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/raid1/www/Hosts/bankrupt/TCR_Public/060704.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, July 4, 2006, Vol. 10, No. 157 Headlines ACE SECURITIES: Moody's Puts Low-B Ratings on Two Cert. Classes ACURA PHARMACEUTICALS: Secures $335,000 Bridge Funding AEROTECH MECHANICAL: Case Summary & 20 Largest Unsecured Creditors ARCH CAPITAL: S&P Assigns Preliminary BB+ Rating on Pref. Stock ASARCO LLC: Sets Up Asbestos Claims Resolution Process & Schedule ASARCO LLC: Wants to Assume Bank of America Equipment Lease ASSOCIATED MATERIALS: Earns $100,000 in Quarter Ended April 1 BANKRUPTCY MGT: Moody's Assigns B2 Corporate Family Rating BELDEN & BLAKE: Earns $5.3 Million in Quarter Ended March 31 BLS COMMS: Case Summary & 20 Largest Unsecured Creditors BOMBARDIER CAPITAL: S&P Puts Two Cert. Classes' Ratings on Default CA INC: Board Approves New $2 Bil. Common Stock Repurchase Plan CA INC: Fitch Downgrades Senior Unsecured Debt Ratings to BB+ CA INC: Delayed Financials Prompts Moody's to Put Low-B Rating CABLEVISION SYSTEMS: DBRS Holds Low-B Ratings on Senior Notes CALPINE CORP: Rosetta Protects Legal Position in Gas & Oil Leases CATHOLIC CHURCH: Claimants Assert Sexual Abuse Claim in Portland CATHOLIC CHURCH: Portland Reacts to LECG Estimation Report CCM MERGER: Moody's Confirms Corporate Family Rating at B1 CITGO PETROLEUM: Turns to JPMorgan for Aid in Pipeline Sale CITIZENS COMMS: To Shoulder 60% of Penobscot River Clean Up Costs CLINICA DE MEDICINA: Case Summary & 13 Largest Unsecured Creditors COMVERSE TECHNOLOGY: Granted Continued Listing By Nasdaq Panel CONGOLEUM CORP: Disclosure Hearings Adjourned to August 7 CSC HOLDINGS: S&P Affirms $5.5 Billion Bank Facilities' BB Rating CWALT INC: Fitch Rates Class B-3 & B-4 Certificates at Low-B CYBER DEFENSE: Files Amended Financial Statements for 2005 DELPHI CORP: Equity Panel Identifies Flaw in Notice Procedures DELPHI CORP: Reports on Claim Transfers Made Through March 31 DELUXE CORP: S&P Lowers Corporate Credit Rating One Notch to BB+ DETROIT MEDICAL: Good Results Cues S&P to Affirm Bonds' BB- Rating DJZ INC: Case Summary & 20 Largest Unsecured Creditors DOCTORS MARKETING: Case Summary & Six Largest Unsecured Creditors EASTMAN KODAK: Shutting Down Kirkby, England Manufacturing Plant EASTMAN KODAK: Withdraws Operations in Chalon-sur-Saone, France ENRON CORP: Court Defers Ruling on JP Morgan Subrogation Request ENRON: Silicon Valley & Valley Electric to Pay $50 Mil. Settlement ENRON CORP: Ct. Dismisses Sparger Suit Seeking Termination Payment EXIDE TECHNOLOGIES: Posts $76MM Net Loss in 2006 Fiscal 4th Qtr. FEDERAL-MOGUL: Panel Taps Jefferies as Advisor Under Modified Pact FOAMEX INTERNATIONAL: Wants Thurmo-Sleep Settlement Pact Approved FOAMEX INTERNATIONAL: Taps SSI Inc. as Exec. Search Consultant FONIX CORPORATION: March 31 Working Capital Deficit Tops $21MM HERBALIFE INT'L: Leverage Decline Cues Moody's to Upgrade Ratings HERBALIFE INT'L: S&P Raises Corporate Credit Rating to BB+ from BB HERTZ CORP: S&P Puts Synthetic Securities' Ratings on Neg. Watch HILLMAN GROUP: S&P Assigns B Corp. Credit Rating With Neg. Outlook ILINC COMMS: Auditors Remove Going Concern Doubt in Audit Opinion LA PETITE: Intends to Explore Refinancing of 10% Senior Notes LARGE SCALE: Court Approves Amended Disclosure Statement MADGE MCGAUGHEY: Voluntary Chapter 11 Case Summary MAGELLAN HEALTH: Paying $210 Million for ICORE Healthcare Assets MANITOWOC COMPANY: Revises Second Quarter 2006 Earnings Guidance MARKWEST ENERGY: S&P Rates Proposed $200 Mil. Sr. Notes Issue at B MCMILLIN COS: S&P Removes Ratings from Negative Watch MEDQUEST INC: Revenue Reduction Cues Moody's to Junk Ratings MERIDIAN AUTOMOTIVE: Court Approves Hilco Appraisal's Retention MERIDIAN AUTOMOTIVE: Expansion of BDO Seidman's Scope of Work OK'd MESABA AVIATION: Court Approves Deloitte as Tax Advisors MORGAN STANLEY: S&P Places Class H & J Cert.'s Ratings on Default NEXTEL PARTNERS: S&P Raises Unsecured Debt Rating to A- from BB- NORTHWOOD PROPERTIES: Claim Trading Objections Rejected by Court NTL CABLE: Fitch Holds Debts' Low-B Ratings on Negative Watch ORMET CORP: Inks Tentative Agreements with United Steelworkers O'SULLIVAN INDUSTRIES: To Close Virginia Manufacturing Facility OVERSEAS SHIPHOLDING: Selling Old Vessels for $168 Million PARKWAY HOSPITAL: Committee Hires Alston & Bird as Bankr. Counsel PASADENA REHAB: Case Summary & Three Largest Unsecured Creditors PATRICIA GILROY: Involuntary Chapter 11 Case Summary PTC ALLIANCE: Court Okays Houlihan Lokey as Financial Advisor QUALITY DISTRIBUTION: Moody's Lifts Corp. Family Rating to B3 RESI FINANCE: S&P Assigns Low-B Ratings to Five Debt Classes SAINT VINCENTS: Taps Mintz Levin as Govt. Contract Administrator SAINT VINCENTS: Tort Panel Hires Kronish Lieb as Counsel SAINT VINCENTS: Gilbert Heintz to Serve as Tort Panel's Consultant SLATER DEV'T: Shareholders Approve Liquidation & Dissolution Plan SPECTRE GAMING: Restatement Raises Accumulated Deficit by $3.4MM SPIRIT AERO: Equity Offering Cues Moody's to Review Ratings STANDARD PACIFIC: S&P Affirms BB Rating & Alters Outlook to Stable STATION CASINOS: Amends Bank of America & Wells Fargo Debt Deal STATION CASINOS: Loan Amendment Cues Moody's to Lower Ratings TELEX COMMS: Robert Bosch Merger Cues S&P to Watch B Rating TENET HEALTHCARE: Fitch Affirms Issuer Default & Debt's B- Ratings THERMAL NORTH: Moody's Holds Ba3 Ratings on $312 Million Loan TOWER AUTOMOTIVE: Inks Sixth Amendment to DIP Credit Agreement TOWER AUTOMOTIVE: Has Until August 26 to File Chapter 11 Plan TRC COMPANIES: Posts $8 Mil. Net Loss in Year Ended June 30, 2005 TYRONE LUINES: Case Summary & Eight Largest Unsecured Creditors UNITED INVESTORS: March 31 Balance Sheet Upside Down by $2.2 Mil. UNIVISION COMMS: S&P Cuts Corp. Credit & Sr. Notes Ratings to BB- USA COMMERCIAL: Wants to Employ Hilco as Real Estate Appraiser USA COMMERCIAL: Committee Taps Lewis and Roca as Counsel VALENTIS INC: Incurs $4.8 Million Net Loss in Third Quarter VICKERY-FAIRWAYS: Voluntary Chapter 11 Case Summary VILLAJE DEL RIO: Files Disclosure Statement in W.D. Texas VOLT INFORMATION: Fitch Upgrades Issuer Default Rating to BB WESTWIND GROUP: Trustee Hires R. Dean Johnson as Accountant WINN-DIXIE: Classification & Treatment of Claims Under Ch. 11 Plan WINN-DIXIE: Court Approves Bowdoin Square Claims Compromise Pact WINN-DIXIE: Stay Lifted to Let Fifth Third Set Off $316,721 Debt * Large Companies with Insolvent Balance Sheets ********* ACE SECURITIES: Moody's Puts Low-B Ratings on Two Cert. Classes --------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE3, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Encore Credit Corp., Aegis Mortgage Corporation, and First NLC Financial Services, LLC, and various others originated adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, and an interest rate swap agreement. Moody's expects collateral losses to range from 5.45% to 5.95%. Ocwen Loan Servicing, LLC will service the loans and Wells Fargo Bank, N.A. will act as master servicer. Moody's assigned Ocwen its servicer quality rating SQ2- as a primary servicer of subprime loans. Moody's has assigned Wells Fargo its top servicer quality rating as a master servicer. The complete rating actions: ACE Securities Corp. Home Equity Loan Trust, Series 2006-HE3, Asset Backed Pass-Through Certificates * Cl. A-1, Assigned Aaa * Cl. A-2A, Assigned Aaa * Cl. A-2B, Assigned Aaa * Cl. A-2C, Assigned Aaa * Cl. A-2D, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba1 * Cl. M-11, Assigned Ba2 ACURA PHARMACEUTICALS: Secures $335,000 Bridge Funding ------------------------------------------------------ Acura Pharmaceuticals, Inc., secured gross proceeds of $335,000 under a term loan agreement with: * Essex Woodlands Health Ventures V, L.P., * Care Capital Investments II, L.P., * Care Capital Offshore Investments II, L.P., * Galen Partners III, L.P., * Galen Partners International III, L.P. and * Galen Employee Fund III, L.P. The Loan matures on Sept. 1, 2006, bears an annual interest rate of 10%, is secured by a lien on all assets of the Company and its subsidiary, and is senior to all other Company debt. The Loan permits the funding of additional cash amounts subject to agreement by the Company and the Bridge Lenders. The Company said there is no assurance that any additional funding will be advanced under the terms of the Loan. Including the Loan, the Company has a total of $5.2 million in bridge loans outstanding and due on Sept. 1, 2006. The Company will utilize the net proceeds from the Loan to continue funding product development and licensing activities relating to OxyADF(TM) tablets and other product candidates utilizing its Aversion(R) Technology. Cash Reserves Update The Company estimates that its current cash reserves, including the net proceeds from the Loan, will fund product development and licensing activities through July 2006. To continue operating thereafter, the Company must raise additional financing or enter into appropriate collaboration agreements with third parties providing for cash payments to the Company. In the absence of additional financing or third-party collaborative agreements, the Company will be required to scale back or terminate operations or seek protection under applicable bankruptcy laws. About Acura Pharmaceuticals Headquartered in Palatine, Illinois, Acura Pharmaceuticals, Inc., (OTCBB:ACUR) -- http://www.acurapharm.com/-- is a specialty pharmaceutical company engaged in research, development and manufacture of innovative and proprietary abuse deterrent, abuse resistant and tamper resistant formulations intended for use in orally administered opioid-containing prescription analgesic products. Acura is actively collaborating with contract research organizations for laboratory and clinical evaluation and testing of product candidates formulated with its Aversion(R) Technology. Going Concern Doubt BDO Seidman, LLP, expressed doubt about Acura Pharmaceuticals' ability to continue as a going concern after auditing the Company's 2005 financial statements. The auditing firm pointed to the Company's recurring losses from operations and net capital deficiency at Dec. 31, 2005. At March 31, 2006, the Company's balance sheet showed total assets of $2 million and total debts of $9.4 million, resulting in $7.3 million stockholders' deficit. AEROTECH MECHANICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Aerotech Mechanical Contractors, Inc. 574 McClurg Road Youngstown, Ohio 44512 Tel: (330) 758-7251 Fax: (330) 758-1812 Bankruptcy Case No.: 06-40955 Type of Business: The Debtor is a project contractor and provides commercial & residential customers with complete sales, service, and installation of quality heating & air conditioning systems from Carrier. The Debtor also fabricates sheet metal, ductwork, and other custom metal items. See http://www.aerotechheatingandcooling.com/ Chapter 11 Petition Date: June 30, 2006 Court: Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Melody Dugic Gazda, Esq. Luckhart, Mumaw, Zellers & Robinson 3810 Starrs Centre Drive Canfield, Ohio 44406 Tel: (330) 702-0780 Fax: (330) 702-0788 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Refrigeration Sales Corp. $525,557 9450 Allen Drive Valley View, OH 44125 Beaver Steel $138,600 1200 Arch Street P.O. Box 111 Carnegie, PA 15106 DWB Property Management #1 LLC $97,800 574 McClurg Road Youngstown, OH 44512 Air Control Products $81,025 Demand Insulation $80,112 Greenheck Fan $69,046 McCrudden Heating Supply $66,911 Freedom Steel $52,153 DWB Property Management #3 LLC $51,225 Schroedel Sculling & Bestic LLC $45,400 Centrus Group, Inc. $44,919 Fazio Mechanical Services $43,335 L. Calvin Jones & Company $40,317 Helicopter Transport $37,530 United Refrigeration $30,244 Johnson Controls $25,870 George Hamilton $25,456 All Crane & Equipment $24,700 Boiler Specialists $24,151 Roberts Mechanical Equipment $23,986 ARCH CAPITAL: S&P Assigns Preliminary BB+ Rating on Pref. Stock --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to Arch Capital Group Ltd.'s (NASDAQ:ACGL) recently filed universal shelf registration. Standard & Poor's also affirmed its 'BBB' counterparty credit rating on ACGL and its 'A-' counterparty credit and financial strength ratings on ACGL's operating subsidiaries. The outlook on all these companies is stable. "The ratings are supported by the group's growing business franchise, strong operating performance, strong capital adequacy, and strong financial flexibility," said Standard & Poor's credit analyst Laline Carvalho. "These positive factors are partially offset by Arch's relatively short operating history and significant proportion of casualty writings that have not fully matured." The new shelf has an unlimited notional amount, which is in accordance with the new SEC rules as of Dec. 1, 2005. At this stage, Standard & Poor's does not expect any potential issuances under the shelf to lead to a material change in the group's financial leverage, which remains within Standard & Poor's expectations. Standard & Poor's expects that Arch's net exposures in property and other short-tail lines of business (particularly in Arch's reinsurance division) will grow moderately in 2006, reflecting the expectation of substantially improved market conditions in these lines. Other lines of business are expected to show flat growth for the year. Assuming normal catastrophe losses, Standard & Poor's expects the group's 2006 operating results to be very strong. The capital adequacy ratio is expected to remain strong in 2006, reflecting anticipated strong earnings for the year, partially offset by expected increased net exposures in property and other short-tail lines. Standard & Poor's expects total debt plus preferred leverage to remain supportive of the ratings at about 18%-20% over the medium term, with fixed charge coverage remaining very strong at more than 8x. ASARCO LLC: Sets Up Asbestos Claims Resolution Process & Schedule ----------------------------------------------------------------- ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to enter into a settlement agreement with the Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors, and Robert C. Pate, future claims representative, regarding procedures to resolve Derivative Asbestos Claims. ASARCO LLC had asked the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to estimate derivative asbestos liabilities and enter a case management order establishing procedures for that estimation, as reported in the Troubled Company Reporter on April 4, 2006. A hearing on the Estimation Motion was held on May 12, 2006. At that time, the Court took the matter under advisement and directed the parties to attempt to negotiate a schedule for an estimation hearing. The parties were able to reach an agreement regarding some aspects of the procedure for resolution of the Derivative Asbestos Claims, Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas, tells the Court. Settlement Agreement The salient terms of the Settlement Agreement are: (a) The parties will ask the Court to conduct a pre-hearing conference in July 2006 to set the manner of conducting the hearing for the derivative asbestos claims issues; (b) The parties set these schedules for discovery: Dec. 1, 2006 -- Completion of all fact discovery Dec. 15, 2006 -- Filing and serving of opening expert reports Dec. 18, 2006 -- Asbestos Committee and the FCR's filing of pleading asserting the aggregate amount of the Derivative Asbestos Claims -- Filing of pleading asserting ASARCO's view of the aggregate amount of its liability for the Derivative Asbestos Claims Jan. 15, 2007 -- Filing and serving of rebuttal expert reports Jan. 31, 2007 -- Completion of discovery regarding opening expert reports -- Filing and serving of revised opening expert reports Feb. 15, 2007 -- Completion of discovery regarding rebuttal experts and revised opening reports (c) Any party may ask the Court to schedule more status conferences; (d) The parties will file a proposed hearing order, witness lists, copies of all exhibits to be offered and all schedules and summaries to be used, and the proposed findings of fact and conclusions of law two weeks before the hearing; (e) The parties will ask the Court to hold a final pre-hearing conference on a date determined by the Court; (f) The parties will ask the Court to commence the hearing on the Contested Matter in March 2007; (g) The adversary proceeding between ASARCO, the Asbestos Committee and the FCR will be stayed pending a resolution of ASARCO's liability for the Derivative Asbestos Claims; and (h) The parties will file a joint motion to resolve the Derivative Asbestos Claims. Mr. Kinzie asserts that the Settlement Agreement strikes a fair and reasonable balance between ASARCO's need to obtain estimation of the Derivative Asbestos Claims, and the Asbestos Committee and the FCR's need for discovery regarding the Derivative Asbestos Claims. The Settlement Agreement permits ASARCO to move forward with the resolution of the Derivative Asbestos Claims, and thereby advance its reorganization efforts, Mr. Kinzie adds. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wants to Assume Bank of America Equipment Lease ----------------------------------------------------------- ASARCO LLC and Bank of America Leasing & Capital LLC, formerly known as Fleet Capital Corporation, are parties to an equipment lease agreement relating to four haul trucks, a mechanical shove and other mining equipment utilized at ASARCO's Ray and Mission mines. The Lease Agreement expired on July 1, 2006, and BofA will not agree to renew the Lease for another term unless ASARCO is in the position to purchase the Equipment, James R. Prince, Esq., at Baker Botts LLP, in Dallas, Texas, notes. ASARCO must first cure all of its defaults under the Equipment Lease Agreement for it to exercise its purchase option. Mr. Prince asserts that the Equipment is indispensable to ASARCO's successful mines operation and contributes to increased production and revenue. Moreover, there is currently a limited availability of mining equipment in the market, Mr. Prince says. Significant lead-time is required to receive new replacement equipment from the manufacturer. Accordingly, ASARCO LLC seeks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to: (a) assume the Lease Agreement; (b) exercise its purchase option; and (c) pay these amounts: -- $527,292 as rent for the last quarter; -- $248,702 as total cure amount; and -- $4,637,000 as purchase price for the Equipment. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASSOCIATED MATERIALS: Earns $100,000 in Quarter Ended April 1 ------------------------------------------------------------- Associated Materials Incorporated's net income increased to $100,000 for the quarter ended April 1, 2006, compared to a net loss of $7.3 million for the quarter ended April 2, 2005. The increase in net income was primarily a result of the higher net sales during the first quarter of 2006 as well as facility closure costs incurred in the first quarter of 2005. The Company's net sales increased 18.6%, or $40.7 million, during the first quarter of 2006 compared to the same period in 2005 driven primarily by increased sales volumes for both vinyl windows and vinyl siding, along with the impact of price increases implemented during the fourth quarter of 2005 and the first quarter of 2006. At April 1, 2006, the Company's balance sheet showed $842,795,000 in total assets and $602,210,000 in total liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?c95 Headquartered in Akron, Ohio, Associated Materials Incorporated -- http://www.associatedmaterials.com/-- manufactures exterior residential building products, which are distributed through company-owned distribution centers and independent distributors across North America. AMI produces a broad range of vinyl windows, vinyl siding, aluminum trim coil, aluminum and steel siding and accessories, as well as vinyl fencing, decking and railing. AMI is a privately held, wholly owned subsidiary of Associated Materials Holdings Inc., a wholly owned subsidiary of AMH, a wholly owned subsidiary of AMH II, which is controlled by affiliates of Harvest Partners, Inc., and Investcorp S.A. * * * As reported in the Troubled Company Reporter on Jan. 23, 2006, Moody's downgraded the ratings of Associated Materials Inc. and its holding company AMH Holdings, Inc. AMH Holdings' corporate family rating and ratings on the AMI's senior secured credit facilities were downgraded to B3 from B2. Moody's said the ratings outlook is stable. BANKRUPTCY MGT: Moody's Assigns B2 Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service assigned a first-time corporate family rating of B2 to Bankruptcy Management Solutions, Inc., B1 to BMS's proposed senior secured first priority term loan and revolver and B3 to the proposed senior secured second priority term loan. Combined net proceeds from the $360 million bank credit facilities together with approximately $92 million of new equity from sponsors, Charlesbank Capital Partners LLC and Ocwen Financial Corporation, will be used to finance the purchase of BMS from Lincolnshire Management, Inc for $385 milllion, to pay fees associated with their depository contracts and the transaction and for general corporate purposes. The ratings outlook is stable. The B2 corporate family rating reflects BMS' substantial pro forma leverage and thin interest coverage ratio particularly given the: (i) company's very small size and narrow focus on bankruptcy case management services; (ii) a fixed pool of trustee customers; (iii) limited asset protection from a very small base of pro forma tangible assets; (iv) competitive pressure from its main rival which is larger and well capitalized; and (v) vulnerability to changes in interest rate and economic environments or changes to the bankruptcy code, both of which could likely result in a decline in bankruptcy filings. The ratings also incorporate BMS' leading share in the duopolistic Chapter 7 trustee market, high barriers to entry, large diversified customer base with "sticky" deposits that provide a stable source of recurring revenues, high customer retention rate, high pro forma EBITDA margins and resultant positive free cash flow generation and personal filing trends that should continue to drive bankruptcy growth. In addition, the company has an interest rate management strategy designed to reduce its earnings volatility, which Moody's views favorably. The stable outlook reflects expectations that the company will continue to generate positive free cash flow after minimal working capital changes and limited capital expenditures, albeit at a lower level constrained by the debt servicing burden, and will use most of its free cash flow for possible debt reduction. Moody's notes that the financial covenants require mandatory first lien debt amortization of 1%, as well as 50% of excess cash sweep to repay the first lien. These first-time ratings were assigned: * Corporate Family Rating -- B2 * $ 15 million Senior Secured First Priority Revolver due 2011 -- B1 * $200 million Senior Secured First Priority Term Loan due 2012 -- B1 * $145 million Senior Secured Second Priority Term Loan due 2013 -- B3 The ratings outlook is stable. Irvine, CA-based Bankruptcy Management Solutions, Inc is a leading provider of bankruptcy case management solutions to Chapter 7 trustees. BELDEN & BLAKE: Earns $5.3 Million in Quarter Ended March 31 ------------------------------------------------------------ Belden & Blake Corporation earned $5,388,000 of net income for the three months ended March 31, 2006, compared to a net loss of $636,000 for the same period in the prior year. The Company's net operating revenues increased from $30.4 million in the first quarter of 2005 to $44.7 million in the first quarter of 2006. The increase was due to higher oil and gas sales revenues of $13 million and higher gas gathering and marketing revenues of $1.3 million. Belden & Blake's balance sheet at March 31 showed $793,922,000 in total assets and $681,178,000 in total liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?c94 Credit Facility Belden & Blake had a $390 million credit facility comprised of a five-year $350 million revolving facility with an initial borrowing base of $80.25 million, of which $53 million was outstanding at March 31, 2006, and a five year $40 million letter of credit facility that may be used only to provide credit support for the Company's obligations under the hedge agreement and other hedge transactions. The borrowing base for the revolving credit facility increased to $90.25 million in April 2006. The full amount borrowed under the Amended Credit Agreement will mature on August 16, 2010. Belden & Blake Corporation develops, produces, operates and acquires oil and natural gas properties in the Appalachian and Michigan Basins (a region which includes Ohio, Pennsylvania, New York and Michigan). The company is a subsidiary of Capital C, an affiliate of EnerVest Management Partners, Ltd. * * * As reported in the Troubled Company Reporter on April 25, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Belden & Blake Corp. to 'B-' from 'B' and removed the rating from CreditWatch with negative implications. Standard & Poor's also affirmed its 'CCC+' rating on Belden's $192.5 million notes, removed the rating from CreditWatch with negative implications, and raised its recovery rating on the notes to '3' from '4'. The outlook is stable. BLS COMMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: BLS Communications Northwest, Inc. 11030 Kitty Drive, Suite 3 Conifer, Colorado 80433 Bankruptcy Case No.: 06-14113 Type of Business: The Debtor is a nationwide business communications systems service provider specializing in managed services for Fortune 1000 companies. Over 1,200 affiliated BLS service providers install, program and service communications and data network systems by major manufacturers such as Avaya and Nortel Systems. See http://www.blscomm.com/ The Debtor's owner, Gary Richards, Sr., filed for chapter 11 protection on June 20, 2006 (Bankr. D. Colo. Case No. 06-13737). Chapter 11 Petition Date: July 3, 2006 Court: District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Robert Padjen, Esq. Laufer and Padjen LLC 5290 DTC Parkway, Suite 150 Englewood, Colorado 80111 Tel: (303) 830-3173 Fax: (303) 830-3135 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CIT Small Business Lending Trade Debt $606,457 P.O. Box 277280 Atlanta, GA 30384 Internal Revenue Service Taxes $90,566 600 17th Street 12th Floor North Tower Stop 5012DEN Denver, CO 80202-2490 Graybar Electric Co., Inc. Trade Debt $20,411 5636 Ruffin Road San Diego, CA 92123 State of Colorado Tax Trade Debt $18,949 Data Connection, Inc. Trade Debt $14,741 Alternative Communication Trade Debt $11,548 Medlin Communications, Inc. Trade Debt $9,164 Telecom Networking Trade Debt $8,948 Systems, Inc. Aschinger Elect Trade Debt $8,900 Parallel Technologies, Inc. Trade Debt $8,105 Wire-Rite Data Cabling Trade Debt $6,692 National Telephone & Equipment Trade Debt $6,166 Hardy Communications & Cabling Trade Debt $6,154 Infrastructure Solutions, Inc. Trade Debt $5,900 Kari-Lane LLC Trade Debt $5,220 John List Trade Debt $5,160 Aurora Fiber & Communications Trade Debt $5,085 Telecom Technicians, Inc. Trade Debt $4,968 Data Systems Inc. Trade Debt $4,727 Performance Telecommunications Trade Debt $4,710 BOMBARDIER CAPITAL: S&P Puts Two Cert. Classes' Ratings on Default ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class M-2 pass-through certificates from Bombardier Capital Mortgage Securitization Corp.'s series 1999-A and the subordinate B-1 class of pass-through certificates from Bombardier Capital Mortgage Securitization Corp.'s series 1998-C to 'D' from 'CCC-'. The lowered ratings reflect the nonpayment of full and timely interest, as well as the increased likelihood that investors will not receive ultimate repayment of their original principal investments. Bombardier 1999-A reported outstanding liquidation loss interest shortfalls for the M-2 class on the April 2006 and May 2006 payment dates, and Bombardier 1998-C reported outstanding liquidation loss interest shortfalls for the B-1 class on the April 2006 and May 2006 payment dates. Standard & Poor's believes that interest shortfalls for these transactions will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pool of manufactured housing installment sales contracts and mortgage loans originated by Bombardier Capital Inc., as well as the location of the write-down interest at the bottom of the transaction payment priorities (after distributions of senior principal). High losses have reduced the overcollateralization and two letters of credit (arranged by the trusts with Societe Generale) to zero, resulting in the partial principal write-down of the subordinate classes. Standard & Poor's will continue to monitor the other outstanding ratings associated with these transactions in anticipation of future credit defaults. CA INC: Board Approves New $2 Bil. Common Stock Repurchase Plan --------------------------------------------------------------- The Board of Directors of CA, Inc., authorized a new stock repurchase plan that enables the Company to buy $2 billion of its common stock in its current fiscal year ending March 31, 2007. "CA's Board of Directors and senior management have determined that a significant stock repurchase program is a timely and appropriate way to both enhance shareholder value and demonstrate our confidence in the long-term value of CA," said John Swainson, CA's president and chief executive officer. "As we evaluated our strategic use of capital, we came to the conclusion that this repurchase program is the best option." CA currently is exploring various options to best execute the stock repurchases and expects it will be financed through a combination of cash on hand and bank financing. This will be subject to a review of the circumstances in place at the time, and will not be implemented until after the Company has filed its Annual Report on Form 10-K. Until the new plan is implemented, CA will continue to buy back common stock in accordance with the program announced in March 2006 which calls for regular repurchases in the open market of up to $600 million during the 2007 fiscal year. As of March 31, 2006, outstanding shares of CA stock totaled 572 million. Based in Islandia, New York, CA, Inc. (NYSE: CA) -- http://www.ca.com/-- is an enterprise software vendor for enterprise management, security, and storage applications. CA INC: Fitch Downgrades Senior Unsecured Debt Ratings to BB+ ------------------------------------------------------------- Fitch Ratings downgraded these ratings for CA, Inc.: -- Issuer Default Rating to 'BB+' from 'BBB-'; -- Senior unsecured bank credit facility due December 2008 to 'BB+' from 'BBB-'; -- Senior unsecured debt to 'BB+' from 'BBB-'; and -- Commercial paper program to 'B' from 'F3'. The Rating Outlook remains Negative. Fitch's action affects approximately $1.8 billion of debt securities. The downgrade and Negative Rating Outlook is based on: -- Fitch's belief that CA's newly announced share repurchase program represents a shift to a more aggressive financial strategy and greater comfort operating at potentially meaningfully higher debt levels; -- An extension of the independent examiner's stay for at least two more quarters; and -- Expectations for continued revenue growth challenges, especially as CA indicated acquisition activity will slow over the next few years. In addition, CA did not meet the extension June 29, 2006 deadline for filing its 10-K (now anticipated to be filed by the end of July 2006). CA announced that its Board of Directors authorized a new $2 billion share repurchase program that will be at least partly debt-financed. CA plans to continue executing on its existing $600 million share repurchase program until it files its 10-K. Once the 10-K is successfully filed CA will cancel the remaining existing program and begin executing on the new program. As a result, total share repurchases for the fiscal-year 2007 ended March 31, 2007, should approximate $2.2 billion, representing nearly double CA's annual free cash flow (defined as cash flow from operations less capital expenditures, capitalized software development costs, and dividends) and substantially higher than Fitch's historical share repurchase expectations of $500-$600 million per year. Despite CA's available cash of approximately $1.9 billion at March 31, 2006, the company's debt levels could more than double from $1.8 billion and result in total leverage (defined as total debt to operating EBITDA) increasing to a Fitch-estimated 2.5 - 3.5x from 1.8x for FY 2006. While CA anticipates the pace of acquisitions to slow over the next few years, Fitch believes the company's commitment to repurchasing shares could result in additional debt incurrence to fund its participation in the consolidating software industry. Fitch remains concerned that CA's further delayed earnings release for the fourth quarter and fiscal year end March 31, 2006, due to two issues arising during the completion of its annual audit by KPMG, continue to highlight weaknesses in the company's internal controls that will take time to resolve and could lead to identification of further inaccuracies in CA's financial statements and additional restatements. Previous misstatements of CA's earnings in FYs 1999 and 2000 resulting from weaknesses in accounting controls were the subject of shareholder lawsuits, which have required significant litigation and settlement costs, and resulted in a Securities and Exchange Commission investigation. In addition, Fitch believes on-going risks exist for meeting corporate governance and internal controls initiatives to satisfy any additional recommendations by the government-appointed independent examiner as required under CA's September 2004 agreement with the Department of Justice and SEC. Although previously anticipated to conclude in September 2006, CA now believes the independent examiner's report and presence at the company will be extended by at least two quarters due to the aforementioned earnings delay and ongoing accounting challenges. The ratings also incorporate: * a slowing and more challenging mainframe market over the longer term; * ongoing integration of various recent acquisitions; and * strong competition from larger, more diversified rivals. Fitch is also concerned about the significant amount of CA management's time that continues to be diverted from focusing on operational improvements in order to resolve the company's historical accounting issues. Positively, the ratings reflect CA's consistent free cash flow and high barriers to entry due to significant 'switching' costs for its various software products. Also considered are the size, diversity, and quality of CA's installed base (99% of Fortune 500) and depth of product line, resulting in recurring revenue and solid customer retention. CA's annual free cash flow has exceeded $1 billion the last seven years and Fitch believes this trend will continue for the intermediate term. Based upon preliminary filings, liquidity was sufficient as of March 31, 2006, and supported by approximately $1.9 billion cash and cash equivalents and an undrawn $1 billion senior unsecured bank credit facility due 2008. However, CA was required to file its 10-K by June 29, 2006, in order to be compliant with its undrawn $1 billion bank agreement and the company will now have 30 days to file its 10-K or obtain a waiver from its bank lenders. Total debt as of March 31, 2006, was approximately $1.8 billion, down from $2.6 billion in FY 2005 and $2.3 billion in FY 