/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060823.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 23, 2006, Vol. 10, No. 200 Headlines ADELPHIA COMMS: Classification of Claims under 5th Amended Plan ADELPHIA COMMS: Wants 2nd Disclosure Statement Supplement Okayed ADVANTAGE CAPITAL: Wiener Goodman Raises Going Concern Doubt ATLANTIC MUTUAL: S&P Maintains Default Rating & Withdraws R Rating AVISTA CORP: Inks Settlement Agreement on Hydroelectric Project BERRY-HILL: American Capital Grants $21 Million DIP Financing BRIGHTPOINT INC: Earns $8.2 Million in Quarter Ended June 30 CATALYST PAPER: Moody's Holds B1 Rating and Says Outlook is Stable CATHOLIC CHURCH: Court Approves Portland's Two Survey Forms CATHOLIC CHURCH: Future Claims Estimation Meeting Set on August 31 CHASE FUNDING: S&P Downgrades Class IB Certificate's Rating to B COMFORCE CORPORATION: Completes $21.4 Million 12% Notes Redemption COMPLETE RETREATS: Creditors Panel Taps Bingham as Lead Counsel COMPLETE RETREATS: U.S. Trustee Wants Xroads Replaced as Agent CONCORD RE: Moody's Rates Proposed Senior Secured Loan at (P)Ba2 COPELANDS' ENT: Organizational Meeting at 2:00 p.m. Tomorrow DANA CORP: Inks Pact Allowing PBGC to File Consolidated Claims DANA CORP: Has Until December 4 to Decide on Danacq Lease E*TRADE FINANCIAL: DBRS Raises Senior Debt Rating to BB (high) EMERITUS CORP: June 30 Balance Sheet Upside-Down by $110 Million ENDOCARE INC: Posts $708,000 Net Loss in Second Quarter of 2006 EVANS INDUSTRIES: Can Provide GE Capital with Adequate Protection FEDERAL-MOGUL: Insurer Says Gilbert Heintz is Not Disinterested FEDERAL-MOGUL: Wants to Enter Into Hercules Payment Agency Pact FISCHER IMAGING: Files Chapter 11 Petition & Sells Assets FOAMEX INTERNATIONAL: Court Extends Removal Period to November 10 FOAMEX INTERNATIONAL: Can Assume ACE American Insurance Policies FUNCTIONAL RESTORATION: Sells All Assets to Nato for $12.28 Mil. GIANT INDUSTRIES: Earns $49.2 Million in Quarter Ended June 30 GLOBAL DOCUGRAPHIX: Wants to Sell Remaining Assets Valued at $3M GLOBAL HOME: D.L. Peterson Wants Leased Vehicles Returned GOLDSPRING INC: June 30 Balance Sheet Upside-Down by $14 Million H.J. HEINZ: High Debt Levels Cue Moody's to Downgrade Ratings HARDWOOD P-G: Selling Pennsylvania Property for $98,500 HINES NURSERIES: Reduced Liquidity Cues Moody's to Lower Ratings HOLLINGER INC: Provides Supplemental Financial Data as of Aug. 4 INTEGRATED HEALTH: Acquisition Wants to Correct U.S. Pact Error INTEGRATED HEALTH: Objects to Travelers' $3,919,891 Priority Claim INT'L SHIPHOLDING: Operating Losses Cue Moody's to Lower Ratings INVERNESS MEDICAL: Posts $10 Mil. Net Loss in Qtr. Ended June 30 LA PETITE ACADEMY: Inks New $215 Million Secured Credit Facilities LIFE SCIENCES: June 30 Balance Sheet Upside-Down by $28 Million LONDON FOG: Iconix to Buy London Fog Brand for $30.5 Mil. in Cash MATHON FUND: Court OKs Pact Resolving Disputes with Sell, et al. MERCER INT'L: Moody's Holds Junks Rating on Senior Unsecured Notes MILLS CORP: Colony Capital to Invest in New Jersey Project MIRANT CORP: Asset Recovery Unit Objects to Several GE Claims MIRANT CORP: Court Approves 2006 Consent Order on Bowline Unit MUSICLAND HOLDING: Wants to Assume & Assign Leases to Record Town MUSICLAND HOLDING: Deluxe Media's Claim Reduced to $2.5 Million NTL INC: Posts GBP195.8 Million Net Loss in 2006 Second Quarter PLATFORM LEARNING: Panel Can Examine Insiders Regarding Sale POPULAR CLUB: Organizational Meeting at 11:00 a.m. Tomorrow PREDIWAVE CORP: Has Until Dec. 10 to File Chapter 11 Plan PROCARE AUTOMOTIVE: Gets Court Nod to Pay JPMorgan's Secured Claim PROCARE AUTO: Has Until August 31 to Finish Investigation on Liens QUIGLEY CO: Asks Court to Reconsider Reduction of Claimants' Votes RED HAT: Improved Performance Prompts S&P to Raise Ratings to B+ RESORT INT'L: Decline in EBITDA Cues Moody's to Junk Ratings S-TRAN HOLDINGS: Can Use LaSalle's Cash Collateral Until Sept. 30 SANITARY AND IMPROVEMENT: Wants DIP Warrants Granted Priority SANMINA-SCI CORP: Solicits Consents from Senior Note Holders SATELITES MEXICANOS: Amends Restructuring Pact with Loral, et al. SATELITES MEXICANOS: Wants to Assume Loral Settlement Agreements SCOTTISH RE: Moody's Lowers Ratings and May Downgrade Further SHAW COMMS: Inks Agreements to Purchase Whistler Cable, Norcom SILICON GRAPHICS: Wants Until December 29 to File Chapter 11 Plan SILICON GRAPHICS: Wants Lease-Decision Period Extended to Dec. 4 SPECTRE GAMING: Receives $5.1 Mil. Gross Proceeds from Debentures STANDARD AERO: S&P Affirms B+ Rating & Removes Negative Watch STATER BROS: June 25 Stockholders' Deficit Widens to $16.8 Million THE SPORTS CLUB: March 31 Balance Sheet Upside-Down by $18 Million TRINSIC INC: June 30 Stockholders' Deficit Widens to $13.9 Million WEEKS LANDING: Wants Plan-Filing Period Stretched to October 15 WILLBROS GROUP: Closes Sale of Venezuelan Businesses WISE METALS: Loses One of its Biggest Customers WISE METALS: Incurs $16.5 Million Net Loss in 2006 Second Quarter WISE METALS: Customer Loss Prompts Moody's to Junk Ratings WORLDCOM INC: Wants Teleserve's $7.3MM Claim Allowed as Class 6 WORLDCOM INC: Teleserve Asserts Claim Deserves 6A Classification * A.M. Best Takes Various Public Data Rating Actions on 48 HMOs * Upcoming Meetings, Conferences and Seminars ********* ADELPHIA COMMS: Classification of Claims under 5th Amended Plan --------------------------------------------------------------- As reported in the Troubled Company Reporter on Aug. 21, 2006, Adelphia Communications Corporation filed drafts of its Fifth Amended Joint Chapter 11 Plan of Reorganization and the related Supplement to its Fourth Amended Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. This summary of the classification and treatment of Claims and Equity Interests under the ACOM Debtors' Fifth Amended Plan of Reorganization assumes that no adjustments are made as a result of that certain True-Up Mechanism for TWC Class A Common Stock: Type of Claim Treatment ------------- --------- A. GENERAL Administrative Claims Paid in full in cash. Estimated total recovery: 100% Estimated claims: $900,000,000 Tax Claims Paid in full in cash. Estimated total recovery: 109% Estimated claims: $112,000,000 B. SUSIDIARY DEBTORS Subsidiary Debtor Paid in full in cash. Priority Claims Estimated total recovery: 100% Estimated claims: <$1,000,000 Subsidiary Debtor Paid in full in cash, plus Secured Claims accrued postpetition interest from the Petition Date through the Effective Date, at the Applicable Rate. Estimated total recovery: 135% Estimated claims: $57,000,000 Unimpaired; not entitled to vote Century Bank Claims Disputed. To the extent allowed, paid in full in cash, subject to disgorgement. Estimated total recovery: 100% Estimated claims: $2,480,000,000 Impaired; entitled to vote FrontierVision Bank Disputed. To the extent Claims allowed, paid in full in cash, subject to disgorgement. Estimated total recovery: 100% Estimated claims: $617,000,000 Impaired; entitled to vote Olympus Bank Claims Disputed. To the extent allowed, paid in full in cash, subject to disgorgement. Estimated total recovery: 100% Estimated claims: $1,265,000,000 Impaired; entitled to vote UCA Bank Claims Disputed. To the extent allowed, paid in full in cash, subject to disgorgement. Estimated total recovery: 100% Estimated claims: $831,000,000 Impaired; entitled to vote Subsidiary Debtor Payment through distribution Trade Claims of cash and TWC Class A Common Stock equal to payment in full. Estimated total recovery: 124% Estimated claims: $452,000,000 Impaired; entitled to vote Subsidiary Debtor Payment through distribution Other Unsecured Claims of cash and TWC Class A Common Stock equal to payment in full. Estimated total recovery: 124% Estimated claims: $137,000,000 Impaired; entitled to vote Arahova Notes Payment through distribution of cash and TWC Common Stock equal to payment in full, and of CVV Series Arahova Interests. Estimated total recovery: 101% Estimated claims: $1,744,000,000 Impaired; entitled to vote FPL Notes Payment through distribution of cash and TWC Class A Common Stock equal to payment in full. Estimated total recovery: 119% Estimated claims: $127,000,000 Impaired; entitled to vote FrontierVision Opco Payment through distribution Notes of cash and TWC Class A Common Stock equal to payment in full. Estimated total recovery: 147% Estimated claims: $204,000,000 Impaired; entitled to vote FrontierVision Holdco Payment through distribution Notes of cash and TWC Common Stock equal to payment in full, and of CVV Series FV Interests. Estimated total recovery: 126% Estimated claims: $339,000,000 Impaired; entitled to vote Olympus Notes Payment through distribution of cash and TWC Common Stock equal to payment in full, and of CVV Series Olympus Interests. Estimated total recovery: 137% Estimated claims: $213,000,000 Impaired; entitled to vote Subsidiary Debtor Payment through CVV Series Existing Securities ESL Interests, if the class Laws Claims accepts, otherwise no distribution. Estimated total recovery: Unknown Estimated claims: Unknown Impaired; entitled to vote Subsidiary Debtor Reinstated. Equity Interests Impaired; entitled to vote C. ACC DEBTORS ACC Debtors Priority Paid in full in cash. Claims Estimated total recovery: 100% Estimated claims: <$1,000,000 ACC Debtors Secured Paid in full in cash. Claims Estimated total recovery: 135% Estimated claims: <$1,000,000 Unimpaired; not entitled to vote ACC Senior Notes Payment through distribution of cash and TWC Common Stock and of CVV Series ACC-1 Interests. Estimated total recovery: 59% Estimated claims: $5,110,000,000 Impaired; entitled to vote ACC Trade Claims Payment through distribution of cash and TWC Common Stock and of CVV Series ACC-2 Interests. Estimated total recovery: 42% Estimated claims: $293,000,000 Impaired; entitled to vote ACC Other Unsecured Payment through distribution Claims of cash and TWC Common Stock and of CVV Series ACC-3 Interests. Estimated total recovery: 42% Estimated claims: $89,000,000 Impaired; entitled to vote ACC Subordinated Notes Payment through distribution Claims of CVV Series ACC-4 Interests if the Class accepts, otherwise, no distribution. Estimated total recovery: Unknown Estimated claims: $2,032,000,000 Impaired; entitled to vote. ACC Existing Securities Payment through distribution Law Claims of CVV Series ACC-5 Interests if the Class accepts and all senior Classes against the ACC Debtors vote to accept. Otherwise, no distribution. Estimated total recovery: Unknown Estimated claims: Unknown Impaired; entitled to vote. ACC Preferred Stock Payment through distribution Interests of CVV Series ACC-6 Interests if the Class accepts and all senior Classes against the ACC Debtors vote to accept. Otherwise, no distribution. Estimated total recovery: Unknown Estimated claims: $1,674,000,000 as to liquidation preference plus accrued but unpaid dividends, and unknown as to existing securities law claims Impaired; entitled to vote. ACC Common Stock Payment through distribution Interests of CVV Series ACC-7 Interests if the Class accepts and all senior Classes against the ACC Debtors vote to accept. Otherwise, no distribution. Impaired; entitled to vote. ACC Subsidiary Equity Reinstated. Interests Impaired; entitled to vote. About Adelphia Communications 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 administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue Nos. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADELPHIA COMMS: Wants 2nd Disclosure Statement Supplement Okayed ---------------------------------------------------------------- Adelphia Communications Corp. and its debtor-affiliates and the Official Committee of Unsecured Creditors ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) approve the form and content of their Second Disclosure Statement Supplement relating to the ACOM Debtors' Fifth Amended Plan of Reorganization; and (b) find that the Supplement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher LLP, in New York, informs the Court that the revised Plan reflects the provisions of the amended and restated agreement concerning the terms and conditions of a modified chapter 11 plan dated July 21, 2006, among the ACOM Debtors and various parties. The Amended Term Sheet reflects a compromise among several creditor groups pursuant to which approximately $1,080,000,000 in value will be transferred from certain unsecured creditors of various ACOM Debtors to certain unsecured senior, trade and other unsecured creditors of ACOM and certain other holding company debtors, subject to repayment from contingent sources of value, including the proceeds of a litigation trust to be established under the Plan to pursue claims against third partied that are alleged to have damaged the ACOM Debtors. Mr. Shalhoub assures the Court that although the Amended Term Sheet does not include an agreement with the ACOM Debtors' bank agents or lenders as to the treatment of their claims, the Amended Term Sheet provides that the parties will continue good faith negotiations with the banks regarding the plan treatment. Mr. Shalhoub asserts that the Supplement contains adequate information with respect to the amendments made to the Plan on the potential consequences resulting from the Plan and the impact those consequences may have on the ACOM Debtors' estates and creditors, with appropriate degrees of specificity and completeness. The Supplement also provides an adequate explanation of the proposed resolution of the intercreditor dispute embodied within the Plan. Record Date The ACOM Debtors and the Creditors Committee ask the Court to establish the day after the Court approves the Supplement as the Record Date for purposes of determining which stakeholders are entitled to vote on the Plan. Confirmation Objection Deadline The ACOM Debtors and the Creditors Committee propose that objections to the Plan must be filed by October 10, 2006. The ACOM Debtors and the Creditors Committee propose to provide to all creditors and equity security holders a copy of the Confirmation Hearing Notice setting forth: (a) the date of approval of the Supplement; (b) the Record Date; (c) the Voting Deadline; (d) the time fixed for filing objections to confirmation of the Plan; and (e) the time, date, and place for the Confirmation Hearing. The ACOM Debtors and the Creditors Committee also propose to publish the Confirmation Hearing Notice, not less than 20 days before the Objection Deadline in: (a) The New York Times (National Edition), The Wall Street Journal (National Edition), and USA Today (National Edition); and (b) in a major regional newspaper in each of the cities of Boston, Buffalo, West Palm Beach, Cleveland, Denver and Los Angeles. The ACOM Debtors will also publish the Confirmation Hearing Notice electronically on their Web site at http://www.adelphia.com/ Voting Deadline The ACOM Debtors and the Creditors Committee propose that each ballot from a holder of a Claim or Equity Interest in a Class entitled to vote must be properly executed, completed, and delivered so as to be received by the Debtors' solicitation and tabulation agent no later than 4:00 p.m., prevailing New York Time, on October 10, 2006. In the case of securities held through an intermediary, creditors must submit ballots to the intermediary by October 6, 2006. Solicitation Materials The ACOM Debtors and the Creditors Committee propose to distribute to all members of the Voting Classes: (a) the Supplement, including the Plan; (b) the order approving the Supplement; (c) the Disclosure Statement; (d) a ballot or a master ballot, as applicable; and (e) a Confirmation Hearing Notice. The ACOM Debtors and the Creditors Committee propose to distribute or cause to be distributed copies of the Solicitation Package as soon as practicable. The ACOM Debtors believe that distribution of the Supplement seven days after the Court approves the Supplement will provide stakeholders with sufficient time to vote to accept or reject the Plan prior to the Voting Deadline. Creditors Committee Seeks Expedited Hearing David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, discloses that the Plan, as required by the Amended Term Sheet, provides that it will be a condition to the Plan's consummation that its effective date occur no later than October 31, 2006. According to Mr. Friedman, the negotiated effective date deadline was put in place to guard against: -- the heavy burden that certain accruals place on the finite proceeds from the Sale Transaction; and -- the potential that the parties may lose the benefit of their negotiated bargain through the continued accrual of postpetition interest and restructuring expenses that could consume the value that unsecured creditors have bargained to distribute. Mr. Friedman relates that each day, the Bank Lenders and other secured creditors accrue interest by virtue of Section 506(b) of the Bankruptcy Code. In addition, interest continues to accrue on approximately $5,000,000,000 of subsidiary level bond and trade debt. Moreover, ongoing administrative and restructuring expenses further compound the costs of continued delay in the resolution of the ACOM Debtors' Chapter 11 cases. At the Creditors Committee's request, the Court will convene a hearing on September 6, 2006, to consider approval of the Second Disclosure Statement Supplement, and the motion to establish noticing procedures and objection deadlines in connection with the Hearing. Objections must be filed by August 28, 2006. About Adelphia Communications 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 administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue Nos. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANTAGE CAPITAL: Wiener Goodman Raises Going Concern Doubt ------------------------------------------------------------ Wiener, Goodman & Company, P.C., in Eatontown, New Jersey, raised substantial doubt about Advantage Capital Development Corporation's ability to continue as a going concern after auditing the Company's financial statements for the fiscal years ended March 31, 2006, and 2005. The auditor pointed to the uncertainty of the Company to satisfy the $8 million judgment levied against it. The Company reported a $9,424,833 net loss on $421,991 of total revenues for the year ended March 31, 2006, compared with a $764,407 net loss on $176,128 of total revenues for the year ended March 31, 2005. At March 31, 2006, the Company's Statement of Net Assets showed $2,087,996 in total assets and $8,383,289 in total liabilities, resulting in a $6,295,293 stockholders' deficit. Full-text copies of the Company's annual report is available for free at http://ResearchArchives.com/t/s?101a Judgment The Company relates that on Oct. 12, 2004, it was served with a Third Party Complaint by American Motorists Insurance Company in the District Court, Clark County, Nevada, titled "Victory Village Limited III v. Builders Control Services Company, Inc. and American Motorist Insurance Company." The Complaint is based on alleged bond made by the Company to American Motorist in 1995. The complaint is based on an agreement signed by the Company that required the Company to indemnify the issuer of a bond in which a wholly owned subsidiary of the Company was a principle. The bond was issued in connection with a real estate transaction that began in 1995. The events that led to the default on the bond occurred between the years of 1995 and 2004. According to the complaint, the Company, while known as C.E.C. Industries Corp. and controlled by a prior management, agreed to indemnify the issuer of the bond for all claims arising against the bond. On June 29, 2006 a judgment in the amount of $7,796,147 was levied against the Company. For the year ended March 31, 2006 the Company recorded an accrued judgment of $7,796,147. Based in Aventura, Florida, Advantage Capital Development Corporation is an internally managed, non-diversified, closed-end investment company. ATLANTIC MUTUAL: S&P Maintains Default Rating & Withdraws R Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'R' counterparty credit rating on Atlantic Mutual Insurance Co. The rating on Atlantic Mutual's surplus notes remains 'D'. AVISTA CORP: Inks Settlement Agreement on Hydroelectric Project --------------------------------------------------------------- Avista Corp. and the U.S. Forest Service have signed a settlement agreement on proposed license conditions for Avista's Post Falls Hydroelectric Project. If adopted by the Federal Energy Regulatory Commission, the conditions will serve to fund improved recreation facilities as well as interpretive and educational programs and visitor surveys on Lake Coeur d'Alene and adjacent waterways. "The funding provided by this agreement will help the Forest Service continue to provide important recreation services on Coeur d'Alene Lake and the Coeur d'Alene River," said Ranotta McNair, forest supervisor, Idaho Panhandle National Forests. Avista has agreed to share funding for maintenance and improvements at Bell Bay campground and at the Medimont and Rainey Hill recreation areas. The company will also work with the Forest Service to develop an interpretation and education plan that will encourage resource protection, cooperation and public safety. In addition to annual funding during the term of the new license, Avista has agreed to provide a 25 percent match toward improvements at the Forest Service sites. "We're pleased with the collaboration that brought us to this agreement," said Speed Fitzhugh, Avista relicensing specialist. "The Forest Service and other public recreation providers agreed early on in the relicensing process that Avista would share a fair portion of the improvements and maintenance funding. This is a win-win situation for all involved." Avista's combined funding proposal for all recreation facilities on the Post Falls Project calls for a total of $982,000 in one-time improvements and $160,000 in annual operation and maintenance funding. Additionally another $60,000 in long term annual funding will be provided ten years after the initial improvements are completed. Avista's license for Post Falls and four other Spokane River dams expires in July 2007. The company has worked collaboratively with stakeholders for several years to develop a license proposal. FERC is now in the process of evaluating license terms and conditions proposed by agencies and organizations who are stakeholders in the relicensing process. A full-text copy of the second settlement agreement on the Post Falls Project is available for free at http://ResearchArchives.com/t/s?101b Headquartered in Spokane, Washington, Avista Corporation -- http://www.avistacorp.com/-- is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is a company operating division that provides service to 338,000 electric and 297,000 natural gas customers in three western states. * * * As reported in the Troubled Company Reporter on Aug. 2, 2006, Fitch Ratings affirmed Avista Corporation's Issuer Default Rating at 'BB'; Senior unsecured debt at 'BB+'; and Trust preferred and preferred stock at 'BB'. At the same time, Fitch revised AVA's Rating Outlook to Positive from Stable. Approximately $1.1 billion of debt is affected by the rating action. BERRY-HILL: American Capital Grants $21 Million DIP Financing ------------------------------------------------------------- American Capital Strategies, Ltd., disclosed it is providing a $21 million in debtor-in-possession financing to Berry-Hill Galleries Inc. American Capital's loan is secured by the Company's prime Manhattan real estate and its art inventory. "We are very pleased to enable this fine family business to refinance its pre-petition secured debt and to provide breathing room for the debtor and its creditors to formulate a plan of reorganization," Gordon O'Brien, American Capital Managing Director, said. "This transaction demonstrates the ability of our Special Situations Group to evaluate challenged businesses across a wide range of industries and to respond swiftly with flexible capital." "Berry-Hill operates a highly regarded gallery with a prime location in the heart of New York City's Upper East Side museum and gallery district. Over four generations, the Hill family has established a deep knowledge of fine art, an impressive art portfolio and strong relationships throughout the art world," Myung Yi, American Capital principal, said. "As a result of these factors, we were able to get comfortable with an atypical asset base in order to provide the debtor with a superior solution under a tight timeframe." "Now that we have received our debtor-in-possession financing and paid off our pre-petition secured lender, we will immediately turn our full attention to working with unsecured creditors to draft a mutually-acceptable plan of reorganization," Frederick D. Hill, the Company's co-owner, said. "We expect that having a patient and resourceful financial partner like American Capital will significantly enhance the long-term value of our family's business." About American Capital American Capital Strategies, Ltd. (Nasdaq: ACAS) -- http://www.americancapital.com/-- is a publicly traded buyout and mezzanine fund with capital resources of $8.9 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to early stage and mature private and small public companies and through its asset management business is a manager of debt and equity investments in private companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. About Berry Hill Galleries Headquartered in New York, New York, Berry-Hill Galleries, Inc. -- http://www.berry-hill.com/-- buys paintings and sculpture through outright purchase or on a commission basis and also exhibits artworks. The Debtor and its affiliate, Coram Capital LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr. S.D.N.Y. Case Nos. 05-60169 & 05-60170). Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors in their restructuring efforts. Robert J. Feinstein, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $100 million and debts between $1 million and $50 million. BRIGHTPOINT INC: Earns $8.2 Million in Quarter Ended June 30 ------------------------------------------------------------ For the three months ended June 30, 2006, Brightpoint Inc. reported net income of $8,241,000 from total revenues of $549,858,000. The Company's balance sheets at June 30, 2006 showed total assets of $493,627,000, total liabilities of $328,504,000 and total shareholders' equity of $165,123,000. A full-text copy of the Company's financial report for the three months ended June 30, 2006 is available for free at: http://researcharchives.com/t/s?100e Headquartered in Plainfield, Indiana, Brightpoint, Inc. -- http://www.brightpoint.com/-- engages in the distribution of wireless devices and accessories, as well as provision of customized logistic services to the wireless industry. The Company primarily operates in Australia, Colombia, Finland, Germany, India, New Zealand, Norway, the Philippines, the Slovak Republic, Sweden, United Arab Emirates and the United States. The Company's customers include mobile operators, mobile virtual network operators, resellers, retailers and wireless equipment manufacturers. Brightpoint was incorporated in 1989 under the name Wholesale Cellular USA, Inc. and changed its name to Brightpoint Inc. in 1995. * * * On April 12, 2006, Standard & Poor's placed the Company's long- term local and foreign issuer credit ratings at BB- with a stable outlook. CATALYST PAPER: Moody's Holds B1 Rating and Says Outlook is Stable ------------------------------------------------------------------ Moody's Investors Service revised the rating outlook for Catalyst Paper Corporation from negative to stable. In each of the past three quarters, LTM free cash flow has been positive, reversing the deficits that occurred in the second and third quarters of 2005. In addition, Catalyst's credit statistics have been gradually improving, reversing a downward trend that coincided with the above-noted deterioration in free cash flow generation. Accordingly, the issues prompting last December's decision to downgrade the outlook to negative have proven to be transitory, and the outlook has been restored to stable. Concurrently, Moody's affirmed Catalyst's senior unsecured notes and corporate family rating at B1. Outlook Actions: Issuer: Catalyst Paper Corporation * Outlook, Changed To Stable From Negative Issuer: Catalyst Paper Finance Limited * Outlook, Changed To Stable From Negative Issuer: Catalyst Paper Finance Limited: Backed Senior Secured Bank Credit Facility: Ba3 While the company's current operating and financial results warrant the revisions in outlook, it is noted there are three external matters that could adversely affect debt holder interests over the near-to-mid term. These matters are noted as concerns, but do not yet have sufficient visibility to warrant explicit accounting in the ratings assessment. The first is an ongoing change in the company's ownership. At this juncture, the matter has no direct influence on Catalyst's business prospects or financial profile, and, therefore, has no current rating impact. Should circumstances change, Moody's will assess the then current facts and respond accordingly. A slow-down in the North American economy that, in turn, causes reduced advertising spending and declining demand for the company's publishing papers would also be an adverse development. Similarly, were the United States dollar exchange value of the Canadian dollar to appreciate materially, Catalyst's relative competitive position would be eroded. While either or both of these contingencies would likely have rating implications, neither is sufficiently certain so as to be explicitly accounted for in the ratings assessment. As is the case with the potential long term implications of the above-noted ownership change, Moody's intends to monitor developments and ensure relevant ratings are appropriate in light of then current facts. Moody's last rating action for Catalyst was in December 2005, when its long-term ratings were lowered and the outlook was changed to negative. Moody's plans to supplement its traditional assessment of expected loss with a proposed Loss-Given-Default Methodology for which a request for comment was circulated during January 2006. Research by Moody's suggests that the realized credit losses on loans have tended to be lower than losses on similarly rated bonds. Moody's research further suggests that the application of a rigorous estimation model for LGD could support a higher degree of up- notching for bank facilities than has been the case with Moody's traditional notching methodology which ascribes considerable importance to asset coverage. Additionally, ratings on senior unsecured and subordinated may change as a result of the LGD methodology. Upon the implementation of this new methodology, Moody's will, if necessary, adjust the ratings of Catalyst's debt and credit facilities accordingly. Headquartered in Vancouver, British Columbia, Canada, Catalyst is a leading producer of mechanical printing papers in North America. The company also produces market pulp and kraft paper and owns Western Canada's largest paper recycling facility. CATHOLIC CHURCH: Court Approves Portland's Two Survey Forms ----------------------------------------------------------- Judge Elizabeth L. Perris of the U.S. Bankruptcy Court for the District of Oregon approves two survey forms: (i) A Claimant Survey Form to be completed by 47 claimants; and (ii) An Accused Survey Form to be completed by the Archdiocese of Portland in Oregon for accused persons who have been named for any resolved or unresolved claim included in Portland's claims estimation database. A full-text copy of the Claimant Survey Form is available for free at http://researcharchives.com/t/s?1021 A full-text copy of the Accused Survey Form is available for free at http://researcharchives.com/t/s?1022 The 47 Claimants are holders of Claim Nos. 110, 114, 195, 215, 217, 243, 244, 259, 261, 263, 268, 276, 278, 279, 280, 284, 293, 294, 298, 299, 315, 316, 317, 324, 325, 326, 330, 439, 440, 441, 442, 444, 445, 448, 449, 458, 463, 466, 467, 472, 548, 549, 550, 552, 842, 843, and 845. Judge Perris directs the Archdiocese to deliver the Claimant Survey Form and a copy of the Order to the Claimants' attorneys, or to the Claimants themselves, if unrepresented, with instructions that the survey forms are to be completed and signed by the Claimants, and survey copies are to be returned to counsel for the Archdiocese and the Tort Committee on or before 30 days after Portland's mailing date. Portland will be entitled to a two-hour mini-deposition of a Claimant who fails to complete and return the survey to the Archdiocese within the period. In compliance with Judge Perris' ruling, the Archdiocese delivered to the Court a proposed verified survey form to be used for collecting data from claimants. A full-text copy of the Archdiocese's Survey Form is available for free at http://researcharchives.com/t/s?1023 The Official Tort Claimants Committee objects to Portland's proposed Survey Form, arguing that a survey form must: * allow for responses like "do not know," "do not recall," or "not certain at this time;" * allow claimants to enter approximate dates or a range of dates when the sexual abuse occurred;; and * contain a declaration to be signed by the claimant that reads: "I declare under the penalty of perjury that the [answers] are, to the best of my recollection at this time, true and correct." The Tort Committee also wants certain questions in Portland's Survey Form eliminated because they are too subjective, general and open-ended, and will have marginal, if any, use in the statistical analysis. The Tort Committee has filed its own survey form and asks Judge Perris to approve it. A full-text copy of the Tort Committee's Survey Form is available for free at http://researcharchives.com/t/s?1024 Additionally, the Tort Committee asks the Court to compel production of documents it requested from the Archdiocese in July 2006. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, says the Tort Committee's request for documents is limited to: * those provided by the Archdiocese to National Economic Research Associates, Inc., in connection with the employment of the firm as Portland's economic consultant; * all documents reviewed, then compiled and collected by Portland for NERA; and * all documents concerning child sexual abuse trials or jury verdicts obtained from, or compiled as a result of, any survey of other Catholic dioceses in the United States of America. The documents requested are, on their face, relevant to the estimation process as confirmed by Dr. Ronald Schmidt of LECG, LLC, the Tort Committee's economic consultant, Mr. Kennedy asserts. The discovery issues must be addressed and resolved quickly because the Tort Committee is subject to an October 15, 2006, discovery cutoff, Mr. Kennedy says. "Cooperation is absolutely necessary to avoid delay." Portland Amends Survey Form The Archdiocese amended its proposed Claimant Survey Form following the Tort Committee's objection. Susan S. Ford, Esq., at Sussman Shank LLP, in Portland, Oregon, tells Judge Perris that the Archdiocese and the Tort Committee have resolved many, but not all issues relating to the Claimant Survey Form. A full-text copy of Portland's amended Survey Form is available for free at http://researcharchives.com/t/s?1025 The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Future Claims Estimation Meeting Set on August 31 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon will conduct a status conference on August 31, 2006, at 2:30 a.m. regarding the scheduling and briefing for the Archdiocese of Portland in Oregon's motion to estimate future claims. As reported in the Troubled Company Reporter on June 26, 2006, the Archdiocese asked the Court for the District of Oregon to estimate the aggregate amount of future claims for temporary allowance for purposes of voting, confirmation and funding of the Archdiocese's third Modified Plan of Reorganization. The Archdiocese proposed that the Bankruptcy Court as well as the U.S. District Court for the District of Oregon estimate the aggregate number and value of the future claims within the ranges stated in the report of Hamilton Rabinovitz & Alschuler, Inc., entitled "Estimating the Number and Value of Future Child Sex Abuse Claims Filed Against the Archdiocese of Portland in Oregon." The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CHASE FUNDING: S&P Downgrades Class IB Certificate's Rating to B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class IB from Chase Funding Loan Acquisition Trust Series 2001-C2 to 'B' from 'BB'. The rating remains on CreditWatch with negative implications, where it was placed March 29, 2006. The lowered rating and CreditWatch placement are the result of realized losses that have exceeded excess interest. During the previous six remittance periods, realized losses have exceeded excess interest by approximately 2x. The failure of excess interest to cover monthly losses has prevented overcollateralization from building to its target balance. As of the July 2006 distribution date, overcollateralization was $1,185,846, which is approximately 45% below the target balance of $2,150,043. Serious delinquencies (90-plus days, foreclosure, and REO) represent 11.56% of the current pool balance. Cumulative realized losses represent 2.73% of the original pool balance. If realized losses continue to outpace excess interest and the level of overcollateralization continues to decline, Standard & Poor's will take further negative rating actions. Conversely, if realized losses stop outpacing monthly excess interest and the level of overcollateralization rebuilds to its target balance, Standard & Poor's will affirm the rating on this class and remove it from CreditWatch negative. Credit support is provided by: * subordination, * overcollateralization, and * excess spread. The underlying collateral consists of 30-year, fixed- or adjustable-rate subprime mortgage loans secured by first liens on residential properties. Rating Lowered and Remaining on Creditwatch Negative: Chase Funding Loan Acquisition Trust Series 2001-C2 Mortgage loan asset-backed certificates Series Class To From ------ ----- -- ---- 2001-C2 IB B/Watch Neg. BB/Watch Neg. Other Outstanding Ratings: Chase Funding Loan Acquisition Trust Series 2001-C2 Mortgage loan asset-backed certificates Series Class Rating ------ ----- ------ 2001-C2 IA-4, IA-5 AAA 2001-C2 IM-1 AA 2001-C2 IM-2 A COMFORCE CORPORATION: Completes $21.4 Million 12% Notes Redemption ------------------------------------------------------------------ Comforce Corp. completed its plans to redeem $21.4 million principal amount of its 12% Senior Notes. Effective as of August 16, 2006, the Company extended the maturity of its remaining Senior Notes by three years until Dec. 1, 2010. The holders of the $22.9 million principal amount of Senior Notes that remain outstanding consented to the extension, the Company disclosed. The term of the Company's $110 million revolving credit facility was also extended until July 24, 2010. The Company used loan proceeds under the credit facility to pay the redemption price of the Senior Notes. "We are pleased to report the completion of these transactions which will significantly reduce our annual interest expense," John Fanning, chairman and chief executive officer, said. "As earlier reported, the three-year extension of our credit facility was conditioned upon our ability to extend our Senior Notes, which we have now accomplished. "These transactions enable us to continue our existing relationships with both our bank lenders and the holders of our Senior Notes, all of whom have supported our goals and vision. "The Company's public debt now stands at $22.9 million, compared to $138 million in June 2000. Based upon current interest rates, COMFORCE expects to save approximately $1 million annually in interest expense as a result of the redemption." COMFORCE Corporation (Amex: CFS) -- http://www.comforce.com/-- provides specialty staffing, consulting and outsourcing services primarily to Fortune 1000 companies and other large employers. The Company operates in three business segments, Human Capital Management Services, Staff Augmentation and Financial Outsourcing Services. The Human Capital Management Services segment provides consulting services for managing the contingent workforce through its PRO Unlimited(SM) subsidiary. The Staff Augmentation segment provides healthcare support services, including RightSourcing(R) Vendor Management Services, Technical, Information Technology and Other Staffing Services. The Financial Outsourcing Services segment provides funding and back office support services to independent consulting and staffing companies. COMFORCE has 36 offices nationwide. * * * At June 25, 2006, Comforce Corporation's balance sheet showed total assets of $176 million and total liabilities of $197 million resulting in a total stockholders' deficit of $21 million. COMPLETE RETREATS: Creditors Panel Taps Bingham as Lead Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor-affiliates' chapter 11 cases asks permission from the U.S. Bankruptcy Court for the District of Connecticut to retain Bingham McCutchen LLP as its lead counsel, nunc pro tunc to Aug. 3, 2006. Committee Chair Joel S. Lawson III informs that Court that Bingham has since represented the Committee in the Debtors' cases. Among other things, Bingham: -- reviewed and analyzed the Debtors' first-day motions and proposed orders; -- was involved in the discussions of the Debtors' proposed postpetition financing arrangements, including discussions of the terms and conditions for repayment of the Debtors' prepetition financing facility; and -- consulted with the Debtors and their legal, financial and restructuring advisors in connection with their operations, management and administration of the bankruptcy cases. As the Committee's lead counsel, Bingham will: (a) provide legal advice with respect to the Committee's rights, powers, and duties; (b) represent the Committee at all hearings and other proceedings; (c) advise and assist in the Committee's discussions with the Debtors and other parties in interest, regarding the overall administration of the bankruptcy cases; (d) assist the Committee in analyzing the claims of the Debtors' creditors and negotiate with the creditors; (e) assist with the Committee's investigation of the assets, liabilities, and financial condition of the Debtors and of the operations of the Debtors' businesses; (f) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, formulating the terms of a plan or plans of reorganization; (g) assist and advise the Committee with respect to its communications with the general creditor body regarding matters in the bankruptcy cases; (h) review and analyze all pleadings, orders, statements of operations, schedules, and other legal documents; (i) prepare, on behalf of the Committee, all pleadings, orders, reports and other legal documents as may be necessary to further the Committee's interests and objectives; and (j) perform all other legal services for the Committee that may be necessary and proper to facilitate the discharge by the Committee of its duties in the bankruptcy cases and any related proceedings. Mr. Lawson asserts that Bingham has had extensive Chapter 11 creditors' committee experience and knowledge and is particularly well suited for the type of representation required by the Committee. "[Bingham] has both a national and international practice, with more than 950 lawyers in 12 offices throughout the United States, as well as in London and Tokyo," Mr. Lawson emphasizes, "and has experience in all aspects of the law that are likely to arise in the bankruptcy cases." The Debtors will pay Bingham on its customary hourly rates: Professional Hourly Rate ------------ ----------- Partners & Counsel $445 - $850 Counsel & Associates $175 - $535 Paraprofessionals $100 - $315 Attorney Hourly Rate -------- ----------- Michael J. Reilly, Partner $750 Jonathan B. Alter, Partner 550 Daniel McGillycuddy, Partner 525 William F. Govier, Counsel 435 Kurt A. Mayr, Counsel 400 Richard H. Agins, Associate 340 Peter H. Bruhn, Associate 255 Michael J. Reilly, a partner at Bingham McCutchen LLP, informs the Court that the firm has represented, and will likely continue to represent, certain creditors of the Debtors and various other parties adverse to the Debtors in matters unrelated to the Debtors' bankruptcy cases. A list of the Interested Parties that Bingham currently represents in matters unrelated to the Debtors' cases is available for free at http://researcharchives.com/t/s?1028 Other than the identified Interested Parties, Mr. Reilly assures the Court that Bingham has no other connection with the Debtors, their creditors, the Acting United States Trustee for Regions 2 and any other parties-in-interest. Mr. Reilly assures the Court that Bingham is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors' estates with respect to the matters for which it is to be retained. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: U.S. Trustee Wants Xroads Replaced as Agent -------------------------------------------------------------- Diana G. Adams, the Acting United States Trustee for Region 2, seeks replacement of Xroads Case Management Services LLC as claims agent to Complete Retreats LLC and its debtor-affiliates. The U.S. Trustee asserts that Xroads Case Management's proposed services are administrative in nature and can be performed by a variety of providers. The U.S. Trustee contends that the XCM Application does not: -- provide information as to whether or not the Debtors tried to obtain estimates of the costs from competing service providers; -- provide information as to whether or not the charges proposed for XCM's services are commercially reasonable; and -- support whether or not XCM's employment is in the best interests of the Debtors' estates and their creditors. XCM is an affiliate of XRoads LLC which may be an insider of the Debtors, the U.S. Trustee notes. While XCM seems qualified to provide the proposed services, the Debtors' estates and creditors may be best served through the employment of another service provider, equally or greater skilled, should the costs of their services be significantly less than XCM's, the U.S. Trustee argues. As reported in the Troubled Company Reporter on Aug. 21, 2006, the Debtors sought permission from the U.S. Bankruptcy Court for the District of Connecticut to hire XCM as their claims and noticing agent. The Debtors informed the Court that they have more than 5,000 creditors and other potential parties-in-interest. The Debtors believe that the Office of the Clerk of the Court is not equipped to: (i) distribute notices; (ii) process all proofs of claim filed in the Chapter 11 cases; and (iii) assist in the balloting process. As their claims and noticing agent, the Debtors expect XCM to: (a) assist the Debtors and their counsel in the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs; (b) assist the Debtors and their counsel in the preparation of the initial reporting package for the United States Trustee; (c) assist the Debtors and their counsel in preparation of the Debtors' monthly operating reports; (d) design, maintain, and administer the Debtors' claims database; (e) provide designated users with access to the claims database to track claims activity, to view claims-related documents in PDF format, and to create reports; (f) send out acknowledgement cards to creditors confirming receipt of their proofs of claim; and (g) provide copy and notice service consistent with the applicable local rules and as asked by the Debtors or the Court, including acting as the official claims agent in lieu of the Court in: (1) serving notice to parties-in-interest; (2) maintaining all proofs of claim and proofs of interest filed and received in the bankruptcy cases; (3) docketing the claims; (4) maintaining and transmitting to the clerk of the Court the official claims registers; (5) maintaining current mailing lists of all entities that have filed claims and notices of appearance it receives; (6) providing public access for examination of the claims at CMS' premises during regular business hours and without charge; and (7) recording assignments of claims to third parties and recording all transfers received by CMS pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure. On the Debtors' behalf, James Mitchell told the Court that XCM was chosen because of its experience, the competitiveness of its fees, and its prepetition involvement with the Debtors. XCM has provided necessary assistance to the Debtors in preparing for their bankruptcy filings. The Debtors will pay XCM these hourly rates for its consulting services: Professional Hourly Rate ------------ ----------- Director or Managing Director US$225 to US$325 Consultant or Sr. Consultant US$125 to US$225 Type of Service Hourly Rate --------------- ----------- Accounting and Document Management US$125 to US$195 Programming and Technical Support US$125 to US$195 Clerical -- data entry US$40 to US$65 John Vander Hooven, a managing director at XRoads Case Management Services, LLC, assured the Court that the firm neither holds nor represents any interest adverse to the Debtors' estates on matters for which it is to be retained and employed. XCM has had no prior connection with the Debtors, however, XCM's employees may, in the ordinary course of their personal affairs, have relationships with certain creditors of the Debtors, Mr. Hooven added. XCM is a "disinterested person", as referenced in Section 327(a) of the Bankruptcy Code and as defined in Sections 101(14) and 1107(b) of the Bankruptcy Code, Mr. Hooven maintained. About Complete Retreats Complete Retreats, LLC, Preferred Retreats, LLC, and their subsidiaries were founded in 1998. Owned by Robert McGrath and four minority owners, the companies operate a five-star hospitality and real estate management business and are a pioneer and market leader of the "destination club" industry. Under the trade name "Tanner & Haley Resorts," Complete Retreats, et al.'s destination clubs have numerous individual and company members. Destination club members pay up-front membership deposits, annual dues, and daily usage fees. In return, members and their guests enjoy the use of first-class private residences, and receive an array of luxurious services and amenities in certain exotic vacation destinations in the United States and locations around the world, including: Abaco, Bahamas; Cabo San Lucas, Mexico; Nevis, West Indies; Telluride, Colorado; and Jackson Hole, Wyoming. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONCORD RE: Moody's Rates Proposed Senior Secured Loan at (P)Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a provisional (P)Ba2 rating to the proposed senior secured term loan due 2012 of Bermuda- domiciled Concord Re Limited. Moody's also assigned a provisional (P)Baa2 insurance financial strength rating to Concord Re. The outlook for both provisional ratings is stable. The rating agency said that it expects to remove the provisional status and assign definitive ratings at the same level upon review of final executed documentation, provided the documentation is consistent with the terms and conditions specified as of August 1, 2006 that underlie the provisional ratings. The senior secured term loan of Concord Re, which is being syndicated to financial institutions and other institutional lenders, is scheduled to mature in early 2012. The loan is secured by the capital stock of Concord Re, and is non-amortizing, but allows for voluntary prepayments, and requires mandatory prepayments under certain circumstances. According to Moody's, Concord Re is a limited-life, newly formed Class 3 Bermuda reinsurer that will enter into a collateralized quota share reinsurance treaty with its sole cedant, Lexington Insurance Company, a property-casualty company of American International Group, Inc. Concord Re will assume a pro rata share of the gross written premiums and losses for the first $10 million of limits per policy, for lines of business underwritten by Lexington's Property Division. This portfolio includes energy manufacturing, general property, real estate, communications, construction services, and the inland marine and specialty classes of Lexington's domestic commercial property book. Initial capitalization for Concord Re is expected to be up to $750 million, comprised of up to $375 million in the senior secured term loan and up to $375 million of common equity. Concord Re will post its total paid-in capital, net of transaction expenses, as cash and securities into a trust to collateralize its reinsurance obligations to Lexington. Funds in the trust are expected to be invested in investment-grade securities with restrictions similar to those specified by Regulation 114. Moody's stated that Concord Re's ratings reflect an analysis of the structural and contractual features of the Concord Re vehicle, as well as probabilistic analysis to determine both the probability of loss and expected severity of loss to both Concord Re's debt holders and its sole cedant, Lexington Insurance Company. The (P)Ba2 provisional rating for the senior secured term loan is supported by Concord Re's capitalization level relative to its loss exposure, a balance sheet that is unencumbered by legacy exposures, and certain structural characteristics that are designed to offer protection to debt holders during the wind-down period. These fundamental strengths are tempered by Concord Re's relatively high debt leverage profile and parameter risk in the modeling assumptions that form the basis of the company's capitalization, particularly assumptions regarding attritional loss ratios. Moody's further noted four structural elements of the transaction which impacted its assessment. First, the minimal collateral requirement, as it is currently structured, may not always rise in lockstep with risk exposure, making it less likely that risk exposure will be reduced -- via an adjustment to the cession percentage -- if funds in the collateral trust fall below the minimum collateral requirement. The minimal collateral requirement was an important quantitative consideration given that the interests of equity holders, cedant, and debt holders are partially aligned through that structural feature. Secondly, subsequent reinsurance purchased by Lexington or AIG will not inure to the benefit of Concord Re. Thirdly, the ability of equity holders to extract dividends out of net income on a quarterly basis also impacted Moody's assessment. Lastly, debt holders are exposed to uncertainty surrounding the exact amount of liabilities that are owed to Lexington when the liabilities are commuted at the end of the vehicle's life. Concord Re's (P)Baa2 insurance financial strength rating reflects the probability of default and expected loss profiles for cedant obligations, which are enhanced by the establishment of a collateral trust for the benefit of its sole cedant. The ratings contemplate a maximum underwriting period of 36 months, assuming that equity holders -- having suffered a cumulative net loss after 18 months -- will elect to extend the underwriting period by another 18 months and that debt remains in place accordingly, for the full tenor of 5.5 years. The ratings also assume no additional debt above the original $375 million committed and fully funded initial term loan. Moody's noted that its expectations at the current rating level are that Concord Re will continue to maintain a financial leverage profile of no more than 50% debt to total capital. That said, the ratings going forward will reflect updated analysis of the cumulative performance of the company, its future overall risk-adjusted capitalization level, and updated prospective probabilistic analysis of its reinsurance portfolio at future points in time. Concord Re Limited, based in Bermuda, is a licensed Class 3 reinsurer that will enter into a collateralized quota share reinsurance treaty with its sole cedant, Lexington Insurance Company, a property-casualty company of New York-based American International Group, Inc. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. COPELANDS' ENT: Organizational Meeting at 2:00 p.m. Tomorrow ------------------------------------------------------------ The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors Copelands' Enterprises, Inc.'s, chapter 11 case at 2:00 p.m., on August 24, 2006, at the J. Caleb Boggs Federal Building, 844 North King Street, Suite 2112 in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in San Luis Obispo, California, Copelands' Enterprises, Inc., dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The Company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). Laura Davis Jones, Esq., Marc A. Berlinson, Esq., and Ira A. Kharasch, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub, in Los Angeles, California, represent the Debtor. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. DANA CORP: Inks Pact Allowing PBGC to File Consolidated Claims -------------------------------------------------------------- Dana Corporation and its debtor-affiliates sponsor 34 defined benefit pension plans covered by Title IV of the Employee Retirement Income Security Act of 1974. Pension Benefit Guaranty Corporation administers the Debtors' defined pension plan termination insurance program under Title IV. PBGC asserts that each of the Debtors may either be a contributing sponsor of one or more of the Pension Plans or a member of the contributing sponsor's controlled group. PBGC further asserts that it is entitled to at least three separate claims regarding each Pension Plan for: (a) unpaid minimum funding contributions required under Section 412 of the Internal Revenue Code and Sections 1082 and 1362 of the Labor Code; (b) unpaid premiums owed to it; and (c) contingent termination liability to it. Each of the PBGC claims will be asserted against each of the Debtors for joint and several liabilities. If PBGC were to separately file three proofs of claim with respect to each of the 34 Pension Plans against each of the 41 Debtors, PBGC would file a total 4,182 claims. Filing voluminous and duplicative claims would impose undue administrative burden on the Debtors, PBGC and the Debtors' claims agent. Accordingly, the parties agree that: (a) PBGC will be permitted to file one or more consolidated proofs of claim in the Debtors' Chapter 11 Cases; (b) the Stipulation is intended solely for the purpose of administrative convenience; and (c) the Stipulation will also apply to any amended proofs of claim that PBGC may file with respect to the Pension Plans. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). The Debtors' consolidated balance sheet at March 31, 2006, showed a $456,000,000 total shareholder' equity resulting from total assets of $7,788,000,000 and total liabilities of $7,332,000,000. DANA CORP: Has Until December 4 to Decide on Danacq Lease --------------------------------------------------------- In October 2001, Dana Corporation and Danacq Rochester Hills, LLC, entered into a 20-year Lease Agreement pursuant to which Danacq Rochester leased to Dana certain non-residential real property located at 2910 Waterview, Rochester Hills, in Michigan. The Court has established Oct. 3, 2006, as the deadline by which the Debtors must decide whether to assume or reject their unexpired non-residential real property leases. The Debtors and Danacq Rochester are currently engaged in discussions regarding the Lease, and wish to extend the lease decision period. Accordingly, in a Court-approved stipulation, the parties agree that: (a) the lease decision period for Danacq's Lease is extended until Dec. 4, 2006; and (b) Dana will continue to timely perform its obligations under the Lease, and that all amounts due and owing under the Lease will constitute administrative expenses of Dana's Chapter 11 estates entitled to first priority. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). The Debtors' consolidated balance sheet at March 31, 2006, showed a $456,000,000 total shareholder' equity resulting from total assets of $7,788,000,000 and total liabilities of $7,332,000,000. E*TRADE FINANCIAL: DBRS Raises Senior Debt Rating to BB (high) -------------------------------------------------------------- Dominion Bond Rating Service upgraded the Issuer & Senior Debt rating for E*TRADE Financial Corporation by two notches to BB (high) from BB (low). The Deposits & Senior Debt rating for E*TRADE's banking subsidiary, E*TRADE Bank, has been upgraded to BBB (low) from BB and E*TRADE's Subordinated Debt rating has been upgraded to BB from B (high). These rating actions conclude a review that was initiated on May 26, 2006. The trend for the long-term ratings of E*TRADE and the Bank is Positive. The Company's short-term ratings remain Under Review with Positive Implications, where they were placed on May 26, 2006, pending the conclusion of DBRS's plans to implement definitional revisions to certain rating categories at the lower end of the scale used to rate Commercial Paper and other short-term debt instruments. DBRS announced these plans in a press release on July 14, 2006. DBRS notes that the upgrades of E*TRADE's ratings are based upon the significant progress that the Company has made over the past nine months in becoming a much larger and broader-based online financial services institution that leverages its strong retail brokerage business. Moreover, this two-notch upgrade reflects E*TRADE's quick and successful integration of recent acquisitions, progress in generating more business from its existing client base, its ability to attract new customers and improvement of its financial profile. The Positive trend incorporates DBRS's expectation that E*TRADE will continue to make progress over the next six to 18 months. The Company has transformed itself from a transaction-focused online broker into a large financial institution with about $49 billion in assets, 3.4 million retail customers and about $180 billion in customer assets at the end of Q2 2006. Accomplishing a significant expansion in its franchise, E*TRADE made two major acquisitions in Q4 2005 that added over 600,000 customers with about $69 billion in customer assets. Integration of these acquisitions has been largely successful, with customer attrition running below the Company's expectations. Importantly, these acquisitions kept E*TRADE among the leading players as the industry has consolidated and gave it the scale to remain a strong competitor. DBRS believes E*TRADE's success with the integration of its brokerage and banking services demonstrates the power of its online franchise. Providing customers with a broader array of tools to manage their financial activities, E*TRADE's new suite of online products shows the strength of its technology and product development capabilities. Benefiting from the growth of E*TRADE's retail business segment, the Company's institutional segment has also experienced increased revenues and profitability. To expand its advisory and asset management services, E*TRADE is making modest acquisitions. E*TRADE is also continuing its successful international expansion, as international trades accounted for about 14% of total trades in second quarter 2006. Building on its online capabilities, the Company is providing foreign investors with better access to their own markets, as well as improving their access to U.S. markets. E*TRADE has leveraged its success with its franchise to strengthen its financial profile. By accumulating the cash resources of its brokerage customers and putting them to work in sweep deposit accounts, the Company has been able to increase interest-earning assets and raise the contribution of net interest income after provisions from 30% of overall net revenues in 2003 to 51% in 2005 and 55% in second quarter 2006. The Company is now much less reliant on the revenues from retail trading commissions as they contribute less than a quarter of its revenues. Product integration has generated significant growth in deposits, which now exceed $21 billion. A more comprehensive array of cash products also helps the Company retain its customers' investment activity in different market environments. For example, it has a broader range of cash products including certificates of deposit to offer investors, as a defensive play when concerns about equity market declines increase. DBRS notes that, despite the demands of E*TRADE's expansion, new product development and major acquisitions, strong cost control has kept expenses and headcount largely flat. With revenues rising and costs constrained, E*TRADE is delivering more stable, higher-margin earnings, a major factor underpinning the new ratings. In DBRS's opinion, the Company's franchise success and the steps it has taken to reduce risk have also improved the financial profile of the Bank. Deposit growth has limited increases in the cost of funds leading to margin improvement. On the asset side, risk has been reduced by growth in secured residential lending in mortgages and home equity lines of credit. The proportion of consumer loans on the balance sheet is declining following the decision to exit the origination businesses in auto lending in 2004 and in recreational vehicles and marine lending in 2005. These portfolios are now in runoff. Strong cost control and the leveraging of E*TRADE's online infrastructure has helped lower the Bank's expense ratio to just 41% in second quarter 2006 from 58% in 2003. DBRS's current ratings for the Company and the Bank reflect the strength of E*TRADE's online franchise and its improving financial profile. At the same time, the ratings also incorporate risks in the leverage in the Company and in the Bank, exposure to downturns in the economy and capital markets as well as the highly competitive environment in online retail financial services. EMERITUS CORP: June 30 Balance Sheet Upside-Down by $110 Million ---------------------------------------------------------------- Emeritus Corporation's balance sheet at June 30, 2006 showed total shareholders' deficit of $$110,786,000 from total assets of $720,775,000 and total liabilities of $831,561,000. The Company's June 30 balance sheet also showed strained liquidity with $61,572,000 in total current assets and $90,116,000 in total current liabilities. For the three months ended June 30, 2006, the Company reported net loss of $7,615,000 from total operating revenues of $103,673,000. A full-text copy of the Company's financial report for the three months ended June 30, 2006 is available for free at: http://researcharchives.com/t/s?1012 Based in Seattle, Washington, Emeritus Corporation (AMEX: ESC) -- http://www.emeritus.com/-- provides assisted living and related services to seniors throughout the United States. Emeritus holds interests in 183 communities representing capacity for approximately 18,500 residents in 35 states. ENDOCARE INC: Posts $708,000 Net Loss in Second Quarter of 2006 --------------------------------------------------------------- Endocare, Inc., reported that the growing number of cryoablation procedures and a strong increase in gross margins resulted in a continued reduction in operating loss from continuing operations in the second quarter ended June 30, 2006. Results from continuing operations exclude the results of the Timm Medical unit, which was divested in February 2006. Second Quarter Results The number of domestic cryoablation procedures performed grew 19.6% to 1,938 in the 2006 second quarter from 1,620 in the prior year period. "While we expect that individual quarters will continue to show varied growth rates going forward, we are pleased by our procedure growth in the second quarter," Endocare chairman and chief executive officer Craig T. Davenport said. "Significantly, procedures increased more than 10% sequentially from 1,761 in the 2006 first quarter." With respect to one of the strategic business model changes underway at the Company, Mr. Davenport said the Company's migration away from being a service provider toward a more conventional medical device manufacturer focused on sales of its cryoablation disposable products again resulted in improved results for the quarter. This revenue mix shift is the result of a strategic change to the business model that will result in top line growth that lags procedure growth in the short-term, but should result in a more scalable and profitable organization in the long-term following the transition. In the 2006 second quarter, sales of disposable products accounted for 66.5% of total procedures, up significantly from 39.6% in the corresponding 2005 period and sequentially up from 49.9% in the 2006 first quarter. Due primarily to the changing product mix, total revenues from continuing operations for the 2006 second quarter were $6.9 million, which is the same as the total revenues for the 2005 second quarter. For continuing operations, the transition in mix had a positive impact on gross margins, which increased to 52.9% compared to 43.3% in the 2005 second quarter and up sequentially from 48.1% in the first quarter of 2006. "Gross profit in this year's second quarter increased from the 2006 first quarter by $158,000, even though relinquishing service- related fees in the 2006 second quarter caused a sequential decline in revenues of approximately $354,000, chief financial officer Michael R. Rodriguez said. "This improvement in gross profit was driven primarily by the 