/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060908.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, September 8, 2006, Vol. 10, No. 214 Headlines ALLIANT TECHSYSTEMS: To Launch $300 Million Senior Notes Offering ALLIANT TECHSYSTEMS: Moody's Rates Proposed Sr. Sub. Notes at B2 ALLIANT TECHSYSTEMS: S&P Rates Proposed $270 Million Notes at B+ ALLIED HOLDINGS: Wants to Sign Lease Agreement with New York City ALLIED HOLDINGS: Wants to Pay Automobile Liability Claims AMERICAN TISSUE: Trustee Taps Andrew Sklar as Special Counsel ARMSTRONG WORLD: Court Okays Modified Reorganization Plan AVNET INC: Higher Gross Level Cues Moody's to Upgrade Ratings BEST MANUFACTURING: Hires Levett Rockwood as Special Counsel BROOKS SAND: Court Approves Sale of All Assets for $6.7 Million CATALYST PAPER: Earns $42.4 Million in 2006 Second Quarter CATHOLIC CHURCH: Portland Court Okays Pact on Hiring Appraisers CHAPARRAL STEEL: Moody's Review Low-B Ratings on Sr. Unsec. Bond CHI-CHI'S: Court Approves Ecolab Adversary Proceeding Settlement CHI-CHI'S: Court Approves Sysco Adversary Proceeding Compromise CM INVESTOR: Ends Capri Capital Purchase Deal for $6 Million COLLINS & AIKMAN: Magna Paying $2.7 Million Under Stipulation COMPLETE RETREATS: Wants to Walk Away from 21 Contracts and Leases COMPLETE RETREATS: Gets Final Okay for Continued Utility Services CONGOLEUM CORP: Bondholders Support New Reorganization Plan Terms CONNACHER OIL: S&P Assigns B+ Long-Term Corporate Credit Rating COPELANDS' ENT: Meeting of Creditors Scheduled on September 21 CRDENTIA CORP: To Acquire iVOW for $3.5 Million DANA CORP: Court Approves Toyota Tooling Pact Assumption DANA CORP: Gets Court Approval on 2nd Settlement With Toledo Press DELTA AIR: Court Approves 2001-1 EETC Stipulation with U.S. Bank DELTA AIR: Wants to Sell 10 Airframes to Planet Marketing DELTA MILLS: Fails to Make September 1 Interest Payment DOMTAR INC: Posts $3 Million Net Loss in 2006 Second Quarter EASY GARDENER: Files Liquidating Plan and Disclosure Statement EDS CORP: Earns $104 Million in Second Quarter Ended June 30 ENRON CORP: Closes $2.9 Bil. Prisma Energy Sale to Ashmore Energy EVERGREEN INT'L: Extends 12% Senior Notes Offering to Sept. 25 FIRST BANCORP: Board Declares $0.07 Dividend Per Common Share FLINTKOTE COMPANY: Wants Exclusivity Period Extended to Dec. 28 FLINTKOTE COMPANY: Wants Until Dec. 28 to File Notices of Removal FOAMEX INTERNATIONAL: Posts $13.2 Mil. Net Loss in Second Quarter FOAMEX INTERNATIONAL: Wants to Assume Amended EDS Contract FORD MOTOR: S&P Maintains Negative Watch on Low-B Ratings GERDAU AMERISTEEL: Moody's Reviews Ba1 Sr. Unsec. Bond's Rating GLOBAL MATRECHS: Inks Manufacturing Agreement With Dow Corning HEMOSOL CORP: CA Court Resolves Prometic Biosciences License Pact IMAX CORP: Shareholders Launches $200 Million Class Action Lawsuit IPC ACQUISITION: Moody's Rates Proposed $50 Mil. Sr. Loan at Ba3 KAISER ALUMINUM: Extends Contract With A.M. Castle & Co. LARRY'S MARKETS: Has Until Nov. 3 to File Chapter 11 Plan LEVITZ HOME: Court OKs Assignment of 3 Additional Leases to PLVTZ LUCENT TECH: Shareowners Approve Merger Agreement with Alcatel SA LUXELL TECH: Closes $1 Million Interim Debt Financing MACDERMID INC: Stock Purchase Proposal Cues S&P's Negative Watch MARKETXT HOLDINGS: Court Declines to Dismiss Epoch Bankruptcy Case MORRIS PUBLISHING: S&P Affirms BB Rating & Removes Negative Watch NEENAH PAPER: Moody's Holds Low-B Ratings on $375 Mil. Sr. Notes NORD RESOURCES: Stockholders' Deficit Tops $4.2 Mil. at June 30 OMEGA HEALTHCARE: Completes New Investments Totaling $25 Million PERFORMANCE TRANSPORTATION: Can Assume Modified Bandag Contract PERFORMANCE TRANSPORTATION: Court Approves Amended Firestone Pact PERKINELMER INC: Acquires Avalon Instruments & Raman Spectroscopy PERSONA COMMS: Moody's Junks $130 Million Sr. Sec. Loan's Rating PERSONA COMMS: Acquisitions Prompts S&P's B Corp. Credit Rating PINNACLE ENT: Sands & Traymore Buy Cues Moody's to Hold Ratings RADNOR HOLDINGS: U.S. Trustee Picks Seven-Member Creditors' Panel READERS DIGEST: Weak Liquidity Cues Moody's to Review Ratings REFCO INC: Wants Exclusive Plan-Filing Period Extended to Dec. 5 REFCO INC: Wants Removal Period Extended to December 12 REPUBLIC STORAGE: Creditors Have Until September 11 to File Claims RIGEL CORP: Wants More Time to File Schedules & Statements RUSH FINANCIAL: Second Quarter Net Loss Increases to $1.4 Million SEDGWICK CMS: High Leverage Prompts Moody's to Hold Ratings SILICON GRAPHICS: Wants to Reject Seven Executory Contracts SILICON GRAPHICS: Court Gives Final Nod on AFCO Financing Pact SMASHING PICTURES: Section 341(a) Meeting Scheduled on October 3 SPOKANE RACEWAY: U.S. Trustee Wants Case Converted to Chapter 7 SPOKANE RACEWAY: Mr. Davidson Wants Case Converted to Chapter 7 THOMAS EQUIPMENT: Federal Partners Withdraws Redemption Notice TOWER RECORDS: U.S. Trustee Appoints Seven-Member Creditors Panel TOWER RECORDS: Taps Houlihan Lokey as Investment Banker TOWER RECORDS: Court Gives Nod on Omni Management as Claims Agent TRANSCAPITAL FINANCIAL: Files Schedules of Assets and Liabilities UBONG AKPAN: Case Summary & 8 Largest Unsecured Creditors U.S. STEEL: Moody's Reviews Ba1 Senior Unsec. Bond's Rating VARIG S.A.: Brazilian Judge Sued for Stopping Route Redistribution VARIG S.A.: ACE Aviation Mulls 10% Equity Purchase VARIG S.A.: Port Authority Wants to Collect Flight Fees VASOMEDICAL INC: Miller Ellin Raises Going Concern Doubt VESTA INSURANCE: Files List of Six Largest Equity Holders VESTA INSURANCE: Court Approves Funds Transfer to Gaines VOLT INFORMATION: Amends Agreement to Extend Expiration Date WARD PRODUCTS: Wants to Hire Jaffe Raitt as Local Counsel WCN ENTERPRISES: Engages Keen Realty as Real Estate Consultant WESTON NURSERIES: First Pioneer Sets September 7 Foreclosure Sale WHITING PETROLEUM: Acquires 15% Working Interest in a Utah Acreage XTREME COMPANIES: Appoints Jack Clark as New COO * Law Firms Blank Rome and Healy & Baillie Will Merge * BOOK REVIEW: The Turnaround Manager's Handbook ********* ALLIANT TECHSYSTEMS: To Launch $300 Million Senior Notes Offering ----------------------------------------------------------------- Alliant Techsystems Inc. intends to offer, subject to market conditions and other factors, up to $300 million aggregate principal amount of convertible senior subordinated notes due 2011 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including up to $30 million aggregate principal amount of such notes for which ATK plans to grant to the initial purchasers an over-allotment option. ATK expects that the notes will be unsecured, senior subordinated obligations of ATK, will pay interest semi-annually, and will be convertible upon satisfaction of certain conditions. Upon conversion, the holder will receive an amount in cash and, in certain circumstances at the option of ATK, shares of its common stock. The notes will be guaranteed on a senior subordinated basis by substantially all of the Company's existing subsidiaries. Holders of the notes will have the right to require ATK to repurchase all or some of their notes upon the occurrence of certain events. ATK intends to use the proceeds from the offering to: (a) purchase approximately $100 million of shares of ATK common stock and (b) make a contribution to its defined benefit pension plan and for other general corporate purposes In addition, simultaneous with the offering of the notes, ATK intends to enter into convertible note hedge transactions with one or more of the initial purchasers of the notes. The convertible note hedge transactions are intended to offset potential dilution to ATK's common stock upon potential future conversion of the notes. ATK will pay expenses of the offering and the related convertible note hedge transactions through existing cash on hand and other borrowings. ATK also expects to enter into separate warrant transactions with one or more of the initial purchasers of the notes. In connection with the convertible note hedge and warrant transactions, affiliates of the initial purchasers that are a party to those transactions have advised ATK that they will purchase ATK's common stock in secondary market transactions and may enter into various over-the-counter derivative transactions with respect to ATK's common stock concurrently with or following pricing of the notes. Headquartered in Edina, Minnesota, Alliant Techsystems, Inc. (NYSE: ATK) -- http://www.atk.com/-- supplies propulsion, composite structures, munitions, precision capabilities, and civil and sporting ammunition. ALLIANT TECHSYSTEMS: Moody's Rates Proposed Sr. Sub. Notes at B2 ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Alliant Techsystems Inc.'s proposed senior convertible subordinated notes, due 2011, and affirmed all of the company's existing ratings. The rating outlook has been changed to positive. Assignments: Issuer: Alliant Techsystems Inc. * Senior Subordinated Conv./Exch. Bond/Debenture, Assigned B2 Outlook Actions: Issuer: Alliant Techsystems Inc. * Outlook, Changed To Positive From Stable The ratings reflect ATK's strong and stable financial performance and retained cash flow generation that has ensued from successful integration of acquired companies amidst a favorable industry environment. The ratings also consider the company's relatively high leverage, which includes under-funded pension levels, the high level of goodwill in the company's asset base, as well as modest anticipated free cash flows through FY 2007. The positive ratings outlook reflects Moody's expectations that ATK will continue to grow its revenue base while possibly pursuing modestly-sized acquisitions with no significant increases in debt levels, and will return to a policy of modest debt repayments upon conclusion of its current share repurchase program over the near term. The positive outlook also takes into account longer range prospects for space flight programs in light of NASA's recently- announced awards of development contracts for next generation space exploration programs, reducing ATK's reliance on the space shuttle program in its Launch Systems Group. Ratings would be subject to upward revision if the company were to reduce debt and improve operating profits and cash flows such that leverage were to fall below 4.0 times and if free cash flow were to exceed 10% of debt for a sustained period, while the company curtails its share repurchase program to more modest levels. Conversely, ratings or their outlook could be lowered if loss of contracts or unexpected deterioration in operating performance were to occur, if the company were to increase its use of cash for share repurchase, or if ATK were to increase debt levels materially for any reason, such that Debt per EBITDA were to exceed 5 times or free cash flow were to fall below 5% of total debt. Proceeds from the proposed notes offering are expected to be used for contributions to the company's pension plans as well as to purchase approximately $100 million of common stock. The transaction will have only a modest affect on ATK's leverage, since the under-funded status of a company's pension plans are considered as debt per Moody's standard methodologies. However, the benefits that may ensue by bolstering pension funding could be offset somewhat by additional levels of share repurchases that have been announced. The B2 rating assigned to the new senior convertible subordinated notes reflect the substantial amount of senior secured debt that is ahead of these securities in claim, as well as subordination to all current and future potential senior unsecured obligations of the company. Headquartered in Edina, Minnesota, Alliant Techsystems Inc. is a leading supplier of propulsion, composite structures, munitions, precision capabilities, and civil and sporting ammunition. ALLIANT TECHSYSTEMS: S&P Rates Proposed $270 Million Notes at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB' corporate credit rating, on Alliant Techsystems Inc. At the same time, Standard & Poor's assigned its 'B+' rating to the propulsion and munitions company's proposed $270 million convertible subordinated notes due 2011. The notes will be issued via SEC rule 144A with registration rights and include a $30 million over allotment option. The outlook is stable. "The proceeds from the proposed notes will be used in part to fund the company's defined-benefit pension plans, but pension-adjusted credit protection measures will not materially change," said Standard & Poor's credit analyst Christopher DeNicolo. "Accordingly, the ratings on Alliant, which reflect a somewhat aggressively leveraged balance sheet and limited, albeit improving program diversity, but benefit from leading market positions and a generally favorable environment for defense spending, are affirmed," the analyst continued. A portion of the proceeds will be used to repurchase $100 million of stock to offset dilutive effect of the convertible notes. The pension contribution plus others already made or previously planned will substantially reduce the pension underfunding, which will reduce increased funding requirements under the recently passed Pension Protection Act, eliminate higher premium payments to the Pension Benefit Guaranty Corp. (about $3 million a year), and allow the company to reverse a portion of the minimum pension liability charge recorded in other comprehensive income. Although debt levels will increase, leverage measures, adjusted for postretirement obligations, will be largely unchanged, with debt to EBITDA around 4x and debt to capital around 80%. Funds from operations to debt is expected to be appropriate for the rating in the mid-20% area. Excess cash flows are expected to be used to reduce debt, pursue strategic acquisitions, and repurchase shares. Alliant is the leading manufacturer of solid rocket motors for space launch vehicles and strategic missiles and is second in the market for tactical missiles. In addition, the firm is the largest provider of small caliber ammunition to the U.S. military and has strong positions in tank and other types of ammunition. Edina, Minnesota-based Alliant's revenues have more than tripled since 2000 due mostly to a series of acquisitions that have improved product and program diversity. Acquisitions in the high-priority precision-guided munitions area have enabled the company to win key contracts for advanced guided missiles and mortars. Other acquisitions have bolstered Alliant's R&D and hypersonic propulsion capabilities, and added new products such as satellite components and propellant tanks. Satisfactory profitability and cash flows, along with some debt reduction, are expected to result in a steadily strengthening credit profile, despite likely share repurchases and the possibility of small to moderate-size debt-financed acquisitions. The outlook could be revised to negative if leverage increases materially to fund a major acquisition. An outlook revision to positive is less likely in the near term. ALLIED HOLDINGS: Wants to Sign Lease Agreement with New York City ----------------------------------------------------------------- Debtor Axis Group, Inc., seeks authority from the U.S. Bankruptcy Court for the Northern District of Georgia for authority to enter into a lease agreement with the city of New York for 74 acres of land and improvements, located at the South Brooklyn Marine Terminal in Brooklyn, New York, Block 662, portion of Lots 1 and 155. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, tells the Court that Axis will use and occupy the Premises for the development of a maritime automobile processing facility handling newly manufactured domestically produced vehicles, imported new vehicles, and pre-owned vehicles. Vehicles will arrive at the facility by truck, barge and deep-sea vessels. The lease contains an inducement to reduce the truck traffic in the New York metropolitan area in the form of rent credits. The initial term of the Lease will be 15 years. For the period beginning on the Petition Date and ending on the day immediately preceding the two-year anniversary of the date that NYC has delivered the entire Premises to Axis and NYC's work has been completed with respect to the entire Premises in accordance with a development plan, Axis will pay annual base rent of $1 per square foot, Mr. Winsberg says. Pursuant to the Lease, Axis will construct and install: (1) two security guardhouses, (2) a carwash building and systems, (3) a trucker support building, and (4) office and administration. Mr. Winsberg relates that Axis has determined that the rent for Premises is a good value. Axis also believes it would be advantageous to its operations to secure a leasehold interest in the Premises. Mr. Winsberg assures the Court that Axis has the ability to perform all of the terms, provisions and conditions of the Lease. A full-text copy of the NYC Lease Agreement is available for free at http://researcharchives.com/t/s?1140 Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ALLIED HOLDINGS: Wants to Pay Automobile Liability Claims --------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia for authority to pay prepetition automobile liability claims in their sole discretion, but, subject to terms and conditions of applicable insurance policies and related agreements. Pursuant to certain policies, two insurance carriers provide automobile liability coverage for the Debtors, specifically: (i) the ACE Group of Companies through the ACE AL Program, which provided coverage for the U.S. Debtors from March 1, 2003, through December 31, 2005; and (ii) the American Home Assurance Company by the AHA Policy, which provided coverage for the Debtors in Canada, prepetition. Under the Insurance Policies, ACE and AHA retained a portion of the premiums paid by the Debtors each year, and ceded the remaining amount of premiums to Haul Insurance Limited in return for Haul's agreement to reinsure a substantial portion of automobile liability losses under the Policies. To secure its obligations to ACE, Haul has caused letters of credit to be issued in favor of ACE under their reinsurance agreement. In 2005, the ACE AL Program carried a $1,000,000 per incident deductible and a $5,000,000 limit of coverage. Under the ACE AL Program, the Debtors are responsible for $7,000,000 inner- aggregate liability between the $1,000,000 and $5,000,000 layers of coverage. On the same year, the AHA Policy carried a CN$500,000 per incident deductible and a CN$2,500,000 limit of coverage, under which the Debtors are responsible for CN$500,000 inner-aggregate liability between the CN$500,000 and CN$1,000,000 layers of coverage. As of the Petition Date, the Debtors have approximately 204 claims pending for alleged automobile-related liability, of which 164 are in the U.S. and 40 are in Canada. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, tells the Court that if the Debtors do not pay amounts within the deductible limits or Haul does not pay its obligations under its reinsurance agreements, the Insurance Carriers may draw on the letters of credit posted by the Debtors or Haul. Mr. Winsberg points out that the draw would hurt Haul's and the Debtors' ability to seek a return of any cash collateral posted with the banks that issued the letters of credit. Furthermore, the Debtors discovered that a policy regarding a corridor deductible for 2005 contained an error. Following discussions with ACE, the Debtors received an endorsement that corrects the 2005 policy to reflect the parties' prepetition agreement. The Debtors also ask the Court to approve the Corrective Endorsement. A full-text copy of the Corrective Endorsement if available for free at http://researcharchives.com/t/s?113f Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN TISSUE: Trustee Taps Andrew Sklar as Special Counsel ------------------------------------------------------------- Christine C. Shubert, Chapter 7 Trustee for the estate of American Tissue, Inc., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Delaware for authority to retain the Law Offices of Andrew Sklar, P.C., as her special counsel related to the collection of judgments in the Debtors' chapter 7 cases. Andrew Sklar, Esq., a shareholder at Andrew Sklar, discloses that the firm will receive a 40% contingency fee of the amount collected from the judgments, plus reimbursement of all costs. Mr. Sklar assures the Court that his firm does not hold or represent any interest materially adverse to the Debtors' estate or any class of creditors and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. American Tissue Inc. is an integrated manufacturer of tissue products and pulp and paper in North America, with a comprehensive product line that includes jumbo tissue rolls for converting and converted tissue products for end-use. The company filed for Chapter 11 protection on September 10, 2001 (Bankr. Del. Case No. 01-10370). On April 22, 2004, the Court converted the Debtors cases into a chapter 7 liquidation proceeding. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represents the Debtors. Dmitry Pilipis, Esq., and Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. ARMSTRONG WORLD: Court Okays Modified Reorganization Plan --------------------------------------------------------- The Honorable Eduardo C. Robreno, U.S. District Court Judge for the Eastern District of Pennsylvania, confirmed the Fourth Amended Plan of Reorganization of Armstrong World Industries, Inc., as modified. Except for Section 1129(a)(8) of the Bankruptcy Code, Judge Robreno finds that Debtor's Fourth Amended Plan satisfies the statutory requirements under Section 1129(a) necessary to confirm the Plan: A. Pursuant to Section 1129(a)(1), the Debtor's Plan satisfies all the applicable provisions of the Bankruptcy Code in that, among others: -- the Plan and the Disclosure Statement describe the Asbestos PI Permanent Channeling Injunction, including the identities of the PI Protected Parties, and the Claims Trading Injunction, in compliance with the requirements of Rule 3016(c) of the Federal Rules of Bankruptcy Procedure; -- due and proper notice of the Disclosure Statement Hearing and the Confirmation Hearing was given to all parties-in- interest; -- the Plan designates 12 classes of claims against and interest in AWI; and -- the Plan provides adequate means of implementation. B. Pursuant to Section 1129(a)(2), the Company complies with all of the applicable provisions of the Bankruptcy Code in that, among others: -- the Company is the proper debtor under Section 109; -- the Company complied with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Voting Procedures, the Disclosure Statement Order and related documents in transmitting the Plan and in soliciting and tabulating Plan votes; and -- the Company complied with applicable bankruptcy and non-bankruptcy laws, the operating guidelines and financial reporting requirements enacted by the United States Trustee, and specific rules of the Bankruptcy Court throughout the Chapter 11 case. C. The Court has examined the totality of the circumstances surrounding the formulation of the Plan. The Plan has been proposed with the legitimate and honest purpose of reorganizing the Company's business and affairs, restructuring its asbestos-related liability, and maximizing the value available for distribution to creditors. The Plan's discharge, exculpation and indemnification provisions have been agreed to in good faith and are consistent with Sections 105 and 1129. Thus, the Company complies with the "good faith and not by any means forbidden by law" requirement of Section 1129(a)(3). D. All payments made or to be made by the Company to professionals Will be subject to review and approval by the Bankruptcy Court or the District Court on final application under Section 330, 331 or 503(b). Thus, the Plan satisfies Section 1129(a)(4). E. The Company has disclosed the identities and nature of compensation of those persons who will serve, on the Effective Date of the Plan, as directors and officers of the Reorganized Company, as well as the identities of the Asbestos PI Trustees and the members of the Trustees' Advisory Committee. Hence, the Plan satisfies Section 1129(a)(5). F. The Plan does not provide for any changes in rates that require regulatory approval of any governmental agency. Hence, Section 1129(a)(6) is inapplicable. G. The Plan satisfies the "best interests" test as to all impaired classes of Claims and Equity Interests in accordance with Section 1129(a)(7). H. All classes of impaired Claims that were entitled to vote on the Plan, other than Class 6 General Unsecured Claims, have voted to accept the Plan. Although the Plan does not comply with Section 1129(a)(8) because of the rejection of the Plan by Class 6, the Plan satisfies the "cramdown" provisions of Section 1129(b) in that it does not discriminate unfairly against the non- accepting class and is otherwise fair and equitable. With respect to Class 12 Equity Interest, which is deemed to reject the Plan, Section 1129(b) is satisfied because under the Plan no holder of any interest that is junior to the Equity Interests in Class 12 will receive or retain any property on account of that junior interest. I. The Plan satisfies Section 1129(a)(9) because the Company has sufficient cash to fund payments of allowed Administrative Expense Claims, Priority Claims, and Priority Tax Claims: (a) Each holder of an Allowed Administrative Expense will be paid in full and in cash, on the Effective Date of the Plan; provided, however, that certain of the administrative expenses will be assumed and paid by the Reorganized Company in accordance with the terms and conditions of the parties' transactions and agreements; (b) Each holder of an Allowed Priority Claim will be paid in full, in cash, and in an amount equal to the Claim, on the later of the Effective Date and as soon as practicable after the date the Claim becomes Allowed; and (c) Each holder of an Allowed Priority Tax Claim will be paid either: (a) in full and in cash, on the latest of: * the Effective Date; * the date the Allowed Priority Tax Claim becomes Allowed; and * the date the Allowed Priority Tax Claim is payable under applicable non-bankruptcy law; or (b) on other terms as may be agreed between each Priority Tax Claim holder and the Reorganized Company. J. The Plan satisfies Section 1129(a)(10) because Classes 3 and 7, which are impaired classes, have voted to accept the Plan by the required majority. Because Classes 3 and 7 contain no insiders, at least one impaired class entitled to vote on the Plan has voted to accept the Plan by the required majority, determined without including any acceptance of the Plan by insiders. K. The reorganized Company will not likely require liquidation or further financial reorganization after confirmation. The Company carefully structured its Plan and the Asbestos PI Trust to provide appropriate mechanisms and funding to consummate the Plan with a high degree of certainty that the Reorganized Company will be able to meet its obligations under the Plan. Hence, the Plan satisfies Section 1129(a)(11). L. The Plan provides for the payment on the Effective Date of all fees payable under Section 1930 of the Judiciary and Judicial Procedures Code. All post-consummation fees that are due and payable will be paid by the Reorganized Company until the Chapter 11 case is closed pursuant to Section 350(a). Accordingly, the Plan satisfies Section 1129(a)(12). M. On and after the Effective Date, the Reorganized Company will Continue to pay all retiree benefits for the duration of the Period that the Company has obligated itself to provide the benefits, in satisfaction of Section 1129(a)(13). Judge Robreno also finds that the principal purpose of the Company's Plan is not to avoid taxes or the requirements of Section 5 of the Securities Act of 1933, as amended. Additionally, there has been no objection to the Plan by any governmental unit alleging any tax avoidance by the Company. Hence, the Plan satisfies Section 1129(d). The District Court also rules that the Asbestos PI Channeling Injunction and the establishment of the Asbestos PI Trust, comply with Section 524(e), and is consistent with Sections 524(g) and 1129, and other applicable provisions of the Bankruptcy Code. The Claims Trading Injunction under the Plan is consistent with Sections 105 and 1129, and other applicable provisions of the Bankruptcy Code. The Plan provisions relating to discharge, exculpation and indemnity are consistent with Sections 105 and 1129, and other provisions of the Bankruptcy Code. Judge Robreno also approved the appointment of: -- Paul Knutti, Anne Ferazzi, Thomas Tully, Lewis Sifford and Harry Huge as initial Asbestos PI Trustees; and -- John D. Cooney, Russell W. Budd, Steven Kazan, Joseph F. Rice, and Perry Weitz as the five initial members of the Trust Advisory Committee. The initial Asbestos PI Trustees and the initial TAC members will serve in accordance with the terms of the Asbestos PI Trust Agreement on the Plan Effective Date. As of the Effective Date, the Future Claimants' Representative, the Asbestos PI Claimants' Committee and the Unsecured Creditors' Committee will be released and discharged of and from all further authority, duties, responsibilities, and obligations relating to and arising from and in connection with the Chapter 11 Case. The committees will be deemed dissolved. The Future Claimants' Representative will continue to serve through the termination of the Asbestos PI Trust to perform the functions required by the Asbestos PI Trust Agreement. A full-text copy of Judge Robreno's Order confirming the Company's Plan of Reorganization may be viewed at no charge at http://bankrupt.com/misc/AWIConfirmationOrder.pdf A full-text copy of Judge Robreno's Findings of Fact and Conclusions of Law may be viewed at no charge at http://bankrupt.com/misc/AWIModPlanFindings&Conclusions.pdf Based in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) AVNET INC: Higher Gross Level Cues Moody's to Upgrade Ratings ------------------------------------------------------------- Moody's Investors Service upgraded the corporate family and senior unsecured debt ratings of Avnet, Inc. to Ba1 from Ba2 and assigned a Ba1 rating to the proposed offering of up to $250 million senior notes due 2016. The new issue proceeds together with cash-on-hand and other financial resources will be used to repurchase not less than $250 million of the outstanding $361.4 million 9.75% senior notes due February 2008. The ratings outlook is stable. The ratings upgrade considers the potential refinancing, which should enhance pro forma credit metrics and improve financial flexibility by reducing borrowing costs and extending near-term debt maturities. Importantly, the upgrade reflects realized operating efficiency improvements that have resulted in operating margin expansion, higher gross cash flow levels and an enhanced business model that has the propensity to deliver consistently higher levels of positive free cash flow compared to prior year periods. It also factors in the enhanced market position, more favorable product mix and operating leverage via the Memec acquisition coupled with better than anticipated results from the integration plan. The company's execution on realizing annualized cost synergies of $150 million beginning in fiscal 2007 is higher than the original plan of $120-130 million. The company's success in completing this sizeable integration in one year is reflective of Avnet's experience in integrating over 30 acquisitions over the past 11 years. The stable outlook reflects Moody's expectations that organic revenues will grow in line with the industry's mid-to-high single digit growth rate; Avnet's diversified geographic presence; and the value of working capital and operating improvements which have increased operating efficiency. The outlook also captures Avnet's low single-digit, albeit improving, operating margins, which leave limited cushion for unexpected setbacks or a disruptive competitive environment. The ratings or outlook could be positively influenced if Avnet: (i) sustains progress in improving its operating performance lifting operating margins; (ii) continues to improve financial leverage via debt reduction and higher operating cash flow leading to enhanced debt protection measures; and (iii) demonstrates continued evidence of high levels of gross cash flow and stability in free cash flow generation, muting the inherent volatility of the semiconductor and computer products cycles. This new ratings were assigned: * Up to $250 million Senior Unsecured Notes due 2016 -- Ba1 These ratings were upgraded: * Corporate Family Rating to Ba1 from Ba2 * Senior Unsecured Notes with various maturities to Ba1 from Ba2 * Senior/Subordinated shelf ratings to (P)Ba1/(P)Ba2 from (P)Ba2/(P)Ba3 Avnet, Inc., headquartered in Phoenix, Arizona, is one of the largest worldwide distributors of electronic components and computer products, primarily for industrial customers. Revenues for the fiscal year ended July 1, 2006 were $14.3 billion. BEST MANUFACTURING: Hires Levett Rockwood as Special Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey allowed Best Manufacturing Group LLC and its debtor-affiliates to employ Levett Rockwood P.C., as their special corporate counsel. As reported in the Troubled Company Reporter on Sept. 6, 2006, the Debtors related that Levett Rockwood has acted as general corporate counsel to Best Manufacturing since on or about June 15, 2001. The Debtors said that the firm has represented one or more of the Debtors in numerous corporate matters including, but not limited to, mergers and acquisitions, contract preparation and review, strategic alliances, corporate structure, litigation, employee and consulting agreements, and corporate finance. Christopher M. Graham, Esq., a member at Levett Rockwood, told the Court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Shareholders $320 - $375 Associates $195 - $260 Paralegals $135 - $150 Mr. Graham disclosed that the firm has received a $30,000 retainer. Mr. Graham assured the Court that his firm does not represent any interest adverse to the Debtors or their estates. Headquartered in Jersey City, New Jersey, Best Manufacturing Group LLC -- http://www.bestmfg.com/-- and its subsidiaries manufacture and distribute textiles, career apparel and other products for the hospitality, healthcare and textile rental industries. The Company and four of its subsidiaries filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. N.J. Case No. 06-17415). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BROOKS SAND: Court Approves Sale of All Assets for $6.7 Million --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Kentucky gave Kenneth C. Henry, the chapter 11 trustee appointed in Brooks Sand & Gravel, LLC's bankruptcy case, authority to sell substantially all of the Debtor's assets to Johnson Materials LLC. The Court specifically authorized the Trustee to pay to Bank of America the sum of $6,200,000 from the proceeds of the sale, which fund will be subject to disgorgement. The Trustee is directed to pay $154,061, less any credit for sums collected prior to closing, to Caterpillar Financial Services Corporation at the closing of the sale. The Trustee is further directed to retain the sum of $25,000 from the Sale Proceeds pending resolution of Caterpillar's claim of entitlement to fees and expenses pursuant to Section 506(b) of the Bankruptcy Code. Caterpillar will cause its lien against the 2003 Caterpillar 966GII Wheel Loader, Serial No. ANZ000597, to be released upon receipt of the allowed payment, but will retain its lien on the Sale Proceeds pending a determination or agreement regarding its claim for fees and expenses. As reported in the Troubled Company Reporter on Aug. 10, 2006, Johnson Materials offered to buy the Debtor's assets for $6.7 million in cash and the assumption of certain liabilities. Johnson Materials was entitled to a $335,000 break-up fee in case another entity acquires the assets. The competing bid deadline was Aug. 25, 2006, with competing bids equal or more than the sum of the purchase price, the break-up fee, recoverable costs and $150,000. Interested bidders were required of a $100,000 good faith cash deposit. The auction sale of the assets was held on Aug. 30, 2006, in Courtroom No. 1, Fifth Floor, United States Courthouse, 601 West Broadway in Louisville, Kentucky. Headquartered in Louisville, Kentucky, Brooks Sand and Gravel LLC leases an 184-acre sand reserve and processing plant in Bethlehem, Indiana, in Clark County and employs about 15 people. Smith Mining and Materials LLC owns a 226-acre limestone quarry in Brooks, Kentucky, in Bullitt County and employs about 25 people. Brooks Sand and Smith Mining filed for chapter 11 protection on Feb. 9, 2006 (Bankr. W.D. Ky. Case No. 06-30259). Dean A. Langdon, Esq., and Laura Day DelCotto, Esq., at Wise DelCotto PLLC represented the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. Judge Cooper approved the appointment of Kenneth C. Henry as chapter 11 trustee. J. Bruce Miller, Esq., and his firm, J. Bruce Miller Law Group represent the chapter 11 trustee. CATALYST PAPER: Earns $42.4 Million in 2006 Second Quarter ---------------------------------------------------------- Higher prices for pulp and paper products, along with continued performance improvements and a favorable federal income tax adjustment, boosted Catalyst Paper's net earnings in the second quarter. Net earnings were $42.4 million on sales of $469.6 million, compared to a net loss of $23.6 million on sales of $456.3 million in the first quarter. The strong Canadian dollar continued to affect the company's earnings as it reached a 28-year high versus the US currency. This reduced operating earnings, but resulted in a $26.2 million after-tax foreign exchange gain on the translation of US-dollar- denominated debt. Net earnings were also bolstered by a $22.9 million release of future income taxes that followed the federal government's decision to reduce the corporate income tax rate. Earnings before income tax, depreciation and amortization for the second quarter were $52.4 million, up from $47.3 million in the first quarter. "There were a lot of positives for us in the second quarter. Operations ran well in all our mills and this was supported by strong cost control and solid sales. Pulp prices approached a six-year high, but once again the Canadian dollar worked against us to erase the gains made," said president and CEO Russell J. Horner. "That disappointment aside, we're well-positioned to take advantage of a strong economy as we continue to capture new operational efficiencies and market opportunities." The company's performance improvement program delivered $19 million toward this year's $70 million goal in the second quarter. This brings the program's total for the year to $32 million, primarily through product optimization, productivity improvements and cost savings for fibre, energy, chemicals and freight. Markets for the company's pulp products were strong in the second quarter, with European benchmark pulp prices approaching a six- year high. Further pulp price increases were announced for the third quarter. Strong box shipments and low containerboard inventories supported higher kraft paper prices. Specialty paper markets were mixed, with coated paper prices weakening. Other paper grades fared better, with a US$40 per ton price increase announced for the company's soft-calendered grades, effective July 1. Directory paper demand remained steady while spot prices rose. Newsprint consumption continued to decline, though industry conditions supported higher prices in the quarter and a further price increase of US$40 per tonne was announced for effect Aug. 1. Based in Vancouver, British Columbia, Catalyst Paper (TSX: CTL) -- http://www.catalystpaper.com/-- produces mechanical printing papers in North America. The Company also produces market kraft pulp and owns Western Canada's largest paper recycling facility. With five mills employing 3,800 people at sites within a 160- kilometer radius on the south coast of British Columbia, Catalyst has a combined annual capacity of 2.4 million tons of product. * * * As reported in the Troubled Company Reporter on Aug. 23, 2006 Moody's Investors Service revised the rating outlook for Catalyst Paper Corporation from negative to stable. Moody's also affirmed Catalyst's senior unsecured notes and corporate family rating at B1. CATHOLIC CHURCH: Portland Court Okays Pact on Hiring Appraisers --------------------------------------------------------------- The Archdiocese of Portland in Oregon and these parties entered into a stipulation governing the retention of certain real estate appraisers who will provide a valuation of some of Portland's selected properties: (1) The Official Committee of Tort Claimants; (2) Committee of Catholic Parishes, Parishioners and Interested Parties; (3) Central Catholic High School Parents Association, and Central Catholic High School Alumni Association; (4) Friends of Regis High School and Regis High School Foundation; and (5) Marist Foundation and the Marist Parent and Alumni Service Club. The U.S. Bankruptcy Court for the District of Oregon approves the parties' stipulation specifying that the maximum allowable fees for each of the appraisers with respect to the appraisal of the properties are: Appraiser Fee --------- --- Powell Valuation, Inc. $56,000 Duncan & Brown, Inc. 29,500 Skelte & Associates, Inc. 100,000 The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CHAPARRAL STEEL: Moody's Review Low-B Ratings on Sr. Unsec. Bond ---------------------------------------------------------------- Moody's Investors Service placed three North American steel companies under review for possible upgrade: United States Steel Corporation's Ba1 corporate family rating, Gerdau Ameristeel Corporation's Ba2, and Chaparral Steel Company's B1 CFR. The reviews for possible upgrade reflect the superior improvement in financial metrics and overall financial risk reduction evidenced by these companies, in combination with Moody's evolving view regarding the expected duration of the current steel industry upcycle. This evolving perspective is primarily due to fundamental changes that appear to have occurred within the industry over the last several years, primarily as a result of industry consolidation. Moody's expects to refine its opinion of the medium- and long-term outlook for the steel industry over the review period, which is expected to last approximately two months. Should Moody's prevailing industry outlook materially change, as is expected, it will publish an Industry Outlook that summarizes its updated thinking and discusses possible rating implications for the rated steel company universe. However, at this stage, Moody's has identified United States Steel, Gerdau Ameristeel and Chaparral Steel as being the most likely upgrade candidates. It is important to note that these companies are being placed on review reflecting certain common factors as well as those unique to these three companies. The common factors include a combination of the strength in the overall operating performance as well as management actions taken to improve their capital structures and financial flexibility. Moody's review of US Steel, Gerdau Ameristeel and Chaparral Steel will focus on the sustainability of improved margins and debt protection measures as well as the likely capital structures expected to be maintained through what will continue to be a cyclical business. These ratings were placed under review for possible upgrade: Chaparral Steel Company Issuer: Chaparral Steel Company On Review for Possible Upgrade: * Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 * Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently Ba2 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B1 Outlook Actions: * Outlook, Changed To Rating Under Review From Stable Chaparral Steel Company, headquartered in Midlothian, Texas, had revenues of $1.5 billion for its year ended May 31, 2006. CHI-CHI'S: Court Approves Ecolab Adversary Proceeding Settlement ---------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approved the compromise and settlement of an adversary proceeding between Ecolab, Inc., aka Ecolab Pest Elimination and William Kaye, the Liquidating Trustee for the Liquidating Trust established pursuant to Chi-Chi's, Inc., and its debtor-affiliates' confirmed plan of reorganization. The Official Committee of Unsecured Creditors, on behalf of the estates of Chi-Chi's commenced, on Oct. 6, 2005, adversary proceeding no. 05-52967. The complaint alleged that Ecolab received preferential and fraudulent transfers from: -- Koo Koo Roo, Inc., -- Chi-Chi's, Inc., and -- The Hamlet Debtors, H.H.K. of Virginia and H.H.K. of Maryland. Under the December 2005 order of the Bankruptcy Court, the Liquidating Trust was substituted as plaintiff in the complaint. The Liquidating Trustee and Ecolab have negotiated and agreed a settlement, which provides for the payment of a certain amount in exchange for the dismissal of the adversary proceeding. The Ecolab Settlement Agreement is filed under seal to preserve confidentiality. The settlement amount is not known. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each engages in the restaurant business. The Debtors filed for chapter 11 protection on October 8, 2003 (Bankr. Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors. Lawyers at Jaspan Schlesinger Hoffman LLP, represent the Official Committee of Unsecured Creditors. The Court confirmed the Debtors' First Amended Plan of Liquidation on Dec. 15, 2005. The Plan became effective on Dec. 27, 2005. The Chi-Chi's Liquidating Trust was created under the Plan as the Debtors' successor-in-interest. William Kaye was appointed at trustee for the Liquidating Trust. When the Debtor filed for bankruptcy, it estimated $50 to $100 million in assets and more than $100 million in liabilities. CHI-CHI'S: Court Approves Sysco Adversary Proceeding Compromise --------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approved the compromise of the Adversary Proceeding between Sysco Food Services of Los Angeles, Inc., and William Kaye, the Liquidating Trustee for the Liquidating Trust established pursuant to Chi-Chi's, Inc., and its debtor- affiliates' confirmed plan of reorganization. The Liquidating Trustee filed a stipulation of voluntary dismissal of the Sysco Adversary Proceeding pursuant to Bankruptcy Rule 9019(a). The Official Committee of Unsecured Creditors, on behalf of the estates of Chi-Chi's commenced, on Oct. 6, 2005, adversary proceeding no. 05-52978. The complaint alleged that Sysco received preferential and fraudulent transfers from: -- Koo Koo Roo, Inc., -- Chi-Chi's, Inc., and -- The Hamlet Debtors, H.H.K. of Virginia and H.H.K. of Maryland. Under the December 2005 order of the Bankruptcy Court, the Liquidating Trust was substituted as plaintiff in the complaint. The Plan provides that with respect to recovery actions brought against Sysco "in which the asserted amount is greater than $50,000, the Liquidating Trustee shall: (i) obtain the written consent of the Oversight Committee; and (ii) obtain approval [from] the Bankruptcy Court to settle, adjust, dispose of, or abandon any such Recovery Rights in accordance with Bankruptcy Rule 9019," The Liquidating Trustee has notified the Oversight Committee (as defined in the Confirmation Order) of his dismissal of the Sysco Adversary Proceedings. The Liquidating Trustee, his legal advisors, and his financial advisors have reviewed the claims asserted against Sysco. Based on this review, the Trustee has determined that it is in the best interest of the Trust to dismiss the Sysco Adversary Proceeding. Because of the currently pending litigation between the Trust and Sysco regarding a Hepatitis A outbreak that occured at the Debtors' Beaver Creek restaurant, the Liquidating Trustee has determined that it is in the best interest of the Liquidating Trust not to enter into a standard settlement agreement, which would contain mutual releases. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each engages in the restaurant business. The Debtors filed for chapter 11 protection on October 8, 2003 (Bankr. Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors. Lawyers at Jaspan Schlesinger Hoffman LLP, represent the Official Committee of Unsecured Creditors. The Court confirmed the Debtors' First Amended Plan of Liquidation on Dec. 15, 2005. The Plan became effective on Dec. 27, 2005. The Chi-Chi's Liquidating Trust was created under the Plan as the Debtors' successor-in-interest. William Kaye was appointed at trustee for the Liquidating Trust. When the Debtor filed for bankruptcy, it estimated $50 to $100 million in assets and more than $100 million in liabilities. CM INVESTOR: Ends Capri Capital Purchase Deal for $6 Million ------------------------------------------------------------ CM Investor, L.L.C., a CharterMac Subsidiary, terminated its option to purchase a 49% interest in Capri Capital Advisors in exchange for a $6 million termination fee from CCA. In connection with the termination of the option, CCA repaid the $20 million loan that CharterMac originally made to CCA in July of 2004, when CCA went through a recapitalization event. "This transaction represented a compelling opportunity to make a solid return on our original investment, while still maintaining a presence in the pension fund advisory business," said Marc D. Schnitzer, Chief Executive Officer and President of CharterMac. "Given our recent acquisition of ARCap, a company that has strong relationships with major pension funds, we believe that CharterMac is well positioned to expand our pension fund advisory platform in the near term. We are extremely excited about the addition of CharterMac Urban Capital, through which we have established a direct advisory relationship with CalPERS, one of the nation's largest pension funds. Daryl Carter, who is currently the Chief Executive Officer of CharterMac Mortgage Capital and had been the Co-Chairman and co-founder of Capri Capital Advisors, will oversee CharterMac Urban Capital. Mr. Carter sold his ownership interest in CCA and will be focused exclusively on his executive role at CharterMac." As part of the transaction, CCA will transfer its interest in the investment fund Capri Urban Capital to CharterMac and the fund will be renamed CharterMac Urban Capital. Formed in 2001, CUC is an investment fund focused on making investments in multifamily and commercial properties in major urban markets. CUC's single investor is the California Public Employees Retirement System. Currently, the fund has $58 million in assets under management, with a commitment from CalPERS for up to $135 million. Commenting on the transaction, Mr. Carter stated: "CharterMac Urban Capital is a vehicle that has tremendous synergies with our existing product offerings. Already this year, we have closed two major multifamily transactions in California where CUC provided the equity and the first mortgage loan was provided by CharterMac Mortgage Capital. We could not ask for a better partner in CalPERS, and I look forward to growing both CharterMac Urban Capital and our pension fund advisory platform." In addition to Mr. Carter, one other CCA employee will transfer to CharterMac to oversee the day to day operations of CUC. Headquartered in New York City, CharterMac (NYSE: CHC) -- http://www.chartermac.com/-- through its subsidiaries, CharterMac is a full-service real estate finance company, with focus on the multifamily industry. CharterMac offers capital solutions to developers and owners of multifamily and commercial real estate throughout the country and quality investment products to institutional and retail investors. * * * As reported in the Troubled Company Reporter on July 18, 2006, Moody's Investors Service assigned a rating of Ba3 to the $500 million CharterMac guaranteed senior credit facility which the company is issuing to acquire ARCap Investors, LLC, a private real estate finance company specializing in high yield CMBS. In addition, Moody's assigned CharterMac a corporate family rating of Ba3. The outlook is stable. The credit facility consists of a three-year $150 million revolver and a six-year $350 million term loan. COLLINS & AIKMAN: Magna Paying $2.7 Million Under Stipulation ------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan approved a stipulation between Collins & Aikman Corporation, its debtor-affiliates, Magna International Inc. and General Electric Capital Corporation. Pursuant to the stipulation, Magna agreed to pay $2,761,254 to a CarCorp, Inc. account related to certain prepetition receivables. Upon receipt of payment by CarCorp, the parties will exchange mutual releases. The Debtors had assigned and transferred certain of their accounts receivables to CarCorp who, in turn, assigned all of those accounts receivables to GECC. As reported in the Troubled Company Reporter on Aug. 15, 2006, the Debtors purchase certain component parts or services from Magna. Magna asserted that the Debtors owed it $1,047,409 for parts and services provided prior to the Debtors' bankruptcy filing. Likewise, Magna purchased component parts, tooling and services from the Debtors. The Debtors assert that Magna owed them $3,808,663 for parts and tooling provided prior to the Petition Date. In addition, the Debtors claimed that they continue to be owed from Magna an additional $165,495 on account of prepetition shipments. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: Wants to Walk Away from 21 Contracts and Leases ------------------------------------------------------------------ Complete Retreats LLC and its debtor-affiliates are parties to 21 executory contracts and unexpired leases for the use and rental of various properties: Monthly Effective Termination Counterparty Fees Date Date ------ ------- --------- ----------- Gordon & Joan Edwards $20,000 09/06/05 09/31/06 Michael Ryan 5,400 09/15/05 09/14/06 Desarrollos Turisticos Milenio 20,000 11/07/05 11/15/06 W. Klappenbach & C. Clift 5,000 09/06/05 08/30/06 Willian O'Neil 31,200 09/14/05 12/31/06 Kenneth E. Moore 15,000 04/10/06 04/30/08 Michelle Redlich 8,500 11/30/05 12/31/09 Brian N. Hollinagel 30,000 04/19/06 04/30/07 Gail Kology 6,000 09/19/06 11/30/06 Ruth Belleville 5,200 08/02/05 08/21/06 Fontainebleau Florida Hotel 69,865 05/05/06 04/30/07 L+M Investment Group L.L.C. 15,000 04/23/04 04/30/07 Marlin Ventures USA Inc. 20,000 03/31/06 04/30/07 Bonita Stewart 4,600 08/20/05 10/31/06 Ted & Lida Urban 6,500 02/13/06 03/31/07 Charles & June McNeirney 10,609 03/16/04 03/31/07 Thomas H. Hurlburt 5,062 11/18/02 12/31/06 Richard & Linda Sher 4,500 07/01/05 07/31/07 Frank Rostron 7,000 05/31/05 07/31/07 Jeff Dishner - 07/29/04 - Christopher Miller/Richard Treves - 10/15/05 - The Debtors have paid security deposits for six of the Contracts and Leases: Agreement Security Deposit --------- ---------------- Edwards Agreement $20,000 Hollinagel Agreement 30,000 L+M Agreement 12,500 Marlin Agreement 20,000 Stewart Agreement 6,750 McNeirney Agreement 30,000 The Debtors have exited all properties related to the Agreements as of the Petition Date because those properties were no longer beneficial to their business or necessary to their reorganization efforts, Jeffrey K. Daman, Esq., at Dechert LLP, in Hartford, Connecticut, tells the Court. Thus, the Debtors ask the U.S. Bankruptcy Court for the District of Connecticut to: (a) grant them authority to reject the 21 Contracts and Leases effective as of the Petition Date; and (b) require that claims arising from the rejection of an Agreement be filed within 30 days from the date the Court approves rejection of that Agreement. According to Mr. Daman, the Dishner Agreement was terminated prior to the Petition Date and the Debtors have surrendered possession of the related property around that time. In an abundance of caution, the Debtors seek to reject the Dishner Agreement as of the Petition Date. The Miller Agreement was unilaterally terminated by the owners, who took possession of the property and barred the Debtors from the premises, Mr. Daman adds. Accordingly, the Debtors were forced to surrender control of the property. Thus, the Debtors seek to reject the Miller Agreement to the extent the contract has not been terminated in accordance with its terms. The Debtors reserve their rights with respect to any violation of the automatic stay committed by the lessor under the Miller Agreement. According to Mr. Daman, the Debtors currently receive limited, if any, benefits from the Agreements, whereas they would owe approximately $2,500,000 if the Agreements are not rejected, potentially as an administrative claim. The Debtors do not believe that the Rejected Agreements could be assigned for any meaningful value or that they provide any other potential value to their estates. Thus, rejecting the Rejected Agreements will clearly benefit the Debtors' estates, as well as their creditors and other parties-in-interest, Mr. Daman asserts. The Debtors propose that all non-debtor parties to the Agreements should be required to return any amounts remaining after applying any security deposits, moneys held in escrow, or any similar funds to any prepetition arrearages or delinquencies under or related to the Agreements. The Debtors intend to pay, or have already paid, all non-Debtor parties to the Agreements amounts due up to the Petition Date, Mr. Daman says. 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. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Gets Final Okay for Continued Utility Services ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut granted, on a final basis, Complete Retreats LLC and its debtor-affiliates' request enjoining utility companies from discontinuing their services to the Debtors. As reported in the Troubled Company Reporter on Aug. 10, 2006, the Court had given its interim approval on the Debtors' request for the Court to: (i) determine that the Utility Companies have been provided with adequate assurance of payment under Bankruptcy Code section 366; (ii) approve the Debtors' proposed offer of adequate assurance and procedures governing the Utility Companies' requests for additional or different adequate assurance; (iii) prohibit the Utility Companies from altering, refusing, or discontinuing services on account of prepetition amounts outstanding or on account of any perceived or alleged inadequacy of the proposed adequate assurance; (iv) establish procedures for the Utility Companies to seek to opt out of the proposed adequate assurance procedures; (v) determine that the Debtors are not required to provide any additional adequate assurance; (vi) set a final hearing on the proposed adequate assurance procedures on August 17, 2006; and (vii) provide for the return of the unused portions of all deposits shortly after the substantial consummation of any confirmed plan of reorganization in their cases. In connection with the operation of their business and management of their properties, the Debtors obtain electricity, gas, water, sewer, trash removal, telephone, Internet, cable television, and other utility services from various utility companies. A 14-page list of Utility Companies providing services to the Debtors is available for free at: http://researcharchives.com/t/s?ec4 Proposed Adequate Assurance The Debtors intend to pay all postpetition obligations owed to the Utility Companies. In addition, the Debtors propose to provide a deposit equal to two weeks of Utility Service to any Utility Company that requests a deposit in writing. However, no deposit will be given to a Utility Company that already holds a deposit equal to or greater than two weeks of Utility Services and that is paid in advance for its services. Upon acceptance of the Deposit, the Utility Company would be deemed to have stipulated that the Deposit constitutes adequate assurance of payment under Bankruptcy Code section 366 and would not be able to make an Additional Adequate Assurance Request. Proposed Adequate Assurance Procedures In light of the severe consequences to the Debtors of any interruption in services by the Utility Companies, but recognizing the right of the Utility Companies to evaluate the Proposed Adequate Assurance on a case-by-case basis, the Debtors propose that the Court approve and adopt these uniform procedures: a. If a Utility Company does not comply with the Adequate Assurance Procedures, it will be forbidden from discontinuing, altering, or refusing service. b. Any Utility Company requesting a Deposit must make a request in writing to: (i) the Debtors Tanner & Haley Resorts 285 Riverside Avenue, Suite 310 Westport, CT 06880 Attn: Jason I. Bitsky, Esq., and (ii) counsel to the Debtors Dechert LLP 30 Rockefeller Plaza New York, NY 10112 Attn: Joel H. Levitin, Esq., and David C. McGrail, Esq. c. If the requesting Utility Company satisfies the requirements, the Debtors would provide a deposit. d. Any Utility Company desiring additional adequate assurance of payment must serve its request on the Debtors and the Debtors' counsel. e. The Debtors have at least two weeks to reach a consensual agreement with the Utility Company resolving the Additional Adequate Assurance Request. f. The Debtors would be permitted to resolve any Additional Adequate Assurance Request by mutual agreement with the Utility Company and without further Court order. g. If the Debtors can't reach a timely consensual resolution with the Utility Company, a hearing will be held to determine the adequacy of adequate assurance of payment. h. Pending resolution of the Determination Hearing, that particular Utility Company would be prohibited from discontinuing, altering, or refusing service to the Debtors. Process for Opting Out A Chapter 11 debtor was historically able to place the burden on utility providers to prove that the adequate assurance offered by the debtor was insufficient. After recent amendments to Bankruptcy Code section 366, the burden has arguably shifted to debtors to provide adequate assurance that the utility providers find satisfactory and to seek court review if a utility provider does not accept the proposed adequate assurance. Under the new reading of Bankruptcy Code section 366, a Utility Company could, on the 29th day after the Petition Date, announce that the proposed adequate assurance is not acceptable, demand an unreasonably large deposit from the Debtors, and threaten to terminate Utility Service the next day unless satisfied. The Debtors believe it is prudent to require Utility Companies to raise any objections to the Adequate Assurance Procedures, so that those objections may be heard by the Court within 30 days of the Petition Date. The Debtors propose these uniform objection procedures: a. Any Utility Company that objects to the Adequate Assurance Procedures must to file a timely objection. b. Any Procedures Objection must, among others, be made in writing and set forth the reason why the Utility Company believes it should be exempted from the Adequate Assurance Procedures. c. The Debtors would be permitted to resolve any Procedures Objection by mutual agreement with the Utility Company and without further Court order. d. If no prompt consensual resolution is reached, the Procedures Objection would be heard at the Final Hearing. e. All Utility Companies that do not timely file a Procedures Objection would be deemed to consent to the Adequate Assurance Procedures. 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. 7; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONGOLEUM CORP: Bondholders Support New Reorganization Plan Terms ----------------------------------------------------------------- The official committee representing Congoleum Corporation's bondholders has reached an agreement in principle with both the company and the asbestos claimants' representatives on certain amendments to Congoleum's pending plan of reorganization. As a result, the official bondholders committee has agreed to support Congoleum's reorganization plan and will be withdrawing the plan of reorganization it had previously filed jointly with Continental Casualty Company and Continental Insurance Company. "We are extremely pleased to have a proposed plan supported by the bondholders' committee and the asbestos claimants' representatives, and expect to have our new plan filed with the court by Sept. 15, 2006," Roger S. Marcus, Chairman of the Board, commented. "A disclosure statement hearing on the plan has been scheduled for Oct. 19, 2006. With all official committees and representatives of future asbestos claims now on board, our confirmation process should be easier and less expensive, and I am optimistic that the plan will be confirmed in early 2007. I appreciate the efforts made by the Court-appointed mediators to bring us to this point." The agreement in principle is subject to mutually agreeable definitive documentation, which will be submitted to the Bankruptcy Court as part of a new amended plan of reorganization. Copies of the modified plan and disclosure statement will be filed by Congoleum with the Securities and Exchange Commission as exhibits to a filing under the Securities Exchange Act of 1934. They will also be available on the investor relations section of Congoleum's Web site at http://www.congoleum.com/ About Congoleum Corporation Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At June 30, 2006, Congoleum Corporation's balance sheet showed a $44,013,000 stockholders' deficit compared to a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). CONNACHER OIL: S&P Assigns B+ Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Calgary, Alta.