2004. At FYE, debt consisted of four tranches of senior notes and senior convertible notes (all pari-passu), with no commercial paper or bank revolver borrowings outstanding. CA's maturity schedule includes: * $350 million due April 2008; * $500 million due December 2009; * $460 million of 1.625% convertible senior notes due December 2009 (non callable); and * $500 million due 2014. As part of the aforementioned agreement with the SEC and DOJ, CA agreed to establish a $225 million restitution fund to compensate CA shareholders, which Fitch believes has been fully funded. CA INC: Delayed Financials Prompts Moody's to Put Low-B Rating -------------------------------------------------------------- Moody's Investors Service placed the Ba1 ratings of CA under review for possible downgrade following the company's announcement that it is delaying the filing of its Annual Report on Form 10-K beyond its extended due date of June 29, 2006. The delay is caused by certain accounting matters related to stock option grants and revenue recognition. The company stated that it is likely that it may have to restate its previously reported results and to report additional material weaknesses. As a result of the filing delay the company may potentially violate the terms dictated under both its bank agreement and bond indentures. The company has a 30-day cure period for the bank agreement and a 90-day cure period under its bond indentures. Moody's review will focus on the ability of the company to file its Form 10-K within the cure periods in order to avert a default and possible debt acceleration, to address its internal control issues, to manage its liquidity as well as to minimize potential longer term impact on its franchise. Headquartered in Islandia, New York, CA, Inc. is an enterprise software vendor for enterprise management, security, and storage applications. CABLEVISION SYSTEMS: DBRS Holds Low-B Ratings on Senior Notes ------------------------------------------------------------- Dominion Bond Rating Service confirmed the ratings of Cablevision Systems Corporation and its wholly owned financing subsidiary, CSC Holdings, Inc. at B (low) and BB (low)/B (high), respectively. All trends are Stable. * Bank Debt Confirmed BB (low) * Senior Notes and Debentures Confirmed B (high) * Senior Notes Confirmed B (low) Stb Cablevision's ratings remain stable at this time after being downgraded in December 2005 after DBRS's expectations were confirmed that the Company would fund a special $3 billion dividend payment to shareholders with debt at CSC Holdings. DBRS notes the Company completed this payment in April 2006 after adding $3.1 billion of additional debt on March 29, 2006. While the additional debt at CSC Holdings has pressured the financial risk profile at this level, cable's strong franchise continues to experience good growth and has been further supported by bundling subscribers with its portfolio of triple-play services. This continues to drive higher industry-leading penetration levels for new services. As a result, Cablevision has: (1) driven ARPU to significant levels of over $100 per month; (2) notably lowered customer turnover; and (3) benefited from growth in basic cable subscribers with subscribers migrating back from satellite. The Company has managed to accelerate this growth while keeping its cable EBITDA margins strong at just under 40%. DBRS expects this EBITDA growth and success in bundling subscribers to continue for Cablevision over the medium term as it is expected to take full advantage of this competitive advantage versus the telcos while it continues to exist. DBRS expects competition to increase for Cablevision as telcos begin to deploy terrestrial video services. This is expected to allow the telcos, which have considerably stronger balance sheets and significant scale, to offer bundles of three and four services to better compete with Cablevision in its franchise area. While DBRS notes that Cablevision currently lacks a wireless offer as part of its bundle, this may be less critical over the next couple of years in a highly penetrated New York City area market until converged wireline and wireless services are developed and take hold. Furthermore, Cablevision could look to join Sprint Nextel Corporation's joint venture with other cable companies to add wireless to its bundle and develop converged services. From a financial perspective, DBRS expects cash flow from operations to remain roughly stable in 2006 as higher interest costs will counter EBITDA growth. While free cash flow is expected to be modest in 2006 at around $150 million, free cash flow should accelerate with organic growth thereafter and allow Cablevision to gradually reduce its debt levels. Therefore, DBRS expects leverage to be reduced in an incremental fashion over time. CALPINE CORP: Rosetta Protects Legal Position in Gas & Oil Leases ----------------------------------------------------------------- Calpine Corporation filed, on June 29, 2006, a motion with the U.S. Bankruptcy Court for the Southern District of New York, where its bankruptcy proceeding is pending. In the motion Calpine asks the Court to assume certain oil and gas leases Calpine previously agreed to sell to Rosetta Resources Inc., to the extent the leases constitute "unexpired leases of non-residential real property" and were not fully transferred to Rosetta as a result of Calpine's filing for bankruptcy. Rosetta filed a timely response to protect its legal position and interests on June 30, 2006. Calpine advised Rosetta that the purpose of the motion is to meet a statutory deadline to avoid automatic forfeiture of the remaining property interests Calpine may have in such properties, if any. A hearing on the motion is set for July 12, 2006. As reported in the Troubled Company Reporter on July 11, 2005, Calpine sold substantially all of its oil and gas assets to Rosetta. Certain properties for which consents were required, but not received, prior to closing were retained by Calpine, and Rosetta retained the allocated portion of the value of those properties. Calpine's bankruptcy filing in December 2005 delayed the transfer of the remaining non-consent oil and gas properties to Rosetta, including certain of the leases described in Calpine's motion. Of the monies withheld by Rosetta from the purchase price of Calpine's oil and gas assets, $68 million will be conveyed to Calpine upon transfer of the roughly 27 non-consent oil and gas properties that appear in the schedule attached to Calpine's motion, which lists 135 oil and gas properties. Rosetta contends that, other than the expired leases or properties for which consents were not received, it paid for and maintains an ownership interest in the majority of the remaining properties on the schedule. Rosetta continuously operated the properties held under the oil and gas leases described in the motion. Because of the recency of the filing, Rosetta did not determined the allocated value of the properties listed in Calpine's motion, but is seeking to do so. Rosetta disputes Calpine's contention that it may have an interest in any significant portion of these oil and gas properties and intends to file a timely response to Calpine's motion with the bankruptcy court to inform the court of its interest in these oil and gas leases and to preserve and protect its legal position with respect to its interests in and to these properties. About Rosetta Resources Rosetta Resources Inc. is an independent oil and gas company engaged in acquisition, exploration, development and production of oil and gas properties in North America. Our operations are concentrated in the Sacramento Basin of California, South Texas, the Gulf of Mexico and the Rocky Mountains. Rosetta is a Delaware corporation based in Houston, Texas. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CATHOLIC CHURCH: Claimants Assert Sexual Abuse Claim in Portland ---------------------------------------------------------------- Individuals asserting claims for sexual abuse filed 23 complaints with the U.S. Bankruptcy Court for the District of Oregon against the Archdiocese of Portland in Oregon and the Roman Catholic Archbishop of Portland in Oregon and his successors. The 23 Complaints assert claims against priests, clergy or employees of the Archdiocese, who abused the plaintiffs when they were minors: Priest, Clergy, or Plaintiff Employee Involved --------- ------------------ T.B., A.E., Fr. Thomas Laughlin Patrick Fihn Unknown Priest J.L.M., Y.R.D. Fr. Thomas Laughlin A.T.M., D.J.C., D.F.T., S.E.M. Fr. J. William McLeod R.H. Fr. James Gallagher H.M.C., H.D.T., and D.C. Fr. Maurice Grammond H.D.S. Jerry Fairbanks C.D.T. Mr. Sanders B.G.J. Mother Mary Eucharista and Mother Mary Freddrick M.M. Fr. Patrick Kiernan W.D.M. Earl Wong S.I.C. Fr. Robert Michele K.M.C. Frank Martin M.R.E. Fr. Michael Raleigh G.M. Fr. Joseph Vanderbeck H.M.T. Sister Betty C.W.R. Fr. John Goodrich and Mr. George Simone G.B. Fr. Martin Thielen and Fr. Johnson R.M. Fr. Chester Wrzaszczak Z.T.M. Fr. Mel Bucher E.S. Fr. Patrick O'Flynn N.M. Fr. Joseph Baccellieri H.L.L. Fr. James McCarthy H.K., E.H. and H.H. John Mackovich, Phyllis Collins, and S.R. Except for H.K., all of the plaintiffs are now adults. E.H. and H.H. are H.K.'s legal guardians. The Plaintiffs also allege intentional infliction of emotional distress, negligence, or breach of fiduciary duty. The Plaintiffs assert that the Archdiocese is liable for damages under the doctrine of respondeat superior. Among other things, the Plaintiffs ask for: (a) a jury trial; (b) non-economic and economic damages, the actual amount to be determined by the jury; (c) payment of the costs and disbursements they incurred in their cases. The Plaintiffs seek payment of non-economic damages ranging from $250,000 to $15,000,000 and economic damages ranging from $25,000 to $1,500,000. 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. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Reacts to LECG Estimation Report ---------------------------------------------------------- Dr. Frederick C. Dunbar, the economic consultant for the Archdiocese of Portland in Oregon, filed a declaration with the U.S. Bankruptcy Court for the District of Oregon in support of the Archdiocese's estimation methodology and reply to the: * estimation report submitted by LECG, LLC, as the Tort Claimants Committee's economic consultant; and * testimony of LECG's Dr. Ronald Schmidt at the estimation hearing on June 16, 2006. As reported in the Troubled Company Reporter on June 26, 2006, Tort Committee filed its estimation report. Any estimate of tort claims for the purpose of capping distribution must estimate the Archdiocese of Portland's probable maximum total liability to claimants with unsettled claims as determined by jury awards, Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, told Judge Perris, on behalf of the Tort Claimants Committee. The "probable maximum total liability" methodology, Mr. Kennedy said, will set a value that is unlikely to be exceeded by actual jury verdicts. Because of the relatively small number of claims, the probability of a few very large jury awards must be considered. The Tort Committee's Methodology is explained in a report prepared by Ronald H. Schmidt and Michael A. Carnall at LECG, LLC. A full-text copy of the LECG Report is available for free at http://researcharchives.com/t/s?be9 Dr. Dunbar clarifies these issues raised by the Tort Committee: (a) appropriateness of resolved tort claims data for an unbiased estimate of the value of unresolved claims; (b) costs and benefits of acquiring trial outcomes data for estimating tort liabilities; and (c) estimating the known rate of error around an unbiased estimate of total liabilities. Among other things, Dr. Dunbar says Dr. Schmidt's assertion -- that resolved claims are fundamentally different from unresolved claims, hence, statistics estimated from a sample of resolved claims cannot be used to estimate the value of unresolved claims -- is neither a fundamental principal of statistics nor is it based on logical reasoning. At base, it is an unsupported conjecture. Dr. Schmidt's claim that additional statistical analysis of the issue is required, is inconsistent with the experience of claims forecasting in other bankruptcies, Dr. Dunbar tells the Judge Perris. "Before expending substantial resources to perform such tests, it would be wise to marshal the existing evidence on this point," Dr. Dunbar says. "If past experience and data in this matter already show that an estimate based on settled claims is likely to provide an unbiased estimate of pending claims, then it would be wasteful to expend resources on additional analyses." A full-text copy of Dr. Dunbar's declaration is available for free at http://researcharchives.com/t/s?cd9 Judge Perris Bifurcates Estimation Hearing As previously reported, the Archdiocese asked the Bankruptcy Court to strike out the LECG Report for untimely filing. Judge Perris denies the Archdiocese's request. Judge Perris, however, grants the Archdiocese's request to bifurcate the estimation hearing. Judge Perris will continue, on June 30, 2006, at 1:30 p.m., the hearing on claims estimation and the parties' proposed estimation methodology, among others. Olson Claimants Want Panel of Estimators The tort claimants, represented by Erin K. Olson, Esq., in Portland, Oregon, ask the Bankruptcy Court to fashion an estimation that involves individual estimation by the same estimator or panel of estimators, who can give due consideration to certain factors that distinguish the sex abuse claims from the mass tort claims. Ms. Olson contends that a hearing appropriate to the estimation of 100 claims does not require sampling or complex statistical analyses. It requires an estimator, or panel of estimators, to: * consider evidence about each individual claim; * consider evidence of historical settlements and jury verdicts; * consider evidence of punitive damages; * evaluate the significant legal issues; and * permit the person or party whose due process rights are at risk to have an opportunity to be heard. Ms. Olson says: -- additional testimony concerning indemnification agreements with co-defendants might be presented by the Archdiocese of Portland in Oregon; and -- some expert testimony applicable to all or many claims could also be helpful, including those pertaining to: * repressed and suppressed memories; * delayed realization of the causal relationship between harm and childhood abuse by trusted priests; and * statistical evidence on appropriate subjects. The parties could even stipulate to an estimated value or range of values for some claims, Ms. Olson adds. Olson Claimants Want Proposed Methods Rejected The Archdiocese's methodology, Ms. Olson asserts, proposes to estimate the aggregate value of 110 unresolved claims using historical settlement values despite the fact that nearly half of the unresolved claims have been through formal mediation. In addition, the Archdiocese's use of the priest's identity in coming up with an average settlement value to apply in its proposed estimation methodology is likely to be no more or less accurate than using the identity of plaintiff's counsel as the independent variable. The Tort Committee's methodology, on the other hand, intends to estimate the aggregate value of the 110 unresolved claims using only historical jury awards, despite the indisputable fact that most claims settle before trial. Neither methodology can account for the myriad of factors that goes into a liquidation of a claim, whether by settlement or by a jury, because most factors are not suitable to serve as independent variables in a statistical model, Ms. Olson contends. Certain factors significant to the monetary "value" of child sex abuse claims cannot be measured by a statistical calculation, Ms. Olson points out. These factors include loss of religious faith, loss of trust in others, sexual performance problems, and depression. Moreover, the Archdiocese's estimation proceeding is not an asbestos estimation matter in which a claim can be assigned a place on a matrix based on whether the claimant has asbestosis or mesothelioma, Ms. Olson asserts. Additionally, the evaluation of factors including the statute of limitations issues would be subject to considerable dispute, Ms. Olson says. Another problem with the Archdiocese's methodology is the use of "claim attributes," which was identified and described by the Archdiocese itself, Ms. Olson points out. This defeats any effort to afford due process to claimants in the estimation process. Furthermore, the Archdiocese's methodology does not incorporate jury verdicts as a "claim attribute," Ms Olson says. For these reasons, the Olson Claimants ask the Court to reject the estimation methodology proposed by the Archdiocese and the Tort Committee, because neither proposal is credible without factoring in what it ignores. Archdiocese Wants Olson Claimants' Alternative Methodology Stricken The Archdiocese asks Judge Perris to strike out Olson Claimants' memorandum offering an alternative estimation methodology and objecting to Portland's and the Tort Committee's methodologies because it was filed past the deadline imposed by the Court. The Archdiocese also asks the Bankruptcy Court to bar argument with respect to the Olson Claimants' proposals and objections. Although the estimation hearing is continued on June 30, Susan S. Ford, Esq., at Sussman Shank LLP, in Portland, Oregon, explains that the hearing was scheduled only as a result of the Bankruptcy Court's granting of the Archdiocese's request to bifurcate the June 16 estimation hearing as an alternative remedy to striking the LECG Report. The June 30 hearing is limited to closing arguments and, if the Tort Committee so elects, cross-examination of Dr. Dunbar's declaration, Ms. Ford points out. Specifically, the Archdiocese wants the Olson Memorandum stricken because: (1) it is not based on any facts or evidence; (2) a proper foundation has not been laid with respect to the authenticity of the information and Ms. Olson's ability to testify; (3) the allegations appear to include inadmissible hearsay; (4) the allegations are merely unsupported conclusions; (5) the proposed "methodology" offered by Ms. Olson does not appear to be a scientific opinion admissible in evidence under Rule 104(A) of the Federal Rules of Evidence; and (6) no foundation has been provided to qualify Ms. Olson as an expert under the Federal Rules of Evidence. The Olson Memorandum relates to "discovery" issues and appears directed at the Archdiocese's request to compel mini depositions, Ms. Ford says. The Olson Memorandum should be stricken on the grounds that the Bankruptcy Court has not direct any briefing with respect to any issues that relate to the Archdiocese's deposition request. Ms. Ford tells Judge Perris that Ms. Olson's and the Olson Claimants' actions would be appropriate for sanctions under the Rule 9011 of the Local Bankruptcy Rules because they have presented to the Bankruptcy Court unnecessary contested matters and have attempted, in clear violation of the Court's Scheduling Order, to multiply the proceedings and "vexatiously" increase the costs to all parties. About the Archdiocese of Portland 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. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCM MERGER: Moody's Confirms Corporate Family Rating at B1 ---------------------------------------------------------- Moody's Investors Service confirmed CCM Merger Inc.'s B1 corporate family rating, B1 senior secured bank loan rating and B3 senior unsecured note rating. A negative rating outlook was assigned. These rating actions conclude the review process begun on April 17, 2006. The confirmation considers that despite a recent decline in operating results and high expected peak leverage due to upcoming expansion activity, CCM Merger continues to benefit from being one of only three casinos authorized to operate in Detroit, MI, a high density gaming market that has exhibited a good historical growth pattern. CCM Merger is also expected to derive some positive impact from the opening of its expanded property as well as the lower tax rate relative to the opening of the expansion. Under Michigan statute, the gaming tax rate for the Detroit casinos will drop from 24% to 19% once the expanded property is opened. Additionally, in the near-term, the Detroit market should receive some benefit from the smoking ban in Windsor that went into effect on June 1st. The negative ratings outlook acknowledges CCM Merger's recent lower than expected operating performance which highlighted its vulnerability to aggressive promotional activities by its competitors, despite the historical strength and positive long- term outlook for the Detroit market and recent market share improvement. As a result, CCM Merger is now weakly positioned in its rating category and more vulnerable to a ratings downgrade if future operating results fall short of Moody's expectations. Moody's most recent rating action on CCM Merger occurred on April 17, 2006 when the company's ratings were placed on review for possible downgrade in light of the company's operating performance in 2005 that was materially below Moody's expectation. CCM Merger, Inc. owns and operates MotorCity Casino in Detroit, Michigan. The company is currently undergoing a $275 million expansion which will include additional gaming space, restaurant outlets and a new hotel. CITGO PETROLEUM: Turns to JPMorgan for Aid in Pipeline Sale ----------------------------------------------------------- CITGO Petroleum Corporation is considering the sale of its interests in the Colonial and Explorer pipelines. CITGO currently owns 15.8% of Colonial Pipeline and 6.8% of Explorer Pipeline. CITGO's board of directors has retained JPMorgan as exclusive financial advisor for the divestiture process. "As with the previously announced potential sale of some of our other non-strategic assets, this is the result of an ongoing review of the company's performance," Alejandro Granado, chairman of CITGO's board of directors, said. "As a product of this study, the board has decided to focus on our core, strategic business." Headquartered in Houston, Texas, CITGO Petroleum Corporation -- http://www.citgo.com/-- is owned by PDV America, an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., the state- owned oil company of Venezuela. PDVSA is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. * * * As reported at the Troubled Company Reporter on Feb. 16, 2006, Standard and Poor's Ratings Services assigned a 'BB' rating on CITGO Petroleum Corp. CITIZENS COMMS: To Shoulder 60% of Penobscot River Clean Up Costs ----------------------------------------------------------------- The U.S. District Court for the District of Maine has issued Findings of Fact and Conclusions of Law in the initial liability phase of an environmental contamination lawsuit filed by the City of Bangor, Maine, against Citizens Communications Company. The City of Bangor had alleged that Citizens is solely responsible for the costs of cleaning up environmental contamination in the Penobscot River alleged to have resulted from the operation of a manufactured gas plant owned by Citizens from 1948 until 1963. With respect to the majority of the alleged contamination in the Penobscot River that is the subject of the case, the Court found that "the possibility of any human contact and the risk of endangerment to humans or the environment is remote and de minimus." The Court determined that Citizens and the City should share cleanup costs for the remaining smaller section of the River 60% and 40%, respectively. "We are pleased that the Court has both recognized that the alleged contamination that needs to be remediated is limited to a small section of the River and that the City also has significant responsibility for the remediation," said Hilary Glassman, Senior Vice President and General Counsel of Citizens. Citizens is continuing to evaluate the decision and the costs it may incur in connection with any required remediation of the smaller section of the River. The precise nature of the remedy in this case remains to be determined by subsequent proceedings. In the interim, Citizens intends to: a) seek relief from the Court in connection with the adverse aspects of the Court's opinion; b) continue pursuing its right to obtain contribution from the third parties against whom Citizens has commenced litigation in connection with this case; and c) vigorously prosecute a lawsuit against certain insurance carriers for indemnification for any remedial costs ultimately assessed against it and for all costs of defense. Citizens cannot at this time determine what amount it may recover from third parties or insurance carriers. The City had claimed that a large section of the Penobscot River required remediation at a cost to Citizens in excess of $50 million. Citizens believes that the Court's decision confirms that the City's allegations about the potential scope of cleanup, as well as Citizens' sole responsibility for cleanup costs, are without merit. About Citizens Communications Based in Stamford, Conn., Citizens Communications Corporation (NYSE:CZN) -- http://www.czn.net/-- is a communications company providing services to rural areas and small and medium-sized towns and cities as an incumbent local exchange carrier, or ILEC. The Company offers its ILEC services under the "Frontier" name. * * * As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service placed the debt ratings of Citizens Communications' on review for possible upgrade, reflecting the company's increased commitment to maintain a stable and predictable debt profile. Affected ratings include the Ba3 ratings of the Company's Corporate family rating, Senior unsecured revolving credit facility, and Senior unsecured notes, debentures, bonds. These ratings were placed on review for possible upgrade. CLINICA DE MEDICINA: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Clinica de Medicina Integral y Acupuntura, M.I.A., Inc. P.O. Box 70114 San Juan, Puerto Rico 00936-8114 Bankruptcy Case No.: 06-02091 Chapter 11 Petition Date: June 30, 2006 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Francisco R. Moya Huff, Esq. BCO Popular Building, Suite 401 Tetuan 206 San Juan, Puerto Rico 00901-1802 Tel: (787) 723-0714 Fax: (787) 724-2447 Total Assets: $1,700,000 Total Debts: $1,909,437 Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carlos Seda Munoz $400,000 [Address not provided] Dr. Marisell Velazquez Vicente $110,000 P.O. Box 70114 San Juan, PR 00936-8114 Marife Rodriguez - Ema Pujada $50,000 [Address not provided] Puerto Rico Telephone $24,000 P.O. Box 71535 San Juan, PR 00936-8635 Internal Revenue Services $20,000 Philadelphia, PA 19255-0030 Humana $6,500 Neo Medics $3,500 Autoridad de Enrigia Electrica $2,580 Dunsdemand $850 UMECO $796 Autoridad De Acueductos y Alcantarillado $672 Praxair Puerto Rico B.V. $578 Advance Collection Services $246 COMVERSE TECHNOLOGY: Granted Continued Listing By Nasdaq Panel -------------------------------------------------------------- The NASDAQ Listing Qualifications Panel has granted Comverse Technology, Inc.'s request for continued listing on the NASDAQ National Market. The Panel granted the company's request for continued listing subject to the requirement that the company file its Annual Report on Form 10-K for the fiscal year ended January 31, 2006 by August 18, 2006 and its Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2006 by no later than September 1, 2006. As reported in the Troubled Company Reporter on June 21, 2006, the Company received a Staff Determination Letter from The NASDAQ Stock Market indicating that the company's securities were subject to delisting based upon the delinquent submission of its Annual Report on Form 10-K for the fiscal year ended January 31, 2006. Comverse Technology, Inc. (NASDAQ: CMVT) -- http://www.comverse.com/-- provides software and systems that enable network-based multimedia enhanced communication and billing services. Over 450 communication and content service providers in more than 120 countries use Comverse products to generate revenues, strengthen customer loyalty and improve operational efficiency. * * * As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services held its ratings on Comverse Technology Inc. on CreditWatch with negative implications, where they were placed on March 15, 2006, on the disclosure that the board of directors at Comverse had created a special committee to review matters relating to the company's stock option grants and the likely need to restate prior-period financial results. As reported in the Troubled Company Reporter on March 17, 2006, Standard & Poor's placed its corporate credit and senior unsecured debt ratings on Comverse Technology on CreditWatch with negative implications. The company has S&P's 'BB-' corporate credit and senior unsecured debt ratings. CONGOLEUM CORP: Disclosure Hearings Adjourned to August 7 --------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey adjourned, until 2:30 p.m., on August 7, 2006, the hearing to determine the adequacy of the disclosure statements explaining: * Congoleum Corp. and its debtor-affiliates' Eighth Modified Joint Chapter 11 Plan of Reorganization; * The Official Committee of Bondholders' First Modified Joint Chapter 11 Plan of Reorganization; and * Continental Casualty Company and Continental Insurance Company's First Modified Joint Chapter 11 Plan of Reorganization. As reported in the Troubled Company Reporter on June 26, 2006, the Court had previously adjourned the Disclosure Hearings to July 13, 2006. Debtors' Plan Under the Debtors' Plan, Administrative Claims, Priority Tax Claims, and Priority Claims will be paid in full. Holders of Lender Secured Claims will have their existing credit agreements amended and restated in accordance with the terms of the Amended Credit Agreement. Holders of these claims will be entitled to all rights and benefits under the Amended Credit Agreement. The Debtors tell the Court that if they are unable to agree on the terms of the Amended Credit Agreement with the holders of the lender secured claims on the confirmation hearing, then holders of these claims will be paid in full. Holder of Other Secured Claims will retain their unaltered legal, equitable and contractual rights, including but not limited to, any liens that secure their claim. Senior Note Claims will be reinstated, provided, that: (i) the maturity date of the Senior Notes will be extended to Aug. 1, 2011; and (ii) holders of Senior Note Claims will receive, less $10 million: (a) all accrued and unpaid interest on the Senior Notes from the Dec. 31, 2003, through and including the interest payment date immediately preceding the effective date; and (b) any accrued and unpaid applicable default interest in accordance with the Indenture from Dec. 31, 2003, through and including the effective date, The Debtors say that all interest accruing on the Senior Notes from interest payment date preceding the effective date will be paid on the next succeeding interest payment date after the effective date and thereafter interest will be paid in accordance with the Indenture. In addition, any funds recovered by the Debtors on account of judgments against Gilbert Heintz & Randolph LLP and The Kenesis Group LLC, will be paid to the holders of the Senior Note Claims. Holders of General Unsecured Claims that remain unpaid prior to the effective date will retain their unaltered legal, equitable and contractual rights and the claims will be reinstated. Workers' Compensation Claims will be paid in the ordinary course pursuant to rights that exist under any state workers' compensation system or laws applicable to the claims. Holders of ABI Claims will receive these treatments: (a) all ABI Claims, other than ABI Asbestos Personal Injury Indemnity Claims, ABI Asbestos Property Damage Indemnity Claims and Other ABI Asbestos Claims, will be reinstated; (b) the ABI Asbestos Personal Injury Indemnity Claims will be channeled to and become the obligations of the Plan Trust, and be payable in accordance with the terms of the Plan and the TDP; and (c) the ABI Asbestos Property Damage Indemnity Claims and Other ABI Asbestos Claims will be deemed disallowed and expunged. On the effective date, all liability for Asbestos Property Damage Claims will be assumed by the Plan Trust. Holders of these claims will be paid solely from the Asbestos Property Damage Claim Sub- Account and after all assets in the Sub-Account have been exhausted, the Plan Trust shall have no further liability or obligation with respect to any these claims. Holders of Congoleum Interests will retain their interests provided that on the effective date, the New Class A Common Stock and the New Convertible Security contributed to the Plan Trust will be issued. Holders of Subsidiary Interests will retain their interests. On the effective date, the Plan Trust will assume all liability for Secured Asbestos Claims of Qualified Claimants. Each Qualified Claimant will have irrevocably consented or be deemed to have irrevocably consented to the Forbearance of his, her or its rights, if any, under the respective Pre-Petition Settlement Agreements or Claimant Agreement, as applicable, and his, her or its rights, if any, under the Collateral Trust Agreement and the Security Agreement by failing to timely object to such Forbearance upon notice thereof in accordance with procedures established by the Bankruptcy Court. The Forbearance will become irrevocable upon occurrence. The Secured Asbestos Claim will be determined, liquidated and treated pursuant to the Plan Trust Agreement and the TDP without priority of payment and in all respects pari passu with the Unsecured Asbestos Personal Injury Claims. Unsecured Asbestos Personal Injury will receive the same treatment as Secured Asbestos Claims of Qualified Claimants. A full-text copy of the Debtors' Disclosure Statement and Eighth Modified Joint Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?852 Bondholders' Plan Under the Bondholders' Plan, all claims will receive the same treatment as stated in the Debtors' plan with the exception of Senior Note Claims being reinstated and all accrued and unpaid prepetition and postpetition interest, plus all applicable fees and costs of the Indenture Trustee, will be paid in full in cash. The Bondholders say that in the alternative, Reorganized Congoleum will: * redeem the Senior Notes in accordance with the terms of the Indenture, * pay the Indenture Trustee, and * pay the holders of Senior Note Claims in full and in cash, the redemption price as set forth in the terms of the Security (as defined in the Indenture), together with accrued and unpaid prepetition and Postpetition Interest, plus all applicable fees and costs of the Indenture Trustee. A full-text copy of the Bondholders Committee's Disclosure Statement explaining its First Modified Joint Chapter 11 Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060427053822 Insurers' Plan Under the Insurers' Plan, these claims receive the same treatment as described in the other plans: * Administrative Claims; * Priority Tax Claims; * Priority Claims; * Other Secured Claims; * Workers' Compensation Claims; * General Unsecured Claims; * Senior Note Claims; * Asbestos Property Damage Claims; and * Subsidiary Interest. Holders of Lender Secured Claims will receive these treatments: * lenders' Existing Credit Agreement will remain in full force and effect; * Reorganized Congoleum will make all payments to holders of the claims as they become due; * the Debtors or Reorganized Debtors will enter into an agreement requested by the lenders Secured