10% sequential increase in procedures, as well as the increase to 66.5% in the percentage of procedures for which we simply sell our cryoablation disposable products." Operating expenses from continuing operations for the 2006 second quarter were $6.5 million, down from the $7.2 million in the 2005 second quarter and from the $8.8 million in the first quarter of this year. Included in the 2006 second quarter operating expense was an $870,000 expense reversal that resulted from reducing a payroll tax liability for which the Company no longer bears liability. Loss from continuing operations in the second quarter of 2006 was $708,000, which includes the $870,000 reduction of the payroll tax liability as well as a $1.9 million reduction of interest expense related to the change in the fair market value of common stock warrants issued in connection with the Company's March 2005 private placement. This compares with a loss from continuing operations of $4.2 million in the 2005 period. The balance sheet as of June 30, 2006, showed cash and cash equivalents of $8.0 million, total assets of $22.1 million and total stockholders' equity of $9.3 million. Cash use in the 2006 second quarter was $3.1 million, including the $750,000 paid to an escrow account in connection with the Company's settlement with the Securities and Exchange Commission, as well as $360,000 from an additional payroll paid on the last business day of the quarter due to the July 4 holiday. SEC & DOJ Settlements The Company consented to a judgment in favor of the Securities and Exchange Commission on July 14, 2006, and entered into a non- prosecution agreement with the Department of Justice on July 18, 2006. These two agreements effectively resolve with respect to the Company the investigations begun by the SEC and the DOJ in January 2003. Under the terms of the consent judgment with the SEC, the Company, without admitting or denying any wrongdoing, agreed to pay a total of $750,000 in civil penalties and is enjoined from future violations of securities laws. Subject to the terms of the non-prosecution agreement with the DOJ, the United States Attorney's Office for the Central District of California has agreed not to prosecute the Company for any crimes committed by the Company's employees relating to the DOJ's investigation. The non-prosecution agreement will become final and irrevocable on Jan. 1, 2007. The investigations conducted by the SEC and the DOJ relative to certain former officers and directors of the Company are ongoing, and are not affected by the Company's settlements with the SEC and the DOJ. Stock Option Administration Internal Review Given the recent announcements by numerous companies and the SEC's current focus on stock option plan administration, the Company's Audit Committee requested that management conduct an internal review of the Company's historical stock option practices, the timing of stock option grants, and related accounting and documentation. Based on this review, management identified several stock option grants made between 1997 and 2002 for which the actual measurement dates appeared to differ from the recorded grant dates. Management analyzed the potential accounting impact, assuming that the measurement dates for these option grants differ from the recorded grant dates, and concluded that the financial impact did not necessitate adjustment to or restatement of the Company's previously-issued financial reports. Management reported the results of its review to the Company's Audit Committee and Board of Directors at their regularly scheduled meetings on July 26, 2006. Following these meetings, the Company contacted the SEC and the DOJ and reported its findings. On Aug. 1, 2006, the Company met with the SEC staff to discuss the Company's findings and later received a subpoena from the SEC staff requesting additional option-related information. The Company is in the process of responding to this subpoena and will continue to cooperate fully with the SEC and DOJ and with their ongoing investigations related to certain former officers and directors of the Company. Financing Update The Company expects that it will need to raise additional capital no later than March 31, 2007, to fund its ongoing operations. The Company is exploring a number of alternative means to raise such capital including an equity financing, debt financing, or a licensing or other corporate transaction. NASDAQ Application Process Update The Company is pursuing re-listing on NASDAQ. On July 20, 2006, following the settlements with the SEC and DOJ, the Company submitted its re-listing application to NASDAQ. There are numerous listing qualifications that must be met and the Company believes it should be able to meet all of these qualifications. Currently, the Company's stock price is below the minimum required for NASDAQ re-listing. The Board and management of the Company have not made the decision if or when the Company would institute a stock split, but they will continue to monitor and evaluate the need and appropriateness of doing so based on a number of factors such as stock price, market conditions, stability of the stock price and other considerations. Going Concern Doubt Management says that if the Company fails to adequately address its liquidity concerns, then its independent auditors may issue a qualified opinion, to the effect that there is substantial doubt about the Company's ability to continue as a going concern. A qualified opinion could itself have a material adverse effect on its business, financial condition, results of operations and cash flows. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?1013 About Endocare Endocare, Inc. (ENDO.OB) -- http://www.endocare.com/-- is an innovative medical device company focused on the development of minimally invasive technologies for tissue and tumor ablation. Endocare has initially concentrated on developing technologies for the treatment of prostate cancer and believes that its proprietary technologies have broad applications across a number of markets, including the ablation of tumors in the kidney, lung and liver and treatment of pain resulting from bone metastases. EVANS INDUSTRIES: Can Provide GE Capital with Adequate Protection ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana allowed Evans Industries, Inc., to pay General Electric Capital Corp. a one payment of $5,616 for retroactive adequate protection payments and $1,872 as monthly adequate protection payments to compensate G.E. Capital for diminution in value of the collateral in which G.E. Capital holds a security interest. The Debtor owes G.E. Capital around $824,648 pursuant to certain promissory notes executed between February 12, 1999 and December 30, 2003 by the Debtor's affiliate, E&H Investments, L.L.C., in favor of G.E. Capital. To provide security for its obligations under the Promissory Notes, E&H granted G.E. Capital a Uniform Commercial Code security interest in certain equipment. An appraisal of the collateral, conducted for G.E. Capital by qualified appraisers Jerome R. Galaszewski and Michael J. Jones, on or about February 8, 2006 determined the value of the Collateral using two different valuation methods: (1) Orderly Liquidation Value; and (2) Forced Liquidation Value. As of February 8, 2006, the Appraisal reports the OLV and FLV of the collateral are: * OLV, $253,500; * FLV, $174,500. Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The company filed for chapter 11 protection on April 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. FEDERAL-MOGUL: Insurer Says Gilbert Heintz is Not Disinterested --------------------------------------------------------------- Mt. McKinley Insurance Company, formerly known as Gibraltar Casualty Company, and Everest Reinsurance Company, formerly known as Prudential Reinsurance Company, ask the Court to disqualify Gilbert Heintz & Randolph, LLP, as the Debtors' special insurance counsel. Sean J. Bellew, Esq., at Cozen O'Connor, in Wilmington, Delaware, argues that Gilbert Heintz concurrently represents the Debtors and individuals holding interests adverse to the Debtors. According to Mr. Bellew, the same conflicted relationship exists in the Debtors' cases and in In re Congoleum Corp., 426 F.3d 675 (3d Cir. 2005), in which case Gilbert Heintz was disqualified. The U.S. Court of Appeals for the Third Circuit disqualified the firm because it represented the debtor, Congoleum, as "special insurance counsel," while at the same time representing the interests of individuals asserting asbestos-related claims against Congoleum, Mr. Bellew says. "[Gilbert Heintz's] representation of asbestos claimants in Congoleum was the result of co-counsel arrangements between [the firm] and certain plaintiffs' firms representing personal injury claimants against certain corporate tort defendants, including Congoleum," Mr. Bellew explains. "[The firm] simultaneously represented the debtor and those suing the debtor." The Third Circuit found these circumstances to be a conflict of interest violating both Section 327 of the Bankruptcy Code and applicable disciplinary rules, Mr. Bellew tells Judge Fitzgerald. Hence, the Insurance Companies assert that the Court should also make the same ruling in the Debtors' cases. To the extent the Court does not yet believe the record suffices to grant their request, the Insurance Companies seek the Court's permission to conduct discovery into the issues raised in their request. Gilbert Heintz Says Motion is Baseless Counsel for Gilbert Heintz, Alan E. Kraus, Esq., at Latham & Watkins LLP, points out that Mt. McKinley and Everest Reinsurance failed to note that the Court has already concluded that the firm has no conflict of interest and is disinterested pursuant to a ruling in In re ACandS, Inc., Case No. 02-12678 (JFK). In ACandS, the Court, concluding that Gilbert Heintz does not have a conflict, denied a request disqualifying the firm. Gilbert Heintz believes that the Insurers' reliance on the Third Circuits decision in Congoleum is misplaced. In Congoleum, Mr. Kraus notes, the Third Circuit found that a conflict existed because of the firm's prepetition activities in negotiating a claimant settlement between the debtor and the claimants. In the Debtors' Chapter 11 cases however, the firm had no role in negotiating any claimant settlements, Mr. Kraus continues. Thus, the Court's findings in Congoleum do not apply to the current circumstances. Additionally, Mr. Kraus argues that contrary to the Insurers' insinuations, Gilbert Heintz's representation of the Debtors has been limited to: -- counseling the Debtors on insurance issues, including as those issues impact any proposed plan of reorganization; and -- handling insurance-related litigation and settlement negotiations. Mr. Kraus insists that, in the Debtors cases, Gilbert Heintz has had no role in settling, valuing or determining qualification criteria for any asbestos claims, and the firm has not advised the Debtors on how their assets could be divided among competing creditors. Gilbert Heintz asks Judge Fitzgerald to deny the request summarily. Debtors Want Request Denied The Debtors contend that the Insurance Companies' arguments have no merit. Furthermore, the Debtors believe that the disqualification request, coming almost five years after the Court issued a final order authorizing the Debtors to employ the firm, represents an improper and abusive litigation tactic by reaping an unfair advantage over them and the other Plan Proponents. The undisputed facts, the Debtors assert, are that they employed Gilbert Heintz at the outset of their Chapter 11 cases upon written application to serve as "Special Counsel" -- an application that was timely filed and supported by the firm's declaration of no adverse interest and disclosure of relevant contacts, and to which there have been no objections. The Court's approval of the firm's employment is now final and non-appealable, Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, argues. The Debtors further assert that Gilbert Heintz has played an important, albeit limited, role as special insurance counsel in their Chapter 11 cases and has rendered services at all times within the scope of its employment. According to Ms. McFarland, the disqualification request is designed to achieve two illegitimate goals: 1. Delay the Debtors' efforts to negotiate, propose and confirm a plan of reorganization that incorporates the Debtors' insurance assets; and 2. Further delay Mt. McKinley and Everest Reinsurance's performance of its obligations under the prepetition contracts of insurance paid for by, and written for the benefit of, the Debtors and their predecessors. Accordingly, the Debtors ask the Court to deny the disqualification request. About Federal-Mogul Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FEDERAL-MOGUL: Wants to Enter Into Hercules Payment Agency Pact --------------------------------------------------------------- Federal-Mogul Corporation, T&N Limited, Ferodo America, Inc. and Gasket Holdings Inc., together with the Official Committee of Asbestos Claimants and Professor Eric D. Green, as the duly appointed legal representative for future asbestos-related personal injury claimants, seek the authority of the United States Bankruptcy Court for the District of Delaware to enter into a payment agency agreement relating to the Hercules asbestos liability policy. The core of the Hercules Agreement, James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, says, is the provision of a mechanism for distribution of recoveries obtained under the Hercules Policy to: 1. a trust to be established for the Debtors' U.K. and certain non-U.K. asbestos personal injury claimants; and 2. a trust to be established for the Debtors' U.S. and certain non-U.S. asbestos personal injury claimants. The distribution will be made in accordance with the division of insurance recoveries that the Court previously approved as part of the U.K. Global Settlement Agreement, Mr. O'Neill adds. The Hercules Agreement is conditioned on the approval of the U.K. Debtors' company voluntary arrangements that, among others, establish the priority scheme of the distribution of the Hercules Recoveries. Hercules Policy The Hercules Policy obligates the insurer to indemnify T&N for all "Ultimate Net Loss" in excess of the retained limit, without limitation, for claims made or brought on or after July 1, 1996, that relate to the exposure of asbestos, asbestos products, asbestos dust, or asbestos fibers that were mined, manufactured, sold, installed or distributed prior to July 1, 1996. The Policy covers liabilities of T&N as well as certain T&N subsidiaries and subsidiary undertakings existing on July 1, 1996. However, T&N is the sole policyholder and is the only entity entitled to payment under the policy -- although it may be the case that GHI and Ferodo are entitled to a certain proportion of the Hercules Recoveries once they have been paid to T&N. The Hercules Policy has an aggregate limit of GBP500 million -- approximately $895 million -- with a retained limit of GBP690 million -- approximately $1.235 billion. The retained limit has diminished to GBP361,802,160. Thus, before either the U.K. Asbestos Trust or the U.S. Asbestos Trust can access coverage under the policy, the retention must be exhausted. The Policy, purchased by T&N in 1996, is underwritten by T&N's captive insurance company, Curzon Insurance, Ltd., and reinsured by three reinsurance companies. Hercules Payment Agency Agreement The parties to the Hercules Agreement are: -- T&N -- the U.K. Administrators -- Phillip Rodney Sykes and Jeremy Mark Willmont; -- the T&N Asbestos Trustee Company Limited -- the U.K. Asbestos Trustee; -- the Asbestos Committee; -- the Futures Representative; -- Federal-Mogul; and -- Ferodo and GHI, potential additional beneficiaries. Messrs. Sykes and Willmont will serve as payment agents under the Hercules Agreement, acting solely as agents of T&N, the U.K. Asbestos Trustee and the U.S. Asbestos Trust, once the U.S. Asbestos Trustee has acceded to the Hercules Agreement. The Hercules Agreement contemplates that after the creation of the U.S. Asbestos Trust, the U.S. Asbestos Trustees will accede to the Agreement. Upon the trustee's accession, the U.S. Asbestos Trust will be deemed to be a party in place of the Asbestos Committee, the Futures Representative, Ferodo and GHI. Even after they will be substituted by the U.S. Asbestos Trust, the Asbestos Committee and the Futures Representative will maintain rights to: a. consult with the Payment Agents and the U.K. Asbestos Trustee in determining an appropriate reserve to pay claims handling costs or costs associated with obtaining the Hercules Recoveries; b. act unanimously and instruct the Payment Agents in investing any funds held prior to the establishment of the U.S. Asbestos Trust; c. consult with the U.K. Asbestos Trustee regarding any remuneration to be paid to the Payment Agents; d. notify the Payment Agents if no further Hercules Recoveries will be paid; and e. together with T&N and the U.K. Asbestos Trustee, terminate either or both Payment Agent(s) and participate in the appointment of successor Payment Agents. The competing interests of the U.S. and the U.K. Asbestos Trusts and T&N in the Hercules Recoveries necessitate a structure where the recoveries are administered and distributed by a third-party, Mr. O'Neill tells the Court. Pursuant to the terms of the CVAs -- and, after it comes into effect, the Debtors' Plan of Reorganization -- Mr. O'Neill says T&N will hold in trust all recoveries obtained under the Hercules Policy for the ultimate benefit of asbestos personal injury claimants. If T&N should receive any Hercules Recoveries, those amounts will be held in trust by T&N for the Payment Agents. Any Hercules Recoveries received by T&N will be held by T&N in an account in its name -- the Hercules Receipt Account -- from which the Payment Agents will have sole authority to transfer or withdraw funds. The Payment Agents will collect all Hercules Recoveries into an account to be established jointly in the names of the U.K. Asbestos Trustee and the U.K. Asbestos Trust -- the Hercules Waterfall Account. The Payment Agents will give instructions to the bank at which the Hercules Receipt Account is maintained to transfer all funds in the Hercules Receipt Account to the Hercules Waterfall Account on the day the funds are received, ensuring that Hercules Recoveries are aggregated as soon as possible into the Hercules Waterfall Account. A full-text copy of the Hercules Agreement is available for free at http://ResearchArchives.com/t/s?101e Agreement is Ministerial but Necessary GHI and Ferodo are parties to the Hercules Agreement because they may ultimately be determined to be entitled to a portion of the Hercules Recoveries and, accordingly, have an interest in preserving those recoveries pending the creation of the U.S. Asbestos Trusts, Mr. O'Neill explains. Federal-Mogul will enter into the Agreement as the parent company of all of the Debtors, and because it has certain responsibilities and rights under the Agreement. The Debtors assert that entering into the Hercules Agreement is largely ministerial, but nonetheless necessary. The Agreement provides for fair, third-party control over the Hercules Recoveries are allocated as contemplated in the U.K. Global Settlement, the CVAs and, when effective, the Debtors' Plan of Reorganization. Because the Debtors believe that the U.K. Asbestos Trust will be established before the U.S. Asbestos Trust, they believe it is necessary for the parties to enter into the Hercules Agreement now and provide for the possibility that T&N may receive Hercules Recoveries before the U.S. Trust is established. Hence, the Debtors, the Asbestos Committee and the Futures Representative want to enter into the Agreement because it is possible that the Hercules Recoveries will come into the Payment Agents' control before the U.S. Asbestos Trust is established. About Federal-Mogul Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FISCHER IMAGING: Files Chapter 11 Petition & Sells Assets --------------------------------------------------------- Fischer Imaging Corporation signed a definitive agreement to sell its RE&S business, which includes EP/SPX, VersaRad and Bloom, to Byers Peak, Inc. Fischer signed an asset purchase agreement with Byers Peak on Aug. 21, 2006. The assets to be sold are all of Fischer's right, title and interest in and to the VersaRad Line, the EPX/SPX Line and the Bloom Line including some related equipment, inventory (excluding Bloom finished goods inventory), general intangibles and intellectual property necessary to design, manufacture, market, sell, distribute, support and repair the Product Lines. Under the RE&S Agreement, Byers agreed, subject to the fulfillment of certain conditions, to purchase the RE&S Assets, and assume service contract and warranty repair obligations for a minimum purchase price of $260,000, to be paid over a period ending no later than one year from the date of closing of the transaction. In addition, Byers agreed to pay Fischer up to another $80,000, depending on the number of Bloom units sold by Byers during the year after the Closing. Under Delaware law, any sale of all or substantially all of Fischer's assets requires approval by the Company's stockholders. Fischer's Board has determined that the sale of the assets related to the RE&S Agreement is considered a sale of all or substantially all of Fischer's remaining assets. In order to avoid the expense and time delay involved in securing stockholder approval and in light of Fischer's deteriorating financial position, Fischer's Board elected to file a petition under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Colorado, and the petition was filed on Aug. 22, 2006. Fischer will immediately move to have the sale under the RE&S Agreement approved pursuant to Section 363(b) and (f) of the Bankruptcy Code. The Company expects it could be up to two months before the Closing is complete. Fischer's Board of Directors intends to either file a liquidating plan of reorganization or convert the Chapter 11 case to a liquidating case under Chapter 7 of the Bankruptcy Code after the closing of the RE&S Agreement. If a Liquidation Plan is filed, the Liquidation Plan must be approved by creditors, interest holders and the Bankruptcy Court after notice and a hearing. It is contemplated that the Liquidation Plan will provide for the liquidation or sale of all of Fischer's remaining assets and the distribution of the proceeds pursuant to the priority scheme allowed under the Bankruptcy Code. It is anticipated that in either a Chapter 11 or Chapter 7 liquidation, the liquidation process would occur over a one- to two-year period. Management is unable to predict whether any amounts will be available for distribution to stockholders. Fischer plans to continue to meet its RE&S service and warranty obligations until the completion of the sale of the RE&S Assets by utilizing the services of Byers Peak through a manufacturing services agreement and other contractors. "We believe this arrangement will provide our RE&S customers with continued customer support and availability of these products," said Dr. Gail Schoettler, Chairperson of the Board of Fischer. "We are excited about the opportunity and look forward to continuing to offer and provide the Fischer Imaging products, services, and warranty coverage to the RE&S markets," Doug Pruett, Vice President of Byers Peak, said. "We plan to provide the latest imaging upgrades for all existing ISS, SPX, and EPX systems, and offer complete ISS systems including the carbon fiber surgical imaging table along with an EP imaging system and Bloom Stimulator. Based on our core competencies, we see this opportunity as a logical progression for Byers Peak's long-range business strategy and believe we are capable of rejuvenating these products successfully." About Byers Peak Headquartered in Wheat Ridge, Colorado, Byers Peak, Inc. -- http://www.byerspeak.com/-- provides turnkey contract manufacturing and related services to the medical device, consumer and technology marketplaces in an FDA-registered and ISO9001:2000- certified facility. Byers Peak's focus is supplying electro- mechanical devices and subsystems at low to mid volumes. In addition to contract assembly services Byers Peak offers repair depot, refurbishment, distribution and field service. About Fischer Imaging Headquartered in Northglenn, Colorado, Fischer Imaging Corporation (Pink Sheets: FIMG) -- http://www.fischerimaging.com/-- services and manufactures medical imaging systems for the screening and diagnosis of disease. Fischer Imaging began producing general- purpose x-ray imaging systems in 1910 and is the oldest manufacturer of x-ray imaging devices in the United States. FOAMEX INTERNATIONAL: Court Extends Removal Period to November 10 ----------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware extended until Nov. 10, 2006, the period within which Foamex International Inc. and its debtor-affiliates must remove civil actions pending as of their chapter 11 filing. Judge Walsh clarifies that the Court order is without prejudice to any position the Debtors may take regarding whether Section 362 of the Bankruptcy Code applies to stay any litigation pending against them. Judge Walsh also maintains the Debtors' right to seek further extensions of the time within which they must remove civil actions pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure. 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. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Can Assume ACE American Insurance Policies ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware allowed Foamex International Inc. and its debtor-affiliates to assume their insurance agreements with ACE American Insurance Company. The Debtors are deemed to have assumed the prepetition insurance policies and related agreements provided by ACE American Insurance Company as of August 7, 2006. As reported in the Troubled Company Reporter on Aug. 1, 2006, subject to the Debtors' assumption of the Insurance Agreements, ACE American has agreed to: -- refund the Debtors $1,323,069, representing adjustments to the pledged cash collateral, reimbursements and premiums they previously paid; and -- authorize the reduction of the Letters of Credit by $1,016,993. Judge Walsh notes that there are no defaults that must be cured under the Insurance Agreements in connection with the assumption. Judge Walsh also rules that all payment and obligations owing to ACE American under the Insurance Agreements are accorded administrative priority status. 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. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FUNCTIONAL RESTORATION: Sells All Assets to Nato for $12.28 Mil. ---------------------------------------------------------------- The United States Bankruptcy Court for the Central District of California approved the sale of substantially all of Functional Restoration Medical Center, Inc.'s assets to Nato Fund, Inc., for $12,280,000 plus the assumption of certain liabilities. Daniel A Lev, Esq., at SulmeyerKupetz, P.C., at, Los Angeles, Calif., told the Court that since the Debtor's bankruptcy filing, the Debtor has attempted to improve its business operations in the hopes of restructuring its business around certain core centers. However, due to the external pressures placed on the company, the Debtor determined that a successful reorganization could be best achieved through a sale of the entire business. Nato initially offered around $10.21 million in cash, stock and assumption of the Debtor's debts, $9.913 million of which is in cash but a competing bid by FRI I prompted Nato to raise its bid. Headquartered in Encino, California, Functional Restoration Medical Center, Inc., is the second largest owner and operator of MRI centers in Southern California. The Debtor filed for chapter 11 protection on Mar. 9, 2006 (Bankr. C.D. Calif. Case No. 06- 10306). Daniel A. Lev, Esq., at SulmeyerKupetz, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts between $10 million and $50 million. GIANT INDUSTRIES: Earns $49.2 Million in Quarter Ended June 30 -------------------------------------------------------------- For the three months ended June 30, 2006, Giant Industries, Inc. reported net earnings of $49,238,000 from net revenues of $1,145,279,000. At June 30, 2006, the Company had total assets of $1,084,440,000, total liabilities of $646,048,000, and total stockholders' equity of $438,392,000. A full-text copy of the Company's financial report for the three months ended June 30, 2006 is available for free at: http://researcharchives.com/t/s?100b Headquartered in Scottsdale, Arizona, Giant Industries, Inc. -- http://www.giant.com/-- is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports, and a chain of retail service station/convenience stores in New Mexico, Colorado, and Arizona. Giant is also the parent Company of Phoenix Fuel Co. Inc. and Dial Oil Co., both of which are wholesale petroleum products distributors. * * * Giant Industries Inc's senior subordinate debt and long-term corporate family rating carry Moody's B3 and B1 ratings respectively. The ratings were placed with a stable outlook. The Company's long-term local and foreign issuer credits carry Standard & Poor's B+ ratings with a positive outlook. GLOBAL DOCUGRAPHIX: Wants to Sell Remaining Assets Valued at $3M ---------------------------------------------------------------- Global DocuGraphix, Inc., and Global DocuGraphix USA, Inc., ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to sell their remaining assets free and clear of liens. Michael P. Cooley, Esq., at Gardere Wynne Sewell LLP, in Dallas, Texas, reminds the Court that after an extensive marketing process and court-approved auction, the Court approved the sale of a substantial portion of the Debtors' assets to various buyers on August 1, 2006. All sales closed on August 7, 2006. In the aggregate, approximately $10.1 million in inventory, receivables, FF&E and the capital stock of TopForm Software, Inc. were sold for total cash proceeds of approximately $9.1 million. To complete the orderly liquidation of the Debtors' estates, approximately $3 million in assets remain to be sold. In round numbers, these assets, excluding the stock of Document Imaging, Inc. d/b/a GDX Data: (1) $2.0 million in accounts receivable; (2) $500,000 in inventory; and (3) an unknown (but relatively minimal) quantity of furniture, fixtures and equipment, vehicles and other miscellaneous assets. These assets are associated with the Debtors' approximately five remaining, unsold divisions. In addition, GDI still owns 100% of the outstanding common stock of GDX Data. The Debtors also ask the Court to approve procedures governing the sale of those assets. A copy of the proposed procedures is available for free at http://ResearchArchives.com/t/s?100d The Debtors also want to pay sale-related incentive fee to Alan Bratton, the Debtors' President and Chief Executive Officer. General Electric Capital Corporation and Antares Capital Corporation, the Debtors secured lenders, have agreed to these sale-related incentive compensation package for Mr. Bratton over and above his existing compensation: (a) $45,000 upon the lenders' receipt of all cash proceeds payable in respect of the sales consummated on August 4 and 7, 2006, excluding the deferred portion of the purchase price payable by BNBS, Inc, in each of the two sale transactions to which it is a party; (b) $85,000 upon the sale, liquidation or other disposition of: -- all or substantially all the remaining assets; and -- the stock of, or all or substantially all of, GDX Data; provided that Mr. Bratton continues to offer his services to assist in the sale, liquidation or other disposition. Headquartered in Plano, Texas, Global DocuGraphix, Inc. -- http://www.gdxinc.com/-- is a commercial printing company offering products and solutions for printing, advertising, marketing, office, and document management. The Company and its subsidiary, Global DocuGraphix USA, Inc., filed for chapter 11 protection on July 18, 2006 (Bankr. N.D. Tex. Case No. 06-32889) Holland N. O'Neil, Esq., and Richard McCoy Roberson, Esq., at Gardere, Wynne and Sewell LLP represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported assets and debts totaling between $10 million and $50 million. GLOBAL HOME: D.L. Peterson Wants Leased Vehicles Returned --------------------------------------------------------- D.L. Peterson Trust asks the United States Bankruptcy Court for the District of Delaware to compel Global Home Products, LLC, to surrender possession of all vehicles leased from the Trust back to the Trust. John D. Demmy, Esq., at Stevens & Lee, PC, in Wilmington, Del., tells the Court that the Debtor leased around 25 vehicles from the Trust under an open-end lease agreement. The Debtor rejected the lease agreement in June 2006. But only eight vehicles have been returned. The Trust demanded for the return of the other 17 vehicles in letter dated July 11, 2006, but the Debtor didn't give a substantive response. The Trust also asks the Court to extend the deadline for it to file a rejection claim. Mr. Demmy explains that the Trust cannot specifically calculate its rejection damage claim until all the vehicles have been recovered and disposed of in accordance with the lease. 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. GOLDSPRING INC: June 30 Balance Sheet Upside-Down by $14 Million ---------------------------------------------------------------- Goldspring, Inc., filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 14, 2006. The Company reported a $1,111,736 net loss on $125,454 of revenues for the second quarter ended June 30, 2006, compared with a $2,793,623 net loss on $691,861 of revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $3,836,619 in total assets and $17,850,973 in total liabilities, resulting in a $14,014,354 shareholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $908,858 in total current assets available to pay $17,124,160 in total current liabilities coming due within the next 12 months. Unfulfilled Note Conversion Requests During July and early August 2006, the Company received conversion notices from investors to convert principal and interest of certain convertible debentures valued at $1,296,116 into 140,648,283 shares of Common Stock. As the Company had issued all of its authorized Common Stock by the end of June 2006, it was unable to honor the conversion notices and is therefore in default of its obligations under such debentures. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?1017 Going Concern Doubt As reported in the Troubled Company Reporter on May 30, 2006, Jewett, Schwartz & Associates, in Hollywood, Florida, raised substantial doubt about Goldspring, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the Company's operating losses and working capital deficit. About Goldspring Goldspring, Inc. (OTCBB:GSPG.OB) -- http://www.goldspring.us/-- is a North American precious metals mining company with an operating gold and silver mine in northern Nevada. The primary nature of its business is the exploration and development of mineral producing properties. H.J. HEINZ: High Debt Levels Cue Moody's to Downgrade Ratings ------------------------------------------------------------- Moody's Investors Service downgraded the long term debt ratings of H.J. Heinz Company and its subsidiaries' senior unsecured debt to Baa2 from Baa1, preferred stock to Ba1 from Baa3 and retained the negative rating outlook. The Prime-2 short-term rating of H.J. Heinz Company was affirmed. This rating action concludes the review that began on June 5, 2006 following Heinz's announcement of a 16.7% dividend increase and its plan to repurchase $1 billion of its shares over the next two years as part of a new aggressive restructuring plan. This latest plan was crafted in response to an earlier, even more aggressive, proposal submitted to the Heinz board by an investor group led by shareholder Nelson Peltz who controls 5.4% of Heinz's shares. The Peltz team could win seats on the board of directors, an issue that is expected to be settled next month after all the ballots are tallied. The downgrade reflects: 1) Heinz's adoption of a more aggressive financial policy that includes a high dividend payout and debt-financed share repurchases; 2) overall weak credit metrics for the Baa category that are likely to deteriorate further due to higher debt levels; and 3) the risk of greater short-term shareholder focus at the expense of bondholders following the challenges to existing management strategy mounted by the Trian Group. The global strength of the Heinz brand, moderate product and geographic diversity, good cash flow generation and strong liquidity are all better than Heinz's assigned senior unsecured rating of Baa2. However, Heinz's ratings are driven down by uneven performance in key operating segments, such as U.S. foodservice, and in Europe; an inconsistent business strategy, in Moody's view, that has led to a series of major restructurings, acquisitions and asset sales; and an aggressive financial policy that has favored shareholders at a time when debt protection has been deteriorating, and which scores at the Ba level. The negative outlook reflects the uncertain outcome of ongoing challenges to the current management team being mounted by Nelson Peltz's Trian Group, which could result in more aggressive financial policy, greater risk in the execution of its operating strategy, and changes in management direction. Heinz has little cushion in the ratings for further share repurchases, large acquisitions, or weakening operating performance. A downgrade could occur if financial policy were to become more aggressive and the execution risk in the company's operating strategy were to increase as a result of shareholder challenges to the current management team and board. Additionally, ratings could be lowered if there were deterioration in Heinz's core businesses, or if the company were unable to achieve the operating performance goals outlined in its plan. Quantitatively, ratings could be lowered if Retained Cash Flow Debt fell below 12% or EBIT fell materially below 4. The ratings outlook could return to stable if Heinz demonstrated stability in the composition and operating performance of its core portfolio; and moderated its financial policy to strike a more equitable balance between shareholder and bondholder interests. Quantitatively, Heinz would need to achieve Retained Cash Flow Debt of at least 15% and EBIT approaching 5 before the outlook would stabilize. Founded in 1869, H. J. Heinz Company markets and produces branded foods in ketchup, condiments, sauces, meals, soups, seafood, snacks and infant foods. Key brands include Heinz(R) Ketchup, sauces, soups, beans, pasta and infant foods, Ore-Ida(R) French Fries and roasted potatoes, Boston Market(R) and Smart Ones(R) meals and Plasmon(R) baby food. Heinz's 50 companies have number-one or number-two brands in 200 countries. H.J. Heinz Company is located in Pittsburgh, Pennsylvania. HARDWOOD P-G: Selling Pennsylvania Property for $98,500 ------------------------------------------------------- Hardwood P-G Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Western District of Texas to sell their real property in Oil City, Pennsylvania free and clear of liens, claims, encumbrances and other interests. The Court approved the sale of the real property for $98,500. As reported in the Troubled Company Reporter on Aug. 9, 2006, The Oil City facility has been closed and the Debtors have no need for the property. The Oil City facility used to house the Debtors' employees in their out of town assignments. The Debtors received a proposal from David Hippensteil to purchase the property for $80,250 in cash, less the expenses and commissions to be paid in full in good funds by Aug. 25, 2006. Headquartered in San Antonio, Texas, Hardwood P-G, Inc., aka Custom Forest Products -- http://www.customforestonline.com/-- sell and deliver local and exotic hardwoods. The Company and two debtor-affiliates filed for chapter 11 protection on Jan. 9, 2006 (Bankr. W.D. Tex. Case No. 06-50057) David S. Gragg., Esq., at Langley & Banack, Inc., represents the Debtors. The firm of Haynes and Boone LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $37 million in total assets and $80,417,456 in total debts. HINES NURSERIES: Reduced Liquidity Cues Moody's to Lower Ratings ---------------------------------------------------------------- Moody's Investors Service lowered its ratings on Hines Nurseries including the company's corporate family rating to B3 from B2, $100 million senior unsecured revolving credit facility to B2 from B1 and $175 million senior unsecured notes to Caa2 from B3. Moody's also revised the ratings outlook to negative from stable. These actions follow the company's announcement of second quarter results which showed continued reductions in revenue, earnings and free cash flow and materially reduced liquidity. Hines' B3 corporate family rating reflects the company's extremely weak financial metrics, limited free cash flow and inherent volatility in its revenues and earnings given the highly seasonal and competitive commercial nursery industry. Hines' rating is supported by its strong market position as one of only two national players in a highly fragmented and regionally-focused industry, as well as its long-standing, albeit highly concentrated position, with key home center and mass retailers. In addition, Moody's recognizes the company's long operating history, proven service capabilities, and reputation for quality and innovation. While Moody's notes that management has taken several necessary steps to realign the business and has used proceeds from asset sales to reduce debt, structural changes in the way the company sells and manages certain inventory with its largest retailer combined with heightened competitive activity from regional participants, has significantly increased the operating risks of the company's core business. In addition, Hines faces significant capital investment requirements over the next several years at a time of breakeven earnings performance which further reduces the likelihood of significant debt reduction. While additional asset sales are expected, Moody's notes that revenues will also decline due to the loss of these businesses albeit margins are likely to improve as these operations were operating at breakeven levels. More importantly, Hines liquidity has been significantly limited by the restrictions on availability under the company's asset based revolver with proceeds from potential asset sales likely needed to fund operating losses and seasonal working capital needs or repay bank borrowings. Moody's does not anticipate any meaningful debt reduction over the near-term. The negative outlook reflects the potential for further margin deterioration due to competitive market conditions, retailer initiatives, as well as the near-term financial challenges the company faces in complying with requirements under the company's revolving credit agreement to build liquidity and reduce debt through asset sales by December 2006. The widening in the spread to two notches for the senior unsecured notes reflects the potential for a greater loss in a distressed scenario. Further negative rating actions could be possible if Hines financial performance continues to deteriorate from the company's latest financial plan resulting in negative free cash flow for an extended period of time or its access to short-term financing becomes restricted. Potential drivers under this scenario could be heightened competitive activity, a loss or reduction in sales from an important retail customer, or failure to complete required asset sales in a timely manner. An upgrade to the company's ratings is unlikely in the near-term given the expectation of limited debt reduction needed to provide more cushion against the inherent volatility of its business. To stabilize the outlook, Hines would need to demonstrate significant improvement in earnings and generate positive free cash flow while reducing leverage to below 7.5x. In addition, Moody's would also need to see some stabilization in the current competitive market conditions and a more permanent resolution of regarding the company's short term financing options. Headquartered in Irvine, California, Hines Nurseries, Inc. is the largest commercial nursery operator in the United States. The company's 13 strategically located nurseries produce approximately 5,500 plan varieties and serve 8,000 retail and commercial customer locations. Hines is a wholly-owned subsidiary of Hines Horticulture, Inc, which in turn is 53.4% owned by affiliates of Madison Dearborn Partners. Revenues and adjusted EBITDA for the last twelve month period ended June 2006 were approximately $299 million and $14 million, respectively. HOLLINGER INC: Provides Supplemental Financial Data as of Aug. 4 ---------------------------------------------------------------- Hollinger Inc. has been unable to file its annual financial statements, Management's Discussion & Analysis and Annual Information Form for the years ended Dec. 31, 2003, 2004 and 2005 on a timely basis as required by Canadian securities legislation. Hollinger has not filed its interim financial statements for the fiscal quarters ended March 31, June 30 and Sept. 30 in each of its 2004 and 2005 fiscal years. Also, Hollinger has not filed its financial statements for the period ended March 31, 2006. The Audit Committee is working with the auditors, and discussing with regulators, various alternatives to return its financial reporting requirements to current status. Supplemental Financial Information As of the close of business on Aug. 4, 2006, Hollinger and its subsidiaries - other than Sun-Times and its subsidiaries - had approximately $40.1 million of cash or cash equivalents on hand, including restricted cash. At that date, Hollinger owned, directly or indirectly, 782,923 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Sun-Times. Based on the Aug. 4, 2006 closing price of the shares of Class A Common Stock of Sun-Times on the NYSE of $8.09, the market value of Hollinger's direct and indirect holdings in Sun-Times was $127.6 million. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Sun-Times is being held in escrow in support of future retractions of its Series II Preference Shares. All of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Sun-Times is pledged as security in connection with the senior notes and the second senior notes. In addition to the cash or cash equivalents on hand, Hollinger has previously deposited approximately CDN$8.8 million in trust with the law firm of Aird & Berlis LLP, as trustee, in support of Hollinger's indemnification obligations to six former independent directors and two current officers. In addition, CDN$753,000 has been deposited in escrow with the law firm of Davies Ward Phillips & Vineberg LLP in support of the obligations of a certain Hollinger subsidiary. As of Aug. 4, 2006, there was approximately $121.3 million aggregate collateral securing the $78 million principal amount of the Senior Notes and the $15 million principal amount of the Second Senior Notes outstanding. Ravelston Receivership and CCAA Proceedings On April 20, 2005, the Court issued two orders by which The Ravelston Corporation Limited and Ravelston Management Inc. were: a) placed in receivership pursuant to the Bankruptcy & Insolvency Act (Canada) and the Courts of Justice Act (Ontario); and b) granted protection pursuant to the Companies' Creditors Arrangement Act (Canada). RSM Richter Inc. was appointed receiver and manager of all of the property, assets and undertakings of Ravelston and RMI. Ravelston holds approximately 16.5% of the outstanding Retractable Common Shares of Hollinger. On May 18, 2005, the Court further ordered that the Receivership Order and the CCAA Order be extended to include Argus Corporation Limited and its five subsidiary companies which collectively own, directly or indirectly, 61.8% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger (collectively, Argus Corporation Limited and its five subsidiary companies, as well as Ravelston and RMI are referred to as the "Ravelston Entities"). On June 12, 2006, the Court appointed Richter as receiver and manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly owned subsidiary of Ravelston. The Ravelston Entities own, in aggregate, approximately 78% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. The Court has extended the stay of proceedings against the Ravelston Entities to September 29, 2006. About Hollinger Inc. Toronto, Ontario-based Hollinger Inc.'s (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- principal asset is its 66.8% voting and 17.4% equity interest in Hollinger International, a newspaper publisher with assets, which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada. Litigation Risks Hollinger, Inc., faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on September 7, 2004; (3) a $425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a November 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a $5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on November 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC INTEGRATED HEALTH: Acquisition Wants to Correct U.S. Pact Error --------------------------------------------------------------- As of February 2, 2000, I.H.S. Acquisition No. 171, Inc., was the licensee for a specialty care hospital known as HSH El Paso. IHS Acquisition also held the Medicare provider agreement for the hospital. IHS Acquisition is owned by Lyric Health Care Holdings III, Inc., which is owned by Lyric Health Care LLC, none of which are debtors in Integrated Health Services, Inc.' Chapter 11 cases. IHS Acquisition had a pending appeal of its Medicare Program reimbursement before the Provider Reimbursement Review Board pursuant to 42 U.S.C. Section 1395 and 42 CFR Section 405.1801, docketed as PRRB Case No. 99-1342, involving fiscal year ended March 31, 1996, relates Louis J. Capozzi, Jr., Esq., at Capozzi and Associates, P.C., in Harrisburg, Pennsylvania. In its May 12, 2003 Order confirming the Debtors' Amended Joint Plan of Reorganization, the U.S. Bankruptcy Court for the District of Delaware authorized the Debtors and the holders of the United States Claims to enter into a Global Settlement Agreement included in the Plan Supplement. Mr. Capozzi says that IHS Acquisition, Lyric Health Care Holdings and Lyric Health Care were not parties to the Global Settlement. The Settlement was intended to result in the withdrawal of many PRRB appeals involving Integrated Health-covered entities, which are defined in the Settlement as the facilities for which a Debtor in the bankruptcy cases was the named provider or for which a Debtor was the owner of the named provider as of the Petition Date. One of the PRRB appeals that is included in exhibit E of the Global Settlement is the FYE March 31, 1996 appeal for HSH-El Paso, under Provider No. 45-2035 and Case No. 99-1342. By correspondence dated October 2, 2003, W. Bradley Bennett, IHS' chief financial officer, requested the PRRB to dismiss Case No. 99-1342 pursuant to the Settlement, which the PRRB did. The Global Settlement did not include as subject to dismissal other PRRB matters involving IHS Acquisition then pending, including the HSH El Paso appeal for FYE March 31, 1997, then pending at PRRB Case No. 00-1463 and other PRRB appeals involving other facilities owned by Lyric Health Care Holdings and Lyric Health Care LLC, including Case Nos. 00-0415 and Case No. 98-2559, Mr. Capozzi relates. Under the Global Settlement, the Debtors have the authority to have the pending PRRB appeals dismissed, however, IHS Acquisition and Lyric Health Care Holding III, Lyric Health Care LLC had not given authorization to dismiss any pending PRRB appeals as they relate to facilities they owned and operated. Accordingly, IHS Acquisition asks the Bankruptcy Court to declare that the inclusion of HSH El Paso's FYE March 31, 1996 PRRB appeal in the Global Settlement was an error and declare that the inclusion of that appeal is void and cannot be enforced in any other proceeding. Mr. Capozzi notes that the Reservation Clause in the Global Settlement expressly limits the application of the Settlement to covered entities, and the Settlement is internally inconsistent concerning the status of HSH El Paso, since it includes one of the facility's appeals in Exhibit E but excludes the same facility's appeal for the next fiscal period. IHS Acquisition's PRRB appeal for FYE March 31, 1997 has been amicably resolved without a hearing and it believes that it can similarly resolve the FYE March 31, 1996 appeal issues once the appeal is reinstated. Integrated Health was able to dismiss IHS Acquisition's FYE March 31, 1996 appeal before the PRRB only because IHS formerly managed the facility involved and had been IHS Acquisition's "legal representative" for that appeal, Mr. Capozzi relates notes. By correspondence dated April 20, 2006, IHS Acquisition requested the concurrence of the parties to the Global Settlement that the inclusion of HSH El Paso's FYE March 31, 1996 PPRB at Case No. 99-1342 was an error by the parties and should be corrected to permit the facility's PRRB appeal to be reinstated pursuant to 42 CFR Section 405.1885. The PRRB has requested that the issue about the error be resolved among the parties if possible prior to IHS Acquisition's filing of a petition for reopening of Case No. 99-1342, which must be filed by October 2, 2006, three years after the PRRB dismissed the appeal pursuant to the request filed by Mr. Bennett. IHS Acquisition maintains that the only logical explanation for the error of including PRRB Case No. 99-1342 in the Global Settlement is a mutual mistake of facts by the parties to the Settlement. Responses (1) IHS Liquidating LLC IHS Acquisition appears to be asking the Court to modify its Order confirming the Debtors' Plan and the Global Settlement Agreement, which could impact IHS Liquidating LLC and the creditors entitled to receive distributions, notes Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP in Wilmington, Delaware. Mr. Brady asserts that IHS Acquisition's request is effectively time-barred because almost three years have passed since the Plan and the Global Settlement became effective and the Plan has been substantially consummated and cannot be modified. This contention, according to Mr. Brady, is supported by Section 1144 of the Bankruptcy Code that provides a six-month window to revoke a confirmation order on grounds of fraud, and Rule 60(b) of the Federal Rules of Civil Procedure that provides a one-year window to revoke other types of orders on grounds of mistake or fraud. Mr. Brady also notes that IHS Acquisition's apparent request to seek declaratory relief with respect to the effect of the Global Settlement on its alleged claims is procedurally improper because Part VII of the Federal Rules of Bankruptcy Procedure requires that declaratory relief be sought by adversary proceeding. At a minimum, the Court should require IHS Acquisition to follow the FRBP so that the parties whose rights may be implicated can receive proper notice and a reasonable opportunity to take discovery and litigate the matter, Mr. Brady argues. IHS Liquidating says that it will not object to the IHS Acquisition's request if it receives assurance that the Motion will not directly or indirectly impact it under any circumstances. Until then, IHS Liquidating asks the Court to deny the Motion. (2) United States The United States of America, on behalf of the Centers for Medicare and Medicaid Services, asks the Court to deny IHS Acquisition's request with prejudice, or, in the alternative, deny its request without prejudice to it filing an adversary proceeding. IHS Acquisition is seeking to invalidate a term of the Settlement between IHS and the United States so that it may pursue its claims against the United States before the PRRB, notes Jeannine R. Lesperance, Esq., at the Civil Division of the United States Department of Justice, in Washington, D.C. The request "should be denied because the remedy IHS Acquisition seeks "would expose the government to double liability on a claim it already paid." Lyric Health Care, LLC, is bound by IHS Debtors' settlement of the HSH-El Paso appeal under the doctrine of apparent authority, Ms. Lesperance contends. Ms. Lesperance asserts that Integrated Health warranted that it had the authority to settle the HSH-El Paso appeal, which is consistent with IHS Acquisition's admission that the Debtor was its authorized representative for the appeal. Because the Debtor and IHS Acquisition both led the United States to believe that the Debtor was authorized to settle the HSH-El Paso appeal, any remedy for mistake, if there was a mistake, must be fashioned between the Debtor and IHS Acquisition, and not against the United States, she argues. The United States also objects to IHS Acquisition's request for declaratory relief because under Rule 7001 of the Federal Rules of Bankruptcy Procedure, the movant cannot bring its challenge via a motion, but must file an adversary proceeding. Ms. Lesperance notes that in an adversary proceeding, IHS Acquisition will be required to identify against whom, specifically, it seeks relief, to specify its cause of action, and the defendant parties will have an opportunity to plead specific defenses and to develop the defenses, and challenge IHS Acquisition's allegations, through formal discovery. Additionally, there is a serious question of whether IHS Acquisition's motion is barred by laches, Ms. Lesperance points out. Without a complaint and pleading of specific causes of action, it is impossible to know what formal statute of limitations applies to IHS Acquisition's bankruptcy claims. By waiting three years to challenge the Settlement before the Court after the Plan and the Settlement has become effective, and most of their terms consummated, IHS Acquisition's attempt to partially void the Settlement does not serve equity, she asserts. IHS Acquisition Reacts to Objections Mr. Capozzi argues that IHS Acquisition's filing of a motion rather than an adversary proceeding is supported by the analysis of the Third Circuit Court in In re O'Brien Environmental Energy Inc., 188 F.3d 116, 124, 3rd Cir. 1999. In the O'Brien ruling, the U.S. Court of Appeals determined that in a contested case under the Bankruptcy Code not otherwise governed by the rules, Rule 9014 supports that use of motion practice. IHS Acquisition also clarifies that, contrary to the allegations of the United States and IHS Liquidating, it is not seeking the revocation of the Court' May 12, 2003 Order or the confirmed Plan. IHS Acquisition says that it is only asking a declaration that the Global Settlement and Plan cannot be construed to include the HSH-El Paso 1996 appeal because nothing in the Settlement, by its own terms can apply to any provider for which a Debtor or a facility owned by a Debtor was not the named provider on the provider agreement when the matter was begun in 2000. IHS Acquisition also maintains that the Motion does not require the United States to make duplicate payments because the $50,694 that it paid to the IHS Debtors under the Global Settlement in connection with the mistaken inclusion of the HSH-El Paso appeal in the Settlement is actually a settlement portion of the amount that CMS owes to Debtors. CMS's records show that it paid the IHS Debtors $50,694 to resolve the HSH-El Paso 1996 appeal as part of the Settlement. In response to the United States' apparent authority argument, Mr. Capozzi notes that the withdrawal of the HSH-El Paso appeal by the IHS Debtors was based on the Global Settlement and not on any authorization or act by IHS Acquisition. Mr. Capozzi adds that, pursuant to 42 CFR Section 405.1885, IHS Acquisition is permitted to seek reopening of its PRRB appeal and federal regulations do not preclude IHS Acquisition from seeking relief within the time period provided by law where the United States has made an error with regards to the Settlement. Moreover, Mr. Capozzi points out, the United States presented no facts that permit any conclusion other than error by the parties in placing the HSH-El Paso 1996 appeal in Exhibit E of the Global Settlement. CMS and Integrated Health never intended to resolve outstanding Medicare appeals for providers that were not IHS-covered entities. Under the definition in the Reservation Clause, agreed to by the United States and adopted by the Court, HSH-El Paso is not an "I.H.S. covered entity." The parties to the agreement made a mistake, Mr. Capozzi reiterates. Accordingly, IHS Acquisition asks the Court to deny the United States' objection. In addition, according to Mr. Capozzi, the United States' objection effectively resolves IHS Liquidating's concerns. He notes that the United States appears to agree that IHS Acquisition has sought no remedy against IHS Liquidating, and there appears to be no way that the Motion could impact IHS Liquidating under any circumstances. Thus, IHS Acquisition maintains that IHS Liquidating should withdraw its objection. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTEGRATED HEALTH: Objects to Travelers' $3,919,891 Priority Claim ------------------------------------------------------------------ Integrated Health Services, Inc., entered into prepetition agreements with Travelers Indemnity Company and certain of its affiliates to provide the Debtors with workers' compensation insurance coverage. Travelers eventually filed a claim for $3,919,891 against the Debtors, representing insurance premiums due for workers' compensation coverage. Travelers asserted its claim as a priority claim under Section 507(a)(4) of the Bankruptcy Code and represents contributions to an employee benefit plan. The Debtors object to the status of Travelers' claim, asserting that it should be classified as a general unsecured claim. The Debtors also want the claim amount reduced to $3,033,255, as reflected in their books and records. The Debtors also maintain that the claim should not be allowed against all the Debtors since Travelers' prepetition agreements were only with IHS. Bankruptcy Court Order On February 24, 2003, the U.S. Bankruptcy Court for the District of Delaware held that Travelers' claim is a contribution to an employee benefit plan and is therefore entitled to priority status under Section 507(a)(4). Judge Walrath noted that Section 507(a)(4) grants priority to allowed unsecured claims for contributions to an employee benefit plan. The Bankruptcy Court found that the premiums due under the agreements are contributions to an employee benefit plan, which means that Travelers' claim enjoys priority under Section 507(a)(4). The Debtors pointed to legislative history as basis to deny priority status to Travelers' claim. The United States Supreme Court, in United States v. Embassy Restaurant, 359 U.S. 29, 1958, held that priority for wages in Section 507(a)(4) did not include employee benefits. The Supreme Court ruled that the United States House and Senate Reports state the priority granted by Section 507(a)(4) is limited to claims for contributions to employee benefit plans, including pension plans, health or life insurance plans. The Bankruptcy Court, however, noted that the Debtors' argument of legislative history is based on the decisions of Eight, Tenth and Sixth Circuit Courts that seized upon the reference to labor contract negotiations to create a narrow definition of employee benefit plans to include only wage substitutes that are the result of labor contract negotiations. The Circuit Courts' interpretation goes beyond the legislative history and creates an exception to Section 507(a)(4), the Judge Walrath said. The Bankruptcy Court held that legislative history does directly state that workers' compensation is not included in Section 507(a)(4), nor does it state that covered employee benefits must be wage substitutes or arise from labor contract negotiations. There is no expresses legislative intent to exclude workers' compensation benefits from the language of Section 507(a)(4), Judge Walrath stated. The Debtors also argued that, to fit Section 507(a)(4), the employee benefits must be the result of bargaining between the Debtor and the employee. The Court, however, noted that the argument is premised on the reference to labor contract negotiations in the House and Senate Reports. According to Judge Walrath, the reference to labor contract negotiations is given by way of example, not as the exclusive type of employee benefit for which priority is conferred. The Debtors took an appeal from Judge Walrath's February 24, 2003 order, entitling Travelers' claim to priority status under Section 507(a)(4), to the United States District Court for the District of Delaware. The Debtors asked the District Court to determine: Whether the Bankruptcy Court erred when it held that a debtor's payments of workers' compensation insurance premiums constitute contributions to an employee benefit plan arising from services rendered and that Travelers' Claim for the Debtor's unpaid workers' compensation insurance premiums for the 1999 policy year was therefore entitled to priority status under Section 507(a)(4) of the Bankruptcy Code? The Honorable Gregory M. Sleet of the District Court for the District of Delaware states that in Howard Delivery Serv. versus Zurich Am. Ins. Co., 547 U.S. ___, 126 S. Ct. 2105, 2109 (2006), the Supreme Court ruled that premiums owed by an employer to a workers' compensation carrier do not fit within Section 507(a)(4), as amended by Section 507(a)(5). In light of the Supreme Court's ruling, Judge Sleet rules that the Bankruptcy Court's order of February 23, 2003, be reversed and remanded for further consideration. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INT'L SHIPHOLDING: Operating Losses Cue Moody's to Lower Ratings ---------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of International Shipholding Corporation -- Corporate Family Rating to B2 from B1, senior unsecured Bond/Debeture to Caa1 from B1. The outlook has been changed to negative from stable. These downgrades were prompted by operating losses in ISC's Liner and Rail-ferry segments during a period of significant capital expenditures, including for the soon-to-be-abandoned Rail- ferry terminal in New Orleans. Free cash flow over the near term is likely to be modest, in Moody's view, because of continuing weak performance in the Liner and Rail-ferry units as well as capital spending that remains high by historic levels. Moody's believes that this weakening financial performance could limit ISC's alternatives to manage the $58 million of debt maturing during 2007, and potentially make the company more reliant on availability of the $50 million revolver. Moody's notes that of the 2007 maturities, approximately $48.5 million of 7.75% senior unsecured notes mature in October 2007. As a result of the operating losses and the capital investment program, EBIT per Interest, and Debt per EBITDA increased to 6.6x from 5.9x. EBIT margins have fallen to 5.2% from 8.7% and free cash flow generation has turned negative over this same 18 month period. The Notes were downgraded three notches to Caa1, as the Notes are structurally subordinated to the senior secured and senior unsecured obligations of ISC's operating subsidiaries. None of the subsidiaries provide guarantees of the Notes. The negative outlook reflects Moody's belief that the Liner service and the Rail-ferry operations could be challenged to achieve profitability over the near term. Earnings of ISC's other segments, including the profitable Time-charter and Contract of Affreightment segments, are expected to remain solid but still not sufficient to generate meaningful free cash flow on a consolidated basis. If free cash flow generation lags significantly behind ISC's near term operating plans and the company draws under the revolver to fund the terminal, availability under the revolver could decrease. The ratings could be downgraded if the Liner service and Rail- ferry businesses do not return to profitability over the near term, measured by gross voyage profits, or if Debt per EBITDA increases above 7x. Favorable rating action could result if the Liner and Rail-ferry segments were to become significantly profitable, resulting in the generation of positive free cash flow on a full year basis and significant improvements in coverage and leverage. The achievement of Debt per EBITDA below 5x and EBIT per Interest above 1.5x could result in an upward rating action. International Shipholding Corporation, headquartered in New Orleans, Louisiana, is a holding company whose subsidiaries operate a diversified fleet of ocean-going vessels that serve mainly niche shipping markets. INVERNESS MEDICAL: Posts $10 Mil. Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Inverness Medical Innovations Inc. incurred a $10,556,000 net loss from net revenues of $139,713,000 for the three months ended June 30, 2006. The Company's balance sheet at June 30, 2006 showed total assets of $948,869,000, total liabilities of $429,295,000 and total stockholders' equity of $519,574,000. A full-text copy of the Company's financial report for the three months ended June 30, 2006 is available for free at: http://researcharchives.com/t/s?100c Based in Waltham, Massachusetts, Inverness Medical Innovations, Inc. -- http://www.invernessmedical.com/-- makes diagnostic products including home pregnancy tests and fertility monitors. The Company also manufactures consumer vitamins and nutritional products. * * * Inverness Medical Innovations' long-term corporate family rating and subordinated debt carry Moody's B3 and Caa3 ratings respectively. The ratings were placed with negative outlook. The Company's long-term local and foreign issuer credits carry Standard & Poor's B rating with a stable outlook. LA PETITE ACADEMY: Inks New $215 Million Secured Credit Facilities ------------------------------------------------------------------ La Petite Academy, Inc., a wholly-owned subsidiary of LPA Holding Corp., entered into new senior secured credit facilities. The new senior secured credit facilities provides for a: * five-year $20 million revolving credit facility, * six-year $110 million delayed draw first lien term loan facility and * seven-year $85 million delayed draw second lien term loan facility. The Company disclosed that approximately $48.25 million of the new first lien term loan facility was used on Aug. 17, 2006 to repay the Company's existing senior secured credit facilities. The remaining $61.75 million of the new first lien term loan facility, plus the entire $85 million second lien term loan facility, are expected to be used to finance the Redemption of its outstanding 10% Senior Notes due 2008. Redemption of Existing Notes The Company also disclosed that, it issued a voluntary Notice of Redemption, to redeem all of its outstanding 10% Senior Notes due 2008, on Sept. 18, 2006 at a redemption price of 100% of the outstanding principal amount, plus accrued but unpaid interest. As of Aug. 17, 2006, $145 million in aggregate principal amount of the Notes were outstanding. La Petite Academy, Inc., based in Chicago, Illinois, is the second largest for-profit preschool provider in the United States. La Petite offers educational, developmental and child care programs that are available on a full-time or part-time basis, for children between six weeks and twelve years old. The company's schools are located in 36 states and the District of Columbia, primarily in the southern, Atlantic coastal, mid-western and western regions of the United States. As of April 8, 2006, the company operated 652 schools, including 593 residential academies, 30 employer-based schools and 29 Montessori schools. * * * As reported in the Troubled Company Reporter on July 31, 2006 Moody's Investors Service assigned B1 ratings to the proposed first lien credit facilities of La Petite Academy, Inc., and a B3 rating to the company's proposed second lien term loan. Concurrently, Moody's upgraded La Petite's Corporate Family Rating to B2 from Caa2. The outlook for the ratings is stable. As reported in the Troubled Company Reporter on July 11, 2006, Standard & Poor's Ratings Services placed its ratings on Chicago, Illinois-based La Petite Academy Inc., including the 'CCC' corporate credit rating, on CreditWatch with positive implications. LIFE SCIENCES: June 30 Balance Sheet Upside-Down by $28 Million --------------------------------------------------------------- At June 30, 2006, Life Sciences Research Inc.'s balance sheet showed a total stockholders' deficit of $28,065,000 resulting from total assets of $198,785,000 and total liabilities of $226,850,000. For the three months ended June 30, 2006, the Company incurred net loss of $19,519,000 from total revenues of $47,851,000. A full-text copy of the Company's financial report for the three months ended June 30, 2006 is available for free at: http://researcharchives.com/t/s?1016 Life Sciences Research, Inc. -- http://www.lsrinc.net/-- is a global contract research organization providing product development services to the pharmaceutical, agrochemical and biotechnology industries. LSR operates research facilities in the United States (the Princeton Research Center, New Jersey) and the United Kingdom (Huntingdon and Eye, England). LONDON FOG: Iconix to Buy London Fog Brand for $30.5 Mil. in Cash ----------------------------------------------------------------- Iconix Brand Group, Inc., disclosed the planned acquisition of the London Fog brand from London Fog Group Inc., subject to certain closing conditions including final approval from Nevada state bankruptcy court. The Company disclosed that the acquisition is scheduled to close on Aug. 28, 2006. The purchase price for the transaction will be $30.5 million in cash and $7 million in the Company's stock. The cash portion of the acquisition will be primarily funded through an increase of the Company's asset backed note, which is secured by certain of the Company's intellectual property. The Company further disclosed that, it will enter into a license agreement with leading outerwear maker Herman Kay Bromley. Herman Kay Bromley will hold the license for men's and women's outerwear and women's suits in the United States. According to Neil Cole, chairman and chief executive officer of Iconix Brand Group, "London Fog is an iconic name with a long and rich heritage and extremely high brand awareness. It will greatly diversify our portfolio by adding a classic brand that appeals to a broad segment of consumers in the U.S. and around the world. We are thrilled to have Herman Kay Bromley as the anchor licensee of what will quickly become a large and diverse licensing program as we expand London Fog into a broader lifestyle brand." About Iconix Brand Group Iconix Brand Group, Inc., (Nasdaq: ICON) owns, licenses and markets a portfolio of consumer brands including CANDIE'S (R), BONGO (R), BADGLEY MISCHKA (R), JOE BOXER (R) RAMPAGE (R) and MUDD (R). The Company has also signed a definitive agreement to purchase the brand MOSSIMO (R) which is anticipated to close in September of this year. The Company licenses it brands to a network of leading retailers and manufacturers that touch every major segment of retail distribution from the luxury market to the mass market. Iconix, through its in-house advertising agency, advertises and markets its brands to continually drive greater consumer awareness and loyalty. About London Fog Headquartered in Seattle, Washington, London Fog Group, Inc., -- http://londonfog.com/-- designs and retails the latest styles in jackets and other professional apparel. The company and six of its affiliates filed for chapter 11 protection on March 20, 2006 (Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtors in their restructuring efforts. Avalon Group, Ltd., serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million to $100 million. MATHON FUND: Court OKs Pact Resolving Disputes with Sell, et al. ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona approved the stipulation resolving Mathon Fund LLC and its debtor-affiliates' disputes with James C. Sell, their conservator, the Arizona Corporation Commission, Duane Slade and Guy Andrew Williams. As reported in the Troubled Company Reporter on Aug. 1, 2006, the approval of the Stipulation is prerequisite to proceeding with the joint Plan of Reorganization the Debtors filed with the Bankruptcy Court on July 7. ACC Action In April 2005, the ACC commenced an action in the Superior Court for Maricopa County in Arizona against the Debtors, Messrs. Slade and Williams and related entities seeking among others, the appointment of a receiver over the assets of the Defendant Entities for violations of the Arizona Securities laws. The Superior Court appointed James C. Sell as Receiver of the Defendant Entities. By subsequent agreements duly approved by the Superior Court, the Receivership was continued and the name was changed to Conservatorship. ACC Action Settlement To further resolve the dispute in the ACC Action, the Debtors, the Conservator, the ACC, and Messrs. Slade and Williams agreed, among others, that: 1) Messrs. Slade and Williams will transfer to the Debtors substantially all of their exempt property, to be liquidated and to be placed in a participating trust for future distribution through a bankruptcy proceeding. A significant portion of the assets are held by W.S.F. -- World Sports Fans. 2) Parties who agreed to participate in the Plan, vote in favor of the Plan, and are not non-participant, will be entitled a pro-rata distribution from the Participating Trust established with the proceeds from the assets of Messrs. Slade and Williams. 3) All parties to the Stipulation will release each other from any further liability arising out of the ACC Action. 4) Investors who vote in favor of a confirmed plan, and are participants to that plan, agree to release, and forever discharge Messrs. Slade and Williams from any liability arising out of the events that gave rise to the ACC Action. 5) Non-participants to the plan will retain their rights and claims against Messrs. Slade and Williams and will be subject to avoidance claims by the Debtors. They will not participate in the distribution from the Participating Trust. If more than 10% of the allowed claims of investors choose to be non-participants, the Stipulation is void, unless waived by the parties. 6) The ACC will receive a $750,000 payment from Messrs. Slade and Williams for damages ACC incurred in the ACC Action, which payment will be made from future revenue obtained by Messrs. Slade and Williams. Payment to the ACC will not be made from any of the assets that are subject to the Participating Trust. 7) Messrs. Slade and Williams will provide the other parties to the Stipulation information relating to the: -- properties, assets and liabilities of the Debtors; or -- investments of and distributions to investors in the Debtors. A full-text copy of the Stipulation is available for a fee at: http://www.ResearchArchives.com/bin/download?id=060731031541 Headquartered in Phoenix, Arizona, Mathon Fund LLC and its debtor-affiliates filed for chapter 11 protection on Nov. 13, 2005 (Bankr. D. Ariz. Case Nos. 05-27993 through 05-27995). Lawrence E. Wilk, Esq., at Jaburg & Wilk, P.C. represents the Debtors in their restructuring efforts. Alan A. Meda, Esq., at Stinson Morrison Hecker LLP represents the Official Committee of Unsecured Creditors. When Mathon Fund filed for protection from its creditors, it listed assets totaling $16,851,721 and debts totaling $79,259,996. MERCER INT'L: Moody's Holds Junks Rating on Senior Unsecured Notes ------------------------------------------------------------------ Moody's Investors Service affirmed the Caa1 rating for Mercer International Inc.'s senior unsecured notes due 2013. Moody's also affirmed the B2 corporate family rating and SGL-3 Speculative Grade Liquidity rating. The outlook remains stable. Moody's ratings are assigned to the Restricted Group of Mercer International Inc. Key factors influencing Mercer's ratings and outlook: i) Modest aggregate scale as the company's entire operations produce a single commodity product with a high level of price volatility, northern bleached softwood kraft pulp and has operations in only two geographies. Overall, however, Mercer provides a profile that remains consistent with that of a B rated paper and forest products company mainly due to annual revenues of only approximately ?330 million and the one product line. ii) Credit protection measures consistent with a Caa rated paper and forest products company. As of the twelve month period ended June 30, 2006, leverage remains high on an adjusted debt to EBITDA basis of approximately 15x, and interest coverage was approximately 0.6x. In the intermediate term, with favorable pulp pricing and the expectation of improved operational efficiency, Moody's expects credit metrics to accommodate the company's current ratings. In order for the company to maintain the existing B2 corporate family rating, Mercer must be successful in executing cost reductions, especially at Celgar and generate positive free cash flow over the intermediate term. iii) Profit margins consistent with those of a Ba rated paper and forest products company. iv) Low level of vertical integration. v) Volatility of operational efficiency and margin stability due to the volatility of pulp pricing and foreign exchange exposure. This is representative of the company's current ratings. The stable outlook reflects: a) Moody's view that operating performance will improve due to favorable pulp pricing; the impact of recent scheduled maintenance and strategic capital expenditure downtime; b) the company's eventual success in completing the integration of the Celgar facility; the ramp up of the Stendal facility to design specifications within the intermediate term; and c) the continued adequacy of the company's liquidity position. Factors that would positively impact the ratings and outlook would be a sustained improvement in operating performance resulting in stronger credit metrics and increased liquidity. However, sustained deterioration in operating performance or liquidity, due in part to an unexpected deterioration in pulp pricing, continued maintenance difficulties in the Celgar facility, or higher raw material or energy costs, would reflect negatively on the ratings or outlook. The most recent prior rating action for Mercer occurred on February 1, 2005. Moody's assigned the current ratings to Mercer based primarily on the current key rating factors mentioned above. In Moody's opinion, Mercer's expected operating performance over the intermediate period justifies an affirmation of the corporate family rating at this time. Mercer International Inc., a Washington-based corporation with corporate offices in Vancouver, British Columbia, is a manufacturer of northern bleached softwood kraft pulp. MILLS CORP: Colony Capital to Invest in New Jersey Project ---------------------------------------------------------- The Mills Corporation signed a non-binding letter of intent with Colony Capital Acquisitions, LLC and Kan Am USA Management XXII Limited Partnership under which Colony would arrange for construction financing for the Meadowlands Xanadu development project and make a significant equity infusion into the joint venture for the Project that currently includes The Mills and Kan Am. Meadowlands Xanadu, located in Northern New Jersey, is planned to be a unique sports, leisure, shopping and family entertainment destination. While the recapitalized partnership will continue to have the same obligations to the New Jersey Sports and Exposition Authority, The Mills will not have any financial obligations post closing. Kan Am has been The Mills' partner on the Project since its inception in 1997. The transaction is expected to close on or prior to Sept. 21, 2006. "Our transaction with Kan Am and Colony would allow The Mills to achieve its goals of reducing the Company's financial obligations and facilitating our exploration of strategic alternatives," said Larry Siegel, Chairman and Chief Executive Officer of The Mills. "Colony is an experienced and well respected real estate investor and its participation attests to the potential long-term economic benefits of the Meadowlands Xanadu development. This transaction, when completed, will enable the realization of Meadowlands Xanadu for the people of New Jersey and the metropolitan area. The Mills will continue to explore strategic alternatives and to take aggressive actions in the interests of enhancing value for its shareholders." "We are happy to be working with Colony," said Kan Am President James Braithwaite. "We believe they share our commitment to this unique entertainment and retail destination. We continue to believe that, upon completion, Meadowlands Xanadu will be a world class project." "This is the culmination of our long-standing relationship with senior management of The Mills Corporation and Kan Am," said Richard Saltzman, President of Colony Capital. "We are thrilled to be joining the Meadowlands Xanadu partnership and look forward to the completion and success of this landmark entertainment and retail development project." As consideration for the transaction, The Mills would issue at closing, at its election, either 4,500,000 shares of The Mills common stock or 4,500,000 units of The Mills Limited Partnership, redeemable for the same number of shares of The Mills common stock. The Mills would also provide resale registration rights with respect to such shares of common stock. The shares or units would be allocated between Colony and Kan Am as they determine (but Kan Am would not receive more than 1% of the outstanding shares of TMC common stock). In addition, upon consummation of the transaction, The Mills would become a limited partner in the Project with a total partner capital account of approximately $485 million, which includes incremental project funding of $90 million from July 31, 2006, to be funded under The Mills' existing term loan. Colony is anticipated to provide up to $500 million of equity financing and arrange for construction loan financing that will fund the remaining balance of the expected $2 billion of total project costs. In addition to Colony's and The Mills' investments, Kan Am's current partner capital account is $342 million. Furthermore, Mack-Cali Realty Corporation invested an additional $32.5 million in the Project through a separate partnership. The arrangement contemplates that Colony and Kan Am would be entitled to certain specified preferred returns on their capital that will result in substantial accruals senior to The Mills' capital investment. As a result, it is unlikely that The Mills will be able to recoup any of its invested capital unless and until the Project has been completed and stabilized and one or more significant capital events has occurred. Certain obligations under the letter of intent are legally binding, including that The Mills, Colony and Kan Am are obligated to negotiate in good faith the terms of the transactions in a manner consistent with the terms set forth in the letter of intent and use commercially reasonable efforts to consummate the transactions by Sept. 21, 2006, and that, until then, Colony will have the exclusive right to negotiate and endeavor to close the transaction with The Mills and Kan Am (without prejudice to The Mills continuing its exploration of strategic alternatives with respect to all or substantially all of The Mills and its subsidiaries). The Mills will also be required in certain circumstances to reimburse Colony for legal and due diligence costs up to a cap of $4 million. In addition, in certain circumstances where Colony stands ready to proceed under the letter of intent but the transaction does not proceed, The Mills will be required to pay Colony a termination fee of up to $25 million. Colony's obligations under the transaction are subject to, among other things, its completion of due diligence and its obtaining of construction financing for the Project on terms satisfactory to the partners. The transactions contemplated by the letter of intent are subject to the approval of lenders under The Mills' term loan with Goldman Sachs as administrative agent. Under certain conditions after closing, Colony would have the right to appoint a director to The Mills Corporation's Board of Directors. The Mills has not yet completed its review of the impact of this transaction on its financial statements. However, The Mills will record a charge relating to the issuance of the 4,500,000 units or shares during the quarter in which the closing occurs in an amount equal to the value of such units or shares. In addition, The Mills currently expects to record an impairment charge during the quarter in which the closing occurs on its $485 million partner capital account. The amount of the expected impairment charge will be determined after The Mills has completed its analysis of the transaction. Other financial statement impacts include the possible de-consolidation of The Mills' investment in the Project. There can be no assurance that the conditions to the transactions contemplated by the letter of intent will be satisfied or that those transactions will be completed or, if completed, that The Mills will recover its invested capital. About Colony Capital Based in Los Angeles, California, Colony Capital Acquisitions LLC -- http://www.colonyinc.com/-- is a private, international investment firm focusing primarily on real estate-related assets, securities and operating companies. About Kan Am Kan Am USA Management XXII Limited Partnership is a German syndicator and asset manager of international real estate investments. About The Mills Corporation Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE:MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on March 24, 2006, The Mills Corporation disclosed that the Securities and Exchange Commission has commenced a formal investigation. The SEC initiated an informal inquiry in January after the Company reported the restatement of its prior period financials. Mills is restating its financial results from 2000 through 2004 and its unaudited quarterly results for 2005 to correct accounting errors related primarily to certain investments by a wholly-owned taxable REIT subsidiary, Mills Enterprises, Inc., and changes in the accrual of the compensation expense related to its Long-Term Incentive Plan. MIRANT CORP: Asset Recovery Unit Objects to Several GE Claims ------------------------------------------------------------- General Electric and its affiliates -- GE Installation & Field Services, General Electric Company, GE Energy Parts, Inc., GE International, Inc., and GE Energy Management Services, Inc. -- have filed numerous proofs of claim against Mirant Corp. and its debtor-affiliates. MC Asset Recovery, LLC, the Debtors' successor-in-interest tells the U.S. Bankruptcy Court for the Northern District of Texas that: (a) eight GE Claims are duplicative of other claims; (b) five GE Claims are asserted against the wrong Debtor or in an incorrect amount; and (c) four GE Claims are disputed claims, which cannot be reconciled with the Debtors' Books and Records, and did not have any supporting information. MCAR, therefore, asks the Court to: (1) disallow and expunge these GE Duplicate Claims: Amount of Duplicate Remaining Remaining Claimant Claims Claims Claims -------- --------- --------- --------- General Electric 6068 6070 $8,353 General Electric 6072 6070 8,353 General Electric 6073 6070 8,353 GE Energy Parts 6535 6581 144,434 GE Installation 6569 6575 50,479 GE Installation 6572 6593 545,114 GE Installation 6573 6593 545,114 GE Installation 6574 6534 8,950 (2) reassign the Wrong Debtor Claims to the correct Debtor entity, and in the case the Claims filed in the incorrect amount, reduce the Claim to the amount proposed for each Claim: Claim Correct Correct Claimant Number Debtor Claim Amount -------- ------ ------- ------------ General Electric 6070 MIRMA $6,742 General Electric TBD Mirant Chalk 441 GE 6575 Jamaica Entity 50,479 GE Installation 6593 MIRMA 275,000 GE Installation TBD Mirant Chalk 261,165 (3) reduce the Disputed Claims to the proposed amount: Claim Original Proposed Claimant Number Claim Amount Claim Amount -------- ------ ------------ ------------ GE Energy Parts 6570 $10,280 $0 General Electric 6578 2,493,606 2,085,552 GE Energy Parts 6581 144,434 24,183 GE Energy Parts 6587 15,711 0 Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, informs the Court that due to the numerous claims filed by GE and to avoid confusion, MCAR listed the Claims, which it has not objected to, and have been withdrawn or expunged by prior Court Order. The GE Claims to be objected to are: Claim Claim Claimant Number Amount -------- ------ ------- GE 6069 $1,546 General Electric 6071 51 GE Installation & Field 6534 8,950 General Electric Company 6576 125,000 General Electric Company 6577 63,000 GE Energy Parts, Inc. 6585 272 GE Energy Parts, Inc. 6586 7,604 GE Energy Parts, Inc. 6589 573 GE International, Inc. 6656 11,978 GE Energy Parts, Inc. 7454 26,828 GE International, Inc. 8037 964,204 The GE Claims already withdrawn or expunged are: Claim Claim Claimant Number Amount -------- ------ ------- GE International, Inc. 6571 $909,693 GE International, Inc. 6579 490,387 GE International, Inc. 6580 169,591 GE Installation & Field 6584 8,380 GE International, Inc. 6588 223,868 GE International, Inc. 6590 101,639 GE International, Inc. 6591 1,628,524 GE International, Inc. 6592 1,031,958 GE Energy Management Services 7060 49,900 About Mirant Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass- through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid- Atlantic LLC, on CreditWatch with negative implications. MIRANT CORP: Court Approves 2006 Consent Order on Bowline Unit -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved a 2006 Consent Order extending Mirant Corporation and its debtor-affiliates' license to operate under a Major Petroleum Facility License. Mirant Bowline, LLC, a Mirant Corp. debtor-affiliate, owns and operates a generating station located in West Haverstraw, New York. As an Onshore Major Oil Storage Facility, Mirant Bowline is subject to extensive environmental regulations by federal, state, and local authorities, which require continuous compliance with conditions established by licensing. The New York Department of Environmental Conservation has the authority to enforce the state's environmental laws including Parts 612-614 of Chapter V of the New York Environmental Conservation Rules and Regulations. The DEC is responsible for the regulation of the storage and handling of petroleum as well as licensing a MOSF in New York. The DEC issued to Mirant Bowline a Major Petroleum Facility License for its Haverstraw generation station, which expired on March 31, 2006. On January 4, 2006, the DEC issued a Notice of Violation to Mirant Bowline alleging that the Debtor: -- violated various provisions of 6 NYCRR Parts 612 through 614; and -- was not in complete compliance with the terms and conditions of its MPFL. Mirant Bowline responded to the alleged violations and presented a proposal to demonstrate its compliance. Mirant Bowline also submitted an application for the renewal of its MPFL. The DEC is currently reviewing Mirant Bowline's renewal application. The DEC is also reviewing Mirant Bowline's Compliance Proposal and has reserved its rights to accept or reject the Compliance Proposal. Before the March 31 expiry of the MPFL, Mirant Bowline and the DEC executed an Order on Consent, which authorizes the Debtor to continue to operate the Facility under the terms and conditions of its MPFL until May 30, 2006, pending the DEC's review of the Debtor's renewal application. The DEC further extended that authority. Under the 2006 Consent Order, the DEC assessed a $20,000 civil penalty against Mirant Bowline. A full-text copy of the July 2006 Consent Order is available for free at http://ResearchArchives.com/t/s?1020 About Mirant Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass- through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid- Atlantic LLC, on CreditWatch with negative implications. MUSICLAND HOLDING: Wants to Assume & Assign Leases to Record Town ----------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New York's authority to assume and assign 287 Store Leases to either Record Town, Inc., or Record Town USA, LLC, wholly owned subsidiaries of Trans World Entertainment Corporation. The Court has reportedly authorized the Debtors to sell substantially all of their assets to TWEC pursuant to an Asset Purchase Agreement dated February 17, 2006. The sale closed effective March 27, 2006. The APA provides TWEC the exclusive right to direct the Debtors to seek the Court's authority to assume and assign to it or its affiliates certain store leases pursuant to Sections 363 and 365 of the Bankruptcy Code, Jonathan P. Friedland, Esq., at Kirkland & Ellis LLP, in New York, relates. Subsequently, TWEC provided the Debtors a Lease Assumption Notice, directing the Debtors to assume and assign 287 Store Leases to either Record Town or Record Town USA. A 25-page list of the TWEC Store Leases to be assumed and assigned is available for free at http://researcharchives.com/t/s?1027 As of July 19, 2006, TWEC determined that it would not be directing the Debtors to assume and assign 42 of the TWEC Store Leases. Accordingly, the Debtors have sought rejection of those Leases pursuant to Court-approved expedited lease rejection procedures. Subsequently, TWEC and the landlords for five of the Store Leases designated for rejection reached an agreement on the terms of assumption and assignment of their Leases. The Leases are included on the Lease Assumption Notice and are identified with an asterisk. The 11 TWEC Store Leases that are not included on the Lease Assumption Notice and that were not the subject of an earlier rejection notice, are deemed rejected by operation of law as the Debtors' time to assume and assign real property leases expired on August 10, 2006: Store No. Mall Name Store Address --------- --------- ------------- 495 Holiday Village Great Falls, MT 3152 Midway Mall Elyria, OH 3422 Harlem & Irving Mall Norridge, IL 3443 York Town Mall Lombard, IL 3600 Springfield Mall Springfield, VA 3612 Dulles Town Center Dulles, VA 3625 Plaza Del Sol Bayamon, Puerto Rico 6004 Willmar Sam Goody Willmar, MN 6006 Cedar Mall Rice Lake, WI 6084 Roaring Fork Marketplace Glenwood Springs, CO 6254 Cross Creek Plaza Beaufort, SC The Debtors further ask the Court to: (a) find that the Leases are transferred and assigned to Record Town or Record Town USA, free and clear of any defaults, liens, claims, mortgages and encumbrances; (b) find that Record Town and Record Town USA are good faith purchasers under Section 363(m) of the Bankruptcy Code; and (c) subject in all respects to any individual assumption and assignment agreements, or modifications to the Leases that Record Town or Record Town USA may have negotiated or may later negotiate between itself and any landlord with respect to one or more Leases: * permit RT to perform non-structural alterations and remodeling to the extent necessary for its operations, and to replace and modify existing signage, regardless of any provision in the Leases or any right of first refusal, recapture right or similar rights -- each an REA -- or local law to the contrary; * rule that any extension or renewal option in the Leases or any REA that purports to be "personal" to the Debtors or exercisable only by the Debtors is an unenforceable restriction on assignment and may be freely exercised by RT to its full extent; * rule that if no objection to the assumption and assignment of a Lease is timely made and filed, or if an objection involves a "cure issue," the assumption and assignment will be effective and binding on the applicable parties and will require no further Court order; * rule that any provisions contained in the Leases or any REA that are, or would have the effect of being: -- recapture provisions; -- provisions that impose a fee, penalty or profit sharing upon assignment; -- provisions that would increase the rent, impose a penalty, or modify or terminate a Lease or an REA upon assignment; -- provisions that directly or indirectly limit, condition or prohibit assignment; and -- similar provisions contained in the Leases or any REA; are unenforceable anti-assignment provisions within the meaning of Section 365 of the Bankruptcy Code, which will not prohibit, restrict or limit the sale, assumption and assignment of the Leases to RT; * approve RT's contemplated use of the store governed by the Leases; and * approve RT's contemplated use at the stores governed by the Leases of tradenames including, without limitation, Coconuts, Strawberries, Second Spin, FYE, Planet Music, Wherehouse and Spec's. According to Mr. Friedland, the assumption and assignment of the Leases is a necessary part of the Debtors' ongoing liquidation efforts. It will minimize claims against the Debtors' estates avoid unsecured rejection claims. Pursuant to the APA, TWEC is responsible for and will pay any cure claim under the Leases; provided, that TWEC is not obligated to pay Cure Claims that exceed $4,200,000, Mr. Friedland informs the Court. The Debtors will be responsible for all or any portion of any Cure Claims in excess of $4,200,000. Record Town and Record Town USA are well-established, national retail entities, well known to the major landlords, and each possess more than adequate financial resources to meet any obligations arising under the Leases post-assignment, Mr. Friedland relates. Because the Debtors' business as a specialty retailer of music, movies, games and other entertainment-related goods is substantially similar, if not identical, to TWEC's, the Debtors do not anticipate objections based on the proposed use of the Leases. 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. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MUSICLAND HOLDING: Deluxe Media's Claim Reduced to $2.5 Million --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York's decision to allow the parties to brief Musicland Holding Corp. and its debtor-affiliates' motion for partial summary judgment as to the maximum amount of Deluxe Media Services, Inc.'s statutory warehouse lien has already caused Deluxe to reduce the amount of its claim from $4,142,931 to $2,546,082, Jonathan P. Friedland, Esq., at Kirkland & Ellis LLP, in New York, notes. As a result, Deluxe concedes that partial summary judgment should be entered capping its statutory lien at $2,546,082. According to Mr. Friedland, Deluxe makes two important concessions in seeking to justify its reduced $2,546,082 demand: -- Deluxe concedes the accuracy of the Debtors' inventory spreadsheet detailing percentages of goods received from September 2005 through January 12, 2006, that were still in its possession as of January 12, 2006, or as of January 22, 2006; and -- Deluxe concedes that the "variable" components of its claimed lien must be reduced by the percentages of goods received from September 2005 to January 12, 2006, that were no longer in its possession on the reference date for its lien. Mr. Friedland argues that Deluxe uses the wrong reference date for its "variable" cost calculations and consequently overstates the "variable" components of its claimed lien by $25,042. Deluxe's figure is $258,612, based on the percentage of inventory remaining in its possession as of January 12, 2006. Mr. Friedland notes that the Debtors' figure is $233,569, based on the percentage of inventory remaining as of January 22, 2006, -- the earliest date Deluxe was granted a replacement lien under the Final DIP Order. The main disagreement between the parties on setting the cap for Deluxe's statutory lien centers on Deluxe's contention that it is entitled to reallocate all of its "fixed costs" to the small percentage of goods received from September 2005 to January 12, 2005, Mr. Friedland says. The goods were still in Deluxe's possession on the reference date for the lien calculation, which is either January 12, 2006, Deluxe's position, or January 22, 2006, the Debtors' position. Mr. Friedland argues that Deluxe's "fixed costs" should be reduced by the same percentages as its "variable costs." Applying the percentages of inventory received in the months that were still in Deluxe's possession on January 22, 2006, results in these reductions to Deluxe's claimed liens for the "fixed costs": Month Claimed % Left On Maximum Received "Fixed" Costs 1/22/06 Specific Lien -------- ------------- --------- ------------- Sep 2005 $521,408 7.1% $37,020 Oct 2005 521,408 5.7% 29,720 Nov 2005 521,408 16.8% 87,596 Dec 2005 521,408 24.8% 129,309 Jan 1-12, 2006 201,835 41.6% 83,963 ------------- -------- ------------ $2,287,469 $340,861 ============= ============ Accordingly, if Deluxe's attempt to reallocate all of its "fixed costs" to the goods that were still in its possession on January 22, 2006, is rejected as a matter of law, Deluxe's maximum statutory lien is reduced to $574,431 or $340,861 in "fixed" charges plus $233,569 in "variable" charges. Consequently, the Debtors ask the Court to grant partial summary judgment capping Deluxe's statutory lien at $574,431. Deluxe failed to include any statement in its alleged warehouse receipts disclosing "that a lien is claimed for charges and expenses in relation to other goods," Mr. Friedland asserts. Had Deluxe made a disclosure and issued a proper warehouse receipt, the Wisconsin UCC would have authorized it, pursuant to W.S.A. 407.209, to assert a lien for all of its warehouse charges, whether or not it had relinquished possession of some of the goods. Deluxe would then have been entitled to a "general" lien. However, since Deluxe failed to make the disclosure statement, Deluxe is limited to the "specific lien," which the statute expressly limits to "charges for storage or transportation . . . in relation to the goods" that are "in the warehouse keeper's possession," Mr. Friedland contends. Deluxe's "fixed cost" argument confuses its right to assert a breach of contract claim with its right to assert a lien that arises solely by statute, Mr. Friedland avers. While it may be true that Deluxe was entitled under the Logistics Services Agreement to charge the Debtors for certain "fixed" expenses that are "dictated" in the Agreement, the right to assert a breach of contract claim for unpaid fees under the Agreement simply has no bearing on the determination of Deluxe's lien rights. Nothing in the statute supports Deluxe's attempt to reallocate all of its "fixed" costs to whatever goods happen to remain in the warehouse at the time it decided to assert its specific lien, Mr. Friedland asserts. To allow Deluxe to claim a "floating specific lien" would eviscerate the distinction carefully created by the statute between a specific lien and that of a general one. 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. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NTL INC: Posts GBP195.8 Million Net Loss in 2006 Second Quarter --------------------------------------------------------------- NTL Incorporated disclosed results for the quarter ended June 30, 2006 - the first full quarter since NTL merged with Telewest Global, Inc. In their condensed consolidated income statement, the company showed a GBP195.8 million net loss on GBP884.3 million in revenues for the second quarter ended June 30, 2006, compared with GBP73.5 million net profit on GBP482.5 million in revenues for the same quarter in 2005. Operating income for the second quarter in 2006 is GBP6.3 million compared with GBP6.4 operating income for the same period in 2005. As of June 30, 2006, the company's condensed consolidated balance sheet revealed GBP10.18 billion in total assets, GBP7.26 billion in total liabilities and GBP2.91 billion in shareholders' equity. Net debt as of June 30, 2006 is GBP5.4 billion. A full-text copy of NTL Inc. second quarter results is available at no charge at http://researcharchives.com/t/s?f69 Steve Burch, Chief Executive Officer of NTL, said: "We are delighted with today's strong operational and financial results. They show continued evidence of improvements in our consumer business. Consumer revenue, OCF, ARPU, RGU per customer and triple play penetration have all improved sharply as we focused our strategy on acquiring profitable quality customers. As expected, this did impact overall customer levels slightly. We also achieved GBP 15 million of estimated synergy cost savings in this quarter, which puts us firmly on track to achieve the GBP250 million run rate as promised by the end of 2007. Now that we have closed the Virgin Mobile transaction, we can really start to reap the benefits of being able to exploit our bundling, branding and network strengths along with new channels to market. The launch of quad-play and Free TV bundles will provide more opportunities to offer our consumers unbeatable value and service, whatever their communication and entertainment needs. By continuing to exploit our competitive strengths, delivering on the growth opportunities in our markets, and capturing substantial merger synergies, we believe we can drive significant free cash flow generation going forward. This will provide us with excellent financial flexibility and improved capital deployment options." About NTL Inc. Headquartered in London, England, NTL Inc. (NASDAQ: NTLI) -- http://www.ntl.com/-- is a Delaware corporation and is publicly- traded is the US on the Nasdaq Global Select Market under the symbol "NTLI." The Company provides broadband, digital television, telephony, content and communications services, reaching over 50% of UK homes and 85% of UK businesses. * * * In July 2006, Fitch Ratings assigned NTL Cable PLC's $550 million 10-year senior notes a rating of B and a Recovery Rating of RR5. NTL Cable's existing senior notes were removed from Rating Watch Negative, and downgraded to B. At the same time, Fitch affirmed NTL Inc.'s Issuer Default rating at B+ with Stable Outlook and its Short-term rating at B. NTL Investment Holdings Limited's GBP5.275 billion senior secured credit facilities were affirmed at BB+ and Recovery Rating RR1. PLATFORM LEARNING: Panel Can Examine Insiders Regarding Sale ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York allowed the Official Committee of Unsecured Creditors appointed in Platform Learning Inc.'s chapter 11 case to conduct a examination under Rule 2004 of the Federal Rules of Bankruptcy Procedure on: * Eugene Wade, the Debtor's CEO, * Juan Torres, the Debtor's President, * Darryl Wash, a Director of the Debtor and Member of Ascend Venture Group, LLC * Ascend Venture Group, LLC, * PLAC, Inc., * Capital Resource Partners V LP, * AlpInvest Partners, Inc., * Stichting Pensioenfonds ABP, and * Stichting Pensioenfonds VDG, Geestelijke En Maatschappelijke Belangen; When the Debtor filed for bankruptcy, it asked the Court for permission to sell substantially all of its assets to PLAC, Inc., for $200,000 and the assumption of certain liabilities. The Sale Motion indicates that the Buyer is affiliated with Ascend Venture Group, LLC, a private investment management firm, which is an equity holder and guarantor of the Debtor. In addition, Darryl Wash is a member of Ascend. According to the Debtor's Statement of Financial Affairs, Mr. Wash is a current director of the Debtor. Moreover, according to the Sale Motion, the Buyer is considering hiring Eugene Wade, the Debtor's Chief Executive Officer, and Juan Torres, the Debtor's President. According to the Debtor's schedules and its motion to approve the use of cash collateral, Silicon Valley Bank holds a first priority security interest in all of the Debtor's assets. Capital Resource Partners V LP, AlpInvest Partners, Inc., Stichting Pensioenfonds ABP, and Stichting Pensioenfonds VDG, Geestelijke En Maatschappelijke Belangen -- the Subordinated Creditors -- allegedly hold second priority security interests in all of the Debtor's assets. According to the Debtor's SOFAs, CRP and the Stichting entities are equity holders of the Debtor. Edward J. LoBello, Esq., at Blank Rome LLP, in New York City, told the Court that the Committee is gravely concerned about the fast track sale process currently underway in the Debtor's case, including the fact that the Debtor did not begin to market its business and assets until July 2006. The Debtor is seeking to sell all of its assets to an insider group, for minimal consideration, on an extremely expedited timeframe, over the summer months, while the Debtor's principals are negotiating the terms of their employment by the insider group. What is worse, it is unlikely that the current sale will provide any benefit to unsecured creditors. The Committee wants to investigate, among other things, the Debtor's financial affairs, the various aspects of the proposed sale, the sale process, and the relationship between the Debtor and the Buyer. Further, the Committee is concerned about the circumstances leading to the granting of liens to the Subordinated Creditors in exchange for alleged loans, especially because the Committee understands that the Subordinated Creditors may credit bid at the sale. Several of the Subordinated Creditors also are equity holders and, therefore, insiders of the Debtor. An investigation of these transactions is in furtherance of the Committee's fiduciary duty, Mr. LoBello contends. About Platform Learning Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through their Learn-to-Succeed tutoring program to students attending public schools that are "in need of improvement." The Debtor works together with parents, schools, community organizations, and local educators to implement their research-based program, which ensures that all children can become successful students by providing appropriate support, motivation and curriculum tailored to their individual needs. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). Andrew C. Gold, Esq., Eric W. Sleeper, Esq., Paul Rubin, Esq., David M. Bass, Esq., and John M. August, Esq., at Herrick, Feinstein LLP, represent the Debtor in its restructuring efforts. Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. POPULAR CLUB: Organizational Meeting at 11:00 a.m. Tomorrow ----------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors Popular Club Plan, Inc.'s, chapter 11 case at 11:00 a.m., on August 24, 2006, at the U.S. Trustee's Office, 14th Floor, Room 1401 in Newark, New Jersey. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Garfield, New Jersey, Popular Club Plan, Inc., is a catalog retailer. The Company filed for chapter 11 protection on Aug. 4, 2006 (Bankr. D. N.J. Case No. 06-17231). Barry W. Frost, Esq., at Teich Groh, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $10,740,500 and total debts of $5,496,884. PREDIWAVE CORP: Has Until Dec. 10 to File Chapter 11 Plan --------------------------------------------------------- The Honorable Randall J. Newsome of the U.S. Bankruptcy Court for the Northern District of California in Oakland extended, until Dec. 10, 2006, Prediwave Corporation's exclusive period to file a plan of reorganization. Judge Newsome also gave the Debtor until Feb. 8, 2007, to solicit acceptances of that plan. As reported in the Troubled Company Reporter on Aug. 21, 2006, the Debtor's request to hire XRoads Solutions Group, LLC, as its financial and restructuring advisor is still pending before the Court. XRoads is expected to help the Debtor on the development, negotiation and implementation of a plan of reorganization. Headquartered in Fremont, Calif., PrediWave Corporation -- http://www.prediwave.com/-- provides cable and satellite operators with end-to-end digital broadcast platforms, and offers products like Video On Demand, Digital Video Recording, interactive video shopping, and subscription services. The Debtor filed for chapter 11 protection on April 14, 2006 (Bankr. N.D. California Case No. 06-40547). Robert A. Klyman, Esq., at Latham & Watkins, LLP, and Jonathan S. Shenson, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtor in its restructuring efforts. John D. Fiero, Esq., at Pachulski, Stang, Ziehl, Young and Jones represents the Official Committee Of Unsecured Creditors. The Debtor's Schedules of Assets and Liabilities showed $145,282,246 in total assets and $773,033,371 in total liabilities. PROCARE AUTOMOTIVE: Gets Court Nod to Pay JPMorgan's Secured Claim ------------------------------------------------------------------ The Honorable Pat E. Morgenstern-Clarren of the U.S.Bankruptcy Court Northern District of Ohio allowed ProCare Automotive Service Solutions, LLC, to pay JPMorgan Chase Bank, N.A., around $184,409 plus $11,572. This obligation was secured by a security interest in some of the Debtor's accounts receivable and its proceeds. Alan R. Lepene, Esq., at Thompson Hine LLP, in Cleveland, Ohio, told the Court that the indebtedness was based on a certain prepetition security agreement dated June 5, 2005, and related Commercial Card Classic Agreement dated June 7, 2005, between the Debtor and JPMorgan. According to Mr. Lepene, the value of the collateral securing the indebtedness exceeds the amount of the indebtedness. Because JPM is oversecured, JPM is entitled, under Section 506(b) of the Bankruptcy Code, to interest, fees and costs. Based in Independence, Ohio, ProCare Automotive Service Solutions, LLC -- http://www.procareauto.com/-- offers maintenance and repair services to all makes and models of foreign, domestic, light truck, and commercial-fleet vehicles. ProCare operates 82 retail locations in eight metropolitan areas throughout three states. The Debtor filed for chapter 11 protection on March 5, 2006 (Bankr. N.D. Ohio Case No. 06-10605). Alan R. Lepene, Esq., Jeremy M. Campana, Esq., and Sean A. Gordon, Esq., at Thompson Hine LLP, represent the Debtor. Scott N. Opincar, Esq., at McDonald Hopkins Co., LPA, represents the Official Committee of Unsecured Creditors. Joseph M. Geraghty at Conway MacKenzie & Dunleavy gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. PROCARE AUTO: Has Until August 31 to Finish Investigation on Liens ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the chapter 11 case of ProCare Automotive Service Solutions, LLC, has until Aug. 31, 2006, to complete its investigation of claims and liens asserted by the secured lenders and commence any adversary proceeding with respect to the validity, extent, priority, perfection, and enforceability of any of the secured Lenders' alleged secured claims and security interests in the Debtor's assets. As reported in the Troubled Company Reporter on May 18, 2006, the Honorable Pat E. Morgenstern-Clarren of the U.S. Bankruptcy Court for the Northern District of Ohio in Cleveland gave ProCare Automotive Service Solutions, LLC, authority to: -- secure a $3,650,000 postpetition financing under Section 364 of the Bankruptcy Code from Monro Muffler, Inc.; -- use cash collateral under Section 363 of the Bankruptcy Code. The Debtor was also allowed to use cash collateral securing repayment of its indebtedness to these parties: -- a $200,000 debt from JPMorgan Chase Bank, N.A., secured by some of the Debtor's accounts receivable; -- an agreement with Stoney Hollow Tire, Inc., which asserts security interests in some of the Debtor's tire inventory; -- an agreement with East Penn Manufacturing, Inc., dated Aug. 21, 2001, which asserts security interests in certain battery inventory sold by East Penn to the Debtor; -- a $6.4 million Key Mezzanine Capital Fund I, L.P.; -- a $1.6 million debt from Regis Capital Partners, L.P.; -- a $236,000 debt from PASS Holdings LLC; and -- a $$96,000 debt from Sullivan Partners LLC. The Court granted the Committee a certain period of time to question the lien of those secured lenders against the Debtor's assets. The lenders and the Committee agreed to extend that period to Aug. 31, 2006. Based in Independence, Ohio, ProCare Automotive Service Solutions, LLC -- http://www.procareauto.com/-- offers maintenance and repair services to all makes and models of foreign, domestic, light truck, and commercial-fleet vehicles. ProCare operates 82 retail locations in eight metropolitan areas throughout three states. The Debtor filed for chapter 11 protection on March 5, 2006 (Bankr. N.D. Ohio Case No. 06-10605). Alan R. Lepene, Esq., Jeremy M. Campana, Esq., and Sean A. Gordon, Esq., at Thompson Hine LLP, represent the Debtor. Scott N. Opincar, Esq., at McDonald Hopkins Co., LPA, represents the Official Committee of Unsecured Creditors. Joseph M. Geraghty at Conway MacKenzie & Dunleavy gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. QUIGLEY CO: Asks Court to Reconsider Reduction of Claimants' Votes ------------------------------------------------------------------ Quigley Company, Inc., together with its parent company, Pfizer, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to reconsider it Aug. 9, 2006, ruling that the claims voted by holders of asbestos personal injury claims who had entered into prepetition settlements with Pfizer should be reduced by 90% for voting purposes. The Debtor and Pfizer think that the Court may not have considered certain direct authority -- including the decisions of at least two Courts of Appeals and the decisions of many other courts following them -- that is in conflict with the Court's ruling. The cases the Debtor and Pfizer cited hold that: (a) Section 510(a) of the Bankruptcy Code commands bankruptcy courts to enforce subordination agreements in accordance with state law and prohibits bankruptcy courts from exercising equitable powers to interpret or enforce subordination agreements; (b) a creditor's pre-bankruptcy agreement to subordinate distributions to be received in a bankruptcy case does not deprive the creditor of the right to vote for the acceptance or rejection of a plan; and (c) a creditor's right to vote a claim in a bankruptcy case depends on whether the creditor holds the claim and not the creditor's economic interest in the claim. The Court ruled, in its Aug. 9, 2006, decision, that asbestos claimants who agreed to settle their claims against Pfizer -- but who have not agreed to release or reduce their claims against Quigley -- should have their claims against the Debtor discounted for purposes of voting on the Debtor's proposed plan of reorganization. According to Lawrence V. Gelber, Esq., at Schulte Roth & Zabel, LLP, in New York City, the sole basis for the Court's ruling is that the settling PI claimants agreed to reduce their distributions (from a section 524(g) trust to be established under Quigley's plan) to 10% of what they otherwise would be entitled to receive, if there are insufficient assets to pay all claimants and future demands in full as provided in the Debtor's plan. The Court construed this provision of the prepetition settlement agreements as a reduction of the settling PI claimants' claims against the Debtors. In reality, however, those claimants merely agreed to subordinate a portion of their distributions. The Court thus treats those claimants' limited and conditional agreement to subordinate distributions as an agreement to reduce their claims, contrary to the express language of the settlement agreements expressly permitting those claimants to assert their full claims against Quigley. Mr. Gelber adds that the agreement to reduce distributions only applies in the case of the Debtor's Consensual Plan, and not in the case of any other plan. The Court's determination thus could lead to the incongruous and inequitable result of the same creditors having different claims against Quigley depending on the particular plan on which they are voting. The Court relied on Rule 3018(a) of the Federal Rules of Bankruptcy Procedure as the authority for its ruling, but no objections have been filed against any claims, Mr. Gelber points out. If there were any objections, they would apply equally to the claims of all claimants, not only the claims of the settling PI claimants. The Court also found that Section 1126(a) does not govern the voting of claims in the Debtor's case, because none of the claimants was required to file proofs of claim, although the Court's order establishing voting procedures expressly provided that claims would be tabulated without the necessity of filing claims; all parties proceeded in reliance on that order with the expectation that votes would be tabulated as if proofs of claim had been filed. The Court did not explain, however, why it believed that if no claims had been allowed within the meaning of Section 1126(c), the Court could nonetheless assign different values to substantially similar claims for voting purposes. The Court's decision to dilute the votes of the settling PI claimants to achieve the reallocation of voting rights is precisely what the courts interpreting Section 510(a) have held is prohibited. This dilution is an exercise of the Court's equitable powers, Mr. Gelber contends. The Debtor and Pfizer submit that the Court should modify its order to permit the settling PI claimants to vote on equal footing with nonsettling creditors. These parties-in-interest join the Debtor and Pfizer in their request for reconsideration: * Baron & Budd, P.C.; * Silber Pearlman, LLP, * Leblanc & Waddell, LLP, * John Arthur Eaves Law Firm, * Norris & Phelps, PLLC, * Robert Peirce & Associates, P.C., * F. Gerald Maples P.A., * Byrd & Associates, PLLC, * Robert G. Taylor II, P.C., * Morris, Sakalarios & Blackwell, PLLC, and * Porter & Malouf, P.A. Objections to the request is due by Sept. 8, 2006. Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. Michael L. Cook, Esq., Lawrence V. Gelber, Esq., and Jessica L. Fainman, Esq., at Schulte Roth & Zabel LLP, represent the Company in its restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal serves as the Futures Representative. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. RED HAT: Improved Performance Prompts S&P to Raise Ratings to B+ ---------------------------------------------------------------- Standard & Poor's Rating Services raised its corporate credit and senior unsecured ratings on Raleigh, North Carolina-based Red Hat Inc. to 'B+' from 'B'. The upgrade reflects Red Hat's improved profitability, operating leverage and financial profile. The outlook is revised to positive. "The ratings reflect a narrow business profile, modest scale relative to other software companies, rapid technology evolution, and still high leverage," said Standard & Poor's credit analyst Stephanie Crane. These concerns are partly offset by a barrier to entry provided by: * the open-source based developer certification program; * above-average liquidity; * positive cash flow; and * significant growth in demand for Red Hat's Linux-based operating systems. Red Hat provides Linux-based operating systems, primarily for servers sold to large enterprise customers, and related services. The company sells a subscription for each server that deploys its operating system, entitling the customer to maintenance, configuration support, and software updates. Red Hat supplements its software business with training and consulting services, and it has a small presence in the desktop and embedded operating systems markets. The company also works with a global open source community of developers, which it uses to build better versions of its Linux based operation system with leading software vendors and to ensure compatibility of applications with its operating system. This certification of interoperability provides a barrier to entry for competitors, such as large, proprietary software vendors, that could seek to build a comparable Linux operating system. RESORT INT'L: Decline in EBITDA Cues Moody's to Junk Ratings ------------------------------------------------------------ Moody's Investors Service lowered Resorts International Hotel and Casino's corporate family rating and first mortgage note rating to Caa1 from B2 and assigned a negative ratings outlook. The downgrade and negative ratings outlook reflect RIH's sharp decline in EBITDA during the most recent quarter, tight liquidity position, and possibility that the company will not be able to service its Sep. 15, 2006 semi-annual interest payment related to RIH's 11.5% first mortgage notes. In RIH's June 30, 2006 10-K filing, RIH stated it is investigating alternatives including refinancing and restructuring some or all of the company's long term debt and related financial covenants. If the company is not able to successfully refinance or restructure its debt in the very near-term, the company will likely default. At June 30, 2006, the company had $19.5 million of balance sheet cash, $13 million of which is required for day-to-day operations. Additionally, RIH's $15 million working capital facility, $2.8 million of which was available at June 30, 2006, expires on Aug. 31, 2006. Also worth noting is that EBITDA for the first six months of 2006 was $11.3 million, considerably lower than the $19.9 million generated in the comparable period. Based on current operating trends, RIH is not likely to meet financial covenants in the future unless they are further amended. At June 30, 2006, RIH was not in compliance with the financial covenants contained in its secured working capital and equipment finance debt facilities, although the company did receive waivers and was able to renegotiate certain covenants. Moody's most recent comment regarding RIH occurred on July 5, 2006 and was related to the possible closing of New Jersey based casinos due to a shutdown of New Jersey's government. Ratings on RIH were initially assigned on March 13, 2002. Resorts International Hotel and Casino owns and operates Resorts Atlantic City, a casino located in Atlantic City, New Jersey. Net revenue for the latest 12-month period ended June 30, 2006 was about $240 million. S-TRAN HOLDINGS: Can Use LaSalle's Cash Collateral Until Sept. 30 ----------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware allowed S-Tran Holdings, Inc., and its debtor-affiliates to use cash collateral securing repayment of the Debtors' indebtedness to LaSalle Business Credit, LLC, until Sept. 30, 2006. Until LaSalle is repaid in full, it will retain 85% of all proceeds related to any reimbursements, refunds or any other funds received by the Debtors relating to Protective Insurance Company, Liberty Mutual Insurance Company, and any other insurance policies held by the Debtors. A copy of the Cash Collateral Budget is available for free at http://ResearchArchives.com/t/s?100f To provide LaSalle with adequate protection required under 11 U.S.C. Sec. 363 for any diminution in the value of its collateral, the Debtors grant LaSalle replacement liens to the same extent, validity and priority as the prepetition lien. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. represents the Debtors in their restructuring efforts. Donald A. Workman, Esq., at Foley & Lardner LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SANITARY AND IMPROVEMENT: Wants DIP Warrants Granted Priority ------------------------------------------------------------- Sanitary and Improvement District #425 of Douglas County, Nebraska and the Official Committee of Unsecured Creditors ask the U.S. Bankruptcy Court for the District of Nebraska for permission to obtain postpetition financing by sale of general fund warrants for the payment of administrative expenses. The Debtor and the Committee also ask the Court to grant postpetition general fund warrants priority over prepetition general fund warrants of lower registration number, and that that warrant will bear interest at the market rate of interest for general fund warrants issued by sanitary and improvement districts located in Douglas County, Nebraska. Mark J. LaPuzza, Esq., at Pansing Hogan Ernst & Bachman, LLP, in Omaha, Nebraska, tells the Court that under the standard operating procedure of sanitary and improvement districts, including the Debtor's procedure prior to filing bankruptcy, payment for services necessary to the regular operation of a sanitary and improvement district are paid by the issuance of general fund warrants, which are provided as payment to the parties providing services. These warrants bear a rate of interest and are freely transferable. Mr. LaPuzza explains that it is in the best interest of the Debtor to continue the issuance of general fund warrants in payment of such services with regard to administrative expenses incurred by the Debtor and approved for payment by the court as administrative expenses. Due to the Debtor's pending bankruptcy, those providing services to the Debtor will not accept general fund warrants as payment for services provided unless postpetition general fund warrants are granted priority over prepetition general fund warrants. Postpetition general fund warrants would have to be paid out of order of registration, requiring that postpetition warrants be paid first, regardless of registration number. Postpetition general fund warrants will be issued at prevailing market rate, which is currently 7%, under terms identical to prepetition general fund warrants of the Debtor and general fund warrants of sanitary and improvement districts in general, with the exception of terms relating to order of payment and priority. Headquartered in Omaha, Nebraska, Sanitary & Improvement District 425 of Douglas County, Nebraska filed for chapter 9 protection on Oct. 26, 2005 (Bankr. D. Nebr. Case No. 05-85871). Mark James LaPuzza, Esq., at Pansing Hogan Ernst & Bachman, LLP, represents the Debtor in its restructuring efforts. William L. Biggs, Jr., Esq., at Gross & Welch represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $500,000 to $1 million and estimated debts between $10 million to $50 million. SANMINA-SCI CORP: Solicits Consents from Senior Note Holders ------------------------------------------------------------ Sanmina-SCI Corporation disclosed that it is soliciting consents from the holders of the $400 million aggregate outstanding principal amount of its 6-3/4% Senior Subordinated Notes due 2013 and the holders of the $600 million aggregate outstanding principal amount of its 8.125% Senior Subordinated Notes due 2016. The Company is requesting a waiver, until December 14, 2006, of any default or event of default that may arise by virtue of the Company's failure to file with the Securities and Exchange Commission and furnish to the trustee and holders of notes, certain reports required to be filed by the Company under the Securities Exchange Act of 1934, as amended. The Company also disclosed that, it has not yet filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2006. The Company is offering a consent fee of $16.25 in cash for each $1,000 in principal amount of its 6-3/4% Senior Subordinated Notes due 2013. The Company is offering a consent fee of $10 in cash for each $1,000 in principal amount of its 8.125% Senior Subordinated Notes due 2016. The consent solicitation will expire at 5:00 p.m., New York City time, on Sept. 6, 2006. Holders may tender their consents to the Tabulation Agent at any time before the expiration date. The Company has retained Global Bondholder Services Corporation to serve as its Information Agent and Tabulation Agent for the consent solicitation. Requests for documents should be directed to Global Bondholder Services at (866) 470-3800 or (212) 430-3774. The Company has also retained Banc of America Securities LLC and Citigroup Corporate and Investment Banking as joint solicitation agents for the consent solicitation. Questions concerning the terms of the consent solicitation should be directed to: Banc of America Securities LLC (888) 292-0070; or (704) 388-4813 Citigroup Corporate and Investment Banking (800) 558-3745; or (212) 723-6106 (collect). Headquartered in San Jose, California, Sanmina-SCI Corporation (Nasdaq: SANM) -- http://www.sanmina-sci.com-- is an electronics contract manufacturing services companies providing a full spectrum of integrated, value added solutions. * * * As reported in the Troubled Company Reporter on Aug. 16, 2006 Standard & Poor's Ratings Services placed its 'BB-' corporate credit and other ratings on San Jose, California-based Sanmina-SCI Corp. on CreditWatch with negative implications following the company's announcement that it will delay filing its June 2006 10-Q financial statements until an internal review of stock option practices is complete. As reported in the Troubled Company Reporter on Aug. 16, 2006, Moody's Investors Service placed the ratings of Sanmina-SCI Corporation on review for possible downgrade following the announcement by the Company updating the status of the on-going investigation into its stock option administration practices and confirming that Sanmina will not be able to file with the Securities and Exchange Commission its 10-Q for the quarter ended July 1, 2006 by the required deadline as result of the investigation. Ratings under review for downgrade include the Company's Ba2 Corporate Family rating (negative outlook); the B1 rating on Sanmina's $400 million senior subordinated notes due 2013; B1 rating on SCI Systems Inc.'s $525 million 3% convertible subordinated notes due 2007; B1 rating on $600 million senior subordinated notes due 2016; and SGL-1 speculative grade liquidity rating. SATELITES MEXICANOS: Amends Restructuring Pact with Loral, et al. ----------------------------------------------------------------- Satelites Mexicanos, S.A. de C.V., entered into an amendment to its March 31, 2006, restructuring agreement with: 1) Servicios Corporativos Satelitales, S.A. de C.V.; 2) Loral Skynet Corporation and Loral SatMex Ltd.; 3) Principia, S.A. de C.V.; 4) certain beneficial owners of the Senior Secured Floating Rate Notes due June 30, 2004; and 5) certain beneficial owners of the 10-1/8% Senior Notes due November 1, 2004. Pursuant to the Amendment, the Debtor's deadline to obtain a final and non-appealable order assuming its global settlement agreement with these Loral entities is extended until Sept. 7, 2006: * Loral Space & Communications Ltd., * Loral Space & Communications Holdings Corporation, * Loral Skynet Network Services, Inc., * Loral SpaceCom Corporation, * Loral Skynet, a division of Loral SpaceCom Corporation, * Space Systems/Loral, Inc., and * Loral Space & Communications Inc. The Debtor will use its commercially reasonable best efforts to have its Chapter 11 Plan of Reorganization confirmed by the Bankruptcy Court, which Plan will include binding mutual releases for all claims among the Debtor, Servicios, Loral, Principia, the other Loral Entities, and all holders of claims against the Debtor, other than claims based on fraud, gross negligence, willful misconduct or criminal conduct, or claims or obligations contained in the Loral Settlement Agreements. The Debtor has filed a request with the Bankruptcy