/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060720.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 20, 2006, Vol. 10, No. 171 Headlines AAMES MORTGAGE: S&P Junks Rating on Series 2001-3 Class B Debts ADELPHIA COMMS: BofA Wants Stay Lifted to File Financing Documents ALLIANCE LAUNDRY: Inks Amendment to Credit Agreement ALLIED HOLDINGS: Court Approves Amended Honda Motor Pact ALLIED HOLDINGS: Sells Kentucky Property to Jack Cooper for $625K ALLTEL GEORGIA: Spin-Off Prompts S&P to Slash Ratings ALPHA-200: Judge Rhodes Dismisses Second Chapter 15 Petition AFFINITY TECHNOLOGY: Amends Withrow & Terranova Agreement AFFINITY TECHNOLOGY: Hires Morgan Keegan as Financial Advisor AMERICHIP INT'L: May 31 Balance Sheet Upside-Down by $697,203 ANCHOR GLASS: Gets Arkema's Nod to Assume Certincoat Agreement ANCHOR GLASS: Court Dismisses Adversary Proceeding Against OCI APOGEE TECH: Posts $729,000 Net Loss in Quarter Ended March 31 APPLIEDTHEORY CORP: Bankruptcy Court Applied STN Factors Properly ASARCO LLC: FFIC Wants to Participate in Asbestos Estimation Steps ASARCO LLC: Wants Stay Lifted to Enter Into Tax Escrow Agreement ASARCO LLC: Wants to Execute IRS Forms for Tax Refunds ATLANTIC WINE: Meyler & Company Raises Going Concern Doubt BLACK PRESS: Moody's Rates Proposed Sr. Sec. Bank Loan at Ba3 BMC INDUSTRIES: Court Approves Second Amended Disclosure Statement BROWNWOOD FORD: Voluntary Chapter 11 Case Summary CALPINE CORP: Wants Court To Approve Pacific Gas Settlement Pact CARRAMERICA REALTY: Closes Merger With Blackstone Group Affiliate CELLSTAR CORP: Earns $2.7 Million in Second Quarter 2006 COLLINS & AIKMAN: Court Approves Haley & Aldrich as Consultant COLLINS & AIKMAN: Unit Wants $256,184 Claim Deemed Timely Filed CONSOLIDATED COMMS: S&P Holds Upsized Facility's Rating at BB- DAVIDSON DIVERSIFIED: Ernst & Young Expresses Going Concern Doubt DAVIDSON DIVERSIFIED: Mar. 31 Balance Sheet Upside-Down by $8.1MM DELPHI CORP: NuTech Wants to Continue Breach-Of-Contract Suit DELPHI CORP: Pays $369,585 to Settle Omega Tool's Complaint DELTA AIR: Wants Court Nod on $195 Million Merrill Lynch Financing DELTA AIR: Wants to Repay $235 Million 9.5% Senior Secured Notes EAGLEPICHER CORP: Moody's Junks Rating on $65 Million Senior Loan EL POLLO: Extends Tender Offer Expiration to August 11 EMPRESAS CENTRAIS: Fitch Rates $100 Million Six-Year Notes at B EVANS INDUSTRIES: Panel Hires Chiron as Financial Advisor EVANS INDUSTRIES: Panel Wants Locke Liddell's Retention as Counsel FALCON AIR: Court Appoints Kenneth A. Welt as Chapter 11 Trustee FLOWSERVE CORP: Repays $25 Million of Debt in 2nd Quarter of 2006 FOAMEX INT'L: Panel Supports CEO Raymond Mabus' Salary Increase FOAMEX INT'L: Panel Wants to Join Recruitment & Selection Process FR X OHMSTEDE: Moody's Junks Rating on $65 Million Sr. Term Loan GLOBAL DOCUGRAPHIX: Case Summary & 36 Largest Unsecured Creditors GLOBAL HOME: Will Auction Off WearEver Business on August 7 GORDIAN RUNOFF: Chapter 15 Petition Hearing Slated for August 28 GRANITE BROADCASTING: Terminates Sale Agreements for TV Stations GUITAR CENTER: Senior Notes Redemption Cues S&P's Positive Watch H&E EQUIPMENT: Restates First Quarter 2006 Financial Results INTERSTATE BAKERIES: Bankr. Court Okays Chubb Surety Bond Program INTERSTATE BAKERIES: Can Sell Medford Property for $1.7 Million INTERSTATE BAKERIES: Court Says Sara Lee's ERISA Action is Stayed JOYCE NUNLEY: Case Summary & 14 Largest Unsecured Creditors KAISER ALUMINUM: Court Okays Los Angeles Pension Plan Termination KAISER ALUMINUM: Wants to Settle With 3 Products Coverage Insurers KL INDUSTRIES: Hires CM&D Capital as Financial Advisor LEVI STRAUSS: Board Designates John Anderson Next Pres. and CEO LEVITZ HOME: Court Allows Assignment of Store No. 40401's Lease LIVING HOPE: Voluntary Chapter 11 Case Summary MAPCO EXPRESS: Buys 40 Stores from Fast Petroleum for $42 Million MASTERCRAFT INTERIORS: Can Decide on Leases Until December 12 MERIDIAN AUTOMOTIVE: Court Adjourns Disclosure Hearing to July 21 MESABA AVIATION: Court Okays Monthly Report Submission Guidelines MESABA AVIATION: UST's Motion to Revoke Paydown Procedures Denied MUSICLAND HOLDING: Ct. Lifts Stay to Let Xerox to Set-Off Deposit MUSICLAND HOLDING: Moves for Summary Judgment on Deluxe's Lien MUSICLAND HOLDING: Wants to Walk Away from 65 Contracts & Leases MXENERGY HOLDINGS: S&P Junks Rating on Proposed $200 Million Debt MXENERGY HOLDINGS: Moody's Junks Rating on Planned $200 Mil. Offer NADER MODANLO: Section 341(a) Meeting Continued to August 1 NBC/AUSTIN WINDRIDGE: Hires Fuqua & Keim as Bankruptcy Counsel NBC/AUSTIN WINDRIDGE: Taps Capstone Real as Management Company NORTHWEST AIRLINES: Employees Urge Congress to Pass Pension Law NORTHWEST AIRLINES: S&P Affirms Default Corporate Credit Rating NUTRAQUEST INC: Confirmation Hearing Scheduled for August 17 NUTRAQUEST INC: Wants Excl. Plan-Filing Period Extended to Oct. 9 OCA INC: Has Until August 14 to Remove State Court Civil Actions ONEIDA LTD: Wants Reorganized Companies Incorporated in Delaware ORIENTAL TRADING: Moody's Junks Rating on Proposed $180 Mil. Loan ORIS AUTOMOTIVE: Wants Plan-Filing Period Stretched to Sept. 24 OWENS CORNING: Court Approves Proposed Plan Voting Procedures PARMALAT GROUP: Wins Appeal Against Citigroup In New Jersey Court PHIBRO ANIMAL: Plans Tender Offer of $240 Million Senior Notes PHYSICIANS INTERINDEMNITY: Receiver Selling $7.9 Mil. of Judgments PLIANT CORP: Completes Restructuring and Exits Chapter 11 PMA CAPITAL CORP: Low Leverage Prompts Moody's to Review Ratings RENT-A-CENTER: Completes $725 Million Senior Debt Refinancing RIEFLER CONCRETE: Files Schedules of Assets and Liabilities RIVIERA TOOL: Files Third Quarter Financials for 2006 Fiscal Year SAINT VINCENTS: Inks New Set-Off Deal with New York Health Dept. SAINT VINCENTS: Inks Settlement Pacts with Curevax & Dr. Wallack SEROLOGICALS CORP: Merger Prompts Moody's to Withdraw Ratings SILICON GRAPHICS: Ad Hoc Committee Objects to FTI's Retention SILICON GRAPHICS: Wants Employee Incentive Plan Implemented ST. MARY'S: Moody's Downgrades Long-Term Rating to Ba3 from Ba1 TEKELEC: Posts $16.5 Million Net Loss in First Quarter of 2006 TFS ELECTRONIC: Asks Court to Approve Global Settlement Agreement UNITED SURGICAL: Launches Tender Offer for Outstanding Sr. Notes US ONCOLOGY: Completes $100 Mil. Incremental Term Loan Facility VARIG S.A.: Brazilian Ct. Voids Creditor Votes Rejecting Volo Bid VILLAGEEDOCS INC: Restates 2005 2nd Quarter Financial Statements VISIPHOR CORP: Completes $1.6 Million Quorum Private Placement WCA WASTE: Stockholders Approve $75 Mil. Equity Investment to Ares WINDSTREAM CORPORATION: Fitch Rates $2.5 Billion Sr. Notes at BB+ WINN-DIXIE: Rejects Lifetime Hoan Prepetition Supply Agreement * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* AAMES MORTGAGE: S&P Junks Rating on Series 2001-3 Class B Debts --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes B and M-2 from Aames Mortgage Trust 2001-3 to 'CCC' from 'BBB' and to 'BB' from 'A', respectively. Additionally, the rating on class M-2 is placed on CreditWatch with negative implications. At the same time, the ratings on the other classes from this transaction are affirmed. Credit support for the pool is derived from a combination of subordination, excess interest, and overcollateralization. The lowered ratings are based on pool performance. Realized losses have consistently surpassed the excess interest spread over the past year, which has reduced overcollateralization to $143,459, as of the June 25 distribution date. Cumulative losses represent 5.65% of the original pool balance. Delinquencies of 90 days or more (including foreclosures and REOs) represent 27.93% of the current pool balance. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Aames Capital Corp. either originated or acquired all of the mortgage loans used as collateral in the pool in accordance with its underwriting standards. The underlying collateral for this transaction is mostly fixed- and adjustable-rate, first-lien, 30- year mortgages on single-family homes. Rating Lowered: Aames Mortgage Trust 2001-3 Series Class To From ------ ----- -- ---- 2001-3 B CCC BBB Rating Lowered and Put on Creditwatch Negative: Aames Mortgage Trust 2001-3 Series Class To From ------ ----- -- ---- 2001-3 M-2 BB/Watch Neg. A Ratings Affirmed: Aames Mortgage Trust 2001-3 Series Class Rating ------ ----- ------ 2001-3 A1 AAA 2001-3 M1 AA+ ADELPHIA COMMS: BofA Wants Stay Lifted to File Financing Documents ------------------------------------------------------------------ Pursuant to the Century Credit Agreement dated April 14, 2000, Bank of America and the other members of the Century Facility lending syndicate had claims and liens in the equity interests of certain non-debtor entities owned directly or indirectly by the Rigas family. Borrowers under the Century Credit Agreement are: * Adelphia Cablevision Corp., * Adelphia Cablevision of Boca Raton, LLC, * Adelphia Cablevision of Fontana, LLC, * Adelphia Cablevision of Inland Empire, LLC, * Adelphia Cablevision of Newport Beach, LLC (PDG: Ft. Myers Debtor Group), * Adelphia Cablevision of Orange County II, LLC, * Adelphia Cablevision of Orange County, LLC (PDG: Ft. Myers Debtor Group), * Adelphia Cablevision of San Bernardino, LLC, * Adelphia Cablevision of Seal Beach, LLC, * Adelphia Cablevision of West Palm Beach III, LLC, * Adelphia Cablevision of West Palm Beach IV, LLC, * Adelphia Cablevision of West Palm Beach V, LLC, * Adelphia Cleveland, LLC, * Adelphia Communications of California II, LLC, * Adelphia Communications of California, LLC, * Adelphia of the Midwest, Inc. , * Adelphia Pinellas County, LLC (PDG: Ft. Myers Debtor Group) , * Adelphia Prestige Cablevision, LLC, * Badger Holding Corporation, * Blacksburg/Salem Cablevision, Inc., * Brazas Communications, Inc. , * California Ad Sales, LLC (PDG: Ft. Myers Debtor Group), * Century Berkshire Cable Corp., * Century Cable Holdings, LLC, * Century Colorado Springs Partnership, * Century Granite Cable Television Corp., * Century Indiana Corp., * Century Island Associates, Inc., * Century Island Cable Television Corp., * Century Mendocino Cable Television, Inc., * Century Mountain Corp., * Century New Mexico Cable Television Corp., * Century Ohio Cable Television Corp., * Century Southwest Colorado Cable Television Corp., * Century Trinidad Cable Television Corp., * Century Virginia Corp., * Century Warrick Cable Corp., * Century Wyoming Cable Television Corp., * Clear Cablevision, Inc., * CMA Cablevision Associates VII, L.P., * CMA Cablevision Associates XI, Limited Partnership, * E. & E. Cable Service, Inc., * Eastern Virginia Cablevision, L.P., * Ft. Myers Cablevision, LLC (PDG: Ft. Myers Debtor Group), * Grafton Cable Company, * Harron Cablevision of New Hampshire, Inc., * Huntington CATV, Inc., * Louisa Cablevision, Inc., * Manchester Cablevision, Inc., * Martha's Vineyard Cablevision, L.P., * Mickelson Media, Inc., * Owensboro Indiana, L.P., * Owensboro on the Air, Inc., * Paragon Cable Television Inc., * Paragon Cablevision Construction Corporation, * Paragon Cablevision Management Corporation, * S/T Cable Corporation, * Scranton Cablevision, Inc., * Sentinel Communications of Muncie, Indiana, Inc., * Southwest Colorado Cable, Inc., * Star Cable Inc., * Tele-Media Company of Tri-States L.P., * The Westover T.V. Cable Co., Incorporated, * TMC Holdings Corporation, * Tri-States, L.L.C., * Wellsville Cablevision, L.L.C. Pursuant to the Court-approved global settlement among Adelphia Communications Corporation and its debtor-affiliates, the Securities and Exchange Commission, the Rigases, and the Department of Justice, the Rigases agreed to forfeit certain assets to the United States government, including the equity interests in the Rigas-Managed Entities. As part of the settlement, the Government then returned certain of the forfeited assets to the Debtors, free and clear of all liens, including the Century Lenders' liens. However, to place the Century Lenders in the same position as they were prior to the forfeiture of the Century RMEs, the Government Settlement Order automatically granted the Century Lenders claims and perfected liens in those assets to the same extent and validity as were held prior to forfeiture. On March 31, 2006, certain RMEs and certain newly formed entities that hold the interests in certain forfeited entities filed their own Chapter 11 petitions. Although the Government Settlement Order automatically granted the Century Lenders claims and perfected liens in the equity interests of the Century RME Debtors, in furtherance of the Government Settlement Order, Bank of America has requested and the Debtors have agreed to make perfection steps by: (i) exchanging the stock certificates of the Century RME Debtors; and (ii) allowing Bank of America to file new UCC financing statements for the Century RME Debtors. Out of an abundance of caution, Bank of America asks the U.S. Bankruptcy Court for the Southern District of New York to modify the automatic stay in the Century Debtors' and Century RME Debtors' Chapter 11 cases to allow it to perform the Perfection Steps. Judith Elkin, Esq., at Haynes and Boone, LLP, in New York, relates that Bank of America has conferred with the Century Debtors and the Century RME Debtors, and they do not oppose the modification of the automatic stay. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06- 10642). Their cases are jointly adminsitered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 139; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIANCE LAUNDRY: Inks Amendment to Credit Agreement ---------------------------------------------------- Alliance Laundry Systems LLC disclosed that on July 14, 2006, it entered into an amendment to its credit agreement, dated Jan. 27, 2006, with Alliance Laundry Holdings LLC, ALH Finance LLC, Lehman Commercial Paper Inc., as administrative agent and lender, and several banks and other financials institutions. The Amendment includes: (a) provision of an additional $60 million of term loans under the Credit Agreement term loan facility, (b) increase in the revolving credit commitments to $55 million from $50 million under the Credit Agreement revolving credit facility, (c) permitting the draw down of the $60 million additional term loan capacity; (d) modification of certain negative covenants in the Credit Agreement, including: * adjusting the calculation of the consolidated leverage ratio, * adjusting the calculation of the consolidated interest coverage ratio, * increasing the annual ordinary course capital expenditures permitted by Alliance Laundry and its subsidiaries to $13 million from $10 million, effective 2007, and * increasing the maximum permitted debt Alliance Laundry's non-U.S. subsidiaries may incur without restriction to $5.0 million from $2.5 million; (e) revision of the procedure for term loan borrowing; (f) revision of the term loan repayment schedule to require repayment in 22 quarterly installments of $587,500 commencing on September 30, 2006, and one installment of $222,075,000, or such lesser amount then outstanding, on Jan. 27, 2012; and (g) making conforming changes to the definitions contained therein. The additional term loans was used to partially finance acquisition of substantially all of Laundry System Group NV's commercial laundry division operations pursuant to a share purchase agreement, dated May 23, 2006 About Alliance Laundry Headquartered in Ripon, Wisconsin, Alliance Laundry Systems LLC -- http://www.comlaundry.com/-- manufactures commercial laundry products and provider of services for laundromats, multi-housing laundries and on-premise laundries. Alliance offers a full line of washers and dryers for light commercial and consumer use as well as large frontloading washers, heavy-duty tumble dryers, and finishing equipment for heavy commercial use. * * * As reported in the Troubled Company Reporter on June 22, 2006 Standard & Poor's Ratings Services affirmed its 'B' rating and its recovery rating of '3' Alliance Laundry Systems LLC's senior secured credit facilities following its proposed $65 million add- on credit facilities. The 'B' bank loan rating remains at the same level as the corporate credit rating. ALLIED HOLDINGS: Court Approves Amended Honda Motor Pact -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia authorized Allied Holdings, Inc., and its debtor-affiliates to assume an Amended Agreement with American Honda Motor Co., Inc., effective as of May 19, 2006. As reported in the Troubled Company Reporter on May 31, 2006, the Debtors asked the Court for permission to assume the Amended Agreement with American Honda. Allied Systems, Ltd., and Honda entered into a motor transportation contract in April 2002. Pursuant to the Agreement, Allied Systems provides delivery and transportation services to Honda in return for which Honda makes payments in accordance with agreed rate terms. In January 2006, the parties amended the Agreement to reflect, among others, modifications to rate terms, a fuel surcharge provision, and an extension to the original term. Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, noted that the Debtors have provided the terms of the Agreement, as amended, to counsel for the Debtors' postpetition lenders and counsel for the Official Committee of Unsecured Creditors, subject to confidentiality agreements. Upon request, the Debtors will provide a copy of the Second Amendment to the Court for in camera review. Mr. Walker said the terms of the Amendment are fair and favorable to the Debtors. The Amended Agreement will be also be valuable to the Debtors' ongoing business operations. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Sells Kentucky Property to Jack Cooper for $625K ----------------------------------------------------------------- The U.S Bankruptcy Court for the Northern District of Georgia approved the sale of Allied Holdings, Inc., and its debtor- affiliates' real property, located in the city of Georgetown, Commonwealth of Kentucky, to Jack Cooper Transport Company, Inc., for $625,000. The Debtors did not receive an initial overbid from a qualified bidder for the property. The Court permits the Debtors to pay Haymaker Company, LLC, doing business as Haymaker/Bean Commercial Real Estate, its commission of 3% of the purchase price out of the deposit and sale proceeds at closing. Allied Systems is authorized to pay Scott County the 2005 Taxes owed on the Property out of the sale proceeds at closing. Allied Systems, Ltd., as landlord, executed a lease with Jack Cooper, as tenant, for approximately 9.43 acres of industrial land located at 239 Triport Road in the City of Georgetown, County of Scott, Commonwealth of Kentucky. The Lease commenced on April 1, 2006, and continues on a month-to-month basis thereafter, with $5,625 in monthly rent due on the first day of each month. The parties also entered into a purchase and sale agreement for the Real Property, pursuant to which Jack Cooper will purchase the Real Property for $625,000, subject to higher and better offers. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLTEL GEORGIA: Spin-Off Prompts S&P to Slash Ratings ----------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit ratings on ALLTEL Georgia Communications Corp. and Alltel Communications Holdings of the Midwest Inc. (formerly Aliant Communications), to 'BB+' from 'A-'. The outlook is negative. At the same time, the rating agency lowered to 'BBB' and 'BBB-', respectively, the ratings of the unsecured debt of ALLTEL Georgia and Alltel Communications Holdings of the Midwest from 'A-', and removed all ratings from CreditWatch, where they had been placed with negative implications on Dec. 9, 2005, following the announcement of the planned spin-off by ALLTEL Corp. (A-/Stable/A- 2) of its wireline business through a merger with the operations of independent local telephone company, Valor Communications Group Inc., into a new entity Windstream Corp. (BB+/Negative/--). Standard & Poor's also raised the rating on Valor's unsecured debt to 'BBB-' from 'B', removed the rating from CreditWatch, and withdrew the corporate credit rating. "With the completion of the merger, Windstream has assumed a total of $180 million of debt issued by these two former ALLTEL Corp. entities," said Standard & Poor's credit analyst Catherine Cosentino. ALLTEL Georgia's debt is two notches above the corporate credit rating on Windstream, reflecting the issue's superior position in the capital structure and the substantial level of overcollateralization. Alltel Communications of the Midwest is rated one notch above the Windstream corporate credit rating since the collateral securing this debt is also pledged on an equal and ratable basis to the Windstream senior secured credit facility. ALPHA-200: Judge Rhodes Dismisses Second Chapter 15 Petition ------------------------------------------------------------ Alpha-200 GmbH & Co. KG failed to gain recognition of its German liquidation as a foreign main proceeding after the U.S. Bankruptcy Court for the Eastern District of Michigan dismissed the second Chapter 15 petition filed by Dr. Oliver Kirschnek, its foreign representative. Judge Steven Rhodes ruled that Dr. Kirschnek did not comply with Section 1515 of the Bankruptcy Code, Terry Brennan at The Deal reports. Section 1515 requires Chapter 15 petitions to be filed together with documents showing the existence of the foreign proceeding as well as the appointment and authority of the foreign representative. M&C Corporation, a local manufacturer's representative and one of Alpha's creditors, sought the dismissal of Alpha's Chapter 15 petition. In 1994, M&C won various arbitration awards against Alpha, then operating as Erwin Behr GmbH & Co. KG, from the International Court of Arbitrations. M&C had taken legal action following Alpha's alleged breach of their sales contract. The U.S. District Court for the Eastern District of Michigan, Southern Division, confirmed the arbitration awards in August 1994 and March 1995. At M&C's request, District Court Judge Paul V. Gadola appointed Gerald W. Hepp as receiver for Alpha's assets. M&C asked the Bankruptcy Court to dismiss Dr. Kirschnek's Chapter 15 petition citing: -- it "runs afoul" of Judge Gadola's receivership injunction enjoining all entities from disturbing the possession of the receiver and prosecuting any action that would affect Alphas' property; -- the petition is barred by Section 109(g) of the Bankruptcy code since the Court has dismissed Dr. Dr. Kirschnek's first Chapter 15 filing; -- the misdeed of Alpha's directors and officers render the petition a bad faith filing; and -- Dr. Kirschnek failed to timely file certain documents required under bankruptcy rules. Dr. Kirschnek's counsel, Andrew J. Munro, Esq., at Munro and Zack, PC, told the Bankruptcy Court that none of M&C's arguments held any merit. He claimed that M&C wanted to keep Alpha out of Chapter 15 to gain sole control of the foreign debtor's U.S. assets and avoid sharing these assets with other creditors. Headquartered in Wendlingen, Germany, Alpha-200 GmbH & Co. KG, aka Erwin Behr GmbH & Co. KG, is an auto parts maker. Alpha's foreign representative, Dr. Oliver Kirschneck, filed a chapter 15 petition on May 24, 2006 (Bankr. E.D. Mich. Case No. 06-46562). Andrew J. Munro, Esq., at Munro and Zack, PC, represents Dr. Kirschneck in Alpha's ancillary proceedings. When Dr. Kirschneck filed the Chapter 15 petition, he estimated Alpha's assets at less than $50,000 and debts at $1 million to $10 million. AFFINITY TECHNOLOGY: Amends Withrow & Terranova Agreement --------------------------------------------------------- Affinity Technology Group, Inc., its wholly-owned subsidiary decisioning.com, Inc., and Withrow & Terranova, PLLC, entered into an Amended and Restated Legal Representation Agreement on July 10, 2006, to acknowledge and consent to decisioning.com's engagement of McBride Law, PC. decisioning.com is party to a Legal Representation Agreement, dated as of May 27, 2003, with Withrow & Terranova, in connection with licensing and enforcing its patents. Concurrently on July 10, 2006, Affinity, decisioning.com and McBride entered into a separate Engagement Agreement, pursuant to which Affinity and decisioning.com engaged the McBride Firm to assist decisioning.com and Withrow & Terranova in connection with the solicitation, negotiation and execution of patent agreements and patent litigation. Pursuant to the Amended Withrow & Terranova Agreement and the McBride Engagement Agreement: -- decisioning.com will pay Withrow & Terranova a fee equal to 19% of all amounts paid as damages, in settlement, or licensing by any parties against whom decisioning.com has commenced litigation, while McBride will be paid a fee equal to 6%. Under the original Withrow & Terranova Agreement, decisioning.com was obligated to pay the entire 25% to Withrow & Terranova; -- decisioning.com will also pay Withrow & Terranova 19% and and McBride 6%, of all other revenues received by decisioning.com pursuant to any patent agreements other than those entered into as a result of litigation, provided that such amounts will be reduced to: Percentage Fee Payable to Percentage Fee Cumulative Withrow & Payable to Licensing Revenues Terranova McBride ------------------ -------------- -------------- Less than $100 Million 19.0% 6.0% $100 Million to $200 Million 15.0% 6.0% $200 Million to $300 Million 11.0% 6.0% $300 Million to $400 Million 7.0% 6.0% $400 Million to $500 Million 4.5% 4.5% Above $500 Million 2.5% 2.5% -- decisioning.com is obligated to pay the same percentage fee to Withrow & Terranova and McBride if Affinity sells one or more of its patents, directly or indirectly through the sale of Affinity or decisioning.com. In such a transaction, the percentages applied to the Licensing Revenues will be applied to the sales price as if the sales price were Licensing Revenues. Under the original Withrow & Terranova Agreement, decisioning.com was obligated to pay 25% of all licensing revenues and the sale price for patents sold entirely Withrow & Terranova; -- decisioning.com will pay Withrow & Terranova and McBride 50% of their billing rates for services rendered under the new agreements; -- Withrow & Terranova and McBride Firm not obligated to undertake more than seven patent lawsuits on behalf of decisioning.com at one time. This number will be reduced to five if the engagement of either firm is terminated; and -- Affinity and decisioning.com are jointly and severally liable for all obligations under the new agreements. A full-text copy of the Withrow & Terranova Legal Representation Agreement is available for free at: http://ResearchArchives.com/t/s?dfd A full-text copy of the Amended and Restated Withrow & Terranova Legal Representation Agreement is available for free at: http://ResearchArchives.com/t/s?dfe A full-text copy of the McBride Engagement Agreement is available for free at http://ResearchArchives.com/t/s?dff About Affinity Technology Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. -- http://www.affi.net/-- owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant- directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. Going Concern Doubt As reported in the Troubled Company Reporter on April 19, 2006, Scott McElveen, L.L.P., expressed substantial doubt about Affinity Technology Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring operating losses, accumulated deficit, and certain convertible notes in default. At Dec. 31 2005, Affinity Technology's stockholders' deficit widened to $2,048,371, from a $1,513,523 stockholders' deficit at Dec. 31, 2004. AFFINITY TECHNOLOGY: Hires Morgan Keegan as Financial Advisor ------------------------------------------------------------- Affinity Technology Group, Inc., entered into a letter agreement, with Morgan Keegan & Company on July 10, 2006. Morgan Keegan will act as Affinity's exclusive financial advisor and is expected to assist the Company in: * strategic planning, * assessing capital markets relative to Affinity, * securing additional equity or debt capital and, * if requested by Affinity, assist in the analysis and consideration of the financial aspects of potential strategic transactions. The Morgan Keegan Letter Agreement has an initial term of two years, subject to automatic extension unless either party determines otherwise. Under the Morgan Keegan Letter Agreement: -- Affinity issued to Morgan Keegan, an advisory fee, a warrant with a five-year term to purchase 2,500,000 shares of Affinity's common stock for $0.50 per share. Affinity will be required to register the shares of common stock covered by the warrant for resale under the Securities Act of 1933, as amended, if Affinity receives additional capital or patent licensing fees of $5 million; -- If Affinity sells debt or equity securities in an amount in excess of $5 million, Affinity will pay Morgan Keegan an additional cash placement fee equal to: * 5% of the amount of any equity financing, * 3% of the amount of any mezzanine financing, and * 1% of the amount of any senior debt financing, subject to certain exceptions. However, Affinity will not be required to pay Morgan Keegan any additional cash placement fee on the sale of additional convertible notes; -- If Affinity decides to pursue the sale of the company, Morgan Keegan will represent Affinity, and Affinity will pay Morgan Keegan a transaction fee equal to 2% of the aggregate consideration received in the transaction; -- If Affinity decides to pursue an acquisition of another company, Morgan Keegan will represent Affinity in the transaction, and Affinity will pay Morgan Keegan a transaction fee equal to 2% of the aggregate consideration paid by Affinity; and -- Affinity will indemnify Morgan Keegan and its directors, officers, employees and agents for all losses, claims, damages, liabilities and expenses incurred in connection with its services to Affinity under the agreement, subject to certain exceptions. A full-text copy of the Letter Agreement, dated July 10, 2006, between Affinity Technology and Morgan Keegan is available for free at http://ResearchArchives.com/t/s?e00 About Affinity Technology Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. -- http://www.affi.net/-- owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant- directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. Going Concern Doubt As reported in the Troubled Company Reporter on April 19, 2006, Scott McElveen, L.L.P., expressed substantial doubt about Affinity Technology Group, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring operating losses, accumulated deficit, and certain convertible notes in default. At Dec. 31 2005, Affinity Technology's stockholders' deficit widened to $2,048,371, from a $1,513,523 stockholders' deficit at Dec. 31, 2004. AMERICHIP INT'L: May 31 Balance Sheet Upside-Down by $697,203 ------------------------------------------------------------- AmeriChip International Inc. delivered its second quarter financial statements for the three months ended May 31, 2006, with the Securities and Exchange Commission on July 17, 2006. The Company reported a $2,226,553 net loss on $33,611 of sales for the three months ended May 31, 2006, compared to a net loss of $609,359 on $25,973 of sales for the same period in 2005. At May 31, 2006, the Company's balance sheet showed $1,028,776 in total assets, $1,722,566 in total liabilities, and $3,413 in minority interest, resulting in a $697,203 stockholders' deficit. The Company's May 31 balance sheet also showed strained liquidity with $279,135 in total current assets available to pay $1,523,566 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?df3 Going Concern Doubt Williams & Webster, P.S., in Spokane, Washington, raised substantial doubt about AmeriChip International Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Nov. 30, 2005, and 2004. The auditor pointed to the Company's significant operating losses. About AmeriChip Headquartered in Plymouth, Michigan, AmeriChip International Inc. -- http://www.americhiplacc.com/-- holds a patented technology known as Laser Assisted Chip Control, the implementation of which results in efficient chip control management in industrial metal machining applications. This technology provides substantial savings in machining costs of certain automobile parts providing much more competitive pricing and more aggressive sales approaches within the industry. ANCHOR GLASS: Gets Arkema's Nod to Assume Certincoat Agreement -------------------------------------------------------------- Anchor Glass Container Corporation and Arkema, Inc., agreed that Anchor Glass will assume the Certincoat System Agreement dated Jan. 1, 2004, pursuant to Section 365 of the Bankruptcy Code. The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida directs Anchor Glass to pay $217,656, as cure amount, on or before Aug. 3, 2006. Arkema had objected to any provision in Anchor Glass' plan that calls for assumption of the Certincoat Contract. Arkema asserted that pursuant to the Pennsylvania law, Anchor Glass is prohibited from assigning, and thus, assuming, the Certincoat Agreement dated Jan. 1, 2004. The Contract is a requirements contract and will materially increase the risk and burdens for Arkema. Arkema, Inc., has withdraw its objection to the confirmation of Anchor Glass' Second Amended Plan of Reorganization. The Court confirmed Anchor Glass' Plan on April 18, 2006. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court Dismisses Adversary Proceeding Against OCI -------------------------------------------------------------- The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for the Middle District of Florida dismissed an Adversary Proceeding filed by Anchor Glass Container Corporation against OCI Chemical Corporation. The Court found that Anchor Glass has taken no action for more than six months in the adversary proceeding. It appears that Anchor Glass no longer desires to pursue the matter, the Court said. OCI Contract Anchor Glass and OCI entered into an OCI Sales Agreement #145 dated June 7, 2004. In the Agreement, OCI agreed to supply bulk density soda to Anchor Glass for a three-year term. OCI supplies approximately 65% of Anchor Glass' annual requirements of soda ash, and is substantially the sole supplier to six of Anchor Glass' eight manufacturing plants. On Aug. 9, 2005, in an attempt to collect a prepetition claim in violation of Section 362 of the Bankruptcy Code, OCI notified the Anchor Glass that Anchor failed to make payments due under the Agreement. OCI asserts a balance due in excess of $1,800,000 as of the Petition Date. OCI also declined further performance under the Agreement pursuant to paragraph 3 of the Terms and Conditions to the Agreement. In addition, OCI has demanded that, as a condition to resuming new shipments of soda ash, Anchor must agree to the substantially higher amount OCI asserts as its unpaid prepetition claim due from Anchor, rather than the amount indicated by Anchor's records. OCI also demanded that Anchor must agree to pay a price of $105 per ton, rather than the $79.20 per ton established under the terms of the Agreement, until Anchor has paid OCI's asserted prepetition claim in full. The Anchor Glass told the Court that OCI's actions constituted a willful violation of the automatic stay and a breach of its obligations under the Agreement, as affected by Section 365, which implicitly obligates a non-debtor party to an executory contract to continue performing its obligations, until Anchor exercises its right to assume or reject the terms of the Agreement. Anchor Glass had asked the Court for: (a) a Temporary Retraining Order against OCI, requiring OCI to (i) resume immediately the shipment of soda ash to Anchor, at the price per ton set by the terms of the Agreement, and (ii) make shipments by truck as well as railcar, to avoid any interruption in the steady supply of soda ash to Anchor's plants, until a regular supply is restored; (b) a Preliminary Injunction requiring OCI to continue shipping soda ash to Anchor under the terms of the Agreement until a final hearing on the merits; (c) a Permanent Injunction requiring OCI to continue shipping soda ash to Anchor under the terms of the Agreement until Anchor assumes or rejects the Agreement; and (d) any relief as may be appropriate, including judgment for all damages sustained by Anchor as a result of OCI's refusal to perform under the terms of the Agreement, and OCI's violation of the automatic stay, including the incremental expense of truck shipments. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) APOGEE TECH: Posts $729,000 Net Loss in Quarter Ended March 31 -------------------------------------------------------------- Apogee Technology, Inc. filed its first quarter financial statements for the period ended March 31, 2006, with the Securities and Exchange Commission. The Company reported a $729,000 net loss on $985,398 of revenues for the three months ended March 31, 2006. This compares to a $1,438,284 net loss on $1,114,740 of revenues for the three months ended March 31, 2005. At March 31, 2006, the Company's balance sheet showed $6,112,641 in total assets, $1,227,506 in total liabilities, and $4,855,135 in stockholders' equity. A full-text copy of the Company's financial statement for the quarterly period ended March 31, 2006, is available for free at: http://researcharchives.com/t/s?dea Going Concern Doubt Miller Wachman, LLP, expressed substantial doubt about Apogee Technology, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring operating losses and negative cash flows from operations. About Apogee Technology Headquartered in Norwood, Massachusetts, Apogee Technology (AMEX: ATA) -- http://www.apogeemems.com/-- designs, develops and markets proprietary sensor and medical device products using its MEMS and nanotechnology for the automotive, industrial, consumer and medical markets. The Company operates a worldwide marketing and sales organization and has offices in the U.S. and Japan. APPLIEDTHEORY CORP: Bankruptcy Court Applied STN Factors Properly ----------------------------------------------------------------- The Honorable Denise Cote of the U.S. District Court for the Southern District of New York affirmed a ruling by the U.S. Bankruptcy Court requiring the Official Committee of Unsecured Creditors of AppliedTheory Corporation to obtain court approval before it could bring an equitable subordination suit against the Debtors' Lenders. Authority Motion On December 23, 2002, the Committee filed a motion seeking authority to commence an adversary proceeding against The Palladin Group, L.P., Elliot Associates, L.P., and other members of a lending syndicate. The Authority Motion contained a proposed complaint asserting claims for voidable preference, fraudulent conveyance, equitable subordination, and aiding and abetting breach of fiduciary duty. In April 2004, the Committee renewed its Authority Motion and submitted a proposed amended complaint, which included an equitable subordination claim. The bankruptcy court denied the motion and the Committee did not appeal. The chapter 11 trustee, appointed on August 6, 2003, reviewed the potential claims against the Lenders at the behest of the Committee and concluded that that there was an insufficient basis to assert all but one of the claims identified by the Committee. Ultimately, a summary judgment was entered against the chapter trustee on that claim. On August 5, 2005, the Lenders filed a motion seeking an order clarifying or limiting the scope of the Committee's authority to engage in litigation against the Lenders. On October 11, 2005, the bankruptcy court granted the Lenders' request and held that the Trustee "would ordinarily" be the proper party to bring the claim and that the Committee required court approval before it could assert the claim. The bankruptcy court declared that in this case, the Trustee "has the sole and exclusive right to assert" the claim after finding that the claim would: * be brought on behalf of all general unsecured creditors; * seek to redress injuries allegedly inflicted upon the Debtors and their creditors generally; and * not be directed toward any particularized injury suffered by any specific creditor, or any allegedly wrongful conduct by the Lenders directed to any specific creditor. The Committee filed a timely Notice of Appeal of the Authority Order on October 20, 2005. District Court Decision In her decision, Judge Cote says that the appeal raises the question of whether a creditor's committee may bring an equitable subordination claim without receiving court approval. Judge Cote says it may not and affirms the bankruptcy court's ruling. Equitable Subordination Judge Cote relates that equitable subordination is a judge-made doctrine that predates Congress' revision of the Bankruptcy Code. United States v. Nolan, 517 U.S. 535, 538, 116 S.Ct. 1524, 134 L.Ed.2d 748 (1996). The purpose of equitable subordination is to undo wrongdoing by an individual creditor in the interest of the other creditors. Given equitable subordination's purpose, many courts have concluded that where a trustee has been appointed, it is the proper party to raise claims of equitable subordination. See, e.g. In re KDI Holdings, Inc., 277 B.R. 493, 507 (Bankr. S.D.N.Y. 1999) Judge Cote says that courts that allowed creditors to bring claims for equitable subordination, did so when an individual creditor sought to bring the equitable claim for its own benefit. STN Factors Judge Cote relates that under the Bankruptcy Code, creditor's committees are "qualified to initiate a suit" but that right is contingent upon the committee obtaining "the approval of the bankruptcy court." In re STN Enters., 779 F.2d 901, 904 (2d Cir. 1985). The right to bring suit may be exercised in a limited set of situations, including when the trustee or "debtor in possession unreasonably fails to bring suit" and "where the trustee or debtor in possession consents." In re Commodore Intern. Ltd., 262 F.3d 96, 100 (2d Cir. 2001) Judge Cote says that in determining whether to allow a committee to bring litigation, the bankruptcy court considers two factors: 1) whether the claim is colorable and 2) whether the claim is "likely to benefit the reorganization estate." These two factors, Judge Cote declares, were introduced by the Second Circuit in STN Enterprises, 779 F.2d at 901, and are referred to as the STN factors. Judge Cote finds that the bankruptcy court had already made factual determinations and that these determinations were not clearly erroneous and not even challenged on appeal. In any event, the Committee was required to obtain approval from the bankruptcy court before bringing any litigation. The bankruptcy court, in addressing an application, must apply the STN Factors. Thus, Judge Cote rules, the bankruptcy court did not err in applying the STN Factors to the issue of the Committee's right to bring an equitable subordination claim. Judge Cote's decision is published at 2006 WL 1711766. Mary Miras, Esq., at Duval & Stachenfeld LLP, and David Parker, Esq., at Kleinberg, Kaplan, Wolff & Cohen P.C., represented Palladain Overseas Fund, Ltd., Halifax Fund, L.P., Palladin Partners I, L.P., Deam Convertible Arbitrage Fund, Ltd., Spectrum Investment Partners, LP, Elliott International, L.P. and Elliott Associates, L.P., in this proceeding. About AppliedTheory AppliedTheory Corporation provides internet service for business and government, including direct internet connectivity, internet integration, web hosting and management service. The Company filed for chapter 11 protection on April 17, 2002 (Bankr. S.D.N.Y. Case No. 02-11868). Joshua Joseph Angel, Esq., and Leonard H. Gerson, Esq., at Angel & Frankel, P.C., represent the Debtors in their restructuring efforts. Andrew I. Silfen, Esq., and Leah M. Eisenberg, Esq., at Arent Fox PLLC, represent the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed $81,866,000 in total assets and $84,128,000 in total debts. ASARCO LLC: FFIC Wants to Participate in Asbestos Estimation Steps ------------------------------------------------------------------ Fireman's Fund Insurance Company asks the U.S. Bankruptcy Court for the Southern District of Texas to: (a) include in any case management order governing any estimation proceedings appropriate protective "insurance neutrality" terms to the effect that any estimation of the Asbestos Claims is not binding on FFIC for any insurance coverage; or (b) permit FFIC to fully and meaningfully participate in any estimation proceedings. FFIC reserves its rights under its policies in the context of any pending, or future, insurance coverage among ASARCO and the Asbestos Debtors. FFIC complains that the Agreement regarding the case management of the estimation of the asbestos claims is unfair. FFIC asserts that it has submitted several objections to the Estimation Motion. FFIC previously asked the Court to include appropriate protective "insurance neutrality" terms in any case management governing any estimation process. FFIC also asked the Court to permit it to participate in any estimation proceeding. FFIC was not included in any negotiations between ASARCO LLC, the Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors, and the Future Claims Representative, Anthony S. Cox, Esq., at Hermes Sargent Bates, LLP, in Dallas, Texas, tells the Court. Mr. Cox argues that the Agreement expanded the scope for which the results of the estimation proceeds will be used. Because of the expanded scope, Mr. Cox believes that the results of the estimation proceedings will be used in connection with the litigation commenced in May 2001 by ASARCO and the Asbestos Debtors against FFIC captioned ASARCO LLC, et al. v. Allianz International Insurance, Ltd., et al. Mr. Cox says the Court should direct ASARCO to include the appropriate protective "insurance neutrality" terms in any case management order to streamline the proposed estimation process by eliminating the need for FFIC's further participation and avoid the fundamental unfairness of imposing a substantive result on a litigant that otherwise has no opportunity to participate in the outcome. Mr. Cox argues that since FFIC was not included in the negotiations for the Agreement, it is now a disadvantage for FFIC to participate meaningfully in the estimation proceeding. The time for discovery set in the Agreement is unreasonably short, Mr. Cox says, considering that other parties have accessed the documentation that must be reviewed to prepare for the estimation proceeding. A compromise or a settlement under Rule 9019(a) of the Federal Rules of Bankruptcy Procedure cannot be used to avoid the express jurisdictional requirements of the Bankruptcy Rules. Mr. Cox emphasizes that the Agreement is neither a compromise nor a settlement because nothing is settled. Rather, Mr. Cox says, the Agreement is an impermissible private re-writing of the Bankruptcy Rules. Based 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 Stay Lifted to Enter Into Tax Escrow Agreement ---------------------------------------------------------------- ASARCO LLC asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to lift the automatic stay, to the extent necessary, to permit ASARCO, the U.S. government and Wells Fargo Bank, National Association, as escrow agent to enter into the Stipulation and the Escrow Agreement and the deposit of the Tax Refund in the Escrow Account. ASARCO LLC's predecessor filed consolidated tax returns as the common parent of an affiliates group of corporations. As a result of the carryback of losses to certain of those consolidated tax years, ASARCO expects to receive a refund from the United States Department of the Treasury, Internal Revenue Service of approximately $40,479,421, plus interest. In February 2006, the U.S. government, on behalf of the Environmental Protection Agency, the Department of Agriculture and the Department of the Interior, filed a secured claim for $130,741,077 as a result of a right of set-off against the Tax Refund, plus any additional amounts subject to set-off. ASARCO objects to the Claim on various grounds, including that the Claim is not allowable under Section 502 of the Bankruptcy Code and that the Tax Refund is not subject to setoff. To resolve their dispute, the parties stipulate that the United States, or ASARCO if it receives the Tax Refund, agrees to transfer any tax overpayments plus any interest resulting from the Tax Refund to an interest bearing escrow account, pending the settlement of the allowance of the United States' Claim. Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas, notes that the transfer will not impair or waive any setoff rights of the U.S. government, or any defenses or objections by the Debtors. Instead, the rights, defenses or objections will be preserved as if the tax overpayments had not been transferred to ASARCO, but instead are held by the U.S. government up until the time the funds are actually distributed from the escrow account to either the U.S. government or ASARCO. Mr. Davis asserts that the Escrow Account provides adequate protection of the U.S. government's asserted setoff rights. To implement the escrow provisions of the Stipulation, ASARCO, the U.S. government and Wells Fargo Bank, National Association, as escrow agent, entered into an Escrow Agreement. A full-text copy of the Escrow Agreement is available for free at http://ResearchArchives.com/t/s?de1 Based 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 Execute IRS Forms for Tax Refunds ------------------------------------------------------ ASARCO LLC seeks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to execute the Internal Revenue Service forms. On May 15, 2003, ASARCO Incorporated filed tax refund claims for $70,160,199 with the Internal Revenue Service. Pursuant to a merger deal between ASARCO, Inc., and ASARCO LLC in February 2005, the Refund Claims is property of ASARCO LLC's bankruptcy estate, James R. Prince, Esq., at Baker Botts LLP, in Dallas, Texas, says. The Refund Claims are based on the carry-back of specified liability losses from: (a) tax years ending on Dec. 31, 1994, and 1995 to the tax year ending on Dec. 31, 1987; (b) tax year ending on Dec. 31, 1998, to the tax year ending on Dec. 31, 1988; and (c) tax year ending on Dec. 31, 1999, to the tax year ending on Dec. 31, 1989. ASARCO particularly asserted that the environmental and workmen's expenditures it incurred qualified as specified liability losses under Section 172(f) of the Internal Revenue Code. The IRS disputed ASARCO's assertions and maintained that the environmental expenditures did not qualify as SLLs. The IRS required ASARCO to provide documents supporting its argument. In the last quarter of 2005, the IRS agreed to use statistical sampling to determine the portion of ASARCO's environmental expenditures that would be classified as SLLs, Mr. Prince relates. Based on the statistical sampling, the IRS tentatively agreed to allow $40,479,421 of the Refund Claims. In May 2006, the Congressional Joint Committee on Taxation approved the allowance of $40,479,421 of the Refund Claims. The IRS notified ASARCO of the allowance, and indicated that the balance of the Refund Claim is disallowed. Attached with the IRS' notice are: (i) IRS Form 870 -- Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and of Acceptance of Overassessment; and (ii) IRS Form 3363 -- Acceptance of Proposed Disallowance of Claim for Refund or Credit. For the IRS to pay the allowed Refund Claims, ASARCO is required to first execute the IRS Forms. If ASARCO does not sign the IRS Forms, the Refund Claims will be disputed and referred to the IRS Appeals Division. The IRS further warned ASARCO that no portion of the Tax Refund would be paid until the dispute is resolved and approved by the Joint Committee on Taxation. Mr. Prince notes that if ASARCO signs the IRS Forms, ASARCO would waive its right to have the IRS reconsider the Refund Claims as part of the current administrative proceedings. However, a reconsideration of the disallowed Refund Claims would unlikely result in a more favorable resolution of the Claims, Mr. Prince says. By signing the IRS forms, ASARCO would not in any way waive its right to pursue litigation for any disallowed portion of the Refund Claims either in the District Court or in the Claims Court, Mr. Prince adds. By executing the IRS forms, ASARCO will avoid additional expenses with respect to the Tax Refund. By separating the allowed amount from the disputed amount, ASARCO narrows the focus of future litigation, Mr. Prince points out. 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). ATLANTIC WINE: Meyler & Company Raises Going Concern Doubt ---------------------------------------------------------- Meyler & Company, LLC, in Middletown, New Jersey, raised substantial doubt about Atlantic Wine Agencies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended March 31, 2006, and 2005. The auditor pointed to the Company's losses since inception, and uncertainty to obtain additional capital and operate successfully. Atlantic Wine reported a net loss of $2,270,382 on $1,132,060 of net sales for the year ended March 31, 2006, compared to a net loss of $3,214,810 on $120,913 of net sales for the same period in 2005. At March 31, 2006, the Company's balance sheet showed $3,865,952 in total assets, $1,905,355 in total current liabilities, and $1,960,597 in total stockholders' equity. Loan From Principal Stockholder The principal stockholders advanced the Company on March 31, 2006, $3,689,821 for working capital of which $2,429,958 has been contributed to capital and $1,259,863 remains as a loan on that date. The loan is non-interest bearing and has no stated maturity date. Subsequent Events The Company entered into an overdraft facility arrangement on June 6, 2006, with a South African bank for ZAR$1,000,000 or $162,200. The loan is secured by the assets of the South African winery and bears a rate of interest at South African Prime of 8%. A full-text copy of the Company's annual report is available for free at http://ResearchArchives.com/t/s?df6 Headquartered in London, Atlantic Wine Agencies, Inc. -- http://www.atlanticwineagencies.com/-- is a public listed company supported by a small group of key investors who are passionate wine enthusiasts. The Company purchased Mount Rozier Estatem, a world-class vineyard estate in Stellenbosch, South Africa, in February 2004. The group has two key business areas; a brand building wine business and a leisure/lifestyle development business. Each is operated separately with management and organizations within the group under the control of the main board. BLACK PRESS: Moody's Rates Proposed Sr. Sec. Bank Loan at Ba3 ------------------------------------------------------------- Moody's Investors Service assigned a Ba3 Corporate Family rating to Black Press Ltd. and a Ba3 rating to its proposed new senior secured credit facilities. The outlook for the rating is stable. The Ba3 Corporate Family rating primarily reflects Black Press's significant consolidated leverage associated with its pending acquisition of the Akron Beacon Journal; its successful track record of acquiring and operating newspapers in smaller communities, which are less exposed to competition and advertising volatility than those in urban markets, coupled with Moody's expectation that management will focus on reducing restricted group leverage below 4 times over the next few years. The rating also reflects the business risk inherent in a smaller scale, pure play newspaper operation with no revenue diversification outside of this challenging sector, as well as the ongoing cash needs of its Hawaiian newspaper operation, which Moody's expects will be funded from the excess cash flow of the restricted group. The rating outlook is stable based on Moody's assumption that Black Press will likely realize operating efficiency improvements at the Akron paper to bring its EBITDA margin up to Black Press's own level, and that debt reduction will be modest as ongoing investments will be made to support Black Press's Hawaiian business. Assignments: Issuer: Black Press Ltd * Corporate Family Rating, Assigned Ba3 * Senior Secured Bank Credit Facility, Assigned Ba3 Black Press Ltd. is a newspaper company that owns and publishes 115 community newspapers in Western Canada as well as Washington, Hawaii and Ohio in the United States. The company is headquartered in Victoria, British Columbia, Canada. BMC INDUSTRIES: Court Approves Second Amended Disclosure Statement ------------------------------------------------------------------ The Honorable Robert J. Kressel of the U.S. Bankruptcy Court for the District of Minnesota approved the Second Amended Disclosure Statement explaining the Second Amended Plan of Reorganization filed in the chapter 11 cases of BMC Industries Inc. and its debtor-affiliates. The Court determined that the Disclosure Statement contained adequate information -- the right amount of the right kind of information necessary for the creditors to make informed decisions -- as required under Section 1125 of the Bankruptcy Code. The Plan provides for the substantive consolidation of the Debtors' estates. All debtor-affiliates will be deemed merged with BMC Industries, canceling intercompany claims. Summarily, the Plan provides for: (1) the distribution in cash on the plan's effective date to the holders of: -- allowed administrative expense claims, aggregating $2,469,000, and -- allowed priority non-tax claims, totaling $4,500; (2) the distribution in cash, in equal annual installments of principal and interest, to holders of allowed priority tax claims, amounting to $166,000 beginning six months following full payment of a working capital adjustment and with the final installment payable no later than the fifth anniversary of the Effective Date; (3) the distribution on the Effective Date to the holders of allowed other secured claims, at the option of the liquidating trustee, either: (a) the proceeds of the sale or disposition of the collateral securing the allowed secured claim to the extent of the value of the holder's secured interest in the allowed secured claim, net of the costs of disposition of the collateral; (b) the collateral securing the allowed secured claim; (c) other treatment that leaves unaltered the legal, equitable, and contractual rights to which the holder of the allowed other secured claim is entitled; or (d) other distribution as necessary to satisfy the requirements of the Bankruptcy Code; (4) the creation of a Liquidating Trust for the benefit of general unsecured creditors of the Debtors and through the distribution on the Effective Date to the holders of allowed general unsecured claims amounting to $55.65 million and to the holders of allowed prepetition lender claims, totaling $70.6 million, of interests in the Liquidating Trust; and (5) cancellation of equity interests. A hearing to consider confirmation of the plan will be held on Aug. 9, 2006, 10:30 a.m. in Courtroom 8 West at U.S. Courthouse, 300 South Fourth Street, Minneapolis, Minn. An objection to confirmation of the plan should be made by motion under Local Rule 3020-1 and received on or before Aug. 4, 2006. Ballots, in order to be counted, should be received on or before Aug. 4, 2006. The attorneys for the Debtors and the Official Committee of Unsecured Creditors will jointly count the ballots and file a report of the tabulation not later than Aug. 8, 2006, under Local Rule 3020-2. A full-text copy of the Second Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060719033103 Headquartered in Ramsey, Minnesota, BMC Industries Inc. -- http://www.bmcind.com/-- is a multinational manufacturer and distributor of high-volume precision products in two business segments, Optical Products and Buckbee Mears. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Minn. Case No. 04-43515) on June 23, 2004. Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman, and Clinton E. Cutler, Esq., at Fredrikson & Byron, P.A., represent the Debtors in there restructuring efforts. Thomas J. Flynn, Esq., at Larkin, Hoffman, Daly & Lindgren, Ltd., represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from its creditors, it listed $105,253,000 in assets and $164,751,000 in liabilities. BROWNWOOD FORD: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Brownwood Ford Lincoln Mercury LLC 500 West Commerce Brownwood, Texas 76801 Tel: (915) 643-1651 Fax: (915) 643-3161 Bankruptcy Case No.: 06-32893 Type of Business: The Debtor operates an automotive dealership. Chapter 11 Petition Date: July 19, 2006 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale 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. CALPINE CORP: Wants Court To Approve Pacific Gas Settlement Pact ---------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve their Settlement Agreement with Pacific Gas & Electric Company. Calpine Gilroy Cogen LP operates a 130-megawatts cogeneration facility. In 1983, Gilroy and Pacific Gas & Electric Company entered into a Power Purchase Agreement. In 1999, the parties executed an agreement for termination and buy-out of standard offer. The PPA was terminated in October 2002. As consideration for the Termination Agreement, the parties agreed that PG&E would make monthly termination payments of not more than $20,700,000 per year for 14 years and 8 months commencing on Feb. 28, 2000, with the last payment due on Sept. 30, 2014. Under the Termination Agreement, PG&E reserved and was granted certain rights of set-off against the Termination Agreement Payments. In November 2003, Gilroy sold the receivable stream associated with the Termination Agreement Payments. The Termination Agreement Payments Receivable was subject to those rights of set- off reserved by PG&E under the Termination Agreement. Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, relates that Calpine Corporation and Gilroy indemnified the purchaser of the Termination Agreement Payments Receivable against any set-offs PG&E may make against the Termination Agreement Payments. The Purchaser was also granted a security interest in the Gilroy Facility, and was given the right to foreclose on the Gilroy Facility if Calpine and Gilroy fail to honor their guaranty obligations. Mr. Cieri notes that for the passed years, PG&E, Gilroy and other power generators have been involved in a dispute regarding certain historical rates charged by Gilroy and other power generators under certain types of contracts with PG&E. The Termination Agreement provided that if Gilroy is found to have any liability to PG&E under the Pricing Dispute, PG&E would be authorized to offset Gilroy's liability against PG&E's Termination Payments. Using the methodology advocated by PG&E in the Pricing Dispute, PG&E's asserted damages against Gilroy under the Pricing Dispute could exceed $40,000,000, Mr. Cieri notes. Calpine disputes liability and does not agree with PG&E's calculations. However, any finding of liability by Gilroy on account of the Pricing Dispute could result in a dollar-for- dollar reduction in the Termination Payments, and could trigger dollar-for-dollar guaranty obligations on the part of Gilroy and Calpine with respect to the Termination Agreement Payments Receivable, Mr. Cieri pointed out. Furthermore, Mr. Cieri said that because the purchaser of the Termination Agreement Payments Receivable was granted a security interest in the Gilroy Facility, any guaranty obligations could constitute secured debt. Thus, Calpine and Gilroy negotiated with PG&E in an attempt to minimize Gilroy's secured debt exposure. Accordingly, the parties agreed that: (a) Calpine's King City Plant, a non-debtor entity, will be the proxy for the Gilroy Plant; (b) Gilroy will pay PG&E, for the next 54 months, the amount equal to $0.975 per MWh of electricity delivered to PG&E from the King City Plant; (c) the settlement will be deemed null and void if no approval from the Court or the California Public Utilities Company is received before December 31, 2006, unless otherwise agreed by the parties; and (d) they will mutually release all claims and causes of action arising from the Settled Issues. A full-text copy of the PG&E Settlement Agreement is available for free at http://ResearchArchives.com/t/s?de2 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. (Calpine Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) CARRAMERICA REALTY: Closes Merger With Blackstone Group Affiliate ----------------------------------------------------------------- CarrAmerica Realty Corporation completed the merger of CarrAmerica with and into Nantucket Acquisition Inc., an affiliate of The Blackstone Group, and the other transactions contemplated by the Agreement and Plan of Merger, dated as of March 5, 2006, as amended, by and among CarrAmerica, certain of its subsidiaries and affiliates of The Blackstone Group. Terms of the Merger Agreement Under the terms of the merger agreement, holders of CarrAmerica's common stock, other than CarrAmerica's subsidiaries and the Blackstone affiliate with which CarrAmerica merged, will receive $44.75 in cash, without interest, for each share of common stock issued and outstanding immediately prior to the effective time of the Merger. Holders of CarrAmerica's 7.50% Series E cumulative redeemable preferred stock will receive one share of 7.50% Series E cumulative redeemable preferred stock of the surviving corporation of the Merger on substantially the same terms as the CarrAmerica Series E Preferred Stock, for each share of CarrAmerica Series E Preferred Stock issued and outstanding immediately prior to the effective time of the Merger. As promptly as practicable, the surviving corporation will be liquidated into Nantucket Parent LLC, an affiliate of The Blackstone Group. In the liquidation, shares of the New Series E Preferred Stock will be canceled and the holders thereof will receive a cash distribution from the surviving corporation of $25 per share plus any accrued and unpaid dividends. In addition, in connection with the mergers of Carr Realty Holdings, L.P. and CarrAmerica Realty, L.P., limited partners of those partnerships will receive $44.75 in cash, without interest, for each unit of partnership interest that they own in the partnerships, or in lieu of such cash consideration, qualified limited partners that properly elected to do so will receive newly issued 6% Class A preferred units in the applicable surviving partnership on a one- for-one basis. Notes Tendered In addition, as of 8:00 a.m., New York City time, on July 13, 2006, the expiration date of the tender offers of its subsidiary, CarrAmerica Realty Operating Partnership, L.P., for * $122,242,000 aggregate principal amount of its 7.375% Senior Notes due 2007, * $0 aggregate principal amount of its 5.261% Senior Notes due 2007, * $168,181,000 aggregate principal amount of its 5.25% Senior Notes due 2007, * $99,837,000 aggregate principal amount of its 6.875% Senior Notes due 2008, * $212,676,000 aggregate principal amount of its 3.625% Senior Notes due 2009, * $237,000,000 aggregate principal amount of its 5.500% Senior Notes due 2010, * $189,645,000 aggregate principal amount of its 5.125% Senior Notes due 2011 and * $353,441,000 aggregate principal amount of its 7.125% Senior Notes due 2012, constituting approximately (i) 97.79% of the 7.375% Notes, (ii) 99.84% of the 6.875% Notes, (iii) 86.39% of the 5.261% Notes, 5.25% Notes, 3.625% Notes and 7.125% Notes, which voted as a single class, and (iv) 94.81% of the 5.500% Notes and 5.125% Notes, which voted as a single class, had been tendered and not withdrawn in the tender offers and consent solicitations. All Notes have been accepted for payment. The Supplemental Indentures governing the 7.375% Notes and the 6.875% Notes, which were executed on June 23, 2006 in connection with the receipt of the requisite consents from the holders of more than a majority in aggregate principal amount of each of the Operating Partnership's outstanding 7.375% Notes and 6.875% Notes to the proposed amendments reflected therein, are now operative. The Supplemental Indentures governing (i) the 5.261% Notes, 5.25% Notes, 3.625% Notes and 7.125% Notes and (ii) the 5.500% Notes and 5.125% Notes, which were executed on June 30, 2006 in connection with the receipt of the requisite consents from the holders of more than a majority in aggregate principal amount of the Operating Partnership's outstanding (i) 5.261% Notes, 5.25% Notes, 3.625% Notes and 7.125% Notes voting as a single class, and (ii) 5.500% Notes and 5.125% Notes voting as a single class to the proposed amendments reflected therein, are now operative. Goldman, Sachs & Co. acted as financial advisor to CarrAmerica. Citigroup, Bank of America and Deutsche Bank acted as financial advisors to Blackstone. Acquisition financing is being provided to Blackstone by Deutsche Bank, Bank of America and Citigroup. Hogan & Hartson L.L.P. acted as legal advisor to CarrAmerica. Simpson Thacher & Bartlett LLP acted as legal advisor to Blackstone. About The Blackstone Group The Blackstone Group -- http://www.blackstone.com/-- a global private investment and advisory firm with offices in New York, Atlanta, Boston, Los Angeles, London, Hamburg, Mumbai and Paris, was founded in 1985. In addition to Real Estate, The Blackstone Group's core businesses include Private Equity, Corporate Debt Investing, Marketable Alternative Asset Management, Mergers and Acquisitions Advisory, and Restructuring and Reorganization Advisory. About CarrAmerica Headquartered in Washington D.C., CarrAmerica Realty Corporation (NYSE: CRE) -- http://www.carramerica.com/-- owns, develops and operates office properties in 12 markets throughout the United States. Currently, CarrAmerica and its affiliates own, directly or through joint ventures, interests in a portfolio of 287 operating office properties, totaling approximately 26.4 million square feet. * * * As reported in the Troubled Company Reporter on July 18, 2006, Moody's Investors Service lowered the senior unsecured ratings on notes of CarrAmerica Realty Corporation and CarrAmerica Realty Operating Partnership LP to Ba3 from Baa2. The rating agency also withdrew CarrAmerica's preferred stock rating. CarrAmerica has been acquired by affiliates of The Blackstone Group, an investment and advisory firm. This concluded Moody's review; the outlook is stable. CELLSTAR CORP: Earns $2.7 Million in Second Quarter 2006 -------------------------------------------------------- CellStar Corp. reported a consolidated net income of $2.7 million for the quarter ended May 31, 2006, compared to a consolidated net loss of $9.4 million in 2005. For the second quarter of 2006, the Company reported income from continuing operations of $2.1 million compared to a loss of $1.8 million in the same period in 2005. The Company's revenues for the quarter decreased to $216.8 million from $261.8 million in the same period last year. As of May 31, 2006, the Company reported year-to-date income from continuing operations of $4.2 million compared to a loss of $5.2 million in 2005. Year-to-date through May 31, 2006, the Company reported consolidated net income of $4.8 million compared to a consolidated net loss of $13.8 million in 2005. The Company reported year-to-date revenues through May 31, 2006, of $422.5 million compared to $488.8 million in 2005. A revenue increase in the North American Region of $17.8 million was offset by a decline of $84.2 million in the Latin American Region. Despite the loss of a portion of the North American Region's insurance replacement business in April 2006, revenues increased $17.8 million or 8.6% compared to year-to-date 2005. The increase was due primarily to the regional carrier business. The decline in revenues in the Latin American Region was primarily in the Miami operations related to reduced handset sales to Telefonica Moviles S.A., a carrier customer in Colombia. Consolidated gross profit increased to $16.6 million in the second quarter of 2006 compared to $13.8 million in 2005. The increase in gross profit was primarily in the North American Region and the Mexico operations. Gross profit as a percentage of revenues was 7.7% compared to 5.3% in the second quarter of 2005. Consolidated Balance Sheet Cash and cash equivalents decreased to $18.2 million, from $26.5 million at February 28, 2006. The balance sheet changes led to a cash generation from operating activities of $18.9 million in the second quarter of 2006. Cash was used to pay down the domestic revolving credit facility. As of May 31, 2006, the Company had borrowed $9.9 million under its domestic revolving credit facility, a decrease of $27.1 million from $37.0 million at February 28, 2006. At May 31, 2006, the Company had additional borrowing availability under the credit facility of $19.6 million. At July 3, 2006, the Company had borrowed $15.8 million and had additional borrowing availability of $20.5 million under the Facility. About CellStar Corp. Coppell, Texas-based CellStar Corp. -- http://www.cellstar.com/-- provides logistics and distribution services to the wireless communications industry. CellStar has operations in North America and Latin America, and distributes handsets, related accessories and other wireless products from manufacturers to a network of wireless service providers, agents, MVNOs, insurance/warranty providers and big box retailers. CellStar specializes in logistics solutions, repair and refurbishment services, and in some of its markets, provides activation services. * * * CellStar Corp.'s 5% Convertible Subordinated Notes due 2002 carries Moody's Investors Service's Ca2 rating. COLLINS & AIKMAN: Court Approves Haley & Aldrich as Consultant -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan authorized Collins & Aikman Corporation and its debtor-affiliates to employ Haley & Aldrich Inc. as environmental consultant. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, told the Court that the Debtors have on-going environmental liabilities and commitments to regulatory agencies. These commitments, Mr. Schrock explained, are required in response to Court orders, existing permits and mandates by various regulatory agencies, some of which include stipulated penalties for not meeting prescribed deadlines. The Debtors determined that they require the services of Haley & Aldrich to provide environmental consulting support and continuity to these projects. Haley & Aldrich has provided environmental consulting services to the Debtors throughout the bankruptcy period as an Ordinary Course Professional and is approaching the $450,000 cap on labor fees. Haley & Aldrich is currently providing consulting services at these locations: * Cardinal Landfill, Farmington, New Hampshire * Collins & Aikman Farmington Plant, Farmington, New Hampshire * Collins & Aikman TEG Facility, Dover, New Hampshire * Collins & Aikman ATC Facility, Dover, New Hampshire * Former Wicks Manufacturing Facility, Mancelona, Michigan * Former Bohn Heat Treatment Facility, Beardstown, Illinois Haley & Aldrich is providing Collins & Aikman with a wide range of services including: -- site and remedial investigations; -- feasibility studies; -- remediation strategy; -- remediation design; -- long-term groundwater monitoring; -- remediation systems operation and maintenance assistance; and -- regulatory support. The Debtors will pay Haley & Aldrich pursuant to this fee schedule: Classification Hourly Rate -------------- ----------- Principal $183 Senior Associate $171 Associate Consultant $161 Senior Professional $124 - $146 Staff Professional $99 - $114 Professional $79 - $94 Field/Lab Geol/Engr Tech $67 - $80 Senior Graphics/GIS/Data Mgt. $99 Graphics/GIS/Data Mgt. $89 Office Support $62 As of July 6, 2006, the Debtors have authorized $419,304 for Haley & Aldrich's services. The Debtors have also authorized $319,000 in additional work and anticipate an additional $133,000, not yet authorized, for environmental services through January 2007. Jeffrey Klaiber, senior vice president at Haley & Aldrich, assured the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Unit Wants $256,184 Claim Deemed Timely Filed --------------------------------------------------------------- Collins & Aikman Floorcoverings, Inc., a former subsidiary of Collins & Aikman Corporation, asks the U.S. Bankruptcy Court for the Eastern District of Michigan to deem its claim timely filed. The Debtors entered into an Acquisition Agreement dated Dec. 9, 1996, whereby they spun off Floorcoverings into a separate company. On Feb. 6, 1997, Floorcoverings became a wholly separate company from the Debtors. In the tax issues portion of the Agreement, the Debtors warrant that all appropriate taxes related to the divestiture of Floorcoverings and the normal operations before the divestiture have been properly paid or withheld. Robert D. Gordon, Esq., at Clark Hill Plc, in Detroit, Michigan, relates that on August 10, 2001, the Florida Department of Revenue informed Floorcoverings that it owed $172,038 in unpaid corporate income taxes to the state. The matter was referred to Eugene White, director of tax for Collins and Aikman Products Co. The Debtors indicated that they would step in and defend the assessment on behalf of Floorcoverings. However, Floorcoverings did not receive any further notice of the proceedings. Floorcoverings believed that the Debtors had resolved the Florida Tax Claim prepetition. Much to Floorcoverings' surprise, however, on March 7, 2006, Floorcoverings received a Warrant for the Collection of Delinquent Corporate Income Tax from the Florida Revenue Department, demanding payment of the Florida Tax Claim plus interest totaling $256,184. Mr. Gordon points out that under the terms of the Agreement, the Debtors would be obligated to indemnify Floorcoverings for the cost of defending the Florida Tax Claim and the amount of any taxes ultimately due. Thus, Floorcoverings is entitled to assert a claim against the Debtors in that amount. Floorcoverings did not know it held a claim against the Debtors until after the Jan. 11, 2006 Claims Bar Date. Upon learning of the tax due, Floorcoverings promptly filed a proof of claim in the Debtors' Chapter 11 cases. Floorcoverings asks the Court to deem its Claim timely filed. Mr. Gordon asserts that Floorcoverings' failure to file a proof of claim prior to the Claims Bar Date was the result of excusable neglect. The Debtors have only just begun the claims objection and reconciliation process, Mr. Gordon notes. He adds that the amount of Floorcoverings' claim is small relative to the Debtors' total unsecured debt. "Deeming Floorcoverings' Proof of Claim timely filed will not prejudice the Debtors, nor will it impact the administration of these bankruptcy cases in any significant way," Mr. Gordon says. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) CONSOLIDATED COMMS: S&P Holds Upsized Facility's Rating at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services took a rating action on Consolidated Communications Inc.'s $500 million secured credit facility. The loan rating on the upsized facility remains at 'BB-' (at the same level as the 'BB-' corporate credit rating on parent Consolidated Communications Holdings Inc.); the recovery rating was revised to '3', indicating the expectation for meaningful recovery of principal in the event of a payment default, from '2'. Consolidated Communications Acquisition Texas Inc. is co-borrower on the loan, and the facility is guaranteed by the parent company. "The rating action follows the company's plan to repurchase $56.7 million of common stock held by private equity sponsor, Providence Equity, with cash and up to $45 million of additional term borrowings under its existing secured credit facility," said Standard & Poor's credit analyst Susan Madison. Ratings List: Consolidated Communications Holdings Inc.: * Corporate credit rating -- BB-/Negative/-- Rating Revised: Consolidated Communications Inc.: * $500 million second credit facility to BB- from BB- * Recovery rating to 3 from 2 DAVIDSON DIVERSIFIED: Ernst & Young Expresses Going Concern Doubt ----------------------------------------------------------------- Ernst & Young LLP, in Greenville, South Carolina, raised substantial doubt about Davidson Diversified Real Estate III, L.P.'s ability to continue as a going concern after auditing the Partnership's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Partnership's recurring operating losses and accumulated deficits. The Partnership earned $5,502,720 in net income on $3,845,000 of total revenues for the year ended Dec. 31, 2005. However, the Partnership reported that it had $2,188,000 in operating losses mitigated by its earnings on the sale of its discontinued operations, which totaled $7,652,990. At Dec. 31, 2005, the Partnership's balance sheet showed $14,087,000 in total assets and $21,852,000 in total liabilities, resulting in a $7,765,000 stockholders' equity deficit. Demand Payment for Outstanding Advances The Partnership reported that as of Dec. 31, 2005 it had approximately $5,827,000 of advances due to an affiliate of the managing general partner. In a letter dated April 4, 2006, this affiliate of the managing general partner demanded payment in full of all outstanding advances owed by the Partnership to it, plus related accrued interest. The Partnership disclosed that it did not have sufficient assets to repay the advances and related accrued interest. In addition, the Partnership does not believe that the proceeds from a refinancing of the mortgage of the its sole investment property would be sufficient to repay the existing first mortgage plus the advances and related accrued interest due to an affiliate of the managing general partner. The Partnership says that if it defaults on its repayment of the advances due to an affiliate of the managing general partner, the Partnership will risk losing its sole investment property through foreclosure. The managing general partner is evaluating its options relative to the payment demand by an affiliate of the managing general partner. A full-text copy of the Company's 2005 Annual Report is available for free at http://researcharchives.com/t/s?de5 About Davidson Diversified Based in Greenville, South Carolina, Davidson Diversified Real Estate III, L.P. is a Delaware limited partnership organized in July 1985. The Company's primary business is to operate and hold for investment existing income-producing residential real estate properties. The Company receives income from its property and is responsible for operating expenses, capital improvements and debt service payments under mortgage obligations secured by the property. The general partners of the Company are Davidson Diversified Properties, Inc., the managing general partner, Freeman Equities, Ltd., the associate general partner, and David W. Talley and James T. Gunn, the individual general partners. DAVIDSON DIVERSIFIED: Mar. 31 Balance Sheet Upside-Down by $8.1MM ------------------------------------------------------------------ Davidson Diversified Real Estate III, L.P., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission. The Company reported a $379,630 net loss on $1,044,000 of revenues for the quarterly period ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $13,338,000 in total assets, $21,495,000 in total liabilities, and $8,157,000 in stockholders' deficit. A full-text copy of the Company's financial statements for the quarterly period ended March 31, 2006, are available for free at http://researcharchives.com/t/s?de7 About Davidson Diversified Based in Greenville, South Carolina, Davidson Diversified Real Estate III, L.P. is a Delaware limited partnership organized in July 1985. The Company's primary business is to operate and hold for investment existing income-producing residential real estate properties. The Company receives income from its property and is responsible for operating expenses, capital improvements and debt service payments under mortgage obligations secured by the property. The general partners of the Company are Davidson Diversified Properties, Inc., the managing general partner, Freeman Equities, Ltd., the associate general partner, and David W. Talley and James T. Gunn, the individual general partners. DELPHI CORP: NuTech Wants to Continue Breach-Of-Contract Suit ------------------------------------------------------------- NuTech Plastics Engineering, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow its prepetition breach-of-contract case against Delphi Automotive Systems USA, LLC, and General Motors Corp. to proceed. The action was filed in 2002 and was set to begin trial shortly after the Debtors filed for Chapter 11 protection. Steven A. Klenda, Esq., at Tisdale & Associates LLC, argues that Delphi and GM breached a contract with NuTech by failing to purchase parts as agreed. Delphi and GM also failed to remove equipment from NuTech necessary for to produce the parts, Mr. Klenda adds. NuTech had increased its manufacturing capability to satisfy Delphi and GM's production demands. Lifting the automatic stay to allow a breach-of-contract case against a debtor to continue is appropriate where the case was on the eve of trial when debtor filed its bankruptcy petition, Mr. Klenda relates citing In re Burger Boys, 183 B.R. 682, 688 (S.D.N.Y. 1994) (affirming Bankruptcy Court decision to lift stay). In addition, Mr. Klenda points out that John Mailey, one of NuTech's former owners and a likely witness, has medical problems that are so serious that trial had to be adjourned once already because he had suffered a stroke. Mr. Klenda assures the Court that the Debtors will not be distracted by a state-court suit in which discovery and all other pretrial preparations were completed long ago. "NuTech's Case is ready for trial, and has been for some time," Mr. Klenda maintains. "This court should allow the trial to proceed now." At the very least, NuTech asks the Court to lift the automatic stay to allow it to proceed against co-defendant, General Motors. 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. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Pays $369,585 to Settle Omega Tool's Complaint ----------------------------------------------------------- In accordance with a settlement agreement, Delphi Corporation and its debtor-affiliates paid Omega Tool Corporation $369,585 in satisfaction of its lien claim. Omega has dismissed its complaint against the Debtor. Before the Debtors' bankruptcy filing, Omega Tool Corp. built and delivered to the Debtors various molds and tooling for use in the Debtors' operations. Omega Tool also delivered molds and tooling to the Debtors after their bankruptcy filing. The Debtors purchased the Molds on credit. Omega Tool filed financing statements perfecting statutory liens on the Molds pursuant to Michigan law, MCL 445.619, 445.620 and 570.541, et. seq. These statutory liens are fully valid, binding, and enforceable against the Debtors and have priority over all other liens, security interests and other interests in the Molds. Omega Tool is in the process of building additional molds and tooling for the Debtors, which have not yet been delivered for final sale. Omega Tool has retained ownership the Undelivered Molds. However, to the extent any other party claims to have superior interest in the Undelivered Molds, Omega Tool asserted that statutory and common law liens have attached to the Undelivered Molds and are perfected pursuant to its possession of the Undelivered Molds. Once the Undelivered Molds are delivered to the Debtors or the Debtors' designee, a statutory lien will attach to the Undelivered Molds and, if Omega Tool properly files -- or has filed -- a financing statement, the liens on the Undelivered Molds will be perfected and will have priority over all other liens, security interests and other interests in the Undelivered Molds. Ryan Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Minnesota, however, noted that the Final DIP Order provides, among others, that JPMorgan Chase Bank, N.A., as agent to the Prepetition Lenders, has first-priority liens and security interests, in the Debtors' real and personal property. The ruling will be binding unless a party-in-interest has timely filed an adversary proceeding challenging the validity and enforceability of the Liens. Against this backdrop, Omega Tool had asked the Court to: (i) determine that its claim against the Debtors is secured by the Molds and the Undelivered Molds; (ii) determine the amount of the secured portion of its claim; (iii) determine that Omega Tool is first in priority with respect to the Molds and the Undelivered Molds; (iv) order the Debtors to take all steps reasonably necessary to ensure adequate maintenance and insurance of the Molds, and keep Omega Tool informed of all information relevant to the Molds, including the anticipated expiration date of any relevant programs using the Molds; and (v) order the Debtors to make adequate protection payments sufficient to cover any diminution in the value of the Molds. 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. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Wants Court Nod on $195 Million Merrill Lynch Financing ------------------------------------------------------------------ Delta Air Lines, Inc., asks the United States Bankruptcy Court for the Southern District of New York to enter into the New Financing with Merrill Lynch Pierce Fenner & Smith Incorporated and perform its obligations under the Engagement Letter. Merrill Lynch has agreed to arrange at least $195,000,000 in new financing for Delta Air, pursuant to an engagement letter dated July 6, 2006. Delta intends to use the New Financing to repay 9.5% Senior Secured Notes due 2008 that it issued pursuant to an Indenture dated Nov. 24, 2004, with The Bank of New York Trust Company, N.A. Delta has reached an agreement with Wells Fargo Bank Northwest, N.A., successor indenture trustee, for the repayment of the Notes and the granting of additional adequate protection with respect to Wells Fargo's interest in 32 aircraft and related equipment securing the Notes. The New Financing will be secured by a first priority security interest in the Aircraft Collateral, and granted superpriority status under Sections 364(c)(1) and (2) of the Bankruptcy Code. Pursuant to the Engagement Letter, Merrill Lynch would undertake to arrange for a syndicate of investors to participate in the New Financing, and will assist in the structuring and documenting of the New Financing. The New Financing is subject to these terms: (i) the principal amount does not exceed 100% of the principal amount of the Notes outstanding immediately prior to the refinancing, except by an amount equal to the interest expense, if any, on any scheduled payments deferred as a result of the refinancing that is not paid currently but is recapitalized as principal; (ii) the final maturity date is later than the final maturity of the Notes; (iii) the refinancing does not reduce the weighted average life to maturity of the Notes; and (iv) the interest cost and other material economic terms of the refinancing are reflective of a competitive marketing process and the best available in the reasonable business judgment of Delta. Delta will pay Merrill Lynch a Structuring Fee at the closing of the New Financing. The Debtors redacted information regarding the Structuring Fee from the Engagement Letter filed with the Court. Delta also agrees, among other things: -- not to enter, for a period of time, into an alternative source of financing to effect the refinancing of the Notes and -- to reimburse Merrill Lynch for its actual and reasonable expenses incurred in connection with the New Financing, regardless of whether the New Financing is consummated; and -- to indemnify Merrill Lynch and certain related parties against any losses, claims or liabilities to which Merrill Lynch or the related parties may become subject as a result of the Engagement Letter and the contemplated transactions, subject to certain exceptions. Delta also requests that, without the prior written consent of Merrill Lynch and other New Lenders, neither the Aircraft Collateral nor any of the New Lenders be subject to surcharge, pursuant to Section 506(c) or otherwise, by Delta or any other party-in-interest. Steven R. Gross, Esq., at Debevoise & Plimpton LLP, in New York, tells Judge Hardin that it is impossible to predict the exact pricing and terms of the New Financing until it is structured and the New Lenders are identified. Merrill Lynch, according to Mr. Gross, could not reasonably be expected to go forward with the process of arranging the New Financing absent, at a minimum, an agreement giving it exclusivity, reimbursement of expenses and an indemnity. The Engagement Letter does not bind either Merrill Lynch or Delta with regard to actually consummating the New Financing, Mr. Gross notes. Entering into the Engagement Letter would not obligate Merrill Lynch to consummate the New Financing, Mr. Gross relates. Moreover, apart from the reimbursement of reasonable expenses, Delta would not be obligated to pay any fees to Merrill Lynch unless and until Delta actually consummates the New Financing. Delta also requests that the automatic stay provisions of Section 362 be vacated and modified to the extent necessary to: -- permit the New Lenders, upon the occurrence of an Event of Default, to exercise all rights and remedies provided for in any of the New Financing Documents, without requiring prior authorization of the Court; and -- exercise all rights and remedies provided for in any of the New Financing Documents, without requiring the Court's prior authorization. Under the terms of their existing debtor-in-possession credit agreements, the Debtors are not required to seek the DIP Lenders' consent to implement the New Financing and the Engagement Letter. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000). DELTA AIR: Wants to Repay $235 Million 9.5% Senior Secured Notes ---------------------------------------------------------------- Delta Air Lines, Inc., and Wells Fargo Bank Northwest, N.A., ask the U.S. Bankruptcy Court for the Southern District of new York to approve their settlement and compromise providing for, among others, the repayment of 9.5% Senior Secured Notes due 2008. Wells Fargo is successor indenture trustee for the 9.5% Senior Secured Notes issued by Delta pursuant to an Indenture dated Nov. 24, 2004, between Delta and The Bank of New York Trust Company, N.A. The Notes are secured by, inter alia, 32 aircraft and related equipment, including five MD-90 aircraft, along with related contract rights, rights under insurance policies and other rights related to the aircraft, as specified in an Aircraft Mortgage and Security Agreement dated as of Nov. 24, 2004. On March 27, 2006, the Court entered an order directing the Debtors to pay $1,400,000 per month to Wells Fargo as adequate protection of its interests in the Aircraft Collateral. As of July 7, 2006, Delta has made $6,000,000 in adequate protection payments to Wells Fargo, according to Delta's attorney, Steven R. Gross, Esq., at Debevoise & Plimpton LLP, in New York. On May 3, 2006, Wells Fargo filed a complaint against Delta seeking a declaration with respect to its rights under Section 1110 of the Bankruptcy Code with respect to the MD-90 Aircraft. Delta has engaged in discussions with Wells Fargo and certain holders of the Notes regarding a proposed repayment of the Notes as part of a compromise and settlement of all obligations and claims of the parties in connection with the Complaint, the Adequate Protection Order, the Notes, the Indenture, and the Mortgage and Security Agreement. Delta agrees to pay: -- $235,000,000 of the principal amount, together with all accrued and unpaid interest to the date of the repayment of the Notes; plus -- Wells Fargo's reasonable fees and expenses to the date of the repayment of the Notes in accordance with the terms of the Indenture; less -- all amounts held by Wells Fargo in reserve on the date of the repayment of the Notes pursuant to the Adequate Protection Order, which amounts will be applied against the obligations outstanding under the Notes. Representing Wells Fargo, James E. Spiotto, Esq., at Chapman and Cutler LLP, in Chicago, Illinois, says that under the terms of the Indenture, the holders of at least a majority of the outstanding principal amount of the Notes may direct and instruct Trustee to enter into the settlement and compromise relating to the Note Repayment. The settlement, if approved by the Court as fair and reasonable, would be binding on all holders of the Notes. Wells Fargo says that holders of the Notes representing at least a majority of the outstanding principal amount of the Notes have delivered an instruction, which: -- states that the Directing Holders have validly and irrevocably instructed Wells Fargo to enter into the Note Repayment; and -- is binding on any transferee of the Notes as long as a final Order approving the Note Repayment is entered on or before Aug. 30, 2006, and Delta deposits with Wells Fargo, on or prior to Sept. 30, 2006, the Note Repayment Amount. Wells Fargo will give notice of repayment under the terms of the Indenture upon being advised by Delta that a funding source has agreed to fund the Note Repayment, in sufficient time to provide at least 30 days' notice prior to the date of the Note Repayment to all holders of Notes of record. Tolling Arrangement Delta intends to use funds on hand and the proceeds of a new financing to implement the Note Repayment. Delta has engaged Merrill Lynch Pierce Fenner & Smith Incorporated to arrange at least $195,000,000 in new financing. To allow Delta to work on the New Financing, Delta and Wells Fargo seek the Court's permission to enter into a tolling arrangement with respect to the Complaint. Until the earlier of September 30, 2006, and the date on which the Debtor gives a notice to Wells Fargo that it will not continue to pursue the New Financing, neither party will: a. except as necessary to effectuate or enforce the terms of the Joint Motion or the Adequate Protection Order: -- commence an adversary proceeding, action or lawsuit, or file any motion, or other dispute resolution proceeding against the other or against any holder of Notes with respect to the subject matter of the Complaint or the Adequate Protection Order; -- proactively take action against the other Party with respect to the Notes or the Collateral in these cases or any other proceeding except as permitted by the other Party; b. amend the Complaint or any existing pleadings with respect to the Complaint, except as required by the Court or another court of appropriate jurisdiction; c. serve any discovery on any of the other Parties with respect to the Complaint or subpoena any third parties for discovery with respect to the Complaint; and d. file motions or ask the Court to rule or set any hearing on the merits with respect to the Complaint or otherwise prosecute or defend the Complaint. Delta will provide Wells Fargo and the Official Committee of Unsecured Creditors with a report on the status of the Note Repayment every 30 days, with the first report to be made as soon as practicable after the Court approves the Joint Motion. Additional Adequate Protection Delta and Wells Fargo ask the Court to grant additional adequate protection to Wells Fargo with respect to the MD-90 Aircraft. Delta agrees to make three additional monthly payments, each for $625,000. The additional monthly payments will be applied and held by Wells Fargo under the terms and conditions applicable to the monthly payments in the Adequate Protection Order. The first payment will be payable three business days after the Court approves the Joint Motion, the second payment will be payable on Aug. 20, 2006, and the third payment will be payable on Sept. 20, 2006. In the event that the Note Repayment does not occur, if, at any time after the Termination Date, any MD-90 is abandoned, surrendered or returned by Delta or repossessed, recovered or foreclosed on by Wells Fargo, and Delta has not performed any heavy maintenance visit with respect to that MD-90, Wells Fargo will be granted an administrative claim in an amount equal to: -- $1,200,000, which represents the cost to Delta of a heavy maintenance visit, less -- $658, representing the daily HMV burn rate, multiplied by the number of days commencing from the date the HMV would have been performed on the MD-90 Aircraft and ending on the date of the return of the Aircraft. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000). EAGLEPICHER CORP: Moody's Junks Rating on $65 Million Senior Loan ----------------------------------------------------------------- Moody's Investors Service assigned ratings of B3 to the first-lien and Caa1 to the second-lien guaranteed senior secured credit facilities of EaglePicher Corporation, which will finance the company's emergence from Chapter 11 bankruptcy protection. First-time monitored rating coverage is being initiated for the capital structure proposed for the reorganized company. EaglePicher reported that the U.S. Bankruptcy Court for the Southern District of Ohio has entered an order confirming the joint plan of reorganization for the Company and its debtor affiliates under Chapter 11 of the U.S. Bankruptcy Code. Effectiveness of the plan is conditioned on bankruptcy court approval of settlement agreements entered into with the U.S. Environmental Protection Agency and several states after a mandatory period of public comment. The Company expects that the settlement agreements will receive the requisite approval in time to complete the reorganization by July 31, 2006. Moody's assigned these specific ratings: * B3 Corporate Family Rating; * B3 rating for the first-lien senior secured exit credit facility due December 2010, consisting of a (1) $70 million revolving credit facility; (2) $160 million term loan facility; and (3) Caa1 rating for the $65 million second-lien senior secured exit term loan due June 2011. The rating outlook is stable. The $50 million third-lien senior secured exit term loan due 2011 is not rated by Moody's. According to the proposed Plan, EaglePicher's total outstanding funded debt, including preferred stock, will be reduced to $275 million from approximately $702 million of pre-petition debt upon the emergence. The $345 million of existing debtor-in- possession credit facilities will be converted to the exit facilities. The exit facilities also will be used to make certain payments satisfying claims allowed by the bankruptcy court, to pay transaction fees and expenses, and to provide ongoing liquidity for the company's working capital needs and other general corporate purposes. The ratings consider that despite the benefits of debt and cost reduction achieved during bankruptcy EaglePicher's financial metrics will remain at levels consistent with the B3 rating following emergence. Financial leverage measured as debt will remain in excess of 6.5 times following reorganization, and projected cash interest coverage will be approximately 1 times. EaglePicher's businesses, while diverse, will continue to be exposed to ongoing challenging conditions in the automotive parts supply sector. The company's Hillsdale and Wolverine businesses, which serve the automotive sector, are expected to contribute approximately 55% of sales and 48% of adjusted EBITDA for pro forma fiscal year 2006. Overall industry trends for automotive parts suppliers remain under pressure, and with some revenue concentration with Big 3 OEMs, the company remains subject to potential volume changes from its customers during the coming year. The company's other major businesses are its Filtration and Minerals segment, and the Defense, Space and Power segment. The FM segment should benefit from continuing worldwide demand for filtration products and that the company is the second largest participant in the diatomaceous earth filtration market. The Defense, Space and Power segment will reflect government spending on batteries and power systems consistent with baseline military operations and stable levels consistent with power requirements for government space and satellite programs. While EaglePicher's credit metrics benefit from the exiting of unprofitable customer relationships, lease rejections, and restructuring actions taken in Chapter 11, the company will be challenged to grow its businesses sufficiently to offset customer price down pressures in the automotive supplier industry, continuing production pressure, and continuing raw material and energy pricing pressures. The stable outlook considers that EaglePicher's earnings and cash flow generation should provide adequate coverage for the company's reduced debt obligations post emergence from Chapter 11. The company will not face material scheduled principal amortization on its debt until 2010. Upon emergence, the company expects to have approximately $41 million in liquidity through the combined availability under the senior secured revolving credit and cash on hand. This liquidity profile should provide the company with flexibility to address near term challenges. Future events that could drive a lower rating outlook or rating downgrade include: declining revenues and operating margins resulting in continued negative free cash flow performance; significantly higher raw material costs which are not passed through in the form of surcharges to customers; the inability to win profitable net new business and improved margins; or liquidity declining to inadequate levels. Consideration for lower ratings could arise if any combination of these factors were to contribute to the deterioration of EBIT coverage below current levels or leverage being maintained over 6 times. Future events that could drive an improved rating outlook or rating upgrade include: net new business wins in the automotive businesses at sufficient margins to offset negotiated price concessions on existing business; improved operating and free cash flow performance; or significant debt reduction through free cash flow or other sources. Consideration for an improved outlook or rating upgrade could arise if any combination of these factors were to reduce leverage consistently under 5 times or increase EBIT coverage consistently above 1.5 times. In assigning a B3 rating to the senior secured first lien facilities, Moody's noted that these facilities represent the largest portion of the company's debt structure. Modest hard asset coverage of the first lien facility, coupled with a moderate amount of junior capital resulted in the assignment of the B3 rating. With respect to the second lien facility, the Caa1 rating represents its junior position in the capital structure relative to the first lien facilities. EaglePicher Corporation, currently headquartered in Inkster, Michigan is a diversified manufacturer of advanced technology and industrial products that are used in the automotive, defense, aerospace, telecommunications, medical implant devices, pharmaceutical services, nuclear energy and food and beverage industries, in addition to other industrial arenas. Annual revenues approximate $600 million. EL POLLO: Extends Tender Offer Expiration to August 11 ------------------------------------------------------ El Pollo Loco Inc. and EPL Intermediate Inc. disclosed that, in connection with the tender offer and consent solicitation by El Pollo Loco for its 11-3/4% Senior Notes Due 2013 and by Intermediate for its 14-1/2% Senior Discount Notes Due 2014, the companies are further extending the expiration time of the Offer to 5 p.m., New York City time, on Aug. 11, 2006. As of June 26, 2006, El Pollo Loco had received tenders and consents for $125,726,000 in aggregate principal amount of the 11-3/4% Notes, representing 100% of the outstanding 11-3/4% Notes and Intermediate had received tenders and consents for $39,342,000 in principal amount at maturity of the 14-1/2% Notes, representing 100% of the outstanding 14-1/2% Notes. The requisite consents to adopt the proposed amendments to the indentures governing the Notes have been received, and supplemental indentures to effect the proposed amendments described in the Offer to Purchase and Consent Solicitations Statement, dated May 15, 2006 have been executed. However, the amendments will not become operative until the Notes are accepted for payment pursuant to the terms of the Offer. The Offer is subject to the satisfaction of certain conditions, including: -- consummation of the Common Stock Offering, -- El Pollo Loco entering into a new credit facility, -- a requisite consent condition, -- a minimum tender condition, -- condition that each of the Offers be consummated and that each of El Pollo Loco and Intermediate receives consents from a majority of holders of each of the 11-3/4% Notes and the-14 1/2% Notes and -- other general conditions. Except as described above, all other provisions of the Offer with respect to the Notes are as presented in the Offer to Purchase. The company reserves the right to further amend or extend the Offer in its sole discretion. Requests for documents may be directed to the information agent for the Offer at: Global Bondholder Services Corp. Tel: 866-937-2200 Additional information concerning the Offer may be obtained by contacting the dealer manager and solicitation agent for the Offer at: Merrill Lynch, Pierce, Fenner & Smith Inc. Tel: 212-449-4914 (collect) 888-ML4-TNDR (U.S. toll-free) About El Pollo Loco El Pollo Loco -- http://www.elpolloloco.com/-- pronounced "L Po-yo Lo-co" and Spanish for "The Crazy Chicken," is the United States' leading quick-service restaurant chain specializing in flame-grilled chicken and Mexican-inspired entrees. Founded in Guasave, Mexico, in 1975, El Pollo Loco's long-term success stems from the unique preparation of its award-winning "pollo" -- fresh chicken marinated in a special recipe of herbs, spices and citrus juices passed down from the founding family. * * * As reported in the Troubled Company Reporter on May 23, 2006, Standard & Poor's Ratings Services expects to raise its corporate credit rating on El Pollo Loco Inc. to 'B+' from 'B' upon the successful completion of the company's planned IPO. S&P said the outlook is stable. Standard & Poor's also assigned a 'B+' rating, same as the expected corporate credit rating, to the company's planned $200 million senior secured bank loan. A recovery rating of '2' is also assigned to the loan, indicating the expectation for substantial recovery of principal in the event of a payment default. Moody's Investors Service upgraded El Pollo Loco, Inc.'s corporate family rating to B1 from B3 and assigned B1 ratings to the company's proposed $200 million senior secured credit facility following the company's proposed initial public offering of shares of its common stock and planned refinancing of its existing debt. At the same time, the SGL-2 Speculative Grade Liquidity rating was affirmed. Moody's said the outlook remains stable. EMPRESAS CENTRAIS: Fitch Rates $100 Million Six-Year Notes at B --------------------------------------------------------------- Fitch Ratings assigned a 'B' rating to the $100 million six-year notes units issued in February 2006 by Empresas Centrais Eletricas de Mato Grosso and Centrais Eletricas do Para. The issuance has been assigned an 'RR4' Recovery Rating, indicating an expected average recovery given a default and an assumed jurisdictional 'RR4' cap on instrument ratings in Brazil. The issuance was split between notes to Cemat ($50 million) and notes to Celpa ($50 million). In addition, Fitch assigned Local and Foreign Currency Issuer Default Ratings of 'B' and Brazilian national scale ratings of 'BBB(bra)' to Cemat, Celpa, and their holding company, Grupo Rede Empresas de Energia Eletrica S.A. All ratings have a Stable Rating Outlook. The proceeds were used to refinance existing debt and for working capital and general corporate purposes. The notes units' underlying securities are separate, standalone indebtedness of each entity; however, the senior notes are nondetachable and contain cross-default provisions, essentially linking the creditworthiness of the two issuers. As a result, the ratings reflect the combined credit quality of the two issuers. Fitch also considered the consolidated credit strength of Rede in assigning the ratings given the importance of these two companies to the group. Celpa and Cemat represented a combined 67% of the consolidated EBITDA of Rede in 2005; Rede owns eight distribution companies in Brazil, which also contribute to consolidated credit quality. The ratings reflect the improvement in credit protection measures of Cemat and Celpa, and on a consolidated basis, Rede. These measures should continue to strengthen over the next few years supported by projected growth in operational results and cash flow and a reduction of annual debt service with the notes issuance. Still, Rede has relatively high leverage when compared to other electricity companies in the Brazilian market. Rede's companies should also benefit from an improved regulatory environment in Brazil and sufficient annual tariff adjustments. The distributors operate as natural monopolies in the regulated distribution market with long-term contracts with generators companies. The new model for the sector allows for the pass-through of all noncontrollable costs for distribution companies. Although regulatory risks remain an ongoing credit concern, the current electric energy industry model is generally positive and should support growth and stability in the sector. The ratings are also supported by Rede and its subsidiary companies' successful leverage reduction program. From 2004 to 2006, sale of generation assets and higher operational cash generation enabled Rede to reduce its leverage significantly. The ratings consider the improvement in Rede's liquidity with the sale in June 2006 of BRL450 million in generation assets in addition to an expected $250 million in loans from Inter-American Development Bank. The proceeds coming from the IDB loan to Celpa ($135 million) and Cemat ($115 million), to be used for capital expenditures, are expected to be utilized by the companies in 2006 (US$180 million) and 2007. There is also the planned public offering by Rede up to September, which could further improve the credit quality of Rede and its subsidiaries, as a large part of these resources may be used for debt reduction. The combined credit profiles of Rede, Cemat, Celpa, and other distribution companies are supported by a broad, diversified and stable customer base. Average consumption growth in the territories of the three operating companies has exceeded the national average over the past five years. Future improvement in operating cash flow should also benefit from improving operating efficiencies and a more favorable economic environment. Rede's consolidated leverage, measured by adjusted gross debt-to- EBITDA, of 3.8x at December 2005, is acceptable for the assigned ratings. Leverage at Celpa and Cemat was 4.2x and 2.0x, respectively. In 2005, Rede reported total consolidated debt of BRL3.1 billion. The recent notes issuance, sale of assets, and the IDB loan should lower refinancing risk and reduce interest expense, allowing the group to lower its leverage through amortization of its short-term debt, as well as by growing EBITDA and equity. In addition, the companies have mitigated currency risk associated with the new issuance via a currency swap. In May 2006, Rede completed a reorganization process of its corporate structure, according to legal requirements in the New Energy Model. After the reorganization, the group holds eight operational assets in the distribution segment and a small portfolio in generation assets. Combined, Rede is one of the largest distribution groups in Brazil, serving approximately 3 million customers and distributing 12,613 GWh of electricity. EVANS INDUSTRIES: Panel Hires Chiron as Financial Advisor --------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Evans Industries, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to employ Chiron Financial Group, Inc., as its marketing and financial advisor, nunc pro tunc to June 19, 2006. Chiron Financial will provide: a) marketing and sales services: i) prepare marketing materials to facilitate the marketing and sale of the Debtor's assets; ii) identify a targeted list of prospective buyers, and send the offering memorandum to those parties. The firm will then work with those parties to complete due diligence and facilitate bidding on the Debtor's assets; iii) manage and facilitate an auction process to maximize the value of the Debtor's assets; and b) financial advisory services: i) review and analyze the Debtor's financial and operating statements and establish a data room of materials for alternative buyers and lenders ot those buyers; ii) evaluate the Debtor's assets and liabilities; iii) review and analyze the Debtor's business and financial projections; iv) evaluate the Debtor's collateral securing all debt and latest merger agreement; v) assist in the determination of an appropriate capital structure for the Debtor; vi) determine a theoretical range of values for the Debtor on a going concern basis; vii) advise the Committee on tactics and strategies for negotiating with the Debtor and other purported stakeholders in order to secure a meaningful return to the unsecured creditors; viii) render financial advice to the Committee and participate in meetings or negotiations with the Debtor and other purported stakeholders in connection with any restructuring, modification, sale of assets or refinancing of the Debtor's existing debt obligations to ensure adequate representation of the unsecured constituency; ix) prepare, analyze and explain a plan of reorganization to the unsecured creditors, which is in the best interest of the general unsecured creditors of the estate; x) provide testimony, as necessary, in any proceeding before the Court; and xi) provide the Committee with other appropriate general restructuring advice. Chiron Financial will: a) receive a $25,000 processing fee for the drafting and preparation of the marketing materials, and running and managing the contemplated auction process for the sale of the Debtor's assets; b) receive a success fee upon a successful sale of the Debtor's assets based upon an increase from the value of the current sale contemplated by the Debtor. The success fee will be calculated as: -- 6% of the first $1 million of the success fee basis, plus -- 7% of the amount of the success fee basis exceeding $1 million up to $2 million of the success fee basis (if any), plus -- 8% of the amount of the success fee basis exceeding $2 million up to $3 million of the success fee basis (if any), plus -- 8.5% of the amount of the success fee basis exceeding $3 million up to $4 million of the success fee basis (if any), plus -- 9.5% of the amount of the success fee basis exceeding $4 million up to $5 million of the success fee basis (if any), plus -- 10% of any amounts of the success fee basis exceeding $5 million; c) receive a $100,000 financial advisory fee; d) receive a placement fee if the firm places senior debt, subordinated debt or equity, calculated as: -- 1% of the aggregate commitment amount of any senior term or revolving debt financing, whether or not funded, payable in cash at the closing of any transaction; or -- 3% of the aggregate commitment amount of subordinated debt financing, whether or not funded, payable in cash at the closing of any transaction; or -- 6% of the gross proceeds raised in any offering of equity securities in a private placement, payable in cash at the closing of each placement of securities; e) entitled to reimbursement of out-of-pocket expenses incurred in connection with the services to be provided; Jay H. Krasoff, Esq., a Chiron Financial member, assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The company filed for chapter 11 protection on Apr. 25, 2006 (Bankr. E.D. La. Case No. 06-10370). Eric J. Derbes, Esq., and Melanie M. Mulcahy, Esq., at The Derbes Law Firm, LLC, represent the Debtor. C. Davin Boldissar, Esq., at Locke Liddell & Sapp, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $500,000 and $1 million and debts between $10 million and $50 million. EVANS INDUSTRIES: Panel Wants Locke Liddell's Retention as Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Evans Industries, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana for permission to retain Locke Liddell & Sapp LLP as its counsel. Locke Liddell will: a) assist and advise the Committee in its consultations with the Debtor and other committees relative to the overall administration of the estate; b) represent the Committee at hearings to be held before the Court and communicate with the Committee regarding matters heard and issues raised as well as decisions and considerations of the Court; c) assist and advise the Committee in its examination and analysis of the Debtor's conduct and financial affairs; d) review and analyze all applications, orders, operating reports, schedules and statement of affairs filed and to be filed with the Court by the Debtor or other interested parties; advise the Committee as to the necessity and propriety of the foregoing and their impact upon the rights of the lesser related claimants, and upon the case generally; and, after the consultation with and approval of the Committee or its designees, consenting to appropriate orders on its behalf; e) assist the Committee in preparing appropriate legal pleadings and proposed orders as may be required in support of positions taken by the Committee and preparing witness and reviewing relevant documents; f) coordinate the receipt and dissemination of information prepared by and received from other professionals retained by the Debtor, as well as information as may be received from independent professionals engaged by the Committee and other committees, as applicable; g) advise and assist the Committee in the negotiations with respect to any proposed plan or plans of reorganization; and h) assist and advise the Committee with regard to communications to the unsecured creditors regarding the Committee's efforts, progress and recommendation with respect to matters arising in the Debtor's case as well as any proposed plans of reorganization. C. Davin Boldissar, Esq., a Locke Liddell associate, discloses that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Omer F. Kuebel, III, Esq. $325 Victoria M. de Lisle, Esq. $325 Philip G. Eisenberg, Esq. $325 C. David Boldissar, Esq. $250 Monique Lafontaine, Esq. $250 Demond Smith, Esq. $85 Julie Burmaster, Esq. $85 Mr. Boldissar assures the Court that the firm does not hold nor represent any interest adverse to the Debtor or its estate. Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The company filed for chapter 11 protection on Apr. 25, 2006 (Bankr. E.D. La. Case No. 06-10370). Eric J. Derbes, Esq., and Melanie M. Mulcahy, Esq., at The Derbes Law Firm, LLC, represent the Debtor. C. Davin Boldissar, Esq., at Locke Liddell & Sapp, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $500,000 and $1 million and debts between $10 million and $50 million. FALCON AIR: Court Appoints Kenneth A. Welt as Chapter 11 Trustee ---------------------------------------------------------------- The Honorable A. Jay Cristol of the U.S. Bankruptcy Court Southern District of Florida appointed Kenneth A. Welt as the chapter 11 trustee for the bankruptcy cases of Falcon Air Express, Inc., and its debtor-affiliates. Felicia S. Turner, the U.S. Trustee for Region 21, moved for the appointment after consulting the Debtors and the Official Committee of Unsecured Creditors. Johanna P. Armengo, Esq., a trial attorney at the U.S. Trustee's Office assured the Court that Mr. Welt does not have any connections with the Debtors, creditors, other parites-in-interest, professionals retained in the Debtors' cases and persons employed under the U.S. Trustee office. Headquartered in Miami, Florida, Falcon Air Express, Inc. -- http://www.falconairexpress.net/-- is a small and low-cost airline company that provides charter service and renders foreign and U.S. carriers sub-services on schedules routes. The Debtor and its affiliate, MAJEL Aircraft Leasing Corp., filed for chapter 11 protection on May 10, 2006 (Bankr. S.D. Fla. Case Nos. 06-11877 & 06-11878). Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. Peter D. Russin, Esq., and Michael S. Budwick, Esq., at Meland Russin & Budwick, P.A., represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. FLOWSERVE CORP: Repays $25 Million of Debt in 2nd Quarter of 2006 ----------------------------------------------------------------- Flowserve Corp. has repaid $25 million of debt in the second quarter of 2006, including a $20 million repayment on its revolving credit facility, which reduced the revolver balance to zero at the end of the quarter. The Company also reported record second quarter bookings of approximately $900 million for 2006. Second quarter 2006 bookings increased to approximately $900 million, which represents a second quarter record. Organic bookings for 2006 compare with second quarter 2005 organic bookings of approximately $696 million, or reported 2005 bookings of $723 million. Organic bookings increased about 29% in the second quarter of 2006 compared with the organic bookings in the prior year period, or about 25% on the reported basis. Currency had a negligible impact on second quarter 2006 bookings. For the first six months of 2006, organic bookings increased to a record level of approximately $1.82 billion. It represents an increase of 32% compared with organic bookings of $1.38 billion, and an increase of 27 percent over reported bookings of $1.44 billion, in the prior year period. Organic bookings exclude divested operations, where applicable, in relevant periods and the effect of currency in 2006 periods. "Our pump business has been extremely robust and achieved the highest quarterly bookings increase among our business segments," said Flowserve President and Chief Executive Officer Lewis M. Kling. "This bodes very well for the future, since project- related purchases of valves typically lag those of pumps in our customers' project investment cycle. And, the increased pump installed base provides us with greater aftermarket opportunities, where our mechanical seal business has been particularly strong." About Flowserve Corp Headquartered in Irving, Texas, Flowserve Corp. (NYSE: FLS) -- http://www.flowserve.com/-- provides fluid motion and control products and services. Operating in 56 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. * * * As reported in the Troubled Company Reporter on July 5, 2006, PricewaterhouseCoopers LLP in Dallas, Texas, said that Flowserve has not maintained effective internal control over its financial reporting as of Dec. 31, 2005. The auditors found seven material weaknesses in the Company's financial statements indicating, among others, that the Company did not adequately document the criteria for measuring hedge effectiveness at the inception of certain derivative transactions, which primarily affects accounts receivable, other expense, other comprehensive income and accumulated other comprehensive income. Flowserve Corp.'s corporate credit rating is rated 'BB-' by Standard & Poor's Ratings Services while its short-term credit rating stands at 'B-3'. The Company's $1 billion credit facility carries S&P's 'BB-' rating. Moody's Investors Service's rated the Company's $1 billion senior secured credit facilities at Ba3. FOAMEX INT'L: Panel Supports CEO Raymond Mabus' Salary Increase --------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates proposed to revise their executive compensation arrangements to, among other things, increase the compensation of Raymond E. Mabus, Jr., from $25,000 per month to $75,000 per month during his tenure as interim president and chief executive officer. The Official Committee of Unsecured Creditors does not object to Mr. Mabus' salary increases. However, the Committee is concerned that the Debtors' request does not place any limit on the length of time during which Mr. Mabus may serve as President and CEO, nor does it limit the time frame during which the Debtors will be authorized to pay Mr. Mabus the increased compensation. The Creditors Committee wants to maintain the Debtors' focus on the prompt recruitment and selection of a permanent President and CEO. Accordingly, the Committee asks the U.S. Bankruptcy Court for the District of Delaware to allow the Debtors to pay the increased compensation to Mr. Mabus only through and including October 31, 2006, subject to their right to seek an extension of the period within which payment of the increased compensation is authorized. Jeremy W. Ryan, Esq., at Saul Ewing LLP, in Wilmington, Delaware, asserts that competent management with in-depth knowledge of a company's business and industry is crucial to the long-term success of any company. While Mr. Mabus is an accomplished individual and his public service record is exemplary, it is not clear at this time that he has the necessary experience to serve as the Debtors' President and CEO for an extended period of time. The Creditors Committee is encouraged that the Debtors have commenced their search for a permanent chief, but submits that the Debtors will be forced to maintain their focus on finding that replacement if they cannot leave Mr. Mabus in place as president and CEO indefinitely. The Creditors Committee believes that the limit it seeks gives the Debtors sufficient time to search for and negotiate with a permanent president and CEO. About Foamex 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Panel Wants to Join Recruitment & Selection Process ----------------------------------------------------------------- The Official Committee of Unsecured Creditors does not object to Foamex International Inc. and its debtor-affiliates' proposal to employ SSI (U.S.) Inc., doing business as SpencerStuart, as their executive search consultant. However, the Committee wants to be included in the recruitment and selection process for the Debtors' permanent president and chief executive officer. Jeremy W. Ryan, Esq., at Saul Ewing LLP, in Wilmington, Delaware, explains that the Creditors Committee, in performing its fiduciary duty to monitor the Debtors' ongoing restructuring efforts, seeks a transparent process during the recruitment and selection of the permanent president and CEO. Accordingly, the Creditors Committee asks the U.S. Bankruptcy Court for the District of Delaware to require the Debtors and SpencerStuart to: (a) invite the Committee to participate in periodic status calls, not less than every two weeks, regarding the progress of the search; (b) provide the Committee with a full list of potential candidates before July 15, 2006, and a profile of each candidate interviewed; (c) consider any candidates the Committee submits prior to July 31, 2006; and (d) grant the Committee's professionals access to the SpencerStuart consultants. The Creditors Committee assures the Court that its professionals will limit their interaction with SpencerStuart to necessary matters regarding the progress of the executive search. The Creditors Committee does not seek to take over the selection process from the existing board, but only wants to work with the Debtors to arrive at the optimal choice to set the strategic course for the Debtors' business, Mr. Ryan says. About Foamex 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) FR X OHMSTEDE: Moody's Junks Rating on $65 Million Sr. Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned first time ratings to FR X Ohmstede Acquisitions Co. in connection with its pending acquisition by an affiliate of First Reserve Corporation. The ratings are subject to confirmation of the final financing documentation. These first time ratings were assigned: * B2 for the corporate family rating; * B2 for the $30 million senior secured revolving credit facility, due 2011; * B2 for the $100 million senior first-lien secured term loan B, due 2013; * Caa1 for the $65 million senior second-lien secured term loan, due 2014. The rating outlook is stable. In June 2006, First Reserve entered into an agreement to purchase Ohmstede from Tanglewood Investments, Inc. The acquisition is expected to be financed with approximately $195 million of new senior secured credit facilities and cash equity investments from First Reserve and senior management. The ratings reflect: (1) the high levels of working capital investment required to finance the Company's rapid growth and its impact on Ohmstede's free cash flow generation, (2) the Company's small scale and limited end-market and customer diversification; and (3) the potential volatility in the Company's earnings and cash flow based on Moody's view that demand for the Company's products and services is generally tied to the level of Gulf Coast crude oil refinery capacity utilization rates, whose future level is unpredictable. The primary factors supporting Ohmstede's ratings are: (1) Ohmstede's competitive position as a proven one-stop provider of manufactured product and specialty services with strategically located facilities that enable the Company to respond quickly and cost-effectively to their customers' needs; (2) the Company's track record in improving productivity and turnaround times through its recent capital investment program and other operating initiatives that reinforce its competitive position; and (3) the significant percentage of revenues generated from recurring maintenance and repair work in the more durable refinery turnaround segment. The stable outlook reflects: (1) Moody's expectation of supportive oil prices and continued high utilization of Gulf Coast refining capacity over the next twelve to eighteen months resulting in stable demand for the Company's products and services, (2) the visibility offered by the Company's significant shop backlog and (3) Moody's expectation that aftermarket and service revenues targeting the more durable turnaround segment will continue to grow as a percentage of sales. Ohmstede, headquartered in Beaumont, Texas, is a leading North American provider of aftermarket shop repair, in-plant turnaround and specialty services, as well as manufacturing of replacement parts and new shell and tube heat exchangers. Total revenues for the twelve months ended June 30, 2006 were approximately $182 million. GLOBAL DOCUGRAPHIX: Case Summary & 36 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Global DocuGraphix, Inc. aka B-N-B Systems, Inc. aka Associated Business Products, Inc. aka Classic Business Forms & Envelopes Corp. aka ABP, Inc. aka Bank and Business Forms aka Print Resources Group 2901 North Dallas Parkway, Suite 370 Plano, Texas 75093 Bankruptcy Case No.: 06-32889 Debtor-affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Global DocuGraphix USA, Inc. 06-32888 Type of Business: The Debtor is a commercial printing company offering products and solutions for printing, advertising, marketing, office, and document management. See http://www.gdxinc.com/ Chapter 11 Petition Date: July 18, 2006 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtors' Counsel: Holland N. O'Neil, Esq. Richard McCoy Roberson, Esq. Gardere, Wynne and Sewell LLP 1601 Elm Street, Suite 3000 Dallas, Texas 75201 Tel: (214) 999-4961 Fax: (214) 999-4667 Debtors' Financial Advisor: Corporate Revitalization Partners, LLC 13355 Noel Road, Suite 1825 Dallas, Texas 75240 Tel: (972) 702-7333 Fax: (972) 702-7334 http://www.crpllc.net/ Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million A. Global DocuGraphix, Inc.'s 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kimberly R. Montalvo Seller Note $1,128,599 410 Jaquin Court Corrales, NM 87048 Kelly D. Matzenbacher Seller Note $1,128,599 5084 Dakota Run Littleton, CO 80125 Thoma Cressey Management Fees $975,500 233 South Wacker 92nd Floor Chicago, IL 60606 Joseph A. Baden Sellers' Note $525,690 5601 Bintliff, Suite 530 Houston, TX 77036 Rick L. King Sellers' Note $112,038 27416 East Braodview Drive Kiowa, CO 80117 BKD, LLP Accounting Services $100,675 Moss Adams Tax Preparation $32,321 Green Manning Bunch Investment Banker $21,848 Davis Graham & Stubbs Legal Fees $7,760 Deborah Stone Employee Expenses $1,777 Ricoh Customer Finance Equipment Lease $1,354 Christopher Walden Employee Expenses $1,228 CT Corp. Corporate Representative $549 Ricoh Business Systems Trade $347 SBC/AT&T Trade $31 Ozarka Trade $25 B. Global DocuGraphix USA, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ PrintXcel Trade $854,674 P.O. Box 536900 Atlanta, GA 30353-6900 Enterprise Group Trade $509,096 7591 Collections Center Drive Chicago, IL 60693 Ennis, Inc. Trade $429,321 P.O. Box 971478 Dallas, TX 75397-1478 Printegra Trade $312,536 P.O. Box 930438 Atlanta, GA 31193 Datamax Pioneer Trade $254,450 7658 East 700th Avenue Robinson, IL 62454 Diversified Labeling Solutions Trade $207,180 Daniel Label Printing Trade $192,775 S.P. Richards Co. Trade $187,026 Central States Business Forms Trade $184,882 Georgia National Forms Trade $150,363 Wisco Trade $148,855 Print South Corporation Trade $145,947 Digital Print Trade $138,298 Technologies, Inc. Hospital Forms & Systems Trade $133,021 Statement Rendering Service Trade $110,729 Airline Graphics Trade $101,841 Ed Dugger Sellers' Note $100,000 Label Art Trade $97,161 Wachovia Bank - Trade $85,021 Wise Business Forms Tri-C Business Forms Trade $84,992 GLOBAL HOME: Will Auction Off WearEver Business on August 7 ----------------------------------------------------------- Global Home Products, LLC, and its debtor-affiliates will be conducting an auction of their WearEver cookware and bakeware businesses on Aug. 7, 2006, at 10:00 a.m. (Eastern Time) at: Pachulski Stang Ziehl Young Jones & Wientraub LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19801 The businesses to be sold are: * Mirro Acquisition Inc., * Mirro Puerto Rico, Inc., * Mirro Operating Company LLC, and * 690949 BC, Ltd. Lifetime Brands, Inc., is the stalking horse bidder, offering to pay $21 million for the assets. Competing bids must be received by Aug. 3, 2006, at 4:00 p.m. (Eastern Time) by: (a) Debtors' counsel: Laura Davis Jones Pachulski Stang Ziehl Young Jones & Wientraub LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19801 (b) Debtors Mark Eichhorn Interim Chief Executive Office Randal Rombeiro Chief Financial Officer Global Home Products, LLC 550 Polaris Parkway, Suite 500 Westerville, Ohio 43082 (c) Debtors' investment bankers Adam L. Dunayer Houlihan Lokey Howard & Zukin Capital Inc. 200 Crescent Court, Suite 1900 Dallas, Texas 75201 The Court will hold a hearing on Aug. 8, 2006, to approve the sale. About Global Home Headquartered in Westerville, Ohio, Global Home Products, LLC -- http://www.anchorhocking.com/and http://www.burnesgroup.com/ -- sells houseware and home products and manufactures high quality glass products for consumers and the food services industry. The company also designs and markets photo frames, photo albums and related home decor products. The company and 16 of its affiliates, including Burnes Puerto Rico, Inc., and Mirro Puerto Rico, Inc., filed for Chapter 11 protection on Apr. 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Debtors. Bruce Buechler, Esq., at Lowenstein Sandler, P.C., represents the Official Committee Of Unsecured Creditors. When the company filed for protection from their creditors, they estimated assets between $50 million and $100 million and estimated debts of more than $100 million. GORDIAN RUNOFF: Chapter 15 Petition Hearing Slated for August 28 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will conduct a hearing to consider Gordian Runoff (UK) Ltd.'s chapter 15 petition on Aug. 28, 2006, 10:00 a.m. EDT, at Courtroom 610 of the U.S. Bankruptcy Court in One Bowling Green, New York City. Any objections to the Petition must be received no later than 4 p.m. EDT on Aug. 22, 2006, by: a) The Clerk of Court U.S. Bankruptcy Court Southern District of New York Room 534, One Bowling Green New York, N.Y. 10004-1408 b) Counsel for Petitioner Solinda A. Melnik, Esq. Edwards Angell Palmer & Dodge LLP Suite 1500 919 North Market St. Wilmington, Delaware 19801, Copies of documents filed with the Court regarding the Petition may be obtained by: 1) those with PACER account from the docket of the case accessible through the Court's Electronic Case Filing system via the Court's Web site at http://www.nysb.uscourts.gov; 2) PDF download from the Scheme Web site at http://www.gordianuk.co.uk;or 3) e-mail upon written request made to the Petitioner's U.S. counsel Selinda A. Melnik, Esq. at: Edwards Angell Palmer & Dodge LLP Suite 1500 919 North Market St. Wilmington, Delaware 19801 Fax: +1-302-777-7263 http://www.eapdlaw.com/ Based in London, England, Gordian RunOff (UK) Ltd. fka GIO (UK) Ltd. -- http://www.gordianuk.co.uk/-- is an underwriter and reinsurance company. The Company, through its designated petitioner Ian Clark of London, England, filed for a chapter 15 petition on July 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11563). Selinda A. Melnik, Esq., at Edwards Angell Palmer & Dodge LLP represents Mr. Clark. When Mr. Clark filed the petition, he estimated the Debtor's assets and debts between $10 million to $50 million. GRANITE BROADCASTING: Terminates Sale Agreements for TV Stations ---------------------------------------------------------------- Granite Broadcasting Corporation decided to retain television station WMYD (formerly WDWB), Channel 20, which in September 2006 will become an affiliate of My Network TV serving the Detroit, Michigan television market. The Company exercised its rights to terminate the agreements to sell television stations WMYD and KBWB, Channel 20 in San Francisco, California to affiliates of DS Audible, LLC. The Company had the right to terminate these agreements, which were contingent on both sales occurring, if the sales did not close by June 30, 2006. The Company also reported its intention to continue marketing its San Francisco station to interested parties. In addition, the Company reiterated its intention to close this month on the previously announced purchase of WBNG, Channel 12, the CBS-affiliated television station serving Binghamton and Elmira, New York. The Company will draw upon its new senior credit facility, announced July 5, 2006, to fund the acquisition of WBNG. About Granite Broadcasting Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK) owns and operates, or provides programming, sales and other services to 21 channels in the following 8 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; and Duluth, Minnesota-Superior, Wisconsin. The Company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. * * * As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service downgraded Granite Broadcasting Corporation's $400 million of 9.75% senior secured notes due 2010 to Caa1 from B3. Additionally, Moody's affirmed the Company's existing ratings, including its Caa2 corporate family rating. The outlook remains negative. GUITAR CENTER: Senior Notes Redemption Cues S&P's Positive Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit rating on specialty music retailer Guitar Center Inc. on CreditWatch with positive implications. The action follows the Westlake Village, California-based company's announcement that it has completed the redemption and conversion of virtually all of its $100 million senior convertible notes due 2013. "This further improves already-strong credit measures for the rating category, with lease-adjusted leverage at about 1.5x," said Standard & Poor's credit analyst Robert Lichtenstein. Standard & Poor's expects to meet with management to review Guitar Center's growth plans as well as its financial policy. H&E EQUIPMENT: Restates First Quarter 2006 Financial Results ------------------------------------------------------------ H&E Equipment Services, Inc. will restate its unaudited interim financial statements for the quarterly period ended March 31, 2006, to reflect the reclassification of a one-time, nonrecurring payment, made in connection with the Company's recently completed initial public offering of common stock. According to the Company, the payment that is the subject of the correction is the $8 million payment that H&E made in connection with the Company's initial public offering of its common stock in February 2006 to terminate its management services agreement with affiliates of two of its principal stockholders. Management accounted for the payment as a direct cost of the Company's initial public offering, and as such, the payment was reflected as a charge to stockholders' equity in the Company's unaudited interim financial statements for the three months ended March 31, 2006. Management has concluded, after further review and discussion with its auditors, that the termination fee should not be accounted for as a direct cost of the initial public offering and should instead be reflected as an expense on the Company's consolidated income statement for the three months ended March 31, 2006. Total revenues and gross profit are not affected by the correction. However, the Company estimates that correcting the one-time payment as a selling, general and administrative expense on its unaudited interim consolidated income statement for the three months ended March 31, 2006 will have these principal effects: -- SG&A will increase from the previously reported $33 million to approximately $41 million; -- Net income will decrease from the previously reported $9.9 million to approximately $3.9 million; -- Earnings per common share will decrease from $0.29 per share to $0.12 per share; and -- EBITDA will decrease from $41.6 million to approximately $33.6 million. The Company has discussed the accounting adjustment and related restatement with the agent for the lenders under its revolving credit facility, and its revolving credit facility lenders have waived the non-compliance by the Company with, and the effects of non-compliance under, various representations and non-financial covenants affected by the accounting adjustments in connection with the restatements. Accordingly, the Company has full access to its revolving credit facility. The Company will include the full restated results for the three months ended March 31, 2006 in an amendment on Form 10-Q/A to the Company's previously filed Form 10-Q for the same period. About H&E Based in Baton Rouge, Louisiana, H&E Equipment Services, Inc., (NASDAQ:HEES) -- http://www.he-equipment.com/-- is an integrated equipment services company with 47 full-service facilities throughout the Intermountain, Southwest, Gulf Coast, West Coast and Southeast regions of the United States. The Company is focused on heavy construction and industrial equipment and rents, sells and provides parts and service support for four core categories of specialized equipment: hi-lift or aerial platform equipment; cranes; earthmoving equipment; and industrial lift trucks. * * * H&E Equipment's corporate credit rating carries Standard & Poor's Ratings Services' 'BB-' rating. INTERSTATE BAKERIES: Bankr. Court Okays Chubb Surety Bond Program ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri approved Interstate Bakeries Corporation and its debtor- affiliates' surety bond program and related blanket indemnity agreement with Federal Insurance Company (Chubb) and its subsidiaries. The Bankruptcy Court also authorized: (a) Chubb to issue bonds on the Debtors' behalf under a $7,500,000 Surety Program, with those bonds to be supplied to various obliges, at their request, at the gross rates of: -- $5 per thousand dollars in face amount of the bond for supply bonds; -- $7.50 per thousand dollars in face amount of the bond for license and permit bonds; and -- $9 per thousand dollars in face amount of the bond for self-insurer's workers compensation bonds plus a $2,500 structuring fee for Chubb's legal and other expenses; (b) them to execute and deliver an Indemnity Agreement to Chubb in the name of Interstate Brands Corporation; (c) them to obtain letters of credit as collateral from time to time in amounts sufficient to cover 100% of Chubb's outstanding exposure for the Surety Bonds; and (d) them to grant priority of payment to Chubb to any of their reimbursement obligation with respect to any of the Surety Bonds or under the Indemnity Agreement, if the letters of credit are inadequate. A full-text copy of the Chubb Indemnity Agreement is available for free at http://ResearchArchives.com/t/s?bd9 Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Can Sell Medford Property for $1.7 Million --------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Western District of Missouri to sell their interest in a certain property located at 48 Commercial Street, in Medford, Massachusetts, to Empire Management Corporation for $1,700,000, subject to higher or better bids. As reported in the Troubled Company Reporter on June 23, 2006, the Property is comprised of several parcels and includes about 1.53 acres of land with an approximately 30,672 square feet building, Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. The Debtors are no longer using the Property in connection with their business operations. The Debtors have utilized the services of a joint venture composed of Hilco Industrial, LLC, and Hilco Real Estate, LLC, to assist them in the sale and marketing of the Property. Empire Management has made a $170,000 deposit for the proposed sale, which is being held by the escrow agent until all conditions to closing are satisfied by the Debtors. The Debtors have agreed to: -- provide bid protection to Empire Management in the form of a termination fee equal to $34,000 to induce Empire Management to makes the first qualified bid; and -- pay to Empire Management reasonable and documented expense reimbursement of up to $50,000. The Court also authorized the Debtors to compromise and pay certain tax claims. In connection with the sale of the Property free and clear of all liens other than permitted encumbrances, the Debtors propose to pay to the City of Medford, Massachusetts, Office of Collector of Taxes: -- $16,769 in principal for real and personal property taxes due for the 2004-2005 tax year; -- interest, accruing at a 6% annual rate, beginning on the date the interest began to accrue on the past due balance; and -- no penalties will be required with respect to any and all delinquent taxes with respect to the Property, in full satisfaction of all real property taxes for the Property for the tax year 2004-2005 and all prior tax years. The Debtors and the Successful Bidder will prorate 2005-2006 real and personal property taxes as of the Closing Date in accordance with the terms of the successful sale agreement. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Court Says Sara Lee's ERISA Action is Stayed ----------------------------------------------------------------- The Honorable Jerry W. Venters of the U.S. Bankruptcy Court for the Western District of Missouri rules that Sara Lee's ERISA Action is stayed on an interim basis until further order from the Bankruptcy Court. The stay will include, but not limited to, extending: (a) the deadline for the ABA Plan and the Board of Trustees to answer, move or plead in response to the Complaint; (b) the deadline, if any, for the Debtors to intervene in the ERISA Action. As reported in the Troubled Company Reporter on June 5, 2006, the Debtors asked the Bankruptcy Court to: (a) enforce the automatic stay; (b) require Sara Lee Corporation to withdraw its Complaint and dismiss its Litigation against the American Bakers Association Retirement Plan and its Board of Trustees; and (c) declare the Sara Lee Litigation to be void, as being violative of the automatic stay. Sara Lee's ERISA Action Sara Lee Corporation, in its capacity as a functional fiduciary on behalf of its employee-participants who are eligible for benefits under the ABA Plan, brought an action against the ABA Plan and the Board of Trustees of the ABA Plan under Section 502(a)(3) of the Employee Retirement Income Security Act of 1974, as amended, in the United States District Court for the District of Columbia, on May 3, 2006. In the ERISA Action, Sara Lee sought a declaration that the ABA Plan and the ABA Plan Trustees have violated the terms of the ABA Plan by: (a) improperly using Sara Lee's contributions to the ABA Plan Trust to provide benefits for employee-participants of other Participating Employers with negative ABA Plan Trust balances; and (b) failing to enforce the ABA Plan in accordance with its terms. The ERISA Action also sought to enjoin the ABA Plan Trustees from further violation of the ABA Plan. John W. McClelland, Esq., at Armstrong Teasdale LLP, in Kansas City, notes the Debtors allege that the ERISA Action violates the automatic stay to the extent that the outcome of the litigation could have a potential, indirect effect upon claims and liabilities that parties other than Sara Lee may assert against their estate. Mr. McClelland argues that the Debtors' argument suffers from a number of legal and factual deficiencies. The Debtors do not allege that the ABA Plan has violated the automatic stay by asserting claims for their unfunded benefit liabilities. However, Mr. McClelland points out, the Debtors allege that the ERISA Action violates the automatic stay because the outcome of that litigation may prompt the ABA Plan to assert the very claims it has already asserted. Mr. McClelland contends that the ERISA Action does not violate the automatic stay because it is not: -- an act to collect, assess, or recover a claim against the Debtors; -- an act to obtain possession of property of the Debtors' estate; and -- an action or proceeding against the Debtors. Section 362 of the Bankruptcy Code gives rise to an automatic stay only with respect to either (i) the debtor, or (ii) property of the debtor's estate, Mr. McClelland reminds the Court. It does not stay an action against a non-debtor party or property of a non-debtor party. Mr. McClelland asserts that Sara Lee cannot be held in contempt because the automatic stay does not extend to non-debtor parties. Moreover, the stay is not extended beyond its statutory limitations to automatically enjoin the ERISA Action. The Debtors suggest that being "forced to participate in the Sara Lee Litigation" and being exposed to "potentially significant, duplicative proceedings and expenses, and possibly inconsistent results" is the type of situation that the stay is intended to remedy. Courts have uniformly held that "mere litigation expense, even substantial and unrecoupable cost, does not constitute irreparable injury", according to Mr. McClelland. Thus, the Debtors cannot make any showing that would satisfy any elements of Rule 65 of the Federal Rules of Civil Procedure. Debtors Talk Back Paul M. Hoffmann, Esq., at Stinson, Morrison, Hecker LLP, in Kansas City, Missouri, disputes Sara Lee's contention that the ERISA Action is merely an action seeking a declaration that the Plan violated the terms of the ABA Plan and an enjoinment of the ABA Plan Trustees from further violating the ABA Plan. Mr. Hoffman notes that the ERISA Action also seeks: -- an injunction requiring the ABA Plan to collect payments from the Debtors and to deny benefits to the Debtors' Plan participants and their beneficiaries if the Debtors do not pay; and -- a determination of the Debtors' rights in certain assets. Those actions are directly within the reach of the automatic stay, Mr. Hoffman maintains. Sara Lee does not explain why it is pursuing the ERISA Action now, nor does it explain how it will be prejudiced by enforcement of the automatic stay, Mr. Hoffman points out. Contrary to Sara Lee's suggestion, there is nothing paradoxical in the Debtors' actions, Mr. Hoffman says. The fact that the ABA Plan has filed a proof of claim for amounts it believes are owed based on its belief that the Plan is an aggregate of single employer plans is fully consistent with the automatic stay, Mr. Hoffman maintains. The ERISA Action is an independent violation of the automatic stay under Section 362(a)(3) and the Court should grant the Stay Motion on that ground alone, Mr. Hoffman contends. In addition, the Sara Lee Litigation also violates the automatic stay in that it falls within the impermissible acts that Section 362(a)(6) was meant to prevent. About Interstate Bakeries Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) JOYCE NUNLEY: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Joyce Nunley 61 Moross Grosse Pointe, Michigan 48236 Bankruptcy Case No.: 06-49324 Type of Business: The Debtor previously filed for chapter 11 protection on January 16, 2001 (Bankr. E.D. Mich. Case Nos. 01-40752 and 01-51968). Chapter 11 Petition Date: July 18, 2006 Court: Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: Michael P. DiLaura, Esq. Michael P. DiLaura & Associates, P.C. 105 Case Avenue Mt. Clemens, Michigan 48043 Tel: (586) 