Claims to grant the holders a duly perfected first priority security interests in the assets securing the Existing Credit Agreement owed on the effective date; and * the Debtors or Reorganized Debtors will enter into an agreement requested by the Lender Secured Claims pursuant to the terms of the Existing Credit Agreement. On the effective date, the Plan Trust will assume all liability for: * Malignant Asbestos Personal Injury Claims, * Non-Malignant Asbestos Personal Injury Claims, and * Derivative Asbestos Personal Injury Claims. Holders of Malignant and Non-Malignant Asbestos PI Claims will receive, pursuant to the Insurers' TDP: (a) the payment percentage of the allowed liquidated value; and (b) subsequent payment, if any, up to the allowed liquidated value of the claim. Holders of Derivative Asbestos PI Claims will receive payment from the Plan Trust provided that the Plan Trust will not pay any Derivative claims unless and until the claimants aggregate liability for the direct claimant's claim has been fixed, liquidated, and paid by the derivative claimant by settlement. Holders of Asymptomatic Asbestos Personal Injury Claims will receive nothing under the Insurer's Plan. Holders of Rejection Damages Claims will be paid in full without interest. Holders of Insurance Company Claims will receive 50% of their claim without interest. Congoleum Interests will be cancelled and holders of these interests will receive nothing under the Insurers' Plan. Insurers' Plan vs. Debtors' Plan The Insurers tell the Court that the Debtor's Plan places control over the Plan Trust Bankruptcy Causes of action in the Trust Advisory Committee. The Insurers say that the Trust Advisory Committee consists of members who are defendants in the Plan Trust Bankruptcy Causes of Action, creating an obvious conflict of interest. The Insurers say that under their plan, the Plan Trust takes control of the Plan Trust Bankruptcy Causes of Action which is a completely neutral party. The Insurers Plan provides for 80% of Congoleum's New Common Stock to be placed in the Plan Trust and used to fund distributions to holders of Asbestos Personal Injury Claims. The remaining 20% will be issued to existing management as part of an incentive program. On the other hand, the Debtors' plan provides issuance of 3.8 million shares of New Class A Common Stock to the Plan Trust but control will remain with the current equity owners and with the Plan Trust. Under the Insurers Plan, the New Common Stock will have full voting rights. The Insurers contend that the Debtors' Plan continues to provide Forbearance by Secured Asbestos Claimants, subject to a claimant's right to object to such Forbearance. The Debtors' Plan does not make avoidance of Secured Asbestos Claims a condition to confirmation of the Debtors' Plan and secured asbestos claimant may still receive preferential treatment if avoidance actions are unsuccessful. The Insurers say that under their plan, Secured Asbestos Claimants are treated pari passu with all other Asbestos Personal Injury Claimants. Secured Asbestos Claimants who do not elect to this treatment will be subject to litigation seeking subordination or avoidance of: * any security interests to the Congoleum estate; and * any obligation under the Claimant or Pre-Petition Settlement Agreements. The Insurers further say that the avoidance is a condition to confirmation of their plan and was designed to eliminate the discriminatory treatment afforded by the Debtors to Secured Asbestos Claimants. The Insurers say that the Debtors' Plan does not include a set of TDP whereas their plan provides for one and is designed to provide fair allocation of available Plan Trust Assets among Asbestos Personal Injury Claimants holding valid claims and bar holders of invalid claims. Insurers' TDP The Insurers' trust distribution procedures require claimants to prove exposure to asbestos from a product manufactured by any of the Debtors or its affiliates that contained asbestos. To receive distribution, claimants must submit medically verifiable proof of their disease. The TDP also provides for an independent Medical Audit Board to audit randomly submitted claims. The TDP also excludes reliance on medical diagnoses and tests submitted by certain physicians banned from submitting medical diagnosis and test results by other bankruptcy asbestos trusts. A full-text copy of the Insurers' Disclosure Statement explaining their Joint Chapter 11 Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060427054424 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 Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At March 31, 2006. Congoleum Corporation's balance sheet showed a $44,694,000 stockholders' deficit compared to a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). CSC HOLDINGS: S&P Affirms $5.5 Billion Bank Facilities' BB Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BBB-' rating and '1' recovery rating to Rainbow National Services LLC's proposed $800 million of secured bank facilities. These ratings denote high expectation of full recovery of principal in the event of a default. Proceeds from the new bank facility will be used to refinance existing indebtedness, including borrowings under the company's current $950 million in secured bank facilities, as well as fund permitted investments, acquisitions and distributions, and for working capital and general corporate purposes. Standard & Poor's also affirmed its 'BB' bank loan rating and '2' recovery rating on CSC Holdings Inc.'s $5.5 billion of secured bank facilities. These ratings denote prospects for substantial (80%-100%) recovery of principal in the event of a default. RNS is a subsidiary of CSC Holdings. Both entities are owned by Bethpage, New York-based parent cable TV operator Cablevision Systems Corp. (Cablevision; BB/Stable/B-1). "The ratings on Cablevision reflect the solid investment-grade characteristics of Cablevision's core cable TV business composed of three million basic subscribers in the metropolitan New York/New Jersey area," said Standard & Poor's credit analyst Catherine Cosentino. These favorable business characteristics are partly offset by the company's aggressive financial policy, including its April 2006 payment of a $3 billion dividend to shareholders. Debt to EBITDA is expected to be in about the mid-6x area on an operating lease- adjusted basis for 2006, including contractual purchase commitments, but excluding collateralized indebtedness for monetization transactions. The company's favorable business profile includes: * very attractive demographics; * healthy broadband penetration; and * good market acceptance of its telephony service. The bank loans at Rainbow National Services consist of a $500 million term loan A maturing in 2013 and a $300 million revolving credit facility maturing in 2012. These are rated 'BBB-' with a '1' recovery rating. The bank loans at CSC Holdings consist of: * a $3.5 billion term loan B maturity in 2013; * a $1 billion term loan A maturing in 2012; and * a $1 billion revolving credit also maturing in 2012. These are rated 'BB' with a '2' recovery rating. CWALT INC: Fitch Rates Class B-3 & B-4 Certificates at Low-B ------------------------------------------------------------ Fitch rated CWALT, Inc.'s Mortgage Pass-Through Certificates, Alternative Loan Trust 2006-19CB: -- $1.51 billion classes A-1 through A-33, X, PO, and A-R certificates (senior certificates) 'AAA' -- $28.3 million class M certificates 'AA' -- $11 million class B-1 certificates 'A' -- $8.7 million class B-2 certificates 'BBB' -- $5.5 million class B-3 certificates 'BB' -- $3.9 million class B-4 certificates 'B' The 'AAA' rating on the senior certificates reflects: * the 3.90% subordination provided by the 1.80% class M; * the 0.70% class B-1; * the 0.55% class B-2; * the 0.35% privately offered class B-3; * the 0.25% privately offered class B-4; and * the 0.25% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), rated RMS2+ by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a group of primarily 30-year conventional, fully amortizing mortgage loans. The pool consists of 30-year fixed rate mortgage loans totaling $1,275,756,564 as of the initial cut-off date, June 1, 2006, secured by first liens on one-to four- family residential properties. The average loan balance is $216,634. The mortgage pool, as of the initial cut-off date, demonstrates an approximate weighted-average original loan-to-value ratio of 70.72%. The weighted average FICO credit score is approximately 723. Cash-out refinance loans represent 33.07% of the mortgage pool and second homes 3.95%. The states that represent the largest portion of mortgage loans are: * California (20.92%), * Florida (8.55%), and * Texas (5.86%). All other states represent less than 5% of the pool as of the cut- off date. Approximately 61.92% and 38.08% of the loans were originated under CHL's Standard Underwriting Guidelines and Expanded Underwriting Guidelines, respectively. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. The depositor will also deposit approximately $296,243,436 into a pre-funding account on the closing date. The amount in this account will be used to purchase supplemental mortgage loans after the closing date and on or prior to July 31, 2006. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CYBER DEFENSE: Files Amended Financial Statements for 2005 ---------------------------------------------------------- Cyber Defense Systems, Inc., filed with the Securities and Exchange Commission on June 22, 2006, its amended financial statements for: -- the year ended Dec. 31, 2004; -- the first quarter ended March 31, 2005; -- the second quarter ended June 30, 2005; and -- the third quarter ended Sept. 30, 2005. The Company's Statement of Operations showed: For the period ended ------------------------------------------------- Year Quarter Quarter Quarter 12/31/04 03/31/05 06/30/05 09/30/05 ---------- ---------- ----------- ----------- Revenue $3,026,287 $0 $65,765 $114,873 Net (Loss) ($420,653) ($5,691,147) ($9,076,537) ($719,460) The Company's Balance Sheet showed: For the period ended ------------------------------------------------- Year Quarter Quarter Quarter 12/31/04 03/31/05 06/30/05 09/30/05 ---------- ---------- ----------- ----------- Current Assets $953,425 $1,155,308 $1,396,334 $1,165,121 Total Assets $2,811,261 $2,979,135 $5,600,607 $17,075,313 Current Liabilities $3,201,269 $3,355,097 $14,686,668 $17,604,431 Total Liabilities and others $3,227,850 [$3,381,678] $14,847,896 $19,058,254 Total Stockholders' Equity (Deficit) ($416,589) [($402,543)] ($9,247,289) ($1,982,941) Techsphere Acquisition The Company amended its financial statements due to the acquisition of Techsphere Systems International, Inc. Cyber Defense acquired 100% of TSI's 100,000 outstanding common shares in exchange for Cyber Defense's 23,076,923 shares of Class A common stock at $5,281,244 and 245,455 shares of Class B common stock at $58,982 totaling $5,340,226. TSI is a manufacturer of low, medium and high altitude commercial airships and was acquired to expand the Company's product offerings. Full-text copies of the company's financial statements are available for free at: Year Ended Dec. 31, 2004 http://ResearchArchives.com/t/s?c8b first quarter ended March 31, 2005 http://ResearchArchives.com/t/s?c8c second quarter ended June 30, 2005 http://ResearchArchives.com/t/s?c8d third quarter ended Sept. 30, 2005 http://ResearchArchives.com/t/s?c8e Going Concern Doubt As reported in the Troubled Company Reporter on May 24, 2006, Hansen, Barnett & Maxwell, in Salt Lake City, Utah, expressed substantial doubt about Cyber Defense Systems, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the Company's working capital deficit and operating losses. Headquartered in St. Petersburg, Florida, Cyber Defense Systems, Inc. (OTCBB: CYDF) -- http://www.cyberdefensesystems.com/-- offers security solutions for the military, government, and the private sector. Cyber Defense manufactures new generation airships for surveillance and communication. DELPHI CORP: Equity Panel Identifies Flaw in Notice Procedures -------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in Delphi Corporation and its debtor-affiliates' bankruptcy cases points out that there are deficiencies in the notice and reporting provisions by the Debtors. The Equity Committee contends that the Debtors omitted the counsel to the Equity Committee as one of the notice parties in these pleadings: -- request to approve protocol for lift stay procedures; -- request for claims settlement procedures; and -- request to sell MobileAria Inc. Bonnie Steingart, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, in New York, contends that as a statutory committee appointed in the Debtors' Chapter 11 cases, the Equity Committee should be provided with any notice or report that is given to any other committee. The Equity Committee should have the opportunity to analyze and assess the potential effects of proposed settlements and or sales, Ms. Steingart says. Ms. Steingart assures the U.S. Bankruptcy Court for the Southern District of New York that the Equity Committee is mindful of the scope limitations imposed by the Court and will adhere to those limitations when determining whether and how to act on issues as they arise. Ms. Steingart adds that the provision of notice and reports to the Equity Committee, which are already being provided to the Official Committee of Unsecured Creditors, does not prejudice or place an undue burden on the Debtors. Debtors Respond The Equity Committee was formed as a limited purpose committee to provide shareholders a voice in those aspects of these cases directly relating to the Debtors' labor transformation, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, argues. Mr. Butler points out that the Equity Committee's appointment did not contemplate that it would have a role in (a) potential agreements to lift the automatic stay for the limited purpose of allowing certain litigants to liquidate their prepetition claims, (b) potential settlements of claims below certain materiality thresholds under the proposed settlement procedures, or (c) sales of assets as those proposed in the MobileAria Motion. The Settlement Procedures and the Lift Stay Procedures are the product of extensive negotiation between the Debtors and the Creditors Committee. The Creditors Committee has not also objected to the MobileAria's sale. Nevertheless, notes Mr. Butler, the Equity Committee seeks to duplicate the role of the Creditors Committee and interject itself broadly into numerous areas wholly unrelated to the Debtors' labor transformation. Mr. Butler contends that a duplication of effort would be inefficient, a waste of the estates' resources, and wholly unnecessary as it will not provide any material benefit to equity holders or any other party-in-interest. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Reports on Claim Transfers Made Through March 31 ------------------------------------------------------------- The first recorded claim transfer agreement in the Delphi Corporation and its debtor-affiliates' docket sheet was filed by Trade-Debt.net on November 2, 2005. Koolant Koolers Inc. transferred its $17,000 claim to Trade-Debt. A month later, Liquidity Solutions, Inc., doing business as Revenue Management, notified the U.S. Bankruptcy Court for the Southern District of New York that it acquired a $221,982 claim filed by Cincinnati Machine and a $239,472 claim filed by Orbis Corporation. In late December 2005, Riverside Claims, LLC, also purchased claims from at least 17 creditors with claim amounts varying from $1,080 to $24,794. During the first quarter of 2006, other parties entered the picture. ASM Capital LP made the most number of claim purchases in the first quarter with at least 191 transfers recorded in the docket. The biggest claim transfers to ASM include: Creditor Claim Amount -------- ------------ World Products Inc. $135,690 Kavlico Corp. 434,962 Westbrook MFG Inc. 466,755 Schaeffler Canada Inc. 713,875 JAE Electronics 549,608 Trade-Debt.net also bought a huge number of claims in the first quarter with at least 188 claim transfer notices filed in the Court's docket. However, the claim amounts of Trade-Debt.net's purchases are minimal, seldom exceeding the $5,000 mark. Sierra Liquidity Fund bought at least 173 claims, the largest of which include: Creditor Claim Amount -------- ------------ Sofanou Inc. $284,545 Atlas Pressed Metals 105,925 New England Interconnect 118,586 Lake Erie Products 100,860 Madison Niche Opportunities bought about 100 claims, including: Creditor Claim Amount -------- ------------ Universal Bearing Inc. $464,157 Micron Precision Machining 355,917 Shumsky Promotional Agency 117,714 Process Development Corp. 156,180 Although Contrarian Funds LLC bought a minimal amount of claims -- not more than 25 -- those claims assert huge amounts, which include: Creditor Claim Amount -------- ------------ Creative Engineered Polymer Products $3,585,701 Magnesium Products of America Inc. 1,427,655 Trostel, Ltd. 1,241,528 Camoplast Inc. 1,545,914 Strattec Security Corp. 3,413,887 Blissfield Manufacturing Co. 1,188,368 Other huge claim transfers -- in terms of claim amounts -- were made to: Transferee Transferor Claim Amount ---------- ---------- ------------ Bear Stearns Investment Alps Automotive Inc. $6,140,513 Products Inc. Longacre Master Fund NGK Automotive Ceramics $3,608,176 Longacre Master Fund Sharp Electronics Corp. $7,343,692 JPMorgan Chase Bank NA Fujitsu Ten Corp. $5,111,996 JPMorgan Chase Bank NA Alcan Rolled Products- $3,648,422 Ravenwood, LLC Credit Suisse First Pioneer North America $6,185,132 Boston Merrill Lynch Credit AW Transmission $10,444,084 Products LLC Engineering U.S.A. Stonehill Institutional Partners, Debt Acquisition Company of America, Amroc Investments LLC, Capital Markets, and Midtown Claims LLC, and VonWin Capital LP, also bought claims from the Debtors' creditors. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELUXE CORP: S&P Lowers Corporate Credit Rating One Notch to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Deluxe Corp., including its long- and short-term corporate credit ratings to 'BB+' from 'BBB-' and 'B' from 'A-3', respectively. In addition, all ratings were placed on CreditWatch with negative implications. The downgrades and CreditWatch listing reflect Deluxe's announcement that it has lowered its EPS guidance for 2006 to $1.37 - $1.47 per diluted share from $2.70 - $2.80, partly due to challenging business conditions in all three of its business units. In addition, Deluxe announced it plans to take a charge in the June 2006 quarter related to the abandonment of a software investment totaling approximately $45 million, or 56 cents per diluted share. The lowered profitability guidance is expected to have a corresponding impact on operating cash flow for the year, which could meaningfully alter expectations for debt repayment and financial profile improvements. Standard & Poor's will resolve its CreditWatch following an assessment of Deluxe's expected operating performance and its financial policies. Given the materiality of the lowered earnings guidance, the outcome of our review could range from an affirmation to a multiple-notch downgrade. DETROIT MEDICAL: Good Results Cues S&P to Affirm Bonds' BB- Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Michigan State Hospital Finance Authority's bonds, issued for Detroit Medical Center, to stable from positive. The lower rating outlook is due to DMC's diminished operating momentum resulting from slack volume trends, and the risk that liquidity will be reduced by sizable pension contributions due in 2006 and 2007. At the same time, Standard & Poor's affirmed its `BB-' rating on DMC's bonds, reflecting positive operating results in 2005 for the first time in many years and continued cost control vigilance in the face of weak volume trends and a challenging local economy. "The stable outlook balances the fact that Detroit Medical Center's operations are measurably improved over prior years with the recent volume weakness, which has caused DMC to fall behind budget at a time when cash flow is critical to maintaining liquidity because of high pension contributions," said Standard & Poor's credit analyst Liz Sweeney. Credit challenges, in addition to the current volume weakness and the low liquidity, include: * high leverage; * limited capital spending; * a challenging payor mix; and * economic challenges in Detroit ('BBB' GO rating, negative outlook), including weakness in the American automotive industry. DMC's credit strengths have not changed and include: * a substantial business base ($1.9 billion in revenue) as the third largest health system in the highly-consolidated southeast Michigan market; * a low debt burden, with maximum debt service at only 2.8% of revenue; * more realistic budgeting procedures beginning in 2004; and * a management team adept at controlling costs. DMC's rating was raised two notches in 2005 to `BB-' from `B' due to an operating turnaround of $116 million in 2004 and positive operating results early in 2005. At the time, volume and operating trends were positive, and the outlook reflected those trends. Although 2005's results as a whole were impressive, with the first operating gain in many years, some momentum was lost in the second half of 2005 and early 2006, with volumes declining again despite DMC's strong customer service initiatives and strengthened marketing campaigns. "It will be critical in 2006 for Detroit Medical Center to remain close to its operational targets and limit the decline in liquidity to at most the forecasted amount," added Ms. Sweeney. "A greater than expected liquidity decline or failure to maintain positive operations could warrant a negative outlook or rating change." The rating outlook revision affects approximately $556 million in rated debt. DJZ INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: DJZ Inc. dba Outrageous Bargains pdba Mill Oak & Pine Furniture aka Loan Mill Inc. pdba Oak Mill 2200 South Vineyard Avenue Ontario, California 91761 Bankruptcy Case No.: 06-11667 Chapter 11 Petition Date: June 30, 2006 Court: Central District Of California (Riverside) Judge: David N. Naugle Debtor's Counsel: Stephen R. Wade, Esq. 400 North Mountain Avenue, Suite 214B Upland, California 91786 Tel: (909) 985-6500 Fax: (909) 985-2865 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Legends Furniture $142,779 10300 West Buckeye Road Tolleson, AZ 85353-9212 Serta Mattress Company $101,829 File #56555 Los Angeles, CA 90074-6555 Wells Fargo Payment Center $75,413 P.O. Box 54349 Los Angeles, CA 90054-0349 Furniture Values $60,452 Thunderbird Furniture $47,140 Michael Nicholas Designs $46,619 San Bernardino County Sun $46,476 Press-Telegram Display $46,462 Grejor Company Inc. $46,034 Los Angeles Times $41,697 Advance Delivery Solutions $39,062 Sunny Designs, Inc. $38,880 Surewood Oak $37,262 Valspar $31,970 Premium Financing $31,912 Mansfield Furniture $31,563 San Gabriel Valley Newspaper $27,082 Fairmont Designs $25,754 Furniture Traditions $24,586 Core Property Management $22,769 DOCTORS MARKETING: Case Summary & Six Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Doctors Marketing Group, LLC 21031 Ventura Boulevard, Suite 701 Woodland Hills, California 91364 Bankruptcy Case No.: 06-11037 Type of Business: The Debtor filed for chapter 11 protection on February 10, 2006 (Bankr. C.D. Calif. Case No. 06-10158). Chapter 11 Petition Date: July 3, 2006 Court: Central District Of California (San Fernando Valley) Judge: Maureen Tighe Debtor's Counsel: Glenn Ward Calsada, Esq. 707 Wilshire Boulevard, Suite 3700 Los Angeles, California 90017 Tel: (213) 892-9950 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Six Largest Unsecured Creditors: Entity ------ All California Funding 13047 Ventura Boulevard, 2nd Floor Studio City, CA 91604 Joe Mu�oz Tel: (818) 990-1100 Fax: (818) 990-1434 William H. Brownstein & Associates, P.C. 1250 Sixth Street, Suite 205 Santa Monica, CA 90401 Tel: (310) 458-0048 Fax: (310) 576-3581 SBS Trustee Network 31194 La Baya Drive, Suite 106 Westlake Village, CA 91362 Duane Van Dyke 104 North Larkin Drive Covina, CA 91722 MCH Medical Center, Inc. 104 North Larkin Drive Covina, CA 91722 Citivest Financial Services 1055 Wilshire Boulevard, Suite 1940 Los Angeles, CA 90017 EASTMAN KODAK: Shutting Down Kirkby, England Manufacturing Plant ---------------------------------------------------------------- Eastman Kodak Company committed to shut down the Synthetic Chemicals operation and associated support facilities that produce chemicals used in the manufacture of photographic products in Kirkby, England, on June 27, 2006. In conjunction with this action, the Company will incur charges totaling approximately $37 million. Included in the restructuring related charges of approximately $29 million are employee termination benefits of approximately $7 million, building and plant equipment accelerated depreciation and inventory write-offs of approximately $14 million, and other exit costs of approximately $8 million. In addition, the Company will record approximately $8 million in operational charges related to executing this action. The severance, other exit costs, and the operational charges require the outlay of cash, while the accelerated depreciation and inventory write-offs represent non-cash charges. The estimated restructuring related charges exclude the potential impacts from any pension plan settlement or curtailment gains or losses that may be incurred, as these amounts are not currently determinable. These actions are expected to be complete by year-end 2007. This action is a part of the Company's restructuring program that was originally announced on January 22, 2004 and subsequently expanded on July 20, 2005. The Company expects that it will continue to consolidate its worldwide operations in order to eliminate excess capacity. Based in Rochester, New York, Eastman Kodak Company -- http://www.kodak.com/-- is a worldwide vendor of imaging products and services. The company is committed to a digitally oriented growth strategy focused on four businesses: Digital & Film Imaging Systems - providing consumers, professionals, and cinematographers with digital and traditional products and services; Health - supplying the medical and dental professions with traditional and digital imaging and information systems, IT solutions, and services; Graphic Communications - providing customers with a range of solutions for prepress, traditional and digital printing, document scanning, and multi-vendor IT services; and Display & Components - supplying original equipment manufacturers with imaging sensors as well as intellectual property and materials for the organic light-emitting diode and LCD display industries. * * * As reported in the Troubled Company Reporter on May 25, 2006, Fitch downgraded Eastman Kodak's Issuer Default Rating to 'B' from 'BB-' and the company's senior unsecured debt to 'B-' from 'B+' on May 16, 2006. The Outlook remains Negative. As reported in the Troubled Company Reporter on May 9, 2006, Moody's Investors Service placed the ratings of the Eastman Kodak Company on review for possible downgrade. Ratings placed on Review for Possible Downgrade included the Company's Corporate Family Rating at B1; Senior Unsecured Rating at B2; and Senior Secured Credit Facilities at Ba3. EASTMAN KODAK: Withdraws Operations in Chalon-sur-Saone, France --------------------------------------------------------------- In its latest action responding to the overall decline in traditional film imaging, Eastman Kodak Company will continue to progressively withdraw manufacturing activities from the Kodak Industrie Chalon Plant in Chalon-sur-Saone, France by a job reduction program. Kodak will end x-ray film finishing operations at the site. The closure will affect about 300 jobs, and the operations will be transferred to other Kodak plants with available capacity. "We will work to smoothly implement these changes, so that customers can rely on the same high-quality x-ray film products they have always received from Kodak," J.P. Martel, president of Kodak Industrie, said. Martel emphasized that Kodak has intensified efforts to develop an industrial park, the Burgundy Region Industrial Park, at the Chalon site, helping secure positions for a significant number of employees through divestitures and by attracting new businesses to the site. He pointed to a number of recent successes in that regard and said that the total number of jobs preserved through these developments could reach 700. Kodak Industrie said it would fulfill its contractual commitments to employees and implement a severance program. This program could include a voluntary retirement and separation program, other opportunities for employee relocation within the industrial park and assistance for employees seeking new jobs. Based in Rochester, New York, Eastman Kodak Company -- http://www.kodak.com/-- is a worldwide vendor of imaging products and services. The company is committed to a digitally oriented growth strategy focused on four businesses: Digital & Film Imaging Systems - providing consumers, professionals, and cinematographers with digital and traditional products and services; Health - supplying the medical and dental professions with traditional and digital imaging and information systems, IT solutions, and services; Graphic Communications - providing customers with a range of solutions for prepress, traditional and digital printing, document scanning, and multi-vendor IT services; and Display & Components - supplying original equipment manufacturers with imaging sensors as well as intellectual property and materials for the organic light-emitting diode and LCD display industries. * * * As reported in the Troubled Company Reporter on May 25, 2006, Fitch downgraded Eastman Kodak's Issuer Default Rating to 'B' from 'BB-' and the company's senior unsecured debt to 'B-' from 'B+' on May 16, 2006. The Outlook remains Negative. As reported in the Troubled Company Reporter on May 9, 2006, Moody's Investors Service placed the ratings of the Eastman Kodak Company on review for possible downgrade. Ratings placed on Review for Possible Downgrade included the Company's Corporate Family Rating at B1; Senior Unsecured Rating at B2; and Senior Secured Credit Facilities at Ba3. ENRON CORP: Court Defers Ruling on JP Morgan Subrogation Request ---------------------------------------------------------------- On Feb. 23, 2003, JPMorgan Chase Bank filed: -- Adversary Proceeding No. 03-8150 against Quachita Power, LLC, Cogentrix Quachita Holdings, Inc., and Cogentrix Energy, Inc., and -- Adversary Proceeding No. 03-8151, against Green Country Energy, LLC, Cogentrix of Oklahoma, Inc., and Cogentrix Energy. On May 23, 2003, the defendants sought dismissal of the Complaints. JPMorgan's claims stem from certain draws made by Green Country and Quachita on various letters of credit issued to them by JPMorgan, pursuant to a Master Letter of Credit and Reimbursement Agreement with Enron Corp. The L/Cs were issued to secure the performance of National Energy Production Company, NEPCO Power Procurement Company and NEPCO Procurement Company with respect to two separate construction projects involving Green Country and Quachita. Pursuant to the Master Agreement, Enron was obligated to reimburse JPMorgan for any draws on the L/Cs. JPMorgan argues that Green Country and Quachita had paid certain sums to the NEPCO Entities that would have been used for the payment of vendors and subcontractors with respect to the construction projects. Because Enron swept the cash prior to its bankruptcy filing, the funds became unavailable to the NEPCO Entities and the construction projects were not completed at the time of the filing. Consequently, Green Country and Quachita drew on their respective L/Cs and JPMorgan paid the draws. JPMorgan argues that the draws were wrongful because both construction projects were completed substantially on time or, with respect to only the Quachita project, it was deliberately delayed by Quachita to allow for its draw on the L/Cs. JPMorgan alleges that the draws on the L/Cs breached the two underlying contracts between the NEPCO entities and Green Country, and between the NEPCO Entities and Quachita because the conditions for a proper draw had not been met. JPMorgan has not been reimbursed for the draws. Both Enron and the NEPCO Entities were applicants on the L/Cs. As a result of its payment for the draws, JPMorgan contends that it is subrogated to Enron's and the NEPCO Entities' rights against Green Country and Quachita. As a purported subrogee, JPMorgan asserts claims for relief against Green Country and Quachita for their alleged breach of contract and breach of warranty under Uniform Commercial Code Sections 5-110(a)(2) and against Green Country and Quachita for inducing the breach of contract and breach of warranty. JPMorgan alleges that Quachita has been unjustly enriched for $41,182,200 at JPMorgan's expense and Cogentrix Holdings and Cogentrix Energy have benefited from the same amount. Quachita drew on the L/Cs issued by JPMorgan in violation of Quachita's construction contract with NEPCO and without having suffered any damages for the draws. With respect to the counts as brought against Green Country and Quachita, the parties acknowledge that: -- pursuant to the terms of the relevant L/Cs, the provisions of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication Brochure No. 500, Int'l Chamber Comm., Unif. Customs and Practice for Documentary Credits (Pub. No. 500 1993), apply; and -- even though the UCP provisions apply, the provisions of the New York Uniform Commercial Code apply, pursuant to both the L/Cs and state law, where the UCC provisions are not in conflict with the UCP. As the UCP does not have any provision relating to subrogation, JPMorgan contends that Section 5-117 of the UCC governs this dispute. Green Country and Quachita, however, contend that there is a conflict between the UCP and the UCC because the term "applicant," which is used in Section 5-117, is defined differently in the UCP and the UCC. Green Country and Quachita argue that, under the UCP definition of applicant, which is a "customer," it is clear that the only customer in this transaction who qualifies as an applicant is Enron and that, therefore, none of the NEPCO Entities qualify as "applicants" to whose position JPMorgan may subrogate. Court Clears Cogentrix Entities With respect to the allegations brought against the Cogentrix Entities, the Court notes the Complaints do not contain any specific facts or circumstances to support JPMorgan's allegation that the Cogentrix Entities directed or caused the actions of Green Country or Quachita to draw on the L/Cs. Nor are there any allegations that Green Country or Quachita were merely shell corporations. Accordingly, the Court grants the Cogentrix Entities' request for dismissal of the Complaints as filed against them. Court Defers Enron Subrogation Ruling With respect to the allegations where JPMorgan, as issuer of the L/Cs, seeks to subrogate to the rights of Enron as applicant, the Court agrees that multi-level subrogation may be a possibility. The Court accepts the analysis set forth in James J. White, Rights of Subrogation in Letters of Credit Transaction, 41 St. Louis U. L.J. 47, 61-64 (1996), where the author promotes the theory that warranty rights should be treated as the underlying obligation owed to the applicant to which the issuer is the secondary obligor. Thus, at this juncture, the Court is not prepared to dismiss the counts seeking to subrogate to Enron's right as applicant on the breach of warranty counts. Court Dismisses Unjust Enrichment Claims With respect to the direct unjust enrichment counts brought against Quachita and Green Country, the Court notes that, under New York law, the existence of a valid contract precludes recovery in quasi-contract for events arising out of the same subject matter. The Court finds that because the parties' rights and obligations are set forth in the four corners of the documents and because the parties knowingly conduct their relationship pursuant to a statutory framework concerning letter of credit law that fills in any gaps, an action for unjust enrichment is not available. The Court, thus, grants the portion of the motions by Green Country and Quachita seeking to dismiss the direct unjust enrichment counts brought against them. With respect to those counts filed against Green Country, other than the portion of the count where JPMorgan seeks to subrogate to Enron's warranty rights under Section 5-110(a)(2), the Complaint as filed against Green Country is dismissed. With respect to the counts filed against Quachita, other than the counts where JPMorgan seeks to subrogate to the rights of the NEPCO Entities, as applicants, and to the portion of the count where JPMorgan seeks to subrogate to Enron's warranty rights under Section 5-110(a)(2), the Complaint is dismissed. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 175; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON: Silicon Valley & Valley Electric to Pay $50 Mil. Settlement ------------------------------------------------------------------ Enron Corp. is expected to receive $50,000,000 of total contract termination payments from Silicon Valley Power, also known as the City of Santa Clara, California, and Valley Electric Association, The New York Times and Bloomberg News reports. Enron supplied energy to Silicon Valley and VAE. The utilities, however, assert that Enron failed to complete its contractual obligations. Under separate settlement agreements, Silicon Valley agrees to pay Enron $36,500,000. VAE agrees to pay Enron $14,000,000. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 175; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Ct. Dismisses Sparger Suit Seeking Termination Payment ------------------------------------------------------------------ John Robert Sparger was as an employee of Enron Expat Services, Inc., and was assigned to Enron Europe Limited until EEL entered into insolvency proceedings in the United Kingdom on November 29, 2001. EEL's insolvency administrator eventually terminated Mr. Sparger's service with EEL. Mr. Sparger informed Expat of his termination from EEL and returned to the United States on December 4, 2001. Mr. Sparger contacted Enron on January 16, 2002, after Expat and Enron failed to give him his salary payment for the first bimonthly pay period for 2002. Enron, however, informed Mr. Sparger that his employment had been terminated on January 1, 2002, and that no payment was due on January 15, 2002. In early 2002, Mr. Sparger was engaged in a dispute with Enron, Expat and Robert W. Jones, Todd Migliore, and C. Robert Vote concerning his January termination. Messrs. Jones, Migliore and Vote acted as agents of Enron and Expat. Enron asserted that Mr. Sparger had been terminated as part of its bankruptcy and that it was not required to satisfy any termination and severance obligations under his employment agreement with Expat. Mr. Sparger objected to Enron's interpretation and argued that his employment was with Expat, which in 2001, had not yet declared bankruptcy and that Enron's bankruptcy did not affect his rights under the employment agreement. On May 13, 2002, Sparger filed a suit against Expat in the 165th Judicial District for Harris County, Texas, alleging that Expat had breached the employment agreement. The proceedings were subsequently stayed after Expat filed for bankruptcy on Nov. 14, 2002. Mr. Sparger subsequently filed Claim No. 797400 for $207,500 against the Debtors in connection with their obligations under the employment agreement. Sparger Demands Termination Payment On June 9, 2003, Mr. Sparger filed Adversary Proceeding No. 03- 08266 against Enron, Expat and Messrs. Jones, Migliore and Vote, alleging that they committed fraud in obtaining a discharge of their obligations to him and making a false or fraudulent representation concerning the employment agreement. On July 21, 2003, Mr. Sparger filed an amended complaint with the defendants' consent. Mr. Sparger asserts: -- contractual termination payments under his employment agreement with Expat to be paid as a priority administrative claim under Sections 503(b)(1)(A) and 507(a)(1) of the Bankruptcy Code; and -- a civil Racketeer Influenced and Corrupt Organizations Act action under 18 U.S.C. Sections 1962(c) and 1964(c), predicated on the defendants' alleged mail and wire fraud violations under Sections 1341 and 1343. Mr. Sparger argues that the defendants' continued refusal to meet their obligations under the employment agreement constitutes willful fraud and a pattern of racketeering activity intended to deprive him of his contractual rights. On October 22, 2003, the defendants sought the dismissal of the Amended Complaint on grounds that the reliefs sought by Mr. Sparger were defective as a matter of law. Bankruptcy Court Dismisses Sparger Suit The Court holds that Mr. Sparger has failed as a matter of law to state a claim for administrative priority under Sections 503(b)(1)(A) and 507(a)(1). For a claim to be accorded administrative priority, a debtor must receive a real, and not potential benefit, Judge Gonzalez relates. Judge Gonzalez notes that the termination payment provided under the employment agreement is inversely related to the length of Mr. Sparger's employment, and no provision is made to increase the payment to reflect the length of his tenure. The termination payment is intended more to encourage the Debtors to retain Mr. Sparger than to protect him from the economic hardship of joblessness. The termination payment entitles Mr. Sparger to no more than his monthly salary for the remaining length of his employment term and is unrelated to any other factor of his employment. Thus, the termination payment is more properly classified as damages as opposed to severance pay, Judge Gonzalez states. The Court also holds that, with regards to the RICO action, Mr. Sparger has failed as a matter of law to adequately plead open- ended continuity of a pattern of racketeering activity on the part of the defendants. The pattern of racketeering activity extended from January 2002, the first alleged predicate act of wire fraud to May 2003, the last alleged instance of mail fraud. Judge Gonzalez, however, notes that the alleged predicate acts are few in number and consist uniformly of communications in which the defendants stated their position vis-a-vis the underlying employment controversy between the parties. Mr. Sparger has only alleged a single scheme consisting of a single fraudulent goal, a single corporate perpetrator and a single victim, and which concerns what amounts to a simple breach of contract, Judge Gonzalez points out. He adds that the mere allegation of continued fraud, even if it is assumed to be true, is insufficient as a matter of law to establish open-ended continuity without factual or contextual support. The Court concludes that the Amended Complaint should be dismissed without leave to amend for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Bankruptcy Procedure. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 175; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECHNOLOGIES: Posts $76MM Net Loss in 2006 Fiscal 4th Qtr. ---------------------------------------------------------------- Exide Technologies reported that net sales of $730.6 million in its financial statements for the fiscal year ended March 31, 2006, compared to $712.8 million in the prior year quarter. Foreign currency negatively impacted year-over-year fourth quarter sales by approximately $32 million, which was more than offset by favorable pricing in all businesses as well as increased volume in both of the Company's Transportation Divisions and in its Industrial Energy North American Division. The net loss for the fourth quarter of fiscal 2006 was $76.3 million compared with a net loss of $44.4 million or in the prior year period. Exide said the increase in the net loss in the fourth quarter is principally driven by the recording of $24 million for a settlement with the U.S. Attorney for the Southern District of Illinois relating to a historic fine, and a $5 million increase in interest cost due to higher debt and rates. The Company reported net sales of $2.82 billion in fiscal 2006 compared with $2.69 billion in fiscal 2005. Exide said the increase was principally attributable to growth in Industrial Energy worldwide and Transportation North America, partially offset by $53 million of negative foreign currency impact. Additionally, net sales were favorably impacted by overall pricing actions throughout all segments. Net loss as reported was $172.7 million in fiscal 2006 compared with net loss of $466.9 million in the period May 6, 2004, to March 31, 2005 (Successor Company). The fiscal 2005 results included a goodwill impairment charge of $389 million. Excluding this, the net loss for the current fiscal year increased by approximately $95 million, principally driven by a $54 million reduction on the gain from revaluation of the Company's warrants' liability (from $63 million in fiscal 2005 to $9 million in fiscal 2006), $27 million of increased interest expense due to higher debt and rates and the recording of the settlement with the U.S. Attorney. According to Exide, it uses adjusted EBITDA as a key measure of its operational financial performance. Adjusted EBITDA is also a key element of the covenants in its bank agreements. Exide said the measure underlies its operational performance and excludes the nonrecurring impact of its current restructuring actions. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and restructuring charges. Exide's adjusted EBITDA definition also adjusts reported earnings for the effect of non-cash currency remeasurement gains or losses, the non-cash gain or loss from revaluation of the Company's warrants liability, impairment charges and non-cash gains or losses on asset sales, as well as a specific exclusion for the settlement with the U.S. Attorney. Exide reported that Adjusted EBITDA in the fourth quarter of 2006 was $19.3 million compared to $6.5 million in the fourth quarter of the fiscal year. Full year 2006 adjusted EBITDA was $104.5 million compared to $105.7 million in fiscal 2005. Moreover, after further review of various tax and non-tax related entries, Exide disclosed that it will not be restating prior period financials results. Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Panel Taps Jefferies as Advisor Under Modified Pact ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorizes the Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Federal-Mogul Corporation and its debtor- affiliates to continue retaining Jefferies & Company, Inc. pursuant to the terms of a modified engagement letter. In March 2005, the Creditors Committee sought and obtained the Court's authority to expand the firm's retention to include work on the potential sale of the Debtors' Zanxx division pursuant to terms of a supplemental engagement letter. The Committee wants to continue to retain Jefferies pursuant to a modified form of the Zanxx Engagement Letter. According to Charlene D. Davis, Esq., at The Bayard Firm, in Wilmington, Delaware, the Modified Zanxx Engagement Letter alters the Zanxx Engagement Letter in two ways: 1. It modifies Jefferies' scope of work. The modified services will relate to the potential sales of these additional assets, operations and businesses -- Divestitures: * Araras Precision Machining Operations * Diadema * Federal-Mogul Windsor Machining Operations * Sintered Products * Wagner Lighting Products 2. It will alter the terms of the firm's compensation: * the aggregate fees owed to it will be fixed at an amount less than the total potential fees under the Zanxx Engagement Letter; and * a portion of fees will be earned and paid on a monthly basis rather than on the occurrence of a sale. The Debtors agree with the expanded scope, Ms. Davis told the Court. The Debtors and the Committee believe that a sale of the Divestitures should be actively explored and pursued since they no longer fit in the Debtors' core strategic product groups and their value is best maximized via a sale to third parties who would view the business as core and strategic. With the stand-alone nature and low degree of integration with the Debtors' other businesses, the Divestitures can be sold with minimal disruption and impact on the Debtors' reorganization, Ms. Davis adds. In connection with the revised engagement, Jefferies will: -- provide a thorough analysis of the Debtors' proposed marketing materials and market positioning of the Divestitures; -- conduct a detailed review of the buyers' list; and -- identify and research additional potential buyers. For the additional services, Jefferies will be entitled to: (a) a monthly fee equal to $150,000 per month for four months. The first Monthly Fee was be payable on May 1, 2006. Subsequent Monthly Fees will be payable on the first day of each subsequent month. (b) a $175,000 fee due and payable on the earlier of a closing of a sale or the effective date of the Debtors' plan of reorganization or liquidation. (c) reimbursement of its expenses incurred in connection with a sale. (d) receive, if Jefferies' services are terminated for any reason, all the agreed fees and reimbursement that had accrued up to and including the effective date of the termination. If Jefferies' services are terminated by the Committee -- or by Jefferies, for cause -- and the Debtors complete a transaction similar to a sale contemplated within a year of the termination, then the Debtors will pay Jefferies, concurrently with the closing of the sale, in cash the agreed fees and reimbursement. The proposed modification will be in addition to all fees and other consideration already paid under the original Zanxx Engagement Letter, and those set forth in the Amended Engagement Letter. Ms. Davis noted that the supplemental fee structure will not alter the obligation to provide to the firm all fees, expense reimbursements or other consideration which may accrue under the Amended Engagement Letter. 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. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Wants Thurmo-Sleep Settlement Pact Approved ----------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a mediated settlement agreement between Foamex L.P. and Thurmo-Sleep USA, Inc. On June 21, 2005, Foamex sued Thurmo-Sleep before the General Court of Justice, Superior Court Division of the State of North Carolina, asserting $572,083 in damages for Thurmo-Sleep's nonpayment of goods delivered by the Debtor. In its response to the State Court Action, Thurmo-Sleep asserted counterclaims against Foamex, alleging that Foamex sold and delivered defective products. On June 14, 2006, the parties participated in a Mediated Settlement Conference. In an effort to avoid the costs and risks associated with litigating the issues raised before the State Court, the parties agreed to resolve all issues and disputes between them. The principal terms of the Settlement are: (a) Thurmo-Sleep will make a settlement payment $515,000 to Foamex. Payment will be made in equal installments of $57,222 per month beginning July 15, 2006, until the settlement amount is paid in full; (b) Thurmo-Sleep will execute and deliver a Uniform Commercial Code financing statement and a security agreement for Foamex to record and file to secure the payment of the settlement amount; (c) Thurmo-Sleep will execute and deliver to Foamex an irrevocable confession of judgment for the settlement amount, which will not be filed until or unless Thurmo- Sleep defaults in any monthly payment; and (d) Foamex will pay $875 to cover the whole cost of the Mediated Settlement Conference. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Taps SSI Inc. as Exec. Search Consultant -------------------------------------------------------------- Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, Foamex International Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's authority to employ SSI (U.S.) Inc., doing business as SpencerStuart, as their executive search consultant, nunc pro tunc to June 26, 2006. SpencerStuart will assist the Debtors' three-member search committee in identifying and hiring the Debtors' permanent president and chief executive officer in accordance with the criteria to be developed by the Search Committee, senior management and advisors. The Debtors believe that SpencerStuart is well suited to serve as their executive search consultant and has the background and expertise in executive recruitment, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says. Subject to Court approval, SpencerStuart will earn a fee of one- third of the total first-year compensation payable to the president and CEO, subject to a $400,000 cap. The first $300,000 of SpencerStuart's fee will be billed in three equal monthly installments with the first payment due June 30, 2006. The remainder of the fees, if any, will be payable upon the hiring of the new president and CEO. SpencerStuart's fees are not refundable and the initial $300,000 fee is not contingent upon the firm's success in placing a candidate, Mr. Barry notes. The Debtors will reimburse SpencerStuart for normal out-of-pocket recruiting-related expenses on a monthly basis. The Debtors will pay: (a) $30,000 over the first three months for telephone, facsimile, postage, computer communication, duplication and other communications costs; and (b) a fixed monthly charge of $100 starting in the fourth month. Due to the nature of SpencerStuart's services, the Debtors propose that the firm be paid at the time its fees and expenses become due without further Court order. SpencerStuart has researched its client database and has discovered that it has provided, or is currently providing, services to some parties-in-interest in matters unrelated to the Debtors' Chapter 11 cases. Nicholas S. Young, a consultant at SpencerStuart, assures the Court that his firm has no connection with the Debtors, their affiliates, their creditors, the U.S. Trustee or any other party with an actual or potential interest in the Debtors' Chapter 11 cases or their respective attorneys or accountants. SpencerStuart is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors or their estates, Mr. Young adds. Mr. Young tells Judge Walsh that the Debtors intend to commence the search for a new CEO immediately and hope to conclude the search by September or October 2006. Because SpencerStuart is expected to jumpstart and conduct the Debtors' search, the Debtors ask the Court to hear the Application on an expedited basis. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) FONIX CORPORATION: March 31 Working Capital Deficit Tops $21MM -------------------------------------------------------------- Fonix Corporation reported a $4,081,000 net loss on $3,182,000 of revenues for the quarter period ended March 31, 2006, compared to a $4,080,000 net loss on $4,223,000 of revenues for the same period in 2005. As of March 31, 2006, the company's balance sheet showed $8,540,000 in total assets and 26,617,000 in total liabilities, resulting in an $18,077,000 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $1.2 million in total current assets available to pay $22.4 million in total current liabilities coming due within the next 12 months. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?cd3 Going Concern Doubt Hansen, Barnett & Maxell expressed substantial doubt about Fonix Corporation's ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Dec. 31, 2005. The auditing firm pointed to the company's significant losses and negative cash flows from operating activities during each of the three years in the period ended Dec. 31, 2005. As of Dec. 31, 2005, the Company had an accumulated deficit of $250,521,000, and negative working capital of $19,004,000. Headquartered in Sandy, Utah, Fonix Corporation -- http://www.fonix.com/-- is a communications and technology company that provides integrated telecommunications services and value-added speech technologies through its wholly owned subsidiaries and operation groups: Fonix Telecom Inc., LecStar Telecom Inc. and The Fonix Speech Group. The combination of interactive speech technology and integrated telecommunications services allows Fonix to provide customers with comprehensive, cost-effective solutions to enhance and expand their communications needs. HERBALIFE INT'L: Leverage Decline Cues Moody's to Upgrade Ratings ----------------------------------------------------------------- Moody's Investors Service rated the proposed bank loan of Herbalife International, Inc. at Ba1 and upgraded the corporate family rating to Ba1. Herbalife will use proceeds from the new debt to repay the existing term loan and to redeem the $165 million issue of 9.5% senior subordinated notes. The upgrade of the rating reflects the decline in leverage as a result of the refinancing transaction coupled with Moody's expectation that the company will continue to grow sales and cash flow. The rating outlook is stable. These ratings are assigned: * $100 million secured revolving credit facility at Ba1, * $200 million secured term loan at Ba1. This rating is upgraded: * Corporate Family Rating to Ba1 from Ba2. The ratings on the existing bank loan and the $165 million issue of 9.5% senior subordinated notes issued by the holding company Herbalife Ltd. will be withdrawn following completion of the proposed refinancing transaction. The corporate family rating will be assigned at the Herbalife International, Inc. level once the rating on the senior subordinated notes is withdrawn. Herbalife's corporate family rating of Ba1 balances certain key quantitative and qualitative rating drivers that have investment grade characteristics against Moody's opinion that many credit attributes for a company without substantial tangible assets are always likely to be stronger than for conventional retailers or consumer products companies that are similarly rated. Profitable rapid growth across many geographies and product categories and the company's pattern of repaying debt with a portion of discretionary cash flow have solid investment grade characteristics. Important factors with non-investment grade characteristics are the company's relatively small size compared to many higher rated companies, the unpredictability of demand for many products in the vitamin, nutritional supplement, and personal care categories, as well as the inherent challenges of managing the high reseller attrition that is a common characteristic of a multi-level marketing business model. The stable rating outlook reflects Moody's expectations that revenue growth will continue to be strong and that the company will use the bulk of free cash flow for prudent purposes such as repaying debt ahead of schedule. An upgrade is unlikely within the medium-term while concerns remain with respect to returns on expected investment increases in China and the use of the potential incremental $200 million from the bank loan. Given the nature of the company's business in which intangible assets provide most of the collateral value, Moody's likely always will expect stronger credit metrics than for similarly-rated retail or consumer products companies. Ratings are unlikely to increase for at least the next two years; however, Moody's believes that the Herbalife is comfortably positioned within its rating category. Important components of an eventual upgrade would be profitable expansion of the company's revenue base and an increased comfort level with potential uses of discretionary cash flow beyond the repayment of debt. The rating and outlook would be negatively impacted following difficulties in recruiting new resellers that lead to an overall decline in the company's primary sales force, financial policy decisions that causes a decrease in fixed charge coverage such as EBIT to interest expense falling toward 4 times or a tightening of the currently comfortable liquidity position, or insufficient returns on investment in China and other locations. Herbalife International, Inc, with corporate headquarters in Los Angeles, California, is a marketer of weight management products, nutritional supplements and personal care items that are sold through a global network of independent distributors in more than 60 countries. Equity of Herbalife, LTD, the company's ultimate parent through a series of intermediate holding companies, is publicly traded. Net revenue for the twelve months ended March 2006 was almost $1.7 billion. HERBALIFE INT'L: S&P Raises Corporate Credit Rating to BB+ from BB ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on direct marketer, Herbalife International Inc., including its corporate credit rating to 'BB+' from 'BB'. Standard & Poor's also raised its ratings on Herbalife's parent, Herbalife Ltd., including the corporate credit rating to 'BB+' from 'BB'. The outlook is stable. "This rating action is based on Herbalife's strong operating performance for the past two years as well as a significant strengthening of its credit measures," said Standard & Poor's credit analyst Ana Lai. The speculative-grade ratings on Herbalife reflect: * the risks associated with the company's network marketing business model; * the intensely competitive and fragmented nature of the weight management and nutritional supplements industries; * the high level of competition in the network marketing business; and * the risks of product liability and negative publicity. Herbalife is a network marketer of weight management products, nutritional supplements, and personal care products. The company generates stable cash flow from its geographically diversified operations. Further, the direct-selling business model has resulted in consistent cash flow generation because of minimal capital requirements and efficient working capital. Still, the company faces intense competition from other marketers of weight management products, as well as a high level of competition from other network marketers to recruit distributors. Herbalife has achieved relatively strong operating performance. Sales increased 20% in fiscal 2005, reflecting good retention and recruitment of distributors, new product launches, success in the growing Mexican market while the core U.S. market continues to recover. Operating margins have benefited from product cost savings from new supply contracts and lower expenses over the last few years, expanding to about 17% in 2005 from 15% a year ago. Positive operating momentum continued into the first quarter ended March 31, 2006, with sales increasing 23%. Although management initiatives to renew focus on distributors and new product launches, as well as increased distributor support, contributed to some recovery in sales in Japan, operating results in this market remain weak. Due to improving earnings and debt reduction, the company has strengthened its capital structure and achieved greater financial flexibility. Debt leverage has declined, with total debt to EBITDA dropping to about 1.2x for the 12 months ended March 31, 2006, from 2.7x in fiscal 2004. Given Herbalife's business risk profile, Standard & Poor's expects the company to maintain credit ratios that are above average for the rating. HERTZ CORP: S&P Puts Synthetic Securities' Ratings on Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on two synthetic securities related to Hertz Corp. and its related entities on CreditWatch with negative implications. The CreditWatch placements follow the June 22, 2006, placement of the long-term corporate credit and senior unsecured debt ratings on Hertz Corp. and its related entities on CreditWatch with negative implications. The ratings of the affected synthetic securities listed below are weak-linked to the underlying collateral, Hertz Corp. debt. Ratings Placed On Creditwatch Negative: SATURNS Trust No. 2003-8 Class To From ----- -- ---- A BB-/Watch Neg. BB- B BB-/Watch Neg. BB- SATURNS Trust No. 2003-15 Class To From ----- -- ---- A BB-/Watch Neg. BB- B BB-/Watch Neg. BB- HILLMAN GROUP: S&P Assigns B Corp. Credit Rating With Neg. Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to hardware distributor and manufacturer The Hillman Group Inc. The outlook is negative. The company will have approximately $397 million of pro forma debt. About $97 million of paid-in-kind preferred stock and accrued dividends maturing 2028 are treated as equity in our analysis. At the same time, Standard & Poor's assigned ratings to Hillman's senior secured bank financing, which consist of a $40 million revolving credit facility that matures in 2010, and a $235 million term loan C that matures in 2011. The loans are rated 'B' (at the same level as the corporate credit rating on the company) with a recovery rating of '3', indicating the expectation of meaningful (50%-80%) recovery of principal in the event of a payment default. The ratings are based on preliminary documents and are subject to review upon final documentation. Proceeds from the term loan C will be used to refinance the existing term loan. "The ratings on Cincinnati, Ohio-based The Hillman Group reflect narrow business focus, customer concentration, and aggressive debt leverage, factors somewhat mitigated by its historically stable financial performance," said Standard & Poor's credit analyst Patrick Jeffrey. Hillman is a narrowly focused manufacturer and distributor of fasteners; keys and key machines; engraving equipment; and letters and signs for sale in hardware and home improvement retail outlets. The company distributes through about 35,000 stock keeping units to national customers such as Lowe's Cos. Inc. and Home Depot Inc., as well as to independent hardware stores. While the company has maintained some stability in its operations over the past year, the negative outlook reflects Standard & Poor's concern regarding the company's internal controls. The ratings could be lowered in the near term if the company's operating performance or liquidity weakens as a result of the competitive operating environment or the company's inability to correct its material weaknesses in internal controls. On a longer term basis, the outlook could be revised to stable when internal controls are resolved and the company continues to demonstrate sustained operating stability. The ratings do not factor in any significant debt-financed acquisitions. ILINC COMMS: Auditors Remove Going Concern Doubt in Audit Opinion ----------------------------------------------------------------- The going concern paragraph has been removed from the audit opinion contained in iLinc Communications, Inc.'s, Form 10-K report. The Going Concern assumption in Generally Accepted Auditing Standards requires an auditor to evaluate conditions or events that raise questions about an entity's ability to continue as a going concern. If an auditor has concerns about a firm's ability to continue as a going concern, the audit opinion will contain a paragraph outlining issues regarding this uncertainty. In its recently filed Form 10-K for the year ended March 31, 2006, iLinc's auditors did not include any such going concern uncertainty paragraph in their audit opinion. "Having the going concern issue removed from our auditor's opinion for fiscal year 2006 is a significant accomplishment and an important step in our overall plan," James M. Powers, Jr., president and chief executive officer of iLinc Communications, said. "Some of our competitors had attempted to use this provision to scare potential customers away from iLinc, but that tactic will no longer be available. Instead customers will be free to focus on the merits of our award-winning feature set and our unique licensing options that we believe give iLinc a sustainable competitive advantage. Having the stigma associated with a going concern provision removed, we hope, will increase confidence to not only potential customers but also to investors. We laid a solid financial foundation in the later part of fiscal year 2006, our operating fundamentals are strong and our employees are intensely focused on executing our strategy to accelerate the growth of the company," Dr. Powers further remarked. Going Concern Doubt Epstein, Weber & Conover, PLC, the Company's auditor for the year ended March 31, 2006, expressed an unqualified opinion on the Company's financial statements. BDO Seidman, LLP, the Company's auditor for the year ended March 31, 2004, had raised substantial doubt about iLinc Communications' ability to continue as a going concern. BDO Seidman pointed to the Company's recurring losses, negative working capital and negative cash flows from operations. Financials The Company reported a $1,356,000 net loss on $12,532,000 of total revenues for the year ended March 31, 2006, compared to a $5,432,000 net loss on $10,369,000 of total revenues for the same period in 2005. At March 31, 2006, the Company's balance sheet showed $16,000,000 in total assets, $11,630,000 in total liabilities, and $4,370,000 in total shareholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $2,715,000 in total current assets available to pay $4,656,000 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's annual report is available for free at http://ResearchArchives.com/t/s?ce1 About iLinc Communications Headquartered in Phoenix, Arizona, iLinc Communications, Inc. (Amex: ILC) -- http://www.iLinc.com/-- develops conferencing products and services for highly secure and cost-effective collaborative online meetings, presentations, and training sessions. The Company provides integrated Web and audio conferencing as a Web-based service, onsite installable software, or through hybrid ownership licensing in which customers pay a one-time fee for unlimited conferencing yet the software is hosted by iLinc. Its products and services include the iLinc suite of Web Conferencing software (MeetingLinc, LearnLinc, ConferenceLinc, and SupportLinc); Phone (Audio) Conferencing Services; On-Demand Conferencing; and EventPlus, a service for professionally managed online and audio conferencing events. iLinc's products and services are used by organizations worldwide in sales, HR and training, marketing, and customer support. LA PETITE: Intends to Explore Refinancing of 10% Senior Notes ------------------------------------------------------------- La Petite Academy, Inc. and LPA Holding Corp. intends to explore alternatives for refinancing their senior credit facility and 10% Senior Notes due 2008, including the possibility of refinancing the debt through a new senior credit facility. The 10% Senior Notes are currently redeemable at the option of La Petite, in whole or in part. La Petite has not made any definite decision regarding the terms of any refinancing, or whether to proceed with a refinancing. There can be no assurances that a refinancing will be consummated. About La Petite Headquartered in Chicago, Illinois, La Petite Academy Inc. -- http://www.lapetite.com/-- is the largest privately held and one of the leading for-profit preschool educational facilities in the United States based on the number of centers operated. The company provides center-based educational services and childcare to children between the ages of six weeks and 12 years. At Jan. 14, 2006, La Petite Academy's balance sheet showed