status of their lungs in regard to asbestosis. They obtained the workers' smoking history, medical history and their lung function tests. The team was able to account the workers' exposure at that time. Dr. Weill said the workers with asbestosis had a markedly elevated risk of lung cancer. "[W]e found that they had a four-fold increase, 400 percent increase, in lung cancer risk." Dr. Weill disputed Dr. Welch's testimony that asbestosis was not a necessary precursor. Dr. Welch relied on the Cullen study. Dr. Weill, however, pointed out that the Cullen study was not designed to determine the relationship between lung cancer and asbestosis. It was designed to determine whether or not taking therapeutic substances called betacarotene and retinol, whether those would prevent lung cancer in high-risk populations. Dr. Weill further told the District Court that assuming Armstrong left the asbestos business in 1958, the incidence of asbestos- related disease should be declining. "[T]he risk would be extremely low for all of the asbestos related diseases because one is well beyond the range of latency." During cross-examination, Mr. Finch attempted to establish or imply that: 1. the decline of asbestosis is gradual; 2. the latency period for mesothelioma is at least as long or longer as the median latency period for asbestosis; 3. there are many other articles in the medical literature that state that radiologically diagnosable asbestosis is not necessary to attribute lung cancer to exposure to asbestos; and 4. Dr. Weill is a known asbestos defendants' expert. In response, Dr. Weill confirmed that the incidence of asbestosis can be considered "gradual" and that the latency period of mesothelioma is about the same as that of asbestosis. He, however, emphasized that it depends on the dose. He noted that the lower the dose, the longer the median latency period. Mr. Finch pointed Dr. Weill to Dr. William Nicholson's 1982 paper, which projects a long gradual decline of mesothelioma incidence. However, Dr. Weill dismissed the projections. He explained that Dr. Nicholson's study was done 25 years ago. He also emphasized that his and Dr. Price's observations are more recent. Dr. Weill also noted that most articles that state that radiologically diagnosable asbestosis is not necessary to attribute lung cancer to asbestos exposure are opinion papers. According to Dr. Weill, there are very few studies -- that he would give some scientific credence to -- that show the opposite. Mr. Finch pointed Dr. Weill to a paper on asbestos-related disease topics, which was prepared at a gathering of medical professionals from many different disciplines in Helsinki, Finland. However, Dr. Weill dismissed the Helsinki research as an opinion paper. He said it was written by a group of individuals "who were of like mind in regard to the issue of asbestos related lung cancer," and "who in fact excluded some who had contrary views." Dr. Weill also downplayed the fact that most of the time he served as an expert for asbestos defendants. "It seemed that the majority, substantial majority of individuals who asked me to testify were people who were defendants," he told the District Court. CREDITORS COMMITTEE'S 2ND EXPERT WITNESS: Dr. Chambers Dr. Letitia Chambers is the managing director at Navigant Consulting Incorporated. She has worked on asbestos-related matters for about 30 years now. She founded Chambers Associates Incorporated, which was later acquired by Navigant, and worked for several different companies beginning with the Manville Corporation to look at asbestos-related occupational injury and estimate future asbestos claims. Dr. Chambers has also been involved in a number of bankruptcy cases, including Celotex Corp., U.S. Gypsum, Wallace & Gale, G-1 Holdings, and W.R. Grace, to estimate asbestos liability or look at asbestos trust procedures. She has been an expert for the debtor, for the unsecured creditors, the financial creditors, the banks or bondholders. Dr. Chambers has a master's degree and doctorate in Education, and a bachelor's degree in English. ACC Says Chambers Not An Expert Before the direct examination of Dr. Chambers, Mr. Inselbuch protested that Dr. Chambers is not qualified to provide an opinion on asbestos liabilities, particularly about future asbestos liabilities. He explained that Dr. Chambers has no training in the field and no court has ever relied on her opinion. Mr. Baughman argued that the fact that some of the cases she has testified may have been settled, or resolved in particular ways -- such that it never got to the point where a particular court had to accept or reject her opinion -- is not relevant. Mr. Baughman clarified that Dr. Chambers would engage in broader analysis instead of merely providing a claims estimate. With that, Judge Robreno admitted Dr. Chambers as expert witness. Chambers' Testimony According to Dr. Chambers, AWI's total estimated asbestos liability is $1,960,000,000. She said the estimate has been adjusted to reflect AWI's participation in the CCR and the fact that certain CCR members, notably GAF, left the facility in 1999 and 2000. She explained that GAF had a large share that was divided among the other CCR members. That division of the GAF share going forward caused a big spike in claim values for Armstrong in the year 2000. Absent the adjustment, AWI's total liability would have been $2,180,000,000. Dr. Chambers believes that the number of future non-malignant claims is expected to decline given these factors: 1. Fraudulent activity in asbestos torts -- where people submit dubious claims based on a diagnosis from a doctor who is part of "asbestos claiming mills" -- which activity was common in the 1990s, has been pointed out in recent court decisions and is unlikely to continue; and 2. The joint and several liability rules have been changed in a number of states. According to Dr. Chambers, her analysis shows that 77% of Armstrong's historical claims were in states that now have restricted joint and several liability. Dr. Chambers also concurred with Dr. Weill's testimony that incidence of asbestos-related injury is past the peak. She pointed out that of the 27,500,000 people that were exposed in the year 2000, only 9,000,000 of them are still alive. Dr. Chambers also disputed Dr. Peterson's and Dr. Florence's estimates of Armstrong's future liability. She explained that Dr. Peterson used values that are not rooted in Armstrong's own history, but values from a company that was on the verge of bankruptcy and only settling claims on the courthouse steps. She said that Dr. Peterson's assumption would result in high values. Dr. Florence's median estimate of $4.4 billion did not factor the anomaly in 2000 related to Armstrong's involvement in the CCR, according to Dr. Chambers. During cross-examination, Mr. Inselbuch tried to establish that GAF's exit from the CCR was a non-factor, and that Armstrong's settlement costs are increasing over the years. Mr. Inselbuch also pointed to an American Academy of Actuaries report, which indicated that starting in the year 2000 and continuing at least through the year 2004, there has been a substantial increase in what the insurance industry thinks it has to pay or has been paying and reserving for asbestos losses. Dr. Chambers told the District Court that while the insurance companies' overall indemnity has gone up, it doesn't mean that it's gone up due to payments for any individual company. Rather, it's gone up because more companies have been brought in to claiming. The insurance industry is now paying on behalf of some companies that it didn't formerly have insurance claims for. Cantor Testimony Barred Judge Robreno denied a last minute attempt by the Creditors Committee to admit Dr. Robin Cantor as expert witness. Mr. Baughman explained that the Creditors Committee did not receive the documents it requested from the CCR until the end of April. The documents were necessary to prepare Dr. Cantor's report on a timely basis. However, Judge Robreno pointed out that the Creditors Committee could have and should have alerted the District Court at an earlier date of its inability to obtain documents. Giving a short sermon, Judge Robreno said late designation is very disruptive to the orderly and efficient trial of the case. He noted that there's a significant public interest involved in the case. There are thousands of claimants that are awaiting compensation, the fate of the debtor is at issue with all of the employees, and consumers that expect resolution of the case one way or the other. "The confidence of the public in the administration of justice is undermined by modifying the scheduling order," he added. The Creditors Committee, in its request, said Dr. Cantor has done a review of 956 claims filed with the CCR that involved Armstrong. Dr. Cantor was supposed to testify that a substantial number of those claims had either no information on product I.D. as to Armstrong or the medical evidence that was submitted was submitted over the signature of doctors and facilities that have been called into significant question. District Court Clears Prof. Brickman Judge Robreno denied the Asbestos Committee and the Futures Representative's request to exclude Prof. Lester Brickman's expert testimony, subject to any motion to revisit his testimony, which may be made at the conclusion of his testimony. As previously reported, the Asbestos Committee and FCR argued that Prof. Brickman's testimony is "inadmissible" because it is, in essence, a partisan account of asbestos law. According to Judge Robreno, Prof. Brickman is qualified by virtue of skill, education and experience to aid the Court in the case. He also noted that the opinions rendered in the professor's report appear to be reliable. Judge Robreno also held that a good deal of the testimony in the case has involved a change in the law in the last few years and how that will affect the Debtors' future liability. He said Prof. Brickman's testimony will be helpful to the District Court. Prof. Brickman Takes the Stand Prof. Brickman took the witness stand late in the afternoon on May 25. He explained to the District Court the entrepreneurial asbestos litigation model that began to emerge in the mid to late 1980s. In this model, he said a number of lawyers determined to go out and seek clients and did so by hiring screening entities. The consolidation of claims in a single proceeding also caused the mass filing of claims to double because there would be no individual consideration of the merits of the claim. Prof. Brickman also noted that plaintiff lawyers prep claimants prior to a court appearance. This "witness coaching" has been revealed when Baron & Budd inadvertently included a witness preparation document in a deposition. He said claims filed against Armstrong are consistent with the results of the entrepreneurial model. He noted that 91% of nonmalignant claims against AWI closely aligns with the percentage of nonmalignant claims that are the product of the model. Prof. Brickman said prepetition settlements that Armstrong entered into with respect to asbestos claims that were the product of the entrepreneurial model, may not be a valid basis for projecting the number and value of future claims. Prof. Brickman also said that if Armstrong were in the tort system, it would be realizing declines in non-malignant claims consistent with the declines experienced by the companies, including American Standard, Ashlon, Crane, Crown Cork & Seal, Certex, Georgia Pacific, Goodyear Tire, Hercules, Honeywell International, Link & Electric, Owens Illinois, Union Carbide and Viacom. Mr. Finch and Mr. Lynn cross-examined Prof. Brickman. They tried to establish that Prof. Brickman was in no position to make an opinion relating to Armstrong's experience in the tort system since he has neither done any study on litigation involving Armstrong nor talked to individual Armstrong claimant or its counsel. They also pointed out that Prof. Brickman has not studied how often mass consolidations were used against Armstrong. Prof. Brickman, however, noted that Armstrong must be involved because the CCR was involved in a number of the mass consolidations in West Virginia and in other locations. Changes to LTI Plan Mr. Karotkin, Esq., disclosed at the May 25 Confirmation Trial that the Debtors have modified their long-term incentive plan, which would take effect on the effective date of the plan of reorganization. Mr. Karotkin explained that changes had to be made to the LTIP. Since the incentive plan was first formulated and the grants were agreed upon two and a half years ago in connection with the original confirmation hearing, there have been obvious changes in the personnel at the Debtors, who would be the people receiving these grants. The economics of the LTIP have not changed, Mr. Karotkin said. The number of options and shares of restricted stock have been reduced slightly since the number of employees has been increased. The exercise price of the options, which will be granted under the plan, will be adjusted from $30 a share. Mr. Karotkin noted that there have been changes in the tax law, and to avoid any adverse tax consequences to the beneficiaries of the grants, the options will now instead be struck at fair market value, at the time of issuance, in accordance with a formula that the parties will agree upon. The statutory committees and the FCR support the modifications. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARVINMERITOR: Moody's Assigns Ba1 Rating on $1 Billion Loan ----------------------------------------------------------- Moody's Investors Service affirmed ArvinMeritor, Inc.'s Corporate Family rating at Ba2 and assigned Ba1 ratings to the company's $1.05 billion of new first lien bank debt. Moody's lowered to Ba3 the ratings on the company's existing senior unsecured notes issued under the company's "1998 Indenture". The actions follow ArvinMeritor plans to reset the terms of its bank revolving credit facility and arranging a new $200 million bank term loan, both of which will benefit from first priority liens against certain of the company's assets. The rating outlook is Negative. Ratings on the company's remaining notes issued under the "1990 Indenture" are under review with direction uncertain as that indenture contains stronger protective features than the 1998 indenture, and their treatment under the refinancing remains to be clarified. Moody's also affirmed ArvinMeritor's Speculative Grade Liquidity rating at SGL-2, representing good liquidity over the next 12 months. Ratings affirmed: ArvinMeritor, Inc. * Corporate Family, Ba2 * Speculative Grade Liquidity, SGL-2 Ratings assigned: ArvinMeritor, Inc. * $850 million first lien revolving credit, Ba1 * $200 million first lien term loan, Ba1 Ratings downgraded: ArvinMeritor, Inc. * 6.75% notes maturing in 2008, to Ba3 from Ba2 * 6.8% notes maturing in 2009, to Ba3 from Ba2 * 8.75% notes maturing in 2012, to Ba3 from Ba2 * 8.125% notes maturing in 2015, to Ba3 from Ba2 * Shelf filing for unsecured notes, to (P)Ba3 from (P)Ba2 Arvin Capital * Backed preferred stock, to B1 from Ba3 Ratings under review with direction uncertain: ArvinMeritor, Inc. * 6.625% notes maturing in 2007 (approximately $5 million remaining) * 7.125% notes maturing in 2009 (approximately $6 million remaining) ArvinMeritor will grant bank lenders under the new facilities a first lien against certain domestic assets, including accounts receivable, inventory, certain property, plant & equipment as well as shareholdings in foreign subsidiaries, the shares of its special purpose vehicle used to facilitate accounts receivable securitization, and inter-company notes due from foreign subsidiaries. The pledged collateral will be designed and documented to not trigger the negative pledge provisions of the company's 1998 and 2006 indentures. Those indentures would mandate equal and ratable security be given to note holders if Secured Debt exceedes a prescribed limit. Subject to the terms of those indentures, a lien basket of 15% of defined Consolidated Net Tangible Assets was established but excluded certain assets and types of debt from the applicable definitions. A "savings clause" will be included in the bank security agreements which will have the effect of turning over to the trustee for the respective issues any amounts realized by the banks in excess of the applicable lien basket. Debt issued under the company's 1990 indenture involved a smaller lien basket and different terms which could be triggered by the proposed refinancing. Approximately $11 million of notes issued under that indenture remain following the company's debt tender in March. The company has not yet specified how these notes will be treated with respect to the terms of the indenture. The company will use $190 mm of the proceeds from the new term loan to reduce usage under its accounts receivable securitization program, which was roughly $206 million at the end of March 2006. The new revolving credit for $850 million will replace an existing $900 million facility. The transaction will not materially increase the company's indebtedness, but will further extend its debt maturity profile. The refinancing will not affect prospects for the company's operations or cash flows. Changes to the company's financial covenants will provide incremental headroom for financial covenant compliance. Covenants are not expected to constrain effective availability under the revolving credit facility over the next 12 months. In turn, this enhances the company's financial flexibility. Consequently, the Corporate Family rating of Ba2 has been affirmed. The negative outlook represents continuing concerns enumerated in Moody's rating action of April 4, 2006. Principally these reflect uncertainty associated with the impact to the company's performance in 2007 when new emission regulations for commercial vehicles in North America come into effect. These could adversely affect results in ArvinMeritor's Commercial Vehicle System's segment, which has accounted for the vast majority of recent operating earnings while its Light Vehicle System's segment has struggled with poor returns. However, CVS's trailer, aftermarket, emission and international operations may mitigate some of the anticipated decline in new commercial vehicle production in North America. In addition, restructuring actions in both segments are expected to generate savings. While visibility on the extent of any potential decline in the CVS business remains limited, margins within LVS must show improvement to support the current ratings. In the absence of a material improvement in those margins, LVS results may not fully offset any potential decline in CVS. The negative outlook also considers the potential for labor disruptions should negotiations between Delphi Corporation, GM and the UAW and between Tower Automotive, Ford and the UAW fail to resolve current issues related to labor costs. The remaining notes issued under the 1990 indenture could be up- graded should they receive equal and ratable treatment with the secured bank debt or receive other treatment that preserves or enhances their position. Conversely, should they for any reason not be granted equal and ratable treatment their ratings could be lowered. The Ba1 rating on the new bank facilities reflects higher recovery expectations based on their priority of claims. However, the new bank facilities are not structured on a borrowing base nor supported by appraisals on the pledged assets. The negative pledge clause in the 1998 and 2006 indenture also somewhat limits the extent of liens which can be granted against foreign subsidiary shareholdings and inter-company notes. Moody's concluded the senior secured ratings could be up-notched one level from Corporate Family. Higher recovery expectations on the secured debt, however, adversely affects recovery expectations for unsecured obligations. Ratings on unsecured instruments have been lowered one notch from Corporate Family. Rating on Arvin Capital's backed preferred shares have also been lowered one notch. The Speculative Grade Liquidity rating of SGL-2 has been affirmed and represents good liquidity over the next 12 months. While the amount of the company's effective availability to its external commitments has increased as a result of the financing, prospects for free cash flow and other internal resources have not changed sufficiently to support a higher overall rating at this time. However, the rating is better positioned within the SGL-2 category. The granting of security interests, related terms, and continuing impact of the negative pledge clause under the indentures, somewhat diminishes the capacity to develop incremental sources of alternative funding. ArvinMeritor, Inc., headquartered in Troy, Michigan, is a global supplier of a broad range of integrated systems, modules and components serving light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. Revenues in fiscal 2005 were approximately $8.9 billion. ATRIUM CO: Moody's Holds Caa1 Rating on $124MM Sr. Discount Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the new $475 million senior secured bank credit facilities of Atrium Companies, Inc., and affirmed the Caa1 rating for the $174 million senior discount notes issued at ACIH, Inc. as well as its B2 corporate family rating and SGL-3 speculative grade liquidity rating. ACIH is an intermediate holding company that is structurally below Atrium Corporation, the ultimate parent company, but resides above Atrium Companies, Inc., the primary operating company. The new $475 million credit facilities are comprised of a $378.5 million term loan B, $46.5 million delay draw term loan and a $50 million revolving credit facility. The proceeds from the new credit facilities will be used to acquire Texas window manufacturer Champion Corp., and also acquire a Californian window manufacturer, and to repay its existing term loan. The ratings outlook is stable. These ratings have been assigned to Atrium Companies, Inc.: * $378.5 million senior secured term loan B, due 2012, assigned B2; * $46.5 million senior secured delay term loan, due 2012, assigned B2; * $50 million senior secured revolving credit facility, due 2011, assigned B2. Moody's notes that the ratings on Atrium Companies, Inc.'s previous credit facilities will be withdrawn. These ratings have been affirmed for ACIH, Inc.: * $174 million senior discount notes, affirmed at Caa1; * Corporate Family Rating, affirmed at B2; * Speculative Grade Liquidity Rating, affirmed at SGL-3. The key rating factors influencing Atrium's ratings and outlook are: the company's acquisition appetite as evidenced by low return on assets, negative tangible net worth, and consistently high debt leverage; exposure to the slowing new home construction industry which accounts for around 65% of the company's revenues; free cash flow generation relative to debt levels; and Atrium's market position as a leading manufacturer of non-wood windows in North America and presence in the higher potential demand hurricane corridor. Headquartered in Dallas, Texas, Atrium Companies, Inc., is one of the largest window manufacturers in the United States. Revenues for 2005 were $787 million. AUSTIN COMPANY: Files Disclosure Statement in Northern Ohio ----------------------------------------------------------- The Austin Company and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Northern District of Ohio a disclosure statement explaining their Joint Plan of Liquidation. Overview of the Plan The Plan provides for liquidation of their assets for the distribution to the holders of allowed claims. On the Effective Date, all of the Debtors' Estates will be substantively consolidated for distribution and all assets will be transferred to, and will vest in, the Liquidating Trust, principally for the benefit of creditors. Under the Plan, a Liquidating Trustee will be appointed and will continue to liquidate all assets, reconcile claims and make distributions to the creditors holding Allowed Claims. Treatment of Claims Under the Plan, all administrative claims will be paid in full on the later to occur of: a) the Effective Date or; b) 11 days after the date upon which administrative claim is allowed. Holders of allowed tax priority claims with an estimated amount of $350,000 will receive in full satisfaction of its allowed claim, cash equally to the amount of the allowed claim after the Effective Date. St. Paul holding's secured claims of up to $14 million will be paid in full on: a) the Initial Distribution Date; or b) as soon as possible after that claim is allowed by final Court-order, subject to any applicable reduction or surcharge pursuant to section 506(c) of the Bankruptcy Code. Each holder of Priority Unsecured Claims totaling $480,000 will be paid in full without interest on the Effective Date or 30 days after the priority claim is allowed. Holders of the Allowed General Unsecured Claims will receive, in full and final satisfaction and release of their claims. The Plan also provides for the pro rata distributions to holders of Allowed General Unsecured Claims. Interest Holders will receive no distribution under the Plan. A full-text copy of the Debtors' Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060608060122 Headquartered in Cleveland, Ohio, The Austin Company is an international firm offering a comprehensive portfolio of in-house architectural, engineering, design-build, construction management and consulting services. The Company also offers value-added strategic planning services including site location, transportation and distribution consulting, and facility and process audits. The Company and two affiliates filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ohio Lead Case No. 05-93363). Christine M. Pierpont, Esq., at Squire, Sanders & Dempsey, LLP, represents the Debtors in their restructuring efforts. M. Colette Gibbons, Esq., and Victoria E. Powers, Esq., at Schottenstein Zox & Dunn Co., LPA, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. AVALON RE: S&P Lowers Subordinated Debt's Rating to CCC- from B --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its subordinated debt rating on Avalon Re Ltd.'s Series C variable rate notes, which are due June 6, 2008, to 'CCC-' from 'B'. Standard & Poor's also removed this rating from CreditWatch with negative implications, where it was placed on March 24, 2006. Avalon Re is a special-purpose reinsurance company that issued three notes of $135 million each. The notes cover successive layers of reinsurance to Oil Casualty Insurance Ltd. (A-/Stable/--). The notes afford Oil Casualty protection for three years against cumulative worldwide excess general liability exposures, including general liability risk, such as third-party bodily injury or property damage. "The Series C Notes were downgraded following Oil Casualty's announcement that it is expected to incur losses of at least $140 million, with the potential to reach the full limit loss of $150 million," explained Standard & Poor's credit analyst Gary Martucci. "This loss is related to the December 2005 U.K. (Buncefield) fuel storage explosion." Because of the losses incurred at Buncefield and the full policy limit loss realized as a result of Hurricane Katrina, the Series C Notes are effectively at risk for any future losses for covered events. Standard & Poor's continues to keep its ratings on Avalon's Series A and Series B notes on CreditWatch negative, pending receipt of addition information from Oil Casualty. Standard & Poor's expects to resolve the CreditWatch status of these ratings within the next two weeks. BENCHMARK HOMES: Auctioning Housing Lots on June 22 --------------------------------------------------- The Honorable Timothy J. Mahoney of the U.S. Bankruptcy Court for the District of Nebraska in Omaha authorized Thomas D. Stalnaker, the Chapter 11 Trustee in Benchmark Homes, Inc., and its affiliates' bankruptcy cases, to sell free and clear of liens and encumbrances through a competitive bidding process: -- the Saddlebrook Lots, -- the Saddlebrook Villas Lots, -- the Grove Lots, -- the Grove Villas Lots, -- the Apartment Lot, -- the Canterberry Lots, -- the Ashford Lots, and -- the Undeveloped Ashford Property. Chief Judge Mahoney ordered that undeveloped housing lots will be sold to the highest bidder at 1:00 p.m. on June 22, 2006, in an auction to be held at 14310 First National Bank Parkway in Omaha, Nebraska. Judge Mahoney said the minimum bid to be accepted on any of the lots will be 100% of the Allocated Loan Balance. The Allocated Loan Balances of the Lots are: 1. SADDLEBROOK LOAN -- Saddlebrook Lots $2,335,079.59 -- Saddlebrook Villas Lots $259,453.29 2. THE GROVE LOAN -- The Grove Lots $2,832,988.39 -- The Grove Villas Lots $236,832.37 -- The Apartment Lot $304,213.042 3. CANTERBERRY LOAN -- Canterberry Lots $1,954,293.00 4. ASHFORD LOAN -- Ashford Lots $3,306,956.10 -- Undeveloped Ashford Property $879,064.30 The Allocated Loan Balances will be subject to recalculation based upon changes in the costs incurred by the Development Lenders in maintaining and protecting the Development Lots, changes in interest rates under the terms of the Development Loan documents, or receipt of full or partial payment of the Development Loans, including the receipt of any lot release payments made under the terms of the Development Loan documents. A Development Lender holding an interest in the lots will be required to submit a bid of 100% of the Allocated Loan Balance as the opening bid. Such bid shall be a credit bid as permitted by Section 363(k) of the Bankruptcy Code. If the highest bid received is a credit bid submitted by a Development Lender, that Lender will not be required to place a deposit with the Trustee. If the highest bidder is not a Lender, that highest bidder will be required to submit to the Trustee a deposit of no less than $200,000, refundable to the bidder only if the Debtors fail or refuse to close the sale for which the bid as been received. A full-text copy of the order is available for a fee at: http://www.researcharchives.com/bin/download?id=060608061325 Headquartered in Omaha, Nebraska, Benchmark Homes, Inc. -- http://www.benchmarkomaha.com/-- designs and builds houses. The Debtor and its affiliates filed for bankruptcy protection on March 7, 2006 (Bankr. D. Nebr. Case No. 06-80243). Robert V. Ginn, Esq., at Blackwell Sanders Peper Martin LLP represented the Debtors. When the Debtor filed for chapter 11 protection, it estimated assets and debts between $1 million to $10 million. BOWATER INC: Posts $18.8 Million Net Loss in 2006 First Quarter --------------------------------------------------------------- Bowater Inc. reported a net loss of $18.8 million on total sales of $893.2 million for the quarter ended March 31, 2006. Bowater's balance sheet at March 31, 2006, showed $5,110.3 million in total assets and $3,935.6 million in total liabilities, and shareholders' equity of $1,174.7 million. The Company's balance sheet also showed total current assets of $1,007 million and total current liabilities of $578.4 million. A full-text copy of Bowater's quarterly report is available for free at http://researcharchives.com/t/s?aff Headquartered in Greenville, South Carolina, Bowater Incorporated (TSX: BWX) produces newsprint and coated mechanical papers. In addition, the company makes uncoated mechanical papers, bleached kraft pulp and lumber products. The company has 12 pulp and paper mills in the United States, Canada and South Korea and 12 North American sawmills that produce softwood lumber. Bowater also operates two facilities that convert a mechanical base sheet to coated products. Bowater's operations are supported by approximately 1.4 million acres of timberlands owned or leased in the United States and Canada and 30 million acres of timber cutting rights in Canada. Bowater is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, the Pacific Exchange and the London Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange. * * * As reported in the Troubled Company Reporter on June 2, 2006, Dominion Bond Rating Service downgraded the rating of Bowater Canadian Forest Products Inc. to BB (low) from BB. The trend remains Negative. The downgrade reflected persistent weakness in Bowater's credit metrics and the expectation that a significant improvement will not take place over the near term. The Negative trend recognized the considerable headwinds facing the Company. Standard & Poor's Ratings Services lowered its ratings on Bowater and subsidiary Bowater Canadian Forest Products Inc., including the corporate credit rating on each entity to 'B+' from 'BB' in December 2005. S&P said the outlook is stable. Moody's Investors Service puts Ba3 senior implied, senior unsecured and issuer ratings on Bowater. Moody's says the outlook is negative. Fitch Ratings rated Bowater's senior unsecured bonds and bank debt 'BB-'. Fitch said the Rating Outlook is Stable. CATHOLIC CHURCH: Frank Voth Wants Stay Lifted to Liquidate Claim ---------------------------------------------------------------- Frank Everett Voth asks Judge Elizabeth L. Perris of the U.S. Bankruptcy Court for the District of Oregon to: (a) lift the automatic stay pursuant to Section 363(d)(1) of the Bankruptcy Code; and (b) allow a sexual battery lawsuit he filed to be resolved at the earliest time. Mr. Voth, who holds Claim No. 262, filed a lawsuit against the Archdiocese of Portland in Oregon and a priest, Father Spaur, in the Circuit Court of the State of Oregon for the County of Multnomah, Case No. 0507-07025, alleging claims for sexual battery of a child and negligence. Mr. Voth alleges that the abuse took place while Father Spaur was employed by the Archdiocese. Thus, the Archdiocese has vicarious liability for Father Spaur's actions. Mr. Voth asserts $12,000,000 in damages as a result of the abuse. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCS MEDICAL: S&P Downgrades Rating to B- With Negative Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Clearwater, Florida-based chronic care supply company CCS Medical. The corporate credit rating was lowered to 'B-' from 'B'. The rating outlook is negative. "The downgrade reflects concerns regarding tight loan covenants at March 31, 2006, and the little cushion available in future periods," said Standard & Poor's credit analyst Alain Pelanne. "Also, we are concerned with the success of business integration, particularly regarding accounts receivable collection and CCS's already highly leveraged financial risk profile. Finally, the company's operating results have not been at the levels initially expected when the rating was first assigned, primarily as a result of additional bad debt reserves and higher-than-anticipated Medicare respiratory reimbursement cuts." The rating reflects: * CCS's exposure to the vagaries of reimbursement by third- party payors; * integration risk related to the merging of the second- and third-largest companies in the mail-order chronic care market; and * the company's aggressive leverage. These risks are somewhat mitigated by the growing market for CCS's services and its relatively diversified revenue and payor mixes. CHARLES RIVER: Posts $100 Mil. Net Loss in Quarter Ended April 1 ---------------------------------------------------------------- For the three months ended April 1, 2006, Charles River Laboratories International, Inc., reported a $100,115,000 net loss on total net sales of $283,769,000. Charles River's balance sheet at April 1, 2006 showed total assets of $2,410,424,000 and total liabilities of $665,126,000, and $1,737,055,000 of total shareholders' equity. The Company's balance sheet also showed total current assets of $412,659,000 and total current liabilities of $268,023,000 at April 1, 2006. A full-text copy of Charles River's quarterly report is available for free at http://researcharchives.com/t/s?b00 Charles River Laboratories International, Inc. sells pathogen- free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models -- rats and mice bred for preclinical experiments, including transgenic "knock out" mice -- to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. * * * As reported in the Troubled Company Reporter on March 1, 2006, Moody's Investors Service assigned Ba1 ratings to new credit facilities of subsidiaries of Charles River Laboratories International, Inc., which are guaranteed by Charles River. Moody's also affirmed Charles River's Ba1 Corporate Family Rating, the Ba1 rating on its existing credit facilities, and the Speculative Grade Liquidity Rating of SGL-1. The rating outlook for the company is stable. CHESAPEAKE ENERGY: Fitch Affirms Conv. Pref. Stock's B+ Rating -------------------------------------------------------------- Fitch Ratings affirmed the ratings of Chesapeake Energy Corporation following the company's announcement that it has entered into an agreement to acquire certain oil and gas properties from a joint venture between Four Sevens Oil Co. Ltd. and Sinclair Oil Corporation (the Four Sevens/Sinclair acquisition) for $845 million. In its press release, Chesapeake also announced the acquisition of an additional 28,000 net acres in the Barnett Shale from other sellers for $87 million. Fitch affirms these with a Stable Outlook: -- Issuer Default Rating at 'BB' -- Senior unsecured debt at 'BB' -- Senior secured revolving credit facility and hedge facility at 'BBB-' -- Convertible preferred stock at 'B+' Despite the continued run-up in acquisition multiples and a softening of spot natural gas prices, Chesapeake is not letting up in its strategy as an aggressive acquirer and developer of low- risk on-shore natural gas reserves. The company has now announced or closed more than $1.85 billion in acquisitions thus far in 2006. The assets included in the Four Sevens/Sinclair transaction are located in one of Chesapeake's core growth regions, the Barnett Shale. Chesapeake will initially book 160 billion cubic feet equivalent of proven reserves from 39,000 net acres of leasehold assets which have current production of approximately 30 million cubic feet equivalent per day. No proven reserves will be booked initially with the smaller transaction. Chesapeake anticipates closing all of the acquisitions by the end of July. While Fitch recognizes the long-term growth expectations for the properties, the initial purchase price for the Four Sevens/Sinclair acquisition equates to nearly $5.00 per million cubic feet equivalent of reserves after backing out $55 million for the associated midstream assets. As with other acquisitions, however, Chesapeake also forecasts spending an additional $2.3 billion to fully develop the properties over the next several years. More than 90% of the reserves from the acquisitions are being booked as probable and possible. With the additional investments, Chesapeake expects to quickly increase current production from the Four Sevens/Sinclair properties with an exit rate of 45 to 50 mmcfe per day expected at the end of 2006 and 80 to 100 mmcfe per day at the end of 2007. Chesapeake's ratings continue to be supported by the size and 'low risk' profile of its oil and gas reserves as the company has grown into one of the largest natural gas producers in North America. Pro-forma for the acquisitions and a positive 100 bcfe revision to its Barnett Shale reserves during the current quarter, Chesapeake anticipates reporting between 8.2 trillion and 8.4 trillion cubic feet equivalent of proven reserves at the end of the second quarter. Reserve replacement has averaged a robust 585% over the last three years (2003-2005), with 222% coming from the company's drilling program at reasonable costs considering the escalation in drilling and service costs across the peer group. Chesapeake also now forecasts 2006 production of between 581 bcfe and 591 bcfe, representing a 26% increase over 2005 levels and a compound growth rate of 34% annually over the last four years. Chesapeake's ratings are also supported by the company's conservative hedging strategy which has given a good line of sight to the expected earnings over the next several quarters. Chesapeake continues to take advantage of the robust strip prices with current swap positions now up to 88%, 69%, and 55% of its gas production in 2006, 2007, and 2008, respectively, at prices between $9.00 and $10.00/mcf in each year. Chesapeake also continues to use a significant level of basis protection swaps to lock in the price differentials for its gas production across its various core regions. The company's oil production, which represents approximately 8% of 2006 forecasts, is also significantly hedged over the same period at between $60 and $70 per barrel in each year. Chesapeake has indicated that the transactions will ultimately be financed with a mix of long-term senior unsecured notes and common/preferred stock. As with other transactions, Fitch views Chesapeake's balanced approach for funding acquisitions at roughly 50% debt and 50% equity positively. The company's debt-to-proven reserve metrics, however, will remain among the highest in the industry. Allocating a percentage of the company's debt to the company's drilling rigs and treating 15% to the company's preferred stock as debt, Fitch expects debt-to-mcfe of proven reserves to be more than $0.75/mcfe at year-end 2006 with debt-to-proven developed reserves of more than $1.15/mcfe. Fitch also forecasts EBITDA-to-interest coverage to be greater than 10x in 2006, with debt to EBITDA of under 2x. These forecasts, however, will likely change significantly as the company continues to pursue further transactions throughout the remainder of the year. Chesapeake is an Oklahoma City-based company focused on the exploration, production and development of natural gas. The company's proved reserves remain predominantly natural gas and are based 100% in North America. Chesapeake's operations are concentrated primarily in the Mid-Continent, South Texas, the Permian Basin, and the Appalachia Basin. The company's reserves reflect the company's aggressive acquisition strategy and consistent success through the drill-bit. CHOICE ONE: S&P Junks Proposed $160 Million Term Loan's Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Rochester, New York- and Boston-based Choice One Communications Inc., a competitive local exchange carrier. The outlook is stable. Choice One Communications is the surviving entity of the combination of Choice One, CTC, and Conversent Communications. Standard & Poor's expects the name of the company to change once the merger is finalized. In addition, Standard & Poor's assigned a 'B' bank loan rating to Choice One Communications Inc.'s proposed $400 million senior secured first-lien term loan and $30 million revolver, and a 'CCC+' rating to the company's proposed $160 million senior secured second-lien term loan. The recovery rating for the first-lien term loan and revolver is '5', suggesting negligible recovery (0%-25%) in the event of payment default or bankruptcy. The second-lien term loan is rated two notches below the corporate credit rating, at 'CCC+', based on the significant amount of priority obligations from the first-lien term loan and revolving facility. The recovery rating for the second-lien term loan is '5' as well. The bank loan rating is based on preliminary documentation subject to receipt of final information. Pro forma total debt is approximately $655 million on an operating lease-adjusted basis. Total bank proceeds of $560 million, combined with $150 million of new equity, will be used: * to fund the $450 million acquisition of Conversent Communications subsequent to the merger of Choice One and CTC; * to refinance $214 million of existing Choice One term loans; * to repay $15 million of subordinated notes owned by shareholder Columbia Ventures; * to pay transaction fees; and * for general corporate purposes. "The ratings on Choice One reflect a vulnerable business risk profile stemming from a lack of sustainable competitive advantages against financially stronger incumbent telecom operators, vulnerability to potential regulatory changes, low barriers to entry, and integration risks associated with the combination of the three companies," said Standard & Poor's credit analyst Allyn Arden. Choice One will be challenged to successfully integrate all three companies while maintaining its customer base in the face of growing competition from the regional Bell operating companies, primarily Verizon Communications Inc. and AT&T Inc. Tempering factors include: * the economies of scale associated the size of the company; cost synergies; * the potential for significant discretionary cash flow generation; and * the lengthy duration of customer contracts. CIMAREX ENERGY: S&P Upgrades Senior Unsecured Debt Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Cimarex Energy Co. and revised the outlook on the company to positive from stable. At the same time, the senior unsecured debt rating was raised to 'BB-' from 'B+' to reflect improved asset coverage of unsecured debt. As of March 31, 2006, the Denver, Colorado-based company had $352 million of debt. The positive outlook reflects improvements to Cimarex's debt leverage and cost structure since its 2005 acquisition of Magnum Hunter Resources Inc., as well as the successful integration of Magnum Hunter, which was roughly three times the size of Cimarex at the time of the acquisition. Due to strong cash flows and related debt repayment during 2005, Cimarex was able to reduce debt per barrel of oil equivalent from roughly $2.80 at the close of the Magnum Hunter acquisition to $1.80. Likewise, pro forma all-in costs of roughly $4 per thousand cubic feet equivalent improved to roughly $3.25 per mcfe during 2005. The improvements made reflect the successful integration of Magnum Hunter, and indicate that Cimarex should be able to maintain its improved financial metrics. Finally, Cimarex's senior unsecured debt rating was raised to 'BB- ', reflecting improved asset coverage of unsecured debt, with secured debt now encumbering less than 15% of adjusted assets. "The positive outlook on Cimarex reflects the potential for ratings improvement over the near to medium term, if Cimarex can maintain its improved debt leverage and cost structure, while continuing to successfully integrate the assets from Magnum Hunter," said Standard & Poor's credit analyst Paul B. Harvey. "Ratings would be stabilized if Cimarex aggressively pursues acquisitions or other growth initiatives, to the detriment of debt leverage or cost structure," he continued. CONGOLEUM: Insurers Want to Buy Back Insurance Policies for $25MM ----------------------------------------------------------------- Congoleum Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey to approve a settlement and policy buyback agreement they inked with: -- American Biltrite, Inc.; -- Travelers Casualty and Surety Co., formerly known as The Aetna Casualty and Surety Company; and -- St. Paul Fire and Marine Insurance Company. To settle the outstanding disputes and to purchase the Debtors' interests in certain insurance policies, the St. Paul Travelers Entities agree to pay a total of $25,000,000 to a Plan Trust to be created to pay asbestos claimants. A full-text copy of the Debtors' Plan Trust Agreement is available for free at http://ResearchArchives.com/t/s?9f0 A copy of the Debtors' Plan Trust Distribution Procedures is available for free at http://ResearchArchives.com/t/s?9f1 The St. Paul Travelers Entities have 18 policies at issue in the Coverage Action. Seventeen of these policies were issued by Travelers, and one was issued by St. Paul. Five of the Travelers policies are written to provide coverage in excess of $10 million of other excess coverage as well as primary coverage for the year in which each of these Travelers policies was in effect and are in the third excess layer above primary insurance. Adding together the aggregate limits of liability of these five policies is $24 million. Two of the Travelers policies are written to provide coverage in excess of $20 million of other excess coverage as well as primary coverage for the year in which each of these Travelers policies was in effect and are in the fourth excess layer above primary insurance. Adding together the aggregate limits of liability of these two policies produces a sum of $10 million. One Travelers policy, effective from October 12, 1972 until January 1, 1976, was written to provide coverage in excess of $25 million of other excess coverage as well as primary coverage for the years in which it was in effect and is in the fourth layer of excess coverage above primary coverage. Seven of the Travelers policies are written to provide coverage in excess of $25 million of other excess coverage as well as primary coverage for the year in which each of these Travelers policies was in effect and are in the fifth excess layer above primary insurance. The Debtors contend that adding together the aggregate limits of these last eight policies would produce a sum of $55 million, while Travelers contends that adding together the aggregate limits of these last eight policies would produce a sum of $40 million. Two of the Travelers policies are written to provide coverage in excess of $80 million of other excess coverage as well as primary coverage for the year in which each of those Travelers policies was in effect and are in the sixth excess layer above primary insurance. Adding together the aggregate limits of these two policies would produce a sum of $20 million. The St. Paul policy was written to provide excess coverage over $25 million of other excess coverage as well as primary coverage for policy period in which it was in effect and is in the fourth excess layer above primary insurance. The Debtors contend that the aggregate limit of liability of this policy is $40 million, while St. Paul contends that the aggregate limit of liability of this policy is no more than $10 million. Gregory S. Kinoian, Esq., at Okin, Hollander & Deluca, L.L.P., in Fort Lee, New Jersey, argues that considering where the St. Paul Travelers Entities' policies sit in the Debtors' coverage program and that claim payments are spread across numerous years of available coverage, an aggregate asbestos liability of more than $1.2 billion likely would not impair all of the potentially available limits of the policies. Under the Plan, there would not be a significant outlay of asbestos claim payments immediately upon confirmation; instead, payments to claimants would occur over time as the Plan Trust evaluates and allows claims. The Debtors believe that the first $200 million of claim allowances by the Plan Trust likely would impair the Travelers policies only in an amount of approximately $3 million. The Debtors submit also that it would require another $300 million (for a total of $500 million) to trigger obligations of approximately $37 million under the Travelers policies. It could be years after confirmation, however, before claim allowances total $500 million. Under the Settlement and Buyback Agreement, the Plan Trust would have $25 million in hand during the early stages of the Plan Trust's operations. The Court will consider approval of the Debtors' request on June 19, 2006. 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). CURATIVE HEALTH: Eliminates $185MM Bondholder Debt Upon Emergence ----------------------------------------------------------------- Curative Health Services, Inc. completed its plan to eliminate $185 million in bondholder debt in less than 75 days. As reported in the Troubled Company Reporter on May 24, 2006, the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's prepackaged plan of reorganization. As a result, the Company now has a strong balance sheet and access to capital through exit financing commitments from a secured lender. In addition to eliminating $185 million in bondholder debt, Curative emerged as a privately held company named Critical Care Systems International, Inc. The wound care management business of the Company was also renamed and will now be called Wound Care Centers, Inc., to better align with the services of the business unit. "We are pleased to complete the Chapter 11 proceedings in less than 75 days," Paul F. McConnell, President and Chief Executive Officer of Curative, said. "The Company is backed by some of the most successful and sophisticated investment companies in the world and we are well positioned for future success and growth. We appreciate the ongoing support from our customers and suppliers and they can expect us to continue to provide exceptional patient care and customer service." About Curative Health Headquartered in Nashua, New Hampshire, Curative Health Services, Inc. -- http://www.curative.com/-- provides Specialty Infusion and Wound Care Management services. The company and 14 of its affiliates filed for chapter 11 protection on Mar. 27, 2006 (Bankr. S.D.N.Y. Case No. 06-10552). Brian E. Greer, Esq., and Martin N. Flics, Esq., at Linklaters, represent the Debtors in their restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtors' chapter 11 cases. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. DANA CORPORATION: Court Approves Sypris Settlement Agreement ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved Dana Corporation and its debtor-affiliates' settlement agreement with Sypris Solution, Inc. As reported in the Troubled Company Reporter on May 23, 2006, Debtors Dana Corporation, Torque-Traction Manufacturing Technologies, LLC, and their nondebtor affiliate, Dana Heavy Axle Mexico, S.A. de C.V., have been parties to a series of contractual agreements and amendments with Sypris since 2001. In 2001, the Dana Companies sold to Sypris their interests in Marion Forge. In connection with that transaction, Dana and Sypris entered into an eight-year supply contract for axle shaft forgings and ring gear and pinion forgings previously produced by the Dana Companies at the Marion Forge facility. In 2003, Sypris purchased the Dana Companies' Morganton, North Carolina facility. In conjunction with that transaction, Dana and Sypris entered into another eight-year supply contract for the casting products that had previously been produced by the Dana Companies at that facility. In 2004, Sypris purchased the Dana Companies' Toluca, Mexico facility. In conjunction with this transaction, Dana and Sypris once again entered into an eight-year supply contract. Under the contract, Sypris was to supply Dana with large steer axle beams and other products. During the course of their relationship, Dana and Sypris entered into a number of amendments to the Supply Contracts. The terms of the amendments ranged from: -- adding additional parts to the Supply Contracts and establishing the prices of the added parts; to -- extending the term of the Marion Supply Contract through December 2014. Through the Supply Contracts, Sypris is Dana's single largest component supplier, accounting for over $120,000,000 in purchases for 2005. Temporary Payment Assurances Agreement In 2005, Sypris began to express concerns to Dana about its financial position. Based on those concerns, on December 15, 2005, the parties entered into a Temporary Payment Assurances Agreement. The TPAA was to run from Dec. 19, 2005 through April 18, 2006 -- the probationary period -- subject to renewal for subsequent 120-day periods. The critical terms of the TPAA include: a. for the duration of the Probationary Period, Dana would pay Sypris on a weekly basis by ACH Transfer; b. Sypris agreed not to suspend Dana's trade credit before its Second Event of Default, which was Dana's failure to pay any invoice in accordance with Sypris' books and records within 45 days of the invoice date; c. any default of the TPAA would automatically extend the Probationary Period by 120 days; and d. Sypris agreed to provide Dana with weekly invoice registers and work in good faith with Dana to resolve any disputes. In February 2006, disputes between the parties arose regarding Sypris' claims that Dana had committed both a First and Second Event of Default under the TPAA. To temporarily resolve the outstanding disputes, in mid-February, Dana agreed to a reduction in payment terms from 62 days to 45 days. On March 2, 2006, Sypris announced that it was eliminating all trade credit to Dana, and unless Dana agreed to pay for Parts on "cash-in-advance" terms, Sypris would not ship products to Dana's facilities. Sypris continued its refusal to supply Dana with Parts. Accordingly on March 6, 2006, the Debtors filed a notice of repudiating vendor with respect to Sypris. The Court conducted a hearing on the notice and the Debtors' oral motion for a temporary restraining order. Under an agreed TRO, the Court required Sypris, among other things, to restore the 45-day credit terms. Other Disputes Between the Parties Owing to the unique "buy-sell" relationship that exists between the Dana Companies and Sypris under the Supply Contracts, Dana was indebted to Sypris for approximately $22,000,000 in prepetition deliveries of goods and services Sypris was also indebted to Dana in excess of $12,000,000 for prepetition deliveries of goods and services. Owing to the complex set-off and recoupment issues raised by the parties' various relationships, the parties could not reach consensus on the validity or scope of those rights. On April 27, 2006, Sypris filed a notice of its intent to implement certain of the proposed set-offs and recoupments. Furthermore, the parties have disagreed regarding the purchase of materials to be used in the production of Parts at Sypris' Morganton facility. While Sypris had historically purchased these materials from Dana's suppliers -- as opposed to the Marion Facility where Dana itself continued to purchase the materials after the sale of its facility to Sypris -- Sypris asserted that its payment of its own material suppliers somehow impacted the parties' relationship. Settlement Agreement Recognizing the risks and costs associated with protracted litigation, the Dana Companies and Sypris negotiated a framework for the resolution of their disputes. As the parties were not able to bring those matters to a close, they engaged the assistance of the former bankruptcy judge James Garrity to serve as mediator. On May 10, 2006, the parties reached a final agreement. The key terms of the parties' settlement agreement are: a. Sypris and Dana will commit to supply each other with Parts and raw materials pursuant to the Supply Contracts. Dana will pay Sypris for Parts and Materials on 44-day ACH payment terms for goods purchased in the United States and on 20-day ACH payment terms for goods purchased in Mexico. Sypris will continue to pay Dana for Parts and Materials purchased from Dana on 59-day payment terms; b. The TPAA will be superseded by the Settlement Agreement, and Dana will release Sypris from any claims relating to actions taken by Sypris pursuant to the TPAA; c. Dana will assume the responsibility for purchasing materials for Sypris' Morganton facility, and the parties will use good faith efforts to facilitate the transfer of this function by May 15, 2006; d. Dana will pay Sypris $9,200,000 representing a partial payment of Sypris' administrative claim under Section 503(b)(9) of the Bankruptcy Code. The remainder of the claim will be paid after a reconciliation of the parties' books and records, and if necessary, an arbitration of those amounts; e. In the event of any insolvency, bankruptcy or liquidation of Dana Heavy Axle, Sypris will be entitled to administrative expense claim against the estates of Dana and TT Manufacturing for amounts owed by Dana Heavy Axle; f. Subject to the parties' reconciliation, Dana would agree that Sypris has valid and enforceable set-off or recoupment rights with respect to those amounts owed by Sypris to Dana for materials purchased prior to March 3, 2006. After reconciliation, any additional amounts due and owing to or from Dana will be paid within five days, provided that any disputes regarding those amounts will be subject to binding arbitration; and g. The parties agree to default, notice and remedy provisions, and alternative dispute resolution procedures. About Dana Corporation 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). DANA CORPORATION: Rejects Ten Equipment & Property Leases --------------------------------------------------------- Dana Corporation and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to reject 10 identified executory contracts that are no longer necessary for their ongoing business operations or restructuring efforts. These Contracts, which are primarily comprised of leases of certain equipment or real property, are deemed rejected as of May 31, 2006: Payment/ Agreement Counterparty Monthly Rent --------- ------------ ------------ Agreement No. 57373 Palace Sports & $22,000 annual Entertainment, Inc. payment Agreement No. 131102 Hillside Productions, $7,000 annual Inc. payment Equipment Lease Dana Commercial $198,174 per No. CO-FAR-004 Credit Corporation month (expires on 8/31/07) Equipment Lease Avid Media Composer $1,435 per No. 58. month Equipment Lease CCA Financial, LLC $75 per No. 150-0823929-001 month Lease of Office and Danacq Farmington $194,217 per Research and Devt. Hills LLC month Facility, in 27404 c/o U.S. Realty Advisors Drake Road, Farmington Hills, Michigan. (expires 10/01/21) Equipment Lease LaSalle Systems $398 per No. 22 Leasing, Inc. month (expires 4/30/07} Equipment Lease LaSalle Systems $434 per No. 17 Leasing, Inc. month (expires 9/30/07) Equipment Lease Pitney Bowes Credit Corp. $798 per No. 4792140005 month (expires 11/18/07) Equipment Lease De Lage Landen $550 per No. 24571460 Financial Svcs., Inc. month (expires 7/19/10) About Dana Corporation 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 Nos. 8 and 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). DANA CORP: Resolves Shipping Charges Dispute With Toledo Press --------------------------------------------------------------- Dana Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve their entry into and performance under a settlement agreement with Toledo Press Company. The settlement resolves certain disputes between the parties relating to shipping charges incurred in connection with the delivery of certain equipment sold by TPC to the Debtors. Corinne Ball, Esq., at Jones Day, in New York, relates that Dana and TPC are party to a number of agreements relating to the purchase of certain equipment from TPC by Dana. Specifically, Dana agreed to purchase from TPC two 2,500-ton presses and two 1,000-ton presses and certain related equipment for more than $10,000,000 in the aggregate, to be paid through a series of quarterly payments to be made through July 2006. The Equipment is to be used by Dana's Structures Division in the manufacture of frames for light trucks and automobiles. TPC was to procure the Equipment, which was manufactured in China, and ship the Equipment to the Debtors' facility in Hopkinsville, Kentucky, where TPC was to install the Equipment and perform certain related services. Shipping charges were to be paid for by TPC as part of the Purchase Price and were not a separate charge to be added to the Purchase Price, Ms. Ball says. TPC arranged for the shipment of the Equipment in several stages on different vessels that were to arrive in New Orleans, Louisiana, in late 2005. Because of Hurricane Katrina, the vessels were diverted to a port in Houston, Texas. According to Ms. Ball, TPC worked to have the Equipment delivered to the Debtors' facility in a timely manner under the terms of the Equipment Purchase Agreements. In light of the enormous size of the Equipment, however, the additional mileage traveled from Houston, Texas to Hopkinsville, Kentucky caused TPC to incur an additional $289,786 in shipping charges over and above what had been anticipated by the parties when the Agreements were entered into. The parties disputed on whether there was an agreement who would pay for the Increased Shipping Charge and, if not, who would pay for it in the absence of an agreement. TPC has alleged that the Debtors agreed verbally and in writing to pay TPC for the Increased Shipping Charges if it worked to ensure timely delivery of the Equipment to the Debtors. The Debtors disputed TPC's allegations. In late April and early May 2006, TPC and the Debtors negotiated a resolution of a number of disputes between them relating to: (a) whether TPC would receive more than $3,800,000, in unpaid installments of the Purchase Price that remained unpaid as of March 3, 2006; and (b) the services that TPC would be required to perform under the terms of the Equipment Purchase Agreements on a postpetition basis, including relating to the installation of the presses. To memorialize their resolution, the parties entered into a letter agreement dated May 5, 2006, whereby the Debtors agreed, among other things, to pay TPC on a provisional basis certain amounts of the TPC Claim. TPC and the Debtors also agreed to resolve their dispute over the Increased Shipping Charge by entering into a separate settlement agreement. The Settlement Agreement provides that: (1) The Debtors will pay $200,000 to TPC in respect of the Increased Shipping Charge dispute; (2) The Payment will be non-disgorgeable even if it is later determined that TPC did not have a valid security interest, securing the amount of the shipping charges, or that any security interest was subject to avoidance under Sections 544 through 550 of the Bankruptcy Code; and (3) The Debtors and TPC will release one another from any claims or causes of action relating only to the Increased Shipping Charge dispute. The parties retain their claims and causes of action unrelated to the Increased Shipping Charge dispute. About Dana Corporation 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. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). DELTA AIR: Says Fee Examiner is Inappropriate and Unnecessary ------------------------------------------------------------- As reported in the Troubled Company Reporter on Apr. 26, 2006, Diana G. Adams, acting U.S. Trustee for Region 2, asked the U.S. Bankruptcy Court for the Southern District of New York to order the appointment of an examiner who will investigate the utilization of professional services in Delta Air Lines, Inc., and its debtor-affiliates' chapter 11 cases, pursuant to Section 1104(c)(2) of the Bankruptcy Code. The Debtors assert that the U.S. Trustee is seeking to impose a "de facto trustee" and her request should be denied. The U.S. Trustee has requested, under Section 1104 of the Bankruptcy Code, for an appointment of a fee examiner to permit "management of the professional services in advance of performance to promote a proactive effort to manage choices during the course of the case." Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, notes that the Debtors' Chapter 11 case have been underway for more than nine months, preceded by a restructuring that commenced in early 2004. In that time period, the Debtors have made enormous progress and at this point no entity, let alone a stranger to the Debtors' Chapter 11 cases, could possibly hope to act prospectively and manage choices here, Mr. Huebner asserts. Mr. Huebner maintains that the U.S. Trustee's request, at this stage in the Debtors' cases, is particularly inappropriate because in the Fall of 2005, Delta Air Lines, Inc., and the Official Committee of Unsecured Creditors proactively approached the Office of the U.S. Trustee seeking to establish a protocol and have a professional retained to assist with fees. The U.S. Trustee asked the Debtors and the Creditors Committee to forebear, and then waited almost six months to file the Fee Examiner Motion, Mr. Huebner says. Delta was given no advance opportunity to comment on pre-filing to try to reach a resolution. Mr. Huebner adds that a fee examiner appointed under Section 1104 is wholly unnecessary in the Debtors' cases. The U.S. Trustee sets forth only two facts in support of its request for a fee examiner: (i) the Court has approved the retention of 22 professionals in the Debtors' cases; and (ii) the professionals have sought approximately $43,000,000 in fees and expenses for services rendered through January 31, 2006. Mr. Huebner, however, points out that the Delta case is the 10th biggest Chapter 11 case in U.S. history. For a case of this size, the number of its retained professionals is quite low, even with all the professionals the two Section 1114 committees have retained and seek to retain. Mr. Huebner notes that most mega cases have significantly more professionals than the Delta case: Assets No. of Mega Case (in Billions) Professionals --------- ------------- ------------- Adelphia $21.5 70 Mirant 19.4 64 UAL 25.2 47 Global Crossing 25.2 43 PG&E 29.9 41 Delphi 16.6 36 Delta 21.8 27 Northwest 14.4 21 Refco 33.3 20 Calpine 26.1 19 Similarly, the aggregate amount of fees incurred is not extraordinary, given the size, complexity and nature of the Debtors' Chapter 11 cases, Mr. Huebner notes. The Debtors believe they were well organized for their Chapter 11 proceedings, and intentionally and simultaneously addressed many important restructuring tasks early in their cases. As a necessary corollary, fees, particularly special counsel fees, have been concentrated in the early part of the case. Much more importantly, the savings associated with those fees have been orders of magnitude greater, Mr. Huebner asserts. By way of example, Delta, according to Mr. Huebner, entered into term sheets or other agreements providing for over 90% of its target mainline aircraft savings in the first 4-1/2 months of these cases. It took other carriers years to do this. These savings account for about $400,000,000 per year, or $33,000,000 per month, an amount nearly equal to the aggregate fees for all retained professionals in the entire first fee application period. Moreover, as these tasks are completed, the reliance on special counsel, and the amount of fees incurred, will decrease. For this reason, aggregate monthly fees have decreased every month since January, and are down a remarkable 39% since then, Mr. Huebner points out. The U.S. Trustee's request is breathtakingly overbroad and seeks to imbue a seemingly innocuous fee examiner with powers statutorily reserved to the debtor alone, like the power to manage professional and proactively make choices about managing the Debtors' estates, Mr. Huebner further argues. The six-page request also seeks to grant to the fee examiner the quasi- judicial powers of a special master with respect to fee application disputes. The U.S. Trustee's request is completely bereft of any allegation, no less proof, of any grounds necessary to justify the extraordinary appointment of a trustee, and special masters are specifically prohibited in bankruptcy cases by the Federal Rules of Bankruptcy Procedure, Mr. Huebner adds. Moreover, Section 1104 of the Bankruptcy Code does not permit the appointment of an examiner, absent a proposed investigation of the debtor, Mr. Huebner asserts. The U.S. Trustee cites no precedent for its novel contention that the Bankruptcy Code mandates the appointment of an examiner under the circumstances, or that Section 1104 even permits the appointment of a fee examiner. Mr. Huebner also notes that the U.S. Trustee has in prior cases expressly argued against the propriety of an appointment of a fee examiner. In Matter of Continental Airlines, Inc., 138 B.R. 439 (Bankr. D. Del. 1992), the U.S. Trustee contended that the order appointing a fee examiner under Section 1104 was inconsistent with various requirements of Sections 1104(b) and 1104(c). The Official Committee of Unsecured Creditors echoes the Debtors' sentiments that the U.S. Trustee's request is wholly without precedent, impermissible under the Bankruptcy Code and Bankruptcy Rules, and will not accomplish the goal of reducing fees and expenses in these cases, but, rather add to them. Representing the Creditors Committee, David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, asserts that the appointment of an examiner will produce the very result the U.S. Trustee seeks to avoid -- an increase in professional fees and expenses. Not only will the fee examiner receive compensation for its services, but for those of its counsel and financial advisors, as well. Given the far-reaching mandate the U.S. Trustee seeks for its fee examiner, the fee examiner and its professionals will likely seek to get "up to speed" on what has occurred during the almost nine months of these proceedings. "It is not difficult to predict that this exercise will be very costly for these estates and their unsecured creditors," Mr. Botter asserts. In addition to this added layer of administrative expense, as the appointment of a fee examiner will not relieve the Committee and the Debtors of their independent obligation to review fee applications and, if appropriate, object to the fees, each of the Committee and the Debtors must still incur substantial fees reviewing the myriad and voluminous fee applications filed in these cases. Fee Committee Instead of Fee Examiner The Creditors Committee and the Debtors believe that the U.S. Trustee's request is poorly tailored to achieve its presumed goals the minimization of unreasonable and unnecessary professional fees in the Debtors' cases. To minimize expense and maximize recoveries, they propose the appointment of a fee committee. Pursuant to a protocol negotiated by the Debtors and the Creditors Committee, the Fee Committee will consist of business representatives of the Debtors, the Creditors Committee, and the U.S. Trustee. Members of the Fee Committee will receive no compensation from the estate for the services they perform, although they are entitled to reimbursement of their reasonable out-of-pocket expenses. The Fee Committee will review fee applications, and interface directly with retained professionals to resolve issues with respect to such fee applications. Only if the parties cannot resolve their differences will a dispute be brought to Court, thus dramatically reducing the number of fee disputes requiring judicial intervention, Mr. Botter relates. In the event of a fee dispute, the Debtors will not pay any disputed amounts until the matter is resolved. As a result, the Protocol and the Fee Committee represent a far better and more efficient dynamic than the fee examiner, with the added virtue of actually being permissible under the Bankruptcy Code and Bankruptcy Rules, Mr. Botter asserts. The Creditors Committee and the Debtors note that every significant recent Chapter 11 case in the Southern District of New York, including Enron Corp., WorldCom, Global Crossing, Adelphia, and Delphi, as well as most mega cases from other districts, like UAL, US Airways, Kmart and Mirant, have had a fee committee. The Protocol proposed in Delta's cases is substantially similar to the protocols adopted in Global Crossing, Adelphia and Delphi. Mr. Botter also asserts that the members of the Fee Committee will have a distinct advantage over a Fee Examiner in that the members know the history of the Debtors' cases and will be able to apply their institutional knowledge to their review of the fee applications and the services performed by the retained professionals. About Delta Air 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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000). DELTA AIR: Court Approves Chicago Set-Off Deal ---------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the stipulation entered into by Delta Air Lines, Inc., and the City of Chicago, owner and operator of Chicago-O'Hare International Airport and Chicago Midway Airport Under the stipulation, the parties agree to the modification of the automatic stay for the sole and limited purpose of permitting Chicago pursuant to Section 553 to set off: (i) $679,521 of the ORD Credit in complete and final satisfaction of each the ORD Prepetition Debt and the Fuel Tax Prepetition Debt, and (ii) $106,668 of the MDW Credit in complete and final satisfaction of the MDW Prepetition Debt. Chicago will pay immediately in cash by wire transfer to the Debtors the $2,000,534 unapplied portion of the ORD Credit; and the $80,531 unapplied portion of the MDW Credit in each case, without counter-claim, set-off, recoupment, deduction or withholding. ORD Agreement Delta and the Chicago are parties to: (i) a Chicago O'Hare International Airport Amended and Restated Airport Use Agreement and Terminal Facilities Lease, dated January 1, 1985; and (ii) a Chicago Midway Airport Amended and Restated Airport Use Agreement and Terminal Facilities Lease, effective as of March 1, 2000. As of Sept. 14, 2005, Delta owed Chicago: (1) $661,023 comprised of rents, fees and other charges arising under the ORD Agreement, (2) $106,668 comprised of rents, fees and other charges arising under the MDW Agreement, and (3) $18,499 comprised of fuel taxes arising under the Agreements relating to Delta's operations at ORD and MDW through June 2005. Pursuant to the ORD Agreement, Chicago owes Delta $2,680,055 aggregate credit for overpayments made by Delta in 2002 and 2003 at ORD. Pursuant to the MDW Agreement, Chicago owes Delta $187,199 aggregate credit for overpayments made by Delta in 2004 at MDW. 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. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000). DOBSON COMMS: Posts $10.8 Million Net Loss for First Quarter 2006 ----------------------------------------------------------------- Dobson Communications Corp. reported a $10,897,520 net loss out of a $287,599,027 total operating revenue for the quarter ended March 31, 2006. Dobson's balance sheet at March 31, 2006 showed total assets of $3,339,211,230 and total liabilities of $3,170,068,483, resulting in a $169,142,747 total stockholders' equity. The Company's balance sheet also showed $327,406,850 in total current assets and $242,129,583 in total current liabilities. A full-text copy of Dobson's quarterly report is available for free at http://researcharchives.com/t/s?b02 Headquartered in Oklahoma City, Dobson Communications Corporation (Nasdaq:DCEL) -- http://www.dobson.net/-- provides wireless phone services to rural markets in the United States and owns wireless operations in 16 states. * * * As reported in the Troubled Company Reporter on April 24, 2006, Fitch assigned ratings for Dobson Communications Corp. and its subsidiaries: Dobson Communications Corp.: -- Issuer default rating 'B-' -- $160 million senior floating rate notes 'CCC+/RR5' -- $150 million senior convertible debentures 'CCC+/RR5' -- $420 million senior notes 'CCC+/RR5' -- $136 million convertible preferred stock 'CCC-/RR6' Dobson Cellular Systems Inc.: -- Issuer default rating 'B-' -- $75 million senior secured credit facility 'BB-/RR1' -- $500 million first priority secured notes 'BB-/RR1' -- $325 million second priority secured notes 'BB-/RR1' Dobson Communications Corp.' 8-7/8% Senior Notes due 2013 carry Moody's Investors Service's Caa2 rating and Standard & Poor's CCC rating. DOMINICK PEBURN: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Dominick T. Peburn dba Dominick Peburn Construction Co. dba Dominick Peburn Contracting Co. 142 Stilson Hill Road New Milford, Connecticut 06776 Bankruptcy Case No.: 06-30835 Type of Business: The Debtor is a real estate developer, project contractor, and home builder. The Debtor previously filed for chapter 11 protection on March 8, 2006 (Bankr. D. Conn. Case No. 06-30265). Chapter 11 Petition Date: June 7, 2006 Court: District of Connecticut (New Haven) Judge: Albert S. Dabrowski Debtor's Counsel: Peter L. Ressler, Esq. Groob Ressler & Mulqueen, P.C. 123 York Street, Suite 1B New Haven, Connecticut 06511-0001 Tel: (203) 777-5741 Fax: (203) 777-4206 Total Assets: $4,392,400 Total Debts: $2,252,395 Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peter Joseph $880,000 67 Mason Street Greenwich, CT 06831 William Granata $385,000 5 Heritage Drive New Milford, CT 06776 Anthony Fraulo $250,000 1234 Summer Stjreet Stamford, CT 06901 Lyle Bross $157,000 Yongsuk Soe $130,000 Louise Bromberger $78,750 Eastern Equipment $75,000 Samuel Bromberger $63,000 Elmo Aiudi $43,000 Ambrose Healey $40,000 Susan Cosbett $33,000 David Hubband $26,000 Nunzeo Carrozza $23,000 Goldman, Gruder, & Woods, LLC $16,000 Henry Bromberger $15,570 David Grossman $12,000 LRC Engineering & Survey $10,000 Lou Shepiro $5,000 HZH Association LLC $3,700 Lawrence Andrea $3,500 EASY GARDENER: Files Schedules of Assets and Liabilities -------------------------------------------------------- Easy Gardener Products, Ltd., and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware their schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $37,750,784 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $39,285,780 E. Creditors Holding Unsecured Priority Claims $277,556 F. Creditors Holding $89,015,616 Unsecured Nonpriority Claims ----------- ------------ Total $37,750,784 $128,578,952 Weatherly Consumer Products, Inc., disclosed zero assets and $39,285,780 in liabilities. Three debtor-affiliates reported liabilities at $39,285,780 with assets at an unknown value: * Weatherly Consumer Products Group, Inc.; * EG Product Management, LLC; and * NBU Group, LLC, Headquartered in Waco, Texas, Easy Gardener Products, Ltd. -- http://www.easygardener.com/-- manufactures and markets a broad range of consumer lawn and garden products, including weed preventative landscape fabrics, fertilizer spikes, decorative landscape edging, shade cloth and root feeders, which are sold under various recognized brand names including Easy Gardener, Weedblock, Jobe's, Emerald Edge, and Ross. The Company and four of its affiliates filed for bankruptcy on April 19, 2006 (Bankr. D. Del. Case Nos. 06-10393 to 06-10397). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP represent the Debtors in their restructuring efforts. Young Conaway Stargatt & Taylor, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they reported assets amounting to $103,454,000 and debts totaling $107,516,000. EASY GARDENER: Committee Hires Young Conaway as Bankruptcy Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Easy Gardener Products, Ltd., and its debtor- affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to hire Young Conaway Stargatt & Taylor, LLP, as its bankruptcy counsel. As reported in the Troubled Company Reporter on May 23, 2006, Young Conaway responsibilities will include: (a) assisting and advising the Committee in its consultation with the Debtors and the United States Trustee relative to the administration of the Debtors' chapter 11 cases; (b) reviewing, analyzing and responding to pleadings filed with the Court by the Debtors and other parties and participating in hearing in those pleadings; (c) assisting and advising the Committee in its examination and analysis of the conduct of the Debtors' affairs and financial condition; (d) assisting the Committee in the review, analysis and negotiation of the disclosure statement and accompanying plans of reorganizations and any asset distribution proposal or sale pleadings that may be filed; (e) taking all necessary action to protect the rights and interests of the Committee, including, but not limited to: (i) possible prosecution of actions on its behalf; (ii) if appropriate, negotiations concerning all litigations in which the Debtors are involved; (iii) if appropriate, review and analysis of claims filed against the Debtors' estates; (f) representing the Committee in connection with the exercise of its powers and duties under the Bankruptcy code and in connection with the Debtors' chapter 11 cases; (g) preparing on behalf of the Committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the Committee; (h) assisting the Committee in the review, analysis and negotiation of any financing arrangements; and (i) performing all other necessary legal services in connection with the Debtors' chapter 11 cases. M. Blake Cleary, Esq., a partner at the firm, discloses to the Court that he charges $425 per hour for his services. He added that other lawyers serving in the Debtors' cases charge these rates. Joel A. Waite $500 Edward J. Kosmowski $365 Sanjay Bhatnagar $215 Melissa Bertsh $115 Mr. Cleary assures the Court that his firm and its professionals do not hold material interest adverse to the Debtors' estates and are "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Waco, Texas, Easy Gardener Products, Ltd. -- http://www.easygardener.com/-- manufactures and markets a broad range of consumer lawn and garden products, including weed preventative landscape fabrics, fertilizer spikes, decorative landscape edging, shade cloth and root feeders, which are sold under various recognized brand names including Easy Gardener, Weedblock, Jobe's, Emerald Edge, and Ross. The Company and four of its affiliates filed for bankruptcy on April 19, 2006 (Bankr. D. Del. Case Nos. 06-10393 to 06-10397). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP represent the Debtors in their restructuring efforts. Young Conaway Stargatt & Taylor, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they reported assets amounting to $103,454,000 and debts totaling $107,516,000. EDS CORP: Completes Purchase of MphasiS Majority Stake for $380MM ----------------------------------------------------------------- EDS Corp. succeeded in its efforts to acquire a majority stake of MphasiS BFL Limited, a leading applications and business process outsourcing services company based in Bangalore, India. More than the required 83 million shares of MphasiS have been tendered in response to EDS' conditional open offer of INR204.5 per share (approximately $4.50), which closed on June 5. As reported in the Troubled Company Reporter on April 4, 2006, total consideration for the transaction that gives EDS a majority stake in MphasiS is approximately $380 million cash. The transaction is expected to be completed by the end of June, subject to administrative settlement procedures. "The acquisition will not only bolster our current offshore delivery capabilities in priority growth areas, but will also allow EDS to deliver a stronger value proposition to better align with clients' changing needs," Mike Jordan, EDS chairman and chief executive officer, said. "The acquisition also gives us access to a world-class management team, a global talent pool and marquee clients." "We look forward to EDS' majority ownership of MphasiS and the expanded opportunities EDS brings to MphasiS' employees and clients through its global footprint," Jerry Rao, chairman and CEO of MphasiS, said. "For MphasiS, this means being able to offer our clients infrastructure outsourcing services in addition to our current application services and BPO offerings." The purchase, one of the largest in the Indian IT services sector, gives EDS access to 11,000 India-based employees skilled in advanced applications development, emerging technologies, BPO/CRM services, and an applications development and business process services-focused sales channel. "This acquisition is about leveraging MphasiS' management knowledge and technical capabilities," EDS Chief Operating Officer Ron Rittenmeyer said. "MphasiS will enable us to accelerate our growth in applications development and more rapidly add scale in business process and CRM services." Based on MphasiS' most recent annual results for the fiscal year ended March 31, 2006, it reported annual revenue of INR9,401 million (approximately $210 million) and net profit of INR1,498.6 million (approximately $33 million). MphasiS is one of the fastest growing offshore providers of IT and business process services. The company's blend of industry knowledge, technology expertise and client relationships, particularly in financial services, has enabled it to quadruple in revenue over the past five years. MphasiS will continue to operate with its current management team and company name following completion of the transaction. Jerry Rao will continue in his current capacity as CEO of MphasiS. Jeroen Tas will continue in his current capacity as vice chairman of MphasiS. EDS will appoint a majority of the MphasiS board of directors and is evaluating the consolidation of its existing India operations with the MphasiS operations. This transaction supports EDS' Global Best ShoreSM delivery strategy, which provides a full range of high-quality, cost- competitive services from designated onshore, near-shore and offshore locations. EDS has approximately 16,000 employees in 27 Best Shore countries, with more than 3,000 in India. With the addition of MphasiS and current expansion plans, EDS' total India work force is projected to exceed 20,000 employees by year end. About MphasiS Headquartered in Bangalore, India, MphasiS BFL Limited -- http://www.mphasis.com/-- a leading applications and business process outsourcing services company currently has 12,000 employees, including 11,000 in India. MphasiS serves clients in multiple industries, including financial services, transportation, technology and healthcare, and is particularly strong in the retail-banking sector serving the world's top five banks. About EDS Corp Headquartered in Plano, Texas, EDS Corp. -- http://www.eds.com/-- is a global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry more than 40 years ago. EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. * * * EDS Corp.'s 7-1/8% Notes due 2009 carry Moody's Investors Service's Ba1 rating. EUGENE SCIENCE: March 31 Balance Sheet Upside Down by $11.3 Mil. ---------------------------------------------------------------- Eugene Science, Inc., fka Ezomm Enterprises, Inc., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 22, 2006. The Company reported a $1,198,494 net loss on $122,443 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $11,696,088 in total assets and $23,073,055 in total liabilities, resulting in a $11,376,967 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $1,571,491 in total current assets available to pay $20,952,649 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?aeb Going Concern Doubt As reported in Troubled Company Reporter on May 18, 2006, SF Partnership, LLP, Chartered Accountants, in Toronto, Canada, raised substantial doubt about Eugene Science, Inc., fka Ezomm Enterprises, 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 recurring losses, negative working capital, and operation in a country whose economy is currently unstable -- South Korea. About Eugene Science Based in Kyonggi Do, South Korea, Eugene Science, Inc., fka Ezomm Enterprises, Inc. (OTCBB: EUSI) is a global biotechnology company that develops, manufactures and markets nutraceuticals, or functional foods that offer health-promoting advantages beyond that of nutrition. Plant sterols are the Company's primary products, which include CZTM Series of food additives and CholZeroTM branded beverages and capsules. In June 2005, the Company received regulatory approval for certain health claims associated with the Company's products from government agencies in the Republic of Korea. FAIRCHILD SEMICONDUCTOR: S&P Rates New $500MM Facilities at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to South Portland, Maine-based Fairchild Semiconductor Corp.'s proposed new senior secured credit facilities, the same as the corporate credit rating. The recovery rating is '2', indicating expectations for substantial (80%-100%) recovery of principal in the event of a payment default. The facilities are composed of: * a $400 million term loan expiring in 2013; and * a $100 million revolving credit agreement expiring in 2012. The new senior secured credit facilities replace the company's former senior secured credit facilities. "At the same time, we affirmed our corporate credit rating and subordinated debt ratings on the company; the ratings outlook is stable," said Standard & Poor's credit analyst Bruce Hyman. The ratings reflect Fairchild's acquisitive business practices in a highly competitive, volatile market, offsetting the company's good position in manufacturing medium-technology semiconductors and a moderate degree of diversity. Fairchild makes a wide range of logic, power analog, power discrete, and certain nonpower semiconductor solutions for computer, communications, and industrial markets. Fairchild had debt of $707 million at March 31, 2006, including capitalized operating leases. Power-management chips now are nearly 80% of total sales, recognizing growing demand in consumer electronics markets such as DVD players, televisions, and set-top boxes. Still, equivalents to most of Fairchild's products are available from several competitors. Fairchild has indicated its willingness to continue to make large acquisitions using debt or equity to support its growth targets. Potential balance-sheet pressures, as well as the management challenges that acquisitions could introduce, provide a cap on ratings. Fairchild Semiconductor Corp. is a wholly owned subsidiary of Fairchild Semiconductor International Inc. FEDERAL-MOGUL: Plans to Close Malden Facility by Year-End --------------------------------------------------------- Federal-Mogul Corp. will close its pistons manufacturing facility in Malden, Missouri, the company disclosed in a regulatory filing with the Securities and Exchange Commission. Federal-Mogul said it announced its decision in February 2006. The company, however, did not indicate when the plant will be shut down. According to topix.net, the Malden plant will be closed by the end of the year. The Malden facility makes pistons for Jasper Engines and Transmissions, Dana Corp., Mercury, J.I. Case Corporation, Wabco, Richland, Herschel Adams, Briggs and Stratton, Ford, among others, according to Federal-Mogul's Web site. The unit was acquired from Sterling Aluminum Products Corporation in 1965. About 300 jobs will be affected by the closure, kfvs12.com says. Federal-Mogul plans to move its piston operations to an un-named overseas manufacturing location, according to a letter sent to members of the Automotive Engine Rebuilders Association board. Federal-Mogul said as a result of the closure, the value associated with buildings and production equipment at the Malden facility has been reduced by approximately $7,100,000 to "reflect estimated realizable values." Federal-Mogul unveiled in January 2006 a three-year restructuring plan to improve corporate performance and expand in key growth markets. The company said the restructuring could affect about 25 facilities and reduce its workforce by approximately 10% by December 2008. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Insurers Object to Kenesis as Insurance Consultant ----------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, asks Judge Judith K. Fitzgerald to adjourn or continue the hearing to consider the application of Federal-Mogul Corporation and its debtor-affiliates to employ The Kenesis Group LLC. As reported in the Troubled Company Reporter on May 25, 2006, The Debtors currently -- and wish to continue -- using Kenesis' services. Hence, they seek the Court's permission pursuant to Section 327(a) to employ the firm as their insurance consultants effective May 8, 2006. As previously reported, the U.S. Trustee entered into a global settlement agreement with Kenesis with respect three bankruptcy cases in Region 3. The settlement agreement, among others, provides for Kenesis' payment of sums to these three bankruptcy estates: 1. Federal-Mogul Global, Inc., and T&N Limited et al.; 2. Burns & Roe Enterprises, Inc. (Bank. D. N.J. Case No. 00- 41610); and 3. ACandS, Inc. (Bank. D. Del. Case No. 02-12687). The U.S. Trustee withdrew, without prejudice, a request for approval of the settlement in ACandS' case, but subsequently refiled the motion in the U.S. District Court in these appellate cases: 1. ACandS, Inc., Appellant v. Travelers Casualty & Surety Co., Appellee, Case No. 03-894 (JJF); and 2. ACandS, Inc., and The Kenesis Group, Appellants v. Kelly Beaudin Stapleton, U.S. Trustee and Travelers Casualty & Surety Co., Appellees, Case No. 03-895 (JJF). The District Court has not set the hearing on the requests. The Settlement Motions in Federal-Mogul's and Burns' cases remain pending. Until all the pending Settlement Motions have been heard, granted and non-appealable orders have been entered with respect to those pending motions, the U.S. Trustee ask the Court to refrain from considering the Debtors' Application. Insurers Object Certain insurance companies assert that Kenesis is not a "disinterested person" and, thus, does not meet the requirements of employment in Section 327(a) of the Bankruptcy Code. 1. Mt. McKinley and Everest Kenesis is not disinterested because of its relationship with certain law firms, its repeated improper conduct in other bankruptcy cases in the Third Circuit and the Debtors' ripe disgorgement claim against it, Sean J. Bellew, Esq., at Cozen O'Connor, argues on behalf of Mt. McKinley Insurance Company and Everest Reinsurance Co. Mr. Bellew notes that Kenesis was formed in 2002 by the Debtors' special insurance counsel, Gilbert Heintz & Randolph LLP. GHR transferred its ownership interest in Kenesis to Jonathan R. Terrell in June 2004. Mt. McKinley and Everest also believe that, despite the Debtors' protests to the contrary, the services that Kenesis has provided, and seeks to continue to provide, are "professional" in nature. Kenesis, Mr. Bellew insists, may hold or represent an interest adverse to the estate in contravention to Section 327(a)'s requirements. Accordingly, Mt. McKinley and Everest ask the Court to deny the Employment Application. The Travelers Indemnity Company and certain affiliates, and Travelers Casualty and Surety Company, support Mt. McKinley and Everest's objection. 2. ACE Insurers The ACE Insurers also ask the Court to deny the Application. Among others, the ACE Insurers complain that: * the Kenesis Application is filed several years too late; * Kenesis will perform, or has already been performing, services for the Debtors that are indisputably "professional" -- assisting in the development of trust distribution procedures that reflect the Debtors' insurance assets; * Kenesis' president and vice presidents each bill $400 an hour or more for their services -- hardly the sort of fees that non-professionals are able to charge. ACE contends that Kenesis may have refused to previously file an employment application because it does not meet either the "disinterested person" or "no adverse interest" prongs of Section 327(a). Brian L. Kasprzak, Esq., at Marks, O'Neill, O'Brien & Courtney, in Wilmington, Delaware, cites four instances: 1. Kenesis has performed unspecified "consulting services" on behalf of asbestos claimants represented by its former owner, GHR; 2. Kenesis assisted GHR in providing services to the asbestos claimants' law firm of Kelley & Ferraro LLP; 3. The asbestos claimants' law firm of Weitz & Luxenberg was GHR's co-counsel when Kenesis undertook, on behalf of GHR, an insurance analysis of Robert A. Keasbey Corporation and Kentile Floors Incorporated; and 4. Certain of the individual asbestos claimants whom Kenesis has assisted may also hold claims against the Debtors. "Representing . . . persons asserting asbestos claims against the Debtors is precisely the type of conflict that prohibits Kenesis from representing Debtors pursuant to [Section] 327(a)," Mr. Kasprzak says. Mr. Kasprzak also tells the Court that there is a strong reason for the ACE Insurers to doubt the thoroughness of Kenesis' disclosures. In In re Congoleum Corp., et al., Case No. 03-51524 (KCF), GHR's successor counsel produced a series of retention letters that GHR failed to disclose. The retention letters demonstrate that GHR was also retained in the Keasbey matter. This, Mr. Kasprzak says, could lead to a conclusion that some of the asbestos claimants Kenesis assisted in that matter are asserting claims against the Debtors. In the alternative, the ACE Insurers ask the Court to defer action on the Application until discovery is taken to uncover facts relating to whether Kenesis is, in fact, disinterested and does not hold or represent an interest adverse to the estates. 3. Columbia Casualty Co., Continental Casualty Co. & The Continental Insurance Co. Columbia Casualty Company, Continental Casualty Company and The Continental Insurance Company, in its individual capacity as well as the successor to certain interests of Harbor Insurance Company, also object to the employment application. The Columbia Entities incorporate the arguments raised by Mt. McKinley and the ACE Insurers. The Columbia Entities reserve the right to join in arguments raised by other parties in response to the Application. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COS: Expects to Allot $73MM to General Unsecured Claims --------------------------------------------------------------- The Post-Confirmation Trust of Fleming Companies, Inc. filed, on June 8, 2006, its Second Status Report with the Bankruptcy Court for the District of Delaware, intended to advise the Court of its financial situation as well as its progress towards completing its obligations under the Fleming Companies' confirmed Plan of Reorganization. The PCT further filed an updated Balance Sheet as part of its regular reporting to the office of the United States Trustee. The PCT Balance Sheet reflects approximately $73 million of net equity. The assumptions the PCT used in preparing the Balance Sheet are described in the Second Status Report and its related documents. In the Second Status Report, the PCT advised that it expects to ultimately distribute at least $73 million in cash to the holders of general unsecured claims. The PCT also advised the Court in the Second Status Report that it expects the aggregate pool of unsecured claims to total approximately $2.3 billion. The PCT reports that it has already allowed roughly $2.21 billion of unsecured claims. Based upon current estimates, the PCT anticipates that those claimholders who have already received a distribution of Core-Mark stock, as called for in the Debtors' plan of reorganization, will receive an additional stock distribution once all unsecured claims are resolved. The approximately $73 million of net equity, the expectations regarding future cash distributions and the approximately $2.3 billion expected pool of unsecured claims were calculated by the PCT using a number of assumptions and projections more fully described in the Second Status Report. It is possible that results may vary materially from the PCT's current expectations due to uncertainties and other unexpected events. All investors are encouraged to read the Second Status Report in full for a description of the assumptions and the risks and uncertainties associated with them. The Second Status Report and the Balance Sheet can be obtained from BMC Group, the PCT's noticing agent. A full-text copy of the Company's First Quarter Post Confirmation Quarterly Summary Report is available for free at: http://ResearchArchives.com/t/s?b1b A full-text copy of the Company's Second Status Report is available for free at: http://ResearchArchives.com/t/s?b19 About Fleming Cos. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- was the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., emerged as a rehabilitated company owned by Fleming's unsecured creditors on August 23, 2004. Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. GLASS GROUP: Unsec. Creditors to Recover at Most 36.66% of Claims ----------------------------------------------------------------- The Glass Group, Inc., filed its Amended Liquidating Plan of Reorganization and an accompanying Amended Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. The Plan provides for the liquidation and distribution of all of the Debtor's assets. The Debtors sold substantially all of its assets to Kimble Glass Inc. for $20 million. As of the plan effective date, the Debtor projects that it will have $7 million cash on hand for distribution. The Plan Administrator may also pursue litigation claims and avoidance actions. The Debtor transferred in excess of $16,195,845 to creditors within the 90 days prior to the Debtor's bankruptcy filing. These classes of claims will be paid in full: * administrative claims; * secured claims; * priority claims. In full satisfaction of its secured claim and other claims, MAP V LLC will get: (a) land consisting of approximately 30.45 acres in Hamilton Township, Atlantic County, New Jersey; (b) a warehouse and surrounding land in 1401 Wheaton Avenue, Millville, New Jersey; (c) a mold sop and the surrounding land in 1401 Wheaton Avenue, Millville, New Jersey; (d) all leases or other agreements and security deposits from those properties. Under a settlement agreement between MAP and the Debtor, MAP will also contribute around $2 million for distribution to the other creditors. Holders of general unsecured claims will be paid their pro rata share of assets to be held by the plan administrator. The Debtor estimate that that general unsecured creditors will recover 36.66% of their claims. Under the Debtor's liquidation analysis, general unsecured creditors will get 15.76% of their claims under a liquidation scenario. Holders of equity interests will get nothing. A copy of the Amended Disclosure Statement is available for a fee at http://www.researcharchives.com/bin/download?id=060608055806 Headquartered in Millville, New Jersey, The Glass Group, Inc. -- http://www.theglassgroup.com/-- manufactures molded glass container and specialty products with plants in New Jersey and Missouri. Its products include cosmetic bottles, pharmaceutical vials, specialty jars, and coated containers. The Company filed for chapter 11 protection on Feb. 28, 2005 (Bankr. D. Del. Case No. 05-10532). Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell represents the Debtor in its restructuring efforts. Jeffrey R. Waxman, Esq., and Mark E. Felger, Esq., at Cozen O'Connor represent the Official Commitee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts of $50 million to $100 million. HAPPY KIDS: Asks Court to Dismiss Chapter 11 Cases -------------------------------------------------- Happy Kids Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to dismiss their chapter 11 cases. Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, tells the Court that after paying the proceeds from the sale of substantially all of their assets to The CIT Group/Commercial Services, Inc., there will not be enough funds or assets available to pay Deutsche Bank Trust Company Americas' prepetition claim. Mr. Hirshon gives the Court three reasons why the chapter 11 cases should be dismissed: a) the Debtors have sold substantially all of their assets; b) the Debtors failed to effectuate a chapter 11 plan; c) the Debtors are unable to pay allowed administrative claims in full or make any distributions to any prepetition creditors or equity holders. The Debtors also seek the Court's dismissal order to include terminating Donlin Recano & Company, Inc.'s retention as the their claims agent as well as disbanding the Official Committee of Unsecured Creditors. The Court will convene a hearing on July 13, 2006 at 10:00 a.m., to consider the Debtors' request. Headquartered in New York, New York, Happy Kids Inc. and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, represents the Debtors in their restructuring efforts. Andrea Fischer, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $54,719,000 and total debts of $82,108,000. HATTERAS REINSURANCE: Chapter 15 Petition Summary ------------------------------------------------- Petitioners: Mike Morrison and Charles Thresh Foreign Representatives Debtor: Hatteras Reinsurance Ltd. Bermuda Case No.: 06-11304 Type of Business: The Debtor offers financial and insurance services. Chapter 15 Petition Date: June 8, 2006 Court: Southern District of New York (Manhattan) Judge: James M. Peck Petitioner's Counsel: Kenneth P. Coleman, Esq. Stephen Doody, Esq. Allen & Overy LLP 1221 Avenue of Americas New York, New York 10022 Tel: (212) 610-6300 Fax: (212) 610-6399 Estimated Assets: Unknown Estimated Debts: Unknown HAWKEYE RENEWABLES: S&P Holds Rating Watch on $185 Million Loan --------------------------------------------------------------- Standard & Poor's Ratings Services held its 'B' rating on Hawkeye Renewables LLC's $185 million senior secured term loan due 2012 on CreditWatch with positive implications following Hawkeye's announcement that it will repay the loan with the proceeds of a new bank loan. Hawkeye said that it will take on a new $700 million senior secured credit facility backing Thomas H. Lee's $1 billion acquisition of an 80% stake in Hawkeye Renewables from investors led by J.H. Whitney. "If the transaction is consummated and the outstanding loan is redeemed, the rating will be withdrawn," said Standard & Poor's credit analyst Elif Acar. The new bank debt will not be rated by Standard & Poor's. If the project were to maintain its existing capital and organizational structure, the 'B' rating on Hawkeye's existing $185 million debt would be raised based on: * strong first full year of operations; * substantial completion of construction of the new 100 million gallon per year Fairbank, Iowa, facility; and * expected deleveraging provided by the cash sweep mechanism in the debt structure and the strong cash flow projections for the rest of the year based on partially hedged margins. Hawkeye Renewables is the project financing for two dry-mill ethanol plants in Iowa. HYMAN FREIGHTWAYS: Chapter 11 Professionals Get to Keep Their Fees ------------------------------------------------------------------ Hyman Freightways, Inc.'s chapter 11 restructuring converted to a chapter 7 liquidation. Following the conversion, Thomas F. Miller, the Chapter 7 Trustee, sought refunds of professional fees paid by the Debtor during the life of the chapter 11 proceeding from: -- Fredrikson & Byron, P.A., -- Kalina, Wills, Gisvold & Clark, P.L.L.P., and -- Merical Associates, Inc. The Professionals, predictably, objected. The United States Trustee joined the Chapter 7 Trustee. None of the Chapter 7 Trustee's pleadings made any allegations of inequitable conduct by the professionals. The Honorable Robert J. Kressel in the United States Bankruptcy Court for the District of Minnesota has ruled that equity did not demand the return of professional fees paid some eight years earlier to entities that served as bankruptcy counsel, special labor and regulatory counsel, and financial advisor in the short- lived Chapter 11 case Judge Kressel's decision is published at 2006 WL 1464398. "I acknowledge the existence of a fair amount of case law contrary to what I am deciding," Judge Kressel writes. "None of it is binding on me. This is a question of statutory interpretation and a lot of cases, built one upon the other, are of little help in that interpretation." During the Chapter 11 case, millions of dollars in administrative expenses were paid to other entities, but the trustee did not ask any of those entities to return the payments so that he could increase the distribution to those with a higher priority, the court observed. Judge Kressel also noted that the professionals in question were all corporations, partnerships, or other artificial entities, so that the cost of any refunds would fall on a group of individuals that was different from the group that benefited from the payments when they were made. The Court held that the trustee was not entitled to a refund under sections 329, 330, 541, 549, or 726 of the Bankruptcy Code. Hyman Freightways, Inc., filed a petition under Chapter 11 on July 23, 1997 (Bankr. D. Minn. Case No. 97-45174). In the course of the debtor's chapter 11 case, it hired Fredrickson & Byron as its attorneys, Kalina, Wills, Gisvold & Clark as its special labor and regulatory counsel, and Merical Associates as its financial advisor. The case was converted to a case under chapter 7 on November 12, 1997 and Thomas F. Miller was appointed trustee. Matthew R. Burton, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd., represents the Chapter 7 Trustee. INTELSAT LTD: March 31 Balance Sheet Upside-Down by $290 Million ---------------------------------------------------------------- In its consolidated statements of operations for the three months ended March 31, 2006, Intelsat Ltd. reported a $90,110,000 net loss on $280,446,000 of total revenues. The Company's balance sheet at March 31, 2006 showed $290,542,000 of total shareholder's deficit, total assets of $5,162,113,000 and total liabilities of $5,452,655,000. The Company's balance sheet also showed $565,012,000 in total current assets and $342,814,000 total current liabilities. A full-text copy of Intelsat's quarterly report is available for free at http://researcharchives.com/t/s?afe Intelsat, Ltd. - http://www.intelsat.com/-- offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high- quality connections, global reach and reliability. * * * As reported in the Troubled Company Reporter on April 11, 2006, Standard & Poor's Ratings Services held all ratings on fixed satellite services provider Intelsat Ltd. (BB-/Watch Neg/--) on CreditWatch with negative implications. INTERACTIVE HEALTH: S&P Junks Senior Unsecured Debt's Rating ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on robotic massage chair producer and marketer Interactive Health LLC to 'B-' from 'B'. The rating on the senior unsecured debt was lowered to 'CCC+' from 'B-'. The ratings have been removed from CreditWatch, where they were placed with negative implications on April 21, 2006, following weaker operating performance (unaudited) and downward trends in credit measures in fiscal 2005. Additionally, Interactive had announced that it received notice of a restricted payment default under its senior unsecured notes, and technical default under its credit agreement, both of which subsequently were cured. The outlook is negative. Total debt outstanding at March 31, 2006, was about $84 million. "The downgrade reflects Interactive Health's weaker operating performance and downward trends in credit measures," said Standard & Poor's credit analyst Alison Sullivan. Leverage remains high as EBITDA margins continue to decline. Standard & Poor's also is concerned about the future business relationship with a key customer, Brookstone, which has been acquired by a consortium led by Osim International. In addition, Standard & Poor's is concerned that Interactive Health may have difficulty meeting financial covenants that become more restrictive at June 30, 2006. The ratings on robotic massage chair producer and marketer Interactive Health LLC and its wholly owned subsidiary Interactive Health Finance Corp. reflect: * the company's substantial debt levels; * narrow product focus; * small size; * supplier concentration; and * the highly discretionary nature of massage chair purchases. JACOBS ENTERTAINMENT: Moody's Affirms B2 Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service affirmed Jacobs Entertainment, Inc.'s B2 corporate family rating and assigned a B1 to the company's $100 million senior secured bank loan, and a B3 to the company's $210 million senior unsecured notes. Net proceeds from these offerings will be used to refinance $148 million of senior secured notes, fund pending acquisitions, and make a distribution to shareholders. The ratings outlook is stable. The ratings and stable outlook consider JEI's high pro forma leverage of about 5.5 times, as well as the expectation that some market share will be lost in Black Hawk, CO as a result of increased competition once construction at competing properties is finished. JEI's Black Hawk, CO casinos currently account for 35% of consolidated net revenues and 65% of property-level EBITDA. JEI has benefited from this construction disruption. Favorable ratings consideration is given to the company's positive year-to-year revenue and EBITDA performance. Additionally, although a significant portion of JEI's cash is concentrated in Black Hawk, CO, the market is characterized by a high barrier to entry, stable gaming revenues, and good long-term growth prospects. The B1 rating on the senior secured credit facilities reflects its superior recovery prospects relative to other debt in the pro forma capital structure. The B3 rating on the senior unsecured notes considers that they will be guaranteed on an unsecured basis by each restricted subsidiary that guarantees the senior secured credit facilities. Moody's previous rating action on JEI took place on Mar. 3, 2005 with the assignment of a B2 rating on the company's $23 million 11 7/8% senior secured notes and confirmation of existing ratings. The company recently announced that it launched a cash tender offer and consent solicitation with respect to these notes. Jacobs Entertainment, Inc. owns and operates gaming and pari- mutuel facilities in Colorado, Nevada, Louisiana, and Virginia. Net revenues for the 12-month period ended Mar. 31, 2006 were $252 million. JACOBS ENTERTAINMENT: S&P Rates Proposed $210 Million Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Jacobs Entertainment Inc.'s proposed $210 million senior unsecured notes due 2014. The proposed note issue, along with its new $100 million bank facility (rated on May 9, 2006), are expected to be used: -- to refinance existing debt; -- to fund the $14.5 million acquisition of a casino in Carson City, Nevada; -- to acquire five truck plazas and land suitable for another truck plaza for $21 million; -- to reimburse $8.8 million of costs associated with the previous acquisition of two truck plazas; -- to fund a $10 million dividend to shareholders; and -- for transaction fees and expenses. At the same time, Standard & Poor's affirmed its existing ratings on the casino owner and operator, including its 'B' corporate credit rating. The outlook remains stable. Golden, Colorado-headquartered Jacobs is estimated to have about $280 million of pro forma debt outstanding, after taking into account the bank loan, including the delayed draw term loan, and expected note financing transactions. JDA SOFTWARE: S&P Rates Proposed $225 Million Facilities at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Scottsdale, Arizona-based JDA Software Group, Inc. At the same time, Standard & Poor's assigned its 'B+' senior secured ratings, with a recovery rating of '2', to JDA's proposed $225 million senior secured bank facilities, which will consist of: * a $50 million revolving credit facility (due 2012); and * a $175 million term loan B (due 2013). The bank loan rating, which is the same as the corporate credit rating, along with the recovery rating, reflect Standard & Poor's expectation of meaningful (80%-100%) recovery of principal by creditors in the event of a payment default or bankruptcy. The proceeds from this facility will be used to finance the acquisition of Manugistics Group Inc. The outlook is stable. "The ratings reflect JDA's second-tier presence in a highly competitive and consolidating industry, the risks associated with integrating acquired operations, and a limited track record of operating at current revenue levels," said Standard & Poor's credit analyst Philip Schrank. These are only partially offset by: * a solid presence within its mid-market niche; * a solid base of maintenance revenues spread across a broad vertical market customer base; and * a moderate debt leverage for the rating. JRV INDUSTRIES: Non-Recourse Deficiency Claim Held Not Dissimilar ----------------------------------------------------------------- In 1999, Jay R. Vass, the president of JRV Industries, Inc., executed a promissory note to Tennessee Engine Works for the purchase of some equipment. To secure payment of the promissory note, Mr. Vass and JRV executed and delivered to TEW a security agreement granting TEW a security interest in the Equipment. The Security Agreement referred to Mr. Vass and JRV as "individually and collectively 'Debtor'". Mr. Vass signed the Security Agreement in his individual capacity and as president of JRV. TEW filed a UCC-1 financing statement with the Secretary of State of Florida listing Mr. Vass as the debtor and JRV as an additional debtor. Mr. Vass signed the financing statement in his individual capacity and as president of JRV. On January 19, 2005 TEW filed a proof of claim asserting a $655,262 secured claim. On January 28, 2005, JRV filed a Chapter 11 Plan of Reorganization. The Plan provided for TEW to have a secured claim in the amount of $150,000 and an unsecured claim in the amount of $505,000. The Plan provided for TEW's unsecured claim to be classified with all other unsecured claims. Mazak Corporation came along and filed a motion to reclassify TEW's claim. Mazak conceded that TEW has a secured claim against JRV but argued that TEW has no recourse against JRV for any amount in excess of the value of the Equipment. Mazak asserted that the Plan should treat TEW's claim as secured to the extent of the value of the Equipment. Additionally, Mazak requested that to the extent 11 U.S.C. Sec. 1111(b) gives TEW an unsecured deficiency claim, that amount should be separately classified from other general unsecured claims. JRV argues that it has properly classified TEW's Sec. 1111(b) deficiency claim with all other unsecured creditors. In Findings of Fact and Conclusions of Law published at 2006 WL 839269, the Honorable Jerry A. Funk rules that TEW's claim against JRV, is secured TEW's non-recourse deficiency claim is not sufficiently dissimilar from the other unsecured claims to mandate separate classification in the Plan pursuant to 11 U.S.C. Sec. 1122. Judge Funk recognized a split of authority on this issue and disagreed with the approach taken by the Seventh Circuit Court of Appeals. JRV Industries, Inc., dba BRC Performance, filed a Chapter 11 bankruptcy petition on June 17, 2004 (Bankr. M.D. Fla. Case No. 04-62363). Lisa C. Cohen, Esq., at Ruff & Cohen, P.A., represents the Debtor. When the company sought chapter 11 protection it estimated its assets between $1 million and $10 million and debts between $500,000 and $1 million. KUSHNER-LOCKE: Allows NIB Capital to Foreclose on Stock Assets -------------------------------------------------------------- The Kushner-Locke Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Central District of California in Los Angeles to approve a stipulation with NIB Capital Bank N.V. concerning the disposal of the Debtors' stocks in First Advantage Corporation. NIB Capital acts as Agent for a group of bank lenders who established a $68 million revolving credit facility for the Debtors under a Credit, Security, Guaranty and Pledge Agreement, dated June 19, 1996. NIB Capital holds a security interest on all of the Debtor's assets, including the First Advantage stocks. The bank lenders have an allowed secured claim in excess of $75 million against the Debtors estate. The Debtors determined that they no longer have any equity on the stock since the bank lenders' allowed claim far exceeds the estimated $5.9 million value of the First Advantage stocks. Alice P. Neuhauser, the Debtors' Responsible Officer, says the First Advantage Stocks are not necessary to the Debtors' effective reorganization. She explains that the stocks have no relevance to the Debtor's ongoing operations or planned post-reorganization operations, which will involve the licensing of the films and other feature programs contained in their library. Pursuant to a stipulation, the Debtors agreed to allow NIB Capital to foreclose on the First Advantage Stocks. The foreclosure will permit the Agent to retain or dispose of all or a part of the stocks without further notice to the Debtors or any party-in- interest in their bankruptcy cases. A copy of the stipulation is available for a fee at: http://www.researcharchives.com/bin/download?id=060608060542 The Hon. Samuel L. Bufford will convene a hearing at 11:00 a.m. on June 27, 2006, to consider approval of the Debtors' stipulation with the bank lenders. The hearing will be held at Courtroom 1575, 255 E. Temple St. in Los Angeles, California. Headquartered in Los Angeles, California, The Kushner-Locke Company is a low-budget movie production studio. The Company, along with its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2001 in the U.S. Bankruptcy Court for the Central District of California. Charles D. Axelrod, Esq., at Stutman, Treister & Glatt, PC, represent the Debtors in their restructuring. Bennett L. Spiegel, Esq., at Los Angeles, California, represent the Official Committee of Unsecured Creditors. LGB INC: Section 341(a) Creditors Meeting Continued to June 29 -------------------------------------------------------------- The U.S. Trustee for Region 17 will continue the meeting of LGB, Inc.'s creditors at 9:30 a.m., on June 29, 2006, at the Office of the U.S. Trustee, Suite 700 235 Pine Street, San Francisco, California. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Grass Valley, California, LGB, Inc., filed for chapter 11 protection on Apr. 27, 2006 (Bankr. E.D. Calif. Case No. 06-21340). George C. Hollister, Esq., at Hollister Law Corp., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts between $100,000 and $500,000. MANITOWOC COMPANY: Enodis Rejects GBP882 Million Offer ------------------------------------------------------ Enodis plc rejected The Manitowoc Company, Inc.'s offer to purchase the company for GBP882 million. Manitowoc made the offer to expand its food service operations and wants to get a foothold in the UK Geoff Foster at This is Money reports. The Company's major shareholders, led by Legal & General and Harris Associates, said they would not accept any bid below GBP2 per share, Mr. Foster says. Last month, Enodis also rejected the GBP796 million offer of Middleby Corporation because it "significantly undervalued the company". According to the Financial Times, other potential bidders are waiting to bid for Enodis. Bankers and analysts have suggested that Illinois Tool Works and UTC could emerge as possible US suitors. In Europe, interest could come from Sweden's Electrolux, Italy's Ali, Germany's Rational einbaukuchen GmbH or the UK's Aga Foodservice Group. Aboubt Enodis Based in London, Enodis plc -- http://www.enodis.com/-- designs, manufactures and supplies food and beverage equipment. Through its two operating groups, Global Food Service Equipment and Food Retail Equipment, it has manufacturing facilities in North America, the UK, Western Europe and Asia and a large portfolio of premium brands including Cleveland(TM), Convotherm(R), Delfield(R), Frymaster(R), Garland(R), Icematic(R), Ice-o- matic(R), Jackson(R), Kysor//Warren(R), Kysor Panel Systems, Lincoln(R), Merrychef(R), Scotsman(R) and Scotsman(R) Beverage Systems. About Manitowoc Headquartered in Maniwotoc, Wisconsin, The Manitowoc Company, Inc. (NYSE: MTW) -- http://www.manitowoc.com/-- provides lifting equipment for the global construction industry, including lattice- boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * As reported in the Troubled Company Reporter on May 25, 2006, Moody's Investors Service affirmed the debt ratings of The Manitowoc Company, Inc. -- Corporate Family Rating at Ba3, Senior Unsecured Notes at B1, and Senior Subordinate Notes at B2. The outlook is changed to positive from stable. MASTERCRAFT INTERIORS: Committee Taps Platzer Swergold as Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Mastercraft Interiors, Ltd., and Kimels of Rockville, Inc.'s chapter 11 cases, asks the U.S. Bankruptcy Court for the District of MAryland for permission to employ Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP, as its bankruptcy counsel. Platzer Swergold will: a. assist and advise the Committee in its consultation with the Debtors relative to the administration of the Debtors' cases; b. attend meetings and negotiate with the representatives of the Debtors; c. assist and advise the Committee in its examination and analysis of the conduct of the Debtors' affairs; d. assist the Committee in the review, analysis and negotiation of any plan of reorganization filed and to assist the Committee in the review, analysis and negotiation of the disclosure statement accompanying any plan of reorganization; e. assist the Committee in the review, analysis and negotiation of any financing agreements; f. take all necessary action to protect and preserve the interests of the Committee, including: * the investigation and prosecution of certain actions, on the Committee's behalf, * negotiations concerning all litigation in which the Debtors is involved, and * if appropriate, review, analyze and reconcile claims filed against the Debtors' estate; g. generally prepare on behalf of the Committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the Committee; h. appear, as appropriate, before the bankruptcy court, the Appellate Courts, other courts and tribunals, and the United States Trustee, and to protect the interests of the Committee before said Courts and the United States Trustee; and i. perform other necessary and appropriate legal services in this case as the Committee may request and as the firm may agree. Sydney G. Platzer, Esq., a partner at Platzer Swergold, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $410 - $595 Associates $170 - $395 Paralegals $135 Mr. Platzer discloses that the firm has agreed to discount its normal and customary hourly rates by 15% for this engagement. Mr. Platzer assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Platzer can be reached at: Sydney G. Platzer, Esq. Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP 1605 Avenue of the Americas New York, New York 10018 Tel: (212) 593-3000 Fax: (212) 593-0353 http://www.platzerlaw.com/ Headquartered in Beltsville, Maryland, Mastercraft Interiors Ltd., -- http://www.mastercraftinteriors.com/-- manufactures high- quality furniture and other home furnishings. The Company and its subsidiary, Kimels of Rockville, Inc., filed for bankruptcy on May 15, 2006, (Bankr. D. Md. Case No. 06-12769). Morton A. Faller, Esq., Michael J. Lichtenstein, Esq., and Stephen A. Metz, Esq., at Shulman, Rogers, Gandal, Pordy & Ecker, P.A., represent the Debtors in their restructuring efforts. When it filed for bankruptcy, Mastercraft Interiors reported assets amounting to $10,600,288 and debts amounting to $25,485,847. Kimels of Rockville reported assets totaling $704,227 and debts amounting to $10,341,704 during the bankruptcy filing. MASTERCRAFT INTERIORS: U.S. Trustee Appoints Seven-Member Panel --------------------------------------------------------------- The U.S. Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Mastercraft Interiors, Ltd., and Kimels of Rockville, Inc.'s chapter 11 cases: 1. Hancock and Moore, Inc. c/o Thomas J. O'Connell P.O. Box 3444 Hickory, North Carolina 28603 Tel: (828) 495-1947 Fax: (828) 495-3021 2. Interim Chairperson Vanguard Furniture Co. c/o Beverly Curtis P.O. Box 2187 Hickory, North Carolina 28603 Tel: (828) 328-5631 Fax: (828) 328-9816 3. The Henkel Harris Co., Inc. c/o William F. Edmonson P.O. Box 2170 Winchester, Virginia 22604 Tel: (540) 667-4900 Fax: (540) 667-5653 4. American Leather, LP c/o James Harris 4501 Mountain Creek Parkway Dallas, Texas 75236 Tel: (972) 296-9599 Fax: (972) 590-9289 5. Kindel Furniture c/o Robert S. Foharty Box 2047 Grand Rapids, Michigan 49501 Tel: (616) 243-3676 Fax: (616) 243-6154 6. French Heritage, Inc. c/o Jacques Wayser 650 South San Vicenre Blvd. Los Angeles, California 90068 Tel: (323) 655-0656 Fax: (323) 852-9162 7. HDM Furniture Industries, Inc. c/o Dominic S. Marchiando 1925 Eastchester Drive High Point, North Carolina 27265 Tel: (336) 888-4914 Fax: (828) 438-2009 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 Beltsville, Maryland, Mastercraft Interiors Ltd., -- http://www.mastercraftinteriors.com/-- manufactures high- quality furniture and other home furnishings. The Company and its subsidiary, Kimels of Rockville, Inc., filed for bankruptcy on May 15, 2006, (Bankr. D. Md. Case No. 06-12769). Morton A. Faller, Esq., Michael J. Lichtenstein, Esq., and Stephen A. Metz, Esq., at Shulman, Rogers, Gandal, Pordy & Ecker, P.A., represent the Debtors in their restructuring efforts. When it filed for bankruptcy, Mastercraft Interiors reported assets amounting to $10,600,288 and debts amounting to $25,485,847. Kimels of Rockville reported assets totaling $704,227 and debts amounting to $10,341,704 during the bankruptcy filing. MEDIA MEDICAL: Moody's Lowers Rating on Sr. Unsec. Bonds to Ba1 --------------------------------------------------------------- Moody's Investors Service downgraded Media General, Inc.'s senior unsecured rating to Ba1 from Baa3 and assigned the company a Ba1 Corporate Family Rating. The rating actions conclude the review for downgrade initiated on April 6, 2006 in connection with Media General's announced plan to acquire four NBC television stations from NBC Universal for an approximate $603 million purchase price that is expected to be financed primarily with debt. Downgrades: Issuer: Media General, Inc. * Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3 * Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3 * Preferred Stock Shelf, Downgraded to (P)Ba3 from (P)Ba2 Assignments: Issuer: Media General, Inc. * Corporate Family Rating, Assigned Ba1 Outlook Actions: Issuer: Media General, Inc. * Outlook, Changed To Stable From Rating Under Review The downgrade reflects the significant increase in Media General's debt-to-EBITDA leverage that will occur as a result of the acquisition, which Moody's believes has a high probability of closing. The increase in financial risk is occurring at a time when the company's sizable 2006 and 2007 capital expenditure program will limit the company's ability to reduce its high leverage in those years. Moody's expects heightened competition for advertising revenues and pressure on media industry equity valuations will prompt the company to continue to seek acquisitions over the intermediate term to increase scale and supplement growth at its mature newspaper and broadcast properties. Moody's believes these pressures and the company's willingness to fund acquisitions with a high debt component will sustain a level and volatility in leverage consistent with the speculative-grade rating. The stable rating outlook reflects Moody's expectation that the company will reduce debt-to-EBITDA to a level below 4.0x by 2008 supported by the addition of the four NBC broadcast properties with good collective operating margins, incremental sales from new product development and enhanced printing capabilities, good business line diversity, and improved cash generation available for debt service once capital expenditures begin to moderate after 2007. Media General, headquartered in Richmond, VA, operates newspapers, television stations and online enterprises, primarily in the southeastern United States. Publishing assets include three metropolitan, 22 daily and more than 100 weekly newspapers and other publications. Broadcast assets include 22 network- affiliated television stations. MERIDIAN AUTOMOTIVE: Wants Until July 31 to File Chapter 11 Plan ---------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive periods to: (a) file a plan of reorganization through and including July 31, 2006; and (b) obtain acceptances of that plan through and including Sept. 30, 2006. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that since they filed their Joint Plan of Reorganization, the Debtors have continued their efforts to gain additional creditor support for the joint plan, have worked diligently to complete a disclosure statement and, along with their co-proponents, have prepared various plan- related documents. Those ongoing efforts culminated with the addition of the Official Committee of Unsecured Creditors as co-proponent of the Debtors' First Amended Joint Plan, which, together with the proposed Disclosure Statement, was filed on May 26, 2006, Mr. Brady notes. "The plan process is well underway, with the support of major creditor constituencies," Mr. Brady says. The Court will consider the adequacy of the information contained in the Debtors' Disclosure Statement on June 27, 2006. To deny further extension of the Exclusive Periods at this stage of the plan process would jeopardize the significant progress made as of May 26, 2006, toward plan confirmation, Mr. Brady asserts. The Court will convene a hearing on June 14, 2006, at 10:30 a.m. (ET) to consider the Debtors' request. By application of Del. Bankr. LR 9006-2, the Debtors' exclusive filing period is automatically extended until the conclusion of that hearing. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Wants Settlement of Centralia Lawsuit Okayed ----------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a settlement of the lawsuit and the agreement to modify the Centralia retiree benefits. The United Auto Workers Local Union 1766 and the Retirees of the Centralia facility advise the Court that they support the Debtors' request. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that the Debtors acquired a facility in Centralia, Illinois, from Cambridge Industries in July 2000. Cambridge, in turn, had acquired the facility from Rockwell International in August 1994. The Debtors closed their Centralia facility in 2003. Although there are no active employees at Centralia, approximately 129 retirees continue to draw health and life insurance benefits under a retiree benefits welfare plan -- Meridian Automotive Systems, Inc., Welfare Benefits Plan for the Centralia, Illinois Bargaining Unit Associates. The Debtors assumed the retiree benefits negotiated first by Rockwell International, and then by Cambridge, with the United Auto Workers Local Union 1766 prior to the 2000 Centralia acquisition. The collective bargaining agreement with the UAW expired on Oct. 1, 2003. Centralia Plan The Debtors' accumulated post-employment benefit obligation for the Centralia Plan is estimated at $26,352,000, their annual cash benefit payments total $1,618,000, and their annual expense is estimated at $1,403,000. According to Mr. Brady, under the current Centralia Plan, participants: (a) pay no premiums; (b) have in-network deductibles of $50 per year for individuals and $100 for families; (c) pay 10% co-insurance for most in-network coverage; (d) pay $3 co-pays for all prescription medications; and (e) receive comprehensive dental, hearing, and life insurance. Lawsuit When the CBA expired, the Debtors informed the UAW that they were discontinuing retiree health care coverage under the Plan, Mr. Brady tells the Court. The retirees filed a lawsuit seeking a preliminary injunction to prevent the Debtors from discontinuing the retiree benefits. The United States District Court for the Eastern District of Michigan granted the Retirees' request. The United States Court of Appeals for the Sixth Circuit affirmed the District Court's ruling. Because of the automatic stay, the Michigan District Court has not yet entered a final order, and the Debtors have contemplated an appeal. Negotiation and Settlement To resolve the dispute and save money, the Debtors proposed modifications to the Centralia Plan. The Union and the Retirees sent a counter-proposal. On April 26, 2006, the Debtors accepted the counterproposal, contingent upon the Court's approval of a Settlement and Memorandum of Agreement and the dismissal with prejudice of the Lawsuit. The parties executed a written agreement embodying these terms on May 17, 2006. Under the Agreement, Retirees will continue to: (a) pay no premiums; (b) have in-network deductibles of $50 per year for individuals and $100 for families; and (c) pay 10% co-insurance for most in-network coverage. The Agreement eliminates lifetime maximum limits on coverage, annual maximums, deductibles, and coinsurance for most preventive care. The coverage for emergency care will be modified to allow full coverage when a person reasonably believes, in essence, that emergency care is needed. Current hearing, dental, and life insurance benefits will continue unchanged. The parties have agreed to: -- establish a new PPO Plan, -- modify reimbursement levels to be based on "reasonable and customary" approved amounts, -- establish a series of new co-pays, and -- increase annual maximum out-of-pocket expenses: * from $200 per individual to $300 per individual; and * $400 per family to $600 per family. Prescription drug co-pays will now range from $4 to $12. A full-text copy of the Settlement and MOA is available for free at http://ResearchArchives.com/t/s?af4 http://bankrupt.com/misc/meridian_centraliaMOA.pdf The Debtors will have significant savings as a result of the retiree plan modification, Mr. Brady maintains. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000). METABOLIFE INT'L: Asks Court to OK Wendy Davis Ephedra Settlement ----------------------------------------------------------------- MII Liquidation, Inc., formerly known as Metabolife International, Inc., and AHP Liquidation, LLC, formerly known as Alpine Health Products, LLC, ask the U.S. Bankruptcy Court for the Southern District of California to approve a settlement agreement with Wendy Davis. Robert R. Barnes, Esq., at Allen Matkins Leck Gamble & Mallory LLP, tells the Court that Wendy Davis is dying in a hospice. MII and its insurers and Ms. Davis have settled her fully insured claim against Metabolife and any other defendants and agreed to the payment that she will receive Court order. For her to realize any benefit from the settlement, the settlement must be approved at once. In addition, if Ms. Davis passes away before the effective date of the order, the present settlement is ineffective and the settlement process becomes substantially more complicated. In short, if the order is not entered timely, the opportunity for a new settlement may be lost or significantly delayed. Before the Debtors' cases were commenced, Ms. Davis filed a lawsuit in California Superior Court, which was consolidated into the San Diego County coordinate proceeding as action JCCP 4360-00095. She also filed a proof claim in the MII (#231) and AHP (#52) chapter 11 cases. Under the settlement, Wendy Davis will receive payment in a confidential amount and will withdraw all proofs of claim. The actions against MII may also be dismissed with prejudice. Ms. Davis also grants a general release of claims against all parties arising from the ephedra use. This means, among other things, that the settlement may also benefit retailers or other indemnified parties, including officers, directors, employees, or shareholders of MII and AHP, Mr. Barnes points out. According to Mr. Barnes, the parties are working on a more general motion to approve other settlements or compromises and procedures for approving still more. MII tried to combine the Davis settlement with the broader motion, but that broader motion is more complex and has not yet been finalized. Mr. Barnes reminds the Court that several major parties in these cases have been mediating ephedra claims against MII. The mediation continues in an effort to resolve claims more or less globally, but the mediation has borne fruit in other ways. MII (including its insurers) and several plaintiffs, including Ms. Davis, have settled their fully insured claims. Mr. Barnes assures the Court that the settlement is being funded entirely by MII's insurers: no property of the estate is used to make a payment, and no creditor is affected by the settlement. In addition, based on an analysis of the available insurance coverage and likely claims resolution, there will be no exhaustion of the coverage. Thus, similarly situated ephedra claimants who benefit from the same insurance coverage will receive equal treatment from the insurance policies. Headquartered in San Diego, California, Metabolife International, Inc. -- http://www.metabolife.com/-- sells dietary supplements and management products in grocery, drug and mass retail locations nationwide. The Company and its subsidiary, Alpine Health Products, LLC, filed for chapter 11 protection on June 30, 2005 (Jointly Administrated Under Bankr. S.D. Calif. Case No. 05-06040). David L. Osias, Esq., and Deb Riley, Esq., at Allen Matkins Leck Gamble & Mallory LLP, represent the Debtors in their chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $23,983,112 in total assets and $12,214,304 in total debts. MMI PRODUCTS: CRH Merger Cues S&P to Lift Rating to BBB+ from B- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Houston, Texas-based MMI Products Inc. to 'BBB+' from 'B-' and removed the ratings from CreditWatch, where they had been placed with positive implications on April 26, 2006. The acquisition of MMI by CRH PLC (BBB+/Stable/A-2) is complete, and MMI's subordinated notes were redeemed by CRH. "Because the notes were redeemed, we have withdrawn our ratings on MMI," said Standard & Poor's credit analyst Lisa Wright. MORGUARD REAL: DBRS Confirms Issuer Rating at BB (High) Stable -------------------------------------------------------------- Dominion Bond Rating Service confirmed the Issuer Rating of Morguard Real Estate Investment Trust as indicated above at BB (high) with a Stable trend. * Issuer Rating Confirmed BB (high) Stb The credit profile of Morguard remains stable and the current rating category reflects: (1) Compared to other DBRS-rated real estate investment trusts, Morguard has less favourable balance sheet and coverage ratios due to higher debt levels. However, DBRS notes that post-Q1 2006, Morguard's 8.5% convertible debentures were converted into trust units with the remaining Cdn$116 million expected to be converted throughout 2006. While this should improve coverage ratios as a result of interest savings, DBRS expects debt levels to return closer to 60% on a debt-to-gross book value assets basis. Although DBRS expects Morguard's EBITDA interest coverage ratio to remain below its peer average of 2.50 times, this ratio should continue to modestly improve with favourable debt refinancing over the medium term. (2) The Trust has exposure to the individual performance of five enclosed shopping centres which collectively represent 30% of the total leasable area. (3) Morguard is vulnerable to the potential store closures of The Bay, Zellers, and Sears, key anchors at a majority of the Trust's enclosed shopping centres. Compared with larger regional malls located in primary markets, DBRS believes that Morguard's mid-market shopping centres in the size range of 200 thousand to 500 thousand square feet are more susceptible to a loss of one of these anchors and could have a more difficult time re-configuring or re- leasing the space to replacement tenants. This could also have a significant impact on ancillary tenants, resulting in a much broader impact on Morguard's cash flow levels than would be suggested by the 5.6% of total basic revenue these tenants currently represent. Notwithstanding the above concerns, DBRS expects Morguard to continue to perform reasonably well throughout 2006, and the rating continues to be supported by the following factors, which are the basis of the confirmation. (1) Morguard's portfolio is underpinned by a stable retail portfolio that comprises community/neighbourhood shopping centres and enclosed shopping centres, including two large regional shopping centres. (2) Morguard's portfolio is diversified by asset class, with the retail segment contributing 62% of net operating income followed by office at 24% and industrial at 14%. (3) Morguard's portfolio metrics remain stable, with consistent occupancy levels in the mid- to low-90% range. Going forward, cash flow stability is also supported by Morguard's reasonable lease profile, averaging 10% of space per year by the end of 2009, with embedded rental rents generally below market rates. DBRS does not expect Morguard to make any meaningful acquisitions in 2006, as the real estate market remains highly competitive with low capitalization rates. Alternatively, the Trust will continue to focus on development projects totalling Cdn$12 million at its existing properties and favourable debt refinancing over the medium term. NATIONAL CENTURY: Ohio Grand Jury Charges 7 Ex-Officers With Fraud ------------------------------------------------------------------ Former Chairman of National Century Financial Enterprises, Inc., Lance K. Poulsen, and six other former NCFE executives were indicted on charges of plotting to defraud NCFE investors of more than $3,000,000,000. The indictment -- unsealed by a grand jury in the U.S. District Court for the Southern District of Ohio on May 22, 2006 -- charges Mr. Poulsen with 47 counts of fraud, conspiracy and money laundering, including six counts of securities fraud. The 60-count indictment also names: * Donald H. Ayers, 70, former vice chairman and chief operating officer; * Randolph H. Speer, 55, former finance chief; * Roger S. Faulkenberry, 45, director of securitizations from 1994 to December 2000; * James E. Dierker, 38, vice president for client development from January 1999 to January 2001; * Rebecca S. Parrett, 57, former vice chairman, who oversaw accounts receivable; and * Jon A. Beacham, 39, director and vice president of securitizations from about January 2001 to November 2002. The seven ex-NCFE executives are accused of lying to investors, diverting funds and conspiring to launder money. Mr. Speer is charged with 42 counts and Mr. Ayers with 35. Three former NCFE employees were also cited as "unindicted" conspirators: (1) Sheryl L. Gibson (2) John A. Snoble (3) Brian J. Stucke Mssrs. Poulsen and Ayers and Ms. Parrett -- founders of NCFE -- are named as the principal defendants. The Conspiracy "The purpose of the conspiracy was basically to embezzle, misappropriate and divert investor funds for improper and unlawful purposes," the indictment stated. Specifically, the Ohio Grand Jury held that the Ex-NCFE executives conspired to prepare materially false and fraudulent documents, and records, and make materially false and fraudulent representations to banks, rating agencies, investors, auditors and others about NCFE and the asset-backed securities programs offered and operated by NCFE's wholly owned subsidiaries. The Ex-NCFE executives then misappropriated, misused and diverted the investors' funds for improper and unlawful purposes, including: (a) financing the acquisition of healthcare providers by NCFE or by the Principal Defendants; (b) providing unsecured "advances" and loans both to clients and entities in which the Principal Defendants had ownership interests, including those in which they concealed or failed to disclose their interests; and (c) diverting investors' funds for: -- the operating expenses of NCFE and its subsidiaries; and -- the unjust and personal enrichment of the principal Defendants. Besides false and fraudulent statements and records, the means by which the conspiracy was accomplished was through: (a) false investor reports; (b) false data in program documents; (c) improper intra-program and inter-bank transfers; (d) improper advances of investor funds; and (e) diversions of investor funds. The Grand Jury narrated at least a hundred overt acts committed by the Defendants. Ex-NCFE Executives Arrested The indictment was returned May 19 and sealed until the defendants could be arrested, said Margaret Cronin Fisk at Bloomberg News. According to Ms. Fisk, Messrs. Poulsen, Ayers, Dierker and Beacham, and Ms. Parrett have already been arrested. Mr. Speer will surrender himself in Atlanta, while arrangements haven't been made with Mr. Faulkenberry. David Hammer at The Associated Press said Mr. Poulsen, who was seen May 22 in the U.S. District Court in Fort Myers, Florida, was released on bond. "My client has violated no law and has intended since the beginning to fight any charges against him vigorously," Mr. Poulsen's lawyer, Thomas Tyack, Esq., at Tyack, Blackmore & Liston Co., LPA, in Columbus, Ohio, told the AP. Representing Mr. Ayers, Karl Schneider, Esq., at Maguire & Schneider, LLP, in Columbus, Ohio, told Bloomberg News that they plan on "defending the charges vigorously." Mr. Dierker's attorney, Harry Reinhart, Esq., on the other hand, said his client denies any wrongdoing. If convicted, the Ex-NCFE Executives will face a maximum of 20 years in prison and a $500,000 fine on each count of money laundering or conspiring to money launder. The wire fraud, mail fraud and securities fraud counts each carry penalties of five years in prison and $250,000 fines. Two of the wire fraud charges and five of the mail fraud charges carry 20-year maximum sentences. The indictment also seeks about $2,000,000,000 in property forfeitures. A full-text copy of the indictment is available for free at http://ResearchArchives.com/t/s?af7 http://bankrupt.com/misc/natl_century_former_execs_indictment.pdf Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL CENTURY: 6th Cir. Affirms Bankr. Court's Enjoinment Order ------------------------------------------------------------------ Long Term Care Management, Inc., Quality Long Term Care Management, Inc., and Quality Long Term Care, Inc., asked the Bankruptcy Appellate Panel for the Sixth Circuit to review whether the U.S. Bankruptcy Court for the Southern District of Ohio erred in: (1) determining that the LTC Entities' prosecution of their adversary proceeding against NPF XII, Inc., and NCFE, Inc., in the U.S. Bankruptcy Court for the District of Nevada violates an injunction in the confirmed Plan of Reorganization issued in the NCFE Debtors' Chapter 11 cases; and (2) holding the LTC Entities in contempt for initiating that proceeding. The LTC Entities believe that the Ohio Bankruptcy Court lack jurisdiction to enjoin the prosecution of the Nevada Adversary Proceeding. BAP Issues Ruling Bankruptcy Appellate Panel Judges Latta, Scott and Whipple disagree with the LTC Entities' assertion that the Ohio Bankruptcy Court lacked jurisdiction to enjoin the prosecution of the Nevada Adversary Proceeding. The Panel says the interpretation and enforcement of the NCFE Plan was "within the jurisdiction of the court that confirmed the plan." Since the issue raised by the VI/XII Collateral Trust's request was one of interpretation of the NCFE Plan, the court confirming the NCFE Plan -- the Ohio Bankruptcy Court -- was the proper court to decide the request. Enjoinment Order is Affirmed The LTC Entities argued that a provision found in the NCFE Plan -- an exception to injunction -- permits them to pursue the Nevada Adversary Proceeding: "Notwithstanding anything to the contrary in this Plan or the Confirmation Order, no party shall be enjoined from taking action to determine the amount, validity or priority of, or to recharacterize or subordinate, any claim or lien of any Debtor in the Providers' respective bankruptcy cases, and the court with jurisdiction over the Providers' bankruptcy cases shall retain full jurisdiction to determine such matters with respect to any such claim or lien of any Debtor." Judges Latta, Scott and Whipple disagree. Under the NCFE Plan, "Provider" refers to "any healthcare company or practitioner that was a healthcare financing client or customer of one or more of the Debtors through . . . the participation in the Debtors' accounts receivable financing program." The Ohio Bankruptcy Court held that the exception does not apply, because NPF XII's claims had already been determined when the Nevada Court confirmed the LTC Entities' Plan, which fixed the amount, validity, and priority of the claims with all defenses expressly waived or released. The Ohio Bankruptcy Court reasoned that the LTC Entities were attempting to "undo a Court approved settlement agreement, not 'determine the amount, validity, priority of, or to recharacterize or subordinate, any claim or lien' of the Debtors." In other words, the Ohio Bankruptcy Court concluded that the exception applies to "determinations" of claims, not to attempts to "redetermine" claims. The Panel believes that the Nevada Adversary Proceeding represents an attempt by the LTC Entities to obtain relief for their failure to undertake due diligence before entering into a settlement with NPF XII regarding the validity, amount, and priority of its claims, which settlement -- including a waiver of all defenses to the allowed claims -- was approved by an order of the Nevada Bankruptcy Court that became final more than two years before the initiation of the Adversary Proceeding. "The Ohio bankruptcy court did not abuse its discretion in interpreting the NCFE Plan as enjoining those efforts because the claims allowance process had been completed as to NPF XII in October 2001," the Panel rules. For this reasons, the Panel affirms the Ohio Bankruptcy Court's interpretation of the NCFE Plan as enjoining the Nevada Adversary Proceeding. Contempt Order is Reversed The Bankruptcy Appellate Panel asserts that "a litigant may be held in contempt if his adversary shows by clear and convincing evidence that 'he violate[d] a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court's order.'" Since the LTC Entities do not dispute that they had knowledge of the injunctions established by the Ohio Bankruptcy Court's confirmation of the NCFE plan, the issue is whether the injunction language is definite and specific enough to support a finding of contempt, the Panel says. Judges Latta, Scott and Whipple note that although the NCFE Plan's injunction language is broad, the carve-out for "action[s] to determine the amount, validity or priority of, or to recharacterize or subordinate, any claim or lien of any Debtor in the Providers' respective bankruptcy cases" is also broad. The Panel believes that the LTC Entities were indisputably included within the definition of "Providers" and they were debtors in a bankruptcy case that had not been closed at the time the NCFE cases commenced. The NCFE Debtors anticipated that their claims against Providers would be subject to litigation in Provider cases in other bankruptcy courts around the country. Accordingly, the Ohio Bankruptcy Court's interpretation of the exception to apply only to nascent or ongoing claims determination processes in other courts was reasonable and well within its discretion, the Panel relates. However, Judges Latta, Scott and Whipple find the distinction between ongoing and completed claims determination processes in the Providers' own bankruptcy cases is not sufficiently definite and specific in the language of the exception to support a finding of contempt against the LTC Entities for initiating the Nevada Adversary Proceeding. The exception also authorized "recharacterizing" any NCFE Debtor's claim in a Providers' bankruptcy case, requiring the Ohio Bankruptcy Court to find implicitly that the LTC Entities' Nevada action was not an attempt to "recharacterize" NPF XII's Allowed Claim within the meaning of the NCFE Plan. The carve-out language could reasonably be interpreted as permitting the initiation and prosecution of the Nevada Adversary Proceeding, the Panel explains. The Ohio Bankruptcy Court abused its discretion in holding the LTC Entities in contempt, the Panel adds. Therefore, the Ohio Bankruptcy Court's decision holding the LTC Entities in contempt is reversed, Judge Whipple says. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Court Deems USGen's Objection Timely Filed ----------------------------------------------------------- On May 18, 2006, Tennessee Gas Pipeline Company and USGen New England, Inc., filed their proposed list of exhibits and deposition excerpts that they would present at a hearing on July 17, 2006, in connection with their claims dispute. USGen filed objections to TGP's exhibits, including an expert report by Andrea Wolfman. USGen stated that TGP's exhibits contained improper expert testimony; the evidences presented are mostly based on hearsay and have questionable relevancy in connection with the dispute; and the exhibits lacked the foundation to support TGP's claims against USGen. TGP, on the other hand, objected to USGen's exhibits, including Thomas J. Norris' expert reports. TGP said that USGen's exhibits contain hearsay; many portions of the exhibits are missing or have been omitted and many parts are also illegible, unintelligible, or unreadable; many evidences in the exhibits are irrelevant; and certain expert opinions do not meet the requirement of the Federal Rules of Civil Procedure. USGen Objection Deemed Timely Filed Pursuant to the U.S. Bankruptcy Court for the District of Maryland's scheduling order, USGen's objections to TGP's exhibits were due for filing on May 24, 2006. Gordon A. Coffee, Esq., at Winston & Strawn LLP in Washington, D.C., explains though that due to an administrative error in the Court's filing system, USGen's objections were filed on May 25, 2006. The Court grants USGen's leave to file its objection out of time, and deems the objection as timely filed. As reported in the Troubled Company Reporter on June 5, 2006, USGen and Tennessee Gas' dispute relates to the computation of Tennessee Gas' claims for damages. The Claim arised from USGen's rejection of their contracts for the transportation of natural gas for use at several New England power plants owned and operated by USGen. About National Energy Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Says Mirick Lost Chance to File Late Claim ----------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Maryland held a hearing on Adam Mirick's motion to file a late claim against National Energy & Gas Transmission, Inc., on May 9, 2006. Mr. Mirick's counsel did not present any admissible evidence of any kind, notwithstanding that it is undisputed that the burden of demonstrating excusable neglect lies with Mr. Mirick, Steven Wilamowsky, Esq., at Willkie Farr & Gallagher LLP in New York, asserts. The Court ruled against Mr. Mirick's informal proof of claim theory as a matter of law and it adjourned the hearing to a later date to give Mr. Mirick another chance to adduce evidence in support of his motion. However, as a condition to the adjournment, the Court required Mr. Mirick to pay NEGT for the fees and expenses of its counsel incurred in connection with its attendance at the May 9 hearing. In an e-mail dated May 10, 2006, to Mr. Mirick's counsel, Brian L. Schwalb, Esq., at Venable, LLP, in Washington, D.C., NEGT indicated that it incurred $8,468 in attorneys' fees, comprised of: -- $6,507 for fees and expenses of Willkie Farr & Gallagher LLP; and -- $1,961 for fees and expenses of Whiteford, Taylor & Preston L.L.P. Mr. Schwalb responded that the Fees were too high and that Mr. Mirick could not pay them in full. Mr. Mirick instead offered to pay $2,700, based on his counsel's purported opinion, not of NEGT's costs related to the May 9 hearing, but of the predicted cost of the adjourned hearing that was yet to be scheduled. In a letter to NEGT dated May 15, 2006, Mr. Mirick explained that his refusal to pay the Attorneys' Fees was because: (1) the Attorneys' Fees are a lot of money for an individual like him to pay; (2) NEGT should have used a different non-bankruptcy counsel to defend against his motion; and (3) Willkie Farr should not have attended the hearing with its local co-counsel. Mr. Mirick has declined to satisfy an express condition that was imposed by the Court as a prerequisite for the second chance that it afforded him, Mr. Wilamowsky notes. Instead, Mr. Mirick has chosen to second-guess the judgment of NEGT regarding its use of counsel and thereby manufacture an excuse for not paying the Attorneys' Fees. By failing to meet the condition imposed by the Court, Mr. Mirick has forfeited the second chance that he had been granted, Mr. Wilamowsky asserts. Accordingly, NEGT asserts that Mr. Mirick's request to file a late claim should be denied, and the adjourned hearing should not go forward. NEGT reserves its right to seek reimbursement of additional fees and expenses incurred as a result of Mr. Mirick's failure to abide by the Court's instructions, including the costs of preparing the Supplemental Objection. Mr. Mirick sought Court-authority to file late claim against NEGT contending that his failure to timely file a proof of claim was a result of excusable neglect. Mr. Mirick told the Court that it was only after the Jan. 9, 2004 bar date had expired that he became aware that the Chapter 11 cases of NEGT, and NEGT Energy Trading Holdings Corporation are consolidated, and of other facts, which prove that NEGT is directly liable to him for unpaid wages and compensation that he earned while working at ET Holdings. Mr. Mirick further told the Court that he did not know the extent of NEGT's involvement in his employment by ET Holdings. However, evidenced revealed only in discovery supports that NEGT actually controlled ET Holdings' employment and compensation decisions, serving as a "joint employer" as a matter of law. Mr. Mirick worked as an energy trader at ET Holdings. He filed Claim No. 77 for $7,859,478 against ET Holdings on March 14, 2003, in connection with the termination of his employment. About National Energy Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Wants to Assume Worldspan Carrier Agreement --------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to assume the Participating Carrier Agreement, as supplemented by the Content Agreement. The Debtors also seek the Court's permission to file the Agreements under seal as a necessary measure to protect the parties from disclosing confidential commercial information. Worldspan PCA In February 1991, Northwest Airlines and Worldspan, L.P., entered into a Participating Carrier Agreement, pursuant to which Worldspan, through its global distribution system, distributed Northwest's products. Northwest Airlines and Worldspan have negotiated a Content Agreement to supplement the PCA beginning August 1, 2006, for a five-year term. Northwest Airlines and Worldspan agree that in connection with the assumption, Worldspan will have an allowed $15,635,000 general unsecured claim for the prepetition amounts due under the PCA. The parties agree that the allowance of Worldspan's prepetition claim, together with the accommodations and financial arrangements encompassed by the terms of the Content Agreement, satisfy any "cure" obligations Northwest Airlines has to Worldspan under Section 365. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, tells the Court that the PCA allows Northwest Airlines to continue to have access to an important component of Northwest Airlines' distribution process. The Content Agreement provides for immediate savings in reduced distribution costs, and further augments the benefits under the PCA by providing for additional and enhanced Northwest Airlines content to be made available to users of the Worldspan GDS. 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. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000). NORTHWEST AIRLINES: Wants Court Nod on ALPA CBA Modifications ------------------------------------------------------------- Northwest Airlines, Inc., and Northwest Airlines Corp. seek the U.S. Bankruptcy Court for the Southern District of New York's authorization to enter into certain modifications to their collective bargaining agreement with the Air Line Pilots Association, International, as embodied in an ALPA Restructuring Agreement. The ALPA CBA, which became effective December 1, 2004, establishes the wages, hours, and terms and conditions of the employment of the Debtors' ALPA-represented pilots. The ALPA CBA is a "bridge agreement" intended to give Northwest labor cost relief while it negotiated with other unions. ALPA agreed to $250,000,000 in annual cost reductions from year 2002 levels of wages and benefits. The reductions included wage cuts, and an agreement by the pilots to pay 20% of their contractual medical insurance premiums. In line with their target to achieve $1,365,110,000 in annual labor cost savings postpetition, the Debtors, on October 12, 2005, filed a request to reject nine collective bargaining agreements with their six unions pursuant to Section 1113(c) of the Bankruptcy Code. To provide an opportunity to reach a consensual labor agreement, on November 7, 2005, the Debtors and ALPA reached an interim agreement under Section 1113(e) to continue negotiations while deferring the hearing on the Debtors' Section 1113(c) request. ALPA agreed to temporary pay cuts of 23.9%, as well as reductions in certain pay premiums and allowances, and certain changes to pay for sick leave and vacation pay. On January 31, 2006, the Debtors, with ALPA's support, obtained Court approval to freeze the pilots' accrual of benefits under certain defined benefit pension plans. On March 3, 2006, the Debtors and ALPA's negotiating committee reached the ALPA Restructuring Agreement, a tentative agreement that provides for modification of the ALPA CBA. The pilots ratified the Agreement on May 3, 2006. The ALPA Restructuring Agreement provides comprehensive terms for wage reductions, work and scope rule changes and other terms that will provide approximately $358,000,000 per year in cost savings for the Debtors, Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates. Specifically, the parties agree to: (1) a 23.9% across-the-board pay reduction and pay increases of 1.5% in 2008-2010 and 2% in 2011; (2) modifications to work rules, including an increase in monthly maximum, modification to widebody aircraft augmentation requirements and reductions in penalty pay, vacation accrual, sick leave costs, wage premiums and certain other benefits; (3) changes in scope requirements, including more opportunity for domestic and international codesharing, and flexibility to continue existing or enter into new joint ventures; and (4) scope modifications permitting a number of 76 seat jets that may be flown at a subsidiary and a number of 77-100 seat jets that may be flown at the Debtors' mainline operations. Mr. Petrick relates that the consensual reductions in wages and other cost savings: -- meet the Debtors' reduction requirements from ALPA; -- are consistent with the assumptions of the Debtors' business plan; and -- will put the Debtors' cost structure with respect to the pilots on competitive terms with other carriers. Mr. Petrick also notes that the ALPA Restructuring Agreement achieves cost savings and labor harmony for an extended period of time. The Agreement has an amendable date on the earlier of (i) December 31 of the 4th calendar year after the Debtors' exit from Chapter 11 or (ii) December 31, 2011. Profit Sharing In addition to the cost savings and scope relief realized, the ALPA Restructuring Agreement provides for the pilots' participation in a profit sharing plan. The terms of profit sharing plan are: (a) if the Debtors' pre-tax income as a percent of revenue for any year in which the plan is in place is less than or equal to 10%, the aggregate payout amount will be equal to 10% of pre-tax income, provided the amount is in excess of $1,000,000; (b) if the Debtors' Pre-Tax Margin for a Plan Year is greater than 10%, the aggregate payout amount will be equal to the sum of: (i) 10% of that portion of income, which would have resulted in the Pre-Tax Margin being equal to 10%; and (ii) 15% of Income for the Plan Year in excess of the 10% Margin Portion, provided the sum is in excess of $1,000,000; and (c) if either the pre-tax income or the sum of 10% Margin Portion and the 15% Excess Margin Portion is less than $1,000,000, the aggregate payment amount will be zero. Each participant's award will be paid in cash in one lump sum no later than April 15 immediately following the end of the year with respect to which the award is paid. $888,000,000 Prepetition Claim ALPA will have an allowed $888,000,000 general unsecured claim in the Debtors' Chapter 11 cases in respect of the concessions it made: Source of Savings Effective Date Savings ----------------- -------------- ------- ALPA Bridge Agreement 12/01/04 - 12/31/06 $521,000,000 Interim Agreement 11/15/05 - 02/28/06 81,000,000 Restructuring Agreement 04/01/06 - 12/31/06 269,000,000 Retiree Medical 04/01/06 - 12/31/06 17,000,000 ------------ T O T A L $888,000,000 The Claim will arise upon the effective date of the Debtors' plan of reorganization and the assumption of the ALPA Restructuring Agreement. The NWA Master Executive Council will have the authority to determine the manner of distribution of the ALPA Claim. The Claim will not be allowed for voting purposes. If the Debtors agree that any pre-ALPA Restructuring Agreement grievance claims with any other union "ride through" the Chapter 11 cases, any similarly situated ALPA grievance claims will ride through to the same extent. No other claims will arise in connection with any agreement with ALPA. Any grievance claims arising under the ALPA Restructuring Agreement during the period after it becomes effective and before its rejection will constitute costs and expenses of administration of the Chapter 11 cases. Plan of Reorganization The parties agree that any plan of reorganization of the Debtors will include certain provisions for exculpation or release of ALPA. To the extent that the Agreement has not been rejected: -- any plan of reorganization of the Debtors will provide for the assumption of the ALPA Restructuring Agreement; and -- the Debtors will not file, sponsor or support confirmation of a plan of reorganization that does not provide for assumption of the Agreement. The Debtors agree to indemnify ALPA in connection with the implementation and negotiation of the ALPA Restructuring Agreement and certain other agreements between them. Cost Reductions from Other Labor Groups The ALPA Restructuring Agreement will not become effective until the Debtors implement, through binding agreement or legal unilateral authority, revisions to: -- the labor contracts of the Debtors' other unionized employees; and -- the wages, benefits and working conditions of the Debtors' non-union employees, The aggregate revisions must be reasonably projected to produce $963,000,000 in average annual savings in labor costs from January 1, 2006, through December 31, 2010, excluding any implementation, severance, or separation program costs. If subsequent to the effective date and during the term of the ALPA Restructuring Agreement, excluding any status quo period, the Debtors make a material aggregate improvement in the wage rates, work rules, benefits or other compensation of: -- the International Association of Machinist, -- the Professional Flight Attendants Association, -- the Aircraft Technical Support Association, -- the Northwest Airlines Meteorologists Association, -- the Transport Workers Union Of America, or -- the Aircraft Mechanics Fraternal Association employees, then that improvement or its proportional hard dollar equivalent will be automatically applied to reduce the labor cost savings agreed upon for ALPA-represented employees. Other Terms Upon its emergence from bankruptcy, Northwest will make a $16,800,000 lump sum payment to the pilots. ALPA will determine the allocation of the payment. As payment of fees and expenses incurred by ALPA related to the restructuring negotiations, Northwest will credit the "ALPA Bank" with $1,500,000 on June 1, 2006. Northwest and ALPA, concurrently with the ALPA Restructuring Agreement, will execute agreements related to: * incentive performance plan for pilots, * profit sharing plan, * bankruptcy protection, release, and indemnification, * pension benefits for pilot employees, and * pilot early retirement program. Mr. Petrick tells the Court that the ALPA Restructuring Agreement modifies the ALPA CBA to achieve many of the Debtors' financial requirements on terms acceptable to ALPA. At the same time, the ALPA Restructuring Agreement resolves part of the complex Sections 1113(c) and 1113(e) litigation as it relates to ALPA, eliminates uncertainty as to the terms of employment for a very substantial employee group, and eliminates the risk of work interruption and other adverse consequences for the Debtors. 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. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000). OCA INC: Disclosure Statement Hearing Slated for June 19 -------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana scheduled the hearing to consider the adequacy of OCA, Inc.'s joint disclosure statement explaining its joint chapter 11 plan on June 19, 2006, 9:00 a.m. at Hale Boggs Federal Building, Room B- 705, 7th Floor, 500 Poydras St., in New Orleans, Louisiana. Objections to the Disclosure Statement must be filed not later than June 12, 2006. As reported in the Troubled Company Reporter on May 16, 2006, the Court approved a Plan Support Agreement in which the Debtor, its senior lenders (Bank of America, as agent, and affiliates of Silver Point Capital), and the Official Committee of Unsecured Creditors agreed to support the approval and confirmation of the Plan. Terms of the Plan Under the Plan, the amount of senior secured indebtedness held by the Senior Lenders will be reduced from approximately $92 million to $50 million. The Senior Lenders will receive under the Plan all of the equity of the reorganized Debtor upon exit from chapter 11. The Debtor's unsecured creditors will receive a cash payment equal to $2,700,000 and will be eligible to receive additional deferred cash payments up to the full amount of their allowed claims after certain distributions and permanent cash paydowns to senior lenders exceed $100 million. All of the Debtor's outstanding stock will be cancelled; however, the Debtor's existing shareholders will be eligible to receive deferred cash payments equal to $1,500,000 after certain distributions and permanent cash paydowns to the Senior Lenders exceed $115 million, an additional $3,500,000 if the distributions and paydowns exceed $150 million and certain additional amounts if such distributions and paydowns are larger than these amounts. DIP Financing Approval The Debtor also received a final order from the Court approving its debtor-in-possession revolving credit financing with Bank of America as agent, and Silver Point Capital pursuant to which the Debtor will be able to obtain debtor-in-possession financing of up to $15,000,000. Upon exit from bankruptcy, the Senior Lenders have committed (subject to the terms of the Plan Support Agreement) to a new working capital facility to be used to pay off amounts borrowed under the DIP loan and for general corporate purposes. CEO Termination In addition, the Debtor reported that, consistent with the terms of the Plan Support Agreement, Bart Palmisano, Sr. was terminated as CEO. Michael Gries, the Debtor's Chief Restructuring Officer, will, effective immediately, assume the additional position of Interim Chief Executive Officer. "We are encouraged by the significant support demonstrated by the Company's senior lenders and the Official Committee of Unsecured Creditors, as well as the Company's vendors and employees," Mr. Gries said. "We also appreciate the continuing loyalty and support of our affiliated orthodontists and dentists. We have met and discussed the Company's restructuring plan with many of our affiliated doctors and look forward to continuing that dialogue throughout the remaining pendency of the case. The Company's restructuring is progressing at a very rapid pace, and we hope to emerge from chapter 11 by the end of the summer." A full-text copy of the Debtor's Joint Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060515213155 A full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060515213437 About OCA Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/ -- provides a full range of operational, purchasing, financial, marketing, administrative and other business services, as well as capital and proprietary information systems to approximately 200 orthodontic and dental practices representing approximately almost 400 offices. The Debtor's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No. 06- 10179). William H. Patrick, III, Esq., at Heller Draper Hayden Patrick & Horn, LLC, represents the Debtors. Patrick S. Garrity, Esq., and William E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed US$545,220,000 in total assets and US$196,337,000 in total debts. OMI TRUST: S&P Lowers Class M-1 & M-2 Transactions' Ratings to CC ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on class M-1 from OMI Trust 1999-D and class M-2 from OMI Trust 2002-C to 'CC' from 'CCC-'. The lowered ratings reflect the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investments. Each class experienced its initial principal write-down on the May 2006 payment date, and each is expected to have a liquidation loss interest shortfall on the next payment date. Standard & Poor's believes that interest shortfalls for these deals will continue to be prevalent in the future in light of the adverse performance trends displayed by the underlying pools of manufactured housing retail installment contracts originated by Oakwood Homes Corp., as well as the location of write-down interest at the bottom of the transactions' payment priorities (after distributions of senior principal). Standard & Poor's will continue to monitor the outstanding ratings associated with these transactions in anticipation of future defaults. Ratings Lowered: OMI Trust 1999-D Rating Class To From ----- -- ---- M-1 CC CCC- OMI Trust 2002-C Rating Class To From ----- -- ---- M-2 CC CCC- OWENS CORNING: Files Sixth Amended Plan & Disclosure Statement -------------------------------------------------------------- Owens Corning and its debtor-affiliates, the Official Committee Of Asbestos Claimants and the Legal Representative for Future Claimants filed a sixth amended plan of reorganization and an accompanying disclosure statement with the Bankruptcy Court on June 5, 2006. As previously reported, the Plan Proponents, the Official Representatives of Bondholders and Trade Creditors, the Ad Hoc Equity Holders' Committee and the Ad Hoc Bondholders' Committee executed an agreement in principle on May 10, 2006, for key terms of a new plan of reorganization, which terms are now incorporated in the Sixth Amended Plan. Pursuant to the Settlement Term Sheet, the Sixth Amended Plan assumes Owens Corning's enterprise value at $5,858,000,000 upon emergence. Owens Corning's asbestos personal injury claims are fixed at $7,000,000,000. New OCD Securities and Rights Offering Under the Sixth Amended Plan, the existing equity of Owens Corning will be extinguished and 131,400,000 shares of common stock of Reorganized OCD will be issued. The Reorganized Debtors will also issue Class A11 and Class A12 Warrants. The Class A11 Warrants will consist of warrants to obtain approximately 17,500,000 shares of New OCD Common Stock -- 11.167% on a fully diluted basis before any management stock -- with an exercise price of $43.00 per share. The Class A12 Warrants will consist of warrants to obtain approximately 7,800,000 shares of New OCD Common Stock -- 5% on a fully diluted basis before any management stock options -- with an exercise price of $45.25 per share. On or before the effective date of the Sixth Amended Plan, the Reorganized Debtors will have executed and consummated a $2,187,000,000 rights offering and secured a $1,800,000,000 exit facility. Pursuant to the rights offering, holders of eligible Class A5 Bondholders Claims, Class A6-A OCD General Unsecured Claims, and Class A6-B OCD General Unsecured/Senior Indebtedness Claims would be offered the opportunity to subscribe for up to their pro rata share of 72,900,000 shares of the New OCD Common Stock at a purchase price of $30.00 per share. On May 10, 2006, Owens Corning and J.P. Morgan Securities Inc. executed an equity commitment agreement. JPMorgan will acquire shares not sold pursuant to the Rights Offering. Owens Corning is obligated to pay a $100,000,000 backstop fee. Asbestos PI Claims All asbestos personal injury claims will be channeled to an asbestos personal injury trust, and will paid pursuant to the terms and provisions of a trust distribution procedures and a asbestos personal injury trust agreement. On the Effective Date, Owens Corning will pay the Asbestos PI Trust, among others, $2,872,000,000 in cash and assign the Trust all rights to any insurance recoveries. Proposed Effective Date As set forth in the Settlement term Sheet, the Plan must be effective no later than October 30, 2006, or at a later date as the Plan Proponents will unanimously agree. Directors and Officers at Effective Date The Reorganized Debtors' Board of Directors will initially consist of 16 members, consisting of the 12 continuing directors, one member to be named by the ACC, one to be named by the FCR, and two by the Ad Hoc Bondholders' Committee. The Reorganized Owens Corning Board will be divided into three classes -- Class I, Class II and Class III -- with five directors in Class I, five in Class II and six in Class III. Eleven of the continuing directors will serve in Class II and Class III, and the remaining directors will serve in Class I. At the first annual meeting of stockholders, which will be held no earlier than the first anniversary of the Effective Date, the terms of office of the Class I directors will expire and Class I directors will be elected for a full term of three years. Plan Support Agreement Pursuant to a plan support agreement dated May 10, 2006, certain holders of prepetition bonds issued by Owens Corning agreed to support the Sixth Amended Plan. Disclosure Statement Hearing on July 10 The Court will hold a hearing to consider the adequacy of the Disclosure Statement accompanying the Sixth Amended Plan on July 10, 2006, at 9:00 a.m. in Pittsburgh, Pennsylvania. Objections to the Disclosure Statement must be filed by June 26. A hearing to consider confirmation of the Sixth Amended Plan has been scheduled for September 18, 2006, at 9:00 a.m. A full-text copy of Owens Corning's Sixth Amended Plan is available for free at http://ResearchArchives.com/t/s?b1c A full-text copy of Owens Corning's Sixth Amended Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?b1d 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. PLIANT CORP: Creditors Vote to Accept Joint Reorganization Plan --------------------------------------------------------------- Pliant Corporation and its debtor-affiliates report that following the solicitation of acceptances of their Second Amended Joint Plan of Reorganization, which ended on May 22, 2006, every Impaired Class of Claims and Interests entitled to vote on the Plan overwhelmingly voted to accept the Plan. In each class entitled to vote, the Debtors note that more than 94% of those voting (by dollar amount) voted to support the Plan: % of Dollar Amount % of No. of of Claims/Shares of Holders Interests Voting to Voting to Class Description Accept the Plan Accept Plan ----- ----------- ------------------- ----------- 3 Revolving Credit 100.00% 100.00% Facility Claims 7 Old Note Claims 94.34% 74.16% 8 Intercompany 100.00% 100.00% Company Claims 9 Series A Preferred 99.97% N/A Stock Interests 10 Series B Preferred 100.00% N/A Stock Interests 11 Outstanding Common 97.87% N/A Stock Interests According to Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, the level of support of the Plan is not surprising, as the Plan is a product of a prepetition compromise and agreement with the holders of more than 66-2/3% of Pliant's 13% Senior Subordinated Notes, the holders of a majority of the outstanding shares of Pliant's mandatorily redeemable preferred stock and the holders of the outstanding shares of Pliant's common stock. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Files Memorandum of Support for Second Amended Plan ---------------------------------------------------------------- Pliant Corporation and its debtor-affiliates assert that their Second Amended Joint Plan of Reorganization does not impair the Holders of First Lien Note Claims or Second Lien Note Claims. The Plan provides alternative forms of consideration to holders of Old Note Claims, Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, asserts. Mr. Brady insists that the Plan meets the feasibility requirement of Section 1129(a)(11) of the Bankruptcy Code. Mr. Brady points out that upon emergence from bankruptcy, the Debtors will have: -- reduced debt by more than $300,000,000; -- eliminated $40,000,000 per year of cash pay interest; -- an EBITDAR/cash interest ratio of 2.5:1; -- negotiated a $200,000,000 exit facility that will provide a liquidity cushion at emergence of more than $60,000,000; -- made substantial progress in reinstating normal trade credit terms with their principal suppliers; and -- adjusted their contracting and procurement practices in a manner that substantially reduces their exposure to risk. In addition, over the 2006-2009 period, the Debtors' business will be cash generative and their EBITDAR to cash interest ratio will increase from 2.5/1 to 5.3/1, Mr. Brady says. By 2009, the Debtors will have sufficient cash to pay down their $200,000,000 exit facility and their leverage ratio will be 4.0/1, Mr. Brady relates. Additionally, Mr. Brady continues, the evidence will show that the projections underlying the Debtors' business plan were based on a thorough analysis of their operations and that the assumptions underlying their business plan are conservative. Mr. Brady also argues that the Emergence Bonus program does not pay bonuses simply based on the fact of emergence nor are the participants rewarded simply for continuing their employment until a certain date. According to Mr. Brady, the emergence bonuses are dependent upon several performance-based criteria: (1) the Emergence Date, which motivates management to strive for an expeditious emergence from Chapter 11; (2) the Recovery to Trade Creditors, which is achieved if the Debtors' trade creditors will receive payment in full through a plan of reorganization or payment pursuant to consensual terms between the Debtors and the trade creditors; and (3) the Capital Structure, which is created in part through the reduction of cash interest payments that would reasonably be anticipated in the future to allow for capital expenditures at industry benchmarked investment rates, and result in a market-based credit profile at bond maturities. Mr. Brady adds that Buck Consultants, an independent compensation consultant who has reviewed emergence bonus programs of other Chapter 11 debtors, reviewed the Emergence Bonus program and concluded that: (a) the proposed program is fair, reasonable and necessary to fairly compensate and incentivize management with respect to the substantial bankruptcy-related duties that transcend their typical day-to-day responsibilities; (b) the performance metrics are appropriate for a company in bankruptcy; (c) the participants included in the proposed Emergence Bonus program are appropriate; (d) the proposed number of participants is low compared to market; (e) the total cost of the program is below median market level; (f) the total Emergence Bonus program cost at target as a percentage of revenue is below median market level; and (g) the total Emergence Bonus program cost relative to the level of participation is consistent with the market. Accordingly, the Debtors ask the Court to overrule the objections and confirm the Plan. The Debtors also ask Judge Walrath to allow their Brief in Support of Confirmation of a Plan of Reorganization to exceed the 40-page limit under the Court's chambers procedures. The Debtors' Memorandum reached 73 pages. According to the Debtors, they need to adequately respond to each of the issues raised in the Confirmation Objections. A full-text copy of the Debtors' 73-page Memorandum is available for free at http://ResearchArchives.com/t/s?b04 Committee Also Supports Plan Don A. Beskrone, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, tells the Court that the Official Committee of Unsecured Creditors, through its professionals, has: (i) reviewed the Amended Plan; (ii) reviewed the Commitment Letter; and (iii) participated in the discovery that was conducted in anticipation of the Confirmation Hearing. The Committee believes that the Amended Plan provides a significant recovery to unsecured creditors and asks the Court to confirm the Amended Plan. The Committee concedes that the Debtors have taken significant measures to position their business to succeed in the future and have secured an exit financing facility that appears to provide appropriate liquidity. Parties Also Respond to Confirmation Objections 1. Sub Note Committee The ad hoc committee of certain holders of 13% Senior Subordinated Notes due 2010 joins in the Debtors' Response to the Confirmation Objections, particularly the Debtors' evidence and arguments in support of feasibility. 2. Bank of New York The Bank of New York -- as the indenture trustee for each of the 13% Senior Subordinated Notes due 2010 issued pursuant to an indenture dated as of May 31, 2000, and the 13% Senior Subordinated Notes due 2010 issued pursuant to an indenture dated as of April 10, 2002 -- opposes the contention that the Plan impairs the claims of the Lien Notes and violates the subordination provisions of the Subordinated Indentures. Christopher A. Ward, Esq., at The Bayard Firm, in Wilmington, Delaware, notes that the Plan proposed by the Debtors cures all payment defaults of the Lien Notes, reinstates their maturity, compensates for all damages and other actual pecuniary losses with respect to the Lien Notes and otherwise reinstates all of the rights with respect to the Lien Notes. "In short, the claims in respect of the Lien Notes are left unimpaired by the Plan," Mr. Ward says. Mr. Ward asserts that the Objections of the Lien Noteholders are without merit. "What the Objectors are really after is an improvement in their recovery over and above what they had originally bargained for and are entitled to under their agreements with the Debtors. Such a result is prohibited by the Bankruptcy Code and should not be countenanced by [the] Court," Mr. Ward says. Thus, the Bank of New York asks the Court to (a) determine that the Plan leaves the claims in Class 4 (First Lien Notes) and Class 5 (Second Lien Notes) unimpaired; and (b) conclude that the treatment of, and distributions to be made in respect of, the claims in Class 7 (Subordinated Notes) do not violate the Subordinated Indentures. 3. JP Morgan Partners Certain affiliates of JP Morgan Partners holding Series A Redeemable Preferred Stock and Common Stock ask Judge Walrath to overrule the Confirmation Objections. Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell, LLP, in Wilmington, Delaware, insists that the Plan does not impair the Senior Secured Debt. The Objections that the Plan violates Section 1129 of the Bankruptcy Code should not be given any weight, Mr. Werkheiser says. "Either the Plan is confirmable because (i) it pays the Senior Secured Debt in full as required by the relevant indenture before distribution may be made to junior creditors or (ii) the distribution is permitted under the indenture's 'x-clause' whether the Senior Secured Debt is paid in full or not." Mr. Werkheiser adds that to the extent the Additional Bondholder Consideration and payment of attorney's fees is determined to impair the Senior Secured Notes, the Plan provides that the holders of the Senior Subordinated Notes will not be entitled to that payment. Debtors File Updated Exhibits On May 26, 2006, the Debtors also delivered updated exhibits to the Debtors' Second Amended Joint Plan of Reorganization: 1. Certificate of Incorporation of New Pliant The company's Amended and Restated Certificate of Incorporation provides that total number of shares of stock that the Corporation has the authority to issue is "[100,336,400]", consisting of: (a) 335,600 shares of Series AA Redeemable Preferred Stock; (b) 8,000 shares of Series M Preferred Stock; and (c) 100,000,000 shares of Common Stock. A full-text blacklined copy of Pliant's Amended and Restated Certificate of Incorporation is available for free at: http://ResearchArchives.com/t/s?b05 2. New Pliant Stockholders Agreement The Debtors made non-material changes to their Stockholders Agreement, a full-text blacklined copy of which is available for free at http://ResearchArchives.com/t/s?b06 3. Pliant Corporation Deferred Cash Incentive Plan The Deferred Cash Incentive Plan provides that the "Maximum In-Kind Amount" now means the lesser of: (x) the aggregate amount of the Bonus Pool created in connection with the Liquidation Event minus the Mandatory Cash Portion, and (y) the Applicable Percentage of the Pre-Hurdle Retained Securities Amount. A full-text blacklined copy of the Deferred Cash Incentive Plan is available for free at: http://ResearchArchives.com/t/s?b07 Mr. Brady discloses that the Debtors are currently contemplating that each insider director of New Pliant will receive a director's fee that is commensurate with the fees paid to the other directors of New Pliant. The directors of Old Pliant were paid approximately $30,000 per year. The Debtors estimate that the insider directors of New Pliant will receive at least that amount, subject to adjustment based on a final determination of the amount to be paid to New Pliant's directors generally. Mr. Brady adds that Pliant Solution Corporation's intercompany claim for $31,340,061 against Pliant Corporation is cancelled pursuant to the Plan. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) POKAGON GAMING: S&P Puts B Rating on Proposed $305 Million Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to the Pokagon Gaming Authority's proposed $305 million senior notes due 2014. Proceeds from the proposed note issue will be used to help fund the construction of the Four Winds Casino & Resort. Concurrently, a 'B' issuer credit rating was assigned to the PGA. The outlook is stable. The PGA is expected to have approximately $480 million in pro forma consolidated peak level debt outstanding. The ratings on the PGA reflect: * its narrow business position as an operator of a single casino once its Four Winds Casino & Resort opens in the third quarter of 2007; * a competitive market environment with another facility less than 15 miles away; and * construction risks associated with the development of the facility. Still, the operating performance of the PGA's Four Winds is expected to be satisfactory upon its opening, the pro forma capital structure provides for a ramp-up period, relatively adequate construction contingencies exist in the event of cost overruns, and pro forma credit measures are expected to be good for the rating. Dowagiac, Michigan-based PGA was created to operate Four Winds for the Pokagon Band of Potawatomi Indians. The PBPI is one of nine federally recognized Native American tribes in Michigan operating 17 land-based Class III gaming facilities. The Tribe's compact with the State of Michigan became effective in 1999 and expires in 2019. The gaming compact permits the operation of Class III gaming, including an unlimited number of slot machines and table games, and requires the PBPI to pay 8% of net slot revenues to the state and 2% of net slot revenues to specified local governments. However, there are currently two pending lawsuits challenging the validity of (or the validity of certain provisions of) the tribal state compacts between Michigan and four Native American tribes, including the PBPI. While the timing and outcome of these challenges are uncertain, it is Standard & Poor's expectation that a resolution will be reached that will not disrupt the operation, once opened, at Four Winds. PROVIDENTIAL HOLDINGS: Buys Western Medical Assets for $5.25 Mil. ----------------------------------------------------------------- Providential Holdings Inc. signed an asset purchase agreement to acquire key assets of Western Medical Inc., an Arizona corporation engaged in the business of selling durable medical equipment and providing related services, with locations in Prescott and Tucson, Arizona, and headquarters in Phoenix. According to the asset purchase agreement, Providential Holdings will purchase key assets, valued at approximately $15 million, of Western Medical Inc. for $5.25 million in cash. These assets include: (i) all of the Western's inventory, now or hereafter owned or acquired by Western wherever located, including all inventory, merchandise, goods and other personal property which are held by or on behalf of Western for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, whole goods, spare parts or components, work in process or materials used or consumed or to be used or consumed in Western's business or in the processing, production, packaging, promotion, delivery or shipping of the same, including other supplies; (ii) all right, title and interest of Western's accounts receivable, other receivables, book debts and other forms of obligations, whether arising out of a sale, lease or other disposition of goods or other property, out of a rendering of services, or otherwise arising under any contract or agreement; rights in, to and under all purchase orders or receipts for goods or services; rights to any goods represented or purported to be represented by any of the foregoing (including unpaid seller's rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods); and monies due or to become due to Western under all purchase orders and contracts for the sale or lease of goods or the performance of services or both by Western (but only to the extent Providential or its designated subsidiary assumes and performs under such purchase orders and contracts), including the proceeds of the foregoing: (iii) all of Western's owned equipment, including all machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and record-keeping equipment, parts, telephone systems, tools and supplies; provided, however, Providential will not acquire: any leased equipment unless Providential assumes the applicable lease and is assigned by order of the Bankruptcy Court; (iv) to the extent legally transferable under applicable law, all Western's rights and interests in its general intangible, including Western's Medicare provider number, all contract rights, including those pertaining to AHCCCS, licenses, permits, patents, patent applications, copyrights, trademarks, trade names, trade secrets, Western's rights in its telephone numbers, customer or supplier lists, product information and formulae and contracts, manuals, operating instructions, permits, franchises, the right to use Western's name, and the goodwill of Western's business; together with (v) all substitutions and replacements for and products of any of the foregoing property, (vi) in the case of all tangible property, together with all accessions, accessories, attachments, parts, equipment and repairs attached or affixed to or used in connection with any such goods, and all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods, and (vii) all proceeds of any and all of the foregoing property. To accomplish the contemplated purchase, Western Medical and Providential Holdings expect that Western Medical will file a Chapter 11 Petition within five business days of the execution of the asset purchase agreement. Thereafter, they will move for the authority to sell the assets to Providential and provide for the assumption and assignment of certain executory contracts to Providential under the terms of the agreement. Both companies understand and acknowledge such sale will be subject to higher and better bids that may be asserted and approved by the Bankruptcy Court. Further, Providential may, in its sole discretion, advance financing to allow Western Medical to purchase equipment and inventory to fulfill customer orders prior to the closing under this agreement. he terms of such financing, if any, will be documented separately and conditioned upon Providential reaching an agreement with the M&I Marshall Isley Bank vis-a-vis the security and priority afforded to such financing, and, if applicable, the Bankruptcy Court approval. Providential has received several indications of interest and commitments from various institutional investors to fund the purchase of these assets. The closing of this transaction is subject to the approval of the Bankruptcy Court and other conditions as described in the asset purchase agreement; and is expected to occur on an agreed-upon date no later than 10 business days following entry of a final Sale Order by the Bankruptcy Court. Robert Buceta, corporate strategist of Providential Holdings, who is instrumental in the process of this asset purchase transaction, commented: "We look forward to building an exceptional company at all levels. Our experienced management team will make Western Medical an industry leader in providing the highest quality services and products for home health care. We firmly believe that our growth and accomplishments stem from the caliber of our employees, who strive to exceed our clients' expectations." About Providential Basedin Huntington Beach, California, Providential Holdings, Inc. (OTCBB:PRVH) -- http://www.phiglobal.com/-- specializes in mergers and acquisitions and invests in international markets. The Company acquires and consolidates special opportunities in selective industries to create additional value, acts as an incubator for emerging companies and technologies, and provides financial consultancy and M&A advisory services to U.S. and foreign companies. * * * Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 14, 2005, Kabani & Company, Inc., raised substantial doubt about Providential Holdings, Inc.'s ability to continue as a going concern after it audited the Company's financial results for the year ended June 30, 2005. The auditors pointed to the Company's accumulated deficit and losses in the years ended June 30, 2005, and 2004. At March 31, 2006, the Company's balance sheet showed accumulated deficit of $18,970,157. The company posted a $186,050 net loss for the period ended March 31, 2006. PSEG ENERGY: S&P Affirms BB- Corp. Credit Rating With Neg. Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its short-term corporate credit rating on PSEG Energy Holdings LLC to 'B-2' from 'B-3'. Standard & Poor's also affirmed its 'BB-' long-term corporate credit rating on the company. The outlook remains negative. Newark, New Jersey-based PSEG Energy Holdings is an intermediate holding company of Public Service Enterprise Group Inc. (BBB/Watch Dev/A-3). As of March 31, 2006, the company had $1.5 billion of recourse debt and $880 million of project-level nonrecourse debt. "The improvement in the short-term rating reflects the company's use of proceeds of asset sales and repatriated cash to retire future debt maturities," said Standard & Poor's credit analyst David Bodek. "However, we remain concerned about contingent liabilities presented by ongoing IRS investigations into the propriety of accelerated tax deductions related to leasing transactions," said Mr. Bodek. The rating on PSEG Energy Holdings is based on the company's stand-alone credit quality, separate from other members of the Public Service Enterprise Group. PTC ALLIANCE: Disclosure & Confirmation Hearings Set for July 13 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania set a combined hearing on July 13, 2006, to determine the adequacy of PTC Alliance Corp.'s Disclosure Statement and confirmation of its prepackaged Chapter 11 Plan of Reorganization. Objections to the Disclosure Statement or Plan must be filed by 5:00 p.m., on July 5, 2006. The Plan seeks to restructure the Debtor's prepetition secured debt and prepetition equity and improve its balance sheet. Plan Funding The Debtor tells the Court that on the effective date, it will execute and deliver: a. a First Priority Exit Facility Agreement consisting of: * a revolving loan of up to $40 million to provide for ongoing capital requirements, and * a term loan in the aggregate principal amount of $30 million; b. a New Second Priority Cash Pay Term Notes in the amount of $76.8 million; and c. a New Third Priority PIK Term Notes in the amount of $45.7 million. Treatment of Claims Under the plan, administrative expenses and priority tax claims will be paid in full. Non-tax priority claims, other secured claims, and general unsecured claims will be reinstated. Holders of Secured Bank Claims will receive their pro rata share of the New Second Priority Cash Pay Term Notes. In addition, on the effective date, holders of these claims will receive payment, in cash: a. all unpaid interest accrued as of the effective date on the claim at the default contract rate in accordance with the Prepetition Credit Agreement, compounded on each interest payment date to the extent not paid when due; and b. all unpaid fees and expenses of the Prepetition Agents and the Prepetition Lenders required to be paid pursuant to the Prepetition Credit Agreement. Holders of Subordinated Secured Note Claims will receive their pro rata share of the New Third Priority PIK Term Loan Notes. Holders of the Old Class AA Preferred Stock Interests will receive 92% of the New Common Stock. Holders of the Old Class BB Preferred Stock Interests will receive 8% of the New Common Stock, provided that if holders of the Debtor's Old Class C and Class M Preferred Stock Interests does not vote in favor of the plan, then holders of the Class BB Stock will, retain all claims or causes of action against Class C and Class Stock holders. The Debtors tell the Court that if holders of the Old Class C and Class M Preferred Stock Interests vote to accepts the plan and execute the Mutual Release, then on the effective date: a. holders of the Class C stock will receive, in exchange for their interests, a pro rata share of the Class C Payment; and b. holders of the Class M stock will receive, in exchange for their interests, a pro rata share of the Class M Payment. Old Common Stock Interests will be cancelled and holders will not receive anything under the plan. A full-text copy of the Debtor's disclosure statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060608054503 About PTC Alliance Headquartered in Wexford, Pennsylvania, PTC Alliance Corp. -- http://www.ptcalliance.com/-- manufactures and markets welded and cold drawn mechanical steel tubing and tubular shapes, chrome- plated bar products, fabricated parts, and precision components. The company filed for chapter 11 protection on May 10, 2006 (Bankr. W.D. Pa. Case No. 06-22110). Eric A. Schaffer, Esq., at Reed Smith LLP, represents the Debtor in its restrucutring efforts. No Officical Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed forprotection from its creditors, it estimated assets and debts of more than $100 million. PTC ALLIANCE: Court Approves Reed Smith as Bankruptcy Counsel ------------------------------------------------------------- PTC Alliance Corp. obtained authority from the U.S. Bankruptcy Court for the Western District of Pennsylvania to employ Reed Smith as its bankruptcy counsel. Reed Smith is expected to: a. advise the Debtor with respect to its powers and duties as debtor and debtor-in-possession in the continued management and operation of its business and properties; b. attend meetings and negotiate with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the chapter 11 case, including all of the legal and administrative requirement of operating in chapter 11; c. take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the estate, and negotiations concerning all litigation in which the Debtor may be involved and objection to claims filed against the estate; d. prepare on behalf of the Debtor all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; e. appear before the bankruptcy court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtor's estate before the courts and the U.S. Trustee; f. take any necessary action on behalf of the Debtor to obtain confirmation of the Debtor's plan of reorganization; and g. perform all other legal services and provide all other necessary legal advice to the Debtor in connection with its chapter 11 case. Eric A. Schaffer, Esq., a partner at Reed Smith, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $305 - $735 Of Counsel $290 - $675 Associates $210 - $440 Legal Assistants, Paralegals, Support Staff $105 - $206 Mr. Schaffer assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Wexford, Pennsylvania, PTC Alliance Corp. -- http://www.ptcalliance.com/-- manufactures and markets welded and cold drawn mechanical steel tubing and tubular shapes, chrome- plated bar products, fabricated parts, and precision components. The company filed for chapter 11 protection on May 10, 2006 (Bankr. W.D. Pa. Case No. 06-22110). Eric A. Schaffer, Esq., at Reed Smith LLP, represents the Debtor in its restrucutring efforts. No Officical Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed forprotection from its creditors, it estimated assets and debts of more than $100 million. PULL'R HOLDINGS: U.S. Trustee Names Seven-Member Creditors Panel ---------------------------------------------------------------- The U.S. Trustee for Region 16 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Pull'R Holdings LLC and its debtor-affiliates' chapter 11 cases: (1) ACE Paper Company Attn: Jeffrey Kaplowitz 2835 E. Washington Blvd. Los Angeles, CA 90023 Tel: (323) 268-1900 (2) Bennett Group Attn: Dean Gavello 2631 Meridian Street Orange, CA 92687 Tel: (714) 336-0112 (714) 289-0500 (3) Fiskars Brands Attn: Robert Hanus 2537 Daniels Street Madison, WI 53718 Tel: (608) 294-4512 (4) Leadgate Industries Attn: Steve Leiserson 10845 C. Wheatlands Avenue Santee, CA 92071 Tel: (619) 562-0626 (5) 1601 Enterprise SQ 3 Attn: Sara Houghton 39 Wang Chiu Road Kowloon Bay, Hongkong Tel: 852 2976 8611 (6) Top Star Group Attn: Bernard J. Reisberg 8585 W. 78th Street, #200 Bloomington, MN 55438 Tel: (612) 281-6427 (7) Worldwide Enterprises, Inc. Attn: Jack Petrone 70 Commercial Way East Providence, RI 02914 Tel: (401) 434-3900 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 Santa Fe Springs, California, Pull'R Holdings LLC -- http://www.pullr.com/-- sell contractors' equipment and tools. They are known for brands such as Bucket Boss, Dead On Tools, and the Maasdam Pow'R-Pull line. The Company and its affiliate, Maasdam Pow'r Pull Inc., filed for bankruptcy protection on April 27, 2006 (Bankr. C.D. Calif. Case No. 06-11669). Lawrence Diamant, Esq., at Robinson, Diamant & Wolkowitz, APC, represent the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors has not yet been appointed. When the Debtors filed for bankruptcy, they reported $1 million to $10 million in total assets and $10 million to $50 million in total debts. PUREBEAUTY INC: Gets Court Final Nod to on $4.75 Mil. DIP Facility ------------------------------------------------------------------ The Honorable Kathleen Thomson of the U.S. Bankruptcy Court for the Central District of California in San Fernando Valley, gave PureBeauty, Inc., and Pure Salons, Inc., final approval to borrow $4.75 million from Webster Business Credit Corporation and Heritage Fund III Investment Corporation. The Debtors will use the proceeds from the DIP loan to pay its prepetition obligations to Webster Business and Heritage Fund III. When they filed for bankruptcy, the Debtors owed Webster Business around $973,734, under a Loan and Security Agreement dated Oct. 31, 2001, as amended. Heritage Fund III is owed $2.4 million in secured loans as of that date. The Court reserves the right for the Official Committee of Unsecured Creditors to seek for: -- disallowance of these lenders' claims; and -- avoidance of security or collateral interest in the Debtors' assets. The Court also granted, on interim basis, the DIP Lenders superpriority administrative claim over the Debtors' assets subject to a $320,000 carve-out to pay for retained professionals in the Debtors' cases and the United States Trustee. The Court also allowed the Debtors to use cash collateral securing the repayment of the Debtors' debt to Webster Business and Heritage Fund III. The Court grants Webster Business and Heritage Fund III, as prepetition lenders, replacement liens and security interests to the extent of any diminution in value of their collateral pursuant to Sections 361 and 363 of the Bankruptcy Code. The Court granted Webster Business and Heritage Fund III, as DIP lenders, perfected first priority claims and priming liens on the Debtors' asset. Webster Business and Heritage Fund III hold superpriority administrative claims and all other benefits and protections allowable under Sections 507(b) and 503(b)(1) of the Bankruptcy Code. PureBeauty, Inc. -- http://www.purebeauty.com/-- operates 48 retail stores and salons offering professional hair care and skincare services, featuring a leading assortment of professional and prestige personal care products. PureBeauty also operates six "brand" stores, providing customers with a variety of aspirational products and services. PureBeauty Inc. and Pure Salons, Inc., an affiliate, filed for chapter 11 protection on April 18, 2006 (Bankr. C.D. Calif. Case No. 06-10545). Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtors in their restructuring efforts. The Debtors' Official Committee of Unsecured Creditors selected Eric E. Sagerman, Esq., and David J. Richardson, Esq., at Winston & Strawn, LLP, as its counsel. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and debts between $50 million and $100 million. QUANTUM CORP: Moody's Lowers Rating on Subordinated Notes to Caa2 ----------------------------------------------------------------- Moody's Investors Service downgraded Quantum Corporation's Corporate Family Rating to B3 from B1 and its subordinated notes rating to Caa2 from B3. This concludes Moody's review of Quantum's ratings which started in May 2006 when Quantum announced that it had signed a definitive agreement to purchase Advanced Digital Information Corporation for $780 million in cash. Moody's also assigned B3 ratings to the proposed credit facilities related to the planned acquisition of ADIC. These new ratings are assigned subject to the receipt and review of the final documentations. The overall ratings outlook is stable. These ratings were downgraded: * Corporate Family rating to B3 from B1 * Convertible subordinated note due 2010 to Caa2 from B3 These new ratings have been assigned: * B3 to $150 million secured revolving facility due 2009 * B3 to $350 million term loan due 2012 * Outlook stable The downgrades reflect the heightened credit risk of the company associated with the planned acquisition of ADIC that will result in increased financial leverage and integration challenges. Furthermore, the downgrades reflect Quantum's continued weak operating performance, with sluggish top line growth and operating losses for each of the past four fiscal years. Quantum's lackluster performance is a result of a combination of overall stagnant to declining tape market due partly to competing technologies, the loss of market share of Quantum's main SDLT technology platform, and ongoing restructuring costs to realign its businesses. The challenging environment has been manifested in two of its key product segments: Tape Drive which has experienced a decline in sales and Storage Systems which has been growing but remain unprofitable. The acquisition of ADIC is designed to bolster the company's market position in automation systems and enhance the direct- to- customer strategic objective. ADIC is a provider of open systems storage solutions to enterprise with a strong presence in the government and data management end markets. ADIC's performance has been relatively stable over the past three years. But revenue is stagnant and profitability is very thin. The Quantum/ADIC combination will create a bigger platform with sales exceeding $1.2 billion. However, Moody's believes that the acquisition will present considerable challenges: the combined company's strategy which will emphasize more direct/branded sales rather than the traditional OEM business of Quantum, potential revenue attrition given the overlap between Quantum's storage business with that of ADIC, and cultural differences between two legacy organizations. Credit metrics are expected to worsen as a result of the acquisition. Leverage will increase to about 4.1x assuming the realization of synergies, and the EBIT interest coverage is expected to be about 1.8x with synergies. The company is expected to generate modest free cash flow. The B3 ratings on the revolving credit facility and the term loan reflect their preponderance in the proposed capital structure, representing over 70% of the pro forma debt structure. The Caa1 rating on the subordinated debt continues to reflect its contractual subordination and the likelihood that recovery may be impaired in distress. Quantum Corporation is headquartered in San Jose, California. It is a provider of tape drive and tape automation for storage purposes. RENATA RESORT: Files Plan and Disclosure Statement in Florida ------------------------------------------------------------- Renata Resort, LLC, unveiled to the U.S. Bankruptcy Court for the Northern District of Florida a Disclosure Statement explaining its Chapter 11 Plan of Reorganization. The Debtor filed its plan and disclosure statement on June 1, 2006. Asset Sale The Debtor reminds the Court that its assets consists of real property located at 12405 Front Beach Road, Panama City Beach, Bay County, Florida, and 600 Lyndell Lane, Panama City Beach, Bay County, Florida, consisting of 3 separate parcels totaling 1.75 acres. The two contiguous gulf front parcels comprise 0.92 acres and the one non-contiguous parcel just north of and across the street from the two other parcels comprise 0.826 acres The Debtor tells the Court that it intends to sell the 0.92-acre and has already identified a Purchaser for the asset. The Debtors says that under the Purchase Agreement, the Purchases will buy the asset for $12 million with 3% of the proceeds to be paid to Merit Commercial Realty, Inc., as a transaction fee for its assistance in facilitating the purchase and sale transaction. The Debtor will use the proceeds to pay Allowed Claims from the Sale Proceeds and to escrow the amount of Disputed Claims until such time as the Court may either estimate such Claims or determine the validity of the Claims. The Debtor tells the Court that it wants to reserve the right to retain and develop or sell the 0.826-acre property. Debtor-in-Possession Financing The Debtor says it has reached an agreement with NexBank, SSB and its permitted assigns to provide a $9 million DIP Financing. The Debtor tells the Court that the financing would allow it to: * fund its operations during the bankruptcy proceeding, * continue with the development of the condominium project, * repay the K.E. Durden Secured Claim, and * assist with the payment of Allowed Claims under the Plan, in the event that: -- the sale of its asset is not approved, -- the Sale Proceeds are not sufficient to pay the Allowed Claims in full, or -- it elects to retain the 0.92-acre property and reorganize. Treatment of Claims Under the plan, these claims will be paid in full: * DIP Lender's Super Priority Secured Administrative Expense Claim; * Administrative Expense Claims; * Professional Fee Claims; and * Priority Claims and Priority Tax Claims. The Debtor tells the Court that unless K.E. Durden's Secured Claim is paid in full using proceeds of the DIP financing, it will cure the default of Durden's Claim by: * reinstating the maturity of the claim pursuant to Section 1124 of the Bankruptcy Code; * paying the principal amount of claim together with accrued interest at the non-default rate; and * paying other compensation for any other damages incurred by the holder of the claim resulting from the reasonable reliance on the acceleration of the note and mortgage or pursuant to applicable law. The Debtor however says that the payment will be without prejudice to and with full reservation of rights, including the right to pursue Debtor's Causes of Action against K. E. Durden. General Unsecured Claims will be paid in full, plus interest, in cash. However if the sale of the Debtor's asset does not close, the Debtor reserves the right to amend the plan and propose a different treatment for general unsecured claims. The Debtor says that Sylvia Harrison Claim's will be paid in full and in cash. However, if the sale of its asset does not close, it reserves the right to amend the plan and propose a different treatment for this claim. The payment of Sylvia Harrison's claims shall be without prejudice to and with a full reservations of rights, including the Debtor's right to pursue the Debtor's Causes of Action against Harrison Unsecured Claims Arising Under Rejected Executory Contracts or Unexpired Leases will be paid in full, plus interest, in cash, but if the sale of the Debtor's asset does not close, then the Debtor reserves the right to amend the plan and propose a different treatment for claims under this class. Equity Interests in the Debtor will be retained but holders will not receive any distributions under the plan. A full-text copy of the Debtor's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060608054733 About Renata Resort Headquartered in Panama City, Florida, Renata Resort, LLC, fdba Sunset Pier Resort, LLC, operates a hotel and resort. The company filed for chapter 11 protection on May 31, 2006 (Bankr. N.D. Fla. Case No. 06-50114). John E. Venn, Jr., Esq., at John E. Venn, Jr., P.A., represents the Debtor in its restrucutring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $19,947,271 and total debts of $8,524,196. RESIDENTIAL ASSET: Moody's Lowers Rating on Class M-I-3 to Caa1 --------------------------------------------------------------- Moody's Investors Service downgraded five certificates, placed on review for downgrade two certificates, and confirmed the ratings on two certificates from two Residential Asset Securities Corporation subprime deals issued in 2001. The transactions consist of a fixed-rate pool and an adjustable-rate pool. The mortgage loans were originated by a variety of different sellers and are serviced by Homecomings Financial Network, Inc., a wholly owned subsidiary of Residential Funding Corporation. RFC is the transaction's master servicer. The subordinate fixed-rate and adjustable-rate certificates from both deals are being downgraded or reviewed for downgrade based on the weaker than anticipated performance of the mortgage pools and the resulting erosion of credit support. The overcollateralization in the deals is being depleted and pipeline losses are likely to put pressure on the most subordinate tranches from the fixed-rate pools. Furthermore, existing credit enhancement levels are low given the current projected losses on the underlying pools. Additionally, the M-II-2 class from the 2001-KS2 deal remains on review for possible downgrade. Moody's final review will focus on loss severities which could further weaken the credit quality of these bonds. Finally, Moody's confirmed the current ratings on the most subordinate certificates from the adjustable-rate pools. Overcollateralization has remained stable over the last several months and credit support is sufficient to support the current ratings on these certificates. In addition, it is probable that the adjustable-rate pools will pass performance triggers and given the current levels of overcollateralization, the M-II-3 classes are likely to be redeemed in full within the next few months. Complete rating actions: Issuer: Residential Asset Securities Corporation Downgrade: * Series 2001-KS2: Class M-I-2, downgraded from Baa2 to Baa3 * Series 2001-KS2: Class M-I-3, downgraded from Ba3 to B3 * Series 2001-KS2: Class M-II-2, downgraded from A2 to Baa3 * Series 2001-KS3: Class M-I-2, downgraded from Baa2 to Ba2 * Series 2001-KS3: Class M-I-3, downgraded from Ba3 to Caa1 Review for Downgrade: * Series 2001-KS2, Class M-II-1, current rating Aa2, under review for possible downgrade * Series 2001-KS2, Class M-II-2, current rating Baa3, under review for possible downgrade Confirm: * Series 2001-KS2: Class M-II-3, confirmed at Baa2 * Series 2001-KS3: Class M-II-3, confirmed at Baa2 SAINT VINCENTS: Committee Taps Alston & Bird as Substitute Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Saint Vincents Catholic Medical Centers of New York and its debtor- affiliates' bankruptcy cases initially retained Thelen Reid & Priest LLP as its counsel. On March 16, 2006, the primary attorneys at Thelen Reid representing the Committee, Martin Bunin, Esq., and Craig Freeman, Esq., commenced working at Alston & Bird LLP. The Committee seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to retain Alston & Bird as its substitute counsel, effective as of March 16, 2006. Bonnie L. Suman, a member of the Committee, asserts that Alston & Bird's broad-based practice, which includes expertise in the areas of finance, litigation, tax, health care, real estate, as well as bankruptcy, will permit the firm to represent fully the Committee's interests in an efficient and effective manner. Alston & Bird will act as the Committee's primary spokesman. The firm will also assist, advise, and represent the Committee with respect to: (a) the administration of the Debtors' bankruptcy cases and the exercise of oversight with respect to the Debtors' affairs, including all issues arising from or impacting the Debtors or the Committee in the Debtors' Chapter 11 cases; (b) the preparation on behalf of the Committee of all necessary applications, motions, orders, reports and other legal papers; (c) appearances in the Bankruptcy Court to represent the Committee's interests; (d) the negotiation, formulation, drafting, and confirmation of any plan of reorganization or liquidation and related matters; (e) the exercise of oversight with respect to any transfer, pledge, conveyance, sale or other liquidation of the Debtors' assets; (f) the investigation, if any, as the Committee may desire concerning, among other things, the assets, liabilities, financial condition, and operating issues concerning the Debtors that may be relevant to their bankruptcy cases; (g) the communication with the Committee's constituents and others, as the Committee may consider desirable in furtherance of its responsibilities; and (h) the performance of all of the Committee's duties and powers under the Bankruptcy Code and the Bankruptcy Rules and the performance of other services as are in the interests of those represented by the Committee or as may be ordered by the Court. Alston & Bird's hourly rates are: Professional Hourly Rate ------------ ----------- Partner $360 to $725 Counsel $335 to $795 Associate $195 to $470 Paralegal $110 to $285 Martin G. Bunin, Esq., a member of the firm, ascertains that Alston & Bird is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Reaches License Agreement with McKesson Automation ------------------------------------------------------------------ Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to enter into a license agreement and a related supplement with McKesson Automation, Inc., to upgrade the pharmacy hardware in the emergency department of Saint Vincent's Hospital, Manhattan. Pursuant to the Agreements: (a) St. Vincents Catholic Medical Centers of New York will acquire pharmacy equipment, related software, and associated licenses for $229,073; and (b) McKesson will provide maintenance in exchange for a $7,500 annual fee for five years. Specifically, SVCMC will buy from McKesson computerized cabinets with touch-screen monitors for storing, dispensing, and tracking medication, as well as related software. McKesson will grant SVCMC a perpetual, non-exclusive, non- transferable license to use the object code version of the Software on the Equipment located at SVCMC's facilities. Maintenance services will include corrections of Software or Documentation due to their defects, and improvements to existing functionality that are provided by McKesson after the delivery date but not otherwise separately priced or marketed by McKesson to its customers generally. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in Boston, Massachusetts, relates that McKesson's liability is limited to the total fees paid by SVCMC to it. According to Mr. Troop, the current system for managing medication in the Emergency Department is largely manual. This manual process is outdated and inefficient, and at times leads to inaccurate billing and dissatisfied patients, Mr. Troop says. The proposed upgrade, Mr. Troop continues, will allow nurses to interface with the pharmacy through the new Equipment and Software which, when combined with the delivery enhancements in the new system, will reduce the time it takes to deliver the appropriate medication to patients. SVCMC estimates that by implementing the new system, it will save more than $30,000 annually. 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. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) SEAENA INC: Incurs $601,137 Net Loss in 2006 1st Fiscal Quarter --------------------------------------------------------------- Seaena Inc., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 22, 2006. The Company reported a $601,137 net loss on $967,088 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $16,560,326 in total assets and $7,894,185 in total liabilities resulting in $8,666,141 stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $2,496,803 in total current assets available to pay $7,894,185 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?ae2 Going Concern Doubt De Joya Griffith & Company, LLC, in Las Vegas, Nevada, raised substantial doubt about Seaena 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 recurring losses from operations, negative working capital, and negative cash flows. About Seaena Inc Seaena, Inc., fka Crystalix Group International, Inc., manufacture and sells laser engraved optical glass and crystal products. It sells its products directly to corporate customers and market organizations. SMOKY RIVER: Moody's Withdraws Caa1 Rating on $125 Million Notes ---------------------------------------------------------------- Moody's Investors Service withdrawn the ratings on notes issued by Smoky River CDO, L.P., a collateralized loan obligation. According to Moody's, the original principal balance of the Class B-1 and Class B-2 notes have been retired in full. The indenture trustee has made request to the current note holders to tender their outstanding notes. Moody's also indicated that deferred interest remain outstanding in the amount of $7,328,076 and $1,941,961 for Class B-1 and Class B-2 respectively. Moody's does not expect the deferred balance to be paid back. Rating action: withdraw rating Issuer: Smoky River CDO, L.P. Tranche Descriptions: * $125,000,000 Class B-1 7.47% Fixed Rate Second Priority Senior Secured Notes due 2010: Previous Rating: Caa1 Rating Action: WR * $96,000,000 Class B-2 Floating Rate Second Priority Senior Secured Notes due 2010: Previous Rating: Caa1 Rating Action: WR SOLUTIA INC: Equistar Says Disclosure Statement Lacks Information ----------------------------------------------------------------- Equistar Chemicals LP objects to the Disclosure Statement explaining Solutia, Inc., and its debtor-affiliates' Plan of Reorganization. Equistar and Solutia are parties to various prepetition executory and service contracts and an unexpired non- residential real property lease. As of the Petition Date, Solutia owes $6,000,000, to Equistar. Edward J. LoBello, Esq., at Blank Rome LLP, in New York, contends that the Debtors have effectively denied creditors affected by their Plan of Reorganization, including Equistar, the ability to make informed decisions concerning the Plan by failing to identify with specificity the significant executory contracts and unexpired leases they propose to assume or reject. "Equistar is unable to make an informed decision to vote on the Debtors' proposed Plan without that information," Mr. LoBello states. Moreover, Mr. LoBello points out, the Disclosure Statement prescribe a submission date of ballots that is earlier than the date by which Debtors must reveal their intentions with regard to assumption or rejection decisions. Creditors may be forced to submit ballots before they know if their contracts and leases will be assumed or rejected. Creditors are not assured that they will be advised before the voting deadline of the amounts that the Debtors might have to pay to cure pecuniary defaults, or to satisfy rejection claims. Equistar is among the Debtors' largest suppliers of critical feedstocks, including propylene. Thus, the assumption or rejection of Equistar's contracts and unexpired lease may have a material impact on the Debtors' future business operations, and may affect their ability to obtain critical raw materials, Mr. LoBello notes. Thus, to have adequate information, all other creditors and parties-in-interest need to know the Debtors' intentions with regard to their contracts and unexpired lease with Equistar before the balloting deadline, Mr. LoBello avers. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOS REALTY: List of 20 Largest Unsecured Creditors -------------------------------------------------- SOS Realty LLC, released a list of its 20 Largest Unsecured Creditors with the U.S. Bankruptcy Court for the District of Massachusetts, disclosing: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Janus Development Construction, $201,040 225A Grove Street payroll, payroll taxes West Roxbury, MA 02132 Mackay Construction Services, $51,550 Inc. 27 Plymouth Road Wakefield, MA 01880 DiMento & Sullivan Legal Services $48,252 Attn: Jimmy DiMento Seven Faneuil Marketplace Boston, MA 02109 American Express $34,949 Paul's Plastering $23,500 National Lumber $23,000 Tiles By Perfection $22,192 Blue Cross/Blue Shield of $21,827 Mass. Leamar Industries, Inc. $21,630 Iodice Family LLC $20,360 T-Quip Sales & Rentals $19,640 Paul Donovan $19,265 Washington Grove Condominium fees for $17,849 unsold units Nuzzo Mechanicl, Inc. $16,300 Lynco Fire Protection, Inc. $16,000 City of Boston Real Estate Taxes $10,994 Allstate Painting Co., Inc. $10,961 Extreme Plumbing, Inc. $8,813 Tran Floor Sanding Corp. $8,350 Pan Electric Company, Inc. $8,200 Based in West Roxbury, Massachusetts, SOS Realty LLC, owns a condominium development known as the "Washington Grove Condominiums." The company filed for chapter 11 protection on May 11, 2006 (Bankr. D. Mass. Case No. 06-11381). Jennifer L. Hertz, Esq., at Duane Morris LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and debts between $1 million and $10 million. SPHINX STRATEGY: Chapter 15 Petition Summary -------------------------------------------- Petitioner: Geoffrey E. Varga Provisional Liquidator of Sphinx Strategy Fund. Ltd. Kinetec Partners Cayman LLP P.O. Box 10387 APO, Strathvale House 90 North Church Street George Town, Grand Cayman Cayman Islands, B.W.I. Debtor: Sphinx Strategy Fund Ltd. c/o Walkers SPV Ltd. P.O. Box 908 GT, Walker House Mary Street George Town, Grand Cayman Cayman Islands, B.W.I. Case No.: 06-11292 Type of Business: The Debtor offers financial services. Chapter 15 Petition Date: June 7, 2006 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Petitioner's Counsel: Peter V. Pantaleo, Esq. Simpson Thacher & Bartlett, LLP 425 Lexington Avenue New York, New York 10017-3954 Tel: (212) 455-2220 Fax: (212) 455-2502 Estimated Assets: Unknown Estimated Debts: $10 Million to $50 Million STRUCTURED ASSET: Moody's Put Low-B Rating on 2 Cert. Classes ------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Structured Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2006-S2, and ratings ranging from Aa1 to Ba2 to the mezzanine and subordinate certificates in the deal. The securitization is backed by Lehman Brothers Holdings Inc. originated or acquired fixed-rated closed end second mortgage loans. he 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 6.75% to 7.25%. Aurora Loan Services LLC will service the loans and act as master servicer. The complete rating actions: Structured Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2006-S2 * Cl. A1, Assigned Aaa * Cl. A2, Assigned Aaa * Cl. A-IO, Assigned Aaa * Cl. M1, Assigned Aa1 * Cl. M2, Assigned Aa2 * Cl. M3, Assigned Aa3 * Cl. M4, Assigned A1 * Cl. M5, Assigned A2 * Cl. M6, Assigned A3 * Cl. M7, Assigned Baa1 * Cl. M8, Assigned Baa2 * Cl. M9, Assigned Baa3 * Cl. B1, Assigned Ba1 * Cl. B2, Assigned Ba2 TATER TIME: Plans to Pay Unsecured Creditors in Full with Interest ------------------------------------------------------------------ Tater Time Potato Company, LLC, and its debtor-affiliates proposes to pay holders of general unsecured claims in full plus 6% interest per annum under their First Amended Plan of Reorganization. Under the plan, the Debtors' assets will be sold to pay creditors. Among the assets to be sold are: * 1290 Acre Farm of Cissne Family LLC, * equipment, and * warden storage facility. Grant County Treasurer of the State of Washington will be paid in full in six months with interest calculated at 12% per annum. These entities will be paid in full in six months with interest calculated at 7% per annum: * Internal Revenue Service; * Washington State Department of Labor and Industries; * Washington State Employment Securities Department; Mutual Life Insurance Company of New York, holding a $3,330,477 claim, will be paid in full with interest. Washington Mutual Savings Bank asserts a $4,418,585 claim. The Debtors dispute the amount. The Plan proposes to pay Washington Mutual based on this schedule: a. if paid by June 30, 2006, $1,530,000; b. if paid by August 30, 2006, $1,570,000; c. if paid by October 30, 2006, $1,615,000; d. if paid by December 28, 2006, $1,665,000; e. if paid by January, 30, 2007, $1,692,000; f. if paid by February 28, 2007, $1,720,000. If Washington Mutual will not be paid by February 28, 2007, its claim will be allowed for $4,418,585 and the stay will be lifted to permit Washington Mutual to exercise its rights granted by state law against its collateral. Fin-Ag, Inc.'s $2,050,628 claim and Cenex Harvest States, Inc.'s $2,703,982 will be joined. The Debtors dispute both claims. On Court determination, if the joint claim exceeds $4 million, the creditors will be paid $150,000 per year. If the joint claim exceeds $2 million but less than $4 million, the creditors will be paid $75,000 per year. If the joint claim exceeds $1 million but less than $2 million, the creditors will be paid $37,500 per year. If the joint claim does not exceed $1 million, the creditors will be paid $18,750 per year. A copy of the First Amended Disclosure Statement explaining the Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060608055146 Headquartered in Warden, Washington, Tater Time Potato Company, LLC, packs and ships potatoes. The Company and its debtor- affiliates filed for chapter 11 protection on January 24, 2005 (Bankr. E.D. Wash. Case No. 05-00509). Dan O'Rourke, Esq., at Southwell & O'Rourke, P.S., represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it reported total assets of $11,312,000 and total debts of $7,639,184. TECHALT INC: Salberg & Company Raises Going Concern Doubt --------------------------------------------------------- Salberg & Company, P.A., in Boca Raton, Florida, raised substantial doubt about Mortgage Assistance Center 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 net losses of $3,754,822, working capital deficit of $4,140,717, and stockholders' deficit of $9,293,447. The Company reported a $3,754,822 net loss on $2,764,227 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $30,263 in total assets and $4,140,717 in total liabilities, resulting in a $9,293,447 stockholders' deficit. A full-text copy of the Company's 2005 Annual Report is available at http://ResearchArchives.com/t/s?ae4 About TechAlt Inc. TechAlt, Inc. -- http://www.techaltinc.com/-- seeks to become the market leader in bringing safety and security solutions to the Homeland Security market through innovative alternative technology. TechAlt Security Technologies seeks to deploy mission critical technology that provides video, voice and data in various homeland security-related markets. TechAlt Security Technologies is targeting a secure wireless communications toolset to be used by emergency first responders for interagency interoperability, communication and collaboration. The company's mission is to deliver a complete technology solution for a wide range of security solutions by developing, implementing and acquiring various technologies. TEREX CORP: Good Performance Cues S&P to Put BB- Rating on Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on construction equipment provider Terex Corp., including its 'BB-' corporate credit rating on CreditWatch with positive implications. "The CreditWatch placement follows the filing of the company's first quarter Form 10Q, Terex's current status on all of its regulatory fillings, and reflects the company's improved operating performance and debt-reduction plans," said Standard & Poor's credit analyst John R. Sico. The company has called for redemption $100 million of its $300 million 10.375% notes that are currently callable and said that it expects to redeem the remaining notes in the near future. The 'B-1' short-term rating was not placed on CreditWatch. Terex has just become current on all of its filings with the SEC following an extended period of internal review and restatements of its financials. While the SEC review is still ongoing, the accounting changes have been relatively minor, and have had no cash impact. The company is still cooperating with the SEC in these matters. Additionally, Terex is in compliance with its bank covenants. Standard & Poor's expects to review the company's financing plans with management before taking any further rating action. Resolution of the CreditWatch could result in a modest upgrade. TIRO ACQUISITION: Court Dismisses Ch. 11 Case Due to Lack of Funds ------------------------------------------------------------------ The Honorable Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware dismissed Tiro Acquisition LLC's chapter 11 case at the Debtor's request. James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, informed the Court that the Debtors' assets have suffered continued diminution and there exists no reasonable likelihood of rehabilitation. The Debtor now exists as a corporate shell since it sold substantially all of its assets to Outsourcing Services Group LLC in March 2005. After winding down its business, the Debtor no longer has funds to pay any creditors. Its estate accrue fees for no good reason. Rehabilitation is no longer possible, Mr. O'Neill contended. Mr. O'Neill added that the sole reason previously given for keeping the Debtor's estate open -- a potential lawsuit against directors and officers -- appears no longer viable. Before the Debtor filed for bankruptcy, it discovered significant accounting misstatements, which had concealed operating losses affecting the Debtor's financial statement for the three years before its bankruptcy filing. A pre-bankruptcy investigation by the Debtors had indicated that a single individual was the cause of the financial irregularities and that no member of the Debtor's board or management had any knowledge of the wrongdoing. The Official Committee of Unsecured Creditors obtained Court authority to investigate and litigate a potential cause of action on these matters. The Debtor stated that many of the D&O claims lack merit but consented to the Committee's request. The Committee has not yet initiated litigation on the D&O claims. Headquartered in Southport, Connecticut, Tiro Acquisition LLC -- http://www.tiroinc.com/-- develops, manufactures and packages hair care and other products for professional salons. The Company and its debtor-affiliates filed for chapter 11 protection on October 12, 2004 (Bankr. D. Del. Case No. 04-12939). Alicia Beth Davis, Esq., and Robert J. Dehney, Esq., at Morris Nichols Arsht & Tunnell represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection, it listed more than $10 million in assets and debts. TRANSDIGM INC: Moody's Puts Rating on Sr. Sec. Facilities at B1 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to TransDigm, Inc.'s proposed amended senior secured credit facilities, due 2013, consisting of a $150 million revolving credit facility and a $650 million term loan facility. Proceeds from the issuance of the new term loan facility will be used, along with a planned public subordinated debt offering as well as company's cash, to repay all of the TransDigm's existing debt, including the existing $400 million subordinated notes due 2011 and to repay a $200 million private loan issued by TransDigm's parent company, TransDigm Group Inc. The Coprporate Family Rating has been affirmed at B1. The ratings outlook remains negative. The ratings continue to reflect the company's substantial debt levels, high leverage and the potential use of additional leverage for equity distributions, and uncertainty about the size and funding of potential future acquisitions. The ratings also consider TransDigm's history of stable profit margins and revenue growth in an improving commercial aerospace environment, as well as the company's strong and stable free cash flow. Good margins and free cash flow generation are expected to continue. These high margins and strong free cash flow are expected to support the company's ability to either repay debt or to fund modestly-sized acquisitions in the future without further reliance on debt. The negative rating outlook, which was changed from stable upon the December 2005 issuance of $200 million in TDG debt to fund a sizeable distribution to shareholders, continues to reflect Moody's concerns about the increased degree of financial risk associated current debt levels, possibly affecting TransDigm's ability to withstand any potential downturn in demand in the aerospace sector that the company serves. A rating downgrade could occur if leverage remains in excess of 5 times for more than 12 months, particularly if the company were to pay additional distributions to shareholders without first reducing debt. Ratings could also face negative pressure if free cash flow were to fall below 5% of total debt over this period, or if the company's operating margins were to fall below 30%. The outlook could return to stable if the company was to repay debt or otherwise reduce leverage to below 5 times, with free cash flow in excess of 10% of debt and EBIT coverage of interest of greater than 2.0 times for a sustained period. The effect of the proposed financing on TransDigm's credit profile is not sufficiently material to warrant a change in rating or affect the outlook. Upon close of the proposed re-financing transactions, including the contemplated new subordinated notes offering and the redemption of substantially all of TransDigm's notes due 2011, TransDigm's total balance sheet debt will increase from about $688 million as of April 1 2006 to about $925 million. However, a substantial portion of this increase is due to the redemption of $200 million of TDG debt, not reflected in TransDigm's reported debt balance, implying a total increase of only 4% for all debt supported by TransDigm's operations. Pro forma leverage is estimated at approximately 5.3 times upon close, which is somewhat high but not inappropriate for the B1 Corporate Family Rating. Coverage and cash flow metrics are relatively strong for this rating, as pro forma EBIT/Interest is estimated at about 2.3 times upon close, and LTM April 2006 free cash flow represents about 8% of pro forma debt. Moreover, assuming TransDigm continues to achieve operating margins of about 40% into the near future along with a moderate degree of revenue growth, Moody's expects that the company will be able to generate enough free cash flow through FY 2007 to repay a modest amount of bank debt and improve leverage. Moody's assesses TransDigm's liquidity to be good relative to the company's near term working capital and cash flow needs. TransDigm reported a modest cash balance as of April 2006, while the company has demonstrated a capability to generate relatively strong and stable levels of free cash flow. Moody's expects that TransDigm's free cash flow will be at approximately the same levels over the next 12-18 months, implying ample ability to cover all but large unexpected CAPEX or working capital requirements through internally-generated sources of cash. Also, the new $150 million revolving facility, which represents a $50 million increase in capacity over the prior facility, further bolsters the company's liquidity position. The revolver is expected to by un-drawn upon close, with the entire amount available. The new credit facilities will be governed by certain restrictive financial covenants, under which Moody's expects the company to have comfortable room over the near term. The B1 rating on the proposed senior secured credit facility, the same as the Corporate Family Rating, reflects the substantial majority of the company's debt structure that is comprised of this facility after the completion of all re-financing transactions. The proposed credit facilities will be secured by substantially all of the company's assets on a first-priority basis. However, Moody's notes that a substantial portion of the company's total assets are in the form of Goodwill, suggesting potentially weak asset coverage in the event of a distressed sale scenario. These facilities are guaranteed by parent TransDigm Group Inc. and each of the company's current and future domestic subsidiaries. Assignments: Issuer: TransDigm Inc. * Senior Secured Bank Credit Facility, Assigned B1 Withdrawals: Issuer: TransDigm Inc. * Senior Secured Bank Credit Facility, Withdrawn, previously rated B1 Headquartered in Cleveland, Ohio, TransDigm Inc. is a leading manufacturer of highly engineered aerospace components to commercial airlines, aircraft maintenance facilities, original equipment manufacturers and various agencies of the U.S. Government. The company had LTM April 2006 revenues of $411 million. TRANSDIGM INC: S&P Puts B+ Rating on Proposed $800 Mil. Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and '2' recovery rating to TransDigm Inc.'s proposed $800 million secured credit facility, indicating expectations of a substantial recovery of principal in the event of payment default. At the same time, Standard & Poor's affirmed its existing ratings, including the 'B+' corporate credit rating, on the aerospace component supplier. The outlook is stable. "The ratings for TransDigm reflect a highly leveraged balance sheet, cyclical and competitive pressures in the commercial aerospace industry, and a relatively modest scale of operations [around $400 million revenues], but incorporate the firm's leading positions in niche markets and very strong profit margins," said Standard & Poor's credit analyst Christopher DeNicolo. The proceeds from the proposed credit facility and other public debt will be used to refinance all outstanding debt, including the $200 million unsecured loan at TransDigm Group Inc. (not rated), the company's ultimate parent. The refinancing will reduce interest expense and extend maturities, but debt levels will increase slightly due to $40 million of tender premiums and expenses. Leverage is high with debt to EBITDA around 5x and debt to capital above 70%. These measures should decline modestly in the near term as earnings increase. TransDigm is a well-established supplier of highly engineered aircraft components for nearly all commercial and military airplanes as well as engines. The company has expanded its product offering through several acquisitions, including three in fiscal 2005 for a total of more than $60 million. A sustained recovery in the commercial aerospace market, efforts to reduce costs, and the proven ability to maintain high margins should enable TransDigm to offset increased debt levels and preserve a credit profile consistent with current ratings. The outlook could be revised to negative if leverage increases significantly as a result of debt-financed acquisitions or efforts to enhance shareholder value. The outlook could be revised to positive if excess cash is used to reduce debt materially and lower leverage ratios are maintained. UGS CORP: S&P Assigns B- Rating to Proposed $300 Million Notes -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its corporate credit rating and other ratings on Plano, Texas-based UGS Corp., and maintained its outlook at stable. Standard & Poor's also assigned a 'B-' rating to the proposed offer of $300 million of payment-in-kind notes due 2011. "The ratings reflect UGS Corp.'s high leverage and a narrow product focus relative to the overall software and services industry," said Standard & Poor's credit analyst Stephanie Crane. These are somewhat offset by UGS's: * entrenched customer relationships; * recurring revenues stemming from long-term contracts; and * good profitability. UGS is adding $300 million in debt to its Holding company, UGS Capital Corp. II, with the proceeds to be largely used to repurchase $254 million of preferred stock, as well as provide a $38 million dividend. UGS is a provider of product lifecycle management software and services to a diversified customer base that enable customers to reduce development and manufacturing costs, expedite time-to- market cycles, and enhance product quality and innovation. UGS grew from a series of acquisitions by former parent Electronic Data Systems Corp., and after a leveraged buyout in May 2004, became an independent company. Although UGS has a relatively narrow product portfolio and its markets remain competitive, the company has achieved a leading market position in a consolidated market. Revenue stability is bolstered by low customer turnover and a high portion of professional services and maintenance revenue, which represents more than 65% of its revenue base. UNIVERSAL COMMS: March 31 Balance Sheet Upside Down by $3.5 Mil. ---------------------------------------------------------------- Universal Communications Systems, Inc., filed its financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 22, 2006. The Company reported a $1,074,549 net loss on $62,468 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $2,636,475 in total assets and $6,157,540 in total liabilities, resulting in a $3,521,065 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $ 2,284,878 in total current assets available to pay $3,066,983 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?ae5 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 19, 2006, Reuben E. Price & Co. expressed substantial doubt about Universal's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Sept. 30, 2005 and 2004. The auditing firm pointed to the Company's over $1.5 million working capital deficit and recurring losses from operations. About Universal Universal Communications Systems, Inc. -- http://www.ucsy.com/-- and its subsidiaries are actively engaged worldwide in developing and marketing solar energy systems, as well as systems for the extraction of drinkable water from the air. Consolidated subsidiaries include wholly-owned subsidiaries AirWater Corp., AirWater Patents Corp, Millennium Electric T.O.U. Ltd, Solar Style (USA) Inc., Solar One Inc, Solar Style Ltd., and Misa Water International, Inc, and majority-owned subsidiaries Atmospheric Water Technologies and Millennium USA. Prior to 2003, the Company was engaged in activities related to advanced wireless communications, including the acquisition of radio-frequency spectrum internationally. Currently, the Company's activities related to advanced wireless communications are conducted solely through its investment in Digital Way, S.A., a Peruvian communication company and former wholly owned subsidiary. U.S. PLASTIC: Plans to Use $2.3M Sale Proceeds to Pay Creditors --------------------------------------------------------------- U.S. Plastic Lumber informs the U.S. Bankruptcy Court for the Southern District of Florida how it will distribute the $2.3 million cash proceeds from the sale of substantially all of its assets to AMPAC Capital Solutions, LLC. Fifty-five percent of the cash proceeds or $1,265,000 will be used to pay administrative claims. The rest, amounting to $1,035,000 will be used to pay allowed priority tax claims and allowed unsecured claims. The Debtor and Halifax Fund, L.P., agreed that 55% of any recoveries or proceeds received in the future with respect to assets not included in the sale will be used to pay allowed priority tax claims and allowed unsecured claims. The Debtors will not be required to pay any secured claims since AMPAC will be assuming the obligation. Halifax unsecured claim against the Debtors will be allowed for $10,024,305. A copy of the Disclosure Statement Supplement containing additional plan terms for the use of the Debtor's assets is available for a fee at: http://www.researcharchives.com/bin/download?id=060608055501 Headquartered in Boca Raton, Florida, U.S. Plastic Lumber -- http://www.usplasticlumber.com/-- manufactures plastic lumber and is the technology leader in the industry. The Company filed for a chapter 11 protection on July 23, 2004 (Bankr. S.D. Fla. Case No. 04-33579). Stephen R. Leslie, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtor in its restructuring efforts. Robert P Charbonneau, Esq., represent the Official Commitee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $78,557,000 in total assets and $48,090,000 in total debts. WILLIAMS COS: S&P Ups $600MM Credit Linked Cert.'s Ratings to BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on The Williams Cos. Inc. Credit Linked Certificate Trust V's $500 million 6.375% certificates due Oct. 1, 2010, and The Williams Cos. Inc. Credit Linked Certificate Trust VI's $200 million floating-rate certificates due Oct. 1, 2010, to 'BB-' from 'B+'. The rating actions reflect the May 9, 2006, raising of the corporate credit and senior unsecured debt ratings on The Williams Cos. Inc. to 'BB-' from 'B+'. The Williams Cos. Inc. Credit Linked Certificate Trust V is a swap-dependent synthetic transaction that is weak-linked to the lowest of the ratings assigned to The Williams Cos. Inc. as borrower and Citibank N.A. as the swap counterparty, the deposit bank, and the subparticipation seller. The Williams Cos. Inc. Credit Linked Certificate Trust VI certificates are weak-linked to the lowest ratings assigned to The Williams Cos. Inc. as borrower and Citibank N.A. as the deposit bank under the certificate of deposit and as the seller under the subparticipation agreement. WILLIAMS COS: Moody's Lifts Long Term Debt Ratings to Ba2 --------------------------------------------------------- Moody's Investors Service upgraded The Williams Companies, Inc.'s long-term debt ratings to Ba2. Moody's upgraded Williams' Corporate Family Rating to Ba2 from Ba3 and its senior unsecured debt to Ba2 from B1. Moody's upgraded the senior unsecured ratings of Williams' natural gas pipeline subsidiaries, Transcontinental Gas Pipeline and Northwest Pipeline Corporation, to Ba1 from Ba2. Moody's also changed Williams' Speculative Grade Liquidity Rating to SGL-1 from SGL-2. The outlook is stable. These actions conclude the rating review begun on April 4, 2006 and reflect improvement in Williams' core natural gas businesses as well as Moody's expectation for growing operating cash flow over the near to medium term. This improvement is mitigated by higher capital spending in 2006 resulting in negative free cash flow. The primary driver of Williams' growing operating cash flow is increased natural gas production, primarily in its Piceance Basin operations, and increased pipeline tariffs that should become effective in the first quarter of 2007. "The two-notch upgrade of Williams' senior unsecured notes also reflected the virtual elimination of secured debt," said Moody's Vice President Steve Wood, "because Williams repaid the secured RMT term loan and replaced its secured revolving credit facility with an unsecured facility." Moody's analyzed Williams' three core natural gas businesses -- exploration and production, midstream gas and natural gas pipelines -- on a standalone basis, as if Williams was not in the merchant electric power generation business. Based on this analysis, Moody's concluded that Williams' natural gas businesses have credit metrics more consistent with a Ba1 Corporate Family Rating. However, Moody's continues to believe that Williams' power business lowers its overall credit quality by one notch, resulting in a CFR of Ba2. Williams' power business adds to the company's adjusted debt through its tolling obligations and increases enterprise risk management liquidity demands related to its various hedge positions. Moody's expects this one notch differential will persist for the foreseeable future, unless Williams exits or substantially mitigates its power business. Williams' SGL-1 Speculative Grade Liquidity rating reflects Moody's expectation of very good liquidity for the 12 months ending June 30, 2007. Moody's does not expect Williams' internally generated cash flow to cover its capital expenditures and dividends over the next twelve months; however, the company has a substantial balance of cash on hand and significant committed credit facilities that should cover any short-fall. Ratings list -- The following ratings were affected: Upgrades: Issuer: MAPCO Inc. * Senior Unsecured Medium-Term Note Program, Upgraded to Ba2 from B1 * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from a range of B3 to B1 Issuer: Northwest Pipeline Corporation * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 from Ba2 * Senior Unsecured Shelf, Upgraded to (P)Ba1 from (P)Ba2 Issuer: Transco Energy Company * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from B1 Issuer: Transcontinental Gas Pipe Line Corporation * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 from Ba2 * Senior Unsecured Shelf, Upgraded to (P)Ba1 from (P)Ba2 Issuer: Williams Capital I * Preferred Stock, Upgraded to B1 from B3 * Preferred Stock Shelf, Upgraded to (P)B1 from (P)B3 Issuer: Williams Capital II * Preferred Stock Shelf, Upgraded to (P)B1 from (P)B3 Issuer: Williams Companies, Inc. (The) * Corporate Family Rating, Upgraded to Ba2 from Ba3 * Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 * Preferred Stock Shelf, Upgraded to (P)B1 from (P)B3 * Preferred Stock 2 Shelf, Upgraded to (P)B1 from (P)B3 * Senior Unsecured Medium-Term Note Program, Upgraded to Ba2 from B1 * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from B1 * Senior Unsecured Shelf, Upgraded to (P)Ba2 from (P)B1 * Subordinated Shelf, Upgraded to (P)Ba3 from (P)B2 Issuer: Williams Holdings of Delaware, Inc. * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from B1 Issuer: Williams Production RMT Company * Corporate Family Rating, Upgraded to Ba2 from Ba3 * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 from B1 Outlook Actions: Issuer: MAPCO Inc. * Outlook, Changed To Stable From Rating Under Review Issuer: Northwest Pipeline Corporation * Outlook, Changed To Stable From Rating Under Review Issuer: Transco Energy Company * Outlook, Changed To Stable From Rating Under Review Issuer: Transcontinental Gas Pipe Line Corporation * Outlook, Changed To Stable From Rating Under Review Issuer: Williams Capital I * Outlook, Changed To Stable From Rating Under Review Issuer: Williams Capital II * Outlook, Changed To Stable From Rating Under Review Issuer: Williams Companies, Inc. (The) * Outlook, Changed To Stable From Rating Under Review Issuer: Williams Holdings of Delaware, Inc. * Outlook, Changed To Stable From Rating Under Review Issuer: Williams Production RMT Company * Outlook, Changed To Stable From Rating Under Review The Williams Companies, Inc., headquartered in Tulsa, Oklahoma, is an integrated natural gas company with operations in interstate natural gas pipelines, midstream gas, E&P and electric power generation. WINN-DIXIE: Wants to Auction Montgomery Dist. Center on June 14 --------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to authorize WD Logistics, Inc., to sell its fee simple title interest in the Montgomery Distribution Center, together with all related improvements, free and clear of liens, claims and interests at an auction to the bidder submitting the highest or best offer. All bids must be submitted not later than 12:00 p.m. on June 12, 2006. The Debtor will conduct the auction at 10:00 a.m. on June 14, 2006. In no event will the Assets be sold at the Auction for less than $7,000,000. If an acceptable bid is received, the Court will hold a hearing to consider the Sale of the Assets on June 15, 2006. WD Logistics, Inc., owns a distribution center in Montgomery, Alabama. Since filing for bankruptcy, the Debtors have consolidated their distribution process and no longer need the Montgomery Distribution Center. DIM Asset Management, Inc., assisted the Debtors in marketing the Montgomery Distribution Center to potential purchasers. 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. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000). WORLDCOM INC: Seinfeld Wants to Pursue Claims Against James Allen ----------------------------------------------------------------- Frank David Seinfeld seeks authority from the U.S. Bankruptcy Court for the District of New York to pursue claims in behalf of WorldCom, Inc. and its debtor-affiliates against James C. Allen and others. Mr. Seinfeld previously filed with the U.S. District Court for the Southern District of New York, a verified stockholder's derivative complaint against Mr. Allen alleging claims on the Debtors' behalf. In July 2002, Mr. Seinfeld's action was automatically stayed as a result of the Debtors' filing of their Chapter 11 voluntary petition. On January 6, 2003, Mr. Seinfeld asked the Bankruptcy Court to vacate the automatic stay. The Debtors opposed that request on the grounds that it would investigate the claims alleged in Mr. Seinfeld's complaint and take appropriate action. The Court denied the Motion to Vacate the Stay. The Amended Complaint On July 19, 2004, the District Court authorized Mr. Seinfeld to amend his complaint and provided a briefing schedule for a motion to dismiss. Gloria Kui, Esq., at Ballon, Bader & Nadler, P.C., in New York, relates that the Amended Complaint alleged that the former directors breached their fiduciary duties to the Debtors by causing it to guarantee and then to pay $198,700,000 owed by Bernie Ebbers to the Bank of America, N.A., that was secured by 11,570,706 shares of the Debtors' stock. As a stockholder, Mr. Seinfeld sought relief on the Debtors' behalf against the former directors and the BofA on the grounds that the Bank knowingly participated in an enterprise with the former directors, thus violating their fiduciary duties to the Debtors. However, upon the Defendants' request, the District Court dismissed the Amended Complaint in May 2005. The Appeal Mr. Seinfeld then took an appeal of the District Court Order to the United States Court of Appeals for the Second Circuit. The Second Circuit affirmed the District Court's order on February 27, 2006. Then, on March 13, 2006, Mr. Seinfeld filed a combined petition for panel rehearing and for rehearing en banc. The issues briefed before the Second Circuit included: -- whether the stockholder had standing; -- whether the stockholder complied with Georgia universal pre-suit demand requirement; -- whether there was a cause of action against BofA under Georgia Law; and -- whether the terms and provisions of the Debtors' Plan of Reorganization barred the stockholder from litigating the case. The Second Circuit didn't address any of those issues. Instead, the Second Circuit held that since no final decree had been entered under the Rule 3022 of the Federal Rules of Bankruptcy Procedure, the Debtors' bankruptcy proceedings remain open and that since the Chapter 11 proceedings remain open, the stockholder should have sought a Bankruptcy Court's order allowing him to pursue those claims on the Debtors' behalf. Ms. Kui notes that Mr. Seinfeld filed his request as a cautionary measure. Mr. Seinfeld has expressed concern that he might face sanctions if the Bankruptcy Court no longer has jurisdiction over the Seinfeld Action. Ms. Kui contends that no sanction should be imposed on Mr. Seinfeld for making his request. "[Mr. Seinfeld's] motion for an order from [the Bankruptcy] Court to proceed is reasonable under the circumstances since it is the direction of the Second Circuit to do so." About WorldCom Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WORLDCOM INC: Galaxy, Silverstein and Akerman Settles Dispute ------------------------------------------------------------- Before its bankruptcy filing, WorldCom, Inc., and its debtor- affiliates filed a lawsuit against Galaxy Long Distance, Inc., in United States District Court for the Middle District of Florida. Pursuant to the District Court Litigation, Galaxy filed Claim No. 12138 for $20,000,000 in the Debtors' Chapter 11 case. The Debtors objected to Galaxy's claim. In a stipulation approved by the U.S. Bankruptcy Court for the District of New York dated Sept. 28, 2005, the parties agreed that Galaxy's Claim No. 12138 will be reduced and allowed as a general unsecured claim for $1,000,000, equivalent to a $178,500 cash payment and 7,140 shares of stock distribution with a then current market value aggregating $141,586. Pursuant to the Galaxy Settlement, these amounts of cash and shares of stock owed to Galaxy have been paid, credited and delivered to the Debtors' counsel, DLA Piper Rudnick Gray Cary US LLP -- instead of to Galaxy -- due to the conflicting demands and an Interpleader Motion: * A credit transfer of 7,140 shares of MCI stock as of October 14, 2005; * MCI dividend check dated October 27, 2005, grossly totaling $39,984, and after taxes withheld, totaling $28,788 net; * A MCI settlement check dated November 17, 2005, totaling $178,500; * A Verizon "merger consideration" check dated January 13, 2006, totaling $19,565; and, * A Verizon dividend check dated February 1, 2006, totaling $1,660. In connection with the payment of the dividend, the Debtors withheld income taxes aggregating $11,955. Akerman Senterfitt represented Galaxy in the District Court Action, but subsequently resigned from that position. Murray Silverstein, P.A., succeeded Akerman as Galaxy's representative. Akerman then filed a motion in the District Court Action to enforce its Charging Lien. However, the Lien Motion was denied. The Debtors then received conflicting demands from Galaxy, Akerman and Silverstein with respect to the Galaxy Settlement Proceeds. Subsequently, in December 2005, the Debtors filed a Motion to Interplead Funds and Stock. To resolve their dispute, the Debtors, Galaxy, Silverstein, DLA Piper and Akerman stipulate that: (a) Galaxy and Silverstein acknowledges the validity of Akerman's Charging Lien, both as to liability and amount to the extent of $162,000, and consents to the Debtors' $162,000 cash payment to Akerman from the Galaxy Settlement Proceeds and in full satisfaction of the indebtedness secured by the Charging Lien; (b) Galaxy withdraws, with prejudice, its: -- Objection to Interpleader Motion, and its motion to enforce settlement and alternative motion for sanctions against DLA Piper; -- Objection and response to Akerman's Motion to Enforce Charging Lien; and -- Amended Notice of Filing of an Affidavit of William Z. Geiger, III, as president of Galaxy, in support of Silverstein charging lien; (c) Galaxy will not voluntarily seek relief under the Bankruptcy Code nor consent to the involuntary commencement of a case against it under the Bankruptcy Code, prior to the expiration of 100 days after the $162,000 Akerman payment; (d) Galaxy if the $162,000 cash payment: (i) does not occur immediately; or (ii) if timely made, Akerman's right to retain the $162,000 payment is abrogated, avoided or set aside by an order or judgment of a court of competent jurisdiction; then their Settlement Stipulation will be null and void. In that event, Galaxy consents to the restoration of the Pending motions and responses, Akerman's claims to its Charging Lien in its original amount, and Galaxy's claims and defenses into the Court's calendar; (e) Silverstein withdraws, with prejudice, the Notice of Charging Lien and Retaining Lien Against Galaxy; (f) The Debtors withdraw, with prejudice, their Interpleader Motion, their reply to Galaxy's objection to the Interpleader Motion, and their objection to Galaxy's Motion for Sanctions; (g) DLA Piper withdraws, with prejudice, its Reservation of Rights and Objection to Galaxy's Motion for Sanctions; (h) The Debtors and DLA Piper acknowledge the validity of Akerman's Charging Lien, both as to liability and amount to the extent of $162,000, and agree to: -- pay $162,000 cash to Akerman from the Galaxy Settlement Proceeds, in full satisfaction of the indebtedness secured by the Charging Lien; -- pay to Galaxy the balance of the cash component of the Galaxy Settlement Proceeds, pursuant to the terms of the Galaxy Settlement Agreement and in accordance with Galaxy's delivery and payment instructions; -- deliver the original executed Transfer of Ownership Form, pursuant to which all their shares of stock to be distributed pursuant to the Galaxy Settlement will be transferred to Galaxy; and -- subject to their receipt of a fully executed W-9 form, pay the Withholding Amount to Galaxy within a reasonable period of time; (i) Akerman withdraws, with prejudice, its: -- Motion to Enforce; -- Reply to Galaxy's Objection to its Motion to Enforce Charging Lien; and -- Reply to Galaxy's Objection to the Interpleader Motion and Objection to Galaxy's Motion to Enforce Settlement; and (j)) The parties will exchange mutual releases with respect to all actions they may have asserted against each other, relating to the Galaxy Claim, the Galaxy Settlement Agreement and the Galaxy Settlement Proceeds. The Parties ask the Bankruptcy Court to approve their Stipulation. About WorldCom Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WORLDCOM INC: Court OKs Pact Settling Missouri's Remaining Claims ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New York approved the stipulation between WorldCom, Inc., and its debtor-affiliates and the state of Missouri resolving Missouri's remaining claims. On Jan. 23, 2003, Missouri filed various proofs of claim asserting liability against the Debtors for various taxes, interest and penalties it imposed. Missouri subsequently amended its Original Claims. Pursuant to an Oct. 7, 2003 order, the Court granted Missouri more time to file additional proof of claims against the Debtors for Missouri state taxes. Missouri filed those Additional Claims. Subsequently, the Debtors settled the Additional Claims with Missouri and various other jurisdictions pursuant to a Settlement Agreement and Release -- the Royalty Settlement. The Debtors have objected to many of Missouri's remaining claims. To resolve their dispute, the Debtors and Missouri agree that: (a) Eleven claims and portions of those claims are deemed to be Priority Tax Claims, Convenience Claims and Administrative Expense Claims, as determined in accordance with the requirements of the Debtors' Plan of Reorganization: Priority Convenience Admin. Total Claim No. Tax Amt. Claim Amt. Expense Amount --------- -------- ---------- ------- -------- 557 - $4,852 - $4,852 30813 - 111 - 111 30808 $556 - $443 1,000 30814 6,350 6,390 - 12,741 30818 24 137 - 161 30819 367 33 - 401 36447 41,339 2,441 - 43,780 33 48,600 4,783 - 53,384 526 846 66 242 1,155 927 29,960 2,310 - 32,270 558 - 10,307 - 10,607 ======== TOTAL $160,468 (b) Missouri acknowledges that the $3,646 overpayment by Brooks Fiber Communications of Missouri, Inc., and the $1,198 by UUNET Technologies, Inc., overpayment can be used to offset the $160,468; (c) After taking into account the Offset Amounts, the Debtors agree to pay Missouri $155,624 net; (d) The 42 remaining Missouri Claims, which do not require payment, along with the Priority Tax Claims, Convenience Claims and Administrative Expense Claims, are considered satisfied in full, released and withdrawn and expunged in their entirety; A list of the 42 Remaining Claims is available for free at http://researcharchives.com/t/s?af1 (e) Except as may otherwise be provided in the Royalty Settlement, the Stipulation resolves all outstanding prepetition tax liabilities claimed by Missouri against the Debtors as well as all tax liabilities for tax periods as of December 31, 2003. For any prepetition period and for any tax period as of December 31, 2003, Missouri agrees not to file any additional tax claims or amend any claim to assert additional tax liabilities against the Debtors. About WorldCom Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945- 7000) * BOOK REVIEW: Harvest Moon: Portrait of a Nursing Home ------------------------------------------------------- Author: Sallie Tisdale Publisher: Beard Books Softcover: 204 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587981653/internetbankrupt Sallie Tisdale uses her vantage point as a registered nurse to present an intriguing look at the structure, operations, staff, and patients of a typical nursing home named Harvest Moon. The privacy of the people she encounters at work has been protected with pseudonyms, but her descriptions of physical facilities, the behavior of individual patients, the commitment of nurses, and other varied issues and relationships encountered in nursing homes will be recognized as true by anyone familiar with this area of healthcare. Harvest Moon is, in the main, a humanistic portrait of a nursing home. Tisdale takes no political position, nor does she offer solutions to the problems of nursing homes and the larger social problem of providing quality healthcare for the elderly. In keeping with the book's humanistic tone, the author is also not critical of any of the many individuals who appear in her fictionalized, but true-to-life, nursing home. Harvest Moon, like the large majority of nursing homes that have a limited number of patients, staff, and administrators and a singular focus on care for the elderly, adopts a kind of tribal village approach (rather than a corporate approach) to providing healthcare for the aged. Without going into the causes of problems in the nursing home industry, Tisdale does nonetheless note that the shift "undeniably and inexorably toward profit" in this field has created a situation where the "demands of profit-oriented budgets are made worse by the shortage of help." Staffing issues have long been a problem in an industry where the annual turnover rate is 60%. Although the "boom" of the nursing home industry has run its course since the book was first published in 1987, conditions in nursing homes are still more or less the same, and the same problems remain. The author's observations that the cost of nursing-home care sometimes causes "impoverishment" for individuals and their families is familiar. With scenes, dialog, recurring characters, and a loose story line, the book reads like a novel. Tisdale's remark, "It is a beautiful and perfectly clear day, a day of short sleeves and no clouds," draws a sharp contrast with the atmosphere of the nursing home with its fluorescent lights that illuminate the same no matter what kind of day it is. A relative of one of the patients comes in with "a shiny pink raincoat." Her hair "falls lankly below her stooped shoulders" as she "steps up to the counter like a Fate." In another place, "smells of kitchen steam and urine, mop buckets and laundry, and disinfectant...mingle together in the halls." These and other vivid descriptions draw the reader into the experience of having entered a nursing home. Unlike most other books that look into the healthcare industry, Harvest Moon does not delve into issues of organizational structure, present cost analyses, opine about government intervention, or offer a laundry list of solutions. Yet all of this can be plainly inferred by any reader with knowledge of the recognized problems of modern-day healthcare and the debates on dealing with those problems. In places, Tisdale cites numbers and other facts of the nursing- home field -- for example, "...there are almost 24,000 nursing homes in the United States.... Nursing homes house two million people at a cost of over $30 billion dollars annually -- about 8% of all the dollars spent nationally on health care." In other places, she uses settings, situations, and individuals to bring in background material on the nursing home industry. Such techniques do not take away from the author's aim of conveying just what things are like in a nursing home -- rather they supplement her objective. For example, her vivid description, "[t]he third hall, C Wing, is a sickly orange, and has room for 40 patients requiring professional nursing, or 'skilled care'", is followed in the same paragraph with an explanation of what "skilled care" means and how it differs from the care provided in hospitals. She continues on to further explain how the skilled care of modern healthcare for "patients who would have never left the hospital" in previous decades but now must do so because of the crushing costs of hospital stays is part of the reason for the growth of nursing homes and the problems they try to deal with. But, as always, Tisdale returns to the illustrative examples of Harvest Moon. For example, a paragraph begins, "The patients on C Wing are notable most of all for variety in condition and disease," followed by the naming of these. There is no better book than Harvest Moon for getting a true picture of a nursing home. It is an exemplary humanitarian tale, while also relating the fundamentals of the business and healthcare issues that have to be taken into account for problems with nursing homes to be alleviated and perhaps some day remedied. A registered nurse, Sallie Tisdale is the well-known author of six books and many articles and also a contributing editor of the magazine Tricycle. Her work and interests in the healthcare field have been recognized with awards and fellowships, including an NEA Fellowship. ********* 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 G. 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 ***