468-5600 Fax: (586) 465-9113 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ E. Adelle Schwan & L. Keeler 223 Gratiot Boulevard $53,023 c/o S. Douglas Touma Marysville, MI 48040 316 McMorran Boulevard L J Ross and Associate Collection $10,840 P.O. Box 1838 Ann Arbor, MI 48106 Internal Revenue Service $11,286 Bankruptcy Section Mail Code 15 P.O. Box 330500 Detroit, MI 48232-6500 United Collection Bureau Collection $6,789 5620 Southwyck Boulevard Toledo, OH 43614 GMAC Mortgage Corp. 20601 Van Antwerp $5,927 500 Enterprise Road Horsham, PA 19044 City of Grosse Pointe Farms 61 Moross Road $5,061 Grosse Pointe Farms Michigan 48236 Fremont Investment & L 61 Moross Road $4,270 City of Marysville 223 Gratiot Boulevard $4,000 Marysville, MI 48040 Christian Financial Cu Secured Credit Card $2,789 Fin Cr Network Ameritech $2,523 Asset Accept SBC Michigan $2,368 City of Harper Woods 20601 Van Antwerp $1,000 Harper Woods, MI 48225 Allianceone Collection $900 J J Marshall & Associaties Collection $620 KAISER ALUMINUM: Court Okays Los Angeles Pension Plan Termination ----------------------------------------------------------------- Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware approved the termination of the Kaiser Aluminum Los Angeles Extrusion Pension Plan, provided that: (a) actual termination will not be effectuated until and unless conditions described in the 2006 collective- bargaining agreement between Kaiser Aluminum & Chemical Corp. and the Teamster Local 986 Miscellaneous Warehouseman Drivers and Helpers of the International Brotherhood of Teamsters have occurred or taken place; and (b) the requirements set forth in the Court-approved Modification of Kaiser/Pension Benefit Guaranty Corp. Settlement are satisfied, including a judgment in favor of KACC in the PBGC Appeal. Judge Fitzgerald also authorized KACC to participate in the Teamsters' Pension Plan, in conformity with the CBA, upon termination of the Los Angeles Plan. As reported in the Troubled Company Reporter on June 6, 2006, KAAC and the Teamster Local 986 Miscellaneous Warehouseman Drivers and Helpers of the International Brotherhood of Teamsters entered into a new three-year collective bargaining agreement. The Unions were covered under the Los Angeles Plan. Paul N. Heath, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, told the U.S. Bankruptcy Court for the District of Delaware that the new CBA included a letter agreement that relates to the pending PBGC Appeal and the potential termination of the Los Angeles Plan. The Letter Agreement provided that in the event that: (i) KAAC prevails in the PBGC Appeal, the Los Angeles Plan will be terminated and replaced with KAAC's participation in the Teamsters' multi-employer pension trust, the Western Conference of Teamsters Trust; and (ii) PBGC prevails in its Appeal, KACC will continue to maintain the Los Angeles Plan through the three-year term of the new collective bargaining agreement. Mr. Heath noted that KAAC's monthly contribution per employee to the Teamsters Pension Plan would be up to $1 an hour for each hour worked. The Teamsters Pension Plan invested the funds received from the employer participants and determines the pension benefits that will be paid at retirement. KACC's only liability in respect of the Teamsters Pension Plan will be its monthly obligation to pay the agreed contribution based on hours worked. Mr. Heath said that KACC's participation in the Teamsters Pension Plan was negotiated as part of the new CBA. The Debtors believed that participation in the Teamsters Pension Plan is both cost- effective and warranted under Section 363(b). About Kaiser Aluminum Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 609/392-0900) KAISER ALUMINUM: Wants to Settle With 3 Products Coverage Insurers ------------------------------------------------------------------ Kaiser Aluminum & Chemical Corporation asks the U.S. Bankruptcy Court for the District of Delaware to: (i) approve its settlement agreements with Republic Indemnity Company, Transport Insurance Company, and Hudson Insurance Company; and (ii) authorize the sale of certain policies back to the corresponding issuers free and clear of liens, claims, encumbrances or other interests. pursuant to Sections 105(a) and 363 of the Bankruptcy Code. To obtain an adjudication of its rights for coverage under certain insurance policies as to asbestos-related bodily injury liabilities, Kaiser Aluminum & Chemical Corp. filed an action against certain insurers before the Superior Court of California, County of San Francisco. Republic, Transport, and Hudson are three of the defendants in KACC's Products Coverage Action. They issued policies that provide insurance coverage to KACC for these periods: Insurer Insurance Coverage ------- ------------------ Republic April 1, 1984 to April 1, 1985 Transport April 1, 1984 to April 1, 1985 Hudson April 1, 1981 to April 1, 1984 KACC and the three insurers have engaged in separate negotiations to resolve their disputes regarding the subject policies, Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates. Under their respective Settlement Agreements with KACC, (a) Republic agrees to make a $1,500,000 settlement payment within 14 days after the Court grants final approval to the Settlement; (b) Transport will pay $1,000,000 as settlement amount no later than 30 days after execution of the Settlement Agreement; and (c) Hudson agrees to pay $500,000 before or on October 15 each year from 2007 to 2012, for a total of $3,000,000 as settlement payment. All three insurers will pay their Settlement Amounts to the U.S. Bank National Association, as settlement account agent, unless the Trigger Date has occurred, in which case, to Wells Fargo Bank, N.A., as insurance escrow agent, for distribution to the Funding Vehicle Trust. The Trigger Date is the day that the last of these events has occurred: -- the order approving the Settlement Agreement becomes a Final Order; -- the order confirming the Reorganizing Debtors' Plan becomes final; and -- the occurrence of the Plan Effective Date. The Settlement Agreements also include these terms: (a) Republic, Transport and Hudson will receive all benefits of being designated as Settling Insurance Companies in the Plan of Reorganization, including the benefits of the Personal Injury Channeling Injunctions; (b) KACC releases all its rights with respect to the Subject Policies of the three insurers as well as its other rights under the three insurers' additional policies, and will dismiss Republic, Transport, and Hudson from the Products Coverage Action; (c) KACC will sell the Subject Policies back to their respective issuers, and the insurers will buy back the policies free and clear of all liens, claims, or interests, with the payment of the Settlement Amounts constituting the consideration for the buy-back; (d) If any claim is brought against Republic, Transport, or Hudson that is subject to a PI Channeling Injunction, the Funding Vehicle Trust will exercise all reasonable efforts to establish that the claim is enjoined as to the three insurers; and (e) Republic, Transport, and Hudson will not seek from any entity other than their reinsurers or retrocessionaires: * reimbursement of any payments that they are obligated to make under their Settlement Agreements; * any other payments they have made to or for the benefit of KACC or, upon its creation, the Funding Vehicle Trust, under the Subject Policies, whether by way of contribution, subrogation, indemnification or otherwise. In no event will the three insurers make any claim for or relating to the insurance, reinsurance or retrocession against any KACC Party. The Settlement Agreements also contain certain rights to adjustment of the Settlement Amount if Asbestos Legislation is enacted into law before the earlier of the Trigger Date and July 31, 2006. About Kaiser Aluminum Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 609/392-0900) KL INDUSTRIES: Hires CM&D Capital as Financial Advisor ------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, allowed KL Industries, Inc., to retain James S. Mahoney and CM&D Capital Advisors LLC as its financial Advisors, effective June 27, 2006. CM&D will assist the Debtor in the sale of its business as a going concern. CM&D is expected to: a) assist the Debtor in analyzing and evaluating its business, operations and financial position; b) assist the Debtor in the preparation of an offering memorandum, relating to the proposed disposition of the Debtor, for distribution and presentation to potential purchasers; c) assist the Debtor in the preparation and implementation of a marketing plan with respect to the proposed disposition; d) assist the Debtor in the screening of interested potential purchasers; e) assist the Debtor in coordinating the materials and information to be made available to potential purchasers and with prospective purchaser due diligence investigations; f) assist the Debtor in evaluating proposals received from potential purchasers; g) counsel the Debtor as to strategy and tactics for negotiating with potential purchasers and, if requested by the Debtor, participate in negotiations relating to the proposed disposition; and h) advise the Debtor with respect to the form and structure of, and consideration to be received in the proposed disposition; and analyze potential capital structure scenarios related to possible recapitalization options and assist the Debtor in the raising of capital or debt restructuring. CM&D's hourly billing rates range from $125 per hour for paraprofessionals to $375 per hour for managing directors. The Debtor agreed to provide CM&D a $40,000 retainer payable upon commencement of the engagement. The total hourly fee payable to CM&D is capped at $120,000, including the retainer. The first monthly payment to CM&D for hourly charges is limited to $40,000 and the combined first and second monthly payments is limited at $80,000. CM&D is also eligible to receive a success fee upon the closing of a sale of the Debtor's business. The success fee is equal to 3% of the purchase price up to $6 million and 5% on amounts over $6 million. In the event of a recapitalization transaction, CM&D is entitled to a $150,000 transaction fee. Approximately $35,000 of aggregate hourly fees will be credited against the transaction fee. La Salle Bank N.A., which holds a superpriority claim in the Debtor's case, has allowed the Debtor to pay the transaction from the proceeds of the disposition. James S. Mahoney assures the Court that his firm is disinterested within the meaning of section of 101(14) of the Bankruptcy Code and does not hold or represent any interest adverse to the Debtor or its estate. Headquartered in Addison, Illinois, KL Industries, Inc., manufactures springs, assemblies and other products for the automotive and electronic markets. The Company does business as KL Spring & Stamping Division, KL Spring Division, KL Stamping Division, KL Assembly Division and American Metal Forming Division. The Company filed for bankruptcy protection on May 2, 2006 (Bankr. N.D. Ill. Case No. 06-04882). Peter J. Roberts, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has retained Winston & Strawn LLP, to represent it in the Debtor's case. When the Debtor filed for bankruptcy protection, it reported assets totaling between $1 million and $10 million and debts amounting between $10 million to $50 million. LEVI STRAUSS: Board Designates John Anderson Next Pres. and CEO --------------------------------------------------------------- Levi Strauss & Co's Board of Directors designated John Anderson, the Company's chief operating officer, as its next president and CEO when Phil Marineau retires on Nov. 26, 2006. Mr. Anderson, a 27-year veteran of the company, was recommended to be the next president and CEO by Mr. Marineau. Size Reduction of Board of Directors The company also disclosed that five members of its 14-member board of directors stepped down from the board as part of a planned reduction in the size of the board. The five directors are: * Angela Glover Blackwell, a director since 1994; * Robert E. Friedman, a director since 1998; * James C. Gaither, a director since 1988; * Miriam L. Haas, a director since 2004; and * Walter J. Haas, a director since 1995. The Company's nine-member board now includes: * Peter A. Georgescu, a director since 2000; * Peter E. Haas, Jr., a director since 1985; * Robert D. Haas, a director since 1984; * F. Warren Hellman, a director since 1985; * Patricia A. House, a director since 2003; * Leon J. Level, a director since 2005; * Philip A. Marineau, a director since 1999; * Patricia Salas Pineda, a director since 1991; and * T. Gary Rogers, a director since 1998. The company expects John Anderson to replace Phil Marineau on the board when he assumes the CEO role. Levi Strauss & Co. is a branded apparel company, with sales in more than 110 countries. Levi Strauss designs and markets jeans and jeans-related pants, casual and dress pants, tops, jackets and related accessories for men, women and children under its Levi's(R), Dockers(R) and Levi Strauss Signature(R) brands. Levi Strauss also licenses its trademarks in various countries throughout the world for accessories, pants, tops, footwear, home and other products. * * * As reported in the Troubled Company Reporter on March 10, 2006, Fitch affirmed the ratings on Levi Strauss & Co.'s Issuer Default Rating at 'B-'; $650 million asset-based loan at 'BB-/RR1'; and $1.8 billion unsecured notes at 'B/RR3'. In addition, Fitch withdrew its 'BB-/RR1' ratings on Levi's $500 million senior secured term loan. The rating outlook is stable. Moody's Investors Service upgraded Levi Strauss & Co.'s corporate family rating to B2 from Caa1; senior secured debt rating to B1 from B3; and senior unsecured debt rating to B3 from Caa2. Moody's said the outlook is stable. Standard & Poor's Ratings Services assigned its 'B-' rating to Levi Strauss & Co.'s $470 million senior notes due 2016 and euro- denominated 8.625% senior notes due 2013. At the same time, S&P affirmed its ratings on the Company's long-term corporate credit rating at 'B-'. S&P said the outlook is stable. LEVITZ HOME: Court Allows Assignment of Store No. 40401's Lease --------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Levitz Home Furnishings, Inc., and its debtor-affiliates to assume and assign Store No. 40401 located in Concord, California, to PLVTZ, LLC. Judge Lifland rules that: (a) PLVTZ will pay the $121,810 cure amount to Macy's West, Inc.; (b) The Debtors and PLVTZ will be responsible for performing all obligations arising out of the settlement of R&B Heritage Investors, L.P., and Marina Square Partners, L.P.'s objection, as memorialized in a letter agreement dated June 9, 2006, which obligations will be performed on behalf of the Master Landlords. PLVTZ will be liable for those obligations, and will defend, indemnify and hold Macy's harmless from any and all claims and causes of action, including attorneys' fees in connection with the obligations memorialized in that Letter Agreement; and (c) Any objections to the assignment, including the Master Landlords' Objection and Macy's Objection, that have not been withdrawn, waived or settled, and all reservations of rights included in those objections or addressed by the ruling, are overruled. PLVTZ, LLC, and the Pride Capital Group, doing-business-as Great American Group, as purchasers of substantially all of Levitz Home Furnishings, Inc. and its debtor-affiliates' assets, provided the Debtors with Lease Assumption Notices store leases. The Debtors sought authority from the Court to assume and assign these leases, including: Store# Address Landlord Cure Amount ------ ------- -------- ----------- 40401 Concord, R&B Heritage Investors, $120,131 California LP, and Marina Square Partners, LP, c/o Reynolds & Brown Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) LIVING HOPE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Living Hope Southwest Medical Services, LLC 801 Arkansas Boulevard Texarkana, Arkansas 71854 Tel: (870) 774-4673 Bankruptcy Case No.: 06-71484 Type of Business: The Debtor provides medical services. Chapter 11 Petition Date: July 18, 2006 Court: Western District of Arkansas (Texarkana) Debtor's Counsel: Richard L. Ramsay, Esq. Eichenbaum, Liles & Heister, P.A. 124 West Capitol, Suite 1400 Little Rock, Arkansas 72201-3736 Tel: (501) 376-4531 Fax: (501) 376-8433 Estimated Assets: Unknown Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. MAPCO EXPRESS: Buys 40 Stores from Fast Petroleum for $42 Million ----------------------------------------------------------------- MAPCO Express, Inc., a wholly owned subsidiary of Delek US Holdings, Inc., completed the purchase of 40 retail fuel and convenience stores from Fast Petroleum, Inc., for $42 million. The Company had an agreement with Fast Petroleum to purchase 43 retail and fuel convenience stores, which are located in northwest Georgia and southeast Tennessee. The Company is continuing to work toward obtaining the third party consents necessary to complete the purchase of the remaining three convenience stores. The 43 stores produced total sales of $111 million and sold 46 million gallons of fuel in the 12 months ended Dec. 31, 2005. The purchase was financed with a combination of cash proceeds from Delek's recently completed IPO and MAPCO's revolving credit facility, which was increased from $70 million to $120 million. "The successful purchase of these 40 convenience stores within 30 days of the signing of the definitive agreement reflects well on our ability to implement our acquisition strategies and enhances the reputation we have developed in our markets as a credible acquiror," Uzi Yemin, President and Chief Executive Officer of Delek US, said. About MAPCO Express Headquartered in Franklin, Tennessee, MAPCO Express, Inc., operates 349 convenience stores in Tennessee, Alabama, Virginia, and adjoining states. As a result of the pending transaction, the company will acquire 40 additional locations around Chattanooga, Tennessee. The Israeli conglomerate Delek Group LTD ultimately owns approximately 80% of the company's equity through Delek US Holdings, Inc. (NYSE: DK). * * * As reported in the Troubled Company Reporter on July 19, 2006, Moody's Investors Service rated the proposed $50 million add-on to the secured revolving credit facility of MAPCO Express, Inc. at B2, and affirmed the corporate family and existing bank loan ratings at B2. The rating outlook is stable. As reported in the Troubled Company Reporter on July 18, 2006, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Franklin, Tennessee-based MAPCO Express Inc. At the same time, Standard & Poor's affirmed the 'B+' senior secured rating on the company's bank loan facility and recovery rating of '2', reflecting its expectations of a substantial recovery of principal in the event of a payment default. "This action follows the company's $50 million increase in its revolving credit facility to $120 million," said Standard & Poor's credit analyst Stella Kapur. The outlook remains negative. MASTERCRAFT INTERIORS: Can Decide on Leases Until December 12 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland gave Mastercraft Interiors Ltd. and Kimels of Rockville Inc. until December 12, 2006 to decide whether to assume or reject unexpired leases. As of May 15, 2006, the Debtors were parties to seven unexpired leases of nonresidential real property. The Debtors continue to occupy five of those nonresidential properties: (1) Alexandria; (2) Annapolis; (3) Rockville; (4) Fair Oaks Mall; and (5) the Beltsville warehouse and offices. The Debtors submit that the extension will ensure opportunity for them to make prudent, appropriate decisions whether to assume or reject the unexpired leases. Since their bankruptcy filing, the Debtors have been reviewing and analyzing their business operations, including reviewing their unexpired leases and executory contracts to determine whether those leases and contracts are beneficial to their businesses and estates. In addition, the Debtors' Court-approved going-out-of-business sales are contemplated to continue until November 20, 2006. Furthermore, the Debtors are also in the process of seeking to assume and assign several of the nonresidential real property leases, which is expected to take a few months. The Debtors have sought Court authority to enter into a Designation Rights Agreement with a joint venture composed of Hilco Real Estate LLC and Next Mid-Atlantic LLC to market and sell the leases. Headquartered in Beltsville, Maryland, Mastercraft Interiors Ltd. -- http://www.mastercraftinteriors.com/-- manufactures furniture and other home furnishings. The Company and its subsidiary, Kimels of Rockville, Inc., filed for bankruptcy on May 15, 2006, (Bankr. D. Md. Case No. 06-12769). Morton A. Faller, Esq., Michael J. Lichtenstein, Esq., and Stephen A. Metz, Esq., at Shulman, Rogers, Gandal, Pordy & Ecker, P.A., represent the Debtors in their restructuring efforts. Bradford F. Englander, Esq., at Linowes and Blocher LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, Mastercraft Interiors reported assets amounting to $10,600,288 and debts amounting to $25,485,847 while Kimels of Rockville reported assets totaling $704,227 and debts amounting to $10,341,704. MERIDIAN AUTOMOTIVE: Court Adjourns Disclosure Hearing to July 21 ----------------------------------------------------------------- Judge Walrath of the U.S. Bankruptcy Court for the District of Delaware adjourned the hearing to consider Meridian Automotive Systems, Inc., and its debtor-affiliates' Disclosure Statement for the Third Amended Joint Plan of Reorganization from July 17, 2006, to July 21, 2006. USW Withdraws Objection United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union withdraws its objection to the Disclosure Statement explaining the Debtors' First Amended Joint Plan of Reorganization. Susan E. Kaufman, Esq., at Heiman, Gouge & Kaufman, LLP, in Wilmington, Delaware, notes that appropriate language has been inserted in the Disclosure Statement for the Third Amended Joint Plan of Reorganization, which satisfies USW's objection. As reported in the Troubled Company Reporter on June 29, 2006, the Union objected to the Debtors' Disclosure Statement explaining their First Amended Joint Plan of Reorganization. As reported in the Troubled Company Reporter on July 6, 2006, the Third Amended Plan, among others, adds another batch of defined terms, amends the treatment of some classes of claims, revises the Preferred Equity Offering and gives assurance on the continuance of the Company's retiree benefits program. 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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000). MESABA AVIATION: Court Okays Monthly Report Submission Guidelines ----------------------------------------------------------------- The Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota directs Mesaba Aviation, Inc., dba Mesaba Airlines, to submit all subsequent monthly operating reports to the U.S. Trustee no later than 25 days after the end of the calendar month to be reported, pursuant to an agreement between the Debtor and Habbo G. Fokkena, U.S. Trustee for Region 12. If the Debtor cannot meet the deadline, it will notify the U.S. Trustee before the due date, and if a resolution cannot be reached, the U.S. Trustee may seek whatever relief he deems appropriate under the Bankruptcy Code. As reported in the Troubled Company Reporter on July 10, 2006, the Trustee asked Court to compel the Debtor to submit all delinquent operating reports, and to timely submit all future operating reports as is necessary. The Trustee complained that the Debtor failed to submit operating reports for April and May 2006. About Mesaba Aviation 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. 20; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MESABA AVIATION: UST's Motion to Revoke Paydown Procedures Denied ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota denied Habbo G. Fokkena's, the U.S. Trustee for Region 12, request to: (1) revoke the Rule 8(c) Procedure as to all professionals in the Debtor's case who were employed by Court approval; (2) direct all of the Debtor's professionals to file a motion with the Court for allowance of their fees and expenses, in accordance with Sections 330 and 331 of the Bankruptcy Code; and (3) prohibit the Debtor from paying an invoice of any professional employed by the estate without a Court order authorizing the payment. Rule 8(c) of the Instructions for Filing a Chapter 11 Case for the District of Minnesota provides that: "(c) Paydown Before Approval: All professionals who seek to take advantage of this procedure must include a request for such treatment in their retention application and provide evidence in their application of their agreement and ability to disgorge if the court so orders, as well as evidence that retention has been approved may be allowed to submit regular monthly bills to the Debtor and the Debtor may be authorized to pay up to 80% of such fees and 100% of such costs, pending court approval of the fees. The court will consider requests for early paydown at the time the retention is approved. Copies of all monthly bills shall be simultaneously sent to the Office of the United States Trustee. The court may sua sponte or upon motion by any interest party revoke the right to this paydown procedure should circumstances in the case so warrant." As reported in the Troubled Company Reporter on July 12, 2006, the U.S. Trustee asserted that circumstances of the Debtor's Chapter 11 case justify the Court's revocation of the Rule 8(c) procedures for paydown for all professionals employed by Court approval, pursuant to Sections 327 and 328 of the Bankruptcy Code. Sarah J. Wencil, trial attorney for the U.S. Trustee, recounts that in the Debtor's renewed request to reject its collective bargaining agreements, the Debtor stated that it is losing money at the rate of approximately $2,000,000 to $3,000,000 per month, and that the losses will result in the exhaustion of its cash by the end of August 2006, unless it obtains DIP financing. The Debtor further stated that its survival is contingent on the Rejection Motion being granted. In this case, Ms. Wencil says, the Debtor is at risk of its work force striking or otherwise leaving the Company. As of June 15, 2006, the Debtor has failed to submit an operating report to the U.S. Trustee for the months of April and May 2006, Ms. Wencil tells the Court. The U.S. Trustee and other interested parties cannot verify the losses to the Debtor, nor the rate of payments to professionals each month. About Mesaba Aviation 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. 20; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MUSICLAND HOLDING: Ct. Lifts Stay to Let Xerox to Set-Off Deposit ----------------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York modified the automatic stay to allow Xerox Capital Services, LLC, to apply the $200,000 security deposit to its $1,023,805 claim. Xerox will amend its claim to reflect application of the Security Deposit and to turn over any surplus funds exceeding its allowed claim. The Court ruled that Xerox will not to file a motion to compel acceptance or rejection of the Leases as long as Musicland Holding Corp. and its debtor-affiliates do not become delinquent, for more than 90 days, on their postpetition payments to Xerox. As reported in the Troubled Company Reporter on July 3, 2006, Xerox as servicing agent for Xerox Corporation, holds a $1,023,805 claim, pursuant to certain leases for goods and services it executed with Musicland Holding on April 19, 2004. On May 4, 2004, in connection with the execution of the Leases, the Debtors provided Xerox with a $200,000 security deposit, Chantel K. Adams, Esq., at Kizer, Hood & Morgan, L.L.P., in Baton Rouge, Louisiana, told the Court. The Leases provide that Xerox can apply any of the deposit towards the obligations owed by Debtors. Xerox was owed a debt by the Debtors as evidenced by its proof of claim, Ms. Adams stated. Xerox also owed an obligation to the Debtors in the form of the security deposit it is holding. Ms. Adams asserted that the Debtors' debt and Xerox's obligation to the Debtors are mutual obligations. Thus, Xerox should be allowed the right to set off the security deposit against its claims for services and goods under non-bankruptcy law. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Moves for Summary Judgment on Deluxe's Lien -------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to grant partial summary judgment in their favor, and deny Deluxe Media Services, Inc.'s statutory lien claim. As reported in the Troubled Company Reporter on April 19, 2006, Deluxe provided warehousing and fulfillment services to the Debtors pursuant to a Logistics Service Agreement by and between Musicland Purchasing Corp. and Deluxe dated March 26, 2004. On March 8, 2006, Deluxe asked the Court to compel the Debtors to pay its alleged $4,142,931 prepetition lien. Pursuant to the LSA, Deluxe also asserted that it is also entitled to interest on the Total Lien Amount at prime plus 4% per annum. Subsequently, pursuant to Court-approved expedited procedures for the rejection of executory contracts, the Debtors rejected the LSA. Jonathan P. Friedland, Esq., at Kirkland & Ellis LLP, in New York, contends that Deluxe's claimed $4,142,931 statutory warehouseman's lien is not restricted to the warehouse charges applicable to the specific goods in its possession as of January 22 or 26, 2006 -- the dates referred to in the Final DIP Order for setting the value of Deluxe's contested lien. According to Mr. Friedman, Deluxe is actually asserting a lien for all of its unpaid prepetition charges as of September 1, 2005, even if majority of the goods for which the charges were incurred had left its warehouse by January 22, 2006. "Since it is undisputed that Deluxe failed to include a notice of a general lien claim in any of the documents it contends constitute its warehouse receipts, it is precluded from asserting such a general lien." Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Wants to Walk Away from 65 Contracts & Leases ---------------------------------------------------------------- For the period June 20, 2006 to July 6, 2006, Musicland Holding Corp. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to reject 61 executory contracts and four unexpired leases pursuant to the Court-approved Expedited Rejection Procedures. As reported in the Troubled Company Reporter on June 6, 2006, after the closing of the Trans World Entertainment Corporation sale, the Debtors told the Court that it no longer requires many of the properties, goods and services they obtained under various executory contracts and unexpired leases to which they are party. Accordingly, pursuant to Sections 365 and 554 of the Bankruptcy Code, the Debtors obtained the Court's approval of expedited procedures for rejecting executory contracts and unexpired personal and residential real property leases. The Leases to be rejected are: Proposed Shopping Center/Mall Rejection Date -------------------- -------------- 10400 Yellow Circle Drive 6/30/06 Southlake Mall 6/30/06 Sandusky Mall 6/30/06 Kirkwood Mall 6/30/06 The Contracts to be rejected are: Rejection Counter Party Description Date ------------- ----------- --------- 5280 Mobile, Inc. License Agreement 6/21/06 IPSH! Promotional Agreement 6/21/06 Mix & Burn, Inc. Confidentiality Pact 6/21/06 Xerox Corporation Service Agreement 6/21/06 Xerox Corporation Lease Agreement 6/21/06 Xerox Corporation Sale Agreement 6/21/06 Xerox Corporation Maintenance Agreement 6/21/06 Xerox Corporation Pool Plan Agreement 6/21/06 ADS Alliance Data Sys. Service Agreement 7/01/06 Frontnet Solutions LLC Customer Agreement 7/01/06 Ameritas Life Insurance Insurance Agreement 7/01/06 Applied Retail Solutions License Agreement 7/01/06 Applied Retail Solutions Service Agreement 7/01/06 Applied Retail Solutions Service Agreement 7/01/06 AWS National Accounts Service Agreement 7/01/06 B2 Direct Inc. Supply Agreement 7/01/06 BCI Eclipse Co., LLC Supply Agreement 7/01/06 Boost Mobile, LLC Supply Agreement 7/01/06 Certergy Check Services Warranty Agreement 7/01/06 Certegy Payment Recovery Services Agreement 7/01/06 Connolly Consulting, Inc. Services Agreement 7/01/06 Continental American Ins. Insurance Agreement 7/01/06 Culligan Services Agreement 7/01/06 DNS Sales Sale Agreement 7/01/06 Duff & Phelps Securities Letter agreement 7/01/06 Eagle Vision, Inc. Distribution Agreement 7/01/06 Family Network Inc. Participation Agreement 7/01/06 Goldhil Home Media Consignment Agreement 7/01/06 H&R Block Digital Distribution Agreement 7/01/06 Hartford Life & Accident Service Agreement 7/01/06 HBO Properties License Agreement 7/01/06 HBO Properties Letter agreement 7/01/06 Interactive Comm. Service Agreement 7/01/06 Klehr, Harrison, Harvey Engagement letter 7/01/06 Lacek Group Marketing Agreement 7/01/06 Licensing Ventures, Inc. Service & Supply Pact 7/01/06 Lifetime Fitness Service Agreement 7/01/06 LP Innovations, Inc. Service Agreement 7/01/06 Master Foods USA Supply Agreement 7/01/06 Microsoft Corporation Supply Agreement 7/01/06 Nielson Soundscan Supply & Purchase Pact 7/01/06 Nielson Videoscan, Inc. Supply & Purchase Pact 7/01/06 Norstan Communications Service/Product Pact 7/01/06 Panasonic Dealer Agreement 7/01/06 Passport Unlimited, Inc. Marketing Agreement 7/01/06 Pelican Accessories Supply Agreement 7/01/06 Penthouse Media Group License Agreement 7/01/06 Pokemon USA, Inc. License Agreement 7/01/06 Retail Consulting Services Service Agreement 7/01/06 Return, Inc. Service Agreement 7/01/06 Rhino Home Video Supply Agreement 7/01/06 Safeco Life Insurance Service Agreement 7/01/06 Samsung Electronics Service & License Pact 7/01/06 Schindler Elevator Corp. Maintenance Agreement 7/01/06 Security Integration, Inc. License and Service Pact 7/01/06 Sony Pictures Retail Agreement 7/01/06 Sony Pictures Retail Agreement 7/01/06 Talx Corporation Service Agreement 7/01/06 Vanguard Integrity License Agreement 7/01/06 Virgin Mobile USA, LLC Distribution Agreement 7/01/06 Yale Mechanical Maintenance Agreement 7/01/06 Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) MXENERGY HOLDINGS: S&P Junks Rating on Proposed $200 Million Debt ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to MxEnergy Holdings Inc. and its 'CCC+' rating to MxEnergy's proposed $200 million senior unsecured debt offering. The 'B' corporate rating reflects MxEnergy's position as one of the largest players in retail gas marketing, with a track record of consistent customer growth, competent management that is very experienced in the industry, and risk management policies that, while not systematized, are appropriate for the nature and scope of MxEnergy's business. The outlook is stable. "The two-notch differential between the corporate credit rating, which indicates the risk of default at MxEnergy, and the senior unsecured debt reflects the poor prospects for recovery of the unsecured debt upon default given that all of MxEnergy's assets, including receivables, inventory, and customer contracts are pledged under a revolving credit facility and a separate hedge facility, both with Societe Generale," said Standard & Poor's credit analyst Swami Venkataraman. "There are significant weaknesses in internal controls, processes, and documentation related both to financial accounting and risk management. Formal risk management systems at MxEnergy are still in the early stages of development. Currently, MxEnergy has a simple spreadsheet-based system, with the top management deeply involved in day-to-day risk management. All developing companies need to make this transition at some point in their life cycle. However, at this time, the aforementioned weaknesses are an important limiting factor on MxEnergy's credit," he added. MxEnergy, founded in April 1999 and headquartered in Stamford, Connecticut, is one of the largest retail gas marketers in the country, serving more than 422,000 residential customer equivalents across 11 eastern states and 26 utility territories. MxEnergy will use the proceeds of the unsecured note offering to acquire the assets of Shell Energy Services Co., the retail marketing arm of Shell, which serves 351,000 RCEs in four utility territories in Georgia and Ohio. MXENERGY HOLDINGS: Moody's Junks Rating on Planned $200 Mil. Offer ------------------------------------------------------------------ Moody's Investors Service assigned first-time ratings to MxEnergy Holdings Inc., a retail energy marketing company engaged in the marketing and sale of primarily natural gas to residential and commercial customers in deregulated markets. With a stable outlook, Moody's assigned a B3 Corporate Family Rating to MxEnergy and a Caa1 rating to its proposed offering of $200 million floating rate senior notes due 2011. Moody's also assigned a Speculative Grade Liquidity rating of SGL- 3 to MxEnergy. Proceeds from the notes offering will be used primarily to fund the acquisition of the retail energy marketing business of Shell Energy Services Company, L.L.C. and to pay transaction fees and expenses. The B3 Corporate Family Rating reflects MxEnergy's complex business model that requires a high degree of precision, expertise, and strong control to execute effectively due to the large number of accounts, high customer attrition, and the risks associated with managing its fixed price exposure; its small size and weak balance sheet in terms of asset coverage, particularly in light of the competitive and confidence-sensitive nature of the retail energy marketing business; the challenges associated with integrating the SESCo acquisition; and the risks associated with MxEnergy's material weaknesses in internal control over financial reporting and over its operations. Support for the rating comes from MxEnergy's progress in establishing a meaningful base of customer accounts in a competitive business; its ability to maintain relatively steady margins over the last couple of years, although that has taken place in a favorable market environment; its experienced management team with expertise in energy marketing operations; and the potential benefits associated with the SESCo acquisition including a higher proportion of variable accounts, increased geographic diversity, and the addition of billing systems, processes, and experienced personnel. The rating outlook is stable. However, financial performance below expectations resulting from losses due to under hedged positions, an inability to maintain customer counts, or problems in integrating the SESCo acquisition could pressure the ratings. An upgrade would require a furtherance of MxEnergy's track record, successful integration of the SESCo acquisition, remediation of material weaknesses in internal control over financial reporting as well as the implementation of stronger operational controls and systems, and ample asset coverage of senior indebtedness. MxEnergy's business is working capital intensive. Pro forma for the transaction as of March 31, 2006, MxEnergy had working capital of approximately $164 million. As of June 30, 2006, a seasonal low in terms of receivables, working