a stockholders' deficit of $306,117,000, compared to a $293,012,000 deficit at July 2, 2005. LARGE SCALE: Court Approves Amended Disclosure Statement -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved, on June 20, 2006, the Amended Disclosure Statement explaining the Amended Joint Plan of Liquidation filed by Large Scale Biology Corporation and its debtor-affiliates. The Court determined that the Disclosure Statement contains adequate information -- the right amount of the right type of information necessary for creditors to make informed decisions -- as required by Section 1125 of the Bankruptcy Code. Overview of the Plan The Debtors tell the Court that the Plan is designed to complete the orderly liquidation of the Debtors' business and assets, including a possible sale as a whole to one purchaser or the sale of related business units, and to distribute the proceeds consistent with the requirements of the Bankruptcy Code and orders of the Court previously entered in their cases. On the Effective Date of the Plan or as soon as practicable, the Consolidated Debtor will use cash on hand from the liquidation of assets to pay in full all allowed Administrative Claims, Professional Claims, Pre-petition Tax Claims and Priority Claims. As funds become available that are not necessary to fund liquidation costs, the Consolidated Debtor will make distributions to other creditors and interest holders in the order of priority set forth in the Plan, which follows the priority scheme set forth in and required by the Bankruptcy Code. The Consolidated Debtor, acting through a Plan Administrator, will continue to liquidate the assets of the Estates after the Effective Date. The Debtors anticipate that the liquidation shall occur over the period of at least nine months to one year. Treatment of Claims The Debtors say that the secured claims of Kevin Ryan and Earl L. White, Ph.D., will be paid in full using proceeds of the sale of the collateral securing their obligations. Deficiencies will be treated as general unsecured claims. Seneca Meadows Corporate Center III is the landlord for premises known as Building #7 in Seneca Meadows Corporate Center in Germantown, Maryland under a lease dated July 26, 2000, with large Scale Biology, which includes a deposit in the form of a letter of credit. The Debtors say that Seneca Meadows will retain all rights to its collateral under the terms of the lease. Holders of General Unsecured Claims will have their claims paid or satisfied in full using unencumbered funds from the sale proceeds of the Debtors' assets after: * payment in full of Administrative Claims, Priority Claims, Pre-Petition Tax Claims, and Professional Claims; and * reservation of sufficient funds to pay for all post- confirmation liquidation expenses. The Debtors say that if there are sufficient unencumbered funds to do so, general unsecured claimants will be entitled to interest at the legal rate as of the effective date from the date the Debtors filed for bankruptcy until paid in full. Otherwise, holders will receive their pro rata share from the unencumbered funds. All warrants and stock options of Large Scale Biology, Large Scale Bioprocessing, Inc., and Predictive Diagnostics, Inc., will be cancelled pursuant to the Plan. Satisfied Claims The Debtors disclose that the secured claim of Agility Capital, LLC has been satisfied in full through a $650,000 payment using the proceeds of the sale of the Owensboro Facility and related assets, pursuant to a Court-approved settlement agreement between Agility and the Debtors. Kentucky Technology, Inc., and Robert Erwin, IRA and Kevin Ryan, IRA's secured claims have also been satisfied in full using the proceeds of the sale of the Owensboro Facility and related assets. A full-text copy of the Debtor's Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?cd4 A full-text copy of the Debtor's Amended Joint Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?cd5 The Court has set 11:00 a.m., on July 31, 2006, to consider confirmation of the Debtors' plan. Objections, if any, must be filed by July 24, 2006. About Large Scale Biology Headquartered in Vacaville, California, Large Scale Biology Corporation -- http://www.lsbc.com/-- develops, manufactures and sells plant-made pharmaceutical proteins and vaccines. LSBC and its debtor-affiliates filed for chapter 11 protection on Jan. 9, 2006. (Bankr. E.D. Calif. Case No. 06-20046). Paul J. Pascuzzi, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi, represent the Debtors in their restructuring efforts. As of Feb. 28, 2006, the Debtor had $25,148,066 in total assets and $13,004,922 in total debts. MADGE MCGAUGHEY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Madge Carolyn McGaughey aka Carolyn McGaughey 8200 Neely Drive, Suite 143 Austin, Texas 78759 Bankruptcy Case No.: 06-10983 Chapter 11 Petition Date: June 30, 2006 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Gray Byron Jolink, Esq. 4131 Spicewood Springs Road, Building C-8 Austin, Texas 78759 Tel: (512) 346-7717 Fax: (512) 346-7714 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. MAGELLAN HEALTH: Paying $210 Million for ICORE Healthcare Assets ---------------------------------------------------------------- Magellan Health Services, Inc., has signed a definitive agreement to acquire ICORE Healthcare, a privately held specialty pharmaceutical management firm headquartered in Orlando, Fla. Under the terms of the agreement, Magellan will pay a base price of $210 million and a potential earn-out of $75 million to the owners of ICORE, all of whom are members of the management team. The base price is payable in cash of $186 million and restricted stock of $24 million, which stock will vest over three years provided the individuals do not terminate their employment over that time. The earn-out comprises two parts -- $25 million based on earnings for the 18-month period ending Dec. 31, 2007, and $50 million based on earnings in 2008. The earn-out, if earned, is payable 33% in cash and 67% in restricted stock that vests over two years after issuance. The transaction is subject to customary closing conditions, including certain regulatory approvals and approval of Magellan's lenders under its credit agreement, and is expected to close in the third quarter of 2006. Specialty pharmaceuticals are high-cost drugs used to treat chronic diseases. Specialty pharmaceutical costs are growing at more than 20% annually, primarily as a result of the introduction of new drugs to the marketplace, greater application of these drugs to a larger variety of illnesses and increasing demand driven by an aging population with longer life spans. ICORE Healthcare works with health plans to manage specialty drugs used in the treatment of cancer, multiple sclerosis, hemophilia, infertility, rheumatoid arthritis, chronic forms of hepatitis and other diseases. It holds contracts with 36 health plans covering 60 million individuals in commercial, Medicare and Medicaid programs. Deutsche Bank AG advised ICORE on the transaction. Assuming the transaction closes August 31, 2006, for the four months of 2006 post-acquisition, the Company expects ICORE to generate approximately $60 million of revenue and $8 million of segment profit. The Company expects ICORE to generate $230 million of revenue and $28 million of segment profit in 2007. "Our health plan customers have told us that they consider specialty pharmaceutical and radiology the top two cost issues for health plans," Steven J. Shulman, chairman and chief executive officer of Magellan said. "As such, specialty pharmaceutical management represents another opportunity for us to execute on our strategy of becoming the leading diversified specialty health care management company and increasing the portion of the health care dollar that we manage. "ICORE serves its customers and partners through clinically based formulary management of specialty drugs and rebates, as well as pharmacy distribution and strategic consulting," Mr. Shulman said. "ICORE has a large client base, a proven management team, led by Raju Mantena, and, we believe, the most comprehensive business model in the industry. This model, which focuses on management of specialty pharmaceutical costs regardless of whether they are paid for out of a plan's medical or pharmacy benefit, consistently provides value to health plan payors. "We plan to build on this successful model by leveraging our managed care expertise, operational infrastructure and financial resources to enhance ICORE's product offerings and value to its stakeholders. Specifically, our experience in customer service, claims payment and clinical management, and our information technology tools and connectivity can be leveraged to scale ICORE's existing capabilities and accelerate the development of a more full-service approach to managing specialty pharmaceuticals and the conditions for which they are prescribed," Mr. Shulman added. "Like Magellan, ICORE has at its foundation a strong commitment to clinical excellence that, coupled with responsible management strategies, yields valuable solutions to the challenges that health plans face in providing cost-effective health care to their customers and members," said Raju Mantena, president and CEO of ICORE. "The ICORE management team and I are pleased to be joining a management team and organization with a track record of industry leadership and success in managing specialty health care and the resources and expertise to support innovation and growth in the management of specialty drugs." About Magellan Health Headquartered in Avon, Connecticut, Magellan Health Services, Inc. (NASDAQ: MGLN) is the United States' leading manager of behavioral health care and radiology benefits. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003 (Bankr. S.D.N.Y. Case No. 03-40515). The Court confirmed the Debtors' Third Amended Plan on Oct. 8, 2003, allowing the Company to emerge from bankruptcy protection on Jan. 5, 2004. * * * As reported in the Troubled Company Reporter on May 25, 2006, Moody's Investors Service changed the ratings outlook for Magellan Health Services Inc. to positive from stable. Moody's affirmed the Company's Senior Secured Bank Credit Facility rating at B1 and Corporate Family Rating at B1. As reported in the Troubled Company Reporter on April 27, 2006, Standard & Poor's Ratings Services raised its counterparty credit rating on Magellan Health Services Inc. to 'BB' from 'B+'. The outlook is stable. MANITOWOC COMPANY: Revises Second Quarter 2006 Earnings Guidance ---------------------------------------------------------------- The Manitowoc Company, Inc., expects second-quarter 2006 earnings per share to be approximately $0.10 in excess of Wall Street average estimates. Because of this second-quarter performance and its outlook for the remainder of the year, the company is also increasing its full- year guidance for 2006 earnings per share to a range of $2.50 - $2.60 from the $2.15 - $2.25 range confirmed at the end of the first quarter. Reported GAAP earnings per share will include a charge of $0.15 for the redemption of the 10-3/8% Senior Subordinated Notes due 2011 and $0.01 loss from discontinued operations, resulting in a GAAP earnings guidance range of $2.35 - $2.45 per share. "Our global leadership in the lifting industry continues to drive Manitowoc's strong financial performance," Terry D. Growcock, chairman and chief executive officer, said. "As we enter the summer construction season - traditionally the period of greatest lifting activity - global demand for our entire product line is exceeding our own expectations, and we expect that demand to remain solid throughout this current construction cycle. In addition to our Crane segment's strong performance, our Foodservice and Marine segments continue to contribute and perform as planned." The Manitowoc Company, Inc. will issue its second-quarter 2006 earnings on July 26, 2006 and will host an earnings conference call on July 27, 2006 at 9:00 a.m. Central time. 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. MARKWEST ENERGY: S&P Rates Proposed $200 Mil. Sr. Notes Issue at B ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on MarkWest Energy Partners L.P. and revised the outlook to stable from negative. At the same time, Standard & Poor's assigned its 'B' rating to the company's proposed $200 million privately placed senior unsecured notes due 2016 and raised its rating on the company's existing $225 million unsecured notes to 'B' from 'B-'. The rating actions reflect the company's implementation of its permanent financing plan to repair its balance sheet following its Javelina acquisition in November 2005. The company plans to use proceeds from the $200 million unsecured notes and an equity offering of 3 million limited partner units (estimated proceeds of $125 million) to repay senior secured debt and return total debt leverage to around 50%. Ratings reflect MWE's weak business risk profile and aggressive financial risk profile. Englewood, Colorado-based MWE is a master limited partnership engaged in the gathering, processing, and transmission of natural gas; transport, fractionation, and storage of natural gas liquids; and gathering and transport of crude oil in the northeastern and southwestern U.S. "The stable outlook on MWE reflects the company's implementation of its permanent financing plan, which should effectively reduce leverage to below 50%, said Standard & Poor's credit analyst Plana Lee. Continued ratings stability relies on successful execution of the financing plan, combined with commensurate cash flow performance, management of commodity price exposure through ongoing contract renegotiation, and a comprehensive hedging program beyond 2006. Conversely, a negative outlook revision or downward rating action could result from the company's failure to issue sufficient equity to return total debt leverage to about 50% and total debt to EBITDA to about 4.2x, additional acquisition activity that further strains the financial profile, problems integrating the Javelina assets, or lower-than-expected cash flows. MCMILLIN COS: S&P Removes Ratings from Negative Watch ----------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on McMillin Cos. LLC and removed them from CreditWatch with negative implications, where they were placed on Sept. 1, 2005. The outlook is stable. The ratings were placed on CreditWatch after McMillin submitted audited 2004 financials containing a qualified opinion. McMillin subsequently replaced its previous auditor with Ernst & Young and resolved the accounting issues that resulted in the qualified opinion and delayed its filing of 2004 financials. McMillin recently provided Standard & Poor's with audited 2005 and unaudited first quarter 2006 financials. "The affirmations reflect the company's good market position, efforts to improve its geographic diversification, above-average profitability, and solid financial profile, particularly for the rating," said credit analyst George Skoufis. "Mitigating factors include McMillin's relatively small and concentrated business, limited financial flexibility, complex financial profile, and a more competitive housing environment in its California markets." A $300 million backlog of homes should provide predictable revenue in the near term, and the stability of the San Antonio market should help offset some of the deterioration that McMillin's California markets are experiencing. Furthermore, the company's balance sheet has the cushion to absorb declining EBITDA as market conditions continue to soften, particularly at the current rating level. Negative rating actions would be warranted if management aggressively grows its community count and land positions during the housing slowdown to the detriment of its financial profile. Positive rating potential is currently limited due to the company's geographic concentration and the challenging housing market. As reported in the Troubled Company Reporter on Sept. 5, 2005, Standard & Poor's placed these ratings on McMillin Cos. LLC on CreditWatch negative: Rating To From -- ---- Corporate credit B+/Watch Neg/-- B+/Stable/-- Senior secured B-/Watch Neg B- MEDQUEST INC: Revenue Reduction Cues Moody's to Junk Ratings ------------------------------------------------------------ Moody's Investors Service downgraded the ratings of MedQuest, Inc. the operating subsidiary of MQ Associates, Inc., together referred to as MQ. This action concludes a rating review initiated on February 16, 2006. Following this rating action, the outlook is stable. These ratings have been downgraded: MQ Associates: * $103 million senior discount notes due 2012, to Ca from Caa3 * Corporate Family Rating, to Caa1 from B2 MedQuest: * $80 million senior secured revolving credit facility due 2007, to Caa1 from B2 * $60 million senior secured term loan due 2009, to Caa1 from B2 * $180 million senior subordinated notes due 2012, to Caa3 from Caa1 The downgrades primarily reflect Moody's belief that the company will experience material reductions in revenues and cash flows as a result of forthcoming changes in Medicare reimbursements for its diagnostic imaging services. The effect of the Medicare changes will be substantial because approximately 18% of MQ's payor mix is derived from Medicare and the company's primary focus has been on the higher modality scans with roughly 67% of the company's gross revenues derived from MRI and another 18% resulting from CT scans. The reduction in revenues and cash flow is expected to strain the company's ability to reduce its debt and repay interest without the assistance of revolver draws. In addition, it is expected to further strain the company's ability to replace and upgrade its equipment portfolio, thereby further exacerbating the company's ability to remain competitive in its industry. Moody's estimates that the implementation of the contiguous body part cuts will negatively affect revenues, cash flows and pre-tax earnings by at least $1 million during 2006 and more than $2 million in 2007. In addition, Moody's anticipates that the fee schedule changes mandated by the DRA will unfavorably affect sales, cash flows and earnings by $10 million or more in 2007. Other factors that affect the ratings negatively include: 1) the company's stagnant operating results; 2) sizeable, negative stockholders equity; 3) an ongoing SEC inquiry; 4) the company's relative small size; 5) the inherent seasonality in the business; and 6) relatively high bad debt expense. The stable outlook reflects Moody's belief that the current ratings reflect the potential expected loss for creditors in the event of a default within the near term. Further downward rating pressure could develop if there is a decline in the company's ratio of adjusted free cash flow to debt below approximately -2% or if the ratio of adjusted total debt to EBITDA increases above 7.5 times. Moody's does not foresee an upgrade in the ratings in the near- term unless there is a material reduction of debt or increase in equity. MedQuest is a leading operator of independent, fixed-site, outpatient diagnostic imaging centers in the United States. These centers provide high quality diagnostic imaging services using a variety of technologies, including magnetic resonance imaging, computed tomography, nuclear medicine, general radiology, ultrasound and mammography. As of March 31, 2006, MedQuest operated a network of ninety-two centers in thirteen states located primarily throughout the southeastern and southwestern United States. MERIDIAN AUTOMOTIVE: Court Approves Hilco Appraisal's Retention --------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Meridian Automotive Systems, Inc., and its debtor-affiliates to employ Hilco Appraisal Services, LLC, as appraiser, nunc pro tunc to May 26, 2006. Judge Walrath modifies the Engagement Letter on the employment of Hilco Appraisal Services, LLC, to exclude the limitation of liability provision. As reported in the Troubled Company Reporter on June 14, 2006, Hilco will perform separate machinery and equipment appraisals for the Prospective Lenders and the Debtors. Hilco will physically appraise the Debtors' machinery and equipment located at: Location Size in Sq. Ft. -------- --------------- Ionia, Michigan 650,318 Ionia, Michigan 94,700 Grabill, Indiana 447,000 Huntington, Indiana 180,000 Shelbyville, Indiana 432,000 Lenoir, North Carolina 131,091 Kentwood, Michigan (Plant #1) 207,000 Kentwood, Michigan (Plant #5) 244,000 Kentwood, Michigan (Plant #7) 268,000 Kentwood, Michigan (29th St.) 52,000 Angola, Indiana 115,000 Angola, Indiana 73,000 Canton, Michigan 120,000 Detroit, Michigan 306,000 Detroit, Michigan 67,765 Kansas City, Kansas 200,000 Shreveport, Louisiana 72,000 Brantford, Ontario 172,000 Rushville, Indiana 97,000 Salisbury, North Carolina 282,000 Grabill, Indiana (SMC) 62,000 Fowlerville, Michigan 234,000 Newton, North Carolina 65,000 Jackson, Ohio 217,000 The appraisal to be used by the Debtors in connection with their fresh start accounting will also focus on those machinery and equipment, assessing their "fair value" in accordance with Statement of Position No. 90-7: Location Size in Sq. Ft. -------- --------------- Ionia, Michigan 650,318 Ionia, Michigan 94,700 Grabill, Indiana 447,000 Huntington, Indiana 180,000 Shelbyville, Indiana 432,000 Lenoir, North Carolina 131,091 Kentwood, Michigan (Plant #1) 207,000 Kentwood, Michigan (Plant #5) 244,000 Kentwood, Michigan (Plant #7) 268,000 Kentwood, Michigan (29th St.) 52,000 Angola, Indiana 115,000 Angola, Indiana 73,000 Canton, Michigan 120,000 Detroit, Michigan 306,000 Detroit, Michigan 67,765 Kansas City, Kansas 200,000 Shreveport, Louisiana 72,000 Brantford, Ontario 172,000 Rushville, Indiana 97,000 Salisbury, North Carolina 282,000 Grabill, Indiana (SMC) 62,000 Fowlerville, Michigan 234,000 Newton, North Carolina 65,000 Jackson, Ohio 217,000 Muzquiz, Mexico 220,000 Celaya, Mexico 102,000 Rio Claro, Brazil 226,000 Hilco will perform an orderly liquidation value appraisal of the Debtors' inventory, to be used as part of the Prospective Lenders' due diligence, delineated between raw materials, work- in-progress, and finished good inventory categories, Mr. Brady tells the Court. With respect to the Debtors' real estate, Hilco will estimate the market value of several of the Debtors' properties located in the United States. This appraisal will be used in connection with the Debtors' fresh start accounting. The Debtors propose to pay Hilco a flat fee for each of these appraisals: Appraisal Fee --------- --- Inventory $48,500 Machinery & Equipment $138,000 Real Estate $76,500 The Debtors will pay Hilco a $50,000 retainer, which will be applied to the total fees charged by Hilco. 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. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Expansion of BDO Seidman's Scope of Work OK'd ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the expansion of BDO Seidman, LLP's scope of work as Meridian Automotive Systems, Inc., and its debtor-affiliates' accountants and auditors, nunc pro tunc to May 26, 2006. As reported in the Troubled Company Reporter on June 14, 2006, BDO's services will include an audit of the Debtors' opening consolidated balance sheet as of June 30, 2006, or upon emergence from Chapter 11, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. According to Mr. Brady, BDO does not anticipate that its fees for performing the Supplemental Services will exceed $150,000 to $175,000. 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. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000). MESABA AVIATION: Court Approves Deloitte as Tax Advisors -------------------------------------------------------- Mesaba Aviation, Inc., dba Mesaba Airlines, obtained authority from the U.S. Bankruptcy Court for the District of Minnesota to employ Deloitte Tax LLP as tax advisors effective as of March 6, 2006. Deloitte Tax is permitted to file an application seeking compensation and expense reimbursement for Tax Compliance Services and Tax Advisory Services rendered to the Debtor before March 6, 2006. No party may object to the application on the basis that the Tax Compliance Services and Tax Advisory Services were performed before March 6, Judge Kishel says. The Tax Compliance Services will be provided at a fixed fee of $80,000. The requirement that professionals furnish daily contemporaneous time and activity descriptions as part of monthly, interim or final fee applications is waived with respect to the Deloitte Tax professionals rendering fixed fee Tax Compliance Services to the Debtor. Instead, these professionals are permitted to file daily time records coded by task number. Moreover, the Engagement Letter dated November 5, 2005, is modified effective from the Debtor's Petition Date but prior to the confirmation of any reorganization plan in the Chapter 11 case. The modifications include: * Deloitte Tax will not be permitted to seek late payment or interest charges with respect to any fees or expenses requested in connection with services rendered to the Debtor; * The provisions contained in "Limitation on Damages" of the Engagement Letter's General Business Terms will be deemed as null and void; * All requests of Deloitte Tax for the payment of indemnity will be made by means of an application, subject to review by the Court, to ensure that payment of the indemnity conforms to the terms of the Engagement Letter, and is reasonable based on the circumstances of the litigation or settlement in respect of which indemnity is sought, provided that in no event will Deloitte Tax be indemnified in the case of its own bad-faith, self-dealing, breach of fiduciary duty, gross negligence or willful misconduct; * In the event that Deloitte Tax seeks reimbursement for attorneys' fees from the Debtor, the invoices and supporting time records from the attorneys will be included in Deloitte Tax's own applications, both interim and final, and those invoices and time records will be subject to the guidelines for compensation and reimbursement of expenses by Habbo G. Fokkena, the U.S. Trustee for Region 12, and the Court's approval without regard to whether the attorneys' services satisfy Section 330(a)(C) of the Bankruptcy Code; * The Court will retain jurisdiction with respect to any matters, claims, rights or disputes arising from or related to Deloitte Tax's provision of services to the Debtor in its Chapter 11 case; and * The provisions contained in "Limitation on Actions" of the Engagement Letter's General Business Terms will be deemed as null and void. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MORGAN STANLEY: S&P Places Class H & J Cert.'s Ratings on Default ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes and lowered its ratings on two classes of commercial mortgage pass-through certificates from Morgan Stanley Dean Witter Capital I Trust 2001-PPM. Concurrently, ratings are affirmed on five other classes from the same series. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. These ratings are constrained by uncertainty related to the largest exposure in the trust. The downgrades resulted from ongoing interest shortfalls due to a loan modification affecting the largest exposure that are not expected to be repaid in full in the near future. The largest exposure in the transaction has a $28.7 million balance and consists of three cross-collateralized and cross- defaulted loans secured by three separate office buildings in Troy, Mich., aggregating 342,000 sq. ft. The master servicer, Capmark Finance Inc., has placed one of these loans, with a $10.7 million balance, on its watchlist due to occupancy issues. Additionally, all three loans had been transferred to the special servicer in 2004 but were returned to Capmark in June 2005 after the terms of the loans were modified. The modification allows the borrower to make 3.0% interest-only payments until the earlier of year-end 2006 or the time that properties become stabilized. Subsequently, the debt service payment would revert to the premodification terms. The modification also calls for all deferred interest to be capitalized and added to the outstanding loan balance. Given the weakness in the Troy office market, it will be difficult for the properties to generate adequate cash flow to service their debt upon the imminent lapse of the modification. Should these loans transfer back to the special servicer, they will present the potential for significant losses upon their eventual resolution. As of the June 15, 2006, remittance report, the collateral pool consisted of 51 loans with an aggregate trust balance of $306.3 million, down from 132 loans totaling $623.6 million at issuance. Capmark reported primarily full-year 2004 or full-year 2005 financial information for 98% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage ratio of 1.31x, down from 1.34x at issuance. To date, the trust has experienced no losses. The top 10 exposures have an aggregate outstanding balance of $166.6 million (54%) and a weighted average DSCR of 1.23x, down from 1.27x at issuance. In addition to the largest exposure, which was discussed previously, two of the other top 10 exposures also appear on the master servicer's watchlist and are discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. Two properties were characterized as "excellent," while the remaining collateral was characterized as "good." Capmark reported a watchlist of 11 loan exposures ($55.9 million, 18%). The ninth-largest exposure has an outstanding balance of $9.0 million (3%) and consists of three cross-collateralized, cross-defaulted loans, two of which are on the watchlist. Each of these loans is secured by an industrial property in the Philadelphia area and have a total of 200,940 sq. ft. One loan with a $4.9 million balance is on the watchlist due to occupancy and DSC issues, while a loan with a $2.2 million balance is on the watchlist because the property has been completely vacant for more than three years. The 10th-largest exposure has an outstanding balance of $8.4 million (3%) and is secured by a 208-unit apartment property in Morrisville, N.C. This loan is on the watchlist because it reported a DSCR of 0.74x for the nine months ended September 2005. The property generated a DSCR of less than 1.0x for each of the previous three years. The remaining loans on the watchlist appear there primarily due to DSCR or occupancy issues. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised, lowered, and affirmed ratings. Ratings Raised: Morgan Stanley Dean Witter Capital I Trust 2001-PPM Commercial mortgage pass-through certificates series 2001-PPM Class To From Credit enhancement ----- -- ---- ------------------ C AA A 19.35% D AA- A- 17.56% E A- BBB 14.00% F BBB+ BBB- 12.47% Ratings Lowered: Morgan Stanley Dean Witter Capital I Trust 2001-PPM Commercial mortgage pass-through certificates series 2001-PPM Class To From Credit enhancement ----- -- ---- ------------------ H D CCC 6.62% J D CCC- 5.60% Ratings Affirmed: Morgan Stanley Dean Witter Capital I Trust 2001-PPM Commercial mortgage pass-through certificates series 2001-PPM Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 30.04% A-3 AAA 30.04% B AA+ 24.95% G B+ 9.67% X AAA N/A N/A -- Not applicable. NEXTEL PARTNERS: S&P Raises Unsecured Debt Rating to A- from BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the unsecured debt of Nextel Partners Inc. to 'A-' from 'BB-', following the completion of Sprint Nextel Corp.'s (A-/Stable/A-2) acquisition of the roughly 69% of the company it did not already own for about $6.5 billion in cash and roughly $860 million in existing net debt. Standard & Poor's also raised the secured bank loan rating on Nextel Partners Operating Corp. to 'A' (one notch higher than the corporate credit rating on Sprint Nextel) from 'BBB-', and affirmed the '1' bank loan recovery rating, indicating high expectation for full recovery of principal following a potential payment default. The rating agency will analyze Nextel Partners, now a wholly owned subsidiary of Sprint Nextel, on a consolidated basis with its parent. Standard & Poor's removed all ratings on Nextel Partners from CreditWatch and withdrew the corporate credit rating. The ratings were placed on CreditWatch with positive implications on Oct. 25, 2005, following Nextel Partners' class A shareholders' vote to put their ownership interest to Sprint Nextel. The rating agency affirmed its 'A-' corporate credit rating and all other ratings on Sprint Nextel because the acquisition of Nextel Partners already had been factored into these ratings. The outlook on Sprint Nextel is stable. "The ratings on Sprint Nextel continue to reflect a strong business profile, the company's market leadership in data services, and its growing wholesale business," said Standard & Poor's credit analyst Eric Geil. The company's intermediate financial risk profile stems from solid liquidity and good discretionary cash flow potential, despite near-term investment spending and business integration costs. Tempering factors include competitive wireless industry conditions, including slowing penetration growth and pricing pressure, churn in the Sprint PCS segment, and potential challenges in integrating the legacy Sprint and Nextel businesses and networks. NORTHWOOD PROPERTIES: Claim Trading Objections Rejected by Court ---------------------------------------------------------------- Northwood Properties, LLC, holds development rights to a condominium development known as Northwood at Sudbury, Sidney. Bourne and Claudio Delise own (or co-own) units at Northwood. They have raised concerns regarding the Debtor's development and management capabilities and oppose the Debtor's exercise of its development rights. Ralph Tyler has filed a $622,270 prepetition claim against the Debtor for attorney's fees arising from his successful dismissal of a prepetition lawsuit by the Debtor against him (and others) under MGLA c. 231 sec. 59H (Massachusetts' so-called anti-SLAPP statute) and attorney's fees under MGLA c. 231 sec. 6F (Massachusetts' so-called frivolous lawsuit statute). Since the Debtor commenced the case on Sept. 22, 2005, Messrs. Bourne, Delise and Tyler have actively opposed most if not all efforts by the Debtor to effectuate a plan of reorganization formulated around the Debtor's remaining development rights at Northwood. At present, the Debtor is proceeding toward a confirmation hearing on its plan of reorganization (scheduled for July 18, 2006). On March 28, 2006, Messrs. Bourne, Delise and Tyler filed notices of claim transfer under Rule 3001(e)(2) of the Federal Rules of Bankruptcy Procedure. Mr. Bourne acquired a $50 pre-petition claim held by NStar; Ms. Delise acquired the $305.92 pre-petition claim of GZA Geoenvironmental, Inc.; and Mr. Tyler acquired the $50 pre-petition claim of Keyspan. The three transferees say they did so to afford them added leverage in opposing the Debtor's plan, to afford them the opportunity to propound their own plan in competition with the Debtor's plan and, in Mr. Tyler's case, to assist him in his pursuit of his attorney's fee claim. The Debtor, as reported in the Troubled Company Reporter on Sept. 26, 2005, has six unsecured creditors. Messrs. Bourne, Delise and Tyler have engaged in settlement talks with the Debtor regarding their concerns and claims but have reached no rapprochement. The Debtor objects to the Claims Transfers on two separate but related grounds: first, that the Claims Transfers were undertaken by the Claims Transferees as a joint enterprise for the improper purpose of obstructing the Debtor's attempts at reorganization; and second, that the Claims Transfers are part of a continuing conspiracy among Messrs. Bourne, Delise and Tyler to obtain an advantage or benefit in the case to which they would not otherwise be entitled. The Debtor portrays the alleged joint enterprise and the alleged conspiracy as covert and collusive. In effect, the Debtor would have me find an impropriety in one or both of the following: concerted opposition to its plan and pursuit of financial accommodations to resolve that opposition. Messrs. Bourne, Delise and Tyler contend they acquired the Claims openly and aboveboard, in compliance with applicable bankruptcy rules and for a valid purpose, namely, to facilitate their opposition to the Debtor's reorganization plan, whether by way of plan rejection (voting the Claims against the Debtor's plan) or by way of plan competition (formulating and filing their own plan) and, in Mr. Tyler's case, to press his prepetition claim. The Claims Transferees also contend that the Debtor lacks standing to object to the Claims Transfers since Rule 3001(e)(2) contemplates notice to, and objection by, the alleged transferor not the Debtor or any other party. On June 20, 2006, the Honorable Robert Somma of the U.S. Bankruptcy Court for the District of Massachusetts held a non- evidentiary hearing on the Debtors' objections. Based upon the Claims Transfers, the Objection, the arguments, the record and applicable law, the Court makes five findings in a Memorandum of Decision published at 2006 WL 1738282: Judge Somma finds: 1. The Claims Transferees acquired the Claims in accordance with Rule 3001(c)(2). 