Court to assume the Loral Settlement Agreements. A hearing to consider the Debtor's request is scheduled for Sept. 6, 2006, at 10 a.m. in Manhattan. A full-text copy of the First Amendment dated July 28, 2006, is available at no charge at http://ResearchArchives.com/t/s?101d The Supporting Floating Rate Noteholders are: * The Canyon Value Realization Fund (Cayman), Ltd., * Canyon Value Realization Fund, L.P., * Canyon Value Realization MAC 18, Ltd., * Institutional Benchmarks Series (Master Feeder) Limited in Respect of The Centaur Series, * Murray Capital Management, Inc., * Morgan Stanley & Co. Incorporated, * Black Diamond Offshore, Ltd., * Double Black Diamond Offshore LDC, * Cedarview Capital Management, LP, * Clinton Group, Inc., * Continental Casualty Company, * Greenwich International, Ltd., * Polygon Global Opportunities Master Fund, * Taconic Capital Advisors, LLC, and * Resolution Master Fund L.P. The Supporting Senior Noteholders are: * Murray Capital Management, Inc., * Atlantic Pacific Management Group LLC, * LPETE LLC, * SSGDP LLC, * DRALLI LLC, * Gramercy Emerging Markets Fund, * HFR EM Select Master Trust, * KAPALI LLC, * LMC Recovery Fund LLC, * PALLMALL LLC, * UVIADO LLC, * GRNPARK LLC, * KADESI LLC, * Harbinger Capital Partners Master Fund I, Ltd., and * Morgan Stanley & Co. Incorporated About Satelites Mexicanos Satelites Mexicanos, S.A. de C.V., provides fixed satellite services in Mexico. Satmex provides transponder capacity via its satellites to customers for distribution of network and cable television programming, direct-to-home television service, on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications. Satmex also provides the government of the United Mexican States with approximately 7% of its satellite capacity for national security and public purposes without charge, under the terms of the Orbital Concessions. The Debtor filed for chapter 11 petition on August 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles, S.C., and Quijano Cortina Lopez y de la Torre give legal advice in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities LLC and Valor Consultores, S.A. de C.V., give financial advice to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq., and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP give legal advice to the Ad Hoc Existing Bondholders' Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc Senior Secured Noteholders' Committee. As of July 24, 2006, the Debtor has $905,953,928 in total assets and $743,473,721 in total liabilities. On May 25, 2005, certain holders of Satmex's Existing Bonds and Senior Secured Notes filed an involuntary chapter 11 petition against the Company (Bankr. S.D.N.Y. Case No. 05-13862). On June 29, 2005, Satmex filed a voluntary petition for a Mexican reorganization, known as a Concurso Mercantil, which was assigned to the Second Federal District Court for Civil Matters for the Federal District in Mexico City. On August 4, 2005, Satmex filed a petition, pursuant to Section 304 of the Bankruptcy Code to commence a case ancillary to the Concurso Proceeding and a motion for injunctive relief seeking, among other things, to enjoin actions against Satmex or its assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SATELITES MEXICANOS: Wants to Assume Loral Settlement Agreements ---------------------------------------------------------------- Satelites Mexicanos, S.A. de C.V., asks permission from the U.S. Bankruptcy Court for the Southern District of New York to assume: (a) the Settlement Agreement, dated as of June 14, 2005, with Space Systems/Loral, Inc.; Loral Space & Communications Corporation, now known as Loral Space & Communications Holdings Corporation; Loral SpaceCom Corporation; Loral Skynet, a division of SpaceCom; and Loral Skynet Network Services, Inc.; (b) a contract with SS/L for the Satmex 6 Satellite Program dated June 14, 2005; (c) an agreement with LSC, as assignee of Loral Skynet, concerning the Lease of Transponders for the Satmex 5 Satellite dated June 14, 2005; (d) an agreement with SS/L, as assignee of LSCC, concerning the Lease of Transponders for the Satmex 6 Satellite dated June 14, 2005; and (e) certain active capacity agreements, as amended, which consist of: (i) Satmex Contract Number 673-1 with Loral Skynet for the lease of satellite space segment capacity dated October 1, 2003; (ii) Satmex Contract Number 383-1 with Loral Skynet for the lease of satellite space segment capacity dated March 1, 2000; and (iii) Satmex Contract Number 257-1 with Loral Skynet Network Services, Inc., for the lease of satellite space segment capacity dated September 1, 1999. Satmex is a party to a global settlement agreement and related documents with various entities affiliated with Loral Skynet Corporation and Loral SatMex Ltd. The Loral Settlement Agreements resolve numerous issues and claims under various of the parties' then-existing relationships and agreements. Satmex is expressly required to assume the Loral Settlement Agreements by September 7, 2006, pursuant to: -- the terms of the Settlement Agreements; and -- an April 2006 stipulation among Satmex; certain holders of its 10-1/8% Unsecured Senior Notes due November 1, 2004, and Senior Secured Floating Rate Notes due June 30, 2004; and the Loral Entities, which was approved by the Bankruptcy Court in the Section 304 Proceeding. The Loral Settlement Agreements are an integral component of the consensual restructuring set forth in Satmex's Chapter 11 Plan of Reorganization, Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, tells the Court. "Absent approval of the assumption of these agreements, it is likely that Loral will not support the Chapter 11 Plan. As a result, confirmation of the Chapter 11 Plan will be made difficult, if not impossible, under Section 1129(b) of the Bankruptcy Code," Mr. Despins says. Loral Settlement Agreements Among other things, the Loral Settlement Agreements provide for SS/L and Satmex's termination of their obligations under a June 25, 2003, Amended and Restated Contract for the Satmex 6 Satellite Program, including SS/L's right to earn potential orbital incentive payments and an "end of life" bonus. The parties entered into a new contract whereby, among other things, SS/L renewed its commitment to provide its continued support for the launch of Satmex 6. Satmex was allowed a $3,694,609 general unsecured claim against SS/L in SS/L's Chapter 11 case. SS/L paid the claim in April 2006. Satmex and SpaceCom also agreed to terminate a November 17, 1997, Satmex Management Agreement and a November 17, 1997, License Agreement. In addition, Satmex agreed to provide to SS/L, as assignee of LSCC, satellite space segment capacity service consisting of two 36 MHz Ku-band transponders and two 36 MHz C-band transponders on Satmex 6. Subject to obtaining certain consents, Satmex will grant SS/L a security interest or title to the SS/L Transponders. Satmex and the Loral Entities agreed to modify the terms of a fully prepaid end-of-life lease agreement between Satmex and Loral Skynet. Under the lease, Satmex provided to Loral Skynet satellite space segment capacity service consisting of three 36 MHz Ku-band transponders on Satmex 5. Subject to obtaining certain consents, Satmex and the Loral Entities also agreed to grant Loral Skynet a security interest or title to the transponders. The Skynet Transponders were subsequently assigned from Loral Skynet to LSC. Pursuant to a March 2006 Restructuring Agreement that Satmex entered into with Servicios Corporativos Satelitales, S.A. de C.V.; Principia S.A. de C.V.; Loral; and the ad hoc committees of holders of Satmex's Senior Secured Notes and Existing Bonds, Loral agreed that the Loral Entities and their assignees would receive, instead of a security interest in or title to the Loral Transponders, the grant of a usufructo under Mexican law in the Loral Transponders. The Loral Usufructo constitutes an in rem property right whereby the Grant Holders are entitled to the quiet use and enjoyment of the Skynet Transponders on Satmex 5 for the life of Satmex 5 and the SS/L Transponders on Satmex 6 for the life of Satmex 6. The Loral Entities are to receive the Loral Grant of the Loral Usufructo on the effective date of Satmex's Chapter 11 Plan of Reorganization, at which time the Loral Settlement Agreements will be modified accordingly. Without waiving any of their rights under the Restructuring Agreement and the Loral Settlement Agreements, the Loral Entities have agreed that for so long as the Restructuring Agreement is in effect as to Loral, the Loral Entities will forbear from exercising their rights in respect of the requirement under the Loral Settlement Agreements that Satmex use its best efforts to transfer title to or a security interest in the Loral Transponders to the applicable Loral Entity or its assignee free and clear of any liens or encumbrances of any kind. Satmex believes that for so long as it is acting in good faith in seeking the Loral Usufructo and the Loral Grant, it has complied with its obligations with respect to the Title/Lien Requirement and no damages should accrue with respect to the Title/Lien Requirement. A summary of the salient terms of the Loral Settlement Agreements is available at no charge at http://ResearchArchives.com/t/s?1033 The Loral Settlement Agreements have been approved in the Chapter 11 cases of Loral Space & Communications Ltd. and its affiliated debtors (Lead Case No. 03-41710 (RDD) (Bankr. S.D.N.Y.)) by order dated July 26, 2005. In addition, Thomas Stanley Heather Rodriguez, the conciliador in the Concurso Proceeding in Mexico, has confirmed his support of the Loral Settlement Agreements. The holders of the Senior Secured Notes, and Citibank, N.A., in its capacity as indenture trustee and collateral trustee for the Senior Secured Notes, assert that certain transactions contemplated by the Loral Settlement Agreements, including the Title/Lien Requirement, require the Senior Secured Noteholders' or Citibank's consent. The Senior Secured Noteholders and Citibank have not granted any consent and reserve the right not to grant any consent in the future. Pursuant to Section 365(b), Satmex will pay $16,415 to LSC to cure any monetary default under the Loral Settlement Agreements. About Satelites Mexicanos Satelites Mexicanos, S.A. de C.V., provides fixed satellite services in Mexico. Satmex provides transponder capacity via its satellites to customers for distribution of network and cable television programming, direct-to-home television service, on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications. Satmex also provides the government of the United Mexican States with approximately 7% of its satellite capacity for national security and public purposes without charge, under the terms of the Orbital Concessions. The Debtor filed for chapter 11 petition on August 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles, S.C., and Quijano Cortina Lopez y de la Torre give legal advice in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities LLC and Valor Consultores, S.A. de C.V., give financial advice to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq., and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP give legal advice to the Ad Hoc Existing Bondholders' Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc Senior Secured Noteholders' Committee. As of July 24, 2006, the Debtor has $905,953,928 in total assets and $743,473,721 in total liabilities. On May 25, 2005, certain holders of Satmex's Existing Bonds and Senior Secured Notes filed an involuntary chapter 11 petition against the Company (Bankr. S.D.N.Y. Case No. 05-13862). On June 29, 2005, Satmex filed a voluntary petition for a Mexican reorganization, known as a Concurso Mercantil, which was assigned to the Second Federal District Court for Civil Matters for the Federal District in Mexico City. On August 4, 2005, Satmex filed a petition, pursuant to Section 304 of the Bankruptcy Code to commence a case ancillary to the Concurso Proceeding and a motion for injunctive relief seeking, among other things, to enjoin actions against Satmex or its assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SCOTTISH RE: Moody's Lowers Ratings and May Downgrade Further ------------------------------------------------------------- Moody's Investors Service downgraded to Ba3 from Ba2 the senior unsecured debt rating of Scottish Re Group Limited and also downgraded to Baa3 from Baa2 the insurance financial strength ratings of the company's core insurance subsidiaries, Scottish Annuity & Life Insurance Company Ltd. and Scottish Re, Inc. The ratings have been placed on review for possible further downgrade. These ratings were downgraded and placed on review for possible further downgrade: Scottish Re Group Limited: * Senior Unsecured to Ba3 from Ba2; * Senior Unsecured Shelf to (P)Ba3 from (P)Ba2; * Subordinate Shelf to (P)B1 from (P)Ba3; * Preferred Stock to B2 from B1; * Preferred Shelf to (P)B2 from (P)B1; Moody's affirmed and placed Scottish Re Group Limited's Junior Subordinate Shelf at (P)B1 on review for downgrade. Moody's stated that Scottish Re's collateral and liquidity needs are greater than had been anticipated at the time of its last rating action on July 31, 2006, when the rating agency downgraded the ratings of Scottish Re and its subsidiaries following the company's profit warning. "The company needs to raise capital or secure collateral to manage through its impending liquidity needs over the near term," According to Scott Robinson, Vice President and Senior Credit Officer at Moody's. "while we believe a sale of the company is likely, the timing is uncertain, and there is a risk that the company could run out of liquidity prior to a sale." Moody's highlighted the August 14 draw down of funds under the Stingray Investor Trust as an indication that the liquidity position of Scottish Re is extremely tight. Liquidity needs include those that can be anticipated and projected to a varying degree of confidence, such as truing up reserve collateral trusts and other collateral requirements, operating expenses, debt servicing and debt repayments, as well as unanticipated liquidity needs that could result from any unexpected deterioration in the financial condition of the company. As Moody's previously commented, there is a significant amount of uncertainty surrounding Scottish Re's ability to access the $168.6 million of additional credit available under its two unsecured 3- year bank facilities. There are also limitations under the bank agreement on monies being transferred from SALIC to Scottish Re. Thus, to pay off the $115 million outstanding 4.5% convertible notes that are putable at par in December, the company needs to raise money at the holding company level or resolve the issue with the bank syndicate, potentially by collateralizing or paying down some or all of the outstanding amount on the facility. The company has stated that it is working with various parties on securing additional capital and freeing up liquidity over the near-term. These include standard reinsurance and surplus relief reinsurance, private equity, or asset based financing type transactions. "Any such transactions would be only temporary solutions, providing Scottish Re with additional liquidity and collateral that could support the company through the sales process." He continued, "there is a reasonable possibility the company will secure additional capital; however, further downgrades are likely if the company is unable to close any such transactions over the very near term." Moody's emphasized that the company likely represents an attractive acquisition target for a variety of buyers, including those seeking value in the inforce blocks of business, as well as those seeking to gain a foothold in the U.S. life reinsurance market. Additionally, the company has a significant net operating loss as well as the ability to generate additional net operating losses, which could be of significant economic benefit for certain buyers. Notwithstanding the likelihood of a sale, the rating agency highlighted that given the complicated nature of the business and the company structure, the timing of any sale is uncertain. Also, recently filed class action lawsuits could cause additional difficulties. Scottish Re Group Limited is a Cayman Islands company with principal executive offices located in Bermuda; it also has significant operations in Charlotte, NC, Denver, CO and Windsor, England. On June 30, 2006, Scottish Re reported assets of $14.6 billion and shareholders' equity of $1.2 billion. Moody's insurance financial strength ratings are opinions on the ability of insurance companies to repay punctually senior policyholder claims and obligations. SHAW COMMS: Inks Agreements to Purchase Whistler Cable, Norcom -------------------------------------------------------------- Shaw Communications as entered into an agreement to acquire Whistler Cable Television Ltd., subject to approval of the Toronto Stock Exchange. Whistler Cable operates cable and Internet systems in Whistler and Pemberton, British Columbia. "Whistler Cable is an excellent system and a perfect fit with Shaw's existing systems on the West Coast, as well with the system that we recently acquired from Coast Mountain Communications Inc. which also operates in Pemberton. We are excited by the opportunity to provide leading entertainment and communications services to the world renowned resort town of Whistler, particularly with the 2010 Winter Olympics approaching," said Peter Bissonnette, President of Shaw. "We are very pleased about joining forces with Shaw" said M.J. Saperstein, the owner of Whistler Cable. "Shaw has a reputation on the West Coast of providing exceptional products and services to their customers, and this will now be extended to the residents of Whistler and Pemberton." Shaw also reported that on August 9, it entered an agreement to acquire Norcom Telecommunications Limited, subject to CRTC approval. Norcom operates cable and Internet systems located in Northwestern Ontario including Kenora, Red Lake, Sioux Lookout, Ear Falls and Ignace, together with the CTV television station, CJBN-TV, in Kenora. "We are truly delighted with the acquisition of Norcom" said Peter Bissonnette, President of Shaw Communications Inc. "Shaw has been proud to serve customers in Winnipeg and Northwestern Ontario, including Thunder Bay, Fort Frances and Dryden, for many years, and we look forward to providing the same leading entertainment and communications services to Norcom's customers." Shaw Communications Inc. (TSX: SJR.B) (NYSE: SJR) -- http://www.shaw.ca/-- is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Big Pipe Inc.) and satellite direct-to-home services (through Star Choice Communications Inc.) to approximately 3.0 million customers. Shaw is a member of the S&P/TSX 60 index. * * * As reported in the Troubled Company Reporter on April 27, 2006, Moody's Investors Service affirms Shaw Communications Inc.'s ratings and assigned a Ba2 rating on the Company's CDN$300 million senior unsecured debenture. Moody's said the outlook for all ratings is stable. As reported in the Troubled Company Reporter on April 27, 2006, Standard & Poor's Ratings Services assigned its 'BB+' debt rating to Shaw Communications Inc.'s CDN$300 million senior unsecured notes due 2016. At the same time, S&P affirmed the Company's 'BB+' long-term corporate credit rating. S&P said the outlook is stable. SILICON GRAPHICS: Wants Until December 29 to File Chapter 11 Plan ----------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the United States Bankruptcy Court for the District of New York to extend, without prejudice to their rights to seek further extensions, their: * Exclusive Plan Proposal Period through and including December 29, 2006; and * Exclusive Solicitation Period through and including February 28, 2007. Gary Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Lifland that the Debtors' Chapter 11 cases are sufficiently large and complex to warrant the requested extension. According to Mr. Holtzer, the Debtors' good-faith progress is evidenced by the accomplishment of several milestones within 90 days of the Petition Date, specifically: -- the filing of a Plan of Reorganization supported by the representatives of all economic parties-in-interest; -- the approval of the related Disclosure Statement; -- the commencement of solicitations; and -- the establishment of a date for the hearing on confirmation of the Plan. Mr. Holtzer maintains that granting the extension will afford the Debtors the opportunity to ensure the confirmation of a viable and consensual Chapter 11 plan, without giving them unfair bargaining leverage over creditor constituencies. Instead of prejudicing any party-in-interest, the extension will afford the Debtors the opportunity to ensure the confirmation of a realistic, viable and consensual Chapter 11 plan. The Debtors assure the Court that since the Petition Date, they have timely met, and will continue to timely meet, their postpetition obligations. 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. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SILICON GRAPHICS: Wants Lease-Decision Period Extended to Dec. 4 ---------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend the period within which they may assume or reject their unexpired leases for an additional 90 days, through and including the earlier of: (i) the effective date of the proposed Plan of Reorganization; and (ii) December 4, 2006. As of August 16, 2006, the Debtors are party to 18 unexpired leases of nonresidential real property, Gary Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, relates. Section 365(d)(4) of the Bankruptcy Code provides that if a debtor does not assume or reject an unexpired lease of nonresidential real property by the earlier of the date that is 120 days after the Petition Date, or the date of the entry of the order confirming a plan, the lease will be deemed rejected and the debtor will immediately surrender the property to the lessor. However, the Court may extend the debtor's lease decision period prior to the expiration of the 120-day period, for 90 days, upon the debtor's request for cause. Under the Plan, the Debtors will generally reject executory contracts and unexpired leases not specifically listed for assumption in the Plan's schedules, with assumption and rejection effective upon the Debtors' emergence from Chapter 11. However, Mr. Holtzer notes that the confirmation of the Plan will not occur until after September 5, 2006, which is the current deadline to assume or reject the Unexpired Leases. Without an extension of the Lease Decision Period, the Debtors may be forced to assume unnecessary leases, including needless administrative expenses, or to reject leases that are beneficial to them, Mr. Holtzer says. Mr. Holtzer notes that the extension is necessary because: * the Unexpired Leases are important to the Debtors' continued operation and their reorganization efforts; and * the Debtors wish to avoid making unreasonable or uninformed decision as to whether to assume or reject the Unexpired Leases. The lessors under the Unexpired Leases will not be prejudiced by the extension, Mr. Holtzer further notes. The Debtors assure Judge Lifland that they are current, and intend to remain current, on their postpetition obligations under the Unexpired Leases. A full-text copy of the list of Unexpired Leases is available for free at http://researcharchives.com/t/s?102a 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. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SPECTRE GAMING: Receives $5.1 Mil. Gross Proceeds from Debentures ----------------------------------------------------------------- Spectre Gaming, Inc., has completed the private placement of its convertible debentures with gross proceeds of $5,171,700. The Company disclosed that, the private placement was subscribed to by institutional investors and high net-worth individuals. The debentures are convertible into common stock of the Company at the price of $1 per common share. The debenture purchasers also received 5-year warrants to purchase an aggregate of 10,343,500 shares of common stock at a price of $1.10 per share. The Company also announced that it has begun placing its AWP machines at customer locations and has successfully installed 156 games at three locations. In addition, the Company has acquired or has in inventory, another 975 machines which it is currently converting to AWP for placement at customer locations. The Company currently has a backlog of customer orders exceeding 4,000 units. D. Bradly Olah, president, stated, "We are very pleased with the response we received during this offering. The proceeds from the offering give us the capital we believe we will need to continue with installations of AWP games in the Florida and Texas marketplace. To date we have placed 156 machines and expect to continue toward our goal of installing 2,000 units by year end. We believe that the initial response from our customers and their patrons at installed locations has been excellent and that we have proven the viability of our technology." The Company further disclosed that, the securities sold in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Headquartered in Minneapolis, Minnesota, Spectre Gaming, Inc., (OTC Bulletin Board: SGMG) -- http://www.spectregaming.com/-- is a provider of a proprietary interactive amusement-with-prize system. The Company designs and develops networks, software and content that provide its customers with a comprehensive amusement system. The company was incorporated as MarketLink, Inc., in 1990 and changed its name to OneLink Communications, Inc., in 1997. Further, OneLink Communications changed its name to OneLink, Inc., in 2000 and to Spectre Gaming, Inc., in 2004. Going Concern Doubt Virchow, Krause & Company, LLP, expressed substantial doubt about Spectre Gaming's ability to continue as a going concern after it audited the company's financial statements for the fiscal years ended Dec. 31, 2005. The auditing firm pointed to the company's net losses for the years ended Dec. 31, 2005 and 2004, had an accumulated deficit at Dec. 31, 2005, and does not have adequate liquidity to fund its operations through out fiscal 2006. STANDARD AERO: S&P Affirms B+ Rating & Removes Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Standard Aero Holdings Inc. from CreditWatch with negative implications, where they were placed Jan. 27, 2006. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' long-term corporate credit rating, on the company. The outlook is negative, reflecting expectations of future earnings pressure as a result of the recent renegotiation of a key contract. Standard Aero is one of the leading independent providers of maintenance, repair, and overhaul of aerospace engines. It has primary operations in the U.S. and Canada, with smaller facilities in Europe and Singapore. About three-quarters of its sales are in the U.S. Standard Aero's annual revenues are approximately $750 million, and are split about equally between its military and commercial (servicing predominantly business and regional aircraft operators) segments. A significant risk to its military business is the concentration of revenues. "Approximately 30% of total corporate revenues relate to its role as a subcontractor to Kelly Aviation Center LP to provide MRO services to T-56 engines, which powers the U.S. C-130 military fleet," said Standard & Poor's credit analyst Kenton Freitag. "This contract was subject to a dispute that was recently resolved. As a result of price concessions, we expect that the contract will become materially less profitable to Standard Aero," Mr. Freitag added. The contract will, however, enable Standard Aero to provide exclusive MRO services until at least 2010, with options potentially to 2014. The negative outlook reflects lingering uncertainty about future levels of profitability, given recent price concessions on its key contract with Kelly Aviation Center, and pontential concerns about remaining compliant with financial covenants in 2007. Should operating profits fall materially in the next 18 months, a downgrade could result. Conversely, if the company is able to maintain or improve current levels of profitability and alleviate covenant concerns, the outlook could be revised to stable. STATER BROS: June 25 Stockholders' Deficit Widens to $16.8 Million ------------------------------------------------------------------ Stater Brothers Holdings Inc. filed its third fiscal financial report for the period ended June 25, 2006, with the Securities and Exchange Commission on Aug. 9, 2006. Sales for the thirteen week third quarter ended June 25, 2006, compared with the third quarter 2005, increased $45.5 million or 5.4% and amounted to $885.9 million compared with $840.4 million for the thirteen weeks ended June 26, 2005. Total sales for the thirty-nine weeks ended June 25, 2006, increased $94.2 million or 3.7% and amounted to $2.62 billion compared with $2.52 billion for the same period in fiscal 2005. Like store sales for the quarter were impacted by the timing of the Easter holiday, which fell in the third quarter of the current year compared to the second quarter of fiscal 2005. Easter added approximately $7.8 million to fiscal 2005-second quarter sales. After taking the effect of the Easter holiday, like store sales increased 2.3% for the third quarter of fiscal 2006 over fiscal 2005. Like store sales increased 1.0% for the year-to-date period of fiscal 2006 over fiscal 2005. The Company reported net income for the thirteen week third quarter ended June 25, 2006, of $5.7 million compared with net income of $7.3 million for the thirteen weeks ended June 26, 2005. Net income for the fiscal year-to-date periods amounted to $15.3 million in 2006 and $14.1 million in 2005. At June 25, 2006, the Company's balance sheet showed $1.040 billion in total assets and $1.057 billion in total liabilities, resulting in a $16.895 million stockholders' deficit, as compared with $13.395 million deficit at Sept. 25, 2005. "The third quarter results reflected positive operating performance due to the dedicated efforts of our Stater Bros. Family members, despite continued competitive pricing pressures," Jack H. Brown, chairman, president and chief executive officer of Stater Bros. Holdings Inc., said. "We remain committed to our 'Valued Customers' to provide a friendly and satisfying shopping experience on each and every one of their visits to our supermarkets and maintain our commitment to being the low price leader." Full-text copy of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?fed Based in Colton, California, Stater Brothers Holdings Inc. -- http://www.staterbros.com/-- operates more than 162 full service Stater Bros. Markets in the United States. The grocery chain also owns and operates milk and juice processor Santee Dairies aka Heartland Farms. Founded in 1936 by twin brothers Leo and Cleo Stater, Stater Bros. is owned by La Cadena Investments, a general partnership consisting of Stater Bros. chairman and CEO Jack Brown. * * * Stater Brothers Holdings' long-term local and foreign issuer credits carry Standard & Poor's B+ ratings. The ratings were placed on June 20, 2006 with a stable outlook. THE SPORTS CLUB: March 31 Balance Sheet Upside-Down by $18 Million ------------------------------------------------------------------ At March 31, 2006, The Sports Club Company Inc.'s balance sheet showed total stockholders' deficit of $18,155,000 from total assets of $105,952,000 and total liabilities of $107,667,000. The Company's March 31 balance sheet also showed total current assets of $22,098,000 and total current liabilities of $21,380,000. For the three months ended March 31, 2006, the Company incurred net loss of $2,671,000 from total revenues of $14,563,000. A full-text copy of the Company's financial report for the three months ended March 31, 2006 is available for free at: http://researcharchives.com/t/s?1018 Headquartered in Los Angeles, California, The Sports Club Company Inc. owns and operates luxury sports and fitness complexes in the United States under the brand-name "The Sports Club/LA." TRINSIC INC: June 30 Stockholders' Deficit Widens to $13.9 Million ------------------------------------------------------------------ Trinsic, Inc., filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 8, 2006. The Company reported $2.795 million net loss on $43.878 million of revenues for the second quarter ended June 30, 2006, compared with $3.257 million net loss on $50.797 million of revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $48.219 million in total assets and $62.154 million in total liabilities, resulting in a $13.935 million stockholders' deficit, as compared with $8.384 million deficit at Dec. 31, 2005. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?1014 Trinsic, Inc. (OTCBB: TRIN) -- http://www.trinsic.com/-- offers consumers and businesses traditional and IP telephony services. Trinsic's products include proprietary services such as Web- accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Trinsic is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. Trinsic, Inc., changed its name from Z-Tel Technologies, Inc. on January 3, 2005. WEEKS LANDING: Wants Plan-Filing Period Stretched to October 15 --------------------------------------------------------------- Weeks Landing, LLC, and its debtor-affiliates ask the United States Bankruptcy Court for the Middle District of Florida in Fort Meyers to extend: a) until Oct. 15, 2006, their exclusive period to filed a Chapter 11 Plan of Reorganization; and b) until Dec. 15, 2006, their exclusive period to solicit acceptances of their Plan. Jordi Guso, Esq., at Berger Singerman, PA, tells the Court that the proposed exclusivity extensions will allow RCMP Enterprises, LLC, to complete its due diligence. RCMP has agreed to fund the Debtors' plan of reorganization pursuant to a court-approved Term Sheet. Under the term sheet, RCMP anticipated completing its due diligence by July 24, 2006. However, RCMP failed to complete its due diligence by the July deadline and asked the Debtor for and an extension of the due diligence through Sept. 24, 2006. The Debtors have consented to the extension. Headquartered in Bonita Springs, Florida, Weeks Landing, LLC, owns the Weeks Fish Camp. The Debtor and three of its affiliates filed for chapter 11 protection on Apr. 14, 2006 (Bankr. M.D. Fla. Case No. 06-01721). Jordi Guso, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. WILLBROS GROUP: Closes Sale of Venezuelan Businesses ---------------------------------------------------- Willbros Group, Inc. has closed the transaction for the sale of its Venezuelan businesses. As previously reported, Willbros determined that it would cease operations in Venezuela and sell all its remaining businesses associated with Venezuelan assets and operations. As anticipated by the Company, Willbros recognized no gain or loss on disposal. "The sale of the Venezuelan businesses removes the uncertainty associated with our presence in that market and allows us to redeploy resources to manage and execute the record backlog in North America" Mike Curran, Chairman and Chief Executive Officer, commented. The transaction included the marine yard and offices located on Lake Maracaibo, the marine equipment in Venezuela and the Company's interest in a project providing water injection services for production in Lake Maracaibo. Willbros Group, Inc. (NYSE:WG) -- http://www.willbros.com/-- is an independent contractor serving the oil, gas and power industries, providing engineering and construction, and facilities development and operations services to industry and government entities worldwide. Long-term Debt Waivers During the period from Nov. 23, 2005, to June 14, 2006, the Company entered into four additional amendments and waivers to the 2004 Credit Facility with its syndicated bank group to waive non- compliance with certain financial and non-financial covenants. Among other things, the amendments provided that: (1) certain financial covenants and reporting obligations were waived and/or modified to reflect the Company's current and anticipated future operating performance; (2) the ultimate reduction of the facility to $70,000 for issuance of letter of credit obligations only; and (3) a requirement for the Company to maintain a minimum cash balance of $15,000. WISE METALS: Loses One of its Biggest Customers ----------------------------------------------- Crown Cork and Seal (USA), Inc., has informed Wise Metals Group LLC that that it will place its beverage can sheet volume with other producers for the fourth quarter of 2006 and for calendar year 2007. However, Crown will continue buying sheet from Wise Metals for its food products. In its quarterly report for the period ended June 30, 2006, filed with the Securities and Exchange Commission, Wise Metals disclosed that sales to Crown totaled approximately 20% of its net sales in 2005. The Company admitted that Crown's decision will result in a substantial loss of volume, and to the extent it is not replaced with other volume, could have a material adverse effect on its financial condition and results of operations. On Aug. 11, 2006, Wise Metals filed a lawsuit against Crown in state court in Alabama. The lawsuit alleges damages because of breaches by Crown of the beverage can sheet contract, and asks the court to interpret certain pricing provisions of the food contract. About Wise Metals Based in Baltimore, Maryland, Wise Metals Group LLC includes: Wise Alloys, producer of aluminum can stock for the beverage and food industries using recycled aluminum in the production of its can stock; Wise Recycling, direct-from-the-public collectors of aluminum beverage containers in the United States, operating shipping and processing locations throughout the United States that support a network of neighborhood collection centers; and Listerhill Total Maintenance Center, specializing in providing maintenance, repairs and fabrication to manufacturing and industrial plants worldwide ranging from small on-site repairs to complete turn-key maintenance. WISE METALS: Incurs $16.5 Million Net Loss in 2006 Second Quarter ----------------------------------------------------------------- Shipments of Wise Metals Group's aluminum beverage can stock, other rolled aluminum products and scrap in the second quarter of 2006 totaled 207.4 million pounds compared to 199.4 million for the same period in 2005, an increase of 4%. Shipments of scrap at Wise Recycling increased 10% in the second quarter of 2006 versus the second quarter of 2005 while shipments of commercial products, or common alloy, increased 36%. These increases were offset by a 1% decrease in can sheet shipment volumes which have been reduced as a result of contractual renegotiations to improve pricing. For the six months ended June 30, 2006, shipments totaled 377.3 million pounds, compared to 395.9 million pounds for the same period in 2005, a 5% decrease. Net loss for the second quarter of 2006 was $16.5 million, which includes a $3.5 million unfavorable impact for FAS 133. This compares to a net income of $5.5 million in the second quarter of 2005, which includes a $4.9 million favorable impact for FAS 133. After adjusting for FAS 133, net loss for the second quarter of 2006 was $13 million, compared to a net income of $600,000 in the second quarter of 2005, adjusting for similar items. The difference of approximately $13.6 million includes the effects of aluminum price caps, increased interest expense of $2.2 million and increased natural gas prices impacting the quarter by $1.9 million. Sales increased by approximately 23% to $283.3 million for the three months ended June 30, 2006, and have increased 10% to $499.5 million for the six months ended June 30, 2006, compared to year- ago figures. Line of Credit Amendment On June 12, 2006, Wise Metals Group LLC completed an amendment to its revolving line of credit resulting in a $20 million increase to the facility from $180 million to $200 million. Furthermore, on Aug. 4, 2006, the facility was further increased to $207.5 million and extended one year to May 5, 2009. These additional funds are immediately available to the company, subject to customary borrowing base calculations. "Second quarter results clearly demonstrate the significant effects that metal price caps have on our industry," said Chairman and Chief Executive Officer David F. D'Addario. "This only underscores the critical nature of the efforts that we began nearly two years ago to set the course for a transformation of this industry standard." Metal price caps or ceilings have been an industry standard in the aluminum can industry and set a maximum price for the aluminum component that is passed through to customers through the industry chain. The price ceiling suppressed the sales price and resulting revenue for the second quarter by an approximate $19.7 million and is expected to have a similar but reduced impact in the third quarter due to lower volumes. "The ceiling impact for the quarter is mitigated somewhat by the effect of price increases that were negotiated back in 2005 and began taking effect January 1 of this year," said Chief Financial Officer Ken Stastny. "Further price increases set to take effect on October 1 and again on January 1, 2007, are expected to offset what may otherwise be a larger impact from the price ceilings in the fourth quarter." The price paid for natural gas in the three months ended June 30, 2006 averaged $8.95 per mmBTU while the average for the same period in 2005 was $7.08 reflecting an increase of 27%. This increase impacted the quarter by approximately $1.9 million versus the same period in 2005. "Despite challenging conditions from energy and the effect of the aluminum price caps, we continue to execute on our cost cutting and productivity efforts while expanding our capabilities to serve the commercial products markets," according to Executive Vice President Phil Tays, who recently was appointed plant manager of Wise Alloys. "We are excited about the ongoing prospects of this business and have placed all efforts to plan for and manage through a difficult transition year," added Mr. D'Addario. "With these management changes we are now eagerly setting the positive direction for our company heading into 2007 and beyond." A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?1015 About Wise Metals Group Based in Baltimore, Maryland, Wise Metals Group LLC includes: Wise Alloys, producer of aluminum can stock for the beverage and food industries using recycled aluminum in the production of its can stock; Wise Recycling, direct-from-the-public collectors of aluminum beverage containers in the United States, operating shipping and processing locations throughout the United States that support a network of neighborhood collection centers; and Listerhill Total Maintenance Center, specializing in providing maintenance, repairs and fabrication to manufacturing and industrial plants worldwide ranging from small on-site repairs to complete turnkey maintenance. WISE METALS: Customer Loss Prompts Moody's to Junk Ratings ---------------------------------------------------------- Moody's Investors Service downgraded the ratings of Wise Metals Group LLC, lowering the company's corporate family rating to Caa3 from Caa1 and the rating for its 10.25% senior secured notes to Ca from Caa1. Wise Metals' speculative grade liquidity rating of SGL-4 was affirmed and the rating outlook continues to be negative. The downgrades were prompted by Wise Metals' announcement that it will lose the beverage can sheet business of one of its major customers, Crown Cork & Seal, for the fourth quarter of 2006 and for all of 2007. Sales to Crown including both beverage can and food can sheet, which the company will continue to supply, represented about 20% of net sales in 2005. Moody's believes it will be difficult to replace the lost Crown beverage can volumes as nearly all aluminum can sheet customers negotiated new sales agreements over the last year and have firmed up much of their near-term volume requirements with their various suppliers. Furthermore, sales of other commercial products may not be as profitable as the Crown can sheet business was expected to be. Wise Metals has limited liquidity and its debt has nearly doubled over the last two years, reaching $334 million at June 30, 2006. This is a very high level of debt for a business that, in good times, earns a conversion margin of only 4 to 5 cents per pound. Over the last two years, Wise Metals' operating margins and liquidity have been negatively impacted by rising prices for aluminum, natural gas and other materials. Most of its can sheet sales agreements, at least until recently, did not allow the full pass-through of higher aluminum prices if they exceeded certain amounts, which has been the case as aluminum prices have skyrocketed. Wise Metals and its competitors have been successful in negotiating new can sheet sales agreements that eliminated aluminum-related price ceilings and Moody's had been expecting Wise Metals' margins to improve in 2007. However, Moody's believes it will be hard for the company to offset the impact of a material decline in volume, and we now expect losses to continue in 2007. High aluminum prices have also raised Wise Metals' working capital investment and necessitated regular increases to its revolving credit facility in order to maintain adequate liquidity. The company has also sold about $16 million of accounts receivables. Nevertheless, liquidity is tight, as indicated by the SGL-4 rating. The negative outlook reflects a high likelihood of financial distress and eventual restructuring over the next 12 months. Moody's could revise the outlook and rating upward if the company is successful in replacing its lost sales volumes, demonstrates the ability to consistently earn conversion margins in excess of its interest and capex requirements, and solidifies its liquidity position and revolver covenant cushions. The rating for Wise Metals' senior secured notes was lowered to Ca, one notch below the corporate family rating, in recognition of the ever-increasing amount of revolver borrowings, which are secured by accounts receivable and inventory, and the likelihood that investor losses on the notes will be very high if there should be a default. The notes are secured by a first priority lien on fixed assets and a second priority lien, junior to the lien securing the revolver, on A/R and inventory. Moody's last rating action on Wise Metals was a year ago when its corporate family and note ratings were lowered to Caa1 from B2. Wise Metals Group LLC produces aluminum can sheet and packaging products from a casting and rolling facility in Muscle Shoals, Alabama and owns several recycling centers throughout the United States. T he company has its headquarters in Linthicum, Maryland. WORLDCOM INC: Wants Teleserve's $7.3MM Claim Allowed as Class 6 --------------------------------------------------------------- WorldCom Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New York to deny Teleserve Systems, Inc.'s request to have its claim allowed as a Class 6A claim. The Debtors rather want the Court to designate Teleserve Systems' claim as an allowed Class 6 Claim. On Jan. 9, 2003, Teleserve filed Claim No. 9449 against Debtors MCI WorldCom Network Services, Inc., and Teleconnect Long Distance Services and Systems Co. asserting $7,573,089 in prepetition claims for damages in connection with the Debtors' purported breach of the parties' Operator Services Agency Agreements. The Debtors allegedly underpaid commissions due Teleserve for commissionable calls made during the terms of the Agreements. The Court then allowed Teleserve's Claim No. 9449 for $7,366,101: (1) subject to the Debtors' right to object to Teleserve's designation of the Allowed Claim as a Class 6A MCI Pre- merger Claim; and (2) payable after a determination by the Court or by stipulation between the parties of the proper classification of the Claim under the Debtor's confirmed Plan of Reorganization. Subsequently, Teleserve asked the Court to allow its Claim a Class 6A classification asserting that it meets the 6A Classification requirements. Teleserve contended that it has absolute right to receive Class 6A status based on five simple, incontrovertible facts: (1) In July 1993, Teleserve became a marketing agent for the Debtors; (2) In August 1995, Teleserve declared the Debtors in breach of their marketing agreements; (3) In September 1995, Teleserve attempted to arbitrate its breach of contract claims against the Debtors; (4) In October 1995, Teleserve commenced a lawsuit against the Debtors to obtain a judicially selected arbitration forum that could hear and determine its breach of contract claims against the Debtors; and (5) In February 1996, the Debtors terminated Teleserve's marketing agreements and put Teleserve out of business. Thomas R. Califano, Esq., at DLA Piper Rudnick Gray Cary US LLP, in New York, New York, notes that in order to qualify for a Class 6A designation, a claimant must establish in writing, with supporting documentation, that: (a) its claim arises solely from an individual transaction or series of transactions that was fully completed on or before September 13, 1998; and (b) it relied on the separate credit of the Debtors. Teleserve's Claim No. 9449 arises out of an arbitration award that did not become final until after the Debtors' bankruptcy filing, and included an award of damages through 2000, which is after the Sept. 13, 1998 cut-off date, Mr. Califano contends. Mr. Califano argues that Teleserve has not established its reliance on the separate credit of the Debtors. Teleserve was an independent contractor that maintained an agency relationship with the Debtors, Mr. Califano states. Pursuant to the Agency Agreements, the Debtors could assign their interest to a "parent, subsidiary or affiliate." The Debtors maintain that Teleserve was fully aware that they might ultimately sell operator-assisted telephone services on behalf of other Debtor- related entities when they entered into the Agency Agreements. The Debtors are not required to take immediate action with respect to the classification of Teleserve's claim, Mr. Califano asserts. The Debtors' treatment of Teleserve's 6A Application is well grounded in fact and law and warranted by the Claims Allowance Order, which explicitly preserves the Debtors' right to challenge the Application. Regardless of whether Teleserve's Claim is designated under Class 6 or Class 6A, it is not entitled to accrue interest under the confirmed Plan of Reorganization, Mr. Califano avers. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WORLDCOM INC: Teleserve Asserts Claim Deserves 6A Classification ---------------------------------------------------------------- Teleserve Systems Inc. asks the U.S. Bankruptcy Court for the District of New York to deny WorldCom Inc. and its debtor- affiliates' request to have its claim designated as an allowed Class 6 Claim. On Jan. 9, 2003, Teleserve filed Claim No. 9449 against Debtors MCI WorldCom Network Services, Inc., and Teleconnect Long Distance Services and Systems Co. asserting $7,573,089 in prepetition claims for damages in connection with the Debtors' purported breach of the parties' Operator Services Agency Agreements. The Debtors allegedly underpaid commissions due Teleserve for commissionable calls made during the terms of the Agreements. The Court then allowed Teleserve's Claim No. 9449 for $7,366,101: (1) subject to the Debtors' right to object to Teleserve's designation of the Allowed Claim as a Class 6A MCI Pre- merger Claim; and (2) payable after a determination by the Court or by stipulation between the parties of the proper classification of the Claim under the Debtor's confirmed Plan of Reorganization. Subsequently, Teleserve asked the Court to allow its Claim a Class 6A classification asserting that it meets the 6A Classification requirements. The Debtors objected and asked the Court to designate Teleserve's claim as an allowed Class 6 Claim. Lee E. Woodard, Esq., at Harris Beach, PLLC, in Syracuse, New York, argues that (i) the date when Teleserve's lawsuit against the Debtors was finally completed before the arbitration panel and consequently confirmed by the Court, or (ii) the manner in which that arbitration panel elected to calculate Teleserve's damages, are wholly irrelevant to 6A Classification's "fully completed" requirement. Teleserve's business relationship with the Debtors ceased once it declared the Debtors in default and then commenced a lawsuit against them to recover damages for that default, Mr. Woodard relates. "Nothing that occurred after those events can breathe new life into the severed business relationship or otherwise resurrect the parties' terminated contracts." The requirements for 6A Classification under the Debtors' Chapter 11 Plan do not require an unsecured creditor to allege or prove its motivation for entering into its business relationship with the Debtors, Mr. Woodard emphasizes. In addition, there is nothing in 6A Classification's requirements that obligate a creditor to allege or prove it "was induced to change its position for the worse" or that it "suffered some substantial injury" by reason of its reliance upon the Debtors, Mr. Woodard contends. Regardless, Teleserve's verified 6A Application, clearly meets even this heightened threshold, Mr. Woodard says. Mr. Woodard argues that Teleserve's 6A Application confirms that Teleserve "invested, expended or incurred substantial sums marketing the Debtors' products and services" in reliance upon its marketing agreements with the Debtors. Teleserve's investment in its marketing efforts for the Debtors exceeded $2,400,000 in August 1995. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * A.M. Best Takes Various Public Data Rating Actions on 48 HMOs --------------------------------------------------------------- A.M. Best Co. has affirmed the public data (pd) financial strength ratings of 19 health maintenance organizations (HMO), upgraded 22, downgraded four and assigned three. These ratings are based solely upon public information and present the most informed view A.M. Best can offer, short of an insurer participating in the full interactive rating process. A.M. Best's pd ratings are assigned to insurers in select markets that do not subscribe to A.M. Best's interactive rating process. A.M. Best uses the same rating scale and definitions as it does for its long-term financial strength interactive ratings but applies a pd rating modifier to ensure the user is aware of the more limited information basis for the rating. An interactive A.M. Best rating is produced at the request of the insurer. The interactive rating process includes detailed interviews of senior management and access to non-public data and other information. Currently, the companies that participate in the interactive rating process collectively represent a significant percentage of market share in the U.S. health insurance industry. The pd rating process is based on the statutory filings of the companies and an A.M. Best committee review of the company's financial strength, along with current market conditions in which the company operates. A.M. Best's HMO pd ratings will be released regularly over the next two months. Each month, A.M. Best will provide an update of these recent rating actions. A.M. Best has affirmed the pd ratings of these HMOs: Cook Children's Health Plan C++ (Marginal) Coordinated Care Corp Indiana, Inc. C+ (Marginal) Driscoll Children's Health Plan C++ (Marginal) FirstGuard Health Plan, Inc. C++ (Marginal) Florida Health Care Plan, Inc. B (Fair) Group Health Cooperative of South Central Wisconsin B+ (Very Good) Health Plan of Michigan B- (Fair) Health Right, Inc. B- (Fair) Managed Health Services Insurance Corporation C++ (Marginal) McLaren Health Plan, Inc. B- (Fair) Midwest Health Plan, Inc. B (Fair) Neighborhood Health Plan, Inc. B- (Fair) Physicians Health Plan of South Michigan B (Fair) UCare Minnesota B (Fair) Union Health Service, Inc. C++ (Marginal) Upper Peninsula Health Plan, Inc. C+ (Marginal) UTMB Health Plans, Inc. C+ Marginal) Vantage Health Plan, Inc. C++ (Marginal) VIVA Health, Inc. C++ (Marginal) A.M. Best has upgraded the pd ratings of these HMOs: Cape Health Plan, Inc. C++ (Marginal) Community First Health Plans, Inc. C++ (Marginal) Community Health Choice, Inc. C++ (Marginal) DC Chartered Health Plan, Inc. B- (Fair) Geisinger Health Plan B- (Fair) Health Plus of Louisiana, Inc. B (Fair) HealthPlus of Michigan, Inc. B- (Fair) Hometown Health Plan B (Fair) Inland Empire Health Plan C++ (Marginal) Managed Health, Inc. C++ (Marginal) Medical Associates Health Plan, Inc. B- (Fair) Medical Health Insuring Corporation of Ohio B+ (Very Good) Mount Carmel Health Plan, Inc. B (Fair) Neighborhood Health Plans of Rhode Island, Inc. C++ (Marginal) Parkland Community Health Plan, Inc. C+ (Marginal) Preferred Health B- (Fair) Seton Health Plan, Inc. B- (Fair) Sioux Valley Health Plan C++ (Marginal) Superior Health Plan, Inc. C+ (Marginal) Tufts Associated Health Maintenance Organization, Inc. B (Fair) University Health Plans, Inc. C++ (Marginal) Virginia Premier Health Plan C++ (Marginal) A.M. Best has downgraded the pd ratings of these HMOs: Athens Area Health Plan Select, Inc. C (Weak) Cariten Health Plan Inc. C++ (Marginal) Central Oregon Independent Health Services C++ (Marginal) Educators Health Care B- (Fair) A.M. Best has assigned pd ratings to the following HMOs: Denver Health Medical Plan, Inc. C+ (Marginal) FirstGuard Health Plan Kansas, Inc. C++ (Marginal) Superior Dental Care, Inc. B- (Fair) A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- August 24, 2006 TURNAROUND MANAGEMENT ASSOCIATION A Walk in the Park Millennium Park, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ August 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ August 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION 4th Annual Alberta Golf Tournament Kananaskis Country Golf Course, Kananaskis, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ September 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Business Mixer TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ September 7-8, 2006 EUROMONEY Leveraged Finance Hotel Rey Juan Carlos I, Barcelona, Spain Contact: http://www.euromoneyplc.com/ September 7-8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Saratoga Regional Conference Gideon Putnam Hotel, Saratoga Springs, New York Contact: http://www.turnaround.org/ September 7-8, 2006 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Wynn Las Vegas, Las Vegas, NV Contact: 1-703-739-0800; http://www.abiworld.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ September 8-9, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium London, England Contact: http://www.turnaround.org/ September 9, 2006 TURNAROUND MANAGEMENT ASSOCIATION ALS Walk 4 Life Montrose Harbor, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ September 11, 2006 AMERICAN BANKRUPTCY INSTITUTE / NEW YORK INSTITUTE OF CREDIT Golf Outing Montammy Golf Club, Alpine, NJ Contact: http://www.abiworld.org/ September 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION ACG/TMA Joint Movie - Enron: The Smartest Guys in the Room TBD, AZ Contact: 623-581-3597 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBA, Secaucus, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Formal Event Long Island, New York Contact: http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Function Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Formal Event - Major Speaker to be Announced Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ September 13-15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Texas Regional Conference Hyatt Regency Resort & Spa Lost Pines, TX Contact: 870-760-7116 or http://www.turnaround.org/ September 14, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Advanced Restructuring and Plan of Reorganization Park Central, New York, NY Contact: http://www.airacira.org/ September 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Kick-Off Reception Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ September 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION BOK Review - Management Gardner Carton & Douglas, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ September 17-24, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Optional Alaska Cruise Seattle, Washington Contact: 800-929-3598 or http://www.nabt.com/ September 19-20, 2006 STRATEGIC RESEARCH INSTITUTE 2nd Annual Euro Distressed Debt Summit Le Meridien Parkhotel, Frankfurt, Germany Contact: http://www.srinstitute.com/ September 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Bankers Club, Miami, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 21, 2006 TURNAROUND MANAGEMENT ASSOCIATION Young Professionals Group - "Conversations in Networking" Dave & Buster's, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ September 21, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring Workshop With US Bankruptcy Judges Hale, Nelms and Lynn Belo Mansion - The Pavilion, Dallas, TX Contact: http://www.turnaround.org/ September 24, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring the Troubled High Tech Company Arizona Contact: http://www.turnaround.org/ September 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION 10th Annual Turnaround Tee-off Golf Tournament & Fundraiser Green Valley Country Club, Lafayette Hill, PA Contact: 215-657-5551 or http://www.turnaround.org/ September 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Carolinas Membership Luncheon featuring a presentation by James Porter of Mesirow Financial City Club, Charlotte, NC Contact: 704-319-2288 or http://www.turnaround.org/ September 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Education Program with NYIC Joint Reception CFA/RMA/IWIRC Woodbridge Hilton, Iselin, NJ Contact: http://www.turnaround.org/ September 26-27, 2006 EUROMONEY Asia Pacific High Yield Debt Summit JW Marriott Hotel, Hong Kong Contact: http://www.euromoneyplc.com/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Cross Border Business Restructuring and Turnaround Conference Banff, Alberta Contact: http://www.turnaround.org/ September 27, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS New York Luncheon - Pension Panel Program Harmonie Club, New York, NY Contact: 541-58-1665 or http://www.airacira.org/ October 3, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Organization of Women Networking Event/ Fundraiser TBD, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ October 3, 2006 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Golf Outing Fox Chapel Golf Club, Pittsburgh, PA Contact: 412-644-8794 or http://www.turnaround.org/ October 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION Commercial Lenders Breakfast Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 6, 2006 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy 2006: Views from the Bench Georgetown University Law Center, Washington, DC Contact: 1-703-739-0800; http;//www.abiworld.org/ October 10, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Center Club, Baltimore, Maryland Contact: 703-912-3309 or http://www.turnaround.org/ October 11, 2006 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Meeting Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION UTS Fundamentals of Turnaround Management Melbourne, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION UTS Fundamentals of Turnaround Management Mecure Hotel - Haymarket, Sydney, Australia Contact: http://www.turnaround.org/ October 16, 2006 AMERICAN BANKRUPTCY INSTITUTE A Year After BAPCPA Georgetown University Law Center, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ October 18-19, 2006 EUROMONEY 2nd Annual Latin America Syndicated Loans Conference JW Marriott Hotel, Miami, FL Contact: http://www.euromoneyplc.com/ October 17, 2006 TURNAROUND MANAGEMENT ASSOCIATION Updates on the New Bankruptcy Law Kansas City, Missouri Contact: http://www.turnaround.org/ October 19, 2006 TURNAROUND MANAGEMENT ASSOCIATION Billards Networking Night - Young Professionals TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Hedge Funds - Expanded Financing Opportunities in Business Turnarounds Arizona Contact: http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast with Coach Dan Reeves Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ October 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION BK/TMA Golf Tournament Orange Tree Golf Resort, AZ Contact: 623-581-3597 or http://www.turnaround.org/ October 30-31, 2006 Distressed Debt Summit: Preparing for the Next Default Cycle Financial Research Associates LLC Helmsley Hotel, New York, NY Contact: http://www.frallc.com/ October 31, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ October 31 - November 1, 2006 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Conference San Francisco, California Contact: http://www.iwirc.com/ November 1, 2006 TURNAROUND MANAGEMENT ASSOCIATION Halloween Isn't Over! - Ghosts of turnarounds past who remind you about what you should have done differently Portland, Oregon Contact: http://www.turnaround.org/ November 1-4, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges San Francisco, California Contact: http://www.ncbj.org/ November 2, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA UK Annual Conference Millennium Gloucester Hotel, London, UK Contact: http://www.turnaround.org/ November 2-3, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Third Annual Conference on Physician Agreements & Ventures Successful Strategies for Medical Transactions and Investments The Millennium Knickerbocker Hotel - Chicago Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast Marriott, Bridgewater, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 7-8, 2006 EUROMONEY 5th Annual Distressed Debt Investment Symposium Hyatt Regency, London, UK Contact: http://www.euromoneyplc.com/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Australia National Conference Sydney, Australia Contact: http://www.turnaround.org/ November 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Program St. Louis, Missouri Contact: 815-469-2935 or http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Reception with NYIC/NYTMA TBA, New York Contact: 908-575-7333 or http://www.turnaround.org/ November 15, 2006 LI TMA Formal Event TMA Australia National Conference Long Island, New York Contact: http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Duquesne Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Dinner Program TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ November 16-17, 2006 STRATEGIC RESEARCH INSTITUTE 8th Annual West Distressed Debt Investing Forum Venetian Resort Hotel Casino, Las Vegas, NV Contact: http://www.srinstitute.com November 23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Martini Party Vancouver, British Columbia Contact: 403-294-4954 or http://www.turnaround.org/ November 27-28, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Thirteenth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Essex House Hotel - New York Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Special Program TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Turnaround Industry Trends Jasna Polana, Princeton, NJ Contact: http://www.turnaround.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ December 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Dinner Portland, Oregon Contact: 503-223-6222 or http://www.turnaround.org/ December 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast The Newark Club, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Holiday Party TBA, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function GE Commercial Finance, Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ December 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Extravaganza - TMA, AVF & CFA Georgia Aquarium, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ January 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual Lender's Panel Breakfast Westin Buckhead, Atlanta, GA Contact: http://www.turnaround.org/ February 8-11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Certified Turnaround Professional (CTP) Training NY/NJ Contact: http://www.turnaround.org/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA PowerPlay - Atlanta Thrashers Philips Arena, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ February 25-26, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Marriott Park City, UT Contact: http://www2.nortoninstitutes.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Martini Madness Cocktail Reception with Geraldine Ferraro Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ March 15-18, 2007 NATIONAL ASSOCIATION OF BANKRUTPCY TRUSTEES NABT Spring Seminar Ritz-Carlton Buckhead, Atlanta, GA Contact: http://www.NABT.com/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, Texas Contact: http://www.turnaround.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ April 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 28 - July 1, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Jackson Lake Lodge, Jackson Hole, WY Contact: http://www2.nortoninstitutes.org/ July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers - the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Emerging Role of Corporate Compliance Panels Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***