-based Connacher Oil and Gas Ltd. At the same time, Standard & Poor's assigned its 'BB-' bank loan rating with a recovery rating of '1' to Connacher Finance Corp.'s proposed seven-year $180 million secured term loan B facility, and Montana Refining Company, Inc.'s five-year $15 million secured revolving credit facility. The '1' recovery rating reflects expectations for a 100% recovery of principal in a default scenario. The 'BB-' bank loan rating is one notch above the corporate credit rating, because the collateral value supporting the loans have a high probability of enabling lenders to recover all principal and accrued interest under a default scenario. The outlook is stable. "The ratings on Connacher are constrained by its aggressive financial risk profile, which reflects the company's lack of meaningful cash flow generation until the first phase, Pod I, of its Great Divide Project achieves full production -- expected in 2008 -- and its relatively high leverage," said Standard & Poor's credit analyst Jamie Koutsoukis. "Nevertheless, we believe Connacher will be able to complete construction of Pod I without any additional debt funding. The risk of cost overruns is tempered by the cost performance of existing steam-assisted gravity-drainage projects, which have been completed on time and on budget. Furthermore, the company's conventional and refinery operations, which are self funding, should allow Connacher to significantly reduce its exposure to natural gas fuel prices, heavy oil differentials, and diluent prices once the project begins operation, which we assess as a strength to the company's credit profile," Ms. Koutsoukis added. Connacher is an oil and natural gas exploration and production company whose principal asset is its approximate 100% working interest in almost 80,000 acres of oil sands leases at its Great Divide oil sands project near Fort McMurray, Alta. In addition to its oil sands project, Connacher has conventional operations primarily at Battrum, Sask., and Marten Creek and Three Hills in Alberta with production of 3,300 to 3,500 barrels of oil equivalent per day. The company also operates an 8,400 barrels per day refinery located in Great Falls, Mont. Following a turnaround and debottlenecking of the refinery in April 2006, the throughput capacity of the refinery has been expanded and up to 9,500 bbl/d have recently been achieved. Connacher owns approximately 30% of and manages Petrolifera Petroleum Limited, which has interests in Argentina and Peru. The stable outlook reflects our expectation that Connacher will be able to complete the development of Pod 1 of its Great Divide project on schedule without any material cost increases or any need for additional funding. Once Connacher achieves full production at its oil sands project and internally generated cash flows are sufficient to meet the company's debt and capital expenditure commitments, there should be a material improvement in its financial risk profile. An improvement in the company's existing financial profile would strengthen the overall credit profile, which should, in turn, result in a positive rating action. Conversely, if Connacher encounters cost overruns as it proceeds with construction and the project economics deteriorate, a negative rating action could occur. COPELANDS' ENT: Meeting of Creditors Scheduled on September 21 -------------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of Copelands' Enterprises, Inc.'s creditors at 2:00 p.m., on Sept. 21, 2006, at Room 2112, Second Floor of the J. Caleb Boggs Federal Building, 844 King Street in Wilmington, Delaware. This is the first meeting of creditors required under Sec. 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. 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 LLP, 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. CRDENTIA CORP: To Acquire iVOW for $3.5 Million ----------------------------------------------- Crdentia Corp. has signed a non-binding term sheet to acquire iVOW, Inc., a provider of disease management services for the treatment of chronic and morbid obesity. The Company will acquire all outstanding shares of iVOW for approximately $3.5 million in the Company's common shares, subject to adjustment based on iVOW's debt and accounts receivable at closing. The Company disclosed that the acquisition of iVOW is anticipated to facilitate the receipt of a NASDAQ Capital Market listing for the combined company. The completion of the transaction is subject to negotiation and execution of a definitive agreement. Any potential closing would occur in the fourth quarter after receipt of the requisite stockholder approvals. The term sheet requires iVOW to preserve its assets, and to have a minimum cash balance upon signing of the definitive agreement. CSI Discontinued Negotiations Crdentia also disclosed that it has discontinued negotiations under the non-binding letter of intent to merge with Caregiver Services, Inc. Headquatered in Dallas, Texas, Crdentia Corp. (OTCBB: CRDT) -- http://www.crdentia.com/-- provides healthcare staffing services. Crdentia seeks to capitalize on an opportunity that currently exists in the healthcare industry by targeting the critical nursing shortage issue. There are many small, private companies that are addressing the rapidly expanding needs of the healthcare industry. Unfortunately, due to their relatively small capitalization, they are unable to maximize their potential, obtain outside capital or expand. By consolidating well-run small private companies into a larger public entity, Crdentia intends to facilitate access to capital, the acquisition of technology, and expanded distribution that, in turn, drive internal growth. Going Concern Doubt KBA Group LLP, in Dallas, Texas, raised substantial doubt about Crdentia Corp.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's incurred net losses of $6,268,503 and $33,702,854 for the years ended Dec. 31, 2005 and 2004, respectively, and cash flows from operating activities of $5,062,267 and $3,186,737 for the years ended Dec. 31, 2005 and 2004, respectively. Additionally, the Company's current liabilities exceed their current assets by $6,493,181 at Dec. 31, 2005. DANA CORP: Court Approves Toyota Tooling Pact Assumption -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Dana Corp. and its debtor-affiliates authority to assume the tooling agreements they entered into with Toyota Motor Engineering & Manufacturing North America Inc. The operation of the Debtors' structures division requires them to purchase tooling for use in the manufacturing process to meet specialized customer orders. The structures division manufactures vehicle frames. For many of their major projects, the Debtors are required to arrange for the manufacture of so-called "customer paid tooling" by third parties that is sold to them, and then resold to original equipment manufacturers. The TEMA Agreements The Debtors have arranged for a number of Tooling purchases with respect to the production of frames for the Toyota Tundra light truck and Toyota Sequoia sport-utility vehicle. Accordingly, the Debtors and Toyota Motor Engineering & Manufacturing North America, Inc., are parties to certain agreements, which commit Toyota to purchase more than $100,000,000 worth of Tooling from the Debtors. The TEMA Agreements include these Supplier Tooling Business Unit Toyota Motor Engineering & Manufacturing Purchase Orders: Amount of Version Dated Purchase Order April 2006 -------------- ----------------------- NATOL-WT00607290 $28,094,423 NATOL-WT00607300 1,944,501 NATOL-WT00607310 46,295,768 The amount Toyota pays under the TEMA Agreements exceeds the amount the Debtors pay to third parties by nearly $5,000,000. The excess payments cover the Debtors' internal costs, including costs incurred in overseeing and coordinating the Tooling procurement process and in integrating the Tooling into Dana's production processes, Corinne Ball, Esq., at Jones Day, in New York, relates. With respect to the Toyota Tundra light truck Program, the TEMA Agreements are comprised of three purchase orders requiring Toyota to pay $76,334,692, in the aggregate, Ms. Ball states. As of Mar. 3, 2006, the Debtors have delivered to Toyota some of the Tooling required for the Toyota Tundra Program. With respect to the Toyota Sequoia sport-utility vehicle, the TEMA Agreements are comprised of a commitment letter, where Toyota agrees to purchase Tooling from the Debtors with a value of at least $28,000,000. As of Mar. 3, 2006, the Debtors have not yet delivered any Tooling to Toyota in connection with the Toyota Sequoia Program. The Third Party Tooling Agreements To fulfill their obligations under the TEMA Agreements, the Debtors entered into a number of agreements with Tooling Suppliers for the manufacture of Tooling for both Toyota Tundra and Toyota Sequoia Programs. Certain of those agreements were fully completed by the Tooling Supplier and are not likely to be executory contracts because the Tooling Supplier has delivered the Tooling to the Debtors as of Mar. 3, 2006, Ms. Ball says. A list of the Third Party Tooling Agreements is available for free at http://researcharchives.com/t/s?f8f In May 2006, the Debtors sought and obtained the Court's authority to pay the claims of several Tooling Suppliers to the extent their claims were unpaid as of Mar. 3, 2006. Other third-party tooling agreements were not executed until after Mar. 3, 2006. August 2006 Agreement To provide greater certainty relating to the programs in process with the Debtors, Toyota asked the Debtors to negotiate the terms of assumption of the TEMA and the Third Party Tooling Agreements, Ms. Ball avers. Toyota also asked the Debtors to negotiate the terms of the Debtors' assumption and assignment of the Tooling Agreements with Ogihara Corporation and Toyota Tsusho Corporation to Toyota. In return, Toyota offered to make certain valuable concessions to the Debtors. As a result of those negotiations, the parties entered into the August 2006 Agreement with these salient terms: (a) The Debtors will assume the TEMA Agreements. No amounts need to be paid to Toyota and no actions need be taken to cure any outstanding defaults by the Debtors under the TEMA Agreements; (b) Toyota agrees to a definitive and accelerated payment schedule under the TEMA Agreements; (c) Toyota has not yet committed to the terms or timing of any reimbursement of about $6,000,000 in costs that may be incurred by the Debtors. The costs will be the subject of additional good faith negotiations between the parties; (d) The Debtors will pay certain amounts to tooling suppliers under the authority previously obtained through the Customer Paid Tooling Order, and Toyota will reimburse the Debtors for amounts so paid; (e) The Debtors will assume the Third Party Tooling Agreements; (f) The Debtors will perform under various purchase orders that were issued to toolmakers since Mar. 3, 2006 and issue certain new purchase orders to toolmakers; (g) The Debtors will assume and assign to Toyota the Japanese Tooling Agreements, and Toyota will pay any cure costs associated with that assumption and assignment. The portion of the TEMA Agreements relating to tooling to be purchased under the Japanese Tooling Agreements will be terminated. (h) The Debtors will communicate with the various Tooling Suppliers and Japanese Toolmakers to seek confirmation that they have paid various amounts owed to the Suppliers. The TEMA Agreements do not permit invoicing until certain approvals were received, thus delaying reimbursement and required the Debtors to pay the Tooling Suppliers before being reimbursed by Toyota, Ms. Ball relates. As of July 7, 2006, the Debtors have paid more than $50,000,000 to Tooling Suppliers, but have been paid less than $36,000,000 by Toyota, Ms. Ball tells the Court. Upon implementation of the August 2006 Agreement, Toyota will make those payments to the Debtors. Ms. Ball asserts that by entering into the August 2006 Agreement, the Debtors will: -- obtain a substantial cash flow benefit by avoiding costs relating to having to make out-of-pocket expenditures; and -- avoid the risk that Toyota later could determine that certain of the Tooling costs the Debtors incurred are not reimbursable. Ms. Ball adds that the assumption of the Third Party Tooling Agreements and the assumption and assignment of the Japanese Tooling Agreements will: -- serve to prevent disruptions of the Debtors' business operations; and -- allay the Tooling Suppliers' fears by removing the risk that Tooling Suppliers and the Japanese Toolmakers will not be paid accordingly. Nevertheless, the Debtors acknowledge that assumption of the Tooling Agreements carries little downside for their estates. Ms. Ball explains that this is largely because of the "customer paid" nature of the Tooling at issue. The assumption of the Third Party Tooling Agreements will unlikely result in any net cash expenditure by the Debtors, as nearly every dollar paid to a Tooling Supplier is to be reimbursed by Toyota to the Debtors under the TEMA Agreements. Pursuant to the August 2006 Agreement, Toyota commits to pay the Debtors more than $110,000,000, more than 95% of the Debtors' total costs, while leaving only an additional $6,000,000 remaining open to future negotiation. In light of the nature of these costs, the Debtors believe that they will be able to demonstrate to Toyota that the additional costs are actual and necessary and should be compensated. The assumption and assignment of the Japanese Tooling Agreements also takes the Debtors out of their "middleman" position between Toyota and the Japanese Tooling Suppliers and at the same time, allow the Debtors to continue to receive all of the benefits of the agreements, Ms. Ball points out. Moreover, the assumption of the Tooling Agreements is an important step for the Debtors to help solidify their relationship with Toyota, one of their key customers, Ms. Ball contends. 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. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 20; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Gets Court Approval on 2nd Settlement With Toledo Press ------------------------------------------------------------------ Dana Corporation and its debtor-affiliates obtained the U.S. Bankruptcy Court for the Southern District of New York's approval for their second settlement agreement with Toledo Press Company. The Debtors and Toledo Press are parties to several equipment purchase agreements pursuant to which the Debtors bought two 2,500-ton presses and two 1,000-ton presses and certain related equipment from Toledo Press. As reported in the Troubled Company Reporter on June 9, 2006, the Debtors entered into a Settlement Agreement with Toledo Press, resolving certain disputes between the parties relating to shipping charges incurred in connection with the delivery of certain equipment sold by Toledo Press to the Debtors. The purchase price of the Equipment amounts to more than $10,000,000, which will be paid through a series of quarterly payments until July 2006. The Equipment was used in the Debtors' Structures Division for the manufacture of frames for light trucks and automobiles. Toledo Press procured the Equipment from China and shipped it to the Debtors' facility in Hopkinsville, Kentucky. Toledo Press was responsible for installing the Equipment and providing other related services. The Purchase Agreements provided that the Debtors grant purchase money security interests to Toledo Press to secure payment of the Purchase Price. According to Toledo Press, the Equipment arrived at the Hopkinsville Facility from October 2005 through January 2006. After the delivery of the Equipment to the Debtors, Toledo Press then filed financing statements in the Commonwealth of Virginia, seeking to perfect the security interests granted pursuant to the Equipment Purchase Agreements. As of Mar. 3, 2006, the Debtors owed Toledo Press $3,825,100 under the Equipment Purchase Agreements, Corinne Ball, Esq., at Jones Day, in New York disclosed. Subsequently, the Debtors and Toledo Press disputed: (a) whether the Equipment Charges represented a prepetition or postpetition claim, and whether any portion of the amounts should be paid on a postpetition basis; (b) whether the Alleged Perfection properly perfected the Security Interests; and (c) even if the Security Interests were properly perfected, whether the perfection would be subject to avoidance under Chapter 5 of the Bankruptcy Code. On May 5, 2006, the Debtors and Toledo Press entered into a letter agreement resolving certain of their disputes on a provisional basis: * The Debtors agreed to pay $2,361,850 to Toledo Press; * The provisional payments would be disgorged to the extent that any Court order resolving the Secured/Administrative Claim Dispute provide that the perfection of the Security Interests should be avoided or that Toledo Press' claims are not secured or administrative claims; and * The Debtors would be entitled to hold the $700,000 balance owed under the Equipment Purchase Agreements pending the outcome of the Secured/Administrative Claim Dispute, but ultimately would pay that amount to Toledo Press if Toledo Press was successful in litigation. The Debtors were scheduled to make a second provisional payment of $763,250 to Toledo Press by the end of July 2006. However, because of the negotiation of a resolution of the issues, the parties agreed that the Second Payment would not be paid as scheduled, Ms. Ball says. Also, in May 2006, the Equipment designated by the parties as Press No. 27 malfunctioned and experienced certain mechanical problems. Toledo Press and the Debtors dispute whether the actions of Toledo Press employees or the Debtors' employees caused the mechanical problems with Press 27, Ms. Ball states. Toledo Press was required to provide various warranties with respect to the Equipment under the Purchase Agreements. The Debtors have advised Toledo Press that they are asserting a claim with respect to Press 27 based on Toledo Press' breach of the warranties. Ms. Ball says the Debtors have paid approximately $91,000 to third parties for the repair of Press 27. The Debtors expect to incur $5,000 in additional costs in connection with the Press 27 Warranty Claim. In June 2006, Toledo Press notified the Debtors that in addition to the Security Interests, its claims were secured by a statutory lien on the Equipment arising under Kentucky law. The Debtors have found that litigating the Secured/Administrative Claim Dispute and the Press 27 Warranty Claim in the Court could take substantial time and resources. Given the nature of the dispute, litigation with Toledo Press would be highly fact- intensive and require multiple witnesses, Ms. Ball notes. Thus, the Debtors and Toledo Press negotiated a resolution of the issues and ultimately agreed that: (a) Toledo Press will be permitted to retain the First Payment totaling $2,361,850; (b) the Debtors will not be required to make the Second Payment totaling $763,250, or pay the $700,000 Remaining Balance to Toledo Press; (c) Toledo Press will be have an allowed general unsecured non-priority claim for $1,433,250 against the Debtors; (d) Toledo Press will release the Debtors and other related parties from any claims it may have relating to the Equipment Purchase Agreements; (e) the Debtors will release Toledo Press from any claims they may have under Sections 544 through 550 relating to the potential avoidance of transfers under the Equipment Purchase Agreements and the Press 27 Warranty Claim; and (f) Toledo Press will continue to perform its warranty obligations under the Equipment Purchase Agreements and the Debtors will retain its warranty rights and claims, other than the Press 27 Warranty Claim. 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. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 20; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Court Approves 2001-1 EETC Stipulation with U.S. Bank ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the Stipulation entered into by Delta Air Lines, Inc., and U.S. Bank Trust National Association, as Subordination Agent under an Intercreditor Agreement dated Sept. 17, 2001. As reported in the Troubled Company Reporter on Sept. 5, 2006, in September 2001, Delta Air, U.S. Bank, and certain other parties entered into a pass through financing arrangement -- the 2001-1 Enhanced Equipment Trust Certificate -- in which Delta financed 36 Boeing aircraft. As part of the 2001-1 EETC, Delta entered into 36 separate Indenture and Security Agreements, one per aircraft, with respect to which U.S. Bank currently acts as Loan Trustee. Delta has issued five series of Equipment Notes -- A-1, A-2, B, C, and D -- under each Indenture, the payment of which is secured by a mortgage on, and security interest in, among other things, all of Delta's right, title and interest in and to the corresponding aircraft. Each Equipment Note was purchased by one of five corresponding Delta Air Lines Pass Through Trusts, known as the Delta Air Lines Pass Through Trusts "2001-1A-1," "2001-1A-2," "2001-1B," "2001- 1C," and "2001-1D", for each of which U.S. Bank currently is Trustee. Each Pass Through Trust purchased all of the Equipment Notes of a specific series using proceeds from the sale of corresponding classes of enhanced equipment trust certificates -- the "Class A-1," "Class A-2," "Class B," "Class C," and "Class D Certificates". The Equipment Notes are registered in the name of U.S. Bank in its capacity as Subordination Agent under an Intercreditor Agreement dated September 17, 2001, as amended, originally entered into by and among: (a) State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, but solely as Pass Through Trustee of each of the Delta Air Lines Pass Through Trusts 2001-1A-1, 2001-1A-2, 2001-1B, 2001-1C, and 2001-1D; (b) Landesbank Hessen-Thuringen Girozentrale as Class A-1, Class A-2, Class B and Class C Liquidity Provider; and (c) State Street in its capacity as Subordination Agent. The Intercreditor Agreement controls the distribution of funds among the parties. Under the Indentures, Delta makes payments on the Equipment Notes semi-annually on each March 18 and September 18. Those payments are received and allocated by the Subordination Agent in accordance with the applicable provisions of the Intercreditor Agreement, and, to the extent of sufficient funds, are distributed to the Pass Through Trustees to make semi-annual payments on the Certificates. Payments of up to three semi-annual installments of interest allocable to the holders of Class A-1, A-2, B and C Certificates are supported by four separate liquidity facilities with the Landesbank. If for any reason the amount distributable to the holders of Certificates of a supported Class is less than the scheduled interest payment on the related Series of Equipment Notes, the Subordination Agent is required to draw on the Liquidity Facilities to the extent necessary to enable the relevant Pass Through Trustee to distribute the full amount of that interest. Delta's filing of a voluntary petition under Chapter 11 of the Bankruptcy Code constitutes a "Triggering Event" under the Intercreditor Agreement. Once a Triggering Event occurs, all distributions under the Intercreditor Agreement are to be made pursuant to Section 3.03 of the Agreement, which provides: -- for the payment of certain fees, expenses and other amounts, including, without limitation, the fees and expenses of U.S. Bank, Liquidity Expenses and Liquidity Obligations prior to payments to the Pass Through Trustees for further distribution on the Certificates; and -- that State Street, as subordination agent, is required to distribute to the Pass Through Trustees, to the extent o sufficient funds, the Adjusted Expected Distribution for their respective Class of Certificates in this order of priority: (i) the Class A-1 and A-2 Trustees, pro rata; (ii) the Class B Trustee, (iii) the Class C Trustee, and (iv) the Class D Trustee. The next scheduled semi-annual payment due on the Equipment Notes, totaling $363,783,038 in principal and accrued interest, is due on September 18, 2006. The Adjusted Expected Distribution for each Class of Certificates on September 18, 2006, is: Class Principal Interest Total ----- --------- -------- ----- A-1 -- $4,301,593 $4,301,593 A-2 -- 20,307,167 20,307,167 B -- 7,983,584 7,983,584 C $169,782,000 6,196,194 175,978,194 D 150,000,000 5,212,500 155,212,500 ---------------------------------------------- Totals $319,782,000 $44,001,038 $363,783,038 Michael E. Wiles, Esq., at Debevoise & Plimpton LLP, in New York, relates that the Adjusted Expected Distributions for the Class C and Class D Certificates represent final distributions, as the principal amount of the related Equipment Notes matures on September 18, 2006. Delta warrants that it currently holds a beneficial interest in $110,392,256 in principal amount of the Class C Certificates, about 65.02% of the total outstanding principal amount, and also owns directly 100% of the principal amount of the outstanding Class D Certificates. Delta acknowledges that each of the aircraft included in the 2001-1 EETC is subject to the provisions of Section 1110 of the Bankruptcy Code. Delta has previously agreed, pursuant to Section 1110(a)(2) and within the time period specified in Section 1110, to: -- perform all obligations of Delta under the Indentures and those other agreements as may be determined to constitute the applicable security agreements under Section 1110; and -- cure defaults, if any, under the 1110 Documents, except to the extent that those defaults do not need to be cured under the terms of Section 1110(a)(2), and to do so within the time periods specified in Section 1110(a)(2). In light of the size of the September 18, 2006 Payment, however, Delta intends to have confirmation that if the Section 3.03 Amounts and the September 18, 2006 Payment are both timely paid, then these payments will be applied in accordance with the terms of the Intercreditor Agreement. In a stipulation, Delta and U.S. Bank agree that, assuming that Delta pays in full on September 18, 2006, an amount equal to: (i) Intercreditor Agreement's Section 3.03 Amount; and (ii) all payments of principal and interest due with respect to the Equipment Notes as of September 18 2006, which is $363,783,038, then the Subordination Agent will distribute to each Pass Through Trustee, and each Pass Through Trustee will promptly distribute to the holders as of the relevant record date of its Class of Certificates the Adjusted Expected Distribution for each Class of Certificates. The parties agree that, once U.S. Bank, in its capacity as both the Subordination Agent and the Pass Through Trustee, distributes the September 18, 2006 Payment, any liability it may have had with respect to the making of those payment will cease to exist. U.S. Bank will not be responsible if any Certificate holders fail to receive their respective portions of the September 18, 2006 Payment as long as it made distributions in accordance with the Stipulation and the applicable provisions of the Pass Through Trust Agreements. Headquartered in Atlanta, Georgia, Delta Air Lines (Other OTC: DALRQ) -- http://www.delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA AIR: Wants to Sell 10 Airframes to Planet Marketing --------------------------------------------------------- Delta Air Lines, Inc., seeks the U.S. Bankruptcy Court for the Southern District of New York's consent to sell nine used Embraer EMB-120ER airframes and one used Embraer EMB-120RT airframe, together with related engines, four spare engines, miscellaneous equipment and documents, to Planet Marketing International Ltd., for an $8,900,000 aggregate purchase price, pursuant to an Aircraft Purchase and Sale Agreement dated Aug. 21, 2006. Nine of the Aircraft bear U.S. Federal Aviation Administration Registration Nos. N275AS, N281AS, N284AS, N286AS, N501AS, N502AS, N504AS, N505AS, and N638AS. One Aircraft does not currently have a FAA registration number, and bears the Mexican registration number XA-UAI. Before the Petition Date, the Aircraft were owned by Atlantic Southeast Airlines, Inc., a Delta subsidiary sold in August 2005. ASA retired the Aircraft in 2002 and 2003 and parked them in Hot Springs, Arkansas. As part of the ASA sale, Delta and ASA entered into the Aircraft Purchase and Sale Agreement dated August 26, 2005, pursuant to which 16 Embraer EMB-120 aircraft and spare parts were purchased by Delta, including the Aircraft. Delta has never used the Aircraft in its operations. Before the Petition Date, Delta owned the Aircraft free and clear of liens, claims and other encumbrances, except for applicable statutory liens, if any. On October 6, 2005, the Court authorized the Debtors to obtain postpetition financing through two separate credit facilities. The Aircraft are subject to liens securing the Debtors' obligations under the Postpetition Credit Facilities. Michael E. Wiles, Esq., at Debevoise & Plimpton LLP, in New York, relates that Delta has phased out its use of the Embraer model 120 aircraft, and has already sold 26 of that aircraft. The last Embraer model 120 aircraft was removed from revenue service in September 2003, and the Aircraft comprise the last remaining 10 Embraer model 120 aircraft that Delta seeks to sell. Mr. Wiles tells the Court that Delta has actively explored possible transactions for the sale of the Embraer model 120 aircraft. Delta has made extensive visits to potential customers and regularly advertises the sale of the Aircraft. As a result of the negotiations surrounding its efforts to sell the surplus Embraer model 120 aircraft, Delta is familiar with the market value of the Aircraft. Delta also seeks the Court's authority to sell the Aircraft to Planet Marketing free and clear of liens, claims, encumbrances and interests, pursuant to Sections 363(b) and 363(f) of the Bankruptcy Code, other than any interests permitted under the Sale Agreement. Planet Marketing has indicated that it is not willing to enter into the Sale Agreement in the absence of that provision. Delta does not anticipate that the sale of the Aircraft will require the assumption of any leases or executory contracts to which the Debtors are a party, or the assignment of any agreements to Planet Marketing. However, the Debtors reserve their rights to file pleadings as may be necessary to assume any leases and contracts, if necessary to further effectuate the transactions contemplated by the Sale Agreement. Headquartered in Atlanta, Georgia, Delta Air Lines (Other OTC: DALRQ) -- http://www.delta.com/-- is the world's second- largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA MILLS: Fails to Make September 1 Interest Payment ------------------------------------------------------- Delta Mills, Inc., disclosed that it will not make the $1,489,024 interest payment due on Sept. 1, 2006, on the Company's outstanding 9-5/8% Senior Notes due 2007. The Indenture relating to the Notes provides a 30-day grace period before the nonpayment of interest due on the Notes will constitute an event of default under the Indenture. Upon any such event of default, The Bank of New York, the Trustee under the Indenture, or the holders of at least 25% in principal amount of the outstanding Notes, would be entitled to declare all of the Notes to be due and payable immediately. In addition, under the Indenture, following the thirty-day grace period, the Trustee could pursue any available remedy to collect the payment of principal and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture. Under the Indenture, the Company must pay interest on overdue installments of interest without regard to any grace period at the rate of 10-5/8% per annum. Currently $30,940,750 in aggregate principal amount of the Notes is outstanding. At this time, the Company has not determined whether it will make the interest payment prior to the expiration of the grace period. Business conditions in the Company's principal lines of business remain difficult, which is affecting the Company's liquidity. As disclosed in the Company's Quarterly Report on Form 10-Q for the third quarter of the Company's fiscal year, defense budget constraints and allocations are a significant factor in determining the level of future business of the Company's government business. The Company has recently been informed by the U.S. Department of Defense that overall demand at the Department of Defense for the products of the Company's customers for the balance of the government's current fiscal year and into the government's next fiscal year will be considerably less than anticipated, even below the minimum levels