2. Absent allegations not here present such as breach of fiduciary duty or fraud, the Debtor lacks standing to object to the Claims Transfers. In re SPM Mfg. Corp., 984 F.2d 1305 (1st Cir. 1993). 3. No such allegations (of breach, fraud or otherwise) have been made or proven despite the Debtor's strenuous effort to uncover a collusive or covert enterprise fraught with bad faith and improper purpose. To the contrary, the Claims Transferees have acted here as they have throughout the case -- openly and aboveboard albeit together to thwart a reorganization they oppose. They may be implacable adversaries of the Debtor but that alone does not warrant the extraordinary remedy of invalidation of the Claims Transfers. 4. The decisional law on which the Debtor relies affords little basis for inquiry, let alone invalidation. For example, in In re Applegate Property, Ltd., 133 B.R. 827 (Bankr. W.D. Tex. 1991), an affiliate of a debtor acquired claims without disclosure to block a competing creditor's plan and to insure confirmation of the debtor's plan. Here, of course, the Claims Transferees are not insiders, the disclosure of the Claims Transfers has been full, prompt and open, there are no competing plans, only the Debtor's and perhaps (though by no means certain) one to be filed by the Claims Transferees, and the Claims Transferees can hardly be characterized as collusive or covert -- their every action in opposition, while often reflecting the rough edges of a pro se initiative (they are not represented by counsel in the case), has been overt, properly purposeful and compliant with applicable law and rules. 5. Messrs. Bourne, Delise and Tyler are entitled to acquire claims against the Debtor to advance their interests in seeking to prevent confirmation of a plan they oppose and to afford them a vehicle, however low-test, to propound their own plan should they formulate one and, in Mr. Tyler's case, to pursue such attorney's fee rights as remain to him after an apparently thus far unsuccessful effort to obtain same in state court. Northwood Properties, LLC, filed for chapter 11 protection on Sept. 22, 2005 (Bankr. D. Mass. Case No. 05-18880). The Debtor is the successor to a co-proponent of a plan of reorganization for Northwood at Sudbury Realty Corp., which filed for chapter 11 protection (Bankr. D. Mass. Case No. 00-14967) on July 25, 2000. Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP, represents the Debtor. The Debtor estimates that its assets and liabilities are in the range of $1 million to $10 million. NTL CABLE: Fitch Holds Debts' Low-B Ratings on Negative Watch ------------------------------------------------------------- Fitch Ratings revised its guidance on the potential notching of NTL Cable plc's senior notes following the company's announcement of potential changes to its refinancing plans. The rating agency states that NTL Cable's senior notes remain on Rating Watch Negative, and at the same time, NTL Inc.'s Issuer Default rating at 'B+' with Stable Outlook is affirmed, as is its Short-term rating at 'B'. NTL Investment Holdings Limited's GBP4.975 billion senior secured credit facilities are affirmed at 'BB+' and Recovery rating 'RR1'. The NTL Cable plc notes on Rating Watch Negative: * GBP375 million 9.75% senior notes due 2014: 'B+'/'RR4' * $425 million 8.75% senior notes due 2014: 'B+'/'RR4' * EUR225 million 8.75% senior notes due 2014: 'B+'/'RR4' As noted above, Fitch's revised guidance follows NTL's announcement of possible changes to its proposed funding structure. NTL has indicated that it may refinance GBP600 million in bridge financing via issuance of senior unsecured notes at either NTL Investment Holdings limited, a finance subsidiary of that company, or at NTL Cable. Fitch's previous expectation had been that the GBP600 million of new notes would be raised at NTL Cable and rank pari passu to the existing notes, on the basis of which it had indicated the potential for the NTL Cable notes to be downgraded one notch to 'B'. In the event that new senior notes are issued at NTLIH or a finance subsidiary thereof, the amount of senior debt ranking ahead of the NTL Cable notes will increase and estimated recoveries of the existing notes will be reduced. In this event Fitch expects the NTL Cable notes to be downgraded by up to two notches to 'B-'. The agency confirms that should the new notes be raised at NTL Cable on a pari passu basis, it then expects its original indication of a one notch downgrade of the NTL Cable notes to apply. Fitch will resolve the Rating Watch status on the NTL Cable notes and assign ratings to the new notes, once the group's funding plans have been finalized. ORMET CORP: Inks Tentative Agreements with United Steelworkers -------------------------------------------------------------- The United Steelworkers reached tentative agreements, on June 30, 2006, with Ormet Corporation on contracts for workers in Hannibal, Ohio and Burnside, Louisiana that, once ratified, will expire at the end of 2009. About 1,500 members of USW Locals 5724 and 5760 have been on strike for 19 months at the company's Hannibal aluminum facilities, and nearly 200 members of USW Local 14465 at the Burnside refinery have been working under the terms of an agreement that expired last September. Upon ratification, the strike in Ohio would end, but Ormet would still need a power deal for electricity similar to the other industrial users in the Ohio Valley before they can restart the reduction plant in Hannibal. Negotiations with the PUCO and American Electric Power are ongoing. Ormet emerged from Chapter 11 Bankruptcy protection last year, and has since sold the Hannibal rolling mill. USW District 1 Director Dave McCall praised the solidarity demonstrated by members of all three USW locals over the past three years throughout the strike and the bankruptcy process and said that the Union will support the new management of Ormet in its bid for a reduced-cost energy supply. Mr. McCall also said that the proposed contracts would not have been possible without the support of MatlinPatterson, a major shareholder of Ormet since the company completed its Plan of Reorganization. "After the replacement of the former CEO and good faith discussions between the Steelworkers and MatlinPatterson," Mr. McCall said, "we have agreed that the best possible resolution would be to reach an acceptable Labor Agreement that puts our members back to work while allowing Ormet to remain a viable player in the aluminum industry." "This agreement will achieve that goal," he said. "Our members and their families have fought long and hard to reach this point, and we will continue our fight to save as many of our jobs as possible." The Union will not disclose the details of the proposed agreements until its bargaining committees have had a chance to meet with the members. Headquartered in Wheeling, West Virginia, Ormet Corporation -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. The Company and its debtor-affiliates filed for chapter 11 protection on January 30, 2004 (Bankr. S.D. Ohio Case No. 04-51255). Adam C. Harris, Esq., in New York, represents the Debtors in their restructuring efforts. When the Company filed for bankruptcy protection, it listed $50 million to $100 million in estimated assets and more than $100 million in total debts. The Company's chapter 11 plan was confirmed by the Court in April 2005. Under the confirmed Plan, Ormet was authorized to break labor contracts, which resulted in conflicts with the United Steelworkers of America. O'SULLIVAN INDUSTRIES: To Close Virginia Manufacturing Facility --------------------------------------------------------------- O'Sullivan Industries, Inc., intends to close its South Boston, Virginia manufacturing and distribution facility by the end of the calendar year. The closure is a result of the continued execution of its strategy focused on improving utilization of production capacity and productivity. This decision stems from an analysis of O'Sullivan's activities as a whole and the implementation of measures aimed primarily at continuing to improve its operational efficiency. "The closure of our South Boston facility is consistent with our strategic plans. O'Sullivan will continue to serve our customers' long-term needs from our Lamar, Missouri facility; which has the capability currently in place to manufacture and distribute all of our product categories," President and Chief Executive Officer, Rick Walters said. "We are working with the customers served from our Virginia plant to execute a smooth and efficient transition. This has been a difficult but necessary decision for us. We determined that this was the most effective course of action to align our available capacity with the market, and to make our total cost structure more competitive. The closure is a result of industry wide excess capacity and is not a reflection on the workforce or management team in South Boston. In fact, the plant has demonstrated continuous improvement operationally and is consistently meeting customer quality and delivery requirements. However, there is an immediate need to improve capacity utilization and optimize overall company performance." The South Boston facility employs 200 people. O'Sullivan plans to add approximately 150 jobs to the Lamar facility over the next 12 months as a result of the consolidation. Local officials of the city of South Boston and Halifax County and the Virginia Employment Commission were notified on June 30, 2006, of plans to close the facility. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-83049). Joel H. Levitin, Esq., at Dechert LLP, represents the Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C., represent the Official Committee of Unsecured Creditors. On Sept. 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. OVERSEAS SHIPHOLDING: Selling Old Vessels for $168 Million ---------------------------------------------------------- Overseas Shipholding Group, Inc., has agreed to sell two of its oldest Aframaxes (the 1993-built Overseas Keymar and the 1994- built Pacific Sapphire) and one of its oldest VLCCs (the 1996- built Majestic Unity) for net proceeds of approximately $168 million. The proceeds will be used to fund the Companyu's newbuild program of four Aframax tankers that are being built at the New Times Shipbuilding Co., Ltd. shipyard in Jinjiang, China. The new 114,000 dwt 44-meter beam Aframaxes are larger, faster and have a lower daily operating cost than the older vessels sold. The closings of the sales of these vessels are subject to the satisfaction of standard vessel sale closing conditions. Delivery of the tankers to their new owners is expected to occur between the middle of July 2006 and the middle of August 2006. OSG expects to realize a net gain of approximately $40 million from these sales. Separately, OSG chartered-in two 2003-built Aframaxes, the Phoenix Alpha and the Phoenix Beta, each for three-year periods. OSG has a 30 percent interest in these modern vessels, both of which trade in the Aframax International pool, which were delivered late in the second quarter. The tanker sales and fleet additions are part of OSG's ongoing active asset management and fleet modernization programs. The Company's newbuild program includes 26 vessels across its crude, products, U.S. Flag and gas segments, which are scheduled for delivery between late 2006 and 2010. The Company has capitalized on the strong second-hand tanker market and has generated net proceeds of approximately $942 million on vessels that have either been sold or sold and leased-back since January 2005, including the sale of the tankers announced today. Giving effect to these tanker sales, the average ages of OSG's owned VLCC and Aframax fleets would have been 5.6 years and 7.4 years, respectively, well-below the average ages of the VLCC and Aframax world fleets, which were 8.4 years and 8.9 years, respectively, as of April 1, 2006. Headquartered in New York City, Overseas Shipholding Group, Inc. (NYSE: OSG) -- http://www.osg.com/-- is a publicly traded tanker company with an owned, operated and newbuild fleet of 113 vessels, aggregating 12.7 million dwt and 865,000 cbm. The Company provides energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets. OSG has offices in New York, Athens, London, Newcastle and Singapore. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Ratings Services affirmed its ratings, including the 'BB+' corporate credit rating, on Overseas Shipholding and removed all ratings from CreditWatch, where they were placed on Dec. 14, 2004. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Feb. 10, 2005, Moody's Investors Service confirmed Overseas Shipholding's senior unsecured and senior implied ratings at Ba1. Moody's also changed the rating outlook to negative from stable. PARKWAY HOSPITAL: Committee Hires Alston & Bird as Bankr. Counsel ----------------------------------------------------------------- The Honorable Prudence Carter Beatty allowed the Official Committee of Unsecured Creditors of The Parkway Hospital, Inc., to hire Alston & Bird LLP as substitute bankruptcy counsel. The Committee has selected Alston & Bird as its counsel because of the expertise and experience of the firm's attorneys in representing creditors' committees in chapter 11 cases. Alston & Bird will: (a) exercise oversight on all issues arising from or impacting the Debtor or the Committee; (b) prepare on behalf of the Committee all necessary applications, motions, orders, reports and other legal papers; (c) appear before the U.S. Bankruptcy Court for the Southern District of New York to represent the Committee's interest; (d) negotiate, formulate, draft and push for confirmaion on any plan of reorganization or liquidation; (e) investigate, as the Committee may desire, concerning, among other things, the assets, the liabilities, financial condition, and operating issues concerning the Debtor that may be relevant to the case; (f) exercise foresight with respect to any transfer, pledge, conveyance, sale or other liquidation of the Debtor's assets; (g) communicate with the Committee's constituents and other as the Committee may consider desirable in furtherance of its responsibilities; and (h) perform all of the Committee's duties and powers under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. The firm's professionals charge these hourly rates: Designation Hourly Rate ----------- ----------- Partner $360 to $725 Counsel $335 to $795 Associate $195 to $470 Paralegal $110 to $285 Martin G. Bunin, Esq., an attorney at the firm, assured the Court that his firm and its professionals do not hold material interest adverse to the Debtor's estate and are disinterested as defined in Section 101(14) of the Bankruptcy Code. The Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. PASADENA REHAB: Case Summary & Three Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Pasadena Rehabilitation Center, Inc. 1015 Thomas Avenue Pasadena, Texas 77056 Bankruptcy Case No.: 06-32835 Type of Business: The Debtor provides physical rehabilitation and pain management services to patients. Chapter 11 Petition Date: June 30, 2006 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Troy J. Wilson, Esq. The Wilson Law Firm P.C. 2616 Southy Loop West, Suite 470 Houston, Texas 77054 Tel: (832) 778-6700 Fax: (832) 778-6703 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's Three Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ernest Whitehead $9,000,000 c/o Steven D. Poock, Esq. Tel: (281) 277-7678 P.O. Box 984 Sugarland, TX 77487 Danny Pham $275,000 9720 Beechnut, Suite 260 Houston, TX 77036 Troy J. Wilson $10,000 7003 Addicks-Clodine Houston, TX 77083 PATRICIA GILROY: Involuntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Particia A. Gilroy 2822 Devils Dive Road Traverse City, Michigan 49686 Bankruptcy Case No.: 06-03035 Chapter 11 Petition Date: June 30, 2006 Court: Western District of Michigan (Grand Rapids) Judge: James D. Gregg Debtor's Counsel: Wallace H. Tuttle, Esq. Wallace H. Tuttle, P.C. 3189 Logan Valley Road P.O. Box 969 Traverse City, Michigan 49685-0969 Tel: (231) 941-0750 Fax: (231) 941-8568 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. PTC ALLIANCE: Court Okays Houlihan Lokey as Financial Advisor ------------------------------------------------------------- PTC Alliance Corp. obtained authority from the U.S. Bankruptcy Court for the Western District of Pennsylvania to employ Houlihan Lokey Howard & Zukin Capital, Inc., as its financial advisor. Houlihan Lokey will continue to advise the Debtor on an exclusive basis, and if applicable act as an agent, with respect to one or more transactions or potential transactions, including: 1. any acquisition of all, or a substantial portion of the capital stock or assets of the Debtor in either a single or a series of transactions; 2. any financing for any portion of the Debtor, whether in the form of secured, unsecured, subordinated or senior debt, equity or equity equivalents, and whether or not the financing is arranged on a public or private basis; and 3. any single or series of transactions that effectuates any material modification the principal balance, accrued or accredited interest, payment term, other debt service requirement or financial or operating covenant; any forebearance for at list 12 months with respect to any payment of obligation; conversion to common or other equity, or any other security or instrument, of any, or all, of the Company's obligations, preferred stock or indebtedness for borrowed money, which are currently outstanding,; the implementation of cash tender offer for all such obligations; any other compromise of the existing terms of such obligations; or any combination of those transactions. If the Debtor's Plan is confirmed, Houlihan Lokey will receive: (a) a monthly fee of $75,000; plus (b) a $1 million restructuring fee. Houlihan Lokey disclosed that it has already received a $125,000 retainer, $75,000 of which was applied to the first monthly fee. Upon the consummation of any sale transaction, Houlihan Lokey will received a sale fee equal to: * the greater of $1 million or 1.15% of that transaction value for up to up to $200 million, plus * 3% of the incremental value for that transaction value from $200 million to $230 million, plus * 5% of the incremental value for that transaction value in excess of $230 million. Upon the consummation of any purchase transaction, Houlihan Lokey will receive $1 million in cash; provided that if a restructuring fee is paid, then the purchase fee will be equal to $750,000. Upon consummation of a financing transaction, Houlihan Lokey will receive a financing fee in cash equal to the greater of $1 million, and the sum of: (a) 1% of the aggregate principal amount of all secured or unsecured senior notes and bank debt raised or committed, (b) 3% of the aggregate amount of all secured and unsecured, non-senior and subordinated debt securities raised or committed, whether structurally or contractually subordinated and whether with the same or different lenders, and (c) 5% of the total amount of all equity equivalents, including convertible securities and preferred stock, placed or committed. Saul E. Burian, a managing director at Houlihan Lokey, assures the Court that his firm is disinterested as that term is defined is 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 restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. QUALITY DISTRIBUTION: Moody's Lifts Corp. Family Rating to B3 ------------------------------------------------------------- Moody's Investors Service raised all debt ratings of Quality Distribution, LLC -- Corporate Family to B3 from Caa1. The outlook has been changed to positive. The rating upgrades reflect steady improvement in the company's operating performance and credit metrics, and the progress made in resolving the internal control problems as Quality remediated the material weaknesses cited in its 2005 report on internal controls. Good operating conditions in Quality's core market of chemical hauls, better cost performance and evidence of effective pricing produced strong improvement in profitability. Quality's operating ratio improved to the 94% level for LTM March 2006 versus the considerably weaker 97.6% for Fiscal 2004. Operating efficiencies are also contributing to the trend of improving profitability as transportation revenue per tractor and per driver have increased in each of the last two years. EBIT covered interest expense in LTM March 2006 at 1.1 times, a notable improvement from EBIT of 0.8 times for Fiscal 2004 and interest coverage is expected to improve steadily over the rest of the year. EBITDA dropped to 6.4 times at March 31, 2006 from the highly levered level of 7.9 times at 2004 year end. During the currently strong market, Moody's believes that Quality should particularly benefit from its position as the largest provider of bulk tank truck transportation, as service requirements are high and the competition is fragmented. Moreover, the company has flexibility to react to a downturn because of its primarily variable cost-based asset-light operating model. Approximately 75% of operating costs are payments to third-party affiliates or owner-operators, who are paid based on actual volumes transported. This cost structure should allow Quality to weather the downturn as its customers are exposed to markets which are somewhat cyclical. Further supporting cash flow during a down-cycle is the relatively low concentration of revenues, as the top four customers accounted for only 15% of transportation revenues during 2005. The positive outlook reflects Moody's expectations that the recent upwardly trending results are sustainable over the intermediate term, and that the company will produce modestly positive free cash flow which will be directed to further debt reduction. Moody's also expects further steady improvements in key credit metrics of EBITDA and Interest coverage, with an operating ratio likely to be maintained in the range of the current 94% or below. The ratings are tempered by the risks inherent in the company's asset-light business model. Quality relies on its network of third party affiliates and owner-operators for its service delivery and maintenance of its reputation. In Moody's view, particularly sound information systems and data security as well as the effective functioning of internal controls are integral to the success of asset-light business models. For Quality, this asset-light risk is somewhat mitigated by the mutual benefits for Quality and the drivers. Quality requires drivers who are particularly qualified in the handling of the cargos carried, particularly Hazmat types. At the same time, these specialized drivers benefit from access to larger customers through Quality's marketing structure, to lower group rate insurance premiums, and Quality's operating certificates. Another typical limiting aspect of asset-light models is a relatively low amount of tangible asset values to support secured obligations; however, Moody's believes the value of Quality's tangible assets should fully cover the secured debt. Quality's overall liquidity is adequate, and the revolver is appropriately sized for the company. Quality's policy is to apply substantially all cash collections to the revolver; while keeping revolver usage as low as possible; this policy leaves Quality with little cash at its disposal in the event it lost access to the revolver due to an event of financial stress. The senior secured ratings have been upgraded to B2, one rating notch above the corporate family rating of B3. This two notch upgrade takes into account that the secured debt has declined as a percent of total debt outstanding, Moody's belief that that the secured debt holders are adequately protected by the assets pledged, and the large amount of subordinated debt below the secured debt. The senior unsecured rating is one notch below the corporate family rating and the subordinated rating is two notches lower, reflecting their respective positions in the debt structure with a relatively lower priority of claim. Moody's notes that the credit facility is supported by upstream guarantees from all domestic subsidiaries and that the obligations under the credit facility and of the subsidiary guarantors are collateralized by a first priority lien under the all assets pledge. The unsecured floating rate notes and 9% subordinated notes are also guaranteed by all domestic subs; however, the guarantees on the subordinated debt are on a subordinated basis. Ratings may be further upgraded if Quality sustains EBIT Interest above 1.5 times and EBITDA in the range of 5.5 times, and enhances liquidity, including higher cash on hand and increased operating cash flow over the intermediate term to sustain free cash flow to debt of at least 5%. The ratings or outlook could be revised downward if EBIT were to decline below 1 times, if EBITDA were to rise above 7 times or if Quality were to sustain negative free cash over the intermediate term resulting in no further reduction in debt from current levels. Upgrades: Issuer: Quality Distribution, LLC * Corporate Family Rating, Upgraded to B3 from Caa1 * Senior Secured Bank Credit Facility, Upgraded to B2 from Caa1 * Senior Subordinated Regular Bond/Debenture, Upgraded to Caa2 from Caa3 * Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 from Caa2 Outlook Actions: Issuer: Quality Distribution, LLC * Outlook, Changed To Positive From Stable Quality Distribution, LLC and Quality Distribution, Inc., its parent holding company, are headquartered in Tampa, Florida. The company is a leading transporter of bulk liquid and dry bulk chemicals. Apollo Management, L.P. owns approximately 52% of the common stock of Quality Distribution, Inc. RESI FINANCE: S&P Assigns Low-B Ratings to Five Debt Classes ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its ratings to RESI Finance L.P. 2006-B/RESI Finance DE Corp. 2006-B's $270,981,000 real estate synthetic investment securities series 2006-B. The ratings are based on: * credit enhancement levels; * the transaction's shifting interest structure; * a legal structure designed to minimize potential losses to securities holders caused by the insolvency of the issuer; and * the credit rating assigned to Bank of America N.A., based on its obligations according to the forward delivery and the credit default swap agreements. Ratings Assigned: RESI Finance L.P. 2006-B/RESI Finance DE Corp. 2006-B Class Rating Amount ----- ------ ------ B3 notes A $79,701,000 B4 notes A- $15,940,000 B5 notes BBB $47,820,000 B6 notes BBB- $23,910,000 B7 notes BB $39,850,000 B8 notes BB- $15,940,000 B9 certificates B+ $15,940,000 B10 certificates B $15,940,000 B11 certificates B- $15,940,000 SAINT VINCENTS: Taps Mintz Levin as Govt. Contract Administrator ---------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to employ, Cohn, Ferris, Glovsky & Popeo, P.C., as an Ordinary Course Professional to provide services for issues relating to: (i) the administration of the Debtors' individual contract with the United States Department of Defense governing their participation in the Uniformed Services Family Health Plan program; (ii) the Debtors' involvement as part of an alliance of six USFHP program participants who collectively negotiate with the DOD on USFHP program issues common to all six parties; and (iii) the effect, if any, of the Debtors' potential transactions involving property on Staten Island on the Special USFHP Matters. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, discloses that since 2001, Mintz Levin provided representation to the Debtors related to the: * administration of the Debtors' USFHP program contract with the Department of Defense; * national military health care program -- TRICARE -- payment policies and its application to payments to non-network providers; and * recoupment of benefits by the Department of Defense for deceased beneficiaries. Mr. Troop notes that as a result of these efforts, Mintz Levin is familiar with the complex USFHP program issues that may arise with respect to the Debtors. According to Mr. Troop, Mintz Levin also renders legal services directly to the Alliance as an entity, and not to its individual members. The legal services to be provided to the Debtors are separate and distinct from the legal services that Mintz Levin has and will continue to provide to the Alliance. The Debtors believe that Mintz Levin's professionals are qualified and experienced to represent them as an Ordinary Course Professional with respect to the Special USFHP Matters. Mr. Troop relates that the interruption and duplicative cost involved in obtaining substitute counsel to replace Mintz Levin at this juncture would unduly prejudice the Debtors, their estates, creditors, and other parties-in-interest considering the time and expense necessary to replicate the firm's ready familiarity with the intricacies of the Debtors' participation in the USFHP program and the USFHP Alliance. In addition, since the USFHP program is unique in the healthcare arena, Mr. Troop says it could be difficult for the Debtors to find an adequate substitute for Mintz Levin. Mintz Levin will be paid on an hourly basis and reimbursed of actual and necessary expenses incurred, subject to a monthly cap of $15,000 and an annual cap of $180,000. A single Cap and Yearly Cap will apply to the amounts paid by the Debtors to Mintz Levin for work done individually for the Debtors, for the Debtors' portion of Alliance work, and for pass-through costs and expenses in connection with the Alliance. Mintz Levin's standard hourly rates are: Professionals Hourly Rates ------------- ------------ Partners $425 to $675 Associates $245 to $470 Paraprofessionals $150 to $230 Stephen M. Weiner, Esq., a partner at Mintz Levin, assures the Court that the firm does not have any connection with or interest adverse to the Debtors, their creditors, or other parties-in- interest. Mintz Levin is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, he adds. 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. 28 Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Tort Panel Hires Kronish Lieb as Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' Official Committee of Tort Claimants to retain Kronish Lieb Weiner & Hellman, LLP, as its counsel, nunc pro tunc to May 17, 2006. The Court previously granted, on April 25, 2006, the Appointment Motion filed by the Jacob D. Fuchsberg Law Firm, LLP, along with nine other similarly situated law firms representing other holders of the Medical Malpractice Claims. Kronish Lieb has been representing the Fuchsberg Firm, one of the medical malpractice law firms representing 20 holders of Medical Malpractice Claims in excess of $140,000,000. Since the Court granted the Appointment Motion, Kronish Lieb has advised medical malpractice attorneys with respect to issues that impact their clients related to the Debtors' Chapter 11 proceedings. Kronish Lieb is expected to: (a) attend the meetings of the Tort Committee; (b) review and analyze financial information furnished by the Debtors to the Tort Committee, including, without limitation, all insurance-related documents; (c) confer with the Debtors and the Official Committee of Unsecured Creditors; (d) review the Debtors' activities, motions and third party filings, and advise the Tort Committee as to their ramifications to the extent they impact the rights of medical malpractice claimants; (e) file appropriate pleadings on behalf of the Tort Committee; (f) provide the Tort Committee with legal advice in relation to the Debtors' Chapter 11 cases; (g) prepare various applications and memoranda of law for submission to the Court for consideration, and manage all other matters relating to the representation of the Tort Committee that may arise; (h) assist the Tort Committee in negotiations with the Debtors and other parties-in-interest on a plan of reorganization; and (i) perform other legal services for the Tort Committee as may be necessary in the Debtors' Chapter 11 proceedings. Kronish Lieb's hourly rates are: Professional Status Hourly Rate ------------ ------ ----------- James A. Beldner Partner $650 Richard S. Kanowitz Partner $585 Jeffrey L. Cohen Associate $380 Seth Van Aalten Associate $290 Noah Falk Associate $245 Richard S. Kanowitz, Esq., ascertains that the firm: (i) does not have any connection with the Debtors, their creditors, or any other party-in-interest, or their attorneys and accountants; and (ii) pursuant to Section 1103(b) of the Bankruptcy Code, does not represent any other entity having an adverse interest in connection with the Debtors' Chapter 11 cases. Mr. Kanowitz discloses that: -- Darren Mobley, a present employee in the U.S. Trustee's office, previously worked for Kronish Lieb before 2001; and -- Kronish Lieb represents the Official Fee Committee in Adelphia Communications Corp.'s case pending in the Southern District of New York. The Tort Committee informs the Court that the Fuchsberg Firm will ask for a substantial contribution award based on Kronish Lieb's legal services from March 27, 2006, through April 24, 2006, at a later date. 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. 