capital is expected to be about $160 million on a pro forma basis, although cash balances will have increased to approximately $70 million as a result of the collection of receivables offset by a slight build in inventories. In terms of asset coverage, MxEnergy's debt is not covered by its working capital which is expected to range $160-$180 million throughout the year, which translates into poor recovery prospects in the event of a default. In evaluating MxEnergy's asset coverage, Moody's excludes the value of customer accounts because they are intangible and therefore do not have a readily available market value. In addition, they are pledged to the hedge facility. Pro forma for the SESCo acquisition, MxEnergy will have about 773,000 residential customer equivalents of which about 61% will be under fixed price contracts with the remaining 39% under variable price contracts. Variable price contracts involve relatively low risk as commodity prices are passed through to customers. Fixed price contracts, on the other hand, involve significantly more risk as they require MxEnergy to enter into hedges to offset estimated physical deliveries. While MxEnergy uses its historical experience to estimate customer attrition, renewals, new customers, and demand, these estimates are inherently imprecise and therefore MxEnergy does not necessarily have a "balanced book" in terms of fixed commitments on both sides of its transactions. MxEnergy's contracts with its residential customers are not rock-solid in that customers can get out of their contracts with little consequence. While MxEnergy can charge a termination fee, these can be difficult to collect. MxEnergy does purchase puts in order to protect against lower volumes; however, it is not cost effective to purchase quantities large enough to offer meaningful protection. Moody's believes that if we were to enter into a lower commodity price environment, MxEnergy's fixed price contracts may become less competitive which could trigger higher-than-expected attrition and could result in greater difficulty in signing up new customers. Over the last several years as natural gas prices have risen, MxEnergy has been able to grow its customer count organically, although it fell slightly in 2005 due to restrictions created by new telemarketing regulations. During the nine months ended March 31, 2006, however, MxEnergy has been successful in increasing its number of RCEs to 422,000, up from 348,000 as of June 30, 2005. SESCo's customer count has fallen steadily over the last several years. At closing, the SESCo acquisition is expected to bring 351,000 RCEs. This is notably lower than SESCo's RCEs of 401,000 and 475,000 as of December 31, 2005 and 2004, respectively, excluding "Percent of Income Payment Plan" customers whose agreements expired earlier this year. Pro forma for the SESCo acquisition, MxEnergy's adjusted EBITDA was approximately $61 million for the nine months ended March 31, 2006 and is expected to range from $65 to $70 million for the year ended June 30, 2006. Adjusted EBITDA excludes unrealized gains and losses from risk management activities which result from marking the hedge book to market through earnings. Excluding these non-cash gains and losses from EBITDA is a reasonable approach given that the value of the offsetting customer contracts is not recognized in earnings. However, Moody's notes that MxEnergy capitalizes customer acquisition costs, which we believe is an unnecessarily aggressive accounting policy. A more conservative accounting treatment would expense these costs as incurred because of the need to continuously spend on marketing efforts in order to maintain overall customer counts and because of the uncertainties around estimating customer attrition. Expensing these costs as incurred reduces MxEnergy's expected adjusted EBITDA of $65 to $70 million for the year ended June 30, 2006 to $59-$64 million. Relative to pro forma debt of approximately $230 million as of June 30, 2006, Moody's estimates that MxEnergy's debt-to-EBITDA less customer acquisition costs is in the 3.6 to 3.9 times range. Relative to pro forma annual interest expense of about $30 million, Moody's estimates that MxEnergy's EBITDA less customer acquisition costs-to-interest is in the 2 to 2.1 times range. These leverage and coverage metrics are not out of ranges appropriate for MxEnergy's B3 Corporate Family Rating. The senior notes are notched down from the Corporate Family Rating due to the size of MxEnergy's senior secured credit facility. Once amended as expected, MxEnergy's credit facility will provide up to $300 million of borrowing availability, subject to the size of the borrowing base which is tied to working capital. Cash borrowings under the credit facility are not expected to exceed $100 million even if the borrowing base grows to the entire $300 million because of the substantial amount of letters of credit that MxEnergy is required to post. Should cash borrowings under the credit facility exceed $100 million, a double-notch would be considered. The SGL-3 rating reflects adequate liquidity. MxEnergy's operating cash flow can vary significantly and can be negative during certain interim periods due to seasonal and other changes in working capital. Sources of external financing appear to be adequate and appropriately sized for MxEnergy's activities with availability under its revolving credit facility expected to be approximately $80 million at closing. The credit agreement contains several financial covenants including maintaining a minimum levels of tangible net worth and working capital, interest coverage of at least 2 times, and funded debt-to-EBITDA of no greater than 4.25 times initially. Based on current projections, Moody's expects that MxEnergy will maintain compliance with its financial covenants over the next 12 months. MxEnergy also has $12 million available under a subordinated line of credit with Sowood. At closing, MxEnergy is expected to have cash balances from $65 to $75 million, which will decrease with the working capital build-up going into the winter months. However, liquidity should be maintained through availability under the revolving credit facility. Concurrent with the acquisition of SESCo, MxEnergy is expected to enter into a new hedge facility that provides it with greater flexibility. Under the new hedge facility, MxEnergy will not be required to post collateral for potential negative mark-to-market changes in the value of its forward hedged positions beyond an initial margin requirement of $25 million. MxEnergy's back-door liquidity, or the ability to sell assets to raise cash, is limited due to the secured nature of its credit and hedge facilities. MxEnergy Holdings Inc. is headquartered in Stamford, Connecticut. NADER MODANLO: Section 341(a) Meeting Continued to August 1 ----------------------------------------------------------- The U.S. Trustee for Region 4 will continue the meeting of Nader Modanlo's creditors to 1:00 p.m., on Aug. 1, 2006. The meeting will be held at 6305 Ivy Lane, Suites 620 to 621, in Greenbelt, Maryland. This is the continuance of the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Nader Modanlo of Potomac, Maryland, is the President of Final Analysis Communication Services, Inc. Mr. Modanlo filed for chapter 11 protection on July 22, 2005 (Bankr. D. Md. Case No. 05-26549). Joel S. Aronson, Esq., at Ridberg Sherbill & Aronson LLP, represents the Debtor. When the Debtor filed for protection from his creditors, he listed total assets of $776,237 and total debts of $106,002,690. Christopher B. Mead is the chapter 11 Trustee for the Debtor's estate. Richard M. Goldberg, Esq., at Shapiro Sher Guinot & Sandler, represent the chapter 11 trustee. NBC/AUSTIN WINDRIDGE: Hires Fuqua & Keim as Bankruptcy Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas allowed NBC/Austin Windridge to employ Fuqua & Keim, LLP, as its bankruptcy counsel. As reported in the Troubled Company Reporter on May 29, 2006, Fuqua & Keim will: (a) provide the Debtor legal advice with respect to its powers and duties as a debtor-in-possession in the continued operation of its business, and management of its property; (b) prepare all pleadings on behalf of the Debtor, as debtor- in-possession, as necessary; (c) negotiate and submit a potential plan of arrangement satisfactory to the Debtor, its estate, and the creditors at large; and (d) perform all other legal services for the Debtor as a debtor-in-possession which may become necessary in the Debtor's bankruptcy proceedings. Richard L. Fuqua, Esq., an attorney at the Fuqua & Keim, will serve as lead counsel for this engagement and bills $400 per hour. The Debtor disclosed that the firm's other professionals bill: Professional Hourly Rate ------------ ----------- Other Partners and Shareholders $300 Associates $120 - $175 Law Clerks and Legal Assistants $60 - $75 To the best of Debtor's knowledge, the firm represents no interest adverse to the Debtor or its estate. Headquartered in Houston, Texas, NBC/Austin Windridge, Ltd., and its debtor-affiliate, NBC Las Brisas, Ltd., filed for chapter 11 protection on May 2, 2006 (Bankr. S.D. Tex. Case Nos. 06-31901 & 06-80154). Richard L. Fuqua, II, Esq., at Fuqua & Keim, LLP, represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. NBC/AUSTIN WINDRIDGE: Taps Capstone Real as Management Company -------------------------------------------------------------- NBC/Austin Windridge, Ltd., and its debtor-affiliate, NBC Las Brisas, Ltd., ask the U.S. Bankruptcy Court for the Southern District of Texas in Houston for authority to retain Capstone Real Estate Service, Inc., as their Management Company, pursuant to Section 327 of the Bankruptcy Code. The Debtors tell the Court that Capstone will assist them in the preparation of accounting and management functions required under their bankruptcy cases. The Debtors say that Capstone represented them prior to their bankruptcy filing and is therefore familiar with their business. The Debtors want to employ Capstone on the fee basis set out in Schedule A of the Management Agreement currently in place between them. The Debtor did not submit a copy of the Management Agreement to the Court. To the best of Debtor's knowledge, Capstone holds no interest adverse to its estate. Headquartered in Houston, Texas, NBC/Austin Windridge, Ltd., and its debtor-affiliate, NBC Las Brisas, Ltd., filed for chapter 11 protection on May 2, 2006 (Bankr. S.D. Tex. Case Nos. 06-31901 & 06-80154). Richard L. Fuqua, II, Esq., at Fuqua & Keim, LLP, represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. NORTHWEST AIRLINES: Employees Urge Congress to Pass Pension Law --------------------------------------------------------------- Hundreds of Northwest Airlines employees from around the country arrived in Washington, on July 18, 2006, to urge members of Congress to quickly pass legislation that will save their pension benefits. The effort involves the participation of hundreds of employees from throughout various functions of the company, including pilots, flight attendants, ground employees, flight dispatchers, meteorologists and management, most flying to Washington for the day-long lobbying push. "The pilots of Northwest Airlines view pension legislation as a win, win, win for the taxpayer, employee and our employer," said Capt. Dave Stevens, master executive council chairman of the Northwest unit of the Air Line Pilots Association, who was among pilots to land in Washington today to participate. "This is not a taxpayer bailout; rather it is Northwest's opportunity to live up to its obligation over a longer period of time." Many flew aboard two specially chartered flights, one from the airline's WorldGateway at Detroit hub, the other from its Minneapolis/St. Paul hub. Northwest provided two aircraft, including a 100-seat DC9-30 from Detroit, and a 124-seat Airbus 319 from the Twin Cities, as well as fuel, landing fees and other related costs. In addition, employees from Northwest's nearby Baltimore reservations call center drove to Washington to be part of the effort. "Flight attendants have worked hard to bring forth fair pension legislation and AFA-CWA is proud to stand with our co-workers and make our voices heard," said Shane Larson, government affairs director for the Association of Flight Attendants. "For too long, companies have been getting away with destroying the futures of their employees in under-funded pension plans. Now, for the first time, we have an airline that wants to do the right thing and fulfill its obligation. Therefore it is up to us, the employees, to unite together and make sure that this happens." The employees divided into smaller groups and are meeting with House and Senate delegations from states where Northwest is a major provider of air service, such as Michigan, Minnesota, Mississippi, Montana, South Dakota, Tennessee, Washington and Wisconsin, among others. "We are here today to urge Congress to swiftly pass legislation that allows our membership to retain their hard-earned pension benefits; while protecting the benefits of thousands of retirees," said Stephen Gordon, president of Local Lodge 141 and president- elect of District 143 of the International Association of Machinists and Aerospace Workers. "It is imperative for Congress to listen to its constituents and reach an amicable solution during these turbulent times." Securing passage of pension reform legislation that will allow the airline to meet its obligations to employees and protect taxpayers has been Northwest's number one legislative priority since the end of 2004. "Many of us know far too many airline employees who have seen their pension plans terminated," said Perry Sprague, president of Local 543 of the Transport Workers Union, who joined fellow TWU- represented flight dispatchers in Tuesday's effort. "We have seen the kind of worry and hardship that this issue creates for employees and their families. We've worked with the company to create a workable solution and now look to Congress to do its part." Northwest's pension plans were fully funded as recently as 2000. However, as a result of 1950s' era interest rates, major stock market declines, and a recession, the company's pension plans are now under-funded. In addition, the law governing pension funding requires highly accelerated "catch-up" payments when a plan is under-funded. These catch-up payments are particularly onerous in the current environment as nearly all U.S. airlines struggle to return to sustained profitability and cannot afford to make such contributions. "This is a very important issue for Northwest Airlines employees and their families," said Rory O'Loughlin, chairman of Northwest Airlines Meteorologists Association, who was in Washington. "We all have made difficult sacrifices as part of our participation in Northwest's restructuring, including moving to a defined contribution plan, but we need Congress' help to protect our existing defined benefit plans." Some of Northwest's largest competitors have terminated their defined benefit contribution plans through the Chapter 11 bankruptcy process, turning responsibility for the plans over to the Pension Benefit Guaranty Corporation, a governmental corporation that partially insures failed pension plans. The PBGC has taken over the pension plans of a number of airlines, including most recently United Airlines and US Airways. Northwest has said that without passage of this legislation, it will be forced to terminate its plans. "For nearly two years, Northwest has worked diligently with members of Congress and other government officials to save these hard-earned retirement benefits for our employees," said Doug Steenland, president and chief executive officer of Northwest. "We believe that fully honoring these commitments is the right thing to do for Northwest's 73,000 pension plan participants. Enacting this important legislation now will protect taxpayers from having another large pension plan become the responsibility of the PBGC." About Northwest Airlines Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: S&P Affirms Default Corporate Credit Rating --------------------------------------------------------------- Northwest Airlines Corp. unit Northwest Airlines Inc. reached a tentative concessionary contract agreement with its flight attendants' union. Standard & Poor's Ratings Services affirmed its 'D' corporate credit ratings on both entities, which are determined by the companies' bankruptcy status. "The agreement, which has to be ratified by union members (who overwhelmingly rejected a previous contract offer), would complete the airline's labor cost reductions and represent an important step forward in its bankruptcy reorganization," said Standard & Poor's credit analyst Philip Baggaley. "Ratification of the contract, which management states will yield annual savings of $195 million, would allow Northwest to implement previously agreed concessionary contracts with its pilots, baggage handlers, and airport service employees; conversely, a second contract rejection by the flight attendants would likely result in court-approved imposition of the concessionary contract and carries some risk of a strike or other labor action in response," the credit analyst continued. The 'D' corporate credit ratings on Northwest Airlines Corp. and its subsidiary reflect the companies' Sept. 14, 2005, bankruptcy filings. Ratings on enhanced equipment trust certificates remain on CreditWatch, excepting 'AAA' rated, insured EETCs. Northwest is seeking to reorganize in Chapter 11 proceedings, reducing losses by shrinking capacity, securing labor cost reductions, and reducing fixed financial obligations. Northwest states that it will seek to cut its costs by $2.2 billion annually, including $1.35 billion of reduced labor costs (an approximate 35% reduction in overall labor expenses, of which about $500 million had been secured before bankruptcy). The company had imposed a new contract on its mechanics workforce (replacements for striking mechanics) prior to bankruptcy and has since reached ratified or tentative concessionary contracts with its other unionized employees. The company is expected to seek court approval to reject the flight attendant contract and impose a new one, but resume negotiations in an effort to reach a consensual agreement. Northwest has said that it will not seek to terminate its underfunded ($3.7 billion deficit, as of the end of 2005) defined-benefit pension plans, if proposed new pension legislation that allows airlines to stretch out repayment of their deficits is enacted. NUTRAQUEST INC: Confirmation Hearing Scheduled for August 17 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey set 9:00 a.m. on Aug. 17, 2006, to consider confirmation of Nutraquest, Inc.'s Second Modified Plan of Reorganization. A copy of the solicitation materials relating to the Plan may be obtained from the Debtor's counsel upon written request addressed to: Sterns & Weinroth, P.C. Attn: Valerie A. Hamilton, Esq. 50 West State Sreet, Suite 1400 P.O. Box 1298 Trenton, New Jersey 08607 Fax: (609) 392-7956 Ballots to accept or reject the Plan must be received from holders of impaired claims by the Court Clerk by 4:00 p.m. (Eastern Time) on July 28, 2006. Any objection to the Debtor's Plan must be in writing and received no later than 4:00 p.m. (Eastern Time) on July 28, 2006, by the Court Clerk. Copies of the objection must be sent to: (a) the Debtor's counsel: Sterns & Weinroth, P.C. Attn: Valerie A. Hamilton, Esq. 50 West State Sreet, Suite 1400 P.O. Box 1298 Trenton, New Jersey 08607 Fax: (609) 392-7956 (b) office of the U.S. Trustee One Newark Center Attn: Fran B. Steele, Esq. Newark, New Jersey 07102 (c) counsel for the Official Committee of Unsecured Creditors Montgomery, McCracken, Walker & Rhoads LLP Attn: Natalie D. Ramsey, Esq. 123 South Broad Street Philadelphia, Pennsylvania 19109 Overview of the Plan Under the Plan, Administrative Expense Claims and Priority Tax Claims will be paid in full. Holders of General Unsecured Claims will receive their pro rata share of the $50,000 fund. Pursuant to the Ephedra PI Settlement Agreement, holders of Ephedra Personal Injury Claims will be paid in full through: * payment of 90% of their claims in cash on the Effective Date, and * the balance, consisting of a portion of Phoenix Laboratories, Inc.'s share of the funding obligation, to be paid over an 18-month period pursuant to a secured, interest-bearing Note. On the Effective Date, the Park Class Claim and all Individual Park Class Member Claims will be automatically, and without further act or deed, transferred to, vested in and assumed by the Park Claims Resolution Facility, and the Park Settlement Administrator shall have the sole authority to determine the Allowed Amounts of the Claims. Distributions to the Park Class Representative and the holders of the Individual Park Class Member Claims are limited to amounts allowed and paid from the Park Claims Resolution Facility. On the Effective Date, all Individual Markowitz Class Member Claims based upon retail purchase of Xenadrine(R) RFA-1 will be automatically, and without further act or deed, transferred to, vested in and assumed by the Markowitz Xenadrine(R) RFA-1 Claims Resolution Facility, and the Markowitz Settlement Administrator shall have the sole authority to determine the Allowed Amounts of such Claims. All Individual Markowitz Class Member Claims based upon retail purchase of Xenadrine(R) EFX will also be automatically, and without further act or deed, transferred to, vested in and assumed by the EFX Consumer Redress Fund. The Federal Trade Commission, or its designee, shall have the sole authority to determine the Allowed Amounts of the Claims. Robert Chinery, Jr., the sole equity owner of the Debtor, will retain his Interests. A full-text copy of the Debtor's Disclosure Statement explaining its Second Modified Plan of Reorganization is available for a fee at http://www.researcharchives.com/bin/download?id=060719033512 Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. Natalie D. Ramsey, Esq., at Montgomery, McCracken, Walker & Rhoads LLP represents the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. NUTRAQUEST INC: Wants Excl. Plan-Filing Period Extended to Oct. 9 ----------------------------------------------------------------- Nutraquest, Inc., asks the U.S. Bankruptcy Court for the District of New Jersey to further extend, until Oct. 9, 2006, the period within which it has the exclusive right to file a chapter 11 plan. The Debtor also asks the Court to extend, until Dec. 8, 2006, its exclusive period to solicit acceptances of its plan. The Debtor tells the Court that it has been extremely diligent in moving toward confirmation of its Plan especially in an extraordinarily complex case involving very large claims of varying types, hundreds of creditors, and both private and governmental claimants. The Debtor says it has put into place an administrative framework to expedite the consideration and confirmation of its Plan after applying for and obtaining the withdrawal of reference of the entire proceeding to this Court. The Debtor contends that the extension is necessary in order to maintain the status quo so that the final pieces of its chapter 11 case may be put in place and a confirmed plan put into effect. The Debtor says that although it has obtained approval of its Disclosure Statement and served it and the Plan on all creditors, there remain significant issues that need to be dealt with. The Debtor discloses that these still open issues include the Fee Mediation and the Phoenix Note Mediation. The Debtor argues that it cannot confirm its Plan until all or most of these matters have been resolved. The Debtor assures the Court that the extension is not intended to delay the bankruptcy proceedings or coerce its creditors to accede to its will. Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. Natalie D. Ramsey, Esq., at Montgomery, McCracken, Walker & Rhoads LLP represents the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. OCA INC: Has Until August 14 to Remove State Court Civil Actions ---------------------------------------------------------------- The Honorable Jerry B. Brown of the U.S. Bankruptcy Court for the Eastern District of Louisiana extended the period within which OCA, Inc., and its debtor-affiliates can remove state court civil actions either to the U.S. District Court for the Eastern District of Louisiana or its Bankruptcy Court to Aug. 14, 2006. Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., New Orleans, Louisiana told the Court that the additional enlargement of time sought will afford the Debtors an opportunity to make fully informed decisions concerning removal of any Civil Action and will ensure that the Debtors do not forfeit valuable rights under Section 1452 of the Judiciary Procedures Code. The rights of the Debtors' adversaries will not be prejudiced by the extension. Any party to a Civil Action that is removed may seek to have it remanded to the applicable court on any equitable ground. Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/ -- provides a full range of operational, purchasing, financial, marketing, administrative and other business services, as well as capital and proprietary information systems to approximately 200 orthodontic and dental practices representing approximately almost 400 offices. The Debtor's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No. 06-10179). Three debtor-affiliates also filed for bankruptcy protection on June 1, 2006 (Bankr. E.D. La. Case No. 06-10503). William H. Patrick, III, Esq., at Heller Draper Hayden Patrick & Horn, LLC, represents the Debtors. Patrick S. Garrity, Esq., and William E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC represent the Official Committee of Unsecured Creditors. Carmen H. Lonstein, Esq., at Bell Boyd & Lloyd LLC and Robin B. Cheatham, Esq., at Adams and Reese LLP represent the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $545,220,000 in total assets and $196,337,000 in total debts. ONEIDA LTD: Wants Reorganized Companies Incorporated in Delaware ---------------------------------------------------------------- Oneida Ltd. and its debtor-affiliates want their reorganized entities incorporated under the laws of Delaware rather than New York, as provided in their First Amended Joint Prenegotiated Plan of Reorganization filed with the Court on July 7, 2006. The proposed prenegotiated plan of reorganization provides, among other things, for the conversion of 100% of Oneida's Tranche B loan, representing approximately $100 million, into 100% of the equity of the newly reorganized company. The Debtors will be substantially consolidated on the plan's effective date, canceling all intercompany claims. The plan also includes a $170 million long-term credit facility that will refinance Oneida's Tranche A debt and provide the company with additional liquidity to continue to grow its business. Oneida's general unsecured creditors will not be impaired under the plan; however, existing common and preferred stockholders will not receive any distributions under the plan and their equity will be cancelled on the effective date of the plan. A full-text copy of the redlined Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060719040309 Headquartered in Oneida, New York, Oneida Ltd. (OTC: ONEI) -- http://www.oneida.com/-- manufactures stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and supplies dinnerware to the foodservice industry. Oneida also supplies a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. Scott L. Hazan, Esq., and Lorenzo Marinuzzi, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. On May 12, 2006, Judge Gropper approved the Debtors' disclosure statement. ORIENTAL TRADING: Moody's Junks Rating on Proposed $180 Mil. Loan ----------------------------------------------------------------- Moody's Investors Service rated the proposed new first-lien bank credit facility and second-lien term loan of Oriental Trading Company, Inc. at B3 and Caa1, respectively. Moody's also lowered the corporate family rating to B3 and assigned a stable rating outlook. The rating action considers the proposed financing that will be associated with the pending leveraged buyout of OTC by The Carlyle Group and co-investors. The acquisition will be financed by the new 1st-lien and 2nd-lien loans, non-rated holding company mezzanine debt, and cash equity. The downgrade is principally driven by the substantially increased leverage and fixed charge burden that will result from the transaction. Ratings assigned are: * $50 million 1st-Lien Revolving Credit facility at B3, * $410 million 1st-Lien Term Loan at B3, * $180 million 2nd-Lien Loan at Caa1. This rating is lowered: * Corporate family rating to B3 from B2. The ratings on the existing $307 million 1st-lien bank loan and $122 million 2nd-lien loan will be withdrawn upon completion of the proposed transaction. Oriental Trading Company's corporate family rating of B3 reflects the impact of key quantitative and qualitative credit attributes. Weighing down the overall rating with low non-investment grade scores are the company's higher leverage and modest fixed charge coverage post-transaction, OTC's relatively small size in revenue terms, and competition including from other catalogue marketers. Steady growth over time in sales and cash flow, coupled with diversification of OTC's customer base and product offering and the relative lack of cash flow seasonality, potentially benefit the ratings. Moody's believes that OTC's corporate family rating is solidly positioned at the B3 level. The stable outlook anticipates that the company will steadily grow revenue and cash flow. The outlook also considers Moody's expectation that the company's discretionary cash flow will be used for balance sheet improvement. However, given the large debt burden being placed on the company and assuming good operating performance, Moody's does not expect material debt reduction within the medium-term. Moody's anticipates that the company will maintain solid liquidity through moderating growth capital investment, if operating results fall below plan. Ratings could eventually move upward once financial flexibility strengthens such that debt to EBITDA falls below 6 times and Free Cash to Debt approaches 5% on a sustainable basis. Inability to grow revenue and operating profit, a permanent decline in cash balances or revolving credit facility availability resulting from negative free cash flow, or an aggressive financial policy action would cause the ratings to be lowered. Specifically, debt to EBITDA above 7 times, EBIT to interest expense falling towards 1 time, or free cash flow to debt below break-even would cause ratings to be lowered. Oriental Trading Company, Inc., with headquarters in Omaha, Nebraska, sells novelties, toys, and home decor items via catalogue and over the Internet. Revenue for the twelve months ending April 1, 2006 was approximately $582 million. ORIS AUTOMOTIVE: Wants Plan-Filing Period Stretched to Sept. 24 --------------------------------------------------------------- Oris Automotive Parts Alabama, Ltd., asks the U.S. Bankruptcy Court for Northern District of Alabama, Southern Division, to extend its exclusive period to file a Chapter 11 Reorganization Plan to Sept. 24, 2006, and its period to solicit acceptances of that Plan to Nov. 24, 2006. Max A. Moseley, Esq., at Johnston Barton Proctor & Powell LLP, tells the Court that the Debtor has not had sufficient time to draft a Reorganization Plan because it has focused its attention n effectuating and finalizing the sale of a substantial majority of its assets. The Court approved the sale of the assets to Flex-N- Gate Corporation on June 20, 2006. With the sale approval, Mr. Moseley says the Debtor will meet with its consultants to prepare and submit a liquidating plan under Chapter 11 of the Bankruptcy Code. Headquartered in McCalla, Alabama, Oris Automotive Parts Alabama, Ltd. -- http://www.oris-gmbh.de/-- manufactures automotive parts. The company filed for chapter 11 protection on March 16, 2006 (Bankr. N.D. Ala. Case No. 06-00813). Clark R. Hammond, Esq., at Johnston, Barton, Proctor & Powell LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million to $10 million and debts between $10 million to $50 million. OWENS CORNING: Court Approves Proposed Plan Voting Procedures ------------------------------------------------------------- The Honorable Judith K. Fitzgerald approves the Plan Voting Procedures proposed by Owens Corning and its debtor-affiliates as revised to reflect changes to the Fifth Amended Plan of Reorganization and with the added modifications to address revisions reflected in their Sixth Amended Plan. The U.S. Bankruptcy Court for the District of Delaware finds the Debtors' proposed notices as constituting sufficient notice to all interested parties, and forms of ballots as adequately addressing the particular need of their Chapter 11 cases. A full-text copy of the Voting Procedures as further amended to address changes reflected in the Sixth Amended Plan is available for free at http://ResearchArchives.com/t/s?da2 The Court directs attorneys for an individual holder of a PI Trust Claim, who is not authorized to vote on behalf of the holder or who otherwise wishes to have the Voting Agent transmit the Solicitation Packages to his or her clients directly, to comply with the terms of the Notice to Asbestos Attorneys and the appended Election Form, on or before July 3, 2006. Claimants holding both Classes A7 and B8 claims do not hold claims on account of the same underlying debt and will be entitled to cast both Classes A7 and B8 Ballots subject to the terms of the Voting Procedures, Judge Fitzgerald says. Votes submitted in relation to Class A7 will be tabulated provisionally as votes in relation to Class I7. Subject to the terms and conditions of the Voting Procedures: a. holders of 6-1/2% Monthly Income Preferred Securities will be the sole parties entitled to vote any Class A11 MIPS Claims and Interests; and b. the Special Voting Agent will tabulate each of the MIPS for which a ballot is cast as a Class A11 claim for $50 per MIPS, unless the Court orders otherwise. Holders of OC Interests will be the sole parties entitled to vote Class A12 OCD Interests in Owens Corning. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Wins Appeal Against Citigroup In New Jersey Court ----------------------------------------------------------------- The Appellate Division of the Superior Court of New Jersey allows Parmalat Finanziara, S.p.A., to continue with its fraud lawsuit against Citigroup, Inc., and certain affiliates. In a decision dated July 14, 2006, the New Jersey Appellate Division rejected an appeal filed by the Citigroup Entities to dismiss a ruling from the New Jersey Law Division, which ruling denied Citigroup's request to dismiss a complaint filed by Dr. Enrico Bondi, extraordinary administrator of Parmalat. In the complaint, Dr. Enrico Bondi alleged that Citigroup, Inc. and Citibank, N.A., aided Parmalat's subsidiaries in their fraudulent scheme. Specifically, Dr. Bondi asserted that Citigroup knowingly structured financing for Parmalat subsidiaries to disguise debt and artificially increase cash flow. Eureka PLC, a United Kingdom-based public liability company, is one of the corporations alleged to be affiliated with Citigroup that have participated in the Parmalat scheme. Dr. Bondi said Citigroup created Eureka as a special purpose entity to assist in Parmalat's scheme. Citigroup purportedly provided credit lines and financial services to Eureka. Eureka, acting on Citigroup's behalf, bought and securitized receivables of Farmland Dairies LLC, a holding company of Parmalat subsidiary Parmalat USA Corporation. Dr. Bondi believes that Eureka's transactions with Farmland were purportedly essential links in the global scheme. In their dismissal motion, the Citigroup Defendants argued that the New Jersey trial court lacks personal jurisdiction over Eureka. The Citigroup Defendants also relied on the forum non conveniens doctrine. They argued that New Jersey lacks interest in the litigation, witnesses and documents are not located in New Jersey, and application of Italian law will make it inconvenient to pursue the case in the State. Under the forum non conveniens doctrine, "a court may decline jurisdiction whenever the ends of justice indicate a trial in the forum selected by the plaintiff would be inappropriate," the New Jersey Appellate Division notes, citing a court ruling in D'Agostino v. Johnson & Johnson, Inc., 225 N.J. Super. 250, 259 (App. Div. 1988), aff'd, 115 N.J. 491 (1989) (D'Agostino I). However, the New Jersey Appellate Division holds that the trial court had established a prima facie case of specific jurisdiction against Eureka. The Appellate Court also finds that the Citigroup Defendants failed to show that they will not have access to sources of proof, or that witnesses will be unavailable so that it would be unreasonable for the lawsuit to proceed in the State. Hence, the Appeals Court rules that the dismissal motion based on forum non conveniens was properly denied. The Appellate Division affirms, without prejudice, the Law Division's decision not to dismiss the Bondi suit based on forum non conveniens, allowing Citigroup to raise the issue again after it: -- has made a good faith effort to obtain discovery necessary to defend the action; and -- can provide the court with a record showing that plaintiff's choice of forum is truly inappropriate. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHIBRO ANIMAL: Plans Tender Offer of $240 Million Senior Notes -------------------------------------------------------------- Phibro Animal Health Corporation reported the proposed private offering of $240 million in aggregate principal amount of its senior notes due 2013. It is anticipated that the consummation of the offering will occur on or about July 31, 2006 and the net proceeds from the offering, together with available cash, will be used to refinance all of the outstanding 13% Senior Secured Notes due 2007 of PAHC and one of its subsidiaries, all of the outstanding 9-7/8% Senior Subordinated Notes due 2008 of PAHC and all of the outstanding 15% Senior Secured Notes due 2010 of PAHC Holdings Corporation, to repay debt outstanding under the existing domestic senior credit facility of PAHC and to pay related fees and expenses. The new notes will be senior unsecured obligations of PAHC, will bear interest semi-annually and will be guaranteed by PAHC's existing domestic subsidiaries and certain of its future domestic subsidiaries. Headquartered in Ridgefield Park, New Jersey, Phibro Animal Health Corporation -- http://www.philipp-brothers.com/-- manufactures and markets a broad range of animal health and nutrition products, specifically medicated feed additives and nutritional feed additives, which it sells throughout the world predominantly to the poultry, swine and cattle markets. MFAs are used preventively and therapeutically in animal feed to produce healthy animals. PAHC is also a specialty chemicals manufacturer and marketer. At March 31, 2006, Phibro Animal Health Corporation's balance sheet showed a $48,865,000 stockholders' deficit compared to a $44,924,000 deficit at June 30, 2005. * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service assigned a B3 rating to the proposed new senior unsecured note offering of Phibro Animal Health Corporation. At the same time, Moody's affirmed the existing ratings of Phibro, including the B2 corporate family rating. The rating outlook is stable. PHYSICIANS INTERINDEMNITY: Receiver Selling $7.9 Mil. of Judgments ------------------------------------------------------------------ David A. Gill, Esq., in his capacity as the Receiver for Physicians Interindemnity Cooperative Corporation, is selling a portfolio of outstanding judgments, settlements and claims against 54 individual physicians totaling $7.9 million, of which Mr. Gill believes as much as $1.6 million is recoverable. Subject to higher and better offers, Mr. Gill has agreed to sell the portfolio for $435,501 under the terms of a Purchase and Sale Agreement filed in the Los Angeles Superior Court. The buyer's identity was not available at press time. Subject to a confidentiality agreement, due diligence materials can be obtained by contacting: Greg Suchniak Danning, Gill, Diamond & Kollitz, LLP 2029 Century Park East, Third Floor Los Angeles, CA 90067 Telephone (310) 277-0077 Mr. Gill will ask the Los Angeles Superior Court to approve the sale to the highest and best bidder at a hearing on August 16, 2006. Physicians Interindemnity Cooperative Corporation (commonly known as PICC) and Physicians Interindemnity Trust (commonly known as PIT) were formed pursuant to section 1280.7 of the California Insurance Code to provide member-physicians with protection from medical malpractice claims. The members paid initial contributions and thereafter paid assessments, which were deposited into a trust fund that was used to cover defense and indemnity for medical malpractice lawsuits. In September 1995, the PIT board of trustees approved a plan of winding up and termination of PIT due to a determination that an assessment of $32.5 million was necessary to replenish the trust fund and to raise sufficient funds for defense and indemnity. The plan included a proposal that the members would obtain malpractice insurance through a specified insurance company. The plan was approved and PIT ceased providing coverage to members for future acts. In March 1996, in an action brought in the Los Angeles Superior Court by the Department of Corporations (Case No. BC145996), PIT/PICC was ordered into receivership. David A. Gill, Esq., at Danning, Gill, Diamond & Kollitz, LLP, was appointed as the Receiver of PIT/PICC's assets. The order appointing Mr. Gill gave him the authority to enforce and collect all debts of the trust and PICC, including assessments. Thereafter, Mr. Gill deemed that the trust fund had insufficient funds to pay debts to defend against, and indemnify for, malpractice claims. Mr. Gill sent a letter to all members demanding assessment payments. Only 20% of the members responded. PIT members stopped receiving coverage for malpractice lawsuits. In July 1997, Mr. Gill sued all members of PIT/PICC, seeking to recover more than $51 million, including funds owed as unpaid assessments levied by the trust's board of trustees, as well as sums for "receiver's assessment." PLIANT CORP: Completes Restructuring and Exits Chapter 11 --------------------------------------------------------- Pliant Corporation completed its financial restructuring and has exited Chapter 11 Bankruptcy protection. The company's financial restructuring plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware on June 23, 2006, subject to several closing conditions. These conditions have all been satisfied, including: -- Closing of a new $200 million senior secured revolving credit facility with Merrill Lynch Commercial Finance Corp. This facility replaces Pliant's existing pre- petition revolver and debtor-in-possession credit facilities. -- Completion of a transaction to reincorporate the company in Delaware. Pliant filed a voluntary petition for Chapter 11 protection on Jan. 3, 2006 to implement a pre-negotiated restructuring of its balance sheet. The financial restructuring significantly increases Pliant's free cash flow, reduces debt and interest expense, and eliminates all existing mandatory redeemable preferred equity through an exchange with holders of the company's 13% Senior Subordinated Notes, Series A and Series B Preferred stock, and Common stock. A key provision of Pliant's Plan of Reorganization provides for payment of all outstanding pre- petition trade vendor claims. Additionally, the Company's 1st Lien and 2nd Lien Senior Secured Notes have been reinstated in accordance with their terms, the interest rate on the 1st Lien Senior Secured Notes has been increased by 0.225% per annum, and holders of the 2nd Lien Senior Secured notes will be entitled to receive payment of accrued but unpaid interest through March 1, 2006 (including interest on interest through July 25, 2006) and a cash consent fee. The record date for such payments to holders of 2nd Lien Senior Secured notes is July 24, 2006. Pliant will now continue its normal business outside the confines of the U.S. Bankruptcy Code. The company is able to commence making payments and distributions to creditors with validated claims under the terms of the confirmed Plan. "Today marks a successful completion of an important process," Harold Bevis, President and CEO said. "I am pleased we have now accomplished our objective of improving Pliant's balance sheet and cash flow, to enable us to continue executing our business plan and investing in our business on a sustained basis. From the start, our goal has been to get in-and-out of Chapter 11 as quickly as possible, to minimize the cost of the process and the impact on our company. I am proud to say that throughout the process, Pliant was able to continue its operations on an uninterrupted basis, and never needed to use the $70 million DIP credit facility. We are all excited about Pliant's future, and look forward to continue providing our customers with value-added products, superior service, and leading-edge innovation programs. Thank you to all of our loyal employees, vendors, and customers for supporting the company during this time period. We believe Pliant's future has never been brighter." As reported in the Troubled Company Reporter on June 22, 2006, Pliant Vice President and General Counsel Stephen T. Auburn disclosed that the Third Amended Plan includes a new class -- Class 11A, which consists of the Durham Subordinated Claims. The Claims are impaired. The Durham Subordinated Claims are the claims of the Durham Parties related to the Durham Put Shares to the extent subordinated by the Bankruptcy Court pursuant to Section 510(b) of the Bankruptcy Code. The Durham Parties referred to Richard P. Durham and Durham Capital, L.L.C. The Durham Put Shares referred to the capital stock and warrants of the Debtors that are subject to the alleged "put" right of the Durham Parties. As of the Petition Date, the Durham Put Shares consisted of 18,200 shares of outstanding common stock, 1,232 shares of Series A Preferred Stock and 1,250 Warrants. The Plan provided if and to the extent the Court determines that Holders of Allowed Durham Subordinated Claims are entitled to receive: (a) a portion of the New Equity Common Stock that is otherwise distributable to Holders of Outstanding Common Stock Interests; or (b) a portion of the Series A Common Stock and the Series A or Series AA Preferred Stock that is otherwise distributable to Holders of Series A Preferred Stock Interests; then the Holders of Allowed Durham Subordinated Claims will receive a payment in Cash equal to the value as of the Effective Date, as agreed with the Debtors or determined by the Court, of that Subordinated Claim Common Stock Allocation and that Subordinated Claim Preferred Allocation; provided, however, that the amount of the distribution will be reduced by the value, as agreed with the Debtors or determined by the Court, of the New Equity Common Stock, the Series A Common Stock and the Series A or Series AA Preferred Stock that is distributed to Holders of Allowed Durham Subordinated Claims on account of Durham Put Shares. For the avoidance of doubt, Class 11 includes the Durham Put Shares that are Outstanding Common Stock Interests but does not include Durham Subordinated Claims. Mr. Auburn clarified that Class 9 includes the Durham Put Shares that are Series A Preferred Stock Interests but does not include Durham Subordinated Claims. A full-text copy of Pliant's Third Amended Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?bda About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. PMA CAPITAL CORP: Low Leverage Prompts Moody's to Review Ratings ---------------------------------------------------------------- Moody's Investors Service placed the ratings of PMA Capital Corporation and the Ba1 insurance financial strength ratings of the PMA Insurance Group companies, on review for possible upgrade. Moody's also affirmed the B1 IFS rating of PMA Capital Insurance Company and changed the outlook to stable from developing. The review for possible upgrade was prompted by PMACC's improved financial flexibility including its recent reduction in financial leverage as well as improving business fundamentals at PMAIG. According to Moody's, the review for possible upgrade will focus on PMAIG's prospective core earnings and fixed charge coverage metrics, the company's reserve and capital adequacy profile as well as holding company liquidity. Moody's noted that the PMAIG company pool has experienced moderate but consistent levels of profitability in recent years, most recently driven by new business production and renewal retention rates near historical norms, as well as an emphasis on managed care initiatives and a change in the geographic mix of business. While PMAIG's business has been reasonably profitable, Moody's believes the group may be challenged by the intensifying competitive environment and by secular trends in medical cost inflation. Moody's changed the outlook on PMA Re to stable from developing reflecting expectations that the company will continue to manage an orderly runoff of its loss reserves and that adverse reserve development will not exhaust the remaining limit on PMA Re's adverse development cover. The last rating action occurred on October 8, 2004, when Moody's assigned a B3 rating to PMA Capital Corporation's senior secured convertible debt, affirmed its long-term debt ratings, and placed a developing outlook on the ratings. These ratings have been placed on review for possible upgrade: PMA Capital Corporation * senior unsecured debt at B3 * prospective senior unsecured debt at (P)B3 * prospective subordinated debt at (P)Caa2 * prospective preferred stock at (P)Caa3; PMA Capital Trust I * prospective preferred securities at (P)Caa2; PMA Capital Trust II * prospective preferred securities at (P)Caa2; Manufacturers Alliance Insurance Company * insurance financial strength at Ba1; Pennsylvania Manufacturers' Association Insurance Company * insurance financial strength at Ba1; Pennsylvania Manufacturers Indemnity Company * insurance financial strength at Ba1. This insurance financial strength rating has been affirmed with a stable outlook: PMA Capital Insurance Company * insurance financial strength at B1. PMACC, headquartered in Philadelphia, Pennsylvania, is an insurance holding company whose operating subsidiaries provide specialty risk management products and services to its customers in the United States. As of March 31, 2006, shareholders' equity was $400 million. RENT-A-CENTER: Completes $725 Million Senior Debt Refinancing ------------------------------------------------------------- Rent-A-Center, Inc., completed the refinancing of its senior secured debt. The new $725 million senior credit facility consists of $325 million in term loans and a $400 million revolving credit facility. The Company drew down the $325 million in term loans and $88 million of the revolving facility today and utilized the proceeds to repay its existing senior term debt. "We believe this enhanced revolving structure will provide us financial flexibility by allowing us to scale our secured debt as we continue to grow our core rent-to-own business and expand our entry into the financial services business," commented Mr. Robert D. Davis, the Company's Chief Financial Officer. "Based upon our present leverage ratio and current debt level, we expect an approximate 50 basis point interest expense savings over the term of the new credit facility," Mr. Davis stated. In connection with the closing of the refinancing, the Company will record a charge in the third quarter of approximately $2.2 million relating to unamortized costs under the Company's previous senior credit facility. Based in Plano, Texas, Rent-A-Center, Inc. (Nasdaq/NGS:RCII) -- http://www.rentacenter.com/-- operates the largest chain of consumer rent-to-own stores in the U.S. with 2,751 company operated stores located in the U.S., Canada, and Puerto Rico. The company also franchises 297 rent-to-own stores that operate under the "ColorTyme" and "Rent-A-Center" banners. * * * As reported in the Troubled Company Reporter on June 29, 2006, Standard & Poor's Ratings Services assigned its 'BB+' rating to Rent-A-Center Inc.'s $725 million credit facility. It also assigned a recovery rating of '4' to the facility, indicating the expectation for marginal recovery of principal in the event of a payment default. The loan comprised a $400 million revolving credit facility due in 2011, a $200 million term loan A due in 2011, and a $125 million term loan B due in 2012. The corporate credit rating on Rent-A-Center Inc. is 'BB+' with a negative outlook. As reported in the Troubled Company Reporter on June 23, 2006, Moody's Investors Service assigned a Ba2 rating to the bank loan of Rent-A-Center, Inc., and affirmed the Ba2 corporate family as well as the senior subordinated note issue at Ba3. The continuation of the positive outlook reflected Moody's opinion that ratings could be upgraded over the medium-term once the company establishes a lengthier track record of sales improvement and Moody's becomes more comfortable with the company's financial policy. RIEFLER CONCRETE: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Riefler Concrete Products, LLC, delivered to the U.S. Bankruptcy Court for the Western District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $591,442 B. Personal Property $19,232,185 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $11,523,948 E. Creditors Holding Unsecured Priority Claims $194,957 F. Creditors Holding Unsecured Nonpriority Claims $11,101,620 ----------- ----------- Total $19,823,627 $22,820,525 A copy of the 194-page document containing the schedules is available for a fee at: http://www.researcharchives.com/bin/download?id=060719043745 Headquartered in Hamburg, New York, Riefler Concrete Products, LLC -- http://www.riefler.com/-- manufactures and distributes licensed concrete masonry products, and offers concrete construction and filling services. The Company and its affiliate, Riefler Real Estate Corp., filed for chapter 11 protection on June 12, 2006 (Bankr. W.D. N.Y. Case No. 06-01574). Bruce F. Smith, Esq., at Jager Smith P.C., represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported assets and debts amounting between $10 million to $50 million. RIVIERA TOOL: Files Third Quarter Financials for 2006 Fiscal Year ----------------------------------------------------------------- Riviera Tool Company filed its financial statements for the third quarter ended May 31, 2006, with the Securities and Exchange Commission on July 17, 2006. The Company earned $18,391 of net income on $6,136,378 of sales for the three months ended May 31, 2006, compared to a net loss of $775,816 on $4,687,278 of sales for the same period in 2005. At May 31, 2006, the Company's balance sheet showed $23,506,938 in total assets, $19,932,955 in total liabilities, and $3,573,983 in total stockholders' equity. Full-text copies of the Company's third quarter financil statement are available for free at http://ResearchArchives.com/t/s?dee Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 13, 2005, Deloitte & Touche LLP expressed substantial doubt about Riviera Tool Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Aug. 31, 2005, and 2004. The auditing firm pointed to the Company's losses from operations, significant current debt, and non-compliance with the terms of certain of its debt agreements. Riviera Tool Co. -- http://www.rivieratool.com/-- designs, develops and manufactures large-scale, custom metal stamping die systems used in the high-speed production of sheet metal parts and assemblies for the global automotive industry. A majority of Riviera's sales are to Mercedes Benz, BMW, Nissan, DaimlerChrysler, General Motors Corp., Ford Motor Co. and their Tier One suppliers. SAINT VINCENTS: Inks New Set-Off Deal with New York Health Dept. ---------------------------------------------------------------- In April 2006, Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates and the New York City Department of Health and Mental Hygiene filed a stipulation seeking to modify the automatic stay to effectuate a setoff. The Original Stipulation does not reflect the agreement between the Debtors and the DOHMH due to a computational error uncovered only after the filing. It was never approved by the U.S. Bankruptcy Court for the Southern District of New York. The Debtors and the DOHMH wish to replace the Original Stipulation to incorporate several changes to their agreements, including: -- the Debtors owe the DOHMH $311,986 for Expense Overpayments incurred prior to the Petition Date; -- the DOHMH owes the Debtors $1,665,329 for Prepetition Grant Funds; -- the DOHMH already paid $196,959 to Saint Vincent Catholic Medical Centers in 2005, and the $1,110,447 due SVCMC for fiscal year 2005 and which will be paid to SVCMC pursuant to the Stipulation may still be subject to further audits to be conducted by the DOHMH; and -- the DOHMH owes SVCMC a $1,353,342 balance in Prepetition Grant Funds. Thus, the parties stipulate that the Original Stipulation is replaced and superseded in its entirety by the Revised Stipulation. The Original Stipulation will be of no further force or effect. Upon Court approval of the Revised Stipulation, the automatic stay of will be modified solely to permit the DOHMH to effectuate the Setoff and the proof of claim filed by the DOHMH on March 20, 2006, for the Prepetition Expense Overpayments will be deemed withdrawn. Furthermore, the Revised Stipulation contemplates that within 10 business days after its approval, the DOHMH will remit to the Debtors the Remaining Prepetition Grant Money Obligations. Any required adjustments based on Additional 2005 Audits will be made against postpetition grant monies owed or that may become owed to the Debtors and will not affect the terms of the Revised Stipulation. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, 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. 29 Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Inks Settlement Pacts with Curevax & Dr. Wallack ---------------------------------------------------------------- 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 enter into separate settlement agreements with Curevax, LLC, and Marc K. Wallack, M.D. In 1999, Saint Vincent Catholic Medical Centers and Dr. Wallack entered into an assignment agreement, pursuant to which Dr. Wallack assigned to SVCMC all interest in certain technology relating to a vaccine for the treatment of melanoma. SVCMC and Dr. Wallack agreed to an income-sharing arrangement governing all income received from the Technology. A patent application covering the Technology was then filed. In September 2000, SVCMC and Curevax entered into: (i) a License Agreement, under which SVCMC granted Curevax an exclusive, worldwide license to develop and sell products and processes related to the Patent Application. In return, SVCMC was to receive payment of an initiation fee, royalties relating to sales and sublicensing or assignment, and milestone payments associated with the completion of various phases of the research; and (ii) a Clinical Trials Agreement, which provided that SVCMC would be engaged to study the safety and efficacy of the vaccine, with Curevax funding much of the research. Since 2000, SVCMC has expended considerable resources in connection with the Vaccine Research. However, the research has experienced numerous delays and no clinical trials have begun. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that SVCMC has decided to terminate involvement with the Vaccine Research because: -- the project is expensive; -- the potential future economic value of SVCMC's rights flowing from royalty payments under the contract are speculative and difficult to quantify; -- the Vaccine Research presents SVCMC with significant administrative and personnel challenges as there are no investigators or ancillary staff available to run the necessary clinical trials; and -- the Joint Commission on Accreditation of Healthcare Organizations instructed SVCMC to increase storage space available to reduce overcrowding in some areas of its facilities. As a result of negotiations between SVCMC, Curevax and Dr. Wallack, several agreements were entered into to fully terminate SVCMC's involvement in the Vaccine Research and its relationship with Dr. Wallack. In combination, the agreements effectively: * transfer the rights and equipment associated with the Vaccine Research to Curevax; * settle disputes over termination with Dr. Wallack consistent with SVCMC's general severance policies; and * result in the exchange of releases and waiver of claims against the estates. Wallack Settlement The Wallack Settlement, among other things, assigns all rights and interests that Dr. Wallack may have retained under the Assignment Agreement to SVCMC, and provides for the mutual releases of all claims Dr. Wallack and SVCMC may have had against each other under the Assignment Agreement, the License Agreement, and the Clinical Trials Agreement. Obtaining a release from Dr. Wallack of any retained rights under the Assignment Agreement arguably is a prerequisite to the ability to perform under the Curevax Settlement. A full-text copy of the Wallack Settlement is available for free at http://researcharchives.com/t/s?de9 Wallack Separation Agreement Dr. Wallack will receive a severance benefit totaling six months' salary over the three-month period following the date a final, non-appealable order approving the Wallack Separation Agreement is received. The severance benefit is subject to offset provisions should Dr. Wallack's salary at Metropolitan Hospital be raised or should he secure regular employment elsewhere during the term of the severance payments. The Wallack Separation Agreement includes standard releases of SVCMC from any liability associated with Dr. Wallack's employment, and provides that SVCMC will purchase tail insurance coverage concerning future claims arising out of Dr. Wallack's employment at SVCMC. Because the Wallack Separation Agreement contains, among other things, information relating to Dr. Wallack's current employment, it is a confidential agreement. Curevax Settlement The Curevax Settlement provides both Curevax and SVCMC with releases from all potential claims or liability associated with the Clinical Trials Agreement, the License Agreement, or any other agreement or transaction between the parties. The Curevax Settlement also assigns to Curevax all of SVCMC's right, title, and interest in and to: -- the Patent Application, together with a related application made a year later, and all patents issued with respect to the applications; -- all trade secrets and confidential information related to the applications; -- all work papers, notebooks, and other materials embodying or practicing the Patent Applications, the Patents, or Related Technology; -- all of SVCMC's books and records relating to the Patent Applications, the Patents, the Related Technology and the Materials; -- all Study Data and unused Vaccine, materials and supplies in SVCMC's possession for the purposes of the Study; and -- certain equipment and other tangible assets listed under the Curevax Settlement. A full-text copy of the Curevax Settlement is available for free at http://researcharchives.com/t/s?de8 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. 29 Bankruptcy Creditors' Service, Inc., 215/945-7000) SEROLOGICALS CORP: Merger Prompts Moody's to Withdraw Ratings ------------------------------------------------------------- Moody's Investors Service withdrew the existing ratings of Serologicals Corporation, including the B1 Corporate Family Rating, concluding a rating review for possible upgrade initiated on April 27, 2006. This rating action follows the acquisition of Serologicals by Millipore Corporation, and Moody's understanding that all of the rated debt obligations of Serologicals have been paid. Ratings withdrawn: * B1 Corporate Family Rating; Ba3 senior secured bank credit facilities Moody's does not rate Serologicals' convertible debentures due 2033. SILICON GRAPHICS: Ad Hoc Committee Objects to FTI's Retention ------------------------------------------------------------- The Ad Hoc Committee of certain holders, for themselves and on behalf of certain funds and managed accounts, of 6.50% Senior Secured Convertible Notes, and certain members of the Ad Hoc Committee as DIP Lenders, ask the U.S. Bankruptcy Southern Court for the District of New York to deny the retention of FTI Consulting, Inc., on the terms and conditions proposed by the Official Committee of Unsecured Creditors. Emmanuel C. Grillo, Esq., at Goodwin Procter LLP, in New York, asserts that the financial terms of the proposed engagement would result in a windfall to FTI at the expense of Silicon Graphics, Inc., its debtor-affiliates and the holders of the Senior Secured Notes. Mr. Grillo points out that the Creditors' Committee is a party to the Global Settlement Agreement dated June 23, 2006, and other than monitoring the cases and complying with the terms of the Agreement, the Creditors' Committee's work has been substantially concluded in the Debtors' cases. According to Mr. Grillo, the Retention of FTI fails to satisfy the factors for assessing reasonableness under Section 328 (a) of the Bankruptcy Code since: * the assignment is not overly complex or broad in scope; * the expected duration of the assignment is a relatively short four months; * the required resources should be minimal. "As to some of the other factors including comparable compensation and including the actual retention agreement, the Retention Application provides little or no information for the Court to make such a determination," Mr. Grillo asserts. Mr. Grillo notes that on an average monthly basis, FTI's compensation would be $58,747 greater than the average monthly compensation of the Ad Hoc Committee's counsel, despite FTI's lesser role and responsibilities. In addition, FTI's proposed compensation of more than $1,000,000 for what amounted to just more than one month's work, is grossly unreasonable and should not be countenanced by the Court, Mr. Grillo says. The Ad Hoc Committee proposes that a reasonable fee structure for FTI under the circumstances would be for it to charge its customary hourly rates as it has done in a number of recent cases wherein it acted as advisor to the creditors' committee. Debtors' Objections The Debtors ask the Court to: -- deny the $500,000 Completion Fee in its entirety at this time; and -- direct the Creditors' Committee to amend and modify the Retention Agreement for FTI to be compensated based on its hourly rates. L.P. Harrison 3rd, Esq., at Curtis, Mallet-Prevost, Colt & Mosle LLP, in New York, contends that the Completion Fee carries all the indicia of a traditional "success fee" and appears to be nothing more than a disguised request for enhanced compensation. No exceptional circumstances or justification exists as to why FTI's retention should include a success fee. Specifically, Mr. Harrison argues that: (i) the scope and complexity of the assignment is not great; (ii) the time period for the completion of the work is short; (iii) there is no evidence of a need by FTI to employ highly specialized skills; and (iv) the resources needed to service the matter appear to be minimal. Ms. Harrison further argues that the payment of a fixed allowance on a monthly basis is inappropriate. If the Court determines that a monthly fixed allowance is appropriate, Ms. Harrison maintains that the Retention Agreement should be modified to provide sufficient information to determine the reasonableness of the Monthly Advisory Fees. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Wants Employee Incentive Plan Implemented ----------------------------------------------------------- Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New York's authority to: (i) implement an employee incentive plan to encourage the retention of and performance by certain essential, non- insider, employees; (ii) pay approximately $330,000 outstanding under various other employee bonus and compensation programs; and (iii) continue to honor and maintain the Other Bonus Programs. Employee Incentive Plan The Employee Incentive Plan pays employees based on whether they are in one of three groups: (1) Managers/Directors -- 23 employees who hold leadership positions in the Debtors' sales, engineering, marketing, finance and human resource divisions, and are critical to the Debtors' ability to generate revenue, develop products, ensure compliance and maintain their workforce through the Chapter 11 cases and beyond. (2) Key Employees of Below-Director Status, excluding Engineers -- 19 employees in various functions, including, sales, product development, manufacturing, procurement, legal and training and development. (3) Engineers -- seven engineers who are critical to the Debtors' ability to design and develop products and support solutions. The Key Employees are eligible to receive bonuses for their continued commitment and service from Aug. 1, 2006, through July 31, 2007. Retention bonuses are payable in three installments. The total cost of the EIP for Key Employees in Groups 1 to 3 is $2,460,427. In addition to the retention bonuses for Groups 1 to 3, the EIP provides for the creation of a discretionary bonus pool for $539,573 from which individual bonus payments may be awarded in the Debtors' sole discretion and after approval by the Chief Executive Officer and the Compensation Committee of the Board of Directors. No. of Bonus as % of Groups Employees Annual Salary Cost of Bonus ------- --------- ------------- ------------- Group 1 23 32% $1,327,783 Group 2 19 32% 766,356 Group 3 7 35% 366,288 Discretionary Pool TBD TBD 539,573 ---------------------------------------------------------- TOTAL TBD TBD $3,000,000 ========================================================== Other Bonus Programs Prior to the Petition Date, the Debtors maintained discretionary bonus and compensation programs: * Referral Program: If a referred employee is hired by the Debtors, the referring employee is entitled to receive a cash bonus of $2,000. Only one Referral Bonus is pending payment. * Lead Program: The Debtors reward employees for providing their sales force with leads that develop into sales revenue for the Debtors. * Special Incentive Program: From time to time, the Debtors' sales force is eligible to participate in a promotional program or contest that provides for incentives, typically in the form of a non-cash prize or award. * Discretionary Bonus Program: The Debtors have awarded, but not paid, six discretionary bonuses totaling $55,000, of which $9,500 has been awarded to two vice presidents in their engineering department. The Debtors also seek to pay $10,000, earned prepetition and inadvertently paid postpetition. * Retention Bonuses: The Debtors have awarded, but not paid, four retention payments for $18,200. In addition, the Debtors seek to pay $5,000, earned prepetition and inadvertently paid postpetition. * Relocation Program: In limited circumstances, the Debtors reimburse newly hired employees for costs associated with relocating to their geographic location. One employee's relocation expenses for $48,000 is pending payment. * Sign-On Bonus Program: Five employees were offered sign-on bonuses for $94,000, which bonuses have not yet been paid. Approximately $40,000 will be paid to one of the Debtors' senior vice presidents. The Debtors also seek retroactive approval of two sign-on bonuses for $6,500, that were earned prepetition and inadvertently paid postpetition. Implementation is Necessary Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the EIP should be approved because: (a) since the Petition Date, 83 employees have left Silicon Graphics, Inc., several of whom would have qualified as Key Employees under the EIP. The EIP is necessary to demonstrate the Debtors' commitment to their Key Employees and to avoid further losses associated with attrition; (b) its implementation will foster employee morale and provide motivation to Key Employees to focus on and remain loyal to the Debtors; (c) it will help eliminate the substantial out-of-pocket costs that would result if the Debtors were required to replace the Key Employees, including, recruiter or headhunter fees and signing bonuses and moving expenses for replacement employees; (d) it will help the Debtors retain: * access to important institutional knowledge which would be difficult to replace through the outside job market, due to the Key Employees' specialized skills; and * key contacts with customers and vendors, including those with the federal government; (e) it will facilitate the Debtors' ability to continue to realize value from the significant time and resources they incurred in recruiting, training and retaining their Key Employees and help them retain the Key Employees; and (f) it will help the Debtors mitigate the domino effect of additional employee departures that can accompany the loss of a particular Key Employee. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ST. MARY'S: Moody's Downgrades Long-Term Rating to Ba3 from Ba1 --------------------------------------------------------------- Moody's Investors Service downgraded St. Mary's Hospital's long-term rating to Ba3 from Ba1. This action affects approximately $32 million of outstanding Series E bonds issued by the Connecticut Health & Educational Facility Authority. The outlook remains negative at the lower rating level and reflects SMH's continued operating challenges and poor liquidity position. The Series E bonds are secured by an absolute and unconditional general obligation of the Obligated Group and a pledge of Gross Receipts and a first mortgage on the Mortgaged Premises. The Obligated Group consists of St. Mary's Hospital Corporation, a 190-staffed bed acute care hospital in Waterbury, Connecticut. Consolidated subsidiaries include: * the Franklin Medical Group employed physician practice that provides outpatient services; * Scovill Medical Group, which owns and operates physician practices in the area; * Naugatuck Valley Surgical Center, in which the Hospital has approximately 80% equity interest and provides outpatient surgical services; and * Southbury Diagnostic Imaging Center, in which the Hospital has a 60% equity interest and provides outpatient imaging services. The hospital represents approximately 82% of consolidated operating revenues. Interest Rate Derivatives: None Strengths -- market leader in Waterbury, Connecticut with recent market share gains attributed largely to service line expansion and recent physician recruits; -- continued growth in both inpatient and outpatient services; -- favorable rate increases from managed care providers, although SMH's reimbursement rates continue to lag state averages; and -- new state budget line-item includes provision for hospital hardships, which may benefit SMH directly. Challenges -- Very poor operating results in fiscal year 2005, due in part to approximately $14 million unfavorable non-cash adjustments; -- Relatively weak demographics in Waterbury with Medicaid representing a high percentage of gross revenues; -- Despite recent capital investments, including emergency department upgrades, the SMH campus requires material renovations or a replacement facility; -- Major competitor of similar size holds the leading market position in the expanded service area, although SMH's market position has improved in 2006; -- sizable underfunded pension liability, although SMH froze the defined benefit plan in 2004 and, as a church plan, is not required to met ERISA funding requirements; and -- Very thin liquidity. Recent Developments The rating downgrade follows a review of SMH's audited FY 2005 financial statements and seven months interim FY 2006 financial results. SMH endured very poor operating results in FY 2005, recording a $19.4 million operating loss and negative operating cash flow of $7.1 million, after reclassifying the portion of investment income included in operating revenue. A significant portion of the poor operating results in FY 2005 is attributed to approximately $14 million of one-time, non-cash adjustments. These include $8.1 million for prior year contractual and bad debt adjustments, $2.6 million of other accounts receivable adjustments, and $1.5 million adjustment for third party reserves. Other factors contributing to SMH's poor performance in FY 2005 include start-up costs associated with new and expanded programs, including a new cardiac surgery joint venture with 268-staffed bed Waterbury Hospital, SMH's primary competitor. The new cardiac program commenced operations in July 2005. SMH's absolute liquidity position improved modestly in 2005 given that much of the operating loss was due to non-cash adjustments as well as realizing a $2 million gain on sale of assets. At fiscal year end 2005, SMH's unrestricted cash increased to $12.7 million from $12.5 million at FYE 2004. Due to a rising expense base, however, cash on hand decreased slightly to a weak 25 days from 27 days. Cash-to-debt decreased somewhat to a thin 27% at FYE 2005 from 30% at FYE 2004 due to the increase in debt in FY 2005 with the addition of a $7.5 million capital lease. We continue to have material concerns regarding SMH's poor liquidity position, particularly in light of the serious operating challenges facing the system. Poor operating results continue into 2006. Through seven months of FY 2006, SMH recorded an operating loss of $7.2 million and was barely cash flow positive, recording operating cash flow of only $85,000. We expect on-going weak cash flow generation to continue to pressure SMH's liquidity. SMH continues to violate debt coverage covenants. Accordingly, SMH management is working with consultants to develop performance improvement strategies. Key improvement initiatives that have been implemented, or are planned to be implemented, include: favorable rate adjustments from managed care payors; reduction in full-time equivalents; recent recruitment of surgeons for new and expanded high-margin service lines such as the new open heart program and neurosurgery are expected to generate volume and revenue growth; a new hospitalist program is expected to help control costs; and SMH management is considering numerous other programmatic changes in order to reduce the loss from operations, as all unprofitable service lines are being reviewed. WH is SMH's only acute care competitor in the City of Waterbury. With 45% market share, SMH leads WH's 41% market share of discharges from the City of Waterbury. WH is the market share leader in the broader total service area, however. We note that SMH's TSA market share has increased in 2006, as recent SMH physician recruits have generated volume gains. No other acute care hospital captures more than 6% of the TSA market share. There is only limited entrepreneurial physician activity in the Waterbury area. Outlook The negative outlook reflects our ongoing concern that SMH will continue to struggle with poor operating results in this demographically challenged and competitive environment, leading to continued pressure on the balance sheet, including potentially declining liquidity against already weak debt measures. What could change the rating -- UP Material gain in total service area market share; improved and consistent cash flow generation leading to liquidity growth and stronger debt coverage ratios What could change the rating -- DOWN Continuation of poor operating margins, resulting in weakened liquidity; increase in debt load either through direct or indirect debt; loss of market share Key Indicators Assumptions & Adjustments: Based on Saint Mary's Hospital, Inc. Consolidated Financial Statements: -- First number reflects audited FY 2004 for the year ended Sept. 30, 2004; -- Second number reflects audited FY 2005 for the year ended Sept. 30, 2005; and -- Investment returns reclassified to non-operating revenue and smoothed at 6%. Inpatient admissions: 12,097; 12,267 Total operating revenues: $178.2 million; $174.7 million Moody's-adjusted net revenues available for debt service: $13.9 million; $-4 million * Total debt outstanding: $42.2 million; $47.5 million * Maximum annual debt service: $4.8 million; $6 million MADS Coverage with reported investment income: 2.94 times; -0.55 times Moody's-adjusted MADS Coverage with normalized investment income: 2.87 times; -0.66 times * Debt-to-cash flow: 3.71 times; -7.02 times * Days cash on hand: 27.0 days; 25.2 days * Cash-to-debt: 29.6%; 26.8% * Operating margin: 0.5%; -11.1% * Operating cash flow margin: 6.7%; -4.0% Rated Debt * Connecticut Health and Educational Facilities Authority Series E bonds, rated Ba3 TEKELEC: Posts $16.5 Million Net Loss in First Quarter of 2006 -------------------------------------------------------------- For the quarter ended March 31, 2006, Tekelec reported revenue of $107.5 million, down 23% compared to revenue of $138.9 million for the first quarter of 2005. On a GAAP basis, the Company incurred a $16.5 million net loss for the first quarter of 2006 compared to net income of $17.5 million for the first quarter of 2005. On a non-GAAP basis, the net loss in the first quarter of 2006 was $9.8 million compared to net income of $20.6 million for the first quarter of 2005. For the first quarter of 2006, the Company had orders of $138.6 million, up 14% compared to $121.5 million for the first quarter of 2005, and a book-to-bill ratio of 1.29. Backlog as of March 31, 2006 was $604.5 million, up 30% compared to backlog of $463.5 million as of March 31, 2005 and up 5% compared to backlog of $573.3 million as of Dec. 31, 2005. At March 31, 2006, Tekelec's consolidated cash, cash equivalents and investments totaled $245.3 million, up from $226.3 million at Dec. 31, 2005, and compared to approximately $237 million at June 30, 2006, excluding proceeds from the sale of IEX which closed on July 6, 2006. Deferred revenues were $305.3 million at March 31, 2006, up from $232.0 million at December 31, 2005 and $179.4 million at March 31, 2005. The operating results for the first quarter of 2006 highlight the variability and volatility of revenues the Company experienced as a result of its change to the residual method of revenue recognition reflected in the Company's 2005 consolidated financial statements and its restated financial statements and data, which were included in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2005 filed with the Commission on May 30, 2006. The application of the residual method of revenue recognition in the first quarter of 2006 affected the timing of revenue recognition for certain NSG customer shipments. Although the Company shipped substantially all deliverables under several large orders in the first quarter of 2006, it deferred approximately $21.9 million in revenue relating to the shipments because it did not ship all the products included in the purchase orders. The Company expects to deliver the remaining products and related software upgrades called for under the arrangements and record most of the revenue in the second half of 2006, primarily in the fourth quarter. The Company's operating results and gross margins for the first quarter of 2006 were adversely impacted by various factors, including lower revenues from the Company's higher margin NSG products and a reduction in SSG gross margins due primarily to pricing pressure in the Company's Alcatel channel and contract mix. With the filing of its financial reports for the first quarter of 2006 on Form 10-Q, the Company believes it has met all the conditions set by a Nasdaq Listing Qualifications Panel for the continued listing of the Company's Common Stock on the Nasdaq Global Market. The Company also expects to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. About Tekelec Tekelec (NASDAQ: TKLC) -- http://www.tekelec.com/-- develops signaling and switching telecommunications software, business intelligence tools and value-added applications. Tekelec's software is deployed in wireline and wireless networks and contact centers worldwide. The Company's corporate headquarters are located in Morrisville, N.C., with research and development facilities and sales offices throughout the world. * * * As reported in the Troubled Company Reporter on July 10, 2006, Tekelec received a notice of default on April 1, 2006 from holders of more than 25% of the outstanding principal amount of the Notes due to the Company's delayed filing of its Annual Report for the year ended Dec. 31, 2005 with the Securities and Exchange Commission. On March 20, 2006, the Company received a notice from The Nasdaq Stock Market indicating that the Company's common stock is subject to potential delisting from the Nasdaq National Market as a result of its failure to comply with Marketplace Rule 4310(c)(14). The listing standard requires the Company to timely file all reports with the Securities and Exchange Commission, as required by the Securities Exchange Act of 1934, as amended. TFS ELECTRONIC: Asks Court to Approve Global Settlement Agreement ----------------------------------------------------------------- TFS Electronic Manufacturing Services, Inc., Three-Five Systems, Inc., and TFS-DI, Inc., ask the U.S. Bankruptcy Court for the District of Arizona to approve the global settlement agreement by and between the Debtor, Three-Five Systems, Inc., the Official Committee of Unsecured Creditors and CGSNW-Willows, LLC. Charles R. Sterbach, Esq., at Greenberg Traurig LLP, tells the Court that the settlement agreement, dated June 5, 2006, resolves claims between the Parties. Under the settlement, the Parties agree that, subject to the reservation of funds sufficient to pay the Debtors' allowed administrative and allowed priority claims, $3.125 million of the existing cash will be distributed, on a pro rata basis, to holders of allowed general unsecured claims other than Three-Five Systems on or before Sept. 30, 2006. Willow's claims against the Debtor and Three-Five Systems will be settled and allowed. Mr. Sterbach notes that the balance of the existing cash will be distributed to Three-Five Systems on account of the TFS claim. Three-Five System will have no administrative or priority claim in the Debtor's chapter 11 case. Mr. Sterbach adds that within twenty days after the Court approves the settlement agreement, the Debtors will seek the Court's approval of a plan and disclosure statement. Headquartered in Redmond, Washington, TFS Electronic Manufacturing Services, Inc., is an electronics manufacturing services facility that specializes in New Product Introduction services, prototype Development and low to medium-volume manufacturing. The Company filed for chapter 11 protection on August 19, 2005 (Bankr. D. Ariz. Case No. 05-15403). John R. Clemency, Esq., Keriann M. Atencio, Esq., and Tajudeen O. Oladiran, Esq., at Greenberg Traurig LLP, represent the Debtor in its restructuring efforts. Brian N. Spector, Esq., at Jennings Strouss & Salmon, PLC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protections from its creditors, it estimated assets between $1 million to $10 million and estimated debts between $10 million to $50 million. UNITED SURGICAL: Launches Tender Offer for Outstanding Sr. Notes ---------------------------------------------------------------- United Surgical Partners International, Inc., commenced a tender offer and related consent solicitation for its outstanding senior subordinated notes. The purchase of the notes tendered in the offer will be financed with the proceeds of a new $200 million credit facility that USPI expects to enter into in July. The total cost of the tender offer is expected to be approximately $160 million, assuming all notes are purchased in the offer. The balance of the proceeds from the new credit facility will be used to repay existing debt under USPI's revolving credit facility. USPI's subsidiary, United Surgical Partners Holdings, Inc., commenced a cash tender offer for any and all of Holdings' outstanding 10% Senior Subordinated Notes due 2011 (CUSIP No. 91301M AB 2), as well as a related consent solicitation to effect certain proposed amendments to such Notes and the indenture pursuant to which the Notes were issued. The consent solicitation will expire at 5:00 p.m., New York City time, on Thursday, July 27, 2006, unless extended or earlier terminated by Holdings. Tendered Notes may not be withdrawn and consents may not be revoked after the Consent Expiration Date. The tender offer will expire at 12:00 midnight, New York City time, on Thursday, Aug. 10, 2006, unless extended or earlier terminated by Holdings. Holders tendering their Notes are obligated to consent to certain proposed amendments to the Notes and the Indenture that would eliminate substantially all of the restrictive covenants contained in the Indenture and the Notes, eliminate certain events of default, modify the covenant regarding mergers, shorten the minimum redemption notice period from 30 to five days, modify provisions regarding defeasance to eliminate certain conditions and modify or eliminate certain other provisions contained in the Indenture and the Notes. Holders may not tender their Notes without also delivering consents and may not deliver consents without also tendering their Notes. The "Total Consideration" for each $1,000 principal amount of Notes validly tendered and accepted for payment pursuant to the tender offer shall be an amount in cash equal to the price, calculated in accordance with standard market practice, based on the assumptions that the Notes will be redeemed in full at $1,050 per $1,000 principal amount of Notes (the redemption price on Dec. 15, 2006, the first date on which the Notes may be redeemed at the option of Holdings), and that the yield to the earliest redemption date is equal to the sum of (A) the yield to maturity on the 2.875% U.S. Treasury Note due November 31, 2006, as calculated by the Dealer Manager in accordance with standard market practice, based on the bid side price for such U.S. Treasury Note as of 11:00 a.m., New York City time, on the fourth business day prior to the Offer Expiration Date plus (B) a fixed spread of 0.50% (50 basis points). The Total Consideration includes a consent payment of $30 for each $1,000 principal amount of Notes for which consents to the proposed amendments are delivered on or prior to the Consent Expiration Date. Holders of the Notes must validly tender and not withdraw Notes on or prior to the Consent Expiration Date in order to be eligible to receive the Total Consideration for such Notes purchased in the tender offer. Holders who validly tender their Notes after the Consent Expiration Date and on or prior to the Offer Expiration Date will be eligible to receive an amount, paid in cash, equal to the Total Consideration less the Consent Payment. In each case, Holders whose Notes are accepted for payment in the tender offer shall receive accrued and unpaid interest in respect of purchased Notes from the last interest payment date to, but not including, the applicable payment date for Notes purchased in the tender offer. The Company may accept for payment Notes tendered on or prior to the Consent Expiration Date at any time following the Consent Expiration Date. The tender offer and the consent solicitation are made upon the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated July 14, 2006, and the related Consent and Letter of Transmittal. The tender offer and the consent solicitation are subject to the satisfaction of certain conditions, including, among other things, Holdings' receipt of consents from holders of a majority of the outstanding principal amount of the Notes and USPI entering into a $200 million credit facility to finance the purchase of the Notes. Further details about the terms and conditions of the tender offer and the consent solicitation are set forth in the Offer to Purchase. Holdings has retained Bear, Stearns & Co. Inc. to act as the Dealer Manager for the tender offer and the Solicitation Agent for the consent solicitation and they can be contacted at (877) 696- BEAR (toll-free). The documents relating to the tender offer and the consent solicitation will be distributed to all noteholders. Requests for documentation may be directed to the Information Agent, which can be contacted at: D.F. King & Co., Inc. Telephone (212) 269-5550 (for banks and brokers only) Toll Free (800) 659-6590 Based in Dallas, Texas, United Surgical Partners International Inc. (NASDAQ: USPI) -- http://www.unitedsurgical.com/-- owns interests or operates 104 surgical facilities. Of the company's 101 U.S.-based surgery centers, 68 are jointly owned with not-for- profit healthcare systems. United Surgical also operates three facilities in the United Kingdom. * * * As reported in the Troubled Company Reporter on April 19, 2006, Standard & Poor's Ratings Services affirmed its ratings on Dallas-based United Surgical Partners International Inc., including the 'BB-' corporate credit rating, and removed them from CreditWatch, where they were placed with positive implications on Oct. 28, 2005. The outlook is stable. US ONCOLOGY: Completes $100 Mil. Incremental Term Loan Facility --------------------------------------------------------------- US Oncology, Inc. successfully closed a new $100,000,000 incremental term loan under its existing senior secured credit facility. A portion of the net proceeds from the term loan were used to repay existing loans under the Company's revolving credit facility, and the remainder will be used for working capital and general corporate purposes. Terms and conditions of the new term loan are substantially similar to the Company's existing term loan, including a variable interest rate interest based on the London Interbank Offered Rate and final maturity in August 2011. In connection with the new term loan, the Company amended its existing senior secured credit facility. About US Oncology Headquartered in Houston, Texas, US Oncology, Inc. -- http://www.usoncology.com/-- provides extensive services and support to its affiliated cancer care sites nationwide to help them expand their offering of the most advanced treatments and technologies, build integrated community-based cancer care centers, improve their therapeutic drug management programs and participate in many of the new cancer-related clinical research studies. The Company also provides a broad range of services to pharmaceutical manufacturers, including product distribution and informational services such as data reporting and analysis. * * * As reported in the Troubled Company Reporter on June 14, 2006, Moody's Investors Service changed the ratings outlook to stable from negative and assigned a Ba3 rating to US Oncology Inc.'s proposed $100 million add-on term loan. Concurrently, Moody's raised the rating of the company's existing senior secured credit facility and senior unsecured notes. These actions are in recognition of the improved stability of the company's operations and substantial enterprise value. Moody's assigned Ba3 rating to US Oncology, Inc.'s $100 term loan add-on. Moody's upgraded US Oncology's $160 million senior secured revolving credit facility, to Ba3 from B1; $400 million senior secured term loan, to Ba3 from B1; and $300 million senior unsecured notes, to B1 from B2. Moody's affirmed the B3 rating of US Oncology's $275 million senior subordinated notes. Standard & Poor's Ratings Services assigned its loan and recovery ratings to Houston, Texas-based cancer care company US Oncology Inc.'s $100 million secured term loan C. The loan rating is 'B+' with a recovery rating of '2', indicating the expectation for substantial recovery of principal in the event of a payment default. Existing ratings on the company, including the 'B+' corporate credit rating, were affirmed. The rating outlook is negative. VARIG S.A.: Brazilian Ct. Voids Creditor Votes Rejecting Volo Bid ----------------------------------------------------------------- Judge Luiz Roberto Ayoub of the 8th District Bankruptcy Court in Brazil annulled on Tuesday, July 18, 2006, the votes cast by some VARIG S.A. creditors to reject Volo do Brasil's $500,000,000 offer for the airlines' assets. The Brazilian Court also scheduled an auction for VARIG's operating assets today, July 20, 2006. As reported in the Troubled Company Reporter yesterday, leasing companies and other key creditors threw out a bankruptcy plan to sell the carrier's assets to Volo, saying the proposal was not enough to pay VARIG's more than BRL7 billion -- $3 billion -- of debt. Representatives of VARIG workers and pensioners, and principal government creditors have agreed to accept Volo's offer. Volo and the airline's unions challenged the voting results and asked the Brazilian Court for a recount. According to Reuters, Marcelo Bottini, VARIG's chief executive officer, complained that creditors with "little financial stake" were given the same voting power as larger creditors. He noted that the larger creditors voted for Volo's offer. Bloomberg News reports that Judge Ayoub invalidated votes cast by 17 parties, including 16 entities affiliated with General Electric Co. Judge Ayoub said those votes don't count because the parties sold their debt in June, Adriana Brasileiro at Bloomberg News says. "Without these votes, we have a very clear reflection of the wish of creditors, which is for the company to be sold and to recover," Judge Ayoub told reporters at a news conference, Ms. Brasileiro relates. Volo initially offered to pay BRL277,000,000 -- $127,000,000 -- for VARIG's assets and invest up to $485,000,000 based on a timetable contained in a business plan. Volo revised its offer to give creditors an option to receive cash instead of bonds, Bloomberg writer Romina Nicaretta says. Volo intends to satisfy a portion of VARIG's debt with BRL100,000,000 of 10-year bonds. Volo, Ms. Nicaretta relates, agreed to improve its offer after Deloitte Touche Tohmatsu, the Court-appointed judicial administrator of VARIG, reported to the Brazilian Court earlier this month that creditors would be better off if the airline is liquidated. Volo, which recently purchased VARIG's cargo unit, VARIG Logistica S.A., is partially controlled by U.S. investment fund MatlinPatterson Global Advisors. Investnews (Brazil) reports that Cinzel Partners fund has created a consortium of investors to come up with a $600,000,000 bid for VARIG. Roberto Lima Netto, former president of Brazilian steel maker Companhia Siderurgica Nacional and representative of Cinzel, told O Estado de Sao Paulo that the consortium intends to acquire as much as 30% of VARIG's operations. Cinzel will allow the airline's employees to acquire the 20% while the remainder would be sold in a public offering. Volo has advanced more than $11,000,000 in deposits to VARIG to keep it flying. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) VILLAGEEDOCS INC: Restates 2005 2nd Quarter Financial Statements ---------------------------------------------------------------- VillageEDOCS, Inc., files its quarterly report on Form 10-QSB/A to amend its second quarter financial statements for the three months ended June 30, 2005, with the Securities and Exchange Commission on July 17, 2006. The amended quarterly report restates the Company's financial statements and Management's Discussion and Analysis or Plan of Operations to properly account for some of its convertible notes payable during 2005. Previously, the Company had not identified or separately valued derivative instruments later determined to have been embedded within certain of the notes. The Company has restated its financial statements to: -- recognize the existence of derivatives, -- account for a derivative liability, and -- record the changes in fair value of the derivatives. In addition, the quarterly report has been amended to reflect changes in the accounting for certain transactions involving the issuance of its common stock and common stock purchase warrants to employees in connection with the acquisitions of Tailored Business Systems, Inc., and Phoenix Forms Inc. Accordingly, changes have been made to the applicable line items associated with goodwill, convertible notes payable, derivative liability, additional paid-in capital, accumulated deficit, general and administrative expense, change in fair value of derivative liability, interest expense, net loss and net loss per common share. Restated Financials The Company reported a restated net loss of $6,460,895 on $2,275,518 of net sales for the three months ended June 30, 2006, compared to a $202,119 of net income on $1,330,346 of net sales for the same period in 2004. At June 30, 2005, the Company's balance sheet showed $8,614,019 in total assets, $3,322,891 in total liabilities, and $5,291,128 in total stockholders' equity. Full-text copy of the Company's restated second quarter financials are available for free at http://ResearchArchives.com/t/s?df0 Going Concern Doubt As reported in the Troubled Company Reporter on June 14, 2006, Corbin & Company, LLP, in Irvine, California, raised substantial doubt about VillageEDOCS' ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses since inception and its working capital deficit of $676,198. VillageEDOCS, Inc. -- http://www.villageedocs.com/-- through its MessageVision subsidiary, provides comprehensive business-to- business information delivery services and products for organizations with mission-critical needs, including major corporations, government agencies and non-profit organizations. The Company's Tailored Business Systems subsidiary provides accounting and billing solutions for county and local governments. Through its Resolutions subsidiary, it provides products for document management, archiving, document imaging, imaging software, document scanning, e-mail archiving, document imaging software, electronic forms, and document archiving. VISIPHOR CORP: Completes $1.6 Million Quorum Private Placement -------------------------------------------------------------- Visiphor Corporation completed a private placement to Quorum Secured Equity Trust of an 8% convertible secured debenture in the principal amount of $1,600,000 maturing on Dec. 15, 2009, convertible, subject to certain adjustments, at the price of $0.45 per common share, and of a performance warrant to purchase up to 2,350,000 common shares in the capital of the Corporation at a price of CDN$0.30 per common share. The Warrant is only exercisable in the event that the 30 day weighted average trading price of the Corporation's common shares has not exceeded $0.45 in at least one 30 day trading period on or before July 14, 2008. The Warrant is exercisable at any time after July 13, 2008 and prior to 4:30 p.m. (Toronto time) on Dec. 15, 2009, provided that the above event has not occurred. The common shares underlying the Offering will have a four-month hold period that expires on Nov. 13, 2006. Under the terms of the agreement Quorum will be appointing a nominee to the Visiphor Board of Directors. "This represents the balance of the financing sought in November 2005," said Roy Trivett, President and CEO of Visiphor. "We are very pleased that the conversion into equity is at the same price as the units issued in the November financing." The proceeds of the Offering will be used to provide general working capital to finance the expansion of the Company's business and to retire $500,000 in demand loans that the Company currently has outstanding. In connection with the Offering, Mr. Roy Trivett and Mr. Keith Kretschmer, directors and officers of the Corporation, have agreed to postpone and subordinate outstanding bridge loans to the Corporation in the amounts of $85,000 and $400,000, respectively, in favour of Quorum. As consideration, the Corporation will issue a promissory note secured by a charge over the accounts receivable of the Company to each of Mr. Trivett and Mr. Kretschmer and the interest rate of such notes will be 12%. About Visiphor Based in Burnaby, British Columbia, Visiphor Corporation (OTCBB: VISRF; TSX-V: VIS; DE: IGYA) -- http://www.imagistechnologies.com/ -- fka Imagis Technologies Inc, specializes in developing and marketing software products that enable integrated access to applications and databases. The company also develops solutions that automate law enforcement procedures and evidence handling. These solutions often incorporate Visiphor's proprietary facial recognition algorithms and tools. Using industry standard "Web Services", Visiphor delivers a secure and economical approach to true, real-time application interoperability. The corresponding product suite is referred to as the Briyante Integration Environment. Going Concern Doubt As reported in the Troubled Company Reporter on Nov. 24, 2005, KPMG LLP expressed substantial doubt about Visiphor's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's recurring losses from operations, deficiency in operating cash flow and deficiency in working capital. WCA WASTE: Stockholders Approve $75 Mil. Equity Investment to Ares ------------------------------------------------------------------ The stockholders of WCA Waste Corporation approved the issuance of a $75 million convertible preferred equity investment to Ares Corporate Opportunities Fund II, L.P. The closing and funding of the preferred stock issuance is expected before the end of July, subject to customary closing conditions. The issuance is part of a capital plan, pursuant to which the Company has refinanced its senior indebtedness and has arranged for additional capital to finance its acquisition and growth plans. Based on the terms of the previously disclosed new senior notes and senior secured financings and the closing of the equity investment, the Company's leverage ratios will be reduced and the effective interest rates will be fixed. In addition, the Company expects that the terms of its new financing arrangements will allow additional acquisitions that are financed pursuant to its new revolving credit facility to be accretive assuming the purchase price of future acquisitions is consistent with past acquisitions. It also expects that its effective cost of borrowing will be reduced after the revolving facility is fully funded. About WCA Waste Headquartered in Houston, Texas, WCA Waste Corporation (Nasdaq:WCAA) -- http://www.wcawaste.com/--is an integrated company engaged in the transportation, processing, and disposal of non-hazardous solid waste. The Company's operations consist of twenty landfills, twenty-one transfer stations/material recovery facilities and twenty-four collection operations located throughout Alabama, Arkansas, Colorado, Florida, Kansas, Missouri, New Mexico, North Carolina, South Carolina, Tennessee and Texas. The Company's common stock is traded on the NASDAQ National Market System under the symbol "WCAA." * * * As reported in the Troubled Company Reporter on June 22, 2006, Moody's Investors Service assigned a B2 rating to the proposed $150 million senior unsecured notes due 2014 of WCA Waste Corporation and upgraded the Corporate Family Rating to B1 from B2. The outlook for the ratings is stable. Concurrently, Moody's affirmed the company's liquidity rating of SGL-2. Standard & Poor's Ratings Services revised its outlook on WCA Waste Systems Inc. to positive from stable and affirmed the existing 'B' corporate credit rating. S&P also assigned a 'B' corporate credit rating and positive outlook to WCA Waste Corp., an indirect parent of WCA Waste Systems. At the same time, based on preliminary terms and conditions, Standard & Poor's assigned its 'B-' rating to WCA Waste Corp.'s proposed $150 million of senior unsecured notes due 2014. This rating reflected the disadvantaged position of the senior unsecured notes in the debt structure relative to a new $100 million revolving credit facility, which S&P expects will be utilized in the near term to finance acquisitions. Proceeds from the senior unsecured notes will be used to refinance remaining balances outstanding under the company's existing senior secured credit facilities. Upon completion of the proposed notes offering, S&P will withdraw all of the ratings on the existing senior secured credit facilities. WINDSTREAM CORPORATION: Fitch Rates $2.5 Billion Sr. Notes at BB+ ----------------------------------------------------------------- Following the completion of the spin-off of Alltel Wireline from Alltel Corporation and Alltel Wireline's merger with Valor Communications Group, Inc., to form Windstream Corporation, Fitch formally assigned ratings. Fitch assigned a 'BBB-' rating to Windstream's credit facility, of which approximately $2.4 billion is outstanding, and a 'BB+' rating to its $2.546 billion of senior unsecured notes. Fitch also formally assigned a 'BBB-' rating the existing $400 million in senior notes co-issued by Valor Telecommunications Enterprises, LLC, and Valor Telecommunications Enterprises Finance Corp. which were not previously rated by Fitch. Windstream's issuer default rating is 'BB+' and the Rating Outlook is Stable for all ratings. These ratings are unchanged: Alltel Georgia Communications: -- IDR 'BB+' -- Notes 'BBB-' Alltel Communications Midwest (formerly Aliant): -- IDR 'BB+' -- Notes 'BB+' The 'BBB-' ratings of Alltel New York and Alltel Pennsylvania are being withdrawn as a result of their retirement due to the transaction. Windstream's 'BB+' IDR and Stable Rating Outlook incorporate Fitch's expectations for Windstream to generate strong operating cash flow, stable credit-protection metrics as well as have access to ample liquidity. Fitch's primary concern is the company's dependence on voice service revenues in an environment of increasing competition. The company's financial performance is expected to be relatively stable due to its primarily rural operations. Contributing to its strong operating cash flow are EBITDA margins that Fitch believes will be in the upper end of a 45%-50% range. Fitch forecasts Windstream's dividend payout ratio as a percentage of its net free cash flow in the 70%-75% range. Fitch expects the company to maintain a stable leverage ratio, with debt-to-EBITDA in the 3.2x-3.3x range over the next few years. On a pro forma basis and including a projected $40 million in net synergies, Windstream's gross debt-to-operating EBITDA was 3.2x in 2005. Liquidity is supported by the company's $500 million revolving credit facility, which will be in place until July 2011. Debt maturities in the next several years, including the required amortization of its credit facilities, are nominal. WINN-DIXIE: Rejects Lifetime Hoan Prepetition Supply Agreement -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida consented to Winn-Dixie Stores, Inc., and its debtor-affiliates' rejection of their prepetition supply agreement with Lifetime Hoan, effective as of July 14, 2006. As reported in the Troubled Company Reporter on July 6, 2006, Winn-Dixie Stores, Inc., was obligated to purchase kitchen tools and gadgets from Lifetime Hoan until the net volume purchased reaches US$15,000,000, with the term of the agreement continuing until the volume requirement is satisfied, pursuant to their supply agreement dated Aug. 2, 2003. The Debtors' reduced store count has operated to extend the term of the Prepetition Supply Agreement, According to Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida. Although the Debtors desire to continue their relationship with Lifetime Hoan, the terms of their contract are no longer feasible, Ms. Jackson told the Court. The Debtors have determined that it is in their best interests to reject the Prepetition Supply Agreement and continue their relationship with Lifetime Hoan on more favorable terms under a new ordinary course supply agreement. The new supply agreement is set to take effect upon rejection of the Prepetition Supply Agreement. Lifetime Hoan has agreed that the Debtors may terminate the new supply agreement without liability if their reorganization plan is not confirmed or does not become effective. Ms. Jackson said that by rejecting the Prepetition Supply Agreement in favor of a new contract with Lifetime Hoan, the Debtors will: (a) avoid the burdensome obligation of the US$15,000,000 volume requirement as well as the risk of significant rejection damages claim if that requirement is not satisfied; and (b) be able to continue offering Lifetime Hoan's products to their customers on terms that better reflect the current and future needs of their operating stores. Claims Resolution Winn-Dixie Procurement, Inc., scheduled a claim in favor of Lifetime Hoan for US$91,247. Lifetime Hoan filed Claim No. 6177 against Winn-Dixie Stores for US$135,650. Ms. Jackson told the Court that the parties have agreed to set off their claims against each other, specifically: (a) the Scheduled Claim will be disallowed and expunged in its entirety; and (b) Claim No. 6177 will be set off against the Debtors' accrued prepetition credits for US$44,403, resulting in an allowed general unsecured claim for US$91,247. In addition, Lifetime Hoan will waive any claim for rejection damages and all other claims against the Debtors, except for the agreed general unsecured claim and any unpaid postpetition invoices. 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. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Julie H. Reeder Bankr. D. Ariz. Case No. 06-00150 Chapter 11 Petition filed July 12, 2006 See http://bankrupt.com/misc/azb06-00150.pdf In re Hennig Broach & Tool Co., Inc. Bankr. N.D. Ill. Case No. 06-08236 Chapter 11 Petition filed July 12, 2006 See http://bankrupt.com/misc/ileb06-08236.pdf In re Midwest Metallurgical Laboratories, Inc. Bankr. N.D. Ind. Case No. 06-11066 Chapter 11 Petition filed July 12, 2006 See http://bankrupt.com/misc/innb06-11066.pdf In re Olde World Cheesecake Company, Inc. Bankr. M.D. Pa. Case No. 06-51104 Chapter 11 Petition filed July 12, 2006 See http://bankrupt.com/misc/pamb06-51104.pdf In re Z's Restaurants, Inc. Bankr. D. Ariz. Case No. 06-02107 Chapter 11 Petition filed July 12, 2006 See http://bankrupt.com/misc/azb06-02107.pdf In re B&S Commercial Properties, LCC Bankr. E.D. Va. Case No. 06-31726 Chapter 11 Petition filed July 13, 2006 See http://bankrupt.com/misc/vaeb06-31726.pdf In re Hill Construction Company, Inc. Bankr. D. Md. Case No. 06-14111 Chapter 11 Petition filed July 13, 2006 See http://bankrupt.com/misc/mdb06-14111.pdf In re P K Land Management LLC Bankr. E.D. Mich. Case No. 06-49100 Chapter 11 Petition filed July 13, 2006 See http://bankrupt.com/misc/mieb06-49100.pdf In re Syed R. Jaffery Bankr. N.D. Ga. Case No. 06-68239 Chapter 11 Petition filed July 13, 2006 See http://bankrupt.com/misc/ganb06-68239.pdf In re Trik Daddy's Custom Cycles, Inc. Bankr. M.D. Fla. Case No. 06-03490 Chapter 11 Petition filed July 13, 2006 See http://bankrupt.com/misc/famb06-03490.pdf In re Bulldog Logistics, Inc. Bankr. W.D. Ark. Case No. 06-71455 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/arwb06-71455.pdf In re Felipe Juarez Bankr. S.D. Tex. Case No. 06-20430 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/txsb06-20430.pdf In re H.Y. Applied Inter Data Services, Inc. Bankr. E.D. N.Y. Case No. 06-71643 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/nyeb06-71643.pdf In re J Inc. Bankr. M.D. Fla. Case No. 06-02087 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/famb06-02087.pdf In re MAG Systems, Inc. Bankr. D. N.J. Case No. 06-16379 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/njb06-16379.pdf In re Michael A. O'Hara Bankr. E.D. Ky. Case No. 06-20534 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/kyeb06-20534.pdf In re Midnight Enterprises Inc. Bankr. N.D. N.Y. Case No. 06-11723 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/nynb06-11723.pdf In re William D. Chambers, DDS PA Bankr. D. Kans. Case No. 06-11240 Chapter 11 Petition filed July 14, 2006 See http://bankrupt.com/misc/ksb06-11240.pdf In re Charles F. Hennig Bankr. N.D. Ill. Case No. 06-08420 Chapter 11 Petition filed July 16, 2006 See http://bankrupt.com/misc/ilnb06-08420.pdf In re Arthur J. McCreary, III Bankr. E.D. Mo. Case No. 06-43095 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/moeb06-43095.pdf In re Charles Terry McCormack Bankr. M.D. Tenn. Case No. 06-03621 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/tnmb06-03621.pdf In re Digido4u LLC Bankr. W.D. Wash. Case No. 06-12291 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/wawb06-12291.pdf In re Hilton Cable Enterprises Bankr. E.D. Va. Case No. 06-10783 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/vaeb06-10783.pdf In re LRD Investments, LLC Bankr. D. Alaska Case No. 06-00267 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/akb06-00267.pdf In re N.E.W.D., LLC Bankr. D. Conn. Case No. 06-20633 Chapter 11 Petition filed July 17, 2006 See http://bankrupt.com/misc/ctb06-20633.pdf In re Athens Restaurant Equipment Corp. Bankr. M.D. Fla. Case No. 06-03578 Chapter 11 Petition filed July 18, 2006 See http://bankrupt.com/misc/famb06-03578.pdf In re Goyette Auto Service Center, Inc. Bankr. E.D. Mich. Case No. 06-31464 Chapter 11 Petition filed July 18, 2006 See http://bankrupt.com/misc/mieb06-31464.pdf In re Thomas J. Palashewski Bankr. D. Minn. Case No. 06-31541 Chapter 11 Petition filed July 18, 2006 See http://bankrupt.com/misc/mnb06-31541.pdf ********* 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 ***