contained in the contracts currently in place with the Company's customers. At the same time, funding within the Department has been tightening up, resulting in less money being made available for supplies, and inventory levels are higher than normal. The Department has responded by lowering its monthly delivery order quantities. The Company's government business customers have informed the Company that the government is seeking modification of their contracts with the government with a view towards contracts involving significantly lower levels of business. It is too early to tell the full impact that this development will have on future orders and whether this reduction in demand will be temporary or longer-term. In addition, the Company has entered into a contract to sell its inactive Pamplico plant and the adjacent real estate totaling approximately 145 acres for approximately $2.25 million, but the closing on that contract has been delayed. The contract provided for closing to occur no later than Aug. 28, 2006. However, shortly before Aug. 28, 2006, the potential buyer requested an extension of the closing date. The Company agreed to grant a short extension of the outside date for closing, and the Company and the potential buyer entered into a written amendment to the contract providing for a new closing date of Sept. 6, 2006. In addition to extending the closing date to Sept. 6, 2006, the contract amendment requires that the $50,000 earnest money deposit (to be applied against the purchase price) held in escrow be released from escrow and paid to the Company. The contract amendment also contains a provision in which the potential buyer acknowledged that it has completed its environmental due diligence with respect to the property and is satisfied with the environmental condition of the property. The potential buyer has now requested an additional extension of the closing date beyond Sept. 6, 2006, and has indicated that it would like to extend the closing date for up to 60 additional days to complete its financing. The Company has not yet decided how to respond to buyer's latest request for an extension of the closing date. The Company is considering its alternatives while it evaluates the request by the potential buyer. The Company currently intends to maintain its current operations while it pursues its strategic alternatives. The Company's Board and management are actively exploring strategic alternatives including selling or otherwise disposing of all or substantially all of the Company's business to one or more third parties through an insolvency proceeding, or initiating an insolvency proceeding to provide for the orderly liquidation of the Company, or some combination of these transactions. The Company has not yet determined which of these strategic alternatives may be most advantageous to the Company or its stakeholders. The Company is in discussions with a potential acquiror to purchase the Company's Beattie plant and certain other assets and assume certain liabilities of the Company. The Company believes that, if the acquisition were consummated, the acquiror would continue to operate the Beattie plant. The Company believes that this potential acquiror has more than adequate financial resources to effectuate any proposed acquisition. The transaction currently under discussion would be structured as an acquisition pursuant to Sections 363 and 365 of the US Bankruptcy Code. To implement the transaction, the Company would be required to file a bankruptcy petition for reorganization under Chapter 11 of the US Bankruptcy Code and to enter into an arrangement pursuant to which the Company's Delta 3 plant would finish cloth for the potential acquiror on a contract basis for a temporary period. Each of FTI Consulting, Inc. and Soles, Brower, Smith & Co. is assisting the Company in evaluating its strategic alternatives, including the possible transaction currently under discussion. The Company is also in communication with an ad hoc committee of holders of Notes and has entered into confidentiality agreements with members of the Ad Hoc Committee. The Ad Hoc Committee has informed the Company that the committee includes holders that beneficially own approximately 41% of the outstanding Notes. In evaluating its strategic alternatives, the Company is also in close communication with GMAC Commercial Finance LLC, its senior lender under its Credit Agreement. GMAC has informally indicated a willingness to work with the Company in connection with any debtor-in-possession financing arrangement. The Company believes that its Credit Agreement is sufficient to meet its working capital needs while it pursues its strategic alternatives, provided that the Company's vendors continue to be supportive of the Company's operations. The occurrence of an event of default under the Indenture, such as the non-payment of interest on the Notes for more than 30 days past the due date for that payment, would become a cross-default under the Company's Credit Agreement unless the Company receives a waiver of such default. About Delta Mills Delta Mills, Inc., a wholly owned subsidiary of Delta Woodside Industries, Inc. (OTCBB:DLWI) -- http://www.deltawoodside.com/-- produces a broad range of finished apparel fabrics in four manufacturing plants in South Carolina. Delta Mills sells and distributes its fabrics through a marketing office in New York City, with sales agents also operating from Atlanta, Chicago, Dallas, Los Angeles, San Francisco and Mexico. Going Concern Doubt KPMG LLP in Greenville, South Carolina, raised substantial doubt about Delta Mills, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended July 2, 2005. The auditor pointed to the Company's recurring losses from operations and uncertainties with regard to its ability to operate within the covenants and availability established by its revolving credit facility with GMAC Commercial Finance LLC. DOMTAR INC: Posts $3 Million Net Loss in 2006 Second Quarter ------------------------------------------------------------ Domtar Inc. incurred a $3 million loss from continuing operations in the second quarter of 2006 compared to a loss from continuing operations of $22 million in the first quarter of 2006 and earnings from continuing operations of $6 million in the second quarter of 2005. "Overall, our operations continued to benefit from price increases covering most of our products, as well as continued strength in all of our different market segments except for lumber. While our costs continue to be impacted by the strong Canadian dollar that reached its highest level since the 1970s, today's improved results from the first quarter also illustrate our employees' efforts and focus on executing the restructuring plan announced in November 2005. The closure of our Vancouver mill in June was a major step in a series of measures aimed at improving the Company's profitability and cash flow generation." "With regard to the softwood lumber dispute, Domtar remains critical of the proposed framework agreement, considering Canada's many key legal victories. The settlement would deprive our shareholders of 20% of the duties collected so far by the U.S. Government, with no guarantee of a long-standing trade peace," said Raymond Royer, Domtar's President and Chief Executive Officer. In accordance with Canadian generally accepted accounting principles, effective in the second quarter of 2006, the information pertaining to the Company's Vancouver paper mill will no longer be included in the Company's paper business but presented as a discontinued operation and assets held for sale. Subsequent to quarter-end, the Company reached an agreement to sell its Vancouver paper mill property, subject to a number of closing conditions. The $58 million increase in operating profit from continuing operations excluding specified items in the Papers segment was mainly the result of higher average selling prices for pulp and paper as well as the benefit pursuant to the closures of the Cornwall and Ottawa paper mills which were effective at the end of the first quarter. These factors were partially offset by lower shipments for paper as well as the negative impact of a stronger Canadian dollar. Free cash flow amounted to $25 million in the second quarter of 2006 including $21 million of cash requirements for working capital. Domtar's net debt-to-total capitalization ratio at June 30, 2006 stood at 57.9% compared to 57.7% as at Dec. 31, 2005. Domtar's net indebtedness decreased by $53 million, largely due to the positive impact of a stronger Canadian dollar (based on month-end exchange rates) on the Company's U.S. dollar denominated debt. About Domtar Inc. Headquartered in Montreal, Quebec, Domtar Inc. (TSX/NYSE: DTC) -- http://www.domtar.com/-- produces uncoated freesheet paper in North America. The Company also a manufactures business papers, commercial printing and publication papers, and technical and specialty papers. Domtar manages according to internationally recognized standards 18 million acres of forestland in Canada and the United States, and produces lumber and other wood products. Domtar has 10,000 employees across North America. The company also has a 50% investment interest in Norampac Inc., a Canadian producer of containerboard. * * * As reported in the Troubled Company Reporter on April 18, 2006, Dominion Bond Rating Service placed the Unsecured Notes and Debentures' ratings at BB (low) and the Preferred Shares' rating at Pfd-5 (high) of Domtar Inc. under review with developing implications following the announcement that the Company will be combined with Weyerhaeuser Company's fine paper and related assets to form a new U.S. company that will continue to be called Domtar. The rating status reflects the uncertainty regarding Domtar's capital structure following closing of the transaction, which is expected in Q1 2007. EASY GARDENER: Files Liquidating Plan and Disclosure Statement -------------------------------------------------------------- Easy Gardener Products, Ltd., and its debtor-affiliates have filed their Joint Plan of Liquidation and an accompanying Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. Under the liquidating plan, the Debtors will be deemed substantively consolidated for distribution purposes, and all intercompany claims will be eliminated. On the effective date, Richard M. Kurz will be authorized to implement the terms of the Plan. Treatment of Claims All Allowed Administrative Claims will be paid in full on the later of the effective date, the date the claim becomes an allowed administrative claim, or as soon as practicable. All Allowed Priority Tax Claims will be paid in full on the effective date, except those claims that have been paid before the effective date. All Class 1 Allowed Other Priority Claims will be paid in full on the later of the effective date, the date the claim becomes an allowed other priority claim, or as soon as practicable. All Class 2 Allowed Lenders' Claims will be paid from the proceeds of the asset sale, under the conditions stated in the Sale Order and the Final DIP Financing Order. Class 3 Allowed Other Secured Claims are impaired. Except if a creditor agrees to a different treatment, the collateral of each claim will be reconveyed to the creditor as is, where is. The holder of the claim will receive a reconveyance of the collateral securing the claim in full satisfaction on the effective date or the date the claim becomes an allowed other secured claim. All costs associated with obtaining the collateral will be borne by the creditors. Any portion not satisfied by the return of the collateral will be treated as a Class 4 Claim. Holders of Class 4 Allowed General Unsecured Claims will receive a pro rata share of 90% of the Net Available Funds within 30 days after the effective date. The remaining 10% will be retained by the Debtors until the Final Distribution. The Net Avalaible Funds will be used to pay the administration of the Plan, the filing of claims objections, the liquidation of the excluded assets, and then distributed to holders of Allowed Class 4 Claims. Class 5 Equity Interests will not receive anything under the Plan. The Court will convene a hearing at 3:00 p.m. on Sept. 20, 2006, to consider the adequacy of the Debtors' Disclosure Statement. Objections to the Debtors' Disclosure Statement, if any, must be submitted by 4:00 p.m. on Sept. 13, 2006. A full-text copy of the Debtors' Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060907220652 A full-text copy of the Debtors' Joint Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060907220946 Headquartered in Waco, Texas, Easy Gardener Products, Ltd. -- http://www.easygardener.com/-- manufactures and markets a broad range of consumer lawn and garden products, including weed preventative landscape fabrics, fertilizer spikes, decorative landscape edging, shade cloth and root feeders, which are sold under various recognized brand names including Easy Gardener, Weedblock, Jobe's, Emerald Edge, and Ross. The Company and four of its affiliates filed for bankruptcy on April 19, 2006 (Bankr. D. Del. Case Nos. 06-10393 to 06-10397). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP and John F. Higgins, Esq., James Matthew Vaughn, Esq., and Joshua W. Wolfshohl, Esq., at Porter & Hedges, LLP, represent the Debtors in their restructuring efforts. Adam Dunayer, Brett Lowrey, Michael Boone, and Ben Williams at Houlihan Lokey Howard & Zukin give financial advice to the Debtors. Joel A. Waite, Esq., and M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Official Committee of Unsecured Creditors. Samuel Star at FTI Consulting, Inc., gives financial advice to the Committee. When the Debtors filed for bankruptcy, they reported assets amounting to $103,454,000 and debts totaling $107,516,000. EDS CORP: Earns $104 Million in Second Quarter Ended June 30 ------------------------------------------------------------ EDS Corp. reported second quarter net income of $104 million versus net income of $26 million in last year's second quarter. EDS' pro forma second quarter net income was $107 million versus second quarter 2005 pro forma net income of $27 million. Pro forma second quarter 2006 net income and EPS excludes after- tax losses of $5 million for discontinued operations and a pre-tax reversal of $4 million of previously recognized restructuring expenses. When further excluding the impact of expensing stock options and performance-based restricted stock units ($43 million pre-tax), pro forma net income was $136 million versus comparable second quarter 2005 pro forma net income of $54 million. "EDS continued to drive operational and financial improvements in the second quarter," said Mike Jordan, EDS chairman and chief executive officer. "Our bottom line benefited from the improved performance of some of our largest accounts, and we expect our margins to continue to expand as we ramp up our productivity and Best Shore initiatives. "Our more than $15 billion in first-half contract signings reflected EDS' best six-month total since 2001. Importantly, this new business was balanced across industries, services lines and geographies and reflects an increasing number of new clients, putting EDS on a path to achieve solid growth," Mr. Jordan said. EDS signed $5.4 billion in contracts in the second quarter, up 103% from $2.6 billion in the year-ago quarter. Significant contracts for the quarter include Kraft Foods Inc., a $1.6 billion new logo, and wins with existing clients Bank of America, $700 million, and the Commonwealth Bank of Australia, $350 million. EDS also completed the acquisition of a majority stake in MphasiS BFL Limited, a leading applications and business process outsourcing services company based in Bangalore, India. The acquisition provides EDS with strong complementary capabilities in applications development and business process outsourcing, particularly customer relationship management; enhances the company's domain expertise in the financial sector; and immediately quadruples the size of EDS' India workforce to approximately 15,000. EDS posted second quarter revenue of $5.19 billion, up 5% on an organic basis (which excludes the impact of currency fluctuations, acquisitions and divestitures) from $5 billion in the year-ago quarter. Free cash flow was $362 million in the second quarter, an improvement of $244 million versus the year-ago period. EDS' operating margin for the second quarter was 3.%, up from 1.7% in the year-ago quarter. Pro forma operating margin was 2.9%, up from 1.5% in the year-ago quarter. When further excluding the impact of expensing stock options and performance-based restricted stock units, pro forma operating margin was 3.7%, compared to 2.4% in the year-ago quarter. The company's effective tax rate from continuing operations for the second quarter of 2006 was 16%. This was primarily due to a $46 million reduction of liabilities for tax contingencies, including the impact of a settlement with the U.S. Internal Revenue Service, partially offset by other items. This resulted in a 3 cent per share favorable impact to the tax rate assumed in the company's second quarter guidance. Second Quarter Results by Segment -- Americas: Second quarter revenue was $2.37 billion, up 3% compared to the prior-year period. Operating profit was $364 million, up 15% from $318 million in the prior-year period, due to improved operating performance on certain major contracts. -- EMEA: Second quarter revenue was $1.60 billion, up 9% compared to the prior-year period, driven by the company's U.K. Ministry of Defence DII contract. Operating profit was $215 million, down slightly from $218 million in the year-ago quarter. -- Asia-Pacific: Second quarter revenue was $352 million, down 8% compared to the prior-year period. Operating profit was $39 million, flat compared with the prior-year period of $39 million. -- U.S. Government: Second quarter revenue was $789 million, up 8% compared to the prior-year period. Operating profit was $122 million, up 35% from $90 million in the prior-year period. Both revenue and operating margin improvements were driven in large part by improved performance of the Navy Marine Corps Intranet contract. About EDS Corp. Headquartered in Plano, Texas, EDS Corp. -- http://www.eds.com/-- is a global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry more than 40 years ago. EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. * * * EDS Corp.'s 7-1/8% Notes due 2009 carry Moody's Investors Service's Ba1 rating. ENRON CORP: Closes $2.9 Bil. Prisma Energy Sale to Ashmore Energy ----------------------------------------------------------------- Enron Corp. has completed the sale of 100% of the outstanding shares of Prisma Energy International Inc. to Ashmore Energy International Limited, which is majority-owned by funds managed by Ashmore Investment Management Ltd. The first stage of the sales transaction closed in May 2006, with Ashmore Energy acquiring an equity stake in Prisma Energy, initially representing just less than 25% of the aggregate voting interest. In addition to amounts previously received at the first stage closing in May 2006, Enron received $462,600,000 in connection with this second stage closing, which amounts will be included in the next creditor distribution in October 2006. Enron expects to realize a total of approximately $2.9 billion from its ownership of Prisma Energy, including approximately $800 million in cash dividends received from Prisma Energy prior to the first stage closing. "We are pleased that this transaction is now completed and the expected value is over three times greater than the estimated value of Prisma Energy contained in the disclosure statement filed with Enron's Bankruptcy Plan," said John J. Ray III, Enron's President and Board Chairman. "This is an enormous milestone for the Enron Estate." Prisma Energy was the last of the three major platform entities under the Bankruptcy Plan to be sold or distributed to Enron's creditors. Prior to entering into the sales transaction, Prisma Energy transferred to a subsidiary of Enron 33.04% of the outstanding stock of Promigas S.A., an energy concern in Colombia, which is expected to be subject to a separate auction process by Enron's subsidiary scheduled for November 2006 in Colombia. Pursuant to an existing agreement, Prisma has agreed to make a bid for such auction shares, at an aggregate purchase price of $350 million. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. EVERGREEN INT'L: Extends 12% Senior Notes Offering to Sept. 25 -------------------------------------------------------------- The pending offer to purchase any and all of Evergreen International Aviation, Inc.'s outstanding 12% Senior Second Secured Notes Due 2010 (CUSIP No. 30024DAF7) previously scheduled to expire at 5:00 p.m., New York City time, on Sept. 5, 2006, has been extended until 5:00 p.m., New York City time, on Sept. 25, 2006, unless otherwise extended or earlier terminated. Except for the above change, all terms and conditions of the tender offer are unchanged and remain in full force and effect. Holders of approximately 97.94% of the outstanding principal amount of the Notes have tendered and consented to the proposed amendments to the indenture governing the Notes. Subject to the satisfaction or waiver of the remaining conditions (including the consummation of a new Senior Secured Credit Facility by Evergreen) set forth in the Offer to Purchase and Consent Solicitation Statement dated July 20, 2006, Evergreen currently intends to accept the entire amount of Notes tendered pursuant to the tender offer and consent solicitation. Credit Suisse Securities (USA) LLC is serving as the exclusive Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the terms of the tender offer or consent solicitation should be directed to: Credit Suisse Securities (USA) LLC Attn: Liability Management Group Telephone (212) 325-7596 or (800) 820-1653 The Tender Agent and Information Agent is D.F. King & Co., Inc. Any questions or requests for assistance or additional copies of documents may be directed to the Information Agent toll free at (800) 290-6426 (bankers and brokers call collect at (212) 269- 5550). Based in McMinnville, Oregon, Evergreen International Aviation, Inc. -- http://www.evergreenaviation.com/-- is a privately held global aviation services company that is active through several subsidiary companies. * * * As reported in the Troubled Company Reporter on Aug. 11, 2006, Standard & Poor's Ratings Services raised its rating on Evergreen International Aviation Inc.'s first-lien bank loan rating to 'B+' from 'B' and changed the recovery rating to '1' from '2'. The rating action reflects a change in the structure of the proposed credit facility. FIRST BANCORP: Board Declares $0.07 Dividend Per Common Share ------------------------------------------------------------- First BanCorp's Board of Directors has declared the next payment of dividends on Common, Series A through E Preferred and Trust Preferred I & II shares. Common stockholders of record as of Sept. 15, 2006, will receive the 45th consecutive quarterly dividend in the amount of $0.07 per share for the 3rd Quarter of 2006, payable on Sept. 29, 2006. The estimated dividend amounts, record dates and payment dates are: Series $Per/share Record Date Payment Date ------ ---------- ----------- ------------ A 0.1484375 Sept. 28, 2006 Oct. 2, 2006 B 0.17395833 Sept. 15, 2006 Oct. 2, 2006 C 0.1541666 Sept. 15, 2006 Oct. 2, 2006 D 0.15104166 Sept. 15, 2006 Oct. 2, 2006 E 0.14583333 Sept. 15, 2006 Oct. 2, 2006 Regulatory approvals were obtained as a part of the Company's agreement with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico. Luis Beauchamp, president and chief executive officer, said, "Our 45th consecutive dividend to common shareholders is evidence of First BanCorp's continued operational and financial success, as well as our continued commitments to our shareholders," First BanCorp (NYSE: FBP) is the parent corporation of FirstBank Puerto Rico, a state chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and of Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and FirstBank Florida, formerly UniBank, the thrift subsidiary of Ponce General, all operate within U.S. banking laws and regulations. * * * As reported in the Troubled Company Reporter on March 22, 2006, Fitch Ratings affirmed the ratings and Outlook for First Bancorp and FirstBank Puerto Rico: long-term Issuer Default Rating 'BB'/short-term 'B'. The Rating Outlook remains Negative. FLINTKOTE COMPANY: Wants Exclusivity Period Extended to Dec. 28 --------------------------------------------------------------- Flintkote Company and Flintkote Mines Limited ask the U.S. Bankruptcy Court for the District of Delaware to extend until Dec. 28, 2006, the period within which they have the exclusive right to file a chapter 11 plan of reorganization. The Debtors also want their time to solicit acceptances of that plan extended to Feb. 28, 2007. The Debtors tell the Court that there has been a development in the litigation against Imperial Tobacco Company of Canada seeking to recover, with interest, at least $525,200,000 transferred by Flintkote to Imperial Tobacco. In addition, the Debtors have made significant progress in the insurance coverage action againts Aviva Insurance Company of Canada Limited and Aviva plc. According to the Debtors, the District Court recently denied Aviva's move to dismiss, on ripeness and jurisdictional grounds, the Debtors' request in the amended complaint for a declaration of coverage for future claims, and extensive discovery is continuing. The Debtors believe that the extension will give them, together with the Asbestos Claimants Committee and Future Claimants Representative, more time to finalize the terms of the joint plan of reorganization and disclosure statement. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliate, Flintkote Mines Limited, filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. The Bankruptcy Court appointed James J. McMonagle as the Legal Representative for Future Asbestos Personal Injury Claimants for Flintkote and Mines on Aug. 26, 2004, and Sept. 9, 2004, respectively. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. FLINTKOTE COMPANY: Wants Until Dec. 28 to File Notices of Removal ----------------------------------------------------------------- Flintkote Company and Flintkote Mines Limited ask the U.S. Bankruptcy Court for the District of Delaware to extend, until Dec. 28, 2006, the period within which they can remove prepetition actions. The Debtors are currently defendants in 157,000 asbestos-related personal injury actions. The Debtors and their creditor constituencies have not yet completed their analysis in this matter. The Debtors explain that they have been working with Asbestos Claimants Committee and Future Claimants Representative to design and propose a joint plan of reorganization for the Debtors and their estates. The extension, the Debtors say, will preserve the estates' existing rights while the Parties will finalize a consensual joint chapter 11 plan, disclosure statement and related trust documents. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company and its affiliate, Flintkote Mines Limited, filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. The Bankruptcy Court appointed James J. McMonagle as the Legal Representative for Future Asbestos Personal Injury Claimants for Flintkote and Mines on Aug. 26, 2004, and Sept. 9, 2004, respectively. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. FOAMEX INTERNATIONAL: Posts $13.2 Mil. Net Loss in Second Quarter ----------------------------------------------------------------- Foamex International, Inc., filed its Form 10-Q for the second quarter ended July 2, 2006, with the U.S. Securities and Exchange Commission. The company reported a net loss of $13,246,000 for the second quarter of fiscal 2006 as compared to a net loss of $14,666,000 during the same period in fiscal 2005. For the two quarters ended July 2, 2006, net income was $3,804,000, as compared to a net loss of $25,520,000 for the same six-month period in fiscal 2005. Net sales for the second quarter of fiscal 2006 increased by 12% to $344,900,000 from $307,200,000 in the prior-year quarter. Net sales for the six months ended July 2, 2006 also increased 12% to $710,800,000 from $633,100,000 in the six months ended July 3, 2005. According to Robert S. Graham, Jr., Foamex's principal financial officer, the company is in compliance with the EBITDA, cumulative cash flow, leverage ratio and capital expenditure covenants under its DIP Facilities for the nine months ended July 2, 2006. Foamex expects to contribute nearly $16,000,000 to its pension plan in 2006, with $3,100,000 contributed during the second quarter. As of July 2, 2006, Foamex had accrued about $700,000 for litigation and other legal matters and around $2,200,000 for environmental matters. Mr. Graham relates that company has revised its business plan in light of its improved financial performance and has determined that the financial projections underlying its December 23, 2005 proposed plan of reorganization are no longer valid and that the plan should be substantially revised. The company, according to Mr. Graham, is in the process of negotiating exit financial commitments from a group of banks and certain of its equity holders to fund the company's emergence from Chapter 11 under an amended plan of reorganization. A full text-copy of Foamex's Quarterly Report is available free of charge at http://researcharchives.com/t/s?1138 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. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Wants to Assume Amended EDS Contract ---------------------------------------------------------- Foamex International Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's authority to assume its amended executory contract with Electronic Data Systems Corp. and EDS Information Services LLC. Pursuant to the original contract dated June 15, 2002, the EDS Companies provide the Debtors information technology services that impact all facets of their businesses, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says. The assumption of the amended EDS Contract provides the Debtors with material benefits, Mr. Barry tells the Court. The parties have agreed that absent the EDS Contract Amendment, the cure claim associated with the assumption of the Original EDS Contract would be $1,495,382. Based on the Debtors' agreement to assume the Amended EDS Contract, the EDS Companies have agreed to a 20% discount on the cure claim, thus saving the estates $300,000, Mr. Barry relates. Mr. Barry adds that the EDS Contract Amendment will reduce the Debtors' ongoing monthly obligations to the EDS Companies by $51,400 from mid-September 2006 through June 2007, when the term of the Amended EDS Contract ends. Moreover, according to Mr. Barry, through the EDS Contract Amendment, the Debtors will obtain ownership rights in certain information technology to which they might not otherwise be entitled. As part of the assumption of the Amended EDS Contract, the Debtors and their estates waive and forever release all claims and causes of action against the EDS Companies. The EDS Companies have conditioned the effectiveness of the EDS Contract Amendment on the Debtors' immediate assumption of the amended contract and the payment of the Cure Amount by Sept. 30, 2006. 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. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORD MOTOR: S&P Maintains Negative Watch on Low-B Ratings --------------------------------------------------------- Standard & Poor's Ratings Services' 'B+' long-term and 'B-2' short-term ratings on Ford Motor Co., Ford Motor Credit Co., and related entities remained on CreditWatch with negative implications where they were placed August 18. The 'BB-' long-term and 'B-2' short-term ratings on FCE Bank PLC, Ford Motor Credit's European bank, also remained on CreditWatch with negative implications, reflecting its linkage to the Ford rating. "Ford's announcement that it has hired a senior executive from Boeing Co. as the new Ford CEO broadens Ford's senior management team and so we consider it a modest positive," said Standard & Poor's credit analyst Robert Schulz. The Ford CreditWatch reflects Standard & Poor's decision to review the ratings in light of the sharply lower production schedule announced for light trucks in the fourth quarter (down 155,000 units, or 28%, versus fourth-quarter production in 2005). These cuts, along with the very likely significant cost reductions to be announced later in September, reveal the magnitude of turnaround efforts needed to deal with Ford's deteriorating product mix, lower market share, and excess production capacity in North America. The lower production will have a significant negative effect on Ford's cash flow in the fourth quarter. Although Ford's North American automotive operations are cash-flow negative, Ford's liquidity should still be sufficient relative to near-term requirements, as the company has a large liquidity position composed of cash, marketable securities, and short-term assets in its VEBA trust (which it could use to meet certain near- term benefits costs, thereby freeing up other cash) totaled $23.6 billion at June 30, 2006 (excluding Ford Credit). At June 30, Ford's cash position exceeded debt by about $6 billion, and Ford expects to end 2006 with a cash balance of at least $20 billion (excluding Ford Credit). As of June 30, 2006, Ford had $6.3 billion of committed credit facilities with various banks, most of which are committed through June 30, 2010. Parent-level debt maturities are moderate for the near term ($1.3 billion for the 12 months from June 30, 2006), and long-term debt has an exceptionally high average maturity of about 25 years. Even under the new pension legislation, Standard & Poor's does not believe Ford faces any significant ERISA-mandated pension fund contributions for the next few years or the need to make contributions to avoid Pension Benefit Guaranty Corp. variable- rate premiums. Standard & Poor's plans to resolve this CreditWatch by the end of September. As part of the review, the rating agency will meet with Ford's management to discuss the company's evolving plans to address the heightened challenges it faces in North America. GERDAU AMERISTEEL: Moody's Reviews Ba1 Sr. Unsec. Bond's Rating --------------------------------------------------------------- Moody's Investors Service placed three North American steel companies under review for possible upgrade: United States Steel Corporation's Ba1 corporate family rating, Gerdau Ameristeel Corporation's Ba2, and Chaparral Steel Company's B1 CFR. The reviews for possible upgrade reflect the superior improvement in financial metrics and overall financial risk reduction evidenced by these companies, in combination with Moody's evolving view regarding the expected duration of the current steel industry upcycle. This evolving perspective is primarily due to fundamental changes that appear to have occurred within the industry over the last several years, primarily as a result of industry consolidation. Moody's expects to refine its opinion of the medium- and long-term outlook for the steel industry over the review period, which is expected to last approximately two months. Should Moody's prevailing industry outlook materially change, as is expected, it will publish an Industry Outlook that summarizes updated thinking and discusses possible rating implications for the rated steel company universe. However, at this stage in our analysis, Moody's have identified United States Steel, Gerdau Ameristeel and Chaparral Steel as being the most likely upgrade candidates. It is important to note that these companies are being placed on review reflecting certain common factors as well as those unique to these three companies. The common factors include a combination of the strength in the overall operating performance as well as management actions taken to improve their capital structures and financial flexibility. Moody's review of US Steel, Gerdau Ameristeel and Chaparral Steel will focus on the sustainability of improved margins and debt protection measures as well as the likely capital structures expected to be maintained through what will continue to be a cyclical business. These ratings were placed under review for possible upgrade: Gerdau Ameristeel Corporation Issuer: Gerdau Ameristeel Corporation On Review for Possible Upgrade: * Corporate Family Rating, Placed on Review for Possible Upgrade, currently Ba2 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently Ba2 Outlook Actions: * Outlook, Changed To Rating Under Review From Stable Gerdau Ameristeel Corporation, headquartered in Tampa, Florida, had revenues of $3.9 billion for the year ended December 31, 2005. GLOBAL MATRECHS: Inks Manufacturing Agreement With Dow Corning -------------------------------------------------------------- Global Matrechs, Inc. has signed a manufacturing agreement with Dow Corning Corporation. Dow Corning will manufacture NuCap(TM), Global Matrechs' lead product, an advanced silicone geo-polymer composite that provides superior containment of radioactive contaminants. Modifications to part of the facility at Dow Corning's manufacturing plant in Midland, Michigan, that will manufacture NuCap(TM) will result in improvements in the manufacturing process efficiency. The upgrades are expected to expand Global Matrechs' ability to meet demand for its innovative materials. "This agreement is a very important advancement in the growth of this company," Michael Sheppard, CEO of Global Matrechs, said. "Dow Corning has collaborated with us for more than eighteen months to help us obtain the level of equipment, management, engineering support and training to meet the standards for quality and quantity required by the growing customer base for our NuCapT materials. We believe this relationship with Dow Corning will enable us to successfully fill certain large orders anticipated in the near future." About Dow Corning Headquartered in Midland, Michigan, Dow Corning Corporation -- http://www.dowcorning.com/-- provides performance-enhancing solutions to serve the diverse needs of more than 25,000 customers worldwide. A global leader in silicon-based technology and innovation, offering more than 7,000 products and services, Dow Corning is equally owned by The Dow Chemical Company and Corning Incorporated. More than half of Dow Corning's sales are outside the United States. About Global Matrechs Headquartered in Ridgefield, Connecticut, Global Matrechs, Inc. (OTCBB: GBMR) -- http://www.globalmatrechs.com/-- operates a licensed technologies business. Through its licensed technologies business, Global Matrechs seeks to convert the licenses it has acquired in emerging technologies in the nuclear energy, environmental and chemical industries into manufactured products primarily through sub-licenses of those technologies to manufacturers. Going Concern Doubt Sherb & Co., LLP, in Boca Raton, Florida, raised substantial doubt about Global Matrechs, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations, negative cash flows and working capital, stockholders' and accumulated deficiencies. HEMOSOL CORP: CA Court Resolves Prometic Biosciences License Pact ----------------------------------------------------------------- The Superior Court of Justice of Ontario released its decision concerning the litigation involving the license agreement between Hemosol LP, an affiliate of Hemosol Corp. and ProMetic Bioscience Ltd. On the three issues before the Court, it found: 1. that the License Agreement includes within it the exclusive license for any Primary Step or Additional Primary Step if performed as a single step for the capture of Proteins or Additional Proteins from Raw Material as defined in the License Agreement. 2. the License Agreement does not include the exclusive right to the capture of Proteins for the purpose of producing hyperimmune globulins. Hyperimmunes are not caught by the definition of IVIG in the License Agreement. 3. that neither the rights nor the technology granted to Nabi Pharmaceuticals under the Nabi Agreement between ProMetic and Nabi falls within the scope of the License Agreement. As for the plan sponsorship agreement entered into between PricewaterhouseCoopers Inc., in its capacity as interim receiver of the assets, property and undertaking of Hemosol and the Plan Sponsor, it continues to be conditioned upon a number of factors, including obtaining the approval of Hemosol's creditors and the Court on a proposed CCAA plan of compromise, and, unless waived by the Plan Sponsor, a plan of arrangement under the OBCA, which, if implemented, will result in a substantial dilution of the equity of Hemosol held by the shareholders existing at the time of implementation. Prometic's Reaction In a judgment that in many significant ways confirms ProMetic's interpretation of the license agreement with Hemosol, Justice Nancy J. Spies concluded that the license agreement did not grant any rights whatsoever to Hemosol in regards to hyperimmune products. These are not within the scope of the license, and as a result, there are no further obstacles to ProMetic's ability to license its technology for the production of hyperimmune products. A license agreement for specific hyperimmune products associated with milestone payments of up to $18 million and royalties on sales was recently signed with Nabi Biopharmaceuticals. In addition, services and resin supply agreements were executed and scheduled to commence this month. The Court also clarified the Parties' rights in regard to Hemosol's ability to use Prometic's Cascade Process or any portion thereof. The Court clearly stated that in this respect, Hemosol's rights were limited to the manufacture of the six proteins pursuant to the License Agreement. "We are pleased with this decision as this acknowledges our interpretation and position since the beginning", stated Mr. Pierre Laurin, ProMetic's President and CEO. "More licensing agreements are anticipated as we are executing on the business plan and we are pleased that the court ruling is in line with our strategy". The parties are scheduled to appear before the Court on Sept. 11, 2006, to monitor the progress of negotiations and of the restructuring process. The potential purchaser of Hemosol currently has an agreement with the Receiver of Hemosol whereby it must conclude an agreement to its satisfaction by Sept. 15, 2006. About ProMetic Life Sciences Headquartered in Montreal, Canada, ProMetic Life Sciences Inc. -- http://www.prometic.com/-- is a biopharmaceutical company specialized in the research, development, manufacture and marketing of a variety of commercial applications derived from its proprietary Mimetic Ligand(TM) enabling technology used in large- scale purification of biologics and the elimination of pathogens. About Hemosol Hemosol Corp. (NASDAQ: HMSLQ, TSX: HML) -- http://www.hemosol.com/ -- is an integrated biopharmaceutical developer and manufacturer of biologics, particularly blood-related protein based therapeutics. Information on Hemosol's restructuring is available at http://www.pwc.com/ca/eng/about/svcs/brs/hemosol.html Hemosol Corp and Hemosol LP filed a Notice of Intention to Make a Proposal Pursuant to section 50.4 (1) of the Bankruptcy and Insolvency Act on Nov. 24, 2005. The Company had defaulted in the payment of interest under its $20 million credit facility. Hemosol said that it would require additional capital to continue as a going concern and is in discussions with its secured creditors with respect to its current financial position. On Dec. 5, 2005, PricewaterhouseCoopers Inc. was appointed interim receiver of the Companies. IMAX CORP: Shareholders Launches $200 Million Class Action Lawsuit ------------------------------------------------------------------ A $200 million class action lawsuit was commenced in the Ontario Superior Court of Justice against IMAX Corporation. Neil Silver of Windsor, Ontario, alleges that IMAX misrepresented its revenue and earnings for the fourth quarter and fiscal year ending on Dec. 31, 2005 and in the first quarter of 2006. Mr. Silver will be the first person in Ontario to seek permission from the court to bring an action under the new provisions of the Securities Act dealing with liability for secondary market disclosure. IMAX shares dropped 40% in value when the company revealed that the U.S. Securities and Exchange Commission has started an informal inquiry in respect of the alleged misrepresentations. Mr. Silver is represented by Harvey T. Strosberg, Q.C., Patricia Speight and Jay Strosberg of Sutts, Strosberg LLP; a Windsor-based law firm specializing in class action lawsuits. "If the allegations are proven, IMAX will be held accountable by its shareholders," says Mr. Harvey Strosberg. "We intend to use our best efforts to ensure this happens." The lawsuit is commenced on behalf of all persons who purchased IMAX shares on or after March 9, 2006 and held them at market close on Aug. 9, 2006. Harvey T. Strosberg, Esq., is a specialist in class action lawsuits. As a lead counsel in the Hepatitis-C class action against the federal government, Mr. Strosberg's efforts yielded a settlement of $1.1 billion -- the largest in Canada's history. He was a lead negotiator in the groundbreaking settlement with the Ontario government for Walkerton residents as a result of E coli contamination and has settled other high profile class actions including YBM Magnex. He is currently prosecuting other large class actions, including one against Atlas Cold Storage Income Trust. About IMAX IMAX Corporation -- http://www.imax.com/-- founded in 1967 and headquartered jointly in New York City and Toronto, Canada, is an entertainment technology company, with particular emphasis on film and digital imaging technologies including 3D, post-production and digital projection. IMAX also designs and manufactures cameras, projectors and consistently commits significant funding to ongoing research and development. At June 30, 2006, IMAX Corporation's balance sheet showed a stockholders deficit of $21,242,000, compared to a deficit of $23,043,000 at Dec. 31, 2005. * * * IMAX Corporation's 9-5/8% Senior Notes due 2010 carry Moody's Investors Service's and Standard & Poor's single-B ratings. IPC ACQUISITION: Moody's Rates Proposed $50 Mil. Sr. Loan at Ba3 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to IPC Acquisition Corporation's proposed $50 million senior secured first lien revolving credit facility and to the $415 million senior secured first lien term loan and a Caa1 rating to its proposed $170 million senior secured second lien term loan. The ratings for the facilities reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B3, and a loss given default of LGD 2 for the first lien secured facilities and LGD 5 to the second lien facility. Proceeds from the credit facilities, in addition to up to $253 million in new sponsor equity, will be used to repay about $423 million in existing debt, and fund the acquisition of IPC equity by Silver Lake Partners. Upon the closing of the acquisition, the ratings on the existing credit facilities will be withdrawn. Additionally, Moody's has affirmed IPC's corporate family rating at B2. Moody's has taken these rating actions: Issuer: IPC Acquisition Corp. * First lien senior secured revolving credit facility maturing 2012 -- Assigned Ba3 * First lien senior secured term loan maturing 2013 - Assigned Ba3 * Second lien senior secured term loan maturing 2014 -- Assigned Caa1 * Corporate family rating -- Affirmed B2 * Probability of default rating -- Assigned B3 * First lien senior secured revolving credit facility maturing 2010 -- Affirmed B2 to be withdrawn * First lien senior secured term loan maturing 2011 -- Affirmed B2 to be withdrawn * Second lien senior secured term loan maturing 2012 -- Affirmed B3 to be withdrawn The outlook on all ratings is stable. The ratings broadly reflect IPC's high leverage and moderate prospects for meaningful free cash flow generation. Pro forma for the acquisition financing, adjusted debt to fiscal year-end EBITDA will be nearly 6.9x. The B2 corporate family rating considers the company's susceptibility to swings in the global financial services industry, customer concentration and business risk as IPC moves to diversify its revenue stream from customer installations to generate recurring service and maintenance revenues. IPC's ratings benefit, however, from high barriers to entry for competitors, high switching costs for the company's customers, and IPC's market leadership position in a small, though highly specialized, market. The stable rating outlook reflects Moody's view that given the company's stable cash flow generating ability, leverage and ratings are unlikely to change over the near term unless triggered by a specific event. The Ba3 rating of the first lien senior secured credit facilities reflects an LGD 2 loss given default assessment as this facility is secured by a pledge of all of the company's domestic assets, and 65% of the stock of foreign subsidiaries, while the second lien facilities provide junior debt cushion of over 25% of total obligations. As a result, the second lien facility is rated Caa1, with an LGD 5 loss given default assessment. IPC Acquisition Corporation, headquartered in New York, New York, is a global provider of voice communications solutions to enterprises, primarily in the financial services industry. KAISER ALUMINUM: Extends Contract With A.M. Castle & Co. -------------------------------------------------------- Kaiser Aluminum reported the extension of a contract with A.M. Castle & Co. to supply aerospace manufacturer Raytheon Aircraft Company with high-quality fabricated aluminum products. The agreement extends an earlier contract to 2010 and calls for an increased supply of high-quality fabricated aluminum sheet and plate products. "We're pleased to extend our collaboration with A.M. Castle & Co. and to further support the production of Raytheon Aircraft Company," said Jack A. Hockema, chairman, president and CEO, Kaiser Aluminum. Kaiser Aluminum's sheet and plate products will be utilized in the production of products for aircraft such as the Hawker 400XP, the Hawker 4000 super-midsize business jet, the Beechcraft Premier IA entry-level business jet, the Beechcraft King Air Series, and the T-6 trainer aircraft. About A.M. Castle A.M. Castle & Co. is a specialty metals and plastics distribution company serving the North American market, principally within the producer durable equipment sector. About Kaiser Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 609/392-0900) LARRY'S MARKETS: Has Until Nov. 3 to File Chapter 11 Plan --------------------------------------------------------- The Honorable Philip H. Brandt of the U.S. Bankruptcy Court for the Western District of Washington in Seattle gave Larry's Markets, Inc., until Nov. 3, 2006, to file its plan of reorganization and Jan. 2, 2007, to obtain confirmation of the Plan. The Debtor said its case is complex because it involves in-depth and substantial negotiations with numerous interested purchasers, negotiating a settlement of Section 503(b)(9) claims with the Committee and Sterling Savings Bank, and addressing the rights of Perishable Agricultural Commodities Act creditors. The Debtor said it is paying its bills as they become due and has maintained continuous and open communication with major parties. Headquartered in Kirkland, Washington, Larry's Markets, Inc., -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors has selected Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP, to represent it in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LEVITZ HOME: Court OKs Assignment of 3 Additional Leases to PLVTZ ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allows Levitz Home Furnishings, Inc., and its debtor-affiliates to assign these leases to PLVTZ, LLC, and pay the cure amounts: Store# Address Landlord Cure Amount ------ ------- -------- ----------- 10205 Soundview, BR Bruckner Corporation; $55,649 New York First New York Partners 10401 Middletown, Topper Associates, LLC 44,688 New York 10504 Kenilworth, Grand Pop Realty Co., 16,500 New Jersey Inc. PLVTZ, and the Pride Capital Group, are purchasers of substantially all of the Debtors' assets. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) LUCENT TECH: Shareowners Approve Merger Agreement with Alcatel SA ----------------------------------------------------------------- Lucent Technologies' shareholders overwhelmingly approved the Agreement and Plan of Merger with Alcatel SA, dated as of April 2, 2006, at the Special Meeting of Shareowners held on Sept. 7, 2006. Final results of the shareowner vote will be disclosed in an upcoming filing with the Securities and Exchange Commission. French company Alcatel is buying its U.S. competitor for $10.5 billion, according to Bloomberg News. "As we have said from the start, the primary driver of this combination is to create long-term value for shareowners, customers, and employees," said Lucent Technologies Chairman and CEO Patricia Russo. "We received approval for the merger from Lucent's shareowners, and as a result, we are another step closer to creating the first truly global communications solutions provider with the broadest wireless, wireline and services portfolio in the industry." Alcatel and Lucent expect to complete their merger transaction by the end of calendar year 2006, within the six- to 12-month timeframe originally announced on April 2. The companies have already cleared several key regulatory and antitrust milestones, including antitrust clearance in the United States and the European Union. In addition, the companies have submitted a formal notice to the Committee on Foreign Investment in the United States, seeking U.S. governmental approval of their pending merger. Merger Agreement As reported in the Troubled Company Reporter on Aug. 31, 2006, the merger agreement will have an aggregate market capitalization of approximately EUR30 billion ($36 billion), based upon the closing prices on March 31, 2006. Based on calendar 2005 sales, the combined company will have revenues of approximately EUR21 billion ($25 billion), divided almost evenly among North America, Europe and the rest of the world. The combined company created by this merger of equals is incorporated in France, with executive offices located in Paris. The North American operations will be based in New Jersey, U.S.A., where global Bell Labs will remain headquartered. The board of directors of the combined company will be composed of 14 members and will have equal representation from each company, including Alcatel CEO Serge Tchuruk and Lucent CEO Patricia Russo, five of Alcatel's current directors and five of Lucent's current directors. The board will also include two new independent European directors to be mutually agreed upon. Bloomberg News reports that Alcatel will have a 60% controlling interest in the combined company, which will be named Alcatel Lucent, with the rest held by Lucent shareholders. Alcatel Lucent intends to lay off 9,000 workers to achieve $1.7 billion in cost synergies within three years. About Alcatel Headquartered in Paris, France, Alcatel S.A. (Paris: CGEP.PA and NYSE: ALA) -- http://www.alcatel.com/-- provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. Alcatel brings its leading position in fixed and mobile broadband networks, applications and services, to help its partners and customers build a user-centric broadband world. With sales of EUR13.1 billion and 58,000 employees in 2005, Alcatel operates in more than 130 countries. About Lucent Technologies Headquartered in Murray Hill, New Jersey, Lucent Technologies (NYSE: LU) -- http://www.lucent.com/-- designs and delivers the systems, services and software that drive next-generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. * * * As reported in the Troubled Company Reporter on April 7, 2006, Moody's Investors Service placed Lucent Technologies, Inc.'s B1 corporate family rating, B1 senior unsecured rating, B3 subordinated rating, and B3 trust preferred rating under review for possible upgrade following the company's announcement of a definitive merger agreement with Alcatel. LUXELL TECH: Closes $1 Million Interim Debt Financing ----------------------------------------------------- Luxell Technologies Inc. has closed a $1 million debt financing arrangement as part of the restructuring and refinancing. This will provide the company with working capital funding necessary to support its operations. John MacDonald, Luxell's Chairman of Board and interim CEO said he was "especially pleased with the support the company has had from its employees in this first phase of the company's restructuring process and for the future of the company. This interim financing allows the company to continue its operations and pursue new sales. We see the ability to produce order book growth, even at this time, as being integral to the company's restructuring plan." As reported in the Troubled Company Reporter on Aug. 30, 2006, Mr. MacDonald stated, "...the Company's Board of Directors has determined the best option to realize a possible future for the Company, its shareholders, employees, suppliers and customers, is to file a proposal to creditors under the Bankruptcy and Insolvency Act, which will take a minimum of 45 days to complete and provide the Company with a complete stay on any creditor proceedings." In order to continue operations, the Company sought new financing for $1 million of Debtor-in-Possession Financing to provide the Company with working capital as well as to fund C.O.D. payments to suppliers. This additional term debt is intended to provide holders of promissory notes with assurance that if the assets of the Company were sold they would not be prejudiced for having accepted the proposal. The Company is also examining the structuring of a further $5 million convertible debenture and what the terms and conditions of such additional financing would entail. Luxell Technologies Inc. (TSX: LUX) -- http://www.luxell.com/ http://www.aktelux.com/and http://www.luxellresearch.com/-- designs, manufactures and licenses flat panel display technologies and solutions for defence and avionics industries through its operating divisions Aktelux and Luxell Research. MACDERMID INC: Stock Purchase Proposal Cues S&P's Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed all its ratings on MacDermid Inc., including its 'BB+' corporate credit rating, on CreditWatch with negative implications. The CreditWatch listing follows the announcement that MacDermid received a proposal letter from Daniel H. Leever, its chairman and chief executive officer, and Court Square Capital Partners to purchase all of its outstanding common stock at $32.50 per share. A special committee of the company's outside directors will consider the offer. "The bid as currently structured would result in a significant erosion of credit quality," said Standard & Poor's credit analyst Cynthia Werneth. If the transaction is consummated, MacDermid's debt could increase to roughly $900 million from approximately $300 million at June 30, 2006, before a moderate amount of leases and postretirement obligations. The CreditWatch listing will be resolved after details of the financing plan are known and Standard & Poor's has met with management to assess its business and financial strategies in view of the potentially highly leveraged capital structure. Denver, Colorado-based MacDermid, with about $700 million in annual sales, manufactures and markets specialty chemicals to a variety of industries, including graphic arts, electronic materials (primarily printed circuit boards), and metal finishing. MARKETXT HOLDINGS: Court Declines to Dismiss Epoch Bankruptcy Case ------------------------------------------------------------------ The Hon. Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York denied creditor Empyrean Investment Fund, L.P.'s request to dismiss the involuntary Chapter 11 petition pending against Epoch Investment, L.P. The Court also ruled that EIF's alternative request to appoint a trustee was premature. Epoch Investment, L.P., is one of the several companies that were substantially or wholly controlled by Omar Amanat, who is a Chapter 7 debtor. The largest company was MarketXT Holdings, Corporation, which was also in Chapter 11. Epoch was formed as a limited partnership, with Epique Revocable Living Trust, its general partner, owning a 1% interest. Another limited partnership controlled by Mr. Amanat, Epic Investments Trust, holds the 99% limited partnership interest in Epoch and is sole beneficiary of Epique. Epique's beneficiaries are members of Mr. Amanat's family. On May 12, 2005, Alan Nisselson, the Chapter 11 trustee for the bankruptcy estate of MarketXT Holdings filed an involuntary Chapter 11 petition against Epoch. MarketXT Holdings asserted that it had a bona fide claim against Epoch that was not contingent as to liability and aggregated at least $2.5 million more than the value of any collateral securing the claim. MarketXT Holdings also represented that Epoch had fewer than 12 creditors. No opposition was filed. On June 13, 2005, the Epoch case was procedurally consolidated with the MarketXT Holdings bankruptcy case. EIF contends that the Epoch bankruptcy case should be dismissed on the ground that MarketXT Holdings' claim is contingent and disputed. EIF asserts that while Mr. Amanat claims MarketXT Holdings holds a liquidated and undisputed claim against Epoch, MarketXT Holdings characterized those claims as contingent and unliquidated in its own schedules. EIF contends that the contingent nature of MarketXT Holdings' claims deprives the Court subject matter jurisdiction over the case and that the issue of subject matter jurisdiction can be raised at any time. In a decision published at 2006 WL 2335565, Judge Gropper decreed that in an involuntary case, the requirement that a petitioning creditor's claim not be subject to any bona fide dispute is jurisdictional does not mean that an objection to the allegedly disputed nature of petitioning creditor's claim may be raised by any party at any time. Rather, the sufficiency of an involuntary petition may only be challenged by the Debtor and not by creditors or third parties like EIF. Judge Gropper also ruled that the request for appointment of a Chapter 11 trustee is premature, and the Court will defer ruling, pending a decision on the request of Mr. Nisselson and the Creditors Committee appointed in MarketXT Holdings' bankruptcy case to substantively consolidate the Epoch estate with the MarketXT Holdings estate. Alexander Cataldo, Esq., at Denner & Pellegrino, LLP, in Norwell, Massachusetts, represents EIF. MarketXT Holdings Corporation, fka Tradescape Corporation, is a day-trading firm conducting electronic trades in equities on all the major US stock exchanges including NASDAQ. The Company filed for chapter 11 protection on March 26, 2004 (Bankr. S.D. N.Y. Case No. 04-12078). Jonathan L. Flaxer, Esq., at Golenblock, Eisenman, Assor, Bell & Peskoe, LLP, in New York City, represents the Debtor. MORRIS PUBLISHING: S&P Affirms BB Rating & Removes Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Morris Publishing Group LLC, including the 'BB' corporate credit rating. In addition, these ratings were removed from CreditWatch where they were listed July 25, 2006, with negative implications. The outlook is negative. The Augusta, Georgia-headquartered newspaper publisher had about $520 million of debt outstanding at June 2006. The ratings affirmation follows a review of the 2006 second quarter results for Morris Publishing and its parent, Morris Communications Co. LLC, which showed meaningful increases in operating cash flow. The ratings on Morris Publishing are based on the consolidated credit quality of Morris Communications and its restricted subsidiaries, which guarantee Morris Publishing's senior secured credit facilities. While the financial profile of Morris Communications has been improving this year, it remains weak for the ratings. Morris Publishing accounts for the majority of Morris Communications' revenues and cash flow. In addition to Morris Publishing, other restricted subsidiaries are involved in outdoor advertising, radio broadcasting, and magazine, book and specialty publishing. Morris Communications does not publicly disclose its financial statements. NEENAH PAPER: Moody's Holds Low-B Ratings on $375 Mil. Sr. Notes ---------------------------------------------------------------- Moody's Investors Service took these rating actions with respect to Neenah Paper Inc.: Ratings Affirmed: * Corporate family rating; B1 * $150 million senior secured revolving credit facility, Ba3 * $225 million senior unsecured notes, B1 Ratings Lowered: * Speculative Grade Liquidity Rating, SGL-3 from SGL-2 The outlook remains stable. Key factors influencing Neenah's ratings and outlook are: i) Moody's belief that the company's operating performance and cash flows will improve over the intermediate term due to the transfer of the Terrace Bay pulp mill. ii) In terms of scale, breadth of product line, and geographic diversity, Neenah will display a Ba portfolio in the paper and forest products sector mainly due to the pending German technical products acquisition. In Moody's view, the company's operations produce two separate and distinct product lines, premium papers and market pulp with locations potentially in two geographies. iii) Profit margins consistent with those of a Ba rated paper and forest products company. iv) Execution risk regarding the company's strategic initiatives to transform itself into a premium fine paper and technical products company. v) Weakened credit metrics after the German technical products acquisition; however Moody's expects credit metrics to accommodate the company's current ratings in the intermediate term. vi) Vertical integration remains low with operational efficiency and margin stability representative of a B rated paper and forest products company. The stable outlook reflects Moody's view that key rating factors are not likely to change over the near term. Given the company's recent events and the expected transition period, Moody's does not anticipate the ratings moving up in the intermediate term. Although the transfer of the Terrace Bay pulp mill will improve overall results, Moody's expects a modest level of volume growth in the fine paper and technical products sectors along with relatively stable pricing, offsetting continued high input costs. Furthermore, Moody's believes the company's debt level will remain consistent with the post-acquisition balance. Factors that would negatively impact the rating and/or outlook would be an inability to execute its strategic initiatives or successfully integrate the German technical products acquisition. A negative action could also result from an increase in leverage due to a significant debt-financed acquisition, deterioration in volumes and/or margins in the fine paper, technical products, or other pulp operations, or deterioration in liquidity. The downgrade of the speculative grade liquidity rating to SGL-3 reflects Neenah's requirement to amend its $150 million revolving credit facility due to the size of the German technical products acquisition. Moody's SGL ratings and SGL rating methodology do not assume that borrowers will be able to obtain amendments, resulting in the downgrade. At the same time, Moody's believes that Neenah will generate enough free cash flow to internally fund all of its cash requirements, and that existing cash balances should be sufficient to fund any shortfall with the exception of extraordinary capital expenditures or seasonal working capital needs. If the company is able to obtain an amendment with terms consistent with the current credit agreement, the SGL rating will likely return to SGL-2. The most recent prior rating action for Neenah occurred on November 8, 2004. Moody's assigned the current ratings to Neenah, as a first time issuer, based primarily on the current key rating factors mentioned above. In Moody's opinion, Neenah's expected improvement in operating performance over the intermediate period justifies an affirmation of the corporate family rating at this time. An established track record of the company's current operating strategy could improve ratings as the transfer of the Terrace Bay facility represents a positive ratings event. Neenah Paper, Inc., headquartered in Alpharetta, Georgia, is a producer of specialty papers and market pulp. NORD RESOURCES: Stockholders' Deficit Tops $4.2 Mil. at June 30 --------------------------------------------------------------- Nord Resources Corporation filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission. The Company reported a $3,521,229 net loss for the second quarter of 2006 compared with a $1,941,702 net loss for the same period in 2005. The Company had no revenue in these quarters. At June 30, 2006, the Company's balance sheet showed $4,214,657 in total assets and $8,430,713 in total liabilities, resulting in a $4,216,056 stockholders' deficit. The Company had a $3,120,573 deficit at March 31, 2006. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?113e Going Concern Doubt As reported in Aug. 3, 2006, Mayer Hoffman McCann PC expressed substantial doubt about Nord's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's significant operating losses. Nord incurred a $3,084,166 net loss for the year ended Dec. 31, 2005, in contrast to a $864,357 net loss in the prior year. About Nord Resources Headquartered in Dragoon, Arizona, Nord Resources Corporation (Pink Sheets: NRDS) -- http://www.nordresources.com/-- is a natural resource company focused on near-term copper production from its Johnson Camp Mine and the exploration for copper, gold and silver at its properties in Arizona and New Mexico. The Company also owns approximately 4.4 million shares of Allied Gold Limited, an Australian company. In addition, the Company maintains a small net profits interest in Sierra Rutile Limited, a Sierra Leone, West African company that controls the world's highest-grade natural rutile deposit. OMEGA HEALTHCARE: Completes New Investments Totaling $25 Million ---------------------------------------------------------------- Omega Healthcare Investors, Inc. closed on $25 million of new investments on Sept. 1, 2006, with subsidiaries of Guardian LTC Management, Inc., an existing operator of the Company. The transaction involved the sale and leaseback of two facilities, a skilled nursing facility in Pennsylvania and a combination SNF and rehabilitation hospital in West Virginia. The facilities and related $2.6 million of initial annual rent were added to an existing master lease with Guardian. The amended master lease now includes 17 facilities and $11.2 million of annual rent, with annual escalators. In addition, the master lease term was extended from October 2014 through August 2016. Based in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real-estate investment trust investing in and providing financing to the long- term care industry. At June 30, 2006, the Company owned or held mortgages on 208 SNFs and ALFs with approximately 23,573 beds located in 27 states and operated by 34 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on June 29, 2006, Fitch upgraded Omega Healthcare Investors' senior unsecured notes to 'BB' from 'BB-' and its preferred stock to 'B+' from 'B'. Additionally, Fitch assigned the Company's secured credit facility at 'BB+'. The Outlook on all Ratings is Stable. PERFORMANCE TRANSPORTATION: Can Assume Modified Bandag Contract --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York allowed Performance Transportation Services, Inc., and its debtor- affiliates to assume a modified contract with Bandag, Inc. The Debtors entered into a contract for tire-related services with Bandag on Oct. 6, 2005. Bandag provided standard tire repair and retreading services including casing inspection and repair, casing retreading, tire mounts and dismounts, tire repair, and emergency tire assistance. On April 11, 2006, Bandag notified the Debtors of its intent to terminate the Contract, effective July 15, 2006. The Debtors said that without Bandag's services, they will not have access to the significant advantages offered by a national retread vendor. Hence, the Debtors convinced Bandag to continue providing tire- related services to ensure a continued supply of useable tires. The Debtors and Bandag consequently agreed to amend the Contract. The amended contract allows either party to terminate the Contract prior to Oct. 24, 2007, at the option of the non-defaulting party. Termination without cause is no longer permitted. Pursuant to the Amendment, the Debtors will pay to Bandag $113,975 for the prepetition debt owed. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: Court Approves Amended Firestone Pact ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York approved a modified supply contract between Performance Transportation Services, Inc., its debtor-affiliates and Bridgestone/Firestone, Inc. The Court clarifies that upon the Debtors' payment of $199,926, they will be deemed to have fully cured all default arising under the Tire Supply Contract. As reported in the Troubled Company Reporter on Aug. 24, 2006, Firestone has provided the Debtors with specialized tires for the last ten years under a lease agreement. The Debtors decided to enter into an addendum to the Firestone Contract to extend its term through Dec. 31, 2009. The Debtors will pay Firestone $199,926 representing unpaid prepetition fees, in exchange for Firestone's agreement to execute the Addendum. The Debtors estimated that assuming the Contract, as modified, rather than entering into an agreement with any other supplier provides them with approximately $102,000 of annual cost savings. About Performance Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERKINELMER INC: Acquires Avalon Instruments & Raman Spectroscopy ----------------------------------------------------------------- PerkinElmer, Inc., disclosed the acquisition of Avalon Instruments Limited, based in Belfast, Northern Ireland. The acquisition expands and complements PerkinElmer's Molecular Spectroscopy product portfolio through adding a family of innovative bench-top dispersive Raman spectrometers. The Avalon Raman platforms support both bulk analysis and microscopic imaging, enabling scientists and technicians to gain more information about their samples with excellent reproducibility. Terms of the deal were not disclosed. "Customers will now have a single dependable source for high- throughput IR, NIR and Raman, along with integrated software and accessories," said Robert F. Friel, president of PerkinElmer Life and Analytical Sciences. "The PerkinElmer Raman instrumentation is designed for intuitive use, minimal operator intervention, and highly reproducible results to help labs achieve a high level of throughput and productivity." Raman spectroscopy identifies and characterizes the composition of both organic and inorganic materials in a wide range of applications. It is a complementary analysis technique to near infrared spectroscopy and infrared spectroscopy. Raman provides labs with the ability to analyze solids, liquids, powders, gels, slurries and aqueous solutions in bulk or to address variation in sample distribution with imaging. The technology is applicable to a diverse range of end markets, including pharmaceuticals, forensics and academia. "We are excited to join PerkinElmer and contribute to their innovative approach to product development and continuous improvement, along with becoming part of a global leader in customer service and support," said Dr. Andrew Dennis, managing director, Avalon Instruments. PerkinElmer Inc. (NYSE: PKI) -- http://www.perkinelmer.com/-- is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. PerkinElmer reported revenues of $1.5 billion in 2005, has 8,000 employees serving customers in more than 125 countries, and is a component of the S&P 500 Index. * * * PerkinElmer Inc.'s Long Term Subordinated Debt carry Moody's Investors Service's Ba1 rating. PERSONA COMMS: Moody's Junks $130 Million Sr. Sec. Loan's Rating ---------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Persona Communications Corp. consisting of a B2 Corporate Family Rating, Ba3 first lien senior secured rating and Caa1 second lien senior secured rating. The ratings reflect both the overall probability of default of the company, to which Moody's assigned a PDR of B3, and a loss given default of LGD 2 for the first lien secured facility and LGD 4 to the second lien secured facility. The outlook is stable. Ratings assigned: * Corporate family rating B2; * Probability-of-default rating B3; * CDN$60 million 1st lien senior secured revolver due September 2011 at Ba3; * $145 million 1st lien senior secured term loan B due September 2013 at Ba3; * $90 million 1st lien senior secured delayed draw term loan B due September 2013 at Ba3; * $130 million 2nd lien senior secured term loan due March 2014 at Caa1. The rating action incorporates Persona's pending acquisition of Delta Cable Systems and Coast Cable Systems and refinancing of its existing indebtedness, including the conversion of its CDN$125 million of subordinated debt into preferred equity by December 31, 2006. The B2 Corporate Family Rating reflects initial pro-forma leverage of over 6x EBITDA, our expectation that Persona's current capital expenditure program will consume cash through 2007, the company's relatively small scale, ongoing basic video subscriber losses albeit at declining rates, and the potential for Persona's network to require further upgrades after 2007. The rating also reflects Persona's market position as the incumbent cable provider in many small-sized Canadian markets, the potential for growth in Internet and digital TV products, which remain under-penetrated, and a strong management team. The stable outlook reflects Moody's view that Persona is likely to make steady progress towards generating free cash flow over the next couple of years but that leverage is unlikely to reduce materially during this time horizon. The Ba3 ratings of the first lien senior secured facility reflects an LGD 2 loss given default assessment as the facility is secured by a first priority lien on substantially all assets of the company, its parent, and key subsidiaries and there is a meaningful amount of junior debt. The Caa1 rating of the $130 million second lien credit facility reflects an LGD 4 loss given default assessment as it is secured by a secondary position in the same collateral package. Persona is the fifth largest cable company in Canada, based in St. John's, Newfoundland. PERSONA COMMS: Acquisitions Prompts S&P's B Corp. Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term corporate rating to the Newfoundland-based cable operator Persona Communications Corp., following the company's announcement to acquire B.C.-based cable operators Delta Communications Ltd., Guiness Communications Inc., and Coast Cable Communications Ltd. At the same time, Standard & Poor's assigned: * a 'B+' debt rating to the company's CDN$318 million equivalent first-lien senior secured credit facilities, consisting of: -- a CDN$60 million five-year revolving credit facility, and -- a $235 million seven-year term loan B, with a recovery rating of '1'; and * a 'CCC+' debt rating to the company's $130 million second-lien senior secured credit facility, with a recovery rating of '5'. The outlook is negative. At the same time, Persona is expected to refinance the existing CDN$348 million equivalent debt facilities. The Delta acquisitions are expected to be debt financed using a $90 million seven-year term loan B. Expected total balance-sheet debt outstanding at the close of the Delta acquisitions is about CDN$417 million. The collective acquisition is expected to close in early December 2006. "The ratings on Persona reflect high debt leverage, weak financial metrics, and weak profitability trends, partially mitigated by a modestly improving business risk profile given an improving asset quality," said Standard & Poor's credit analyst Madhav Hari. "Overall asset quality improves from the combination of significant cable plant upgrades and the addition of demographically attractive cable systems (and corresponding synergies), both of which should support healthy broadband growth and slower basic subscriber erosion," Mr. Hari added. The acquired systems are in areas adjacent to other Persona cable systems in western Canada, and are largely upgraded for both digital TV and high-speed Internet services. Together with the early-December 2005 acquisition of Alberta-based Northern Cablevision Ltd., these acquisitions should meaningfully enhance Persona's customer demographics, scale, and geographic diversification. The negative outlook reflects weak operating performance coupled with a further weakening of credit measures following recent debt- financed acquisitions. The ratings on Persona could be lowered if the company fails to deliver EBITDA growth as forecast, and shows little progress toward achieving positive free operating cash flow within the next 18 months. Consideration of a stable outlook will depend on the company meeting its EBITDA and free operating cash flow targets, and on lease-adjusted debt to EBITDA remaining below our 5.5x expectation at year-end 2007. PINNACLE ENT: Sands & Traymore Buy Cues Moody's to Hold Ratings --------------------------------------------------------------- Moody's Investors Service affirmed the ratings and positive outlook of Pinnacle Entertainment, Inc., following the company's announcement that it signed a definitive agreement under which Pinnacle agreed to purchase the entities that own The Sands and Traymore sites in Atlantic City, New Jersey from entities affiliated with financier Carl Icahn for approximately $250 million, plus an additional $20 million for certain tax-related benefits and real estate. The transaction is expected to close by the end of 2006 and is subject to customary approvals. Pinnacle has a B2 corporate family rating, B1 senior secured bank debt rating, and Caa1 senior subordinated debt rating. The affirmation considers that the purchase of The Sands Atlantic City site is consistent with the company's plans to diversify geographically into major gaming markets, a key factor with respect to ratings improvement. At the same time, the affirmation acknowledges that Pinnacle will likely have to obtain additional external financing to support the purchase of The Sands, and that as part of the agreement, Pinnacle required that the sellers proceed to close the existing hotel-casino. As a result, Pinnacle will not be acquiring any immediate cash flow from the transaction. The company plans to design and build an entirely new casino hotel on the site. Although no specific development plans are in place at this time, Moody's expects that Pinnacle will spend upwards of $1 billion to develop a new Atlantic City property. The positive ratings outlook continues to reflect the improvement in Pinnacle's overall operating results and liquidity profile. In addition, it takes into account the two St. Louis developments that will provide Pinnacle with an increased level of diversification, the purchase of certain Lake Charles, LA gaming assets from Harrah's, and the sale of Casino Magic Biloxi to Harrah's. Continued revenue and cash flow growth could have a positive impact in ratings although any upgrade would need to consider longer-term plans to develop and finance an Atlantic City casino. Moody's previous rating action on Pinnacle occurred on May 22, 2006 with the confirmation of ratings and the assignment of a positive ratings outlook. Pinnacle Entertainment, Inc. owns and operates five casino properties in the United States. In addition, the company is developing two casinos in St. Louis, Missouri and also signed an agreement to acquire two additional gaming licenses in Louisiana, one of which it intends to utilize to build a second casino resort in Lake Charles, Los Angeles. Internationally, Pinnacle operates casinos in Argentina, and since May 2006, a casino adjoining the Four Seasons Resort Great Exuma at Emerald Bay in the Bahamas. RADNOR HOLDINGS: U.S. Trustee Picks Seven-Member Creditors' Panel ----------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Radnor Holdings Corporation and its debtor- affiliates' chapter 11 cases: 1. U.S. Bank N.A. Attn: Laura L. Moran One Federal Street, 3 Floor Boston, MA 02110 Phone: 617-603-6429 Fax: 617-603-6640 2. Airlie Group Attn: Jeremy Bloomer 115 East Putnam Avenue Greenwich, CT 06830 Phone: 203-661-6200 Fax: 203-661-0479; 3. Barclays Bank PLC Attn: Mark Manski 200 Park Avenue New York, NY 10166 Phone: 212-412-3326 Fax: 212-412-5660 4. Peritus I Asset Management LLC Attn: Timothy Gramatovich 26 West Anapamu Street, 3 Floor Santa Barbara, CA 93101 Phone: 805-882-1100 Fax: 805-882-1122; rd 5. Total Petrochemicals USA, Inc. Attn: Letitia H. White 1201 Louisiana Street, Suite 1800 Houston, TX 77002 Phone: 713-483-5372 Fax: 713-483-5383 6. Lyondell Chemical Company Attn: J. Donald Hamilton 1221 McKinney Street One Houston Center, Suite 700 Houston, TX 77010 Phone: 713-309-4980 Fax: 713-652-4542 7. Polar Plastics, Inc. Attn: Eric Cohen 4210 Thimens Blvd Saint-Laurent, OC. Canada H4R2B9 Phone: 514-331-0207 Fax: 514-331-2475 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactures and distributes a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Case No. 06-10894). Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher, represent the Debtors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. READERS DIGEST: Weak Liquidity Cues Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service placed The Reader's Digest Association, Inc.'s Ba1 Corporate Family Rating and Ba2 senior unsecured note rating on review for possible downgrade. The review is prompted by increasing debt to fund acquisitions and return of capital to shareholders, deterioration in cash generation, and Moody's concern regarding the company's weakened liquidity position. On Review for Possible Downgrade: Issuer: Reader's Digest Association, Inc. * Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba2 Outlook Actions: Issuer: Reader's Digest Association, Inc. * Outlook, Changed To Rating Under Review From Negative Moody's will evaluate the company's plans to stabilize and reverse the significant operating performance decline in the consumer business segment, and improve working capital management in support of new product introductions and the international expansion strategy. Moody's will also assess the company's financial policies and priorities for the use of debt and cash generated to fund acquisitions and capital returns to shareholders. In addition, Moody's will review the liquidity position as Reader's Digest enters its peak seasonal borrowing period, including the company's ability to maintain compliance with restrictive financial covenants in the credit facility at September 30, 2006 and beyond. The Reader's Digest Association, Inc, headquartered in Pleasantville, New York, is a global publisher and direct marketer of products including magazines, books, recorded music collections and home videos. Products include Readers Digest magazine, which is published in 50 editions and 21 languages. Annual revenues approximate $2.4 billion. REFCO INC: Wants Exclusive Plan-Filing Period Extended to Dec. 5 ---------------------------------------------------------------- Refco Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend, for an additional 95 days, the periods for them to: -- exclusively file a Chapter 11 plan through and including December 5, 2006; and -- solicit acceptances of that plan until February 3, 2007, without prejudice to the Debtors' right to seek further extensions of the Exclusive Periods. From the outset of their Chapter 11 cases, the Debtors have worked diligently to stabilize and preserve the value of their businesses, Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the Bankruptcy Court. After the Debtors filed for bankruptcy, Ms. Henry relates, the Debtors initiated the process to sell their regulated futures brokerage business. Despite facing numerous complicated issues, the Debtors managed in roughly a month to hold a competitive auction with five active bidders and structure the sale of their assets in an unprecedented dual-bankruptcy structure, ultimately resulting in enormous benefit to the estates through a sale of futures brokerage business to Man Financial Inc. Ms. Henry notes that through the Man Sale and various other smaller asset sales, more than $1,000,000,000 in proceeds has come into the Refco, Inc. estates for ultimate distribution to creditors. The Debtors and Marc Kirschner, the Chapter 11 Trustee of Refco Capital Markets, Ltd.'s estate, continue to analyze and value their remaining assets to realize value for the Debtors' creditors and interest holders for distribution through a plan of reorganization. Concurrently with managing the orderly sale and wind-down of their business operations, Ms. Henry states that the Debtors have been involved in numerous complex and expedited litigations that have returned significant value to their estates and have helped to clarify legal positions of various case constituencies. The Debtors continue to evaluate other possible causes of action against various parties that might serve as additional sources of value to fund a plan. In addition, the Debtors and their advisors continue to devote significant time and effort to analyze, among others: (i) the complex web of intercompany obligations among the Debtors; and (ii) the quantification and evaluation of claims asserted against the Debtors' estates by third-party creditors. Although the claims analysis process has been ongoing since the Petition Date, Ms. Henry points out that the claims bar date recently passed and the last of the timely filed proofs of claim was added to the claims register as of August 21, 2006. Thus, the full-blown claims analysis is only in its early stages, and the results of that process may fundamentally affect the structure of any proposed reorganization plan. In this light, Ms. Henry states that the Debtors have been able to develop a framework for a consensual resolution of their cases. The process is ongoing, and the Debtors' models may require revision as newly received claims data is used to confirm or revise the Debtors' underlying liability assumptions. Furthermore, the Debtors continue to assess potential claims and causes of action that may provide additional assets to fund a reorganization plan. Now that the Debtors' efforts have yielded fruit and the groundwork for a global resolution of their cases is in place, the Debtors should be given the opportunity to bring the process to completion, Ms. Henry tells Judge Drain. The Debtors maintain that the Exclusive Periods are designed to afford them the opportunity to negotiate and propose a Plan without the disruption that might be caused by competing plans. A hearing on the Debtors' Second Extension Motion will be held on September 12, 2006, at 10:00 a.m. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: Wants Removal Period Extended to December 12 ------------------------------------------------------- Refco Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend, until Dec. 12, 2006, the period within which they may file notices of removal with respect to actions, pursuant to Bankruptcy Rule 9006(b). The Debtors tell the Court that when they filed for bankruptcy, they were plaintiffs in 37 actions and proceedings in a variety of state and federal courts throughout the country. Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that neither the Debtors nor Refco Capital Markets, Ltd., has reviewed all the Actions to determine whether any of those should be removed under Rule 9027(a)(2) of the Federal Rules of Bankruptcy Procedure because the Debtors have continued to focus primarily on winding down their businesses and formulating a global resolution of their cases. Ms. Henry asserts that the extension of the Removal Period will afford the Debtors sufficient opportunity to assess whether the Actions can and should be removed, hence, protecting their valuable right to adjudicate lawsuits under Section 1452 of the Judiciary and Judicial Procedure Code. Until the Debtors have had a sufficient time to develop a consensual plan of reorganization in their cases, it would be premature to allow the Removal Period to lapse, as the plan formation process may well impact the Debtors' decisions regarding the removal of the Actions, Ms. Henry insists. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) REPUBLIC STORAGE: Creditors Have Until September 11 to File Claims ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Ohio set Sept. 11, 2006 as the last day for persons owed money by Republic Storage Systems Company Inc. nka The Belden Locker Company to file proofs of claim in the Debtor's Chapter 11 case. Proofs of claim must be filed with the Court electronically or in paper at: U.S. Bankruptcy Court Northern District of Ohio Frank T. Bow Building 201 Cleveland Avenue, S.W. Canton, OH 44702 Based in Canton, Ohio, Republic Storage Systems Company Inc. nka The Belden Locker Company -- http://www.republicstorage.com/-- an employee-owned firm, manufactures industrial and commercial shelving, storage rack, mezzanine systems and shop equipment. The Company filed for Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Halter & Griswold, LLP, represents the Debtor in its restructuring efforts. Dov Frankel, Esq., at Buckley King, LPA, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. RIGEL CORP: Wants More Time to File Schedules & Statements ---------------------------------------------------------- Anthony H. Mason, the Chapter 7 Trustee of Rigel Corporation, asks the U.S. Bankruptcy Court for the District of Arizona, to extend until Sept. 23, 2006, its deadline to file its schedules of assets and liabilities and statements of financial affairs. Currently, the Debtor is in the process of compiling information That will be made available to the Chapter 7 Trustee. Headquartered in Tempe, Arizona, Rigel Corporation, is a Krispy Kreme franchisee. The Company also operates Godfather's Pizza, KFC and Bruegger's Bagels' franchises. The Company filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. Ariz. Case NO. 06-02480). Michael W. Carmel, Esq., at Michael W. Carmel, Ltd., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on Aug. 15, 2006. Anthony H. Mason is the Chapter 7 Trustee. RUSH FINANCIAL: Second Quarter Net Loss Increases to $1.4 Million ----------------------------------------------------------------- Rush Financial Technologies, Inc., filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Aug. 21, 2006. The Company reported a $1,414,737 net loss on $9,676,044 of total revenues for the second quarter of 2006 compared with an $809,544 net loss on $540,631 of total revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $216,859,206 in total assets, $187,995,275 in total liabilities, and $28,863,931 in total shareholders' equity. The Company had a $2,077,281 shareholders' 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?113d Going Concern Doubt KBA Group LLP in Dallas, Texas, raised substantial doubt about Rush Financial Technologies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005, and 2004. The auditor pointed to the Company's negative working capital, net losses, negative cash flows from operations, unpaid payroll tax obligations, past due convertible notes payable, and significant amount of past due trade payables. About Rush Financial Technologies Headquartered in Dallas, Texas, Rush Financial Technologies, Inc., -- http://www.rushgroup.com/http://www.terranovatrading.com/ http://www.daytrade.comand/and http://www.rushtrade.com/-- through its subsidiaries, provides various broker/dealer services in the United States. It develops and operates portfolio management software products, order management systems, direct- access trading software applications, and data services center. The company offers market data platforms and direct access trading systems to online investors, semiprofessional traders or institutional portfolio managers, and traders using its direct access routing technology. Rush Financial also provides securities and direct access online brokerage, trading, and order routing services to retail customers utilizing its software products. SEDGWICK CMS: High Leverage Prompts Moody's to Hold Ratings ----------------------------------------------------------- Moody's Investors Service affirmed the B1 rating on the senior secured credit facility of Sedgwick CMS Holdings, Inc. which is to be increased by $150 million to $505.5 million in order to finance the acquisition of CompManagement, Inc. The modified credit facility will consist of a $445.5 million senior secured term loan and a $60 million revolving credit facility. In the same action, Moody's also assigned a B1 Corporate Family Rating to Sedgwick. The rating outlook for Sedgwick is stable. Sedgwick's rating is based primarily on the company's high degree of financial leverage, with debt-to-EBITDA on a pro forma basis of approximately 5x. Other risks include a low level of financial flexibility and marginal coverage interest and fixed charges. These risks are offset to a degree by Sedgwick's status as a market leader in the claims management sector, its strong historic organic revenue growth, its diverse customer base, product line and geographic spread and its relatively stable cost structure. Moody's considers the acquisition of CMI to be consistent with the company's growth strategy and its current operational profile. CMI operates in similar lines of business to Sedgwick, and the acquisition will add scale and increase market share in key product lines. However, a strategy of growth through acquisitions also creates integration risk in terms of systems, operations and turnover among employees. At its current rating level, Moody's expects Sedgwick to maintain its debt-to-EBITDA ratio between approximately 4x and 5x; free cash flow-to-debt coverage between 5% and 8%; and interest coverage above 2x. The last rating action occurred on January 24, 2006, when Moody's assigned a B1 rating to Sedgwick's senior secured credit facility. Sedgwick CMS Holdings, Inc. is the holding company for Sedgwick Claims Management Services, Inc. Sedgwick is headquartered in Memphis, Tennessee, and is a market leader in insurance claims management services. For 2005, the company reported total revenue of $398 million. SILICON GRAPHICS: Wants to Reject Seven Executory Contracts ----------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to reject seven Contracts, effective as of Aug. 25, 2006. The Debtors are party to: 1. a U.S. business travel services agreement with American Express Travel Related Services Company, Inc., dated March 1, 2003; 2. an American Express Corporate Travel Online (CTO) Agreement with American Express, dated July 6, 2005; 3. an American Express Interactive Travel Group (ITG) Central E-Fulfillment Services Agreement with American Express, dated July 6, 2005; 4. a co-marketing agreement with SpaceWorld Foundation, dated November 1, 2005, which contemplated the creation of a theatre utilizing certain visual graphics-related products of the Debtors; 5. a consulting agreement with Atle Technology, Inc., dated September 29, 2005, under which, the Debtors pay about $18,000 per month; 6. a QualysGuard service user agreement, dated February 3, 2004, with Qualys, Inc., wherein the Debtors pay Qualys around $5,500 per month for network scanning security services; and 7. a master services agreement, dated February 5, 2001, with Electronic Data Systems Corporation and EDS Information Services L.L.C., pursuant to which the Debtors pay about $110,000 per month. Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that after examining the needs of their businesses, the Debtors concluded that the seven Contracts and their related obligations constitute unnecessary expenses. Continued compliance with the Contracts' terms would be burdensome and would provide little benefit to the Debtors and their estates. Mr. Waisman discloses that rejection of the Contracts will not prejudice the counterparties. 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. The Debtors' exclusive plan-filing period will expire on Dec. 29, 2006, and its exclusive solicitation period will expire on Feb. 28, 2007. (Silicon Graphics Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SILICON GRAPHICS: Court Gives Final Nod on AFCO Financing Pact -------------------------------------------------------------- On a final basis, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorizes Silicon Graphics, Inc., and its debtor-affiliates to: -- enter into, and pay all sums due under, the Premium Finance Agreement with AFCO Premium Acceptance, Inc.; and -- grant AFCO a security interest that extends to all unearned insurance premiums, which may become payable under the insurance policies, and loss payments that reduce the unearned insurance premiums subject to any mortgagee or loss payee interests. In the event the Debtors default on any of the terms of the Agreement, the automatic stay will be modified solely to the extent necessary to permit AFCO to exercise its rights, without prejudice to the Debtors' rights, and without the necessity of further application to the Court, to cancel the Insurance Policies financed under the Agreement, Judge Lifland says. AFCO may receive and apply all unearned premiums returned to the Debtors upon cancellation of the Insurance Policies to any amounts owed by the Debtors to AFCO, without further Court order. If the unearned premiums received by AFCO are insufficient to pay the Debtors' total amount due, any remaining amount owing to AFCO will be given administrative expense priority in any distribution of assets pursuant to the Debtors' Plan of Reorganization. Judge Lifland further authorizes the Debtors to execute and deliver the necessary documents and amendments to the Agreement. The validity of the lien granted to AFCO will not be affected by any reversal or modification on appeal of the authorization under the Order and Section 364 of the Bankruptcy Code. AFCO's rights pursuant to the Agreement will be preserved and protected and will not be impaired by, among others, the pendency of the Chapter 11 cases. 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. The Debtors' exclusive plan-filing period will expire on Dec. 29, 2006, and its exclusive solicitation period will expire on Feb. 28, 2007. (Silicon Graphics Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SMASHING PICTURES: Section 341(a) Meeting Scheduled on October 3 ---------------------------------------------------------------- The U.S. Trustee for Region 16 set a meeting of Smashing Pictures LLC's creditors at 1:00 p.m., on Oct. 3, 2006, at Room 2610, 725 South Figueroa Street in Los Angeles California. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Manhattan Beach, California, Smashing Pictures LLC, filed for chapter 11 protection on Aug. 28, 2006 (Bankr. C.D. Calif. Case No. 06-14100). David A. Tilem, Esq., in Glendale, California represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $7,000,400 and total debts of $29,740,875. The Debtor's exclusive period to file a chapter 11 plan expires on Dec. 26, 2006. SPOKANE RACEWAY: U.S. Trustee Wants Case Converted to Chapter 7 -------------------------------------------------------------- Ilene J. Lashinsky, the U.S. Trustee for Region 18, asks the U.S. Bankruptcy Court for the Eastern District of Washington to convert Spokane Raceway Park, Inc.'s chapter 11 case to a chapter 7 liquidation proceeding or, in the alternative, appoint a chapter 11 trustee. The Trustee reminds the Bankruptcy Court that Barry Davidson, the Receiver appointed by the Washington Superior Court of Spokane County for Washington Motorsports Limited, also filed a motion seeking to convert the Debtor's case to a chapter 7 liquidation. Washington Motorsports was formed as a limited partnership to own and develop real property in Spokane, Washington with the Debtor as the general partner. The Trustee tells the Court that the conversion to Chapter 7 or appointment of a chapter 11 trustee is warranted citing: (a) the Debtor has filed inaccurate schedules; (b) the existence of secret bank accounts; (c) the Debtor's withholding of titles to vehicles from the receiver; and (d) the Superior Court's determination that the Debtor failed to keep adequate books and records. Inaccurate Schedules The Trustee says that the State Court had ordered the Debtor to turnover the assets of Washington Motorsports to Mr. Davidson. The Trustee relates that the Debtor's schedules, when viewed in light of the ruling, are inaccurate and misleading. The Debtor asserts ownership over property it was ordered to turnover. The Trustee contends that according to Mr. Davidson, although the Debtor was ordered to turnover the assets, it did not do so. The Trustee further says that the Debtor failed to list the assets as held by another nor explain the situation it has with Washington Motorsports in its Schedules of Assets and Liabilities and Statement of Financial Affairs. The Trustee says that the Debtor failed in its fiduciary obligation by failing to disclose material information to the Bankruptcy Court and its creditors. The Trustee also discloses that the Debtor lists some $830,000 in bank accounts without comment or qualification. Mr. Davidson however has shown that the bank account belongs to Washington Motorsports, the Trustee relates. The Trustee further discloses that the Debtor's list of creditors does not include the investors who have asserted claims against the Debtor for the portion of profits due the investors. Despite the existing litigation in which the Receiver was appointed, the investors are not listed as parties with a claim to some sort of payment. The very parties that have forced the Receiver's appointment and the examination of the financial condition of the raceway are not on the master mailing list. Further, the Trustee says that the Knaez Joint Venture listed in the Debtor's Schedule G has already been ruled by the Superior Court to be in the name of Washington Motorsports. Secret Bank Accounts The Trustee reveals that the State Court found that Mr. Orville Moe, the Debtor's manager, diverted some funds from Washington Motorsports to an unauthorized bank account. The Trustee contends that even if the intent was to use the funds to pay the bills of Washington Motorsports, taking of another's funds can constitute as fraud and dishonesty. Withholding Titles to Vehicles The Trustee discloses that one year prior to appointing a Receiver for Washington Motorsports, the Superior Court had already ordered the Debtor to turn over the titles to the vehicles. The Debtor had to be ordered again to comply with the original ruling. Inadequate Books and Records Finally, the Trustee tells the Court that when the receiver was appointed, one of Mr. Davidson's duties was to determine who and where the investors are. The Trustee argues that this was because the Debtor did not keep proper records under state law. The same was found true about the financial records of the debtor. That failure to meet the minimum statutory record-keeping can be considered as gross mismanagement. About Spokane Raceway Headquartered in Spokane, Washington, Spokane Raceway Park Inc. -- http://www.spokaneracewaypark.com/-- operates a 2.5 mile Grand Prix Road Course and racing facility. The Debtor filed for chapter 11 protection on Aug. 17, 2006 (Bankr. E. D. Wash. Case No. 06-01966). Bruce R. Boyden, Esq., in Spokane, Washington, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $62,904,383 and total debts of $2,252,748. SPOKANE RACEWAY: Mr. Davidson Wants Case Converted to Chapter 7 --------------------------------------------------------------- Barry W. Davidson, General Receiver for Washington Motorsports, Ltd. asks the U.S. Bankruptcy Court for the Eastern District of Washington to convert Spokane Raceway Park, Inc.'s chapter 11 case to a chapter 7 liquidation, or in the alternative, appoint a chapter 11 trustee. Washington Motorsports was formed as a limited partnership to own and develop real property in Spokane, Washington with the Debtor as the general partner. Mr. Davidson tells the Bankruptcy Court that the Debtor has no reasonable likelihood of rehabilitation, and no ability to effectuate a plan. Additionally, Mr. Davidson also cites these reasons as cause for conversion: * the Debtor commenced its bankruptcy proceeding in bad faith, having with no liquidity from available assets with which to reorganize; * the Debtor has no employees; * the Debtor has little or no cash flow; * the Debtor has no income to sustain a plan of reorganization; * the Debtor has few non-insider unsecured creditors whose claims are relatively small; * the Debtor's unsuccessful efforts in defending state court actions; * allegations of wrongdoing the Debtor and its principals; and * rulings by Spokane County Superior Court that the Debtor breached contractual, statutory, and fiduciary duties to Washington Mutual. Mr. Davidson contends that the Debtor has invoked the jurisdiction of the Bankruptcy Court for the apparent purpose of interfering with the administration of the Receivership Action and related litigation, including: (1) the Aug. 25, 2006 presentment hearing on a written order on the Receiver's Motion For Order Finding Spokane Raceway Park, Inc. And Orville Moe In Contempt Of Court And Imposing Remedial Sanctions, And On Amended Motion For Clarification And Further Instructions Pursuant To RCW 7.60.060(1)(g); (2) the Aug. 25, 2006 hearing on the Receiver's Second Motion For Order Finding Spokane Raceway Park, Inc. And Orville Moe In Contempt Of Court And Imposing Remedial Sanctions, Including Attorneys Fees; (3) the Aug. 25, 2006 hearing on the Receiver's Motion to Employ Kennedy Wilson, Inc. As Exclusive Selling Agent For Receiver; (4) the Aug. 25, 2006 hearing on the Derivative Plaintiffs and Receiver's Motion to Realign Washington Mutual as a Plaintiff and to Separate and Stay Derivative Claims; and (5) the Aug. 25, 2006 hearing on remand of certain causes of action in Kalispel v. Spokane Raceway Park Inc. et. al., No. 2:03-cv-00423 EFS, pending in the U.S. District Court for the Eastern District of Washington. Mr. Davidson discloses that it objects to the dismissal of the Debtor's case saying that conversion to a Chapter 7 liquidation or appointment of a chapter 11 trustee is in the best interest of the Debtor's creditors. Headquartered in Spokane, Washington, Spokane Raceway Park Inc. -- http://www.spokaneracewaypark.com/-- operates a 2.5 mile Grand Prix Road Course and racing facility. The Debtor filed for chapter 11 protection on Aug. 17, 2006 (Bankr. E. D. Wash. Case No. 06-01966). Bruce R. Boyden, Esq., in Spokane, Washington, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $62,904,383 and total debts of $2,252,748. THOMAS EQUIPMENT: Federal Partners Withdraws Redemption Notice -------------------------------------------------------------- Thomas Equipment, Inc., received a letter from Federal Partners L.P. exercising their right of redemption pursuant to the terms of the Preferred Stock it owns, on Aug. 28, 2006. On Sept. 1, 2006, Federal Partners agreed to withdraw its request without further consideration. Pursuant to the Certificate of Designation for the Preferred Stock, upon a redemption of the Preferred Stock the Company is required to redeem such shares of Preferred Stock in cash for an amount equal to 110% of the stated value of the Preferred Stock, plus accrued and unpaid dividends and all other amounts due to the holder, payable within 10 trading days of the notice of redemption. The stated value of the shares of Preferred Stock held by Federal is $7,400,000, which would require a payment of $8,140,000, plus accrued and unpaid dividends and all other amounts due to the holder. The company has advised Federal that it does not currently have the resources with which to pay the redemption amount. About Thomas Equipment Headquartered in Milwaukee, Wisconsin, Thomas Equipment, Inc. -- http://www.thomas-equipment.com/-- is a technologically advanced global manufacturer of a full line of skid steer and mini skid steer loaders as well as attachments, mobile screening plants and six models of mini excavators. The Company distributes its products through a worldwide network of distributors and wholesalers. In addition, the Company's wholly owned subsidiaries manufacture specialty industrial and construction products, a complete line of potato harvesting and handling equipment, fluid power components, pneumatic and hydraulic systems, spiral wound metal gaskets, and packing material. At March 31, 2006, Thomas Equipment Inc.'s balance sheet showed a stockholders' deficit of $31,289,000, compared to a $67,129,000 at June 30, 2005. TOWER RECORDS: U.S. Trustee Appoints Seven-Member Creditors Panel ----------------------------------------------------------------- The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in MTS, Inc., dba Tower Records, and its debtor-affiliates' chapter 11 cases: 1. The Bank of New York, Trustee Attn: Kenny Tang, Vice President 101 Barclay Street, 8W New York, NY 10286 Tel: (212) 815-2816 Fax: (212) 815-5131 2. ALJ Capital II, L.P c/o ALJ Capital Management Attn: Lawrence B. Gill 6300 Wilshire Boulevard, Suite 700 Los Angeles, CA 90048 Tel: (323) 651-3508 Fax: (323) 927-1806 3. Baldwin Place Refi Co., LLC c/o JP Morgan Investment Management, Inc. Attn: James P. Shanahan, Jr. 8044 Montgomery Road, Suite 555 Cincinnati, OH 45236 Tel: (513) 985-3200 Fax: (513) 985-3217 4. Baker & Taylor, Inc. Attn: Sarah Moore 2550 West Tyvola Road Suite 300 Charlotte, NC 28217 Tel: (704) 998-3410 Fax: (704) 998-3317 5. International Periodical Distributors, Inc. Attn: Douglas J. Bates 27500 Riverview Center Boulevard, Suite 400 Bonita Springs, FL 34134 Tel: (239) 949-7688 Fax: (239) 949-7689 6. Harmonia Mundi USA Attn: Rene Goiffon 1117 Chestnut Street Burbank, CA 91506 Tel: (818) 333-1515 Fax: (815) 364-1078 7. Majap Investments Limited Attn: John Kearney 4 Neidpath Road West G46655 Glasgow, Scotland Tel: (44) 0141-639-4509 Fax: (44) 0141-639-4509 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Documents with the Court does not show who the Committee has selected to represent it in the Debtors' bankruptcy proceedings. Headquartered in West Sacramento, California, MTS, Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The Company and seven of its affiliates filed for chapter 11 protection on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Dec. 18, 2006. The Company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the plan on March 15, 2004. TOWER RECORDS: Taps Houlihan Lokey as Investment Banker ------------------------------------------------------- MTS, Inc., dba Tower Records, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their investment banker. Houlihan Lokey will: (a) solicit, coordinate, and evaluate indications of interest regarding a sale of the Debtors; (b) facilitate due diligence requests by interested parties; (c) assist the Debtors in communications and negotiations with its constituents, including creditors, vendors, shareholders, and other parties-in-interest in connection with a sale of the Debtors; and (d) conduct and facilitate the auction process to be run pursuant to Section 363 of the Bankruptcy Code. The Debtors tell the Court that it will pay Houlihan Lokey a transaction fee, upon closing or consummation of a sale, equal to 2% of the aggregate gross consideration of up to $85 million, plus 4% of incremental aggregate gross consideration from $85 million to $120 million, plus 6% aggregate gross consideration in excess of $120 million, less $488,000. To the best of the Debtors' knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in West Sacramento, California, MTS, Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The Company and seven of its affiliates filed for chapter 11 protection on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Dec. 18, 2006. The Company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the plan on March 15, 2004. TOWER RECORDS: Court Gives Nod on Omni Management as Claims Agent ----------------------------------------------------------------- MTS, Inc., dba Tower Records, and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Omni Management Group, LLC, as their noticing, claims and balloting agent. Omni Management is expected to: (a) prepare and serve certain required notices in the Debtors' chapter 11 cases, including: * notice of commencement of the Debtors' chapter 11 cases and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code, * notice of the claims bar date, * notice of objection to claims, * notice of any hearings on a disclosure statement and confirmation of a plan of reorganization, and * other miscellaneous notices to any entities as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the Debtors' chapter 11 cases; (b) within five days after mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of person to whom the notice was mailed and the date of mailing; (c) maintain copies of all proofs of claim and proofs of interest filed; (d) maintain official claims registers by docketing all proofs of claims and proofs of interest on claims registers, including these information: * name and address of the claimant and any agent thereof if the proof of claim or proof of interest was filed by agent; * date received; * claim number assigned, and * asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) regularly transmit to the Clerk's Office a copy of the claims registers as requested by the Clerk's Office; (g) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list shall be available upon request of a party in interest or the Clerk's Office; (h) provide access to the public for examination of copies of proofs of claim or interest without charge during regular business hours; (i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of the transfers as required by Bankruptcy Rule 3001(e); (j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders, and other requirements; (k) provide temporary employees to process claims, as necessary; and (l) promptly comply with further conditions and requirements as may be requested by the Debtor or the Clerk's Office or the Court may at any time prescribed. The Debtor tells the Court that Omni's professionals bill between $35 to $285 per hour. To the best of the Debtors knowledge, Omni Management does not represent any interest adverse to the Debtors or their estates. Headquartered in West Sacramento, California, MTS, Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The Company and seven of its affiliates filed for chapter 11 protection on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Dec. 18, 2006. The Company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the plan on March 15, 2004. TRANSCAPITAL FINANCIAL: Files Schedules of Assets and Liabilities ----------------------------------------------------------------- TransCapital Financial Corporation, filed with the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $109,311,837 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,586,521 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $2,690,589 Unsecured Nonpriority Claims ------------ ---------- Total $109,311,837 $4,277,110 The Debtor's Schedule of Creditors Holding Secured Claims and Creditors Holdings Unsecured Nonpriority Claims contain amounts labeled as unknown relating to Judgment Proceeds in its litigation. The Debtor's Schedule of Creditors Holding Unsecured Priority Claims all contain amounts marked unknown. A full-text copy of the Debtor's Schedules of Assets and Liabilities is available for free at: http://ResearchArchives.com/t/s?1139 Government Litigation On Aug. 8, 1995, America Capital Corporation, along with TransCapital, filed a complaint in the U.S. Court of Federal Claims asserting both breach of contract and takings claims styled "America Capital Corporation & Transcapital Financial Corporation v. United States (Case No. 95-523C)." The America Capital and Transcapital discloses that on May 31, 2005, the Court of Federal Claims issued its Final Opinion and Order awarding TransCapital $109.309 million in damages. The Government filed an appeal with the U.S. Court of Appeals for the Federal Circuit on July 27, 2005. Oral argument in the appeal of the TransCapital Judgment was conducted on June 5, 2006, and the appeal is still pending. About TransCapital Financial Based in Miami, Florida, TransCapital Financial Corporation is a holding and management company that conducted substantially all of its operations through its wholly-owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings' key activities as a savings and loans institution were banking and lending and its primary lending activity was the originating and purchasing of loans secured by mortgages on residential properties. Transohio Savings also endeavored to generate residential loan originations through branch personnel and real estate brokers. Mobile home and home improvement loans were generated through dealers and contractors and additionally, Transohio Savings made construction loans generated by contractors that usually extended to not more than one year in length. America Capital Corporation owns 65.19% of TransCapital's interest. TransCapital Financial Corporation filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644). Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $109,309,000 and total debts of $36,094,038. America Capital also filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No. 06-12645). Mindy A. Mora, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents American Capital. UBONG AKPAN: Case Summary & 8 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Ubong Akpan 2522 Claremont Drive Grand Prairie, TX 75052 Bankruptcy Case No.: 06-42987 Chapter 11 Petition Date: September 5, 2006 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Thomas Dwain Powers, Esq. Harris, Finley and Bogle 777 Main St., Suite 3600 Ft. Worth, TX 76102 Tel: (817) 870-8700 Fax: (817) 333-1188 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First National Bank of Omaha Credit Card $7,873 Washington Mutual P.C. Credit Card $5,400 Bank of America Credit Card $5,367 Beneficial Credit Card $4,000 Chase Credit Card $957 Office Max Credit Card $470 Chevron Texaco Credit Card $415 American Express Credit Card $0 U.S. STEEL: Moody's Reviews Ba1 Senior Unsec. Bond's Rating ----------------------------------------------------------- Moody's Investors Service placed three North American steel companies under review for possible upgrade: United States Steel Corporation's Ba1 corporate family rating, Gerdau Ameristeel Corporation's Ba2, and Chaparral Steel Company's B1 CFR. The reviews for possible upgrade reflect the superior improvement in financial metrics and overall financial risk reduction evidenced by these companies, in combination with Moody's evolving view regarding the expected duration of the current steel industry upcycle. This evolving perspective is primarily due to fundamental changes that appear to have occurred within the industry over the last several years, primarily as a result of industry consolidation. Moody's expects to refine its opinion of the medium- and long-term outlook for the steel industry over the review period, which is expected to last approximately two months. Should Moody's prevailing industry outlook materially change, as is expected, it will publish an Industry Outlook that summarizes updated thinking and discusses possible rating implications for the rated steel company universe. However, at this stage, Moody's has identified United States Steel, Gerdau Ameristeel and Chaparral Steel as being the most likely upgrade candidates. It is important to note that these companies are being placed on review reflecting certain common factors as well as those unique to these three companies. The common factors include a combination of the strength in the overall operating performance as well as management actions taken to improve their capital structures and financial flexibility. Moody's review of US Steel, Gerdau Ameristeel and Chaparral Steel will focus on the sustainability of improved margins and debt protection measures as well as the likely capital structures expected to be maintained through what will continue to be a cyclical business. In the case of US Steel, the review will also consider the secured nature of its bank credit facility, which is a limiting factor in achieving investment grade status. These ratings were placed under review for possible upgrade: United States Steel Company Issuer: Allegheny County Industrial Dev. Auth., PA On Review for Possible Upgrade: * Senior Unsecured Revenue Bonds, Placed on Review for Possible Upgrade, currently Ba1 Issuer: United States Steel Corporation On Review for Possible Upgrade: * Corporate Family Rating, Placed on Review for Possible Upgrade, currently Ba1 * Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently Ba1 Outlook Actions: * Outlook, Changed To Rating Under Review From Stable United States Steel Corporation, headquartered in Pittsburgh, Pennsylvania, had revenues of $14 billion for the year ended December 31, 2005. VARIG S.A.: Brazilian Judge Sued for Stopping Route Redistribution ------------------------------------------------------------------ Brazil's Civil Aviation Agency has filed a formal complaint against Judge Marcia Cunha Silva de Carvalho of the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro for stopping the redistribution of VARIG's former routes and slots to other airline companies, Investnews (Brazil) reports. ANAC commenced the action before the Brazilian Justice Council, Investnews says. ANAC argued that only the federal justice could suspend the redistribution of routes and slots. ANAC began redistributing VARIG's international routes and take- off and landing slots late in August 2006 despite an injunction entered by the Brazilian Bankruptcy Court, Bloomberg News relates, citing Brazilian newspaper O Estado de S. Paulo. ANAC gave VARIG's routes to TAM, Gol, OceanAir, and BRA. The Injunction allows ANAC to act only if VARIG fails to resume service on its 272 routes within 30 days of receiving a new route permit, Estado said, according to Bloomberg. VARIG has not received new permits. ANAC was fined BRL1,000,000 -- $467,500 -- by the Brazilian Bankruptcy Court for violating the injunction, Bloomberg relates, citing another Brazilian newspaper Folha de S. Paulo. Judge Cunha lifted the fine after ANAC agreed to stop the redistribution. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VARIG S.A.: ACE Aviation Mulls 10% Equity Purchase -------------------------------------------------- ACE Aviation Holdings, parent of Air Canada, is in discussions to acquire a 10% equity interest in VARIG S.A., Dow Jones reports, citing Brazilian newspaper O Estado de S. Paulo. ACE, however, refused to comment on the report. A spokeswoman for ACE said the company "looks at a number of investment opportunities on an ongoing basis but we do not comment on specifics," according to Flightglobal.com. As previously reported, Volo do Brasil acquired the operating arm of VARIG at an auction in July 2006. Volo pledged to invest more than $500,000,000 to pay VARIG's debt and keep the airline flying. O Estado said a draft deal between the parties provides for the transfer of certain of Air Canada's Boeing 767 fleet and at least six orders for Embraer E190 planes to VARIG, Dow Jones relates. A spokesperson for Volo told Dow Jones that Air Canada has no stake in VARIG at present. According to Dow Jones, Estado said Air Canada's involvement depends on the approval of the sale of VARIG's operating unit to Volo do Brasil. Estado noted that the National Civil Aviation Agency in Brazil was expected to rule on the sale on August 25, 2006. Estado further relates that Air Canada's acquisition of a stake in VARIG still needs sanction from ANAC. Brazilian law prohibits foreign companies from owning more than 20% equity stake in local airlines. About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VARIG S.A.: Port Authority Wants to Collect Flight Fees ------------------------------------------------------- The Port Authority of New York and New Jersey asks the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to compel VARIG, S.A., and its two foreign debtor-affiliates to pay postpetition flight fees and other fees totaling $207,500 as an administrative expense pursuant to Sections 105, 503 and 507 of the Bankruptcy Code. The Port Authority operates four airports in the New York-New Jersey metropolitan area: * John F. Kennedy International Airport, * LaGuardia Airport, * Newark Liberty International Airport, and * Teterboro Airport VARIG is a party to a Flight Fees Agreement, dated Jan. 1, 2004, with the Port Authority for flights that take off from the Kennedy Airport. VARIG agreed to submit an activity report, setting forth, inter alia, the number of flights it had taken off at the Kennedy Airport each month. VARIG also agreed to pay a flight fee to the Port Authority. The activity report is due on the 10th day of the month following the month the flights occurred. The payment of the flight fees is due to the Port Authority 10 days after the activity report is due. VARIG submitted its activity report for May, June and July 2006. According to the activity report, VARIG owed these flight fees to the Port Authority: Month Amount Due ----- ---------- May 2006 $63,752 June 2006 $49,614 July 2006 $35,359 VARIG also owed these fees to the Port Authority: Month Description Amount Due ----- ----------- ---------- July 2006 Itinerant aircraft fees $58,368 July 2006 Supplemental Flight Fee $250 May 2006 Monthly parking fee $50 June 2006 Monthly parking fee $50 June 2006 Lost card fee $50 June 2006 Interterminal vehicle connection service charge $6 In an e-mail message dated August 25, 2006, the Port Authority asked VARIG pay the outstanding amounts. To date, VARIG has not paid to the Port Authority any of the flight fees, parking fees, and charges it incurred at the Kennedy Airport between May and July 2006. The Port Authority is entitled to an administrative expense claim because all the fees and charges accrued postpetition, Milton H. Pachter, Esq., tells Judge Drain. The Port Authority has no obligation to continue to allow VARIG to fly in and out of the Kennedy Airport pending the assumption or rejection of their Agreement unless VARIG pays for its obligations, Mr. Milton contends, citing In re NLRB v. Bildisco and Bildisco, 465 U.S. 513, 531, 104 S. Ct. 1188, 1199 (1984). About VARIG Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's largest air carrier and the largest air carrier in Latin America. VARIG's principal business is the transportation of passengers and cargo by air on domestic routes within Brazil and on international routes between Brazil and North and South America, Europe and Asia. VARIG carries approximately 13 million passengers annually and employs approximately 11,456 full-time employees, of which approximately 133 are employed in the United States. The Company, along with two affiliates, filed for a judicial reorganization proceeding under the New Bankruptcy and Restructuring Law of Brazil on June 17, 2005, due to a competitive landscape, high fuel costs, cash flow deficit, and high operating leverage. The Debtors may be the first case under the new law, which took effect on June 9, 2005. Similar to a chapter 11 debtor-in-possession under the U.S. Bankruptcy Code, the Debtors remain in possession and control of their estate pending the Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de Advocacia Sergio Bermudes, represents the carrier in Brazil. Each of the Debtors' Boards of Directors authorized Vicente Cervo as foreign representative. In this capacity, Mr. Cervo filed a Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury Winthrop Shaw Pittman LLP represents Mr. Cervo in the United States. As of March 31, 2005, the Debtors reported BRL2,979,309,000 in total assets and BRL9,474,930,000 in total debts. (VARIG Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VASOMEDICAL INC: Miller Ellin Raises Going Concern Doubt -------------------------------------------------------- Miller Ellin & Company, LLP, expressed substantial doubt about Vasomedical, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended May 31, 2006. The auditing firm pointed to the Company's recurring losses from operations and a net capital deficiency. The Company recorded a net loss attributable to common shareholders of $504,000 during the three months ended May 31, 2006, compared to a loss of $1,001,000 in the same period in fiscal 2005. Vasomedical generated $1.9 million of total revenues in the fourth quarter of fiscal 2006, compared with $3.8 million of total revenues in the fourth quarter of fiscal 2005. Revenues from equipment sales declined approximately 72% to $822,000 in the fourth quarter of fiscal 2006 compared to $2,888,000 for the same period in the previous year. Equipment rentals and services were $1,063,000 in the three months ended May 31, 2006, up approximately 11% from $960,000 for the same period in the previous year. For the fiscal year 2006, total revenues were $10.9 million, compared with $15.1 million for the fiscal year 2005. The net loss attributable to common shareholders for the fiscal year ended May 31, 2006, was $11.6 million, which included a non-recurring income tax expense for $7.1 million compared with a net loss of $5.6 million for the fiscal year ended May 31, 2005. As of May 31, 2006, the Company had cash, cash equivalents and certificates of deposit balances of $2.9 million compared with $2.7 million as of May 31, 2005 and working capital as of May 31, 2006 of $2.9 million as compared with $3.9 million as of May 31, 2005. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?1142 Thomas Glover, president and chief executive officer of Vasomedical, commented, "EECP(R) therapy has been proven to be an effective, safe, noninvasive, low cost therapy for ischemic heart disease, however the therapy continues to face significant challenges obtaining broader adoption in the cardiology community due in large part to reimbursement policies that limit the patient population and restrict availability of the therapy. We are committed to working diligently with leading physicians in the cardiology community to obtain a broader understanding of the therapy's many benefits and with CMS to expand reimbursement coverage for patients not already covered under the existing guidelines." Mr. Glover continued, "In order to preserve cash we have found it necessary to reduce expenditures in all areas including clinical research, product development, as well as sales and marketing, and we are continuing to restructure our costs to be better aligned with potential near-term sales. These cuts, while necessary, have delayed our ability to advance the adoption of EECP therapy in the medical market place." About Vasomedical Vasomedical, Inc. -- http://www.vasomedical.com/-- is primarily engaged in designing, manufacturing, marketing and supporting EECP external counter-pulsation systems based on the Company's unique proprietary technology. EECP therapy is a noninvasive, outpatient therapy for the treatment of diseases of the cardiovascular system currently indicated for use in cases of stable or unstable angina, congestive heart failure, acute myocardial infarction and cardiogenic shock. The Company provides hospitals, clinics and private practices with EECP equipment, treatment guidance and a staff training and equipment maintenance program designed to provide optimal patient outcomes. VESTA INSURANCE: Files List of Six Largest Equity Holders --------------------------------------------------------- Vesta Insurance Group Inc. disclosed that it has six principal stockholders as of Dec. 31, 2005, at which time the company had 37,101,129 shares of common stock outstanding: Name and Address No. of Shares Percent ---------------- ------------- ------- Jana Partners, LLC 3,583,588 9.7% 201 Post Street, Suite 1000 San Francisco, California 94108 Newcastle Partners, LP 3,050,700 8.3% 300 Crescent Court, Suite 1110 Dallas, Texas 75201 Becker Capital Management 2,898,400 7.9% 1211 SW Fifth Avenue, Suite 2185 Portland, Oregon 97204 Alabama Reassurance Company 2,767,338 7.5% P.O. Box 020152 Tuscaloosa, Alabama 35402 Dimensional Fund Advisors, Inc. 2,692,510 7.3% 1299 Ocean Avenue Santa Monica, California 90401 Heartland Advisors, Inc. 2,512,800 6.8% 789 North Water Street Milwaukee, Wisconsin 53202 About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VESTA INSURANCE: Court Approves Funds Transfer to Gaines -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama authorized Vesta Insurance Group Inc. to transfer funds to J. Gordon Gaines Inc. for the purpose of funding an amount equal to the 50% of Executive Payroll due on Aug. 18, 2006, and Sept. 1, 2006. The Hon. Thomas B. Bennett defers consideration of the request to fund 100% of the Executive Payroll commencing September 2, 2006. As reported in the Troubled Company Reporter on Sept. 4, 2006, Vesta asked Judge Bennett of the U.S. Bankruptcy Court for the Northern District of Alabama for authority to transfer funds to Gaines for the purpose of: (a) funding an amount equal to 50% of the Executive Payroll due on August 18, 2006, and Sept. 1, 2006; and (b) funding 100% of the Executive Payroll, with the exception of the payroll obligation relating to Norman Gayle who does not currently hold an executive position with VIG, commencing on September 2, 2006, and continuing thereafter for so long as the Executives are employed by VIG. As of Dec. 31, 2005, J. Gordon Gaines, Inc., had more than 300 employees, the majority of which were located in Birmingham, Alabama. These employees included the executives who held these positions with Vesta Insurance Group, Inc., and Gaines: Name VIG Gaines ---- --- ------ Norman Gayle Director Chairman/President Director David W. Lacefield President/CEO Senior VP Director John Hines Senior VP, CFO Senior VP, CFO and Treasurer and Treasurer Donald Thornton Senior VP, Senior VP, General Counsel General Counsel and Secretary and Secretary John McCullough VP, Associate VP, Associate Counsel and Counsel, Assistant Assistant Secretary and Secretary former Director Edwin M. Meadows VP Controller and Chief Accounting Officer Payment of payroll to these Executives was routinely accomplished through the Gaines Payroll. Pursuant to a management agreement, Gaines provided the personnel and infrastructure support for Vesta Fire Insurance Corporation, Texas Select Lloyds Insurance Company, Vesta Insurance Corporation, Shelby Casualty Company, The Shelby Insurance Company, The Hawaiian Insurance & Guaranty Company, Ltd., Florida Select Insurance Company, and Select Insurance Services, Inc., in the ordinary course of their businesses. Gaines also provided an array of management and support services to VIG. Prime Tempus, Inc., the Special Deputy Receiver for the Texas Insurance Subsidiaries, purported to terminate the Management Agreement on behalf of the Texas Commissioner of Insurance, as rehabilitator and liquidator for the Texas Receivership Entities. C. Edward Dobbs, Esq., at Parker, Hudson, Rainer & Dobbs, LLP, in Atlanta, Georgia, relates that at this time, the effectiveness of the termination remains a disputed issue. Notwithstanding the asserted termination, the SDR, acting on behalf of the Texas Commissioner and purporting to act at the request of the Insurance Commissioner of the State of Hawaii, as rehabilitator of The Hawaiian Insurance & Guaranty Company, asked Gaines to continue, for a limited period of time, to provide services of essentially the same type and nature previously provided under the Management Agreement in exchange for compensation generally consistent with that set forth in the Management Agreement. According to Mr. Dobbs, at the close of business on August 4, 2006, without assurances of a source of revenue from which to pay its employees, Gaines was forced to terminate substantially all of its employees based in locations outside of Birmingham, Alabama, and a substantial number of its workforce in Birmingham, Alabama, leaving Gaines with approximately 190 employees to service the needs of any area of the Vesta Insurance Group. Gaines elected to retain some 190 of its employees, Mr. Dobbs says, based on representations of the SDR that it would be prepared to fund the payroll and infrastructure expenses for those employees pending execution of a definitive agreement. Since Aug. 4, 2006, Gaines and the SDR have engaged in negotiations for the terms and conditions on which Gaines would continue to provide management services to the SDR and the Hawaii Commissioner. These discussions culminated in a "Client Services Agreement." Gaines, the SDR, and the Hawaiian Commissioner have entered into the Client Services Agreement, which provides essentially for the same type of services, but on a reduced scale, and essentially the same form of payment for those services and infrastructure, as existed under the Management Agreement. Mr. Dobbs relates that the SDR has agreed to fund in advance of any approval the amounts to which the SDR committed under the proposed Client Services Agreement, including amounts relating to the August 18, 2006, payroll. Under the Client Services Agreement, the SDR is funding an amount relating to the Executives equal to 50% of the Executive Payroll for the period of Aug. 7, 2006, through Sept. 1, 2006. The SDR does not currently propose to pay Gaines an amount attributable to the Executives for any time after Sept. 1, 2006. With regard to the Aug. 18, 2006, payroll, the SDR's funding leaves unpaid a $37,052 balance for the Executives. VIG and Gaines anticipate that the shortfall for the payroll due on Sept. 1, 2006, will be approximately the same, Mr. Dobbs says. As of the end of August 2006, the Executive ranks will be reduced by resignations of John Hines and John McCullough. Mr. Dobbs tells the Court that the Executive ranks may also be further reduced during this period by additional resignations or terminations. Commencing on Sept. 2, 2006, and continuing thereafter for so long as the Executives are employed by VIG or Gaines, the shortfall will be equal to the entire amount of the Executive Payroll absent a change in the position of the SDR or other developments, Mr. Dobbs says. "Absent the VIG Payroll Funding, neither VIG nor Gaines will be able to retain key members of the management team that are critical to the operation of VIG and Gaines. Such individuals have considerable institutional knowledge regarding VIG which is irreplaceable and central to the performance of VIG's duties under the Bankruptcy Code and to any prospect of a successful outcome in [the Debtor's] bankruptcy case," Mr. Dobbs says. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VOLT INFORMATION: Amends Agreement to Extend Expiration Date ------------------------------------------------------------ Volt Information Sciences, Inc., Volt Funding Corp. and Three Rivers Funding Corporation amended their Receivables Purchase Agreement, to extend the expiration date from April 2, 2008 to April 2, 2009. The Receivables Purchase Agreement The Company entered into a $100 million receivable securitization program, under which, receivables related to its staffing solutions business and of its subsidiaries are sold from time to time by the Company to Volt Funding Corp., a wholly owned special purpose subsidiary of the Company. Volt Funding, in turn, sells to Three Rivers Funding Corporation, an asset backed commercial paper conduit sponsored by Mellon Bank, N.A., an undivided percentage ownership interest in the pool of receivables Volt Funding acquires from the Company. The Company retains the servicing responsibility for the accounts receivable. The Securitization Program is designed to enable receivables sold by the Company to Volt Funding to constitute true sales of those receivables. As a result, the receivables are available to satisfy Volt Funding's own obligations to its own creditors before being available, through the Company's residual equity interest in Volt Funding, to satisfy the Company's creditors. TRFCO has no recourse to the Company for any of the sold receivables. Volt Information Sciences, Inc. -- http://www.volt.com/-- provides national Staffing Services and Telecommunications and Information Solutions to Fortune 100 customers. Operating through a network of over 300 Volt Services Group branch offices, the Staffing Services segment fulfills IT and other technical, commercial and industrial placement requirements of its customers, on both a temporary and permanent basis. The Telecommunications and Information Solutions businesses, which include the Telecommunications Services, Computer Systems and Telephone Directory segments, provide complete telephone directory production and directory publishing; a full spectrum of telecommunications construction, installation and engineering services; and advanced information and operator services systems for telephone companies. * * * As reported in the Troubled Company Reporter on July 4, 2006 Fitch Ratings upgraded Volt Information Sciences' Issuer Default Rating to 'BB' from 'BB-', and has affirmed its senior secured rating at 'BBB-'. The Rating Outlook is Stable. WARD PRODUCTS: Wants to Hire Jaffe Raitt as Local Counsel --------------------------------------------------------- Ward Products, L.L.C., asks the U.S. Bankruptcy Court for the Eastern District of Michigan for permission to employ Jaffe, Raitt, Heuer & Weiss, P.C., as its local counsel, nunc pro tunc to Aug. 4, 2006. Jaffe Raitt is expected to assist McGuireWoods, L.L.P., the Debtor's primary bankruptcy counsel, and perform all necessary legal tasks on the Debtor's chapter 11 case. The Debtor tells the Court that the Firm has received a $25,000 retainer. Documents filed with the Court do not disclose how much Jaffe Raitt will be paid. The Firm assures the Court it does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code. The Firm can be reached at: Jaffe, Raitt, Heuer & Weiss, P.C. 27777 Franklin Road Suite 2500 Southfield, MI 48034 Tel: (248) 351-3000 Fax: (248) 351-3082 http://www.jaffelaw.com Headquarted in Royal Oak, Michigan, Ward Products, L.L.C., manufactures receiving antennas. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. E.D. Mich. Case No. 06-50527). Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Paige E. Barr, Esq., and Richard E. Kruger, Esq., at Jaffe Franklin Heuer & Weis, P.C. represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. WCN ENTERPRISES: Engages Keen Realty as Real Estate Consultant -------------------------------------------------------------- WCN Enterprises, Inc., has retained Keen Realty, LLC, to market and sell their former Quality Inn and Suites located in San Angelo, Texas. The hotel consists of 51,150+/- sq. ft. with 105 rooms situated on 5.19+/- acres in the Historic Concho Street District of San Angelo, Texas. The property's amenities include a lounge, indoor pool with Jacuzzi, sauna, indoor miniature golf, game room, high speed Internet, a business center, meeting facilities, and bus parking. Located in the historic downtown area of San Angelo, Texas, the former Quality Inn & Suites is located within 5 miles of all San Angelo's attractions. The hotel overlooks the Concho River and is within walking distance to both the Convention Center, shops, and dining. "Interested parties are encouraged to act immediately," said Matthew Bordwin, Keen Realty's Executive Vice President. "This former Quality Inn and Suites represents an excellent opportunity to enter into the market with an already existing facility. The property's amenities and its proximity to downtown San Angelo are unmatched. I anticipate there to be a tremendous amount of interest in this property." The Firm can be contacted at: Matthew Bordwin EVP Keen Realty, LLC 60 Cutter Mill Road Suite 214, 11021 Great Neck, New York Tel: (516) 482-2700 ext. 226 Fax: (516) 482-5764 Headquartered in Dallas, Texas, WCN Enterprises, Inc., aka Quality Inn & Suites and Clarion Inn & Suites operates a hotel. The Company filed for chapter 11 protection on July 1, 2006 (Bankr. N.D. Tex. Case No. 06-32628). Robert A. Simon, Esq., at Barlow Garsek & Simon, LLP, in Fort Worth, Texas, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million and $10 million. WESTON NURSERIES: First Pioneer Sets September 7 Foreclosure Sale ----------------------------------------------------------------- First Pioneer Farm Credit of Bedford plans a mortgage foreclosure sale at 11 a.m., on Sept. 27, 2006, to auction off over 350 acres of Weston Nurseries, Inc.'s property after the Debtor failed to pay off its $7 million debt, Milford Daily News reports. The farmland will be divided into three parcels -- ranging from 90 to 135 acres each -- and sold off separately, according to the news. Weston's CEO Gary Furst said the Company hopes to raise enough money without selling off the entire 350-acre section. Daily News staff writer John Hilliard says that in July, about 655 acres of the 920-acre property were up for sale at a bankruptcy auction. However, the auction failed to attract bidders primarily because of certain purchase requirements such as minimum bids and the sale of the land as a single piece. Mr. Furst told the Daily News that company officials are considering more than four proposals from private developers, who have plans for both housing and commercial uses on the Nurseries' property. Mr. Furst added that the Company is also in talks with leaders from the town of Hopkinton. The town is funding a $200,000 master plan for East Hopkinton and any sale of the Nurseries' land should not affect it, selectmen Chairwoman Muriel Kramer said. According to State law, the town has the right of first refusal on any farmland, but that right does not apply to a mortgage foreclosure sale. The town must receive 90 days notice before the sale. Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc., -- http://www.westonnurseries.com/-- is central New England's premier resource in designing, creating, and enjoying outdoor living areas. Weston Nurseries grows and sells plants, trees, shrubs, and perennials. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884). Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP, represents the Debtor in its restructuring efforts. Michael J. Fencer, Esq., and Steven C. Reingold, Esq., at Jager Smith, PC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. WHITING PETROLEUM: Acquires 15% Working Interest in a Utah Acreage ------------------------------------------------------------------ Whiting Petroleum Corporation has acquired, for an undisclosed price, a 15% working interest in approximately 170,000 leased acres in the central Utah Hingeline play from a privately held independent oil company. The acquired acreage is on trend with, but not a part of, the Covenant field, which was discovered in 2004. Covenant field currently produces approximately 7,000 barrels of oil per day from 10 wells. The seller of the acreage retained a 20% working interest and a third-party oil company owns a 65% working interest in the acreage and will be operator of the majority of the acreage. As part of the transaction, the operator will pay 100% of the Company's total drilling and completion cost for the first three wells in the project. The initial wells are located on seismically defined structures that are on trend with Covenant field. Drilling operations on the first of the three planned wells are expected to begin in the fourth quarter of 2006. James J. Volker, president and chief executive officer, commented, "This acreage acquisition and the carried working interest in the initial three wells provides Whiting exposure to an exploration play that we believe holds large reserve potential. Multiple structurally based drilling prospects have been identified on the acreage." Based in Denver, Colorado, Whiting Petroleum Corporation (NYSE: WLL) -- http://www.whiting.com/-- is a holding company engaged in oil and natural gas acquisition, exploitation, exploration and production activities primarily in the Rocky Mountains, Permian Basin, Gulf Coast, Michigan and Mid-Continent regions of the United States. * * * As reported on the Troubled Company Reporter on May 11, 2006, Standard & Poor's Rating Services placed its 'B+' corporate credit rating on oil and gas exploration and production company Whiting Petroleum Corp. on CreditWatch with positive implications. The ratings action follows the recent change in Standard & Poor's oil pricing assumptions. In 2006, 2007, and 2008, S&P raised its pricing assumptions for West Texas Intermediate oil by $10 to $60, $50 and $40 per barrel, respectively. These changes positively affect the calculation of Whiting's credit measures for these years under our pricing assumptions and could, on further examination, be sufficient to warrant upgrading the corporate credit rating by one notch. XTREME COMPANIES: Appoints Jack Clark as New COO ------------------------------------------------ Xtreme Companies, Inc., has appointed former Fountain Powerboat Industries COO, Jack Clark as new Chief Operating Officer. The Company disclosed that Mr. Clark served as Fountain's chief operating officer from 2002 to 2005. Fountain is one of the leading manufacturers of high performance powerboats in the world. Laurie Phillips, chief executive officer, stated, "Having worked informally with Jack as we restructured our organization over the past several months, it quickly became clear that we were a perfect match for one another. His in-depth knowledge, established relationships and years of experience as a senior executive in the boating industry fit seamlessly with our mission and new direction. She added, "One of our recently stated primary initiatives was to begin assembling some of the best talent in the industry. We couldn't have gotten off to a better start." Mr. Clark commented, "Working with the Xtreme team over the past few months has been exciting. The Company is committed to building a quality product, distribution network, and organization that delivers value. I believe that the new boats that are being engineered and tooled now, will move the Company to a new level of customer satisfaction in performance, sales, and service. With this being the stated and demonstrated goals of the organization, I am pleased to join the Xtreme management team." The Company further disclosed that, prior to joining the Company, Mr. Clark was recently a consultant to the Sea Swirl Boats Division of Genmar, one of the largest boat manufacturers in the world. In addition to his tenure at Fountain, his 40 years of experience in the boating industry included tenure as GM/VP Donzi Marine, VP Operations Glaston-Carlson Boats and start-up Plant Manager with Bayliner Marine Corp. Headquartered in Washington, Missouri, Xtreme Companies, Inc., (OTC Bulletin Board: XTME) -- http://www.xtremecos.com/-- manufactures and markets mission-specific Fire-Rescue and Patrol boats used in emergency, surveillance and defense deployments. The boats have been marketed and sold directly to fire and police departments, the U.S. Military and coastal port authorities throughout the United States. The Company's balance sheet at June 30, 2006 showed a total shareholders' deficit of $9.7 million. * Law Firms Blank Rome and Healy & Baillie Will Merge ----------------------------------------------------- Blank Rome LLP and Healy & Baillie, LLP will combine their practices as of Oct. 1, 2006. Healy & Baillie is ranked as one of the leading maritime law firms in the United States with a notable international practice and office in Hong Kong. The combined firm will house the nation's largest Maritime practice. "We are thrilled to welcome Healy & Baillie to the Blank Rome family. Their depth of experience in international, maritime and admiralty law is unmatched and will be an excellent complement to our existing practice," said Carl M. Buchholz, Managing Partner and Chief Executive Officer of Blank Rome. "This combination clearly strengthens our national platform and international presence by positioning Blank Rome in Hong Kong, which is well aligned with our overall strategic growth strategy." Founded in 1948, Healy & Baillie provides legal services to the maritime industry in New York, Hong Kong, New Jersey, and Connecticut. The Firm is consistently listed as one of the leading maritime law firms in the United States by Chambers Global and US editions of "Leading Lawyers." "Blank Rome is a forward-thinking and results-driven firm with a growing national and international platform, which made it the perfect choice for us," said John D. Kimball, Chairman of Healy & Baillie, LLP and 2006 recipient of the Chambers Award for Excellence as the leading lawyer in shipping litigation in the United States. "We are confident that our combination will provide substantial benefits for our clients. The strengths of Healy & Baillie's admiralty expertise and international footprint mesh ideally with the regulatory, legislative and environmental practices of Blank Rome. This is a combination in which the whole will be far greater than the sum of the two parts." This combination follows Blank Rome's recently announced strategic alliance with Brussels-based public affairs and public relations agency Interel. This partnership was designed to link Blank Rome and Interel core competencies to provide a seamless US-EU legal, public affairs, government relations, and strategic communications service offering to companies and organizations who are increasingly impacted by decisions taken on both sides of the Atlantic. About Healy & Baillie, LLP Healy & Baillie is an international law firm providing legal services in New York, Hong Kong, New Jersey and Connecticut. The firm was formed in 1948, and currently has 28 attorneys, specializing in both maritime and general international commercial law. Healy & Baillie has a long history of representing international clients in the United States and in assisting domestic clients in protecting their interests abroad. It is the only U.S.- based maritime law firm with a local license to practice Hong Kong law. The Firm's Hong Kong office offers a full-service maritime practice in that jurisdiction and is also well-positioned to assist clients in China and throughout Asia and Oceania. About Blank Rome LLP Blank Rome LLP -- http://www.blankrome.com/-- is one of America's largest law firms. With nearly 500 attorneys serving clients across the United States, Blank Rome is a national law firm representing businesses and organizations ranging from Fortune 500 companies to start-up entities. Blank Rome helps its clients in all aspects of their businesses. The firm's practices cover areas including business tax; commercial and corporate litigation; employment benefits and labor; financial services; bankruptcy and financial restructuring; government relations; health law; intellectual property; maritime, international trade and procurement; matrimonial; privately held and emerging companies; product liability; public companies and capital formation; public finance; real estate; trusts and estates; and white collar, internal and government investigations. Blank Rome also represents pro bono clients in a wide variety of cases and matters. * BOOK REVIEW: The Turnaround Manager's Handbook ------------------------------------------------ Author: Richard S. Sloma Publisher: Beard Books Paperback: 244 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122409/internetbankrupt In the introduction to this book, the author suggests that an accurate subtitle could be "How to Become a Successful Company Doctor." Using everyday medical analogies throughout, he targets "corporate general practitioners" charged with the fiscal health of their companies. As with many human diseases, early detection of turnaround situations is critical. The author describes turnaround situations as a continuum differentiated by length of time to disaster: "Cash Crunch," "Cash Shortfall," "Quantity of Profit," and "Quality of Profit." The book centers on 13 steps to a successful turnaround. The steps are presented in a flowchart form that relates one to another. Extensive data collection and analysis are required, including the quantification of 28 symptoms, the use of 48 diagnostic and analytical tools, and up to 31 remedial actions. (In case the reader balks at the effort called for, the author points out that companies that collect and analyze such data on a regular basis generally don't find themselves in a turnaround situation to begin with!) The first step is to determine which of 28 symptoms are plaguing the company. The symptoms generally pertain to manufacturing firms, but can be applied to service or retail companies as well. Most of the symptoms should be familiar to the reader, but the author lays them out systematically, and relates them to the analytical tools and remedial actions found in subsequent chapters. The first seven involve the inability to make various payments, from debt service to purchase commitments. Others include excessive debt/equity ratio; eroding gross margin; increasing unit overhead expenses; decreasing product line profitability; decreasing unit sales; and decreasing customer profitability. Step 2 employs 48 diagnostic and analytical tools to derive inferences from the symptom data and to judge the effectiveness of any proposed remedy. The author begins by saying "...if the only tool you have is a hammer, you will view every problem only as a nail!" He then proceeds to lay out all 48 tools in his medical bag, which he sorts into two kinds, macro- and micro-tools. Macro-tools require data from several symptoms or assess and evaluate more than a single symptom, whereas micro-tools more general-purpose in function. The 12 macro-tools run from "The Art of Approximation" to "Forward-Aged Margin Dollar Content in Order Backlog." The 36 micro-tools include "Product Line Gross Margin Percent Profitability," "Finance/Administration People-Related Expenses As Percent Of Sales," and "Cumulative Gross $ by Region." Next, managers are directed to 31 possible remedial actions, categorized by the four-stage turnaround continuum described above. The first six actions are to be considered at the Cash Crunch stage, and range from a fire sale of inventory to factoring accounts receivable. The next six deals with reducing people-related expenses followed by 13 actions aimed at reducing product- and plant-related expenses. The subsequent five actions include eliminating unprofitable products, customers, channels, regions, and reps. Finally, managers are advised on increasing sales and improving gross margin by cost reduction in various ways. The remaining steps involve devising the actual turnaround plan, ensuring management and employee ownership of the plan, and implementing and monitoring the plan. The advice is comprehensive, sensible and encouraging, but doesn't stoop to clich, or empty motivational babble. The author has clearly operated on patients before and his therapeutics have no doubt restored many a firm's financial health. ********* 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 ***