28 Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Gilbert Heintz to Serve as Tort Panel's Consultant ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' Official Committee of Tort Claimants' request to retain Gilbert Heintz & Randolph, LLP, as its special insurance consultant. According to Tort Committee Chairperson Alan Fuchsberg, Esq., at The Jacob D. Fuchsberg Law Firm, LLP, in New York, the Tort Committee selected Gilbert Heintz based on its: -- expertise in serving as special insurance counsel for numerous and diverse committees in Chapter 11 cases throughout the United States; and -- considerable experience in representing corporate policyholder-debtors, creditors' committees, future claimants' representatives, and bankruptcy trusts in large Chapter 11 cases in federal bankruptcy courts. Mr. Fuchsberg related that Gilbert Heintz's expertise in the pursuit of insurance proceeds to fund debtors' estates should minimize its fees. As special insurance counsel, Gilbert Heintz will: (i) attend some meetings of the Tort Committee; (ii) review and analyze insurance-related documents and information furnished by the Debtors to the Tort Committee; (iii) confer with the Debtors' management and counsel, and the Creditors' Committee's counsel regarding the availability of insurance proceeds; (iv) review the Debtors' activities, motions and third party filings, and advise the Tort Committee as to the ramifications of the activities and motions on the availability of insurance proceeds for the Medical Malpractice Claimants; (v) provide the Tort Committee with advice in relation to the issues; (vi) assist the Tort Committee in negotiations with the Debtors, their insurers and other parties-in-interest in connection with the availability and distribution of any insurance recovery; and (vii) perform other services for the Tort Committee as may be necessary or proper. Gilbert Heintz's standard hourly rates are: Professionals Hourly Rate ------------- ----------- Partner $425 - $785 Scott D. Gilbert $785 Associate $190 - $375 Justin F. Lavella $330 Paralegal $90 - $190 Scott D. Gilbert, Esq., assured the Court that the firm (i) represents no interest adverse to the Tort Committee, the Debtors, or their estates; (ii) has no connection with the U.S. Trustee or any other person employed in the office of the US Trustee; and (iii) has not been paid any retainer against which to bill fees and expenses. 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. 28 Bankruptcy Creditors' Service, Inc., 215/945-7000) SLATER DEV'T: Shareholders Approve Liquidation & Dissolution Plan ----------------------------------------------------------------- Slater Development Corp. (Pink Sheets: STDV) disclosed that at a Special Meeting of Shareholders held on June 22, 2006, its shareholders approved the Plan of Complete Liquidation and Dissolution. The Company intends to file a Certificate of Dissolution with the New York Department of State promptly following receipt of the consent of the New York State Department of Taxation and Finance, which is a precondition for dissolution under New York's Business Corporation Law. As soon as possible after the filing of the Certificate of Dissolution, and after paying its remaining obligations, the Company intends to distribute to its shareholders all of its remaining cash in one or more distributions, which the Company currently believes will be approximately $2,950,500 or approximately $3.63 for each share of its common stock. Herbert Slater, the Company's Chairman of the Board, stated that, "The Company believes that the Plan of Dissolution represents an effective mechanism to bring closure to the affairs of the Company and convert our shareholders' shares into cash in a structure that we believe satisfies our legal obligations with respect to environmental contingencies and reasonably protects our shareholders, employees, officers and directors from potential liability." SPECTRE GAMING: Restatement Raises Accumulated Deficit by $3.4MM ---------------------------------------------------------------- Spectre Gaming, Inc., filed its amended financial results for the first quarter ended March 31, 2006, with Securities and Exchange Commission on June 27, 2006. The company restated its preferred stock dividends for the year ended Dec. 31, 2005, to recognize a beneficial conversion feature associated with the Series B Variable Rate Convertible Preferred Stock issued on Oct. 27, 2005. The restatement increased additional paid-in capital and the accumulated deficit by $3,412,860 at Dec. 31, 2005, and March 31, 2006. The company incurred a $1.3 million net loss on zero revenue for the three months ended March 31, 2006, compared to a $1.2 million net loss on zero revenue for the same period in 2005. The Company's March 31 balance sheet also showed strained liquidity with $1.2 million in total current assets available to pay $4.3 million in total current liabilities coming due within the next 12 months. As of March 31, 2006, the company's accumulated deficit widened to $35.7 million from a $34.2 million accumulated deficit at Dec. 31, 2005. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?cd6 Going Concern Doubt Virchow, Krause & Company, LLP, expressed substantial doubt about Spectre Gaming's ability to continue as a going concern after it audited the company's financial statements for the fiscal years ended Dec. 31, 2005. The auditing firm pointed to the company's net losses for the years ended Dec. 31, 2005 and 2004, had an accumulated deficit at Dec. 31, 2005, and does not have adequate liquidity to fund its operations through out fiscal 2006. Headquartered in Minneapolis, Minnesota, Spectre Gaming, Inc. -- http://www.spectregaming.com/-- provides interactive electronic games to the Native American, amusement-with-prize, and charitable gaming markets in the United States. It designs and develops content, hardware, software, and networks to provide its customers with redemption gaming systems. Spectre Gaming sells its products and services to gaming operators through internal sales staff and agents. The company was incorporated as MarketLink, Inc., in 1990 and changed its name to OneLink Communications, Inc., in 1997. Further, OneLink Communications changed its name to OneLink, Inc., in 2000 and to Spectre Gaming, Inc., in 2004. SPIRIT AERO: Equity Offering Cues Moody's to Review Ratings ----------------------------------------------------------- Moody's Investors Service placed the ratings of Spirit AeroSystems, Inc., on review for possible upgrade in response to parent company Spirit AeroSystems Holdings Inc.'s announcement of an initial public equity offering, which will result in a reduction in debt upon close, as well as the expectation of continued strength in operating performance. According to Spirit's June 30, 2006 S-1 filing, the company intends to raise a maximum of $500 million from the primary offering of Class A shares publicly. Proceeds from the sale of the company's shares will be used to repay certain amounts of debt outstanding under its senior secured credit facility, as well as to partially satisfy obligations under the company's union equity plan. The ratings review will focus on the ultimate application of funds raised from Spirit's planned equity offering to repay debt and other obligations, analysis of the company's projected operating performance and cash flow generation over the next 12 to 24 months, and Moody's assessment of on-going risk associated with integration of Spirit AeroSystems Limited, which was created by the April 2006 acquisition of BAE Systems Aerostructures business. Moody's will assess the impact of the planned debt reduction on Spirit's financial metrics, leverage in particular, in conjunction with developments in the company's operating performance in the early stages of its history as an independent supplier to OE aircraft manufacturers. Moody's recognizes the investment challenges that this sector is placing on suppliers' cash flows owing to substantial working capital and CAPEX requirements associated with the development of new aircraft platforms and the ramp-up of capacity related to growth of current platform demand. As such, Moody's expects Spirit's free cash flow through 2007 to reflect continuing investments to support the cyclical upturn in commercial aerospace. Moderate balance sheet debt levels, therefore, are quite important to the Spirit's credit profile. On Review for Possible Upgrade: Issuer: Spirit Aerosystems, Inc. * Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 * Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently B1 Outlook Actions: Issuer: Spirit Aerosystems, Inc. * Outlook, Changed To Rating Under Review From Stable Spirit AeroSystems, Inc., headquartered in Wichita, Kansas, with facilities in Wichita, Tulsa and McAlester OK, Prestwick, Scotland and Samlesbury, England, is a designer and manufacturer of fuselages, struts, nacelles, thrust reversers and other complex components for Boeing and Airbus. STANDARD PACIFIC: S&P Affirms BB Rating & Alters Outlook to Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Standard Pacific Corp. to stable from positive. At the same time, all existing ratings are affirmed. The rating actions affect $1.25 billion of rated securities. "The outlook revision reflects challenging housing conditions that are expected to negatively affect profitability and coverage measures, which nonetheless should remain acceptable for the rating," explained Standard & Poor's credit analyst George Skoufis. "Leverage has risen and may increase further, but it should begin to decline in the latter half of 2007. The company's good market position, improved diversification, and still appropriate financial profile support the rating." Despite expectations that the environment will remain challenging, leading to lower returns and a relatively weaker financial profile, these metrics are coming off historic highs and should remain acceptable for the rating. Furthermore, SPF remains well positioned in homebuilding markets that have strong long-term prospects, and Standard & Poor's believes management is taking appropriate steps to manage its inventory levels and leverage profile. STATION CASINOS: Amends Bank of America & Wells Fargo Debt Deal --------------------------------------------------------------- Station Casinos, Inc., entered into Amendment No.1 to the Third Amended and Restated Loan Agreement with Bank of America, N.A., Wells Fargo Bank, N.A. and certain other financial institutions on June 26, 2006. Among other things, the Amendment: -- Increases the maximum Parent Leverage ratio under the Credit Facility to 6.50 to 1.00 from 5.50 to 1.00. The maximum leverage ratio will decline in steps during the remaining term of the credit facility to 5.00 to 1.00 in 2010, the final year of the credit facility. -- allows for the repurchase of up to an additional $600 million of common stock of the Company subject to the approval of the Company's Board of Directors A full-text copy of Amendment No. 1 to the Third Amended and Restated Loan Agreement is available for free at: http://researcharchives.com/t/s?ccc Station Casinos, Inc. (NYSE:STN) -- http://www.stationcasinos.com/ -- is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company and The Greens in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community. * * * As reported in Troubled Company Reporter on Feb. 27, 2006, Standard & Poor's Ratings Services revised its outlook on Station Casinos Inc. to stable from positive. At the same time, Standard & Poor's placed a 'B+' rating on the Company's $300 million senior subordinated notes due 2018. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the Las Vegas-based casino owner. Total pro forma debt outstanding is about $2.2 billion. STATION CASINOS: Loan Amendment Cues Moody's to Lower Ratings ------------------------------------------------------------- Moody's Investors Service lowered Station Casinos, Inc.'s corporate family rating to Ba2 from Ba1, senior unsecured note rating to Ba3 from Ba2, and senior subordinated note rating to B1 from Ba3. The ratings outlook is stable. The downgrade is in response to the company's announcement that it entered into a bank loan amendment that allows for the repurchase of up to an additional $600 million of common stock and increases the maximum EBITDA ratio to 6.5 times from 5.5 times. These amendments indicate that Station, despite its strong asset profile and operating results, may not maintain EBITDA at or below 4.5 times. The downgrade also assumes that Station will take full advantage of the additional $600 million share repurchase allowance. As a result, the company's longer-term financial profile is not expected to be consistent with a Ba1 corporate family rating. Station already used a significant amount of its revolver capacity to repurchase the shares allowed under its share repurchase authorization program. As a result, leverage has increased prompting the company to amend its back facility by increasing the total allowable EBITDA covenant to 6.5 times from the current 5.5 times. For the 12- month period ended Mar. 31, 2006, debt/EBITDA was 5.3 times. The stable ratings outlook considers that Station continues to benefit from the rapidly growing Las Vegas area, and that it has been highly effective at using debt to further develop its asset profile, market leadership position, and competitive advantage in the Las Vegas locals market. Ratings could be lowered if the company seeks an additional further share repurchase allowance and unanticipated declines in operating results occur. Ratings upside is currently limited by Station's aggressive financial policy. The SGL-2 speculative grade liquidity rating indicates good liquidity and is based on the expectation that internally generated cash flow combined with existing cash balances and availability under the company's bank credit facility will be sufficient to meet capital spending and debt service requirements over the next twelve months. The SGL-2 also acknowledges that Station has a considerable amount of land held for development that could be sold in the event the company wants or needs to raise cash. Station Casinos, Inc. (NYSE: STN) owns and operates casinos in the Las Vegas locals market including a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino, and a 6.7% interest in the Palms Casino Resort. In addition, Station Casinos manages the Thunder Valley Casino for the United Auburn Indian Community in California. TELEX COMMS: Robert Bosch Merger Cues S&P to Watch B Rating ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on audio equipment manufacturer and marketer Telex Communications Holdings Inc. and its affiliates, including Telex's 'B' corporate credit rating, on CreditWatch with positive implications. Total debt outstanding at March 31, 2006, was about $211 million. "The CreditWatch placement follows the company's announcement that it has signed a definitive merger agreement to be acquired by a wholly owned subsidiary of Robert Bosch GmbH (AA-/Stable/A-1+) for an aggregate purchase price of $420 million, including the assumption of Telex's debt," said Standard & Poor's credit analyst Patrick Jeffrey. "The transaction is expected to close in the third quarter of fiscal 2006. Should Telex's debt be repaid upon completion of the transaction, the ratings will be withdrawn." TENET HEALTHCARE: Fitch Affirms Issuer Default & Debt's B- Ratings ------------------------------------------------------------------ In light of the announcement of the settlement of investigations being conducted by the Department of Justice and a number of State Attorneys into Medicare outlier payments, Fitch Ratings affirmed these debt, Issuer Default Rating and Recovery Rating for Tenet Healthcare Corp., with a Negative Rating Outlook. -- Issuer Default Rating 'B-'; and -- Senior unsecured debt 'B-/RR4'. The settlement ameliorates the uncertainty regarding the extent of costs necessary to resolve the most daunting legal issues facing Tenet. The company will make a payment of $470 million, including interest, and will be obligated to make quarterly payments on $275 million at an interest rate of 4.125% starting in November 2007 and ending in August 2010. The settlement concludes investigations at the Department of Justice and the State attorneys offices in Los Angeles, El Paso, Memphis, St. Louis, San Francisco, and New Orleans. The development is notable given the recent settlement of a similar investigation regarding the Alvarado Hospital Medical Center in San Diego, which could have created a watershed of legal activity. Although the cash outflows devoted to satisfying a number of legal concerns will significantly affect free cash flow generation in 2006, Fitch looks upon the settlements favorably. Fitch believes that the company will have negative free cash flow of $1 billion in 2006, which includes the increase in capital spending to $800 million and litigation payments of approximately $640 million. Strengthening of free cash flow will need to be derived from operational improvement given a larger capital commitment in the intermediate term. Tenet's large unrestricted cash balance of $975 million at the end of the first quarter of 2006 supports the rating as the company faces operational and industry-related pressures. Additional sources of cash in the near term include asset divestitures of $250 million-$275 million and insurance recoveries. The mitigation of significant legal exposure eases a major strain on liquidity. Currently, Tenet does not have a significant long-term debt maturity until 2011. Fitch believes that Tenet's credit profile will continue to be constrained by soft volumes and bad debt exposure, endemic to acute care providers. Partially offsetting the negative industry factors, the company has sustained a positive pricing trend for three consecutive quarters starting with the third quarter of 2005. Overall same-store inpatient pricing was up 5.8% in the first quarter, 6.7% in the fourth quarter of 2005, and 2.8% in the third quarter of 2005, demonstrating productive negotiations with managed care payors. The Negative Outlook reflects the challenge of reversing an operational downturn in an environment lacking volume gains. THERMAL NORTH: Moody's Holds Ba3 Ratings on $312 Million Loan ------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 rating for Thermal North America, Inc.'s senior secured credit facilities totaling approximately $312 million. The rating outlook is stable. The rating affirmation takes into account Thermal's weaker-than- expected financial performance that was due in significant part to warmer than normal weather during the first quarter of 2006. As a result, Thermal was in violation of a consolidated leverage covenant at March 31, 2006. Thermal intends to rebalance its capital structure through a permanent $20 million reduction in debt that will be funded with additional equity to be contributed by its indirect parent, Thermal North America Holdings LLC. Thermal has asked its lenders to waive the covenant violation through September 30, 2006, prior to which it intends to present a revised business plan and updated financial projections. The rating affirmation incorporates expectation that the waiver will be approved and that the equity contribution and related debt reduction will occur shortly. Furthermore, it assumes a permanent resolution of the event of default prior to the end of the waiver period. Failure to meet these expectations would likely have a negative effect on the rating or the outlook. The rating affirmation reflects the rebalanced capital structure which will improve Thermal's financial flexibility and an expectation for improved cash flows resulting from normalized weather and the completion of accretive revenue generating projects. The rating affirmation also reflects Thermal's efforts to address perceived weaknesses in its financial controls through the addition of permanent accounting staff and the retention of a financial advisor to review accounting procedures and controls. The stable rating outlook reflects the contractual nature of Thermal's cash flows, the significant barriers to entry within its various district heating and cooling system's service areas and Holdings' commitment to the business as evidenced by the additional equity contribution. Thermal owns and operates a portfolio of ten district cooling and heating systems located in eight metropolitan areas in the United States. TOWER AUTOMOTIVE: Inks Sixth Amendment to DIP Credit Agreement -------------------------------------------------------------- Tower Automotive, Inc., and its debtor-affiliates filed a Sixth Amendment to the Revolving Credit, Term Loan and Guaranty Agreement, dated as of February 15, 2006, among R.J. Tower Corp., as Borrower, Tower Automotive, Inc. and its subsidiaries, as Guarantors, and JP Morgan Chase Bank, N.A., as Agent for the Lenders, with the U.S. Bankruptcy Court for the Southern District of New York on June 27, 2006. The Debtors covenant with the Lenders that "Tower Automotive Korea" will be added in the definition of terms, which refers Tower Automotive Korea Co., Ltd. The Sixth Amendment reflects that any Foreign Subsidiary may merge or consolidate with any other Foreign Subsidiary, and that Tower Automotive Korea may merge or consolidate with Seojin Industrial Co. Ltd. so that after giving effect to the merger or consolidation, Seojin, the surviving entity, will continue to be an indirect wholly owned Subsidiary of the Parent. The Sixth Amendment also reflects technical amendments to certain provisions of the DIP Credit Agreement. A full-text copy of the Sixth Amendment to the DIP Credit Agreement is available for free at: http://ResearchArchives.com/t/s?cde Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000). TOWER AUTOMOTIVE: Has Until August 26 to File Chapter 11 Plan ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended Tower Automotive, Inc., and its debtor-affiliates' exclusive periods to: (a) file a plan of reorganization to August 26, 2006; and (b) solicit acceptances of that plan to October 27, 2006. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Gropper that the recent decision by the Official Committee of Unsecured Creditors to take an appeal of the Court's ruling approving key settlement agreements between the Debtors and the Milwaukee Unions and the Official Committee of Retired Employees may have a material impact on the timing of the Debtors' confirmation process. The Debtors are continuing to evaluate the extent to which the appeal may delay the filing of a plan. According to Mr. Sathy, the Debtors have made significant progress as evidenced by their operational restructuring efforts, the development of their business plan, and the considerable time and attention devoted to the development and negotiation of proposals under Sections 1113 and 1114 of the Bankruptcy Code. The Debtors have also been busy with: a. extensive discussions and meetings with their North American and European customers and suppliers to ensure the continued integrity of their supply chain and to garner the support and cooperation of these constituencies that are so vital to the success of the Debtors' restructuring efforts; b. on-going evaluation of their executory contracts and unexpired leases; c. analysis and reconciliation of claims in connection with developing a plan of reorganization; d. evaluation of their entire business model to rationalize, evaluate and enhance the efficiencies of the businesses. The Debtors have substantially completed the business plan that they expect will serve as the foundation for their Chapter 11 plan; and e. good faith discussions with their various unions and with the Retiree Committee in an attempt to negotiate labor and retiree cost savings. In light of this progress, the Debtors believe that they deserve the opportunity to continue to pursue their restructuring objectives without the distraction of allowing third parties the opportunity to file and solicit acceptances of a competing plan of reorganization. The Official Committee of Unsecured Creditors, and Silver Point Capital Fund, L.P. -- the administrative agent for prepetition secured lenders -- do not oppose the 60-day extension, Mr. Sathy says. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000). TRC COMPANIES: Posts $8 Mil. Net Loss in Year Ended June 30, 2005 ----------------------------------------------------------------- TRC Companies Inc. reported its financial results for fiscal 2005, restated financial results for the first three quarters of fiscal 2005, and restated financial results for fiscal years 2001 through 2004. "We have made great progress in our programs to integrate TRC's operations, rationalize our cost structure, and improve internal controls, processes and reporting," CEO Chris Vincze said. "Our new senior management team is focused and energized, and committed to building a high performance organization that can deliver sustained revenue and earnings growth and build value for our shareholders. While we still have a lot of work to do to achieve all that we are striving for, business conditions in our core markets are sound, backlog is strong, and we are increasingly confident that TRC is on the right track for continued improvement and renewed growth." Strategic Plan "In 1997, TRC implemented a growth strategy that contributed to an increase in net service revenue from about $51 million for fiscal 1997 to $228.9 million for fiscal 2005, a compound growth rate of 20%," Mr. Vincze continued. "Acquisitions were a significant feature of this strategy, as was a decentralized corporate structure under which decision-making and operating controls in many instances were delegated to local management. As the Company grew, this business model resulted in a duplicative cost structure and inadequate internal controls that ultimately reduced profitability. Incompatible financial, human resource, IT and marketing support systems increased operating and Sarbanes-Oxley compliance costs and hindered internal data sharing and communication, while inefficient risk management processes and execution at some businesses further handicapped performance and in some cases put us in a loss position on certain contracts. "The new senior management team appointed during 2006 has developed and implemented a strategic plan to address these issues. We are integrating acquired businesses into company-wide systems and standardizing processes, controls and reporting. We already have reduced the number of financial systems from 17 to four as we work toward having all of our operations managed from a single, common platform by fiscal 2008. To build a fully integrated core business, we are rationalizing our corporate and business unit staff, consolidating real estate, and centralizing such functions as risk management, human resources, purchasing, payroll and cash management. We believe that the risk management controls now in place will reduce loss contracts compared to our recent experience, and our goal is to remediate all material control weaknesses in every operational area by the end of fiscal 2007. "We also are focused on reducing our working capital requirements and enhancing our balance sheet. Days sales outstanding decreased from 120 days at June 30, 2005, to 111 days at April 30, 2006, and we are working to secure additional improvements. In March 2006, we completed the sale of $20 million of TRC stock in a privately negotiated transaction, with proceeds earmarked to reduce debt and for general corporate purposes. To further improve our financial flexibility, we currently are negotiating a new bank financing facility and are confident that an agreement will be finalized soon which will allow us to continue building our organization and implementing our plans for the future. "We expect a considerably reduced pace of acquisitions in the near term as we concentrate on implementing these operational improvements and taking advantage of the many opportunities for organic growth we see in our businesses. Backlog at June 30, 2005, was approximately $213 million versus $209 million at June 30, 2004. We estimate current backlog of approximately $235 million, giving us a solid base on which to build." Fiscal 2005 Results For the twelve months ended June 30, 2005, gross revenue increased 4.7% to $370.9 million compared to a restated $354.4 million for fiscal 2004. The loss from operations for fiscal 2005 was $8.7 million. This compares to restated income from operations for fiscal 2004 of $18.2 million. The net loss applicable to common shareholders for fiscal 2005 was $8 million, which included a previously announced reduction in net income of $600,000 for the cumulative effect of a change in accounting principle from the cost method to the equity method for the Company's 19.9% interest in a start-up energy savings company. This compares to restated net income applicable to common shareholders for fiscal 2004 of $9 million. Restatements Subsequent to the issuance of the Company's consolidated financial statements for the fiscal year ended June 30, 2004, it was determined that certain restatements, including a restatement to correctly account for certain components of the Company's Exit Strategy program were required. Under an Exit Strategy contract, at inception a client pays the proceeds. A portion of these proceeds, generally 5% to 10%, is remitted to the Company. The balance of contract proceeds, less any insurance premiums and fees for a policy to cover potential cost overruns and other factors, are deposited into a restricted investment account with an insurer and used to pay the Company as work is performed. The arrangement with the insurer provides for the deposited funds to earn interest at the one-year constant maturity T-Bill rate. The Company has now determined that the net proceeds deposited with the insurer and interest growth thereon should be recorded as an asset (current and long-term restricted investment) on the Company's consolidated balance sheet, with a corresponding liability related to the net proceeds (included within current and long-term deferred revenue). Previously, the proceeds held by the insurer were not recorded in the Company's financial statements. When determining contract revenue, the Company had previously considered future interest to be earned as escalation to the contract price, which was recognized as work was performed on the contract under the percentage of completion method. The Company has now determined that the interest should be accounted for as interest income, to be recognized as earned, rather than contract escalation and that any proceeds from an Exit Strategy insurance policy beyond the client's initial deposit and interest growth thereon should be accounted for as an insurance recovery rather than contract revenue as previously reported. Interest income from contractual arrangements and insurance recoveries, are reported as separate line items in the consolidated statement of operations. Additionally, when determining the extent of progress towards completion on Exit Strategy contracts, prepaid insurance premiums and fees are amortized on a straight-line basis to cost incurred over the life of the related insurance policy. Previously, the prepaid insurance premiums and fees were excluded from the percentage of completion calculation and were not recorded on the Company's balance sheet; rather the premium and fee amount for each project was amortized to revenue and cost over the expected duration of the remediation phase. The restatement adjustments relate to the timing and classification within the statement of operations but not the ultimate amount of revenue, interest, insurance recoveries and related costs to be recognized under the contracts. The underlying economic value of the Exit Strategy business remains unchanged. The resulting effect is that the consolidated financial statements for the fiscal years ended June 30, 2004 and 2003 have been restated from the amounts previously reported. The pre-tax impacts for the Exit Strategy restatements were losses of $5,737 and $1,780 for fiscal 2004 and fiscal 2003, respectively. In fiscal 2001, the Company made a 50% investment in a privately held energy services contracting company that specialized in the installation of ground source heat pump systems. The Company used the equity method of accounting for this investment since inception. On Dec. 24, 2003, the Financial Accounting Standard Board issued FIN 46(R) "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51", which was applicable for financial statements issued for reporting periods ending after March 15, 2004. The Company considered the provisions of FIN 46(R) in preparing its previously issued fiscal 2004 financial statements and made the determination that Co-Energy was not a variable interest entity pursuant to the requirements of FIN 46(R) and therefore was not required to consolidate the financial statements of Co-Energy. Subsequent to the issuance of such 2004 financial statements it has determined that Co-Energy is a VIE and the Company is the primary beneficiary, resulting in the need to restate its 2004 financial statements to consolidate Co-Energy into the Company's financial statements beginning in April 2004. As part of this process, the Company also identified corrections, which needed to be made to the estimated extent of progress towards completion for certain contracts at Co-Energy. As a result, the 2004 and 2003 financial statements of Co-Energy were also restated to correct contract revenues and costs to reflect the percentage of completion adjustments along with certain other adjustments primarily related to (1) accrual of contract costs and (2) various other items and reclassifications. The impacts for these restatement adjustments were earnings of $18 and losses of $200 for fiscal 2004 and fiscal 2003, respectively. CEG became an operating and reporting segment in fiscal 2005. Prior periods have been restated to present CEG segment data in all periods. In addition, based on a recent review of the accounting treatment for long-term contracts, the Company identified errors with respect to the accuracy and completeness of the estimated extent of progress towards completion for certain contracts. Specifically, two of the Company's locations did not update, on a timely basis, their estimates to take into account available information that would have otherwise increased the total estimated costs to be incurred on certain contracts at the end of the reporting period. After increasing the total estimated costs for these contracts the Company recalculated the percentage of completion and recorded a reduction of revenue and a charge to contract costs as a provision for future losses in the appropriate reporting period. Also, the Company completed a review of its accounting for rental expense and determined that adjustments were required to recognize rental expense on a straight-line basis over the life of the lease. The Company also made certain other adjustments primarily related to (1) accrual of contract costs, (2) equity changes and (3) other various items and reclassifications to amounts previously reported, including adjustments to the statement of cash flows. The pre-tax impacts for these restatement adjustments were losses of $21 and earnings of $1,359 for fiscal 2004 and fiscal 2003, respectively. Outlook For Fiscal 2006 "We are encouraged by signs of increased activity in many markets where we do business, and we expect favorable federal legislation related to transportation and energy to stimulate activity in these areas where TRC enjoys a strong market position, Mr. Vincze said. "Backlog for Exit Strategy projects has increased, and demand for our commercial land development and redevelopment services (including brownfield development) remains strong. We are optimistic about TRC's long-term prospects." Vincze said that the Company plans to report substantially all of the remaining anticipated restructuring costs in fiscal 2006. In January 2006, he said that TRC will report a pre-tax charge in the second quarter of fiscal 2006 of approximately $1.5 million to cover employee severance and other costs related to staff reductions and elimination of underperforming business operations. In addition, the Company will report an additional $2.2 million of SOX compliance costs related to fiscal 2005 that will be reflected in results for the first quarter of fiscal 2006. He noted that substantially all of the affected employees were terminated by Dec. 30, 2005. "Primarily because of these costs, and the planned completion of certain loss and low-margin contracts entered into in prior years, we currently expect the Company to report a loss from operations for fiscal 2006 comparable to the loss reported for fiscal 2005," Vincze continued. "In addition, we expect to record a loss on the disposition of PacLand of approximately $4.5 million. We expect net service revenue for fiscal 2006 to be comparable to net service revenue for fiscal 2005. "With the anticipated costs of the restructuring soon to be behind us, the significantly reduced impact we expect from loss or low- margin legacy business and related staff and cost reductions, and a sound operating platform in place to take advantage of TRC's strong strategic position in each of our key markets, we currently expect improved financial results for fiscal 2007, which begins next month. We will provide additional guidance for fiscal 2007 when we release our fiscal 2006 results," Mr. Vincze said. Mr. Vincze added that the Company is working to report its financial results for the first three quarters of fiscal 2006 as soon as possible. Credit Facility Default The Company has defaulted on its credit facility and is currently operating under a forbearance agreement. The Company's credit facilities have contained covenants and in the future are expected to contain covenants, which, among other things, require it to maintain minimum coverage ratio requirements, maximum leverage ratio requirements, and minimum current assets to total liabilities ratio requirements. At June 30, 2005, the Company failed to comply with these covenants and was required to enter into forbearance agreements with its lenders, and is currently operating under a forbearance agreement. Any future failure to comply with the covenants under its credit facilities could result in further events of default, which, if not cured or waived, could trigger prepayment obligations. A full-text copy of the Company's Annual Report is available for free at http://ResearchArchives.com/t/s?cdb About TRC Companies TRC Companies Inc. (NYSE:TRR) -- http://www.TRCsolutions.com/-- is a customer-focused company that creates and implements sophisticated and innovative solutions to the challenges facing America's environmental, infrastructure, power, and transportation markets. The Company is also a leading provider of technical, financial, risk management, and construction services to commercial and government customers across the country. TYRONE LUINES: Case Summary & Eight Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Tyrone Luines, Jr. Shannon M. Luines 402 Ridgeview Drive Spartanburg, South Carolina 29303 Bankruptcy Case No.: 06-02780 Chapter 11 Petition Date: June 30, 2006 Court: District of South Carolina (Spartanburg) Debtors' Counsel: Robert H. Cooper, Esq. 3523 Pelham Road, Suite B Greenville, South Carolina 29615 Tel: (864) 271-9911 Fax: (864) 232-5236 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtors' Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chase Unsecured Credit Card $14,000 P.O. Box 15583 Wilmington, DE 19886-1194 MBNA America Unsecured Credit Card $14,000 c/o Bankruptcy Department 400 Christina Road Newark, DE 19713 GMAC Vehicle $9,000 c/o Bankruptcy Department 2500 Great Northern Corp. Center North Olmsted, OH 44070 CitiFinancial Unsecured Loans $5,000 Citi Unsecured Credit Card $4,000 Capital One Unsecured Credit Card $1,800 Home Depot Unsecured Credit Card $750 Lowes Unsecured Credit Card $500 UNITED INVESTORS: March 31 Balance Sheet Upside Down by $2.2 Mil. ----------------------------------------------------------------- United Investors Growth Properties reported a $97,000 net loss on $234,000 of revenues for the first quarter ended March 31, 2006, compared to an $86,000 net loss on $208,000 of revenues for the same period in 2005. As of March 31, 2006, the company's balance sheet showed $2,993,000 in total assets and 5,230,000 in total liabilities, resulting in a $2,237,000 stockholders' deficit. At March 31, 2006, the company had cash and cash equivalents of approximately $113,000 compared to approximately $70,000 at March 31, 2005. The decrease in cash and cash equivalents of approximately $22,000 from Dec. 31, 2005, is due to approximately $20,000 of cash used in operating activities and approximately $10,000 of cash used in financing activities, partially offset by approximately $8,000 of cash provided by investing activities. Cash used in financing activities consisted of principal payments made on the mortgage encumbering the investment property. Cash provided by investing activities consisted of net withdrawals from restricted escrow accounts maintained by the mortgage lender offset by property improvements and replacements. The company invests its working capital reserves in interest bearing accounts. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?cce Going Concern Doubt Ernst & Young LLP expressed substantial doubt about United Investors' ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Dec. 31, 2005. The auditing firm pointed to the Company's recurring operating losses and suffers from inadequate liquidity. Headquartered in Greenville, South Carolina, United Investors Growth Properties was established in 1988 to invest in and operate residential and commercial real estate. The firm's general partner and manager, United Investors Real Estate, is a subsidiary of multifamily real estate giant AIMCO. The firm held a portfolio of about five residential and retail properties, but sold or lost most of those asset through foreclosure. The partnership now owns and manages one Memphis apartment community with about 140 individual units. AIMCO and its affiliates own 36% of United Investors Growth Properties. UNIVISION COMMS: S&P Cuts Corp. Credit & Sr. Notes Ratings to BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured notes ratings on Los Angeles-based Univision Communications Inc. to 'BB-' from 'BBB-', based on the company's agreement in principle to a $12.3 billion (excluding existing debt) LBO led by investor group Madison Dearborn Partners LLC. All ratings, including the 'BBB-' rating on the company's credit facility, remain on CreditWatch, with implications revised to negative from developing. The ratings were originally placed on CreditWatch on Feb. 9, 2006, after the company announced it was exploring strategic alternatives. Terms of the credit agreement require debt to be repaid upon a change of control of the company. Therefore, upon completion of the announced buyout and repayment of the bank debt, Standard & Poor's will withdraw this rating. However, if the transaction becomes derailed, the rating agency will reassess overall credit quality and the position of bank creditors relative to all other creditors. "We anticipate a significant debt burden and deterioration of key credit measures upon completion of the transaction," said Standard & Poor's credit analyst Heather M. Goodchild. "An important element of this review is whether Univision and its principal programming supplier, Grupo Televisa S.A., will restore their working relationship." In resolving the CreditWatch listing, Standard & Poor's will review the company's business strategy, capital structure, and liquidity. Univision, a Spanish-language broadcaster, had about $1.4 billion in debt at March 31, 2006. USA COMMERCIAL: Wants to Employ Hilco as Real Estate Appraiser -------------------------------------------------------------- USA Commercial Mortgage Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada for permission to employ Hilco Real Estate, LLC, and Hilco Real Estate Appraisal, LLC, as their real estate appraisers. The Debtors want Hilco to provide appraisal and related services because of its broad national reach in the real estate marketplace, its vast experience in conducting valuations of the various types of properties securing the loans. Hilco is expected to: a) provide a range of valuation reports, determined by, among other things, the presence or absence of a current appraisal for a given property, the reliability of any existing appraisal and the payment history or status of the loan; b) provide expert witness services, including court testimony and deposition testimony, as necessary, on related matters; consulting services concerning the status of various properties and real issues relating to delinquent or defaulted loans; and advisory services relating to funding new loans, if any, or funding loans which currently are unfunded or under-funded; and c) provide services relating to the disposition of properties which the Debtors acquire through foreclosure, settlement or otherwise. Jeffrey W. Linstrom, a Hilco member, discloses that the Hilco and the Debtors entered into an agreement on the firm's compensation. Under the agreement, Hilco will be paid a $300,000 base fee for its valuation services in three monthly installments of $100,000 each, beginning on May 31, 2006, through July 31, 2006. For its expert witness, consulting and advisory services, the firm's professionals bill: Designation Hourly Rate ----------- ----------- Senior Professionals $450 Midlevel Professionals $350 - $400 Junior Level Professionals $250 - $300 Administrative Staff $100 Hilco will receive a disposition fee based on a sliding percentage scale of the gross proceeds from the disposition of a property, which fee will be paid out of the gross proceeds at the time of closing of the disposition. Those percentages are: Amount Percentage Scale ------ ---------------- up to $5,000,000 5% $5,000,001 to $10,000,000 4% $10,000,001 to $20,000,000 3% over $20,000,000 1.5% Mr. Linstrom assures the Court that the Firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital (USACM) -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., represent the Debtors' Investor Committees. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. USA COMMERCIAL: Committee Taps Lewis and Roca as Counsel -------------------------------------------------------- The Official Committee of Unsecured Creditors in USA Commercial Mortgage Company and its debtor-affiliates' chapter 11 cases, asks the U.S. Bankruptcy Court for the District of Nevada for permission to employ Lewis and Roca LLP, as its counsel. Lewis and Roca will: a) advise the Committee with respect to the powers and duties of the Committee in these Chapter 11 cases; b) consult with the Debtor concerning the administration of this case; c) advise the Committee with respect to the powers and duties of the Debtor in the continued operation of its business and the management of its assets in this Chapter 11 case; d) investigate the Debtor's acts, conduct, assets, liabilities, and financial condition, the operation of the Debtor's business and the desirability of the e) participate in the negotiation, formulation, and drafting of a plan of reorganization, including modifications and amendments, and advise the Committee regarding the acceptance and confirmation process; f) prepare all necessary pleadings and papers pertaining to matters of bankruptcy law or the case, including, without limitation, appeals and other litigation as is necessary to represent the Committee; g) participate in any proceeding or hearing in the Bankruptcy Court, any federal appellate Court, or any other judicial or administrative forum in which any action or proceeding may be pending which may affect the Debtor, its assets, or the claims of its creditors; h) advise the Committee with respect to the use, sale or lease of property, financing and the rejection and assumption of executory contracts and unexpired leases, among other things; and i) provide all other legal services that may be necessary during the pendency of this Chapter 11 case on behalf of the Committee. Rob Charles, Esq., a Lewis and Roca partner, discloses that the firm's professionals bill: Attorney Position Hourly Rate -------- -------- ----------- Susan M. Freeman Partner $510 Rob Charles Partner $385 Scott K. Brown Associate $320 Marilyn Schoenike Certified Legal $185 Assistant Mr. Linstrom assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital (USACM) -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. Candace C. Carlyon, Esq., and Shawn w. Miller, Esq., at Shea & Carlyon, Ltd., represent the Debtors' Investor Committees. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 million and $50 million. VALENTIS INC: Incurs $4.8 Million Net Loss in Third Quarter ----------------------------------------------------------- Valentis, Inc., incurred a $4.8 million net loss on $114,000 of revenues for the three months ended March 31, 2006, compared to a $2.9 million net loss on $324,000 of revenues for the same period in 2005. As of March 31, 2006, the company's accumulated deficit widened to $236.9 million from a $224.6 million accumulated deficit at Dec. 31, 2005. At of March 31, 2006, the company had $7.9 million in cash, cash equivalents and investments compared to $12.5 million at June 30, 2005. The decrease of $4.6 million in cash, cash equivalents and investments balances primarily reflected the funding of ongoing operations, offset by net proceeds of $5 million received from a private placement of the company's common stock completed in March 2006. The company's capital expenditures were approximately $32,000 in the nine months ended March 31, 2006. The company expects its capital expenditures to remain at or near current spending levels. In March 2006, the company completed a private placement of 2.1 million shares of its common stock and warrants to purchase up to approximately 1.1 million additional shares of its common stock at $2.50 per unit, resulting in net proceeds of approximately $5 million. The warrants are exercisable for a five-year period at a price of $3.00 per share. The company leases its facilities under operating leases. These leases expire between November 2006 and October 2007 with renewal options at the end of the initial terms to extend the leases for an additional six and five years, respectively. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?cd8 Going Concern Doubt Ernst & Young, LLP, expressed substantial doubt about Valentis' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2004. The auditing firm cited Valentis' losses since inception, including a net loss of $11.1 million for the year ended June 30, 2005, and its accumulated deficit of $224.6 million at June 30, 2005. Headquartered in Burlingame California, Valentis, Inc. -- http://www.valentis.com/-- is a clinical-stage biotechnology company engaged in the development of innovative products for peripheral arterial disease. PAD is due to chronic inflammation of the blood vessels of the legs leading to the formation of plaque that obstructs blood flow. Valentis was formed from the merger of Megabios Corp. and GeneMedicine, Inc., in March 1999. In August 1999, the Company acquired PolyMASC Pharmaceuticals plc as its wholly owned subsidiary. Valentis is incorporated in the State of Delaware. VICKERY-FAIRWAYS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Vickery-Fairways Estates LLC 807 The Heights Drive Fort Worth, Texas 76112 Bankruptcy Case No.: 06-32736 Chapter 11 Petition Date: July 3, 2006 Court: Northern District of Texas (Dallas) Debtor's Counsel: Joyce W. Lindauer, Esq. 8140 Walnut Hill Lane, Suite 301 Dallas, Texas 75231 Tel: (972) 503-4033 Fax: (972) 503-4034 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. VILLAJE DEL RIO: Files Disclosure Statement in W.D. Texas --------------------------------------------------------- Villaje Del Rio, Ltd., delivered to the U.S. Bankruptcy Court for the Western District of Texas a disclosure statement explaining its Chapter 11 Plan. Overview of the Plan The Plan contemplates an auction of the Debtor's real property, and construction of the litigation claims against Deutsche Bank, the United States Department of Housing and Urban Development and Colina Del Rio, L.P., as well as claims against Andres Construction for breach of contract and negligence and The Hartford Fidelity & Bonding. The Hartford's claims resulted from Hartford's failure to honor the completion bond posted in connection with the construction of the project, and are the subject of a lawsuit currently pending in state district court in Bexar County, Texas, cause number 2006-CI- 00180, in the 224th District Court. The Plan also contemplates that all administrative claimants will be paid in full. Unsecured creditors may receive a percentage recovery of their claimant unless they elect to receive a lump sum payment of $100 as a Class VI convenience creditor. Assets Sale The Debtor has asked the Court for permission to sell its property for a minimum bid price of $4.5 million. After the completion of the sale, the funds will be held in an interest bearing account pending the outcome of the litigation by and between the Debtor and Colina, to determine the extent and validity of liens and whether Colina's claims should be subordinated of those of other creditors in the case. Upon completion of the litigation with Colina, the proceeds of the sale will be distributed to creditors according to the Plan. Treatment of Claims Under the Debtor's Plan, holders of an Allowed Administrative Claim will receive either: i) the amount of Allowed Claim in one cash payment on the later of: a) the Effective Date, b) the date that is sixty days after a request for payment of the Claim is filed, c) the date that is twenty (20) days after the Claim becomes an Allowed Claim; or ii) other treatment as may be agreed upon in writing by such holder; provided, however, that an Allowed Administrative Claim representing a liability incurred in the ordinary course of business will be paid by the Debtor upon presentment or otherwise in accordance with the terms of the particular transaction and any related agreements. Holders of Allowed Class II Priority Non Tax Claim will be paid in full on the Effective Date. Class III Priority Tax Claim holders will be paid in full, by equal quarterly payments of allowed claim over a period of six years, plus statutory interest. Allowed secured claim of Colina will be paid from the net proceeds of the sale of the property on the 30th day following the entry of a final non-appealable judgment in the adversary proceeding filed or to be filed against Colina. Colina asserts a claim in excess of $20 million. Mechanic's lien claimants will receive payments from the proceeds of sale to the extent that lien claim of Colina is reduced and the proceeds of sale exceed the amount of any first lien. Each holder of allowed Convenience claims will receive the lesser of their allowed claim or the sum of $100 in full satisfaction of their allowed claim within 60 days from the Effective Date. Pursuant to the terms of the Plan, George Geis' allowed claim will be paid with excess cash flow available from the Debtor after all senior classes, if any, are paid in full. All Allowed Lease Cure Claims, equal to the monetary amount necessary to fully cure any lease or executory contract of the Debtor assumed under the Plan, will be paid. Equity interest holders will retain their interests. Headquartered in San Antonio, Texas, Villaje Del Rio, Ltd., is a real estate developer. The company filed for chapter 11 protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797). Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets of less the $50,000 and estimated debts between $10 million and $50 million. VOLT INFORMATION: Fitch Upgrades Issuer Default Rating to BB ------------------------------------------------------------ Fitch Ratings upgraded Volt Information Sciences' Issuer Default Rating to 'BB' from 'BB-', and has affirmed its senior secured rating at 'BBB-'. The Rating Outlook is Stable. The ratings reflect Volt's ability to maintain solid coverage and leverage metrics and improved operating performance in recent quarters, while continuing to diversify its sources of operating income. This is most notably the case with the Staffing Services segment, which has declined as a percentage of total operating income from 89% in 2002 to 39% in 2005 and has been offset by the Computer Systems segment, which contributed 45% to total operating income in 2005. Importantly, the company has experienced double digit revenue growth in each of the last three years. Operating EBITDA margins have improved from 1.5% in 2002 to 3.5% in the last 12 months ending April 30, 2006, with operating EBITDA increasing significantly from $22 million to $80 million over that time period. This has resulted interest coverage on an LTM basis of 11x compared to 4.15x in 2002. In addition, leverage, as measured by total debt to operating EBITDA, strengthened from 3.5x in 2002 to 2.1x on an LTM basis. Excluding borrowings under the company's accounts receivable program, leverage improved from 0.8x to 0.3x in the same time frame. Further, total adjusted debt to operating EBITDAR improved from 5.8x to 3.7x. However the free cash flow generating ability of the company remains a concern although Fitch recognizes the impact of working capital needs to support growth and higher capital expenditures related to investment in non-staffing business segments. Other credit concerns continue to reflect strong competition and high operating costs particularly in the Staffing Services segment, which still represents a significant 39% of operating income or $31.2 million. The high sensitivity to the business cycle, thin operating margins that range from 1.6% to 2.3% annually and modest geographic diversity have resulted in volatility of the Staffing Services operating income and inconsistent segment growth. Fitch believes the company's ability to manage costs in this business as well as across the broader company will be key factors for continued improvement in operating performance. Furthermore, while Fitch recognizes that the company benefits from long-term relationships with certain key clients, this revenue concentration coupled with the short-term nature of most contracts is a concern. Operating performance for the first half of 2006 was solid. Volt generated $1.14 billion in revenues, a 10% increase from one year prior. Operating EBITDA grew to $80 million for LTM April 30, 2006, which compares favorably to approximately $70 million in fiscal years 2005 and 2004 and $35 million in fiscal year 2003. With ongoing cost cutting efforts by Volt in key areas and continued strong economic factors, Fitch expects improvement in Volt's operating results to continue. The company also plans to continue investing in non-staffing segments and Fitch expects Volt to continue utilizing conservative financial policies to achieve these plans. Adequate liquidity is provided by unrestricted cash balances of $45 million, and the company's recently increased $200 million accounts receivable securitization program that expires in April 2008, which currently has $120 million outstanding on it and is the company's main source of funding. Liquidity is also provided by the company's $40 million credit facility, which currently has $6 million outstanding and also matures in 2008, as well as free cash flow of $31 million at LTM April 30, 2006. The revolving credit facility requires the maintenance of certain accounts receivable in excess of borrowings. Financial covenants include a maximum coverage ratio as defined by EBIT/(interest expense plus securitization expense) of 1.25x and a maximum debt to capitalization ratio of 45%. During the LTM ended April 30, 2006, the company's coverage ratio, as determined in accordance with the bank agreement, was approximately 6.82x, and the debt/capitalization ratio was approximately 35%. As of April 30, 2006, the company's short-term debt was approximately $12 million, which consisted of $11.5 million in bank borrowings and $0.5 million of maturing long-term debt. The $13.1 million balance of long-term represented a term real estate loan. WESTWIND GROUP: Trustee Hires R. Dean Johnson as Accountant ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California authorized Leslie T. Gladstone, the Chapter 7 Trustee of Westwind Group North Carolina Inc., to hire R. Dean Johnson as accountant, effective April 19, 2006. R. Dean Johnson will investigate the financial affairs of Westwind Group, prepare necessary accountings not completed and prepare required tax returns for the bankruptcy estate. For his services R. Dean Johnson will bill at $175 per hour. His paraprofessionals bill: Paraprofessional Hourly Rate ---------------- ----------- Leslie E. Steenerson $80 Hayle D. Hill $50 Kerrie R. Johnson $50 Sandra Taylor $50 R. Dean Johnson assured the Court that he does not hold any interest adverse to the Debtors, their estates or other parties- in-interest. Headquartered in San Diego, California, Westwind Group North Carolina, Inc., specializes in training systems development and implementation, engineering services, and management support for production and manufacturing based commercial/industrial clients workforce. The Company filed for chapter 11 protection on November 21, 2003 (Bankr. S.D. Calif. Case No. 03-10575). Karla A. Lyon, Esq., at Gray Cary Ware & Freidenrich represented the Debtors. On Oct. 5, 2005, the Debtor's case was converted to a chapter 7 liquidation. The Court appointed Leslie T. Gladstone as the Debtor's chapter 7 Trustee. When the Company filed for protection from its creditors, it listed $2,405,125 in total assets and $48,975,443 in total debts. WINN-DIXIE: Classification & Treatment of Claims Under Ch. 11 Plan ------------------------------------------------------------------ Winn-Dixie Stores, Inc., and its debtor-affiliates' Plan of Reorganization groups claims and interests into 21 classes: Class Claims Treatment ----- ------ --------- n/a Administrative Claims Paid in cash, in full Estimated Allowed Claims: $76,600,000 n/a DIP Facility Claims Paid in cash, in full Estimated DIP Facility Claims: $0 in revolving loans; $40,000,000 in term loans; $220,600,000 in letters of credit n/a Priority Tax Claims Paid in cash, in full Estimated Allowed Claims: $14,900,000 1 Other Priority Claims Paid in cash, in full Estimated Allowed Claims: $0 2 MSP Death Benefit Claims Holders will receive one lump sum payment when the participant dies, as soon as the beneficiary provides satisfactory proof of death. The MSP Death Benefit Claims are Unimpaired Estimated Allowed Claims: $51,000,000 (Gross Claims); $21,000,000 (present value) 3 Workers Compensation Claims Paid in full. Estimated Allowed Claims: N/A 4 Bond/Letter of Credit Paid in cash, in full Backed Claims Estimated Allowed Claims: $857,000 5 Convenience Claims Paid in cash, in full Estimated Allowed Claims: $35,200 6 Subsidiary Interests Retained 7 AmSouth Bank Collateralized Reinstated and impaired; Letter of Credit Claim Estimated percentage recovery is 100% Estimated Allowed Claims: $17,000,000 (contingent) 8 Thrivent/Lutherans Reinstated and impaired; Leasehold Mortgage Claim Estimated percentage recovery is 100% Estimated Allowed Claims: $395,864 (as of June 29, 2006) 9 NCR Purchase Money Security Paid in full over a Interest Claim period of three years, with interest at 4.25% per annum; holder may elect to receive a lump sum cash payment equal to 90% of the allowed claim amount The NCR Purchase Money Security Interest Claim is impaired. Estimated Allowed Claims: $3,400,000 10 Secured Tax Claims Paid in full over a period of six years, with interest at 6% per annum. Secured Tax Claims are impaired. Estimated Allowed Claims: $31,300,000 11 Other Secured Claims At the Debtors' discretion, either: * each holder's contractual rights will be reinstated; * each holder will retain the liens securing the claim or receive deferred cash payments; * the collateral will be surrendered; or * the claim will be paid in full. Other Secured Claims are impaired. Estimated Allowed Claims: $0 12 Noteholder Claims Estimated Percentage Recovery: 95.6% Each holder will receive: * 62.69 shares of New Common Stock for each $1,000 of Allowed Claim; and * a pro rata distribution of any excess shares of New Common Stock in the Common Stock Reserve. Estimated Allowed Claims: $310,540,582 13 Landlord Claims Estimated Percentage of Recovery: 70.6% Each holder will receive: * 46.26 shares of New Common Stock for each $1,000 of Allowed Claim; and * a pro rata distribution of any excess shares of New Common Stock in the Common Stock Reserve. In the alternative, the holder may elect to reduce the claim to $3,000 and receive cash equal to 67% of the allowed claim amount. This alternative is available on a "first come, first serve" basis. Estimated Allowed Claims: $284,100,000 14 Vendor/Supplier Claims Estimated Percentage of Recovery: 70.6% Each holder will receive: * 46.26 shares of New Common Stock for each $1,000 of Allowed Claim; and * a pro rata distribution of any excess shares of New Common Stock in the Common Stock Reserve. In the alternative, the holder may elect to reduce the claim to $3,000 and receive cash equal to 67% of the allowed claim amount. This alternative is available on a "first come, first serve" basis. Estimated Allowed Claims: $218,900,000 15 Retirement Plan Claims Estimated Percentage of Recovery: 59.1% Each holder will receive: * 38.75 shares of New Common Stock for each $1,000 of Allowed Claim; and * a pro rata distribution of any excess shares of New Common Stock in the Common Stock Reserve. In the alternative, the holder may elect to reduce the claim to $3,000 and receive cash equal to 67% of the allowed claim amount. This alternative is available on a "first come, first serve" basis. Estimated Allowed Claims: $87,800,000 16 Other Unsecured Claims Estimated Percentage of Recovery: 53.2% Each holder will receive: * 34.89 shares of New Common Stock for each $1,000 of Allowed Claim; and * a pro rata distribution of any excess shares of New Common Stock in the Common Stock Reserve. In the alternative, the holder may elect to reduce the claim to $3,000 and receive cash equal to 67% of the allowed claim amount. This alternative is available on a "first come, first serve" basis. Estimated Allowed Claims: $84,100,000 17 Small Claims Holders will receive cash equal to 67% of the allowed claim amount. Estimated Allowed Claims: $3,200,000 18 Intercompany Claims Deemed discharged 19 Subordinated Claims Deemed discharged 20 Non-Compensatory Damages Deemed discharged Claims Estimated Allowed Claims: $10,000,000 21 Winn-Dixie Interests Cancelled Holders of claims in Classes 7 to 17 are entitled to vote on the Plan. Classes 1 to 6 are deemed to have accepted the Plan while Classes 18 to 21 are deemed to have rejected the Plan. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Court Approves Bowdoin Square Claims Compromise Pact ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida approved Winn-Dixie Stores, Inc., and its debtor-affiliates' compromise of claims filed by Bowdoin Square, LLC: (a) Claim No. 9939 for $1,267,412 against Winn-Dixie Stores, Inc.; and (b) Claim No. 9940 for $1,267,412 against Winn-Dixie Montgomery, Inc. As reported in the Troubled Company Reporter on June 16, 2006, Bowdoin filed an action in the Circuit Court of Mobile County, Alabama in 2002, alleging that the Debtors breached their obligations under a lease and guaranty, D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, related. The Debtors defended the State Court Action and asserted that the lease has been terminated when the use of the property changed. The Debtors prevailed at trial, but the verdict was overturned on appeal and the case was remanded for a new trial. Before the second trial was to commence, the Debtors and the Claimant agreed to settle the State Court Action. Pursuant to the settlement agreement, Bowdoin agreed to accept $400,000 in full satisfaction of the claims asserted in the State Court Action. However, before the settlement payment could be made, the Debtors' Chapter 11 petitions were filed. In accordance with the Settlement Agreement, the parties have agreed to compromise the Claims: (a) Each of the Claims will be allowed as an unsecured non- priority claim for $400,000 to be treated in accordance with a confirmed plan of reorganization in the Debtors' Chapter 11 cases; (b) In the event that the Debtors' cases are not substantively consolidated, Bowdoin will not receive distributions from the Debtors having an aggregate value that exceeds $400,000; (c) If the Debtors' cases are substantively consolidated for purposes of distribution under a confirmed plan of reorganization, the plan may provide that no distributions will be made in connection with claims that are based on guarantees and, in that event, no distribution will be made on Claim No. 9939; and (d) Bowdoin will dismiss with prejudice the action pending in the Circuit Court of Mobile County, Alabama. 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. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Stay Lifted to Let Fifth Third Set Off $316,721 Debt ---------------------------------------------------------------- Judge Funk lifts the automatic stay to permit Fifth Third Processing Solutions to set off $316,721 of their mutual prepetition debts. The balance of the amounts owed by Fifth Third to Winn-Dixie will be treated in accordance with a separate agreement by the parties. 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 $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (22) 125 (6) AFC Enterprises AFCE (44) 176 31 Adventrx Pharma ANX (26) 23 (27) Alaska Comm Sys ALSK (29) 550 12 Alliance Imaging AIQ (29) 683 19 AMR Corp. AMR (1,272) 29,918 (1,924) Atherogenics Inc. AGIX (114) 227 182 Bally Total Fitn BFT (1,463) 486 (442) Biomarin Pharmac BMRN 46 488 (322) Blount International BLT (134) 462 129 CableVision System CVC (2,468) 12,832 2,643 CCC Information CCCG (95) 112 34 Centennial Comm CYCL (1,069) 1,409 32 Cenveo Inc CVO (56) 1,045 157 Choice Hotels CHH (148) 274 (68) Cincinnati Bell CBB (727) 1,888 33 Clorox Co. CLX (427) 3,622 (258) Columbia Laborat CBRX 11 43 24 Compass Minerals CMP (59) 702 171 Crown Holdings I CCK 46 6,885 171 Crown Media HL CRWN (165) 1,229 93 Deluxe Corp DLX (71) 1,394 (264) Denny's Corporation DENN (261) 505 (75) Domino's Pizza DPZ (632) 387 (10) Echostar Comm DISH (690) 8,935 1,438 Emeritus Corp. ESC (105) 725 (19) Emisphere Tech EMIS (26) 13 (11) Empire Resorts I NYNY (28) 57 (5) Encysive Pharm ENCY (38) 119 82 Foster Wheeler FWLT (239) 2,032 (52) Gencorp Inc. GY (84) 1,002 (3) Graftech International GTI (175) 919 286 H&E Equipment HEES 204 667 13 Hollinger Int'l HLR (198) 1,038 (271) I2 Technologies ITWO (65) 195 (20) ICOS Corp ICOS (51) 248 121 IMAX Corp IMAX (25) 238 33 Incyte Corp. INCY (38) 399 189 Indevus Pharma IDEV (134) 86 50 Investools Inc. IEDU (33) 87 (54) Koppers Holdings KOP (100) 556 150 Kulicke & Soffa KLIC 46 399 204 Labopharm Inc. DDS (8) 46 9 Level 3 Comm. Inc. LVLT (546) 8,284 713 Ligand Pharm LGND (212) 289 (144) Linn Energy LLC LINE (45) 280 (51) Lodgenet Entertainment LNET (70) 261 7 Maxxam Inc. MXM (661) 1,048 101 Maytag Corp. MYG (187) 2,954 150 McDermott Int'l MDR (50) 3,160 277 McMoran Exploration MMR (38) 411 (1) Movie Gallery MOVI (171) 1,248 (843) NPS Pharm Inc. NPSP (129) 287 212 New River Pharma NRPH 3 96 82 Omnova Solutions OMN (15) 360 65 ON Semiconductor ONNN (224) 1,211 251 Qwest Communication Q (3,060) 21,126 (923) Revlon Inc. REV (1,042) 1,085 37 Riviera Holdings RIV (30) 219 7 Rural/Metro Corp. RURL (93) 302 50 Rural Cellular RCCC (500) 1,427 144 Sepracor Inc. SEPR (128) 1,284 906 St. John Knits Inc. SJKI (52) 213 80 Sun Healthcare SUNH (1) 531 (46) Tivo Inc. TIVO (33) 143 19 USG Corp. USG (496) 6,522 1,956 Unigene Labs Inc. UGNE (7) 21 (2) Vertrue Inc. VTRU (24) 466 (78) Weight Watchers WTW (42) 856 (69) Worldspace Inc. WRSP (1,516) 682 197 WR Grace & Co. GRA (548) 3,506 881 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. 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 ***